Document:

Exhibit
10.34

EXECUTION COPY

SUPPLEMENTAL
RETIREMENT AGREEMENT

THIS SUPPLEMENTAL RETIREMENT
AGREEMENT (this “Agreement”), is entered by and between MOTHERS WORK,
INC., a Delaware Corporation (the “Company”), and DAN W. MATTHIAS
(the “Executive”);

WHEREAS, the Executive
is presently employed by the Company in a key executive position and possesses
substantial talent, ability and unique business experience which has been and
will continue to be of great value to the Company; and

WHEREAS, in
consideration for the Executive’s past contributions to the Company and his continued
service with the Company, the Company desires to provide the Executive with
supplemental retirement benefits upon his cessation of service with the
Company;

NOW, THEREFORE,
intending to be legally bound, the parties agree as follows:

1.            DEFINITIONS.  For purposes of this Agreement, the
following terms will have the meanings defined below:

(a)           “Actuarial Present Value” means, for any stream of
payments as of any date, the actuarial present value of those payments on the
date specified, determined using the 1994 Group Annuity Unisex Mortality table
and assuming a 6% rate of interest.

(b)           “Benefit” means the benefit payable to the
Executive pursuant to the terms of this Agreement.

(c)           “Board” means the Board of Directors of the
Company, as constituted from time to time; provided,
however, that if the Board appoints a committee to perform some or
all of the Board’s administrative functions hereunder, references to the “Board”
will be deemed to also refer to that committee in connection with matters
performed by that committee.

(d)           “Cause” will have the same meaning as is set forth
in the Employment Agreement.

(e)           “Change in Control” will have the same meaning as
is set forth in the Employment Agreement.

(f)            “Code” means the Internal Revenue Code of 1986, as
amended, and any successor thereto.

(g)           “Deemed Final Pay” means $531,803 (the “Base
Salary”), increased by 3% per year on each October 1st that occurs after
the Effective Date and before the Executive ceases to be employed by the
Company, provided, however, that no
increases to Deemed Final Pay will be made on or after October 1, 2012.

(h)           “Effective Date” means the date this Agreement is
fully executed by both parties hereto.

(i)            “Employment Agreement” means that certain Second Amended
and Restated Employment Agreement between the Executive and the Company dated
March 2, 2007, as amended from time to time.

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

(k)           “Good Reason” will have the same meaning as is set
forth in the Employment Agreement.

(l)            “Plan
Administrator” means the Board.

(m)          “Separation from Service” means a separation from
service as defined in Prop. Treas. Reg. § 1.409A-1(h).

(n)           “Vested
Percentage” means as of any given date, that portion of the Benefit that is
then vested, as determined in accordance with Section 2 hereof.

2.            VESTING OF BENEFIT.

(a)           Vesting
Based on Continued Service.  Subject
to the remainder of this Section 2, the Vested Percentage will be determined as
follows:

(i)            The
Vested Percentage will be 331/3%
on the Effective Date;

(ii)           Subject
to Section 2(b), the Vested Percentage will be increased by 15% on each
September 30th occurring after the Effective Date, provided the Executive has
remained in continuous employment with the Company through that date; and

(iii)          In
no event will the Vested Percentage exceed 100%.

(b)           Part-Time Service. 
If the Executive elects “part-time” status in accordance with Section 2.2
of the Employment Agreement, the reference to “15%” in Section 2(a)(ii) will thereafter
be replaced with a reference to “7.5%.”

(c)           Accelerated Vesting.  The Vested Percentage will be 100% if, following
a Change in Control, the Executive’s employment by the Company ceases due to
the Executive’s resignation with Good Reason or termination by the Company
without Cause.

3.            AMOUNT, FORM
AND TIMING OF BENEFIT.

(a)           Form of Benefit. 
The Benefit will be paid in cash, in a single lump sum and will be
subject to applicable tax withholding.

(b)           Amount of Benefit. 
The amount of the Benefit will be equal to: (i) the Actuarial Present
Value, determined as of the date of Executive’s Separation from Service, of an 

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immediately commencing single life annuity with
annual payments equal to 60% of the Executive’s Deemed Final Pay, multiplied by
(ii) the Vested Percentage.

(c)           Time Of Payment.

(i)            Subject to Section 2(c)(ii), the
Benefit will be paid within 60 days following the Executive’s Separation from
Service.

(ii)           If the
payment of the Benefit is subject to the requirements of Prop. Treas. Reg. §
1.409A-3(g)(2) (or any successor provision), the Benefit will be paid on
the first day of the seventh month following the Executive’s Separation from
Service (or, if earlier, the date of the Executive’s death).

(d)           One Payment Only. 
Only one Benefit will be paid hereunder and payment of that Benefit will
constitute a full discharge of all the Company’s liabilities hereunder.  For avoidance of doubt, if a Benefit is paid
before the amount of the Benefit is maximized (e.g., because the Vested
Percentage is then less than 100% or because Deemed Final Pay has not yet been
maximized), a subsequent return to employment will not create a right to any
additional or incremental payment hereunder.

(e)           Payment to Beneficiary.  By delivery of notice in writing to the
Company, the Executive may designate a beneficiary to receive his Benefit in
the event of the Executive’s death (i) while still employed, or (ii) after a
Separation from Service but before payment of the Benefit.  In the event of the Executive’s death while
still employed, the amount of the Benefit will be determined as though the
Executive had experienced a Separation from Service immediately prior to his
death.  Any beneficiary designation that
is duly made will supersede all prior designations.  If no designation is duly made, the Executive’s
beneficiary will be his spouse or, if the Executive is unmarried at the time of
his death, the Executive’s estate.

4.            FUNDING.

(a)           Benefits payable under this Agreement will be “unfunded,”
as that term is used in Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of
ERISA with respect to unfunded plans maintained primarily for the purpose of
providing deferred compensation to a select group of management or highly
compensated employees.  Accordingly, except
as otherwise provided below in Section 4(b), the Company will not be required
to segregate or earmark any of its assets for the benefit of the Executive, and
the Executive will have only a contractual right against the Company for
benefits hereunder.

(b)           The
Company will establish a grantor trust, the assets of which will be used
exclusively to provide benefits to the Executive pursuant to this Agreement
(subject, however, to the claims of the general creditors of the Company).  Unless otherwise agreed between the Company
and Executive, the trustee of that grantor trust will be Wachovia Bank,
National Association.  An initial deposit
will be made to that trust within 60 days following the Effective Date.  Subsequent deposits will be made within 60
days following the end of each fiscal year of the Company ending after the
Effective Date and before the Benefit is paid. 
Deposits will be made in cash or marketable securities and will in each
case be an amount sufficient, on an actuarial basis, to cause the total assets
of the trust immediately following the 

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deposit to reasonably approximate the Company’s
then current obligation hereunder if the Executive then experienced a
Separation from Service.  After the Benefit
has been paid, any amounts remaining in the trust will be distributed to the
Company.

(c)           The
Company will exercise commercially reasonable efforts to cause the grantor
trust and its assets described in the preceding paragraph to be excluded from
any security interest granted by the Company to secure its debts, including
under the credit agreements it is currently negotiating.  To the extent the Company is successful in
excluding grantor trust assets from security interests granted under such
credit agreements, but subsequently negotiates additional or replacement credit
agreements, the Company agrees that it will (i) not agree in any such
additional or replacement credit agreement to grant any security interest to
any additional or replacement lender in any amounts held in the trust and
excluded from any then existing lender’s security interests at the time the
Company enters into such additional or replacement credit agreement, and (ii)
use commercially reasonable efforts to exclude from any additional or
replacement lender’s security interests any assets to be contributed to the
trust after the date of such additional or replacement credit agreement.  Nothing in this paragraph will be deemed to
exclude the assets of the grantor trust from the reach of the Company’s general
creditors in the event of insolvency or bankruptcy.

5.            ADMINISTRATION.

The Board, as Plan Administrator, will have
full power, authority and discretion to (i) supply omissions, reconcile
inconsistencies and to otherwise interpret this Agreement, (ii) prescribe,
amend and rescind any rules, forms and procedures as it deems necessary or
appropriate for the proper administration of this Agreement, and (iii) make other
determinations and take other such actions as it deems necessary or advisable
in carrying out its duties under this Agreement.  All action taken by the Plan Administrator
arising out of, or in connection with, the administration of this Agreement or
any rules adopted hereunder will be final, conclusive and binding upon the Company
and the Executive.

6.            CLAIMS PROCEDURE.

(a)        
Pursuant to the requirements of ERISA, claims for benefits hereunder will be
handled in accordance with 29 CFR §2560.503-1, as such regulations of the
United States Department of Labor may from time to time be amended, as follows:

(i)            In
General.  If the Executive believes
that he is being denied any rights or benefits under this Agreement, he may
file a claim in writing with the Plan Administrator.  If any such claim is wholly or partially
denied, the Plan Administrator will notify the Executive of its decision in
writing.  Such notification will contain
(1) specific reasons for the denial, (2) specific reference to pertinent
provisions of this Agreement, (3) a description of any additional material or
information necessary for the Executive to perfect such claim and an
explanation of why such material or information is necessary, and (4)
information as to the steps to be taken if the Executive wishes to submit a
request for review.  Such notification
will be given within 90 days after the claim is received by the Plan
Administrator (or within 180 days, if special circumstances require an
extension of time for processing the claim and if written notice of such
extension and circumstances is given to the Executive within the initial 90-day
period).  

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If such notification is not given within the
specified period, the claim will be deemed denied and the Executive may then
appeal the denial of his claim.

(ii)           Appeals.  Within 60 days after the date on which the Executive
receives a written notice of a denied claim (or, if applicable, within 60 days
after the date on which denial is deemed to have occurred) the Executive (or
his duly authorized representative) may (1) file a written request with the
Plan Administrator for a review of his denied claim and of pertinent documents
and (ii) submit written issues and comments to the Plan Administrator.  The Plan Administrator will notify the
Executive of its decision in writing. 
Such notification will be written in a manner calculated to be
understood by the Executive and will contain specific reasons for the decision
as well as specific references to pertinent provisions of this Agreement.  The decision on review will be made within 60
days after the request for review is received by the Plan Administrator (or
within 120 days, if special circumstances, such as an election by the Plan
Administrator to hold a hearing, require an extension of time for processing
the request, and if written notice of such extension and circumstances is given
to the Executive within the initial 60-day period).  If the decision on review is not made within
such period, the claim will be considered denied.

(b)           Mediation.  If the Executive is dissatisfied with the
Plan Administrator’s decision upon appeal, the Executive agrees that he will
make a good faith attempt to resolve his claim by submitting the matter to
mediation in Philadelphia, Pennsylvania before resorting to any other
proceeding or forum.  The parties will
submit the matter to mediation within 5 business days of the determination that
there is a dispute and will choose a mediator within 5 business days following
such submission, provided that if the parties cannot agree on a mediator, the
mediator will be selected by the American Arbitration Association.  Within 30 days after the selection of the
mediator, the parties and their respective attorneys will meet with the
mediator for two mediation sessions of at least two hours each.  If the claim or dispute cannot be settled
during such mediation sessions (or a mutually agreed continuation of those
sessions), either of the parties may give the mediator and the other party
written notice declaring the end of the mediation process.  All discussions connected with this mediation
provision will be confidential and treated as compromise and settlement
discussions.  Accordingly, nothing
disclosed in such discussions may be used for any purpose in any later
proceeding.

7.            MISCELLANEOUS PROVISIONS.

(a)           Entire Agreement. 
This Agreement represents the entire agreement between the parties
hereto relating to the subject matter hereof, and merges and supersedes all
prior and contemporaneous discussions, agreements and understandings of every
nature regarding that subject matter.

(b)           Employment Status. This Agreement does not
constitute a contract of employment or impose upon the Executive any obligation
to remain as an employee, nor does it impose on the Company any obligation (i)
to retain the Executive as an employee or (ii) to limit in any respect the
right of the Company to discharge the Executive at any time for any reason.  For avoidance of doubt, service as a director
will not, itself, constitute employment by the Company for purposes of this
Agreement.

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(c)           Non-alienation. 
Except as expressly provided herein with respect to payment to a
designated beneficiary in the event of the Executive’s premature death, the
rights and interests of the Executive under this Agreement will not be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge
or encumbrance by the Executive or any person claiming under or through the
Executive, nor will they be subject to the debts, contracts, liabilities or
torts of the Executive or anyone else prior to payment.

(d)           Notices. Any notices provided hereunder must be in
writing, and such notices or any other written communication will be deemed
effective upon the earlier of personal delivery (including personal delivery by
facsimile) or the third day after mailing by first class mail, to the Company
at its primary office location and to the Executive at the Executive’s address
as listed in the Company’s payroll records.  Any payments made by the Company to the Executive
under the terms of this Agreement will be delivered to the Executive either in
person or at the address as listed in the Company’s payroll records.  

(e)           Legal Construction. All questions concerning the
construction, validity and interpretation of this Agreement will be governed by
the laws of the Commonwealth of Pennsylvania, without regard to such state’s
conflict of laws rules, to the extent that such laws are not preempted by
ERISA.

(f)            Amendment.  This
Agreement may only be amended by a writing signed by each of the parties
hereto.

(g)           Counterparts.  This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement on the respective
date(s) below indicated.

