Document:

Exhibit
10.3

 

EXECUTION VERSION (02-08-08)

 

CONFIDENTIAL TREATMENT
REQUESTED

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

 

VLA4
PARTNER SUPPORT AGREEMENT

 

BY AND BETWEEN

 

ISIS
PHARMACEUTICALS, INC.

 

AND

 

TEVA
PHARMACEUTICAL INDUSTRIES LTD.

 

FEBRUARY
8, 2008

 

 

This
VLA4 PARTNER SUPPORT AGREEMENT (the “Agreement”),  entered into as of February 8,
2008 (the “Effective Date”), is made by and between ISIS Pharmaceuticals, Inc.,
a Delaware corporation with a principal place of business at 1896 Rutherford
Road, Carlsbad, CA  92008 (“ISIS”)  and TEVA Pharmaceutical Industries Ltd.,  a
limited liability company organized under the laws of Israel with its principal
place of business at Petah Tiqva 49131, Israel (“TEVA”).

 

BACKGROUND

 

A.            ISIS
and ATL entered into that certain collaboration and license agreement, dated October 30,
2001, which agreement was amended and restated on February 8, 2008 (the “Amended
and Restated ISIS/ATL Agreement”).

 

B.            ATL
and TEVA have agreed to enter into a license agreement dated as of even date
hereof (the “ATL/TEVA Agreement”).

 

C.            In
order to, among other things, induce TEVA to enter into the ATL/TEVA Agreement
and to undertake its obligations thereunder, ISIS agrees to provide TEVA, in
ISIS’ capacity as licensor under the Amended and Restated ISIS/ATL Agreement,
with:

 

(i)            certain limited assurances and
agreements supporting the assurances and agreements made by ISIS to ATL under
the Amended and Restated ISIS/ATL Agreement and the assurances and agreements
made by ATL to TEVA under the ATL/TEVA Agreement, and

 

(ii)           support services in connection with
the development of Products, as more fully described herein.

 

NOW,
THEREFORE, for and in consideration of the representations, warranties and
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged; it is agreed by
and between the parties as follows:

 

1.                                      DEFINITIONS

 

1.1          All capitalized terms used but not
defined herein will have the meaning ascribed to such terms in the Amended and
Restated ISIS/ATL Agreement.

 

1.2          Other
Defined Terms.  The
following defined terms have the meanings set forth in the respective Sections
referred to below:

 

	
  Defined Term

  	
   

  	
  Section

  
	
  VLA4 Compounds/Products

  	
   

  	
  2.1

  
	
  ISIS/TEVA Meeting

  	
   

  	
  3.1

  

 

 

1

 

	
  ISIS Indemnitees

  	
   

  	
  7.1(a)

  
	
  Claims

  	
   

  	
  7.1(a)

  
	
  TEVA Indemnitees

  	
   

  	
  7.1(b)

  
	
  Indemnified Party

  	
   

  	
  7.2

  
	
  Indemnity Claim

  	
   

  	
  7.2

  
	
  Liaisons

  	
   

  	
  10.3

  
	
  Executives

  	
   

  	
  10.12(a)

  
	
  ICC

  	
   

  	
  10.12(b)

  

 

1.3          Interpretation.  The Section, Paragraph and
other headings contained in this Agreement are for reference purposes only and
will not affect the meaning or interpretation of this Agreement.  All references in this Agreement to a Section or
Paragraph will refer to a Section or Paragraph in or to this Agreement,
unless otherwise stated. All references to a “party” is to a party to this
Agreement Any reference to any federal, national, state, local, or foreign
statute or law will be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.  The word “including” and similar words mean “including
without limitation.” The words “herein,” “hereof’ and “hereunder” and other
words of similar import refer to this Agreement as a whole and not to any
particular Section, Paragraph or other subdivision.  References in this Agreement to “provisions
of this Agreement” refer to the representations, warranties and covenants
contained in this Agreement taken as a whole. 
All references to days, months, quarters or years/annual are references
to Business Days, calendar months, calendar quarters, or calendar years,
respectively.  References to the singular
include the plural.

 

2.                                      ASSURANCES REGARDING AMENDED AND RESTATED ISIS/ATL
AGREEMENT

 

2.1          No Conflict.  For the purpose of assuring and confirming to
TEVA the rights and licenses granted to ATL in the Amended and Restated
ISIS/ATL Agreement, ISIS will not enter into any agreement, without TEVA’s
prior written consent, which would impair or conflict with or adversely impact
the rights and licenses granted by ISIS to ATL under the Amended and Restated
ISIS/ATL Agreement with respect to ATL 1102, VLA4 Compounds or Other VLA4
Compounds and VLA4 Products (collectively, the “VLA4 Compounds/Products”).

 

2.2          Further Amendment of the Amended and Restated ISIS/ATL
Agreement.  Without the
prior written consent of TEVA, ISIS will not amend, modify or waive any
provision of the Amended and Restated ISIS/ATL Agreement (including but not limited to the assignment
provision thereof) in any manner that would (a) diminish any rights
of ATL under the Amended 

 

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and Restated ISIS/ATL Agreement
that would result in any direct or indirect diminution of TEVA’s rights under
the ATL/TEVA Agreement, (b) diminish any rights expressly conferred upon
TEVA under the Amended and Restated ISIS/ATL Agreement or under this Agreement,
or (c) directly or indirectly impose any additional financial or other
obligations upon TEVA beyond those specified in this Agreement and the ATL/TEVA
Agreement.

 

2.3          Material Default under the Amended and Restated ISIS/ATL
Agreement.

 

(a)         In the event of a default by ATL under
the Amended and Restated ISIS/ATL Agreement that relates to VLA4
Compounds/Products (including, without limitation, any fundamental breach of
the Amended and Restated ISIS/ATL Agreement by ATL with respect to which ISIS
provides written notice to ATL under Section 12.2 thereof), ISIS will
promptly inform TEVA in writing, and the parties agree that TEVA will have the
right to cure such default on ATL’s behalf.

 

(b)        ISIS acknowledges and agrees that: (i) ISIS
does not have the right to terminate the Amended and Restated ISIS/ATL
Agreement except in the event ATL is in fundamental breach of its obligations
thereunder (i.e., a breach which goes to the heart
of the Amended and Restated ISIS/ATL Agreement) and neither ATL nor TEVA has
cured such breach within the period specified in Section 12.2(a) of
the Amended and Restated ISIS/ATL Agreement; and (ii) a material breach of
the Amended and Restated ISIS/ATL Agreement by ATL that is not fundamental
gives rise solely to a right of damages but not a right to terminate the
Amended and Restated ISIS/ATL Agreement.

 

(c)         If ATL commits a fundamental breach of
the Amended and Restated ISIS/ATL Agreement relating to VLA4
Compounds/Products, and ISIS provides written notice of such fundamental breach
to ATL under Section 12.2(a) of the Amended and Restated ISIS/ATL
Agreement, ISIS will concurrently provide a copy of such notice to TEVA, and
TEVA will have the right to cure such breach on ATL’s behalf within the
applicable time period specified in such Section 12.2(a).  If ATL cures such breach, or TEVA cures such
breach on ATL’s behalf, within the applicable time period specified in Section 12.2(a),
ISIS will not have the right to terminate the Amended and Restated ISIS/ATL
Agreement on the basis of such fundamental breach.

 

(d)        If ATL commits a fundamental breach of
the Amended and Restated ISIS/ATL Agreement unrelated to VLA4
Compounds/Products, and ISIS provides written notice of such fundamental breach
to ATL under Section 12.2(a) of the Amended and Restated ISIS/ATL
Agreement, ISIS will concurrently provide a copy of such notice to TEVA.  Notwithstanding any failure by ATL to cure
said fundamental breach within the applicable time period specified in such Section 12.2(a),
ISIS acknowledges and agrees that such uncured fundamental breach will not give
ISIS the right to terminate the Amended and Restated ISIS/ATL Agreement in its
entirety, and that in such event, the Amended and Restated ISIS/ATL Agreement
will: (A) terminate as it 

 

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relates to Research Targets other than CD49d and
Collaboration Compounds other than VLA4 Compounds/Products; and (B) remain
in full force and effect in accordance with its terms (including, without
limitation, such Section 12.2) as it relates to CD49d and VLA4
Compounds/Products.

 

2.4          Other Termination of the Amended and Restated ISIS/ATL
Agreement. Except as expressly set forth in Section 2.3
above or in Section 2.5 below, ISIS will not terminate the Amended and
Restated ISIS/ATL Agreement prior to its expiration.  However, if in fact the Amended and Restated
ISIS/ATL Agreement is terminated for any reason with respect to VLA4
Compounds/Products resulting in the termination of the ATL/TEVA Agreement, then
ISIS and TEVA shall enter into a ISIS/TEVA License Agreement as provided in Section 2.5
below.

 

2.5          Effect of TEVA’s Curing of a Fundamental Breach by ATL and
the Effect of ATL’s Bankruptcy.  In
the event that (i) under Section 2.3 of this Agreement TEVA cures
more than one fundamental breach relating to VLA4 Compounds/Products by ATL of
the Amended and Restated ISIS/ATL Agreement or in the event that ATL commits a
fundamental breach relating to VLA4 Compounds/Products of the Amended and
Restated ISIS/ATL Agreement that is not capable of being cured by TEVA (e.g., a
breach that is not monetary and may be performed only by ATL), or (ii) TEVA
exercises its right to terminate the ATL/TEVA Agreement under Section 21.2(c) thereof,
then ISIS shall terminate the Amended and Restated ISIS/ATL Agreement as it
relates to VLA4 Compounds/Products and TEVA shall terminate the ATL/TEVA
Agreement.  In such event, ISIS and TEVA
shall on an urgent basis negotiate in good faith and enter into an agreement
(an “ISIS/TEVA License Agreement”) substantially on the same
non-financial terms and conditions (but on the exact same financial terms and
conditions) as set forth in the Amended and Restated ISIS/ATL Agreement as it
relates to VLA4 Compounds/Products, in effect substituting TEVA for ATL under
those provisions of the Amended and Restated ISIS/ATL Agreement relating to
VLA4 Compounds/Products.  For the avoidance
of doubt, so as not to interrupt the Exploitation by TEVA of the Licensed
Rights with respect to VLA4 Compounds/Products during any period of negotiation
and drafting of an ISIS/TEVA License Agreement, ISIS and TEVA shall conduct
themselves as if the ATL/TEVA Agreement is in full force and effect, except
that references to “ATL” in the those portions of the Amended and Restated
ISIS/ATL Agreement that relate to VLA4 Compounds/Products shall be deemed
references to “TEVA” as if the Amended and Restated ISIS/ATL Agreement (as it
relates to VLA4 Compounds/Products) were between ISIS and TEVA.  By its signature below, ATL (x) acknowledges
and agrees that the goal of allowing TEVA to Exploit VLA4 Compounds/Products as
contemplated in the ATL/TEVA Agreement and allowing ISIS to receive royalties
and other payments under the Amended and Restated ISIS/ATL Agreement is of such
fundamental importance to TEVA and ISIS that any such termination of the
Amended and Restated ISIS/ATL Agreement and the ATL/TEVA Agreement is fair, (y) consents
to the provisions of this Section 2.5 and (z) agrees that it shall
have no Claims against (A) TEVA or its Affiliates, agents, employees,
officers or directors arising from or in connection with any such termination
by TEVA of the ATL/TEVA Agreement or its entering into an ISIS/TEVA License
Agreement (except that TEVA and its Affiliates, agents, employees, officers and
directors shall not have the benefit of this clause (z) in the event
that TEVA wrongfully exercises its termination right in contravention of Section 21.2(c) of
the ATL/TEVA Agreement), or against (B) ISIS or its Affiliates, agents,
employees, officers or directors arising from or in connection 

 

4

 

with any such termination by ISIS of the Amended and
Restated ISIS/ATL Agreement or its entering into an ISIS/TEVA License Agreement
(except that ISIS and its Affiliates, agents, employees, officers and directors
shall not have the benefit of this clause (z) in the event that ISIS
wrongfully exercises its termination right in contravention of the Amended and
Restated ISIS/ATL Agreement).

 

2.6          Notice under the  Amended and
Restated ISIS/ATL Agreement. 
ISIS agrees that all notices to ATL under the Amended and Restated
ISIS/ATL Agreement (other than notices regarding matters that are unrelated to
the VLA4 Compounds/Products and in ISIS’ good faith judgment would not
reasonably be expected to have an adverse impact on the development or
commercialization of VLA4 Compounds/Products) will be copied to TEVA at the
address set forth in Section 10.6 hereof.

 

3.                                      FURTHER ASSURANCES AND SUPPORT

 

3.1          [***] Education and Support.  ISIS will provide, [***] to TEVA, assistance,
education and support reasonably requested by TEVA for up to (a) [***]
hours per [***] for the period ending [***] following the Effective Date and (b) [***]
hours per [***] for each [***] thereafter until TEVA files an NDA (or foreign
equivalent in a Major Market) for a Product; provided, however, that hours not
used in a [***] do not carry over to the next [***] (i.e., no banking of hours
not used in a [***]).  ISIS will also
host, at [***] TEVA, an educational meeting for TEVA personnel (the “ISIS/TEVA
Meeting”) for up to [***], at a mutually agreeable time, after the Effective
Date.  The ISIS/TEVA Meeting will be in
addition to the [***] support to be provided by ISIS for the month in which the
meeting occurs.  In addition, ISIS will provide to TEVA copies of existing reports or
other existing information relating to VLA4 Compounds/Products that are in ISIS’
possession and control that TEVA may reasonably request, including any such
reports related to class effect.  Such
reports will be provided at no cost to TEVA, except that TEVA will reimburse
ISIS’ out-of-pocket costs incurred in providing the same.

 

3.2          [***] Education and Support.  In addition to the assistance, education and
support referenced in Section 3.1, ISIS will provide additional
assistance, education and support as reasonably requested by TEVA from time to
time hereafter, at [***] cost and expense, in accordance with a plan mutually
agreed upon by the parties in writing (which agreement will not be unreasonably
withheld), for (a) the regulatory aspects of [***] with respect to VLA4
Compounds/Products, (b) [***] with respect to VLA4 Compounds/Products,
including the [***], (c) [***] issues/activities with respect to VLA4
Compounds/Products, including responding to queries submitted by TEVA with
respect to the [***] built by ISIS with respect to VLA4 Compounds/Products in
order for TEVA to gain the benefit of the information contained therein, and (d) such
other matters related to VLA4 Compounds/Products as the parties may mutually
agree in writing.

 

3.3          VLA4 Restrictive Covenant.
In order to allow TEVA to fully Exploit
its rights under the ATL/TEVA Agreement and as a material inducement for TEVA
to enter into the ATL/TEVA Agreement, ISIS covenants and agrees that, during
the term of this Agreement, ISIS will
[***] of this Agreement and the Amended and Restated ISIS/ATL Agreement [***]
with respect to [***] with respect to any [***]; provided, however, that if a VLA4 Product has not 

 

5

 

been [***] (or such later date
as is mutually agreed by the parties), then the provisions of this Section 3.3
shall terminate as of such date.

 

3.4          Certain Future Inventions and
Intellectual Property.  Pursuant to Section 4.2(c)(i)(A) of the Amended and Restated
ISIS/ATL Agreement, ISIS has granted to ATL rights to certain future inventions.

 

4.                                      ADDITIONAL TECHNOLOGY

 

4.1          Other VLA4 Compounds or Next Generation VLA4 Compounds.  ISIS will have no obligation to generate for
TEVA any Other VLA4 Compounds or Next Generation VLA4 Compounds, unless and
until:

 

(a)         TEVA and ISIS mutually agree in writing
upon a research plan, which agreement shall not be unreasonably withheld,
specifically describing the activities to be undertaken by ISIS, including the
amounts to be reimbursed by TEVA to ISIS for performing such activities; and

 

(b)        With respect to Next Generation VLA4
Compounds, TEVA and ISIS mutually agree in writing upon license terms
(including, without limitation, milestones and royalties payable to ISIS) with
respect to products developed utilizing such Next Generation VLA4 Compounds.

 

4.2          Access to Additional Technology.  If,
after the Effective Date and during the Term of this Agreement, ISIS creates,
develops, comes to own, or acquires a license with the right to grant
sublicenses thereunder, any new or additional ISIS Core Technology Patent
Rights or Manufacturing Patent Rights, or any new or additional Technology that
both (i) is necessary or useful for the development, manufacture or
commercialization of VLA4 Compounds/Products and (ii) is or has been [***]
and TEVA desires access to any of the foregoing rights for the purpose of
development, manufacture or commercialization of VLA4 Compounds/Products, ISIS
agrees to negotiate in good faith with ATL and TEVA regarding such access,
provided that any licenses or sublicenses from ISIS to ATL or TEVA under such
Patents and/or Technology are conditioned on ATL’s or TEVA’s (as applicable)
agreement (a) to [***]; and (b) to abide by all terms of the
agreement under which a third party license is granted to ISIS.  Notwithstanding the foregoing, ISIS agrees to
provide to TEVA, [***], (i) any [***] that are used in ISIS’ [***], and/or
(ii) such ISIS technology that (A) is required for TEVA to be able to
[***] and (B) ISIS is [***] for such required technology.

 

4.3          Updates. 
No more than once per calendar year at ISIS’ facility in Carlsbad,
California (or such other location as is agreed upon by the parties), upon the
written request of, but at no cost to, TEVA, ISIS will present an update to a
reasonable number of TEVA staff scientists on [***] and any [***] for VLA4
Compounds/Products (provided that TEVA will be responsible for the expenses
incurred by TEVA personnel in attending such update).  In addition, upon TEVA’s written request no
more than once per year, and at no cost to TEVA, ISIS will update Exhibit 1.39
to the Amended and Restated ISIS/ATL Agreement and provide such updated exhibit
to TEVA.

 

6

 

5.                                      REPRESENTATIONS, COVENANTS AND WARRANTIES.

 

5.1          Mutual
Warranties.  Each of
ISIS and TEVA hereby represents and warrants to the other  as of the Effective Date as follows:

 

(a)         It is duly organized and validly
existing under the laws of the jurisdiction of its incorporation.  It has the requisite legal and company power
and authority to conduct its business as presently being conducted and as
proposed to be conducted by it  and is
duly qualified to do business in those jurisdictions where its ownership of
property or the conduct of its business requires, in each case the failure to
have such power, authority or qualification would have a material adverse
impact upon the respective rights and obligations of the parties under this
Agreement.

 

(b)        It has all requisite legal and company
power and authority to enter into this Agreement and to perform its obligations
contemplated hereunder.  All company
actions on its part, its boards of directors or managers, or similar governing
body and its equity holders necessary for (A) the authorization,
execution, delivery and performance by it of this Agreement, and (B) the
consummation of the transactions contemplated hereby, have been duly taken.

