Document:

Exhibit 10.5

 

	
  CONFIDENTIAL TREATMENT REQUESTED

  	
   

  	
  EXECUTION
  VERSION

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

  	
   

  	
   

  

 

 

CALL OPTION AGREEMENT

 

 

BY AND AMONG

 

 

ISIS PHARMACEUTICALS, INC.,

 

 

IBIS BIOSCIENCES, INC.

 

 

AND

 

 

ABBOTT MOLECULAR INC.

 

 

January 30, 2008

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II GRANT OF CALL OPTION; SUBSCRIPTION
  RIGHTS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Grant of Option

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.2

  	
   

  	
  Subscription Right

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.3

  	
   

  	
  Purchase Price

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.4

  	
   

  	
  Milestone Adjustments

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III EXERCISE OF OPTION

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Exercise of Call Option

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.2

  	
   

  	
  Exercise of Subscription Right

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.3

  	
   

  	
  Call Option Extension

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.4

  	
   

  	
  Call Option Acceleration

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.5

  	
   

  	
  Effect of Expiration and Termination of Call Option,
  Subscription Right

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.6

  	
   

  	
  Call Option Exercise and Subscription Right Exercise
  Preparation

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV MISCELLANEOUS PROVISIONS

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Assignment

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.2

  	
   

  	
  Notices

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.3

  	
   

  	
  Counterparts

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.4

  	
   

  	
  Amendment

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.5

  	
   

  	
  Severability

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.6

  	
   

  	
  Remedies Cumulative

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.7

  	
   

  	
  Governing Law; Alternative Dispute Resolution

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.8

  	
   

  	
  Rules of Construction

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.9

  	
   

  	
  Further Assurances

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
  Form of Stock
  Purchase Agreement

  	
   

  	
   

  
	
  B

  	
  Form of Stock
  Subscription Agreement

  	
   

  	
   

  
	
  C

  	
  [***] Milestone and
  Value Accretion Milestones

  	
   

  	
   

  
	
  D

  	
  Option Notice 

  	
   

  	
   

  
								

 

i

 

CALL OPTION AGREEMENT

 

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

 

RECITALS

 

WHEREAS, on the
date hereof, the Parties have entered into a Strategic Alliance Master
Agreement (the “Master Agreement”) and certain other Investment
Documents, pursuant to which, among other things, AMI has acquired the Shares
from Ibis;

 

WHEREAS, in
connection with the transactions contemplated by the Investment Documents, Isis
has agreed to grant an option to AMI and AMI has agreed to acquire from Isis an
option for AMI to acquire all of the Capital Stock (other than the Shares (and
the Additional Shares if AMI elects to acquire the Additional Shares pursuant
to the Stock Subscription Agreement)) of Ibis (the “Optioned Stock”)
from Isis on the terms set forth in this Agreement and the Acquisition
Agreement;

 

WHEREAS, in
connection with the transactions contemplated by the Investment Documents, Ibis
has agreed to grant a subscription right to AMI and AMI has agreed to acquire
from Ibis a subscription right to subscribe for and acquire the Additional
Shares from Ibis on the terms set forth in this Agreement and the Stock
Subscription Agreement; and

 

WHEREAS, the
execution and delivery of this Agreement by Isis and Ibis is a material
inducement for AMI to enter into the Master Agreement and to acquire the
Shares.

 

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

 

ARTICLE I

DEFINITIONS

 

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

 

“Acquisition Agreement” means the form of Stock
Purchase Agreement attached hereto as Exhibit A.

 

 

“Call Option Expiration Date” means 5:00 p.m.
(Pacific Time) on the date the Call Option expires pursuant to the terms
hereof, which, subject to Section 3.1, Section 3.2, Section 3.3
and Section 3.4, shall be December 31, 2008.

 

“Call Period” means the period of time
commencing on the date hereof and ending on the Call Option Expiration Date.

 

“Cut-Off
Date” means, subject to Section 3.2, 5:00 p.m.
(Pacific Time) on July 31, 2008.

 

“Stock Subscription Agreement” means the form
of Stock Subscription Agreement attached hereto as Exhibit B.

 

ARTICLE II

GRANT OF CALL OPTION; SUBSCRIPTION RIGHTS

 

Section 2.1             Grant of Option.  Subject to the terms set forth in this
Agreement, Isis hereby grants to AMI, and AMI hereby acquires from Isis, an
exclusive option, in AMI’s sole discretion (the “Call Option”), to
purchase the Optioned Stock on the terms set forth in this Agreement and in the
Acquisition Agreement.

 

Section 2.2             Subscription Right.  Subject to the terms set forth in this
Agreement, Ibis hereby grants to AMI, and AMI hereby acquires from Ibis the
exclusive right, in AMI’s sole discretion (the “Subscription Right”), to
subscribe for and purchase the Additional Shares on the terms set forth in this
Agreement and in the Stock Subscription Agreement for an aggregate purchase
price of $20,000,000.

 

Section 2.3             Purchase Price.  The “Transaction Value” for the Optioned
Stock shall be equal to (a) either (i) One Hundred Seventy Five
Million and No/100 Dollars ($175,000,000.00) if AMI has exercised the
Subscription Right and acquired the Additional Shares or (ii) One Hundred
Ninety Five Million and No/100 Dollars ($195,000,000.00) if AMI has not exercised
the Subscription Right (the “Base Purchase Price”) plus (b) the
Milestone Adjustments (as defined below), if any.

 

Section 2.4             Milestone Adjustments.  If AMI, in good faith, determines that the
[***] Milestone (as set forth in Exhibit C hereto) has been reached
prior to AMI’s delivery to Isis of the Option Notice or Isis’ delivery to AMI
of the Purchase Offer Notice (as defined below), as the case may be, then:

 

(a)   if AMI, in good faith, also
determines that the [***] Milestone (as set forth in Exhibit C
hereto) has been reached as of the date of the Option Notice or the Purchase
Offer Notice, as the case may be, then the Transaction Value shall be increased
by [***] (the “[***] Milestone Adjustment”);

 

(b)   if AMI, in good faith, also
determines that the [***] Milestone (as set forth in Exhibit C
hereto) has been reached as of the date of the Option Notice or the Purchase
Offer 

 

2

 

Notice, as the case may be, then the Transaction Value shall be
increased by [***] (the “[***] Milestone Adjustment”); and

 

(c)   if AMI, in good faith, also
determines that the [***] Milestone (as set forth in Exhibit C
hereto) has been reached as of the date of the Option Notice or the Purchase
Offer Notice, as the case may be, then the Transaction Value shall be increased
by [***] (the “[***] Milestone Adjustment” and, together with the [***]
Milestone Adjustment and the [***] Milestone Adjustment, the “Milestone
Adjustments”).

 

The Milestone Adjustments shall not, under any circumstances,
exceed Fifteen Million and No/100 Dollars ($15,000,000.00) in the aggregate,
and the Transaction Value shall not, under any circumstances, exceed, in the
aggregate (1) One Hundred Ninety Million and No/100 Dollars
($190,000,000.00) if AMI has exercised the Subscription Right and acquired the
Additional Shares or (2) Two Hundred Ten Million and No/100 Dollars
($210,000,000.00)  if AMI has not
exercised the Subscription Right.

 

ARTICLE III

EXERCISE OF OPTION

 

Section 3.1             Exercise of Call Option.

 

(a)   AMI, in its sole discretion at
any time prior to the Call Option Expiration Date, may exercise the Call Option
by executing and delivering to Isis the Option Notice attached hereto as Exhibit D
(the “Option Notice”).  If AMI
exercises the Call Option in accordance with this Section 3.1, then
in the Option Notice AMI shall instruct Isis and Ibis to execute and deliver to
AMI, promptly upon receipt of the Option Notice, the Acquisition Agreement and
the Disclosure Schedules thereto (which shall be the most recent Disclosure
Schedules delivered by Isis pursuant to Section 3.6(a), unless
otherwise agreed to by the Parties in writing).

 

(b)   If the Disclosure Schedules
attached to the Acquisition Agreement executed and delivered by Isis and Ibis
pursuant to Section 3.1(a) are the most recent Disclosure
Schedules delivered by Isis pursuant to Section 3.6(a), then the
Call Option shall automatically expire if AMI, in its sole discretion, does not
execute and deliver the Acquisition Agreement to Isis within five (5) Business
Days after AMI’s receipt of the executed Acquisition Agreement.

 

(c)   If the Disclosure Schedules
attached to the Acquisition Agreement executed and delivered by Isis and Ibis
pursuant to Section 3.1(a) are not the most recent Disclosure
Schedules delivered by Isis pursuant to Section 3.6(a), then the
Call Option shall automatically expire if AMI, in its sole discretion, does not
execute and deliver the Acquisition Agreement to Isis on or prior to the later
of (i) the date that is one month after AMI’s receipt of the executed
Acquisition Agreement and (ii) the Call Option Expiration Date (which, in
this instance, subject to Section 3.3 and Section 3.4,
is December 31, 2008).

 

3

 

Section 3.2             Exercise of Subscription Right.

 

(a)   AMI, in its sole discretion at
any time prior to the Cut-Off Date, may exercise the Subscription Right by
providing written notice to Isis.  If AMI
exercises the Subscription Right in accordance with this Section 3.2,
then, promptly upon receipt of notice from AMI, Ibis and Isis shall execute and
deliver to AMI the Stock Subscription Agreement and the Disclosure Schedules
thereto (which shall be the most recent Disclosure Schedules delivered by Isis
pursuant to Section 3.6(a), unless otherwise agreed to by the
Parties in writing).

 

(b)   If the Disclosure Schedules
attached to the Stock Subscription Agreement executed and delivered by Isis and
Ibis pursuant to Section 3.2(a) are the most recent Disclosure
Schedules delivered by Isis pursuant to Section 3.6(a), then the
Subscription Right and the Call Option shall automatically expire if AMI, in
its sole discretion, does not execute and deliver the Stock Subscription
Agreement to Isis within five (5) Business Days after AMI’s receipt of the
executed Stock Subscription Agreement.

 

(c)   If the Disclosure Schedules
attached to the Stock Subscription Agreement executed and delivered by Isis and
Ibis pursuant to Section 3.2(a), above are not the most recent
Disclosure Schedules delivered by Isis pursuant to Section 3.6(a),
then the Subscription Right and the Call Option shall automatically expire if
AMI, in its sole discretion, does not execute and deliver the Stock
Subscription Agreement and acquire the Additional Shares on or prior to August 31,
2008.

 

(d)   Subject to Section 3.2(a),
Section 3.2(b) and Section 3.2(c), in the event
that Isis or Ibis or any of their respective Representatives receives a
Purchase Offer within [***] of the Cut-Off Date, then the Cut-Off Date shall be
the Call Acceleration Date.

 

Section 3.3             Call Option Extension.  If the [***] Milestone has not been met on or
before [***], then AMI, in its sole discretion and without the payment of any
additional consideration, may elect to extend the Call Option Expiration Date to
June 30, 2009, by providing written notice to Ibis at any time prior to
11:59 p.m. (Pacific Time) on [***]

 

Section 3.4             Call Option Acceleration.

 

(a)   If, during the Call Period,
Isis or Ibis or any of their respective Representatives receives a Purchase
Offer, then Isis shall, within [***] after such receipt, notify AMI in writing
of such Purchase Offer, setting forth in such notice (the “Purchase Offer
Notice”) [***] and indicating therein whether, assuming that the conditions
in Section 3.4(b) have been met, it intends to pursue such Purchase
Offer.

 

(b)   If (i) the Purchase Offer is from an unaffiliated third party and is
unsolicited, bona fide and in writing, (ii) the [***], (iii) AMI has
not exercised the Call Option, (iv) the consummation of the Purchase Offer
would result in AMI [***] in exchange for the surrender of the Shares and, if
AMI has exercised the Subscription Right and acquired the Additional Shares,
[***] in exchange for the surrender of the Additional Shares and (v) in
such Purchase Offer Notice, Isis indicates that it desires to pursue the
Purchase Offer, then the Call Option Expiration Date shall accelerate to the
date which is [***] days (the “Call Acceleration Date”) from the date on
which AMI receives such Purchase Offer Notice.

 

4

 

(c)   At any time prior to 5:00 p.m. (Pacific Time) on the Call
Acceleration Date, AMI shall have the right, in its sole discretion, to
exercise the Call Option for either (i) [***], or (ii) [***]; provided that, if AMI, in its sole
discretion, elects option (ii) above, the Acquisition Closing shall be
consummated [***].  If AMI does not
exercise the Call Option prior to 5:00 p.m. (Pacific Time) on the Call
Acceleration Date, then the Call Option shall expire.

 

(d)   If Isis or Ibis (as applicable) fails to consummate the transactions
contemplated by such Purchase Offer on terms no less favorable to Isis or Ibis
(as applicable) than those indicated in the Purchase Offer Notice within [***]
days from the date of the Purchase Offer Notice (the “Purchase Offer
Termination Date”), then (i) Isis and Ibis shall be prohibited from
pursuing the Purchase Offer, (ii) the Call Option shall be reinstated, (iii) the
Call Period shall be extended automatically to the date that is the later of (A) [***]
days after the Purchase Offer Termination Date and (B) [***] days after
the Call Option Expiration Date (giving effect to any extensions thereof, but
disregarding any acceleration of such date pursuant to Section 3.4(b))
and (iv) during the Call Period, Isis and Ibis shall not be permitted to
entertain any subsequent offers from the third party that submitted such
Purchase Offer.

 

Section 3.5             Effect of Expiration and
Termination of Call Option, Subscription Right. After (a) the Call Option
Expiration Date (subject to Section 3.4(d)) or (b) if AMI
exercises the Call Option, (i) the termination of the Acquisition
Agreement in accordance with its terms or (ii) the Acquisition Closing, (A) this
Agreement shall terminate automatically and the Call Option and Subscription
Right shall be null and void and of no further force or effect without any
further action by the Parties and (B) Isis, Ibis and AMI shall have no
further rights or obligations under this Agreement.  Except as expressly set forth in any
Investment Document, the expiration of the Call Period shall not affect the
rights and obligations of any of the parties hereto and thereto.

 

Section 3.6             Call Option Exercise and Subscription
Right Exercise Preparation.

 

(a)   AMI may, in connection with its
good faith determination whether to exercise in its sole discretion the
Subscription Right or the Call Option, request that Isis deliver the Disclosure
Schedules to the Stock Subscription Agreement or the Acquisition Agreement, as
the case may be, to AMI and, thereafter, Isis shall, as soon as reasonably
possible, deliver to AMI the Disclosure Schedules to the Stock Subscription
Agreement or the Acquisition Agreement, as the case may be, together with a
certification of an authorized signatory of Isis that the representations and
warranties set forth in the Stock Subscription Agreement or the Acquisition
Agreement, as the case may be, as qualified by the Disclosure Schedules, are
true and correct in all respects as of the date of delivery to AMI.  In any event, Isis shall deliver the
Disclosure Schedules to the Stock Subscription Agreement to AMI no later than June 30,
2008.

 

(b)   Isis and Ibis shall reasonably
cooperate with AMI to (i) obtain all necessary waivers, consents and
approvals and (ii) effect all necessary registrations, filings and
submissions that may be required in connection with the consummation of the
transactions contemplated by the Transaction Documents, including, but not
limited to, A) filings under the Hart Scott Rodino Antitrust Improvements Act
of 1976, as amended and any other submissions requested by the Federal Trade
Commission or Department of Justice and (B) such filings, 

 

5

 

consents, approvals, orders, registrations and
declarations as may be required under the Laws of any foreign country.

