UNITED STATES SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 4
| Delaware | 2834 | 77-0602661 | ||
|
(State or other jurisdiction of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
300 Third Street
John M. Maraganore, Ph.D.
Copies to:
|
Steven D. Singer, Esq.
Peter N. Handrinos, Esq. Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 (617) 526-6000 |
Danielle Carbone, Esq.
Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 (212) 848-4000 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date hereof.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. o
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under
the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier
effective registration statement for the same
offering.
o
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.
o
If this Form is a post-effective amendment filed
pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same
offering.
o
If delivery of the Prospectus is expected to be
made pursuant to Rule 434, please check the following
box.
o
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) is being filed solely for the purpose of filing exhibits, and no changes or additions are being made hereby to the prospectus that forms a part of the Registration Statement. Accordingly, the prospectus has been omitted from this filing.
PART II
INFORMATION NOT REQUIRED IN
PROSPECTUS
Item 13.
Other
Expenses of Issuance and Distribution.
The following table indicates the expenses to be
incurred in connection with the offering described in this
Registration Statement, other than underwriting discounts and
commissions, all of which will be paid by Alnylam. All amounts
are estimates, other than the SEC registration fee, the NASD
filing fee and the NASDAQ National Market listing fee.
Item 14.
Indemnification
of Directors and Officers.
Section 102 of the Delaware General
Corporation Law allows a corporation to eliminate the personal
liability of directors of a corporation to the corporation or
its stockholders for monetary damages for a breach of fiduciary
duty as a director, except where the director breached his duty
of loyalty, failed to act in good faith, engaged in intentional
misconduct or knowingly violated a law, authorized the payment
of a dividend or approved a stock repurchase in violation of
Delaware corporate law or obtained an improper personal benefit.
Alnylam has included such a provision in its Certificate of
Incorporation.
Section 145 of the General Corporation Law
of Delaware provides that a corporation has the power to
indemnify a director, officer, employee or agent of the
corporation and certain other persons serving at the request of
the corporation in related capacities against amounts paid and
expenses incurred in connection with an action or proceeding to
which he is or is threatened to be made a party by reason of
such position, if such person shall have acted in good faith and
in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, in any criminal
proceeding, if such person had no reasonable cause to believe
his conduct was unlawful; provided that, in the case of actions
brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to
which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the adjudicating
court determines that such indemnification is proper under the
circumstances.
Our Restated Certificate of Incorporation
includes a provision that eliminates the personal liability of
its directors for monetary damages for breach of fiduciary duty
as a director, except for liability:
II-1
These provisions are permitted under Delaware
law. Our Restated Certificate of Incorporation provides that:
The indemnification provisions contained in our
Restated Certificate of Incorporation and Amended and Restated
Bylaws are not exclusive of any other rights to which a person
may be entitled by law, agreement, vote of stockholders or
disinterested directors or otherwise.
In addition, we maintain insurance on behalf of
our directors and executive officers insuring them against any
liability asserted against them in their capacities as directors
or officers or arising out of such status.
Item 15.
Recent
Sales of Unregistered Securities.
Set forth below is information regarding shares
of common stock and preferred stock issued, and options and
warrants granted, by the Registrant within the past three years.
Also included is the consideration, if any, received by the
Registrant for such shares, options and warrants and information
relating to the section of the Securities Act, or rule of the
Securities and Exchange Commission under which exemption from
registration was claimed.
II-2
No underwriters were involved in the foregoing
sales of securities. The securities described in
paragraph 1 of Item 15 were issued to a combination of
foreign and U.S. investors in reliance upon exemptions from the
registration provisions of the Securities Act set forth in
Section 3(b) and Regulation S. The securities
described in paragraphs 2 through 9 of Item 15 were
issued to a combination of foreign and U.S. investors in
reliance upon exemptions from the registration provisions of the
Securities Act set forth in Section 4(2) or
Regulation S thereof relative to sales by an issuer not
involving any public offering, to the extent an exemption from
such registration was required. All purchasers of shares of our
convertible preferred stock described above represented to us in
connection with their purchase that they were accredited
investors and were acquiring the shares for investment and not
distribution, that they could bear the risks of the investment
and could hold the securities for an indefinite period of time.
Such purchasers received written disclosures that the securities
had not been registered under the Securities Act and that any
resale must be made pursuant to a registration or an available
exemption from such registration.
The issuance of stock options and the common
stock issuable upon the exercise of such options as described in
paragraph 10 of Item 15 were issued pursuant to
written compensatory plans or arrangements with our employees,
directors and consultants, in reliance on the exemption provided
by Rule 701 promulgated under the Securities Act.
All of the foregoing securities are deemed
restricted securities for purposes of the Securities Act. All
certificates representing the issued shares of common stock
described in this Item 15 included appropriate legends
setting forth that the securities had not been registered and
the applicable restrictions on transfer.
II-3
Item 16.
Exhibits
and Financial Statement Schedules.
(a)
Exhibits
II-4
(b)
Financial Statement Schedules
.
None
The undersigned registrant hereby undertakes to
provide to the underwriters at the closing specified in the
underwriting agreement certificates in such denominations and
registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers, and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is
therefore unenforceable. In the event that a claim for
indemnification by the registrant against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned registrant hereby undertakes that:
II-5
II-6
$
10,928
9,125
100,000
250,000
900,000
450,000
20,000
5,000
154,947
$
1,900,000
•
for any breach of the director’s duty of
loyalty to Alnylam or its stockholders;
•
for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law;
•
under section 174 of the Delaware General
Corporation Law regarding unlawful dividends and stock
purchases; or
•
for any transaction from which the director
derived an improper personal benefit.
•
we must indemnify our directors and officers to
the fullest extent permitted by Delaware law;
•
we may indemnify our other employees and agents
to the same extent that we indemnified our officers and
directors, unless otherwise determined by our Board of
Directors; and
•
we must advance expenses, as incurred, to our
directors and executive officers in connection with a legal
proceeding to the fullest extent permitted by Delaware law.
(1)
In July 2003, in connection with its
acquisition of Alnylam Europe, AG, the Registrant issued an
aggregate of 815,376 shares of its common stock to the
former stockholders of Ribopharma AG in exchange for the
outstanding shares of common stock of Alnylam Europe, AG and
issued 49,496 shares of its common stock to former holders of
Alnylam Europe, AG debt upon settlement of Alnylam Europe, AG
accrued interest.
(2)
In July 2003, the Registrant issued and sold an
aggregate of 3,000,010 shares of its Series A Preferred
Stock to a group of eight investors at a price per share of
$1.00. Upon the closing of this offering, these shares will
convert into 1,578,949 shares of common stock. These
investors consisted of Polaris Venture Partners III, Polaris
Entrepreneurs Fund III, Polaris Founders Fund III,
Abingworth BioVentures III A, Abingworth BioVentures III B,
Abingworth BioVentures III C, Abingworth BioVentures Executives
III and CHP II, L.P.
(3)
In July 2003, the Registrant issued and sold an
aggregate of 16,561,845 shares of its Series B Preferred
Stock to a group of 25 investors at a price per share of $2.50.
Upon the closing of this offering, these shares will convert
into 8,716,743 shares of common stock. These investors
consisted of Polaris Venture Partners III, Polaris Entrepreneurs
Fund III, Polaris Founders Fund III, Atlas Venture Fund V,
Atlas Venture Parallel Fund V-A, Atlas Venture Parallel Fund
V-B, Atlas Venture Entrepreneurs Fund V, Atlas Venture Fund VI,
Atlas Venture Entrepreneur Fund VI, Atlas Venture Fund VI GmbH,
Arch Venture Fund V, Arch Entrepreneurs Fund L.P., Arch V
Entrepreneurs Fund, L.P., Abingworth BioVentures III A,
Abingworth BioVentures III B, Abingworth BioVentures III C,
Abingworth BioVentures Executives III, Cambridge Science
Equities, CHP II, L.P., Phillip A. Sharp, Ph.D., Paul R.
Schimmel, Ph.D. and John G. Conley.
(4)
In July 2003, the Registrant issued an
aggregate of 881,845 shares of Series B Preferred Stock to
a group of three institutions in connection with a certain
license agreement. Upon the closing of this offering, these
shares will convert into 464,128 shares of common stock.
These institutions consisted of the Massachusetts Institute of
Technology, the Whitehead Institute for Biomedical Research and
Max Planck-Gesellschaft zur Förderung der Wissenschaften
e.V.
(5)
In July 2003, the Registrant assumed the
obligations of Alnylam U.S., Inc. under a warrant issued to
Silicon Valley Bank to purchase 25,000 shares of Series B
Preferred Stock at an exercise price
of $2.50 per share. Upon the closing of this
offering, this warrant will become exercisable for
13,157 shares of common stock at an exercise price of $4.75.
(6)
In September 2003, the Registrant issued and sold
an aggregate of 1,000,000 shares of its Series C
Preferred Stock to Merck & Co., Inc. at a price per
share of $5.00. Upon the closing of this offering, these shares
will convert into 526,315 shares of common stock.
(7)
In October 2003, the Registrant issued and sold
an aggregate of 504,825 shares of its Series C
Preferred Stock to a group of 17 investors at a price per share
of $5.00. Upon the closing of this offering, these shares will
convert into 265,697 shares of common stock. These
investors included Polaris Venture Partners III, Polaris
Entrepreneurs Fund III, Polaris Founders Fund III,
Atlas Venture Fund V, Atlas Venture Parallel Fund V-A,
Atlas Venture Parallel Fund V-B, Atlas Venture
Entrepreneurs Fund V, Atlas Venture Fund VI, Atlas
Venture Entrepreneur Fund VI, Atlas Venture Fund VI
GmbH, Arch Venture Fund V, Arch V Entrepreneurs Fund,
Abingworth BioVentures III A, Abingworth
BioVentures III B, Abingworth
BioVentures III C and Abingworth BioVentures
Executives III.
(8)
On March 11, 2004, the Registrant issued and
sold 1,666,667 shares of Series D Preferred Stock to Isis
Pharmaceuticals, Inc. at a price per share of $6.00. Upon the
closing of this offering, these shares will convert into
877,193 shares of common stock.
(9)
On March 30, 2004, the Registrant issued and
sold warrants to purchase an aggregate of 100,000 shares of
Series C Preferred Stock at an exercise price of $5.00 per
share to Lighthouse Capital Partners V, L.P. and Lighthouse
Capital Partners IV, L.P. Upon the closing of this offering,
these shares will convert into 52,630 shares of common
stock at an exercise price of $9.50.
(10)
Through April 30, 2004, the Registrant has
granted stock options under its stock option plans for an
aggregate of 1,987,167 shares of Common Stock (net of
exercises, expirations and cancellations) at exercise prices of
$.19 to $0.95 per share. Options to purchase 196,463 shares
of Common Stock have been exercised for an aggregate purchase
price of $133,987.
Exhibit
No.
Description
1.1*
Form of Underwriting Agreement
3.1
Certificate of Incorporation of the Registrant,
as amended
3.2*
Bylaws of the Registrant
3.3*
Restated Certificate of Incorporation of the
Registrant to be effective upon closing of the offering
3.4*
Amended and Restated Bylaws of the Registrant to
be effective upon closing of the offering
4.1*
Specimen certificate evidencing shares of common
stock
5.1*
Opinion of Hale and Dorr LLP
10.1*
2002 Employee, Director and Consultant Stock
Plan, as amended, together with forms of Incentive Stock Option
Agreement, Non-qualified Stock Option Agreement and Restricted
Stock Agreement
10.2*
2003 Employee, Director and Consultant Stock
Plan, as amended, together with forms of Incentive Stock Option
Agreement, Non-qualified Stock Option Agreement and Restricted
Stock Agreement
10.3*
2004 Stock Incentive Plan, together with forms of
Incentive Stock Option Agreement and Nonstatutory Stock Option
Agreement
10.4*
2004 Employee Stock Purchase Plan
10.5*
Registration Rights Agreement dated as of
July 31, 2003 and amended as of October 9, 2003 and
February 26, 2004 by and among the Registrant and the
parties listed on Schedule A thereto
10.6*
Investor Rights Agreement dated as of
September 8, 2003 and amended on February 26, 2004 by
and between the Registrant and Merck & Co., Inc.
10.7*
Letter Agreement between the Registrant and
John M. Maraganore, Ph.D. dated October 30, 2002
10.8*
Letter Agreement between the Registrant and
Vincent J. Miles, Ph.D. dated June 16, 2003
10.9*
Letter Agreement between the Registrant and
Thomas R. Ulich, M.D. dated June 15, 2003
10.10*
Letter Agreement between the Registrant and
Barry E. Greene dated September 29, 2003
10.11*
Loan and Security Agreement by and between
Lighthouse Capital Partners V, L.P. and the Registrant dated as
of March 26, 2004, together with the Negative Pledge
Agreement by and between Lighthouse Capital Partners V, L.P. and
the Registrant dated as of March 26, 2004.
10.12*
Warrants to Purchase Preferred Stock effective as
of March 30, 2004 issued to Lighthouse Capital Partners V,
L.P. and Lighthouse Capital Partners IV, L.P.
10.13*
Warrant to Purchase Stock dated December 18,
2002 issued to Silicon Valley Bank
10.14*
Lease, dated as of August 5, 2003, between
the Registrant and ARE-770/784/790 Memorial Drive, LLC, as
amended
10.15*
Lease, dated as of September 26, 2003 by and
between the Registrant and Three Hundred Third Street LLC
10.16†
License Agreement between Cancer Research
Technology Limited and Alnylam U.S., Inc. dated July 18,
2003
10.17†*
License Agreement between the Carnegie
Institution of Washington and Alnylam Europe, AG, effective
March 1, 2002, as amended by letter agreements dated
September 2, 2002 and October 28, 2003.
10.18†
License Agreement by and between the Cold Spring
Harbor Laboratory and Alnylam U.S., Inc. dated December 30,
2003
10.19†
Co-exclusive License Agreement between Garching
Innovation GmbH and Alnylam U.S., Inc. dated December 20,
2002, as amended by Amendment dated July 8, 2003, together
with Indemnification Agreement by and between Garching
Innovation GmbH and Alnylam Pharmaceuticals, Inc. effective as
of April 1, 2004
10.20†
Co-exclusive License Agreement between Garching
Innovation GmbH and Alnylam Europe, AG dated July 30, 2003
Exhibit
No.
Description
10.21†
Agreement between The Board of Trustees of the
Leland Stanford Junior University and Alnylam U.S., Inc.
effective as of September 17, 2003
10.22†
Research Collaboration and License Agreement by
and among Merck & Co., Inc., Alnylam U.S., Inc. and
Registrant dated September 8, 2003
10.23†
Sponsored Research Agreement among Mayo
Foundation for Medical Education and Research, Mayo Clinic
Jacksonville and Alnylam Pharmaceuticals, Inc. effective as of
October 1, 2003
10.24†
Strategic Collaboration and License Agreement
effective as of March 11, 2004 between Isis
Pharmaceuticals, Inc. and the Registrant
10.25*
Investor Rights Agreement entered into as of
March 11, 2004 by and between the Registrant and Isis
Pharmaceuticals, Inc.
10.26*
Agreement between the Registrant and Perini
Building Company, Inc. effective as of March 26, 2004
21.1*
Subsidiaries of the Registrant
23.1*
Consent of PricewaterhouseCoopers LLP,
Independent Auditors
23.2*
Consent of PricewaterhouseCoopers Gesellschaft
mit beschränkter Haftung
Wirtschaftsprüfungsgesellschaft, Independent Auditors
23.3*
Consent of Hale and Dorr LLP (included in
Exhibit 5.1)
24.1*
Power of Attorney
*
Previously filed.
†
Confidential treatment requested as to certain
portions, which portions have been filed separately with the
Securities and Exchange Commission.
Item 17.
Undertakings.
(1) For purposes of determining any
liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b) (1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any
liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Cambridge,
Commonwealth of Massachusetts on this 20th day of May, 2004.
II-7
ALNYLAM PHARMACEUTICALS, INC.
By:
/s/ JOHN M. MARAGANORE
John M. Maraganore, Ph.D.
President and Chief Executive Officer
Signature
Title
Date
/s/ JOHN M. MARAGANORE
JOHN M. MARAGANORE, PH.D.
President, Chief Executive Officer and
Director
(Principal Executive Officer)
May 20, 2004
/s/ BARRY E. GREENE
BARRY E. GREENE
Chief Operating Officer and Treasurer (Principal
Financial and Accounting Officer)
May 20, 2004
*
PETER BARRETT, PH.D.
Director
May 20, 2004
*
JOHN BERRIMAN
Director
May 20, 2004
*
JOHN CLARKE
Director
May 20, 2004
*
PAUL SCHIMMEL, PH.D.
Director
May 20, 2004
*
PHILLIP A. SHARP, PH.D.
Director
May 20, 2004
*
KEVIN STARR
Director
May 20, 2004
*
CHRISTOPH H. WESTPHAL, M.D., PH.D.
Director
May 20, 2004
*By:
/s/ JOHN M. MARAGANORE
JOHN M. MARAGANORE, PH.D.
Attorney-in-fact
EXHIBIT INDEX
Exhibit
No.
Description
1.1*
Form of Underwriting Agreement
3.1
Certificate of Incorporation of the Registrant,
as amended
3.2*
Bylaws of the Registrant
3.3*
Restated Certificate of Incorporation of the
Registrant to be effective upon closing of the offering
3.4*
Amended and Restated Bylaws of the Registrant to
be effective upon closing of the offering
4.1*
Specimen certificate evidencing shares of common
stock
5.1*
Opinion of Hale and Dorr LLP
10.1*
2002 Employee, Director and Consultant Stock
Plan, as amended, together with forms of Incentive Stock Option
Agreement, Non-qualified Stock Option Agreement and Restricted
Stock Agreement
10.2*
2003 Employee, Director and Consultant Stock
Plan, as amended, together with forms of Incentive Stock Option
Agreement, Non-qualified Stock Option Agreement and Restricted
Stock Agreement
10.3*
2004 Stock Incentive Plan, together with forms of
Incentive Stock Option Agreement and Nonstatutory Stock Option
Agreement
10.4*
2004 Employee Stock Purchase Plan
10.5*
Registration Rights Agreement dated as of
July 31, 2003 and amended as of October 9, 2003 and
February 26, 2004 by and among the Registrant and the
parties listed on Schedule A thereto
10.6*
Investor Rights Agreement dated as of
September 8, 2003 and amended on February 26, 2004 by
and between the Registrant and Merck & Co., Inc.
10.7*
Letter Agreement between the Registrant and
John M. Maraganore, Ph.D. dated October 30, 2002
10.8*
Letter Agreement between the Registrant and
Vincent J. Miles, Ph.D. dated June 16, 2003
10.9*
Letter Agreement between the Registrant and
Thomas R. Ulich, M.D. dated June 15, 2003
10.10*
Letter Agreement between the Registrant and
Barry E. Greene dated September 29, 2003
10.11*
Loan and Security Agreement by and between
Lighthouse Capital Partners V, L.P. and the Registrant dated as
of March 26, 2004, together with the Negative Pledge
Agreement by and between Lighthouse Capital Partners V, L.P. and
the Registrant dated as of March 26, 2004.
10.12*
Warrants to Purchase Preferred Stock effective as
of March 30, 2004 issued to Lighthouse Capital Partners V,
L.P. and Lighthouse Capital Partners IV, L.P.
10.13*
Warrant to Purchase Stock dated December 18,
2002 issued to Silicon Valley Bank
10.14*
Lease, dated as of August 5, 2003, between
the Registrant and ARE-770/784/790 Memorial Drive, LLC, as
amended
10.15*
Lease, dated as of September 26, 2003 by and
between the Registrant and Three Hundred Third Street LLC
10.16†
License Agreement between Cancer Research
Technology Limited and Alnylam U.S., Inc. dated July 18,
2003
10.17†*
License Agreement between the Carnegie
Institution of Washington and Alnylam Europe, AG, effective
March 1, 2002, as amended by letter agreements dated
September 2, 2002 and October 28, 2003.
10.18†
License Agreement by and between the Cold Spring
Harbor Laboratory and Alnylam U.S., Inc. dated December 30,
2003
10.19†
Co-exclusive License Agreement between Garching
Innovation GmbH and Alnylam U.S., Inc. dated December 20,
2002, as amended by Amendment dated July 8, 2003 together
with Indemnification Agreement by and between Garching
Innovation GmbH and Alnylam Pharmaceuticals, Inc. effective
April 1, 2004
Exhibit
No.
Description
10.20†
Co-exclusive License Agreement between Garching
Innovation GmbH and Alnylam Europe, AG dated July 30, 2003
10.21†
Agreement between The Board of Trustees of the
Leland Stanford Junior University and Alnylam U.S., Inc.
effective as of September 17, 2003
10.22†
Research Collaboration and License Agreement by
and among Merck & Co., Inc., Alnylam U.S., Inc. and
Registrant dated September 8, 2003
10.23†
Sponsored Research Agreement among Mayo
Foundation for Medical Education and Research, Mayo Clinic
Jacksonville and Alnylam Pharmaceuticals, Inc. effective as of
October 1, 2003
10.24†
Strategic Collaboration and License Agreement
effective as of March 11, 2004 between Isis
Pharmaceuticals, Inc. and the Registrant
10.25*
Investor Rights Agreement entered into as of
March 11, 2004 by and between the Registrant and Isis
Pharmaceuticals, Inc.
10.26*
Agreement between the Registrant and Perini
Building Company, Inc. effective as of March 26, 2004
21.1*
Subsidiaries of the Registrant
23.1*
Consent of PricewaterhouseCoopers LLP,
Independent Auditors
23.2*
Consent of PricewaterhouseCoopers Gesellschaft
mit beschränkter Haftung
Wirtschaftsprüfungsgesellschaft, Independent Auditors
23.3*
Consent of Hale and Dorr LLP (included in
Exhibit 5.1)
24.1*
Power of Attorney
*
Previously filed.
†
Confidential treatment requested as to certain
portions, which portions have been filed separately with the
Securities and Exchange Commission.
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
ALNYLAM HOLDING CO.
FIRST: The name of the Corporation is Alnylam Holding Co.
SECOND: The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 3,000 shares of Common Stock, $0.01 par value per share.
The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware.
FIFTH: The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
John Conley 790 Memorial Drive
Cambridge, MA 02139
|
SIXTH: In furtherance of and not in limitation of powers conferred by
statute, it is further provided:
1. Election of directors need not be by written ballot.
2. The Board of Directors is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation.
SEVENTH: Except to the extent that the General Corporation Law of Delaware prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty, no director of the Corporation shall be personally liable to the Corporation or its stockholders for
monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.
EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of Delaware, as amended from time to
time, indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he or she is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer, partner, employee or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by or on behalf of an Indemnitee in connection with such
action, suit or proceeding and any appeal therefrom.
As a condition precedent to an Indemnitee's right to be indemnified, the Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving such Indemnitee for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to the Indemnitee.
In the event that the Corporation does not assume the defense of any action, suit, proceeding or investigation of which the Corporation receives notice under this Article, the Corporation shall pay in advance of the final disposition of such matter any expenses (including attorneys' fees) incurred by an Indemnitee in defending a civil or criminal action, suit, proceeding or investigation or any appeal therefrom; provided, however, that the payment of such expenses incurred by an Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Article, which undertaking shall be accepted without reference to the financial ability of the Indemnitee to make such repayment; and further provided that no such advancement of expenses shall be made under this Article if it is determined that (i) the Indemnitee did not act in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Corporation, or (ii) with respect to any criminal action or proceeding, the Indemnitee had reasonable cause to believe his conduct was unlawful.
The Corporation shall not indemnify an Indemnitee pursuant to this Article in connection with a proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. In addition, the Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an
Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund such indemnification payments to the Corporation to the extent of such insurance reimbursement.
All determinations hereunder as to the entitlement of an Indemnitee to indemnification or advancement of expenses shall be made in each instance (a) by a majority vote of the directors of the Corporation consisting of persons who are not at that time parties to the action, suit or proceeding in question ("disinterested directors"), whether or not a quorum, (b) by a committee of disinterested directors designated by majority vote of disinterested directors, whether or not a quorum, (c) if there are no disinterested directors, or if the disinterested directors so direct, by independent legal counsel (who may, to the extent permitted by law, be regular legal counsel to the Corporation) in a written opinion, or (d) by the stockholders of the Corporation.
The rights provided in this Article (i) shall not be deemed exclusive
of any other rights to which an Indemnitee may be entitled under any law,
agreement or vote of stockholders or disinterested directors or otherwise, and
(ii) shall inure to the benefit of the heirs, executors and administrators of
the Indemnitees. The Corporation may, to the extent authorized from time to time
by its Board of Directors, grant indemnification rights to other employees or
agents of the Corporation or other persons serving the Corporation and such
rights may be equivalent to, or greater or less than, those set forth in this
Article.
NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation.
[SIGNATURE ON FOLLOWING PAGE]
EXECUTED at Cambridge, Massachusetts, on May 5, 2003.
/s/ John Conley
----------------------------
John Conley
Incorporator
|
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALNYLAM HOLDING CO.
Pursuant to Section 242
of the General Corporation Law of
the State of Delaware
ALNYLAM HOLDING CO. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "General Corporation Law"), hereby certifies as follows:
The Board of Directors of the Corporation duly adopted, pursuant to Sections 141(f) and 242 of the General Corporation Law of Delaware, resolutions setting forth an amendment to the Certificate of Incorporation of the Corporation and declaring said amendment to be advisable. The Stockholders of the Corporation duly approved said proposed amendment by written consent in accordance with Sections 228 and 242 of the General Corporation Law of Delaware. The resolutions setting forth the amendment are as follows:
RESOLVED: That Article FOURTH of the Certificate of Incorporation be and hereby is deleted in its entirety and the following Article FOURTH is inserted in lieu thereof:
FOURTH: The total number of shares of all classes of stock which the Corporation has authority to issue is 51,911,480 shares, consisting of 32,239,392 shares of Common Stock, par value $.0001 per share (the "Common Stock"), 3,000,010 shares of Series A Convertible Preferred Stock, par value $.0001 per share (the "Series A Preferred Stock"), and 16,672,078 shares of Series B Convertible Preferred Stock, $.0001 par value per share (the "Series B Preferred Stock"). The Series A Preferred Stock and Series B Preferred Stock are sometimes hereinafter collectively referred to as the "Preferred Stock."
The powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of each class or series of stock of the Corporation shall be as follows:
Section 1. Liquidation Rights.
(a) Liquidation Payments.
(i) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of the then outstanding shares of Preferred Stock shall be entitled to be paid first out of the assets of the
Corporation available for distribution to holders of the Corporation's capital stock of all classes an amount equal to (a) in the case of the Series A Preferred Stock, $1.00 per share (subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such series of Preferred Stock) and (b) in the case of the Series B Preferred Stock, $2.50 per share (subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such series of Preferred Stock), plus (in the case of all series of Preferred Stock) all dividends declared thereon but unpaid and any and all other amounts owing with respect to such shares, as of and including the date full payment shall be tendered to the holders of the Preferred Stock with respect to such liquidation, dissolution or winding up. Such amount is sometimes hereinafter referred to as the "Preference Amount."
If the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Preferred Stock of the entire Preference Amount so distributable to them, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Preferred Stock in proportion to the full Preference Amount each such holder is otherwise entitled to receive under this Section 1(a)(i).
No payment shall be made with respect to the Common Stock unless and until full payment has been made to the holders of the Preferred Stock of the full Preference Amount.
(ii) After all payments shall have been made in full to the holders of the Preferred Stock as contemplated by Section 1(a)(i) above, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Preferred Stock so as to be available for such payments, the remaining assets available for distribution shall be distributed among the holders of the Common Stock ratably in proportion to the number of shares of Common Stock then held by them.
(iii) Upon any such liquidation, dissolution or winding up, any holder of Preferred Stock may elect to receive, in lieu of the Preference Amount otherwise payable to it pursuant to Section 1.1(a)(i), an amount per share of Preferred Stock as would have been payable had such share been converted to Common Stock immediately prior to such liquidation, dissolution or winding up, plus all dividends declared but unpaid on each such share of Preferred Stock to and including the date full payment shall be tendered to the holders of the Preferred Stock with respect to such liquidation, dissolution or winding up.
(iv) Upon conversion of shares of Preferred Stock into shares of Common Stock pursuant to Section 2 below, the holder of such Common Stock shall not be entitled to any preferential payment or distribution in case of any liquidation, dissolution or winding up, but shall share ratably in any distribution of the assets of the Corporation to all the holders of Common Stock.
(v) The amounts payable with respect to shares of Preferred Stock under this Section 1(a) are sometimes hereinafter referred to as "Liquidation Payments."
(b) Distributions Other than Cash. The amount deemed
distributed to the holders of Preferred Stock upon any liquidation, dissolution,
or winding-up (including any transaction treated as such pursuant to Section
1(c)), and the value of the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock (as defined below), if
distributed or received, as the case may be, in any form of property (tangible
or intangible) other than cash shall be the fair market value of such property.
The term "fair market value" or "fair value" means, with respect to any
security, its Market Price (as defined below), and with respect to any property
or assets other than cash or securities, the fair value thereof determined in
good faith jointly by the Corporation (including the approval of a director
nominated by holders of Common Stock) and the Requisite Holders (as defined
below); provided, however, that if the parties are not able to agree within a
reasonable period of time (not to exceed thirty (30) days) what amount
constitutes fair value, then the fair value will be determined pursuant to the
Arbitration Procedure (as defined below). The term "Requisite Holders" means the
holders of at least two-thirds in voting power of the then outstanding Preferred
Stock. The term "Market Price" means, as to any security, the average of the
closing prices of such security's sales on all United States securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 30 days consisting of the thirty day period ending
three days prior to the date as of which Market Price is being determined. If at
any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the Market
Price of such security shall be the fair value thereof as determined in good
faith jointly by the Corporation (including the approval of a director nominated
by holders of Common Stock) and the Requisite Holders; provided, however, that
if such parties are not able to agree within a reasonable period of time (not to
exceed ten (10) days) what amount constitutes the Market Price, then the Market
Price shall be determined pursuant to the Arbitration Procedure. The term
"Arbitration Procedure" means the following procedure to determine the fair
value or the Market Price, as applicable (the "valuation amount"). The valuation
amount shall be determined by an investment banking firm of national
recognition, which firm shall be reasonably acceptable to the Corporation and
the Requisite Holders. If the Corporation and the Requisite Holders are unable
to agree upon an acceptable investment banking firm within ten (10) days after
the date either party proposed that one be selected, the investment banking firm
will be selected by an arbitrator located in the City of Boston, Massachusetts,
selected by the American Arbitration Association (or if such organization ceases
to exist, the arbitrator shall be chosen by a court of competent jurisdiction).
The arbitrator shall select the investment banking firm (within ten (10) days of
his appointment) from a list, jointly prepared by the Corporation and the
Requisite Holders, of not more than six investment banking firms of national
standing in the United States, of which no more than three may be named by the
Corporation and no more than three may be named by the Requisite Holders. The
arbitrator may consider, within the ten-day period allotted, arguments from the
parties regarding which investment banking firm to choose, but the selection by
the
arbitrator shall be made in its sole discretion from the list of six. The determination of the final valuation amount by such investment banking firm shall be final and binding upon the parties. The Corporation shall pay one-half of the fees and expenses of the investment banking firm and arbitrator (if any) used to determine the valuation amount and the holders of the Preferred Stock shall pay the other half of such fees and expenses (allocated among them pro rata based on the number of shares of Preferred Stock, on an as-converted basis, then held by each of them). If required by any such investment banking firm or arbitrator, the Corporation and the holders of the Preferred Stock shall execute a retainer and engagement letter containing reasonable terms and conditions, including customary provisions concerning the rights of indemnification and contribution by the Corporation and the holders of the Preferred Stock in favor of such investment banking firm or arbitrator and its officers, directors, partners, employees, agents and affiliates.
(c) Merger as Liquidation, etc. The merger or
consolidation of the Corporation into or with another corporation (except one in
which the holders of capital stock of the Corporation immediately prior to such
merger or consolidation continue to hold a majority in voting power of the
capital stock of the surviving corporation, in which case the provisions of
Section 2(h) shall apply), or the sale of all or substantially all of the assets
of the Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 1 with respect
to the Preferred Stock, unless the holders of at least two-thirds in voting
power of the then outstanding shares of Preferred Stock elect to the contrary;
such election to be made by giving notice thereof to the Corporation at least
three days before the effective date of such event. If such notice is given with
respect to the Preferred Stock, the provisions of Section 2(h) shall apply.
Unless such election is made with respect to the Preferred Stock, any amounts
received by the holders of Preferred Stock as a result of such merger or
consolidation shall be deemed to be applied toward, and all consideration
received by the Corporation in such asset sale together with all other available
assets of the Corporation shall be distributed toward, the Liquidation Payments.
(d) Notice. In the event the Corporation shall propose to
undertake any liquidation, dissolution or winding up of the affairs of the
Corporation (including any merger, consolidation or sale of assets which may be
deemed to be a liquidation, dissolution or winding up of the affairs of the
Corporation under Section 1(c)), the Corporation shall, within ten (10) days
after the date the Board of Directors approves such action or twenty (20) days
prior to any stockholders' meeting called to approve such action, whichever is
earlier, give each holder of Preferred Stock initial written notice of the
proposed action. Such initial written notice shall describe the material terms
and conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of the Preferred Stock and of
Common Stock upon consummation of the proposed action and the proposed date of
delivery thereof. If any material change in the facts set forth in the initial
notice shall occur, the Corporation shall promptly give each holder of Preferred
Stock written notice of such material change. The Corporation shall not
consummate any such proposed liquidation, dissolution or winding up before the
expiration of thirty (30) days after the mailing of the initial notice or twenty
(20) days after the mailing of any subsequent written notice, whichever is
later, provided that any such 30-day or 20-day period may be shortened or waived
upon the written consent of the holders of at least two-thirds in voting power
of the outstanding shares of Preferred Stock. Any holder of
outstanding shares of Preferred Stock may waive any notice required by this
Section by a written instrument specifically indicating such waiver.
