Document:

Exhibit 10.6

 

 

May 2, 2006

 

Crown Media Holdings, Inc.

12700 Ventura Boulevard 

Suite 200

 

Studio City, CA 91604

 

Attn:                    William J. Aliber, Chief Financial Offcer

 

Re:                               Letter
of Credit Support

 

Dear Bill:

 

Hallmark
has received Crown Media’s request to extend and increase Hallmark’s letter of
credit in support of Crown Media’s credit facility. The letter of credit would
be extended to June 10,
2007 and the amount would be increased to $240 million.

 

Hallmark
is willing to provide this support with the understanding that no other sources
of cash are reasonably available, subject to the following terms and
conditions:

 

•                                          Crown Media will continue to pay the fee to
Citigroup with respect to the letter of credit, which shall be .875% per year
($2,100,000/year).

 

•                                          Crown Media’s pricing on the credit facility
will remain at the rate of Libor plus 3.0%, of which 2.25% will be paid to
Hallmark or its designated subsidiary and the balance will be paid to the
banks.

 

•                                          Crown Media shall pay all fees and expenses
incurred in connection with its credit facility.

 

•                                          Any draw on this credit facility will be
subject to the prior approval of Crown Media’s Board of Directors and Hallmark
agrees to sign the Borrowing Certifcate upon receipt of evidence of such approval.

 

 

Please
confirm your acceptance of these terms and conditions by executing and
returning a copy of this
letter to my attention.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  Hallmark Cards,
  Incorporated

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert J. Druten

  	
   

  
	
   

  	
  Robert J. Druten

  
	
   

  	
  Chief Financial Offcer

  

 

 

	
  Agreed and Accepted:

  
	
   

  
	
  Crown Media
  Holdings, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/ William
  J. Aliber

  
	
   

  	
   

  
	
  Title:

  	
  EVP / CFO

  
	
   

  	
   

  
	
  Date:

  	
  5/4/06Exhibit 10.2

 

EXECUTION COPY

 

CONFIDENTIAL
TREATMENT REQUESTED

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

 

 

 

PURCHASE
OPTION AGREEMENT

 

by and among

 

 

ISIS PHARMACEUTICALS, INC.,

 

 

SYMPHONY GENISIS HOLDINGS LLC

 

and

 

 

SYMPHONY GENISIS, INC.

 

 

 

Dated as of
April 7, 2006

 

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  Section 1. Grant of
  Purchase Option

  	
  2

  
	
   

  	
   

  
	
  Section 2. Exercise of
  Purchase Option

  	
  3

  
	
   

  	
   

  
	
  Section 2A. Put Option

  	
  6

  
	
   

  	
   

  
	
  Section 3. Isis
  Representations, Warranties and Covenants

  	
  7

  
	
   

  	
   

  
	
  Section 4. Holdings
  Representations, Warranties and Covenants

  	
  9

  
	
   

  	
   

  
	
  Section 5. Symphony
  GenIsis Representations, Warranties and Covenants

  	
  12

  
	
   

  	
   

  
	
  Section 6. Notice of Material Event

  	
  20

  
	
   

  	
   

  
	
  Section 7. Assignment;
  Transfers; Legend

  	
  20

  
	
   

  	
   

  
	
  Section 8. Costs and
  Expenses; Payments

  	
  21

  
	
   

  	
   

  
	
  Section 9. Expiration;
  Termination of Agreement

  	
  21

  
	
   

  	
   

  
	
  Section 10. Survival;
  Indemnification

  	
  21

  
	
   

  	
   

  
	
  Section 11. No Petition

  	
  24

  
	
   

  	
   

  
	
  Section 12. Third-Party Beneficiary

  	
  25

  
	
   

  	
   

  
	
  Section 13. Notices

  	
  25

  
	
   

  	
   

  
	
  Section 14. Governing
  Law; Consent to Jurisdiction and Service of Process

  	
  26

  
	
   

  	
   

  
	
  SECTION 15. WAIVER OF
  JURY TRIAL

  	
  27

  
	
   

  	
   

  
	
  Section 16. Entire
  Agreement

  	
  27

  
	
   

  	
   

  
	
  Section 17. Amendment;
  Successors; Counterparts

  	
  27

  
	
   

  	
   

  
	
  Section 18. Specific
  Performance

  	
  28

  
	
   

  	
   

  
	
  Section 19. Severability

  	
  28

  
	
   

  	
   

  
	
  Section 20. Tax Reporting

  	
  28

  
	
   

  	
   

  
	
  Schedule I

  	
  Quarterly Price Table

  	
   

  
	
   

  	
   

  	
   

  
	
  Annex A

  	
  Certain Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit 1 

  	
  Purchase Exercise Notice

  	
   

  
	
  Exhibit 2

  	
  Form of
  opinion of Isis’ General Counsel

  	
   

  

 

 

PURCHASE
OPTION AGREEMENT

 

This
PURCHASE OPTION AGREEMENT (this “Agreement”) is entered into as of April 7,
2006 (the “Closing Date”)
by and among ISIS PHARMACEUTICALS, INC., a Delaware corporation (“Isis”), SYMPHONY
GENISIS HOLDINGS LLC, a Delaware limited liability company (“Holdings”), and
SYMPHONY GENISIS, INC., a Delaware corporation (“Symphony GenIsis”).  Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in Annex A
attached hereto.

 

PRELIMINARY
STATEMENT

 

WHEREAS,
Isis and Holdings have entered into a Technology License Agreement pursuant to
which Isis has granted Holdings an exclusive license (the “License”) to the use
of certain intellectual property related to the Programs owned or controlled by
Isis;

 

WHEREAS,
contemporaneously with the execution of this Agreement, Isis, Holdings and
Symphony GenIsis are entering into a Novated and Restated Technology License
Agreement, pursuant to which, among other things, Holdings will assign by way
of novation the License to Symphony GenIsis;

 

WHEREAS, Isis and
Holdings have entered into a Research and Development Agreement pursuant to
which Isis has agreed, among other things, to perform, on behalf of Holdings,
research and development of the Programs;

 

WHEREAS,
contemporaneously with the execution of this Agreement, Isis, Holdings and
Symphony GenIsis are entering into an Amended and Restated Research and
Development Agreement, pursuant to which, among other things, Holdings will
assign its rights and obligations under the Research and Development Agreement
to Symphony GenIsis;

 

WHEREAS,
contemporaneously with the execution of this Agreement, in order to fund such
research and development, institutional investors are committing to invest
$75,000,000 in Holdings (the “Financing”) in exchange for membership interests in
Holdings and for warrants (the “Warrants”)
to purchase up to a total of 4.25 million shares of Isis Common Stock, to be
initially issued to Holdings, and Holdings will agree to contribute the net
proceeds of the Financing to Symphony GenIsis;

 

WHEREAS, Holdings
desires, in consideration for the Warrants, to grant Isis an option to purchase
all of the Common Stock of Symphony GenIsis and any other Equity Securities
issued by Symphony GenIsis (together, the “Symphony GenIsis Equity Securities”) owned,
or hereinafter acquired, by Holdings on the terms described in this Agreement;
and

 

WHEREAS, Symphony GenIsis
and Holdings have determined that it is in each of its best interest to perform
and comply with certain agreements and covenants relating to each of its
ongoing operations contained in this Agreement;

 

NOW, THEREFORE, in
consideration of the foregoing and for other good and

 

 

valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto (the “Parties”)
agree as follows:

 

Section 1.  Grant of Purchase Option.

 

(a)   Holdings hereby grants to Isis an exclusive option (the “Purchase Option”) to purchase all, but not less
than all, of the outstanding Symphony GenIsis Equity Securities owned or
hereinafter acquired by Holdings, in accordance with the terms of this
Agreement.

 

(b)   Symphony GenIsis hereby covenants and agrees that all
Symphony GenIsis Equity Securities issued by Symphony GenIsis at any time prior
to the expiration of the Term (including to Holdings on, prior to, or after the
date hereof or to any other Person at any time whatsoever, in all cases prior
to the expiration of the Term) shall be subject to a purchase option on the
same terms as the Purchase Option (except as provided by the immediately
following sentence) and all of the other terms and conditions of this Agreement
without any additional action on the part of Isis or Holdings.  Further, to the extent Symphony GenIsis shall
issue any Symphony GenIsis Equity Securities (including any issuance in respect
of a transfer of Symphony GenIsis Equity Securities by any holder thereof,
including Holdings) after the date hereof to any Person (including Holdings)
(any issuance of such Symphony GenIsis Equity Securities being subject to the
prior written consent of Isis as set forth in Sections 5(c) and 7(b)
hereof, as applicable), Symphony GenIsis hereby covenants and agrees that it
shall cause such Symphony GenIsis Equity Securities to be subject to the
Purchase Option without the payment of, or any obligation to pay, any additional
consideration in respect of such Symphony GenIsis Equity Securities by Isis,
Symphony GenIsis or any Symphony GenIsis Subsidiary to the Person(s) acquiring
such subsequently issued Symphony GenIsis Equity Securities, the Parties
acknowledging and agreeing that the sole consideration payable by Isis pursuant
to this Agreement for all of the outstanding Symphony GenIsis Equity Securities
now or hereinafter owned by any Person shall be the Purchase Price.

 

(c)   Isis’ right to exercise the Purchase Option granted hereby
is subject to the following conditions:

 

(i)            The Purchase Option may only be
exercised for the purchase of all, and not less than all, of Holdings’ Symphony
GenIsis Equity Securities;

 

(ii)           The Purchase Option may only be
exercised a single time;

 

(iii)          Except as expressly provided in Sections
1(c)(iv) and (v), the Purchase Option may be exercised only during
the period (the “Purchase Option Period”) commencing on and including
April 7, 2007 (the “Purchase Option Commencement Date”) and ending on and including
the earlier of (x) April 7, 2010 (the “Final
Termination Date”), and (y) the 90th calendar day (such 90th
calendar day, the “Funds
Termination Date”) immediately following the first date (each, a
“Balance Sheet Deficiency Date”)
on which a notice of an impending Funds Termination Date (a “Funds Termination Notice”) is
delivered to Isis in accordance with Section 13 hereof, accompanied by
an internally prepared, unaudited, balance sheet of Symphony GenIsis (prepared
in accordance with GAAP)  stating that
the aggregate amount of cash and cash 

 

2

 

equivalents held by Symphony GenIsis is less
than [***] net of all accrued and unpaid amounts owing by Symphony GenIsis at
such time;

 

(iv)          In the event that Isis has agreed to
share the costs of additional research pursuant to the Research Cost Sharing
and Extension Agreement, the Purchase Option Period shall be determined in
accordance with the Research Cost Sharing and Extension Agreement (for the
avoidance of doubt, funds advanced by Isis pursuant to the Research Cost
Sharing and Extension Agreement shall not be included in any calculation of the
Purchase Price hereunder); and

 

(v)           In the event that Holdings terminates
the Amended and Restated Research and Development Agreement pursuant to Section
17.2 thereof, Isis shall have five (5) Business Days to notify Holdings of its
exercise of the Purchase Option under the terms of this Agreement. Such
exercise of the Purchase Option by Isis may occur prior to the Purchase Option
Commencement Date (an “Early Purchase Option
Exercise”).

 

Section 2.  Exercise of Purchase Option.

 

(a)   Exercise Notice.  Isis may exercise the Purchase Option only by
delivery of a notice in the form attached hereto as Exhibit 1 (the “Purchase Option Exercise
Notice”)
during the Purchase Option Period.  The
Purchase Option Exercise Notice shall be delivered on a Business Day to
Holdings and Symphony GenIsis and shall be irrevocable once delivered.  The date on which the Purchase Option
Exercise Notice is first delivered to Holdings and Symphony GenIsis is referred
to as the “Purchase
Option Exercise Date.”  The
Purchase Option Exercise Notice shall contain (1) an estimated date  for the settlement of the Purchase Option
(the “Purchase Option Closing”), which date shall be
estimated in accordance with this Section 2(a), (2) the  Purchase Price, determined in accordance with
Section 2(b) hereof, and (3) if Isis intends to pay part of the Purchase
Price in Isis Common Stock, notice of such intent, the number of shares to be
transferred as such purchase price, the valuation thereof and the percentage
such portion bears to (A) the Purchase Price, and (B) the total amount of Isis Common Stock then issued
and outstanding (which shall be no greater percentages than are permitted
under Section 2(c)).  Such notice
and election shall be irrevocable once given and made.  If, during the period following the delivery
of the Purchase Option Exercise Notice, the amount of cash and cash equivalents held
by Symphony GenIsis is an amount less than or equal to [***], then
Symphony GenIsis shall cease payment of any amounts owed to Isis in respect of
its activities pursuant to the Amended and Restated Research and Development
Agreement, but shall continue to pay amounts owed to all other Persons.  The date of the Purchase Option Closing (the
“Purchase Option Closing Date”) shall be determined as
follows:

 

(i)            If Isis elects to pay the entire
Purchase Price in cash, the Purchase Option Closing Date shall be the date that
is the later of: (A) five (5) Business Days following the Purchase Option
Exercise Date; and (B) five (5) Business Days following the date that Isis
receives all necessary Government Approvals related to its HSR Filings; provided,
however that unless Holdings receives from Isis an opinion from
nationally recognized anti-trust counsel (which opinion is acceptable in form
and substance to Holdings) to the effect that no HSR Filings are required, Isis
and Holdings shall make all necessary HSR Filings within five (5) Business Days
following the Purchase Option

 

3

 

Exercise Date and shall diligently pursue the
related regulatory process; and provided, further that (1) if
there is no second request from the Federal Trade Commission or the Department
of Justice, as  applicable, with respect
to Isis’ or Holdings’ HSR Filings, then in no event shall the Purchase Option
Closing Date be more than sixty (60) days following the Purchase Option
Exercise Date, and (2) if there is a second request from the Federal Trade
Commission or the Department of Justice, as 
applicable, with respect to Isis’ or Holdings’ HSR Filings, then in no
event shall the Purchase Option Closing Date be more than one hundred and
twenty (120) days following the Purchase Option Exercise Date.  If Isis shall fail to make such cash payment
within such sixty (60) day period or one hundred and twenty (120) day period,
as applicable, then in addition to any other rights that Holdings shall have hereunder,
this Agreement shall terminate and Isis shall relinquish all rights hereunder
to purchase the Symphony GenIsis Equity Securities; or

 

(ii)           If Isis  elects to pay a portion of the Purchase Price
in Isis Common Stock (subject to the limitations set forth herein and in the
Registration Rights Agreement), the Purchase Option Closing Date shall be the
date that is the later of:

 

(A)          five (5) Business Days
following the Effective Registration Date of such Isis Common Stock; provided,
that Isis shall file the Registration Statement contemplated by Section
3(b)(i) within (x) [***] Business Days after the Purchase Option Exercise
Date if Isis is eligible to use Form S-3 under the Securities Act (or any
successor form), or (y) [***] Business Days after the Purchase Option Exercise
Date if Isis is not eligible to use Form S-3 under the Securities Act (or any
successor form); and

 

(B)           five (5) Business Days
following the date that Isis receives the necessary Government Approvals
related to its HSR Filings (if any); provided, however, that Isis
and Holdings shall make all necessary HSR Filings within five (5) Business Days
following the Purchase Option Exercise Date and shall diligently pursue the
related regulatory process;

 

provided,
further, that Isis shall use commercially reasonable efforts to have
such Registration Statement declared effective by the United States Securities
and Exchange Commission as promptly as possible.  In the event that such Registration Statement
is not declared effective within [***] days of the Purchase Option Exercise
Date, Isis shall pay the full Purchase Price in cash within two (2) Business
Days thereafter (in which event the Purchase Option Closing Date shall be the
date upon which such cash payment is made by Isis).  If Isis shall fail to make such cash payment
within such two (2) Business Day period, then in addition to any other rights
or remedies that Holdings shall have arising from such breach, this Agreement
shall terminate and Isis shall relinquish all rights hereunder to purchase the
Symphony GenIsis Equity Securities.