 

(c)         This Agreement is a legally valid and
binding obligation of it, enforceable against it in accordance with its terms.

 

(d)        None of the execution and delivery of
this Agreement, the consummation of the transactions provided for herein or
contemplated hereby, or the fulfillment by it of the terms hereof or thereof,
will (with or without notice or passage of time or both) (A) conflict with
or result in a breach of any provision of the certificate or articles of
incorporation or formation, by-laws, statutes, operating agreement or other
governing documents of it, (B) result in a default, constitute a default
under, give rise to any right of termination, cancellation or acceleration, or
require any consent or approval (other than approvals that have heretofore been
obtained) of any governmental authority or under any of the terms, conditions
or provisions of any material note, bond, mortgage, indenture, loan,
arrangement, license, agreement, lease or other instrument or obligation to
which it is a party or by which its assets may be bound, or (C) violate
any rule or regulation of any stock exchange on which such party’s
securities are listed applicable to it.

 

5.2          Additional Representations
and Warranties of ISIS. 
ISIS hereby further represents and warrants to TEVA, regardless of any
investigation by TEVA, that as of the Effective Date:

 

(a)         ISIS has assigned to ATL, free and
clear of all liens, claims and encumbrances of every kind or nature, all
rights, title and interests in and to the VLA4 Compound Patent Rights;

 

7

 

(b)        to the best of ISIS’ knowledge as of the Effective Date, the VLA4
Compound Patent Rights are valid and enforceable and are not subject to any
pending or threatened re-examination, opposition, interference or litigation
proceedings, and all assignments and maintenance fees have been timely filed
and paid with respect to the VLA4 Compound Patent Rights;

 

(c)         to the best of ISIS’s knowledge as of
the Effective Date, the practice of the ISIS Core Technology Patent Rights, and
the Manufacturing Technology to manufacture VLA4 Compounds, as currently
manufactured by ISIS as of the Effective Date, does not infringe on any Third
Party patents;

 

(d)        to the best of ISIS’ knowledge as of the Effective Date, without
reference to a specific development plan and without any investigation, the
ISIS Core Technology Patent Rights, ISIS Formulation Patent Rights,
Manufacturing Patent Rights and VLA4 Compound Patent Rights, considered
together, constitute all of the Patents controlled by ISIS (as of immediately
prior to the Effective Date) that are necessary for the development and
commercialization of the ATL1102 Compound and VLA4 Compounds using the ISIS
Standard Chemistry;

 

(e)         ISIS has not granted, directly or
indirectly, any licenses or other rights under the VLA4 Compound Patent Rights
to any Person other than ATL and its Affiliates;

 

(f)         the Amended and Restated ISIS/ATL Agreement
is in full force and effect and has not been modified or amended; and

 

(g)        to the best of ISIS’ knowledge as of the
Effective Date, neither ISIS nor ATL is in material default under, and neither
party claims or has grounds upon which to claim the other party is in material
default under, the Amended and Restated ISIS/ATL Agreement.

 

5.3          Notice of Patent Infringement.  ISIS will promptly advise TEVA if it becomes
aware of any suspected or actual infringement of the VLA4 Compound Patent
Rights by any Person or of any suspected or actual infringement by the VLA4
Compound Patent Rights of any rights of any Person.  In addition, ISIS will notify TEVA of any
final determination of any legal action of ISIS or known to ISIS involving the
ISIS Core Technology Patent Rights and/or the Manufacturing Patent Rights that,
in each case, claim inventions used in the manufacture of VLA4
Compounds/Products then under development or being commercialized by or on
behalf of TEVA.

 

5.4          Additional
Covenant of the Parties.  Each
of the parties will not insist upon, claim, plead, or take any benefit under
any local laws of any jurisdiction, other than the internal laws of the United
States and the State of New York, that may be available to it, in order to
prevent, delay, hinder or otherwise frustrate the enforcement by the other of
any of the provisions of this Agreement. 
In furtherance of the foregoing, each of the parties waives any rights
or benefits that may be available under any local laws of any jurisdiction
(other than the 

 

8

 

internal laws of the United
States and New York) that are contrary to any provision of this Agreement.

 

5.5          Disclaimer.  THE PARTIES EXPRESSLY DISCLAIM ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD
PARTY RIGHTS, UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.

 

6.                                      CONFIDENTIALITY AND NONDISCLOSURE

 

6.1          Nondisclosure
Agreement.  The Non-Disclosure Agreement entered into by
and between the parties on July 23, 2007 is hereby incorporated herein as
if set forth in full, and the terms thereof will be deemed to apply to all
information as may be disclosed by each of the parties during the term of this
Agreement.

 

6.2          Publications.  TEVA will have the right to
review any paper proposed for publication by or with the authorization of ISIS
that discusses VLA4 Compounds/Products, including oral presentations and
abstracts, regardless of whether such paper or presentation includes any
Confidential Information.  ISIS will
deliver a complete copy to TEVA at least [***] days prior to submitting the
paper to a publisher.  TEVA will review
any such paper and give its  comments to ISIS within [***] days
of the delivery of such paper to TEVA. 
ISIS will consider in good faith any TEVA request to delete references
to any rights specified herein and comply with any TEVA request to delete
references to any TEVA Confidential Information in any such paper and agrees to
withhold publication of same for an additional [***] days in order to permit
the parties to obtain patent protection, if TEVA deems it necessary, in
accordance with the terms of this Agreement. 
To the extent that any approval of TEVA is not forthcoming within the
time periods set forth herein, the ISIS Liaison with confer with the TEVA
Liaison regarding TEVA’s approval. 
Notwithstanding the foregoing, ISIS will not have the right to publish
or present any clinical trial results from trials of VLA4 Compounds/Products
without the prior written consent of TEVA.

 

6.3          Public Announcements. 
If the parties mutually agree, they will issue a joint
press release regarding the execution of this Agreement. Except as otherwise
specified in this Agreement or required by law, neither party will originate
any news release or other public announcement, written or oral, whether in the
public press, or stockholders’ reports, or otherwise, relating to this
Agreement, and neither party will use the name, trademark, trade name, logo or
likeness of the other party or its employees in any publicity, news release or
disclosure relating to this Agreement, or its subject matter, without the prior
express written permission of the other party. The foregoing prohibition
against news release or other public announcement will not apply where such
publication, presentation or other public announcement is required by law or
the rules of any relevant stock exchange, as instructed by the party’s
outside legal counsel; provided, however, that in any such case the disclosing
party will provide notice thereof to the other party with sufficient
opportunity to respond and, to the extent feasible, to prevent or limit any
such disclosure or to request confidential treatment thereof, and the receiving
party will give reasonable assistance to the disclosing party to preserve the
information 

 

9

 

as confidential.  The Liaisons will be the contact persons for
the exchange of the proposed public disclosures for party review.

 

7.                                      INDEMNIFICATION

 

7.1          Indemnification.

 

(a)         TEVA will indemnify, defend and hold
ISIS and its agents, employees, officers and directors (the “ISIS
Indemnitees”) harmless from and against any and all liability, damage,
loss, cost or expense (including reasonable attorneys’ fees) arising out of
third party claims or suits (collectively, “Claims”) related to (i) breach
by TEVA of its representations, warranties or covenants set forth in this
Agreement; or (ii) the development, manufacture, use, handling, storage,
sale or other disposition of any VLA4 Compounds/Products by TEVA or any of its
affiliates, contractors or sublicensees; provided, however,
that TEVA’s obligations pursuant to this Section 6.1(a) will not
apply to the extent such Claims result from (A) the gross negligence or
willful misconduct of any of the ISIS Indemnitees or (B) a breach by ISIS
of its representations and warranties set forth in this Agreement.

 

(b)        ISIS will indemnify, defend and hold
TEVA and its affiliates and each of their respective agents, employees,
officers and directors (the “TEVA Indemnitees”) harmless from and
against any and all Claims related to breach by ISIS of its representations,
warranties or covenants set forth in this Agreement; provided however,
that ISIS’ obligations pursuant to this Section 6.1(b) will not apply
to the extent that such Claims result from (A) the gross negligence or
willful misconduct of any of the TEVA Indemnitees; (B) a breach by TEVA of
its representations and warranties set forth in this Agreement, or (C) ISIS’
performance of development or other activities with respect to VLA4
Compounds/Products on behalf of TEVA in accordance with TEVA’s written
instructions and specifications.

 

7.2          Procedure.  A party will give the other party notice of
any Claim upon which such party (the “Indemnified Party”) intends to
base an indemnification claim (an “Indemnity Claim”).  The indemnifying party has the right to
control the defense, settlement or disposition of any Indemnity Claim using
counsel of its choice and on terms that it deems are appropriate, except that
Indemnified Party may, at its own expense, participate in that defense,
settlement or disposition using counsel of its own choice.  With respect to the defense, settlement or
disposition of an Indemnified Claim, the Indemnified Party will provide the
indemnifying party, upon its request, with reasonable assistance and
cooperation with respect to the Indemnified Claim.  Without limiting the generality of the
foregoing, indemnifying party may not cease to defend, settle or otherwise
dispose of any Indemnity Claim without the Indemnified Party’s prior written
consent, which consent may be unreasonably withheld, if, as a result thereof,
the Indemnified Party would become subject to injunctive or other equitable
relief.

 

7.3          Limitation of Liability. 
Notwithstanding any other provision of this Agreement
to the contrary, in no event will ISIS’ total liability under this Agreement
(including, but not 

 

10

 

limited to, liability under Section 7.1)
exceed [***]; provided, however, that the
foregoing limitation shall not apply in the case of (a) any knowing
misrepresentation by ISIS under this Agreement, or (b) any knowing and
intentional breach of any covenant made by ISIS under this Agreement.

 

8.                                      TERM AND TERMINATION.

 

8.1          Term.  This Agreement will expire
upon the expiration or termination of both the Amended and Restated ISIS/ATL
Agreement and the ATL/TEVA Agreement.

 

8.2          Insolvency or Bankruptcy.  All rights and licenses granted under or
pursuant to this Agreement by ISIS or TEVA are, and will otherwise be deemed to
be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,
licenses of right to “intellectual property” as defined under Section 101
of the U.S. Bankruptcy Code.  The parties
agree that the parties, as licensees of such rights under this Agreement, will
retain and may fully exercise all of their rights and elections under the U.S.
Bankruptcy Code.  The parties further agree
that, in the event of the commencement of a bankruptcy proceeding by or against
either party under the U.S. Bankruptcy Code, the party hereto which is not a
party to such proceeding will be entitled to a complete duplicate of (or
complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, and same, if not already in their
possession, will be promptly delivered to them (i) upon any such
commencement of a bankruptcy proceeding upon their written request therefor,
unless the party subject to such proceeding elects to continue to perform all
of its obligations under this Agreement, or (ii) if not delivered under (i) above,
following the rejection of this Agreement by or on behalf of the party subject
to such proceeding upon written request therefor by the non-subject party.

 

8.3          Survival. 
Expiration or termination of this Agreement will not relieve the parties
of any obligation accruing prior to such expiration or termination.  Sections 5.4 and 5.5, this Section 8.3
and Article 10 will survive expiration or termination of this
Agreement.  Any expiration or early
termination of this Agreement will be without prejudice to the rights of either
party against the other accrued or accruing under this Agreement prior to
termination, including the obligations to make any payments that were due or
had accrued immediately prior the effective date of such termination.

 

9.                                      CHANGE OF CONTROL

 

9.1          Change of Control of Isis.  ISIS acknowledges and agrees that in the event
of a Change of Control of ISIS in which the Third Party acquiring control of
ISIS or its assets relating to VLA4 Compounds/Products is [***], then: (a) ISIS
(or the successor entity) will not be allowed to [***]; and (b) ATL will
be prohibited from providing ISIS (or the successor entity) with [***], other
than (A) reports and information required to be made available under
Sections 5.6 and 5.8 of the Amended and Restated ISIS/ATL Agreement and (B) summary
annual reports regarding TEVA’s development and commercialization activities
with respect to VLA4 Compounds/Products in sufficient detail to allow ISIS to
ascertain ATL’s compliance with its diligence obligations under the Amended and
Restated ISIS/ATL Agreement.

 

11

 

9.2          Change of Control of ATL.  In the event of a Change of Control of ATL in
which the Third Party acquiring control of ATL or its assets relating to VLA4
Compounds/Products is [***], then TEVA agrees that it will continue to provide
to ISIS all reports relating to the development or commercialization of VLA4
Compounds/Products that would have been delivered to ATL but for such Change of
Control of ATL.  ISIS agrees that it will
hold all such reports and the information contained therein confidential to the
same extent that ISIS would be required to hold such reports and information
confidential pursuant to the Amended and Restated ISIS/ATL Agreement if
received from ATL.

 

10.                               MISCELLANEOUS.

 

10.1        Payment Related to [***].  Within five (5) Business Days after ISIS’
receipt of notice from ATL that ATL has [***], on or before [***].

 

10.2        Force Majeure.  Neither party will be
responsible or liable in any way for failure or delay in carrying out the terms
of this Agreement resulting from any cause or circumstance beyond its
reasonable control, including fire, flood, other natural disasters, war,
interruption of transit, accident, explosion, civil commotion, and acts of any
governmental authority; provided, that
the party so affected will give prompt notice thereof to the other.  No such failure or delay will terminate this
Agreement, and each party will complete its obligations hereunder as promptly
as reasonably practicable following cessation of the cause or circumstances of
such failure or delay.

 

10.3        Liaisons.  For
purposes of coordinating activities between the parties under the Agreement,
including, without limitation, sharing of press releases and publications for
review, each party will appoint an individual to act as its liaison (each a “Liaison”
and collectively, the “Liaisons”). 
A party may change its Liaison at any time by providing written notice
to the other party along with contact information for the its new Liaison.

 

10.4        Agency. 
Neither party is, nor will be deemed to be, an employee, agent or legal
representative of the other party for any purpose.  Neither party will be entitled to enter into
any contracts in the name of, or on behalf of the other party, nor will a party
be entitled to pledge the credit of the other party in any way or hold itself
out as having authority to do so.

 

10.5        Choice of Law.  This Agreement will be governed and
interpreted, and all rights and obligations of the parties will be determined,
in accordance with the laws of the State of New York (USA), without regard to
its conflict of laws rules.

 

10.6        Notices. 
All notices, requests, demands, waivers, consents, approvals or other
communications to any party hereunder will be in writing and will be deemed to
have been duly given if delivered personally to such party or sent to such
party by facsimile transmission or by registered or certified mail, postage
prepaid, to the addresses listed below, or to such other address as the
addressee may have specified in notice duly given to the sender as provided
herein.

 

12

 

	
  If to TEVA:

  	
   

  	
  with a copy to:

  
	
  TEVA Pharmaceutical Industries Ltd.

  	
   

  	
  TEVA’s General Counsel, Uzi Karniel,

  
	
  5 Basel Street, P.O.  Box 3190

  	
   

  	
  at the address of TEVA (Fax: 972-3-926-7429); and

  
	
  Petah Tiqva 49131

  	
   

  	
  Richard S. Egosi, Esq.

  
	
  Israel

  	
   

  	
  Senior Vice President and General

  
	
  Attn: Vice President, Global Innovative Pipeline
  Management

  	
   

  	
  Counsel

  
	
  Fax: 972-3-926-7742

  	
   

  	
  TEVA North America

  
	
   

  	
   

  	
  1090 Horsham Road

  
	
   

  	
   

  	
  North Wales, PA 19454-1090

  
	
   

  	
   

  	
  Fax: (215) 591-8813

  

 

	
  If to ISIS:

  	
   

  	
  With a copy to:

  
	
  Isis Pharmaceuticals, Inc.

  	
   

  	
  Isis Pharmaceuticals, Inc.

  
	
  1896 Rutherford Road

  	
   

  	
  1896 Rutherford Road

  
	
  Carlsbad, CA 92008

  	
   

  	
  Carlsbad, CA 92008

  
	
  USA

  	
   

  	
  USA

  
	
  Attention: Chief Operating Officer

  	
   

  	
  Attention: General Counsel

  
	
  Fax No.: +1 (760) 931-9639

  	
   

  	
  Fax No.: +1 (760) 268-4922

  
	
   

  	
   

  	
   

  

 

Such notice, request, demand, waiver, consent,
approval or other communications will be deemed to have been given as of the
date so delivered, if sent by facsimile transmission, or five (5) days
after so mailed.

 

10.7        Severability.  Should one or more provisions of this
Agreement be held unenforceable or in conflict with applicable law or
regulation, the parties will substitute, by mutual consent, valid provisions
for such invalid provisions which valid provisions in their economic effect are
sufficiently similar to the invalid provisions that it can be reasonably
assumed that the parties would have entered into this Agreement with such valid
provisions.  In case such valid
provisions cannot be agreed upon, the invalidity of one or several provisions
of this Agreement will not affect the validity of this Agreement as a whole,
unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the parties would not have
entered into this Agreement without the invalid provisions.

 

10.8        Entire
Agreement.  This
Agreement, along with any agreements referenced herein and that certain Drug
Supply, Manufacture and Technology Transfer Agreement between the parties dated
as of the Effective Date, each as amended from time to time, states the entire
agreement reached between the parties with respect to the transactions
contemplated hereby and may not be amended or modified except by written
instrument duly executed by the parties. 
This Agreement replaces and supersedes any and all previous agreements
and understandings between the parties regarding the subject matter hereof,
whether written or oral (including, without limitation, that certain Letter of
Agreement, dated August 8, 2007, by and among ISIS, TEVA and ATL).

 

13

 

10.9        No Waiver. 
The failure of either party to enforce at any time, or for any period of
time, any provision of this Agreement will not be construed as a waiver of such
provision or of the right of such party thereafter to enforce each and every
provision.

 

10.10      Assignment; Binding Effect.  This
Agreement is personal to each party and neither party may assign, dispose of,
transfer or delegate any of its rights, duties or obligations under this
Agreement or any interest in this Agreement without the other party’s prior
written consent, which consent may not be unreasonably withheld, except that subject to the provisions of
this Section 10.10, (a) either party may assign or delegate any or
all of its rights and obligations under this Agreement to its affiliates
without the other party’s prior written consent; provided, that the assigning party remains primarily liable
for the performance and nonperformance of its affiliate’s duties and
obligations under this Agreement and provided,
further, that the non-assigning party does not incur or suffer any
adverse tax or other financial consequences as a result thereof, and (b) either
party may assign this Agreement without the other party’s prior written consent
to its successor in interest in connection with a merger, acquisition or sale
of all or substantially all of such party’s assets; and (c) TEVA may
assign this Agreement without the prior written consent of ISIS to a successor
in interest in connection with the sale of substantially all of the assets used
primarily in its multiple sclerosis business or 
any other business of an indication being exploited hereunder; provided,
that in all such cases such successor in interest agrees in writing to be bound
by all of such party’s obligations as assignee.   This Agreement is binding upon, enforceable
against, and inures to the benefit of the parties  and their respective successors and permitted
assigns.  Any attempt by either party to
assign or delegate any of the duties, responsibilities or other obligations of
this Agreement that is not in compliance with this Paragraph 8.8 will be deemed
to be null and void ab initio.