Section 2. Conversion. The holders of Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert; Conversion Price. Each share of Preferred Stock shall be convertible, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Preferred Stock, into such number of fully paid and nonassessable shares of Common Stock as is determined in accordance with the following:
(i) in the case of the Series A Preferred Stock, by dividing $1.00 by the Series A Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series A Preferred Stock without the payment of any additional consideration by the holder thereof (the "Series A Conversion Price") shall initially be $1.00 per share of Common Stock. Such initial Series A Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series A Preferred Stock is convertible, as hereinafter provided.
(ii) in the case of the Series B Preferred Stock, by dividing $2.50 by the Series B Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment of any additional consideration by the holder thereof (the "Series B Conversion Price") shall initially be $2.50 per share of Common Stock. Such initial Series B Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series B Preferred Stock is convertible, as hereinafter provided.
Each of the Series A Conversion Price and the Series B Conversion is sometimes hereinafter referred to as a "Conversion Price."
The right of conversion with respect to any shares of Preferred Stock which shall have been called for redemption under Section 6 hereof shall terminate at the close of business on the day fixed for redemption unless the Corporation shall default in the payment of the redemption price, in which case the right of conversion with respect to such shares shall continue unless and until such redemption price is paid in full.
(b) Automatic Conversion.
(i) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price then in effect upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the public at an offering price per share
(prior to underwriters' discounts and commissions) of not less than $7.50 (as adjusted to reflect any stock dividends, distributions, combinations, reclassifications or other like transactions effected by the Corporation in respect of its Common Stock) and with gross proceeds to the Corporation of not less than $25,000,000 (a "Qualified Public Offering"), in the event of which offering the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until the closing of such offering.
(ii) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price then in effect upon the written election of the holders of not less than two-thirds in voting power of the then outstanding shares of Preferred Stock to require such mandatory conversion.
(c) Mechanics of Automatic Conversions. Upon the occurrence of an event specified in Section 2(b), the Preferred Stock of the applicable series shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that all holders of shares of Preferred Stock being converted shall be given written notice of the occurrence of the event specified in Section 2(b) triggering such conversion, including the date such event occurred (the "Mandatory Conversion Date"), and the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation (which agreement will not require a bond) to indemnify the Corporation from any loss incurred by it in connection therewith. On the Mandatory Conversion Date, all rights with respect to the Preferred Stock so converted shall terminate, except any of the rights of the holder thereof, upon surrender of the holder's certificate or certificates therefor, to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted, together with cash in an amount equal to all dividends declared but unpaid on, and any and all other amounts owing with respect to, the shares of Preferred Stock converted to and including the time of conversion. Upon the automatic conversion of the Preferred Stock, the holders of such Preferred Stock shall surrender the certificates representing such shares at the office of the Corporation or of its transfer agent. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by the holder's attorney duly authorized in writing. Upon surrender of such certificates there shall be issued and delivered to such holder, or to such holder's nominee or nominees promptly at such office, a certificate or certificates for the number of shares of Common Stock into which the shares of Preferred Stock surrendered were convertible on the date on which such automatic conversion occurred, together with cash in an amount equal to all dividends declared but unpaid on, and any and all other amounts owing with respect to, the shares of Preferred Stock converted to and including the time of conversion. Upon the automatic conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional share of
Common Stock shall be issued. In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the Mandatory Conversion Date, as reasonably determined by the Board of Directors in good faith (notwithstanding the provisions of Section 1(b)).
(d) Mechanics of Optional Conversions. Before any holder
of Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate or certificates therefor at
the office of the Corporation or of any transfer agent for the Preferred Stock,
and shall give written notice to the Corporation at such office that the holder
elects to convert the same and shall state therein the holder's name or the name
or names of the holder's nominees in which the holder wishes the certificate or
certificates for shares of Common Stock to be issued. On the date of conversion,
all rights with respect to the Preferred Stock so converted shall terminate,
except any of the rights of the holder thereof, upon surrender of the holder's
certificate or certificates therefor, to receive certificates for the number of
shares of Common Stock into which such Preferred Stock has been converted and
cash in an amount equal to all dividends declared but unpaid on, and any and all
other amounts owing with respect to, the shares of Preferred Stock being
converted to and including the time of conversion. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon the optional conversion
of the Preferred Stock of any series, all shares of Preferred Stock being
converted by any holder thereof shall be aggregated for the purpose of
determining the number of shares of Common Stock to which such holder shall be
entitled, and no fractional share of Common Stock shall be issued. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of the Common Stock on the date of conversion, as reasonably determined by
the Board of Directors in good faith (notwithstanding the provisions of Section
1(b)). The Corporation shall, promptly after surrender of the certificate or
certificates for conversion, issue and deliver at such office to such holder of
Preferred Stock, or to the holder's nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid, together with cash in lieu of any fraction of a share
and cash in an amount equal to all dividends declared but unpaid thereon and any
and all other amounts owing with respect thereto at such time. Unless otherwise
specified by the holder in the written notice of conversion, such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.
(e) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this
Section 2(e), the following definitions shall apply:
(1) "Option" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities.
(2) "Original Issue Date" shall mean with respect to any series of Preferred Stock the first date on which a share of Preferred Stock of such series was issued.
(3) "Convertible Securities" shall mean any evidences of indebtedness, shares of capital stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 2(e)(iii), deemed to be issued) by the Corporation after the Original Issue Date, other than:
(A) shares of Common Stock issued or issuable upon conversion of shares of Preferred Stock;
(B) up to 3,250,000 shares of Common Stock issued or issuable to employees, consultants or directors of the Corporation pursuant to a stock purchase or stock option plan or other employee stock bonus arrangement approved by a majority of the Corporation's Board of Directors, which majority includes at least two of the Preferred Stock Directors (as hereinafter defined) (such vote, a "Majority Directors Vote"); and provided that such number may be adjusted upward by a Majority Directors Vote;
(C) securities issued in connection with capital leases, bank financing or other similar transactions with a non-equity financing purpose, in each case as approved by a Majority Directors Vote;
(D) securities issued in connection with licensing or strategic alliance transactions, in each case as approved by a Majority Directors Vote;
(E) securities issued pursuant to the acquisition of another corporation or other entity by the Corporation by merger, purchase of substantially all of the assets, or other reorganization whereby the Corporation acquires not less than 51% of the voting power of such corporation or other entity in a transaction approved by a Majority Directors Vote;
(F) up to 1,000,000 shares of Series A Preferred Stock issued or issuable at a price not less than $1.00 per share pursuant to a Series A and Series B Convertible Preferred Stock Purchase Agreement to be entered into, and performed by, the Corporation with certain existing investors of the Corporation and Abingworth Management Limited;
(G) shares of Common Stock issued or issuable at any time to holders of capital stock of Ribopharma AG ("Ribopharma") pursuant to the Share
Exchange Agreement dated July 3, 2003 among the Corporation, Alnylam Pharmaceuticals, Inc. ("Alnylam"), Ribopharma and the stockholders of Ribopharma (the "Share Exchange Agreement");
(H) up to 898,173 shares of Series B Preferred Stock issued to Garching Innovation GmbH ("Garching"), Massachusetts Institute of Technology ("MIT"), Whitehead Institute for Biomedical Research ("Whitehead Institute") and Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e.V ("Max-Planck") pursuant to license agreements between such entities and Alnylam;
(I) shares of capital stock of the Corporation issued to University of Massachusetts Medical School ("UMASS") pursuant to license agreements between the Corporation and UMASS, in each case as approved by a Majority Directors Vote;
(J) shares of Common Stock issued in connection with a Qualified Public Offering; and
(K) up to 94,044 shares of Common Stock issued to Abingworth Bioventures III A LP, Abingworth Bioventures III B LP, Abingworth Bioventures III C LP and Abingworth Bioventures III Executives LP (the "Lenders") pursuant to Section 8.2 of the Loan Agreement, dated April 4, 2003, between the Lenders and Ribopharma and the Assignment of Loan among Ribopharma, the Corporation and the Lenders dated on or about the date hereof.
(ii) No Adjustment of Conversion Price. Except as
set forth in Section 2(e)(vi), no adjustment in the number of shares of Common
Stock into which any series of Preferred Stock is convertible shall be made, by
adjustment in the applicable Conversion Price for such series in respect of the
issuance of Additional Shares of Common Stock, (a) unless the consideration per
share for an Additional Share of Common Stock (determined pursuant to Section
2(e)(v)) issued or deemed to be issued by the Corporation is less than the
applicable Conversion Price for such series in effect on the date of, and
immediately prior to, the issue of such Additional Shares of Common Stock or (b)
if prior to such issuance or within twenty (20) days thereafter the Corporation
receives notice from the holders of at least two-thirds of the outstanding
shares of such series of Preferred Stock that no such adjustment in the
Conversion Price for such series shall be made.
(iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock
(1) Options and Convertible Securities. In the event the Corporation at any time or from time to time after the Original Issue Date for any series of Preferred Stock shall issue any Options (excluding for all purposes of this Section 2(e)(iii)(1) Options excluded from the definition of Additional Shares of Common Stock in Section 2(e)(i)(4)(B)) or Convertible Securities or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the
maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, and the Conversion Price of any such series of Preferred Stock shall be adjusted accordingly, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price of any such series of Preferred Stock shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;
(B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price of any such series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price of any such series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:
(I) In the case of Convertible Securities or Options for Common Stock the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and
(II) in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been
received by the Corporation (determined pursuant to Section 2(e)(v)) upon the issue of the Convertible Securities with respect to which such Options were actually exercised;
(D) no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the Conversion Price of any such series of Preferred Stock to an amount which exceeds the lower of (i) the Conversion Price of any such series of Preferred Stock immediately prior to adjustment on the original adjustment date, or (ii) the Conversion Price of any such series of Preferred Stock that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date;
(E) if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the Conversion Price of any such series of Preferred Stock which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Conversion Price of any such series of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and Subdivisions. In the event the Corporation at any time or from time to time after the Original Issue Date for any series of Preferred Stock shall declare or pay any dividend or make any other distribution on the Common Stock payable in Common Stock or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued with respect to such series of Preferred Stock:
(A) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or
(B) in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective.
If such record date shall have been fixed and no part of such dividend or distribution shall have been paid on the date fixed therefor, the adjustment previously made in the Conversion Price of any such series of Preferred Stock which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Conversion Price of such series of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of the time of actual payment of such dividend or distribution.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event that at any time or from time to time after the Original Issue Date for the Series A Preferred Stock or Series B Preferred Stock the Corporation shall issue Additional Shares of Common Stock (including, without limitation, Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(1) but excluding Additional
Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2), which event is dealt with in Section 2(e)(vi)(1)), without consideration or for a consideration per share less than the Series A Conversion Price or the Series B Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Series A Conversion Price or Series B Conversion Price, as the case may be, shall be reduced, concurrently with such issue, to a price (calculated to the nearest one tenth of one cent) determined in accordance with the following formula:
(P(1)) (Q(1)) + (P(2)) (Q(2))
NCP = -----------------------------
Q(1) + Q(2)
where:
NCP = New Series A Conversion Price or Series B Conversion
Price, as applicable;
P(1) = Series A Conversion Price or Series B Conversion
Price, as applicable, in effect immediately prior to
new issue;
Q(1) = Number of shares of Common Stock outstanding, or
deemed to be outstanding as set forth below,
immediately prior to such issue;
P(2) = Price per share received by the Corporation upon
such issue;
Q(2) = Number of shares of Common Stock issued, or deemed
to have been issued, in the subject transaction;
|
provided that for the purpose of this Section 2(e)(iv), all shares of Common
Stock issuable upon conversion or exercise of Options or Convertible Securities
(including without limitation shares of Preferred Stock) outstanding immediately
prior to such issue shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section
2(e)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.
(v) Determination of Consideration. For purposes of this Section 2(e), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property: Such consideration shall:
(A) insofar as it consists of cash, be computed at the aggregate amounts of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in accordance with Section 1(b); and
(C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 2(e)(iii)(1),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by (y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidations of Common Stock.
(1) Stock Dividends, Distributions or Subdivisions. In the event the Corporation shall be deemed to issue Additional Shares of Common Stock pursuant to Section 2(e)(iii)(2) in a stock dividend, stock distribution or subdivision, the Conversion Price of each series of Preferred Stock in effect immediately before such deemed issuance shall, concurrently with the effectiveness of such deemed issuance, be proportionately decreased.
(2) Combinations or Consolidations. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.
(f) Adjustments for Certain Dividends and Distributions. In the event that at any time or from time to time after the Original Issue Date for any series of Preferred Stock the Corporation shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock or securities the issuance of which are deemed to be issuances of Common Stock under Section 2(e)(iii), then and in each such event provision
shall be made so that the holders of Preferred Stock of such series shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock immediately prior to such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application during such period to all adjustments called for herein.
(g) Adjustment for Reclassification, Exchange, or Substitution. In the event that at any time or from time to time after the Original Issue Date for any series of Preferred Stock, the Common Stock issuable upon the conversion of such series of Preferred Stock shall be changed into the same or a different number of shares of any class or series of stock or other securities or property, whether by capital reorganization, reclassification, recapitalization or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of any shares of such series of Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, recapitalization or other change by the holder of a number of shares of Common Stock equal to the number of shares of Common Stock into which such shares of such series of Preferred Stock might have been converted immediately prior to such reorganization, reclassification, recapitalization or change, all subject to further adjustment as provided herein.
(h) Adjustment for Merger, Consolidation or Sale of Assets. In the event that at any time or from time to time the Corporation shall merge or consolidate with or into another entity or sell all or substantially all of its assets, and such consolidation, merger or sale is not treated as a liquidation under Section 1(c), each share of Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Preferred Stock would have been entitled to receive upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 2 with respect to the rights and interest thereafter of the holders of shares of such Preferred Stock, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Conversion Prices) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of such Preferred Stock.
(i) Special Mandatory Conversion.
(i) Mandatory Conversion Upon Failure to Participate in Equity Financing.
(1) When any holder of shares of Series A Preferred Stock is entitled to exercise its right of first refusal (the "Right of First Refusal") as set forth in Section 3 of that certain Investor Rights Agreement, dated on or about the date hereof, by and
among the Corporation and certain of its stockholders (the "Rights Agreement") with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series A Conversion Price in effect immediately prior to such issue or sale (a "Series A Dilutive Issuance") and (x) the Corporation has complied in all material respects with its obligations pursuant to Section 3 of the Rights Agreement in respect thereof and (y) the provisions of the Right of First Refusal applicable to the particular Series A Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not, by exercise of such holder's Right of First Refusal, acquire at least such holder's Basic Amount (as defined in and calculated in accordance with Section 3.1 of the Rights Agreement) of New Securities (as defined in Section 3.2 of the Rights Agreement) in such Series A Dilutive Issuance, then each Non-Participating Series A Share (as defined below) held by such holder shall automatically and without further action on the part of such holder be converted, effective subject to and concurrently with consummation of the Series A Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series A Dilutive Issuance, at the Series A Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series A Preferred Stock are converted into shares of Common Stock in accordance with this Section 2(i)(i)(1) shall be deemed to have waived with respect to each Non-Participating Series A Share (A) the reduction in the Series A Conversion Price of such Non-Participating Series A Share that would have otherwise resulted pursuant to Section 2(e) from such Series A Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series A Share pursuant to this Section 2(i)(i)(1), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "Non-Participating Series A Shares" shall mean such number of shares of Series A Preferred Stock of a holder that is determined by multiplying the total number of shares of Series A Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series A Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(2) When any holder of shares of Series B Preferred Stock is entitled to exercise its Right of First Refusal as set forth in Section 3 of the Rights Agreement with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series B Conversion Price in effect immediately prior to such issue or sale (a "Series B Dilutive Issuance") and (x) the Corporation has complied in all material respects with its obligations pursuant to Section 3 of the Rights Agreement in respect thereof and (y) the provisions of the Right of First Refusal applicable to the particular Series B Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not by exercise of such holder's Right of First Refusal, acquire at least such holder's Basic Amount of New Securities in such Series B Dilutive Issuance, then each Non-Participating Series B Share (as defined below) held by such holder shall automatically and without further action on the part of
such holder be converted, effective subject to and concurrently with consummation of the Series B Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series B dilutive Issuance, at the Series B Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series B Preferred Stock are converted into shares of Common Stock in accordance with this Section 2(i)(i)(2) shall be deemed to have waived with respect to each Non-Participating Series B Share (A) the reduction in the Series B Conversion Price of such Non-Participating Series B Share that would have otherwise resulted pursuant to Section 2(e) from such Series B Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series B Share pursuant to this Section 2(i)(i)(2), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "Non-Participating Series B Shares" shall mean such number of shares of Series B Preferred Stock of a holder that is determined by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B Dilutive Issuance minus the number of new Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series B Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(ii) Notwithstanding the foregoing, in the event that the Corporation issues equity securities in a transaction that is both a Series A Dilutive Issuance and a Series B Dilutive Issuance (the "Series A/B Dilutive Issuance") and a holder of both Series A Preferred Stock and Series B Preferred Stock does not acquire at least such holder's Basic Amount of New Securities, then the shares of Preferred Stock of such holder that shall be converted into shares of Common Stock in accordance with this Section 2(i) shall be allocated pro rata to such holder's Series A Preferred Stock and Series B Preferred Stock. For purposes of clarity, in the event of a Series A/B Dilutive Issuance, (A) the term "Non-Participating Series A Shares" shall mean such number of shares of Series A Preferred Stock of a holder that is determined by multiplying the total number of shares of Series A Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series A/B Dilutive Issuance minus the number of new Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A/B Dilutive Issuance, and the denominator of which is such holder's Basic Amount and (B) the term "Non-Participating Series B Shares" shall mean such number of shares of Series B Preferred Stock of a holder that is determined by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series A/B Dilutive Issuance minus the number of new Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A/B Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(iii) Mechanics of Special Mandatory Conversion. The holder of any shares of Series A Preferred Stock or Series B Preferred Stock converted pursuant to this Section 2(i) shall surrender the certificate or certificates of such shares, duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfers attached, at the office of the Corporation or any transfer agent for such Preferred Stock (or such holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen or destroyed and shall execute an agreement reasonably satisfactory to the Corporation (which
agreement will not require a bond) to indemnify the Corporation from any loss incurred by it in connection therewith). The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to such holder's nominee or nominees, a certificate or certificates for the number of full shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the consummation of the Series A Dilutive Issuance or Series B Dilutive Issuance, as the case may be, unless the transfer books of the Corporation are closed on that date, in which event such holder shall be deemed to have become a holder of record of Common Stock on the next succeeding date on which the transfer books are open.
(j) No Impairment. The Corporation shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but shall at all times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price for a particular series of Preferred Stock pursuant to this Section 2, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of shares of such series of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of shares of a particular series of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price for such series at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of each share of such series of Preferred Stock.
(l) Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class or series of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Corporation shall mail to each holder of Preferred Stock at least ten (10) days prior to such record date a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.
(m) Common Stock Reserved. The Corporation shall reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then outstanding shares of Preferred Stock, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
(n) Certain Taxes. The Corporation shall pay any issue or transfer taxes payable in connection with the conversion of Preferred Stock, provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer to a name other than that of the holder of the Preferred Stock.
(o) Closing of Books. The Corporation shall at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the timely conversion or transfer of such Preferred Stock or Common Stock.
(p) Validity of Shares. The Corporation agrees that it will from time to time take all such actions as may be required to assure that all shares of Common Stock which may be issued upon conversion of any Preferred Stock will, upon issuance, be legally and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
Section 3. Restrictions.
(a) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 60% in voting power of the then outstanding shares of Series A Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series A Preferred Stock;
(ii) amend or repeal any provision of, or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any corporation or other entity in which it holds, directly or indirectly, an equity interest representing more than 50% of the voting power of all outstanding capital stock of such entity (any such entity, a "Subsidiary") to amend or repeal any provision of or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-Laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series A Preferred Stock or increase or decrease the number of authorized shares of Series A Preferred Stock;
(iii) authorize or designate any class or series of capital stock having rights senior to or on a parity with either the Series A Preferred Stock as to dividends, liquidation or otherwise.
(b) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 66 2/3% in voting power of the then outstanding shares of Series B Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series B Preferred Stock;
(ii) amend or repeal any provision of or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any Subsidiary to amend or repeal any provision of, or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series B Preferred Stock or increase or decrease the number of authorized shares of Series B Preferred Stock;
(iii) authorize or designate any class or series of capital stock having rights senior to or on a parity with either the Series B Preferred Stock as to dividends, liquidation or otherwise.
(c) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 662/3% in voting power of the then outstanding shares of all series of Preferred Stock, voting together as a single class, the Corporation will not:
(i) pay or declare any dividend or distribution on any shares of its capital stock (except dividends payable solely in shares of Common Stock), or apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through subsidiaries or otherwise, of any shares of the Corporation's capital stock except (a) as expressly set forth herein or (b) for repurchases of Common Stock upon termination of employment or service pursuant to written agreements in effect on the date hereof or written agreements approved by the Corporation's Board of Directors or a committee thereof);
(ii) sell, lease or otherwise dispose of all or substantially all of the assets of the Corporation, or permit any Subsidiary to sell, lease or otherwise dispose of all or substantially all of the assets of such Subsidiary;
(iii) voluntarily liquidate or dissolve or permit any Subsidiary to voluntarily liquidate or dissolve;
(iv) enter into any merger, consolidation or capital reorganization, or permit any Subsidiary to enter into any merger, consolidation or capital reorganization, except as contemplated by the Share Exchange Agreement;
(v) effect any acquisition of the capital stock of another entity that results in the consolidation of that entity into the results of operations of the Corporation, except as contemplated by the Share Exchange Agreement;
(vi) increase the number of seats on the Board of Directors above nine;
(vii) acquire all or substantially all of the assets of another entity, except as contemplated by the Share Exchange Agreement;
(viii) incur indebtedness for borrowed funds, in a single or related series of transactions, in principal amount at any time outstanding in excess of $500,000 (except in connection with the transactions contemplated by the Share Exchange Agreement, including the assumption of indebtedness owed by Ribopharma to Abingworth Bioventures III A LP, Abingworth Bioventures III B LP, Abingworth Bioventures III C LP and Abingworth Bioventures Executives LP.)
(ix) create a new plan or arrangement for the
grant of stock options, stock appreciation rights, restricted stock or other
similar stock-based compensation, or increase the number of shares or other
rights available under such existing plan or arrangement, except for increases
in the number of shares approved in the manner provided in Section
2(e)(i)(4)(B); or
(x) any provision of the By-Laws of the Corporation to the contrary notwithstanding, increase the number of directors constituting the entire Board of Directors, except as necessary to add independent outside directors whose election is subject to the approval of all of the Preferred Stock Directors then in office (as defined below).
(d) Notwithstanding any other provision of this Certificate of Incorporation or the Corporation's By-Laws to the contrary, written notice of any action specified in Section 3(a), 3(b) or 3(c) shall be given by the Corporation to each holder of outstanding shares of Preferred Stock at least twenty (20) days before the date on which the books of the Corporation shall close or a record shall be taken with respect to such proposed action, or, if there shall be no such date, at least twenty (20) days before the date when such proposed action is scheduled to take place. Any holder of outstanding shares of Preferred Stock may waive any notice required by this Section by a written document specifically indicating such waiver, and the holders of two-thirds in voting power of all series of Preferred Stock, voting together as a single class, may waive any such notice on behalf of all holders of the Preferred Stock.
Section 4. Voting Rights.
(a) Except as otherwise required by law or set forth in this Certificate of Incorporation, the holders of Preferred Stock shall be entitled to notice of any meeting of stockholders and shall vote together with the holders of Common Stock as a single class upon any matter submitted to the stockholders for a vote. With respect to all questions as to which, under law, stockholders are required to vote by classes or series, the Preferred Stock shall vote separately as a single class and series apart from the Common Stock. Shares of Common Stock and Preferred Stock shall entitle the holders thereof to the following number of votes on any matter as to which they are entitled to vote:
(i) Holders of Common Stock shall have one vote per share; and
(ii) Holders of Preferred Stock shall have that number of votes per share as is equal to the number of shares of Common Stock (including fractions of a share) into which each such share of Preferred Stock held by such holder could be converted on the date for determination of stockholders entitled to vote at the meeting or on the date of any written consent.
(b) Except as contemplated by the Rights Agreement, the Board of Directors shall not delegate any of its powers or duties to any committee of the Board of Directors without the consent of all of the Preferred Stock Directors then in office.
(c) In addition to any other vote required by law or by this Certificate of Incorporation, the Corporation shall not amend this Certificate of Incorporation, whether by merger, consolidation or otherwise, so as to amend, alter or repeal the powers, preferences or special rights of the Preferred Stock in a manner that affects them adversely, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.
(d) At all times during which the number of outstanding shares of Series A Preferred Stock equals or exceeds 1,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Series A Preferred Stock shall have the exclusive right, separately from the Common Stock and the other series of Preferred Stock, to elect two directors of the Corporation. Any such director is sometimes hereinafter referred to as a "Series A Preferred Stock Director." At all times during which the number of outstanding shares of Series B Preferred Stock equals or exceeds 1,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Series B Preferred Stock shall have the exclusive right, separately from the Common Stock and the other series of Preferred Stock, to elect one director of the Corporation. Such director is sometimes hereinafter referred to as a "Series B Preferred Stock Director." At all times during which the number of outstanding shares of Preferred Stock equals or exceeds 2,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Preferred Stock, voting together as a single class, shall have the exclusive right, separately from the Common Stock, to elect one director of the Corporation. Such director is sometimes hereinafter referred to as a "Series A/B Preferred Stock Director" and each of the Series A Preferred Stock Directors, the Series B Preferred Stock Director and the Series A/B Director is sometimes hereinafter referred to as a "Preferred Stock Director." Each Preferred Stock Director shall be elected by the vote or written consent of the holders of a plurality in voting power of the series of Preferred Stock entitled to elect such Preferred Stock Director. If a Preferred Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the series of Preferred Stock entitled to elect such Preferred Stock Director shall replace such director. Any Preferred Stock Director may be removed, with or without cause, and a replacement Preferred Stock Director may be elected in his stead, at any time by the
affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a plurality in voting power of the outstanding series of Preferred Stock entitled to elect such director.
(e) At all times during which shares of Common Stock remain outstanding, the holders of the outstanding shares of Common Stock shall have the exclusive right, separately from the Preferred Stock, to elect two directors of the Corporation (the "Common Stock Directors"). Each Common Stock Director shall be elected by the vote or written consent of the holders of a plurality in voting power of the outstanding Common Stock. If a Common Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Common Stock shall replace such director. Any Common Stock Director may be removed, with or without cause, and a replacement Common Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a plurality in voting power of the outstanding Common Stock.
(f) All other directors of the Corporation shall be elected by the holders of the Common Stock and Preferred Stock voting together as a single class, with the holders of Preferred Stock to have that number of votes as is determined in accordance with Section 4(a)(ii).
(g) In addition to any rights which may be available under the Corporation's By-Laws or otherwise under law, the holders of not less than twenty percent (20%) in voting power of the outstanding Preferred Stock shall be entitled to call meetings of the stockholders of the Corporation. Within five (5) business days after written application by the holders of not less than twenty percent (20%) in voting power of the outstanding Preferred Stock, the President or Secretary, or such other officer of the Corporation as may be authorized in the By-Laws of the Corporation to give notice of meetings of stockholders of the Corporation, shall notify each stockholder of the Corporation entitled to such notice of the date, time, place and purpose of such meeting.
Section 5. Dividends.
(a) Dividends may be declared and paid on Common Stock and Preferred Stock from funds lawfully available therefor as and when determined by the Board of Directors of the Corporation.
(b) No dividends shall be declared or paid on the Common Stock or Preferred Stock except as set forth in this Section 5.
Section 6. Redemption
(a) At the written election of holders of at least 66 2/3% in voting power of the outstanding shares of Preferred Stock made at any time on or after July 25, 2007 (the "Redemption Election"), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Preferred Stock in three equal annual installments, upon the terms set forth in this Section 6. The first installment of such redemption (the "First Redemption Date")
shall occur on a date specified in the Redemption Election, which shall be not
less than ninety (90) days after the date of the Redemption Election, and the
second and third installments of such redemption shall occur on the first and
second anniversaries, respectively, of the First Redemption Date. The
Corporation shall redeem one-third of the outstanding shares of Preferred Stock
held by each holder on the First Redemption Date, one half of the outstanding
shares of Preferred Stock then held by each holder on the first anniversary
thereof and the remaining shares on the second anniversary thereof. On each such
redemption date, the holders shall surrender the certificate or certificates for
the shares to be redeemed duly endorsed for transfer or with duly executed stock
transfer powers sufficient to permit transfer attached, at the offices of the
Corporation or of any transfer agent for the Preferred Stock. The Corporation
shall, as soon as practicable thereafter, issue and deliver to each holder a
certificate or certificates for the balance of the shares not being redeemed.
The redemption price of each share of Series A Preferred Stock shall be equal to
(i) $1.00 (as adjusted for any stock dividend, stock split, combination of
shares, reclassification or other similar event with respect to such Preferred
Stock) plus all dividends declared but unpaid on such share on the applicable
redemption date (the "Series A Redemption Amount") plus (ii) an additional
amount computed like interest payable on the Series A Redemption Amount at the
rate equal to simple interest of ten percent (10%) per annum from the date of
issuance of such share of Preferred Stock. The redemption price of each share of
Series B Preferred Stock shall be equal to (i) $2.50 (as adjusted for any stock
dividend, stock split, combination of shares, reclassification or other similar
event with respect to such Preferred Stock) plus all dividends declared but
unpaid on such share on the applicable redemption date (the "Series B Redemption
Amount," each of the Series A Redemption Amount and the Series B Redemption
Amount being sometimes hereinafter referred to as a "Redemption Amount") plus
(ii) an additional amount computed like interest payable on the Series B
Redemption Amount at the rate equal to simple interest of ten percent (10%) per
annum from the date of issuance of such share of Preferred Stock.
(b) Notice of redemption shall be sent by first class mail, postage prepaid, to each holder of record of the Preferred Stock, not less than thirty days nor more than sixty days prior to the First Redemption Date, at the address of such holder as it appears on the books of the Corporation. Such notice shall set forth (i) the First Redemption Date, the dates of the second and third installments of such redemption, and the place of redemption; and (ii) the number of shares to be redeemed on each date of redemption and the redemption price calculated in accordance with Section 6(a) above, on each such date. The Corporation shall be obligated to redeem the Preferred Stock on the dates and in the amounts set forth in the notice; provided, however, that any holder of Preferred Stock who is not party to a Redemption Election may convert any or all of the shares owned by such holder into Common Stock in accordance with Section 2(d) at any time prior to the date of redemption of such shares. The Corporation, if advised before the close of business on the relevant redemption date by written notice from any holder of record of Preferred Stock to be redeemed, shall credit against the number of shares of Preferred Stock required to be redeemed from such holder, and shall not redeem, the number of shares of Preferred Stock which shall have been converted by such holder on or before such date and which shall not previously have been credited against any redemption.
(c) If, on or before a redemption date, the funds necessary for such redemption shall have been set aside by the Corporation and deposited with a bank or trust
company, in trust for the pro rata benefit of the holders of the Preferred Stock that has been called for redemption, then, notwithstanding that any certificates for shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such redemption date, and all rights of holders of such shares so called for redemption shall forthwith, after such redemption date, cease and terminate with respect to such shares, excepting only the right to receive the redemption funds therefor to which they are entitled. Any interest accrued on funds so deposited and unclaimed by stockholders entitled thereto shall be paid to such stockholders at the time their respective shares are redeemed or to the Corporation at the time unclaimed amounts are paid to it. In case the holders of Preferred Stock which shall have been called for redemption shall not, within one year after the final redemption date, claim the amounts so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any funds so deposited with a bank or trust company which shall not be required for such redemption by reason of the exercise subsequent to the date of such deposit of the right of conversion of any shares or otherwise shall be returned to the Corporation forthwith.
(d) If the Corporation for any reason fails to redeem any
of the shares of Preferred Stock in accordance with Section 6(a) on or prior to
the redemption dates determined in accordance with this Section 6, then, the
Corporation shall become obligated to pay, in addition to the redemption price
specified in Section 6(a), interest on the unpaid balance of such price, which
shall accrue at a rate equal to the lesser of (i) one percent (1%) per month or
(ii) the maximum interest rate allowable under applicable law, until such price
is paid in full.
(e) If the funds of the Corporation legally available for redemption of shares of Preferred Stock on a redemption date are insufficient to redeem the total number of shares of Preferred Stock submitted for redemption, those funds which are legally available will be used to redeem the maximum possible number of whole shares ratably among the holders of such shares based on the total Redemption Amounts owed to such holders. The shares of Preferred Stock not redeemed shall remain outstanding and entitled to all rights and preferences provided herein. At any time thereafter when additional funds of the Corporation are legally available for the redemption of such shares of Preferred Stock, such funds will be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available.
Section 7. No Reissuance of Preferred Stock. No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
Section 8. Residual Rights. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein shall be vested in the Common Stock.
Section 9. Notices. All notices required or permitted to be sent pursuant to this Article FOURTH shall be deemed sufficient if contained in a written instrument and delivered in person or duly sent by first-class mail postage prepaid (other than in the case of notices to or from any non-U.S. resident) or by fax or DHL, Federal Express or other recognized express international courier service, addressed to the intended recipient at the recipient's address as it appears on the books of the Corporation.