	
  MOTHERS WORK, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Edward M. Krell

  	
    

  	
  Date:

  	
  March 2, 2007

  	
    

  
	
  Name:

  	
  Edward M. Krell

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice President - Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXECUTIVE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Dan C. Matthias

  	
    

  	
  Date:

  	
  March 2, 2007

  	
    

  
	
   

  	
  Dan C. Matthias

  	
   

  	
   

  
							

 

 6Exhibit 10.1

	
   

  	
  CONFIDENTIAL TREATMENT
  REQUESTED  

  
	
   

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

  

 

LICENSE
AGREEMENT

THIS LICENSE AGREEMENT
is made and entered into effective as of March 7, 2007 (the “Effective Date”),
by and between Atlantic Healthcare (UK) Limited (registered
number 6025726), whose registered office is MoFo Notices Limited, 7th Floor, City Point, One Ropemaker Street,
London EC2Y 9AW (proposed to be renamed [***] Limited) (“Atlantic”) and Isis Pharmaceuticals, Inc., having
principal offices at 1896 Rutherford Road, Carlsbad, CA 92008 (“Isis”).   Atlantic and Isis each may be referred to
herein individually as a “Party,” or collectively as the “Parties.”

WHEREAS, Isis wishes to license
to Atlantic the drug known as Alicaforsen (also known as ISIS 2302) so that
Atlantic may develop and commercialize Alicaforsen Products, on the terms set
forth below;

WHEREAS, Isis wishes to
collaborate with Atlantic to discover, develop, and commercialize Second
Generation ICAM-1 Products (as defined below);

WHEREAS, Isis is willing to grant Atlantic a license
to develop and commercialize Second Generation ICAM-1 Products on the terms set
out below;

NOW, THEREFORE, the Parties do
hereby agree as follows:

ARTICLE 1
- DEFINITIONS

Capitalized terms used in this Agreement and not otherwise defined
herein have the meanings set forth in Appendix 1.

ARTICLE 2
- 

ALICAFORSEN GRANT OF RIGHTS

Section 2.1      Alicaforsen
License Grant.

2.1.1       Subject to the
terms and conditions of this Agreement, Isis hereby grants to Atlantic:

(i)            an
exclusive, worldwide license under the Alicaforsen Patents and the ICAM-1
Specific Patents solely to develop, make, have made, use, sell, offer for sale,
have sold and import Alicaforsen API and Alicaforsen Products. The license
granted to Atlantic under this Section 2.1.1(i) is sublicensable only in
connection with a license of rights to an Alicaforsen Product to a Third Party
for the continued development, manufacture and commercialization of that
Alicaforsen Product in accordance with the terms of this Agreement; and

(ii)           a
non-exclusive, worldwide license under the Excluded Manufacturing IP solely to
make and have made Alicaforsen API. The license granted to Atlantic under this
Section 2.1.1(ii) is sublicensable to a Third Party for the manufacture of
Alicaforsen API in accordance with the terms of this Agreement.

*** CONFIDENTIAL
TREATMENT REQUESTED

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2.1.2       The Parties agree that Atlantic shall have no right
to exercise the license right granted to it under Section 2.1.1(ii) to make and
have made Alicaforsen API unless and until it is permitted to do so under the
terms of the Manufacturing Agreement.

Section 2.2      Data Transfer.

2.2.1       Promptly
after the Effective Date, Isis will transfer and assign to Atlantic all of Isis’
right, title and interest in and to (i) the Regulatory Documentation, data,
results and information related to testing and studies of Alicaforsen
(including clinical data, analytical test results and non-clinical pharmacology
and safety data) in the possession of Isis on the Effective Date to the extent
such data, results and/or information is necessary for the continued
development and commercialization of Alicaforsen Products (“Isis Data”), and
(ii) the know how which is owned by or licensed to Isis at the Effective Date
that relates to the formulation of Alicaforsen Product from Alicaforsen API, but excluding the Excluded Manufacturing IP (the “Isis
Manufacturing Know How”).

ARTICLE 3 - 

ALICAFORSEN PRODUCT DEVELOPMENT

Section 3.1      Development/Commercialization/Regulatory
Responsibilities.  Unless Isis
exercises its reversion rights under Section 11.2,  Atlantic is fully responsible for the continued development
and commercialization of Products and undertakes to Isis to use Commercially
Reasonable Efforts to develop Products for all commercially reasonable
indications, including Alicaforsen Products for the treatment of pouchitis and
to make its First Commercial Sale of an Alicaforsen Product for the treatment
of pouchitis in the USA as soon as practicable.  Atlantic hereby assumes all regulatory
responsibilities in connection with Products, including sole responsibility for
all Regulatory Documentation and for obtaining all Regulatory Approvals.  Atlantic will comply with all Applicable Laws
in connection with the development and commercialization of Products.

Section 3.2      Joint Development
Committee.

3.2.1       To
promote the successful development of the Products, the Parties will establish
a Joint Development Committee (the “JDC”) which will be comprised of one Isis
representative and one or more representatives of Atlantic (“Committee Members”).  A Party may replace any of its Committee
Member(s) by notice to the other Party. 
Each Committee Member shall be appropriately qualified and experienced
in order to make a meaningful contribution to JDC meetings.  The purpose of the JDC is to provide a forum
for the Parties to share information and knowledge on the on-going research and
development of the Alicaforsen Products, including sharing scientific direction
and data, discussing the current development and regulatory status of
Alicaforsen Products, discussing regulatory or quality assurance issues in
relation to the Alicaforsen API and coordinating the conduct of the Second
Generation ICAM-1 Research Program in accordance with the Agreement.  The JDC shall conduct its discussions in good
faith with a view to operating to the mutual benefit of the and in furtherance
of the successful marketing of Alicaforsen Products.  The JDC shall meet at Isis’ corporate offices
located in Carlsbad, California, USA where such meeting is not held by
video-conference or telephone conference, as often as the Committee Members may
determine but in any event not 

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less than once
per calendar quarter.  Each JDC meeting
shall be chaired by a Committee Member nominated by Atlantic.

3.2.2       The
JDC will continue in existence for three years after the Effective Date or
until completion of the Second Generation ICAM-1 Research Program, which ever
is the later, subject to extension by mutual agreement of the Parties.

Section 3.3      Safety
Database.

3.3.1       Isis maintains a
database that includes information regarding the tolerability of its drug
compounds, individually and as a class, including information discovered during
pre-clinical and clinical development (the “Isis Database”).  In an effort to maximize understanding of the
safety profile and pharmacokinetics of Isis compounds, Atlantic will cooperate
in connection with populating the Isis Database.  Atlantic will promptly provide Isis with
copies of toxicology, pharmacokinetic and serious adverse event reports related
to each Alicaforsen Product.  In
addition, in connection with any reported serious adverse event, Atlantic will
provide Isis (promptly following such event and prior to any communication with
a Regulatory Authority or ethics committee) in a mutually acceptable format,
the following patient data where it is reasonably available to Atlantic once
informed of a serious adverse event and any other data Atlantic reasonably
deems relevant to the Isis Database: (a) basic statistics (including age, race,
gender, weight, height); (b) medical history; (c) concurrent medication usage;
(d) particulars of the event (verbatim term, MedDRA term & system organ
class, onset date, resolution date, relation to Alicaforsen Product,
severity/seriousness, outcome); (e) dosing history (dates, quantity of
Alicaforsen Product administered, method of administration); (f) chemistry and
hematology lab tests; and (g) ocular pressure. 
For clarity, Atlantic shall be responsible for all safety and/or
pharmacovigilance matters relating to or arising from the development and
commercialization of the Alicaforsen Products and for making all adverse event
reports to the relevant Regulatory Authorities at the times and in the manner
it deems appropriate to comply with all Applicable Laws.

Section 3.4      Reports.
Atlantic agrees to keep Isis informed with respect to activities and
progress with the further development and commercialization of Alicaforsen
Products, and agrees to provide to the JDC every six months a summary of such
activities and progress.

Section 3.5      Supply
of Existing  Alicaforsen API.

3.5.1       Isis agrees to
supply Atlantic with a quantity of Alicaforsen API that is in Isis’ possession
as of the Effective Date, reasonably sufficient to obtain Regulatory Approval
for an Alicaforsen Product for pouchitis (but not to exceed [***] kg) in the
USA [***], in accordance with a clinical trial program designed by Atlantic and
discussed by the JDC.

3.5.2       Atlantic and
Isis agree that, to the extent available from the stocks of Alicaforsen API in
Isis’ possession as of the Effective Date, any other quantities of Alicaforsen
API required by Atlantic for the development of Alicaforsen Product may be
purchased from Isis in a minimum order size of [***] kg at a cost of [***]
Dollars ($[***]) per gram until such stocks have been exhausted; once such
existing stocks of Alicaforsen API with greater than [***] 

*** CONFIDENTIAL
TREATMENT REQUESTED

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months of shelf life have been exhausted, additional
quantities of Alicaforsen API may be acquired from Isis on the terms of Section
3.6.

3.5.3       All Alicaforsen
API ordered by Atlantic pursuant to Section 3.5 will be shipped by Isis to
Atlantic, EXW (Incoterms 2000) Isis’ premises, to the destination specified in
writing by Atlantic.  All transportation
and insurance costs are the sole responsibility of Atlantic.  Isis warrants that each such amount of
Alicaforsen API supplied by Isis pursuant to Section 3.5; (i) will have been
manufactured in accordance with cGMP, (ii) meets the specification for
Alicaforsen API set out in the Regulatory Documentation existing at the
Effective Date, (iii) have at least [***] months shelf life remaining when
delivered, and will be accompanied by a certificate of analysis.

3.5.4       The Parties
agree that any supply of Alicaforsen API under this Section 3.5 will be subject
to and in accordance with the terms of the Manufacturing Agreement (as defined
below).

Section 3.6      Commercial
Supply and Manufacturing of Alicaforsen API.

3.6.1       Following the
Effective Date, at Atlantic’s election, Isis and Atlantic will negotiate in
good faith, agree and execute a separate written agreement for the commercial
supply and manufacture of Alicaforsen API by Isis for Atlantic (the “Manufacturing
Agreement”) such Manufacturing Agreement to be entered into within [***] of the
Effective Date.  Such Alicaforsen API
will be manufactured in accordance with cGMP, applicable Alicaforsen API
specifications, and the terms and conditions of the Manufacturing Agreement,
which will include, among other standard commercial terms, Isis’ agreement to
maintain a drug master file for Alicaforsen API (“DMF”) and Atlantic’s right to
reference the DMF in its Regulatory Documentation.  Should: (a) a Regulatory Authority in a
particular jurisdiction in which Isis has not filed a DMF, or (b) a Regulatory
Authority which does not allow cross-referencing to an existing DMF, request
information regarding Alicaforsen API and its manufacture contained in a DMF
somewhere in the world, Isis undertakes to (i) provide such information
directly on behalf of Atlantic to the applicable Regulatory Authority, or if
not legally possible (ii) consult with Atlantic in good faith regarding the
appropriate response to such inquiry and to give Atlantic (and its relevant
sub-licensee(s)) reasonable assistance with answering that Regulatory Authority’s
questions, save that should a Regulatory Authority request Isis’s proprietary
information relating to the Alicaforsen API or its manufacture outside of the
definition of Isis Manufacturing Know-How Isis shall not be obliged to share
such information with Atlantic (or its relevant sub-licensee(s)) and shall
respond directly to the Regulatory Authority on Atlantic’s or the relevant
sublicensee’s behalf. Notwithstanding Section 2.1.1 and 2.2.1 above, while Isis
is manufacturing Alicaforsen API for Atlantic under the Manufacturing
Agreement, Isis will transfer, at Atlantic’s written request and subject to the
confidentiality obligations under Article 8, analytical methods within Excluded
Manufacturing IP necessary to properly characterize and release the Alicaforsen
API.

3.6.2       Atlantic agrees
that a minimum order size of [***] kg at a price of [***] Dollars ($[***]) per
gram will apply to all purchases of Alicaforsen API under the Manufacturing
Agreement.

*** CONFIDENTIAL
TREATMENT REQUESTED

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3.6.3       Isis and Atlantic agree that Atlantic shall only be
permitted to exercise its license rights under Section 2.1.1(ii) to manufacture
Alicaforsen API in the event either that Isis is unable to supply Atlantic with
its requirements of Alicaforsen API for [***] successive calendar quarters or
that Isis fails to supply Atlantic with Alicaforsen API that meets the agreed
specification therefor for [***] successive calendar quarters or because
Atlantic is otherwise entitled to terminate the Manufacturing Agreement for
cause and there is not another available supplier who can produce Alicaforsen
API without access to the Excluded Manufacturing IP.  For clarity such permission shall not arise
simply by virtue of expiration of either this Agreement or the Manufacturing
Agreement.

Section 3.7      Product
Manufacturing Responsibility.  Except
as otherwise provided in this Agreement, Atlantic acknowledges and agrees that
it is solely responsible for the manufacturing of Alicaforsen Product,
including management of the overall manufacturing strategy and tactics,
formulation, contract manufacturer selection for finished Product, associated
audits, and stability testing.

ARTICLE 4
- 

SECOND GENERATION ICAM-1 PRODUCTS

Section 4.1      Second
Generation ICAM-1 ASO Drug Candidate License.

4.1.1       Candidate Pool.  Immediately following receipt of a notice
from Atlantic requesting Isis to commence the work (such notice to be given
within [***] of the grant of Regulatory Approval in the USA of an Alicaforsen
Product for the treatment of pouchitis, but in no event
will such notice be given later than [***] after the Effective Date), Isis
agrees to, at its sole cost and expense, commence in vitro
screening in accordance with a written work plan to be mutually agreed upon by
both Parties (the “Work Plan”), to attempt to discover between [***] and [***]
Second Generation ICAM-1 ASO Drug Candidates (the “Candidate Pool”) (the “Second
Generation ICAM-1 Research Program”). 
Isis agrees to use Commercially Reasonable Efforts and the Quality
Standard when discharging any of its obligations under the Work Plan and will
keep or cause to be kept written laboratory notebooks and other records and
reports of its progress with the Work Plan and its activities under the Work
Plan in sufficient detail and in a good scientific manner for all purposes
including patent purposes.  Isis will
report its progress with the Second Generation ICAM-1 Research Program to the
JDC.