 

ARTICLE IV

 

MISCELLANEOUS PROVISIONS

 

Section 4.1             Assignment.  No Party hereto may assign this Agreement or
its rights and obligations hereunder without the prior written consent of the
other Parties; provided, that AMI
may (i) designate one or more of its Affiliates to exercise the Call
Option or Subscription Right hereunder or to receive title to the Optioned
Stock or Additional Shares by providing written notice to Ibis at any time
prior to the Acquisition Closing or the acquisition of the Additional Shares
and (ii) assign its rights and obligations hereunder in connection with a
Change of Control of AMI; provided further
that Isis may assign its rights and obligations in connection with a Change of
Control of Isis if such Transfer involves all of the Capital Stock of Ibis
that is owned by Isis and the surviving or acquiring entity assumes all of
Isis’ obligations under the Investment Documents.

 

Section 4.2             Notices.  All notices or other communications that are
required or permitted under this Agreement will be in writing and delivered
personally with acknowledgement of receipt, sent by facsimile or other
electronic means (and promptly confirmed by personal delivery, registered or certified
mail or overnight courier as provided herein), sent by nationally-recognized
overnight courier or sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:

 

	
  If to Ibis, to:

  	
   

  	
  

  

  Ibis Biosciences Inc. 

  1896 Rutherford Road

  Carlsbad, California 92008

  Attn: President

  Facsimile Number: (760) 603-4653

  
	
   

  	
   

  	
   

  
	
  If to Isis, to:

  	
   

  	
  

  

  Isis Pharmaceuticals, Inc.

  1896 Rutherford Road

  Carlsbad, California 92008

  Attn: Chief Financial Officer

  Facsimile Number: (760) 603-4650

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  

  

  Isis Pharmaceuticals, Inc.

  1896 Rutherford Road

  Carlsbad, California 92008

  Attn: General Counsel

  Facsimile Number: (760) 268-4922

  

 

6

 

	
  If to AMI, to:

  	
   

  	
  Abbott Laboratories

  Corporate Transactions and Medical Products Legal Operations

  Dept. 322, Bldg. AP6A

  100 Abbott Park Road

  Abbott Park, Illinois 60064-6010

  Attn: Vice President and Associate General Counsel

  Facsimile Number: (847) 938-1206

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Kirkland &
  Ellis LLP

  200 East Randolph Drive

  Chicago, Illinois 60601

  Attn:R. Scott Falk, P.C.

  Facsimile Number: (312) 861-2200

  

 

or to such other address
as the Party to whom notice is to be given may have furnished to the other
Parties in writing in accordance herewith. 
Any such communication will be deemed to have been given (i) when
delivered on a Business Day, if personally delivered or sent by facsimile or
other electronic means (subject to confirmation of such delivery), on such
Business Day, (ii) when delivered other than on a Business Day, if
personally delivered or sent by facsimile or other electronic means (subject to
confirmation of such delivery), on the first Business Day after dispatch, (iii) on
the first Business Day after dispatch, if sent by nationally-recognized overnight
courier, and (iv) on the third Business Day following the date of mailing,
if sent by mail.  It is understood and
agreed that this Section 4.2 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 4.3             Counterparts.  This Agreement may be executed in any number
of counterparts, each of which will be an original, but all of which together
will constitute one instrument.  This
Agreement and any signed agreement or instrument entered into in connection
with this Agreement, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine or other electronic means, shall
be treated in all manner and respects as an original agreement or instrument
and shall be considered to have the same binding legal effect as if it were the
original signed version thereof delivered in person.  At the request of any Party hereto or to any
such agreement or instrument, each other Party hereto or thereto shall
re-execute original forms thereof and deliver them to all other Parties.  No Party hereto or to any such agreement or
instrument shall raise the use of a facsimile machine or other electronic means
to deliver a signature or the fact that any signature or agreement or
instrument was transmitted or communicated through the use of a facsimile
machine or other electronic means as a defense to the formation of a contract
and each such Party forever waives any such defense.

 

Section 4.4             Amendment.  This Agreement may be amended or modified,
and the rights and obligations of the Parties under this Agreement may be
waived, only upon the written consent of each Party.

 

Section 4.5             Severability.  In the event that any provision of this
Agreement, or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement shall continue in full force and effect and the 

 

7

 

application of such provision to other Persons or circumstances shall
be interpreted so as reasonably to effect the intent of the Parties
hereto.  The Parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.

 

Section 4.6             Remedies Cumulative.  Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a Party shall be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or
equity upon such Party, and the exercise by a Party of any one remedy shall not
preclude the exercise of any other remedy.

 

Section 4.7             Governing Law; Alternative Dispute
Resolution.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without regard to principles of conflicts of law.  The Parties agree that any dispute arising
from or relating to this Agreement shall be exclusively resolved by the
Alternative Dispute Resolution procedures set forth in Exhibit D to the
Master Agreement, the result of which shall be binding upon the Parties.

 

Section 4.8             Rules of Construction.  The Parties acknowledge and agree that they
have been represented by counsel during the negotiation, preparation and
execution of this Agreement and, therefore, waive the application of any Law or
rule of construction providing that ambiguities in an agreement or other
document shall be construed against the Party drafting such agreement or
document. Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates.  When the
context so requires the word “or” when used herein shall mean “and/or.”  All pronouns contained herein, and any
variations thereof, will be deemed to refer to the masculine, feminine or
neutral, singular or plural, as the identity of the Parties may require.

 

Section 4.9             Further Assurances.  Each of the Parties to the Agreement shall
use commercially reasonable efforts to effectuate the transactions contemplated
hereby.  Each Party hereto, at the
reasonable request of another Party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.

 

*   *  
*   *   *

 

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

 

8

 

IN WITNESS WHEREOF, Isis, Ibis and AMI each have
caused this Call Option Agreement to be executed and delivered in their names
by their respective duly authorized officers or representatives.

 

	
   

  	
  ISIS:

  
	
   

  	
   

  
	
   

  	
  ISIS PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/
  B. Lynne Parshall

  
	
   

  	
  Name:

  	
    B. Lynne Parshall

  
	
   

  	
  Title:

  	
      COO &
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  IBIS:

  
	
   

  	
   

  
	
   

  	
  IBIS BIOSCIENCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Michael J Treble

  
	
   

  	
  Name:

  	
   Michael J Treble

  
	
   

  	
  Title:

  	
     President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMI:

  
	
   

  	
   

  	
   

  
	
   

  	
  ABBOTT MOLECULAR INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Stafford
  O’Kelly

  
	
   

  	
  Name:

  	
   Stafford O’Kelly

  
	
   

  	
  Title:

  	
     President

  
								

 

 

SIGNATURE PAGE TO CALL OPTION AGREEMENT

 

 

EXHIBIT A

 

 

STOCK
PURCHASE AGREEMENT

 

by
and among

 

IBIS
BIOSCIENCES, INC.,

 

ISIS
PHARMACEUTICALS, INC.

 

and

 

ABBOTT
MOLECULAR INC.

 

 

Dated:

 

[                      ,             ]

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Basic
  Transaction; Purchase Price

  	
   

  	
  13

  
	
  2.1

  	
   

  	
  Sale and
  Transfer of the Remaining Shares

  	
   

  	
  13

  
	
  2.2

  	
   

  	
  Purchase
  Price

  	
   

  	
  14

  
	
  2.3

  	
   

  	
  Earnout
  Payments

  	
   

  	
  14

  
	
  2.4

  	
   

  	
  Restricted
  Assets

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Closing
  Of The Transaction

  	
   

  	
  16

  
	
  3.1

  	
   

  	
  The
  Closing

  	
   

  	
  16

  
	
  3.2

  	
   

  	
  Deliveries
  at the Closing

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Conditions
  To Obligation To Close

  	
   

  	
  17

  
	
  4.1

  	
   

  	
  Conditions
  to Obligation of AMI

  	
   

  	
  17

  
	
  4.2

  	
   

  	
  Conditions
  to Obligation of Isis

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Representations
  And Warranties

  	
   

  	
  19

  
	
  5.1

  	
   

  	
  Representations
  and Warranties of Isis

  	
   

  	
  19

  
	
  5.2

  	
   

  	
  Representations
  And Warranties Of AMI

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Reserved

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Pre-Closing
  Covenants

  	
   

  	
  37

  
	
  7.1

  	
   

  	
  General

  	
   

  	
  37

  
	
  7.2

  	
   

  	
  Affirmative
  Covenants of Isis and Ibis

  	
   

  	
  37

  
	
  7.3

  	
   

  	
  Negative
  Covenants of Isis

  	
   

  	
  38

  
	
  7.4

  	
   

  	
  Notices
  and Consents

  	
   

  	
  40

  
	
  7.5

  	
   

  	
  Full
  Access

  	
   

  	
  40

  
	
  7.6

  	
   

  	
  Transition
  Assistance

  	
   

  	
  40

  
	
  7.7

  	
   

  	
  Notice of
  Developments

  	
   

  	
  41

  
	
  7.8

  	
   

  	
  Exclusivity

  	
   

  	
  41

  
	
  7.9

  	
   

  	
  Indebtedness
  and Intercompany Accounts

  	
   

  	
  41

  
	
  7.10

  	
   

  	
  Distribution
  of Cash and Grants Receivable

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Additional
  Agreements

  	
   

  	
  42

  
	
  8.1

  	
   

  	
  Survival

  	
   

  	
  42

  
	
  8.2

  	
   

  	
  Indemnification

  	
   

  	
  43

  
	
  8.3

  	
   

  	
  Press
  Release and Announcements

  	
   

  	
  45

  
	
  8.4

  	
   

  	
  Expenses

  	
   

  	
  45

  
	
  8.5

  	
   

  	
  Setoff

  	
   

  	
  45

  
	
  8.6

  	
   

  	
  Certain
  Tax Matters

  	
   

  	
  46

  
	
  8.7

  	
   

  	
  Further
  Assurances

  	
   

  	
  49

  
	
  8.8

  	
   

  	
  Confidentiality

  	
   

  	
  50

  
	
  8.9

  	
   

  	
  Noncompetition
  and Nonsolicitation

  	
   

  	
  51

  

 

i

 

	
  8.10

  	
   

  	
  Access to
  Books and Records

  	
   

  	
  53

  
	
  8.11

  	
   

  	
  Employee
  and Related Matters

  	
   

  	
  53

  
	
  8.12

  	
   

  	
  Consolidated
  Return

  	
   

  	
  55

  
	
  8.13

  	
   

  	
  Isis
  Intellectual Property License

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.

  	
   

  	
  Termination

  	
   

  	
  56

  
	
  9.1

  	
   

  	
  Termination

  	
   

  	
  56

  
	
  9.2

  	
   

  	
  Effect of
  Termination

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.

  	
   

  	
  Miscellaneous

  	
   

  	
  56

  
	
  10.1

  	
   

  	
  No Third
  Party Beneficiaries

  	
   

  	
  56

  
	
  10.2

  	
   

  	
  Entire
  Agreement

  	
   

  	
  56

  
	
  10.3

  	
   

  	
  Successors
  and Assigns

  	
   

  	
  57

  
	
  10.4

  	
   

  	
  Counterparts

  	
   

  	
  57

  
	
  10.5

  	
   

  	
  Headings

  	
   

  	
  57

  
	
  10.6

  	
   

  	
  Notices

  	
   

  	
  57

  
	
  10.7

  	
   

  	
  Governing
  Law

  	
   

  	
  58

  
	
  10.8

  	
   

  	
  Alternative
  Dispute Resolution Procedure

  	
   

  	
  59

  
	
  10.9

  	
   

  	
  Amendments
  and Waivers

  	
   

  	
  59

  
	
  10.10

  	
   

  	
  Delays or
  Omissions

  	
   

  	
  59

  
	
  10.11

  	
   

  	
  Incorporation
  of Exhibits and Schedules

  	
   

  	
  59

  
	
  10.12

  	
   

  	
  Construction

  	
   

  	
  60

  
	
  10.13

  	
   

  	
  Remedies

  	
   

  	
  60

  
	
  10.14

  	
   

  	
  Severability

  	
   

  	
  60

  
	
  10.15

  	
   

  	
  No Other
  Compensation

  	
   

  	
  60

  

 

ii

 

STOCK PURCHASE AGREEMENT

 

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

 

WHEREAS, on January 30, 2008, the Parties entered
into the Master Agreement, the Call Option Agreement and the Investor Rights
Agreement, pursuant to which, among other things, AMI acquired the Shares and
the Call Option for an aggregate purchase price of $20,000,000;

 

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

 

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

 

WHEREAS, on [                ]
[200    ],
pursuant to the terms of the Call Option Agreement, AMI exercised the Call
Option, electing to acquire the Remaining Shares pursuant to the terms hereof;
and

 

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

 

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

 

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

 

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

 

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

 

(c)           “Affiliate” of
an entity means any other entity that, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with such first entity.  For purposes of
this definition only, “control” (and, with correlative meanings, the terms “controlled
by” and “under common control with”) means the possession, directly or
indirectly, of the power to direct the management or policies of an entity,

 

 

whether through the ownership of voting securities or
by Contract relating to voting rights or corporate governance; provided, that (i) with respect to
AMI and Abbott, the term “Affiliate” shall specifically exclude [***] and (ii) with
respect to Isis, the term “Affiliate” shall specifically exclude [***].

 

(d)           “Applicable Law”
or “Law” means all applicable common law, laws, constitutional
provisions, ordinances, statutes, rules, regulations, administrative rulings,
executive orders and other pronouncements having the effect of law of any
federal, national, multinational, state, provincial, county, city or other
political subdivision, agency or other body, domestic or foreign, including but
not limited to any applicable rules, regulations, guidelines, or other
requirements of Governmental Authorities that may be in effect from time to
time.

 

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

 

(f)            [***]

 

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

 

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

 

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

 

(j)            “Call Option
Agreement” means that certain Call Option Agreement, dated as of the
Investment Date, by and among Isis, Ibis and AMI.

 

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

 

(l)            “Change of Control”
means, with respect to any Person, the occurrence of (i) any consolidation
or merger of such Person with or into any other Person, or any other corporate
reorganization or transaction (including the acquisition of Capital Stock of
such Person (or any rights to acquire, or securities convertible into or
exchangeable for, any such Capital Stock)), whether or not such Person is a
party thereto, in which the stockholders or equity-holders of such Person or
other Persons controlling such Person immediately prior to such consolidation,
merger, reorganization or transaction, own Capital Stock either (A) representing
directly, or indirectly through one or more entities, less than fifty percent (50%)
of the economic interests in or voting power of such Person or other surviving
entity immediately after such 

 

2

 

consolidation, merger, reorganization or transaction
or (B) that does not directly, or indirectly through one or more entities,
have the power to elect a majority of the entire board of directors or
equivalent governing body of such Person or other surviving entity immediately
after such consolidation, merger, reorganization or transaction or (ii) a
sale, lease, license or other disposition of all or a material portion of the
assets of such Person.