 

(b)   Purchase
Price Upon Option Exercise.  Upon
exercise of the Purchase Option and as complete and full consideration for the
sale to Isis by Holdings of its Symphony GenIsis Equity Securities (and for the
Symphony GenIsis Equity Securities of any other Person), Isis shall pay to
Holdings (i) the “Quarterly Price” set forth on Schedule I hereto for the
applicable quarter following the Closing Date in which the Purchase Option
Closing Date actually occurs,

 

4

 

minus (ii) the aggregate amount of
all Discontinuation Prices and other amounts paid directly to Holdings or to
Symphony GenIsis pursuant to Section 11.1 of the Amended and Restated Research
and Development Agreement and subsequently dividended or otherwise distributed
to Holdings (if any) (the “Purchase
Price”).  In the event of
the Early Purchase Option Exercise, pursuant to Section 1(c)(v) hereof,
the “Purchase Price” shall be an amount equal to (x) the amount set forth on Schedule
I applicable to the Quarterly Price for the 5th Quarter, minus (y) the aggregate amount of all
Discontinuation Prices and other amounts paid directly to Holdings or to
Symphony GenIsis pursuant to Section 11.1 of the Amended and Restated Research
and Development Agreement and subsequently dividended or otherwise distributed
to Holdings  (if any).

 

(c)   Form of Payment.  Subject to Sections 2(a) and 2(e),
the Purchase Price may be paid in cash or in a combination of cash and Isis Common
Stock, at the sole discretion of Isis; provided, that in no event may
the value of Isis Common Stock (determined in accordance with Section 2(e)
hereof) delivered in connection with the exercise of the Purchase Option
constitute more than either (x) 33% of the total consideration to be tendered
for payment of the Purchase Option Exercise Price, calculated using the Isis
Common Stock Valuation (as defined herein) procedure, or (y) 10% of all the
Isis Common Stock then issued and outstanding.

 

(d)   Surrender of Symphony GenIsis
Equity Securities.  Subject to the terms and conditions of this
Agreement, on or prior to the Purchase Option Closing Date, Holdings shall
surrender to Isis its certificates representing its Symphony GenIsis Equity
Securities, and shall convey good title to such Symphony GenIsis Equity
Securities, free from any Encumbrances and from any and all restrictions that
any sale, assignment or other transfer of such Symphony GenIsis Equity
Securities be consented to or approved by any Person.  On or prior to the Purchase Option Closing
Date, Holdings shall remove all directors serving on the Symphony GenIsis
Board, other than the Isis Director (as defined in Section 4(b)(iv)
hereof) from the Symphony GenIsis Board as of the Purchase Option Closing
Date.  Furthermore, Holdings shall use
commercially reasonable efforts to deliver to Isis, promptly after the Purchase
Option Closing Date, any certificates representing Symphony GenIsis Equity
Securities which were not surrendered to Isis on the Purchase Option Closing
Date.

 

(e)   Valuation of Isis Stock.  In the event that Isis elects to pay part of
the Purchase Price through the delivery to Holdings of Isis Common Stock, the
value per share thereof (the “Isis Common Stock Valuation”) shall equal the average
closing price of Isis Common Stock, as reported by the NASDAQ National Market,
or other national exchange that is the primary exchange on which Isis Common
Stock is listed, for the sixty (60) trading days immediately preceding (but not
including) the second trading day prior to the Purchase Option Exercise
Date.  If Isis Common Stock is not traded
on a national exchange or the NASDAQ National Market, then Isis shall be
obligated to pay the Purchase Price solely in cash on the Purchase Option Closing
Date.  Isis shall calculate the Isis
Common Stock Valuation in accordance with this Section 2(e),
subject to review and confirmation by Holdings.

 

(f)    Government Approvals.  On or prior to the Purchase Option Closing
Date, each of Isis, Symphony GenIsis and Holdings shall have taken all
necessary action to cause all Governmental Approvals with respect to such Party
(including, without limitation, the preparing and filing of any pre-merger
notification and report forms required under the Hart-Scott-Rodino

 

5

 

Antitrust Improvements Act of 1976, as amended (“HSR Filings”)) required to be in effect in
connection with the transactions contemplated by this Agreement to be in
effect; provided, however, that with respect to Government
Approvals required by a Governmental Authority other than the United States
federal government and its various branches and agencies, the Parties’
obligations under this Section 2(f) shall be limited to causing to be in
effect only those Government Approvals, the failure of which to be in effect
would, either individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on any of the Parties.    Each of Symphony GenIsis and Isis shall pay
its own costs associated with taking such action.  Symphony GenIsis shall pay any costs of
Holdings associated with obtaining Government Approvals required in connection
with the exercise of the Purchase Option. 
All other costs and expenses of Holdings shall be paid by Holdings
pursuant to Section 8(b) hereof, including any costs arising from any
error in Holdings’ initial valuation of its investment in Symphony GenIsis.

 

(g)   Transfer
of Title.  Transfer of title to Isis
of all of the Symphony GenIsis Equity Securities shall be deemed to occur
automatically on the Purchase Option Closing Date, subject to the payment by
Isis on such date of the Purchase Price and its performance of its other
obligations herein required to be performed under Sections 2(e) and (f),
and under the Registration Rights Agreement, as applicable, on or prior to the
Purchase Option Closing Date to the reasonable satisfaction of Holdings, and
thereafter Symphony GenIsis shall treat Isis as the sole holder of all Symphony
GenIsis Equity Securities, notwithstanding the failure of Holdings to tender
certificates representing such shares to Isis in accordance with Section
2(d) hereof.  After the Purchase
Option Closing Date, Holdings shall have no rights in connection with such
Symphony GenIsis Equity Securities other than the right to receive the Purchase
Price; provided, however, that nothing in this Section 2(g)
shall affect the survivability of any indemnification provision in this
Agreement upon termination of this Agreement.

 

(h)   Consents
and Authorizations. 
On or prior to the Purchase Option Closing Date, Isis shall have
obtained all consents and authorizations necessary from stockholders and/or its
board of directors for the consummation of the exercise and closing of the
Purchase Option, as may be required under the organizational documents of Isis,
any prior stockholders or board resolution, any stock exchange or similar rules
or any applicable law; provided, however, that with
respect to consents or authorizations required by a Governmental Authority
other than the United States federal government and its various branches and
agencies, the Parties’ obligations under this Section 2(h) shall be
limited to obtaining only those consents and authorizations, the failure of
which to be obtained would, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on any of the Parties.

 

Section
2A.  Put Option.

 

(a)
Holdings has an exclusive put option (the “Put Option”) for 100% of the Symphony GenIsis Equity Securities which
may be exercised if, following a Change of Control with respect to Isis, the
successor entity breaches a material term of any Operative Document and such
breach continues unremedied for a period of thirty (30) days after Holdings has
delivered written notice thereof to such successor entity.

 

(b)  Holdings may exercise the Put Option only by
delivery of written notice (the “Put Option Exercise Notice”)
during the Purchase Option Period. The Put Option Exercise

 

6

 

Notice shall be delivered on a Business Day to the
successor entity to Isis and Symphony GenIsis, and shall thereafter be deemed
for all purposes under the terms of this Agreement to be a Purchase Option
Exercise Notice by Isis (in accordance with the provisions of Section 2
hereof) as of the date such notice is delivered (such date to be deemed for all
purposes under the terms of this Agreement as the Purchase Option Exercise
Date).  The Purchase Price with respect to such an exercise of the Put Option
shall be the Purchase Price otherwise applicable (under Section 2(b)
hereof) to the Purchase Option Closing Date selected by Isis following Isis’
receipt of the Put Option Exercise Notice.

 

Section 3.  Isis Representations, Warranties and
Covenants.

 

(a)   As of the date hereof, Isis hereby represents and warrants,
and, except to the extent that any of the following representations and
warranties is limited to the date of this Agreement or otherwise limited, on
the Purchase Option Closing Date, shall be deemed to have represented and
warranted, to Holdings and Symphony GenIsis that:

 

(i)            Organization.  Isis is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware.

 

(ii)           Authority and Validity. Isis has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated
hereby.  The execution, delivery and
performance by Isis of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action required on the part of Isis, and no other proceedings on the part of
Isis are necessary to authorize this Agreement or for Isis to perform its obligations
under this Agreement.  This Agreement
constitutes the lawful, valid and legally binding obligation of Isis,
enforceable in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.

 

(iii)          No Violation or Conflict.  The execution, delivery and performance of
this Agreement and the transactions contemplated hereby do not
(A) violate, conflict with or result in the breach of any provision of the
Organizational Documents of Isis, (B) as of the date of this Agreement, and as
of the Purchase Option Closing Date if Isis elects to pay part of the Purchase
Price through the delivery of Isis Common Stock (a “Partial Stock Payment”), conflict with or violate any
law or Governmental Order applicable to Isis or any of its assets, properties
or businesses, or (C) conflict with, result in any breach of, constitute a
default (or event that with the giving of notice or lapse of time, or both,
would become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of Isis, pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which Isis is a party except, in the case of
clauses (B) and (C), to the extent that such conflicts, breaches,
defaults or other

 

7

 

matters would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Isis.

 

(iv)          Governmental Consents and Approvals.  Other than any HSR Filings which, if the
Purchase Option is exercised by Isis and if such HSR Filings are required
pursuant to Section 2(a)(i) hereof, will be obtained on or prior to the
Purchase Option Closing Date, the execution, delivery and performance of this
Agreement by Isis do not, and the consummation of the transactions contemplated
hereby do not and will not, require any Governmental Approval which has not
already been obtained, effected or provided, except with respect to which the
failure to so obtain, effect or provide would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Isis.

 

(v)           Litigation.   As of (A) the date of this Agreement, except
as disclosed on the Isis 2005 10-K, and (B) the Purchase Option Closing Date if
Isis elects to make a Partial Stock Payment, there are no actions by or against
Isis pending before any Governmental Authority or, to the knowledge of Isis,
threatened to be brought by or before any Governmental Authority, that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Isis.  There are no
pending or, to the knowledge of Isis, threatened actions, to which Isis is a
party (or is threatened to be named as a party) to set aside, restrain, enjoin
or prevent the execution, delivery or performance of this Agreement or the
Operative Documents or the consummation of the transactions contemplated hereby
or thereby by any party hereto or thereto. 
As of the date of this Agreement, and as of the Purchase Option Closing
Date if Isis elects to make a Partial Stock Payment, Isis is not subject to any
Governmental Order (nor, to the knowledge of Isis, is there any such
Governmental Order threatened to be imposed by any Governmental Authority) that
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Isis.

 

(b)           Isis
hereby covenants and agrees with Holdings as follows:

 

(i)            Immediately prior to the
Purchase Option Closing Date, Isis shall have sufficient amounts of cash and/or
firm commitments for such cash from third parties with the wherewithal to pay,
and which third parties are reasonably acceptable to Holdings and, if
applicable, sufficient authorized but unissued, freely transferable and
nonassessable Isis Common Stock available to satisfy the portion of the
Purchase Price to be paid in cash or Isis Common Stock pursuant to Sections
2(b) and 2(c).  In the event that Isis elects to
satisfy any portion of the Purchase Price in Isis Common Stock (A) Isis shall
have not later than the Purchase Option Closing Date, a Registration Statement
declared effective by the Securities and Exchange Commission for the resale of
any such shares of Isis Common Stock to be delivered in partial satisfaction of
the Purchase Price, accompanied by evidence reasonably acceptable to Holdings
that such Isis Common Stock has been approved for listing on the NASDAQ
national market or such other national market on which the Isis Common Stock is
then listed, and (B) Isis shall deliver to Holdings on or before the Purchase
Option Closing Date, a legal opinion from Isis’ General Counsel, or such other
counsel as Isis and Holdings shall mutually agree, which opinion shall be, in
form and substance, reasonably acceptable to Holdings and shall

 

8

 

contain, with respect to the Isis Common
Stock to be used as partial payment of the Purchase Price, substantially the
same opinions rendered by Isis’ General Counsel in paragraphs 4, 5 and 8 of the
opinion delivered to Holdings on the Closing Date, along with customary
assumptions and limitations.

 

(ii)           If
Isis elects to satisfy any portion of the Purchase Price in Isis Common Stock,
Isis shall convey good and marketable title to such Isis Common Stock, free
from any Encumbrances and any and all other restrictions that any issuance,
sale, assignment or other transfer of such Isis Common Stock be consented to or
approved by any Person.

 

(iii)          Upon the expiration of the
Purchase Option or the termination of this Agreement pursuant to Section 9
hereof, or as soon thereafter as is practical, Isis shall (A)  in accordance with and pursuant to Sections
2.7 and 2.8 of the Novated and Restated Technology License Agreement, deliver
to Symphony GenIsis all Regulatory Files and Tangible Materials, and (B) in
accordance with and pursuant to Section 2.11 of the Novated and Restated
Technology License Agreement, negotiate in good faith, and on commercially
reasonable terms and conditions, a supply agreement relating to materials,
including compounds and Products, required by Symphony GenIsis or its partners
or transferees for the continued development (including clinical development),
manufacture and commercialization of Products.

 

(iv)          In the event that Isis exercises
the Purchase Option, then Isis shall maintain the separate corporate existence
of Symphony GenIsis for a minimum of two (2) years following such exercise,
unless such maintenance would have a Material Adverse Effect on Isis or any of
its Affiliates.

 

Section 4.  Holdings Representations, Warranties and
Covenants.

 

(a)  As of the date hereof, Holdings hereby
represents and warrants, and, except to the extent that any of the following
representations and warranties is limited to the date of this Agreement or
otherwise limited, on the Purchase Option Closing Date, shall be deemed to have
represented and warranted, to Isis and Symphony GenIsis that:

 

(i)            Organization.  Holdings is a limited liability company, duly
formed, validly existing and in good standing under the laws of the State of
Delaware.