4.1.2       Candidate Selection.  Isis will provide Atlantic with written
notice and any supporting in vitro data
at such time as the Candidate Pool is available for consideration by Atlantic
(the “Notice”). Atlantic must notify Isis, in writing within [***] following
the Notice, that (i) it has elected to develop a Second Generation ICAM-1
Product and nominate one of the candidates from the Candidate Pool as the lead
Second Generation ICAM-1 ASO Drug Candidate, and (ii) it agrees to promptly
establish, in good faith, a significant development program pursuant to a
written development plan to be set by Atlantic (the “Second Generation
Development Plan”).  If Atlantic fails to
elect to develop a Second Generation ICAM-1 Product using the Second Generation
ICAM-1 ASO Drug Candidates under this Article 4 neither Isis nor Atlantic will
have any further obligations under this Agreement with regard to the Candidate
Pool, any Second Generation ICAM-1 ASO Drug Candidate or any Second Generation
ICAM-1 Product.  If, despite Isis’
Commercially Reasonable Efforts, Isis fails to produce a Candidate 

*** CONFIDENTIAL
TREATMENT REQUESTED

 5
 

Pool that is reasonably acceptable to Atlantic,
neither Isis nor Atlantic will, for a period of three years following the date
of the Notice, take any steps to research another anti-sense oligonucleotide
drug candidate designed to directly inhibit ICAM-1 without the prior consent of
the other Party.

4.1.3       License Grant.
If Atlantic so informs Isis of such election and agreement under Section 4.1.2
above, then Isis will grant to Atlantic, subject to and upon the same terms and
conditions of this Agreement:

(x) an exclusive license under the ICAM-1 Specific Patents solely to
develop, make, have made, use, sell, offer for sale, have sold and import
Second Generation ICAM-1 ASO Drug Candidates and Second Generation ICAM-1
Products;

(y) an exclusive license under the Second Generation ICAM-1
Product-Specific Patents solely to develop, make, have made, use, sell, offer
for sale, have sold and import Second Generation ICAM-1 ASO Drug Candidates and
Second Generation ICAM-1 Products; and

(z) a non-exclusive worldwide license under the Isis Core Technology
Patents solely to develop, make, have made, use, sell, offer for sale, have
sold and import Second Generation ICAM-1 ASO Drug Candidates and Second
Generation ICAM-1 Products.

The licenses granted to Atlantic under this
Section 4.1.3 are sublicensable only in connection with a license of a Second
Generation ICAM-1 Product to a Third Party for the continued development and
commercialization of Second Generation ICAM-1 Products in accordance with the
terms of this Agreement.

4.1.4       Data Transfer.
In addition, promptly following Isis’ license grants to Atlantic under Section
4.1.3 above, Isis will transfer and assign to Atlantic all of Isis’ right,
title and interest in and to all data, results, and information related to
testing and studies of the Second Generation ICAM-1 ASO Drug Candidates
(including analytical test results and non-clinical pharmacology and safety
data) in the possession of Isis (the “Second Generation Isis Data”) to the
extent such data, results and/or information is necessary for the continued
development and commercialization of Second Generation ICAM-1 Products; but excluding any Excluded Isis IP.

4.1.5       Should Atlantic
elect to develop Second Generation ICAM-1 Products pursuant to Section 4.1.2,
Atlantic shall be fully responsible for the development and commercialization
of Second Generation ICAM-1 Products and undertakes to use Commercially
Reasonable Efforts to develop a Second Generation ICAM-1 Product and to make
its First Commercial Sale of a Second Generation ICAM-1 Product in a Major
Market as soon as practicable following its election, in accordance with
Section 3.1 above.  Atlantic will develop
such Products on the terms set out in Section 3.3 and Section 3.4.  Should Atlantic elect to have Second
Generation ICAM-1 ASO Drug Candidate manufactured by Isis, Isis and Atlantic
will conduct a negotiation in good faith, agree and execute a separate written
agreement for the supply of Second Generation ICAM-1 ASO Drug Candidates for
use in the development and 

 6
 

commercialization of Second Generation ICAM-1
Products within [***] of Atlantic notifying Isis that it wishes Isis to so supply.

Section 4.2      Exclusive
Partner.

4.2.1       For a period of
[***] following the Effective Date or until the [***] period following the
delivery of the Notice set out in Section 4.1.2 has expired (which ever is the
later) (the “Period”), and thereafter during the Term of this Agreement if
Atlantic elects to develop a Second Generation ICAM-1 Product under Section
4.1.2 within the Period, Isis will not develop or commercialize itself, and
will not permit or grant any license under the Alicaforsen Patents, ICAM-1
Specific Patents, Second Generation ICAM-1 Product-Specific or Isis Core
Technology Patents to a Third Party to develop or commercialize, any antisense
drug compound designed to directly inhibit ICAM-1. Notwithstanding the
foregoing, Isis retains the right to use antisense compounds modulating ICAM-1
or to transfer such antisense compounds to Third Parties for non-commercial
target validation purposes, and such activities will not be interpreted as a
breach of this Agreement.  Isis’
obligations under this Section 4.2.1 will automatically terminate in the event
of a Discontinuance.

4.2.2       To avoid
confusion in the marketplace, during the term of this Agreement, Atlantic
agrees not to develop or commercialize any product designed to directly inhibit
ICAM-1 other than the Product(s), and will not permit or grant any license
under the Alicaforsen Patents, ICAM-1 Specific Patents, or Second Generation
ICAM-1 Product-Specific Patents to a Third Party to develop or commercialize
any such product other than the Product(s).

ARTICLE 5
- 

BONA FIDE THIRD PARTY LICENSE OFFERS

Section 5.1      Bona
Fide Third Party License Offers.

5.1.1       If, following the
earlier to occur of a [***] or [***], a Third Party makes an offer to Atlantic
to take a Sublicense under the Alicaforsen Patents, ICAM-1 Specific Patents,
Second Generation ICAM-1 Product-Specific Patents and/or the Isis Core
Technology Patents in order to develop and commercialize a Product in [***]
that Atlantic is developing for an alternative indication, for an indication
for which Atlantic is not then developing a Product, Atlantic will promptly
inform Isis of its receipt of this offer and whether it considers this offer to
be a bona fide offer on commercial terms which are reasonably acceptable to
Atlantic.  If Atlantic considers the
offer to be a bona fide offer on commercial terms which are reasonably
acceptable to Atlantic, Atlantic will, in good faith, consider such offer and
within [***] from receipt of such a bona fide offer Atlantic will either:

(i) notify Isis that it reasonably believes that it is unlikely that
Atlantic will, within the period of [***] from the date of receipt of such
offer, initiate development of a Product for the indication in question itself;
in which case it will then promptly commence good faith negotiation of a
definitive written license agreement with such Third Party pursuant to which
the Third Party will be granted the rights under the Alicaforsen Patents,
ICAM-1 Specific Patents, Second Generation ICAM-1 Product-Specific Patents
and/or the Isis Core 

*** CONFIDENTIAL
TREATMENT REQUESTED

 7
 

Technology
Patents (as applicable) to develop, make and commercialize a Product in [***]
for the indication in question; or

(ii) notify Isis that it reasonably believes that it is likely that
Atlantic will, within the period of [***] from the date of receipt of such
offer, initiate development of a Product for the indication in question itself;
in which case it may decline such Third Party licensing offer and, if it
declines such offer, will use its Commercially Reasonable Efforts to initiate
development of a Product in [***] for the indication in question within [***]
of the date of this notice.

5.1.2       If a Third Party
makes an offer to Atlantic to take a Sublicense under the Alicaforsen Patents,
ICAM-1 Specific Patents, Second Generation ICAM-1 Product-Specific Patents
and/or the Isis Core Technology Patents in order to develop and commercialize a
Product in [***] for an indication for which Atlantic is not then developing a
Product Atlantic will promptly inform Isis of its receipt of this offer and
whether it considers this offer to be a bona fide offer on commercial terms
which are reasonably acceptable to Atlantic. 
If Atlantic considers the offer to be a bona fide offer on commercial
terms which are reasonably acceptable to Atlantic, Atlantic will, in good
faith, consider such offer and within [***] from receipt of such a bona fide
offer Atlantic will either:

(i) notify Isis that it reasonably believes that it is unlikely that
Atlantic will, within the period of [***] from the date of receipt of such
offer, initiate [***]; in which case it will promptly commence good faith
negotiation of a definitive written license agreement with such Third Party
pursuant to which the Third Party will be granted the rights under the
Alicaforsen Patents, ICAM-1 Specific Patents, Second Generation ICAM-1
Product-Specific Patents and/or the Isis Core Technology Patents (as
applicable) to develop, make and commercialize a Product in [***] for the
indication in question; or

(ii) notify Isis that it reasonably believes that it is likely that
Atlantic will, within the period of [***] from the date of receipt of such
offer, initiate [***]; in which case it may decline such Third Party licensing
offer and if it declines such offer will [***] of the date of this notice.

ARTICLE 6
- 

FINANCIAL PROVISIONS

Section 6.1      Up-Front Payment
by Atlantic.

6.1.1       Upon the
execution of the Subscription and Share Exchange Agreement (defined below),
Atlantic will pay an up-front license fee of $[***] to Isis which shall be
satisfied (in full) by the issue to Isis of [***] ordinary shares in Atlantic’s
share capital, which shall then be immediately exchanged for [***] ordinary
shares in Atlantic Healthcare’s share capital pursuant to the terms of the
subscription and share exchange agreement (the “Subscription and Share Exchange
Agreement”), which will be executed by and between Isis, 

*** CONFIDENTIAL
TREATMENT REQUESTED

 8
 

Atlantic, and Atlantic Healthcare on or
before March 16, 2007 (the “SSEA Execution Date”); provided,
however,

(a)  if
at any time during the Anti-Dilution Protection Period (to be defined in the
Subscription and Share Exchange Agreement) Atlantic Healthcare issues any
shares in the capital of Atlantic Healthcare to current shareholders
(determined by reference to the date of this Agreement) at a subscription price
per share of less than £[***], then Isis shall have the right to subscribe for
additional AH Shares (to be defined in the Subscription and Share Exchange
Agreement) at [***] in the share capital of Atlantic Healthcare (for which
purpose all shares in Atlantic Healthcare previously issued to Isis pursuant to
this Agreement shall be deemed held by Isis, irrespective of whether Isis
remains the registered holder thereof) had such new shares so issued to
existing shareholders [***], as further provided for in the Subscription and
Share Exchange Agreement; and

(b) if at any time
during the Anti-Dilution Protection Period Atlantic Healthcare issues any
shares in the capital of Atlantic Healthcare to [***] (to be defined in the
Subscription and Share Exchange Agreement) 
and/or [***] (to be defined in the Subscription and Share Exchange
Agreement) beyond [***] shares on terms not offered to other shareholders
(including Isis), then Isis will have the right to participate on the same
terms as [***] (as the case may be) so as to maintain its pro-rata shareholding
in Atlantic Healthcare (for which purpose all shares in Atlantic Healthcare
previously issued to Isis pursuant to this Agreement shall be deemed held by
Isis, irrespective of whether Isis remains the registered holder thereof) as
further provided for in the Subscription and Share Exchange Agreement.

6.1.2  In no event will Atlantic issue shares to
Isis that exceed the Equity Cap.

6.1.3  If the Subscription and Share Exchange
Agreement is not executed by Isis, Atlantic, and Atlantic Healthcare on or
before [***], this Agreement will automatically terminate without any liability
to either Party.

Section 6.2      Milestone
Payments by Atlantic.

6.2.1       Atlantic will
pay to Isis the relevant milestone payment in cash or in an equivalent amount
of Atlantic Equity Securities (subject to the written consent of Atlantic
Healthcare Limited and in accordance with the terms of the Subscription and
Share Exchange Agreement), at Atlantic’s sole discretion, not more than 60 days
after achievement by Atlantic, its Affiliates or a sublicensee, of each of the
applicable events, as follows:

	
  Event

  	
   

  	
  Payment

  	
   

  
	
  [***]

  	
   

  	
  US $[***]

  	
   

  
	
  [***]

  	
   

  	
  US $[***]

  	
   

  

 

*** CONFIDENTIAL
TREATMENT REQUESTED

 9
 

6.2.2 Notwithstanding
the foregoing, in no event will Atlantic issue Atlantic Equity Securities to
Isis that exceed the Equity Cap. To the extent any milestone payment of
Atlantic Equity Securities will cause Isis’ aggregate equity ownership in
Atlantic to exceed the Equity Cap, Atlantic will issue to Isis only the number
of shares that will maintain such Equity Cap, and will pay Isis the remainder
of such milestone payment in cash.  For
purposes of this Section 6.2, the term “Atlantic Equity Securities” means (a)
if Atlantic has a class of stock (x) registered under Section 12(b) or 12(g) of
the Securities Exchange Act of 1934 and that is publicly traded on a major US
exchange such as the NYSE or NASDAQ, or (y) traded on a major European exchange
such as Deutsche Börse or the London Stock Exchange, such publicly traded
common stock of Atlantic, the value of which will be determined [***] by the
average closing price for the 15 trading days immediately preceding the date
the particular milestone event referenced in this Section 6.2 is achieved; or
(b) if Atlantic does not have a class of publicly traded stock, the equity
securities of Atlantic issued in its most recent venture capital financing
occurring prior to the date the particular milestone event referenced in this
Section 6.2 is achieved, which will be issued to Isis at the same price per
share and with the same rights, preferences and privileges as provided to the
other investors in such financing.