 

10.11      Counterparts.  This Agreement may be executed
in any number of counterparts each of which will be deemed to be an original
and all of which taken together will constitute one and the same instrument.

 

10.12      Dispute Resolution.

 

(a)         It is the objective of the parties to
seek to resolve any issues or disputes arising under this Agreement in an
expedient and amicable manner, if at all possible, and to that end the parties
agree to abide by the following procedures set forth in this Section 10.12
to resolve any such issues or disputes. 
The parties initially will attempt to settle any such issue or dispute
through good faith negotiations in the spirit of mutual cooperation between
business executives with authority to resolve the dispute.  Prior to taking action as provided in Section 10.12(b) of
this Agreement, the parties will first submit such dispute to the Executive
Vice President and Chief Financial Officer of ISIS and the Group Vice President
of Global Innovative Resources of TEVA (collectively, the “Executives”)
for resolution.  The Executives will
attempt to resolve the dispute through good faith negotiations over a
reasonable period of up to 60 calendar days, unless the Executives
mutually agree in writing to extend such period of negotiation.  Such 60-calendar day period will be deemed to
commence on the date the dispute was submitted to the Executives.  The Executives will, if mutually agreed by
the Executives, submit the dispute to 

 

14

 

voluntary mediation at such place and following such
procedures as the parties will reasonably agree.  All negotiations pursuant to this Section 10.12(a) will
be confidential, and will be treated as compromise and settlement negotiations
for purposes of applicable rules of evidence.

 

(b)        Any dispute that is not resolved by the
parties by negotiation and/or mediation pursuant to Section 10.12(a) above
will, upon the submission of a written request of either party to the other
party, be submitted to binding arbitration before a single arbitrator in
accordance with the then prevailing rules of the International Chamber of
Commerce (“ICC”).

 

(c)         If the dispute involves technical
issues, the arbitrator will be qualified in the field of pharmaceuticals
research and development.  If the parties
cannot agree on an arbitrator within thirty (30) days of filing with the ICC,
then the ICC will appoint one in accordance with its then prevailing rules.

 

(d)        The arbitration will be held in New
York, New York, USA.  The decision and
award of the arbitrator will be final and binding and the award so rendered may
be entered in any court having jurisdiction in relation to the award, as a
judgment of the court.

 

(e)         Each party will pay one half of the fee
charged by the arbitrator, and half of any charge payable in respect of the
venue where the arbitration is conducted; provided, however, that in rendering
its decision the arbitrator has the discretion to reallocate the aforementioned
payments. The parties will otherwise each bear their own costs of arbitration.

 

(f)         The decision of the arbitrator may be
reduced to a judgment by any court of competent jurisdiction.

 

(g)        Notwithstanding the above, to the full
extent allowed by law, either party may bring an action in any court of
competent jurisdiction for injunctive relief (or any other provisional remedy)
to protect the parties’ rights or enforce the parties’ obligations under this
Agreement pending final resolution of any claims related thereto in an
arbitration proceeding as provided above. 
In addition, either party may bring an action in any court of competent
jurisdiction to resolve disputes pertaining to the validity, construction,
scope, enforceability, infringement or other violations of patents or other
proprietary or intellectual property rights.

 

10.13      No Consequential
Damages.  IN NO EVENT
SHALL EITHER ISIS OR TEVA OR THEIR AFFILIATES BE LIABLE FOR SPECIAL, INDIRECT,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT
OR ANY OTHER LEGAL THEORY; PROVIDED, THAT THIS LIMITATION SHALL NOT LIMIT
THE INDEMNIFICATION OBLIGATION OF SUCH PARTY UNDER THE PROVISIONS OF SECTION 6
FOR SUCH DAMAGES CLAIMED BY A THIRD PARTY.

 

15

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered in duplicate originals as of the date first above
written.

 

	
  TEVA PHARMACEUTICAL INDUSTRIES, LTD.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ruth Levy, Ph.D

  	
   

  
	
   

  	
   

  
	
  Its:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
  ISIS PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/ B. Lynne Parshall

  	
   

  
	
   

  	
   

  
	
  Its:

  	
  COO & CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  With respect to Section 2.5 and
  Section 10.1 only,

  
	
   

  
	
  ANTISENSE THERAPEUTICS LTD.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Mark Diamond

  	
   

  
	
   

  	
   

  
	
  Its:

  	
  CEO

  	
   

  
					

 

16Exhibito 10.4

 

	
  CONFIDENTIAL TREATMENT
  REQUESTED

  	
   

  	
  EXECUTION
  VERSION

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

  	
   

  	
   

  

 

 

STRATEGIC
ALLIANCE MASTER AGREEMENT

 

AMONG

 

IBIS
BIOSCIENCES, INC.

 

ISIS
PHARMACEUTICALS, INC.

 

AND

 

ABBOTT
MOLECULAR INC.

 

 

January 30, 2008

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
  Section 1.

  	
   

  	
  Definitions

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Financing Closing; Transaction Documents

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Representations And Warranties.

  	
  12

  
	
  3.1

  	
   

  	
  Representations and
  Warranties of Ibis and Isis

  	
  12

  
	
   

  	
   

  	
  (a)

  	
  Power and Authority

  	
  12

  
	
   

  	
   

  	
  (b)

  	
  Enforceability

  	
  12

  
	
   

  	
   

  	
  (c)

  	
  Governmental Authority;
  Consents

  	
  12

  
	
   

  	
   

  	
  (d)

  	
  No Conflicts

  	
  13

  
	
   

  	
   

  	
  (e)

  	
  Due Organization;
  Qualification

  	
  13

  
	
   

  	
   

  	
  (f)

  	
  Subsidiaries

  	
  13

  
	
   

  	
   

  	
  (g)

  	
  Capitalization; Voting
  Rights

  	
  14

  
	
   

  	
   

  	
  (h)

  	
  Agreements; Liabilities

  	
  14

  
	
   

  	
   

  	
  (i)

  	
  Obligations to Related
  Parties

  	
  15

  
	
   

  	
   

  	
  (j)

  	
  Title to Properties and
  Tangible Assets; Liens, Etc.

  	
  15

  
	
   

  	
   

  	
  (k)

  	
  Sufficiency of Assets

  	
  15

  
	
   

  	
   

  	
  (l)

  	
  Intellectual Property

  	
  16

  
	
   

  	
   

  	
  (m)

  	
  Compliance with Other
  Instruments

  	
  20

  
	
   

  	
   

  	
  (n)

  	
  Litigation

  	
  20

  
	
   

  	
   

  	
  (o)

  	
  Tax Matters

  	
  20

  
	
   

  	
   

  	
  (p)

  	
  Employees

  	
  21

  
	
   

  	
   

  	
  (q)

  	
  Compliance with Laws;
  Licenses

  	
  23

  
	
   

  	
   

  	
  (r)

  	
  Environment, Health and
  Safety

  	
  24

  
	
   

  	
   

  	
  (s)

  	
  Offering Valid

  	
  24

  
	
   

  	
   

  	
  (t)

  	
  Financial Statements

  	
  25

  
	
   

  	
   

  	
  (u)

  	
  Subsequent Events

  	
  25

  
	
   

  	
   

  	
  (v)

  	
  Brokers’ Fees

  	
  26

  
	
   

  	
   

  	
  (w)

  	
  Leased Real Property

  	
  27

  
	
   

  	
   

  	
  (x)

  	
  Contracts

  	
  27

  
	
   

  	
   

  	
  (y)

  	
  Insurance

  	
  28

  
	
   

  	
   

  	
  (z)

  	
  Customers and Suppliers

  	
  28

  
	
   

  	
   

  	
  (aa)

  	
  No Material Adverse Effect

  	
  28

  
	
   

  	
   

  	
  (bb)

  	
  Names and Locations

  	
  28

  
	
   

  	
   

  	
  (cc)

  	
  Directors, Officers and
  Bank Accounts

  	
  28

  
	
   

  	
   

  	
  (dd)

  	
  Regulatory Filings

  	
  28

  
	
   

  	
   

  	
  (ee)

  	
  Disclosure

  	
  29

  
	
  3.2

  	
   

  	
  Representations and
  Warranties of AMI

  	
  29

  
	
   

  	
   

  	
  (a)

  	
  Power and Authority

  	
  29

  
	
   

  	
   

  	
  (b)

  	
  Enforceability

  	
  29

  
	
   

  	
   

  	
  (c)

  	
  Governmental Authority;
  Consents

  	
  29

  
	
   

  	
   

  	
  (d)

  	
  No Conflicts

  	
  29

  
	
   

  	
   

  	
  (e)

  	
  Due Organization;
  Qualification

  	
  29

  

 

i

 

	
   

  	
   

  	
  (f)

  	
  Investment Representations

  	
  29

  
	
   

  	
   

  	
  (g)

  	
  Transfer Restrictions

  	
  30

  
	
   

  	
   

  	
  (h)

  	
  Legends

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  [Reserved.]

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Confidentiality; Notice of Developments.

  	
  31

  
	
  5.1

  	
   

  	
  Disclosure and Use
  Restriction

  	
  31

  
	
  5.2

  	
   

  	
  Authorized Disclosure

  	
  31

  
	
  5.3

  	
   

  	
  Effect
  of Authorized Disclosure

  	
  32

  
	
  5.4

  	
   

  	
  Terms of Agreement

  	
  32

  
	
  5.5

  	
   

  	
  Exclusivity

  	
  32

  
	
  5.6

  	
   

  	
  Injunctive Relief

  	
  32

  
	
  5.7

  	
   

  	
  Press Release; Public
  Disclosure

  	
  33

  
	
  5.8

  	
   

  	
  Notice
  of Developments

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  [Reserved.]

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Additional Agreements.

  	
  33

  
	
  7.1

  	
   

  	
  Survival

  	
  33

  
	
  7.2

  	
   

  	
  Indemnification

  	
  34

  
	
  7.3

  	
   

  	
  Affirmative
  Covenants of Ibis and Isis

  	
  35

  
	
   

  	
   

  	
  (a)

  	
  Due Diligence

  	
  35

  
	
   

  	
   

  	
  (b)

  	
  Ordinary Course

  	
  35

  
	
   

  	
   

  	
  (c)

  	
  Consolidation of Ibis and Isis

  	
  36

  
	
  7.4

  	
   

  	
  Negative Covenants of Ibis
  and Isis

  	
  36

  
	
  7.5

  	
   

  	
  No Solicitation of AMI
  Employees

  	
  38

  
	
  7.6

  	
   

  	
  No Solicitation of Ibis or
  Isis Employees

  	
  38

  
	
  7.7

  	
   

  	
  No Solicitation of Ibis
  Employees

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Miscellaneous.

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Governing Law; Alternative
  Dispute Resolution Procedure

  	
  39

  
	
  8.2

  	
   

  	
  Successors and Assigns

  	
  39

  
	
  8.3

  	
   

  	
  Entire Agreement; Exhibits
  and Schedules

  	
  40

  
	
  8.4

  	
   

  	
  No
  Third Party Beneficiaries

  	
  40

  
	
  8.5

  	
   

  	
  Severability

  	
  40

  
	
  8.6

  	
   

  	
  Amendment and Waiver

  	
  41

  
	
  8.7

  	
   

  	
  Delays or Omissions

  	
  41

  
	
  8.8

  	
   

  	
  Notices

  	
  41

  
	
  8.9

  	
   

  	
  Expenses

  	
  42

  
	
  8.10

  	
   

  	
  Titles and Subtitles

  	
  42

  
	
  8.11

  	
   

  	
  Counterparts

  	
  43

  
	
  8.12

  	
   

  	
  Construction

  	
  43

  
	
  8.13

  	
   

  	
  No Other Compensation

  	
  43

  

 

ii

 

STRATEGIC ALLIANCE
MASTER AGREEMENT

 

THIS STRATEGIC ALLIANCE
MASTER AGREEMENT (this “Master
Agreement”) is made and entered into as of this 30th day of January, 2008, by and among Isis Pharmaceuticals, Inc.,
a Delaware corporation (“Isis”), Ibis Biosciences, Inc., a Delaware
corporation (“Ibis”), Abbott Molecular Inc., a Delaware
corporation (“AMI”) and Affiliate of Abbott Laboratories, an Illinois
corporation (“Abbott”).  Ibis,
Isis and AMI are sometimes referred to herein individually as a “Party,”
and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Ibis, Isis
and AMI wish to enter into a strategic alliance related to the Business;

 

WHEREAS, as part of
this strategic alliance, AMI will make an investment in Ibis by purchasing the
Shares pursuant to Section 2 of this Master Agreement;

 

WHEREAS, as a
material inducement for AMI to enter into this Master Agreement and the other
Transaction Documents, Ibis and Isis will grant to AMI certain additional
rights pursuant to the Investor Rights Agreement, the form of which is attached
hereto as Exhibit A (the “Investor Rights Agreement”);

 

WHEREAS, as a
material inducement to enter into this Master Agreement and the other
Transaction Documents, Isis has granted to AMI an option to, in AMI’s sole
discretion, purchase all of the Capital Stock of Ibis (other than the Shares (and
the Additional Shares if AMI elects to acquire the Additional Shares pursuant
to the Call Option Agreement and the Stock Subscription Agreement)) pursuant to
the Call Option Agreement, in the form attached hereto as Exhibit B
(the “Call Option Agreement”);

 

WHEREAS, as a
material inducement to enter into this Master Agreement and the other
Transaction Documents, Ibis has granted to AMI a subscription right to, in AMI’s
sole discretion, subscribe for and purchase the Additional Shares prior to the
Cut-Off Date for an aggregate purchase price of $20,000,000 pursuant to the
Stock Subscription Agreement, the form of which has been agreed to by the
Parties and is attached as an exhibit to the Call Option Agreement (the “Stock
Subscription Agreement”); and

 

WHEREAS, if AMI, in
its sole discretion, exercises the Call Option, the Parties will consummate the
purchase by AMI of all of the Capital Stock of Ibis (other than the Shares (and
the Additional Shares if AMI exercises the Subscription Right and acquires the
Additional Shares pursuant to the Call Option Agreement and the Stock
Subscription Agreement)) pursuant to the Stock Purchase Agreement, the form of
which has been agreed to by the Parties and is attached as an exhibit to the
Call Option Agreement (the “Acquisition Agreement”).

 

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:

 

 

AGREEMENT

 

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)                                  “Acquisition
Closing” means the consummation of the purchase by AMI of all of the
Capital Stock of Ibis (other than the Shares (and the Additional Shares if AMI
elects to acquire the Additional Shares pursuant to the Call Option Agreement
and the Stock Subscription Agreement)) pursuant to the Acquisition Agreement.

 

(c)                                  “Additional
Shares” means 114,250 shares of Common Stock that may be acquired by AMI
from Ibis in AMI’s sole discretion prior to 5:00 p.m. (Pacific Time) on
the Cut-Off Date pursuant to the Call Option Agreement and the Stock
Subscription Agreement, as may be held from time to time by AMI and its
permitted assigns, which, together with the Shares, will represent
approximately 18.6% of the issued and outstanding Common Stock.

 

(d)                                  “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 (i) with respect to
AMI and Abbott, the term “Affiliate” shall specifically exclude [***] and (ii) with
respect to Isis, the term “Affiliate” shall specifically exclude [***]

 

(e)                                  “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.

 

(f)                                    “[***]
Milestone” has the meaning ascribed to such term in the Call Option
Agreement.

 

(g)                                 “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 performing of services relating to the foregoing, as conducted by Ibis
or by Isis, with respect to the Division, on and prior to the date hereof.

 

(h)                                 “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.

 

2

 

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

 

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

 

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

 

(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 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)                                  “Closing
Date” means 9:00 a.m. Pacific Time on the date hereof.

 

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

 

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

 

(r)                                  “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

 

3

 

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

 

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

 

(s)                                  “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.

 

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

 

(u)                                 “Corporate
Services Agreement” means the Corporate Services Agreement, dated July 31,
2007, by and between Ibis and Isis.

 

(v)                                   “Cut-Off Date”
has the meaning ascribed to such term in the Call Option Agreement.

 

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

 

(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.

 

4

 

(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
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)                            “Escrow
Agreement” means the Escrow Agreement to be attached as an exhibit to the
Acquisition Agreement.

 

(dd)                            “Financing”  means the sale of the Shares by
Ibis to AMI pursuant to this Master Agreement, together with the other
transactions contemplated hereby.

 

(ee)                            “Financing
Closing” means the closing of the Financing under this Master Agreement.

 

(ff)                                “Fundamental
AMI Representations” means those representations and warranties of AMI set
forth in Section 3.2(a) (Power and Authority), Section 3.2(b)
(Enforceability), Section 3.2(c) (Governmental Authority;
Consents), and Section 3.2(d) (No Conflicts).

 

(gg)                          “Fundamental
Isis Representations” means those representations and warranties of Ibis
and Isis set forth in Section 3.1(a) (Power and Authority), Section 3.1(b)
(Enforceability), Section 3.1(c) (Governmental Authority;
Consents), Section 3.1(d) (No Conflicts),  Section 3.1(e) (Due Organization;
Qualification), Section 3.1(g) (Capitalization; Voting Rights), Section 3.1(j)
(Title to Properties and Tangible Assets; Liens, etc.), Section 3.1(k)
(Sufficiency of Assets), Section 3.1(m) (Compliance with Other
Instruments) and Section 3.1(v) (Brokers’ Fees).

 

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

 

5

 

(ii)                                “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.

 

(jj)                                “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, 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.

 

(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 as a result of the transactions
contemplated hereby, other than the Permitted Employee Compensation Plan, (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 forty-five (45) days of the date of invoice thereof (xi) 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 (xii)
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)                                “Initial
Offering”  means Ibis’ first
firm commitment underwritten public offering of its Common Stock registered
under the Securities Act.

 

(mm)                    “Intellectual Property” means all of the following in any
jurisdiction throughout the world:  (i) patents,
patent applications and patent disclosures and statutory

 

6

 

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.

 

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

 

(oo)                            “Knowledge”
and terms of similar meaning (including, without limitation, “is aware of”)
mean with respect to Ibis and Isis, the actual knowledge of any of the
individuals set forth on Schedule 1(oo), after due investigation,
including, without limitation, inquiry of Persons with subject matter
knowledge, provided that (A) solely
for purposes of Sections 3.1(l)(v), 3.1(l)(vi) and 3.1(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 3.1(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(oo).

 

(pp)                            “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.

 

(qq)                            “Loss”
means any loss, liability, demand, Claim, action, cause of action, cost,
damage, material 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.

