ALL TITLE AND ESCROW CANCELLATION CHARGES.  NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THIS SECTION 7(A) LIMIT THE DAMAGES RECOVERABLE BY EITHER PARTY AGAINST THE OTHER PARTY DUE TO THE OTHER PARTY’S OBLIGATION TO INDEMNIFY SUCH PARTY IN ACCORDANCE WITH SECTION 14 OF THIS AGREEMENT.  BY SEPARATELY EXECUTING THIS SECTION 7(A). BELOW, BUYER AND SELLER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE PROVISION COVERING LIQUIDATED DAMAGES, AND THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS EXECUTED.

B.            Seller’s Default.  In the event that Seller shall fail to perform the acts required by this Agreement to be performed by it prior to or as of the Closing for any reason, or the conditions set forth in Section 4B were not satisfied for any reason, Buyer shall be entitled, as its sole and exclusive remedy, to (i) receive the return of the Deposit, which return shall operate to terminate this Agreement and release Seller from any and all liability hereunder, or (ii) to enforce specific performance of Seller’s obligation to convey the Premises to Buyer as contemplated by this Agreement, it being understood that the remedy of specific performance shall not be available to enforce any other obligation of Seller hereunder. Buyer shall be deemed to have elected to terminate this Agreement and receive the return of the Deposit as its sole and exclusive remedy if Buyer fails to file suit for specific performance against Seller in a court having jurisdiction in the county and state in which the Premises is located within sixty (60) days following the scheduled Closing Date.

8.             Seller’s Representations, Warranties and Covenants.  Seller hereby represents, warrants and covenants to Buyer, as of the Effective Date, as follows:

A.            Seller has full capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

B.            This Agreement, and all other instruments and documents to be executed and delivered by Seller to Buyer hereunder or pursuant hereto, have been or will be duly

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executed and delivered by Seller and constitute (or will constitute, as to those instruments and documents to be executed and delivered) the legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and general principals of equity.

C.            There is no suit, action or proceeding pending or to the knowledge of Seller threatened against Seller before or by any court, administrative agency or other governmental or quasi-governmental authority, (i) affecting the Premises or (ii) which brings into question the validity of this Agreement or the Transaction.

9.             Buyer’s Representations, Warranties and Covenants.  Buyer hereby represents, warrants and covenants to Seller, as of the Effective Date, as follows:

A.            Buyer has full capacity, power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder.

B.            This Agreement and all other instruments and documents to be executed and delivered by Buyer to Seller hereunder or pursuant hereto have been or will be duly executed and delivered by Buyer and constitute (or will constitute, as to those instruments and documents to be executed and delivered) the legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms.

C.            There is no suit, action or proceeding pending or to the knowledge of Buyer threatened against Buyer or affecting the Premises before or by any court, administrative agency or other governmental or quasi-governmental authority, or which brings into question the validity of this Agreement or the Transaction.

10.           Investigations.

A.            Buyer acknowledges that it (i) is familiar with the Premises, (ii) has been given an opportunity to inspect the Premises and (iii) has completed all of its inspections with respect to the condition of the Premises as of the Effective Date.

11.           Disclaimers and Warranties.

A.            AS IS SALE; DISCLAIMERS. WITH RESPECT TO CLAUSES (i) THROUGH (iv) BELOW, EXCEPT IN THE CASE OF A BREACH BY SELLER OF THE REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 8, AND EXCEPT FOR SELLER’S BREACH OF ITS COVENANT SET FORTH IN SECTION 3D:

i.              SELLER IS NOT MAKING, AND HAS NOT AT ANY TIME MADE, ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PREMISES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

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ii.             UPON CLOSING SELLER SHALL SELL AND CONVEY TO BUYER, AND BUYER SHALL ACCEPT, THE PREMISES “AS IS, WHERE IS, WITH ALL FAULTS”.  BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PREMISES OR RELATING THERETO MADE OR FURNISHED BY SELLER OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING.  ALL MATERIALS, DATA AND INFORMATION DELIVERED BY SELLER TO BUYER, OR OTHERWISE MADE AVAILABLE TO BUYER, IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY ARE PROVIDED TO BUYER AS A CONVENIENCE ONLY AND ANY RELIANCE ON OR USE OF SUCH MATERIALS, DATA OR INFORMATION BY BUYER SHALL BE AT THE SOLE RISK OF BUYER.  NEITHER SELLER, NOR ANY AFFILIATE OF SELLER, NOR THE PERSON OR ENTITY WHICH PREPARED ANY REPORT OR REPORTS MADE AVAILABLE BY SELLER TO BUYER SHALL HAVE ANY LIABILITY TO BUYER FOR ANY INACCURACY IN OR OMISSION FROM ANY SUCH REPORTS.  BUYER ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE PREMISES IS BEING SOLD “AS IS.”