Section 6.3      Sublicense
Revenue.

6.3.1       In the event
that Atlantic enters into a Sublicense Atlantic will pay Isis [***]% of the
Sublicense Revenue (which does not include royalties on Net Sales) from such
sublicensing of any Product by Atlantic and its Affiliates.

6.3.2       Any payment to
Isis for its portion of Sublicensing Revenue due under this Section 6.3 will be
due within 30 days of Atlantic receiving such Sublicensing Revenue.

Section 6.4      Royalty Payments
by Atlantic.

6.4.1       For any Product
sold by Atlantic or its Affiliates, in consideration of Isis’ collaborative
efforts and the licenses granted hereunder, Atlantic will pay Isis royalties on
Net Sales of each Product in accordance with the following table.  

	
  Cumulative Net Sales

  	
   

  	
  Royalty Rate

  (Alicaforsen

  Products)

  	
   

  	
  Royalty Rate

  (Second Generation

  ICAM-1 Products)

  	
   

  
	
  Less than US $[***]

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  
	
  US $[***] to US $[***]

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  
	
  Above US $[***]

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  

 

*** CONFIDENTIAL
TREATMENT REQUESTED

 10
 

6.4.2       For any Products
sold pursuant to a Sublicense, in consideration of Isis’ collaborative efforts
and the licenses granted hereunder, Atlantic will pay Isis royalties on Net
Sales as follows:

6.4.2.1           For Alicaforsen
Products sold for [***] indication, Atlantic will pay Isis royalties on Net
Sales of each Product equal to the greater of (i) [***]% of the royalty
Atlantic is entitled to receive under such Sublicense, or (ii) [***]% of Net
Sales; and

6.4.2.2           For Products sold
pursuant to a Sublicense of (i) a Second Generation ICAM-1 Product, or (ii) an
Alicaforsen Product that is not indicated for [***], Atlantic will pay Isis
royalties on Net Sales of each Product as follows:

(a)
If the royalty to Atlantic is less than or equal to [***]% of Net Sales, then
Isis receives [***]% of Net Sales of each Product;

(b)
If the royalty to Atlantic is greater than [***]% but less than [***]% of Net
Sales, then Isis receives [***]% of Net Sales of each Product; or

(c)
If the royalty to Atlantic is equal to or greater than [***]% of Net Sales,
then Isis receives [***]% of Net Sales of each Product.

6.4.3       Isis will be
responsible for payment of any Third Party royalty obligations related to
Product that exist as of the Effective Date (“Existing Royalties”), including
(i) with respect to the Alicaforsen Product, Existing Royalties due under the
agreement with [***] dated [***], and (ii) with respect to Second Generation
ICAM-1 Products, Existing Royalties due under the agreement with [***] dated
[***] and the agreement with [***] dated [***]. 
Atlantic will be responsible for all other Third Party royalties, fees
and milestones that may arise related to the development or commercialization
of Products.

Section 6.5      Term;
Timing of Royalty Payments.  Atlantic’s
obligation to pay royalties on each Product will expire on a county-by-country
basis as follows:

6.5.1       With respect to
Alicaforsen Products, Atlantic’s obligation to pay royalties on each Product
will expire on a county-by-country basis upon the later of: (i) [***] years
from the date of First Commercial Sale of such Product in such country of sale,
or (ii) the expiration of the last to expire Valid Claim of Alicaforsen Patents
and ICAM-1 Specific Patents covering the making, using, or selling of such
Alicaforsen Product in the country of sale, or (iii) the expiration of the last
to expire Valid Composition of Matter Claim within Alicaforsen Patents or
ICAM-1 Specific Patents in the country of manufacture of that Alicaforsen
Product.

6.5.2       With respect to
Second Generation ICAM-1 Products, Atlantic’s obligation to pay royalties on
each Second Generation ICAM-1 Product will expire on a county-by-country basis
upon the later of: (i) [***] years from the date of First Commercial Sale of
such Second Generation ICAM-1 Product in such country of sale, or (ii) the
expiration of the last to expire Valid Claim of ICAM-1 Specific Patents and
Second Generation ICAM-1 Product Specific Patents covering the making, using,
or selling of such Second Generation ICAM-1 

*** CONFIDENTIAL
TREATMENT REQUESTED

 11
 

Product in the country of sale, or (iii) the
expiration of the last to expire Valid Composition of Matter Claim within
ICAM-1 Specific Patents and Second Generation ICAM-1 Product Specific Patents
in the country of manufacture of that Second Generation ICAM-1 Product.

6.5.3       The royalties
due under Section 6.4 will become due and payable: (i) within 30 days of each
respective Royalty Due Date with respect to Net Sales received by Atlantic or
its Affiliates, and (ii) with respect to royalties due under Sublicenses,
within 30 days of Atlantic itself receiving the royalty payments due from its
sublicensees.  In each case royalties
will be calculated in respect of the Net Sales in the calendar quarter
immediately preceding the applicable Royalty Due Date.

Section 6.6      Payment
Method.  Any amounts due to Isis
under this Agreement will be paid in U.S. dollars, by wire transfer in
immediately available funds to an account designated by Isis.  Any payments or portions thereof due
hereunder which are not paid on the date such payments are due under this
Agreement and the payment is not in dispute between the Parties, or if disputed
the dispute has not been resolved, will bear interest at a rate equal to the
prime rate as published in The Wall Street
Journal, Eastern Edition, on the first day of each calendar quarter
in which such payments are overdue, plus 1% calculated on the number of days
such payment is delinquent, compounded monthly.

Section 6.7      Currency;
Foreign Payments.  If any currency
conversion will be required in connection with any payment hereunder, such
conversion will be made by using the exchange rate for the purchase of U.S.
dollars as published in The Wall Street
Journal, Eastern Edition, on the last business day of the calendar
quarter to which such payments relate. 
If at any time legal restrictions prevent the prompt remittance of any
payments in any jurisdiction, Atlantic may notify Isis and make such payments
by depositing the amount thereof in local currency in a bank account or other
depository in such country in the name of Isis or its designee, and Atlantic
will have no further obligations under this Agreement with respect
thereto.  All payments under this
Agreement shall be made free and clear and without any set off, deduction,
withholding or deferment in respect of any taxes unless required by law or
practice of any relevant governmental authority.  The Parties shall co-operate to minimize any
deduction or withholding in relation to any payments pursuant to this
Agreement.

Section 6.8      Records
Retention; Audit.

6.8.1       Record Retention.  Atlantic will
maintain (and will ensure that its Affiliates and sublicensees will maintain)
complete and accurate books, records and accounts that fairly reflect Net Sales
with respect to each Product, in each case in sufficient detail to confirm the
accuracy of any payments required hereunder and in accordance with IFRS, which
books, records and accounts will be retained by Atlantic, its Affiliates or
sublicensees (as applicable) for the later of (i) 5 years after the end of the
period to which such books, records and accounts pertain, and (ii) the
expiration of the applicable tax statute of limitations (or any extensions
thereof), or for such longer period as may be required by Applicable Law.

6.8.2       Audit.  Isis will have the right to have an
independent certified public accounting firm of nationally recognized standing,
reasonably acceptable to Atlantic, have access during normal business hours,
and upon reasonable prior written notice, to Atlantic’s records 

 12
 

(and its Affiliates and sublicensees) as may
be reasonably necessary to verify the accuracy of Net Sales, Sublicense
Revenue, as applicable, for any calendar quarter or calendar year ending not
more than [***] months prior to the date of such request; provided,
however, that Isis will not have the right to conduct more than one
such audit in any Calendar Year except as provided below.  The accounting firm will enter into
appropriate obligations with Atlantic to treat all information it receives
during its inspection as confidential. 
The accounting firm shall disclose to Isis only whether the reported Net
Sales and Sublicense Revenue are correct and details of any discrepancies but
no other information shall be disclosed to Isis.  Isis will bear the cost of such audit unless
the audit reveals a variance of more than [***]% from the reported results, in
which case Atlantic will bear the cost of the audit.

6.8.3       Payment of Additional Amounts.  If, based on the results of such audit,
additional payments are owed by either party to the other under this Agreement,
the party due to make a payment will make such additional payments, with
interest as set forth in Section 6.6, within 30 days after the date on which
such accounting firm’s written report is delivered to such Party.

6.8.4       Confidentiality.  Isis will treat the financial information
reported to it under Section 6.8.2 in accordance with the confidentiality
provisions of Article 8; provided, however,
that Isis may provide Third Parties to which Isis owes Existing Royalties on
Products such information if it exercises its audit rights concerning the
Products against Isis and provided such Third Party is bound to keep such
information confidential.

ARTICLE 7
- 

PRESS RELEASES & PUBLICATIONS

Section 7.1        Press Releases

7.1.1 Press Releases - Generally.  Each provision of this Section 7.1.1 is
subject to Section 7.1.2 below.  Press
releases or other similar public communication by either Party relating to this
Agreement, will be approved in advance by the other Party, which approval will
not be unreasonably withheld or delayed, except for those communications
required by Applicable Law, which are Authorized Disclosures or disclosures of
information for which consent has previously been obtained, and information of
a similar nature to that which has been previously disclosed publicly with
respect to this Agreement, each of which will not require advance approval, but
will be provided to the other Party as soon as practicable after the release or
communication thereof.

*** CONFIDENTIAL
TREATMENT REQUESTED

 13
 

7.1.2
Press Releases – Product Safety/Efficacy. Each Party will
immediately notify (and, if possible, provide as much advance notice as
possible to) the other of any event materially related to Products (including
any regulatory approval) so that the Parties may analyze the need to or
desirability of publicly disclosing or reporting such event.  Notwithstanding Section 7.1.1 above, any
press release or other similar public communication by either Party related a
Product’s efficacy or safety data and/or results, will be submitted to the
other Party for review and approval at least 72 hours in advance of such
proposed public disclosure, which approval will not be unreasonably withheld or
delayed.

Section 7.2      Publications.  Each provision of this Section 7.2 is
subject to Section 7.1.2 above.  At least
[***] days prior to a Party’s submission of any material related to the
research or development activities hereunder for publication or presentation,
the publishing Party will provide to the other Party with a draft of such
material for its review and comment.  The
non-publishing Party will provide any comments to the publishing Party within
[***] days of receipt of such materials. 
No publication or presentation with respect to the research or
development activities hereunder will be made unless and until the
non-publishing Party’s comments on the proposed publication or presentation
have been discussed by the Parties.   If
requested in writing by the non-publishing Party, the publishing Party will
withhold material from submission for publication or presentation for a
reasonable time to allow for the filing of a patent application.

ARTICLE 8
- 

CONFIDENTIALITY

Section 8.1      Disclosure
and Use Restriction.  Except pursuant
to an Authorized Disclosure, the Parties agree that, for the Term and for five
years thereafter, each Party will keep completely confidential and will not
publish, submit for publication or otherwise disclose, and will not use for any
purpose except for the purposes contemplated by this Agreement, any
Confidential Information received from the other Party.

ARTICLE 9
- 

INTELLECTUAL PROPERTY

Section 9.1      Prosecution
of Patents.

9.1.1       Solely Owned Patents.
With the exception of the Alicaforsen Patents, the ICAM-1 Specific Patents, and
the Second Generation ICAM-1 Product-Specific Patents, which are addressed in
Sections 9.1.2 and 9.1.3 below, each Party will have the sole right, at its
cost and expense and at its sole discretion, to obtain, prosecute, maintain and
enforce throughout the world any Patents solely owned or Controlled by such
Party, including with respect to Isis, the Isis Core Technology Patents.

9.1.2       Alicaforsen Patents and ICAM-1 Specific
Patents.  Subject
to Section 9.1.4 below,  Isis will
have the sole obligation at its expense, to obtain, prosecute and maintain the
Alicaforsen Patents and the ICAM-1 Specific Patents in such countries as Isis
is prosecuting such Patents on the Effective Date using Commercially Reasonable
Efforts.  For clarity, Atlantic will not
have the right to review or comment on any applications or registrations to be
filed by 

*** CONFIDENTIAL
TREATMENT REQUESTED

 14
 

Isis under this Section 9.1.2, and Isis may
cease prosecuting or maintaining particular applications or patents in the
Alicaforsen Patents and ICAM-1 Specific Patents in selected jurisdictions, if
Isis determines that it is not commercially reasonable to continue such efforts
(in which case the terms of Section 9.1.4 will apply).

9.1.3       Second Generation
ICAM-1 Product-Specific Patents.
Subject to Section 9.1.4 below,  Atlantic
will have the sole obligation, at Atlantic’s expense, to obtain, prosecute and
maintain in such countries as are commercially appropriate the Second
Generation ICAM-1 Product-Specific Patents using Commercially Reasonable
Efforts. Atlantic will keep Isis informed of all Second Generation ICAM-1
Product-Specific Patent applications and registrations to be filed by Atlantic,
and Isis will have the right to review and comment on such applications within the
timeframes of the patent filing process and deadlines.  For clarity, Atlantic may cease prosecuting
or maintaining particular applications or patents in the Second Generation
ICAM-1 Product-Specific Patents in selected jurisdictions, if Atlantic determines
that it is not commercially reasonable to continue such efforts (in which case
the terms of Section 9.1.4 will apply). 
Isis’ review and comment rights in this Section 9.1.3 will continue so
long as there is the possibility of a Discontinuance.