 

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

 

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

 

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

 

(p)           “Confidential
Information” means all information and any tangible embodiments thereof
provided by or on behalf of the Disclosing Party to the Receiving Party or to
the Receiving Party’s Representatives either in connection with the discussions
and negotiations pertaining to the Transaction Documents or in the course of
performing the Transaction Documents, including without limitation: know-how;
data; knowledge; practices; processes; research and development plans;
engineering designs and drawings; research data; manufacturing processes and
techniques; scientific, manufacturing, marketing and business plans; and
financial and personnel matters relating to the Disclosing Party or to its
present or future products, sales, suppliers, customers, employees,
consultants, independent contractors, investors or business; regardless of
whether any of the foregoing are marked “confidential” or “proprietary” or
communicated to the other by the Disclosing Party in oral, written, graphic or
electronic form.  Notwithstanding the
foregoing, information of a Party will not be deemed Confidential Information
to the extent that the Receiving Party can show by competent proof that such
information:

 

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

 

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

 

(iii)          is or becomes available to the Receiving
Party or its Representatives from a Person, other than the Disclosing Party or
its Representatives, who is not bound by a confidentiality obligation to the
Disclosing Party or its Representatives; or

 

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

 

3

 

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

 

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

 

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

 

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

 

(u)           “Earnout Threshold”
means $150 million minus all commercial revenue for the period beginning on the
date [***] through the Closing Date as set forth on Schedule 1(u), which
has been prepared in accordance with GAAP and Isis’ internal controls and
procedures for financial reporting.

 

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

 

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

 

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

 

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

 

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

 

(aa)         “Escrow Agent”
means LaSalle Bank National Association, a national banking association.

 

4

 

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

 

(cc)         “Fundamental Isis
Representations” means those representations and warranties of Isis set
forth in Sections 5.1(a) (Power and Authority), 5.1(b) (Enforceability),
5.1(c) (Governmental Authority; Consents), 5.1(d) (No Conflicts),
5.2(e) (Due Organization; Qualification), 5.1(g) (Capitalization;
Voting Rights), 5.1(j) (Title to Properties and Tangible Assets; Liens,
etc.), 5.1(k) (Sufficiency of Assets), 5.1(m) (Compliance with
Other Instruments) and 5.1(v) (Brokers’ Fees).

 

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

 

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

 

(ff)           “Grants Receivable”
means (i) any payments due to Ibis from a Governmental Authority or not
for profit Person with respect to grants awarded to Ibis or Contracts with
Ibis, in each case to the extent Ibis has performed the research or other
services described in the grant or Contract, but not received payment therefor
as of the Closing and (ii) the rate reserves identified as “Government
Rate Reserves” on Schedule 1(ff), which has been prepared in accordance
with GAAP and Isis’ internal controls and procedures for financial reporting.

 

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

 

(hh)         “Ibis Employee
Retention Amount” means $[***].

 

5

 

(ii)           “Ibis Net Sales”
means:

 

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

 

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

 

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

 

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

 

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

 

(ii)           [***];
and

 

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

 

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

 

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

 

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

 

3. In the event a Product or Service is incorporated
into a profile in which said Product or Service contributes only a small proportion
of the value of the total package, but the adjustment set forth in paragraph 2,
above is impractical or if similar quantities of product(s) are not sold
or similar quantities of Services are not provided pursuant to paragraph 1,
above, then the Parties

 

6

 

shall negotiate in good
faith to establish an equitable adjustment to Ibis Net Sales for such Product
or Service to fairly reflect the proportion of the value of the profile
contributed by the Product or Service or the value of the Product or Service.

 

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

 

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

 

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

 

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

 

7

 

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

 

(oo)         “Isis Licensed
Intellectual Property” means the Intellectual Property set forth on Schedule 1(qq).(1)

(pp)         [***]

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(1) This will be the Isis Intellectual Property
that Ibis Employees have identified as being useful to the Business.

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(fff)         “Purchase Offer”
means any proposal or offer from any Person (other than AMI and its Affiliates
in connection with the transactions contemplated hereby) or any agreement or
offer relating to any (i) reorganization, liquidation, dissolution, share
exchange, 

 

9

 

business combination or recapitalization of Ibis, (ii) merger or
consolidation involving Ibis, (iii) purchase or sale of any assets or
Capital Stock of Ibis (other than the purchase and sale of inventory and
capital equipment in the ordinary course of business), (iv) distribution
of Ibis’ existing or future products, (v) licensing of any Business IP
from Ibis or (vi) any other transaction or business combination involving
Ibis or its business or assets which would reasonably be expected to interfere
with, impede or materially delay the transactions contemplated by the
Transaction Documents or dilute the benefits thereof to AMI and its Affiliates.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

copyrights, patent
applications or patents that are [***]to make, have made, use, sell, offer for
sale or import any [***]

 

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

 

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

 

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

 

	
  Defined Term

  	
   

  	
  Section

  
	
  “§ 338(h)(10) Election”

  	
   

  	
  8.6(g)

  
	
  “Abbott”

  	
   

  	
  Preamble

  
	
  “ADR”

  	
   

  	
  10.8

  
	
  “Agreement”

  	
   

  	
  Preamble

  
	
  “AMI”

  	
   

  	
  Preamble

  
	
  “AMI Group”

  	
   

  	
  8.2(a)

  
	
  “AMI Proceeding”

  	
   

  	
  8.6(e)(ii)

  
	
  “Applicable AMI Proceeding”

  	
   

  	
  8.6(e)(ii)

  
	
  “Closing”

  	
   

  	
  3.1

  
	
  “Closing Date”

  	
   

  	
  3.1

  
	
  “Closing Purchase Price”

  	
   

  	
  2.2

  
	
  “Disclosing Party”

  	
   

  	
  8.8(a)

  
	
  “Disclosure Schedules”

  	
   

  	
  Section 5

  
	
  “Earnout Payments”

  	
   

  	
  2.3(e)

  
	
  “Earnout Period”

  	
   

  	
  2.3(a)

  
	
  “Escrow Agreement”

  	
   

  	
  4.1(l)

  
	
  “Financial Statements”

  	
   

  	
  5.1(t)

  
	
  “Foreign Person”

  	
   

  	
  4.1(m)

  
	
  “Government Contracts”

  	
   

  	
  5.1(l)(ii)

  
	
  “HSR Act”

  	
   

  	
  4.1(d)

  
	
  “Ibis”

  	
   

  	
  Preamble

  

 

12

 

	
  “Ibis Contracts”

  	
   

  	
  5.1(x)(i)

  
	
  “Ibis Employees”

  	
   

  	
  8.11(a)

  
	
  “Indemnified Party”

  	
   

  	
  8.2(e)

  
	
  “Indemnifying Party”

  	
   

  	
  8.2(e)

  
	
  “Isis”

  	
   

  	
  Preamble

  
	
  “Isis Proceeding”

  	
   

  	
  8.6(e)(i)

  
	
  “Isis Retirement Plans”

  	
   

  	
  8.11(d)

  
	
  “Leased Real Property”

  	
   

  	
  5.1(w)(ii)

  
	
  “Leasehold Improvements”

  	
   

  	
  5.1(w)(ii)

  
	
  “Leases”

  	
   

  	
  5.1(w)(ii)

  
	
  “Material Adverse Effect”

  	
   

  	
  4.1(j)

  
	
  “Material Licenses”

  	
   

  	
  5.1(q)(ii)

  
	
  “Noncompete Period”

  	
   

  	
  8.9(a)

  
	
  “Nonsolicitation Period”

  	
   

  	
  8.9(c)

  
	
  “Parties”

  	
   

  	
  Preamble

  
	
  “Party”

  	
   

  	
  Preamble

  
	
  “Purchase Price”

  	
   

  	
  2.2

  
	
  “Receiving Party”

  	
   

  	
  8.8(a)

  
	
  “Remaining Shares”

  	
   

  	
  Recitals

  
	
  “Restricted Assets”

  	
   

  	
  2.4

  
	
  “Seller Group”

  	
   

  	
  8.2(b)

  
	
  “Straddle Period”

  	
   

  	
  8.6(c)(ii)

  
	
  “Third Party Claim”

  	
   

  	
  8.2(e)

  
	
  “Transaction Value”

  	
   

  	
  2.2

  
	
  “Transition Services Agreement”

  	
   

  	
  4.1(k)

  
	
  “WARN Act”

  	
   

  	
  8.11(b)

  

 

Section 2.            BASIC TRANSACTION; PURCHASE PRICE.

 

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

 

13

 

2.2           Purchase
Price.  The purchase price (the “Purchase
Price”) for the Remaining Shares shall be equal to (i) $[                  ](2) (the “Transaction Value”),
minus (ii) the amount of any Indebtedness of Ibis as of the Closing (not
including the amount of any Indebtedness that is Permitted Indebtedness under
clauses (i) or (ii) of the Permitted Indebtedness definition), minus (iii) the
Ibis Employee Retention Amount, plus (iv) the Earnout Payments.  The “Closing Purchase Price” is an
amount equal to (x) the Transaction Value, minus (y) the amount of
any Indebtedness of Ibis as of the Closing (not including the amount of any
Indebtedness that is Permitted Indebtedness under clauses (i) or (ii) of
the Permitted Indebtedness definition), minus (z) the Ibis Employee
Retention Amount.

 

2.3           Earnout
Payments.

 

(a)           Subject
to Sections 2.3(e) and 2.3(f), from and after the Closing
Date until December 31, 2025 (the “Earnout Period”), Ibis will pay
to Isis an amount equal to five percent (5%) (the “Earnout Rate”) of
cumulative Ibis Net Sales that are (i) in excess of the Earnout Threshold
and (ii) less than or equal to $2.1 billion.  Such amounts payable to Isis will be reduced
by an amount equal to [***]% of any [***], but in no event will such amounts
for such Ibis Net Sales be less than two and a half percent (2.5%) of such
cumulative Ibis Net Sales.

 

(b)           For
cumulative Ibis Net Sales that are in excess of $2.1 billion, the Earnout Rate
will reduce from 5% to 3%.  The
corresponding amounts payable to Isis will be reduced by an amount equal to
[***]% of any [***], but in no event will such amounts for such Ibis Net Sales
be less than one and a half percent (1.5%) of such cumulative Ibis Net Sales.

 

(c)           In
calculating the amount of any reduction to the earn-out payments permitted by
the second sentence of either Section 2.3(a) or Section 2.3(b) that
result from any [***] that are [***], the amount of such [***] will be [***] of
the Earnout Period from the date of such [***]. 
For example, if Ibis makes a [***] in the form of [***] equal to [***]
to [***] which, in AMI’s reasonable judgment was [***] and such [***] was made
in 2015, then, in each calendar quarter, Ibis would be able to reduce the
corresponding amounts payable for such quarter by [***], in each case subject
to the applicable 2.5% or 1.5% floor under Section 2.3(a) or Section 2.3(b).

 

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

 

(2) The Transaction Value from the Option Notice to be inserted
here.

 

14

 

funds using the same conversion
methodology that Abbott uses to prepare its financial statements filed with the
SEC.

 

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

 

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

 

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

 

2.4           Restricted
Assets.  Notwithstanding any other
provision in this Agreement to the contrary, this Agreement shall not
constitute an agreement to assign or transfer any interest in any Contract,
asset, claim, right or benefit the assignment or transfer of which is otherwise
contemplated by the transactions contemplated by this Agreement to the extent
such assignment or transfer (or attempt to make such an assignment or transfer)
without the consent or approval of a third party would constitute a breach or
other contravention of the rights of such third party, or affect adversely the
rights of any Party or their Affiliates thereunder (such assets being
collectively referred to herein as “Restricted Assets”).  Any assignment or transfer of a Restricted
Asset shall be made subject to such consent or approval being obtained.  If any such consent or approval is not
obtained prior to the Closing, (i) the assigning or transferring Party
shall continue to use its commercially reasonable efforts to cooperate with the
other Party in attempting to obtain any such consent or approval and (ii) establish
alternative arrangements (such as a license, sublease, subcontract or operating
agreement) until such time as such consent

 

15

 

or approval has been obtained
which results in the assignee or transferee Party receiving all the benefits
and bearing all the burdens with respect to any such Restricted Asset (subject
to Section 8.4, pursuant to which Isis shall be liable for and pay
all out-of-pocket costs and expenses associated with obtaining third party
consents associated with any Ibis Contract or Restricted Asset in excess of
$[***] in the aggregate).

 

Section 3.              CLOSING OF THE TRANSACTION.

 

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

 

3.2           Deliveries
at the Closing.  At the Closing:

 

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

 

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

 

(c)           AMI
shall deliver to the Escrow Agent the Ibis Employee Retention Amount, via wire
transfer of immediately available funds to an account designated by the Escrow
Agent, to be held in escrow pursuant to the terms of the Escrow Agreement;

 

(d)           Isis
shall deliver to Ibis all books, records and other materials of Ibis or related
to or used by Ibis in the Business (unless otherwise specifically set forth in
the Transition Services Agreement);

 

(e)           Isis
shall deliver to AMI the Permitted Employee Compensation Plan; and

 

(f)            Isis
shall deliver to AMI one or more compact discs or other electronic media
containing the contents of the electronic dataroom maintained by Isis at [***]
as of the date that is three Business Days prior to the date hereof, together
with a certificate of an authorized officer certifying that such compact discs
contain true, accurate and complete copies of the materials in such dataroom as
of such date.

 

16

 

Section 4.              CONDITIONS
TO OBLIGATION TO CLOSE.

 

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

 

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

 

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

 

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

 

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

 

(e)           Isis
shall have delivered to AMI (i) a certificate from an officer of Isis to
the effect that each of the conditions specified in Section 4.1(a),
Section 4.1(b) and Section 4.1(j) is
satisfied in all respects, (ii) a copy of the resolutions of the governing
body of each of Isis and Ibis approving the transactions contemplated by this
Agreement, certified by an officer of each of Isis and Ibis, respectively, (iii) certificates
from appropriate authorities, dated as of or about the Closing Date, as to the
good standing and qualification to do business of Ibis in its jurisdiction of
incorporation, (iv) such other documents or instruments as are required to
be delivered at the Closing pursuant to the terms hereof and (v) such
other documents or instruments as AMI reasonably requests to effect the
transactions contemplated hereby.

 

(f)            Isis
shall tender to AMI a certificate representing the Remaining Shares duly and
validly endorsed for transfer in favor of AMI or accompanied by a separate
stock power duly and validly executed by Isis and otherwise sufficient to vest
in AMI legal and beneficial ownership of the Remaining Shares.

 

(g)           Isis
shall have received and delivered to AMI all third party consents identified on
Schedule 4.1(g) and Isis and AMI shall have received all other 

 

17

 

authorizations,
consents, and approvals of Governmental Authorities referred to in Sections 5.1(c) and
5.1(d).

 

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

 

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

 

(j)            Since
the Investment Date, there shall have been no occurrence or disclosure of any
event, circumstance or state of facts which has, or would reasonably be
expected to have, a material adverse effect on the business, assets, condition
(financial or otherwise), operations, operating results, employee relations,
customer relations or supplier relations of Ibis (a “Material Adverse Effect”).

 

(k)           Isis
and Ibis shall have executed and delivered to AMI the Transition Services
Agreement substantially in the form attached hereto as Exhibit A
(the “Transition Services Agreement”) and the Transition Services
Agreement shall be in full force and effect.

