Formation And Performance Agreement

FORMATION AND PERFORMANCE AGREEMENT


THIS FORMATION AND PERFORMANCE AGREEMENT (this "Formation Agreement") is made and entered into effective as of June 6, 2000 by and between ICOS CORPORATION, a Delaware corporation ("ICOS"), and TEXAS BIOTECHNOLOGY CORPORATION, a Delaware corporation ("TBC") (separately, a "Party," and collectively, the "Parties").


RECITALS


A. ICOS-ET-LP LLC, a Washington limited liability company ("ICOS-LP"), and TBC, both as limited partners, and ICOS-ET-GP LLC, a Washington limited liability company ("ICOS-GP"), and TBC-ET, Inc., a Delaware corporation ("TBC- GP"), both as general partners, will form ICOS-Texas Biotechnology L.P., a Delaware limited partnership (the "Partnership"), and will execute the Agreement of Limited Partnership of the Partnership, to be dated effective as of the date hereof (the "Partnership Agreement"). Capitalized terms used but not otherwise defined in this Formation Agreement shall have the meanings set forth in the Partnership Agreement.


B. ICOS-LP and ICOS-GP are wholly owned by ICOS. TBC-GP is wholly owned by TBC.


C. ICOS-LP, ICOS-GP, TBC-GP and any Affiliate of a Party who acquires a Partnership Interest are hereafter referred to collectively as the "Subsidiaries" and individually as a "Subsidiary." ICOS and TBC are hereafter referred to collectively as the "Parent Companies" and individually as a "Parent Company."


D. TBC intends to transfer to the Partnership the Endothelin License Agreement, pursuant to which the Partnership (as licensee) will receive a license to the Background Technology, in return for a forty-nine and nine-tenths percent (49.9%) Partnership Interest.


E. TBC further intends to contribute certain assets to TBC-GP and then cause TBC-GP to contribute all such assets to the Partnership within [ * ] of the effective date of its formation.


F. ICOS intends to contribute certain assets to ICOS-LP and ICOS-GP and then cause each of them to contribute all such assets to the Partnership within [ * ] of the effective date of its formation.


G. Each of TBC and ICOS intends to provide assurances to the other that it will cause its respective Subsidiaries to perform all obligations and duties as a Partner of the


[ * ] designates portions of this document that have been omitted pursuant to a request for confidential treatment filed separately with the Commission.


Partnership as provided in the Partnership Agreement and that it will cause its respective Subsidiaries or Affiliates who are providing services to the Partnership to perform all of their obligations and duties under any contracts with the Partnership, upon the terms set forth herein.


NOW, THEREFORE, in consideration of the mutual covenants of the Parties, each to the other, and of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:


AGREEMENT


1. Performance by the Subsidiaries


For so long as a Parent Company's Subsidiary owns a Partnership Interest in the Partnership, and thereafter for so long as a Subsidiary has an accrued but unperformed obligation to the Partnership pursuant to the Partnership Agreement, such Parent Company [ * ], to cause the Subsidiary to perform all of the Subsidiary's agreements, covenants and obligations under the Partnership Agreement, subject to the terms and conditions thereof. Each Parent Company [ * ] agreements with the Partnership to which the Subsidiaries or Affiliates are parties or become parties, regardless of when such agreements are created. Without limiting the generality of the foregoing, each Parent Company [ * ]. The Parties acknowledge and agree that each Parent Company [ * ] pursuant to the Partnership Agreement, and such other agreements to which the Subsidiary, or any of its Affiliates, and the Partnership are parties, and not with respect to the performance of the Subsidiary or Affiliate of any obligations or duties ...