9.1.4       Discontinued Patents.  If under Section 9.1.2 or Section 9.1.3
a Party elects to discontinue prosecution or maintenance of any particular
applications or patents in the Alicaforsen Patents, the ICAM-1 Specific Patents
(if applicable), or the Second Generation ICAM-1 Product-Specific Patents, as
the case may be, in a selected jurisdiction, such Party will give thirty (30)
days advance written notice to the other Party of any decision to cease
preparation, filing, prosecution and maintenance of that Patent right (a “Discontinued Patent”).  In such case, the other Party may elect at
its sole discretion to continue preparation, filing, prosecution or maintenance
of the Discontinued Patent in the select jurisdiction at its sole expense, and
thereafter such Party will own any such patent application and patents maturing
therefrom and be solely responsible for all costs.  In the event of a Discontinued Patent caused
by Atlantic, Atlantic’s exclusive licenses under Article 2 and Article 4 (if
applicable) with respect to such Discontinued Patent in such jurisdiction will
automatically convert into nonexclusive licenses with the financial terms set
forth in Article 6 remaining intact, and Isis’ obligations under Section 4.2
will terminate in such select jurisdiction solely with respect to such
Discontinued Patent. The Party electing to cause a Discontinued Patent will
execute such documents and perform such acts as may be reasonably necessary for
the other Party to continue prosecution or maintenance of the applicable Discontinued
Patent, including assigning ownership of such Patent or application. Should
Atlantic elect to continue preparation, filing, prosecution and maintenance of
Discontinued Patents which are Alicaforsen Patents or ICAM-1 Specific Patents,
such Patents will no longer be deemed to be Alicaforsen Patents or ICAM-1
Specific Patents for the purposes of this Agreement.   Notwithstanding the foregoing, Atlantic’s
right to continue the preparation, filing, prosecution and maintenance of a
Discontinued Patent that is an ICAM-Specific Patent is limited solely to the
extent such Patent claims ICAM-1.

9.1.5       Cooperation.  Each Party will
cooperate reasonably in the preparation, filing, prosecution, and maintenance
of the Alicaforsen Patents, the ICAM-1 Specific Patents (if applicable), the
Second Generation ICAM-1 Product-Specific Patents, and the other Party’s
Patents which cover a Product.  Such
cooperation includes (a) promptly executing all papers and instruments and
requiring employees to execute such papers and instruments as reasonable and 

 15
 

appropriate so as to enable such other Party,
to file, prosecute, and maintain its Patents in any country; and (b) promptly
informing such other Party of matters that may affect the preparation, filing,
prosecution, or maintenance of any such Patents.

9.1.6       Patent Term Extensions.  The Parties agree to cooperate in an effort
to avoid loss of any of the Patents forming part of Alicaforsen Patents, ICAM-1
Specific Patents or Second Generation ICAM-1 Product-Specific Patents including
by executing any documents as may be reasonably required.  In particular, the Parties shall cooperate
with each other in obtaining patent term extension or restoration or
supplemental protection certificate (“Patent Term Extensions”) or their equivalents
in any country and region where applicable. 
In particular but without limiting the foregoing Isis shall provide
reasonable assistance to Atlantic, including by executing any required
documents and providing any relevant patent information to Atlantic, so that
Atlantic, as Regulatory Approval applicant, may deal with the applicable
Regulatory Authority in connection with obtaining such Patent Term Extension.

Section 9.2      Enforcement of
Patents

9.2.1       Rights and Procedures.  If Isis or Atlantic determines that any
Patent licensed hereunder is being infringed by a Third Party’s activities and
that such infringement could affect the exercise by the Parties of their
respective rights and obligations under this Agreement, it will promptly notify
the other Party in writing.  Except for
the Alicaforsen Patents, the ICAM-1 Specific Patents, and the Second Generation
ICAM-1 Product-Specific Patents, which are discussed below, the Party
controlling the Patent(s) which are allegedly being infringed will have the sole
right and obligation to remove such infringement.

9.2.2       Alicaforsen Patents; ICAM-1 Specific
Patents; and Second Generation ICAM-1
Product-Specific Patents. 
With respect to the Alicaforsen Patents, the ICAM-1 Specific Patents (if
applicable and solely to the extent infringed by a Third Party with a product
targeting ICAM-1), and the Second Generation ICAM-1 Product-Specific Patents,
Atlantic will have the first right, but not the obligation, at Atlantic’s
expense, to remove such infringement.  
In the event that Atlantic fails to take commercially appropriate steps
to remove any such infringement within 90 days following notice of such
infringement, or earlier notifies Isis in writing of its intent not to take
such steps, and such infringement is likely to have a material adverse effect
on the Product, (i) so long as the infringement is not taking place in a Major
Market and so long as Atlantic does not inform Isis that Atlantic considers, in
good faith, that to take such proceeds would (x) be prejudicial to its
litigation strategy in a Major Market and (y) be commercially unreasonable
under the circumstances, Isis will have the right to do so at its expense, (ii)
Atlantic will have the right, at its own expense, to be represented in any such
action, and (iii) the exclusive license(s) granted under Article 2 and Article
4 (if applicable) that pertain to such Alicaforsen Patent, ICAM-1 Specific
Patent (if applicable), or Second Generation ICAM-1 Product-Specific Patent,
will automatically convert into nonexclusive licenses. Isis will have the
right, at Isis’s own expense, to remove infringement of the Alicaforsen
Patents, ICAM-1 Specific Patents (if applicable), or Second Generation ICAM-1
Product-Specific Patents if (i) Isis is unilaterally developing and commercializing
a Product pursuant to Section 11.2, or (ii) if a Third Party is infringing the
ICAM-1 Specific Patents with any product that does not target ICAM-1.

 16
 

(a)           Cooperation.  The Party not enforcing the applicable Patent
will provide reasonable assistance to the other Party (at the enforcing Party’s
expense), including providing access to relevant documents and other evidence,
making its employees available at reasonable business hours, and joining the
action to the extent necessary to allow the enforcing Party to maintain the
action.  If Isis requests that Atlantic
take action to remove infringement of an Alicaforsen Patent, ICAM-1 Specific
Patent (if applicable) to the extent infringed by a Third Party with a product
targeting ICAM-1, or a Second Generation ICAM-1 Product-Specific Patent, and
Atlantic believes it is not commercially appropriate to take such actions, the
Parties will meet and discuss in good faith such circumstances and seek to
reach agreement on what appropriate steps to take to cause such infringement to
end in a commercially appropriate manner.

9.2.3       Recovery.  Any amounts recovered by Atlantic in
connection with or as a result of any action contemplated by Section 9.2.1(a),
whether by settlement or judgment, will be used to reimburse the Parties for
their reasonable costs and expenses in making such recovery (which amounts will
be allocated pro rata if insufficient to cover the totality of such expenses),
with any remainder in excess of the reasonable costs and expenses in making such
recovery will be treated as Net Sales of an Alicaforsen Product and royalties
will be due in respect of such Net Sales pursuant to this Agreement.  Isis will retain all amounts it recovers
enforcing the Alicaforsen Patents, the ICAM-1 Specific Patents, the Second
Generation ICAM-1 Product-Specific Patents, and the Isis Core Technology
Patents.

ARTICLE
10 - 

TERM AND TERMINATION

Section 10.1    Term.  The term of this Agreement (the “Term”)
commences upon the Effective Date and, unless earlier terminated in accordance
with the provisions of this Article 10, will continue until the expiration of
all obligations to pay royalties on all Products to Isis.

Section 10.2    Rights
in Bankruptcy or Insolvency  If
either Party becomes insolvent, files a petition in bankruptcy, has such a
petition filed against it, determines to file a petition in bankruptcy, or
receives notice of a Third Party’s intention to file an involuntary petition in
bankruptcy, such Party immediately shall notify the other Party in
writing.  In addition to any other
remedies available at law or in equity, the other Party (i.e., the non-bankrupt
Party) may immediately terminate this Agreement, in whole or in part as the
terminating Party may determine, upon learning of any of the foregoing events; provided, however, that the financial
terms set forth in Article 6 above will remain in tact and will survive any
such termination.  The terminating Party
shall provide to the other Party a written notice regarding the extent of termination.
If Isis seeks to be or is involuntarily placed under the protection of the “Bankruptcy
Code” (i.e., Title 11, U.S. Code) or its equivalent outside the USA, and the
trustee in bankruptcy, or Isis as a debtor-in-possession, rejects this
Agreement, then Atlantic hereby elects, under Section 365(n) of the Bankruptcy
Code, to retain all licenses of rights to “intellectual property” (as defined
under such Bankruptcy Code) granted to it under this Agreement, to the extent
permitted by law.  As of the commencement
of a bankruptcy proceeding by or against Isis, Atlantic is entitled to a
complete duplicate of all embodiments of “intellectual property” licensed to it
hereunder.  To the extent such
embodiments are not already in Atlantic’s possession as of 

 17
 

the commencement of a bankruptcy, Isis (or
the trustee in bankruptcy) shall deliver such embodiments to Atlantic (i) upon
any such commencement of a bankruptcy proceeding, unless Isis elects to
continue to perform all of its obligations under this Agreement, or (ii) if not
delivered under (i), then upon a rejection of this Agreement (or the
equivalent) by or on behalf of Isis.

Section 10.3    Material
Breach.  Failure by a Party to comply
with any of its material obligations contained herein will entitle the Party
not in default to give to the defaulting Party notice specifying the nature of
the material breach, requiring the defaulting Party to make good or otherwise
cure such default, and stating its intention to invoke the provisions of
Section 14.4 if such default is not cured. 
If such default is not cured within 90 days after the receipt of such
notice (or, if such default cannot be cured within such 90-day period, if the
Party in default does not commence actions to cure such default within such
period and thereafter diligently continue such actions), the Party not in
default will be entitled, without prejudice to any of its other rights
conferred on it by this Agreement, to invoke the provisions of Section 14.4;
provided, however, that in the event of a good faith dispute with respect to
the existence of a material breach, the 90-day cure period will be stayed until
such time as the dispute is resolved pursuant to Section 14.4 hereof.

Section 10.4    Consequences
of Expiration or Termination.

10.4.1     Licenses.  Upon expiration of the Term or upon
termination of this Agreement in its entirety by either Party pursuant to
Section 10.3, or by Isis pursuant to Section 10.2 and upon payment of all
amounts owed pursuant to this Agreement, the licenses granted by Isis to
Atlantic hereunder will terminate.

10.4.2     Return of Information and Materials.  Upon early termination of this Agreement in
its entirety by either Party pursuant to Section 10.3, or by Isis pursuant to
Section 10.2, Atlantic will return all data, files, records and other materials
in its possession or control relating to the Second Generation ICAM-1 Product
Specific Patents or containing or comprising Isis’ Confidential Information
and, in each case (except one copy of which may be retained for archival
purposes).

Section 10.5    Accrued Rights;
Surviving Obligations.

10.5.1     Accrued Rights.  Termination or expiration of this Agreement
for any reason will be without prejudice to any rights or financial
compensation that will have accrued to the benefit of a Party prior to such
termination or expiration.  Such
termination or expiration will not relieve a Party from obligations that are
expressly indicated to survive the termination or expiration of this Agreement.

10.5.2     Survival.  Articles 7, 8, 9.1, 10, 11, 12, and 14, and
Section 6.8 of this Agreement will survive expiration or termination of this
Agreement for any reason.

 18

ARTICLE
11

DISCONTINUED DEVELOPMENT BY ATLANTIC

Section 11.1  Discontinuances. In the event of a
Discontinuance, Isis will have a reversion right as further described in
Section 11.2.

Section 11.2  Reversion Rights. Following the
occurrence of a Discontinuance, Isis may elect to continue to develop Product
by notice in writing to Atlantic (an “Election Notice”) that Isis is exercising
its rights under this Section 11.2, in which case this Agreement will terminate
(subject to the survival provisions set forth in Section 10.5.2). Upon receipt
of an Election Notice, Atlantic will (i) grant to Isis a sublicensable,
worldwide license or sublicense, as the case may be, to all Patents controlled
by Atlantic solely as they are necessary to make, have made, use, sell, offer
for sale, have sold and import the Product and (ii) transfer to Isis, for Isis’
unlimited use, any data, results, regulatory information and files in the
possession of Atlantic as of the date of the Election Notice that relate to the
Product, subject to the negotiation in good faith of a reasonable royalty
payable to Atlantic that represents the value of the items transferred to Isis.

ARTICLE 12 - 

INDEMNIFICATION
AND INSURANCE

Section 12.1    Indemnification
of Isis.  Atlantic will indemnify
Isis and its Affiliates, and each of their respective directors, officers,
employees and agents, and defend and hold each of them harmless, from and
against any and all losses, damages, liabilities, costs and expenses (including
reasonable attorneys’ fees and expenses) to the extent arising from or
occurring as a result of any and all liability suits, investigations, claims or
demands by a Third Party (collectively, “Losses”) arising from or occurring as
a result of or in connection with (a) the breach of any of Atlantic’s
representations, warranties, or covenants contained in Article 13 below, or (b)
whether or not negligence is found or alleged, the manufacture (except to the
extent attributable to Isis’ negligence), use, handling, storage, sale or other
disposition of a Product or other compound that is developed or sold by
Atlantic, its Affiliates, agents or sublicensees, except to the extent Isis has
an obligation to indemnify Atlantic under Section 12.2 below.