 

(ii)           Authority and Validity.  Holdings has all requisite limited liability company
power and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by
Holdings of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action required on the part of Holdings, and no other proceedings on the part
of Holdings are necessary to authorize this Agreement or for Holdings to
perform its obligations under this Agreement. 
This Agreement constitutes the lawful, valid and legally binding
obligation of Holdings, enforceable in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and general equitable

 

9

 

principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.

 

(iii)          No Violation or Conflict.  The execution, delivery and performance of
this Agreement and the transactions contemplated hereby do not
(A) violate, conflict with or result in the breach of any provision of the
Organizational Documents of Holdings, (B) as of the date of this Agreement,
conflict with or violate any law or Governmental Order applicable to Holdings
or any of its assets, properties or businesses, or (C) as of the date of
this Agreement, conflict with, result in any breach of, constitute a default
(or event that with the giving of notice or lapse of time, or both, would
become a default) under, require any consent under, or give to others any
rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of Holdings, pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or arrangement to which Holdings is a party except, in the
case of clauses (B) and (C), to the extent that such conflicts,
breaches, defaults or other matters would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on
Holdings.

 

(iv)          Governmental Consents and
Approvals.  The execution, delivery and performance of
this Agreement by Holdings do not, and the consummation of the transactions
contemplated hereby do not and will not, require any Governmental Approval
which has not already been obtained, effected or provided, except with respect
to which the failure to so obtain, effect or provide would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Holdings.

 

(v)           Litigation. As of the date of
this Agreement, there are no actions by or against Holdings pending before any
Governmental Authority or, to the knowledge of Holdings, threatened to be
brought by or before any Governmental Authority, that would, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Holdings.  There are no pending or, to
the knowledge of Holdings, threatened actions to which Holdings is a party (or
is threatened to be named as a party) to set aside, restrain, enjoin or prevent
the execution, delivery or performance of this Agreement or the Operative
Documents or the consummation of the transactions contemplated hereby or
thereby by any party hereto or thereto. 
As of the date of this Agreement, Holdings is not subject to any
Governmental Order (nor, to the knowledge of Holdings, is there any such
Governmental Order threatened to be imposed by any Governmental Authority) that
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Holdings.

 

(vi)          Stock Ownership.  All of Symphony GenIsis’ issued and
outstanding  Symphony GenIsis Equity
Securities are owned beneficially and of record by Holdings, free and clear of
any and all encumbrances.

 

(vii)         Interim Operations.  Holdings was formed solely for the purpose of
engaging in the transactions contemplated by the Operative Documents, has
engaged in

 

10

 

no other business activities and has
conducted its operations only as contemplated by the Operative Documents.

 

(viii)        Accredited Investor.

 

(A)          Holdings
is and will remain at all relevant times an Accredited Investor.

 

(B)           Holdings has relied completely on the advice
of, or has consulted with or has had the opportunity to consult with, its own
personal tax, investment, legal or other advisors and has not relied on Isis or
any of its Affiliates for advice related to any offer and sale of Isis Common
Stock in connection with the Purchase Option. 
Holdings has reviewed the Investment Overview and is aware of the risks
disclosed therein.  Holdings acknowledges
that it has had a reasonable opportunity to conduct its own due diligence with
respect to the Products, the Programs, Symphony GenIsis, Isis and the
transactions contemplated by the Operative Documents.

 

(C)           Holdings is able to bear the economic risk of
such investment for an indefinite period and to afford a complete loss thereof

 

(D)          Holdings
agrees that the Isis Common Stock may not be resold (A) without registration
thereof under the Securities Act (unless an exemption from such registration is
available), or (B) in violation of any law.

 

(E)           No person or entity acting on behalf
of, or under the authority of, Holdings is or will be entitled to any broker’s,
finder’s, or similar fees or commission payable by Isis or any of its
Affiliates.

 

(b)   Holdings hereby covenants and agrees with Isis as follows:

 

(i)            Contribution to Symphony GenIsis.  On or prior to the Stock Payment Date,
Holdings shall, pursuant to the Subscription Agreement, contribute proceeds
from the Financing of $75,000,000 to Symphony GenIsis, Inc.

 

(ii)           Encumbrance.  Holdings will not, and will not permit any of
its Subsidiaries to, create, assume or suffer to exist any Encumbrance on any
of its Symphony GenIsis Equity Securities except with the prior written consent
of Isis.

 

(iii)          Transfer and Amendment.  Commencing upon the date hereof and ending
upon the earlier to occur of (x) the Purchase Option Closing Date, (y) the
unexercised expiration of the Purchase Option Period, and (z) the termination
of this Agreement pursuant to Section 9 (such period, the “Term”), the manager of Holdings
shall not (A) transfer, or permit the transfer of, any Membership Interest
without the prior written consent of Isis or (B) amend, or permit the amendment
of, any provisions relating to the transfer of Membership Interests, as set
forth in Section 7.02 of the Holdings LLC Agreement, to the extent such
amendment would adversely affect Isis’ right of consent set forth in Sections
7.02(b)(i) and 7.02(c) of the
Holdings LLC Agreement.

 

11

 

(iv)          Symphony GenIsis Directors.  During the Term, Holdings agrees to vote all
of its Symphony GenIsis Equity Securities (or to exercise its right with
respect to such Symphony GenIsis Equity Securities to consent to action in
writing without a meeting) in favor of, as applicable, the election, removal
and replacement of one director of the Symphony GenIsis Board, and any
successor thereto, designated by Isis (the “Isis Director”) as directed by Isis.  In furtherance and not in limitation of the
foregoing, Holdings hereby grants to Isis an irrevocable proxy, with respect to
all Symphony GenIsis Equity Securities now owned or hereafter acquired by
Holdings, to vote such Symphony GenIsis Equity Securities or to exercise the
right to consent to action in writing without a meeting with respect to such
Symphony GenIsis Equity Securities, such irrevocable proxy to be exercised
solely for the limited purpose of electing, removing and replacing the Isis Director
in the event of the failure or refusal of Holdings to elect, remove or replace
such Isis Director, as directed by Isis. Additionally, Holdings agrees, during
the Term, to elect [***] independent directors (of the [***] directors of
Symphony GenIsis not chosen by Holdings at the direction of Isis), and any
successors thereto, as shall be selected by mutual agreement of Isis and
Holdings.

 

(v)           Symphony GenIsis Board.  During the Term, Holdings shall not vote any
of its Symphony GenIsis Equity Securities (or exercise its rights with respect
to such Symphony GenIsis Equity Securities by written consent without a
meeting) to increase the size of the Symphony GenIsis Board to more than five
(5) members without the prior written consent of Isis.

 

(vi)          Symphony GenIsis Charter.  During the Term, Holdings shall not approve
or permit any amendment to Article IV, Paragraphs (1) and (3); Article VI;
Article VII; Article X; Article XI or Article XIII of the Symphony GenIsis
Charter without the prior written consent of Isis.

 

Section 5.  Symphony GenIsis Representations, Warranties
and Covenants.

 

(a)   As of the date hereof, Symphony GenIsis hereby represents
and warrants, and, except to the extent that any of the following
representations and warranties is limited to the date of this Agreement or
otherwise limited, on the Purchase Option Closing Date, shall be deemed to have
represented and warranted, to Isis and Holdings that:

 

(i)            Organization.  Symphony GenIsis is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware.

 

(ii)           Authority and Validity.  Symphony GenIsis has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby.  The execution, delivery and performance by
Symphony GenIsis of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action required on the part of Symphony GenIsis, and no other proceedings on
the part of Symphony GenIsis are necessary to authorize this Agreement or for
Symphony GenIsis to perform its obligations under this Agreement.  This Agreement constitutes the lawful, valid
and legally binding obligation of Symphony GenIsis, enforceable in accordance

 

12

 

with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.

 

(iii)          No Violation or Conflict.  The execution, delivery and performance of
this Agreement and the transactions contemplated hereby do not
(A) violate, conflict with or result in the breach of any provision of the
Organizational Documents of Symphony GenIsis, (B) conflict with or violate any
law or Governmental Order applicable to Symphony GenIsis or any of its assets,
properties or businesses, or (C) conflict with, result in any breach of,
constitute a default (or event that with the giving of notice or lapse of time,
or both, would become a default) under, require any consent under, or give to others
any rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrance on any of the
assets or properties of Symphony GenIsis, pursuant to, any note, bond, mortgage
or indenture, contract, agreement, lease, sublease, license, permit, franchise
or other instrument or arrangement to which Symphony GenIsis is a party except,
in the case of clauses (B) and (C), to the extent that such
conflicts, breaches, defaults or other matters would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Symphony GenIsis.

 

(iv)          Governmental Consents and
Approvals.  The execution, delivery and performance of
this Agreement by Symphony GenIsis do not, and the consummation of the
transactions contemplated hereby do not and will not, require any Governmental
Approval which has not already been obtained, effected or provided, except with
respect to which the failure to so obtain, effect or provide would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
on Symphony GenIsis.

 

(v)           Litigation.  There are no actions by or against Symphony
GenIsis pending before any Governmental Authority or, to the knowledge of
Symphony GenIsis, threatened to be brought by or before any Governmental
Authority that would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Symphony GenIsis.  There are no pending or, to the knowledge of
Symphony GenIsis, threatened actions to which Symphony GenIsis is a party (or
is threatened to be named as a party) to set aside, restrain, enjoin or prevent
the execution, delivery or performance of this Agreement or the Operative
Documents or the consummation of the transactions contemplated hereby or
thereby by any party hereto or thereto. 
Symphony GenIsis is not subject to any Governmental Order (nor, to the
knowledge of Symphony GenIsis, is there any such Governmental Order threatened
to be imposed by any Governmental Authority) that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Symphony
GenIsis.

 

(vi)          Capitalization.  Holdings is the beneficial and record owner
of all issued and outstanding Symphony GenIsis Equity Securities.  No shares of Symphony GenIsis capital stock
are held in treasury by Symphony GenIsis or any Symphony GenIsis
Subsidiary.   All of the issued and
outstanding Symphony GenIsis Equity Securities (A)

 

13

 

have been duly authorized and validly issued
and are fully paid and nonassessable, (B) were issued in compliance with all
applicable state and federal securities laws, and (C) were not issued in
violation of any preemptive rights or rights of first refusal.  No preemptive rights or rights of first
refusal exist with respect to any Symphony GenIsis Equity Securities and no
such rights will arise by virtue of or in connection with the transactions
contemplated hereby (other than for the Purchase Option).  Other than the Purchase Option, there are no
outstanding options, warrants, call rights, commitments or agreements of any
character to acquire any Symphony GenIsis Equity Securities.  There are no outstanding stock appreciation,
phantom stock, profit participation or other similar rights with respect to
Symphony GenIsis.  Symphony GenIsis is
not obligated to redeem or otherwise acquire any of its outstanding Symphony
GenIsis Equity Securities.

 

(vii)         Interim
Operations.  Symphony GenIsis was
formed solely for the purpose of engaging in the transactions contemplated by
the Operative Documents, has engaged in no other business activities and has
conducted its operations only as contemplated by the Operative Documents.

 

(viii)        Investment
Company.  Symphony GenIsis is not,
and after giving effect to the transactions contemplated by the Operative
Documents will not be, required to register as an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended.

 

(b)   Symphony GenIsis covenants and agrees that:

 

(i)            Symphony GenIsis will comply
with all laws, ordinances or governmental rules or regulations to which it is
subject and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other Governmental Approvals necessary to the ownership
of its properties or to the conduct of its business, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other Governmental
Approvals would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Symphony GenIsis.

 

(ii)           Symphony GenIsis will file (or cause
to be filed) all material tax returns required to be filed by it and pay all
taxes shown to be due and payable on such returns and all other taxes imposed
on it or its assets to the extent such taxes have become due and payable and
before they have become delinquent and shall pay all claims for which sums have
become due and payable that have or might become attached to the assets of
Symphony GenIsis; provided, that Symphony GenIsis need not file any such
tax returns or pay any such tax or claims if (A) the amount, applicability or
validity thereof is contested by Symphony GenIsis on a timely basis in good
faith and in appropriate proceedings, and Symphony GenIsis has established
adequate reserves therefor in accordance with GAAP on the books of Symphony
GenIsis or (B) the failure to file such tax returns or the nonpayment of such
taxes and assessments, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on Symphony GenIsis.

 

14

 

(iii)          Symphony GenIsis will at all
times preserve and keep in full force and effect its corporate existence.

 

(iv)          Symphony GenIsis will keep
complete, proper and separate books of record and account, including a record
of all costs and expenses incurred, all charges made, all credits made and
received, and all income derived in connection with the operation of the
business of Symphony GenIsis, all in accordance with GAAP (which GAAP shall be
conformed to those used by Isis to the extent practicable), in each case to the
extent necessary to enable Symphony GenIsis to comply with the periodic
reporting requirements of this Agreement, and will promptly notify Isis if it
adopts or changes any accounting principle pursuant to a change in GAAP or
applicable Law.

 

(v)           Symphony GenIsis will perform
and observe in all material respects all of the terms and provisions of each
Operative Document to be performed or observed by it, maintain each such
Operative Document to which it is a party, promptly enforce in all material
respects each such Operative Document in accordance with its terms, take all
such action to such end as may be from time to time reasonably requested by
Holdings or Isis and make to each other party to each such Operative Document
such demands and requests for information and reports or for action as Symphony
GenIsis is entitled to make under such Operative Document.

 

(vi)          Symphony GenIsis shall permit
the representatives of Holdings (including Holdings’ members and their respective
representatives), each Symphony Fund and Isis, at each of their own expense and
upon reasonable prior notice to Symphony GenIsis, to visit the principal
executive office of Symphony GenIsis, to discuss the affairs, finances and
accounts of Symphony GenIsis with Symphony GenIsis’ officers and (with the
consent of Symphony GenIsis, which consent will not be unreasonably withheld)
its Auditors, all at such reasonable times and as often as may be reasonably
requested in writing.

 

(vii)         Symphony
GenIsis shall permit each Symphony Fund, at its own expense and upon reasonable
prior notice to Symphony GenIsis, to inspect and copy Symphony GenIsis’ books
and records and inspect Symphony GenIsis’ properties at reasonable times.

 

(viii)        Symphony
GenIsis shall allow Isis or its designated representatives to have reasonable
visitation and inspection rights with regard to the Programs and materials,
documents and other information relating thereto.

 

(ix)           Symphony
GenIsis shall permit each Symphony Fund to consult with and advise the
management of Symphony GenIsis on matters relating to the research and
development of the Programs in order to develop the Product.

 

(x)            On the Purchase Option Closing
Date, or as soon thereafter as is practical, Symphony GenIsis shall deliver to
Isis all materials, documents, files and other information
relating to the Programs (or, where necessary, copies thereof).