 

(l)            Isis
shall have executed and delivered to AMI an escrow agreement substantially in
the form attached hereto as Exhibit B (the “Escrow Agreement”)
and the Escrow Agreement shall be in full force and effect.

 

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

 

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

 

(o)           Except
as contemplated by Section 2.4 and the Transition Services
Agreement, Ibis shall be entitled to fully exercise without restriction or
limitation all legal and beneficial rights under the Ibis Contracts (including
the Government Contracts) and all other assets, properties and rights related to,
used in or necessary to operate and conduct the Business in all respects in the
manner conducted on and prior to the Closing Date and as contemplated to be
conducted from and after the Closing Date.

 

(p)           [***].

 

AMI may waive any condition specified in this Section 4.1
if it executes a writing so stating at or prior to the Closing.  In the event of any such waiver, AMI shall be
deemed to have waived any claim against Isis for failure to satisfy such
condition; provided that, except
to the extent specifically and expressly set forth in such waiver, any such
waiver shall not limit 

 

18

 

AMI’s right to recovery
hereunder for a breach by either Isis or Ibis of any other provision of this
Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

(f)            AMI
shall have executed and delivered to Isis the Escrow Agreement and the Escrow
Agreement shall be in full force and effect.

 

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

 

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

 

Section 5               REPRESENTATIONS
AND WARRANTIES.

 

5.1           Representations
and Warranties of Isis.  As a
material inducement to AMI to enter into this Agreement, except as set forth in
the corresponding Section of the Disclosure 

 

19

 

Schedules delivered to AMI
herewith on the date hereof (the “Disclosure Schedules”), Isis hereby
represents and warrants the following representations and warranties are as of
the date hereof, and will be as of the Closing Date, true and correct:

 

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

 

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

 

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

 

(d)   No Conflicts. 
The execution and delivery of each of the Transaction Documents by each
of Ibis and Isis and the performance of each such Party’s obligations hereunder
and thereunder, with or without the passage of time or giving of notice, (1) do
not and will not conflict with or violate any requirement of Applicable Law or
any provision of the certificate of incorporation, bylaws or any similar
instrument of such Party, as applicable (2) do not and will not require
any notice, conflict with, violate, or breach or constitute a default or
require any consent or give rise to any termination or acceleration right or
the creation of any Encumbrance on the Shares, the Additional Shares or the
Remaining Shares or any of the properties or assets of Ibis under, any
contractual obligation by which such Party is bound or subject to and (3) do
not and will not cause the suspension, revocation, impairment, forfeiture or
nonrenewal of any License applicable to Ibis, the Business or any of Ibis’
operations, assets or properties.

 

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

 

(f)    Subsidiaries.  Ibis does not own or control any Capital
Stock or other interest of any Person. 
Ibis is not a participant in any joint venture, partnership, limited
liability company or similar arrangement. 
Since its inception Ibis has not merged with, acquired all or
substantially all of the assets of (except pursuant to the Contribution
Agreement) or acquired the Capital Stock of or any interest in any Person.  Ibis does not hold the right to acquire any
Capital

 

20

 

Stock or interest in any other
Person or have any obligation to make any investment in any Person and no such
rights, Capital Stock or interests are necessary for the operation of the
Business.  Isis does not control or
possess the power, directly or indirectly to control the management, actions or
policies of Regulus Therapeutics, LLC.

 

(g)   Capitalization; Voting Rights.

 

(i)            The authorized Capital Stock of Ibis
consists of 1,228,501 shares of Common Stock, par value $0.001 per share, [1,114,251]
shares of which are issued and outstanding, 1,000,000 of which are held by Isis
(the “Remaining Shares”) [and
114,251  shares of which are held
by AMI].

 

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

 

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

 

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

 

(h)   Agreements; Liabilities.

 

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

 

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

 

21

 

(iii)          Ibis has no material obligations or
liabilities (whether accrued, absolute, or to Isis’ or Ibis’ Knowledge
contingent, unliquidated or otherwise, whether due or to become due and
regardless of when or by whom asserted), including, without limitation, Taxes,
except (A) obligations under the Ibis Contracts made available to AMI or
under Contracts entered into in the ordinary course of business which, because
of the dollar thresholds set forth in Sections 5.1(l) and 5.1(x),
are not required pursuant to Sections 5.1(l) and 5.1(x) below
to be described on Schedules 5.1(l) or 5.1(x) (but not
liabilities for breaches of any such Contracts), (B) liabilities reflected
on the Most Recent Balance Sheet, (C) liabilities and obligations which
have arisen after the date of the Most Recent Balance Sheet in the ordinary
course of business (none of which is material or is a liability for breach of
contract, tort, infringement (directly, contributorily, by inducement or
otherwise), Claim or warranty (other than warranty claims arising in the
ordinary course of business in connection with the sale of Products or under
Ibis Contracts made available to AMI, none of which warranty claims
individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect) and (D) other liabilities and obligations to the
extent expressly disclosed in Schedule5.1(h)(iii).

 

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

 

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

 

(k)   Sufficiency of Assets.

 

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

 

(ii)           Except the services, funding and facilities
provided under the Corporate Services Agreement and indirectly, via the
Remaining Shares, Isis and its Affiliates do not have any right, title or
interest in or to any asset, property, title or interest that is used in or
necessary to operate or conduct the Business as conducted on and prior to the
Closing Date or as contemplated to be conducted by Ibis and Isis after the
Closing Date as reflected in the Offering Memorandum and Management
Presentations.

 

22

 

Pursuant to the Contribution Agreement, Isis has transferred to Ibis
all assets, properties and rights Isis owned or which are or were used in or
necessary to operate or conduct the Business except the services, funding and
facilities provided under the Corporate Services Agreement.  No person employed by the Division prior to
the date of the Contribution Agreement is currently employed by Isis and no
former employee of Ibis or the Division is or has been employed by Isis.

 

(l)    Intellectual Property.

 

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

 

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

 

(iii)          Ibis owns and possesses all right, title and
interest in and to, free and clear of all Encumbrances (other than the rights
of Governmental Authorities under Government Contracts identified in Schedule
5.1(l)(iii) to the Intellectual Property identified in such Schedule) or
has a valid and enforceable license to use (pursuant to a

 

23

 

written license agreement set forth and described in Schedule 5.1(l)(ii) or
a written license for unmodified, commercially available, off-the-shelf
Software purchased or licensed for less than an individual cost of $[***] and a
total cost of $[***] in the aggregate) the Business IP.

 

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

 

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

 

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

 

24

 

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

 

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

 

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

 

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

 

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

 

(xii)          None of the Transaction Documents nor the
transactions contemplated by any of the Transaction Documents would result in
or reasonably be expected to result in:  (A) Ibis,
AMI or any of their respective Affiliates granting to any Person any right to
or with respect to any Intellectual Property owned by, or licensed to, any of
them as a result of any Encumbrance or Contract to which, Ibis or any of their
Affiliates is a party or bound by, (B) other than standard
non-solicitation agreements entered into in the ordinary course of business and
made available to AMI, Ibis, AMI or any of their respective Affiliates being
bound by, or subject to, any non-compete or other

 

25

 

material restriction on the operation or scope of their respective
businesses as a result of any Encumbrance or Contract to which Isis, Ibis or
any of their Affiliates is a party or bound by, (C) other than as
contemplated by the Acquisition Agreement, Ibis, AMI or any of their respective
Affiliates being obligated to pay any royalties or other material amounts, to
increase or accelerate any royalty or payment obligation, or to offer any
discounts, to any Person as a result of any Encumbrance or Contract to which
Isis, Ibis or any of their Affiliates is a party or bound by, or (D) any
adverse effect on Ibis’ right, title or interest in and to any of the Business
IP.

 

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

 

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

 

(xv)         The individuals identified as the outside
counsel involved in the development or prosecution of the Business IP on Schedule
1Section 1(qq) represent the outside counsel who have provided Isis or Ibis
strategic legal and Intellectual Property advice related to the Business IP and
the Ibis Business during the three (3) years prior to the Closing Date.

 

26

 

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

 

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

 

(o)   Tax Matters.

 

(i)            [Ibis
has not been required to file any Tax Returns.]  All Taxes owed and due by Ibis have been
paid.  No claim has ever been made by an
authority in any jurisdiction that Ibis is or may be subject to taxation by
that jurisdiction.  There are no
Encumbrances on any of the assets used by Ibis that arose in connection with
any failure (or alleged failure) to pay any Tax.  Schedule 5.1(o)(i) contains a
list of states, territories and jurisdictions (whether foreign or domestic) in
which Ibis is required to file Tax Returns.

 

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

 

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

 

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

 

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

 

27

 

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

 

(p)   Employees.

 

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

 

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

 

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

 

28

 

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

 

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

 

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

 

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

 

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

 

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

 

(x)            No Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of Ibis after retirement or other
termination of service (other than (A) coverage mandated by any Applicable
Law, (B) death benefits or retirement benefits under any employee pension
benefit plan or (C) benefits, the full direct cost of which are borne by
the current or former employee (or beneficiary thereof)).

 

29

 

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

 

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

 

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

 

(q)   Compliance with Laws; Licenses.

 

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

 

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

 

(r)    Environment, Health and Safety.  Ibis and the Business have at all times
materially complied with and are in material compliance with all Environmental
Laws, 

 

30

 

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

 

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

 

(t)    Financial Statements.  Schedule 5.1(t) attached hereto
contains the following financial statements (collectively the “Financial
Statements”): (i) the profit and loss statement for the Division for
the fiscal year ended December 31, 2007 and (ii) the profit and loss
statement for Ibis and the related balance sheet (the “Most Recent Balance
Sheet”) for the [            ] month period ended [                ]. 
The Financial Statements have been prepared in accordance with GAAP
throughout the periods covered thereby, present fairly in all material respects
the financial condition of Ibis or the Division (as the case may be) as of such
dates and

 

31

 

the results of
operations of Ibis or the Division (as the case may be) for such periods, and
are materially correct and complete and consistent with the books and records
of Ibis (which books and records are materially correct and complete).

 

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

 

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

 

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

 

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

 

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

 

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

 

(vi)          Ibis has not amended, modified, or terminated
any Plan;

 

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

 

(viii)        Neither Ibis nor Isis has licensed,
sublicensed, allowed any Encumbrance to exist on, abandoned, or permitted to
lapse any Business IP or, except in the ordinary course of business, disclosed
any Confidential Information of Ibis or the Business to any Person (other than
AMI and AMI’s Representatives);

 

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

 

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

 

(v)   Brokers’ Fees.  There are no brokerage commissions, finders’
fees or similar compensation due in connection with the transactions
contemplated by the Transaction Documents based on any arrangement or agreement
made by or on behalf of Isis or Ibis.  To
the extent there are any brokerage commissions, finders’ fees or similar
compensation due in 

 

32

 

connection
with the transactions contemplated by the Transaction Documents to [***], Isis
shall be solely liable for any and all such amounts.

 

(w)  Leased Real Property.

 

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

 

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

 

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

 

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

 

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

 

(x)    Contracts.

 

(i)            Schedule 5.1(x)(i) lists the
following Contracts relating to the Business or to which Ibis is a party:  (A) Contract for the employment of any
officer, individual employee, or other Person on a full-time, part-time,
consulting, or other basis or Contract relating to loans to officers,
directors, employees or Affiliates; (B) agreement or indenture relating to
borrowed money or other Indebtedness or the mortgaging, pledging, or otherwise
placing an Encumbrance on assets or Capital Stock of Ibis; (C) lease or
agreement under which Ibis is the lessee of or holds or operates any property,
real or personal, owned by any other party, except for any lease or agreement
for real or personal property under which the aggregate annual consideration is
less than or equal to 

 

33

 

$25,000; (D) lease or agreement under which Ibis is the lessor of
or permits any Person to hold or operate any property, real or personal, owned
or controlled by Ibis; (E) distribution or franchise agreement; (F) agreement
with a term of more than six months and (1) which is not terminable by
Ibis upon less than 90 days’ notice without penalty or (2) which involves
aggregate annual consideration in excess of $25,000; (G) agreements
relating to ownership of or investments in any business or enterprise,
including joint ventures and minority equity investments; (H) Contract
prohibiting it from freely engaging in any business or competing anywhere in
the world; (I)  except as otherwise disclosed on Schedule 5.1(x)(i) any
other Contract or group of related Contracts with the same party or group of
affiliated parties that involves aggregate annual consideration from or to Ibis
in excess of $100,000; or (J) any Contract that is otherwise material to
Ibis and/or the Business, including, without limitation, any IP Contract or
Government Contract, whether or not entered into in the ordinary course of
business and whether or not performance thereunder has been completed.  All of the Contracts and other similar
arrangements set forth on or required to be set forth on Schedule 5.1(x)(i) (the
“Ibis Contracts”).

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

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

 

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

 

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

 

35

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)            AMI
Bears Economic Risk.  AMI may
be required to bear the economic risk of its investment in the Remaining Shares
indefinitely unless the Remaining Shares are registered pursuant to the
Securities Act, or an exemption from registration is available.

 

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

 

36

 

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

 

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

 

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

 

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

 

Section 6.      RESERVED.

 

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

 

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

 

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

 

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

 

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

 

37

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           sell,
transfer, assign, license or sublicense, or allow any Encumbrance on any
Business IP other than (i) rights of the U.S. federal government in
Intellectual Property pursuant to the Government Contracts set forth on Schedule
5.1(l)(iii) or new Government Contracts entered into in the ordinary
course of business and (ii) end user license agreements related to the
Software embodied in the T5000 Biosensor Systems that are issued in the
ordinary course of business solely to purchasers of T5000 Biosensor Systems;

 

38

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.5           Full
Access.  Ibis will cooperate with AMI
in AMI’s investigation of Ibis and the Business, and Ibis will permit AMI and
its employees, agents, accountants, attorneys, environmental consultants, and
other authorized representatives to (i) have full access to the premises,
books and records of Ibis and, to the extent related to the Business, Isis,
upon reasonable prior notice during normal business hours, (ii) visit and
inspect any of the properties of Ibis and, to the extent related to the
Business, Isis, upon reasonable prior notice during normal business hours and (iii) discuss
the affairs, finances and accounts of Ibis with the officers, directors,
employees, key customers, suppliers and independent accountants of Ibis.

 

7.6           Transition
Assistance.  From and after the date
hereof, neither Isis nor Ibis will in any manner take or cause to be taken any
action which is designed, intended or might reasonably be anticipated to have
the effect of discouraging current or potential customers, 

 

40

 

suppliers, licensors, lessors,
independent contractors, consultants, employees and other associates of Ibis or
the Business from establishing or maintaining the same business relationships
with AMI after the date of this Agreement as were maintained with Ibis or the
Business prior to the date of this Agreement.

 

7.7           Notice
of Developments.

 

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

 

(b)   AMI
shall promptly (once AMI obtains Knowledge thereof, but in any event within
three (3) Business Days of such Knowledge) inform Isis in writing of any
inaccuracy in or breach of the representations and warranties contained in Section 5.2
or any breach of any covenant hereunder by AMI. 
No such disclosure by AMI pursuant to this Section 7.7,
however, shall be deemed to cure any breach of any representation or warranty
or covenant contained herein for purposes of determining the fulfillment of the
conditions set forth in Sections4.2(a) and 4.2(b) as of
the Closing or for purposes of determining the accuracy of the representations
and warranties contained in Section 5.2 and the liability of AMI
with respect thereto under Section 8.2(c).