iii.            BUYER REPRESENTS AND COVENANTS TO SELLER THAT BUYER HAS CONDUCTED SUCH INVESTIGATIONS OF THE PREMISES, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION OF THE PREMISES AND THE EXISTENCE OR NONEXISTENCE OF, OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO, ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PREMISES, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO.

iv.            UPON CLOSING, BUYER SHALL AUTOMATICALLY ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER’S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER’S AFFILIATES, PREDECESSORS, SUCCESSORS, PARTNERS, MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, TRUSTEES, EMPLOYEES, AGENTS, REPRESENTATIVES, LENDERS, CONSULTANTS AND ATTORNEYS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION IN LAW OR IN EQUITY (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, FIXED OR CONTINGENT, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER’S AFFILIATES, PREDECESSORS, SUCCESSORS, PARTNERS, MEMBERS, OFFICERS,

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DIRECTORS, SHAREHOLDERS, TRUSTEES, EMPLOYEES, AGENTS, REPRESENTATIVES, LENDERS, CONSULTANTS AND ATTORNEYS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PREMISES.  THE UNDERSIGNED ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

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“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

THE UNDERSIGNED, BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPALS OF SIMILAR EFFECT.

_____________________

Buyer’s Initials

B.            Survival of Disclaimers. The provisions of this Section 11 shall survive Closing or any termination of this Agreement.

12.           Notices.  All notices or other communications to be given by one party to the other under this Agreement shall be in writing, mailed or delivered to the other party at the following addresses:

If intended for Seller:

BMR-2282 FARADAY AVENUE LLC

Attn: Vice President, Real Estate Counsel

17190 Bernardo Center Drive

San Diego, California 92128

Phone: (858) 485-9840 Fax: (858) 485-9843

If intended for Buyer:

Isis Pharmaceuticals, Inc.

Attn:  Chief Operating Officer

1896 Rutherford Road

Carlsbad, California 92008

Phone: (760) 931-9200 Fax: (760) 918-3599

with a copy to: General Counsel

Fax:  760 ###-###-####

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Notices may be delivered by Federal Express, United Parcel Service, or other nationally recognized overnight (one-night) mail courier service, or sent by facsimile (provided a copy of such notice is deposited with an overnight courier for next business day delivery). Any such notice shall be considered given on the date of such hand or couriered delivery, confirmed facsimile transmission if received on a business day, deposit with such overnight courier for next business day delivery.

Either party may, with proper notice, at any time designate a different address to which notices shall be sent.

13.           Assignment.  Buyer may not assign its rights under this Agreement without first obtaining Seller’s written approval, which approval may be given or withheld in Seller’s sole discretion, except that Buyer may assign this agreement without Seller’s approval but with written notice, to any (i) successor by merger or sale of substantially all of Buyer’s assets (including, without limitation, this Agreement) in a manner such that the assignee will become liable and responsible for the performance and observance of all Buyer’s duties and obligations hereunder; or (ii) corporation or other entity which controls, is controlled by, or is under common control with Buyer.  In no event shall any assignment of this Agreement release or discharge Buyer from any liability or obligation hereunder unless expressly agreed otherwise by Seller in writing.  Any transfer, directly or indirectly, (whether by merger, consolidation or otherwise) of any stock, partnership interest or other ownership interest in Buyer or any other transaction, in each case which results (whether directly or indirectly) in a change in control of Buyer shall constitute an assignment of this Agreement.

14.           Brokerage.  Each of Seller and Buyer represents and warrants to the other of them that it has not dealt with any broker, agent, finder or other intermediary in connection with the conveyance of the Premises or this Agreement. Each of Seller and Buyer agrees to indemnify, defend and hold the other harmless of, from and against any damages, costs, claims, losses or liabilities whatsoever (including attorney’s fees, expenses and court costs) arising from any breach by the indemnifying party of the foregoing warranties, representations and agreements.  This Section shall survive Closing under this Agreement.

15.           Time of the Essence.  Time, wherever mentioned herein, shall be of the essence of this Agreement.

16.           Binding Effect.  This Agreement shall be binding upon and inure to the benefit of Seller and Buyer and their respective successors, heirs and assigns.