Section 12.2    Indemnification
of Atlantic.  Isis will indemnify
Atlantic, its Affiliates, and its sublicensees, and each of their respective
directors, officers, employees and agents, and defend and hold each of them
harmless, from and against any and all Losses arising from or occurring as a
result of or in connection with the breach of any of Isis’ representations,
warranties, or covenants contained in Article 13 below, except to the extent
Atlantic has an obligation to indemnify Isis under Section 12.1 above.

Section 12.3    Insurance.  Each Party will have and maintain such types
and amounts of liability insurance as is reasonable and customary in the
industry generally for parties similarly situated, and will upon request
provide the other with a certificate of insurance.  Each 

 19
 

Party will promptly notify the other of any
material change in insurance coverage or lapse in coverage in that regard.

Section 12.4    Liability.
Neither Party shall be liable to the other in contract, tort, negligence,
breach of statutory duty or otherwise for any loss, damage, costs or expenses
of any nature whatsoever incurred or suffered by the other or its Affiliates:

12.4.1     of a direct nature
where the same is a loss of turnover, profits, business or goodwill; or

12.4.2     of an indirect or
consequential or punitive nature, including any indirect or consequential
economic loss or other indirect or consequential loss of turnover, profits,
loss of enterprise value, business or goodwill or otherwise.

ARTICLE
13 - 

REPRESENTATIONS AND WARRANTIES

Section 13.1    Representations,
Warranties and Covenants.  Each Party
hereby represents, warrants and covenants to the other Party as of the
Effective Date as follows:

Section 13.2    Corporate
Authority.  Such Party (a) has the
power and authority and the legal right to enter into this Agreement and perform
its obligations hereunder, and (b) has taken all necessary action on its part
required to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder. 
This Agreement has been duly executed and delivered on behalf of such
Party and constitutes a legal, valid and binding obligation of such Party 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 and judicial principles affecting the
availability of specific performance and general principles of equity, whether
enforceability is considered a proceeding at law or equity.

Section 13.3    Consents,
Approvals, etc.  All necessary consents,
approvals and authorizations of all Regulatory Authorities and other parties
required to be obtained by such Party in connection with the execution and
delivery of this Agreement and the performance of its obligations hereunder
have been obtained.

Section 13.4    Conflicts.  The execution and delivery of this Agreement
and the performance of such Party’s obligations hereunder (a) do not conflict
with or violate any requirement of Applicable Law or any provision of the
articles of incorporation, bylaws or any similar instrument of such Party, as
applicable, in any material way, and (b) do not conflict with, violate, or
breach or constitute a default or require any consent not already obtained
under, any contractual obligation or court or administrative order by which
such Party is bound.

Section 13.5    Intellectual
Property.  To each Party’s knowledge,
as of the Effective Date, no additional Third Party licenses are required to
develop, use and sell the enema formulation of Alicaforsen.

Section 13.6    Isis
Representations, Warranties, and Covenants. Isis  hereby represents, warrants and covenants to Atlantic as of
the Effective Date as follows:

 20
 

13.6.1     IP Ownership.  Isis
has the sufficient legal and/or beneficial title and ownership of the
Alicaforsen Patents, the ICAM-1 Specific Patents, and the Isis Core Technology
Patents as is necessary to fulfill its obligations under this Agreement and to
grant the licenses (or sublicenses as the case may be) to Atlantic pursuant to
this Agreement; Isis has not previously entered into any agreement, whether
written or oral, with respect to, or otherwise assigned, licensed, transferred,
conveyed or otherwise encumbered its right, title or interest in or to the Isis
Data (“Isis Background Know How”) or the Alicaforsen Patents and ICAM-1
Specific Patents licensed  hereunder
(including by granting any covenant not to sue with respect thereto) (the Isis
Background Know How and such Alicaforsen Patents and ICAM-1 Specific Patents
licensed hereunder together being the “Isis Background IP”).   To the best of Isis’ knowledge, the
conception, development and reduction to practice of the Isis Background IP
existing as of the Effective Date have not constituted or involved the
misappropriation of trade secrets or other rights or property of any Third
Party; and

13.6.2     Patent Maintenance. True,
complete and correct copies of the complete file wrapper and other material
correspondence with any patent office relating to the prosecution, validity and
enforceability of the Patents within the Alicaforsen Patents and the ICAM-1
Specific Patents existing at the Effective Date have been provided to or made
available to Atlantic prior to the Effective Date and, to the best of Isis’
knowledge, there is no material reason why any of such Patents are invalid.  In respect of the pending patent applications
included within such Patents, Isis has presented all relevant prior art of
which it and the inventors are aware to the relevant patent examiners at the
relevant patent offices; and

13.6.3     Patent Prosecution.  The Alicaforsen Patents and ICAM-1 Specific
Patents licensed hereunder that are applications at the Effective Date are
being diligently procured from the respective patent offices and the Patents
within such Patents licensed hereunder that are granted at the Effective Date
have been maintained properly and correctly and all applicable fees have been
paid on or before the due date for payment; and

13.6.4     Third Party Actions.  To the best of Isis’ knowledge,  no actions, suits, claims, disputes, or proceedings
concerning the Alicaforsen Patents, the ICAM-1 Specific Patents, or the Isis
Core Technology Patents licensed hereunder or the Alicaforsen Product are
currently pending or are threatened in writing, that if determined adversely to
Isis would have a material adverse effect on the Alicaforsen Product or would
impair Isis’ ability to perform its obligations under this Agreement.

13.6.5     Alicaforsen.  As of the Effective Date, Isis does not
Control any Patents other than the Alicaforsen Patents and the ICAM-1 Specific
Patents that would be necessary to develop or commercialize Alicaforsen
Products or to manufacture Alicaforsen Product or Alicaforsen API other than
the Patents within Excluded Isis IP.

Section 13.7    Atlantic
Representations, Warranties, and Covenants. 
Atlantic hereby represents, warrants and covenants to Isis that:

13.7.1     Capabilities.   Atlantic has the requisite personnel,
expertise, experience and skill to perform its obligations under this
Agreement; Atlantic’s sales representatives will 

 21
 

perform in a professional, timely, competent
and efficient manner; and Atlantic, its Affiliates, and its sublicensees will
at all times comply with all Applicable Laws.

13.7.2     Capitalization.  Appendix 6 contains a complete and correct
table showing the capitalization of Atlantic as of the Effective Date, on a
fully-diluted basis.  Except as set forth
in Appendix 6, there are no outstanding shares of capital stock of Atlantic or
warrants, options, agreements, convertible securities or other commitments
pursuant to which Atlantic is or may become obligated to issue any shares of
its capital stock or other securities. 
Atlantic understands and agrees that Isis is relying upon these
representations and warranties when accepting the issuance of Atlantic Equity
Securities under Section 6.1 above.

Section 13.8    DISCLAIMER
OF WARRANTY.  EXCEPT FOR THE EXPRESS
WARRANTIES SET FORTH IN THIS ARTICLE 13, ATLANTIC AND ISIS MAKE NO
REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR
BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND ATLANTIC AND ISIS EACH
SPECIFICALLY DISCLAIM ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS
OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR
THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.

ARTICLE
14 - 

MISCELLANEOUS

Section 14.1    Assignment.  Without the prior written consent of the
other Party hereto, neither Party will sell, transfer, assign, delegate, pledge
or otherwise dispose of, whether voluntarily, involuntarily, by operation of
law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that (i) either Party
hereto may assign or transfer this Agreement or any of its rights or
obligations hereunder without the consent of the other Party to (a) any of its
Affiliates, or (b) any Third Party with which it has merged or consolidated, or
to which it has transferred all or substantially all of its assets to which
this Agreement relates provided always in the case where Isis is the assigning
Party it also transfers title to the Alicaforsen Patents, the ICAM-1 Specific
Patents, the Second Generation ICAM-1 Product-Specific Patents and the Isis
Core Technology Patents to such Third Party, and if in any such event the Third
Party assignee or surviving entity assumes in writing all of the assigning
Party’s obligations under this Agreement, (ii) Atlantic may assign or transfer
this Agreement, without Isis’ consent, to Atlantic Healthcare, or (iii) Isis
may assign or transfer its rights under Article 6.4 (but no liabilities) to a
Third Party in connection with a royalty factoring transaction.  Any purported assignment or transfer in
violation of this Section 14.1 will be void ab
initio and of no force or effect.

Section 14.2    Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable by a court of competent jurisdiction, such
adjudication will not affect or impair, in whole or in part, the validity,
enforceability, or legality of any remaining portions of this Agreement.  All remaining portions will remain in full
force and effect as if the original Agreement had been executed without the
invalidated, unenforceable or illegal part.

 22
 

Section 14.3    Governing
Law.  This Agreement will be governed
by and construed in accordance with the laws of New York, USA without reference
to any rules of conflicts of laws.

Section
14.4    Dispute Resolution.

14.4.1     General.  Any
dispute, controversy or claim arising from
or related to this Agreement or the breach thereof will first be
referred to the attention of the Chief Executive Officer of Atlantic and the
Executive Vice President of Isis (the “Executive Officers”) by notice in writing
in accordance with the terms of this Agreement. 
The Executive Officers (or their respective designees) will meet as soon
as reasonably possible thereafter, and use their good faith efforts to mutually
agree upon the resolution of the dispute, controversy or claim.  If any dispute, controversy or claim is not
resolved by the designated officers of the Parties (or their designees) within
30 days after such dispute is referred to them, then the Parties agree that such
dispute will be referred to mediation, and if the dispute remains unresolved
after mediation, either Party will have the right to arbitrate such dispute in
accordance with Section 14.4.3; provided, however,
that any dispute relating to the construction or validity of any Patent will
not be subject to arbitration.

14.4.2     Mediation.  If the Parties pursue mediation proceedings
the Parties will attempt to resolve such dispute in accordance with the
Commercial Mediation Procedures of the American Arbitration Association (“AAA”),
before resorting to arbitration in accordance with Section 14.4.3 below.  The mediation will be conducted by a single
mediator experienced in the business and technology that is the subject of this
Agreement.  The place of mediation will
be in New York, NY, USA.  Either Party
may apply to the mediator or to a court for interim injunctive relief until the
mediation decision is rendered or the dispute, controversy or claim is
otherwise resolved.

14.4.3     Arbitration.
If the Parties do
not fully settle any dispute, controversy or claim pursuant to Section 14.4.1
or 14.4.2 and a Party wishes to pursue the matter further, each such dispute,
controversy or claim will be finally resolved by binding arbitration in
accordance with the Commercial Arbitration Rules of the AAA, and judgment on
the arbitration award may be entered in any court having jurisdiction thereof.
The arbitration will be conducted by a single arbitrator agreeable by the
Parties, if the Parties cannot agree upon an arbitrator, the arbitrator will be
appointed by the AAA. No individual will be appointed to arbitrate a
dispute pursuant to this Agreement unless he or she agrees in writing to be
bound by the provisions of this Section 14.4. 
The place of arbitration will be New
York, NY, USA. Either Party may apply to the arbitrator for interim injunctive
relief until the arbitration award is rendered or the controversy is otherwise
resolved.

14.4.4     Disputes
Regarding Material Breach.  If the Parties are in dispute as
to whether one party is in material breach of this Agreement, then the mediator
or arbitrators will first determine if material breach has in fact occurred,
and if so, will grant the defaulting Party the cure period provided pursuant to
Section 10.3.  If the material breach is
not cured within the time period provided pursuant to Section 10.3, the
mediation or arbitration will continue and the mediator or arbitrators will, as
part of the same mediation or arbitration, award actual direct damages to the
non-defaulting Party.

 23
 

14.4.5     Costs
and Expenses.  Except as expressly provided herein, each
Party will bear its own costs and expenses and attorneys’ fees and an equal
share of the mediator’s and/or arbitrators’ and any administrative fees of
mediation and arbitration. Notwithstanding the foregoing, in the case of
arbitration, if a Party has been found to be in material breach of this
Agreement, the defaulting Party will be responsible for both Parties’ Third
Party costs and expenses (including the costs of the arbitrators and any
administrative fees of arbitration) and the reasonable attorneys’ fees of the
non-defaulting Party; provided, however,
that the total amount of such fees and expenses the defaulting Party is
required to reimburse the non-defaulting Party cannot exceed the total amount
of monetary damages awarded to the non-defaulting Party as a result of such
material breach.

14.4.6     Procedure.   Except
to the extent necessary to confirm an award or as may be required by law,
neither a Party, a mediator, nor an arbitrator may disclose the existence,
content, or results of a mediation or an arbitration without the prior written
consent of both Parties. In no event will arbitration be initiated after the
date when commencement of a legal or equitable proceeding based on the dispute,
controversy or claim would be barred by the applicable New York statute of
limitations.

14.4.7     Speedy Resolution.   The Parties intend, and will take all reasonable action as is
necessary or desirable to ensure, that there be a speedy resolution to any
dispute which becomes the subject of mediation or arbitration, and the mediator
and arbitrators will conduct the mediation or arbitration so as to resolve the
dispute as expeditiously as possible.

14.4.8     Awards. In any
mediation, a decision or opinion issued by the mediator regarding the dispute
between the Parties is non-binding. The
arbitrators may award monetary damages and injunctive relief, but may not order
the granting or termination of licenses or assign rights to a Product to either
of the Parties.  Monetary damages
will be in the form of off-set royalties or
otherwise, to account for the damages to the non-defaulting Party from the
breach, and to account for the defaulting Party’s contribution to the Product
in view of the breach.  All awards
will be in writing and will state reasons. 
Executed copies of all awards will be delivered by the arbitrators to
the Parties as soon as is reasonably possible. 
All awards of the arbitrators will be final and binding on the Parties,
and there will be no appeal of any such award whatsoever.  The Parties undertake to satisfy any award
without delay.