 

7.8           Exclusivity.

 

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

 

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

 

7.9           Indebtedness
and Intercompany Accounts.

 

(a)   Prior
to the Closing, Isis (i) shall assume, extinguish, repay or contribute as
equity, or shall cause to be assumed, extinguished, repaid or contributed as
equity, all Indebtedness and ancillary obligations thereto owed by Ibis to any
Person (including Isis and its Affiliates) (not including the amount of any
Indebtedness that is Permitted Indebtedness under

 

41

 

clauses (i) or
(ii) of the Permitted Indebtedness definition that is owed to any Person
other than Isis or any of its Affiliates), such that Ibis shall have no
Indebtedness or ancillary obligations to any Person (not including the amount
of any Indebtedness that is Permitted Indebtedness under clauses (i) or (ii) of
the Permitted Indebtedness definition that is owed to any Person other than
Isis or any of its Affiliates) and (ii) shall, and shall cause its
Affiliates to, repay in full all Indebtedness and ancillary obligations thereto
it or they owe to Ibis.

 

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

 

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

 

(d)   At
or prior to the Closing, Isis and Ibis shall terminate the Corporate Services
Agreement and shall amend the Contribution Agreement as reasonably requested by
AMI.

 

7.10         Distribution
of Cash and Grants Receivable.

 

Immediately prior to the Closing, Ibis may distribute (i) all of
its cash and cash equivalents and (ii) Grants Receivable to Isis.

 

Section 8.              ADDITIONAL
AGREEMENTS.

 

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

 

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

 

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

 

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

 

Notwithstanding the foregoing, claims for indemnification pursuant to Section 8.2
as to which the Indemnified Party has given the Indemnifying Party proper
notice pursuant to Section 10.6 prior to the expiration of the
applicable survival period shall survive such expiration 

 

42

 

until such claims are resolved
by written agreement of the Parties or by order of a court of competent
jurisdiction.

 

8.2           Indemnification.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

(e)   If any third party shall notify any Party to this Agreement (the “Indemnified
Party”) of any matter which may give rise to a claim (a “Third Party
Claim”) for indemnification against any other Party to this Agreement (the
“Indemnifying Party”) under this Section 8.2, then the
Indemnified Party shall notify the Indemnifying Party thereof; provided that
the failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder except to the extent such
failure shall have actually materially prejudiced the Indemnifying Party.  Once the Indemnified Party has given notice
of the matter to the Indemnifying Party, the Indemnified Party shall defend
against the matter in any manner it reasonably may deem appropriate.  The Indemnifying Party may, at its sole cost
and expense, participate in the defense of such Claim with co-counsel of its
choice.  Notwithstanding anything herein
to the contrary, the Indemnifying Party shall not have the right to participate
in such defense if the claim in which the Indemnifying Party seeks to
participate (i) seeks non-monetary relief that does not seek to obtain a
license or other access to, restrict the scope of, or adversely affect the
enforceability of, any Intellectual Property controlled by the Indemnifying
Party, (ii) involves criminal allegations against an Indemnified Party or
(iii) is one in which the Indemnifying Party is also a party and joint
representation would be inappropriate or there may be legal defenses available
to the Indemnified Party which are different from or additional to those
available to the Indemnifying Party.  The
Indemnified Party will not consent to the entry of any judgment with respect to
the matter or enter into any settlement with respect to the matter without the
Indemnifying Party’s prior written consent (not to be unreasonably withheld,
conditioned or delayed).

 

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

 

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

 

(h)           Indemnification for each Loss for which an Indemnifying Party, but for
this Section 8.2(h), would be liable under Section 8.2(a) or
Section 8.2(c) shall be reduced by the amount of any insurance
proceeds actually paid to any member of the AMI Group or the Seller Group, as
the case may be, by any unaffiliated third party with respect to such Loss, in

 

44

 

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

 

(i)    For Tax purposes, the parties agree to treat all payments made under
this Section 8.2 as adjustments to the Purchase Price.

 

8.3           Press Release and Announcements.  On
the date hereof, the Parties may issue a press release announcing [the execution of this
Agreement//consummation of the transactions contemplated hereby](3) substantially in the form
attached hereto as Exhibit E. 
Each Party agrees not to issue any other press release or other public
statement relating to or make any public filing with respect to the Transaction
Documents or the transactions contemplated hereby without the prior written
consent of the other Party, which consent will not be unreasonably withheld or
delayed.  Each Party agrees to provide to
the other Party a copy of any public announcement or public filing regarding
the Transaction Documents or the subject matter thereof as far in advance as
practicable under the circumstances prior to its scheduled release.  Except under extraordinary circumstances,
each Party will provide the other with an advance copy of any such announcement
at least [***] prior to its scheduled release. 
The contents of any announcement or filing or similar publicity which
has been reviewed, approved and released by the reviewing Party may be
re-released by either Party without a requirement for advance notice or re-approval.

 

8.4           Expenses.  Except as otherwise provided
herein, each of AMI and Isis will bear its own costs and expenses (including,
without limitation, all legal, accounting, consulting, investment banking,
brokerage and other fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby; provided that all costs and expenses associated with
obtaining third party consents with respect to Ibis Contracts or any Restricted
Asset less than or equal to $[***] in the aggregate shall be borne by AMI and
that, in accordance with Section 2.4, all such costs and expenses
in excess of $[***] in the aggregate shall be borne by Isis; provided further, that the initial
premerger notification and filing fee for HSR shall be borne by AMI, but any
fees arising from any subsequent filings with respect thereto shall be borne
equally by AMI and Isis.

 

8.5           Setoff.  AMI and Ibis shall have the
right to set off any claim AMI or Ibis may have against Isis under this
Agreement or the Transition Services Agreement against any amounts owing to
Isis under this Agreement; provided
that (i) AMI provides written notice to

 

(3) Timing
of press release TBD.

 

45

 

Isis of such setoff claim and
(ii) initiates the ADR process described in Exhibit C
hereto.  AMI shall setoff any amounts
pursuant to the foregoing by [***].

 

8.6           Certain Tax Matters.

 

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

 

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

 

(c)   Tax Liability.

 

(i)            Isis shall, in accordance with Section 8.2(a) (except
as explicitly provided in this Section 8.6), indemnify and hold
harmless the AMI Group 

 

46

 

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

 

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

 

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

 

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

 

(d)   Tax Returns.

 

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

 

47

 

income
Taxes due in respect of such Tax Returns, and (Y) any other Taxes due in
respect of such Tax Returns that are due on or before the Closing Date.

 

(e)   Contest Provisions.

 

(i)            Isis
shall have the sole right to control the conduct and resolution of any audit,
litigation, contest, dispute, negotiation, or other proceeding with any Tax
authority that relates to income Taxes of Ibis relating to a Pre-Closing Tax
Period, including, without limitation, by selecting counsel of its choice to
represent Ibis, unless Isis fails to assert such control within 30 days of
receiving notice of such proceeding (each such proceeding for which Isis
asserts such control, an “Isis Proceeding”); provided, that
(1) Isis shall consult with AMI and keep AMI informed regarding the
progress and any potential compromise or settlement of each Isis Proceeding;
and (2) AMI shall be entitled to participate at its own expense in each
Isis Proceeding and (C) Isis shall not settle or otherwise compromise any
Isis Proceeding without the consent of AMI to the extent such settlement or
compromise would have an adverse effect on AMI or Ibis with respect to a
Post-Closing Tax Period, which consent shall not be unreasonably withheld,
conditioned or delayed.

 

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

 

(iii)          Provided
AMI fails to assert control over an Applicable AMI Proceeding within 30 days of
receiving notice of such proceeding, Isis shall have the sole right to control
the conduct and resolution of an Applicable AMI Proceeding with any Tax
authority, including, without limitation, by selecting counsel of its choice to
represent Ibis; provided, however, that (1) Isis shall promptly consult
with AMI regarding the progress and any potential compromise or settlement of
any Applicable AMI Proceeding; (2) AMI shall be entitled to participate at
its own expense in any Applicable Isis Proceeding; and (3) neither Isis
nor Ibis shall settle or compromise any Applicable AMI Proceeding without the
prior written consent of AMI, which shall not be unreasonably withheld,
conditioned or delayed.

 

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

 

48

 

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

 

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

 

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

 

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

 

(g)   Code § 338(h)(10) Election. At AMI’s option, Isis and AMI shall join in making an election under
Code § 338(h)(10) (and any corresponding elections under state, local, or
foreign tax law) (collectively a “§ 338(h)(10) Election”) with
respect to the purchase and sale of the Shares, [the Additional Shares]
and the Remaining Shares, unless and to the extent the Code is amended to
prevent or limit the filing of a § 338(h)(10) Election. Isis will pay any
Tax attributable to the making of the § 338(h)(10) Election and will
indemnify the AMI Group against any Losses arising out of any failure to pay
such Tax.

 

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

 

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

 

49

 

8.8           Confidentiality.

 

(a)   Each Party agrees that for a period of three (3) years after the
Closing Date, a Party (the “Receiving Party”) receiving or that has received
Confidential Information of the other Party (the “Disclosing Party”)
will (i) maintain and cause its Representatives to maintain in confidence
such Confidential Information using not less than the efforts such Receiving
Party uses to maintain in confidence other proprietary information of similar
kind and value (it being understood and agreed that AMI shall have no
obligation to maintain the confidentiality of any Ibis Confidential Information
and that Isis shall have an obligation to maintain the confidentiality of all
Ibis Confidential Information pursuant to this Section 8.8),
(ii) not disclose such Confidential Information except to the Receiving
Party’s employees or Affiliates having a need-to-know such Confidential
Information solely for purposes of performing the Receiving Party’s obligations
under the Transaction Documents, (iii) not disclose such Confidential
Information to any Person without the prior written consent of the Disclosing
Party, except for disclosures expressly permitted by the Transaction Documents,
and (iv) not use such Confidential Information for any purpose except
those expressly permitted by the Transaction Documents.  The provisions of this Section 8.8
shall supersede the provisions of Section 5.1, Section 5.2 and
Section 5.3 of the Master Agreement which shall terminate and be of no
further force or effect from and after the Closing Date.  Upon AMI’s request Isis will return or
destroy (and certify to AMI any such destruction) all Confidential Information
of AMI or its Affiliates and upon Isis’ request, AMI will return or destroy
(and certify to Isis any such destruction) all Confidential Information of Isis
that is not Confidential Information of Ibis; provided,
that AMI may retain one (1) copy of Isis’ Confidential Information in
Abbott’s confidential files.

 

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

 

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

 

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

 

(iii)          disclosure,
in connection with the performance of the Transaction Documents and solely on a
need-to-know basis, to employees or independent contractors (including without
limitation consultants and clinical investigators), each of whom prior to disclosure
must be bound by written obligations of confidentiality and non-use no less
restrictive than the obligations set forth in this Section 8.8;
provided, that the Receiving Party will remain responsible for any failure by
any Person who receives Confidential Information pursuant to this Section 8.8
to treat such Confidential Information as required under this Section 8.8.

 

(c)   If and whenever any Confidential Information is disclosed in accordance
with this Section 8.8, such disclosure will not cause any such
information to cease to be Confidential Information except to the extent that
such permitted disclosure results in a public disclosure of such information
(other than by breach of this Agreement). 
Except as prohibited by

 

50

 

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

 

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

 

(e)   The existence and the terms and conditions of the Transaction Documents
that the Parties have not specifically agreed to disclose pursuant to Section 8.8(b) or
Section 8.3 will be considered Confidential Information of both
Parties.  AMI and, subject to the terms
of Section 7.8, Isis may disclose such terms to a bona fide
potential investor, investment banker, acquirer, merger partner or other
potential business partner of AMI or Isis, respectively, and their attorneys
and agents, provided that each
such Person to whom such information is to be disclosed is informed of the
confidential nature of such information and has entered into a written
agreement with the Party requiring such Person to keep such information
confidential.

 

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

 

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

 

(b)   Pre-Existing Business. 
Notwithstanding the foregoing, if a Person becomes an Affiliate of Isis
after the Closing Date, and such Person was engaged in a line of business that
on or before the time such Person became an Affiliate of Isis, competed with
the Business as conducted on and prior to the Closing Date and as contemplated
by Ibis and Isis to be 

 

51

 

conducted
after the Closing Date, as reflected in the Offering Memorandum and Management
Presentations (a “Pre-Existing Business”), then the provisions of Section 8.9(a) will
not apply to such Pre-Existing Business if (i) such third party does not
[***] and (ii) appropriate protective measures and procedures are
established by Isis and its Affiliates and such Person and its Affiliates to
protect and safeguard the confidentiality of Abbott and Ibis Confidential
Information.

 

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

 

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

 

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

 

For purposes of Sections 8.9(c), 8.9(d) and
8.9(e), “recruit,” “solicit” or “induce” shall not be deemed to mean (i)
circumstances where an employee, consultant or independent contractor or former
employee, consultant or independent contractor initiates contact with a Party
with regard

 

52

 

to
possible employment, or (ii) general solicitations of employment not
specifically targeted at specific employees of a Party, including responses to
general advertisements.

 

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

 

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

 

8.11         Employee and Related Matters.

 

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

 

53

 

any
employee benefit plan, policy or arrangement, except that neither Abbott nor
AMI nor Ibis may make any material amendment to the terms and provisions of the
Permitted Employee Compensation Plan.

 

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

 

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

 

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

 

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

 

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

 

54

 

continuously
absent from work with Ibis for any reason for longer than five (5) working
days, other than for approved paid vacation.

 

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

 

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

 

8.12         Consolidated Return.  From
and after the date hereof, Isis will file a consolidated Tax Return with
respect to itself and Ibis in lieu of separate Tax Returns with respect to
income Tax imposed by Chapter 1 of the Code for the Tax year beginning
January 1, 2007 through and including the Closing unless the provisions of
the Code shall have been amended after the date hereof to disallow the filing
of such consolidated Tax Returns.  In the
event of an Internal Revenue Service audit of Isis arising out or related to
the consolidation of Ibis and Isis in such consolidated Tax Return, Isis will
promptly (but in any event within [***]) notify AMI of such audit and allow AMI
to participate and advise Ibis and Isis in connection with such audit.

 

8.13         Isis Intellectual Property License.

 

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

 

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

 

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

 

55

 

Section 9.              TERMINATION.

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 10.            MISCELLANEOUS.

 

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

 

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

 

56

 

10.3         Successors and Assigns.  This
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors and permitted assigns.  No Party may assign either this Agreement or
any of its rights, interests or obligations hereunder without the prior written
approval of the other Party; provided
that AMI may (x) assign any or all of its rights and interests hereunder
to one or more of its Affiliates, (y) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of which cases
AMI nonetheless shall remain responsible for the performance of all of its
obligations hereunder), and (z) assign any or all of its rights and interests
hereunder in connection with a Change of Control of AMI.  Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon and be enforceable by the Parties and their respective successors,
assigns, heirs, executors and administrators.

 

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

 

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

 

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

 

	
  If
  to Ibis, to:

  
	
   

  
	
  Ibis
  Biosciences Inc.

  
	
  1896
  Rutherford Road

  
	
  Carlsbad,
  CA  92008

  
	
  Attention:   President 

  
	
  Facsimile:
  (760) 603-4653

  

 

57

 

	
  If
  to Isis, to:

  
	
   

  
	
  Isis
  Pharmaceuticals, Inc.