 

15

 

(xi)           During
the Term, Isis shall have the right to consent to any increase in the size of
the Symphony GenIsis Board to more than five (5) directors.

 

(xii)          During
the Term, Isis shall have the right to designate, remove and replace [***]
director of the Symphony GenIsis Board, including any successor thereto.

 

(xiii)         Symphony GenIsis shall indemnify
the directors and officers of Symphony GenIsis against liability incurred by
reason of the fact that such Person is or was a director or officer of Symphony
GenIsis, as permitted by Article VII of the Symphony GenIsis Charter and Section
9.01 of the Symphony GenIsis By-laws, as set forth in, and on the terms of, the
Indemnification Agreement and the RRD Services Agreement, respectively.

 

(xiv)        During the Term, Symphony
GenIsis shall comply with, and cause any Persons acting for it to comply with,
the terms of the Investment Policy with respect to the investment of any funds
held by it.

 

(c)   Symphony GenIsis covenants and agrees that, until the
expiration of the Term, it shall not, and shall cause its Subsidiaries (if any)
not to, without Isis’ prior written consent (such consent, in the case of clause
(x) below, not to be unreasonably withheld):

 

(i)            issue any Symphony GenIsis
Equity Securities or any Equity Securities of any Subsidiary thereof (other
than any issuances of Equity Securities by Symphony GenIsis made in accordance
with Section 1(b) hereof to Holdings so long as Symphony GenIsis is a
wholly owned subsidiary of Holdings, or by a Subsidiary of Symphony GenIsis to
Symphony GenIsis or to another wholly owned Subsidiary of Symphony GenIsis); provided,
however, that in any event any such Symphony GenIsis Equity Securities
shall be issued subject to the Purchase Option;

 

(ii)           redeem, repurchase or otherwise
acquire, directly or indirectly, any Symphony GenIsis Equity Securities or the
Equity Securities of any Subsidiary of Symphony GenIsis;

 

(iii)          create, incur, assume or permit
to exist (A) any Encumbrance over or on any of its assets, other than (x)
statutory liens or (y) liens created in the ordinary course  of Symphony GenIsis’ business securing obligations
valued at less than [***] (unless the Development Committee shall authorize the
existence of ordinary course liens securing obligations valued at greater than
[***] ), or (B) Debt other than any Debt 
incurred pursuant to the Operative Documents and the Development Budget
(including payables incurred in the ordinary course of business) (“Excepted Debt”); provided, however,
that the aggregate outstanding principal amount of all such Excepted Debt for
borrowed money shall not exceed [***] at any time;

 

(iv)          declare or pay dividends or
other distributions on any Symphony GenIsis Equity Securities other than any
dividend declared from the proceeds of (x) the exercise of a Discontinuation
Option, or (y) a sale or license  of a
discontinued Program to a third party, in each case in respect of which
Symphony GenIsis shall be entitled to pay (subject to the existence of lawfully
available funds) a dividend equal to the net amount (such net

 

16

 

amount calculated as the gross proceeds
received less amounts required to be paid in respect of any and all corporate
taxes owed by Symphony GenIsis as a result of the receipt of such gross
amounts) of such Discontinuation Price or the amounts received from such third
party, as the case may be;

 

(v)           enter into any transaction of
merger or consolidation, or liquidate, wind up or dissolve itself, or convey,
transfer, license, lease or otherwise dispose of all, or a material portion of,
its properties, assets or business;

 

(vi)          other than in respect of the
Programs, engage in the development of products for any other company or engage
or participate in the development of products or engage in any other material
line of business;

 

(vii)         other than entering into, and
performing its obligations under, the Operative Documents and participating in
the Programs, engage in any action that negates or is inconsistent with any
rights of Isis set forth herein;

 

(viii)        (A) other than as contemplated
by the RRD Services Agreement and Section 6.2 of the Amended and
Restated Research and Development Agreement, hire, retain or contract for the services of, any
employees until the termination of such agreements, or (B) appoint, dismiss or
change any RRD Investment Personnel;

 

(ix)           incur
any financial commitments in respect of the development of the Programs other
than those set forth in the Development Plan and the Development Budget, or
those approved by the Development Committee and, if so required by the terms of
Paragraph 11 of the Development Committee Charter, the Symphony GenIsis Board
in accordance with the Operative Documents;

 

(x)            other than any transaction
contemplated by the Operative Documents, enter into or engage in any Conflict
Transactions without the prior approval of a majority of the Disinterested
Directors of the Symphony GenIsis Board; or

 

(xi)           waive, alter, modify, amend or
supplement in any manner whatsoever any material terms and conditions of the
RRD Services Agreement, the Subscription Agreement, the Research Cost Sharing
and Extension Agreement, or Articles 4 and 6 of
the Amended and Restated Research and Development Agreement, except in
compliance with the terms of the Operative Documents.

 

(d)   Symphony GenIsis covenants and agrees to deliver, cause to
be delivered, and provide access thereto, to each other Party, each Symphony Fund, and such Auditors as Isis may designate, so
long as such Auditors shall (x) be subject to confidentiality requirements at
least as stringent as the Confidentiality Agreement or (y) be an Isis
Accounting Advisor retained pursuant to an agreement which incorporates
confidentiality provisions substantially the same as the ones incorporated in
the agreements in effect between Isis and such Accounting Advisors as of the
Closing Date:

 

(i)            upon request, copies of the then
current Development Plan for each quarter, on or before March 31, June 30,
September 30, and December 31 of each year;

 

17

 

(ii)           upon request, copies of the then current
Development Budget for each quarter, including a report setting forth in
reasonable detail the projected expenditures by Symphony GenIsis pursuant to
the Development Budget, on or before March 31, June 30, September 30, and
December 31 of each year;

 

(iii)          prior to the close of each fiscal
year, Symphony
GenIsis shall cause the Manager to seek to obtain from the Symphony GenIsis Auditors schedules of
certain financial information to be provided to Isis’ Auditors in connection
with the Symphony GenIsis Auditors’ audit of Symphony GenIsis.  Within [***] Business Days after the close of
each fiscal year, Symphony GenIsis (or the Manager acting on its behalf) will
provide Isis’ Auditors with the required Client Schedules.  If the Symphony GenIsis Auditors deliver the
Client Schedules after the end of the fiscal year, Symphony GenIsis (or the
Manager acting on its behalf) will provide the completed Client Schedules to
Isis’ Auditors within [***] Business Days of such receipt;

 

(iv)          prior to the close of each fiscal
year, Isis’ Vice President of Finance, the Symphony GenIsis Auditors, Isis’
Auditors and Symphony GenIsis (or the Manager acting on its behalf) shall agree
to a completion schedule that will include (A) the provision by Symphony
GenIsis to Isis of the financial information reasonably necessary for Isis to
consolidate the financial results of Symphony GenIsis and (B) the following
financial statements, including the related notes thereto, audited and
certified by the Symphony GenIsis Auditors: 
(1) a balance sheet of Symphony GenIsis as of the close of such fiscal
year, (2) a statement of net income for such fiscal year, and (3) a statement
of cash flows for such fiscal year.  Such
audited annual financial statements shall set forth in comparative form the
figures for the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and Symphony GenIsis (or the Manager acting on its
behalf) shall, to the extent that Symphony GenIsis (or the Manager acting on
its behalf), using commercially reasonable means, can procure such an opinion,
be accompanied by an opinion thereon of the Symphony GenIsis Auditors to the
effect that such financial statements present fairly, in all material respects,
the financial position of Symphony GenIsis and its results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and
that such audit provides a reasonable basis for such opinion in the
circumstances;

 

(v)           within [***] Business Days following
each calendar month and upon receipt from Isis of its monthly invoice to
Symphony GenIsis, current accrued monthly vendor expenses and prepaid expenses,
Symphony GenIsis (or the Manager acting on its behalf) will provide to Isis:
(A) the unaudited balance sheet of Symphony
GenIsis for the
previous calendar month; (B) the unaudited statement of net income for such
previous calendar month; (C) the unaudited statement of cash flows for such
previous calendar month; (D) the trial balance schedule for such previous
calendar month; and (E) related account reconciliations for such previous
calendar month (collectively, “Unaudited Financial Information”);

 

18

 

(vi)          within [***] Business Days following
its receipt thereof from Symphony GenIsis’ tax return preparer, a copy of each
income tax return filed by Symphony GenIsis with any foreign, federal, state or
local taxing authority (including all supporting schedules thereto);

 

(vii)         any other documents, materials or other
information pertaining to the Programs or Symphony GenIsis as Isis may
reasonably request, including preliminary financial information;

 

(viii)        promptly, and in any event
within [***] days of receipt thereof, copies of any notice to Symphony GenIsis
from any federal or state Governmental Authority relating to any order, ruling,
statute or other law or regulation that would reasonably be expected to have a
Material Adverse Effect on Symphony GenIsis;

 

(ix)           promptly upon receipt thereof,
notice of all actions, suits, investigations, litigation and proceedings before
any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting Symphony GenIsis;

 

(x)            promptly upon receipt thereof,
copies of any other notices, requests, reports, financial statements and other
information and documents received by Symphony GenIsis under or pursuant to any
other Operative Document, including, without limitation, any notices of breach
or termination of any subcontracts or licenses entered into or permitted
pursuant to the Operative Documents; and

 

(xi)           with reasonable promptness, such
other data and information relating to the business, operations, affairs,
financial condition, assets or properties of Symphony GenIsis or relating to
the ability of Symphony GenIsis to perform its obligations hereunder and under
the Operative Documents as from time to time may be reasonably requested by
Isis and/or Holdings;

 

provided, that neither Symphony
GenIsis, nor the Manager acting on behalf of Symphony GenIsis, shall have any
liability to Isis for the failure to deliver financial documents or other
materials hereunder, if such failure was caused by a failure of Isis to
provide, in a timely manner, data required to prepare such financial documents
or other materials to Symphony Isis in a timely manner.

 

(e)   Symphony GenIsis will use commercially reasonable
efforts, at its own expense (as set forth in the Management Budget), to
cooperate with Isis in meeting Isis’ government compliance, disclosure, and
financial reporting obligations, including without limitation under the
Sarbanes-Oxley Act of 2002 and any rules and regulations promulgated
thereunder, and under FASB Interpretation No. 46. 
Without limiting the foregoing, Symphony GenIsis further
covenants, until the completion of all the reporting, accounting and other
obligations set forth therein with respect to the fiscal year in which this
Agreement shall terminate, expire and end, that (w) the principal executive
officer and the principal financial officer of Symphony GenIsis, or persons
performing similar functions, shall provide certifications to Isis corresponding
to those required with respect to public companies for which

 

19

 

a class of securities is registered under the Securities
Exchange Act  (“Public Companies”) under Sections 302 and 906 of
the Sarbanes-Oxley Act of 2002; (x) Symphony GenIsis shall maintain a system of
disclosure controls and internal controls (as defined under the Exchange Act)
and conduct quarterly and annual evaluations of the effectiveness of such
controls as required under the Exchange Act for Public Companies; (y) Symphony
GenIsis shall provide to Isis an attestation report of its Auditors with
respect to Symphony GenIsis management’s assessment of Symphony GenIsis’
internal controls as required under the Exchange Act for Public Companies; and
(z) Symphony GenIsis will maintain, or cause to have maintained,
such sufficient evidentiary support for management’s assessment of the
effectiveness of Symphony GenIsis’ internal controls as required under the
Exchange Act for Public Companies.

 

Section 6.  Notice
of Material Event .  Each Party
agrees that, upon it receiving knowledge of a material event or development
with respect to any of the transactions contemplated hereby that, to the
knowledge of its executive officers, is not known to the other Parties, such
Party shall notify the other Parties in writing within [***] Business Days of
the receipt of such knowledge by any executive officer of such Party; provided,
that the failure to provide such notice shall not impair or otherwise be deemed
a waiver of any rights any Party may have arising from such material event or
development and that notice under this Section 6 shall not in itself
constitute notice of any breach of any of the Operative Documents.

 

Section 7.  Assignment; Transfers; Legend.

 

(a)   Assignment by Isis and Symphony
GenIsis.  Neither Isis nor Symphony GenIsis may assign,
delegate, transfer, sell or otherwise dispose of (collectively, “Transfer”), in whole or in part, any or
all of their rights or obligations hereunder to any Person (a “Transferee”) without the prior written
approval of each of the other Parties; provided, however, that
Isis, without the prior approval of each of the other Parties, acting in
accordance with Article 14 of the Amended and Restated Research and Development
Agreement, may make such Transfer to any Person which acquires all or
substantially all of Isis’ assets or business (or assets or business related to
the Programs) or which is the surviving or resulting Person in a merger or
consolidation with Isis; provided, further, that in the event of
any Transfer, Isis or Symphony GenIsis, as applicable, shall provide written
notice to the other Parties of any such Transfer not later than thirty (30)
days after such Transfer setting forth the identity and address of the
Transferee and summarizing the terms of the Transfer.  In no event shall such assignment alter the
definition of “Isis Common Stock” except as a result of the surviving or
resulting “parent” entity in a merger being other than Isis, in which case any
reference to Isis Common Stock shall be deemed to instead reference the common
stock, if any, of the surviving or resulting entity.

 

(b)   Assignment and Transfers by
Holdings.  Prior to the expiration of the Purchase
Option, Holdings may not Transfer, in whole or in part, any or all of its
Symphony GenIsis Equity Securities or any or all of its rights or obligations
hereunder to any Person (other than Isis) without the prior written consent of
Isis.  In addition, any Transfer of
Symphony GenIsis Equity Securities by Holdings or any other Person to any
Person other than Isis shall be conditioned upon, and no effect shall be given
to any such Transfer unless such transferee shall agree in writing in form and
substance satisfactory to Isis to be bound by all of the terms and conditions
hereunder, including the Purchase Option, as if such transferee were originally
designated as “Holdings” hereunder.

 

20

 

(c)   Legend.  Any certificates evidencing Symphony GenIsis
Equity Securities shall bear a legend in substantially the following form:

 

THE
SECURITIES OF SYMPHONY GENISIS, INC., EVIDENCED HEREBY ARE SUBJECT TO AN
OPTION, HELD BY ISIS, AS DESCRIBED IN A PURCHASE OPTION AGREEMENT (THE “PURCHASE
OPTION AGREEMENT”) DATED AS OF APRIL 7, 2006, BY AND AMONG ISIS
PHARMACEUTICALS, INC., AND THE OTHER PARTIES THERETO, TO PURCHASE SUCH
SECURITIES AT A PURCHASE PRICE DETERMINED PURSUANT TO SECTION 2 OF THE PURCHASE
OPTION AGREEMENT, EXERCISABLE BY WRITTEN NOTICE AT ANY TIME DURING THE PERIOD
SET FORTH THEREIN.  COPIES OF THE
PURCHASE OPTION AGREEMENT ARE AVAILABLE AT THE PRINCIPAL PLACE OF BUSINESS OF
SYMPHONY GENISIS, INC. AT 7361 CALHOUN PLACE, SUITE 325, ROCKVILLE, MARYLAND 20855, AND WILL BE FURNISHED TO THE HOLDER HEREOF UPON
WRITTEN REQUEST WITHOUT COST.