Section 14.5    Notices.  All notices or other communications that are
required or permitted hereunder 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:

 24
 

If to Atlantic, to:

Atlantic
Healthcare (UK) Limited

MoFo Notices Limited

7th Floor

CityPoint

One Ropemaker Street

London EC2Y 9AW

Attention:   Chief Executive Officer

Facsimile:  +44 (0) 20 7496 8500

If to Isis, to:

Isis
Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, California 92008

Attention: Executive Vice President and CFO

Facsimile: +1 (760) 603-4650

with a copy to:

Attention:  General Counsel

Facsimile: +1 (760) 268-4922

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, if personally delivered or sent by facsimile on a Business Day, (ii)
on the Business Day after dispatch, if sent by nationally-recognized overnight
courier, and (iii) on the third business day following the date of mailing, if
sent by mail.  It is understood and
agreed that this Section 14.5 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 Agreement.

Section 14.6    Entire
Agreement; Modifications.  This
Agreement sets forth and constitutes the entire agreement and understanding
between the Parties with respect to the subject matter hereof and all prior
agreements, understanding, promises and representations, whether written or
oral, with respect thereto are superseded hereby.  Each Party confirms that it is not relying on
any representations or warranties of the other Party except as specifically set
forth herein.  No amendment,
modification, release or discharge will be binding upon the Parties unless in
writing and duly executed by authorized representatives of both Parties.

Section 14.7    Relationship
of the Parties.  It is expressly
agreed that the Parties will be independent contractors of one another and that
the relationship between the Parties will not constitute a partnership, joint
venture or agency.

Section 14.8    Waiver.  Any term or condition of this Agreement may
be waived at any time by the Party that is entitled to the benefit thereof, but
no such waiver will be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition.  Any such waiver will not be deemed a waiver
of any other right or breach hereunder.

 25
 

Section 14.9    Counterparts.  This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

Section 14.10  No
Benefit to Third Parties.  The
provisions of this Agreement are for the sole benefit of the Parties and their
successors and permitted assigns.  This
Agreement shall not confer any rights or remedies upon any person other than
Isis and Atlantic and their respective successors and permitted assigns except
as otherwise expressly provided in Section 12. Except as expressly provided in
Section 12, no person who is not a party to this Agreement (including any employee,
officer, agent, representative or subcontractor of either Party) shall have the
right to enforce any terms of this Agreement which expressly or by implication
confers a benefit on that person without the prior written agreement of the
Parties which agreement must refer to this Section 14.10.

Section 14.11  Further
Assurance.  Each Party will duly
execute and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including
the filing of such assignments, agreements, documents and instruments, as may
be necessary to carry out the provisions and purposes of this Agreement.

Section 14.12  Force
Majeure. Neither Party shall be responsible to the other for any failure or
delay in performing any of its obligations under this Agreement or for other
non-performance hereunder if such delay or non-performance is caused by strike,
stoppage of labor, lockout or other labor trouble, fire, flood, accident, war,
act of terrorism, act of God or of the government of any country or of any
local government, or by cause unavoidable or beyond the control of any Party
hereto. In such event, the Party affected will use Commercially Reasonable
Efforts to resume performance of its obligations.

[SIGNATURES ON FOLLOWING PAGE]

 26
 

IN WITNESS WHEREOF, the Parties
hereto have caused this Agreement to be executed by their duly authorized
representatives as of the date first above written.

	
  Atlantic Healthcare (UK) Limited

  	
   

  	
  Isis Pharmaceuticals, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Per: 

  	
  /s/
  Toby Wilson Waterworth

  	
   

  	
   

  	
  Per: 

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

  	
   

  
	
   

  	
   

  	
   

  
	
  Toby Wilson
  Waterworth

  	
   

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

  
	
  Director

  	
   

  	
  Chief Executive Officer

  
							

 

 27

APPENDIX
1

Definitions

“Affiliate”
of a Party means any other party that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such Party. 
For purposes of this definition only, “control” and, with correlative
meanings, the terms “controlled by” and “under common control with” will mean
the possession, directly or indirectly, of the power to direct the management
or policies of a party, whether through the ownership of voting securities or by
contract relating to voting rights or corporate governance.

“Agreement” means this document
including any and all schedules, appendices and other addendum to it as may be
added and/or amended from time to time in accordance with the provisions of
this document.

“Alicaforsen”
means the compound known by the USAN name “Alicaforsen,” which is also known as
ISIS 2302.

“Alicaforsen
API” means Alicaforsen in bulk form
manufactured in accordance with cGMP.

Alicaforsen Patents” means (i) the Patents listed on Appendix 2, and (ii)
all Patents issuing from the Patents in (i), and (iii) any other Patent
Controlled by Isis during the term of this Agreement which covers the
composition, formulation or use of Alicaforsen but
excluding always the Patents within Excluded Isis IP and the ICAM-1
Specific Patents.

 “Alicaforsen Product” means
a pharmaceutical preparation in any formulation comprising Alicaforsen.

“Applicable
Law” means all applicable laws, rules, and regulations,
including any rules, regulations, guidelines, or other requirements of the
Regulatory Authorities that may be in effect from time to time.

“Atlantic
Equity Securities” has the meaning set forth in Section
6.2.2.

“Atlantic Healthcare” means that company incorporated in England
and Wales with company registration no. 5878612 whose registered address is
Maple House, Birdbrook, Halstead, Essex CO9 4BB.

“Authorized Disclosure” means a disclosure of Confidential Information by
the receiving Party to the extent that such disclosure is:

(i) 
made in response to a valid order of a court of competent jurisdiction; provided, however, that such receiving
Party will first have given notice to such other Party and given such other
Party a reasonable opportunity to quash such order and to 

obtain a protective order requiring that the
Confidential Information and documents that are the subject of such order be
held in confidence by such court or agency or, if disclosed, be used only for
the purposes for which the order was issued; and provided further that if a disclosure order is not quashed
or a protective order is not obtained, the Confidential Information disclosed
in response to such court or governmental order will be limited to that
information which is legally required to be disclosed in response to such court
or governmental order;

(ii)       otherwise required to comply with
Applicable Laws, including to the extent such disclosure is required in
publicly filed financial statements or other public statements under rules
governing a stock exchange (e.g., the rules of the United States Securities and
Exchange Commission, NASDAQ, NYSE, UKLA or any other stock exchange or which
securities of either Party may be listed) provided,
however, to the extent possible bearing in mind such Applicable Laws
and subject to the next subsequent sentence of this paragraph, the receiving
Party shall provide the other Party with a copy of the proposed text of such
statements or disclosure five (5) Business Days in advance of the date on which
the disclosure is to be made to enable the other Party to review and provide
comments, unless a shorter review time is agreed.  If the compliance with an Applicable Law
requires filing of this Agreement, the filing Party shall to the extent
possible seek confidential  treatment of portions of this Agreement from the relevant
competent authority and shall provide the other Party with a copy of the
proposed filings at least ten (10) Business Days prior to filing for the other
Party to review any such proposed filing. 
Each Party agrees that it will obtain its own legal advice with regard
to its compliance with Applicable Laws and will not rely on any statements made
by the other receiving Party relating to such laws;

(iii)      made by such receiving Party to the
Regulatory Authorities as necessary for (a) the development or
commercialization of a Product in a particular country, or (b) as required in
connection with any filing, application or request for Regulatory Approval in a
particular country and in either case to the extent consistent with the
licenses granted under the terms of this Agreement;

(iv)      made by the receiving Party, in connection
with the performance of this Agreement, to Affiliates sublicensees, licensors,
licensees, directors, officers, employees, consultants, representatives or
agents, each of whom prior to disclosure must be bound by obligations of
confidentiality and non-use at least equivalent in scope to those set forth in
this Agreement;

(v)       made by the receiving Party to existing
or potential acquirers; existing or potential pharmaceutical collaborators (to
the extent contemplated hereunder); investment bankers; existing or potential
investors, merger candidates, partners, venture capital firms or other
financial institutions or investors for purposes of obtaining financing; or,
bona fide strategic potential partners; each of whom prior to disclosure must
be bound by obligations of confidentiality and non-use at least equivalent in
scope to those set forth in this Agreement; or

(vi)          made
by the receiving Party to its legal advisers for the purpose of seeking advice.

“Business Day” means 9.00am to 5.00pm
local time on any day, other than Saturday, Sunday or any statutory holiday or
public holiday in the United States or England and Wales.

“Calendar Year” means each
successive period of 12 months commencing on January 1 and ending on December
31.

“cGMP” means current Good Manufacturing Practices as
specified in ICH Guideline Q7A, the United States Code of Federal Regulations,
or equivalent laws, rules, or regulations of an applicable Regulatory Authority
at the time of manufacture.

“Commercially Reasonable Efforts” (i) in respect of Atlantic means efforts and
resources commonly used in the biotechnology industry by companies at a similar
stage of development for products of similar commercial potential to develop
and commercialize a product owned by such a company or to which it has rights,
which product is at a similar stage in its development or product life and is
of similar market potential to the Product in question and taking into account the
patent and other proprietary position of the product; and (ii) in respect of
Isis means efforts and resources commonly used by biotechnology companies of a
similar size to Isis based on market capitalization to develop a product owned
by such a company or to which it has rights, which product is at a similar
stage in its development or product life and is of similar market potential to
the Product in question and taking into account the patent and other
proprietary position of the product. 
Promptly following the meeting with the FDA to discuss the
registration strategy for a pouchitis indication, Atlantic and Isis will agree
on the Development Timeline to be included in Appendix 5. Atlantic’s meeting of such
Development Timeline in Appendix 5 and Isis’ provision of the Candidate Pool to
Atlantic in accordance with the Work Plan will be deemed to be examples of
using Commercially Reasonable Efforts; provided,
however, that a failure to meet such Development Timeline will not
be dispositive of a failure to use Commercially Reasonable Efforts.

“Committee Members” has
the meaning set forth in Section 3.2.

“Candidate Pool” has
the meaning set forth in Section 4.1.1.

“Confidential Information” means
all information and know-how and any tangible embodiments thereof provided by
or on behalf of one Party to the other Party either in connection with the
discussions and negotiations pertaining to this Agreement or in the course of
performing this Agreement, including data; knowledge; practices; processes;
ideas; research 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, investors or business.

Exceptions.
Notwithstanding the foregoing, information or know-how of a Party will not be
deemed Confidential Information for purposes of this Agreement if such
information or know-how:

(a)       was
already known to the receiving Party, other than under an obligation of
confidentiality or non-use, at the time of disclosure to such receiving Party;

(b)       was
generally available or known to parties reasonably skilled in the field to
which such information or know-how pertains, or was otherwise part of the
public domain, at the time of its disclosure to, or, with respect to know-how,
discovery or development by, such receiving Party;

(c)       became
generally available or known to parties reasonably skilled in the field to
which such information or know-how pertains, or otherwise became part of the
public domain, after its disclosure to such receiving Party through no fault of
the receiving Party;

(d)       was
disclosed to such receiving Party, other than under an obligation of
confidentiality or non-use, by a Third Party who had no obligation to the
disclosing Party not to disclose such information or know-how to others; or

(e)       was
independently discovered or developed prior to disclosure by such receiving Party,
as evidenced by their written records, without the use of Confidential
Information belonging to the disclosing Party.

“Control”
means, with respect to any Patent or other intellectual property right,
possession of the right (whether by ownership, license or otherwise), to
assign, or grant a license, sublicense or other right to or under, such Patent
or right as provided for herein without violating the terms of any agreement or
other arrangement with any Third Party or incurring any additional financial or
other obligation to a Third Party except the obligations specifically described
in Section 6.7.

“Cumulative
Net Sales” means the total cumulative amount of Net Sales
calculated separately for each of the Alicaforsen Products and each of the
Second Generation ICAM-1 Products, from the first date that each respective
Product was approved for commercialization by a Regulatory Authority.  For purposes of clarity, the Net Sales for
any Second Generation ICAM-1 Products will not be taken into consideration when
calculating Cumulative Net Sales for Alicaforsen Products, and vice versa.

“Discontinuance” means the
occurrence of any one of the following:

1.
Atlantic voluntarily elects to abandon researching, developing and/or commercializing
all Products, as evidenced by a written communication from an authorized officer
of Atlantic to Isis; or

2.  Atlantic fails to use
Commercially Reasonable Efforts and the Quality Standard to develop and
commercialize at least one Product.

 “Discontinued
Patent” has the meaning set forth in Section 9.1.4.

“DMF” has the meaning set forth in Section 3.6.1.

“EMEA”
means the European Regulatory Authority known as the European Medicines Agency
and any successor agency thereto.

“Equity
Cap” means [***]% of the issued and outstanding share capital
of Atlantic (on an as-issued, post financing basis).

“Excluded
Isis IP” means all know how and Patents Controlled by Isis on
the Effective Date and at any time during the term of the Agreement other than
(A) Alicaforsen Patents, (B) ICAM-1 Specific Patents, (C) Isis Core Technology
Patents, (D) Second Generation ICAM-1 Product-Specific Patents, (E) Isis Data,
(F) Isis Manufacturing Know How, and (G) Second Generation Isis Data.  For clarity, Excluded Isis IP include any
know how and Patents Controlled by Isis which cover Isis’ (i) formulation and
delivery technology (save as expressly claimed in the Alicaforsen Patents,
ICAM-1 Specific Patents, Second Generation ICAM-1 Product-Specific Patents and
Isis Manufacturing Know How), (ii) RNAi technologies, (iii) microRNA
technologies, and (iv) chemical modifications and motifs other than Isis MOE
Gapmer Chemistry, and (v) the Excluded Manufacturing IP.