RESOLVED: That Article SIXTH of the Certificate of Incorporation be and hereby is deleted in its entirety and the following Article SIXTH is inserted in lieu thereof:
SIXTH: In furtherance of and not in limitation of powers conferred by statute, it is further provided:
1. Election of directors need not be by written ballot.
2. Subject to the limitations and exceptions, if any, contained in the By-Laws of the Corporation or this Certificate of Incorporation, the By-Laws may be adopted, amended or repealed by the Board of Directors of the Corporation with, and only with, a Majority Directors Vote.
3. Subject to any applicable requirements of law, the books of the Corporation may be kept outside the State of Delaware at such locations as may be designated by the Board of Directors or in the Bylaws of the Corporation; and
4. Except as provided to the contrary in the provisions establishing a class or series of stock, the number of authorized shares of such class or series may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote or written consent of a majority in voting power of the stock of the Corporation entitled to vote, voting together as a single class.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its Chief Executive Officer this 24th day of July, 2003.
ALNYLAM HOLDING CO.
By: /s/ John Maraganore
------------------------
Name: John Maraganore
Title: President and CEO
|
State of Delaware
Secretary of State
Division of Corporations
Delivered 04:31 PM 09/08/2003
FILED 04:31 PM 09/08/2003
SRV 030578313 - 3651907 FILE
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALNYLAM HOLDING CO.
Alnylam Holding Co., a Delaware corporation (hereinafter, the "CORPORATION"), hereby certifies as follows:
1. The name of the Corporation is Alnylam Holding Co. The date of filing of its original Certificate of Incorporation with the Delaware Secretary of State was May 8, 2003.
2. The Certificate of Incorporation of the Corporation, as filed on May 8, 2003, as amended by the Certificate of Amendment, as filed on July 24, 2003 (collectively, the "CERTIFICATE OF INCORPORATION"), is hereby further amended by deleting Article FOURTH thereof in its entirety and by substituting in lieu of said Article FOURTH the following new Article FOURTH:
"FOURTH: The total number of shares of all classes of stock which the Corporation has authority to issue is 56,911,480 shares, consisting of 34,739,392 shares of Common Stock, par value $.0001 per share (the "COMMON STOCK"), 3,000,010 shares of Series A Convertible Preferred Stock, par value $.0001 per share (the "SERIES A PREFERRED STOCK"), 16,672,078 shares of Series B Convertible Preferred Stock, $.0001 par value per share (the "SERIES B PREFERRED STOCK"), and 2,500,000 shares of Series C Convertible Preferred Stock, $.0001 par value per share (the "SERIES C PREFERRED STOCK"). The Series A Preferred Stock and Series B Preferred Stock are sometimes hereinafter collectively referred to as the "SENIOR PREFERRED STOCK." The Senior Preferred Stock and the Series C Preferred Stock are sometimes hereinafter collectively referred to as the "PREFERRED STOCK."
The powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of each class or series of stock of the Corporation shall be as follows:
Section 1. Liquidation Rights.
(a) Liquidation Payments.
(i) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of the then outstanding shares of Senior Preferred Stock shall be entitled to be paid first out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock of all classes an amount equal to (a) in the case of the Series A Preferred Stock, $1.00 per share
(subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such series of Senior Preferred Stock) and (b) in the case of the Series B Preferred Stock, $2.50 per share (subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such series of Senior Preferred Stock), plus (in the case of all series of Senior Preferred Stock) all dividends declared thereon but unpaid and any and all other amounts owing with respect to such shares, as of and including the date full payment shall be tendered to the holders of the Senior Preferred Stock with respect to such liquidation, dissolution or winding up. Such amount is sometimes hereinafter referred to as the "SENIOR PREFERENCE AMOUNT."
If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Senior Preferred Stock of the entire
Senior Preference Amount so distributable to them, then the entire assets of the
Corporation available for such distribution shall be distributed ratably among
the holders of the Senior Preferred Stock in proportion to the full Senior
Preference Amount each such holder is otherwise entitled to receive under this
Section l(a)(i).
No payment shall be made with respect to the Series C Preferred Stock or Common Stock unless and until fall payment has been made to the holders of the Senior Preferred Stock of the full Senior Preference Amount.
(ii) After all payments shall have been made
in full to both the holders of the Senior Preferred Stock as contemplated by
Section l(a)(i) above and to the holders of any class of equity securities that
is senior to or pari passu with the Senior Preferred Stock (the "ADDITIONAL
SENIOR PREFERRED STOCK"), or funds necessary for such payments shall have been
set aside by the Corporation in trust for the account of holders of Senior
Preferred Stock and Additional Senior Preferred Stock so as to be available for
such payments, the holders of the then outstanding shares of Series C Preferred
Stock shall be entitled to receive out of the remaining assets available for
distribution an amount equal to the price per share paid for the Series C
Preferred Stock (subject to equitable adjustment whenever there shall occur a
stock dividend, stock split, combination of shares, reclassification or other
similar event with respect to such series of Preferred Stock), plus all
dividends declared thereon but unpaid and any and all other amounts owing with
respect to such shares, as of and including the date full payment shall be
tendered to the holders of the Series C Preferred Stock with respect to such
liquidation, dissolution or winding up. Such amount is sometimes hereinafter
referred to as the "SERIES C PREFERENCE AMOUNT," together with the Senior
Preference Amount and the preference amount payable with respect to the
Additional Senior Preferred Stock, the "PREFERENCE AMOUNT."
(iii) After all payments shall have been made in full to the holders of the Senior Preferred Stock, the Additional Senior Preferred Stock and the Series C Preferred Stock as contemplated by Section 1(a)(i) above and Section 1(a)(ii) above, respectively, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Senior Preferred Stock, the Additional Senior Preferred Stock and the Series C Preferred Stock so as to be available for such payments, remaining assets available for distribution shall be distributed among the holders of the Common Stock ratably in proportion to the number of shares of Common Stock then held by them.
(iv) Upon any such liquidation, dissolution
or winding up, any holder of Preferred Stock may elect to receive, in lieu of
the Preference Amount otherwise payable to it pursuant to Section 1.1(a)(i) or
Section 1(a)(ii), an amount per share of Preferred Stock as would have been
payable had such share been converted to Common Stock immediately prior to such
liquidation, dissolution or winding up, plus all dividends declared but unpaid
on each such share of Preferred Stock to and including the date full payment
shall be tendered to the holders of the Preferred Stock with respect to such
liquidation, dissolution or winding up.
(v) Upon conversion of shares of Preferred Stock into shares of Common Stock pursuant to Section 2 below, the holder of such Common Stock shall not be entitled to any preferential payment or distribution in case of any liquidation, dissolution or winding up, but shall share ratably in any distribution of the assets of the Corporation to all the holders of Common Stock.
(vi) The amounts payable with respect to shares of Preferred Stock under this Section 1(a) are sometimes hereinafter referred to as "LIQUIDATION PAYMENTS."
(b) Distributions Other than Cash. The amount deemed distributed to the holders of Preferred Stock upon any liquidation, dissolution, or winding-up (including any transaction treated as such pursuant to Section 1(c)), and the value of the consideration received by the Corporation for the issue of any Additional Shares of Common Stock (as defined below), if distributed or received, as the case may be, in any form of property (tangible or intangible) other than cash shall be the fair market value of such property. The term "FAIR MARKET VALUE" or "FAIR VALUE" means, with respect to any security, its Market Price (as defined below), and with respect to any property or assets other than cash or securities, the fair value thereof determined in good faith jointly by the Corporation (including the approval of a director nominated by holders of Common Stock) and the Requisite Holders (as defined below); provided, however, that if the parties are not able to agree within a reasonable period of time (not to exceed thirty (30) days) what amount constitutes fair value, then the fair value will be determined pursuant to the Arbitration Procedure (as defined below). The term "REQUISITE HOLDERS" means the holders of at least two-thirds in voting power of the then outstanding Preferred Stock. The term "MARKET PRICE" means, as to any security, the average of the closing prices of such security's sales on all United States securities exchanges on which such security may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P. M., New York time, on such day, or, if on any day such security is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar or successor organization, in each such case averaged over a period of 30 days consisting of the thirty day period ending three days prior to the date as of which Market Price is being determined. If at any time such security is not listed on any domestic securities exchange or quoted in the NASDAQ System or the domestic over-the-counter market, the Market Price of such security shall be the fair value thereof as determined in good faith jointly by the Corporation (including the approval of a director nominated by holders of Common Stock) and the Requisite Holders; provided, however, that if such parties are not able to agree within a
reasonable period of time (not to exceed ten (10) days) what amount constitutes the Market Price, then the Market Price shall be determined pursuant to the Arbitration Procedure. The term "ARBITRATION PROCEDURE" means the following procedure to determine the fair value or the Market Price, as applicable (the VALUATION AMOUNT"). The valuation amount shall be determined by an investment banking firm of national recognition, which firm shall be reasonably acceptable to the Corporation and the Requisite Holders. If the Corporation and the Requisite Holders are unable to agree upon an acceptable investment banking firm within ten (10) days after the date either party proposed that one be selected, the investment banking firm will be selected by an arbitrator located in the City of Boston, Massachusetts, selected by the American Arbitration Association (or if such organization ceases to exist, the arbitrator shall be chosen by a court of competent jurisdiction). The arbitrator shall select the investment banking firm (within ten (10) days of his appointment) from a list, jointly prepared by the Corporation and the Requisite Holders, of not more than six investment banking firms of national standing in the United States, of which no more than three may be named by the Corporation and no more than three may be named by the Requisite Holders. The arbitrator may consider, within the ten-day period allotted, arguments from the parties regarding which investment banking firm to choose, but the selection by the arbitrator shall be made in its sole discretion from the list of six. The determination of the final valuation amount by such investment banking firm shall be final and binding upon the parties. The Corporation shall pay one-half of the fees and expenses of the investment banking firm and arbitrator (if any) used to determine the valuation amount and the holders of the Preferred Stock shall pay the other half of such fees and expenses (allocated among them pro rata based on the number of shares of Preferred Stock, on an as-converted basis, then held by each of them). If required by any such investment banking firm or arbitrator, the Corporation and the holders of the Preferred Stock shall execute a retainer and engagement letter containing reasonable terms and conditions, including customary provisions concerning the rights of indemnification and contribution by the Corporation and the holders of the Preferred Stock in favor of such investment banking firm or arbitrator and its officers, directors, partners, employees, agents and affiliates.
(c) Merger as Liquidation, etc. The merger or
consolidation of the Corporation into or with another corporation (except one in
which the holders of capital stock of the Corporation immediately prior to such
merger or consolidation continue to hold a majority in voting power of the
capital stock of the surviving corporation, in which case the provisions of
Section 2(h) shall apply), or the sale of all or substantially all of the assets
of the Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 1 with respect
to the Preferred Stock, unless the holders of at least two-thirds in voting
power of the then outstanding shares of Preferred Stock elect to the contrary;
such election to be made by giving notice thereof to the Corporation at least
three days before the effective date of such event. If such notice is given with
respect to the Preferred Stock, the provisions of Section 2(h) shall apply.
Unless such election is made with respect to the Preferred Stock, any amounts
received by the holders of Preferred Stock as a result of such merger or
consolidation shall be deemed to be applied toward, and all consideration
received by the Corporation in such asset sale together with all other available
assets of the Corporation shall be distributed toward, the Liquidation Payments.
(d) Notice. In the event the Corporation shall
propose to undertake any liquidation, dissolution or winding up of the affairs
of the Corporation (including any merger, consolidation or sale of assets which
may be deemed to be a liquidation, dissolution or winding up of the affairs of
the Corporation under Section 1(c)), the Corporation shall, within ten (10) days
after the date the Board of Directors approves such action or twenty (20) days
prior to any stockholders' meeting called to approve such action, whichever is
earlier, give each holder of Preferred Stock initial written notice of the
proposed action. Such initial written notice shall describe the material terms
and conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of the Preferred Stock and of
Common Stock upon consummation of the proposed action and the proposed date of
delivery thereof. If any material change in the facts set forth in the initial
notice shall occur, the Corporation shall promptly give each holder of Preferred
Stock written notice of such material change. The Corporation shall not
consummate any such proposed liquidation, dissolution or winding up before the
expiration of thirty (30) days after the mailing of the initial notice or twenty
(20) days after the mailing of any subsequent written notice, whichever is
later, provided, that any such 30-day or 20-day period may be shortened or
waived upon the written consent of the holders of at least two-thirds in voting
power of the outstanding shares of Preferred Stock. Any holder of outstanding
shares of Preferred Stock may waive any notice required by this Section by a
written instrument specifically indicating such waiver.
Section 2. Conversion. The holders of Preferred Stock shall have conversion rights as follows (the "CONVERSION RIGHTS"):
(a) Right to Convert; Conversion Price. Each share of Preferred Stock shall be convertible, without the payment of any additional consideration by the holder thereof and at the option of the bolder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Preferred Stock, into such number of fully paid and nonassessable shares of Common Stock as is determined in accordance with the following:
(i) in the case of the Series A Preferred Stock, by dividing $1.00 by the Series A Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series A Preferred Stock without the payment of any additional consideration by the holder thereof (the "SERIES A CONVERSION PRICE") shall initially be $1.00 per share of Common Stock. Such initial Series A Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series A Preferred Stock is convertible, as hereinafter provided.
(ii) in the case of the Series B Preferred Stock, by dividing $2.50 by the Series B Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment of any additional consideration by the holder thereof (the "SERIES B CONVERSION PRICE") shall initially be $2.50 per share of Common Stock. Such initial Series B Conversion Price shall be subject to adjustment, in order
to adjust the number of shares of Common Stock into which the Series B Preferred Stock is convertible, as hereinafter provided.
(iii) in the case of the Series C Preferred Stock, by dividing the price per share paid for the Series C Preferred Stock by the Series C Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series C Preferred Stock without the payment of any additional consideration by the holder thereof (the "SERIES C CONVERSION PRICE") shall initially be the price per share paid for the Series C Preferred Stock per share of Common Stock. Such initial Series C Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series C Preferred Stock is convertible, as hereinafter provided.
Each of the Series A Conversion Price, the Series B Conversion Price and the Series C Conversion Price is sometimes hereinafter referred to as a "CONVERSION PRICE."
The right of conversion with respect to any shares of Senior Preferred Stock which shall have been called for redemption under Section 6 hereof shall terminate at the close of business on the day fixed for redemption unless the Corporation shall default in the payment of the redemption price, in which case the right of conversion with respect to such shares shall continue unless and until such redemption price is paid in full.
(b) Automatic Conversion.
(i) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price then in effect upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the public at an offering price per share (prior to underwriters' discounts and commissions) of not less than $7.50 (as adjusted to reflect any stock dividends, distributions, combinations, reclassifications or other like transactions effected by the Corporation in respect of its Common Stock) and with gross proceeds to the Corporation of not less than $25,000,000 (a "QUALIFIED PUBLIC OFFERING"), in the event of which offering the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until the closing of such offering.
(ii) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price then in effect upon the written election of the holders of not less than two-thirds in voting power of the then outstanding shares of Preferred Stock to require such mandatory conversion.
(c) Mechanics of Automatic Conversions. Upon the occurrence of an event specified in Section 2(b), the Preferred Stock of the applicable series shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent;
provided, however, that all holders of shares of Preferred Stock being converted
shall be given written notice of the occurrence of the event specified in
Section 2(b) triggering such conversion, including the date such event occurred
(the "MANDATORY CONVERSION DATE"), and the Corporation shall not be obligated to
issue certificates evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of Preferred Stock being
converted are either delivered to the Corporation or its transfer agent, or the
holder notifies the Corporation or any transfer agent that such certificates
have been lost, stolen, or destroyed and executes an agreement satisfactory to
the Corporation (which agreement will not require a bond) to indemnify the
Corporation from any loss incurred by it in connection therewith. On the
Mandatory Conversion Date, all rights with respect to the Preferred Stock so
converted shall terminate, except any of the rights of the holder thereof, upon
surrender of the holder's certificate or certificates therefor, to receive
certificates for the number of shares of Common Stock into which such Preferred
Stock has been converted, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, the holders of such
Preferred Stock shall surrender the certificates representing such shares at the
office of the Corporation or of its transfer agent. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon surrender of such
certificates there shall be issued and delivered to such holder, or to such
holder's nominee or nominees promptly at such office, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Preferred Stock surrendered were convertible on the date on which such automatic
conversion occurred, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, all shares of Preferred
Stock being converted by any holder thereof shall be aggregated for the purpose
of determining the number of shares of Common Stock to which such holder shall
be entitled, and no fractional share of Common Stock shall be issued. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of the Common Stock on the Mandatory Conversion Date, as reasonably
determined by the Board of Directors in good faith (notwithstanding the
provisions of Section 1(b)).
(d) Mechanics of Optional Conversions. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall surrender the certificate or certificates therefor at the office of the Corporation or of any transfer agent for the Preferred Stock, and shall give written notice to the Corporation at such office that the bolder elects to convert the same and shall state therein the holder's name or the name or names of the holder's nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued. On the date of conversion, all rights with respect to the Preferred Stock so converted shall terminate, except any of the rights of the holder thereof, upon surrender of the holder's certificate or certificates therefor, to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted and
cash in an amount equal to all dividends declared but unpaid on, and any and all
other amounts owing with respect to, the shares of Preferred Stock being
converted to and including the time of conversion, If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly-executed by the registered holder or by
the holder's attorney duly-authorized in writing. Upon the optional conversion
of the Preferred Stock of any series, all shares of Preferred Stock being
converted by any holder thereof shall be aggregated for the purpose of
determining the number of shares of Common Stock to which such holder shall be
entitled, and no fractional share of Common Stock shall be issued. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of the Common Stock on the date of conversion, as reasonably determined by
the Board of Directors in good faith (notwithstanding the provisions of Section
1(b)). The Corporation shall, promptly after surrender of the certificate or
certificates for conversion, issue and deliver at such office to such holder of
Preferred Stock, or to the holder's nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid, together with cash in lieu of any fraction of a share
and cash in an amount equal to all dividends declared but unpaid thereon and
any and all other amounts owing with respect thereto at such time. Unless
otherwise specified by the holder in the written notice of conversion, such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
(e) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions For purposes of this Section 2(e), the following definitions shall apply:
(1) "OPTION" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities.
(2) "ORIGINAL ISSUE DATE" shall mean with respect to any series of Preferred Stock the first date on which a share of Preferred Stock of such series was issued.
(3) "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness, shares of capital stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.
(4) "ADDITIONAL SHARES OF COMMON
STOCK" shall mean all shares of Common Stock issued (or, pursuant to Section
2(e)(iii), deemed to be issued) by the Corporation after the Original Issue
Date, other than:
(A) shares of Common Stock issued or issuable upon conversion of shares of Preferred Stock;
(B) up to 3,250,000 shares of Common Stock issued or issuable to employees, consultants or directors of the Corporation pursuant to a stock purchase or stock option plan or other employee stock bonus arrangement approved by a majority of the Corporation's Board of Directors, which majority includes at least two of the Preferred Stock Directors (as hereinafter defined) (such vote, a "MAJORITY DIRECTORS VOTE"); and provided that such number may be adjusted upward by a Majority Directors Vote;
(C) securities issued in connection with capital leases, bank financing or other similar transactions with a non-equity financing purpose, in each case as approved by a Majority Directors Vote;
(D) securities issued in connection with licensing or strategic alliance transactions, in each case as approved by a Majority Directors Vote;
(E) securities issued pursuant to the acquisition of another corporation or other entity by the Corporation by merger, purchase of substantially all of the assets, or other reorganization whereby the Corporation acquires not less than 51% of the voting power of such corporation or other entity in a transaction approved by a Majority Directors Vote;
(F) up to 1,000,000 shares of Series A Preferred Stock issued or issuable at a price not less than $1.00 per share pursuant to a Series A and Series B Convertible Preferred Stock Purchase Agreement to be entered into, and performed by, the Corporation with certain existing investors of the Corporation and Abingworth Management Limited;
(G) shares of Common Stock issued or issuable at any time to holders of capital stock of Ribopharma AG ("RIBOPHARMA") pursuant to the Share Exchange Agreement dated July 3, 2003 among the Corporation, Alnylam Pharmaceuticals, Inc. ("ALNYLAM"), Ribopharma and the stockholders of Ribopharma (the "SHARE EXCHANGE AGREEMENT");
(H) up to 898,173 shares of Series B Preferred Stock issued to Garching Innovation GmbH ("GARCHING"), Massachusetts Institute of Technology ("MIT"), Whitehead Institute for Biomedical Research ("WHITEHEAD INSTITUTE") and Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e.V ("MAX-PLANCK") pursuant to license agreements between such entities and Alnylam;
(I) shares of capital stock of the Corporation issued to University of Massachusetts Medical School ("UMASS") pursuant to license agreements between the Corporation and UMASS, in each case as approved by a Majority Directors Vote;
(J) shares of Common Stock issued in connection with a Qualified Public Offering;
(K) up to 94,044 shares of Common Stock issued to Abingworth Bioventures III A LP, Abingworth Bioventures III B LP, Abingworth Bioventures III C LP and Abingworth Bioventures III Executives LP (the "LENDERS") pursuant to Section 8.2 of the Loan Agreement, dated April 4, 2003, between the Lenders and Ribopharma and the Assignment of Loan among Ribopharma, the Corporation and the Lenders dated on or about the date hereof; and
(L) shares of Series C Preferred Stock and Common Stock issued to Merck & Co., Inc. ("MERCK") pursuant to a Securities Purchase Agreement to be entered into, and performed by, the Corporation and Merck.
(ii) No Adjustment of Conversion Price. Except as set forth in Section 2(e)(vi), no adjustment in the number of shares of Common Stock into which any series of Preferred Stock is convertible shall be made, by adjustment in the applicable Conversion Price for such series in respect of the issuance of Additional Shares of Common Stock, (a) unless the consideration per share for an Additional Share of Common Stock (determined pursuant to Section 2(e)(v)) issued or deemed to be issued by the Corporation is less than the applicable Conversion Price for such series in effect on the date of, and immediately prior to, the issue of such Additional Shares of Common Stock or (b) if prior to such issuance or within twenty (20) days thereafter the Corporation receives notice from the holders of at least two-thirds of the outstanding shares of such series of Preferred Stock that no such adjustment in the Conversion Price for such series shall be made.
(iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock.
(1) Options and Convertible
Securities. In the event the Corporation at any time or from time to time after
the Original Issue Date for any series of Preferred Stock shall issue any
Options (excluding for all purposes of this Section 2(e)(iii)(1) Options
excluded from the definition of Additional Shares of Common Stock in Section
2(e)(i)(4)(B)) or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record, date shall have been fixed, as
of the close of business on such record date, and the Conversion Price of any
such series of Preferred Stock shall be adjusted accordingly, provided, that in
any such case in which Additional Shares of Common Stock are deemed to be
issued:
(A) no further adjustment in the Conversion Price of any such series of Preferred Stock shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;
(B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Corporation, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price of any such series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion Price of any such series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:
(I) In the case of Convertible Securities or Options for Common Stock the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and
(II) in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation (determined pursuant to Section 2(e)(v)) upon the issue of the Convertible Securities with respect to which such Options were actually exercised;
(D) no readjustment pursuant to
clause (B) or (C) above shall have the effect of increasing the Conversion Price
of any such series of Preferred Stock to an amount which exceeds the lower of
(1) the Conversion Price of any such series of Preferred Stock immediately prior
to adjustment on the original adjustment date, or (ii) the Conversion Price of
any such series of Preferred Stock that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
(E) if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the Conversion Price of any such series of Preferred Stock which became
effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Conversion Price of any such series of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and Subdivisions. In the event the Corporation at any time or from time to time after the Original Issue Date for any series of Preferred Stock shall declare or pay any dividend or make any other distribution on the Common Stock payable in Common Stock or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued with respect to such series of Preferred Stock:
(A) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or
(B) in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective.
If such record date shall have been fixed and no part of such dividend or distribution shall have been paid on the date fixed therefor, the adjustment previously made in the Conversion Price of any such series of Preferred Stock which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Conversion Price of such series of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of the time of actual payment of such dividend or distribution.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock.
(1) Series A Preferred Stock and Series B Preferred Stock: In the event that at anytime or from time to time after the Original Issue Date for the Series A Preferred Stock or Series B Preferred Stock the Corporation shall issue Additional Shares of Common Stock (including, without limitation, Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(1) but excluding Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2), which event is dealt with in Section 2(e)(vi)(1)), without consideration or for a consideration per share less than the Series A Conversion Price or the Series B Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Series A Conversion Price or Series B Conversion Price, as the case may be, shall be reduced, concurrently with such issue, to a price (calculated to the nearest one tenth of one cent) determined in accordance with the following formula:
NCP=(P(1))(Q(1))+(P(2))(Q(2))/Q(1)+Q(2)
where:
NCP = New Series A Conversion Price or Series B Conversion
Price, as applicable;
P(1) = Series A Conversion Price or Series B Conversion
Price, as applicable, in effect immediately prior to
new issue;
Q(1) = Number of shares of Common Stock outstanding, or
deemed to be outstanding as set forth below,
immediately prior to such issue;
P(2) = Price per share received by the Corporation upon such
issue;
Q(2) = Number of shares of Common Stock issued, or deemed to
have been issued, in the subject transaction;
|
Provided, that for the purpose of this Section 2(e)(iv), all shares of Common
Stock issuable upon conversion or exercise of Options or Convertible Securities
(including without limitation shares of Preferred Stock) outstanding immediately
prior to such issue shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section
2(e)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.
(2) Series C Preferred Stock: If there shall occur any adjustment in the Series B Conversion Price pursuant to Section 2(e)(iv)(1) above, then and in such event, the Series C Conversion Price shall be automatically adjusted (rounded down to the nearest cent) by the same percentage as the percentage of the adjustment to the Series B Conversion Price.
(v) Determination of Consideration. For purposes of this Section 2(e), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at the aggregate amounts of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in accordance with Section 1(b); and
(C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for
consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible
Securities. The consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to Section
2(e)(iii)(1), relating to Options and Convertible Securities, shall be
determined by dividing (x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by (y) the maximum number
of shares of Common Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.
(vi) Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidations of Common Stock.
(1) Stock Dividends, Distributions or Subdivisions. In the event the Corporation shall be deemed to issue Additional Shares of Common Stock pursuant to Section 2(e)(iii)(2) in a stock dividend, stock distribution or subdivision, the Conversion Price of each series of Preferred Stock in effect immediately before such deemed issuance shall, concurrently with the effectiveness of such deemed issuance, be proportionately decreased.
(2) Combinations or Consolidations. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.
(f) Adjustments for Certain Dividends and Distributions. In the event that at any time or from time to time after the Original Issue Date for any series of Preferred Stock the Corporation shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock or securities the issuance of which are deemed to be issuances of Common Stock under Section 2(e)(iii), then and in each such event provision shall be made so that the holders of Preferred Stock of such series shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock immediately prior to such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period, giving application during such period to all adjustments called for herein.
(g) Adjustment for Reclassification, Exchange, or Substitution. In the event that at any time or from time to time after the Original Issue Date for any series of Preferred Stock, the Common Stock issuable upon the conversion of such series of Preferred Stock shall be changed into the same or a different number of shares of any class or series of stock or other securities or property, whether by capital reorganization, reclassification, recapitalization or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of any shares of such series of Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, recapitalization or other change by the holder of a number of shares of Common Stock equal to the number of shares of Common Stock into which such shares of such series of Preferred Stock might have been converted immediately prior to such reorganization, reclassification, recapitalization or change, all subject to further adjustment as provided herein.
(h) Adjustment for Merger, Consolidation or Sale
of Assets. In the event that at any time or from time to time the Corporation
shall merge or consolidate with or into another entity or sell all or
substantially all of its assets, and such consolidation, merger or sale is not
treated as a liquidation under Section 1(c), each share of Preferred Stock shall
thereafter be convertible into the kind and amount of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Corporation deliverable upon conversion of such Preferred Stock would
have been entitled to receive upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 2 with respect to the rights and interest thereafter of the holders of
shares of such Preferred Stock, to the end that the provisions set forth in this
Section 2 (including provisions with respect to changes in and other adjustments
of the Conversion Prices) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other securities or
property thereafter deliverable upon the conversion of such Preferred Stock.
(i) Special Mandatory Conversion.
(i) Mandatory Conversion Upon Failure to Participate in Equity Financing.
(1) When any holder of shares of Series A Preferred Stock is entitled to exercise its right of first refusal (the "RIGHT OF FIRST REFUSAL") as set forth in Section 3 of that certain Investor Rights Agreement, dated as of July 31, 2003, by and among the Corporation and certain of its stockholders (the "RIGHTS AGREEMENT") with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series A Conversion Price in effect immediately prior to such issue or sale (a "SERIES A DILUTIVE ISSUANCE") and (x) the Corporation has complied in all
material respects with its obligations pursuant to Section 3 of the Rights Agreement in respect thereof and (y) the provisions of the Right of First Refusal applicable to the particular Series A Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not, by exercise of such holder's Right of First Refusal, acquire at least such holder's Basic Amount (as defined in and calculated in accordance with Section 3.1 of the Rights Agreement) of New Securities (as defined in Section 3.2 of the Rights Agreement) in such Series A Dilutive Issuance, then each Non-Participating Series A Share (as defined below) held by such holder shall automatically and without further action on the part of such holder be converted, effective subject to and concurrently with consummation of the Series A Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series A Dilutive Issuance, at the Series A Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series A Preferred Stock are converted into shares of Common Stock in accordance with this Section 2(i)(i)(1) shall be deemed to have waived with respect to each Non-Participating Series A Share (A) the reduction in the Series A Conversion Price of such Non-Participating Series A Share that would have otherwise resulted pursuant to Section 2(e) from such Series A Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series A Share pursuant to this Section 2(i)(i)(1), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES A SHARES" shall mean such number of shares of Series A Preferred Stock of a holder that is determined by multiplying the total number of shares of Series A Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series A Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(2) When any holder of shares of Series B Preferred Stock is entitled to exercise its Right of First Refusal as set forth in Section 3 of the Rights Agreement with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series B Conversion Price in effect immediately prior to such issue or sale (a "SERIES B DILUTIVE ISSUANCE") and (x) the Corporation has complied in all material respects with its obligations pursuant to Section 3 of the Rights Agreement in respect thereof and (y) the provisions of the Right of First Refusal applicable to the particular Series B Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not by exercise of such holder's Right of First Refusal, acquire at least such holder's Basic Amount of New Securities in such Series B Dilutive Issuance, then each Non-Participating Series B Share (as defined below) held by such holder shall automatically and without further action on the part of such holder be converted, effective subject to and concurrently with consummation of the Series B Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series B Dilutive Issuance, at the Series B Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series B Preferred Stock are converted into shares of Common
Stock in accordance with this Section 2(i)(i)(2) shall be deemed to have waived with respect to each Non-Participating Series B Share (A) the reduction in the Series B Conversion Price of such Non-Participating Series B Share that would have otherwise resulted pursuant to Section 2(e) from such Series B Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series B Share pursuant to this Section 2(i)(i)(2), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES B SHARES" shall mean such number of shares of Series B Preferred Stock of a holder that is determined by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B Dilutive Issuance minus the number of new Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series B Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(3) When any holder of shares of Series C Preferred Stock is entitled to exercise its right of first refusal (the "SERIES C RIGHT OF FIRST REFUSAL") as set forth in Section 16 of that certain Investor Rights Agreement, dated as of September 8,2003, by and between the Corporation and Merck & Co.,Inc. (the "SERIES C RIGHTS AGREEMENT") with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series C Conversion Price in effect immediately prior to such issue or sale (a "SERIES C DILUTIVE ISSUANCE") and (x) the Corporation has complied in all material respects with its obligations pursuant to Section 16 of the Series C Rights Agreement in respect thereof and (y) the provisions of the Series C Right of First Refusal applicable to the particular Series C Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Series C Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not, by exercise of such holder's Series C Right of First Refusal, acquire at least such holder's Basic Amount (as defined in and calculated in accordance with Section 16(a) of the Series C Rights Agreement) of New Securities (as defined in Section 16(b) of the Series C Rights Agreement) in such Series C Dilutive Issuance, then each Non-Participating Series C Share (as defined below) held by such holder shall automatically and without further action on the part of such holder be converted, effective subject to and concurrently with consummation of the Series C Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series C Dilutive Issuance, at the Series C Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series C Preferred Stock are converted into shares of Common Stock in accordance with this Section 2(i)(i)(3) shall be deemed to have waived with respect to each Non-Participating Series C Share (A) the reduction in the Series C Conversion Price of such Non-Participating Series C Share that would have otherwise resulted pursuant to Section 2(e) from such Series C Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series C Share pursuant to this Section 2(i)(i)(3), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of Series C Preferred Stock of a holder that is determined by multiplying the total number of shares of Series C Preferred Stock held by such holder by a fraction, the numerator of which is such holder's
Basic Amount in such Series C Dilutive Issuance minus the number of New
Securities purchased by such holder (and any assignee of such holder pursuant to
Section 16(i) of the series C Rights Agreement) in the Series C Dilutive
Issuance, and the denominator of which is such holder's Basic Amount.