 

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

 

(ss)                            “Material
Adverse Effect” means any event, circumstance or state of facts which has,
or would reasonably be expected to have, a material adverse effect on the

 

7

 

business, assets, condition (financial or otherwise),
operations, operating results, employee relations, customer relations or
supplier relations of Ibis or the Business.

 

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

 

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

 

(vv)                              “Permitted
Employee Compensation Plan”  means the
compensation plan mutually agreed by the Parties regarding [***], the terms of
which are described on Exhibit C attached hereto.

 

(ww)                        “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.

 

(xx)                            “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.

 

(yy)                            “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).

 

(zz)                            “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’ 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.  For the avoidance of doubt,
the foregoing shall not apply to any transaction involving Isis and which only
indirectly involves assets and/or Capital Stock of Ibis.

 

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

 

8

 

(bbb)           “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.

 

(ccc)           “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.

 

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

 

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

 

(fff)             “Schedule”
means any of the Disclosure Schedules delivered to AMI herewith and
incorporated herein pursuant to Section 8.3(b) hereof.

 

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

 

(hhh)          “Shares”  means 114,251 shares of Common Stock issued to AMI pursuant to this
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.

 

(iii)             “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.

 

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

 

(kkk)         “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.”

 

(lll)             “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, 

 

9

 

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.

 

(mmm)       “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.

 

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

 

(ooo)           “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.

 

(ppp)           “Transition
Services Agreement” means the Transition Services Agreement to be attached
as an exhibit to the Acquisition Agreement.

 

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

 

	
  Defined Term

  	
   

  	
  Section

  
	
  “Abbott”

  	
   

  	
  Preamble

  
	
  “Acquisition
  Agreement”

  	
   

  	
  Recitals

  
	
  “ADR”

  	
   

  	
  8.1

  
	
  “Business
  IP”

  	
   

  	
  3.1(l)(i)

  
	
  “AMI”

  	
   

  	
  Preamble

  
	
  “AMI
  Group”

  	
   

  	
  7.2(a)

  
	
  “Call
  Option Agreement”

  	
   

  	
  Recitals

  
	
  “Disclosing
  Party”

  	
   

  	
  5.1

  
	
  “Disclosure
  Schedules”

  	
   

  	
  3.1

  
	
  “ERISA
  Affiliate”

  	
   

  	
  3.1(p)(ii)

  
	
  “ERISA
  Plans”

  	
   

  	
  3.1(p)(ii)

  
	
  “FDA”

  	
   

  	
  3.1(q)(i)

  
	
  “Financial
  Statements”

  	
   

  	
  3.1(t)

  
	
  “Government
  Contracts”

  	
   

  	
  3.1(l)(ii)

  
	
  “Ibis”

  	
   

  	
  Preamble

  
	
  “Ibis
  Contracts”

  	
   

  	
  3.1(x)(i)

  
	
  “Indemnified
  Party”

  	
   

  	
  7.2(c)

  
	
  “Indemnifying
  Party”

  	
   

  	
  7.2(c)

  

 

10

 

	
  Defined Term

  	
   

  	
  Section

  
	
  “Insurance
  Policies”

  	
   

  	
  3.1(y)

  
	
  “Investor
  Rights Agreement”

  	
   

  	
  Recitals

  
	
  “IP
  Contracts”

  	
   

  	
  3.1(l)(ii)

  
	
  “Isis”

  	
   

  	
  Preamble

  
	
  “Leased
  Real Property”

  	
   

  	
  3.1(w)(ii)

  
	
  “Leasehold
  Improvements”

  	
   

  	
  3.1(w)(ii)

  
	
  “Leases”

  	
   

  	
  3.1(w)(ii)

  
	
  “Master
  Agreement”

  	
   

  	
  Preamble

  
	
  “Material
  Licenses”

  	
   

  	
  3.1(q)(ii)

  
	
  “Most
  Recent Balance Sheet”

  	
   

  	
  3.1(t)

  
	
  “Parties”

  	
   

  	
  Preamble

  
	
  “Party”

  	
   

  	
  Preamble

  
	
  “Plans”

  	
   

  	
  3.1(p)(ii)

  
	
  “Receiving
  Party”

  	
   

  	
  5.1

  
	
  “Remaining
  Shares”

  	
   

  	
  3.1(g)(i)

  
	
  “Seller
  Group”

  	
   

  	
  7.2(b)

  
	
  “Share
  Purchase Price”

  	
   

  	
  2(d)

  
	
  “Stock
  Subscription Agreement”

  	
   

  	
  Recitals

  
	
  “Third
  Party Claim”

  	
   

  	
  7.2(c)

  

 

SECTION 2.  FINANCING CLOSING; TRANSACTION DOCUMENTS

 

Subject to and upon the terms and conditions set forth
in this Master Agreement, and in reliance upon the respective representations
and warranties made herein by each of the Parties, at the Financing Closing:

 

(a)   Ibis shall issue, sell,
convey, assign, transfer and deliver to AMI
a certificate representing the Shares sufficient to vest in AMI legal and beneficial ownership of
the Shares, free and clear of all Encumbrances;

 

(b)   Each Party shall execute
and deliver to the other Parties the Call Option Agreement;

 

(c)   Each
Party shall execute and deliver to the other Parties the Investor Rights Agreement;

 

(d)   AMI shall purchase, acquire and accept the Call Option, the
Subscription Right and the Shares from Ibis and Isis for an aggregate purchase
price of $20,000,000 (the “Share Purchase Price”), paid to Ibis via wire
transfer of immediately available funds to an account designated by Ibis in
writing;

 

11

 

(e)   Ibis and Isis shall deliver
to AMI a certificate, in a form
reasonably acceptable to AMI, of
an authorized officer of each certifying to and attaching thereto (i) Ibis’
Certificate of Incorporation as in effect on the date hereof, (ii) Ibis’
Bylaws as in effect on the date hereof and (iii) resolutions of the Board
of Directors of Isis and Ibis authorizing the transactions contemplated by this
Master Agreement and by the other Transaction Documents;

 

(f)    Isis
shall deliver to AMI the consent of Silicon Valley Bank to the Financing and
the other transactions contemplated by the Investment Documents;

 

(g)   Isis shall deliver to AMI
one or more compact discs containing the contents of the electronic dataroom
maintained by Isis at [***] as of January 23, 2008, together with a
certificate of an authorized officer certifying that such compact discs contain
true, accurate and complete copies of the materials in such dataroom as of such
date; and

 

(h)   Isis shall deliver to AMI
one or more compact discs containing the Management Presentations of Ibis
previously made available to AMI by Isis and Ibis.

 

SECTION 3.  REPRESENTATIONS AND WARRANTIES.

 

3.1  Representations and
Warranties of Ibis and Isis. 
As a material inducement to AMI to enter into this Master Agreement,
except as set forth in the corresponding Section of the Disclosure
Schedules delivered to AMI herewith on the date hereof (the “Disclosure
Schedules”), Ibis and Isis each hereby jointly and severally represent and
warrant as follows:

 

(a)   Power and Authority.  Each of Ibis and Isis (i) has the power,
authority and the legal right to enter into this Master Agreement and the other
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 this Master Agreement and the other Transaction
Documents and the performance of its obligations hereunder and thereunder.

 

(b)   Enforceability.  Each of this Master Agreement, the Call
Option Agreement and the Investor Rights Agreement 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.  If executed and delivered on the date hereof,
the Stock Subscription Agreement and the Acquisition Agreement would constitute
legal, valid and binding obligations of each of Ibis and Isis and would be
enforceable against each in accordance with their 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 this Master Agreement and the other Investment Documents and the
performance of their obligations hereunder and thereunder have been obtained.

 

12

 

(d)   No Conflicts.

 

(i)            The
execution and delivery of this Master Agreement, the Call Option Agreement and
the Investor Rights Agreement 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, (A) 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 (B) 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 (C) 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.

 

(ii)           If
executed and delivered on the date hereof, the execution and delivery of the
Stock Subscription Agreement and the Acquisition Agreement and the performance
of Ibis’ and Isis’ obligations under each such agreement, with or without the
passage of time or giving of notice, (A) would not conflict with or
violate any requirement of Applicable Law or any provision of the certificate
of incorporation, bylaws or any similar instrument of each such Party, as
applicable, (B) would 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 Encumbrances on the
Shares, the Additional Shares or the Remaining Shares under, any contractual
obligation by which such Party is bound and (C) would 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 this Master Agreement and the other 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.

 

(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 [***].

 

13

 

(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, 1,000,000 shares of which are issued and
outstanding and held by Isis (the “Remaining Shares”).

 

(ii)           The
issued and outstanding Capital Stock of Ibis as of the Financing Closing will
consist exclusively of the 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, other than with respect to the Shares and the Additional Shares
and Ibis has not issued any Capital Stock other than the Remaining Shares.  No Capital Stock issued by Ibis is listed on
any stock exchange or unregulated market. 
Other than the Investment Documents, there are no agreements with Isis
or Ibis or any other Person with respect to the voting or Transfer of the
Capital Stock.

 

(iii)         The
Shares and 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 and the rights and
obligations set forth in the Investor Rights Agreement; provided,
that the Shares may be subject to restrictions on Transfer set forth in the
Investor Rights Agreement and 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)          If
AMI exercised the Subscription Right and acquired the Additional Shares on the
date hereof, the Additional Shares would be: (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 rights and
obligations set forth in the Investor Rights Agreement; provided,
that the Additional Shares may be subject to restrictions on Transfer set forth
in the Investor Rights Agreement and under state and/or federal securities Laws
as set forth in the Stock Subscription Agreement or as otherwise required by
such Laws at the time a Transfer is proposed.

 

(v)            Neither
the sale of the Shares to AMI
hereunder, nor the sale of the Additional Shares to AMI under the Stock
Subscription Agreement, nor the sale of the Remaining Shares to AMI under the Acquisition Agreement is
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 Shares, the Additional Shares or the Remaining Shares pursuant
to the terms of the Transaction Documents.

 

14

 

(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 (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 3.1(l) and
3.1(x), are not required pursuant to Sections 3.1(l) and 3.1(x) below
to be described on Schedule 3.1(l) or Schedule 3.1(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 3.1(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 (A) for payment of salary to employees of Ibis for
services rendered in the ordinary course of business, (B) reimbursement to
employees of Ibis for reasonable expenses incurred in the ordinary course of
business on behalf of Ibis, (C) standard employee benefits made generally
available to all employees, pursuant to the Plans described on Schedule
3.1(p)(ii), (D) the Permitted Employee Compensation Plan or (E) 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 3.1(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.

 

15

 

(ii)           As
of the date hereof, except for 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 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 date hereof or
as contemplated to be conducted by Ibis and Isis after the date hereof 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 for
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
3.1(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 3.1(l)(i)) “Business IP”).

 

(ii)           Schedule
3.1(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.

 

16

 

(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
3.1(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 3.1(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 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 3.1(l)(v) and
not the representations and warranties contained in Sections 3.1(k)(i), 3.1(l)(viii) or
3.1(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

 

17

 

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 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 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 made available to AMI, and (B) to make, have made, import, use,
offer for sale, or sell any product(3) 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.  As of the date hereof, the Business IP is
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 3.1(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.

 

18

 

(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, any of them as a result of any
Encumbrance or Contract to which, Isis, 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.

 

(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.

 

19

 

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

 

(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)            Prior
to the date hereof, Ibis has not been required to file any 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
3.1(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 Acquisition Closing and (B) unless the provisions of the Code

 

20

 

pertaining to filing Tax Returns as a consolidated group are amended
prior to the Acquisition Closing, Ibis and Isis will be eligible to file a
consolidated Tax Return in lieu of separate Tax Returns with respect to income
Tax imposed by Chapter 1 of the Code for all taxable years through and
including the Acquisition Closing.

 

(vi)          Ibis is not and will
not at the Acquisition 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 January 1, 2007.

 

(ii)           Schedule  3.1(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 3.1(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)         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 this Master Agreement,
there are no Contracts, written or oral, or omissions that would prevent or
impair any Plan (including any Plan covering retirees or other

 

21

 

former employees) from being amended or terminated by Ibis or Isis
prior to or at the Acquisition Closing or, with respect to the Plans listed on Schedule
3.1(p)(xii) if any, by Ibis or AMI
(or any successor thereto) on or at any time after the Acquisition 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 

 

22

 

(A) coverage mandated by any Applicable Law, (B) death
benefits or retirement benefits 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)          As
of the date hereof, 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 Acquisition Closing.

 

(xii)         Except
for the Permitted Employee Compensation Plan, 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 on or before the date hereof 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.  Except such as must be made after the
Financing Closing (or, with respect to the Additional Shares, the Subsequent
Closing), which will be filed in a timely manner, 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 Investment Documents, the issuance of
the Shares or, if issued on the date hereof, the Additional Shares or, except
as contemplated by the Acquisition Agreement, 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 3.1(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 for the lawful operation of the Business as conducted on
and prior to the date hereof and immediately following the Financing
Closing.  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

 

23

 

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.

 

(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 Master 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 3.2 hereof, the offer, sale and issuance of the Shares
(and the Additional Shares if AMI exercised the Subscription Right and acquired
the Additional Shares pursuant to the Stock Subscription Agreement on the date
hereof) 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 Ibis nor any agent on its behalf has

 

24

 

solicited or will
solicit any offers to sell or has offered to sell or will offer to sell all or
any part of the Shares or Additional Shares to any Person or Persons so as to
bring the sale of such Shares or Additional Shares by Ibis within the
registration provisions of the Securities Act or any state securities Laws.

 

(t)    Financial
Statements.  Schedule 3.1(t) 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, 2006 and (ii) the profit and loss
statement for Ibis and the related balance sheet (the “Most Recent Balance
Sheet”) for the nine month period ended September 30, 2007.  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).

 

(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;

 

(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

 

25

 

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 under [***] 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
3.1(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.

 

26

 

(x)   Contracts.

 

(i)            Schedule
3.1(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 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 3.1(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 3.1(x)(i) (the
“Ibis Contracts”).

 

(ii)           All
of the Ibis Contracts are valid, binding, enforceable and in full force and
effect, and the Financing will not cause such Contracts to cease to be valid,
binding, enforceable and in full force and effect on identical terms following
the Closing Date.  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
3.1(x)(i)).  Schedule 3.1(x)(i) contains
an accurate and complete description of all material terms of all oral
Contracts referred to therein.

 

27

 

(y)   Insurance. 
Schedule 3.1(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 3.1(z) accurately sets forth a list of the Business’ top
ten customers by revenue for the fiscal year ended December 31, 2006 and
the nine month period ended September 30, 2007.  Except as set forth on Schedule 3.1(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
3.1(z) also accurately sets forth a list of the Business’ top ten
suppliers by dollar amount for the nine month period ended September 30,
2007.  Except as set forth on Schedule
3.1(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
3.1(cc) (i) sets forth a true and correct list of the directors and
officers of Ibis and the title of each such officer.  Schedule 3.1(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.

 

28

 

(ee)         Disclosure.  None of the Investment 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.

 

3.2  Representations and Warranties of AMI.  AMI hereby represents and warrants to Ibis
and Isis as follows (provided that such representations and warranties do not
lessen or obviate the representations and warranties of Ibis and Isis set forth
in this Master Agreement):

 

(a)   Power and Authority.  AMI has the power, authority and the legal
right to enter into this Master Agreement, the Call Option Agreement and the
Investor Rights Agreement 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 this Master Agreement, the Call Option Agreement and the Investor Rights
Agreement 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 this
Master Agreement, the Call Option Agreement and the Investor Rights Agreement
and the performance of its obligations hereunder and thereunder have been
obtained.

 

(d)   No Conflicts.  The execution and delivery of this Master
Agreement, the Call Option Agreement and the Investor Rights Agreement 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 this
Master Agreement, the Call Option Agreement and the Investor Rights Agreement
and to perform its obligations hereunder and thereunder.

 

(f)    Investment
Representations.  AMI understands
that the Shares have not been registered under the Securities Act.  AMI also understands that the Shares are
being

 

29

 

offered and sold
pursuant to an exemption from registration contained in the Securities Act
based in part upon AMI’s representations contained in this Master
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
Shares indefinitely unless the Shares are registered pursuant to the Securities
Act, or an exemption from registration is available.  AMI understands that Ibis has no present
intention of registering the Shares or any shares of its Capital Stock.  AMI also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow AMI to
Transfer all or any portion of the Shares under the circumstances, in the
amounts or at the times AMI might propose.

 

(ii)           Acquisition for Own Account.   AMI is acquiring the 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 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)   Transfer Restrictions.  AMI acknowledges
and agrees that the Shares are subject to restrictions on Transfer as set forth
in the Investor Rights Agreement.

 

(h)   Legends.  AMI understands and agrees that the
certificates evidencing the Shares, or any other Capital Stock issued in
respect of the Shares upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, will bear the legends required by the
Investor Rights Agreement, including legends relating to restrictions on
Transfer under federal and state securities Laws and legends required under
applicable state securities Laws.

 

30

 

SECTION 4. [RESERVED.]

 

SECTION 5. CONFIDENTIALITY;
NOTICE OF DEVELOPMENTS.

 

5.1  Disclosure
and Use Restriction.  Each Party agrees that for a period of three
(3) years after the date hereof, a Party (the “Receiving Party”)
receiving or that has received Confidential Information of the other Party (the
“Disclosing Party”) will (a) 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, (b) 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 Investment Documents, (c) not
disclose such Confidential Information to any Person without the prior written
consent of the Disclosing Party, except for disclosures expressly permitted by
the Investment Documents, and (d) not use such Confidential Information
for any purpose except those expressly permitted by the Investment
Documents.  Notwithstanding the
foregoing, the provisions of this Section 5.1, Section 5.2
and Section 5.3 shall terminate and be of no further force or
effect from and after the Acquisition Closing. 
The Letter Agreement by and between Isis and Abbott, dated as of
November 8, 2007 shall terminate and be of no further force and effect
upon the Financing Closing; provided
that any Confidential Information of any Party disclosed prior to the Financing
Closing shall be governed by the terms hereof. 
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; provided,
that AMI may retain one (1) copy of Isis’ Confidential Information in
Abbott’s confidential files.  In
addition, after the expiration of the Call Period, upon Isis’ or Ibis’ written
request, AMI will return or destroy (and certify to Isis and Ibis any such
return or destruction) all Confidential Information of Ibis; provided, that AMI may retain one
(1) copy of Ibis’ Confidential Information in Abbott’s confidential files.

 

5.2  Authorized
Disclosure.  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:

 

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

 

(b)   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

 

(c)   disclosure, in connection
with the performance of the Investment 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 Section 5.1, this Section 5.2
and Section 5.3; provided, that
the Receiving Party will remain responsible for any failure by any Person who
receives Confidential

 

31

 

Information pursuant to
this Section 5.2 to treat such Confidential Information as required under Section 5.1,
this Section 5.2 and Section 5.3.