  
	
  1896
  Rutherford Road

  
	
  Carlsbad,
  CA 92008

  
	
  Attention:
  Chief Financial Officer

  
	
  Facsimile:
  (760) 603-4650

  
	
   

  
	
  with
  a copy to:

  
	
   

  
	
  1896
  Rutherford Road

  
	
  Carlsbad,
  CA 92008

  
	
  Attention:  General Counsel

  
	
  Facsimile:
  (760) 268-4922

  
	
   

  
	
  If
  to AMI:

  
	
   

  
	
  Abbott
  Molecular Inc.

  
	
  c/o
  Abbott Laboratories

  
	
  Corporate
  Transactions and Medical Products Legal Operations

  
	
  Dept.
  322, Bldg. AP6A 

  
	
  100
  Abbott Park Road

  
	
  Abbott
  Park, IL 60064-6010

  
	
  Attention:  Vice President and Associate General
  Counsel

  
	
  Facsimile:
  (847) 938-1206

  
	
   

  
	
  with
  a copy to:

  
	
   

  
	
  Kirkland &
  Ellis LLP

  
	
  200
  East Randolph Drive

  
	
  Chicago,
  IL 60601

  
	
  Attn:  R. Scott Falk, P.C.

   R. Henry Kleeman

  
	
  Facsimile:  (312) 861-2200

  

 

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

 

10.7         Governing Law.  This
Agreement shall be governed by and construed in accordance with the domestic laws
of the State of Delaware without giving effect to any choice 

 

58

 

or conflict of law provision
or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of Delaware.

 

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

 

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

 

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

 

10.11       Incorporation of Exhibits and Schedules.  The
exhibits and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.  The
Parties acknowledge and agree that (i) the Disclosure Schedules are
arranged in sections corresponding to the sections and paragraphs of this
Agreement and the disclosures therein qualify the specifically referenced
corresponding representations and warranties of the Parties contained in this
Agreement, (ii) to the extent this Agreement requires disclosure of any
matter, such matter disclosed pursuant to one provision, subprovision, section
or subsection of the Disclosure Schedules shall be deemed disclosed only to the
extent actually disclosed with respect to the specific provision, subprovision,
section or subsection of the Disclosure Schedule that it is actually disclosed
pursuant to and (iii) section numbers and titles inserted in the
Disclosure Schedules are for convenience of reference only and shall to no
extent have the effect of amending or changing the express description of such
sections of the Disclosure Schedules as set forth in this Agreement.  Information set forth in each section of the
Disclosure Schedules specifically refers to the section of this Agreement to
which such information is responsive, and such information shall not be deemed
to have been disclosed with respect to any statement made in any other section
of this Agreement.  Any capitalized terms
used in any Schedule but not otherwise defined therein shall have the meanings
ascribed to such terms in this Agreement.

 

59

 

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

 

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

 

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

 

10.15       No Other Compensation.

 

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

 

*    *    *   
*    *

 

60

 

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

 

	
   

  	
  ISIS PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  IBIS BIOSCIENCES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  ABBOTT MOLECULAR INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  

 

SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT

 

 

LIST OF EXHIBITS

 

	
  Exhibit A-

  	
  Transition
  Services Agreement 

  
	
  Exhibit B-

  	
  Escrow
  Agreement

  
	
  Exhibit C-
  

  	
  Alternative
  Dispute Resolution Procedures

  
	
  Exhibit D-
  

  	
  Permitted
  Employee Compensation Plan

  
	
  Exhibit E

  	
  Press
  Release

  

 

 

EXHIBIT A

 

TRANSITION SERVICES AGREEMENT

 

 

EXHIBIT B

 

ESCROW AGREEMENT

 

 

EXHIBIT C

 

ADR
PROCEDURE

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

3

 

EXHIBIT D

 

PERMITTED EMPLOYEE COMPENSATION PLAN

 

AMI and Isis will mutually agree on the [***].  The money available for such package, in the
aggregate, will be $[***], a portion of which (approximately $[***] assuming
normal employee turnover rates) would be [***]. 
Any funds [***] would be released to [***].

 

 

EXHIBIT E

 

PRESS
RELEASE

 

 

EXHIBIT B

 

STOCK
SUBSCRIPTION AGREEMENT

 

AMONG

 

IBIS
BIOSCIENCES, INC.

 

ISIS
PHARMACEUTICALS, INC.

 

AND

 

ABBOTT
MOLECULAR INC.

 

[                              ],
2008

 

 

STOCK SUBSCRIPTION AGREEMENT

 

THIS STOCK SUBSCRIPTION AGREEMENT  (this
“Agreement”) is made and entered into as of this [    ]  day
of [                ], 2008, by and among Isis
Pharmaceuticals, Inc., a Delaware corporation (“Isis”), Ibis Biosciences, Inc., a Delaware
corporation and majority owned subsidiary of Isis (“Ibis”), and Abbott
Molecular, Inc.,
a Delaware corporation (“AMI”).  Isis, Ibis and AMI are sometimes referred to
herein individually as a “Party,” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS,
on January 30, 2008, the Parties entered into a Strategic Alliance Master
Agreement (the “Master Agreement”) and certain other Investment
Documents, pursuant to which, among other things, AMI acquired the Shares from
Ibis;

 

WHEREAS,
in connection with the transactions contemplated by the Investment Documents,
Ibis granted a Subscription Right to AMI and AMI acquired the Subscription
Right from Ibis on the terms set forth in the Call Option Agreement; and

 

WHEREAS, on [                  ],
2008, in accordance with the terms and provisions of the Call Option Agreement,
AMI has exercised the Subscription Right and desires to acquire the Additional
Shares pursuant to the terms hereof.

 

AGREEMENT

 

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

 

SECTION 1.         Definitions.

 

Capitalized terms used
and not otherwise defined herein have the meanings ascribed to such terms in
the Master Agreement.

 

SECTION 2.         Subsequent Closing;
Delivery And Payment.

 

2.1          Subsequent Closing.  The closing of the sale and purchase of the Additional Shares under this
Agreement (the “Subsequent Closing”) will take place at 1:00 p.m.
on the date hereof, at the offices of Kirkland & Ellis LLP, 200 E.
Randolph Dr. Chicago, IL 60601 or at such other time or place as the
Parties may mutually agree (such date is hereinafter referred to as the “Subsequent
Closing Date”).

 

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

 

1

 

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

 

(b)           AMI shall purchase, acquire and accept
the Additional Shares from Ibis for $20,000,000, paid to Ibis via wire transfer
of immediately available funds to an account designated by Ibis in writing.

 

SECTION 3.        Representations And
Warranties of the Parties.

 

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

 

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

 

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

 

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

 

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

 

(e)    Due
Organization; Qualification.  Each of
Ibis and Isis is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to enter into this Agreement. 
Except as would not reasonably be expected to have a Material Adverse
Effect, Ibis has obtained and currently maintains all qualifications to do
business as a foreign corporation in all jurisdictions in which

 

2

 

the character of
the Business requires it to be so qualified. 
Ibis has all requisite power and authority and all authorizations and
Licenses necessary to own, operate or conduct the Business.

 

(f)    Capitalization;
Voting Rights.

 

(i)          The
authorized Capital Stock of Ibis consists of 1,228,501 shares of Common
Stock, par value $0.001 per share, 1,114,251 shares of which are issued and
outstanding and 1,000,000 of which are held by Isis (the “Remaining Shares”)
and 114,251 of which are held by AMI.

 

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

 

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

 

(iv)        Neither
the sale of the Additional Shares to AMI
hereunder nor the sale of the Remaining Shares to AMI under the Acquisition Agreement is subject to any preemptive
rights, rights of first refusal or similar rights.

 

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

 

(h)   Financial
Statements.  Schedule 3.1(t) attached
hereto contains the following financial statements (collectively the “Financial
Statements”): [(i) the
profit and loss statement for Ibis for the fiscal year ended December 31,
2007, (ii) the profit and loss statement for Ibis and the related balance
sheet (the “Most Recent Balance Sheet”) for the [three] month
period ended [March 31,
2008].(1)  The Financial
Statements have been prepared in accordance with GAAP throughout the periods
covered thereby, present fairly in all material respects the financial
condition of Ibis or the Division (as the case may be) as of such dates and the
results of operations of Ibis or the Division (as the case may be) for such
periods, and are materially

 

(1) The most
recent financial statements available upon exercise of the Subscription Rights
will be referenced in this Section.

 

3

 

correct and complete and consistent with the books and records of Ibis
(which books and records are materially correct and complete).

 

(i)    Customers
and Suppliers. Schedule 3.1(z) accurately sets forth a list of
the Business’ top ten customers by revenue for the fiscal year ended
December 31, 2007 and the [three] month period ended [March 31, 2008]. 
Except as set forth on Schedule 3.1(z), neither Isis nor Ibis has
received any indication from any material customer of the Business or any
Governmental Authority to the effect that, and neither Isis nor Ibis has any
reason to believe that, such customer or Governmental Authority will in the
future stop, or materially decrease the rate of buying products or services
from the Business.  Schedule 3.1(z) also
accurately sets forth a list of the Business’ top ten suppliers by dollar
amount for the fiscal year ended December 31, 2007 and the [three] month period ended [March 31,
2008].(2)  Except as set
forth on Schedule 3.1(z), neither Isis nor Ibis has received any
indication from any material supplier of the Business to the effect that, and
neither Isis nor Ibis has any reason to believe that, such supplier will stop
or materially decrease the rate of providing products or services to the
Business and its customers.  Neither Isis
nor Ibis is involved in any material dispute with any customer or supplier of
or to the Business.

 

(j)    No
Material Adverse Effect.  Since the
Financing Closing, there has been no Material Adverse Effect.

 

(k)   Master
Agreement. The representations and warranties made by Isis and Ibis in the
Master Agreement are true and correct as of the date hereof, except that the
representations and warranties in Sections 3.1(t) and 3.1(z) of
the Master Agreement are true and correct as restated as set forth in Sections
3.1(h) and 3.1(i), respectively, above.  Ibis and Isis have complied with and
performed the covenants and agreements set forth in the Investment Documents in
all material respects as of the date hereof.

 

(l)    Offering
Valid.  Assuming the accuracy of the
representations and warranties of AMI
contained in Section 3.2 hereof, the offer, sale and issuance of
the Additional Shares is exempt from the registration requirements of the
Securities Act, and have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or qualification
requirements of all applicable state securities Laws.  Neither Ibis nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Additional Shares to any Person or Persons
so as to bring the sale of such Additional Shares by Ibis within the
registration provisions of the Securities Act or any state securities Laws.

 

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

 

(a)   Power
and Authority.  AMI has the power,
authority and the legal right to enter into this Agreement and to perform its
obligations hereunder, and it has taken all

 

(2) Data for the period reflected in the most recent financial statements
available upon exercise of the Subscription Rights will be referenced in this
Section.

 

4

 

necessary action required to authorize the execution and delivery of
such agreement and the performance of its obligations hereunder.

 

(b)   Enforceability.
This Agreement has been duly executed and delivered on behalf of AMI and
constitutes its legal, valid and binding obligation and is enforceable against
it in accordance with its terms subject to the effects of bankruptcy,
insolvency or other Laws of general application affecting the enforcement of
creditor rights.

 

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

 

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

 

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

 

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

 

(i)            AMI Bears Economic Risk. 
AMI may be required to bear the economic risk of its investment in the
Additional Shares indefinitely unless the Additional Shares are registered
pursuant to the Securities Act, or an exemption from registration is
available.  AMI understands that Ibis has
no present intention of registering the Additional Shares or any shares of its
Capital Stock.  AMI also understands that
there is no assurance that any exemption from registration under the Securities
Act will be available and that, even if available, such exemption may not allow
AMI to Transfer all or any portion of the Additional Shares under the
circumstances, in the amounts or at the times AMI might propose.

 

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

 

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

 

5

 

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

 

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

 

(g)   Transfer
Restrictions. 
AMI acknowledges and agrees that the Additional Shares are subject to
restrictions on Transfer as set forth in the Investor Rights Agreement.

 

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

 

(i)    Master
Agreement. AMI has complied with and performed the covenants and agreements
set forth in the Investment Documents in all material respects as of the date
hereof.

 

SECTION 4.         Indemnification.

 

4.1          The representations and warranties of Ibis
and Isis set forth in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d),
3.1(e), 3.1(f) and 3.1(g), above and each Fundamental
Isis Representation set forth in the Master Agreement as restated on the date
hereof shall also be ‘Fundamental Isis Representations’ under the Master
Agreement.

 

4.2          The representations and
warranties of AMI set forth in Sections 3.2(a), 3.2(b), 3.2(c) and
3.2(d), above and each Fundamental AMI Representation set forth in the
Master Agreement as restated on the date hereof shall also be ‘Fundamental AMI
Representations’ under the Master Agreement.

 

4.3          The representations,
warranties, covenants and agreements of the Parties set forth in this Agreement
shall be subject to Sections 5.8, 7.1 and 7.2 of the Master Agreement.

 

SECTION 5.         Miscellaneous. Section 8 of the
Master Agreement is incorporated herein by reference.

 

6

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

7

 

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

 

 

	
   

  	
  ISIS
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IBIS BIOSCIENCES, INC.

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ABBOTT
  MOLECULAR INC.

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
  

  
									

 

 

Signature
Page TO Stock Subscription Agreement

 

 

EXHIBIT C

 

[***] MILESTONE AND
VALUE ACCRETION MILESTONES

 

 

[***]

 

C-1

 

EXHIBIT
D

 

OPTION NOTICE

 

Reference is made to that
certain Call Option Agreement (the “Agreement”) dated as of January 30,
2008 by and among Isis Pharmaceuticals, Inc., a Delaware corporation (“Isis”),
Ibis Biosciences, Inc., a Delaware corporation, and Abbott Molecular Inc.,
a Delaware corporation (“AMI”). 
Capitalized terms used but not defined herein have the meanings given to
such terms in the Agreement.

 

AMI hereby notifies Isis
that AMI is exercising its Call Option pursuant to the Agreement as of this
       date of
                  ,
200    .

 

1.     The
Base Purchase Price, per the Agreement is [One
Hundred Seventy Five Million and No/100 Dollars ($175,000,000.00)// One Hundred
Ninety Five Million and No/100 Dollars ($195,000,000.00)].

 

2.     AMI
in its good faith judgment has determined that the [***] Milestone has not been
reached as of the date hereof and the Transaction Value is therefore [One Hundred Seventy Five Million and
No/100 Dollars ($175,000,000.00)// One Hundred Ninety Five Million and No/100
Dollars ($195,000,000.00)].