(ii) Notwithstanding the foregoing, in the event that the Corporation issues equity securities in a transaction that is both a Series A Dilutive Issuance and a Series B Dilutive Issuance (the "SERIES A/B DILUTIVE ISSUANCE") and a holder of both Series A Preferred Stock and Series B Preferred Stock does not acquire at least such holder's Basic Amount of New Securities, then the shares of Senior Preferred Stock of such holder that shall be converted into shares of Common Stock in accordance with this Section 2(i) shall bo allocated pro rata to such holder's Series A Preferred Stock and Series B Preferred Stock. For purposes of clarity, in the event of a Series A/B Dilutive Issuance, (A) the term "NON-PARTICIPATING SERIES A SHARES" shall mean such number of shares of Series A Preferred Stock of a holder that is determined by multiplying the total number of shares of Series A Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series A/B Dilutive Issuance minus the number of new Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A/B Dilutive Issuance and the denominator of which is such holder's Basic Amount and (B) the term "NON-PARTICIPATING SERIES B SHARES" shall mean such number of shares of Series B Preferred Stock of a holder that is determined by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series A/B Dilutive Issuance minus the number of new Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A/B Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(iii) Mechanics of Special Mandatory Conversion. The holder of any shares of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock converted pursuant to this Section 2(i) shall surrender the certificate or certificates of such shares, duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfers attached, at the office of the Corporation or any transfer agent for such Preferred Stock (or such holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen or destroyed and shall execute an agreement reasonably satisfactory to the Corporation (which agreement will not require a bond) to indemnify the Corporation from any loss incurred by it in connection therewith). The Corporation shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock, or to such holder's nominee or nominees, a certificate or certificates for the number of full shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the consummation of the Series A Dilutive Issuance, Series B Dilutive Issuance or Series C Dilutive Issuance, as the case may be, unless the transfer books of the Corporation are closed on that date, in which event such holder shall be deemed to have become a holder of record of Common Stock on the next succeeding date on which the transfer books are open.
(j) No Impairment. The Corporation shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but shall at all times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Eights of the holders of Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price for a particular series of Preferred Stock pursuant to this Section 2, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of shares of such series of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of shares of a particular series of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price for such series at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of each share of such series of Preferred Stock.
(l) Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class or series of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Corporation shall mail to each holder of Preferred Stock at least ten (10) days prior to such record date a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.
(m) Common Stock Reserved. The Corporation shall reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then outstanding shares of Preferred Stock, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
(n) Certain Taxes. The Corporation shall pay any issue or transfer taxes payable in connection with the conversion of Preferred Stock, provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer to a name other than that of the holder of the Preferred Stock.
(o) Closing of Books. The Corporation shall at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the timely conversion or transfer of such Preferred Stock or Common Stock.
(p) Validity of Shares. The Corporation agrees that it will from time to time take all such actions as may be required to assure that all shares of Common Stock which may be issued upon conversion of any Preferred Stock will, upon issuance, be legally and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
Section 3. Restrictions.
(a) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 60% in voting power of the then outstanding shares of Series A Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series A Preferred Stock;
(ii) amend or repeal any provision of, or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any corporation or other entity in which it holds, directly or indirectly, an equity interest representing more than 50% of the voting power of all outstanding capital stock of such entity (any such entity, a "SUBSIDIARY") to amend or repeal any provision of or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-Laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series A Preferred Stock or increase or decrease the number of authorized shares of Series A Preferred Stock; or
(iii) authorize or designate any class or series of capital stock having rights senior to or on a parity with the Series A Preferred Stock as to dividends, liquidation or otherwise.
(b) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 66 2/3% in voting power of the then outstanding shares of Series B Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series B Preferred Stock;
(ii) amend or repeal any provision of or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any Subsidiary to amend or repeal any provision of, or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series B Preferred Stock or increase or decrease the number of authorized shares of Series B Preferred Stock; or
(iii) authorize or designate any class or series of capital stock having rights senior to or on a parity with the Series B Preferred Stock as to dividends, liquidation or otherwise.
(c) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of the then outstanding shares of Series C Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series C Preferred Stock; or
(ii) amend or repeal any provision of or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any Subsidiary to amend or repeal any provision of, or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series C Preferred Stock or increase or decrease the number of authorized shares of Series C Preferred Stock.
(d) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 66 2/3% in voting power of the then outstanding shares of all series of Senior Preferred Stock, voting together as a single class, the Corporation will not:
(i) pay or declare any dividend or distribution on any shares of its capital stock (except dividends payable solely in shares of Common Stock), or apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through Subsidiaries or otherwise, of any shares of the Corporation's capital stock except (a) as expressly set forth herein or (b) for repurchases of Common Stock upon termination of employment or service pursuant to written agreements in effect on the date hereof or written agreements approved by the Corporation's Board of Directors or a committee thereof);
(ii) sell, lease or otherwise dispose of all or substantially all of the assets of the Corporation, or permit any Subsidiary to sell, lease or otherwise dispose of all or substantially all of the assets of such Subsidiary;
(iii) voluntarily liquidate or dissolve or permit any Subsidiary to voluntarily liquidate or dissolve;
(iv) enter into any merger, consolidation or capital reorganization, or permit any Subsidiary to enter into any merger, consolidation or capital reorganization, except as contemplated by the Share Exchange Agreement;
(v) effect any acquisition of the capital stock of another entity that results in the consolidation of that entity into the results of operations of the Corporation, except as contemplated by the Share Exchange Agreement;
(vi) increase the number of seats on the Board of Directors above nine;
(vii) acquire all or substantially all of the assets of another entity, except as contemplated by the Share Exchange Agreement;
(viii) incur indebtedness for borrowed funds, in a single or related series of transactions, in principal amount at any time outstanding in excess of $500,000 (except in connection with the transactions contemplated by the Share Exchange Agreement, including the assumption of indebtedness owed by Ribopharma to Abingworth Bioventures III A LP, Abingworth Bioventures III B LP, Abingworth Bioventures III C LP and Abingworth Bioventures Executives LP.)
(ix) create a new plan or arrangement for the
grant of stock options, stock appreciation rights, restricted stock or other
similar stock-based compensation, or increase the number of shares or other
rights available under such existing plan or arrangement, except for increases
in the number of shares approved in the manner provided in Section
2(e)(i)(4)(B);or
(x) any provision of the By-Laws of the Corporation to the contrary notwithstanding, increase the number of directors constituting the entire Board of Directors, except as necessary to add independent outside directors whose election is subject to the approval of all of the Preferred Stock Directors then in office (as defined below).
(e) (i) Notwithstanding any other provision of this Certificate of Incorporation or the Corporation's By-Laws to the contrary, written notice of any action specified in Section 3(a), 3(b) or 3(d) shall be given by the Corporation to each holder of outstanding shares of Senior Preferred Stock at least twenty (20) days before the date on which the books of the Corporation shall close or a record shall be taken with respect to such proposed action, or, if there shall be no such date, at least twenty (20) days before the date when such proposed action is scheduled to take place. Any holder of outstanding shares of Senior Preferred Stock may waive any notice required by (his Section by a written document specifically indicating such waiver, and the holders of two-thirds in voting power of all series of Senior Preferred Stock, voting together as a single class, may waive any such notice on behalf of all holders of the Senior Preferred Stock.
(ii) Notwithstanding any other provision of this Certificate of Incorporation or the Corporation's By-Laws to the contrary, written notice of any action specified in Section 3(c) shall be given by the Corporation to each holder of outstanding shares of Series C Preferred Stock at least twenty (20) days before the date on which the books of the Corporation shall close or a record shall be taken with respect to such proposed action, or, if there shall be no such date, at least twenty (20) days before the date when such proposed action
is scheduled to take place. Any holder of outstanding shares of Series C Preferred Stock may waive any notice required by this Section by a written document specifically indicating such waiver, and the holders of a majority in voting power of the Series C Preferred Stock, voting together as a single class, may waive any such notice on behalf of all holders of the Series C Preferred Stock.
Section 4. Voting Rights.
(a) Except as otherwise required by law or set forth in this Certificate of Incorporation, the holders of Preferred Stock shall be entitled to notice of any meeting of stockholders and shall vote together with the holders of Common Stock as a single class upon any matter submitted to the stockholders for a vote. With respect to all questions as to which, under law, stockholders are required to vote by classes or series, the Preferred Stock shall vote separately as a single class and series apart from the Common Stock. Shares of Common Stock and Preferred Stock shall entitle the holders thereof to the following number of votes on any matter as to which they are entitled to vote:
(i) Holders of Common Stock shall have one vote per share; and
(ii) Holders of Preferred Stock shall have that number of votes per share as is equal to the number of shares of Common Stock (including fractions of a share) into which each such share of Preferred Stock held by such holder could be converted on the date for determination of stockholders entitled to vote at the meeting or on the date of any written consent.
(b) Except as contemplated by the Rights Agreement, the Board of Directors shall not delegate any of its powers or duties to any committee of the Board of Directors without the consent of all of the Preferred Stock Directors then in office.
(c) In addition to any other vote required by law or by this Certificate of Incorporation, the Corporation shall not amend this Certificate of Incorporation, whether by merger, consolidation or otherwise, so as to amend, alter or repeal the powers, preferences or special rights of the Senior Preferred Stock in a manner that affects them adversely, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Senior Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.
(d) In addition to any other vote required by law or by this Certificate of Incorporation, the Corporation shall not amend this Certificate of Incorporation, whether by merger, consolidation or otherwise, so as to amend, alter or repeal the powers, preferences or special rights of the Series C Preferred Stock in a manner that affects them adversely, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case maybe) separately as a class.
(e) At all times during which the number of outstanding shares of Series A Preferred Stock equals or exceeds 1,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Series A Preferred Stock shall have the exclusive right, separately from the Common Stock and the other series of Preferred Stock, to elect two directors of the Corporation. Any such director is sometimes hereinafter referred to as a "SERIES A PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding shares of Series B Preferred Stock equals or exceeds 1,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Series B Preferred Stock shall have the exclusive right, separately from the Common Stock and the other series of Preferred Stock, to elect one director of the Corporation. Such director is sometimes hereinafter referred to as a "SERIES B PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding shares of Senior Preferred Stock equals or exceeds 2,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Senior Preferred Stock, voting together as a single class, shall have the exclusive right, separately from the Common Stock, to elect one director of the Corporation. Such director is sometimes hereinafter referred to as a "SERIES A/B PREFERRED STOCK DIRECTOR" and each of the Series A Preferred Stock Directors, the Series B Preferred Stock Director and the Series A/B Director is sometimes hereinafter referred to as a "PREFERRED STOCK DIRECTOR." Each Preferred Stock Director shall be elected by the vote or written consent of the holders of a plurality in voting power of the series of Senior Preferred Stock entitled to elect such Preferred Stock Director. If a Preferred Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the series of Senior Preferred Stock entitled to elect such Preferred Stock Director shall replace such director. Any Preferred Stock Director may be removed, with or without cause, and a replacement Preferred Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a plurality in voting power of the outstanding series of Senior Preferred Stock entitled to elect such director.
(f) At all times during which shares of Common Stock remain outstanding, the holders of the outstanding shares of Common Stock shall have the exclusive right, separately from the Preferred Stock, to elect two directors of the Corporation (the "COMMON STOCK DIRECTORS"). Each Common Stock Director shall be elected by the vote or written consent of the holders of a plurality in voting power of the outstanding Common Stock. If a Common Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Common Stock shall replace such director. Any Common Stock Director may be removed, with or without cause, and a replacement Common Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a plurality in voting power of the outstanding Common Stock.
(g) All other directors of the Corporation shall be elected by the holders of the Common Stock and Preferred Stock voting together as a single class, with the holders of Preferred Stock to have that number of votes as is determined in accordance with Section 4(a)(ii).
(h) In addition to any rights which may be available under the Corporation's By-Laws or otherwise under law, the holders of not less than twenty percent (20%) in voting power of the outstanding Senior Preferred Stock shall be entitled to call meetings of the stockholders of the Corporation. Within five (5) business days after written application by the holders of not less than twenty percent (20%) in voting power of the outstanding Senior Preferred Stock, the President or Secretary, or such other officer of the Corporation as may be authorized in the By-Laws of the Corporation to give notice of meetings of stockholders of the Corporation, shall notify each stockholder of the Corporation entitled to such notice of the date, time, place and purpose of such meeting.
Section 5. Dividends.
(a) Dividends may be declared and paid on Common Stock and Preferred Stock from funds lawfully available therefor as and when determined by the Board of Directors of the Corporation.
(b) No dividends shall be declared or paid on the Common Stock or Preferred Stock except as set forth in this Section 5.
Section 6. Redemption
(a) At the written election of holders of at least 66 2/3% in voting power of the outstanding shares of Senior Preferred Stock made at any time on or after July 25,2007 (the "REDEMPTION ELECTION"), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Senior Preferred Stock in three equal annual installments, upon the terms set forth in. this Section 6. The first installment of such redemption (the "FIRST REDEMPTION DATE") shall occur on a date specified in the Redemption Election, which shall be not less than ninety (90) days after the date of the Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Redemption Date. The Corporation shall redeem one-third of the outstanding shares of Senior Preferred Stock held by each holder on the First Redemption Date, one half of the outstanding shares of Senior Preferred Stock then held by each holder on the first anniversary thereof and the remaining shares on the second anniversary thereof. On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached, at the offices of the Corporation or of any transfer agent for the Senior Preferred Stock. The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed. The redemption price of each share of Series A Preferred Stock shall be equal to (i) $1.00 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such Senior Preferred Stock) plus all dividends declared but unpaid on such share on the
applicable redemption date (the "SERIES A REDEMPTION AMOUNT") plus (ii) an additional amount computed like interest payable on the Series A Redemption Amount at the rate equal to simple interest of ten percent (10%) per annum from the date of issuance of such share of Senior Preferred Stock. The redemption price of each share of Series B Preferred Stock shall be equal to (i) $2.50 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such Senior Preferred Stock) plus all dividends declared but unpaid on such share on the applicable redemption date (the "SERIES B REDEMPTION AMOUNT," each of the Series A Redemption Amount and the Series B Redemption Amount being sometimes hereinafter referred to as a "REDEMPTION AMOUNT") plus (ii) an additional amount computed like interest payable on the Series B Redemption Amount at the rate equal to simple interest of ten percent (10%) per annum from the date of issuance of such share of Senior Preferred Stock.
(b) Notice of redemption shall be sent by first class mail, postage prepaid, to each holder of record of the Senior Preferred Stock, not less than thirty days nor more than sixty days prior to the First Redemption Date, at the address of such holder as it appears on the books of the Corporation. Such notice shall set forth (i) the First Redemption Date, the dates of the second and third installments of such redemption, and the place of redemption; and (ii) the number of shares to be redeemed on each date of redemption and the redemption price calculated in accordance with Section 6(a) above, on each such date. The Corporation shall be obligated to redeem the Senior Preferred Stock on the dates and in the amounts set forth in the notice; provided, however, that any holder of Senior Preferred Stock who is not party to a Redemption Election may convert any or all of the shares owned by such holder into Common Stock in accordance with Section 2(d) at any time prior to the date of redemption of such shares. The Corporation, if advised before the close of business on the relevant redemption date by written notice from any holder of record of Senior Preferred Stock to be redeemed, shall credit against the number of shares of Senior Preferred Stock required to be redeemed from such holder, and shall not redeem, the number of shares of Senior Preferred Stock-which shall have been converted by such holder on or before such date and which shall not previously have been credited against any redemption.
(c) If, on or before a redemption date, the funds necessary for such redemption shall have been set aside by the Corporation and deposited with a bank or trust company, in trust for the pro rata benefit of the holders of the Senior Preferred Stock that has been called for redemption, then, notwithstanding that any certificates for shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such redemption date, and all rights of holders of such shares so called for redemption shall forthwith, after such redemption date, cease and terminate with respect to such shares, excepting only the right to receive the redemption funds therefor to which they are entitled. Any interest accrued on funds so deposited and unclaimed by stockholders entitled thereto shall be paid to such stockholders at the time their respective shares are redeemed or to the Corporation at the time unclaimed amounts are paid to it. In case the holders of Senior Preferred Stock which shall have been called for redemption shall not, within one year after the final redemption date, claim the amounts so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be
relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any funds so deposited with a bank or trust company which shall not be required for such redemption by reason of the exercise subsequent to the date of such deposit of the right of conversion of any shares or otherwise shall be returned to the Corporation forthwith.
(d) If the Corporation for any reason fails to redeem any of the shares of Senior Preferred Stock in accordance with Section 6(a) on or prior to the redemption dates determined in accordance with this Section 6, then, the Corporation shall become obligated to pay, in addition to the redemption price specified in Section 6(a), interest on the unpaid balance of such price, which shall accrue at a rate equal to the lesser of (i) one percent (1%) per month or (ii) the maximum interest rate allowable under applicable law, until such price is paid in full.
(e) If the funds of the Corporation legally available for redemption of shares of Senior Preferred Stock on a redemption date are insufficient to redeem the total number of shares of Senior Preferred Stock submitted for redemption, those funds which are legally available will be used to redeem the maximum possible number of whole shares ratably among the holders of such shares based on the total Redemption Amounts owed to such holders. The shares of Senior Preferred Stock not redeemed shall remain outstanding and entitled to all rights and preferences provided herein. At any time thereafter when additional funds of the Corporation are legally available for the redemption of such shares of Senior Preferred Stock, such funds will be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available.
Section 7. No Reissuance of Preferred Stock. No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
Section 8. Residual Rights. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein shall be vested in the Common Stock.
Section 9. Notices. All notices required or permitted to be sent pursuant to this Article FOURTH shall be deemed sufficient if contained in a written instrument and delivered in person or duly sent by first-class mail postage prepaid (other than in the case of notices to or from any non-U.S. resident) or by fax or DHL, Federal Express or other recognized express international courier service, addressed to the intended recipient at the recipient's address as it appears on the books of the Corporation."
3. Pursuant to Section 228(a) of the General Corporation Law of
the State of Delaware, the holders of outstanding shares of the Corporation
having no less than the minimum number of votes that would be necessary to
authorize or take such actions at a meeting at which all shares entitled to vote
thereon were present and voted, consented to the adoption of the aforesaid
amendments without a meeting, without a vote and without prior notice and that
written notice of the taking of such actions has been given in accordance with
Section 228(e) of State of Delaware.
4. The amendment of the certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
Signed this 8th day of September 2003.
ALNYLAM HOLDING CO.
BY: /s/ JOHN MARAGANORE
----------------------
Name: JOHN MARAGANORE
Title: President & CEO
|
State of Delaware
Secretary of State
Division of Corporations
Delivered 01:41 PM 10/09/2003
FILED 01:13 PM 10/09/2003
SRV 030650919 - 3651907 FILE
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALNYLAM HOLDING CO.
Alnylam Holding Co., a Delaware corporation (hereinafter, the "CORPORATION"), hereby certifies as follows:
1. The name of the Corporation is Alnylam Holding Co. The date of filing of its original Certificate of Incorporation with the Delaware Secretary of State was May 8,2003.
2. The Certificate of Incorporation of the Corporation, as filed on May 8, 2003, as amended by the Certificate of Amendment, as filed on July 24, 2003 and the Certificate of Amendment, as filed on September 8, 2003 (collectively, the "CERTIFICATE OF INCORPORATION"), is hereby further amended by deleting the first paragraph of Article FOURTH thereof in its entirety and by substituting in lieu of said first paragraph of Article FOURTH the following new first paragraph of Article FOURTH:
"The total number of shares of all classes of stock which the Corporation has authority to issue is 57,011,480 shares, consisting of 34,739,392 shares of Common Stock, par value $.0001 per share (the "COMMON STOCK"), 3,000,010 shares of Series A Convertible Preferred Stock, par value $.0001 per share (the "SERIES A PREFERRED STOCK"), 16,672,078 shares of Series B Convertible Preferred Stock, $.0001 par value per share (the "SERIES B PREFERRED STOCK"), and 2,600,000 shares of Series C Convertible Preferred Stock, $.0001 par value per share (the "SERIES C PREFERRED STOCK"). The Series A Preferred Stock and Series B Preferred Stock are sometimes hereinafter collectively referred to as the "SENIOR PREFERRED STOCK." The Senior Preferred Stock and the Series C Preferred Stock are sometimes hereinafter collectively referred to as the "PREFERRED STOCK."
3. The Certificate of Incorporation is hereby further amended by deleting in its entirety Section 2(i)(i)(3) of Article FOURTH and by substituting in lieu of such section the following new Section 2(i)(i)(3) of Article FOURTH:
"(3) When any holder of shares of Series C Preferred Stock is
entitled to exercise its right of first refusal (the "SERIES C RIGHT OF
FIRST REFUSAL") as set forth in Section 3 of the Rights Agreement or
Section 16 of that certain Investor Rights Agreement, dated as of
September 8, 2003, by and between the Corporation and Merck & Co., Inc.
(the "SERIES C RIGHTS AGREEMENT"), as the case may be, with respect to
any issuance or sale by the Corporation of any equity securities (but
not options, warrants or debt securities
convertible into equity securities) of the Corporation without
consideration or for a consideration per share less than the Series C
Conversion Price in effect immediately prior to such issue or sale (a
"SERIES C DILUTIVE ISSUANCE") and (x) the Corporation has complied in
all material respects with its obligations pursuant to Section 3 of the
Rights Agreement or Section 16 of the Series C Rights Agreement, as the
case may be, in respect thereof and (y) the provisions of the Series C
Right of First Refusal applicable to the particular Series C Dilutive
Issuance involved have not been waived by the Corporation or eliminated
in accordance with the terms of the Rights Agreement or the Series C
Rights Agreement, as the case may be, if such holder (either alone or
with or through its partners, stockholders or affiliates) does not, by
exercise of such holder's Series C Right of First Refusal, acquire at
least such holder's Basic Amount (as defined in and calculated in
accordance with Section 3.1 of the Rights Agreement or Section 16(a) of
the Series C Rights Agreement, as the case may be) of New Securities
(as defined in Section 3.2 of the Rights Agreement or Section 16(b) of
the Series C Rights Agreement, as the case may be) in such Series C
Dilutive Issuance, then each Non-Participating Series C Share (as
defined below) held by such holder shall automatically and without
further action on the part of such holder be converted, effective
subject to and concurrently with consummation of the Series C Dilutive
Issuance, into shares of Common Stock at the time of the first closing
of such Series C Dilutive Issuance, at the Series C Conversion Price in
effect immediately prior to such closing. Each holder whose shares of
Series C Preferred Stock are converted into shares of Common Stock in
accordance with this Section 2(i)(i)(3) shall be deemed to have waived
with respect to each Non-Participating Series C Share (A) the reduction
in the Series C Conversion Price of such Non-Participating Series C
Share that would have otherwise resulted pursuant to Section 2(e) from
such Series C Dilutive Issuance and (B) the right to receive, upon
conversion of such Non-Participating Series C Share pursuant to this
Section 2(i)(i)(3), any additional shares of Common Stock that would
have been issuable as a result of such reduction in the Conversion
Price. The term "NON-PARTICIPATING SERIES C SHARES" shall mean such
number of shares of Series C Preferred Stock of a holder that is
determined by multiplying the total number of shares of Series C
Preferred Stock held by such holder by a fraction, the numerator of
which is such holder's Basic Amount in such Series C Dilutive Issuance
minus the number of New Securities purchased by such holder (and any
assignee of such holder pursuant to Section 3.9 of the Rights Agreement
or Section 16(i) of the Series C Rights Agreement, as the case may be)
in the Series C Dilutive Issuance, and the denominator of which is such
holder's Basic Amount."
4. The Certificate of Incorporation is hereby further amended by deleting in its entirety Section 2(i)(ii) of Article FOURTH and by substituting in lieu of such section the following new Section 2(i)(ii) of Article FOURTH:
"(ii)(1) Notwithstanding the foregoing, in the event that the Corporation issues equity securities in a transaction that is both a Series B Dilutive Issuance and a Series C Dilutive Issuance (the "SERIES B/C DILUTIVE ISSUANCE") and a holder of both Series B Preferred Stock and Series C Preferred Stock does not acquire at least such holder's Basic Amount of New Securities, then the shares of Preferred Stock of such holder that shall be
converted into shares of Common Stock in accordance with this Section 2(i) shall be allocated pro rata to such holder's Series B Preferred Stock and Series C Preferred Stock. For purposes of clarity, in the event of a Series B/C Dilutive Issuance, (A) the term "NON-PARTICIPATING SERIES B SHARES" shall mean such number of shares of Series B Preferred Stock of a holder that is determined by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B/C Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series B/C Dilutive Issuance, and the denominator of which is such holder's Basic Amount and (B) the term "NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of Series C Preferred Stock of a holder that is determined by multiplying the total number of shares of Series C Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B/C Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series B/C Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(2) Notwithstanding the foregoing, in the event that the
Corporation issues equity securities in a transaction that is a Series
A Dilutive Issuance, a Series B Dilutive Issuance and a Series C
Dilutive Issuance (the "SERIES A/B/C DILUTIVE ISSUANCE") and a holder
of any combination of (i) Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock, (ii) Series A Preferred Stock and
Series B Preferred Stock or (iii) Series A Preferred Stock and Series C
Preferred Stock does not acquire at least such holder's Basic Amount of
New Securities, then the shares of Preferred Stock of such holder that
shall be converted into shares of Common Stock in accordance with this
Section 2(i) shall be allocated pro rata to such holder's Series A
Preferred Stock, Series B Preferred Stock and/or Series C Preferred
Stock. For purposes of clarity, in the event of a Series A/B/C Dilutive
Issuance, (A) the term "NON-PARTICIPATING SERIES A SHARES" shall mean
such number of shares of Series A Preferred Stock of a holder that is
determined by multiplying the total number of shares of Series A
Preferred Stock held by such holder by a fraction, the numerator of
which is such holder's Basic Amount in such Series A/B/C Dilutive
Issuance minus the number of New Securities purchased by such holder
(and any assignee of such holder pursuant to Section 3.9 of the Rights
Agreement) in the Series A/B/C Dilutive Issuance, and the denominator
of which is such holder's Basic Amount, (B) the term "NON-PARTICIPATING
SERIES B SHARES" shall mean such number of shares of Series B Preferred
Stock of a holder that is determined by multiplying the total number of
shares of Series B Preferred Stock held by such holder by a fraction,
the numerator of which is such holder's Basic Amount in such Series
A/B/C Dilutive Issuance minus the number of New Securities purchased by
such holder (and any assignee of such holder pursuant to Section 3.9 of
the Rights Agreement) in the Series A/B/C Dilutive Issuance, and the
denominator of which is such holder's Basic Amount and (C) the term
"NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of
Series C Preferred Stock of a holder that is determined by multiplying
the total number of shares of Series C Preferred Stock held by such
holder by a fraction, the
numerator of which is such holder's Basic Amount in such Series A/B/C Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A/B/C Dilutive Issuance, and the denominator of which is such holder's Basic Amount."
5. Pursuant to Section 228(a) of the General Corporation Law of
the State of Delaware, the holders of outstanding shares of the Corporation
having no less than the minimum number of votes that would be necessary to
authorize or take such actions at a meeting at which all shares entitled to vote
thereon were present and voted, consented to the adoption of the aforesaid
amendments without a meeting, without a vote and without prior notice and that
written notice of the taking of such actions has been given in accordance with
Section 228(e) of the General Corporation Law of the State of Delaware.
6. The amendment of the certificate of incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
Signed this 9th day of October, 2003.
ALNYLAM HOLDING CO.
By: /s/ JOHN G. CONLEY
-------------------
Name: JOHN G. CONLEY
Title: CFO
|
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALNYLAM HOLDING CO.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Alnylam Holding Co. (hereinafter called the "Corporation"), organized and existing under and by virtue of the General Corporation Laws of the State of Delaware, does hereby certify as follows:
At a meeting of the Board of Directors of the Corporation a resolution
was duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth amendments to the Certificate of Incorporation
of the Corporation and declaring said amendments to be advisable. The
stockholders of the Corporation duly adopted said amendments by written consent
in accordance with Sections 228 and 242 of the General Corporation Law of the
State of Delaware. Said amendments have been duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendments is as follows:
RESOLVED: That the Certificate of Incorporation of the Corporation, as amended (the "Certificate of Incorporation") be further amended as follows:
(1) Article FIRST of the Certificate of Incorporation is deleted in its entirety and the following is inserted in lieu thereof:
"FIRST: The name of the Corporation is Alnylam Pharmaceuticals, Inc."
(2) Section 2(b)(i) of Article FOURTH of the Certificate of Incorporation is deleted in its entirety and the following is inserted in lieu thereof:
"(i) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price then in effect upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the public with gross proceeds to the Corporation of not less than $25,000,000 (a "Qualified Public Offering"), in the event of which offering the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until the closing of such offering."
(3) Section 2(e)(i)(4)(B) of Article FOURTH of the Certificate of Incorporation is deleted in its entirety and the following is inserted in lieu thereof:
"(B) up to 4,407,500 shares of Common Stock issued or issuable to employees, consultants or directors of the Corporation pursuant to a stock purchase or stock option plan or other employee stock bonus arrangement approved by a majority of the Corporation's Board of Directors, which majority includes at least two of the Preferred Stock Directors (as hereinafter defined), (such vote, a "Majority Directors Vote"); and provided that such number may be adjusted upward by a Majority Directors Vote;"
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer on this 26th day of February 2004.
ALNYLAM HOLDING CO.
By: /s/ John M. Maraganore
-------------------------------------
John M. Maraganore
President and Chief Executive Officer
|
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALNYLAM PHARMACEUTICALS, INC.
Alnylam Pharmaceuticals, Inc., a Delaware corporation (hereinafter, the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is Alnylam Pharmaceuticals, Inc. The date of filing of its original Certificate of Incorporation with the Delaware Secretary of State was May 8, 2003.
2. The Certificate of Incorporation of the Corporation, as filed on May 8, 2003, as amended by the Certificate of Amendment, as filed on July 24, 2003, the Certificate of Amendment, as filed on September 8, 2003, the Certificate of Amendment, as filed on October 9, 2003, and the Certificate of Amendment, as filed on February 26, 2004 (collectively, the "CERTIFICATE OF INCORPORATION") is hereby further amended by deleting Article FOURTH thereof in its entirety and by substituting in lieu of said Article FOURTH the following new Article FOURTH:
"FOURTH: The total number of shares of all classes of stock which the Corporation has authority to issue is 54,943,580 shares, consisting of 32,000,000 shares of Common Stock, par value $.0001 per share (the "COMMON STOCK"), 3,000,010 shares of Series A Convertible Preferred Stock, par value $.0001 per share (the "SERIES A PREFERRED STOCK"), 16,672,078 shares of Series B Convertible Preferred Stock, $.0001 par value per share (the "SERIES B PREFERRED STOCK"), 1,604,825 shares of Series C Convertible Preferred Stock, $.0001 par value per share (the "SERIES C PREFERRED STOCK") and 1,666,667 shares of Series D Convertible Preferred Stock, $.0001 par value per share (the "SERIES D PREFERRED STOCK"). The Series A Preferred Stock and Series B Preferred Stock are sometimes hereinafter collectively referred to as the "SENIOR PREFERRED STOCK." The Senior Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock are sometimes hereinafter collectively referred to as the "PREFERRED STOCK."
The powers, preferences and rights, and the qualifications, limitations or restrictions thereof in respect of each class or series of stock of the Corporation shall be as follows:
Section 1. Liquidation Rights.
(a) Liquidation Payments.
(i) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, the holders of the then outstanding shares of Senior Preferred Stock shall be entitled to be paid first out of the assets of the Corporation available for distribution to holders of the Corporation's capital stock of all
classes an amount equal to (a) in the case of the Series A Preferred Stock, $1.00 per share (subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such series of Senior Preferred Stock) and (b) in the case of the Series B Preferred Stock, $2.50 per share (subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such series of Senior Preferred Stock), plus (in the case of all series of Senior Preferred Stock) all dividends declared thereon but unpaid and any and all other amounts owing with respect to such shares, as of and including the date full payment shall be tendered to the holders of the Senior Preferred Stock with respect to such liquidation, dissolution or winding up. Such amount is sometimes hereinafter referred to as the "SENIOR PREFERENCE AMOUNT."
If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Senior Preferred Stock of the entire
Senior Preference Amount so distributable to them, then the entire assets of the
Corporation available for such distribution shall be distributed ratably among
the holders of the Senior Preferred Stock in proportion to the full. Senior
Preference Amount each such: holder is otherwise entitled to receive under this
Section 1(a)(j).
No payment shall be made with respect to the Series C Preferred: Stock or Common Stock unless and until full payment has been made to the holders of the Senior Preferred Stock of the full Senior Preference Amount.
(ii) After all payments shall have been made in
full to both the holders of the Senior Preferred Stock as contemplated by
Section 1(a)(i) above and to the holders of any class of equity securities that
is senior to or pari passu with the Senior Preferred Stock (the "ADDITIONAL
SENIOR PREFERRED STOCK"), or funds necessary for such payments shall have been
set aside by the Corporation in trust for the account of holders of Senior
Preferred Stock and Additional Senior Preferred Stock so as to be available for
such payments, the holders of the then outstanding shares of Series C Preferred
Stock and the holders of the then outstanding Series D Preferred Stock shall be
entitled to receive out of the remaining assets available for distribution (a)
an amount equal to the price per share paid for the Series C Preferred Stock in
the case of the Series C Preferred Stock and (ii) an amount equal to the price
per share paid for the Series D Preferred Stock in the case of the Series D
Preferred Stock (in each case, subject to equitable adjustment whenever there
shall occur a stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to such series of Preferred
Stock), plus all dividends declared thereon but unpaid and any and all other
amounts owing with respect to such shares, as of and including the date full
payment shall be tendered to the holders of the Series C Preferred Stock and
Series D Preferred Stock with respect to such liquidation, dissolution or
winding up. Such amount is sometimes hereinafter referred to as the "SERIES C
PREFERENCE AMOUNT" in the case of the Series C Preferred Stock and as the
"SERIES D PREFERENCE AMOUNT" in the case of the Series D Preferred Stock.
(iii) After all payments shall have been made in full to the holders of the Senior Preferred Stock, the Additional Senior Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock as contemplated by Section 1(a)(i) above and Section 1(a)(ii) above, respectively, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Senior Preferred Stock, the
Additional Senior Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock so as to be available for such payments, remaining assets available for distribution shall be distributed among the holders of the Common Stock ratably in proportion to the number of shares of Common Stock then held by them.