 

5.3  Effect of Authorized Disclosure.  If and whenever any Confidential Information
is disclosed in accordance with Section 5.2, such disclosure will
not cause any such information to cease to be Confidential Information except
to the extent that such permitted disclosure results in a public disclosure of
such information (other than by breach of this Master 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 (a) or (b) of Section 5.2
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).

 

5.4  Terms
of Agreement.  The existence and the
terms and conditions of the Transaction Documents that the Parties have not
specifically agreed to disclose pursuant to Section 5.2 or Section 5.7
will be considered Confidential Information of both Parties.  AMI and, subject to the terms of Section 5.5,
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.

 

5.5  Exclusivity.  During the Call Period or, if AMI exercises
the Call Option, until the Acquisition 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.

 

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

 

5.6  Injunctive
Relief.  The Parties hereto
understand and agree that remedies at Law may be inadequate to protect against
any breach of any of the provisions of this Section 5 by either
Party or their employees, agents, officers or directors or any other person
acting in concert with it or on its behalf. 
Accordingly, each Party may be entitled to seek injunctive relief by a
court of competent jurisdiction against any action that constitutes any such
breach of this Section 5.

 

32

 

5.7  Press
Release; Public Disclosure. Upon
execution of this Master Agreement, Isis will issue the mutually agreed upon
press release, attached hereto as Exhibit E, announcing the
consummation of the transactions contemplated hereby.  Each Party agrees not to issue any other
press release or other 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.

 

5.8  Notice of Developments.  During the Call Period, Isis shall promptly
(once Isis or Ibis obtains Knowledge thereof), but in any event within [***] of
such Knowledge, inform AMI in writing of:

 

(i)            any Material
Adverse Effect;

 

(ii)           any
material inaccuracy in or breach of any representation or warranty of Ibis or
Isis made herein which Isis or Ibis acquire Knowledge of after the date hereof.

 

No such disclosure by Ibis or Isis pursuant to this Section 5.8,
however, shall be deemed to limit or otherwise affect the liability of Ibis and
Isis under Section 7.2(a).

 

SECTION 6. [RESERVED.]

 

SECTION 7. ADDITIONAL
AGREEMENTS.

 

7.1  Survival.  Except as expressly provided otherwise
herein, the covenants in this Master Agreement shall survive the Financing
Closing indefinitely. The representations and warranties in this Master
Agreement shall survive the Financing Closing as follows:

 

(a)   the Fundamental Isis
Representations and Fundamental AMI Representations shall terminate on [***];

 

(b)   the representations and
warranties in Section 3.1(l) (Intellectual Property) shall
terminate on the earlier of
(i) the [***]-year anniversary of the Closing Date and (ii) the
Acquisition Closing; and

 

(c)   all other representations
and warranties in this Master Agreement shall terminate on the earlier of
(i) the [***]-year anniversary of the Closing Date and (ii) the
Acquisition Closing.

 

33

 

Notwithstanding the foregoing, claims for indemnification pursuant to Section 7.2
as to which the Indemnified Party has given the Indemnifying Party proper
notice pursuant to Section 8.8 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.

 

7.2  Indemnification.

 

(a)   Ibis and Isis shall jointly
and severally indemnify, defend and hold harmless AMI, its 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 Ibis or Isis in the Investment
Documents or in any certificate delivered by Isis or Ibis pursuant hereto or
thereto; and

 

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

 

(b)   AMI shall indemnify, defend
and hold harmless Ibis and Isis, their 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:

 

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

 

(iv)          the
breach of any covenant or agreement made by AMI in the Investment Documents or
in any certificate delivered by AMI pursuant hereto or thereto.

 

(c)   If any third party shall
notify any Party to this Master 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 Master Agreement (the “Indemnifying
Party”) under this Section 7.2, 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. 
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
relief that does not seek to obtain a license or other access to, restrict the
scope of, or adversely affect the enforceability of, any Business IP or
Intellectual Property controlled by the Indemnifying Party, (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

 

34

 

available to the
Indemnified Party which are different from or additional to those available to
the Indemnifying Party.  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).

 

(d)   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 Master Agreement to the extent that any such Person has already recovered Losses
with respect to such matter pursuant to other provisions of this Master
Agreement or the Acquisition Agreement.

 

(e)   In determining the amount
of any Loss arising from the breach of any representation, warranty, covenant
or agreement hereunder, any materiality, Material Adverse Effect, or similar
qualification contained therein shall be disregarded.

 

(f)    Indemnification for each
Loss for which an Indemnifying Party, but for this Section 7.2(f),
would be liable under Section 7.2(a) or Section 7.2(b) 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 7.2(f) 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 7.2(f).  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.

 

(g)   For Tax purposes, the
parties agree to treat all payments made under this Section 7.2 as
adjustments to the Share Purchase Price.

 

7.3  Affirmative Covenants of Ibis and Isis.

 

(a)   Due Diligence.  During the Call Period or, if AMI exercises
the Call Option, until the Acquisition Closing (i) AMI shall have the right to conduct a legal, business,
operational and financial review of the Business in accordance with a
reasonable procedure to be agreed upon by the Parties in good faith and
designed to limit disruptions to the operations of Ibis and Isis and
(ii) Ibis and Isis shall cooperate with AMI in performing such review, including, without limitation,
providing reasonable access to its records, Representatives and properties
during normal business hours; provided
that Isis and Ibis may limit AMI’s access with respect to each of the foregoing
to the extent necessary to comply with Applicable Law.

 

(b)   Ordinary Course.  As long as AMI or any of its Affiliates hold
at least [***] Shares or Additional Shares (subject to adjustment for any stock
dividends, combinations, splits, recapitalization and the like with respect to
such Shares or Additional Shares after the

 

35

 

issuance thereof),
Ibis shall and Isis shall cause Ibis to (i) conduct the Business only in
the ordinary course (ii) use commercially reasonable efforts to keep Ibis’
business organization and properties intact, including Ibis’ business
operations, physical facilities, working conditions, executives and key
employees and Ibis’ and the Business’ relationships with consultants,
independent contractors, lessors, licensors, suppliers, customers, carriers,
and others having business relations with Ibis or the Business (iii) use
commercially reasonable efforts to keep in full force and effect and maintain
in good repair, order and condition, 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. 
Notwithstanding anything in the foregoing to the contrary, nothing in
this Section 7.3(b) shall (A) prohibit or limit an
Initial Offering, (B) after the Call Option Expiration Date, prohibit or
limit a Change of Control of Ibis in compliance with the terms of the Investor
Rights Agreement or (C) require any additional investment by Isis in Ibis.

 

(c)   Consolidation of Ibis
and Isis.  Unless the
provisions of the Code pertaining to filing Tax Returns as a consolidated group
are amended prior to the Acquisition Closing, Ibis and Isis will file a
consolidated Tax Return in lieu of separate Tax Returns with respect to income
Tax imposed by Chapter 1 of the Code for the Tax year beginning January 1,
2007 through and including the Acquisition Closing.  In 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.  Upon the Acquisition Closing, this provision
will be superseded by Section 8.12 of the Acquisition Agreement.

 

7.4  Negative
Covenants of Ibis and Isis.  Until
the earlier of (i) the expiration of the Call Period and (ii) the
execution of the Acquisition Agreement, 
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 or Additional Shares;

 

(c)   take any action by written
stockholder consent of Ibis without at least [***] 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
class or series of Capital Stock of Ibis;

 

36

 

(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’
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 3.1(l)(iii) or
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 3.1(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 (except for the Permitted Employee
Compensation Plan as contemplated by this Master Agreement), (v) amend any
Plan outside the ordinary course of business or commence making contributions
to any multiemployer plan, or (vi) cause the number of full-time
equivalent employees of Ibis (not including temporary employees) to exceed
[***] in the aggregate or to be less than [***] in the aggregate;

 

(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 strategic
alliance or joint venture;

 

37

 

(q)   enter into any joint
marketing arrangement or agreement outside the ordinary course of business;

 

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

 

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

 

(t)    increase or decrease
marketing or promotional spending in any material respect from the rates
established in the anticipated 2008 Budget;

 

(u)   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;

 

(v)    take any other action
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; or

 

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

 

7.5  No
Solicitation of AMI Employees.  Until
(a) the execution of the Acquisition Agreement (it being understood that
if the Acquisition Closing does not occur, then until the date provided for in
clause (b)) or (b) if the Call Option expires or terminates, the date that
is [***] years following the Call Option Expiration Date (the applicable
period, the “Nonsolicitation Period”), neither Isis nor Ibis shall and
neither shall 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 any of its Affiliates during the [***] months prior to the date of
such hiring, in each case to work for Isis or Ibis.

 

7.6  No
Solicitation of Ibis or Isis Employees. 
During the Nonsolicitation Period, 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.

 

38

 

7.7  No
Solicitation of Ibis Employees. 
During the Call 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, or
(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.

 

For purposes of Sections 7.5, 7.6 and 7.7,
“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 Sections 7.5, 7.6
or 7.7, to the contrary, if at any time a court holds that the
restrictions stated in Sections 7.5, 7.6 or 7.7 or any
part of any of the foregoing are unreasonable or otherwise unenforceable under
circumstances then existing, the Parties hereby 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 Sections 7.5, 7.6 or 7.7 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 Sections
7.5, 7.6 or 7.7 (including, if the court so determines, the
extension of the Nonsolicitation Period 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 the provisions of Sections 7.5,
7.6 or 7.7, the Nonsolicitation Period will be tolled until such
alleged breach or violation is resolved. 
The Parties agree that the restrictions contained in Sections 7.5,
7.6 and 7.7 are reasonable in all respects.

 

SECTION 8. MISCELLANEOUS.

 

8.1  Governing
Law; Alternative Dispute Resolution Procedure.  This Master Agreement will be governed by and
construed under the laws of the State of Delaware in all respects, without
giving effect to any conflict of law principles thereof.  The Parties recognize that from time to time
a dispute may arise relating to a Party’s rights or obligations under this
Master 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 D the result of which shall be binding upon the
Parties.

 

8.2  Successors
and 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 Parties; provided that (i) AMI may
(x) assign any or all of its rights and interests hereunder to one or more
of its Affiliates, (y) 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

 

39

 

performance of all of its obligations
hereunder), and (z) assign any or all of its rights and interests
hereunder in connection with a Change of Control of AMI and (ii) Isis may
assign its rights and obligations in connection with a Change of Control of
Isis if such Transfer involves all of the Capital Stock of Ibis that is
owned by Isis and the surviving or acquiring entity assumes all of Isis’
obligations under the Investment Documents. 
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon and be enforceable by the
Parties and their respective successors, assigns, heirs, executors and
administrators.

 

8.3  Entire Agreement; Exhibits and Schedules.

 

(a)   This Master 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.

 

(b)   The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.  The Parties acknowledge and
agree that (i) the Disclosure Schedules are arranged in sections
corresponding to the sections and paragraphs of this Master Agreement and shall
qualify the specifically referenced corresponding representations and
warranties of the Parties contained in this Agreement, (ii) to the extent
this Master 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 (iii) 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 Master Agreement.  Information set forth in each section of the
Disclosure Schedules specifically refers to the section of this Master
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 Master Agreement. 
Any capitalized terms used in any Schedule but not otherwise defined
therein shall have the meanings ascribed to such terms in this Master
Agreement.

 

8.4  No Third Party Beneficiaries.  This Master Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.

 

8.5  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.

 

40

 

8.6  Amendment
and Waiver. This Master Agreement may be amended or modified, and the
rights and obligations of the Parties under this Master Agreement may be
waived, only upon the written consent of each Party.  The other Investment Documents may only be
amended as specifically set forth therein.

 

8.7  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 an Investment
Document or Ibis’ Certificate of Incorporation, 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 an Investment Document or Ibis’ Certificate of
Incorporation or any waiver on such Party’s part of any provisions or
conditions of an Investment Document, or Ibis’ Certificate of Incorporation
must be in writing and will be effective only to the extent specifically set
forth in such writing.  All remedies,
either under an Investment Document, Ibis’ Certificate of Incorporation, bylaw,
or otherwise afforded to any Party, will be cumulative and not alternative.

 

8.8  Notices.  All notices or other communications that are
required or permitted under an Investment Document will be in writing and
delivered personally with acknowledgement of receipt, sent by facsimile (and
promptly confirmed by personal delivery, registered or certified mail or
overnight courier as provided herein), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

 

If to
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

 

41

 

with a
copy to:

Isis Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, CA  92008

Attention:  General Counsel

Facsimile: (760) 268-4922

 

If to
AMI, to:

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

Attention:  R. Scott Falk, P.C.

                    R.
Henry Kleeman

Facsimile:  (312) 861-2200

 

or to such other address
as the Party to whom notice is to be given may have furnished to the other
Party in writing in accordance herewith. 
Any such communication will be deemed to have been given (i) when
delivered 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.  It is
understood and agreed that this Section 8.8 is not intended to
govern the day-to-day business communications necessary between the Parties in
performing their duties, in due course, under the terms of this Master
Agreement.

 

8.9          Expenses.  Each Party will pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery and
performance of this Master Agreement and the other Transaction Documents.

 

8.10        Titles
and Subtitles.  The titles of the
sections and subsections of this Master Agreement are for convenience of reference
only and are not to be considered in construing this Master Agreement.

 

42

 

8.11        Counterparts.  This Master Agreement may be executed in any
number of counterparts, each of which will be an original, but all of which
together will constitute one instrument. 
This Master Agreement and any signed agreement or instrument entered
into in connection with this Master 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.

 

8.12        Construction.  The
Parties acknowledge and agree that they have been represented by counsel during
the negotiation, preparation and execution of this Master 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
to the identity of the Parties hereto may require.  Other than with respect to Section 2
and the preamble to Section 3.1, the words, “provided to,”
“delivered” or “made available” or words of similar import when used in this
Master Agreement to refer to obligations of Isis and/or Ibis to “provide,”
“deliver” or “make available” materials to AMI will mean “made available in the
online dataroom maintained by Isis at [***] by 12:00 p.m. Pacific time on
or before January 23, 2008.”

 

8.13        No Other
Compensation.

 

The Parties hereby agree that the terms of the
Investment 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. Except pursuant to the Permitted
Employee Compensation Plan, 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.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY
LEFT BLANK]

 

*************

 

43

 

IN WITNESS WHEREOF, the parties
hereto have executed this STRATEGIC ALLIANCE MASTER
AGREEMENT as of the date set forth in the first paragraph hereof.

 

 

	
   

  	
  ISIS
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
  /s/ B. Lynne
  Parshall

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
  B. Lynne
  Parshall

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  COO &
  CFO

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IBIS
  BIOSCIENCES, INC.

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
  /s/ Michael
  J Treble

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
  Michael J
  Treble

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ABBOTT
  MOLECULAR INC.

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
  /s/ Stafford
  O’Kelly

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
  Stafford
  O’Kelly

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
   

  
						

 

SIGNATURE PAGE TO STRATEGIC ALLIANCE MASTER
AGREEMENT

 

 

LIST OF EXHIBITS

 

	
  Investor Rights Agreement

  	
   

  	
  Exhibit A

  
	
   

  	
   

  	
   

  
	
  Call Option Agreement

  	
   

  	
  Exhibit B

  
	
   

  	
   

  	
   

  
	
  Terms of Permitted Employee Compensation Plan

  	
   

  	
  Exhibit C

  
	
   

  	
   

  	
   

  
	
  Alternative Dispute Resolution Procedures

  	
   

  	
  Exhibit D

  
	
   

  	
   

  	
   

  
	
  Press Release

  	
   

  	
  Exhibit E

  

 

 

EXECUTION VERSION

 

EXHIBIT A

 

 

INVESTOR
RIGHTS AGREEMENT

 

BY
AND AMONG

 

 

ISIS
PHARMACEUTICALS, INC.,

 

IBIS
BIOSCIENCES, INC.

 

 

AND

 

 

ABBOTT
MOLECULAR INC.

 

 

January 30,
2008

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  	
   

  
	
  TABLE OF CONTENTS

  	
   

  	
   

  	
  i

  
	
   

  	
   

  	
   

  	
   

  
	
  IBIS BIOSCIENCES, INC. INVESTOR RIGHTS AGREEMENT

  	
  1

  
	
   

  	
   

  
	
  1.

  	
  General.

  	
  1

  
	
   

  	
  1.1

  	
  Definitions

  	
  1

  
	
   

  	
  1.2

  	
  Table of Defined Terms

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Restrictions on Transfer; Registration Rights.

  	
  4

  
	
   

  	
  2.1

  	
  Restrictions on Transfer

  	
  4

  
	
   

  	
  2.2

  	
  Right to Cause an Offering

  	
  6

  
	
   

  	
  2.3

  	
  Piggyback Registrations

  	
  7

  
	
   

  	
  2.4

  	
  Expenses of Registration

  	
  8

  
	
   

  	
  2.5

  	
  Obligations of Ibis

  	
  9

  
	
   

  	
  2.6

  	
  Delay of Registration; Furnishing
  Information

  	
  10

  
	
   

  	
  2.7

  	
  Indemnification

  	
  10

  
	
   

  	
  2.8

  	
  “Market Stand-Off” Agreement

  	
  13

  
	
   

  	
  2.9

  	
  Agreement to Furnish Information

  	
  13

  
	
   

  	
  2.10

  	
  Rule 144 Reporting

  	
  13

  
	
   

  	
  2.11

  	
  Termination of Registration Rights

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Covenants of the Isis Parties.

  	
  14

  
	
   

  	
  3.1

  	
  Use of Proceeds

  	
  14

  
	
   

  	
  3.2

  	
  Basic Financial Information and
  Reporting

  	
  14

  
	
   

  	
  3.3

  	
  Sale of Shares

  	
  15

  
	
   

  	
  3.4

  	
  Board Observer

  	
  15

  
	
   

  	
  3.5

  	
  Restrictions on Transfer

  	
  15

  
	
   

  	
  3.6

  	
  Tag Along

  	
  15

  
	
   

  	
  3.7

  	
  Right of Participation

  	
  17

  
	
   

  	
  3.8

  	
  Termination

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Make Whole Provision.

  	
  19

  
	
   

  	
  4.1

  	
  Make Whole Payment

  	
  19

  
	
   

  	
  4.2

  	
  Remaining Proceeds

  	
  19

  
	
   

  	
  4.3

  	
  Initial Offering Termination

  	
  19

  
	
   

  	
  4.4

  	
  Post Call Period Financing

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Miscellaneous.