17.           Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto regarding the transaction contemplated hereby and there are no other terms, covenants, conditions, warranties, representations or statements, oral or otherwise, of any kind whatsoever.  Any agreement hereafter made shall be ineffective to change, modify, discharge or effect an abandonment of this Agreement in whole or in part unless such agreement is in writing and signed by the party against whom enforcement of the change, modification, discharge or abandonment is sought.

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18.           Headings.  The headings incorporated in this Agreement are for convenience and reference only and are not a part of this Agreement and do not in any way control, define, limit, or add to the terms and conditions hereof.

19.           Governing Law.  This Agreement shall be construed, interpreted and governed by the laws of the State of California.

20.           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original, and such counterparts together shall constitute one and the same instrument.

21.           Attorneys’ Fees.  If either party commences an action against the other party arising out of or in connection with this Agreement, then the prevailing party shall be entitled to have and recover from the other party reasonable attorneys’ fees, charges and disbursements and costs of suit in proportion to [***] up to a maximum of 100%; provided, however, that in the case where the prevailing party is awarded any equitable relief, then the prevailing party may recover the full amount of such costs and attorney’s fees.  For example, if the prevailing party [***] and no equitable relief, but [***], and the prevailing party had two hundred thousand dollars ($200,000) in costs and attorneys’ fees, then such prevailing party would be entitled to recover [***] of such costs and attorneys’ fees.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, under seal, as of the day and year first-above written.

S-1

ACKNOWLEDGMENT AND CONSENT OF TITLE COMPANY

On this                   day of                         , 20    , the undersigned, the Title Company named in the foregoing Agreement, intending to be legally bound hereby, agrees to keep, observe and perform the terms and conditions of said Agreement relating to the holding and disbursement of the Deposit (as defined in the Agreement), together with any interest earned thereon, and all additional monies paid to it in escrow pursuant to the terms and conditions thereof.  Title Company shall not incur any liability to anyone for damages, losses, or expenses except for fraud, negligence or willful conversation in respect to any action taken or omitted in good faith.  Title Company may tender into the registry of any court of competent jurisdiction any escrow funds if it deems that there is a dispute with respect to the disbursement of such funds.  Thereafter, Title Company will be discharged from all further duties and liabilities hereunder.

S-2

EXHIBIT “A”

(Legal Description of Premises)

Real property in the City of Carlsbad, County of San Diego, State of California, described as follows:

Parcel A:

Lot 7 of Carlsbad Tract No. 84-9, according to Map thereof No. 11230, filed in the Office of the County Recorder of San Diego County, May 10, 1985, as instrument no. 85-165947 of Official Records, and a portion of Parcel D of Parcel Map No. 14461, filed in the Office of the County Recorder of San Diego County, September 12, 1986 as instrument no. 86-402406 of Official Records; all in the City of Carlsbad, County of San Diego, State of California, more particularly described as follows:

Commencing at the Northwest corner of said Parcel D of Parcel Map No. 14461; thence along the Westerly property line of said Parcel D, South 18 degrees 26’06” East, 278.43 feet, to the true point of beginning; thence leaving said Westerly line North 50 degrees 30’00” East, 145.33 feet; thence North 70 degrees 12’00” East, 92.23 feet; thence South 39 degrees 30’48” East, 256.97 feet; thence South 50 degrees 29’12” West, 83.13 feet; thence South 71 degrees 33’54” West, 242.68 feet to a point on said Westerly property line; thence North 18 degrees 26’06” West, 215.24 feet to the true point of beginning.

Said  property being described as “Parcel C” in a Certificate of Compliance recorded on April 21, 2003 as instrument no. 2003-0459192 of Official Records of said San Diego County.

Parcel B:

A non-exclusive easement on, over and under the common areas as defined and shown on those certain amended and restated declaration of establishment of Covenants, Conditions and Restrictions, and Reservation of Easements (the “Declarations”), dated June 28, 1988 and recorded August 8, 1988 as instrument no. 88-387705 of Official Records, for the purposes of ingress and egress, parking, the construction, installation, maintenance, removal replacements, operation and use of utilities, including but not limited to sewers, water and gas pipes, drainage lines and systems, electric power, conduit lines and wiring, telephone, conduits, lines and wires and other utilities, public or private, beneath the ground surface (except vaults, vents, access, structures and other facilities required to be above ground), subject to the terms, as more particularly set forth in the Declaration.