(iv) Upon any such liquidation, dissolution or
winding up, any holder of Preferred Stock may elect to receive, in lieu of the
Preference Amount otherwise payable to it pursuant to Section 1.1(a)(i) or
Section 1(a)(ii), an amount per share of Preferred Stock as would have been
payable had such share been converted to Common Stock immediately prior to such
liquidation, dissolution or winding up, plus all dividends declared but unpaid
on each such share of Preferred Stock to and including the date full payment
shall be tendered to the holders of the Preferred Stock with respect to such
liquidation, dissolution or winding up.
(v) Upon conversion of shares of Preferred Stock into shares of Common Stock pursuant to Section 2 below, the holder of such Common Stock shall not be entitled to any preferential payment or distribution in case of any liquidation, dissolution or winding up, but shall share ratably in any distribution of the asset of the Corporation to all the holders of Common Stock.
(vi) The amounts payable with respect to shares of Preferred Stock under this Section 1(a) are sometimes hereinafter referred to as "LIQUIDATION PAYMENTS."
(b) Distributions Other than Cash. The amount deemed
distributed to the holders of Preferred Stock upon any liquidation, dissolution,
or winding-up (including any transaction treated as such pursuant to Section
1(c)), and the value of the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock (as defined below), if
distributed or received, as the case may be, in any form of property (tangible
or intangible) other than cash shall be the fair market value of such property.
The term "FAIR MARKET VALUE" or "FAIR VALUE" means, with respect to any
security, its Market Price (as defined below), and with respect to any property
or assets other than cash or securities, the fair value thereof determined in
good faith jointly by the Corporation (including the approval of a director
nominated by holders of Common Stock) and the Requisite Holders (as defined
below); provided, however, that if the parties are not able to agree within a
reasonable period of time (not to exceed thirty (30) days) what amount
constitutes fair value, then the fair value will be determined pursuant to the
Arbitration Procedure (as defined below). The term "REQUISITE HOLDERS" means the
holders of at least two-thirds in voting power of the then outstanding Preferred
Stock. The term "MARKET PRICE" means, as to any security, the average of the
closing prices of such security's sales on all United States securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 30 days consisting of the thirty day period ending
three days prior to the date as of which Market Price is being determined. If at
any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the Market Price of such security shall be the fair value thereof as determined in good faith jointly by the Corporation (including the approval of a director nominated by holders of Common Stock) and the Requisite Holders; provided, however, that if such parties are not able to agree within a reasonable period of time (not to exceed ten (10) days) what amount constitutes the Market Price, then the Market Price shall be determined pursuant to the Arbitration Procedure. The term "ARBITRATION PROCEDURE" means the following procedure to determine the fair value or the Market Price, as applicable (the "VALUATION AMOUNT"). The valuation amount shall be determined by an investment banking firm of national recognition, which firm shall be reasonably acceptable to the Corporation and the Requisite Holders. If the Corporation and the Requisite Holders are unable to agree upon an acceptable investment banking firm within ten (10) days after the date either party proposed that one be selected, the investment banking firm will be selected by an arbitrator located in the City of Boston, Massachusetts, selected by the American Arbitration Association (or if such organization ceases to exist, the arbitrator shall be chosen by a court of competent jurisdiction). The arbitrator shall select the investment banking firm (within ten (10) days of his appointment) from a list, jointly prepared by the Corporation and the Requisite Holders, of not more than six investment banking firms of national standing in the United States, of which no more than three may be named by the Corporation and no more than three may be named by the Requisite Holders. The arbitrator may consider, within the ten day period allotted, arguments from the parties regarding which investment banking firm to choose, but the selection by the arbitrator shall be made in its sole discretion from the list of six. The determination of the final valuation amount by such investment banking firm shall be final and binding upon the parties. The Corporation shall pay one-half of the fees and expenses of the investment banking firm and arbitrator (if any) used to determine the valuation amount and the holders of the Preferred Stock shall pay the other half of such fees and expenses (allocated among them pro rata based on the number of shares of Preferred Stock, on an as-converted basis, then held by each of them). If required by any such investment banking firm or arbitrator, the Corporation and the holders of the Preferred Stock shall execute a retainer and engagement letter containing reasonable term and conditions, including customary provisions concerning the rights of indemnification and contribution by the Corporation and the holders of the Preferred Stock in favor of such investment banking firm or arbitrator and its officers, directors, partners, employees, agents and affiliates.
(c) Merger as Liquidation, etc. The merger or
consolidation of the Corporation into or with another corporation (except one in
which the holders of capital stock of the Corporation immediately prior to such
merger or consolidation continue to hold a majority in voting power of the
capital stock of the surviving corporation, in which case the provisions of
Section 2(h) shall apply), or the sale of all or substantially all of the assets
of the Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 1 with respect
to the Preferred Stock, unless the holders of at least two-thirds in voting
power of the then outstanding shares of Preferred Stock elect to the contrary;
such election to be made by giving notice thereof to the Corporation at least
three days before the effective date of such event. If such notice is given with
respect to the Preferred Stock, the provisions of Section 2(h) shall apply.
Unless such election is made with respect to the Preferred Stock, any amounts
received by the holders of Preferred Stock as a result of such merger or
consolidation shall be deemed to be applied toward, and all consideration
received by the
Corporation in such asset sale together with all other available assets of the Corporation shall be distributed toward, the Liquidation Payments.
(d) Notice. In the event the Corporation shall propose to
undertake any liquidation, dissolution or winding up of the affairs of the
Corporation (including any merger, consolidation or sale of assets which may be
deemed to be a liquidation, dissolution or winding up of the affairs of the
Corporation under Section 1(c)), the Corporation shall, within ten (10) days
after the date the Board of Directors approves such action or twenty (20) days
prior to any stockholders' meeting called to approve such action, whichever is
earlier, give each holder of Preferred Stock initial written notice of the
proposed action. Such initial written notice shall describe the material terms
and conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of the Preferred Stock and of
Common Stock upon consummation of the proposed action and the proposed date of
delivery thereof. If any material change in the facts set forth in the initial
notice shall occur, the Corporation shall promptly give each holder of Preferred
Stock written notice of such material change. The Corporation shall not
consummate any such proposed liquidation, dissolution or winding up before the
expiration of thirty (30) days after the mailing of the initial notice or twenty
(20) days after the mailing of any subsequent written notice, whichever is
later, provided, that any such 30-day or 20-day period may be shortened or
waived upon the written consent of the holders of at least two-thirds in voting
power of the outstanding shares of Preferred Stock. Any holder of outstanding
shares of Preferred Stock may waive any notice required by this Section by
written instrument specifically indicating such waiver.
Section 2. Conversion. The holders of Preferred Stock shall have conversion rights as follows (the "CONVERSION RIGHTS"):
(a) Right to Convert Conversion Price. Each share of Preferred Stock shall be convertible, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof; at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Preferred Stock, into such number of fully paid and nonassessable shares of Common Stock as is determined in accordance with the following:
(i) in the case of the Series A Preferred Stock, by dividing $1.00 by the Series A Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series A Preferred Stock without the payment of any additional consideration by the holder thereof (the "SERIES A CONVERSION PRICE") shall initially be $1.00 per share of Common Stock. Such initial Series A Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series A Preferred Stock is convertible, as hereinafter provided.
(ii) in the case of the Series B Preferred Stock, by dividing $2.50 by the Series B Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series B Preferred Stock without the payment of any additional consideration by the holder thereof (the "SERIES B CONVERSION PRICE") shall initially be $2.50 per share of
Common Stock. Such initial Series B Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series B Preferred Stock is convertible, as hereinafter provided.
(iii) in the case of the Series C Preferred Stock, by dividing the price per share paid for the Series C Preferred Stock by the Series C Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series C Preferred Stock without the payment of any additional consideration by the holder thereof (the "SERIES C CONVERSION PRICE") shall initially be the price per share paid for the Series C Preferred Stock per share of Common Stock. Such initial Series C Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series C Preferred Stock is convertible, as hereinafter provided.
(iv) in the case of the Series D Preferred Stock, by dividing the price per share paid for the Series D Preferred Stock by the Series D Conversion Price, determined as hereinafter provided, in effect at the time of conversion. The Conversion Price at which shares of Common Stock shall be deliverable upon conversion of Series D Preferred Stock without the payment of any additional consideration by the holder thereof (the "SERIES D CONVERSION PRICE") shall initially be the price per share paid for the Series D Preferred Stock per share of Common Stock. Such initial Series D Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series D Preferred Stock is convertible, as hereinafter provided.
Each of the Series A Conversion Price, the Series B Conversion Price, the Series C Conversion Price and the Series D Conversion Price is sometimes hereinafter referred to as a "CONVERSION PRICE."
The right of conversion with respect to any shares of Senior Preferred Stock which shall have been called for redemption under Section 6 hereof shall terminate at the close of business on the day fixed for redemption unless the Corporation shall default in the payment of the redemption price, in which case the right of conversion with respect to such shares shall continue unless and until such redemption price is paid in full.
(b) Automatic Conversion.
(i) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price then in effect upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of Common Stock for the account of the Corporation to the public with gross proceeds to the Corporation of not less than $25,000,000 (a "QUALIFIED PUBLIC OFFERING"), in the event of which offering the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until the closing of such offering.
(ii) Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Conversion Price then in effect upon the written election of the holders of not less than two-thirds in voting power of the then outstanding shares of Preferred Stock to require such mandatory conversion.
(c) Mechanics of Automatic Conversions. Upon the occurrence of an event specified in Section 2(b), the Preferred Stock of the applicable series shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided, however, that all holders of shares of Preferred Stock being converted shall be given written notice of the occurrence of the event specified in Section 2(b) triggering such conversion, including the date such event occurred (the "MANDATORY CONVERSION DATE"), and the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation (which agreement will not require a bond) to indemnify the Corporation from any loss incurred by it in connection therewith. On the Mandatory Conversion Date, all rights with respect to the Preferred Stock so converted shall terminate, except any of the rights of the holder thereof, upon surrender of the holder's certificate or certificates therefor, to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted, together with cash in an amount equal to all dividends declared but unpaid on, and any and all other amounts owing with respect to, the shares of Preferred Stock converted to and including the time of conversion. Upon the automatic conversion of the Preferred Stock, the holders of such Preferred Stock shall surrender the certificates representing such shares at the office of the Corporation or of its transfer agent. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by the holder's attorney duly authorized in writing. Upon surrender of such certificates there shall be issued and delivered to such holder, or to such holder's nominee or nominees promptly at such office, a certificate or certificates for the number of shares of Common Stock into which the shares of Preferred Stock surrendered were convertible on the date on which such automatic conversions occurred, together with cash in an amount equal to all dividends declared but unpaid on, and any and all other amounts owing with respect to, the shares of Preferred Stock converted to and including the time of conversion. Upon the automatic conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional share of Common Stock shall be issued. In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the Mandatory Conversion Date, as reasonably determined by the Board of Directors in good faith (notwithstanding the provisions of Section 1(b)).
(d) Mechanics of Optional Conversions. Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall surrender the certificate or certificates therefor at the office of the Corporation or of any
transfer agent for the Preferred Stock, and shall give written notice to the Corporation at such office that the holder elects to convert the same and shall state therein the holder's name or the name or names of the holder's nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued. On the date of conversion, all rights with respect to the Preferred Stock so converted shall terminate, except any of the rights of the holder thereof, upon surrender of the holder's certificate or certificates therefor, to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted and cash in an amount equal to all dividends declared but unpaid on, and any and all other amounts owing with respect to, the shares of Preferred Stock being converted to and including the time of conversion. If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by the holder's attorney duly authorized in writing. Upon the optional conversion of the Preferred Stock of any series, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional share of Common Stock shall be issued. In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the date of conversion, as reasonably determined by the Board of Directors in good faith (notwithstanding the provisions of Section 1(b)). The Corporation shall, promptly after surrender of the certificate or certificates for conversion, issue and deliver at such office to such holder of Preferred Stock, or to the holder's nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled as aforesaid; together with cash in lieu of any fraction of a share and cash in an amount equal to all dividends declared but unpaid thereon and any and all other amounts owing with respect thereto at such time. Unless otherwise specified by the holder in the written notice of conversion, such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.
(e) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this
Section 2(e); the following definitions shall apply:
(1) "OPTION" shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire either Common Stock or Convertible Securities.
(2) "CONVERTIBLE SECURITIES" shall mean any evidences of indebtedness, shares of capital stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.
(3) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common Stock issued (or, pursuant to Section 2(e)(iii), deemed to be issued) by the Corporation after March 11, 2004 (the "Baseline Date"), other than:
(A) shares of Common Stock issued or issuable upon conversion of shares of Preferred Stock;
(B) up to 4,407,500 shares of Common Stock issued or issuable to employees, consultants or directors of the Corporation pursuant to a stock purchase or stock option plan or other employee stock bonus arrangement approved by a majority of the Corporation's Board of Directors, which Majority includes at least two of the Preferred Stock Directors (as hereinafter defined), (such vote, a "MAJORITY DIRECTORS VOTE"); and provided that such number may be adjusted upward by a Majority Directors Vote;
(C) shares of Series D Preferred Stock issued or issuable to Isis Pharmaceuticals, Inc. (or affiliates thereof);
(D) securities issued in connection with capital leases, bank financing or other similar transactions with a non-equity financing purpose, in each case as approved by a Majority Directors Vote;
(E) securities issued in connection with licensing or strategic alliance transactions, in each case as approved by a Majority Directors Vote;
(F) securities issued pursuant to the acquisition of another corporation or other entity by the Corporation by merger, purchase of substantially all of the assets, or other reorganization whereby the Corporation acquires not less than 51% of the voting power of such corporation or other entity in a transaction approved by a Majority Directors Vote;
(G) up to 16,328 shares of Series B Preferred Stock issued to Garching Innovation GmbH ("GARCHING"), Massachusetts Institute of Technology ("MIT"), Whitehead Institute for Biomedical Research ("WHITEHEAD INSTITUTE") and Max-Planck-Gesellschaft zur Foerderung der Wissonschaften e.V ("MAX PLANCK") pursuant to license agreements between such entities and Alnylam; and
(H) shares of Common Stock issued in connection with a Qualified Public Offering.
(ii) No Adjustment of Conversion Price. Except
set forth in Section 2(e)(vi), no adjustment in the number of shares of Common
Stock into which any series of Preferred Stock is convertible shall be made, by
adjustment in the applicable Conversion Price for such series in respect of the
issuance of Additional Shares of Common Stock, (a) unless the consideration per
share for an Additional Share of Common Stock (determined pursuant to Section
2(e)(v)) issued or deemed to be issued by the Corporation is less than the
applicable Conversion Price for such series in effect on the date of, and
immediately prior to the issue of such Additional Shares of Common Stock or (b)
if prior to such issuance or within twenty (20) days thereafter the Corporation
receives notice from the holders of at least two-thirds of the outstanding
shares of such series of Preferred Stock that no such adjustment in the
Conversion Price for such series shall be made.
(iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock.
(1) Options and Convertible Securities.
In the event the Corporation at any time or from time to time after the Baseline
Date shall issue any Options (excluding for all purposes of this Section
2(e)(iii)(1) Options excluded from the definition of Additional Shares of Common
Stock in Section 2(e)(i)(4)(B)) or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, and the Conversion
Price of any such series of Preferred Stock shall be adjusted accordingly;
provided, that in any such case in which Additional Shares of Common Stock are
deemed to be issued:
(A) no further adjustment in the Conversion Price of any such series of Preferred Stock shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;
(B) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Corporation, or decrease in the number of shares of Common stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price of any such series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;
(C) upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the Conversion price of any such series of Preferred Stock computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:
(I) in the case of Convertible Securities or Options for Common Stock the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether at not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which
were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and
(II) in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation (determined pursuant to Section 2(e)(v)) upon the issue of the Convertible Securities with respect to which such Options were actually exercised;
(D) no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the Conversion Price of any such series of Preferred Stock to an amount which exceeds the lower of (i) the Conversion Price of any such series of Preferred Stock immediately prior to adjustment on the original adjustment date, or (ii) the Conversion Price of any such series of Preferred Stock that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date;
(E) if such record date shall
have been fixed and such Options or Convertible Securities are not
issued on the date fixed therefor, the adjustment previously made in
the Conversion Price of any such series of Preferred Stock which became
effective on such record date shall be canceled as of the close of
business on such record date, and thereafter the Conversion Price of
any such series of Preferred Stock shall be adjusted pursuant to this
Section 2(e)(iii) as of the actual date of their issuance.
(2) Stock Dividends Stock Distributions and Subdivisions. In the event the Corporation at any time or from time to time after the Baseline Date shall declare or pay any dividend or make any other distribution on the Common Stock payable in Common Stock or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued with respect to such series of Preferred Stock:
(A) in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or
(B) in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective.
If such record date shall have been fixed and no part of such dividend or distribution shall have been paid on the date fixed therefor, the adjustment previously made in the Conversion Price of any such series of Preferred Stock which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the Conversion Price of such series
of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of the time of actual payment of such dividend or distribution.
(iv) Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock.
(1) Series A Preferred Stock and Series B Preferred Stock. In the event that at any time or from time to time after the Baseline Date the Corporation shall issue Additional Shares of Common Stock (including, without limitation, Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(1) but excluding Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2), which event is dealt with in Section 2(e)(vi)(1)), without consideration or for a consideration per share less than the Series A Conversion Price or the Series B Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, such Series A Conversion Price or Series B Conversion Price, as the case may be, shall be reduced, concurrently with such issue, to a price (calculated to the nearest one tenth of one cent) determined in accordance with the following formula:
(P1) (Q1) + (P2) (Q2)
NCP = ---------------------
Q1 + Q2
where:
NCP = New Series A Conversion Price or Series B
Conversion Price, as applicable;
P1 = Series A Conversion Price or Series B
Conversion Price, as applicable, in effect
immediately prior to new issue;
Q1 = Number of shares of Common Stock outstanding,
or deemed to be outstanding as set forth below,
immediately prior to such issue;
P2 = Price per share received by the Corporation upon
such issue;
Q2 = Number of shares of Common Stock issued, or
deemed to have been issued, in the subject
transaction;
|
Provided, that for the purpose of this Section 2(e)(iv), all shares of Common
Stock issuable upon conversion or exercise of Options or Convertible Securities
(including without limitation shares of Preferred Stock) outstanding immediately
prior to such issue shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section
2(e)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.
(2) Series C Preferred Stock and Series D Preferred Stock. If there shall occur any adjustment in the Series B Conversion Price pursuant to Section 2(e)(iv)(1) above, then and in such event, the Series C Conversion Price and the Series D
Conversion Price shall each be automatically adjusted (rounded down to the nearest cent) by the same percentage as the percentage of the adjustment to the Series B Conversion Price.
(v) Determination of Consideration. For purposes of this Section 2(e), the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
(A) insofar as it consists of cash, be computed at the aggregate amounts of cash received by the Corporation excluding amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in accordance with Section 1(b); and
(C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 2(e)(iii)(1),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by (y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) Adjustments for Dividends, Distributions, Subdivisions, Combinations or Consolidations of Common Stock.
(1) Stock Dividends, Distributions or Subdivisions. In the event the Corporation shall be deemed to issue Additional Shares of Common Stock pursuant to Section 2(e)(iii)(2) in a stock dividend, stock distribution or subdivision, the Conversion Price of each series of Preferred Stock in effect immediately before such deemed issuance shall, concurrently with the effectiveness of such deemed issuance, be proportionately decreased.
(2) Combinations or Consolidations. In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.
(f) Adjustments for Certain Dividends and Distributions. In the event that at any time or from time to time after the Baseline Date the Corporation shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation other than shares of Common Stock or securities the issuance of which are deemed to be issuances of Common Stock under Section 2(e)(iii), then and in each such event provision shall be made so that the holders of Preferred Stock of such series shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock immediately prior to such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application during such period to all adjustments called for herein.
(g) Adjustment for Reclassification, Exchange, or Substitution. In the event that at any time or from time to time after the Baseline Date, the Common Stock issuable upon the conversion of such series of Preferred Stock shall be changed into the same or a different number of shares of any class or series of stock or other securities or property, whether by capital reorganization, reclassification, recapitalization or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of any shares of such series of Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification recapitalization or other change by the holder of a number of shares of Common Stock equal to the number of shares of Common Stock into which such shares of such series of Preferred Stock might have been converted immediately prior to such reorganization, reclassification, recapitalization or change, all subject to further adjustment as provided herein.
(h) Adjustment for Merger, Consolidation or Sale of Assets. In the event that at any time or from time to time the Corporation shall merge or consolidate with or into another entity or sell all or substantially all of its assets, and such consolidation, merger or sale is not treated as a liquidation under Section 1(c), each share of Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Preferred Stock would have been entitled to receive upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 2 with respect to the rights and interest thereafter of the holders of shares of such Preferred Stock, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Conversion Prices) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of such Preferred Stock
(i) Special Mandatory Conversion.
(i) Mandatory Conversion Upon Failure to Participate in Equity Financing.
(1) When any holder of shares of Series A Preferred Stock is entitled to exercise its right of first refusal (the "RIGHT OF FIRST REFUSAL") as set forth in Section 3 of that certain Investor Rights Agreement, dated as of July 31, 2003, by and among the Corporation and certain of its stockholders, as the same may be amended and/or restated from time to time (the "RIGHTS AGREEMENT") with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series A Conversion Price in effect immediately prior to such issue or sale (a "SERIES A DILUTIVE ISSUANCE") and (x) the Corporation has complied in all material respects with its obligations pursuant to Section 3 of the Rights Agreement in respect thereof and (y) the provisions of the Right of First Refusal applicable to the particular Series A Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not, by exercise of such holder's Right of First Refusal, acquire at least such holder's Basic Amount (as defined in and calculated in accordance with Section 3.1 of the Rights Agreement) of New Securities (as defined in Section 3.2 of the Rights Agreement) in such Series A Dilutive Issuance, then each Non-Participating Series A Share (as defined below) held by such holder shall automatically and without further action on the part of such holder be converted, effective subject to and concurrently with consummation of the Series A Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series A Dilutive Issuance, at the Series A Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series A Preferred Stock are converted into shares of Common Stock in accordance with this Section (i)(i)(1) shall be deemed to have waived with respect to each Non-Participating Series A Share (A) the reduction in the Series A Conversion Price of such Non-Participating Series A Share that would have otherwise resulted pursuant to Section 2(e) from such Series A Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series A Share pursuant to this Section 2(i)(i)(1), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES A SHARES" shall mean such number of shares of Series A Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series A Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series A Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(2) When any holder of shares of Series B Preferred Stock is entitled to exercise its Right of First Refusal as set forth in Section 3 of the Rights Agreement with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series B Conversion Price in effect immediately prior to such issue or sale (a "SERIES B DILUTIVE ISSUANCE") and (x) the Corporation has complied in all material respects with its obligations pursuant to Section 3 of the Rigs Agreement in respect thereof and (y) the provisions of the Right of First Refusal applicable
to the particular Series B Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not by exercise of such holder's Right of First Refusal, acquire at least such holder's Basic Amount of New Securities in such Series B Dilutive Issuance, then each Non-Participating Series B Share (as defined below) held by such holder shall automatically and without further action on the part of such holder be converted, effective subject to and concurrently with consummation of the Series B Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series B Dilutive Issuance, at the Series B Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series B Preferred Stock are converted into shares of Common Stock in accordance with this Section 2(i)(i)(2) shall be deemed to have waived with respect to each Non-Participating Series B Share (A) the reduction in the Series B Conversion Price of such Non-Participating Series B Share that would have otherwise resulted pursuant to Section 2(e) from such Series B Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series B Share pursuant to this Section 2(i)(i)(2), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES B SHARES" shall mean such number of shares of Series B Preferred Stock of a holder that is determined by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series B Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(3) When any holder of shares of Series
C Preferred Stock is entitled to exercise its right of first refusal (the
"SERIES C RIGHT OF FIRST REFUSAL") as set forth in Section 3 of the Rights
Agreement or Section 16 of that certain Investor Rights Agreement, dated as of
September 8, 2003, by and between the Corporation and Merck & Co., Inc. (the
"SERIES C RIGHTS AGREEMENT"), as the case may be, with respect to any issuance
or sale by the Corporation of any equity securities (but not options, warrants
or debt securities convertible into equity securities) of the Corporation
without consideration or for a consideration per share less than the Series C
Conversion Price in effect immediately prior to such issue or sale (a "SERIES C
DILUTIVE ISSUANCE") and (x) the Corporation has complied in all material
respects with its obligations pursuant to Section 3 of the Rights Agreement or
Section 16 of the Series C Rights Agreement, as the case may be, in respect
thereof and (y) the provisions of the Series C Right of First Refusal applicable
to the particular Series C Dilutive Issuance involved have not been waived by
the Corporation or eliminated in accordance with the terms of the Rights
Agreement or the Series C Rights Agreement, as the case may be, if such holder
(either alone or with or through its partners, stockholders or affiliates) does
not, by exercise of such holder's Series C Right of First Refusal, acquire at
least such holder's Basic Amount (as defined in and calculated in accordance
with Section 3.1 of the Rights Agreement or Section 16(a) of the Series C Rights
Agreement, as the case may be) of New Securities (as defined in Section 3.2 of
the Rights Agreement or Section 16(b) of the Series C Rights Agreement, as the
case may be) in such Series C Dilutive Issuance, then each Non-Participating
Series C Share (as defined below) held by such holder shall automatically and
without further action on the part of such holder be converted, effective
subject to and concurrently with consummation of the Series C Dilutive Issuance,
into shares of Common Stock at the time of the first closing of such Series C
Dilutive
Issuance, at the Series C Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series C Preferred Stock are converted into shares of Common Stock in accordance with this Section 2(i)(i)(3) shall be deemed to have waived with respect to each Non-Participating Series C Share (A) the reduction in the Series C Conversion Price of such Non-Participating Series C Share that would have otherwise resulted pursuant to Section 2(e) from such Series C Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series C Share pursuant to this Section 2(i)(i)(3), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of Series C Preferred Stock of a holder that is determined by multiplying the total number of shares of Series C Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series C Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement or Section 16(i) of the Series C Rights Agreement, as the case may be) in the Series C Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(4) When any holder of shares of Series D Preferred Stock is entitled to exercise its right of first refusal (the "SERIES D RIGHT OF FIRST REFUSAL") as set forth in Section 16 of that certain Investor Rights Agreement, dated as of March 11, 2004, by and between the Corporation and Isis Pharmaceuticals, Inc. (the "SERIES D RIGHTS AGREEMENT") with respect to any issuance or sale by the Corporation of any equity securities (but not options, warrants or debt securities convertible into equity securities) of the Corporation without consideration or for a consideration per share less than the Series D Conversion Price in effect immediately prior to such issue or sale (a "SERIES D DILUTIVE ISSUANCE") and (x) the Corporation has complied in all material respects with its obligations pursuant to Section 16 of the Series D Rights Agreement in respect thereof and (y) the provisions of the Series D Right of First Refusal applicable to the particular Series D Dilutive Issuance involved have not been waived by the Corporation or eliminated in accordance with the terms of the Series D Rights Agreement, if such holder (either alone or with or through its partners, stockholders or affiliates) does not, by exercise of such holder's Series D Right of First Refusal, acquire at least such holder's Basic Amount (as defined in and calculated in accordance with Section 16(a) of the Series D Rights Agreement) of New Securities (as defined in Section 16(b) of the Series D Rights Agreement) in such Series D Dilutive Issuance, then each Non-Participating Series D Share (as defined below) held by such holder shall automatically and without further action on the part of such holder be converted, effective subject to and concurrently with consummation of the Series D Dilutive Issuance, into shares of Common Stock at the time of the first closing of such Series D Dilutive Issuance, at the Series D Conversion Price in effect immediately prior to such closing. Each holder whose shares of Series D Preferred Stock are converted into shares of Common Stock in accordance with this Section 2(i)(i)(4) shall be deemed to have waived with respect to each Non-Participating Series D Share (A) the reduction in the Series D Conversion Price of such Non-Participating Series D Share that would have otherwise resulted pursuant to Section 2(e) from such Series D Dilutive Issuance and (B) the right to receive, upon conversion of such Non-Participating Series D Share pursuant to this Section 2(i)(i)(4), any additional shares of Common Stock that would have been issuable as a result of such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES D SHARES" shall mean such number of shares of Series D Preferred Stock of a holder that is determined by multiplying the total number of shares of Series D Preferred Stock held by such holder by a fraction, the numerator of which is such holder's
Basic Amount in such Series D Dilutive Issuance minus the number of New
Securities purchased by such holder (and any assignee of such holder pursuant to
Section 16(i) of the Series D Rights Agreement) in the Series D Dilutive
Issuance, and the denominator of which is such holder's Basic Amount.
(1) Notwithstanding the foregoing, in the event that the Corporation issues equity securities in a transaction that is a Series B Dilutive Issuance, a Series C Dilutive Issuance and a Series D Dilutive Issuance (the "SERIES B/C/D DILUTIVE ISSUANCE") and a holder of Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock does not acquire at least such holder's Basic Amount of New Securities, then the shares of Preferred Stock of such holder that shall be converted into shares of Common Stock in accordance with this Section 2(i) shall be allocated pro rata to such holder's Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. For purposes of clarity, in the event of a Series B/C/D Dilutive Issuance, (A) the term "NON-PARTICIPATING SERIES B SHARES" shall mean such number of shares of Series B Preferred Stock of a holder that is determined by multiplying the total number of shares of Series B Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B/C/D Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series B/C/D Dilutive Issuance, and the denominator of which is such holder's Basic Amount, (B) the term "NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of Series C Preferred Stock of a holder that is determined by multiplying the total number of shares of Series C Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B/C/D Dilutive Issuance minus the number of New Securities purchased by such holder (and any assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the Series B/C/D Dilutive Issuance, and the denominator of which is such holder's Basic Amount and (C) the term "NON-PARTICIPATING SERIES D SHARES" shall mean such number of shares of Series D Preferred Stock of a holder that is determined by multiplying the total number of shares of Series D Preferred Stock held by such holder by a fraction, the numerator of which is such holder's Basic Amount in such Series B/C/D Dilutive Issuance minus the number of New Securities purchased by such holder (and any Affiliate of such holder pursuant to Section 16(i) of the Series D Rights Agreement) in the Series B/C/D Dilutive Issuance, and the denominator of which is such holder's Basic Amount.
(2) Notwithstanding the foregoing, in
the event that the Corporation issues equity securities in a transaction that is
a Series A Dilutive Issuance, a Series B Dilutive Issuance, a Series C Dilutive
Issuance and a Series D Dilutive Issuance (the "SERIES A/B/C/D DILUTIVE
ISSUANCE") and a holder of any combination of (i) Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock,
(ii) Series A Preferred Stock and Series B Preferred Stock, (iii) Series A
Preferred Stock and Series C Preferred Stock or (iv) Series A Preferred Stock
and Series D Preferred Stock does not acquire at least such holder's Basic
Amount of New Securities, then the shares of Preferred Stock of such holder that
shall be converted into shares of Common Stock in accordance with this Section
2(i) shall be allocated pro rata to such holder's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and/or Series D Preferred
Stock. For purposes of clarity, in the event of
a Series A/B/C/D Dilutive Issuance, (A) the term "NON-PARTICIPATING SERIES A
SHARES" shall mean such number of shares of Series A Preferred Stock of a holder
that is determined by multiplying the total number of shares of Series A
Preferred Stock held by such holder by a fraction, the numerator of which is
such holder's Basic Amount in such Series A/B/C/D Dilutive Issuance minus the
number of New Securities purchased by such holder (and any assignee of such
holder pursuant to Section 3.9 of the Rights Agreement) in the Series A/B/C/D
Dilutive Issuance, and the denominator of which is such holder's Basic Amount,
(B) the term "NON-PARTICIPATING SERIES B SHARES" shall mean such number of
shares of Series B Preferred Stock of a holder that is determined by multiplying
the total number of shares of Series B Preferred Stock held by such holder by a
fraction, the numerator of which is such holder's Basic Amount in such Series
A/B/C/D Dilutive Issuance minus the number of New Securities purchased by such
holder (and any assignee of such holder pursuant to Section 3.9 of the Rights
Agreement) in the Series A/B/C/D Dilutive Issuance, and the denominator of which
is such holder's Basic Amount, (C) the term "NON-PARTICIPATING SERIES C SHARES"
shall mean such number of shares of Series C Preferred Stock of a holder that is
determined by multiplying the total number of shares of Series C Preferred Stock
held by such holder by a fraction, the numerator of which is such holder's Basic
Amount in such Series A/B/C/D Dilutive Issuance minus the number of New
Securities purchased by such holder (and any assignee of such holder pursuant to
Section 3.9 of the Rights Agreement) in the Series A/B/C/D Dilutive Issuance,
and the denominator of which is such holder's Basic Amount and (D) the term
"NON-PARTICIPATING SERIES D SHARES" shall mean such number of shares of Series D
Preferred Stock of a holder that is determined by multiplying the total number
of shares of Series D Preferred Stock held by such holder by a fraction, the
numerator of which is such holder's Basic Amount in such Series A/B/C/D Dilutive
Issuance minus the number of New Securities purchased by such holder (and any
Affiliate of such holder pursuant to 16(i) of the Series D Rights Agreement) in
the Series A/B/C/D Dilutive Issuance, and the denominator of which is such
holder's Basic Amount.
(iii) Mechanics of Special Mandatory Conversion.