 

OR

 

2.     AMI
in its good faith judgment has determined that the [***] Milestone has been
reached as of the date hereof and:

 

(i)            AMI
in its good faith judgment has determined that the [***] Milestone has//has not
been reached as of the date hereof;

 

(ii)           AMI
in its good faith judgment has determined that the [***] Milestone has//has not
been reached as of the date hereof; and

 

(iii)          AMI in its good faith judgment has determined that the [***] Milestone
has//has not been reached as of the date hereof and, therefore, the Transaction
Value is as follows:

 

	
  Base Purchase Price

  	
   

  	
  $175,000,000.00//

  $195,000,000.00

  	
   

  
	
  [[***] Milestone
  Adjustment

  	
   

  	
  $

  	
  [***]]

  	
   

  
	
  [[***] Milestone
  Adjustment

  	
   

  	
  $

  	
  [***]]

  	
   

  
	
  [[***] Milestone
  Adjustment]

  	
   

  	
  $

  	
  [***]]

  	
   

  
	
  Transaction Value

  	
   

  	
  $

  	
  [                     ]

  	
   

  

 

The Transaction Value is
$[                ].  Pursuant to Section 3.1 of the
Agreement, AMI hereby instructs Isis to execute and return the Acquisition
Agreement to AMI via facsimile in accordance with the provisions of Section 4.2
of the Agreement upon receipt of this Option Notice.

 

AMI represents and
warrants to Isis that AMI has obtained the consent of its Board of Directors to
exercise the Call Option and to execute the Acquisition Agreement based upon
the most recent Disclosure Schedules delivered by Isis to AMI.

 

	
   

  	
  ABBOTT MOLECULAR INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

D-1Exhibit 10.3

 

AMENDMENT TO
LOAN AND SECURITY AGREEMENT

 

THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and
entered into on May 7, 2008, by and among BANK OF
AMERICA, N.A., a national banking association (“BA”), in its
capacity as collateral and administrative agent for the Lenders under the Loan
Agreement (as hereinafter defined) (BA, in such capacity, the “Agent”),
BA, as Lender under the Loan Agreement (BA, together with the various financial
institutions listed on the signature pages hereof, in such capacity, the “Lenders”),
the Lenders, INTEGRATED ELECTRICAL SERVICES, INC.,
a Delaware corporation (“Parent”), each of the Subsidiaries of Parent
listed on Annex I attached hereto (Parent and such  Subsidiaries of Parent being herein referred
to collectively as the “Borrowers”), and the Subsidiaries of Parent
listed on Annex II attached hereto (such Subsidiaries being referred to herein
as the “Guarantors”, and Borrowers and Guarantors being referred to
herein as the “Credit Parties”).

 

RECITALS

 

A.            Agent, Lenders and Credit Parties have entered into that
certain Loan and Security Agreement, dated as of May 12, 2006 (the Loan
and Security Agreement, as amended from time to time, being referred to herein
as the “Loan Agreement”).

 

B.            Credit Parties, Agent and Lenders desire to amend the
Loan Agreement as hereinafter set forth, subject to the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the premises herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

 

AGREEMENT

 

ARTICLE I

Definitions

 

1.01        Capitalized terms used in this Amendment
are defined in the Loan Agreement, as amended hereby, unless otherwise stated.

 

ARTICLE II

Amendments

 

Effective as of the respective date hereinafter
specified, the Loan Agreement is hereby amended as follows:

 

2.01        Amendment
of Section 1.  Effective as of the date
hereof, the introductory paragraph of Section 1 of the Loan
Agreement is amended to replace the amount “$80,000,000” with the amount “$60,000,000”.

 

2.02        Amendment
of Section 2.2.  Effective as of the date
hereof, Section 2.2.3 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

 

 

“2.2.3  Letter of Credit Fee.  The Borrowers jointly and severally agree to
pay (i) to the Agent, for the account of the Lenders, in accordance with
their respective Pro Rata shares, for each Letter of Credit, a fee (the “Letter
of Credit Fee”) (a) for the period from the Amendment Closing Date through
September 30, 2008, equal to three percent (3.00%) per annum and (b) at
any thereafter, equal to the Applicable Margin for Revolver Loans that are
LIBOR Loans, and (ii) to Agent for the benefit of the Letter of Credit
Issuer a fronting fee of one-quarter of one percent (0.25%) per annum of the
undrawn face amount of each Letter of Credit, and (iii) to the Letter of
Credit Issuer, all out-of-pocket costs, fees and expenses incurred by the
Letter of Credit Issuer in connection with the application for, processing of,
issuance of, or amendment to any Letter of Credit, which costs, fees and
expenses shall include a “fronting fee” payable to the Letter of Credit
Issuer.  The Letter of Credit Fee shall
be payable monthly in arrears on the first day of each month following any
month in which a Letter of Credit is outstanding and on the Termination
Date.  The Letter of Credit Fee shall be
computed on the basis of a 360-day year for the actual number of days elapsed.”

 

2.03        Amendment
of Section 5.1.  Effective as of the date
hereof, Section 5.1 of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:

 

“5.1        Original Term of Commitments. 
Subject to each Lender’s right to cease making Loans and other
extensions of credit to Borrowers when any Default or Event of Default exists
or upon termination of the Commitments as provided in Section 5.2 hereof, the Commitments
shall be in effect through the close of business on May 12, 2010 (the “Original
Term”).”

 

2.04        Amendment
of Section 5.2.3.  Effective as
of the date hereof, Section 5.2.3 of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:

 

                “5.2.3      Termination Charges.  On the effective date of termination of the
Commitments pursuant to Section 5.2.2,
Borrowers shall be jointly and severally obligated to pay to Agent, for the Pro
Rata benefit of Lenders (in addition to the then outstanding principal, accrued
interest, fees and other charges owing under the terms of this Agreement and
any of the other Loan Documents), as liquidated damages for the loss of the
bargain and not as a penalty, an amount equal to (a) 0.50% of the
aggregate Commitments if such termination occurs on or before May 11,
2009, (b) 0.25% of the aggregate Commitments if such termination occurs on
or after May 12, 2009 and before May 12, 2010 and (c) $0 at any
time thereafter.”

 

2.05        Amendment
of Section 9.2.7.  Effective as of the date hereof, Section 9.2.7
of the Loan Agreement is amended and restated in its entirety to read as
follows:

 

“9.2.7      Distributions.  Declare or make any Distributions, except for
(i) Upstream Payments, (ii) repurchases of common stock of Parent
from employees solely to satisfy their tax obligations arising from their
acquisition of such common stock in an aggregate amount not to exceed
$1,500,000 in any fiscal year 

 

2

 

of Credit Parties;
provided, that no such repurchases of common stock of Parent shall be
permitted unless Borrower has Availability of at least $10,000,000 at the time
of such repurchase after giving effect to such repurchase and (iii) other
repurchases of common stock of Parent; provided, that (a) Borrowers
shall have entered into the Tontine Subordinated Debt Documentation, incurred
the Tontine Subordinated Debt and prepaid the Tranche B Loan with the proceeds
thereof and Unrestricted Cash On Hand prior to any such repurchase, (b) the
aggregate amount paid in connection with all such repurchases during any period
of two fiscal years of Credit Parties shall not exceed $27,500,000, (c) there
shall not be any Revolver Loans outstanding at the time of any such repurchase,
(d) Borrower shall have Unrestricted Cash On Hand of at least $40,000,000
after giving effect to any such repurchase, (e) no such repurchase shall
be of common stock of the Tontine Lenders or any of their Affiliates or of
common stock of any officer, director, consultant, manager, agent or employee
of any Credit Party or any Affiliate of any Credit Party but only if such
repurchase is pursuant to a privately negotiated transaction between such
Person and Parent (as distinguished from an open market repurchase by Parent,
for example).”

 

2.06        Amendment
to Section 9.3.  Effective as of the date
hereof, Section 9.3.7 of the Loan Agreement is amended and restated
to read in its entirety as follows:

 

“9.3.7.  Fixed Charge Coverage Ratio.  At any time the aggregate amount of
Unrestricted Cash On Hand of the Credit Parties plus Availability is less than
$50,000,000, maintain a Fixed Charge Coverage Ratio, on a Consolidated basis,
of not less than 1.25:1.00 as of the end of the immediately preceding month for
which financial statements were required to be delivered pursuant to Section 9.1, calculated on a trailing twelve calendar
month basis,  and as of the end of each month
thereafter, calculated on a trailing twelve calendar month basis, until such
time as the aggregate amount of Unrestricted Cash On Hand of the Credit Parties
plus Availability has been at least $50,000,000 for a period of 60 consecutive
days.”

 

2.07        Amendment
to Section 9.3.  Effective as of the date
hereof, Section 9.3.8 of the Loan Agreement is amended and restated
to read in its entirety as follows:

 

“9.3.8  Leverage Ratio –
At any time the aggregate amount of Unrestricted Cash On Hand of the Credit
Parties plus Availability is less than $50,000,000, maintain a Leverage Ratio,
on a Consolidated basis, of not more than 3.50 to 1.00 as of the end of the
immediately preceding month for which financial statements were required to be
delivered pursuant to Section 9.1
hereof, calculated on
a trailing twelve calendar month basis, and as of the end of each
month thereafter,
calculated on a trailing twelve calendar month basis, until such
time as the aggregate amount of Unrestricted Cash On Hand of the Credit Parties
plus Availability has been $50,000,000 for a period of 60 consecutive days.

 

3

 

2.08        Amendment
to Section 9.4.  Effective as of the date
hereof, the text of Section 9.4 of the Loan Agreement is hereby
deleted in its entirety and replaced with the phrase “[INTENTIONALLY OMITTED]”.

 

2.09        Amendment
to Appendix A.  Effective as of the date hereof, the
definition of “Accounts Formula Amount” in Appendix A to the Loan
Agreement is hereby amended to replace “85%” with “80%”.

 

2.10        Amendment
to Appendix A.  Effective as of the date hereof, the
definition of “Applicable Margin” in Appendix A to the Loan Agreement is
hereby amended and restated in its entirety as follows:

 

“Applicable Margin – (i) for the period from the Amendment
Closing Date through September 30, 2008, a percentage equal to (a) 1.00%
with respect to Revolver Loans that are Base Rate Loans, (b) 3.00% with
respect to Revolver Loans that are LIBOR Loans, and (c) 3.00% with respect
to fees payable to Lenders pursuant to Section 2.2.3 and (ii) at any time thereafter, the
Applicable Margin shall equal the applicable LIBOR margin or Base Rate margin
in effect from time to time determined as set forth below based upon the
applicable Total Liquidity then in effect pursuant to the appropriate column in
the table below:

 

	
  Total Liquidity

  	
   

  	
  Applicable

  LIBOR

  Margin

  	
   

  	
  Applicable

  Base Rate

  Margin

  	
   

  
	
  Greater than or equal to $60,000,000

  	
   

  	
  2.75

  	
  %

  	
  .75

  	
  %

  
	
  Greater than $40,000,000 and less than $60,000,000

  	
   

  	
  3.00

  	
  %

  	
  1.00

  	
  %

  
	
  Less than or equal to $40,000,000

  	
   

  	
  3.25

  	
  %

  	
  1.25

  	
  %

  

 

The Applicable Margin shall be adjusted (up or down)
prospectively on a quarterly basis three days after delivery to the Agent of
Borrower’s quarterly (i.e. for the last month of the applicable quarter) or
annual (as applicable) Compliance Certificate pursuant to Section 9.1.3
hereof (commencing with the Compliance Certificate for the period ending September 30,
2008).  If the Credit Parties shall fail
to deliver any quarterly or annual Compliance Certificate by the date required
pursuant to Section 9.1.3, then, at the
Agent’s election, effective as of the first day of the month following the end
of the fiscal month for which such Compliance Certificate was to have been
delivered, and continuing through the first day of the month following the date
(if ever) when such Compliance Certificate is finally delivered, the Applicable
Margin shall be conclusively presumed to equal the highest Applicable Margin
specified in the pricing table set forth above.

 

4

 

If, as a result of any restatement of or other adjustment to the
financial statements of the Borrowers or for any other reason, the Agent
determines that (a) the Total Liquidity as calculated by the Borrowers as
of any applicable date was inaccurate and (b) a proper calculation of the
Total Liquidity would have resulted in different pricing for any period, then (i) if
the proper calculation of the Total Liquidity would have resulted in higher
pricing for such period, the Borrowers shall automatically and retroactively be
obligated to pay to the Agent, promptly on demand by the Agent, an amount equal
to the excess of the amount of interest and fees that should have been paid for
such period over the amount of interest and fees actually paid for such period;
and (ii) if the proper calculation of the Total Liquidity would have
resulted in lower pricing for such period, Agent shall provide the Borrowers a
credit with respect to any interest or fees paid in excess of the amounts
thereof that should have been paid for such period (such credit to be allocated
ratably among all Lenders); provided that if, as a result of any restatement or
other event a proper calculation of the Total Liquidity would have resulted in
higher pricing for one or more periods and lower pricing for one or more other
periods (due to the shifting of income or expenses form one period to another
period or any similar reason), then (x) the amount payable by the
Borrowers pursuant to clause (i) above shall be based upon the excess, if
any, of the amount of interest and fees that should have been paid for all
applicable periods over the amount of interest and fees paid for all such
periods or (y) the amount to be credited by the Lenders pursuant to clause
(ii) above shall be based upon the excess, if any, of the amount of
interest and fees paid for all applicable periods over the amount of interest
and fees that should have been paid for all such periods.”

 

2.11        Amendment
to Appendix A.  Effective as of the date hereof, clause (vii) of
the definition of “Availability Reserve” in Appendix A to the Loan
Agreement is hereby amended and restated in its entirety to read as follows:

 

“(vii) a general reserve of $8,000,000, until
such time as Agent removes or reduces such reserve; provided that such
general reserve will be reduced to $5,000,000 if no Default or Event of Default
has occurred and is continuing upon the date Agent receives the audited September 30,
2008 financial statements delivered pursuant to Section 9.1
hereof;”

 

2.12        Amendment
to Appendix A.  Effective as of the date hereof, the
definition of “Commitments” in Appendix A to the Loan Agreement is
hereby amended to replace the amount “$80,000,000” with the amount “$60,000,000”.

 

2.13        Amendment
to Appendix A.  Effective as of the date hereof, the
definition of “Letter of Credit Subfacility” in Appendix A to the Loan
Agreement is amended and restated in its entirety to read as follows:

 

“Letter of Credit Subfacility - $60,000,000.”

 

5

 

2.14        Amendment
to Appendix A.  Effective as of the date hereof, the
following new definitions are inserted into Appendix A to the Loan
Agreement in appropriate alphabetical order, each to read in its entirety as
follows:

 

“Amendment Closing Date – May 7, 2008.”

 

“Average Daily Availability – for any given
period, the quotient of (a) the sum of daily Availability for each day
during such period divided by (b) the number of days during such period.”

 

“Total Liquidity – for any given period, the
sum of (i) Average Daily Availability for such period plus (ii) average
daily Unrestricted Cash On Hand for such period.”

 

“Unrestricted Cash On Hand”
- at any date of determination, and without duplication, the sum of the
following for all Credit Parties: (i) Institutional Balances and (ii) Cash
Equivalents (other than Eligible Cash Collateral), in each case as to
which no Lien shall exist, other than a Lien in favor of the Lenders. “Institutional
Balances”, as used in the preceding definition, shall mean the amount of
all cash of the Credit Parties as reflected on the books of the deposit
institutions where any Credit Party maintains an account balance.

 

2.15        Amendment
to Title Page.  Effective as of the date hereof, the title page to
the Loan Agreement is hereby amended and restated in its entirety in the form
of Exhibit A attached hereto.