APN: 212-061-33-00

EXHIBIT “B”

FORM OF DEED

RECORDING REQUESTED BY

AND WHEN RECORDED MAIL TO:

The undersigned Grantor declares:  documentary transfer tax not shown pursuant to Section 11932 of the Revenue and Taxation Code, as amended

GRANT DEED

FOR VALUE RECEIVED, BMR-2282 FARADAY AVENUE LLC, a Delaware limited partnership (“Grantor”), grants to ISIS PHARMACEUTICALS, INC., a Delaware corporation (“Grantee”), all that certain real property (the “Property”) situated in the City of Carlsbad, County of San Diego, State of California, described on Exhibit A attached hereto and by this reference incorporated herein, subject to all covenants, conditions, easements, encumbrances and all other matters affecting the Property.

IN WITNESS WHEREOF, the undersigned has executed this Grant Deed dated as of                        , 20    .

BMR-2282 FARADAY AVENUE LLC,

a Delaware limited liability company

On                                             ,                    before me,                                                                                                                                                                         &nbs p;                                                                                                                                         , a Notary Public in and for said County and  State, personally appeared,                                                                                                                                                                        ;                                                                                                                                                                                                                           &nb sp;                                                                            , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

EXHIBIT A TO FORM OF DEED

DESCRIPTION OF PROPERTY

Real property in the City of Carlsbad, County of San Diego, State of California, described as follows:

Parcel A:

Lot 7 of Carlsbad Tract No. 84-9, according to Map thereof No. 11230, filed in the Office of the County Recorder of San Diego County, May 10, 1985, as instrument no. 85-165947 of Official Records, and a portion of Parcel D of Parcel Map No. 14461, filed in the Office of the County Recorder of San Diego County, September 12, 1986 as instrument no. 86-402406 of Official Records; all in the City of Carlsbad, County of San Diego, State of California, more particularly described as follows:

Commencing at the Northwest corner of said Parcel D of Parcel Map No. 14461; thence along the Westerly property line of said Parcel D, South 18 degrees 26’06” East, 278.43 feet, to the true point of beginning; thence leaving said Westerly line North 50 degrees 30’00” East, 145.33 feet; thence North 70 degrees 12’00” East, 92.23 feet; thence South 39 degrees 30’48” East, 256.97 feet; thence South 50 degrees 29’12” West, 83.13 feet; thence South 71 degrees 33’54” West, 242.68 feet to a point on said Westerly property line; thence North 18 degrees 26’06” West, 215.24 feet to the true point of beginning.

Said  property being described as “Parcel C” in a Certificate of Compliance recorded on April 21, 2003 as instrument no. 2003-0459192 of Official Records of said San Diego County.

Parcel B:

A non-exclusive easement on, over and under the common areas as defined and shown on those certain amended and restated declaration of establishment of Covenants, Conditions and Restrictions, and Reservation of Easements (the “Declarations”), dated June 28, 1988 and recorded August 8, 1988 as instrument no. 88-387705 of Official Records, for the purposes of ingress and egress, parking, the construction, installation, maintenance, removal replacements, operation and use of utilities, including but not limited to sewers, water and gas pipes, drainage lines and systems, electric power, conduit lines and wiring, telephone, conduits, lines and wires and other utilities, public or private, beneath the ground surface (except vaults, vents, access, structures and other facilities required to be above ground), subject to the terms, as more particularly set forth in the Declaration.

APN: 212-061-33-00

EXHIBIT “C”

(Bill of Sale and Assignment and Assumption of Warranties)

THIS BILL OF SALE AND ASSIGNMENT AND ASSUMPTION OF WARRANTIES (the “Assignment”) made as of this [        ] day of                   , 20     between BMR-2282 FARADAY AVENUE LLC, a Delaware limited liability company (the “Assignor”), and ISIS PHARMACEUTICALS, INC., a Delaware corporation (“Assignee”). Assignor and Assignee are parties to the Agreement of Purchase and Sale dated               ,              between Assignor and Assignee (the “Agreement”).  Capitalized terms used herein but not otherwise defined shall have the meanings ascribed thereto in the Agreement.

1.             Assignor is the owner of that certain real property located in Carlsbad, California, more particularly described in Exhibit A attached hereto (the “Real Property”).  Assignor hereby assigns, transfers, sets over and conveys to Assignee all of Assignor’s right, title and interest, in, to, and under the following, in each case to the extent assignable without payment or fee: all warranties, indemnities, guaranties (express or implied), applications, permits, authorizations, approvals and licenses (to the extent applicable in any way to the above referenced Real Property and any improvements thereon (collectively, the “Warranties”).