The holder of any shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock converted pursuant to this
Section 2(i) shall surrender the certificate or certificates of such shares,
duly endorsed for transfer or with duly executed stock transfer powers
sufficient to permit transfers attached, at the office of the Corporation or any
transfer agent for such Preferred Stock (or such holder shall notify the
Corporation or any transfer agent that such certificates have been lost, stolen
or destroyed and shall execute an agreement reasonably satisfactory to the
Corporation (which agreement will not require a bond) to indemnify the
Corporation from any loss incurred by it in connection therewith). The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Preferred Stock, or to such holder's nominee or
nominees, a certificate or certificates for the number of full shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the consummation of the Series
A Dilutive Issuance, Series B Dilutive Issuance, Series C Dilutive Issuance or
Series D Dilutive Issuance, as the case may be, unless the transfer books of the
Corporation are closed on that date, in which event such holder shall be deemed
to have become a holder of record of Common Stock on the next succeeding date on
which the transfer books are open.
(j) No Impairment. The Corporation shall not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but shall at all times in good faith assist in the carrying out of all the provisions of this Section 2 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price for a particular series of Preferred Stock pursuant to this Section 2, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of shares of such series of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of shares of a particular series of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price for such series at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of each share of such series of Preferred Stock.
(l) Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class or series of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Corporation shall mail to each holder of Preferred Stock at least ten (10) days prior to such record date a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.
(m) Common Stock Reserved. The Corporation shall reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then outstanding shares of Preferred Stock, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
(n) Certain Taxes. The Corporation shall pay any issue or transfer taxes payable in connection with the conversion of Preferred Stock, provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer to a name other than that of the holder of the Preferred Stock.
(o) Closing of Books. The Corporation shall at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the timely conversion or transfer of such Preferred Stock or Common Stock.
(p) Validity of Shares. The Corporation agrees that it will from time to time take all such actions as may be required to assure that all shares of Common Stock which may be issued upon conversion of any Preferred Stock will, upon issuance, be legally and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.
Section 3. Restrictions.
(a) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 60% in voting power of the then outstanding shares of Series A Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series A Preferred Stock;
(ii) amend or repeal any provision of, or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any corporation or other entity in which it holds, directly or indirectly, an equity interest representing more than 50% of the voting power of all outstanding capital stock of such entity (any such entity, a "SUBSIDIARY") to amend or repeal any provision of or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-Laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series A Preferred Stock or increase or decrease the number of authorized shares of Series A Preferred Stock; or
(iii) authorize or designate any class or series of capital stock having rights senior to or on a parity with the Series A Preferred Stock as to dividends, liquidation or otherwise.
(b) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 66 2/3% in voting power of the then outstanding shares of Series B Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series B Preferred Stock;
(ii) amend or repeal any provision of or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any Subsidiary to amend or repeal any provision of, or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series B Preferred Stock or increase or decrease the number of authorized shares of Series B Preferred Stock; or
(iii) authorize or designate any class or series of capital stock having rights senior to or on a parity with the Series B Preferred Stock as to dividends, liquidation or otherwise.
(c) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of the then outstanding shares of Series C Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series C Preferred Stock; or
(ii) amend or repeal any provision of or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any Subsidiary to amend or repeal any provision of, or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series C Preferred Stock or increase or decrease the number of authorized shares of Series C Preferred Stock.
(d) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least a majority of the voting power of the then outstanding shares of Series D Preferred Stock, the Corporation will not:
(i) amend the preferences, rights or privileges of the Series D Preferred Stock; or
(ii) amend or repeal any provision of or add any provision to, the Corporation's Certificate of Incorporation or By-laws or permit any Subsidiary to amend or repeal any provision of, or add any provision to, the Certificate of Incorporation (or other equivalent organizational document) or By-laws (or other equivalent document) of such Subsidiary that would adversely affect the preferences, rights or privileges of the Series D Preferred Stock or increase or decrease the number of authorized shares of Series D Preferred Stock.
(e) In addition to any other vote required by law or this Certificate of Incorporation, without first obtaining the affirmative vote or written consent of the holders of at least 66 2/3% in voting power of-the then outstanding shares of all series of Senior Preferred Stock, voting together as a single class, the Corporation will not:
(i) pay or declare any dividend or distribution on any shares of its capital stock (except dividends payable solely in shares of Common Stock), or apply any of its assets to the redemption, retirement, purchase or acquisition, directly or indirectly, through Subsidiaries or otherwise, of any shares of the Corporation's capital stock except (a) as expressly set forth herein or (b) for repurchases of Common Stock upon termination of employment or service pursuant to written agreements in effect on the date hereof or written agreements approved by the Corporation's Board of Directors or a committee thereof);
(ii) sell, lease or otherwise dispose of all or substantially all of the assets of the Corporation, or permit any Subsidiary to sell, lease or otherwise dispose of all or substantially all of the assets of such Subsidiary;
(iii) voluntarily liquidate or dissolve or permit any Subsidiary to voluntarily liquidate or dissolve;
(iv) enter into any merger, consolidation or capital reorganization, or permit any Subsidiary to enter into any merger, consolidation or capital reorganization;
(v) effect any acquisition of the capital stock of another entity that results in the consolidation of that entity into the results of operations of the Corporation;
(vi) increase the number of seats on the Board of Directors above nine;
(vii) acquire all or substantially all of the assets of another entity;
(viii) incur indebtedness for borrowed funds, in a single or related series of transactions, in principal amount at any time outstanding in excess of $500,000;
(ix) create a new plan or arrangement for the
grant of stock options, stock appreciation rights, restricted stock or other
similar stock-based compensation, or increase the number of shares or other
rights available under such existing plan or arrangement, except for increases
in the manner of shares approved in the manner provided in Section
2(e)(i)(4)(B); or
(x) any provision of the By-Laws of the Corporation to the contrary notwithstanding, increase the number of directors constituting the entire Board of Directors, except as necessary to add independent outside directors whose election is subject to the approval of all of the Preferred Stock Directors then in office (as defined below).
(f) (i) Notwithstanding any other provision of this Certificate of Incorporation or the Corporation's By-Laws to the contrary, written notice of any action specified in Section 3(a) or 3(b) shall be given by the Corporation to each holder of outstanding shares of Senior Preferred Stock at least twenty (20) days before the date on which the books of the Corporation shall close or a record shall be taken with respect to such proposed action, or, if there shall be no such date, at least twenty (20) days before the date when such proposed action is scheduled to take place. Any holder of outstanding shares of Senior Preferred Stock may waive any notice required by this Section by a written document specifically indicating such waiver, and the holders of two-thirds in voting power of all series of Senior Preferred Stock, voting together as a single class, may waive any such notice on behalf of all holders of the Senior Preferred Stock.
(ii) Notwithstanding any other provision of this Certificate of Incorporation or the Corporation's By-Laws to the contrary, written notice of any action
specified in Section 3(c) shall be given by the Corporation to each holder of outstanding shares of Series C Preferred Stock at least twenty (20) days before the date on which the books of the Corporation shall close or a record shall be taken with respect to such proposed action, or, if there shall be no such date, at least twenty (20) days before the date when such proposed action is scheduled to take place. Any holder of outstanding shares of Series C Preferred Stock may waive any notice required by this Section by a written document specifically indicating such waiver, and the holders of a majority in voting power of the Series C Preferred Stock, voting together as a single class, may waive any such notice on behalf of all holders of the Series C Preferred Stock.
(iii) Notwithstanding any other provision of this Certificate of Incorporation or the Corporation's By-Laws to the contrary, written notice of any action specified in Section 3(d) shall be given by the Corporation to each holder of outstanding shares of Series D Preferred Stock at least twenty (20) days before the date on which the books of the Corporation shall close or a record shall be taken with respect to such proposed action, or, if there shall be no such date, at least twenty (20) days before the date when such proposed action is scheduled to take place. Any holder of outstanding shares of Series D Preferred Stock may waive any notice required by this Section by a written document specifically indicating such waiver, and the holders of a majority in voting power of the Series D Preferred Stock, voting together as a single class, may waive any such notice on behalf of all holders of the Series D Preferred Stock.
Section 4. Voting Rights.
(a) Except as otherwise required by law or set forth in this Certificate of Incorporation, the holders of Preferred Stock shall be entitled to notice of any meeting of stockholders and shall vote together with the holders of Common Stock as a single class upon any matter submitted to the stockholders for a vote. With respect to all questions as to which, under law, stockholders are required to vote by classes or series, the Preferred Stock shall vote separately as a single class and series apart from the Common Stock. Shares of Common Stock and Preferred Stock shall entitle the holders thereof to the following number of votes on any matter as to which they are entitled to vote:
(i) Holders of Common Stock shall have one vote per share; and
(ii) Holders of Preferred Stock shall have that number of votes per share as is equal to the number of shares of Common Stock (including fractions of a share) into which each such share of Preferred Stock held by such holder could be converted on the date for determination of stockholders entitled to vote at the meeting or on the date of any written consent.
(b) Except as contemplated by the Rights Agreement, the Board of Directors shall not delegate any of its powers or duties to any committee of the Board of Directors without the consent of all of the Preferred Stock Directors then in office.
(c) In addition to any other vote required by law or by this Certificate of Incorporation, the Corporation shall not amend this Certificate of Incorporation, whether by merger, consolidation or otherwise, so as to amend, alter or repeal the powers, preferences or special rights of the Senior Preferred Stock in a manner that affects them adversely, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Senior Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.
(d) In addition to any other vote required by law or by this Certificate of Incorporation, the Corporation shall not amend this Certificate of Incorporation, whether by merger, consolidation or otherwise, so as to amend, alter or repeal the powers, preferences or special rights of the Series C Preferred Stock in a manner that affects them adversely, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Series C Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.
(e) In addition to any other vote required by law or by this Certificate of Incorporation, the Corporation shall not amend this Certificate of Incorporation, whether by merger, consolidation or otherwise, so as to amend, alter or repeal the powers, preferences or special rights of the Series D Preferred Stock in a manner that affects them adversely, without the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Series D Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.
(f) At all times during which the number of outstanding stares of Series A Preferred Stock equals or exceeds 1,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Series A Preferred Stock shall have the exclusive right, separately from the Common Stock and the other series of Preferred Stock, to elect two directors of the Corporation. Any such director is sometimes hereinafter referred to as a "SERIES A PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding shares of Series B Preferred Stock equals or exceeds 1,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Series B Preferred Stock shall have the exclusive right, separately from the Common Stock and the other series of Preferred Stock, to elect one director of the Corporation. Such director is sometimes hereinafter referred to as a "SERIES B PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding shares of Senior Preferred Stock equals or exceeds 2,000,000 (such minimum number of shares to be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event), the holders of the outstanding shares of Senior Preferred Stock, voting together as a single class, shall have the exclusive right, separately from the Common Stock, to elect one director of the Corporation. Such director is sometimes hereinafter referred to as a "SERIES A/B PREFERRED STOCK DIRECTOR" and each of the Series A Preferred Stock Directors, the Series B Preferred Stock Director and the Series A/B Director is sometimes hereinafter referred to as a "PREFERRED STOCK DIRECTOR." Each Preferred Stock Director shall be elected by the vote or written consent of the holders of a plurality in
voting power of the series of Senior Preferred Stock entitled to elect such Preferred Stock Director. If a Preferred Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the series of Senior Preferred Stock entitled to elect such Preferred Stock Director shall replace such Director. Any Preferred Stock Director may be removed, with or without cease, and a replacement Preferred Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a plurality in voting power of the outstanding series of Senior Preferred Stock entitled to elect such director.
(g) At all times during which shares of Common Stock remain outstanding, the holders of the outstanding shares of Common Stock shall have the exclusive right, separately from the Preferred Stock, to elect two directors of the Corporation (the "COMMON STOCK DIRECTORS"). Each Common Stock Director shall be elected by the vote or written consent of the holders of a plurality in voting power of the outstanding Common Stock. If a Common Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Common Stock shall replace such director. Any Common Stock Director may be removed, with or without cause, and a replacement Common Stock Director maybe elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a plurality in voting power of the outstanding Common Stock.
(h) All other directors of the Corporation shall be elected by the holders of the Common Stock and Preferred Stock voting together as a single class, with the holders of Preferred Stock to have that number of votes as is determined in accordance with Section 4(a)(ii).
(i) In addition to any rights which maybe available under the Corporation's By-Laws or otherwise under law, the holders of not less than twenty percent (20%) in voting power of the outstanding Senior Preferred Stock shall be entitled to call meetings of the stockholders of the Corporation. Within five (5) business days after written application by the holders of not less than twenty percent (20%) in voting power of the outstanding Senior Preferred Stock, the President or Secretary, or such other officer of the Corporation as may be authorized in the By-Laws of the Corporation to give notice of meetings of stockholders of the Corporation, shall notify each stockholder of the Corporation entitled to such notice of the date, time, place and purpose of such meeting.
Section 5. Dividends.
(a) Dividends may be declared and paid on Common Stock and Preferred Stock from funds lawfully available therefor as and when determined by the Board of Directors of the Corporation.
(b) No dividends shall be declared or paid on the Common Stock or Preferred Stock except as set forth in this Section 5.
Section 6. Redemption.
(a) At the written election of holders of at least 66 2/3% in voting power of the outstanding shares of Senior Preferred Stock made at any time on or after July 25, 2007 (the "REDEMPTION ELECTION"), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Senior Preferred Stock in three equal annual installments, upon the teams set forth in this Section 6. The first installment of such redemption (the "FIRST REDEMPTION DATE") shall occur on a date specified in the Redemption Election, which shall be not less than ninety (90) days after the date of the Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Redemption Date. The Corporation shall redeem one-third of the outstanding shares of Senior Preferred Stock held by each holder on the First Redemption Date, one half of the outstanding shares of Senior Preferred Stock then held by each holder on the first anniversary thereof and the remaining shares on the second anniversary thereof. On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached, at the offices of the Corporation or of any transfer agent for the Senior Preferred Stock. The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed. The redemption price of each share of Series A Preferred Stock shall be equal to (1) $1.00 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such Senior Preferred Stock) plus all dividends declared but unpaid on such share on the applicable redemption date (the "SERIES A REDEMPTION AMOUNT") plus (ii) an additional amount computed like interest payable on the Series A Redemption Amount at the rate equal to simple interest of ten percent (10%) per annum from the date of issuance of such share of Senior Preferred Stock. The redemption price of each share of Series B Preferred Stock shall be equal to (1) $2.50 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to such Senior Preferred Stock) plus all dividends declared but unpaid on such share opt the applicable redemption date (the "SERIES B REDEMPTION AMOUNT," each of the Series A Redemption Amount and the Series B Redemption Amount being sometimes hereinafter referred to as a "REDEMPTION AMOUNT") plus (ii) an additional amount computed like interest payable on the Series B Redemption Amount at the rate equal to simple interest often percent (10%) per annum from the date of issuance of such share of Senior Preferred Stock.
(b) Notice of redemption shall be sent by first class mail, postage prepaid, to each holder of record of the Senior Preferred Stock, not less than thirty days nor more than sixty days prior to the First Redemption Date, at the address of such holder as it appears on the books of the Corporation. Such notice shall set forth (i) the First Redemption Date, the dates of the second and third installments of such redemption, and the place of redemption, and (ii) the number of shares to be redeemed on each date of redemption and the redemption price calculated in accordance with Section 6(a) above, on each such date. The Corporation shall be obligated to redeem the Senior Preferred Stock on the dates and in the amounts set forth in the notice; provided; however, that any holder of Senior Preferred Stock who is not party to a Redemption Election may convert any or all of the shares owned by such holder into Common Stock in accordance with Section 2(d) at any time prior to the date of redemption of such shares. The Corporation, if advised before the close of business on the relevant redemption date by written notice from any holder of record of Senior Preferred Stock to be redeemed, shall credit against the number of shares of Senior Preferred Stock required to be redeemed from such holder, and
shall not redeem, the number of shares of Senior Preferred Stock which shall have been converted by such holder on or before such date and which shall not previously have been credited against any redemption.
(c) If, on or before a redemption date, the funds necessary for such redemption shall have been set aside by the Corporation and deposited with a bank or trust company, in trust for the pro rata benefit of the holders of the Senior Preferred Stock that has been called for redemption, then, notwithstanding that any certificates for shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such redemption date, and all rights of holders of such shares so called for redemption shall forthwith, after such redemption date, cease and terminate with respect to such shares, excepting only the right to receive the redemption funds therefor to which they are entitled. Any interest accrued on funds so deposited and unclaimed by stockholders entitled thereto shall be paid to such stockholders at the time their respective shares are redeemed or to the Corporation at the time unclaimed amounts are paid to it. In case the holders of Senior Preferred Stock which shall have been called for redemption shall not, within one year after the final redemption date, claim the amounts so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof. Any funds so deposited with a bank or trust company which shall not be required for such redemption by reason of the exercise subsequent to the date of such deposit of the right of conversion of any shares or otherwise shall be returned to the Corporation forthwith.
(d) If the Corporation for any reason fails to redeem any of the shares of Senior Preferred Stock in accordance with Section 6(a) on or prior to the redemption dates determined in accordance with this Section 6, then, the Corporation shall become obligated to pay, in addition to the redemption price specified in Section 6(a), interest on the unpaid balance of such price, which shall, accrue at a rate equal to the lesser of (i) one percent (1%) per month or (ii) the maximum interest rate allowable under applicable law, until such price is paid in full.
(e) If the funds of the Corporation legally available for redemption of shares of Senior Preferred Stock on a redemption date are insufficient to redeem the total number of shares of Senior Preferred Stock submitted for redemption, those funds which are legally available will be used to redeem the maximum possible number of whole shares ratably among the holders of such shares based on the total Redemption Amounts owed to such holders. The shares of Senior Preferred Stock not redeemed shall remain outstanding and entitled to all rights and preferences provided herein. At any time thereafter when additional funds of the Corporation are legally available for the redemption of such shares of Senior Preferred Stock, such funds will be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available.
Section 7. No Reissuance of Preferred Stock. No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.
Section 8. Residual Rights. All rights accruing to the outstanding shares of the Corporation not expressly provided for to the contrary herein shall be vested in the Common Stock.
Section 9. Notices. All notices required or permitted to be sent pursuant to this Article FOURTH shall be deemed sufficient if contained in a written instrument and delivered in person or duly sent by first-class mail postage prepaid (other than in the case of notices to or from many non U.S. resident) or by fax or DHL, Federal Express or other recognized express international courier service, addressed to the intended recipient at the recipient's address as it appears on the books of the Corporation.
3. Pursuant to Section 228(a) of the General Corporation Law of the State of Delaware, the holders of outstanding shares of the Corporation having no less than the minimum number of votes that would be necessary to authorize or take such actions at a meeting at which all shares entitled to vote thereon were present and voted, consented to the adoption of the aforesaid amendments without a meeting, without a vote and without prior notice and that written notice of the taking of such actions has been given in accordance with Section 228(e) of the General Corporation Law of the State of Delaware.
4. The amendment of the certificate of Incorporation herein certified has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
Signed this 11th day of March, 2004.
ALNYLAM PHARMACEUTICALS, INC.
By: /s/ Vincent J. Miles
-------------------------------
Name: Vincent J. Miles
Title: Senior Vice President, Business Development
|
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALNYLAM PHARMACEUTICALS, INC.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Alnylam Pharmaceuticals, Inc. (hereinafter called the "Corporation"), organized and existing under and by virtue of the General Corporation Laws of the State of Delaware, does hereby certify as follows:
At a meeting of the Board of Directors of the Corporation a resolution was
duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth amendments to the Certificate of Incorporation
of the Corporation and declaring said amendments to be advisable. The
stockholders of the Corporation duly adopted said amendments by written consent
in accordance with Sections 228 and 242 of the General Corporation Law of the
State of Delaware. Said amendments have been duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendments is as follows:
RESOLVED: That the Certificate of Incorporation of the Corporation, as amended (the "Certificate of Incorporation") be further amended as follows:
(1) The first paragraph of Article FOURTH of the Certificate of Incorporation is deleted in its entirety and the following two new paragraphs are inserted in lieu thereof:
"That, effective upon the filing of this Certificate of Amendment of Certificate of Incorporation (the "Effective Time"), a one-for-1.9 reverse stock split of the Corporation's Common Stock shall become effective, pursuant to which each 1.9 shares of Common Stock outstanding and held of record by each stockholder of the Corporation (including treasury shares) immediately prior to the Effective Time shall be reclassified and combined into one share of Common Stock automatically and without any action by the holder thereof upon the Effective Time and shall represent one share of Common Stock from and after the Effective Time. No fractional shares of Common Stock shall be issued as a result of such reclassification and combination. In lieu of any fractional shares to which the stockholder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the then fair market value of the Common Stock as determined by the Board of Directors of the Corporation.
The total number of shares of all classes of stock which the Corporation has authority to issue is 152,943,580 shares, consisting of 125,000,000 shares of common stock, par value $.0001 per share (the "Common Stock"); and
27,943,580 shares of preferred stock, $0.0001 par value per share, of which 3,000,010 shares have been designated as Series A Convertible Preferred Stock, par value $.0001 per share (the "Series A Preferred Stock"), 16,672,078 shares have been designated as Series B Convertible Preferred Stock, $.0001 par value per share (the "Series B Preferred Stock"), 1,604,825 shares have been designated as Series C Convertible Preferred Stock, $.0001 par value per share (the "Series C Preferred Stock"), and 1,666,667 shares have been designated as Series D Convertible Preferred Stock, $.0001 par value per share (the "Series D Preferred Stock"), and 5,000,000 shares, as of the date hereof, are undesignated.
The Series A Preferred Stock and Series B Preferred Stock are sometimes hereinafter collectively referred to as the "Senior Preferred Stock." The Senior Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock are sometimes hereinafter collectively referred to as the "Preferred Stock." The undesignated Preferred Stock is hereinafter referred to as "Undesignated Preferred Stock."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer on this 7th day of May, 2004.
ALNYLAM PHARMACEUTICALS, INC.
By: /s/ John M. Maraganore ------------------------------------------ John M. Maraganore President and Chief Executive Officer |
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALNYLAM PHARMACEUTICALS, INC.
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
Alnylam Pharmaceuticals, Inc. (hereinafter called the "Corporation"), organized and existing under and by virtue of the General Corporation Laws of the State of Delaware, does hereby certify as follows:
At a meeting of the Board of Directors of the Corporation a resolution was
duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth amendments to the Certificate of Incorporation
of the Corporation and declaring said amendments to be advisable. The
stockholders of the Corporation duly adopted said amendments by written consent
in accordance with Sections 228 and 242 of the General Corporation Law of the
State of Delaware. Said amendments have been duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendments is as follows:
RESOLVED: That the Certificate of Incorporation of the Corporation, as amended (the "Certificate of Incorporation") be further amended as follows:
(1) Section 2(c) of Article FOURTH of the Certificate of Incorporation is hereby amended by adding the following at the end of such Section 2(c) of Article FOURTH:
"All certificates evidencing shares of Preferred Stock which are required to be surrendered for conversion in accordance with the provisions of this Section 2(c) shall be, from and after the date such certificates are so required to be surrendered, deemed to have been retired and canceled and the shares of Preferred Stock presented thereby converted into Common Stock for all purposes, notwithstanding the failure of the holder or holders thereof to surrender such certificates on or prior to such date. Upon the closing of the sale of shares of Common Stock in a Qualified Public Offering, the number of authorized shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock shall be automatically reduced by the number of shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock that had been designated as Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock and all references to the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock in this Certificate of Incorporation shall be deleted and of no further force and effect."
(2) Article SEVENTH of the Certificate of Incorporation is hereby amended by deleting the last sentence thereof and the following is inserted in lieu thereof:
"No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal."
(3) Article EIGHTH of the Restated Certificate is deleted in its entirety and the following new Article EIGHTH is inserted in lieu thereof:
"EIGHTH: The Corporation shall provide indemnification as follows:
Section 1. Actions, Suits and Proceedings Other than by or in the Right of the Corporation. The Corporation shall indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) (all such persons being referred to hereafter as an "Indemnitee"), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.
Section 2. Actions or Suits by or in the Right of the Corporation. The Corporation shall indemnify any Indemnitee who was or is a party to or threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by
reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Section 2 of Article EIGHTH in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Corporation, unless, and only to the extent, that the Court of Chancery of Delaware shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses (including attorneys' fees) which the Court of Chancery of Delaware shall deem proper.
Section 3. Indemnification for Expenses of Successful Party. Notwithstanding any other provisions of this Article EIGHTH, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article EIGHTH, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, Indemnitee shall be indemnified against all expenses (including attorneys' fees) actually and reasonably incurred by or on behalf of Indemnitee in connection therewith. Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Corporation, (iii) a please of guilty or nolo contendere by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and (v) with respect to any criminal proceeding, an adjudication that Indemnitee had reasonable cause to believe his conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.
Section 4. Notification and Defense of Claim. As a condition precedent to an Indemnitee's right to be indemnified, such Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit, proceeding or investigation involving such Indemnitee for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel reasonably acceptable to Indemnitee. After notice from the Corporation to Indemnitee of its election so to assume such defense, the Corporation shall not be liable to Indemnitee for any legal or other expenses subsequently incurred by Indemnitee in connection with such action, suit, proceeding or investigation, other than as provided below in this Section 4 of Article EIGHTH. Indemnitee shall have the right to employ his or her own counsel in connection with such action, suit, proceeding or investigation, but the
fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized by the Corporation, (ii) counsel to Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the Corporation and Indemnitee in the conduct of the defense of such action, suit, proceeding or investigation or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, suit, proceeding or investigation, in each of which cases the fees and expenses of counsel for Indemnitee shall be at the expense of the Corporation, except as otherwise expressly provided by this Article. The Corporation shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Corporation or as to which counsel for Indemnitee shall have reasonably made the conclusion provided for in clause (ii) above. The Corporation shall not be required to indemnify Indemnitee under this Article EIGHTH for any amounts paid in settlement of any action, suit, proceeding or investigation effected without its written consent. The Corporation shall not settle any action, suit, proceeding or investigation in any manner which would impose any penalty or limitation on Indemnitee without Indemnitee's written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay its consent to any proposed settlement.
Section 5. Advance of Expenses. Subject to the provisions of
Section 6 of this Article EIGHTH, in the event that the Corporation
does not assume the defense pursuant to Section 4 of this Article
EIGHTH of any action, suit, proceeding or investigation of which the
Corporation receives notice under this Article, any expenses
(including attorneys' fees) incurred by or on behalf of Indemnitee in
defending an action, suit, proceeding or investigation or any appeal
therefrom shall be paid by the Corporation in advance of the final
disposition of such matter; provided, however, that the payment of
such expenses incurred by or on behalf of Indemnitee in advance of the
final disposition of such matter shall be made only upon receipt of an
undertaking by or on behalf of Indemnitee to repay all amounts so
advanced in the event that it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Corporation as
authorized in this Article; and further provided that no such
advancement of expenses shall be made under this Article EIGHTH if it
is determined (in the manner described in Section 6 of this Article
EIGHTH) that (i) Indemnitee did not act in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests
of the Corporation, or (ii) with respect to any criminal action or
proceeding, Indemnitee had reasonable cause to believe his conduct was
unlawful. Such undertaking shall be accepted without reference to the
financial ability of Indemnitee to make such repayment.
Section 6. Procedure for Indemnification. In order to obtain indemnification or advancement of expenses pursuant to Sections 1, 2, 3 or 5 of this Article EIGHTH, an Indemnitee shall submit to the Corporation a written request. Any such advancement of expenses shall be made promptly, and in any
event within 30 days after receipt by the Corporation of the written
request of Indemnitee, unless the Corporation determines within such
30-day period that Indemnitee did not meet the applicable standard of
conduct set forth in Sections 1, 2 or 5 of this Article EIGHTH, as the
case may be. Any such indemnification, unless ordered by a court,
shall be made with respect to requests under Sections 1 or 2 of this
Article EIGHTH only as authorized in the specific case upon a
determination by the Corporation that the indemnification of
Indemnitee is proper because Indemnitee has met the applicable
standard of conduct set forth in Sections 1 or 2 of this Article
EIGHTH, as the case may be. Such determination shall be made in each
instance (a) by a majority vote of the directors of the Corporation
consisting of persons who are not at that time parties to the action,
suit or proceeding in question ("disinterested directors"), whether or
not a quorum, (b) by a committee of disinterested directors designated
by majority vote of disinterested directors, whether or not a quorum,
(c) if there are no disinterested directors, or if the disinterested
directors so direct, by independent legal counsel (who may, to the
extent permitted by law, be regular legal counsel to the Corporation)
in a written opinion, or (d) by the stockholders of the Corporation.
Section 7. Remedies. The right to indemnification or advancement of expenses as granted by this Article EIGHTH shall be enforceable by Indemnitee in any court of competent jurisdiction. Neither the failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 6 of this Article EIGHTH that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. Indemnitee's expenses (including attorneys' fees) reasonably incurred in connection with successfully establishing Indemnitee's right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation.
Section 8. Limitations. Notwithstanding anything to the contrary in this Article, except as set forth in Section 7 of this Article EIGHTH, the Corporation shall not indemnify an Indemnitee pursuant to this Article IX in connection with a proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board of Directors of the Corporation. Notwithstanding anything to the contrary in this Article, the Corporation shall not indemnify an Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of insurance, and in the event the Corporation makes any indemnification payments to an Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of insurance, such Indemnitee shall promptly refund indemnification payments to the Corporation to the extent of such insurance reimbursement.
Section 9. Subsequent Amendment. No amendment, termination or repeal of this Article EIGHTH or of the relevant provisions of the General Corporation Law of Delaware or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.
Section 10. Other Rights. The indemnification and advancement of expenses provided by this Article EIGHTH shall not be deemed exclusive of any other rights to which an Indemnitee seeking indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to action in Indemnitee's official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of Indemnitee. Nothing contained in this Article EIGHTH shall be deemed to prohibit, and the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth in this Article EIGHTH. In addition, the Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article EIGHTH.
Section 11. Partial Indemnification. If an Indemnitee is entitled under any provision of this Article to indemnification by the Corporation for some or a portion of the expenses (including attorneys' fees), judgments, fines or amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with any action, suit, proceeding or investigation and any appeal therefrom but not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such expenses (including attorneys' fees), judgments, fines or amounts paid in settlement to which Indemnitee is entitled.
Section 12. Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan) against any expense, liability or loss incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of Delaware.
Section 13. Savings Clause. If this Article or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify each Indemnitee as to any expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article that shall not have been invalidated and to the fullest extent permitted by applicable law.
Section 14. Definitions. Terms used herein and defined in
Section 145(h) and Section 145(i) of the General Corporation Law of
Delaware shall have the respective meanings assigned to such terms in
such Section 145(h) and Section 145(i)."
(4) The following new Article TENTH is hereby added to the Certificate of Incorporation:
"TENTH: Upon the closing of a Qualified Public Offering, the following provisions shall apply:
Section 1. Number of Directors; Election of Directors. Subject to the rights of holders of any series of Preferred Stock to elect directors, the number of directors of the Corporation shall be established by the Board of Directors. Election of directors need not be by written ballot, except as and to the extent provided in the Bylaws of the Corporation.
Section 2. Classes of Directors. Subject to the rights of holders of any series of Preferred Stock to elect directors, the Board of Directors shall be and is divided into three classes: Class I, Class II and Class III.
Section 3. Terms of Office. Subject to the rights of holders of any series of Preferred Stock to elect directors, each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, that each director initially appointed to Class I shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2005; each director initially appointed to Class II shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2006; and each director initially appointed to Class III shall serve for a term expiring at the Corporation's annual meeting of stockholders held in 2007; provided further, that the term of each director shall continue until the election and qualification of his successor and be subject to his earlier death, resignation or removal.
Section 4. Quorum. The greater of (a) a majority of the directors at any time in office and (b) one-third of the number of directors fixed pursuant to Section 2 of this Article TENTH shall constitute a quorum. If at any meeting of the Board of Directors there shall be less than such a quorum, a majority of the directors present may adjourn the meeting from time to time
without further notice other than announcement at the meeting, until a quorum shall be present.
Section 5. Action at Meeting. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors unless a greater number is required by law or by this Certificate of Incorporation.
Section 6. Removal. Subject to the rights of holders of any series of Preferred Stock, directors of the Corporation may be removed only for cause by the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors.
Section 7. Vacancies. Subject to the rights of holders of any series of Preferred Stock, any vacancy or newly created directorships in the Board of Directors, however occurring, shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director and shall not be filled by the stockholders. A director elected to fill a vacancy shall be elected to hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of a successor and to such director's earlier death, resignation or removal.
Section 8. Stockholder Nominations and Introduction of Business, Etc. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders before a meeting of stockholders shall be given in the manner provided by the Bylaws of the Corporation.
Section 9. Amendments to Article. Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article TENTH."
(5) The following new Article ELEVENTH is hereby added to the Certificate of Incorporation:
"ELEVENTH: (A) Upon the closing of a Qualified Public Offering, stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, this Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would
be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section (A) of Article ELEVENTH.
(B) Special meetings of stockholders for any purpose or purposes may be called at any time by the Board of Directors, the Chairman of the Board or the President, but such special meetings may not be called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Notwithstanding any other provision of law, this Certificate of Incorporation or the Bylaws of the Corporation, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least seventy-five percent (75%) of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Section (B) of this Article ELEVENTH."
(6) The following new Article TWELFTH is hereby added to the Certificate of Incorporation:
"TWELFTH: Undesignated Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors of the Corporation as hereinafter provided. Any shares of Undesignated Preferred Stock that may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law.
Authority is hereby expressly granted to the Board of Directors from time to time to issue the Undesignated Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issuance of the shares thereof, to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the General Corporation Law of Delaware. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Undesignated Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Undesignated Preferred Stock of any other series to the extent permitted by law.
The number of authorized shares of Undesignated Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of Delaware."
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its President and Chief Executive Officer on this 10th day of May, 2004.
ALNYLAM PHARMACEUTICALS, INC.