  	
  20

  
	
   

  	
  5.1

  	
  Governing Law; Alternative Dispute
  Resolution

  	
  20

  
	
   

  	
  5.2

  	
  Assignment

  	
  20

  
	
   

  	
  5.3

  	
  No Third Party Beneficiaries

  	
  20

  
	
   

  	
  5.4

  	
  Severability

  	
  20

  
	
   

  	
  5.5

  	
  Counterparts

  	
  20

  
						

 

A-i

 

	
   

  	
  5.6

  	
  Amendment and Waiver

  	
  21

  
	
   

  	
  5.7

  	
  Termination

  	
  21

  
	
   

  	
  5.8

  	
  Notices

  	
  21

  
	
   

  	
  5.9

  	
  Construction

  	
  21

  
	
   

  	
  5.10

  	
  Expenses

  	
  21

  
	
   

  	
  5.11

  	
  Entire Agreement

  	
  21

  
	
   

  	
  5.12

  	
  Titles and Subtitles

  	
  21

  
	
   

  	
  5.13

  	
  Delays or Omissions

  	
  22

  

 

A-ii

 

IBIS BIOSCIENCES, INC. 

INVESTOR RIGHTS AGREEMENT

 

THIS INVESTOR RIGHTS
AGREEMENT  (this “Agreement”) is made
and entered into as of this 30th day of January, 2008, by and among Isis Pharmaceuticals, Inc., a
Delaware corporation (“Isis”), Ibis
Biosciences, Inc., a Delaware corporation (“Ibis”), and Abbott Molecular
Inc.,  a Delaware
corporation (“AMI”).  Isis, Ibis
and AMI are sometimes referred to herein individually as a “Party,” and
collectively as the “Parties.”

 

RECITALS

 

WHEREAS, AMI, Isis and Ibis have
formed a strategic alliance pursuant to the Strategic Alliance Master
Agreement, of even date herewith (the “Master Agreement”);

 

WHEREAS, pursuant to the Master Agreement, AMI is
purchasing the Shares and may, in its sole discretion, subscribe for and
purchase the Additional Shares pursuant to the Call Option Agreement and the
Stock Subscription Agreement;

 

WHEREAS, the execution and
delivery of this Agreement by Isis and Ibis is a material inducement to AMI to
enter into the Master Agreement and the other Transaction Documents; and

 

WHEREAS, in connection with the
consummation of the Financing, the Parties desire to enter into this Agreement
in order to grant registration, information, protective and other rights to AMI
as set forth below.

 

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

 

1.             General.

 

1.1          Definitions.

 

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

 

(a)           “Additional
Shares” means 114,250 shares of Common Stock that may be acquired by AMI
from Ibis in AMI’s sole discretion prior to 5:00 p.m. (Pacific Time) on
the Cut-Off Date pursuant to the Call Option Agreement and the Stock Subscription
Agreement, as may be held from time to time by AMI and its permitted assigns,
which, together with the Shares, will represent approximately 18.6% of the
issued and outstanding Common Stock at the time of such issuance.

 

A-1

 

(b)           “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 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.

 

(c)           “Equivalent
Shares” means, at any date of determination, (i) as to any outstanding
shares of Common Stock, such number of shares of Common Stock and (ii) as
to any outstanding options, warrants or other convertible securities which are
directly or indirectly convertible into or exchangeable or exercisable for
shares of Common Stock, the maximum number of shares of Common Stock for which
or into which such options, warrants or other convertible securities may at the
time be exercised, converted or exchanged (or which shall become exercisable,
convertible or exchangeable on or prior to, or by reason of, the transaction or
circumstance in connection with which the number of Equivalent Shares is to be
determined).

 

(d)           “Exchange Act”  means the Securities
Exchange Act of 1934, as amended.

 

(e)           “Holder”
means any Person owning of record Registrable Securities.

 

(f)            “Initial
Offering”  means Ibis’ first
firm commitment underwritten Offering of its Common Stock registered under the
Act.

 

(g)           “Make Whole
Event” means (i) a Change of Control of Ibis, (ii) any
liquidation, dissolution, share exchange, business combination or
recapitalization of Ibis, or (iii) a Change of Control of Isis pursuant to
which such transferee, successor or acquiring Person does not assume Isis’
obligations under the Investment Documents; provided
that a Change of Control arising in connection with a Transfer by Isis pursuant
to and in compliance with Section 3.6 or a Change of Control
arising in connection with an Issuance in compliance with Section 3.7
shall not be a Make Whole Event.

 

(h)           “Offering”
means a public offering of Ibis’ Common Stock registered under the Act.

 

(i)            “Register,”
“registered,” and “registration” refer to a registration effected
by preparing and filing a registration statement in compliance with the Act,
and the declaration or ordering of effectiveness of such registration statement
or document.

 

A-2

 

(j)            “Registrable
Securities” means the Shares. 
Notwithstanding the foregoing, Registrable Securities shall not include
any securities (i) sold by a Person to the public either pursuant to a
registration statement or Rule 144 or (ii) sold in a private
transaction in which the transferee does not become a party to this Agreement.

 

(k)           “Registration
Expenses” means all expenses incurred by Ibis in complying with Sections 2.2
or 2.3 of this Agreement, including, without limitation, all underwriter
expenses (not including underwriter discounts), registration and filing fees
and printing expenses, legal fees, Blue Sky fees and expenses and the expense
of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of Ibis which shall be paid in
any event by Ibis).

 

(l)            “Shares”
means (i) 114,251 shares of Common
Stock issued to AMI pursuant to the Master Agreement, representing
approximately 10.25% of the issued and outstanding Common Stock (whether held
by AMI or any transferee of AMI in accordance with the terms of this
Agreement), (ii) the Additional Shares, if AMI exercises the Subscription
Right and acquires the Additional Shares pursuant to the Call Option Agreement
and the Stock Subscription Agreement and (iii) any Capital Stock issued as
(or issuable upon the conversion or exercise of any Capital Stock which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such above-described securities.

 

(m)          “Special
Registration Statement” means (i) a registration statement relating to
any employee benefit plan or equity incentive plan for directors, officers
and/or consultants, (ii) with respect to any corporate reorganization or
transaction under Rule 145 of the Act, any registration statements related
to the issuance or resale of securities issued in such a transaction, or (iii) a
registration related to the distribution by Isis to Isis’ stockholders of
shares of Common Stock held by Isis.

 

(n)           “Subsequent
Closing” means, if AMI exercises the Subscription Right and acquires the
Additional Shares, the consummation of such acquisition.

 

(o)           “Transfer”
means 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.

 

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

 

	
  Term

  	
   

  	
  Section

  
	
  “Abbott Holders”

  	
   

  	
  Section 2.1(d)

  
	
  “Act”

  	
   

  	
  Section 2.1(e)

  
	
  “Agreement”

  	
   

  	
  Preamble

  
	
  “AMI”

  	
   

  	
  Preamble

  
	
  “Demand Registration Notice”

  	
   

  	
  Section 2.2(a)

  
	
  “Holder Violation”

  	
   

  	
  Section 2.7(b)

  

 

A-3

 

	
  “Holder Indemnified Party”

  	
   

  	
  Section 2.7(a)

  
	
  “Ibis”

  	
   

  	
  Preamble

  
	
  “Ibis Indemnified Party”

  	
   

  	
  Section 2.7(b)

  
	
  “Initiating Stockholder”

  	
   

  	
  Section 2.3(b)

  
	
  “Isis”

  	
   

  	
  Preamble

  
	
  “Issuance

  	
   

  	
  Section 3.7

  
	
  “Issuer”

  	
   

  	
  Section 3.7

  
	
  “Make Whole Payment”

  	
   

  	
  Section 4.1

  
	
  “Master Agreement”

  	
   

  	
  Recitals

  
	
  “Participating Buyer”

  	
   

  	
  Section 3.7(b)

  
	
  “Participating Seller”

  	
   

  	
  Section 3.6(b)

  
	
  “Participation Notice”

  	
   

  	
  Section 3.7(a)

  
	
  “Participation Offerees”

  	
   

  	
  Section 3.7(a)

  
	
  “Participation Portion”

  	
   

  	
  Section 3.7(a)(i)

  
	
  “Prospective Buyer”

  	
   

  	
  Section 3.6(a)(i)

  
	
  “Prospective Subscriber”

  	
   

  	
  Section 3.7(a)(i)

  
	
  “Participating Holder Majority”

  	
   

  	
  Section 2.5(a)

  
	
  “Party” and “Parties”

  	
   

  	
  Preamble

  
	
  “Rule 144”

  	
   

  	
  Section 2.1(b)(iii)

  
	
  “Sale Notice”

  	
   

  	
  Section 2.1(d)(i)

  
	
  “Subject Securities”

  	
   

  	
  Section 3.7

  
	
  “Suspension Period”

  	
   

  	
  Section 2.5(a)

  
	
  “Tag Along Holder”

  	
   

  	
  Section 3.6(a)

  
	
  “Tag Along Notice”

  	
   

  	
  Section 3.6(a)

  
	
  “Tag Along Offer”

  	
   

  	
  Section 3.6(b)

  
	
  “Tag Along Sellers”

  	
   

  	
  Section 3.6(b)

  
	
  “Third Party Demand Registration”

  	
   

  	
  Section 2.3(b)

  
	
  “Violation”

  	
   

  	
  Section 2.7(a)

  

 

2.             Restrictions on
Transfer; Registration Rights.

 

2.1          Restrictions on
Transfer.

 

(a)           Before the Call
Option Expiration Date AMI cannot Transfer all or any portion of the Shares or
Registrable Securities.

 

(b)           After the Call Option
Expiration Date, AMI and its transferees cannot Transfer all or any portion of
the Shares or Registrable Securities unless and until:

 

(i)            there is then in
effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with such registration
statement;

 

(ii)           if reasonably
requested by Ibis, in connection with any Transfer not covered by Section 2.1(b)(i) or
Section 2.1(b)(iii) hereof, Ibis has received an 

 

A-4

 

opinion of counsel, reasonably satisfactory to Ibis,
that such disposition shall not require registration of such Shares or
Registrable Securities under the Act; or

 

(iii)         such Shares or
Registrable Securities may be transferred pursuant to Rule 144, as
promulgated under the Act (“Rule 144”).

 

(c)           Notwithstanding the
provisions of Section 2.1(a) and Section 2.1(b) above
and Section 2.1(d) below, no restrictions contained in such
Sections shall apply to a Transfer by AMI to any of its Affiliates or to
Transfers between Affiliates of AMI; provided
that in such case the transferee agrees in writing to be bound by the terms of
this Agreement; and provided  further that any such Transfer to an
Affiliate of AMI is for no fewer than [***] Shares per Transfer.

 

(d)           AMI and its
Affiliate transferees, if any (collectively, the “Abbott Holders”),
hereby grant to Isis a right of first refusal with respect to the Shares held
by such Abbott Holders on the following terms:

 

(i)            If, after the Call
Option Expiration Date, an Abbott Holder proposes to Transfer any of the
Shares, then such Abbott Holder shall promptly give written notice (the “Sale
Notice”) to Ibis and to Isis at least [***] prior to the closing of such
Transfer.  The Sale Notice shall describe
in reasonable detail the proposed Transfer including, without limitation, the
number of Shares to be transferred, the nature of such Transfer, the
consideration to be paid, and the name and address of each prospective
purchaser or transferee.

 

(ii)           Following receipt
of any Sale Notice from an Abbott Holder, Isis shall have the right, within
[***] after receipt of the Sale Notice, to elect in a written notice to such
Abbott Holder, with a copy to Ibis, to purchase the Shares described in the
Sale Notice from such Abbott Holder for cash in an amount equal to the
consideration to be paid in the proposed Transfer.  Upon such election, Ibis shall have [***]
from the date of the Sale Notice to consummate its acquisition of the Shares
described in the Sale Notice.  The
exercise or non-exercise of the rights of Isis hereunder to participate in one
or more Transfers by Abbott Holders shall not adversely affect Isis’ right to
participate in subsequent Transfers of Shares by Abbott Holders.

 

(iii)         To the extent Isis
does not within such [***] period elect to purchase the Shares described in the
Sale Notice or does not consummate such purchase within such [***] period, (A) the
Abbott Holder submitting the Sale Notice may, not later than [***] following
delivery to Isis of the Sale Notice, enter into an agreement providing for the
closing of the Transfer of such Shares within [***] of the date of such
agreement, or as soon thereafter as reasonably practicable, on terms and
conditions that when taken as a whole are not materially less favorable to such
Abbott Holder than those described in the Sale Notice and (B) Ibis and
Isis shall reasonably cooperate in good faith with such Abbott Holder to
consummate such Transfer.  Any proposed
Transfer on terms and conditions materially less favorable to such Abbott
Holder than those described in the Sale Notice, as well as any subsequent
proposed Transfer of any of the Shares by such Abbott Holder, shall again be
subject to the rights of Isis and shall require compliance by such Abbott Holder
with the procedures described in this Section 2.1(d).  Notwithstanding anything to the contrary
contained herein, the provisions of this Section 2.1(d) 

 

A-5

 

shall not apply to any subsequent Transfers by any
prospective purchaser or transferee of Shares that are not Abbott Holders
following the consummation of the Transfer contemplated by the Sale Notice.

 

(iv)          The provisions of
this Section 2.1(d) shall terminate following the closing of
an Initial Offering.

 

(e)           Each certificate
representing Registrable Securities shall be stamped or otherwise imprinted
with legends substantially similar to the following (in addition to any legend
required under applicable state securities laws):

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”)
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR ENTITLED TO AN
AVAILABLE EXEMPTION THEREFROM.

 

THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN INVESTOR RIGHTS AGREEMENT BY AND BETWEEN THE STOCKHOLDER AND THE
COMPANY.  COPIES OF SUCH AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

 

(f)            Ibis shall be
obligated to reissue promptly unlegended certificates at the request of AMI or
any of its transferees if Ibis has completed an Offering and Ibis has been
furnished with an opinion of counsel (which counsel may be counsel to Ibis)
reasonably acceptable to Ibis to the effect that the securities proposed to be
disposed of may lawfully be so disposed of without registration, qualification
and legend; provided that the second legend listed above shall be removed only from (i) Registrable
Securities the Holders of which are not subject to any restrictions hereunder
or (ii) Shares that have been Transferred to a transferee who is not an
Abbott Affiliate and does not become a party to this agreement.

 

2.2          Right to Cause an
Offering.

 

(a)           After the Call
Option Expiration Date, AMI, by providing written notice (a “Demand
Registration Notice”) to Ibis, may demand that Ibis file a registration
statement under the Act to effect an Offering of all of the Registrable
Securities.  Upon receipt of a Demand
Registration Notice, Ibis shall use its reasonable best efforts to effect, as
expeditiously as reasonably possible, such Offering, including the registration
under the Act of all Registrable Securities, on terms reasonably requested by
AMI.  Subject to the consent of Ibis,
which shall not be unreasonably withheld, conditioned or delayed, AMI shall
have the right to select the underwriter or underwriters in connection with any
Offering made pursuant to a Demand Registration Notice.

 

A-6

 

(b)           Notwithstanding the
foregoing, Ibis shall not be required to effect a registration pursuant to this
Section 2.2:

 

(i)            prior to the Call
Option Expiration Date;

 

(ii)           during the period
beginning on the date of filing of, and ending on the date that is the earlier
of (A) [***] following the date of the filing of or (B) [***]
following the effective date of, the registration statement pertaining to an
Offering initiated by Ibis (or such longer period as may be determined pursuant
to Section 2.8 hereof); provided that Ibis uses its reasonable best
efforts to cause such registration statement to become effective;

 

(iii)         if within [***] of
receipt of a Demand Registration Notice, Ibis furnishes to AMI a certificate
signed by the Chairman of the Board of Directors of Ibis stating that in the
good faith judgment of the Board of Directors of Ibis, it would be seriously
detrimental to Ibis and its stockholders for such registration statement to be
effected at such time, Ibis shall have the right to defer such filing for a
period of not more than [***] after receipt of such Demand Registration Notice;
provided that such right to delay a request may be exercised by Ibis not more
than once in any [***] period; or

 

(iv)          if such registration
is for less than [***] percent ([***]%) of the Shares.

 

(c)           All Holders
proposing to distribute their Registrable Securities through an Offering
pursuant to this Section 2.2 shall enter into an underwriting
agreement in customary form and reasonably satisfactory to each of Ibis and
AMI.

 

2.3          Piggyback Registrations.

 

(a)           Ibis shall notify
all Holders of Registrable Securities in writing at least twenty (20) days
prior to the filing of any registration statement under the Act for purposes of
an Offering (including, but not limited to, Offerings initiated at the request
of a third party, but excluding Special Registration Statements), and shall
afford each such Holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such Holder.  Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within [***] after the above-described notice from Ibis, so notify Ibis
in writing.  Such notice shall state the
intended method of disposition of the Registrable Securities by such
Holder.  If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by Ibis, such Holder shall nevertheless continue to have the
right to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by Ibis with respect to
Offerings of its securities, all upon the terms and conditions set forth
herein.

 

(b)           If the registration
statement of which Ibis gives notice under this Section 2.3 is for
an underwritten Offering, Ibis shall so advise the Holders of Registrable
Securities.  In such event, the right of
any such Holder to include Registrable Securities in a

 

A-7

 

registration pursuant to this Section 2.3
shall be conditioned upon such Holder’s participation in such underwriting and
the inclusion of such Holder’s Registrable Securities in the underwriting to
the extent provided herein.  All Holders
proposing to distribute their Registrable Securities through such underwriting
shall enter into an underwriting agreement in customary form with the underwriter
or underwriters selected for such underwriting by Ibis.  Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated in
accordance with the following terms. If the Offering is for the account of Ibis
or Isis and cannot accommodate all of the Registrable Securities requested by
Abbott Holders to be registered, each of the other selling stockholders shall
be cut back (including Isis and selling stockholders who are transferees of AMI
but not Abbott Holders), pro rata, based on the number of shares for which
registration was requested by each such selling stockholder, to the maximum
extent possible before the Registrable Securities requested by Abbott Holders
to be registered are cut back. If an Offering is made pursuant to a demand made
by a stockholder (the “Initiating Stockholder”) that is not AMI or a
stockholder acting for the account of Ibis or Isis (a “Third Party Demand
Registration”) and cannot accommodate all of the Registrable Securities
requested by Abbott Holders to be registered, each of the other selling
stockholders (other than the Initiating Stockholder) shall be cut back
(including selling stockholders who are transferees of AMI but not Abbott
Holders), pro rata, based on the number of shares for which registration was
requested by each such selling stockholder, to the maximum extent possible
before the Registrable Securities requested by Abbott Holders to be registered
are cut back.  If any Holder disapproves
of the terms of any such underwriting, such Holder may elect to withdraw
therefrom by written notice to Ibis and the underwriter, delivered at least
[***] prior to the effective date of the registration statement.  Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.  For any Holder which is a
partnership, limited liability company or corporation, the partners, retired
partners, members, retired members and stockholders of such Holder, or the
estates and family members of any such partners, retired partners, members,
retired members and stockholders and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single “selling stockholder.”  For purposes of the preceding sentence, all
Abbott Holders will be treated as a single “selling stockholder.”