“Excluded
Manufacturing IP” means all
Patents and know how (including any and all information directly
relating to manufacturing methods (including related analytical methods) of
Alicaforsen API) Controlled by Isis on
the Effective Date and at any time during the term of the Agreement which claim
the manufacturing process by which Isis manufactures Alicaforsen API.

“Existing
Royalties” has the meaning set forth in Section 6.4.3.

“FDA”
means the United States Food and Drug Administration and any successor agency
thereto.

“First
Commercial Sale” means the first sale of a Product by
Atlantic, its Affiliates or a sublicensee to a Third Party in a particular
country after Regulatory Approval has been obtained.

“[***]”
means a chronic disorder of the [***], including without limitation, [***] or
[***].

“ICAM-1”
means intercellular adhesion molecule-1 (also called CD54).

“ICAM-1
Specific Patents” means (i) the Patents listed on Appendix 3 (ii) all Patents issuing therefrom, and (iii) any
other Patents Controlled by Isis during the term of this Agreement which cover
the composition, formulation or use of Alicaforsen Products 

*** CONFIDENTIAL
TREATMENT REQUESTED

or
Second Generation ICAM-1 Products, but excluding always the
Alicaforsen Patents, the Second Generation ICAM-1 Product-Specific Patents and
the Patents within Excluded Isis IP.

“IFRS” means
International Financial Reporting Standards established by the International
Accounting Standards Board, as amended from time to time.

“[***]”
means a formulation and excipient system and technologies that delivers a drug
compound into the human body by [***] directly into the [***] to achieve a
local or systemic therapeutic effect.

“Initiation of Phase I Clinical Trial” means the first visit
by the first human patient in a Phase I Clinical Trial during which dosing of Product or placebo occurs.

“Initiation
of Pivotal Quality Clinical Trial” means the first visit by the first patient in a
Pivotal Quality Clinical Trial during which dosing of Product or placebo
occurs.

“Isis
Background IP” has the meaning set forth in Section 13.6.1.

“Isis
Background Know How” has the meaning set forth in Section
13.6.1.

“Isis Core Technology Patents” means Patents Controlled by
Isis on the Effective Date that are necessary for the development and
commercialization of the Product, but does not include (A) Alicaforsen Patents,
(B) ICAM-1 Specific Patents, (C) Second Generation ICAM-1 Product-Specific
Patents, or (D) Patents Controlled by Isis that claim, and only to the extent
that they claim, Excluded Isis IP.

“Isis
Data” has the meaning set forth in Section 2.2.1.

“Isis
Database” has the meaning set forth in Section 3.3.1.

 “Isis Manufacturing Know How” has
the meaning set forth in Section 2.2.1.

“JDC” has the meaning set forth
in Section 3.2.

“Losses”
has the meaning set forth in Section 12.1.

“Major
Market” means the [***], [***], [***], [***], [***], [***],
[***] and [***].

“Manufacturing
Agreement” has the meaning set forth in Section 3.6.1.

“MOE
Gapmer” means a single stranded antisense Phosphorothioate
oligonucleotide of 15-30 nucleotides wherein all of the backbone linkages are
modified by adding a sulfur at the non-bridging oxygen (Phosphorothioate) and a
stretch of at least 10 consecutive nucleotides remain unmodified (deoxy sugars)
and the remaining nucleotides contain an O’ – methyl O’ – ethyl substitution at
the 2’ position.

*** CONFIDENTIAL
TREATMENT REQUESTED

 

“NDA” means a New Drug Application filed with the FDA
after completion of clinical trials to obtain Regulatory Approval for
commercial product in the United States or an equivalent application for
regulatory approval in other Major Market countries.

“Net
Sales” means the gross invoiced price charged by Atlantic or
its Affiliates or sublicensees, as appropriate, for the sale of a Product to a
Third Party by Atlantic, its Affiliates or its sublicensees, as appropriate, less
the following deductions:

(i)       Trade
and quantity discounts actually granted;

(ii)      Credits
for returns or allowances;

(iii)     Actual
uncollectible amounts for Product where collectibility is determined in
accordance with IFRS consistently applied to all of Atlantic’s products;

(iv)     Freight,
shipping insurance and other transportation expenses directly related to the
sale of the Product (if actually borne by Atlantic, its Affiliates or
sublicensees without reimbursement from any Third Party);

(v)      The
amount of any sales tax or other taxes assessed directly on the sale of such
Product which is not refunded; and

(vi)     Charge
back payments or rebates granted to managed health care organizations or
federal, state and local governments, their agencies, purchasers and
reimburses.

The transfer of Product by Atlantic or one of its Affiliates to another
Affiliate shall not be considered a sale. 
Upon the sale or other disposal of Product for other than monetary
consideration , which sales price is either customary or is reasonably expected
in the country in which such sale is made, such sale or other disposal shall be
deemed to be a sale with the consideration for such sale constituting Net Sales
hereunder  at the average sales price
during the applicable reporting period generally achieved (or as achieved by
similar products) for such Product in the country in which such sale or other
disposal occurred when such Product is sold alone and not with other products.
Disposal of Product for or use of Product in clinical trials or as free samples
shall not be deemed a sale under this Section. 
Such amounts shall be determined from the books and records of Atlantic
maintained in accordance with IFRS, consistently applied.

Where Product
contains Alicaforsen API or a Second Generation ICAM-1 ASO Drug Candidate and
is sold in combination with one or more other active ingredient(s) that are
sold either as a fixed dose or as separate doses in a single package  for a single price (a “Combination Product”),
Net Sales will be determined as follows:

(X divided by Y)
multiplied by Z

where
X is the average sales price during the applicable reporting period generally
achieved for the Product in the country in which such sale or other disposal
occurred when such Product is sold alone and not as a Combination Product; Y is
the sum of the 

average
sales price during the applicable reporting period generally achieved in that
country, when sold alone, by each product (including the Product) included in
the Combination Product that is sold for the single price; and Z equals the
single price at which the Combination Product represented in Y was actually
sold.  In the event one or more of the
products in the Combination Product are not sold separately, the Parties shall
confer in good faith to determine a fair market price that shall be equitable
for the value of the Product within the Combination Product.

 “Notice” has the meaning set
forth in Section 4.1.2.

“[***]” means a formulation and
excipient system and technologies to deliver a drug compound to the [***] to
achieve a local or systemic therapeutic effect.

“Patents”
will include (x) all U.S. patents and patent applications, (y) any
substitutions, divisions, continuations, reissues, renewals, registrations,
confirmations, re-examinations, extensions, supplementary protection
certificates and the like, and any provisional applications, of any such
patents or patent applications, and (z) any foreign or international equivalent
of any of the foregoing.

“Patent
Term Extensions” has the meaning set forth in Section 9.1.6.

“Phase I Clinical Trial” means the initial clinical testing
of a Product in humans (first-in-humans study).

“Pivotal Quality Clinical Trial” means a human clinical trial of a Product
designed to be of a size and statistical power to support an NDA filing alone
or in combination with other studies.  If
it is unclear whether or not a study design will be sufficient to support an
NDA filing (other than by virtue of the uncertainty of safety and efficacy data
from that trial) the study will be deemed to be a Pivotal Quality Clinical
Trial on the initiation of activities to support an NDA filing.  A Phase III clinical study will be deemed to
be a Pivotal Quality Clinical Trial.

“Positive Pouchitis Clinical Trial” means a clinical study of Alicaforsen Product in
humans conducted by Atlantic in accordance with this Agreement that is directed
to the treatment of pouchitis, which meets the study’s primary endpoint(s).

“Product”
means (i) an Alicaforsen Product and, (ii)
at such time as Isis grants to Atlantic the licenses in Section 4.1.3 of the
Agreement, a Second Generation ICAM-1 Product, or (iii) both, which
Atlantic or its Affiliates are developing or commercializing under this
Agreement or that is being developed or commercialized under a Sublicense.

“Quality Standard” means, with respect to research, development, manufacture or
commercialization of the Candidate Pool, the Second Generation ICAM-1 ASO Drug
Candidate or a Product, the standard of care, quality, and professional
competence commonly used in the biotechnology industry for products of similar
commercial potential at a similar stage in its lifecycle.

*** CONFIDENTIAL
TREATMENT REQUESTED

“Regulatory
Approval” means (a) in the United States, approval by the FDA
of an NDA, or similar application for marketing approval, and satisfaction of
any related applicable FDA registration and notification requirements (if any),
and (b) in a Major Market other than the United States, approval by Regulatory
Authorities having jurisdiction over such country of a single application or
set of applications comparable to an NDA and satisfaction of any related
applicable regulatory and notification requirements (if any).

“Regulatory
Authority” means any applicable government entities
regulating or otherwise exercising authority with respect to the development
and commercialization of the Product.

“Regulatory
Documentation” means all applications, registrations,
licenses, authorizations and approvals (including all Regulatory Approvals),
all correspondence submitted to or received from Regulatory Authorities
(including minutes and official contact reports relating to any communications
with any Regulatory Authority), all supporting documents and all clinical
studies and tests, including the manufacturing batch records, relating to the
Product, and all data contained in any of the foregoing, including all
regulatory drug lists, advertising and promotion documents, adverse event files
and complaint files.

 “Royalty Due Dates” means
the last working days of March, June, September and December of each and every
year during which this Agreement remains in full force and effect.

“Second Generation Development Plan” has the meaning set
forth in Section 4.1.2.

“Second Generation ICAM-1 ASO Drug Candidate” means a MOE
Gapmer targeted to ICAM-1 that is selected by Atlantic under Section 4.1.2 of
the Agreement.

“Second
Generation ICAM-1 Products” means pharmaceutical
preparation(s) comprising the Second Generation ICAM-1 ASO Drug Candidate.

“Second Generation ICAM-1 Product-Specific Patents”
means any Patent that is Controlled by Isis on, before or after Atlantic makes
its election under Section 4.1.2 of this Agreement, that (i) claims the
specific composition of matter of a Second Generation ICAM-1 ASO Drug
Candidate, or (ii) methods of using such Second Generation ICAM-1 ASO Drug
Candidate as a therapeutic.

“Second
Generation ICAM-1 Research Program” has the meaning set forth
in Section 4.1.1.

“Second Generation Isis Data” has the meaning set forth in
Section 4.1.4.

“SSEA
Execution Date” has the meaning set forth in Section 6.1.1.

“Sublicense”
means a sublicense from Atlantic to a Third Party under the
Alicaforsen Patents or the ICAM-1 Patents or the Second Generation ICAM-1
Product-Specific Patents to develop, use, sell, offer for sale, have sold
and/or import any Product.

 “Sublicense Revenue” means
any consideration that Atlantic receives from a sublicensee in consideration
for a grant of any Sublicense, including, but not limited to, license fees,
milestone payments, and license maintenance fees, but excluding: (i) royalties
on Net Sales of Products, (ii) payments made in consideration of equity or debt
securities of Atlantic at fair market value and (iii) payments specifically
committed to reimburse Atlantic for the direct cost of research and
development.  If Atlantic receives any
non-cash Sublicense Revenue, Atlantic will pay Isis, at Isis’ election, either
(x) a cash payment equal to the fair market value of Isis’ appropriate portion
of the Sublicense Revenue or (y) the in-kind portion, if practicable, of the
Sublicense Revenue.  For purposes of calculating
Sublicense Revenue, a series of
Sublicenses to the same sublicensee or related sublicensees will be aggregated
to constitute a single Sublicense.

“Subscription and Share Exchange Agreement”
has the meaning set forth in Section 6.1.1.

“Term” has the meaning set forth in Section 10.1.

“Third
Party” means any party other than Isis or Atlantic or their
respective Affiliates.

“Valid
Claim” means a claim of a Patent which (i) in the case of any
granted, unexpired United States or foreign Patent, shall not have been donated
to the public, disclaimed or held invalid or unenforceable by a court of
competent jurisdiction in an unappealed or unappealable decision, or (ii) in the
case of any United States or foreign patent application, is being prosecuted in
good faith and shall not have been permanently cancelled, withdrawn, or
abandoned provided that no more than eight (8) years have passed since the
earliest priority date for such application.

“Valid
Composition of Matter Claim” means a Valid Claim of a Patent
in a given country that covers the structure of the compound comprising the
active pharmaceutical ingredient in the Product (be it Alicaforsen API or
Second Generation ICAM-1 ASO Candidate Drug) as opposed to its process of
manufacture, use or method of treatment.

“Work
Plan” has the meaning set forth in Section 4.1.1.

APPENDIX
2

ALICAFORSEN
PATENTS

[***]

*** CONFIDENTIAL
TREATMENT REQUESTED

APPENDIX
3

ICAM-1
SPECIFIC PATENTS

[***]

*** CONFIDENTIAL
TREATMENT REQUESTED

APPENDIX
4

ISIS CORE
TECHNOLOGY PATENTS

[***]

*** CONFIDENTIAL
TREATMENT REQUESTED

APPENDIX
5

DEVELOPMENT
TIMELINE

[***]

*** CONFIDENTIAL
TREATMENT REQUESTED

APPENDIX
6

ATLANTIC
EQUITY SECURITIES CAPITALIZATION TABLE

[***]

*** CONFIDENTIAL
TREATMENT REQUESTED

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