By: /s/ John M. Maraganore -------------------------------------- John M. Maraganore President and Chief Executive Officer |
EXHIBIT 10.16
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
DATED 18 JULY 2003
CANCER RESEARCH TECHNOLOGY LIMITED
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ALNYLAM PHARMACEUTICALS, INC
LICENCE AGREEMENT
CONFIDENTIAL
CANCER RESEARCH TECHNOLOGY LIMITED
Sardinia House
Sardinia Street
London WC2A 3NL
THIS LICENCE AGREEMENT is made as of the 18th day of July 2003
BETWEEN:
(1) CANCER RESEARCH TECHNOLOGY LIMITED a company registered in England (registered number 1626049) whose registered office is at Sardinia House, Sardinia Street 61, London WC2A 3NL ("CRT"); and
(2) ALNYLAM PHARMACEUTICALS INC a Delaware company whose principal place of business is at 790 Memorial Drive, Cambridge, MA 02139 United States of America ("Alnylam")
WHEREAS:
(A) Researchers at the University of Cambridge (some of whom were formerly in receipt of funding provided by the Lister Institute of Preventive Medicine) have developed techniques for performing RNA interference ("RNAi") in mammalian cells and embryos which are the subject of an international patent application entitled "inhibiting gene expression with dsRNA". The research was supported by funding provided by The Cancer Research Campaign ("CRC") and Cancer Research UK. The researchers and the University have assigned their right, title and interest in the foregoing patent application to Cancer Research Ventures Limited ("CRV") a wholly owned subsidiary of CRT, and CRV have assigned their right, title and interest to CRT.
(B) CRT is the wholly owned subsidiary of Cancer Research UK and is responsible for the management and exploitation of the results derived from research funded by CRC and Cancer Research UK. Cancer Research UK (registered number 4325234) and registered charity (number 1089464) was formed as the successor charity to the Imperial Cancer Research Fund and CRC following the merger of their operations with effect from 4 February 2002.
(C) Alnylam have requested a licence under the technology described in the CRT Patent Rights (as defined below) permitting them to develop therapeutics and CRT has agreed to grant a licence to Alnylam on the following terms and conditions.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Licence Agreement and in the Schedules to this Licence Agreement the following words and phrases shall have the following meanings unless the context requires otherwise:
"Affiliate" means any company, partnership or
other entity which directly or
indirectly Controls, is Controlled
by, or is under common Control
with, any Party including as a
subsidiary or holding company of
any Party.
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"Blocking IP" any and all Patent Rights (other
than that licensed under this
Licence Agreement) which, if claims
covering subject matter of such
Patent Rights issue, would render
the use, development, manufacture,
sale, or other disposal of a
Licensed Product unlawful in the
absence of a licence to such Patent
Rights from a Third Party.
"Business Day" means a day other than a Saturday,
Sunday, bank or other public
holiday in England or the United
States of America.
"Cancer Research UK-Funded means any academic researcher in
Researcher" receipt of Cancer Research UK
funding, whether an employee of
Cancer Research UK or a university
employee.
"Clinical Trial" means a clinical trial conducted in
accordance with recognised
protocols approved by a Competent
Authority including CTX clinical
trials or their equivalents
anywhere in the World.
"Commencement Date" means the date first above written.
"Competent Authority" means any local or national agency,
authority, department,
inspectorate, minister, ministry
official or public or statutory
person (whether autonomous or not)
of, or of any government of, any
country having jurisdiction over
this Licence Agreement or over any
of the Parties or over the
development or marketing of
medicinal products including, but
not limited to, the European
Commission and the European Court
of Justice.
"Control" means the ownership of at least 50%
of the issued share capital or the
legal power to direct or cause the
direction of the general management
and policies of the Party in
question.
"CRT Patent Rights" means the patent applications
referred to in Schedule 1 and all
Patent Rights deriving priority
from them and all Patent Rights
deriving priority from such Patent
Rights.
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SECTION CONFIDENTIAL
"Field" means the development of RNAi
therapeutic products for the
treatment of human disease
(including by means of gene
therapy).
"Force Majeure" means in relation to a Party or its
Affiliate any event or
circumstances which is beyond the
reasonable control of that Party or
its Affiliate which event that
Party or its Affiliate could not
reasonably be expected to have
taken into account at the
Commencement Date and which results
in or causes the failure of that
Party or its Affiliate to perform
any or all of its obligations under
this Licence Agreement including
act of God, lightening, fire,
storm, flood, earthquake,
accumulation of snow or ice, lack
of water arising from weather or
environmental problems, strike,
lockout or other industrial
disturbance, war, terrorist act,
blockade, revolution, riot
insurrection, civil commotion,
public demonstration, sabotage, act
of vandalism, prevention from or
hindrance in obtaining in any way
materials, energy or other
supplies, explosion, fault or
failure of plant or machinery,
governmental restraint, act of
legislature and directive or
requirement of a Competent
Authority governing any Party or
its Affiliate provided that lack of
funds shall not be interpreted as a
cause beyond the reasonable control
of that Party or its Affiliate.
"Health Registration Approval" means, with respect to a country in
the Territory, approval by the
health or other Competent Authority
necessary to manufacture and market
a Licensed Product in the country.
"Issued Valid Claim" means a claim of an issued and
unexpired and unabandoned patent
included within the CRT Patent
Rights, which claim has not been
held permanently revoked,
unenforceable or invalid by a
decision of a court or other
governmental agency of competent
jurisdiction, unappealable or
unappealed within the time allowed
for appeal, or which has not been
admitted to be invalid or
unenforceable through reissue or
disclaimer or otherwise.
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SECTION CONFIDENTIAL
"Licence Agreement" means this agreement and any and
all schedules, appendices and other
addenda to it as may be varied from
time to time in accordance with the
provisions of this agreement.
"Licensed Products" means product or products which, or
the process of production of which,
or the use of which falls within
the scope of a Valid Claim of the
CRT Patent Rights and Licensed
Product shall be construed as any
one of them.
"Milestone Patent Grant" means the first grant in the United
States or by the European Patent
Office of a claim comprised within
the CRT Patent Rights, which claim
is substantially similar to and of
equivalent breadth to claim 16 as
originally filed in the PCT
application number [**].
"Net Sales" means the invoiced amount billed
for sales of Royalty Licensed
Products to a Third Party (the
"Customer") by Alnylam or its
Affiliates or by Sub-licensees less
the following items to the extent
they are paid or incurred or
allowed:
a) quantity, trade and/or
cash discounts or rebates
actually granted or
accrued;
b) amounts repaid or credited
and allowances including
cash, credit or free goods
allowances, given by
reason of billing errors
and rebates actually
allowed or paid or
accrued;
c) amounts refunded or
credited for Licensed
Products which were
rejected or damaged or
recalled;
d) taxes, tariffs, customs
duties and surcharges and
other governmental charges
incurred in connection
with the sale, exportation
or importation of Licensed
Products; and
e) outbound transportation
costs prepaid or allowed
and costs of insurance in
transit.
Where Royalty Licensed Products are
not sold separately, but are sold
together with other therapeutic
agents and such combination has
received regulatory approval,
hereinafter such combinations
referred to as a "Combination
Product" and the Royalty Licensed
Product and each such other product
being referred to as a "Component
Product", the Net Sales price to be
used for the purpose of calculating
royalties payable in respect of
Combination Products shall be
determined by multiplying the Net
Sales price of the Combination
Product by the percentage value of
the Royalty Licensed
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SECTION CONFIDENTIAL
Product comprising a Component
Product contained in the
Combination Product and subtracting
the items listed in subsections a)
through e) above, using the
following formula:
A/B = C
C*B = D
"A" equals the selling price of the
Royalty Licensed Product; "B"
equals the selling price of the
Combination Product; "C" represents
the fraction of the selling price
of the Combination Product
attributable to the Royalty
Licensed Product; "D" is the Net
Sales price attributable to the
Royalty Licensed Product to be used
for the purpose of calculating
royalties
If the selling price of a Component
Product is not known the fraction
attributable to the Royalty
Licensed Product shall be
calculated by subtracting the price
sold singly of the other Component
Product from the selling price of
the Combination Product.
If the selling price of each
Component Product is unknown the
Parties agree to negotiate in good
faith to agree on a reasonable
value.
For the sake of consistency the
selling price attributable to the
Royalty Licensed Product shall be
the same whether it is sold singly
or as part of a Combination
Product, providing that the grade,
amount, potency and purity of the
Royalty Licensed Product is the
same when sold singly or in
combination
The transfer of Royalty Licensed
Products by Alnylam or one of its
Affiliates to another Affiliate or
to a Sub-licensee shall not be
considered a sale. In such cases,
Net Sales shall be determined based
on the invoiced sale price levied
by the Affiliate or Sub-licensee on
the Customer, less the
aforementioned deductions to the
extent they are allowed, paid or
accrued.
"Non-cash Consideration" means any form of consideration
which is not directly calculable in
monetary terms, including, shares,
goods and cross-licences entered
into by Alnylam.
"Non-Platform Sub-licence" means a Sub-licence other than a
Platform Sub-
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SECTION CONFIDENTIAL
licence.
"Non-Platform Sub-licence Income" means all upfront cash payments
excluding equity and research and
development payments, that accrue
to Alnylam or its Affiliate as of
the commencement date of the
Non-Platform Sub-licence (whether
due on the commencement date of the
Non-Platform Sub-licence or
thereafter) under a Sub-licence
other than a Platform Sub-licence.
"Parties" means CRT and Alnylam and "Party"
shall be construed as either one of
them.
"Patent Rights" means any patent applications,
patents, author certificates,
inventor certificates, utility
models (including all divisions,
renewals, continuations,
continuations-in-part, extensions,
reissues, substitutions,
confirmations, registrations,
revalidations and additions of or
to them, as well as any SPC, or any
like form of protection) and any
foreign counterparts thereto and
patents issuing therefrom.
"Pivotal Phase II Study" means a phase II Clinical Trial
upon the basis of which an
application for Health Registration
Approval is made.
"Platform Sub-licence" means a bare Sub-licence under the
CRT Patent Rights only and which
grants no rights inter alia: (i) to
Licensed Products developed by
Alnylam or its Affiliate; or (ii)
to develop Licensed Products in
collaboration with Alnylam or its
Affiliate.
Platform Sub-licence Income means any and all gross
consideration (including upfront,
periodic, and milestone payments
and Non-cash Consideration) other
than royalty payments on Net Sales
that accrue to Alnylam or its
Affiliates under a Platform
Sub-licence.
"Quarter" means a period of three (3)
consecutive calendar months
commencing on 1 January, 1 April, 1
July or 1 October in any year.
"Royalty Licensed Product" means a Licensed Product which, or
the process of production of which,
or the use of which falls within
the scope of an Issued Valid Claim.
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SECTION CONFIDENTIAL
"SPC" means a right based on a patent
pursuant to which the holder of the
SPC is entitled to exclude third
parties from using, making, having
made, selling or otherwise
disposing or offering to dispose
of, importing or keeping the
product to which the SPC relates,
such as Supplementary Protection
Certificates in Europe, and any
similar right anywhere in the
world.
"Sub-licence" means a sub-licence in the Field
granted by Alnylam or its Affiliate
(in accordance with Clause 2.4).
"Sub-licensee" means any person granted a
Sub-licence by Alnylam or its
Affiliate.
"Territory" means the world.
"Third Party" means any entity or person other
than the Parties or an Affiliate of
a Party.
"Valid Claim" means either:-
a) a claim of an issued and
unexpired and unabandoned
patent included within the
CRT Patent Rights, which
claim has not been held
permanently revoked,
unenforceable or invalid
by a decision of a court
or other governmental
agency of competent
jurisdiction, unappealable
or unappealed within the
time allowed for appeal,
or which has not been
admitted to be invalid or
unenforceable through
reissue or disclaimer or
otherwise; or
b) a claim of a pending
patent application
included within the CRT
Patent Rights which claim
was filed in good faith
and has not been abandoned
or finally disallowed
without the possibility of
appeal or refiling of the
application.
"Year" means the one (1) year periods
commencing on 31 March annually,
and "Yearly" shall be construed
accordingly.
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SECTION CONFIDENTIAL
1.2 In this Licence Agreement:
1.2.1 unless the context otherwise requires, all references to a
particular clause or schedule shall be a reference to that
clause or schedule in or to this Licence Agreement as it may
be amended from time to time pursuant to this Licence
Agreement;
1.2.2 the headings are inserted for convenience only and shall be
ignored in construing this Licence Agreement;
1.2.3 unless the contrary intention appears, words importing the
masculine gender shall include the feminine and vice versa and
words in the singular include the plural and vice versa;
1.2.4 unless the contrary intention appears, words denoting persons
shall include any individual, partnership, company,
corporation, joint venture, trust association, organisation or
other entity, in each case whether or not having separate
legal personality;
1.2.5 the words "include", "included" or "including" are to be
construed without limitation to the generality of the
preceding words; and
1.2.6 reference to any statute or regulation includes any
modification or re-enactment of that statute or regulation.
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2. GRANT OF LICENCE
2.1 CRT hereby grants to Alnylam, and its Affiliate(s) who have confirmed to Alnylam their agreement in writing to be bound (to CRT) by the terms of this Licence Agreement which specifically apply to Affiliates, with a copy to be sent to CRT, a licence in the Field throughout the Territory under the CRT Patent Rights to research, develop, have developed, use, keep, make, have made, import, have imported, sell, have sold and otherwise dispose or offer to dispose of Licensed Products. Such Affiliates shall be listed on Schedule 2 to this Licence Agreement which shall be updated periodically by Alnylam and sent to CRT. For the sake of clarity, save to the extent necessary for the development and/or sale of Licensed Products in the Field neither Alnylam or any Affiliate is granted the right to make use of the CRT Patent Rights to research, develop, use, keep, make, have made, sell and otherwise dispose or offer to dispose of products:
a) for any diagnostic application;
b) as research tools or reagents;
c) for target validation; or
d) small molecule drug discovery
including the provision of services in relation thereto to Affiliates or Third Parties.
2.2 Subject to Clause 2.3, the licence granted in Clause 2.1 shall, in relation to a particular country in the Territory, be exclusive within the Field for the term of the relevant Patent Rights included within the CRT Patent Rights.
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2.3 It is acknowledged and agreed that CRT and Cancer Research UK shall have the right to use, and CRT shall have the right to consent to the use by academic research institutions (including for the sake of clarity those in receipt of Cancer Research UK funding) of, the CRT Patent Rights in the Field for internal, or in collaboration with another academic research institution, non-commercial, non-commercially sponsored research. For the sake of clarity, Cancer Research UK-funded Researchers shall be permitted under the CRT Patent Rights to conduct clinical trials of potential dsRNA therapeutic agents as part of their Cancer Research UK-funded academic research.
2.4 Alnylam and its Affiliates shall be entitled to sublicence the rights granted in this Licence Agreement. Any Sub-licence which is granted in breach of this Clause 2.4 shall be void. Alnylam or its Affiliate shall (subject to Alnylam's and its Affiliate's right to redact confidential information not related to CRT's rights hereunder) provide to CRT in confidence a copy of each and every Platform Sub-licence entered into. Any Sub-licence entered into by Alnylam or an Affiliate shall;
a) be limited to the Field and shall contain restrictions in equivalent terms to those set out in Clause 2.1.
b) provide that the Sub-licence shall terminate automatically on the expiry or termination for whatever reason of this Licence Agreement. In the event of termination of this Agreement pursuant to Clause 10, CRT shall enter into a direct licensing arrangement with any Sub-licensee on terms substantially similar to those contained herein save that any licence granted by CRT to any Sub-licensee shall be consistent with the terms of the Sub-licence granted by Alnylam (or its Affiliate as the case may be) in relation to field, territory, exclusivity, rights to sub-license and payment provisions. However, in the event of termination of this Agreement by Alnylam pursuant to Clause 10.2 the provisions of the foregoing sentence shall apply save that the granting of such licence by CRT shall be subject to CRT's consent. Nothing in this Clause 2.4 shall confer upon CRT any obligation to enter into a direct licensing arrangement with the Sub-licensee where the Sub-licensee is in default of its obligations under the Sub-licence. CRT shall not be expected to take any responsibility for any disputes between Alnylam (or its Affiliate as the case may be) and its Sub-licensees relating to the terms of the Sub-licence(s) and notwithstanding the foregoing provisions of this Clause 2.4, CRT shall not be obliged to enter into a direct licence with a Sub-licensee in circumstances in which the Sub-licensee reserves any right to maintain a claim against CRT where such claim was previously maintained against Alnylam (or its Affiliate as the case may be).
c) provide that the Third Party with whom the Sub-licence has been entered into shall undertake to CRT directly to allow CRT the same access to the books and records as it has to Alnylam's books and records under this Licence Agreement; and
d) contain restrictions on assignment in equivalent terms to those set out in Clause 15 and require that any further sublicensing be subject to the terms of this Clause 2.4.
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Alnylam shall only grant a Platform Sub-licence as a separate licence (or sub-licence) for separate consideration identified in the Platform Sub-licence and shall not include a Platform Sub-licence as part of any other licence (or sub-licence).
2.5 CRT hereby grants an option to Alnylam and its Affiliates exercisable during the term of this Licence Agreement to enter into non-exclusive, non-sublicensable and non-assignable licences under the CRT Patent Rights in the fields of either or both of:
a) [**]; and
b) [**]
on terms to be agreed in good faith between CRT and Alnylam, the payment terms in respect of each licence which shall be no more than:
a) annual payments of [**] pounds sterling ((pound)[**]); or
b) any (lesser) sum that may be agreed between CRT and a Third Party licensee after the Commencement Date in the same field (other than a licence pursuant to which, or under the terms of a related agreement, significant resources are provided by the Third Party in respect of a collaboration in the field).
3. CONSIDERATION
3.1 In consideration of the rights granted under this Licence Agreement, Alnylam shall pay the following sums to CRT:
3.1.1 subject to Clause 3.5, [**] United States dollars (US$[**]) on
the Commencement Date; and
3.1.2 until the expiry of the last to expire of the CRT Patent
Rights on each and every anniversary of the Commencement Date,
an annual fee of [**] United States dollars (US$[**]); and
3.1.3 a one-time payment of [**] United States dollars (US$[**]) on
Milestone Patent Grant; and
3.1.4 the following milestone fees in respect of the first Licensed
Product in the Field to achieve the milestone (upon
achievement of the milestone by Alnylam, or its Affiliate, or
a Non-Platform Sub-licensee);
(a) [**] United States dollars (US$[**]) on the
commencement of the first phase I Clinical Trial
conducted anywhere in the Territory; and
(b) [**] United States dollars (US$[**] on the
commencement of the first phase II Clinical Trial or
Privotal Phase II Study conducted anywhere in the
Territory.
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SECTION CONFIDENTIAL
3.1.5 any and all reasonable patent filing, maintenance and
prosecution costs incurred after the Commencement Date by CRT
or its agents subject to Clause 7, within 30 (thirty) days of
the date of an invoice from CRT.
3.2 As further consideration of the rights granted under this
Licence Agreement, Alnylam (or its Affiliate as the case may
be) shall pay the following sums to CRT:
3.2.1 royalties of [**] percent ([**]%) of Net Sales of
Royalty Licensed Products in the Field; and
3.2.2 [**] percent ([**]%) of Platform Sub-licence Income
provided that to the extent Platform Sub-licence
Income includes;
(a) milestone payment(s) for patent issuance,
the milestone payment made by Alnylam in
Clause 3.1.3 shall be fully creditable
against that part of Platform Sub-licence
Income expressly payable for patent issuance
and Alnylam or its Affiliate shall not pay
[**]% of Platform Sub-licence Income payable
for patent issuance until the milestone
payment made by Alnylam in Clause 3.1.3 has
been fully credited against such Platform
Sub-licence Income; and/or
(b) Non-cash Consideration, Alnylam or its
Affiliate shall following consultation with
CRT have the option of apportioning such
Non-cash Consideration (including by
transfer of [**] percent ([**]%) of
Alnylam's or its Affiliate's shareholding
where Non-Cash Consideration is comprised of
shares), if possible, or valuing the
Non-cash Consideration at its fair market
value, when received and paying [**] percent
([**]%) of the cash equivalent to CRT; and
3.2.3 in respect of each Non-Platform Sub-licence, and
solely to the extent that Alnylam or its Affiliate
receives Non-Platform Sub-licence Income arising
therefrom, [**] percent ([**]%) of Non-Platform
Sub-licence Income under such Non-Platform
Sub-licence; and
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3.3 Provided always that the royalty payable to CRT shall not in any event be reduced below [**] percent ([**]%), if at any time prior to or during the period for the payment of royalties under this Licence Agreement in relation to any particular territory, Alnylam (or its Affiliate as the case may be) or a Sub-licensee elects in its reasonable opinion to take a licence from a Third Party to any Blocking IP to develop, make, sell or otherwise dispose of Licensed Products, the royalties set forth in Clause 3.2.1 applicable to such Licensed Product shall be reduced by [**]% of the amount paid to such Third Party to access said Blocking IP.
3.4 Provided always that Non-Platform Sub-licence Income shall not in any event be reduced below [**] percent ([**]%), the percent payment of Non-Platform Sub-licence Income set forth in Clause 3.2.3 shall be reduced if at any time prior to or
SECTION CONFIDENTIAL
during the period for the payment thereof under this Licence Agreement in relation to any particular territory, in order to grant the rights under the Sub-licence Alnylam (or its Affiliate as the case may be) elects to take a licence from a Third Party under Patent Rights which Alnylam (or its Affiliate as the case may be) reasonably believes to be Blocking IP and thereafter the percent of Non-Platform Sub-licence Income payable shall be determined by applying the formula [**]N [**] where N is the number of Third Party licensors of Blocking IP.
3.5 CRT agrees that in respect of the sum payable under Clause 3.1.1 credit shall be given to Alnylam for the sum of [**] dollars (US$[**]) received by CRT under the terms of a letter of exclusivity dated 4 June 2003 entered into between the Parties, and provided that Alnylam has confirmed that CRT is entitled to retain the said sum, Alnylam shall only be obliged to pay [**] dollars (US$[**]) pursuant to Clause 3.1.1.
4. PAYMENT
4.1 All payments due to CRT under this Licence Agreement shall (subject to written advice from CRT amending the account details) be made in United States dollars or pounds sterling by telegraphic transfer to the accounts below:
Payee: Cancer Research Technology Limited
Lloyds TSB, Pall Mall St James's Branch
8-10 Waterloo Place
London SW1Y 4BE
US$ account
Sort Code: 30-00-08
Account Code: [**]
Account Name: Cancer Research Technology Ltd
Sterling account
Sort Code: 30-00-08
Account Code: [**]
Account Name: Cancer Research Technology Ltd
For the attention of the Financial Controller (or such other nominee of CRT as CRT may direct from time to time).
4.2 Alnylam (or its Affiliate as the case may be) shall make the payments
to CRT:
4.2.1 in the case of the royalties payable pursuant to Clause 3.2.1,
within 30 (thirty) days of the end of the Quarter in which the
sales of the relevant Licensed Products took place;
4.2.2 in the case of Platform Sub-licence Income and Non-Platform
Sub-licence Income payable pursuant to Clauses 3.2.2 and 3.2.3
within the later of 30 (thirty) days of the date of receipt of
the payment from the Sub-licensee (in respect of any up-front
payments) or the end of the Quarter in which the Sub-licence
Income has been received by Alnylam;
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SECTION CONFIDENTIAL
4.2.3 in the case of the payments due under Clauses 3.1.1 through
3.1.3, within thirty (30) days of the date of an invoice from
CRT; and
4.2.4 in the case of the payments due under Clause 3.1.4, within
thirty (30) days of the achievement of the relevant milestone.
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4.3 Where sums are received by Alnylam (or its Affiliate as the case may be) in a currency other than United States dollars or pounds sterling, conversion of such currencies to United States dollars will be performed at the closing mid-point rate published in the Financial Times in London on the last Business Day of the Quarter in which the sum is to be paid. For the sake of clarity Alnylam (or its Affiliate as the case may be) shall be under no obligation to convert payments received into United States Dollars.
4.4 Where CRT does not receive payment of any sums due to it within thirty
(30) days of the dates set out in Clauses 3.1 or 4.2 as the case may be
(the "Due Date"), interest shall accrue on the sum due and owing to CRT
at the rate equivalent to an annual rate of four percent (4%) over the
then current US dollar base rate of Lloyds Bank plc, calculated on a
daily basis, without prejudice to CRT's right to receive payment on the
Due Date.
4.5 All payments to CRT shall be made free and clear of, and without deduction or deferment in respect of, any claims, set-off and taxes imposed or levied by any competent authority including any withholding taxes. In the event that Alnylam (or its Affiliate as the case may be) is obliged to deduct any withholding or other taxes it shall pay to CRT an amount as shall result in the net amount being received by CRT being equal to the amount which would have been received by CRT had no deduction or withholding been made. If CRT is able to recover or set-off any such deduction or withholding it shall refund such amount to Alnylam (or its Affiliate as the case may be) as shall result in net amount being retained by CRT being equal to the amount which would have been received by CRT had no deduction or withholding been made. CRT shall to any extent reasonably practicable co-operate with Alnylam in seeking to effect a recovery from the relevant taxation authority of any withholding taxes actually deducted and in the event that CRT makes a recovery shall pay to Alnylam (or its Affiliate as the case may be) any sums recovered.
5. BOOKS AND RECORDS
5.1 Following the earlier of the first commercial sale of a Licensed Product in the Field by Alnylam or its Affiliate or the grant of a Sub-licence, Alnylam (or its Affiliate as the case may be) shall prepare an annual statement which shall show on a country by country basis for the previous calendar year all monies due to CRT under this Licence Agreement. That statement shall include the number of units of each Royalty Licensed Product sold in each country in which sales occurred, and shall be submitted to CRT within sixty (60) Business Days of 31st March of each year. If CRT gives notice to Alnylam within twenty (20) Business Days of the receipt of any such statement that it does not accept the same, that statement shall be certified by an independent accountant appointed by agreement between Alnylam and CRT or, in default of agreement within ten (10) Business Days, appointed at the request of either
SECTION CONFIDENTIAL
CRT or Alnylam by the President for the time being of the Institute of Chartered Accountants of England and Wales in London. Alnylam (or its Affiliate as the case may be) shall make available to the independent accountant all books and records required for the purpose of that certification under terms of confidentiality equivalent to those contained in this Agreement and the statements so certified shall, in the absence of manifest error, be final and binding between the Parties. The cost of the certification shall be the responsibility of Alnylam if the statement is shown to have underestimated the monies payable to CRT by more than five percent (5%) and the responsibility of CRT otherwise. Any outstanding payments due to CRT which are identified as a result of carrying out the investigation shall be paid to CRT immediately. There shall be no more than one certification by an independent accountant in relation to any one annual statement.
5.2 Alnylam shall, and shall require that its Affiliates and Sub-licensees
shall, keep true and accurate records and books of account containing
all data necessary for the calculation of the amounts payable by it to
CRT pursuant to this Licence Agreement. Such records and books of
account shall be kept for five (5) years following the end of the
calendar year to which they relate and shall, upon reasonable notice
having been given by CRT, be open at all reasonable times on Business
Days for inspection under the terms of confidentiality contained in
this Licence Agreement, by an independent firm of accountants appointed
by agreement between the Parties or, failing such agreement within ten
(10) Business Days, appointed at the request of either CRT or Alnylam
by the President for the time being of the Institute of Chartered
Accountants of England and Wales in London. The cost of any such
examination shall be borne by CRT, such examination to take place not
later than five (5) years following the expiration of the period to
which it relates and there shall be no more than one examination per
year.
SECTION CONFIDENTIAL
6. PERFORMANCE AND CLINICAL DEVELOPMENT
6.1 Alnylam shall use reasonable efforts to develop, make, market, sell and otherwise dispose of Licensed Products in all therapeutic areas within the Field and market each Licensed Product in the Field throughout the United States, Europe and Japan. This obligation may be satisfied by the efforts of Alnylam's Affiliate(s) or Sub-licensee(s).
6.2 CRT shall provide notice to Alnylam of its knowledge of a willing potential sub-licensee. Without prejudice to Clause 6.1, in the event that Alnylam (itself or through Affiliates or Sub-licensees) declines to develop, make, market, sell or otherwise dispose of Licensed Products in any therapeutic area or any indication within the cancer therapeutic area within the Field or any territory within the Territory in the Field, Alnylam shall (save as hereinafter provided) upon direct approach made by, or receipt of notice from CRT of a, willing potential sublicensee in respect of a Licensed Product that has demonstrated clinical efficacy be obliged to enter into negotiations in good faith with such Third Party to enter into a Sub-licence in relation to such therapeutic area, indication, or territory. The preceding provisions of this Clause 6.2 shall not apply in respect of any therapeutic area, indication, or territory in respect of which Alnylam provides to CRT's reasonable satisfaction evidence that the conclusion of a Sub-licence would:
6.2.1 be contrary to sound and reasonable business practice
applicable to pharmaceutical development; or
6.2.2 not materially increase the availability of therapeutic
products covered by the CRT Patent Rights.
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6.3 If CRT believes that Alnylam has failed to meet the diligence requirements set forth in Clause 6, it shall serve notice on Alnylam of such failure and Alnylam shall have a [**] period from the date of receipt of such notice to reestablish diligence towards its objectives, and if Alnylam reestablishes diligence towards its objectives during this [**] period, any prior lack of diligence will be deemed cured. Notwithstanding anything in this agreement to the contrary, in the event that Alnylam fails to reestablish diligence to the standard provided in Clause 6 within the said [**] period, this shall not be cause for CRT's termination of this Licence Agreement, rather, CRT's remedy shall be limited to, at CRT's discretion, termination of Alnylam's licence under the CRT Patent Rights in the particular territory or therapeutic area or, with respect to Clause 6.2, indication within the cancer therapeutic area for which Alnylam has failed to meet the diligence requirements. For the sake of clarity should Alnylam's licence be terminated in respect of a therapeutic area or territory pursuant to this Clause 6.3 CRT shall be free to offer such therapeutic area or territory to a potential licensee.
As part of its annual statement deliverable to CRT pursuant to Clause 6.4, Alnylam shall include a detailed description of therapeutic areas and territories under development and an overview of Alnylam's development plans for the forthcoming year (itself or through Affiliates or Sub-licensees).
SECTION CONFIDENTIAL
6.4 Alnylam shall, within thirty days of the end of each Year provide CRT with a written report of the steps taken by Alnylam, its Affiliates and any Sub-licensees to comply with the performance obligations of Clauses 6.1 and 6.2.
6.5 In the event that Alnylam (or its Affiliate as the case may be) intends to undertake a Phase I Clinical Trial of any Licensed Product in the UK Alnylam shall, at its option (a) notify CRT providing particulars in reasonable detail of the proposed investigation; and (b) allow Cancer Research UK the opportunity of conducting or procuring the conduct of the investigation on behalf of Alnylam or participate in such an investigation, subject to the agreement of terms acceptable to Alnylam, CRT and Cancer Research UK.
7. MANAGEMENT OF PATENT RIGHTS
7.1 CRT shall or shall procure in consultation with and (save to the extent provided in Clause 7.2) at the reasonable expense of Alnylam the filing, prosecution, and maintenance of any patents and patent applications comprised within the CRT Patent Rights. CRT shall use reasonable efforts to ensure that Alnylam is provided with copies of all material correspondence with patent agents in sufficient time for Alnylam to comment thereon. Alnylam's comments shall be incorporated to the extent reasonably practicable. Alnylam shall (save to the extent provided in Clause 7.2) bear the full expense and shall reimburse in full and hold CRT harmless in respect of any and all reasonable fees, charges, costs, levies or expenses incurred by CRT or its agents after the Commencement Date in relation to such applications. Nothing in this Licence Agreement shall oblige CRT or Alnylam to bring, defend or contest any enforcement, interference, opposition or infringement proceedings in respect of any of the CRT Patent Rights.
7.2 Save as hereinafter provided in this Clause 7.2, the reasonable costs of opposition and interference proceedings in relation to the CRT Patent Rights (together "Challenges") shall be borne equally by the Parties. In the event that the total aggregate costs of Challenges in any year exceed [**] United States dollars (US$[**]), CRT shall be free to make no further contribution to the costs of Challenges and all further costs incurred during that year ("Further Challenge Costs") and, at Alnylam's option, the future control of such Challenge(s) shall be borne by Alnylam solely. CRT shall give credit for [**] percent ([**]%) of Further Challenge Costs actually paid by Alnylam against sums due from Alnylam to CRT pursuant to Clause 3 from that time forward. In the event that one or more of the CRT Patent Rights are the subject of a declaration of interference by the U.S. Patent and Trademark Office as interfering with claims in a patent or patent application which is owned by or licensed by Alnylam or its Affiliate, CRT and Alnylam shall negotiate in good faith to reasonably agree on a mechanism outside the U.S. Patent and Trademark Office which simplifies the issues involved in determining priority and which awards priority to the appropriate party to the interference.
In any country where Alnylam elects not to have a patent application included in CRT Patent Rights filed or to pay expenses associated with filing, prosecuting, interference or equivalent proceedings, or maintaining a patent application or patent included in CRT Patent Rights, CRT may file, prosecute, continue with interference or equivalent proceedings, and/or maintain such patent application or patent at its own expense and
SECTION CONFIDENTIAL
for its own exclusive benefit and Alnylam (and its Affiliates) thereafter shall not be licensed under such patent or patent application. For the sake of clarity, should Alnylam elect not to continue with interference or equivalent proceedings and CRT elect to continue with such proceedings, Alnylam (and its Affiliates) shall cease to be licensed for the patent subject to interference for that territory.
7.3 If either Party receives any notice, claim or proceedings from any Third Party alleging infringement of that Third Party's intellectual property by reason of Alnylam's activities in relation to this Licence Agreement or the use and exploitation of the CRT Patent Rights by Alnylam or its Sub-licensee(s) or its Affiliates, the Party receiving that notice shall forthwith notify the other Party of the notice, claim or proceeding.