 

(c)           Ibis shall have the
right to terminate or withdraw any registration initiated by it under this Section 2.3
whether or not any Holder has elected to include securities in such
registration.  The Registration Expenses
of such withdrawn registration shall be borne by Ibis in accordance with Section 2.4
hereof.

 

2.4          Expenses of
Registration.  Except as specifically
provided herein, all Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 2.2
or Section 2.3 herein shall be borne by Ibis.  All underwriter discounts incurred in
connection with any registrations hereunder shall be borne by the holders of
the securities so registered.  Holders
participating in a registration proceeding shall be required to pay for
reasonable Registration Expenses for any registration proceeding begun pursuant
to Section 2.2, the request of which has been subsequently
withdrawn by AMI unless (a) the withdrawal is based upon material adverse
information concerning Ibis of which AMI was not aware at the time of such
request or (b) AMI agrees to deem such registration to have been effected
as of the date of such withdrawal for purposes of determining whether Ibis
shall be

 

A-8

 

obligated pursuant to Section 2.2 to undertake any
subsequent registration, in which event such right shall be forfeited by AMI
and all other Holders.  If the Holders
are required to pay the Registration Expenses, such expenses shall be borne by
the stockholders (including Holders and any other stockholders of Ibis that
would have participated in such registration proceeding) pro rata based on the number of shares for
which registration was requested by each such Holder or other stockholder.

 

2.5          Obligations of Ibis.  Whenever required to effect the registration
of any Registrable Securities, Ibis shall, as expeditiously as reasonably
possible:

 

(a)           prepare and file
with the SEC a registration statement with respect to such Registrable
Securities and use its reasonable best efforts to cause such registration
statement to become effective, and, upon the request of Holders of at least 50%
of the Registrable Securities so registered (a “Participating Holder
Majority”), keep such registration statement effective for up to [***]
[***] or, if earlier, until the Holder or Holders have completed the
distribution related thereto; provided
that at any time, upon written notice to all Holders whose Registrable
Securities were so registered, for a period not to exceed [***] thereafter (the
“Suspension Period”), Ibis may delay the filing or effectiveness of any
registration statement or suspend the use or effectiveness of any registration
statement (and such Holders hereby agree not to offer or sell any Registrable
Securities pursuant to such registration statement during the Suspension
Period) if Ibis reasonably believes that there is or may be in existence
material nonpublic information or events involving Ibis, the failure of which
to be disclosed in the prospectus included in the registration statement could
result in a Violation (as defined below). 
In the event that Ibis exercises its right to delay or suspend the
filing or effectiveness of a registration hereunder, the applicable time period
during which the registration statement is to remain effective shall be
extended by a period of time equal to the duration of the Suspension
Period.  Ibis may extend the Suspension
Period for an additional consecutive [***] with the consent of a Participating
Holder Majority, which consent shall not be unreasonably withheld.  If so directed by
Ibis, Holders shall (i) not offer to sell any Registrable Securities
pursuant to the registration statement during any Suspension Period; and (ii) use
their reasonable best efforts to deliver to Ibis (at Ibis’ expense) all copies,
other than permanent file copies then in its possession, of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.  Notwithstanding the foregoing, Ibis shall not
be required to file, cause to become effective or maintain the effectiveness of
any registration statement other than (A) a registration statement
pursuant to Section 2.2 or (B) a registration statement on Form S-3 that contemplates
a distribution of securities on a delayed or continuous basis pursuant to Rule 415
under the Act.

 

(b)           Prepare and file
with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement for the
period set forth in Section 2.5(a) above.

 

(c)           Furnish to the
Holders such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them.

 

A-9

 

(d)           Use its reasonable
best efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as may be reasonably requested by any Holder covered by such
registration statement; provided that Ibis
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.

 

(e)           In the event of any
underwritten Offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such Offering. 
Each Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.

 

(f)            Notify each Holder
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing. Ibis shall use its reasonable best efforts to amend or supplement
such prospectus in order to cause such prospectus not to include any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing.

 

(g)           Use its reasonable
best efforts to furnish, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (i) an opinion, dated as of such date, of the
counsel representing Ibis for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a comfort
letter, dated as of such date (including any requested updates thereto), from
the independent certified public accountants of Ibis, in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering addressed to the underwriters.

 

2.6          Delay of Registration;
Furnishing Information.

 

(a)           No Holder shall
have any right to obtain or seek an injunction restraining or otherwise
delaying any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 2.

 

(b)           It shall be a
condition precedent to the obligations of Ibis to take any action pursuant to Section 2.2,
Section 2.3 or Section 2.5 that the selling Holders
shall furnish to Ibis such information regarding themselves, the Registrable
Securities held by them and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of their
Registrable Securities.

 

2.7          Indemnification.  In the event any Registrable Securities are
included in a registration statement under Sections 2.2 or 2.3,
whichever is applicable:

 

A-10

 

(a)           To the extent permitted by law, Ibis and, as
long as Isis holds [***] or more of the Equivalent Shares outstanding
immediately following the completion of the Offering contemplated by such
Registration Statement, Isis shall, jointly and severally, indemnify and hold
harmless each Holder, the partners, members, officers, directors, stockholders,
employees, representatives, agents and Affiliates of each Holder, any
underwriter (as defined in the Act) for such Holder and each person, if any,
who controls such Holder or underwriter within the meaning of the Act or the
Exchange Act (each a “Holder Indemnified Party”), against any Losses to
which it may become subject under the Act, the Exchange Act or other federal or
state law, insofar as such Losses arise out of or are based upon any of the
following statements, omissions or violations (collectively a “Violation”)
by Ibis: (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement or incorporated by reference
therein, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated
therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by Ibis of the Act, the Exchange
Act, any state securities law or any rule or regulation promulgated under
the Act, the Exchange Act or any Blue Sky law in connection with the Offering
covered by such registration statement; provided
that the indemnity obligations contained in this Section 2.7(a) shall
not apply to amounts paid in settlement of any Loss if such settlement is
effected without the consent of Ibis, which consent shall not be unreasonably
withheld, conditioned or delayed, nor shall Ibis or Isis be liable in any such
case for any such Loss to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such Holder
Indemnified Party (or with respect to the Abbott Holders, any Abbott Holder).

 

(b)           To the extent permitted by law, each Holder
shall indemnify and hold harmless Ibis, the partners, members, officers,
directors, stockholders, employees, representatives, agents and Affiliates of
Ibis, any underwriter (as defined in the Act) for Ibis and each person, if any,
who controls Ibis or such underwriter within the meaning of the Act or the
Exchange Act (each an “Ibis Indemnified Party”) against any Losses to
which it may become subject under the Act, the Exchange Act or other federal or
state law, insofar as such Losses arise out of or are based upon any of the
following: (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement or incorporated
reference therein, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by Ibis of the Act (collectively,
a “Holder Violation”), in each case to the extent (and only to the
extent) that such Holder Violation occurs in reliance upon and in conformity
with written information furnished by such Holder under an instrument duly
executed by such Holder and stated to be specifically for use in connection
with such registration (it being understood and agreed that solely for purposes
of and notwithstanding the foregoing, the Abbott Holders shall jointly and
severally indemnify and hold harmless the Ibis Indemnified Parties against Losses
arising out of or based upon any Holder Violation by any Abbott Holder); provided that the indemnity obligations
contained in this Section 2.7(b) shall not apply to amounts
paid in settlement of any such Loss, if such settlement is effected without the
consent of such Holder, which consent shall not be unreasonably withheld,
conditioned or delayed; provided further,
that in no event shall any indemnity under this Section 2.7 exceed
the

 

A-11

 

net proceeds from the
Offering received by such Holder (it being understood and agreed that solely
with respect to this provision, all of the Abbott Holders will be considered
one Holder for purposes of calculating the net proceeds from the Offering to
any particular Abbott Holder).

 

(c)           Promptly after receipt by an indemnified
party under this Section 2.7 of notice of the commencement of any
action (including any governmental action), such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 2.7, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties; provided that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses thereof to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would, in the view of such
indemnified party, be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding.  The
failure to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action shall relieve such indemnifying
party of any liability to the indemnified party under this Section 2.7
to the extent, and only to the extent, prejudicial to its ability to defend
such action, but the omission so to deliver written notice to the indemnifying
party shall not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 2.7.

 

(d)           If the indemnification provided for in this Section 2.7
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Loss referred to herein, the indemnifying
party, in lieu of indemnifying such indemnified party thereunder, shall to the
extent permitted by applicable law contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the Violation(s) or Holder Violation(s) that resulted
in such Loss as well as any other relevant equitable considerations.  The relative fault of the indemnifying party
and of the indemnified party shall be determined by a court of law by reference
to, among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; provided,
that in no event shall any contribution by a Holder, hereunder exceed the net
proceeds from the Offering received by such Holder.

 

(e)           The obligations of Ibis, Isis and each Holder
under this Section 2.7 shall survive completion of any Offering of
Registrable Securities in a registration statement and, with respect to
liability arising from an Offering to which this Section 2.7 would
apply that is covered by a registration filed before termination of this
Agreement, such termination.  No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which (i) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect to such claim or
litigation or (ii) contains an admission of liability or guilt or
imposes any liability or obligation on the indemnified party.

 

A-12

 

2.8          “Market Stand-Off” Agreement.  Each
Holder hereby agrees that it shall not sell, Transfer, make any short sale of,
grant any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale, any Capital Stock of Ibis
held by such Holder (other than those included in the registration) during
(a) the [***] period following the effective date of the Initial Offering
(or such longer period, not to exceed [***] after the expiration of the [***]
period, as the underwriters or Ibis shall request in order to facilitate
compliance with NASD Rule 2711), and (b) the [***] period following
the effective date of a registration statement of Ibis filed under the Act (or
such longer period, not to exceed [***] after the expiration of [***], as the
underwriters or Ibis shall request in order to facilitate compliance with NASD
Rule 2711); provided that,
with respect to (a) and (b) above, all stockholders holding [***]% or
more of Ibis’ then outstanding Capital Stock (other than to the extent such
stockholders are participating in such registration) and all officers and
directors of Ibis are bound by and have entered into similar agreements.  Ibis may impose stop-transfer instructions
with respect to the shares of Capital Stock subject to the foregoing
restriction until the end of the stand-off period.  The obligations described in this Section 2.8
shall not apply to a registration relating solely to employee benefit plans on
Form S-1 or Form S-8 or similar forms that may be promulgated in the
future, or a registration relating solely to a transaction on Form S-4 or
similar forms that may be promulgated in the future.

 

2.9          Agreement to Furnish
Information.  Each Holder hereby agrees to execute and
deliver such other agreements as may be reasonably requested by Ibis or the
underwriter that are consistent with such Holder’s obligations under this
Agreement or that are necessary to give further effect thereto.  In addition, if requested by Ibis or the
representative of the underwriters of Common Stock (or other securities) of
Ibis, such Holder shall provide, within [***] of such request, such information
as may be required by Ibis or such representative in connection with the completion
of any Offering of Ibis’ securities pursuant to a registration statement filed
under the Act.  The obligations described
in Section 2.8 and this Section 2.9 shall not apply to
a Special Registration Statement.  The
underwriters of Ibis’ stock are intended third party beneficiaries of Section 2.8
and this Section 2.9 only and will have the right, power and
authority to enforce such provisions as though they were a party hereto.

 

2.10        Rule 144 Reporting.  With
a view to making available to the Holders the benefits of certain
rules and regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, Ibis agrees to use
its reasonable best efforts to:

 

(a)           Make and keep public information available,
as those terms are understood and defined in Rule 144 or any similar or
analogous rule promulgated under the Act, at all times after the effective
date of the first registration filed by Ibis for an Offering of its securities
to the general public;

 

(b)           File with the SEC, in a timely manner, all
reports and other documents required of Ibis under the Exchange Act; and

 

A-13

 

(c)           So long as a Holder owns any Registrable
Securities, furnish to such Holder forthwith upon request: a written statement
by Ibis as to its compliance with the reporting requirements of Rule 144,
and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
Ibis filed with the Commission; and such other reports and documents as a
Holder may reasonably request in connection with availing itself of any
rule or regulation of the SEC allowing it to sell any such securities
without registration.

 

2.11        Termination of Registration
Rights.  The right of any Holder to request
registration or inclusion of Registrable Securities in any registration
pursuant to Section 2.2 or Section 2.3 hereof shall
terminate upon the earlier of: (a) the date [***] following an Initial
Offering; or (b) following the Initial Offering, such time as all
Registrable Securities issuable or issued upon conversion of the Shares held by
and issuable to such Holder (and its Affiliates) may be sold pursuant to
Rule 144 during any [***] period.

 

3.            Covenants of the Isis
Parties.

 

3.1          Use of Proceeds.  The
proceeds from the Financing shall be used exclusively to fund the operations of
the Ibis business, including, without limitation, research and development
related to the Assay Kit Milestone and the Value Accretion Milestones (as each
such term is defined in the Call Option Agreement).  Furthermore, no portion of the proceeds from
the Financing may be transferred to or used for the benefit of (except as an
indirect benefit via Isis’ ownership of the Remaining Shares) Isis except as
expressly (a) required by the Corporate Services Agreement,
(b) Section 3 of the Contribution Agreement, or (c) contemplated
by Section 7.10 of the Acquisition Agreement.

 

3.2          Basic Financial Information
and Reporting.

 

(a)           Ibis shall maintain true books and records of
account in which full and correct entries shall be made of all its business
transactions pursuant to a system of accounting established and administered in
accordance with GAAP (except as noted therein or as disclosed to the recipients
thereof), and shall set aside on its books all such proper accruals and
reserves as shall be required under GAAP.

 

(b)           For as long as any Abbott Holder holds any
Shares, subject to AMI’s confidentiality obligations pursuant to Sections
5.1, 5.2 and 5.3 of the Master Agreement, as soon as
practicable after the end of each fiscal year of Ibis, and in any event within
one hundred twenty (120) days thereafter, Ibis shall furnish to AMI a balance
sheet of Ibis, as at the end of such fiscal year, and a statement of results
from operations and a statement of cash flows of Ibis, for such year, all
prepared in accordance with GAAP (except as noted therein or as disclosed to
the recipients thereof).  In addition,
Ibis shall include a summary report comparing the results from operations to
the budget approved by Ibis’ Board of Directors.  Such financial statements shall be signed by
the senior financial officer of Ibis or be prepared by a nationally recognized
accounting firm.

 

(c)           For as long as Abbott Holders hold at least
[***]% of the Shares, Ibis shall furnish to AMI: (i) beginning with the
2009 fiscal year, at least thirty (30) days prior to

 

A-14

 

the beginning of each fiscal
year, an annual budget (and a statement of the assumptions embodied therein)
for such fiscal year that has been approved by Ibis’ Board of Directors (and as
soon as available, any subsequent written revisions thereto); and (ii) as
soon as practicable after the end of each calendar quarter, and in any event
within forty five (45) days thereafter, a balance sheet of Ibis as of the end
of each such quarter, and a statement of income and a statement of cash flows
of Ibis for such quarter and for the current fiscal year to date, including a
comparison to plan figures for such period, prepared in accordance with GAAP
(except as noted thereon or as disclosed to the recipients thereof), with the
exception that no notes need be attached to such statements and year-end audit
adjustments may not have been made.  Such
financial statements shall be signed by the senior financial officer of Ibis or
be prepared by a nationally recognized accounting firm.  Ibis shall deliver the 2008 annual budget and
related statement of assumptions to AMI on the date hereof.

 

(d)           After the Call Period and for as long as
Abbott Holders hold at least [***]% of the Shares, AMI shall have the right to
visit and inspect any of the properties of Ibis, and to discuss the affairs,
finances and accounts of Ibis with Ibis’ officers and Board of Directors, and
to review such information as is reasonably requested all at such reasonable
times and as often as may be reasonably requested; provided that Ibis shall not be obligated under this Section 3.2(d) with
respect to information which the Ibis Board of Directors determines in good
faith is highly confidential or attorney-client privileged and should not,
therefore, be disclosed.

 

3.3          Sale of Shares.  Ibis
and Isis shall take all reasonable actions requested by any Abbott Holder in
connection with any Transfer by such Abbott Holder of the Shares to any
proposed transferee after the Call Option Expiration Date, including, without
limitation, cooperating in good faith with any due diligence efforts undertaken
by any proposed transferee.

 

3.4          Board Observer.  For
as long as Abbott Holders hold at least [***]% of the Shares, AMI shall be
entitled to have a representative of AMI attend all meetings of the Ibis Board
of Directors (which, in any event Ibis and Isis shall cause to occur not less
than once per calendar quarter upon no less than 5 Business Days prior written
notice to AMI) in a nonvoting observer capacity and, in this respect, Ibis
shall give such representative copies of all notices, minutes, consents, and other
material that it provides to its directors not less than 3 Business Days prior
to each such meeting, provided
that Ibis may withhold information or materials or exclude AMI’s representative
from meetings as reasonably necessary to preserve the attorney-client privilege
or in the event of a conflict of interest. 
AMI agrees, and any representative of AMI shall agree, that information
provided to AMI’s representative shall be Confidential Information of Ibis
subject to Sections 5.1, 5.2 and 5.3 of the Master Agreement.

 

3.5          Restrictions on
Transfer.  Prior to the Call Option Expiration Date,
Isis cannot Transfer any of the Capital Stock of Ibis held by it, except if (a) such Transfer is in
connection with a Change of Control of Isis, (b) such Transfer involves
all of the Capital Stock of Ibis that is owned by Isis and (c) the
surviving or acquiring entity assumes all of Isis’ obligations under the
Investment Documents.

 

3.6          Tag Along. 
Following the Call Option Expiration Date and for as long as any Shares
remain outstanding, if Isis proposes to Transfer any Capital Stock of Ibis for
consideration (other than a Transfer in connection with a Change of Control of
Isis that involves

 

A-15

 

all of the Capital Stock of
Ibis that is owned by Isis and an assignment is made by Isis in accordance with
Section 5.2 hereof), then:

 

(a)           Isis shall deliver a written notice (the “Tag
Along Notice”) to each holder of Shares (each, a “Tag Along Holder”)
at least twenty (20) Business Days prior to such proposed Transfer.  The Tag Along Notice shall include:

 

(i)            The principal terms of the proposed Transfer,
including (A) with respect to each class of Capital Stock to be
transferred, the purchase price for such Capital Stock, (B) with respect
to each class of Capital Stock to be transferred, the total number of shares of
such Capital Stock Isis proposes to Transfer, (C) the name and address of
the prospective transferee (the “Prospective Buyer”) and (D) the
draft sale agreement with the Prospective Buyer, if available (and if not
available, promptly after it becomes available); and

 

(ii)           With respect to each class of Capital Stock
to be transferred, an invitation to each Tag Along Holder to make an offer to
include in the proposed Transfer to the Prospective Buyer a number of Shares
held by such Tag Along Holder on the same terms and conditions as Isis is
proposing to Transfer such Capital Stock.