 

Section 8.  Costs and Expenses; Payments.

 

(a)   Symphony GenIsis Costs and
Expenses.  Symphony GenIsis shall pay any of its ongoing
legal expenses with respect to the transactions described in the Operative
Documents from the funds allocated for such purpose in the Management Budget.

 

(b)   Costs and Expenses of the
Purchase Option.  Except as otherwise specified in Section
2(f) hereof, each Party shall pay its own costs and expenses incurred in
connection with the exercise of the Purchase Option.

 

(c)   Payments
to Holdings.  Payment of the Purchase
Price, plus any costs and expenses payable by Symphony GenIsis under Section
2(f) hereof, shall be made to the account of Holdings contemporaneously
with or prior to the payout of the Purchase Price on the Purchase Option
Closing Date no later than 1:00 pm (New York time).

 

Section 9.  Expiration; Termination of Agreement

 

(a)   Termination.

 

(i)            This
Agreement shall terminate upon the mutual written consent of all of the
Parties.

 

(ii)           Subject to Section 1(c)(v)
hereof, each of Holdings and Symphony GenIsis may terminate this Agreement in
the event that  Symphony
GenIsis terminates the Amended and Restated Research and Development Agreement
in accordance with its terms.

 

Section 10.  Survival; Indemnification.

 

(a)   Survival of Representations and
Warranties; Expiration of Certain Covenants.

 

21

 

(i)            The representations and warranties
of the Parties contained in this Agreement shall survive for a period of one
year from the making of such representations. 
The liability of the Parties related to their respective representations
and warranties hereunder shall not be reduced by any investigation made at any
time by or on behalf of Holdings, Symphony GenIsis or Isis, as applicable.

 

(ii)           For
the avoidance of doubt, the covenants and agreements set forth in Sections
4(b), 5(b)(i), 5(b)(v), 5(b)(vii)-(ix), 5(b)(xi)-(xiv),
5(c), 5(d)(i), 5(d)(ii) and 5(d)(viii)-(xi)
shall, upon the expiration of the Term, expire and end without any further
obligation by Symphony GenIsis or Holdings thereunder.

 

(iii)          For
the avoidance of doubt, the covenants and agreements set forth in Sections
5(b)(ii)-(iv), 5(b)(vi), 5(b)(x), 5(d)(iii)-(vii)
and 5(e) shall, upon the completion of all the reporting, accounting and
other obligations set forth therein with respect to the fiscal year in which
this Agreement shall terminate, expire and end without any further obligation
by Symphony GenIsis or Holdings thereunder.

 

(b)   Indemnification.  To the greatest extent permitted by
applicable law, Isis shall indemnify and hold harmless Holdings and Symphony
GenIsis and Holdings shall indemnify and hold harmless Isis, and each of their
respective Affiliates, officers, directors, employees, agents, partners,
members, successors, assigns, representatives of, and each Person, if any
(including any officers, directors, employees, agents, partners, members of
such Person) who controls Holdings, Symphony GenIsis and Isis, as applicable,
within the meaning of the Securities Act or the Exchange Act, (each, an “Indemnified Party”), from and against any and all
actions, causes of action, suits, claims, losses, costs, interest, fees,
liabilities and damages, and expenses with an aggregate value of at least
$25,000 (as determined by the applicable Indemnified Party acting in good
faith), in connection therewith (irrespective of whether any such Indemnified
Party is a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys’ fees and disbursements (hereinafter, a “Loss”), incurred by any Indemnified
Party to the extent resulting from, arising out of, or relating to: (i) in the
case of Isis being the Indemnifying Party, (A) any breach of any representation
or warranty made by Isis herein or in any other Operative Document, or (B) any
breach of any covenant, agreement or obligation of Isis contained herein or in
any other Operative Document, and (ii) in the case of Holdings being the
Indemnifying Party, (A) any breach of any representation or warranty made by
Holdings or Symphony GenIsis  or in any
other Operative Document, or (B) any breach of any covenant, agreement or
obligation of Holdings or Symphony GenIsis contained herein or in any other
Operative Document.  To the extent that
the foregoing undertaking by Isis or Holdings may be unenforceable for any
reason, such Party shall make the maximum contribution to the payment and
satisfaction of any Loss that is permissible under applicable law.

 

(c)   Notice of Claims.  Any Indemnified Party that proposes to assert
a right to be indemnified under this Section 10 shall notify Isis or
Holdings, as applicable (the “Indemnifying Party”), promptly after receipt of notice of commencement of any
action, suit or proceeding against such Indemnified Party (an “Indemnified Proceeding”) in respect of which a claim
is to be made under this Section 10, or the incurrence or realization of
any Loss in respect of which a claim is to be made under this Section 10,
of the commencement of such Indemnified Proceeding or of such incurrence or
realization, enclosing a copy of all relevant documents, including all

 

22

 

papers served and claims made, but the omission to so notify the applicable
Indemnifying Party promptly of any such Indemnified Proceeding or incurrence or
realization shall not relieve (x) such Indemnifying Party from any
liability that it may have to such Indemnified Party under this Section 10
or otherwise, except, as to such Indemnifying Party’s liability under this Section
10, to the extent, but only to the extent, that such Indemnifying Party
shall have been prejudiced by such omission, or (y) any other indemnitor
from liability that it may have to any Indemnified Party under the Operative
Documents.

 

(d)   Defense
of Proceedings.  In case any
Indemnified Proceeding shall be brought against any Indemnified Party, it shall
notify the applicable Indemnifying Party of the commencement thereof as
provided in Section 10(c), and such Indemnifying Party shall be entitled
to participate in, and provided such Indemnified Proceeding involves a claim
solely for money damages and does not seek an injunction or other equitable
relief against the Indemnified Party and is not a criminal or regulatory
action, to assume the defense of, such Indemnified Proceeding with counsel
reasonably satisfactory to such Indemnified Party.  After notice from such Indemnifying Party to
such Indemnified Party of such Indemnifying Party’s election so to assume the
defense thereof and the failure by such Indemnified Party to object to such
counsel within ten (10) Business Days following its receipt of such notice,
such Indemnifying Party shall not be liable to such Indemnified Party for legal
or other expenses related to such Indemnified Proceedings incurred after such
notice of election to assume such defense except as provided below and except
for the reasonable costs of investigating, monitoring or cooperating in such
defense subsequently incurred by such Indemnified Party reasonably necessary in
connection with the defense thereof. 
Such Indemnified Party shall have the right to employ its counsel in any
such Indemnified Proceeding, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party unless:

 

(i)            the employment of counsel by such
Indemnified Party at the expense of the applicable Indemnifying Party has been
authorized in writing by such Indemnifying Party;

 

(ii)           such Indemnified Party shall have
reasonably concluded in its good faith (which conclusion shall be determinative
unless a court determines that such conclusion was not reached reasonably and
in good faith) that there is or may be a conflict of interest between the
applicable Indemnifying Party and such Indemnified Party in the conduct of the
defense of such Indemnified Proceeding or that there are or may be one or more
different or additional defenses, claims, counterclaims, or causes of action
available to such Indemnified Party (it being agreed that in any case referred
to in this clause (ii) such Indemnifying Party shall not have the right to
direct the defense of such Indemnified Proceeding on behalf of the Indemnified
Party);

 

(iii)          the applicable Indemnifying Party
shall not have employed counsel reasonably acceptable to the Indemnified Party,
to assume the defense of such Indemnified Proceeding within a reasonable time
after notice of the commencement thereof; provided, however, that
(A) this clause (iii)
shall not be deemed to constitute a waiver of any conflict of interest that may
arise with respect to any such counsel, and (B) an Indemnified Party may not
invoke this clause (iii) if such Indemnified Party failed to timely
object to such counsel pursuant to the first paragraph of this Section 10(d)
above

 

23

 

(it
being agreed that in any case referred to in this clause (iii) such
Indemnifying Party shall not have the right to direct the defense of such
Indemnified Proceeding on behalf of the Indemnified Party); or

 

(iv)          any counsel employed by the applicable
Indemnifying Party shall fail to timely commence or reasonably conduct the
defense of such Indemnified Proceeding and such failure has prejudiced (or is
in immediate danger of prejudicing) the outcome of such Indemnified Proceeding
(it being agreed that in any case referred to in this clause (iv) such
Indemnifying Party shall not have the right to direct the defense of such
Indemnified Proceeding on behalf of the Indemnified Party);

 

in each of which cases the fees and expenses of
counsel for such Indemnified Party shall be at the expense of such Indemnifying
Party.  Only one counsel shall be
retained by all Indemnified Parties with respect to any Indemnified Proceeding,
unless counsel for any Indemnified Party reasonably concludes in good faith
(which conclusion shall be determinative unless a court determines that such
conclusion was not reached reasonably and in good faith) that there is or may
be a conflict of interest between such Indemnified Party and one or more other
Indemnified Parties in the conduct of the defense of such Indemnified
Proceeding or that there are or may be one or more different or additional
defenses, claims, counterclaims, or causes or action available to such
Indemnified Party.

 

(e)   Settlement.  Without the prior written consent of such
Indemnified Party, such Indemnifying Party shall not settle or compromise, or
consent to the entry of any judgment in, any pending or threatened Indemnified
Proceeding, unless such settlement, compromise, consent or related judgment
(i) includes an unconditional release of such Indemnified Party from all
liability for Losses arising out of such claim, action, investigation, suit or
other legal proceeding, (ii) provides for the payment of money damages as
the sole relief for the claimant (whether at law or in equity),
(iii) involves no finding or admission of any violation of law or the
rights of any Person by the Indemnified Party, and (iv) is not in the nature of
a criminal or regulatory action.  No Indemnified
Party shall settle or compromise, or consent to the entry of any judgment in,
any pending or threatened Indemnified Proceeding (A) in respect of which any
payment would result hereunder or under any other Operative Document, (B) which
includes an injunction that will adversely affect any Indemnifying Party, (C)
which involves a finding or admission of any violation of law or the rights of
any Indemnifying Party, or (D) which is in the nature of a criminal or
regulatory action, without the prior written consent of the Indemnifying Party,
such consent not to be unreasonably conditioned, withheld or delayed.

 

Section 11.  No
Petition .  Each of Isis and Holdings
covenants and agrees that, prior to the date which is one year and one day
after the expiration of the Purchase Option Period, it will not institute or
join in the institution of any bankruptcy, insolvency, reorganization or
similar proceeding against Symphony GenIsis. 
The provisions of this Section 11 shall survive the termination
of this Agreement.

 

24

 

Section 12.  Third-Party Beneficiary .  Each of the Parties agrees that each Symphony
Fund shall be a third-party beneficiary of this Agreement.

 

Section 13.  Notices.  Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted to be given to
any Party shall be in writing and shall be deemed given only if delivered to
the Party personally or sent to the Party by facsimile transmission (promptly followed
by a hard-copy delivered in accordance with this Section 13), by next
Business Day delivery by a nationally recognized courier service, or by
registered or certified mail (return receipt requested), with postage and
registration or certification fees thereon prepaid, addressed to the Party at
its address set forth below:

 

Isis:

 

Isis
Pharmaceuticals, Inc.

1896
Rutherford Road

Carlsbad,
CA 92008-7208

Attn:
B. Lynne Parshall

Facsimile:
(760) 603-4652

 

with a copy to:

 

Isis
Pharmaceuticals, Inc.

1896 Rutherford
Road

Carlsbad,
CA 92008-7208

Attn:
General Counsel

Facsimile:
(760) 268-4922

 

Symphony
GenIsis:

 

Symphony GenIsis, Inc.

7361 Calhoun Place, Suite 325

Rockville, MD 
20850

Attn:  Charles W.
Finn, Ph.D.

Facsimile:  (301) 762-6154

 

Holdings:

 

Symphony GenIsis Holdings LLC

7361 Calhoun Place, Suite 325

Rockville, MD 
20850

Attn:  Joseph P. Clancy

Facsimile:  (301) 762-6154

 

25

 

with copies to:

 

Symphony
Capital Partners, L.P.

875
Third Avenue

18th
Floor

New
York, NY  10022

Attn:
Mark Kessel

Facsimile:  (212) 632-5401

 

and

 

Symphony
Strategic Partners, LLC

875
Third Avenue

18th
Floor

New
York, NY  10022

Attn:
Mark Kessel

Facsimile:  (212) 632-5401

 

or to such other address as such Party may from time
to time specify by notice given in the manner provided herein to each other
Party entitled to receive notice hereunder.

 

Section 14.  Governing Law; Consent to Jurisdiction and
Service of Process.

 

(a)   This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York; except
to the extent that this Agreement pertains to the internal governance of
Symphony GenIsis or Holdings, and to such extent this Agreement shall be
governed and construed in accordance with the laws of the State of Delaware.

 

(b)   Each of the Parties hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court and Delaware State court
or federal court of the United States of America sitting in The City of New
York, Borough of Manhattan or Wilmington, Delaware, and any appellate court
from any jurisdiction thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the Parties hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in any such New York State court, any such Delaware State court or, to the
fullest extent permitted by law, in such federal court.  Each of the Parties agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Nothing in this
Agreement shall affect any right that any Party may otherwise have to bring any
action or proceeding relating to this Agreement.

 

(c)   Each of the Parties irrevocably
and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any New York State or federal court, or any Delaware State or
federal court.  Each of the Parties
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient

 

26

 

forum to the maintenance of such action or proceeding in any such
court.  Each of the parties hereby
consents to service of process by mail.

 

Section 15.  WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

 

Section 16.  Entire Agreement.  This Agreement (including any Annexes,
Schedules, Exhibits or other attachments hereto) constitutes the entire agreement
between the Parties with respect to the matters covered hereby and supersedes
all prior agreements and understanding with respect to such matters between the
Parties.

 

Section 17.  Amendment; Successors; Counterparts.

 

(a)   The terms of this Agreement
shall not be altered, modified, amended, waived or supplemented in any manner
whatsoever except by a written instrument signed by each of the Parties.

 

(b)   Except as set forth in Section
12, nothing expressed or implied herein is intended or shall be construed
to confer upon or to give to any Person, other than the Parties, any right,
remedy or claim under or by reason of this Agreement or of any term, covenant
or condition hereof, and all the terms, covenants, conditions, promises and
agreements contained herein shall be for the sole and exclusive benefit of the
Parties and their successors and permitted assigns.

 

(c)   This Agreement may be executed
in one or more counterparts, each of which, when executed, shall be deemed an
original but all of which, taken together, shall constitute one and the same
Agreement.