 

ARTICLE III

No Waiver

 

3.01        No Further Waiver.  Except as specifically provided in this
Amendment, nothing in
this Amendment shall directly or indirectly whatsoever either:  (i) be construed as a waiver of any
covenant or provision of the Loan Agreement, any other Loan Document or any
other contract or instrument or (ii) impair, prejudice or otherwise
adversely affect any right of Agent or Lender at any time to exercise any
right, privilege or remedy in connection with the Loan Agreement, any other
Loan Document or any other contract or instrument, or (iii) constitute any
course of dealing or other basis for altering any obligation of Credit Parties
or any right, privilege or remedy of Agent or Lenders under the Loan Agreement,
any other Loan Document or any other contract or instrument or constitute any
consent by Agent or Lenders to any prior, existing or future violations of the
Loan Agreement or any other Loan Document. 
Credit Parties hereby agree and acknowledge that hereafter Credit
Parties are expected to strictly comply with their duties, obligations and agreements
under the Loan Agreement and the other Loan Documents.

 

ARTICLE IV

Conditions Precedent

 

4.01        Conditions
to Effectiveness.  The effectiveness of this
Amendment (including the agreements and waiver contained herein) is subject to
the satisfaction of the following conditions precedent in a manner satisfactory
to Agent, unless specifically waived in writing by Agent:

 

6

 

(a)           Agent
shall have received this Amendment, duly executed by each of the Credit Parties.

 

(b)           The
representations and warranties contained herein and in the Loan Agreement and
the other Loan Documents, as each is amended hereby, shall be true and correct
in all material respects as of the date hereof, as if made on the date hereof,
except for those representations and warranties specifically made as of an
earlier date, which shall be true and correct in all material respects as of
such earlier date.

 

(c)           After
giving effect to the provisions of this Amendment, no Default or Event of Default
shall have occurred and be continuing, unless such Default or Event of Default
has been otherwise specifically waived in writing by Agent.

 

(d)           All
organizational proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto shall be reasonably satisfactory to Agent and its
legal counsel.

 

(e)           Agent shall have
received, for the pro rata application among the Lenders, an amendment fee of
$75,000.

 

ARTICLE V

Ratifications, Representations and Warranties

 

5.01        Ratifications. 
The terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Loan Agreement
and the other Loan Documents, and, except as expressly modified and superseded
by this Amendment, the terms and provisions of the Loan Agreement and the other
Loan Documents are ratified and confirmed and shall continue in full force and
effect.  Each Credit Party and Lenders
and Agent agree that the Loan Agreement and the other Loan Documents, as
amended hereby, shall continue to be legal, valid, binding and enforceable in
accordance with their respective terms.

 

5.02        Representations
and Warranties.  Each Credit Party hereby represents and
warrants to Lenders and Agent that (a) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
organizational action on the part of such Credit Party and will not violate the
organizational or governing documents of such Credit Party; (b) the
representations and warranties contained in the Loan Agreement, as amended
hereby, and any other Loan Document are true and correct in all material respects
on and as of the date hereof and on and as of the date of execution hereof as
though made on and as of each such date, except for those representations and
warranties specifically made as of an earlier date, which shall be true and
correct in all material respects as of such earlier date; (c) no Default
or Event of Default under the Loan Agreement, as amended hereby, has occurred
and is continuing, unless such Default or Event of Default has been
specifically waived in writing by Agent; (d) each Credit Party is in
material compliance with all covenants and agreements contained in the Loan
Agreement and the other Loan Documents, as amended hereby; and (e) no
Credit Party has 

 

7

 

amended its organizational or governing documents since the date of
execution of the Loan Agreement other than as has been previously disclosed and
delivered to the Agent.

 

ARTICLE VI

Miscellaneous Provisions

 

6.01        Survival
of Representations and Warranties.  All
representations and warranties made in the Loan Agreement or any other Loan
Document, including, without limitation, any document furnished in connection
with this Amendment, shall survive the execution and delivery of this Amendment
and the other Loan Documents, and no investigation by Lender or Agent or any
closing shall affect the representations and warranties or the right of Lender
or Agent to rely upon them.

 

6.02        Reference
to Loan Agreement.  Each of the Loan Agreement and
the other Loan Documents, and any and all other Loan Documents, documents or
instruments now or hereafter executed and delivered pursuant to the terms
hereof or pursuant to the terms of the Loan Agreement, as amended hereby, are
hereby amended so that any reference in the Loan Agreement and such other Loan
Documents to the Loan Agreement shall mean a reference to the Loan Agreement,
as amended hereby, and any reference in the Loan Agreement and such other Loan
Documents to any other Loan Document amended by the provisions of this
Amendment shall mean a reference to such other Loan Documents, as amended
hereby.

 

6.03        Expenses
of Lender.  As provided in the Loan Agreement, each
Credit Party agrees to pay on demand all costs and out-of-pocket expenses
incurred by Agent in connection with the preparation, negotiation, and
execution of this Amendment and the other Loan Documents executed pursuant
hereto and any and all amendments, modifications, and supplements thereto,
including, without limitation, the costs and fees of Agent’s legal counsel, and
all costs and out-of-pocket expenses incurred by Agent in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any other Loan Documents, including, without, limitation, the costs
and fees of Agent’s legal counsel and consultants retained by Agent or retained
by Agent’s legal counsel.

 

6.04        Severability. 
Any provision of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the
remainder of this Amendment and the effect thereof shall be confined to the
provision so held to be invalid or unenforceable.

 

6.05        Successors
and Assigns.  This Amendment is binding upon and shall
inure to the benefit of Lenders and Agent and each Credit Party and their respective
successors and assigns, except that no Credit Party may assign or transfer any
of its rights or obligations hereunder without the prior written consent of
Lender and Agent.

 

6.06        Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which when so executed shall be deemed to be an original, but all of which when
taken together shall constitute one and the same instrument.

 

6.07        Effect
of Waiver.  No consent or waiver, express or implied, by
Lenders or Agent to or for any breach of or deviation from any covenant or
condition by any Credit Party 

 

8

 

shall be deemed a consent to or waiver of any other breach of the same
or any other covenant, condition or duty.

 

6.08        Headings. 
The headings, captions, and arrangements used in this Amendment are for
convenience only and shall not affect the interpretation of this Amendment.

 

6.09        Applicable
Law.  THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE
PERFORMABLE IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.

 

6.10        Final
Agreement.  THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS, EACH AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION
OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE THIS
AMENDMENT IS EXECUTED.  THE LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.  NO MODIFICATION, RESCISSION, WAIVER, RELEASE
OR AMENDMENT OF ANY PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A
WRITTEN AGREEMENT SIGNED BY EACH CREDIT PARTY AND LENDERS AND AGENT.

 

6.11        Release.  EACH CREDIT
PARTY HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET,
CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT CAN BE
ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO REPAY
THE “OBLIGATIONS” OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR
NATURE FROM LENDER OR AGENT.  EACH CREDIT
PARTY HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDERS
AND AGENT AND ITS RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND
ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES,
COSTS, EXPENSES, AND LIABILITIES (INCLUDING ALL STRICT
LIABILITIES) WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE
THIS AMENDMENT IS EXECUTED, WHICH ANY CREDIT PARTY MAY NOW OR HEREAFTER
HAVE AGAINST LENDERS OR AGENT OR ITS RESPECTIVE PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY “LOANS,” INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR
AND EXECUTION OF THIS AMENDMENT.

 

9

 

IN WITNESS WHEREOF, this Amendment has been executed on the date first
written above, to be effective as the respective date set forth above.

 

	
   

  	
   

  	
  AGENT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF
  AMERICA, N.A., as Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
            /s/
  H Michael Wills

  
	
   

  	
   

  	
  Name:

  	
       H
  Michael Wills

  
	
   

  	
   

  	
  Title:

  	
         Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF
  AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
            /s/
  H Michael Wills

  
	
   

  	
   

  	
  Name:

  	
       H
  Michael Wills

  
	
   

  	
   

  	
  Title:

  	
        Senior
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WELLS
  FARGO FOOTHILL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
            /s/
  David P Hill

  
	
   

  	
   

  	
  Name:

  	
       David
  Hill

  
	
   

  	
   

  	
  Title:

  	
         Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE CIT
  GROUP/BUSINESS CREDIT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
           /s/
  Chris Handler

  
	
   

  	
   

  	
  Name:

  	
       Chris
  Handler

  
	
   

  	
   

  	
  Title:

  	
          Assistant
  Vice President

  
										

 

 

	
   

  	
  CREDIT PARTIES:

  
	
   

  	
   

  
	
   

  	
  INTEGRATED ELECTRICAL SERVICES,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Curt L. Warnock

  
	
   

  	
   

  	
  Curt L. Warnock

  
	
   

  	
   

  	
  Senior Vice President

  
				

 

 

	
   

  	
  BRYANT ELECTRIC COMPANY, INC.

  
	
   

  	
  IES INDUSTRIAL, INC.

  
	
   

  	
  IES RESIDENTIAL, INC.

  
	
   

  	
  IES COMMERCIAL, INC.

  
	
   

  	
  IES HOUSTON RESOURCES, INC.

  
	
   

  	
  IES PROPERTIES, INC.

  
	
   

  	
  IES TANGIBLE PROPERTIES, INC.

  
	
   

  	
  IES PURCHASING & MATERIALS, INC.

  
	
   

  	
  IES CONSOLIDATION, LLC

  
	
   

  	
  IES SHARED SERVICES, INC.

  
	
   

  	
  IES OPERATIONS GROUP, INC.

  
	
   

  	
  IES RESIDENTIAL GROUP, INC.

  
	
   

  	
  ICS HOLDINGS LLC

  
	
   

  	
  INTEGRATED ELECTRICAL FINANCE, INC.

  
	
   

  	
  KEY ELECTRICAL SUPPLY, INC.

  
	
   

  	
  MARK HENDERSON, INCORPORATED

  
	
   

  	
  MID-STATES ELECTRIC COMPANY, INC.

  
	
   

  	
  MILLS ELECTRICAL CONTRACTORS, INC.

  
	
   

  	
  MILLS MANAGEMENT LLC

  
	
   

  	
  NEAL ELECTRIC MANAGEMENT LLC

  
	
   

  	
  PAN AMERICAN ELECTRIC, INC,

  
	
   

  	
  PAN AMERICAN ELECTRIC COMPANY, INC.

  
	
   

  	
  RAINES ELECTRIC CO., INC.

  
	
   

  	
  RAINES MANAGEMENT LLC

  
	
   

  	
  THOMAS POPP & COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Curt L. Warnock

  
	
   

  	
  Curt L. Warnock

  
	
   

  	
  Vice President

  

 

 

	
   

  	
  IES MANAGEMENT ROO, LP

  
	
   

  	
   

  
	
   

  	
  By: Neal Electric Management LLC

  
	
   

  	
  General Partner of IES Management ROO, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Curt L. Warnock

  
	
   

  	
  Name:

  	
  Curt L. Warnock

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IES MANAGEMENT LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: IES Residential Group, Inc.

  
	
   

  	
  General Partner of IES Management LP

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Curt L. Warnock

  
	
   

  	
  Name: 

  	
  Curt L. Warnock

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MILLS ELECTRIC, LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Mills Management LLC

  
	
   

  	
  General Partner of Mills Electric, LP

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Curt L. Warnock

  
	
   

  	
  Name:

  	
  Curt L. Warnock

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RAINES ELECTRIC LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Raines Management LLC

  
	
   

  	
  General Partner of Raines Electric LP

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Curt L. Warnock

  
	
   

  	
  Name:

  	
  Curt L. Warnock

  
	
   

  	
  Title:

  	
  Vice President

  
								

 

 

	
   

  	
  MILLS ELECTRICAL HOLDINGS, LLC.

  
	
   

  	
  MILLS ELECTRIC HOLDINGS II, LLC.

  
	
   

  	
  RAINES HOLDINGS, LLC.

  
	
   

  	
  RAINES HOLDINGS II, LLC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Curt L. Warnock

  
	
   

  	
  Curt L. Warnock

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  IES REINSURANCE, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Curt L. Warnock

  
	
   

  	
  Curt L. Warnock

  
	
   

  	
  President

  

 

 

Annex I

 

Borrowers

 

	
  Bryant Electric
  Company, Inc.

  	
  North Carolina

  
	
  IES
  Commercial, Inc.

  	
  Delaware

  
	
  IES
  Consolidation LLC

  	
  Delaware

  
	
  IES Houston
  Resources, Inc.

  	
  Delaware

  
	
  IES
  Industrial, Inc.

  	
  South Carolina

  
	
  IES Management,
  LP

  	
  Texas

  
	
  IES Management
  ROO, LP

  	
  Texas

  
	
  IES Properties
  Inc.

  	
  Delaware

  
	
  IES
  Purchasing & Materials, Inc.

  	
  Delaware

  
	
  IES
  Residential, Inc.

  	
  Delaware

  
	
  IES Shared
  Services, Inc.

  	
  Delaware

  
	
  IES Tangible
  Properties, Inc.

  	
  Delaware

  
	
  Integrated
  Electrical Finance, Inc.

  	
  Delaware

  
	
  Integrated
  Electrical Services, Inc.

  	
  Delaware

  
	
  Key Electrical
  Supply, Inc.

  	
  Texas

  
	
  Mark Henderson,
  Incorporated

  	
  Delaware

  
	
  Mid-States
  Electric Company, Inc.

  	
  Delaware

  
	
  Mills Electric
  LP

  	
  Texas

  
	
  Mills Electrical
  Contractors, Inc.

  	
  Delaware

  
	
  Pan American
  Electric, Inc.

  	
  Tennessee

  
	
  Raines Electric
  LP

  	
  Texas

  
	
  Thomas
  Popp & Company

  	
  Ohio

  

 

 

Annex II

Guarantors

 

	
  ICS Holdings LLC

  	
  Arizona

  
	
  IES Operations
  Group, Inc.

  	
  Delaware

  
	
  IES Reinsurance
  Ltd.

  	
  Bermuda

  
	
  IES Residential
  Group, Inc.

  	
  Delaware

  
	
  Mills Electric
  Holdings II LLC

  	
  Delaware

  
	
  Mills Electrical
  Holdings LLC

  	
  Arizona

  
	
  Mills Management
  LLC

  	
  Arizona

  
	
  Neal Electric
  Management LLC

  	
  Arizona

  
	
  Pan American
  Electric Company, Inc.

  	
  New Mexico

  
	
  Raines Electric
  Co., Inc.

  	
  Delaware

  
	
  Raines Holdings
  II LLC

  	
  Delaware

  
	
  Raines Holdings
  LLC

  	
  Arizona

  
	
  Raines
  Management LLC

  	
  Arizona

  

 

 

Exhibit A

 

INTEGRATED
ELECTRICAL SERVICES, INC., AND THE

SUBSIDIARIES
OF INTEGRATED ELECTRICAL SERVICES, INC.

SIGNATORY HERETO AS BORROWERS,

as Borrowers

 

 

THE
SUBSIDIARIES OF INTEGRATED ELECTRICAL SERVICES, INC.

SIGNATORY HERETO AS GUARANTORS,

as Guarantors

 

 

LOAN
AND  SECURITY  AGREEMENT

 

Dated:  May 12, 2006

 

$60,000,000.00

 

 

THE
FINANCIAL INSTITUTIONS

PARTY
HERETO FROM TIME TO TIME, as Lenders

 

and

 

BANK
OF AMERICA, N.A.,
as Agent

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