 

(b)           Within ten (10) Business Days after the
delivery of the Tag Along Notice, each Tag Along Holder desiring to make an
offer to include Shares in the proposed Transfer (each a “Participating
Seller” and, together with Isis, collectively, the “Tag Along Sellers”)
shall furnish a written notice (the “Tag Along Offer”) to Isis offering
to include, with respect to each class of Capital Stock to be transferred, a
number of Shares which such Participating Seller desires to have included in
the proposed Transfer.  With respect to
each class of Capital Stock to be transferred, each Tag Along Holder who does
not accept Isis’ invitation to make an offer to include any Shares in the
proposed Transfer shall be deemed to have waived all of its rights with respect
to such Transfer, and the Tag Along Sellers shall thereafter be free to
Transfer to the Prospective Buyer, at a per share price no greater than the per
share price set forth in the Tag Along Notice and on other principal terms
which are not materially more favorable to the Tag Along Sellers than those set
forth in the Tag Along Notice, without any further obligation to such
non-accepting Tag Along Holder.

 

(c)           Isis shall attempt to obtain the inclusion in
the proposed Transfer of the entire number of Shares which each of the Tag
Along Sellers requested to have included in the Transfer (as evidenced in the
case of Isis by the Tag Along Notice and in the case of each Participating
Seller by such Participating Seller’s Tag Along Offer).  In the event Isis shall be unable to obtain
the inclusion of such entire number of Shares in the proposed Transfer, the
number of shares of Ibis Common Stock to be sold in such proposed Transfer
shall be allocated to each Tag Along Seller in proportion to, as nearly as
practicable, the proportion the Shares held by such Tag Along Seller bears to
the total number of shares of Ibis Common Stock held by all the Tag Along
Sellers.  To the extent a Tag Along
Seller elects to include less than its full allocation of Shares in the
proposed Transfer, the portion not included in the proposed Transfer shall be
allocated to the Tag Along Sellers (who are not able to include in the proposed
Transfer all of the Shares identified in their Tag Along Offer) in the same
manner as set forth in this Section 3.6(c).

 

A-16

 

(d)           If the Tag-Along Sellers have not completed
the proposed Transfer by the end of the 180th day following the
delivery of the Tag Along Notice, each Participating Seller shall be released
from its obligations under its Tag Along Offer, the Tag Along Notice shall be
null and void, and it shall be necessary for a separate Tag Along Notice to be
furnished, and the terms and provisions of this Section 3.6
separately complied with, in order to consummate such proposed Transfer
pursuant to this Section 3.6, unless the failure to complete such
proposed Transfer resulted from any failure by any Participating Seller to
comply with the terms of this Section 3.6.

 

3.7          Right of Participation. 
Prior to the Call Option Expiration Date Ibis shall not, and shall not
permit any of its Subsidiaries (Ibis and any such Subsidiary, an “Issuer”)
to, issue or sell any Capital Stock or enter into any agreements providing for
the issuance (contingent or otherwise) of, any of its Capital Stock (each an “Issuance”
of “Subject Securities”).  After
the Call Option Expiration Date and for as long as any Shares remain
outstanding, no Issuer shall initiate or commence any Issuance, except in
compliance with the provisions of this Section 3.7.

 

(a)           Offer.  Not fewer than ten
(10) Business Days prior to the consummation of an Issuance, a notice (the
“Participation Notice”) shall be furnished by the Issuer to each holder
of Shares (the “Participation Offerees”).  The Participation Notice shall include:

 

(i)            The principal terms of the proposed Issuance,
including (A) the amount and kind of Subject Securities to be included in
the Issuance, (B) the number of Equivalent Shares represented by such
Subject Securities (if applicable), (C) the percentage of the total number
of Equivalent Shares outstanding as of immediately prior to giving effect to
such Issuance that are held by such Participation Offeree (the “Participation
Portion”), (D) the maximum and minimum price per unit of the Subject
Securities, (E) the name and address of the Person to whom the Subject
Securities shall be issued (the “Prospective Subscriber”) and
(F) the sale agreement with the Prospective Subscriber, if available (and
if not available, promptly after it becomes available); and

 

(ii)           An offer by the Issuer to issue, at the
option of each Participation Offeree, to such Participation Offeree such
portion of the Subject Securities to be included in the Issuance as may be
requested by such Participation Offeree (not to exceed the Participation
Portion of the total amount of Subject Securities to be included in the
Issuance), on the same terms and conditions, with respect to each unit of
Subject Securities issued to the Participation Offerees, as each of the
Prospective Subscribers shall be issued units of Subject Securities.

 

(b)           Each Participation Offeree desiring to accept
the offer contained in the Participation Notice shall send a written commitment
to the Issuer within ten (10) Business Days after the delivery of the
Participation Notice specifying the amount of Subject Securities (not in any event
to exceed the Participation Portion of the total amount of Subject Securities
to be included in the Issuance) which such Participation Offeree desires to be
issued (each a “Participating Buyer”). 
Each Participation Offeree who has not so accepted such offer shall be
deemed to have waived all of his rights with respect to the Issuance, and the
Issuer shall

 

A-17

 

thereafter be free to issue
Subject Securities in the Issuance to the Prospective Subscriber and any
Participating Buyers, at a price not less than the minimum price set forth
in the Participation Notice and on other principal terms not materially more
favorable to the Prospective Subscriber than those set forth in the
Participation Notice, without any further obligation to such non-accepting
Participation Offerees.  If, prior to
consummation, the terms of such proposed Issuance shall change with the result
that the price shall be less than the minimum price set forth in the
Participation Notice or the other principal terms, when taken as a whole, shall
be materially more favorable to the Prospective Subscriber than those set forth
in the Participation Notice, it shall be necessary for a separate Participation
Notice to be furnished, and the terms and provisions of this Section 3.7
shall be separately complied with, in order to consummate such Issuance
pursuant to this Section 3.7.

 

(c)           Time Limitation.  If
at the end of the 180th day following the date of delivery of the
Participation Notice the Issuer has not completed the Issuance, each
Participating Buyer shall be released from its obligations under the written
commitment, the Participation Notice shall be null and void, and it shall be
necessary for a separate Participation Notice to be furnished, and the terms
and provisions of this Section 3.7 shall be separately complied
with, in order to consummate such Issuance pursuant to this Section 3.7.

 

(d)           Excluded Transactions.  The
provisions of this Section 3.7 shall not apply to Issuances by any
Issuer as follows:

 

(i)            after the Call Option Expiration Date any
Issuance of Subject Securities upon the exercise or conversion of any
Equivalent Shares issued in compliance with the provisions of this Section 3.7,;

 

(ii)           after the Call Option Expiration Date any Issuance
of Subject Securities to officers, employees, directors or consultants of an
Issuer in connection with such Person’s employment, consulting arrangements or
directorship with an Issuer;

 

(iii)         any Issuance of Subject Securities in
connection with bona fide, third party strategic commercial transactions as
approved by the Ibis Board of Directors, unless such transaction would result
in a Change of Control of Ibis where the holders of the Shares would receive
less than the full Make Whole Payment under Section 4.1;

 

(iv)          after the Call Option Expiration Date any
Issuance of Subject Securities, pursuant to an Initial Offering where the
payment contemplated in Section 4.3 is made;

 

(v)            the Issuance of Subject Securities to AMI in
connection with the Financing Closing or the Subsequent Closing; or

 

(vi)          after the Call Option Expiration Date any
Issuance of Subject Securities in connection with any stock split, stock
dividend, stock combination or stock reclassification.

 

A-18

 

3.8          Termination.

 

The provisions of
subsections (b)-(d) of Section 3.2, and Sections 3.3
through 3.5, shall terminate following the closing of an Initial Offering and
the provisions of Section 3.6 and Section 3.7 shall
terminate following the earlier of (i) a Change of Control of Ibis and
(ii) the closing of an Initial Offering.

 

4.             Make Whole Provision.

 

4.1           Make Whole Payment. Upon any Make Whole Event, before any
distribution or payment shall be made to the holders of any Capital Stock other
than holders of Shares with respect to the Shares, holders of Shares shall be
entitled to be paid, pro rata according to each such holder’s ownership of
Shares, out of the proceeds of such Make Whole Event legally available for
distribution or payment an aggregate amount equal to the sum of
(a) $20,000,000, plus interest thereon at an annual rate of 3% calculated
from the date of the Financing Closing on the basis of a 360-day year and
(b) if AMI exercises the Subscription Right and acquires the Additional
Shares, $20,000,000, plus interest thereon at an annual rate of 3% calculated
from the date of the Subsequent Closing on the basis of a 360-day year (the “Make
Whole Payment”) until the date of such distribution or payment.  If, upon any such Make Whole Event, the
proceeds of such Make Whole Event are insufficient to make payment in full to
all holders of Shares, then all such proceeds shall be paid or distributed to
holders of Shares, pro rata according to each such holder’s ownership of
Shares, without any payment or distribution to any other holders of Capital
Stock.  If the consideration to be
received in such Make Whole Event is securities or property other than cash,
such property’s value shall be deemed its fair market value as determined in good
faith by Ibis’ Board of Directors on the date such determination is made.

 

4.2          Remaining Proceeds.  After
distribution or payment of the Make Whole Payment, the remaining proceeds of
such Make Whole Event legally available for distribution, if any, shall
(a) next be distributed ratably to Isis (or any other holders of Common
Stock (other than the Shares) after the Call Option Expiration Date) up to an
amount per share of Common Stock equal to the amount per Share paid to holders
of Shares with respect to the Make Whole Payment and (b) then distributed
ratably to all holders of Common Stock (including holders of Shares).

 

4.3          Initial Offering Termination.

 

The provisions of this Section 4
shall terminate following the closing of an Initial Offering if, in connection
with the closing of such Initial Offering, each Holder receives its pro rata
share of an aggregate amount equal to the interest
payable on each of [***]at an annual rate of [***]calculated from the date of
the [***]on the basis of a [***]day year[***], at an annual rate of [***]%
calculated from the date of [***]on the basis of a [***]-day year, in each case
until the closing of such Initial Offering, payable, at Ibis’ election either
in cash or in Common Stock based on the price per share of such Initial
Offering.  If Ibis issues the Holders
additional shares of Common Stock under this Section 4.3, such
shares will be considered Shares under this Agreement.

 

A-19

 

4.4           Post Call Period Financing.

 

In the event that, after the
Call Option Expiration Date, Ibis, in compliance with Section 3.7,
issues any Capital Stock, then any liquidation preference or other similar
preferential distribution rights embodied in the terms of such Capital Stock
shall be subordinate to the Holders’ right to receive the Make Whole Payment
upon a Make Whole Event pursuant to this Section 4.  Subject to the foregoing, to the extent
reasonably necessary to facilitate such Issuance, the Parties will cooperate in
good faith to amend or replace this Section 4 and/or amend Ibis’
Certificate of Incorporation.

 

5.             Miscellaneous.

 

5.1          Governing Law; Alternative
Dispute Resolution.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard
to principles of conflicts of law.  The
Parties agree that any dispute arising from or relating to this Agreement shall
be exclusively resolved by the Alternative Dispute Resolution provisions set
forth in Exhibit D to the Master Agreement, the result of which shall be
binding upon the Parties.

 

5.2          Assignment. 
Except as expressly permitted herein, no Party hereto may assign this
Agreement or its rights and obligations hereunder without the prior written
consent of the other Parties; provided that
any Abbott Holder may assign its rights and obligations hereunder in connection
with its Transfer of Shares in accordance with the terms of this Agreement if
(a) within [***] after such Transfer, such Abbott Holder furnishes to Ibis
written notice of the name and address of such transferee and (b) such
transferee agrees in writing to be bound by the terms of this Agreement; provided further that Isis may assign its
rights and obligations in connection with a Change of Control of Isis
if such Transfer involves all of the Capital Stock of Ibis that is owned
by Isis and the surviving or acquiring entity assumes all of Isis’
obligations under the Investment Documents. 
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon and be enforceable by the
Parties and their respective successors, assigns, heirs, executors and
administrators.

 

5.3          No Third Party Beneficiaries. 
Except as expressly provided in Section 2.9, this Agreement
shall not confer any rights or remedies upon any Person other than the parties
hereto and their respective successors and permitted transferees and assigns.

 

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

 

5.5          Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one

 

A-20

 

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.

 

5.6          Amendment and Waiver.  This Agreement may be amended or
modified, and the rights and obligations of the Parties under this Agreement
may be waived, only upon the written consent of each Party.

 

5.7          Termination.  This
Agreement shall terminate and be of no further force or effect upon a Make
Whole Event pursuant to which the Make Whole Payment with respect to all the
Shares has been indefeasibly made.

 

5.8          Notices.  All
notices or other communication that are permitted or required under this
Agreement shall be made pursuant to the terms of the Master Agreement.

 

5.9          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, shall be deemed to refer to the masculine, feminine
or neutral, singular or plural, as to the identity of the Parties hereto may
require.

 

5.10        Expenses.  Each
Party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.

 

5.11        Entire Agreement.  This
Agreement constitutes the full and entire understanding and agreement between
the Parties with regard to the subjects hereof and no party shall 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.

 

5.12        Titles and Subtitles.   The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.

 

A-21

 

5.13        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 hereunder or
under Ibis’ Certificate of Incorporation, shall impair any such right, power or
remedy, nor shall 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
hereunder or under Ibis’ Certificate of Incorporation or any waiver on such
Party’s part of any provisions or conditions of this Agreement or Ibis’
Certificate of Incorporation must be in writing and shall be effective only to
the extent specifically set forth in such writing.  All remedies, either under this Agreement,
Ibis’ Certificate of Incorporation, bylaw, or otherwise afforded to any Party,
shall be cumulative and not alternative.

 

[THIS
SPACE INTENTIONALLY LEFT BLANK]

 

A-22

 

IN WITNESS
WHEREOF, the parties
hereto have executed this INVESTOR RIGHTS
AGREEMENT as of the date set forth in the first paragraph hereof.

 

 

	
   

  	
  ISIS PHARMACEUTICALS, INC.

  	 

	 
	
   

  	
   

  
	 
	
   

  	
   

  
	
   

  	
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  IBIS BIOSCIENCES, INC.

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	
   

  	
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  ABBOTT MOLECULAR INC.

  
	 
	
   

  	
   

  
	 
	
   

  	
   

  
	
   

  	
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SIGNATURE PAGE FOR INVESTOR RIGHTS AGREEMENT

 

 

EXHIBIT B

 

[CALL OPTION AGREEMENT FILED SEPARATELY AS EXHIBIT 10.5 TO
REGISTRANT’S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 2008]

 

B-1

 

EXHIBIT
C

 

TERMS
OF PERMITTED EMPLOYEE COMPENSATION PLAN

 

AMI and Isis will mutually agree on the [***] package
payable by [***].  The money available
for such package, in the aggregate, will be [***] of which shall be [***] the
Acquisition Closing.  Any funds left in [***] would
be released to [***].

 

C-1

 

EXHIBIT
D

 

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.

 

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.

 

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.

 

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 Affiliates.

 

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

 

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

 

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

 

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.

 

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

 

D-1

 

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.

 

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

 

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.

 

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.

 

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.

 

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

 

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.

 

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.

 

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. T he neutral(s) shall not issue any written opinion or
otherwise explain the basis of the ruling.

 

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:

 

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.

 

D-2

 

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 between 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.

 

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.

 

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.

 

All ADR hearings shall be conducted in the English
language.

 

D-3

 

EXHIBIT
E

 

PRESS
RELEASE

 

Isis Announces Equity Investment in Ibis Biosciences
Subsidiary by Abbott; Option Acquired to Purchase Remaining Ibis Equity

 

- Conference call webcast Thursday, January 31,
2008, 8:30 a.m. EST at www.isispharm.com

 

CARLSBAD, Calif., Jan 31, 2008 /PRNewswire-FirstCall
via COMTEX News Network/ — Isis Pharmaceuticals, Inc. (Nasdaq: ISIS)
announced today that Abbott is investing up to $40 million in Ibis Biosciences, Inc.,
an Isis subsidiary. The investment will allow Ibis to further develop the Ibis
T5000(TM) Biosensor System, which offers a unique solution for rapid
identification and characterization of infectious agents that can identify
virtually all bacteria, viruses and fungi, and can provide information about
drug resistance, virulence and strain type of these pathogens within a few
hours.

 

Under the terms of the agreement, Abbott will
initially acquire approximately 10.25 percent of the equity in Ibis for $20
million. Abbott will have the right to invest an additional $20 million before July 31,
2008 for a total of 18.6 percent of Ibis equity. Abbott will also receive an
exclusive option to purchase the remaining equity in Ibis for an additional
$175 to $195 million through June 30, 2009 plus an earn out tied to achievement
of certain cumulative sales. The option exercise price can increase to up to
$190 to $210 million with Ibis’ successful completion of pre-negotiated
milestones.

 

“This investment by Abbott reflects the significant
value we have built through our Ibis business,” said Michael Treble, President
of Ibis. “We have been successful in commercializing our products for various
government, epidemiology and clinical research applications, and we are excited
about expanding our markets to hospital-based infections and, eventually, to
diagnostics. We believe that this investment will allow us to accelerate the
evolution of the Ibis technology to address our biggest market opportunity:
clinical diagnostics.”

 

“Ibis is a tangible example of the value of the innovation
taking place at Isis and of our strategy,” said B. Lynne Parshall, COO and CFO
of Isis. “The investment by Abbott provides Ibis the funding to take the key
next steps in enhancing its value. Because of the transaction structure, even
if the option is exercised, Isis shareholders will continue to benefit from
Ibis’ success through the earn out provision. As a result we believe this is a
very attractive transaction for Isis shareholders.”

 

Conference Call

 

At 8:30 a.m. Eastern Standard Time today, January 31,
2008, Isis will conduct a live webcast conference call to discuss this
transaction. Interested parties may access the webcast at
http://www.isispharm.com or listen to the call by dialing 877-440-5796. A
webcast replay will be available for a limited time at the same address. 

 

E-1

 

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 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, including through its partner,
Bruker Daltonics, a subsidiary of Bruker BioSciences Corporation. Additional
information about Ibis can be found by selecting the Ibis link from Isis’ homepage at
http://www.isispharm.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 18 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. Ibis
Biosciences, Inc., Isis’ majority-owned subsidiary, is developing and
commercializing the Ibis T5000(TM) Biosensor System, a revolutionary system to
identify infectious organisms. 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
http://www.isispharm.com.

 

This release includes forward-looking statements
regarding Abbott’s investment in Isis’ subsidiary, Ibis, and the development
and commercialization of the Ibis T5000 Biosensor System and Ibis’ technology.
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
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, 2006, and
its quarterly report 

 

E-2

 

on Form 10-Q for the quarter ended September 30,
2007, which are on file with the SEC. Copies of this and other documents are
available from the Company.

 

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

 

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.

 

E-3

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