 

27

 

Section
18.  Specific Performance.  The Parties acknowledge that irreparable
damage would result if this Agreement were not specifically enforced, and they
therefore agree that the rights and obligations of the Parties under this
Agreement may be enforced by a decree of specific performance issued by a court
of competent jurisdiction.  Such a remedy
shall, however, not be exclusive, and shall be in addition to any other
remedies which any Party may have under this Agreement or otherwise.  The Parties further acknowledge and agree
that a decree of specific performance may not be an available remedy in all
circumstances.

 

Section 19.  Severability.  If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in a
manner materially adverse to either party. 
Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

 

Section 20.  Tax Reporting.  The Parties acknowledge and agree
that, for all federal and state income tax purposes:

 

(a)   (i) Holdings shall be treated as
the owner of all the Equity Securities of Symphony GenIsis; (ii) the Purchase
Option shall be treated as an option to acquire all the Equity Securities of
Symphony GenIsis; (iii) the Warrants shall be treated as option premium payable
in respect of the grant of the Purchase Option; and (iv) Symphony GenIsis shall
be treated as the owner of all the Licensed Intellectual Property and shall be
entitled to all deductions claimed under Section 174 of the Code in respect of
the Licensed Intellectual Property to the extent of the amounts funded by
Symphony GenIsis (which, for the avoidance of doubt, shall not preclude Isis
from claiming deductions under Section 174 of the Code to which Isis is
otherwise entitled); and

 

(b)   no Party shall take any tax position inconsistent with any
position described in Section 20(a) above, except (i) in the
event of a “determination” (as defined in Section 1313 of the Code) to the
contrary, or (ii) in the event either of the Parties receives an opinion of
counsel to the effect that there is no reasonable basis in law for such a
position or that a tax return cannot be prepared based on such a position
without being subject to substantial understatement penalties; provided,
however, that in the case of Isis, such counsel shall be reasonably
satisfactory to Holdings.

 

[SIGNATURES FOLLOW
ON NEXT PAGE]

 

28

 

IN WITNESS WHEREOF, the parties hereto have
signed this Agreement as of the day and year first above written.

 

	
   

  	
   

  	
  ISIS
  PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ 

  	
  B. Lynne Parshall, J.D.

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  B. Lynne Parshall, J.D.

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Executive Vice
  President, Chief Financial

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Officer and Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SYMPHONY
  GENISIS HOLDINGS LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Symphony Capital Partners, L.P.,

  
	
   

  	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Symphony Capital GP, L.P.,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Symphony GP, LLC,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark Kessel

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Mark Kessel

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SYMPHONY GENISIS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Neil J. Sandler 

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Neil J.
  Sandler

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman of the Board

  
											

 

 

SCHEDULE I

 

PURCHASE
PRICE TABLE

 

	
  Quarter Following the

  Closing Date

  	
   

  	
  First Date of

  Quarter

  	
   

  	
  Last Date of

  Quarter

  	
   

  	
  Quarterly Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (in millions)

  	
   

  
	
  5th Quarter

  	
   

  	
  April 1, 2007

  	
   

  	
  June 30, 2007

  	
   

  	
  $

  	
  112.5

  	
   

  
	
  6th Quarter

  	
   

  	
  July 1, 2007

  	
   

  	
  September 30, 2007

  	
   

  	
  $

  	
  120.0

  	
   

  
	
  7th Quarter

  	
   

  	
  October 1, 2007

  	
   

  	
  December 31, 2007

  	
   

  	
  $

  	
  127.5

  	
   

  
	
  8th Quarter

  	
   

  	
  January 1, 2008

  	
   

  	
  March 31, 2008

  	
   

  	
  $

  	
  135.0

  	
   

  
	
  9th Quarter

  	
   

  	
  April 1, 2008

  	
   

  	
  June 30, 2008

  	
   

  	
  $

  	
  142.5

  	
   

  
	
  10th Quarter

  	
   

  	
  July 1, 2008

  	
   

  	
  September 30, 2008

  	
   

  	
  $

  	
  150.0

  	
   

  
	
  11th Quarter

  	
   

  	
  October 1, 2008

  	
   

  	
  December 31, 2008

  	
   

  	
  $

  	
  157.5

  	
   

  
	
  12th Quarter

  	
   

  	
  January 1, 2009

  	
   

  	
  March 31, 2009

  	
   

  	
  $

  	
  165.0

  	
   

  
	
  13th Quarter

  	
   

  	
  April 1, 2009

  	
   

  	
  June 30, 2009

  	
   

  	
  $

  	
  172.5

  	
   

  
	
  14th Quarter

  	
   

  	
  July 1, 2009

  	
   

  	
  September 30, 2009

  	
   

  	
  $

  	
  180.0

  	
   

  
	
  15th Quarter

  	
   

  	
  October 1, 2009

  	
   

  	
  December 31, 2009

  	
   

  	
  $

  	
  187.5

  	
   

  
	
  16th Quarter

  	
   

  	
  January 1, 2010

  	
   

  	
  March 31, 2010

  	
   

  	
  $

  	
  195.0

  	
   

  

 

 

ANNEX A

 

CERTAIN
DEFINITIONS

 

CERTAIN
DEFINITIONS

 

“$” means United
States dollars.

 

“Accredited Investor”
has the meaning set forth in Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended.

 

“Act” means the
Delaware Limited Liability Company Act, 6
Del. C. § 18-101 et seq.

 

“Ad Hoc Meeting” has
the meaning set forth in Paragraph 6 of Annex B of the Amended and Restated
Research and Development Agreement.

 

“Additional Party” has
the meaning set forth in Section 13 of the Confidentiality Agreement.

 

“Additional Regulatory Filings”
means such Governmental Approvals as required to be made under any law
applicable to the purchase of the Symphony GenIsis Equity Securities under the
Purchase Option Agreement.

 

“Adjusted Capital Account
Deficit” has the meaning set forth in Section 1.01 of the Holdings LLC
Agreement.

 

“Affected Member” has
the meaning set forth in Section 27 of the Investors LLC Agreement.

 

“Affiliate” means,
with respect to any Person (i) any Person directly or indirectly
controlling, controlled by or under common control with such Person, (ii) any
officer, director, general partner, member or trustee of such Person, or (iii)
any Person who is an officer, director, general partner, member or trustee of
any Person described in clauses (i) or (ii) of this sentence.  For purposes of this definition, the terms
“controlling,” “controlled by” or “under common control with” shall mean the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person or entity, whether through the
ownership of voting securities, by contract or otherwise, or the power to elect
at least 50% of the directors, managers, general partners, or persons
exercising similar authority with respect to such Person or entities.

 

“Amended and Restated Research and
Development Agreement” means the Amended and Restated Research
and Development Agreement dated as of the Closing Date, among Isis, Holdings
and Symphony GenIsis.

 

“ApoB”
means apolipoprotein B.

 

 

“ApoB
Product” means a pharmaceutical composition comprising an ASO
that targets ApoB.

 

“ApoB
Program” means the identification, development, manufacture
and/or use of any ApoB Product in accordance with the Development Plan.

 

“ASO”
means an oligonucleotide or analog, mimic or mimetic thereof having a sequence
that selectively modulates protein synthesis via the binding, partially or
wholly, of such oligomeric compound to a complementary nucleic acid sequence
encoding, directly or indirectly, said protein.

 

“Asset Value” has the
meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Auditors” means an
independent certified public accounting firm of recognized national standing.

 

“Balance
Sheet Deficiency Date” has the meaning set forth in Section
1(c)(iii) of the Purchase Option Agreement.

 

“Bankruptcy Code”
means the United States Bankruptcy Code.

 

“Business Day” means any day other than Saturday,
Sunday or any other day on which commercial banks in The City of New York or
the City of San Francisco are authorized or required by law to remain closed.

 

“Capital Contributions”
has the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Capitalized Leases”
means all leases that have been or should be, in accordance with GAAP, recorded
as capitalized leases.

 

“Cash Available for Distribution”
has the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Chair” has the meaning
set forth in Paragraph 4 of Annex B to the Amended and Restated Research and
Development Agreement.

 

“Change of Control”
means and includes the occurrence of any of the following events, but
specifically excludes (i) acquisitions of capital stock directly from Isis
for cash, whether in a public or private offering, (ii) sales of capital
stock by stockholders of Isis, and (iii) acquisitions of capital stock by
or from any employee benefit plan or related trust:

 

(a)           the
merger, reorganization or consolidation of Isis into or with another
corporation or legal entity in which Isis’ stockholders holding the right to
vote with respect to matters generally immediately preceding such merger,
reorganization or consolidation, own less than fifty percent (50%) of the
voting securities of the surviving entity; or

 

 

(b)           the
sale of all or substantially all of Isis’ assets or business.

 

“Class A Member” means
a holder of a Class A Membership Interest.

 

“Class A Membership Interest”
means a Class A Membership Interest in Holdings.

 

“Class B Member” means
a holder of a Class B Membership Interest.

 

“Class B Membership Interest”
means a Class B Membership Interest in Holdings.

 

“Class C Member” means
a holder of a Class C Membership Interest.

 

“Class C Membership Interest”
means a Class C Membership Interest in Holdings.

 

“Client Schedules” has
the meaning set forth in Section 5(b) of the RRD Services Agreement.

 

“Clinical Budget Component”
has the meaning set forth in Section 4.1 of the Amended and Restated Research and
Development Agreement.

 

“Closing Date” means
April 7, 2006.

 

“CMC” means the
chemistry, manufacturing and controls documentation as required for filings
with Regulatory Authority relating to the manufacturing, production and testing
of drug products.

 

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

 

“Committed Capital” means $75,000,000.00.

 

“Common Stock” means
the common stock, par value $0.01 per share, of Symphony GenIsis.

 

“Company Expenses” has
the meaning set forth in Section 5.09 of the Holdings LLC Agreement.

 

“Company Property” has
the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Confidential Information”
has the meaning set forth in Section 2 of the Confidentiality Agreement.

 

“Confidentiality Agreement” means the
Confidentiality Agreement, dated as of the Closing Date, among Symphony
GenIsis, Holdings, Isis, SCP, SSP, Investors, Symphony Capital and RRD,
as such agreement may be amended or amended and restated from time to time.

 

 

“Conflict Transaction” has the meaning
set forth in Article X of the Symphony  GenIsis Charter.

 

“Control” means, with
respect to any material, information or intellectual property right, that a
Party owns or has a license to such item or right, and has the ability to grant
the other Party access, a license or a sublicense (as applicable) in or to such
item or right as provided in the Operative Documents without violating the
terms of any agreement or other arrangement with any third party.

 

“Debt” of any Person means, without duplication:

 

(a)           all
indebtedness of such Person for borrowed money,

 

(b)           all
obligations of such Person for the deferred purchase price of property or
services (other than any portion of any trade payable obligation that shall not
have remained unpaid for 91 days or more from the later of (A) the original due
date of such portion and (B) the customary payment date in the industry and
relevant market for such portion),

 

(c)           all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments,

 

(d)           all
obligations of such Person created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person (whether or not the rights and remedies of the seller or lender under
such agreement in an event of default are limited to repossession or sale of
such property),

 

(e)           all
Capitalized Leases to which such Person is a party,

 

(f)            all
obligations, contingent or otherwise, of such Person under acceptance, letter
of credit or similar facilities,

 

(g)           all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value any Equity Securities of such Person,

 

(h)           the
net amount of all financial obligations of such Person in respect of Hedge Agreements,

 

(i)            the
net amount of all other financial obligations of such Person under any contract
or other agreement to which such Person is a party,

 

(j)            all
Debt of other Persons of the type described in clauses (a) through (i)
above guaranteed, directly or indirectly, in any manner by such Person, or in
effect guaranteed, directly or indirectly, by such Person through an agreement
(A) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (B) to purchase, sell or lease (as
lessee or lessor) property, or to purchase or sell services, primarily for the
purpose of enabling the debtor to make payment of such Debt or to assure the
holder of such Debt against loss, (C) to supply funds to or in any other

 

 

manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or
(D) otherwise to assure a creditor against loss, and

 

(k)           all
Debt of the type described in clauses (a) through (i) above secured by (or
for which the holder of such Debt has an existing right, contingent or
otherwise, to be secured by) any Encumbrance on property (including accounts
and contract rights) owned or held or used under lease or license by such
Person, even though such Person has not assumed or become liable for payment of
such Debt.

 

“Development Budget”
means the budget (comprised of the Management Budget Component and the Clinical
Budget Component) for the implementation of the Development Plan (the initial
form of which was agreed upon by Isis and Symphony GenIsis as of
the Closing Date and attached to the Amended and Restated Research and
Development Agreement as Annex D thereto), as may be further developed and
revised from time to time in accordance with the Development Committee Charter
and the Amended and Restated Research and Development Agreement.

 

“Development Committee”
has the meaning set forth in Article 3 of the Amended and Restated
Research and Development Agreement.

 

“Development Committee Charter”
has the meaning set forth in Article 3 of the Amended and Restated
Research and Development Agreement.

 

“Development Committee Member” has the meaning
set forth in Paragraph 1 of Annex B to the Amended and Restated Research and Development
Agreement.

 

“Development Plan” means the development plan
covering all the Programs (the initial form of which was agreed
upon by Isis and Symphony GenIsis as of the Closing Date and attached to
the Amended and Restated Research and Development Agreement as Annex C
thereto), as may be further developed and revised from time to time in
accordance with the Development Committee Charter and the Amended and Restated
Research and Development Agreement.

 

“Development Services”
has the meaning set forth in Section 1(b) of the RRD Services Agreement.

 

“Director(s)” means
the Persons identified as such in the Preliminary Statement of the
Indemnification Agreement (including such Persons as may become parties thereto
after the date hereof).

 

“Disclosing Party” has
the meaning set forth in Section 3 of the Confidentiality Agreement.

 

“Discontinuation Closing Date”
has the meaning set forth in Section 11.1 of the Amended and Restated Research
and Development Agreement.

 

 

“Discontinuation Date”
means any date designated by Symphony GenIsis which shall occur on or after the
90th day following the receipt by Isis of notice from Symphony
GenIsis of Symphony GenIsis’ intent to discontinue a Program in accordance with
the terms of the Amended and Restated Research and Development Agreement.

 

“Discontinuation Option”
has the meaning set forth in Section 11.1 of the Amended and Restated Research
and Development Agreement.

 

“Discontinuation Price”
has the meaning set forth in Section 11.1 of the Amended and Restated Research
and Development Agreement.

 

“Discontinued Program”
has the meaning set forth in Section 2.12 of the Novated and Restated
Technology License Agreement.

 

“Disinterested Directors”
has the meaning set forth in Article IX of the Symphony GenIsis Charter.

 

“Distribution” has the
meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Early
Purchase
Option Exercise” has the meaning set forth in Section 1(c)(iv)
of the Purchase Option Agreement.

 

“Effective
Registration Date” has
the meaning set forth in Section 1(b) of the Registration Rights Agreement

 

“Encumbrance” means
(i) any security interest, pledge, mortgage, lien (statutory or other), charge
or option to purchase, lease or otherwise acquire any interest, (ii) any
adverse claim, restriction, covenant, title defect, hypothecation, assignment,
deposit arrangement, license or other encumbrance of any kind, preference or
priority, or (iii) any other security agreement or preferential arrangement of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement).

 

“Enhancements” means
findings, improvements, discoveries, inventions, additions, modifications,
enhancements, derivative works, clinical development data, or changes to the
Licensed Intellectual Property and/or Regulatory Files, in each case whether or
not patentable.

 

“Equity Securities”
means, with respect to any Person, shares of capital stock of (or other
ownership or profit interests in) such Person, warrants, options or other rights
for the purchase or other acquisition from such Person of shares of capital
stock of (or other ownership or profit interests in) such Person, securities
convertible into or exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options
for the purchase or other acquisition from such Person of such shares (or such
other interests), and other ownership or profit interests in such Person
(including, without limitation, partnership, member or trust interests
therein), whether voting or nonvoting, and whether or not such shares,
warrants, options, rights or other interests are authorized or otherwise
existing on any date of determination.

 

 

“ERISA” means the
United States Employee Retirement Income Security Act of 1974, as amended.

 

“Excepted
Debt” has the meaning set forth in Section 5(c)(iii) of the
Purchase Option Agreement.

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

 

“Exclusive Field” means human
therapeutics, but does not include the Nonexclusive Field.

 

“Existing
NDA” has the meaning set forth in Section 2 of the
Confidentiality Agreement.

 

“Expert” has
the meaning set forth in Section 11.1(c) of the Amended and Restated Research
and Development Agreement.

 

“External
Directors” means, at any time, up to two (2) Persons elected to
the Symphony GenIsis Board after the Closing Date (who shall be neither
employees of the Symphony Capital nor of Isis) in accordance with the Symphony
GenIsis Charter, the Symphony GenIsis By-laws and Section 4(b)(iv) of the
Purchase Option Agreement.

 

“FDA” means the United
States Food and Drug Administration or its successor agency in the United
States.

 

“FDA Sponsor” has the
meaning set forth in Section 5.1 of the Amended and Restated Research and
Development Agreement.

 

“Final
Termination Date” has the meaning set forth in Section 1(c)(iii)
of the Purchase Option Agreement.

 

“Financial
Audits” has the meaning set forth in Section 6.6 of the Amended
and Restated Research and Development Agreement.

 

“Financing” has the
meaning set forth in the Preliminary Statement of the Purchase Option
Agreement.

 

“Fiscal Year” has the
meaning set forth in each Operative Document in which it appears.

 

“Form S-3” means the
Registration Statement on Form S-3 as defined under the Securities Act.

 

“FTE” has the
meaning set forth in Section 4.1 of the Amended and Restated Research and Development Agreement.

 

 

“Funds Termination Date”
has the meaning set forth in Section 1(c)(iii) of the Purchase Option
Agreement.

 

“Funds
Termination Notice” has the meaning set forth in Section 1(c)(iii) of the
Purchase Option Agreement.

 

“GAAP”
means generally accepted accounting principles in effect in the United States
of America from time to time.

 

“GCCR”
means a glucocorticoid receptor.

 

“GCCR
Product” means a pharmaceutical composition comprising an ASO
that targets GCCR.

 

“GCCR
Program” means the identification, development, manufacture
and/or use of any GCCR Product in accordance with the Development Plan.

 

“GCGR”
means a glucagon receptor.

 

“GCGR
Product” means a pharmaceutical composition comprising an ASO
that targets GCGR.

 

“GCGR
Program” means the identification, development, manufacture
and/or use of any GCGR Product in accordance with the Development Plan.

 

“GenIsis
Relevant Action” means an action against others in the courts,
administrative agencies or otherwise to prevent or terminate infringement,
misappropriation, illegal use or misuse of the Licensed Patent Rights or other
Licensed Intellectual Property due to the manufacture, use, sale or importation
of an ASO that targets ApoB, GCCR or GCGR, as applicable, in the Exclusive
Field.

 

“Governmental Approvals”
means authorizations, consents, orders, declarations or approvals of, or
filings with, or terminations or expirations of waiting periods imposed by any
Governmental Authority.

 

“Governmental Authority”
means any United States or non-United States federal, national, supranational,
state, provincial, local, or similar government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or
judicial or arbitral body.

 

“Governmental Order”
means any order, writ, judgment, injunction, decree, stipulation, determination
or award entered by or with any Governmental Authority.

 

“Hedge Agreement”
means any interest rate swap, cap or collar agreement, interest rate future or
option contract, currency swap agreement, currency future or option contract or
other similar hedging agreement.

 

 

“Holdings” means
Symphony GenIsis Holdings LLC, a Delaware limited liability company.

 

“Holdings Claims” has
the meaning set forth in Section 5.01 of the Warrant Purchase Agreement.

 

“Holdings LLC Agreement”
means the Amended and Restated Limited Liability Company Agreement of Holdings
dated as of the Closing Date.

 

“HSR Filings” means
the pre-merger notification and report forms required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“IND” means an
Investigational New Drug Application, as described in 21 U.S.C. § 355(i)(1) and
21 C.F.R. § 312 in the regulations promulgated by the United States Food and
Drug Administration, or any foreign equivalent thereof.

 

“Indemnification Agreement”
means the Indemnification Agreement among Symphony GenIsis and the Directors
named therein, dated as of the Closing Date, as such agreement may be amended
or amended and restated from time to time.

 

“IND-Enabling
Studies” means the pharmacokinetic and toxicology studies
required for filing an IND.

 

“Indemnified
Party” has the meaning set forth in each Operative Document in
which it appears.

 

“Indemnified
Proceeding” has the meaning set forth in each Operative Document
in which it appears.

 

“Indemnifying
Party” has the meaning set forth in each Operative Document in
which it appears.

 

“Initial Development Budget”
means the initial development budget prepared by representatives of Symphony
GenIsis and Isis prior to the Closing Date, and attached to the Amended and
Restated Research and Development Agreement as Exhibit D thereto.

 

“Initial Development Plan”
means the initial development plan prepared by representatives of Symphony
GenIsis and Isis prior to the Closing Date, and attached to the Amended and
Restated Research and Development Agreement as Exhibit C thereto.

 

“Initial Holdings LLC Agreement”
means the Agreement of Limited Liability Company of Holdings, dated March 8,
2006.

 

“Initial Investors LLC Agreement”
means the Agreement of Limited Liability Company of Investors, dated March 8,
2006.

 

“Initial LLC Member”
has the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

 

“Interest Certificate”
has the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Investment Company Act”
means the Investment Company Act of 1940, as amended.

 

“Investment Overview”
means the investment overview describing the transactions entered into pursuant
to the Operative Documents.

 

“Investment Policy”
has the meaning set forth in Section 1(a)(vi) of the RRD Services Agreement.

 

“Investors” means
Symphony GenIsis Investors LLC.

 

“Investors LLC Agreement”
means the Amended and Restated Agreement of Limited Liability Company of
Investors dated as of the Closing Date

 

“IRS” means the U.S.
Internal Revenue Service.

 

“Isis” means Isis
Pharmaceuticals, Inc., a Delaware corporation.

 

“Isis
2005 10-K” means the annual report for fiscal year 2005 filed by
Isis on Form 10-K on March 16, 2006, pursuant to the Exchange Act.

 

“Isis Accounting Advisor”
means Ernst & Young LLP or Deloitte & Touche USA LLP.

 

“Isis Common Stock”
means the common stock, par value $0.001 per share, of Isis.

 

“Isis
Commitment Amount” has the meaning set forth in Paragraph 14 of
Annex B to the Amended and Restated Research and Development Agreement.

 

“Isis Common Stock Valuation”
has the meaning set forth in Section 2(e) of the Purchase Option Agreement.

 

“Isis
Funding Notice” has the meaning set forth in Section 2 of the
Research Cost Sharing and Extension Agreement.

 

“Isis Obligations” has the meaning set forth
in Section 6.1 of the Amended and Restated Research and Development Agreement.

 

“Isis Personnel” has the meaning set forth
in Section 8.4 of the Amended and Restated Research and Development Agreement.

 

“Isis Subcontractor”
has the meaning set forth in Section 6.2 of the Amended and Restated Research
and Development Agreement.

 

 

“Key Personnel” means
those Isis Personnel listed on Schedule 6.4 to the Amended and Restated
Research and Development Agreement, as such schedule may be updated from time
to time by mutual agreement of the parties to the Amended and Restated Research
and Development Agreement.

 

“Knowledge” means the
actual (and not imputed) knowledge of the executive officers of Isis, without
the duty of inquiry or investigation.

 

“Law” means any law,
statute, treaty, constitution, regulation, rule, ordinance, order or
Governmental Approval, or other governmental restriction, requirement or
determination, of or by any Governmental Authority.

 

“License” has the
meaning set forth in the Preliminary Statement of the Purchase Option
Agreement.

 

“Licensed Intellectual Property”
means the Licensed Patent Rights, Symphony GenIsis Enhancements, Licensor
Enhancements and the Licensed Know-How.

 

“Licensed Know-How”
means any and all proprietary technology that is Controlled by Licensor prior
to the unexercised expiration or termination of the Purchase Option that
relates to, or is exploitable in connection with, the Licensed Patent Rights,
Regulatory Files, Products or the Programs, including without limitation,
manufacturing processes or protocols, know-how, writings, documentation, data,
technical information, techniques, results of experimentation and testing,
diagnostic and prognostic assays, specifications, databases, any and all
laboratory, research, pharmacological, toxicological, analytical, quality
control pre-clinical and clinical data, and other information and materials,
whether or not patentable.

 

“Licensed Patent Rights”
means:

 

(a)           any and
all patents, patent applications and invention disclosures Controlled by
Licensor prior to the unexercised expiration or termination of the Purchase
Option and relating to, or exploitable in connection with, any Product and/or
any Program;

 

(b)           any and
all reissues, continuations, divisionals, continuations-in-part,
reexaminations, renewals, substitutes, extensions or foreign counterparts of
the patents, patent applications and invention disclosures described in (a)
filed prior to the unexercised expiration or termination of the Purchase
Option; and

 

(c)           any and
all reissues, continuations, divisionals, continuations-in-part,
reexaminations, renewals, substitutes, extensions or foreign counterparts of
the patents, patent applications and invention disclosures described in (a) or
(b) filed after the unexercised expiration or termination of the Purchase
Option but solely to the extent the subject matter in any such
continuation-in-part embodies Licensed Know-How or has been disclosed in the
patents or patent applications described in (a) or (b).

 

Licensed Patent Rights
include any and all patents and patent applications that claim Licensor
Enhancements or Symphony GenIsis Enhancements and Program-Specific Patents.

 

 

“Licensor” means Isis.

 

“Licensor Enhancements”
means all findings, improvements, discoveries, inventions, additions,
modifications, enhancements, derivative works, clinical development data, or
changes to the Licensed Know-How, Regulatory Files, Products or the Programs,
in each case, developed by Licensor during the Term (in each case whether or not
patentable), to the extent such items do not otherwise qualify as Symphony
GenIsis Enhancements hereunder, regardless of whether such work is funded by
Symphony GenIsis or Isis.

 

“Lien” has the meaning
set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Liquidating Event”
has the meaning set forth in Section 8.01 of the Holdings LLC Agreement.

 

“LLC Agreements” means
the Initial Holdings LLC Agreement, the Holdings LLC Agreement, the Initial
Investors LLC Agreement and the Investors LLC Agreement.

 

“Loss” has the meaning
set forth in each Operative Document in which it appears.

 

“Major
Market” means the United States, Germany, the United Kingdom,
Italy, Spain, Japan, India, France and Canada.

 

“Management Budget Component”
has the meaning set forth in Section 4.1 of the Amended and Restated Research
and Development Agreement.

 

“Management Fee” has
the meaning set forth in Section 6(a) of the RRD Services Agreement.

 

“Manager” means (i)
for each LLC Agreement in which it appears, the meaning set forth in such LLC
Agreement, and (ii) for each other Operative Document in which it appears, RRD
in its capacity as manager of Symphony GenIsis.

 

“Management Services”
has the meaning set forth in Section 1(a) of the RRD Services Agreement.

 

“Manager Event” has the
meaning set forth in Section 3.01(g) of the Holdings LLC Agreement.

 

“Material Adverse Effect”
means, with respect to any Person, a material adverse effect on (i) the
business, assets, property or condition (financial or otherwise) of such Person
or, (ii) its ability to comply with and satisfy its respective agreements and
obligations under the Operative Documents or, (iii) the enforceability of the
obligations of such Person of any of the Operative Documents to which it is a
party.

 

“Material Subsidiary” means, at any time, a
Subsidiary of Isis having assets in an amount equal to at least 5% of the
amount of total consolidated assets of Isis and its Subsidiaries (determined as
of the last day of the most recent reported fiscal quarter of Isis) or revenues
or net

 

 

income in an amount equal
to at least 5% of the amount of total consolidated revenues or net income of
Isis and its Subsidiaries for the 12-month period ending on the last day
of the most recent reported fiscal quarter of Isis.

 

“Medical Discontinuation Event”
means (a) as specified in each Protocol, those data that, if collected in such
Protocol, demonstrate that such Protocol should not be continued or (b) a
series of adverse events, side effects or other undesirable outcomes that, when
collected in a Protocol, would cause a reasonable FDA Sponsor to discontinue
such Protocol.

 

“Membership Interest”
means (i) for each LLC Agreement in which it appears, the meaning set forth in
such LLC Agreement, and (ii) for each other Operative Document in which it
appears, the meaning set forth in the Holdings LLC Agreement.

 

“MOE
Gapmer” means a single stranded antisense oligonucleotide of
less than [***] nucleotides (i) wherein all of the backbone linkages are
modified by adding a sulfur at the non-bridging oxygen (phosphorothioate) and
(ii) comprising a region of at least [***] unsubstituted 2′-deoxy
nucleotides with the remaining nucleotides contain a 2′-O-(methoxyethyl)
substitution at the 2′ position.

 

“NASDAQ” means the
National Association of Securities Dealers Automated Quotation System.

 

“NDA” means a New Drug
Application, as defined in the regulations promulgated by the United States
Food and Drug Administration, or any foreign equivalent thereof.

 

“Nonexclusive
Field” means (i) manufacturing (including analytical methods)
ASOs, (ii) formulating ASOs, (iii) conducting Research on ASOs and/or (iv)
supplying ASOs solely to conduct Research.

 

“Non-Isis Capital Transaction”
means any (i) sale or other disposition of all or part of the Symphony GenIsis Shares or all or substantially all of the
operating assets of Symphony GenIsis, to a Person other than Isis or an Affiliate of Isis or (ii)
distribution in kind of the Symphony GenIsis Shares following the expiration of the Purchase Option.

 

“Novated
and Restated Technology License Agreement” means the Novated and
Restated Technology License Agreement, dated as of the Closing Date, among
Isis, Symphony GenIsis and Holdings.

 

“Operative Documents”
means, collectively, the Indemnification Agreement, the Holdings LLC Agreement,
the Purchase Option Agreement, the Warrant Purchase Agreement, the Registration
Rights Agreement, the Subscription Agreement, the Technology License Agreement,
the Novated
and Restated Technology License Agreement, the RRD Services Agreement,
the Research and Development Agreement, the Research Cost Sharing and Extension
Agreement, the Amended and Restated Research and Development Agreement, the
Confidentiality Agreement, and each other certificate and agreement executed in
connection with any of the foregoing documents.

 

“Organizational Documents”
means any certificates or articles of incorporation or formation, partnership
agreements, trust instruments, bylaws or other governing documents.

 

 

“Partial Stock Payment”
has the meaning set forth in Section 3(a)(iii) of the Purchase Option
Agreement.

 

“Party(ies)” means,
for each Operative Document or other agreement in which it appears, the parties
to such Operative Document or other agreement, as set forth therein.  With respect to any agreement in which a
provision is included therein by reference to a provision in another agreement,
the term “Party” shall be read to refer to the parties to the document at hand,
not the agreement that is referenced.

 

“Payment Terms” has
the meaning set forth in Section 8.2 of the Amended and Restated Research and
Development Agreement.

 

“Percentage” has the
meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Permitted Investments”
has the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Permitted Lien” has
the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Person” means any
individual, partnership (whether general or limited), limited liability
company, corporation, trust, estate, association, nominee or other entity.

 

“Personnel” of a Party
means such Party, its employees, subcontractors, consultants, representatives
and agents.

 

“Prime Rate” means the quoted “Prime Rate” at
JPMorgan Chase Bank or, if such bank ceases to exist or is not quoting a base
rate, prime rate reference rate or similar rate for United States dollar loans,
such other major money center commercial bank in New York City selected by the
Manager.

 

“Products”
means an ApoB Product, a GCCR Product and/or a GCGR Product.

 

“Profit” has the meaning
set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Programs”
means the ApoB Program, the GCCR Program and/or the GCGR Program.

 

“Program-Specific
Patents” means

 

(a)           any and
all patents, patent applications and invention disclosures Controlled by
Licensor prior to the unexercised expiration or termination of the Purchase
Option that claim any composition of matter comprising, or method of using, an
ASO targeting any of ApoB, GCCR or GCGR, including but not limited to, the
patents and patent applications listed on Annex C to the Novated and Restated
Technology License Agreement;

 

 

(b)           any and
all reissues, continuations, divisionals, continuations-in-part,
reexaminations, renewals, substitutes, extensions or foreign counterparts of
the patents, patent applications and invention disclosures described in (a)
filed prior to the unexercised expiration or termination of the Purchase
Option; and

 

(c)           any and
all reissues, continuations, divisionals, continuations-in-part,
reexaminations, renewals, substitutes, extensions or foreign counterparts of
the patents, patent applications and invention disclosures described in (a) or
(b) filed after the unexercised expiration or termination of the Purchase
Option but solely to the extent the subject matter in such any
continuation-in-part embodyies Licensed Know-How or has been disclosed in the
patents or patent applications described in (a) or (b).

 

“Protocol” means a written protocol that meets the substantive requirements of
Section 6 of the ICH Guideline for Good Clinical Practice as adopted by the
FDA, effective May 9, 1997 and is included within the Development Plan or
later modified or added to the Development Plan pursuant to the Amended and
Restated Research and Development Agreement.

 

“Public Companies” has
the meaning set forth in Section 5(e) of the Purchase Option Agreement.

 

“Purchase Option” has
the meaning set forth in Section 1(a) of the Purchase Option Agreement.

 

“Purchase Option Agreement”
means this Purchase Option Agreement dated as of the Closing Date, among Isis,
Holdings and Symphony GenIsis.

 

“Purchase
Option Closing” has the meaning set forth in Section 2(a) of the
Purchase Option Agreement.

 

“Purchase Option Closing Date”
has the meaning set forth in Section 2(a) of the Purchase Option Agreement.

 

“Purchase Option Commencement Date”
has the meaning set forth in Section 1(c)(iii) of the Purchase Option
Agreement.

 

“Purchase Option Exercise Date”
has the meaning set forth in Section 2(a) of the Purchase Option Agreement.

 

“Purchase Option Exercise Notice”
has the meaning set forth in Section 2(a) of the Purchase Option Agreement.

 

“Purchase Option Interim Date”
has the meaning set forth in Section 2(b)(i) of the Purchase Option Agreement.

 

“Purchase Option Period”
has the meaning set forth in Section 1(c)(iii) of the Purchase Option
Agreement.

 

 

“Purchase Price” has
the meaning set forth in Section 2(b) of the Purchase Option Agreement.

 

“Put
Option” has the meaning set forth in Section 2A of the Purchase
Option Agreement.

 

“Put
Option Exercise Notice” has the meaning set forth in Section 2A
of the Purchase Option Agreement.

 

“QA Audits” has the
meaning set forth in Section 6.5 of the Amended and Restated Research and
Development Agreement.

 

“Quarterly Price” has
the meaning set forth in Section 2(b)(i) of the Purchase Option Agreement.

 

“Registration Rights Agreement”
means the Registration Rights Agreement dated as of the Closing Date, between
Isis and Holdings.

 

“Registration Statement”
has the meaning set forth in Section 1(b) of the Registration Rights Agreement.

 

“Regulatory Authority”
means the United States Food and Drug Administration, or any successor agency
in the United States, or any health regulatory authority(ies) in any other
country that is a counterpart to the FDA and has responsibility for granting
registrations or other regulatory approval for the marketing, manufacture,
storage, sale or use of drugs in such other country.

 

“Regulatory Allocation”
has the meaning set forth in Section 3.06 of the Holdings LLC Agreement.

 

“Regulatory Files”
means any IND, NDA or any other filings filed with any Regulatory Authority
with respect to the Programs.

 

“Representative” of
any Person means such Person’s shareholders, principals, directors, officers,
employees, members, managers and/or partners.

 

“Research”
means research, including gene function, gene expression and target validation
research, which may include small pilot toxicology studies but excludes
IND-Enabling Studies or dosing humans. 
Research does not include commercialization.

 

“Research
Cost Sharing and Extension Agreement” means the Research Cost
Sharing and Extension Agreement dated as of the Closing Date, among Isis,
Holdings and Symphony GenIsis, Inc..

 

“Research and Development Agreement”
means the Research and Development Agreement dated as of the Closing Date,
between Isis and Holdings.

 

“RRD” means RRD
International, LLC, a Delaware limited liability company.

 

 

“RRD FTE Budget” means the
budget attached to the RRD Services Agreement as Exhibit 3 thereto.

 

“RRD Indemnified Party”
has the meaning set forth in Section 10(a) of the RRD Services Agreement.

 

“RRD Investment
Personnel” has the meaning set forth in Section 1(a)(v) of the
RRD Services Agreement.

 

“RRD Loss” has the
meaning set forth in Section 10(a) of the RRD Services Agreement.

 

“RRD Personnel” has
the meaning set forth in Section 1(a)(ii) of the RRD Services Agreement.

 

“RRD Services Agreement”
means the RRD Services Agreement between Symphony GenIsis and RRD, dated as the
Closing Date, 2006.

 

“Schedule K-1” has the
meaning set forth in Section 9.02(a) of the Holdings LLC Agreement.

 

“Scheduled Meeting”
has the meaning set forth in Paragraph 6 of Annex B of the Amended and Restated
Research and Development Agreement.

 

“Scientific Discontinuation Event”
has the meaning set forth in Section 4.2(c) of the Amended and Restated
Research and Development Agreement.

 

“SCP” means Symphony
Capital Partners, L.P., a Delaware limited partnership.

 

“SEC” means the United
States Securities and Exchange Commission.

 

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

 

“Selling
Stockholder Questionnaire” has the meaning set forth in Section
4(a) of the Registration Rights Agreement.

 

“Shareholder” means any Person who owns any
Symphony GenIsis Shares.

 

“Solvent” has the
meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“SSP” means Symphony
Strategic Partners, LLC, a Delaware limited liability company.

 

“Stock Payment Date”
has the meaning set forth in Section 2 of the Subscription Agreement.

 

“Stock Purchase Price”
has the meaning set forth in Section 2 of the Subscription Agreement.

 

 

“Subcontracting Agreement”
has the meaning set forth in Section 6.2 of the Amended and Restated Research
and Development Agreement.

 

“Sublicensed
Intellectual Property” has the meaning set forth in Section 3.2
of the Novated and Restated Technology License Agreement.

 

“Sublicense
Obligations” has the meaning set forth in Section 3.2 of the
Novated and Restated Technology License Agreement.

 

“Subscription Agreement”
means the Subscription Agreement between Symphony GenIsis and Holdings, dated
as the Closing Date.

 

“Subsidiary” of any
Person means any corporation, partnership, joint venture, limited liability
company, trust or estate of which (or in which) more than 50% of (a) the issued
and outstanding capital stock having ordinary voting power to elect a majority
of the board of directors of such corporation (irrespective of whether at the
time capital stock of any other class or classes of such corporation shall or
might have voting power upon the occurrence of any contingency); (b) the
interest in the capital or profits of such partnership, joint venture or
limited liability company; or (c) the beneficial interest in such trust or
estate is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person’s other Subsidiaries.

 

“Surviving Entity” means
the surviving legal entity which is surviving entity to Isis after giving effect
to a Change of Control.

 

“Symphony Capital”
means Symphony Capital LLC, a Delaware limited liability company.

 

“Symphony Fund(s)”
means Symphony Capital Partners, L.P., a Delaware limited partnership, and
Symphony Strategic Partners, LLC, a Delaware limited liability company.

 

“Symphony GenIsis”
means Symphony GenIsis, Inc., a Delaware corporation.

 

“Symphony GenIsis Auditors” has the meaning set forth
in Section 5(b) of the RRD Services Agreement.

 

“Symphony GenIsis Board”
means the board of directors of Symphony GenIsis.

 

“Symphony GenIsis By-laws”
means the By-laws of Symphony GenIsis, as adopted by resolution of the Symphony
GenIsis Board on the Closing Date.

 

“Symphony GenIsis Charter”
means the Amended and Restated Certificate of Incorporation of Symphony
GenIsis, dated as of the Closing Date.

 

“Symphony GenIsis Director Event” has the meaning set
forth in Section 3.01(h)(i) of the Holdings LLC Agreement.

 

 

“Symphony GenIsis Enhancements”
means findings, improvements, discoveries, inventions, additions,
modifications, enhancements, derivative works, clinical development data, or
changes to the Licensed Know-How, Regulatory Files, Products or the Programs,
made by or on behalf of Symphony GenIsis during the Term, in each case whether
or not patentable, including any such findings, improvements, discoveries,
inventions, additions, modifications, enhancements, derivative works, clinical
development data, or changes related to data and information generated or derived
by RRD and assigned to Symphony GenIsis pursuant to Section 12 of the RRD
Services Agreement.

 

“Symphony GenIsis Equity Securities”
means the Common Stock and any other stock or shares issued by Symphony
GenIsis.

 

“Symphony GenIsis Loss”
has the meaning set forth in Section 10(b) of the RRD Services Agreement.

 

“Symphony GenIsis Shares”
has the meaning set forth in Section 2.02 of the Holdings LLC Agreement.

 

“Tangible Materials” means any tangible
documentation, whether written or electronic, existing as of the Closing Date
or during the Term, that is Controlled by the Licensor, embodying or relating
to the Licensed Intellectual Property, Regulatory Files, Products or the
Programs, including, but not limited to, safety, efficacy or other data related
to the Products or Programs, documentation, patent applications and invention
disclosures.

 

“Tax Amount” has the
meaning set forth in Section 4.02 of the Holdings LLC Agreement.

 

“Technology
License Agreement” means the Technology License Agreement, dated
as of the Closing Date, between Isis and Holdings.

 

“Term” has the meaning
set forth in Section 4(b)(iii) of the Purchase Option Agreement, unless
otherwise stated in any Operative Document.

 

“Territory” means the
world.

 

“Third Party IP” has
the meaning set forth in Section 2.9 of the Novated and Restated Technology
License Agreement.

 

“Third
Party Licensor” means a third party from which Isis has received
a license or sublicense to Licensed Intellectual Property.

 

“Transfer” has for
each Operative Document in which it appears the meaning set forth in such
Operative Document.

 

“Transferee” has, for
each Operative Document in which it appears, the meaning set forth in such
Operative Document.

 

 

“Voluntary Bankruptcy”
has the meaning set forth in Section 1.01 of the Holdings LLC Agreement.

 

“Warrant Closing” has
the meaning set forth in Section 2.03 of the Warrant Purchase Agreement.

 

“Warrant Date” has the
meaning set forth in Section 2.02 of the Warrant Purchase Agreement.

 

“Warrant Purchase Agreement”
means the Warrant Purchase Agreement, dated as of the Closing Date, between
Isis and Holdings.

 

“Warrant Shares” has
the meaning set forth in Section 2.01 of the Warrant Purchase Agreement.

 

“Warrant Surrender Price”
has the meaning set forth in Section 7.08 of the Warrant Purchase Agreement.

 

“Warrants” has the
meaning set forth in Section 2.01 of the Warrant Purchase Agreement.

 

 

EXHIBIT 1

 

PURCHASE EXERCISE NOTICE

 

 

 

               ,
20     

 

Attention:                  

 

Ladies and Gentlemen:

 

Reference
is hereby made to that certain Purchase Option Agreement dated as of April 7,
2006 (the “Purchase
Option Agreement”) by and among Isis Pharmaceuticals, Inc., a
Delaware corporation (“Isis”),
Symphony GenIsis Holdings LLC, a Delaware limited liability company, and
Symphony GenIsis, Inc., a Delaware corporation. 
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned thereto in the Purchase Option Agreement.

 

Pursuant
to Section 2(a) of the Purchase Option Agreement, Isis hereby irrevocably
notifies you that it hereby exercises the Purchase Option.

 

Subject
to the terms set forth therein, Isis hereby affirms the representations and
warranties set forth in Section 3(a) of the Purchase Option Agreement, as of
the date hereof.

 

Isis
estimates that the Purchase Option Closing Date will be                       .

 

The
Purchase Price will be $                           .

 

[Isis
intends to pay             
% of the Purchase Price in Isis Common Stock.]

 

 

	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ISIS PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  [B. Lynne Parshall, J.D].

  
	
   

  	
   

  	
  Title:

  	
  [Executive Vice President, Chief Financial

  Officer and Secretary]

  
						

 

 

EXHIBIT 2

 

[FORM OF OPINION OF ISIS’ GENERAL COUNSEL]

 

[***]

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