7.4 Alnylam shall, at its option and at its own cost, defend and enforce or shall procure the defence or enforcement of the rights under the CRT Patent Rights. CRT shall, at Alnylam' reasonable cost, render such reasonable assistance as Alnylam reasonably requests. If necessary, CRT shall grant to Alnylam the right to conduct such an action in its name. Any damages or financial settlement monies received by Alnylam pursuant to such proceedings shall, after deduction of all of the costs incurred by Alnylam in such proceedings, be treated as Net Sales.
7.5 Without prejudice to CRT's other rights arising from such failure, if Alnylam opts not to defend or enforce the relevant CRT Patent Rights and if CRT desires to enforce or defend such rights, CRT shall notify Alnylam and Alnylam shall, at CRT's request, grant to CRT any and all rights that would be necessary for CRT to undertake the enforcement or defence. If Alnylam is unable to grant such rights then it shall, at CRT's request, grant to CRT the right to conduct such an action in its name. Alnylam shall provide, at CRT's request and CRT's reasonable expense, such reasonable assistance as CRT may reasonably request in any such proceedings. Any monies received by CRT pursuant to any enforcement or defence of the CRT Patent Rights by them under this Clause 7.5 shall be solely for the benefit of CRT.
8. WARRANTIES AND LIABILITY
8.1 Each Party represents and warrants to the other Party that it has legal power, authority and right to enter into this Licence Agreement and to perform its respective obligations hereunder.
8.2 CRT represents and warrants to Alnylam that it has had assigned to it all Cambridge University's and the Lister Institute of Preventive Medicine's rights under the CRT Patent Rights pursuant to the terms of assignments, a copy of which will be provided to Alnylam upon request.
8.3 CRT represents and warrants to Alnylam that to the best of its knowledge, upon reasonable inquiry, as at the Commencement Date the inventors (as determined by the laws of England) of the patent applications referred to in Schedule 1 are [**] and all of these inventors have assigned their rights in the CRT Patent Rights to CRV (to the extent that the same were not vested in Cambridge University or the Lister Institute of Preventive Medicine and assigned to CRT in accordance with Clause 8.2). CRV have in turn assigned their rights to CRT. In the event of breach of this Clause 8.3,
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Alnylam's remedy for breach shall be limited to the rights conferred upon Alnylam by Clause 8.9.
8.4 Other than expressly set out herein, no Party gives any representation or warranty to any other Party that the performance of this Licence Agreement will not result in the infringement of any rights, including intellectual property rights, vested in a Third Party and it is agreed and understood by the Parties that Alnylam is responsible for undertaking each and every investigation necessary to satisfy itself that the rights granted under this Licence Agreement can be properly and lawfully exercised by Alnylam (and any Affiliate) without infringing the rights of any Third Party, and save as expressly set out in Clauses 8.1 and 8.2 no warranties of any kind are given by CRT in relation to the intellectual property rights granted under this Licence Agreement or owned or controlled by any Third Party which may affect the exercise of such rights.
8.5 Nothing in this Licence Agreement shall be construed as a representation made or warranty given by CRT in relation to the CRT Patent Rights that:
8.5.1 any patent will issue based upon any pending patent
application;
8.5.2 any patent which issues will be valid; nor
8.5.3 the use of any CRT Patent Rights will not infringe the patent
or proprietary rights of any Third Party.
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Furthermore, CRT makes no representation or warranty, express or implied, with respect to merchantability or fitness of the CRT Patent Rights for a particular purpose.
8.6 No Party shall be liable to the other Party, its Affiliates or Sub-licensees in contract, tort, negligence, breach of statutory duty or otherwise for any loss, damage, cost or expense of an indirect or consequential nature (including any economic loss or other loss of turnover, profits, business or goodwill) arising out of or in connection with this Licence Agreement or the subject matter of this Licence Agreement.
8.7 Alnylam and any Affiliate licenced under this Licence Agreement shall respectively be responsible for and indemnify, defend and hold harmless CRT, the University of Cambridge, the Lister Institute of Preventive Medicine and their respective officers, servants and agents against any and all liability, loss, damage, cost or expense (including reasonable attorney's fees and court and other expenses of litigation) arising out of or in connection with Third Party claims relating to the discovery, research, development, manufacture, marketing, selling and disposal of Licensed Products or candidate Licensed Products by Alnylam, its Affiliates and their Sub-licensees except to the extent due to the gross negligence or wilful misconduct of an indemnitee.
8.8 In the event that CRT intends to seek indemnification under Clause 8.7, it shall promptly inform Alnylam (or its Affiliate as the case may be) in writing of a claim after receiving notice of the claim and shall permit Alnylam (or its Affiliate as the case may be) to direct and control the defence of the claim and shall provide such reasonable assistance as reasonably requested by Alnylam (or its Affiliate as the case may be) (at Alnylam's (or its Affiliate's as the case may be) cost) in the defence of
SECTION CONFIDENTIAL
the claim. Provided always that nothing in this Clause 8.8 shall permit Alnylam (or its Affiliate as the case may be) to make any admission on behalf of CRT, without the prior written consent of, CRT.
8.9 In the event that a Third Party has rights to the CRT Patent Rights, CRT shall obtain, at its cost, such Third Party's rights in the CRT Patent Rights to the extent necessary to preserve Alnylam's exclusive licence granted under and on the terms of this Licence Agreement. If CRT is not able to obtain such rights within one year of learning of the existence of such Third Party's rights, Alnylam shall have the option to 1) terminate this Licence Agreement; or 2) decrease all financial obligations of Alnylam, its Sub-licensees and Affiliates by 50% in respect of all future revenues, credit 50% of past revenues against future revenues owed to CRT under this Licence Agreement and, at Alnylam's option, renegotiate the terms of this Licence Agreement with CRT in order, to preserve the original intent of this Licence Agreement. For the sake of clarity CRT shall not be obliged to repay sums received previously.
9. CONFIDENTIALITY
9.1 Each Party undertakes and agrees not at any time for any reason whatsoever to disclose or permit to be disclosed to any Third Party or otherwise make use of or permit to be made use of (except as expressly permitted by or in conjunction with a licence granted under this Licence Agreement), any trade secrets or confidential information relating to the other Party's technology or the business affairs or finances of the other Party or of an Affiliate, Sub-licensee or of any suppliers, agents, distributors or customers of the other Party (the "Confidential Information") which come into its possession pursuant to this Licence Agreement. Nothing in this Licence Agreement shall prevent CRT from disclosing its own information relating to the CRT Patent Rights for any purpose outside the Field.
9.2 The Parties shall ensure that only those of their and their Affiliates' and Sub-licensee(s) officers, employees, agents and consultants who have a need to know are given access to Confidential Information and that those who are directly concerned with the carrying out of this Licence Agreement and who have access to the Confidential Information of the other Party are informed of its secret and confidential nature and are bound by obligations of confidentiality and non-use comparable to those obligations set forth in this Clause 9.
9.3 The obligations of confidence referred to in this Clause 9 shall not extend to any Confidential Information which:
9.3.1 is at the time of disclosure, or thereafter becomes, available
to the public otherwise than by reason of a breach by the
recipient Party of the provisions of this Clause 9; or
9.3.2 is known to the recipient Party without obligations of
confidence to the disclosing Party prior to its receipt from
the disclosing Party, as can be shown by written record; or
9.3.3 is subsequently disclosed to the recipient Party by another
party owing no obligations of confidentiality to the
disclosing Party in respect thereof; or
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9.3.4 is required to be disclosed by any applicable law or any
Competent Authority to which a Party is from time to time
subject provided to any extent practicable that the disclosing
Party receives prior written notice of such disclosure and
that the receiving Party takes all reasonable and lawful
actions to obtain confidential treatment for such disclosure
and, if possible, to minimize the extent of such disclosure;
or
9.3.5 is independently developed by a servant, agent, consultant or
employee of the recipient Party having no access to the
Confidential Information disclosed by a Party, as demonstrated
by written records.
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9.4 The obligations of each Party under this Clause 9 shall survive the expiration or termination for whatever reason of this Licence Agreement for a period of five (5) years.
10. TERM AND TERMINATION
10.1 This Licence Agreement shall become effective as of the Commencement
Date and expires when Alnylam's and its Affiliate's obligations to pay
sums according to Clause 3 finally expire.
10.2 In the event that Alnylam serves a written notice upon CRT confirming
Alnylam's intention to terminate this Licence Agreement, this Licence
Agreement shall terminate 90 (ninety) days after receipt by CRT of such
notice.
10.3 Either CRT on the one hand or Alnylam on the other hand ("the
Terminating Party") shall have the right to terminate this Licence
Agreement forthwith upon giving written notice of termination to
Alnylam on the one hand or CRT on the other hand as the case may be
("the Defaulting Party"), upon the occurrence of any of the following
events at any time during this Licence Agreement:
10.3.1 the Defaulting Party commits a material breach of this Licence
Agreement which in the case of a breach capable of remedy
shall not have been remedied within sixty (60) Business Days
of the receipt by it of a notice identifying the breach and
requiring its remedy;
10.3.2 the Defaulting Party for a period of longer than sixty (60)
Business Days becomes bankrupt or insolvent (including without
limitation being deemed to be unable to pay its debts);
10.3.3 proceedings are commenced in relation to the Defaulting Party
under any law, regulation or procedure relating to the
re-construction or re-adjustment of debts (including where a
petition is filed or proceeding commenced seeking any
reorganisation, arrangement, composition or re-adjustment
under any applicable bankruptcy, insolvency, moratorium,
reorganisation or other similar law affecting creditors'
rights or where the Defaulting Party consents to, or
acquiesces in, the filing of such a petition), which is not
dismissed within ninety (90) days;
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10.3.4 the Defaulting Party takes, any action, or any legal
proceedings are started or other steps taken by a Third Party,
which proceedings are not dismissed within ninety (90) days
with a view to:
(i) the winding up or dissolution of the Defaulting Party
(other than for the reconstruction of a solvent
company for any purpose, including the inclusion of
any part of the share capital of the Defaulting Party
on a recognised public Stock Exchange); or
(ii) the appointment of a liquidator, trustee, receiver,
administrative receiver, receiver and manager,
interim receiver custodian, sequestrator or similar
officer of the Defaulting Party against the
Defaulting Party or a substantial part of the assets
of the Defaulting Party,
or anything analogous to any of the foregoing occurs under the
laws of any country.
10.4 In the event of Alnylam's material breach of its obligations under
either or both of Clauses 6.1 and 6.2 CRT shall have the right in its
absolute discretion to selectively terminate the licence granted under
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Clause 2 in respect of either or both of:
10.4.1 any therapeutic area or areas within the Field; and
10.4.2 any territory or territories within the Territory
in respect of which Alnylam is in material breach as set forth in
Clause 6.3. In the event of termination by CRT of any part of the
licence granted to Alnylam under Clause 2 pursuant to the exercise of
CRT of its rights under this Clause 10.4, the other terms of this
Licence Agreement (including any surviving licence under Clause 2)
shall remain in full force and effect.
10.5 CRT shall have the right to terminate this Licence Agreement forthwith
upon giving thirty (30) days written notice of termination to Alnylam
in the event that Alnylam or its Affiliate:
10.5.1 commences legal proceedings, with for the sake of clarity the
exception of interference proceedings declared by the USPTO or
any other patent office, contesting the validity of the CRT
Patent Rights ; or
10.5.2 commences itself, or provides any material assistance to a
Third Party in relation to, legal proceedings contesting the
ownership of the CRT Patent Rights.
For the sake of clarity and notwithstanding anything in this Licence
Agreement to the contrary, any actions taken concerning determination
of priority of invention under US patent law between a CRT Patent Right
and claims in a patent or patent application which is owned by or
licensed by Alnylam or its Affiliate, shall not be considered a contest
of validity or ownership under this Clause 10.5.
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SECTION CONFIDENTIAL
11. CONSEQUENCES OF TERMINATION
11.1 Upon termination of this Licence Agreement:
11.1.1 the licence rights granted by CRT to Alnylam and its
Affiliates pursuant to Clause 2 shall terminate in its
entirety;
11.1.2 Alnylam and any Affiliates shall pay to CRT within sixty (60)
Business Days all sums due to CRT hereunder which have accrued
prior to the date of termination;
11.1.3 Save that each Party shall be entitled to retain a single copy
of any document for their records, Alnylam and CRT shall
return to each other any Confidential Information provided
under this Agreement.
11.2 Termination or expiry of this Licence Agreement for whatever reason
shall not affect the accrued rights of the Parties arising in any way
out of this Licence Agreement as at the date of termination or expiry
and in particular but without limitation the right to recover damages
and interest, and the provisions of Clauses 5, 8, 9 and 20 shall remain
in full force and effect.
12. WAIVER
12.1 Neither Party or its Affiliate shall be deemed to have waived any of
its rights or remedies conferred by this Licence Agreement unless the
waiver is made in writing and signed by a duly authorised
representative of that Party or its Affiliate. In particular, no delay
or failure of either Party or its Affiliate in exercising or enforcing
any of its rights or remedies conferred by this Licence Agreement shall
operate as a waiver of those rights or remedies or so as to preclude or
impair the exercise or enforcement of those rights or remedies nor
shall any partial exercise or enforcement of any right or remedy by
either Party or its Affiliate preclude or impair any other exercise or
enforcement of that right or remedy by that Party or its Affiliate.
13. ENTIRE AGREEMENT/VARIATIONS
13.1 This Licence Agreement constitutes the entire agreement and
understanding between the Parties and supersedes all prior oral or
written understandings, arrangements, representations or agreements
between them relating to the subject matter of this Licence Agreement.
No director, employee or agent of either Party is authorised to make
any representation or warranty to another Party not contained in this
Licence Agreement, and each Party acknowledges that it has not relied
on any such oral or written representations or warranties.
13.2 No variation, amendments, modification or supplement to this Licence
Agreement shall be valid unless made in writing in the English language
and signed by a duly authorised representative of each Party.
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14. NOTICES
14.1 Any notice to be given pursuant to this Licence Agreement shall be in
writing in the English language and shall be delivered by hand, sent by
reputable courier service, or sent by facsimile confirmed to the
address or facsimile number of the recipient set out below or such
other address or facsimile number as a Party may from time to time
designate by written notice to the other Party.
ADDRESS OF CRT
Sardinia House
Sardinia Street
London
WC2A 3NL
For the attention of the Chief Executive
Fax No. ++ 44 207 269 3641
For the attention of the Chief Executive.
ADDRESS OF ALNYLAM
790 Memorial Drive
Suite 202
Cambridge, Massachusetts 02139
United States of America
For the attention of the Chief Executive
Fax No. ++1 617 252 0011
14.2 Any notice given pursuant to this Clause 14 shall be deemed to have
been given upon receipt.
15. ASSIGNMENT
15.1 Subject to Clause 15.2, neither Party shall without the prior written
consent of the other Party, which shall not be unreasonably withheld,
assign the benefit and/or burden of this Licence Agreement nor
sub-contract any of its obligations hereunder unless otherwise
permitted by the terms hereof.
15.2 Either Party shall be entitled to assign the benefit and/or burden of
this Licence Agreement to any Affiliate or to its successor in
connection with any merger, consolidation or sale or other disposal of
all or substantially all of its assets and/or business to which this
Agreement relates.
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SECTION CONFIDENTIAL
16. FORCE MAJEURE
16.1 If a Party or its Affiliate (the "Non-Performing Party") is unable to
carry out any of its obligations under this Licence Agreement due to
Force Majeure this Licence Agreement shall remain in effect but the
Non-Performing Party's relevant obligations under this Licence
Agreement and the relevant obligations of the other Party ("the
Innocent Party") under this Licence Agreement shall be suspended for a
period equal to the duration of the circumstance of Force Majeure
provided that:
16.1.1 the suspension of performance is of no greater scope than is
required by the Force Majeure;
16.1.2 the Non-Performing Party gives the Innocent Party prompt
notice describing the circumstance of Force Majeure, including
the nature of the occurrence and its expected duration, and
continues to furnish regular reports during the period of
Force Majeure;
16.1.3 the Non-Performing Party uses all reasonable efforts to remedy
its inability to perform and to mitigate the effects of the
circumstance of Force Majeure; and
16.1.4 as soon as practicable after the event which constitutes Force
Majeure, the Non-Performing Party shall discuss with the
Innocent Party how best to continue its operations as far as
possible in accordance with this Licence Agreement.
16.2 If an event of Force Majeure should persist for more than 12 (twelve)
months in any territory or therapeutic area, and a Third Party has the
ability and desire to perform Alnylam's or its Affiliate's obligations
under this Licence Agreement in such territory or therapeutic area, and
Alnylam or its Affiliate does not enter into good faith negotiations
with such Third Party during such twelve month period to conclude a
Sub-licence in such territory or therapeutic area during Alnylam's or
its Affiliate's period of disability and does not conclude a
Sub-licence within 18 (eighteen) months of the commencement of the
event of Force Majeure, then CRT shall have the right to terminate this
Licence Agreement for such therapeutic area or territory as the case
may be upon thirty (30) days written notice to Alnylam. The ability and
desire of a Third Party to enter into a Sub-licence and perform
Alnylam's or its Affiliate's obligations under this Licence Agreement
in such territory or therapeutic area shall be demonstrated by CRT
introducing a potential Sub-licensee who has confirmed in writing the
terms upon which they agree to be bound. If Alnylam or its Affiliate is
unable to conclude a Sub-licence with such Third Party, but such Third
Party agrees nonetheless with CRT on the terms of an agreement to
perform Alnylam's or its Affiliate's obligations in such territory or
therapeutic area, then Alnylam or its Affiliate shall be given the
opportunity to grant a Subl-icence to such Third Party on the same
terms as those agreed between CRT and such Third Party and uponentering
a Sub-licence with such Third Party, Alnylam's and its Affiliate's
rights and obligations under this Licence Agreement in such territory
or therapeutic area will be reinstated.
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SECTION CONFIDENTIAL
17. SEVERANCE OF TERMS
17.1 If the whole or any part of this Licence Agreement is or becomes or is
declared illegal, invalid or unenforceable in any jurisdiction for any
reason (including both by reason of the provisions of any legislation
and also by reason of any court or Competent Authority which either has
jurisdiction over this Licence Agreement or has jurisdiction over
either or both of the Parties):
17.1.1 in the case of the illegality, invalidity or un-enforceability
of the whole of this Licence Agreement it shall terminate only
in relation to the jurisdiction in question; or
17.1.2 in the case of the illegality, invalidity or un-enforceability
of part of this Licence Agreement, that part shall be severed
from this Licence Agreement in the jurisdiction in question
and that illegality, invalidity or un-enforceability shall not
in any way whatsoever prejudice or affect the remaining parts
of this Licence Agreement which shall continue in full force
and effect.
17.2 If in the reasonable opinion of either Party any severance under this
Clause 17 materially affects the commercial basis of this Licence
Agreement, the Parties shall negotiate, in good faith, to modify the
Licence Agreement to eliminate the material effect and to preserve (to
the extent possible) the original intent. If the parties fail to reach
a modified agreement within thirty (30) days after the severance under
this Clause 17, then the dispute shall be resolved in accordance with
the procedures set forth in Clause 20.
18. THIS LICENCE AGREEMENT NOT TO CONSTITUTE A PARTNERSHIP
18.1 None of the provisions of this Licence Agreement shall be deemed to
constitute a partnership between the Parties and no Party shall have
any authority to bind any other Party in any way except as provided in
this Licence Agreement.
19. PUBLIC STATEMENTS
19.1 Except as provided in Clause 19.2, neither Party shall, without the
prior written consent of the other Parties, which shall not be
unreasonably withheld:
19.1.1 use in advertising, publicly or otherwise, any trade-name,
personal name, trademark, trade device, service mark, symbol,
or any abbreviation, contraction or simulation thereof, owned
by another Party (including for the sake of clarity in
relation to CRT, Cancer Research UK); or
19.1.2 represent, either directly or indirectly, that any product or
service of another Party is a product or service of the
representing Party or that it is made in accordance with or
utilises the information or documents of another Party.
19.2 The restrictions in Clause 19.1 shall not apply to the following:
19.2.1 a press release, in a form agreed to in writing by the
Parties, publicly announcing this Licence Agreement; or
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SECTION CONFIDENTIAL
19.2.2 use as required by any applicable law or governmental
regulation; or
19.2.3 a statement that Alnylam or its Affiliate is licensed by CRT
under one or more of the patents and/or patent applications
comprising the CRT Patent Rights; or
19.2.4 re-use of any previously agreed to public statement.
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20. GOVERNING LAW AND JURISDICTION
20.1 Save to the extent provided in Clause 20.2, the Parties shall attempt
to settle any dispute or claim arising out of or relating to this
Agreement by good faith negotiations. If the Parties fail to agree on a
reasonable settlement within sixty (60) days after the affected Party
informed the other Party in writing of such dispute or claim, either
Party may initiate arbitration under the procedural Rules of the
American Arbitration Association upon written notice to the other Party
within thirty (30) days after such failure. The arbitration tribunal
shall be appointed as follows: each Party shall select, within thirty
(30) days after notice to initiate arbitration, an independent and
experienced Third Party as its arbitrator. The two arbitrators selected
by the parties shall mutually select an independent and experienced
Third Party as a third arbitrator. The venue for the arbitration
procedure shall be in London, England and the validity, construction
and performance of this Licence Agreement shall be governed by the laws
of England. The award of the arbitration tribunal shall be final and
binding for the parties. Notwithstanding the foregoing, each Party may
apply for interlocutory relief in court.
20.2 In the event of a dispute between the Parties as to whether:
20.2.1 the Milestone Patent Grant has been achieved; or
20.2.1 Alnylam's belief that any Patent Rights are Blocking IP is
reasonable,
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the dispute shall be referred to an independent expert in the field of patents (acting as an expert and not as an arbitrator) appointed by agreement between the Parties and in the absence of such agreement within thirty (30) Business Days, then at the request of either Party by the President for the time being of the Chartered Institute of Patent Agents. The cost of the expert shall be borne equally by the Parties.
SECTION CONFIDENTIAL
SCHEDULE 1
CRT Patent Rights
[**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ [**] [**] ------------------------------------------------------------------------ [**] [**] [**] [**] [**] Pending ------------------------------------------------------------------------ |
SECTION CONFIDENTIAL
SCHEDULE 2
LICENSED AFFILIATES
(details to be provided by Alnylam pursuant to Clause 2.1).
SECTION CONFIDENTIAL
IN WITNESS whereof this Licence Agreement has been executed by duly authorised officers of the Parties on the date first above written.
Signed by: /s/Harpal S. Kumar
---------------------------
Name: Harpal S. Kumar
Title: Chief Executive
For and on behalf of
CANCER RESEARCH TECHNOLOGY LIMITED
Signed by: /s/John Maraganore
---------------------------
Name: John Maraganore
Title: CEO
For and on behalf of
ALNYLAM PHARMACEUTICALS INC
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SECTION CONFIDENTIAL
ALNYLAM
PHARMA
790 MEMORIAL DRIVE - SUITE 220
CAMBRIDGE, MA 02139
TELEPHONE - 617-252-0700
FAX-617-252-0011
5 August 2003
Dr. Robert Kreutzer
Chief Executive Officer
Ribopharma AG
Fritz-Hormschuch-Strasse 9
95326 Kulmbach
Germany
RE: CANCER RESEARCH TECHNOLOGY LIMITED AND ALNYLAM PHARMACEUTICALS, INC.
LICENSE AGREEMENT DATED 18 JULY 2003
Dear Roland:
By signing this letter Riopharma AG hereby agrees to be bound to Cancer Research Technology Ltd. By the terms of the above referenced License Agreement that specifically apply to Affiliates.
Sincerely,
/s/John G. Conley John G. Conley Vice President Strategy, Chief Financial Officer |
Acknowledge and Agreed,
/s/Roland Kreutzer August 11, 2003 ------------------ Roland Kreutzer |
ALNYLAM
PHARMA
790 MEMORIAL DRIVE - SUITE 220
CAMBRIDGE, MA 02139
TELEPHONE - 617-252-0700
FAX-617-252-0011
August 27, 2003
VIA COURIER
Harpala S. Kumar
Chief Executive
Cancer Research Technology Ltd.
Sardina House
Sardina Street
London WC2A 3NL
United Kingdom
RE: AMENDED SCHEDULE 2 TO THE LICENSE AGREEMENT BETWEEN CANCER RESEARCH
TECHNOLOGY LIMITED AND ALNYLAM PHARMACEUTICALS, INC. DATED 18 JULY 2003
Dear Mr. Kumar
Enclosed please find an Amended Schedule 2 to be attached to our mutual License Agreement. The amendment adds Ribopharma AG as a licensed Affiliate, now that our merger has been completed. Pursuant to Clause 2, I have enclosed a copy of a letter in which Ribopharma AG agrees to be bound as an Affiliate (to CRT) by the terms of the License Agreement.
Please sign all copies of this letter acknowledging the above and return two letters to me.
Sincerely,
/s/John M. Maraganore Acknowledged and agreed, John M. Maraganore, Ph.D. President and Chief Executive Officer Tel: 617-252-0700 /s/Harpal S. Kumar Fax: 617-252-0011 ------------------ jmaraganore@aknylam.com Harpal S. Kumar |
cc: J.Solbe 29/8/03
R.Kreutzer Date
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Enclosures (3)
EXHIBIT 10.18
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
LICENSE AGREEMENT
This License Agreement (this "Agreement"), is effective December 30, 2003 (the "Effective Date"), by and between Cold Spring Harbor Laboratory, a not-for-profit research institution located at 1 Bungtown Road, Cold Spring Harbor, New York ("CSHL"), and Alnylam Pharmaceuticals, Inc., a Delaware corporation having a principal place of business at 790 Memorial Drive, Cambridge, MA 02139 ("Alnylam").
WHEREAS, CSHL has certain RNAi-related technologies developed in the laboratory of Dr. Greg Hannon at Cold Spring Harbor Laboratory as taught in the patent applications listed in Schedule A;
WHEREAS, Alnylam further desires to obtain rights to the aforementioned RNAi-related technologies for the consideration set forth herein; and
WHEREAS, CSHL is willing to grant to Alnylam a non-exclusive license to research and use know-how and inventions to make, use, import and sell therapeutic products, which in each case may be covered by claims in the patent applications listed in Exhibit A on the terms and conditions set forth below;
THEREFORE, the parties agree as follows:
1. DEFINITIONS
1.1 "Affiliate" shall mean a corporation, company, partnership,
joint venture or other entity which directly or indirectly controls, is
controlled by or under common control with Alnylam. For the purposes of this
Section 1.1 only, "control" shall mean (A) the direct or indirect ownership or
control of fifty percent (50%) or more of (i) the stock (or other securities or
voting rights) having the right to vote for directors or other governing
authority thereof or (ii) ownership interest or (B) the ability to otherwise
control the management thereof or (C) in any country where the local law shall
not permit foreign equity participation of fifty percent (50%) or more, then the
direct or indirect ownership or control of the maximum percentage of such
outstanding stock or voting rights permitted by local law.
1.2 "Alnylam Confidential Information" or "Confidential Information" of Alnylam shall mean all non-public information disclosed by Alnylam to CSHL. Notwithstanding the foregoing, only the information, which is designated as confidential in writing by Alnylam, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such
information is disclosed by Alnylam to CSHL shall be considered Alnylam Confidential Information. Information which is orally, visually or physically disclosed by Alnylam shall constitute Alnylam Confidential Information only if Alnylam indicated at the time of such disclosure that such information was confidential and, within thirty (30) days after such disclosure, delivers to CSHL a written document or documents describing such information and referencing the place and date of such oral, visual or physical disclosure and the names of the persons to whom such disclosure was made.
1.3 "Commercial Introduction" of Licensed Product(s) means, on a country-by-country and Licensed Product-by-Licensed Product basis, the date of first commercial sale of a Licensed Product by Alnylam or its Affiliates in an arms'-length transaction to an independent third party in such country after obtaining all necessary Regulatory Approvals; provided that such Licensed Product(s) are neither units provided for evaluation purposes nor free units for indigent persons.
1.4 "Contractor" means a third party corporation, person, or entity under written agreement with Alnylam ("Contract") (i) who, for non-royalty based payment(s), undertakes on the behalf of Alnylam to make, use, and/or import, products or processes embodying or made in accordance with the Licensed Patents (collectively, "Contract Work"), and (ii) which party shall not, after termination of the Contract, receive subsequent CSHL rights to CSHL intellectual property under this Agreement and (iii) from whom Alnylam receives no payments for entering such Contract (iv) and from whom Alnylam receives full ownership and/or exclusive license to all results obtained from the Contract Work.
1.5 "Control" or "Controlled" means possession of the ability to grant access to or a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any third party.
1.6 "CSHL Confidential Information" or "Confidential Information" of CSHL means (a) non-public documents and information relating to the filing and prosecution of Licensed Patents provided to Alnylam during the term of this Agreement at Alnylam's written request; and (b) CSHL Know-How provided to Alnylam. Notwithstanding the foregoing, only such documents, information, reports, and CSHL Know-How which are designated as confidential in writing by CSHL, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such documents, information or reports are disclosed by CSHL to Alnylam shall be considered CSHL Confidential Information. The information, reports, or CSHL Know-How described above which are orally, visually or physically disclosed by CSHL shall constitute CSHL Confidential Information only if CSHL indicated at the time of such disclosure that such information, reports, or CSHL Know-How were confidential and, within thirty (30) days after such disclosure, delivers to Alnylam a written document or documents describing such information, reports, or CSHL Know-How and referencing the place and date of such oral, visual or physical disclosure and the names of the persons to whom such disclosure was made. No other information disclosed by CSHL to Alnylam hereunder shall be considered Confidential Information of CSHL, unless the parties specifically and expressly agree otherwise in a separate writing signed by the authorized representatives of both parties.
1.7 "CSHL Know-How" means all non-public information, and all non-public materials, ideas, and technical information, developed by or for the Principal Investigator and owned or Controlled by CSHL and necessary to practice the Licensed Patents. CSHL Know-How shall not include anything that is generally ascertainable from publicly available information or that was, as evidenced by Alnylam's written record, (i) known to Alnylam prior to disclosure to Alnylam by CSHL, as evidenced by Alnylam's written record or, (ii) which Alnylam develops independently or obtains not in violation of any obligation of confidentiality owed to CSHL.
1.8 "FDA" shall mean the United States Food and Drug Administration and any successor agency or authority thereto.
1.9 "FDA Approval" means the act of the FDA necessary for the marketing and sale of a Product in the United States.
1.10 "Field of Use" means all therapeutic uses in humans, including without limitation the diagnosis, prevention and treatment of diseases or conditions and all other healthcare applications. Field of Use shall not include research reagent sales.
1.11 "Gross Sales" of a Licensed Product means, on a Licensed Product-by Licensed Product basis, for purposes of the calculation of royalties, the gross amount invoiced for independent arm's length sales of a Licensed Product by Alnylam or its third party sublicensees to independent third parties, on a worldwide basis. If a product is sold for use in a single vial or other single dispensation vehicle in combination with other active ingredient(s), notwithstanding the foregoing, "Gross Sales" shall mean Adjusted Gross Sales. "Adjusted Gross Sales" shall mean the gross invoiced sales price from such sales multiplied by the fraction B/(A+B), where A is the gross invoiced sales price for the amount of the other active ingredient(s) used in the combination when distributed separately and B is the gross invoiced sales price for the amount of the Licensed Product used in the combination when distributed separately.
1.12 "Licensed Patents" means the U.S. Patent Applications listed in Schedule A and any divisions, continuations, reissues, reexamines, extensions and continuations-in-part applications thereof and any patents issuing thereto; and any and all foreign patents, foreign applications, extensions and supplemental protection certificates or patent applications corresponding thereto having the Principal Investigator as an inventor and claiming the same priority date as a parent application.
1.13 "Licensed Product" means any product, including but not limited to any lyophilized liquid, sustained release or aerosolized formulation or other formulation, or process for which Alnylam, or its Affiliate has received FDA Approval and/or Regulatory Approval, which is made through the use of CSHL Know-How or falls within the scope of a Valid Claim of a Licensed Patent.
1.14 "Net Sales" of a Licensed Product, means the Gross Sales of such Licensed Product less applicable Sales Returns and Allowances for such Licensed Product, on a worldwide basis. Bona fide sample units, free units for indigent persons, and pre-clinical,
clinical (including any placebo materials), or market-focused trial units of Licensed Product will not be included in any calculations of Net Sales.
1.15 "Regulatory Approval" means the approval, license, registration or other authorization of the relevant Regulatory Authority received by Alnylam or its Affiliates necessary for the commercial sale of a Licensed Product.
1.16 "Regulatory Authority" means any regulatory authority, comparable to the FDA, which is responsible for the approval and regulation of a Licensed Product within a country, or if applicable a centralized regulatory authority with jurisdiction over multiple countries, and any successor regulatory authority or authorities. The term "Regulatory Authority" includes, but is not limited to, the FDA.
1.17 "Sales Returns and Allowances" means, for purposes of the
calculation of royalties due for Licensed Products, the sum of (a) and (b),
where: (a) is a provision, determined by Alnylam under U.S. GAAP or IAS as
applicable for sales of such products for (i) trade, cash and quantity
discounts or price adjustments or rebates on such products (including but not
limited to discounts or rebates to governmental or managed care organizations),
other than price discounts granted at the time of invoicing and which are
included in the determination of Gross Sales, (ii) credits or allowances given
or made for rejection or return of, and for uncollectible amounts on, such
previously sold products or for retroactive price reductions (including
Medicare and similar types of rebates and chargebacks), (iii) taxes, duties or
other governmental charges (including any tax such as a value added or similar
tax or government charge other than an income tax) levied on or measured by the
billing amount for such products, as adjusted for rebates and refunds,
(iv) charges for freight and insurance directly related to the distribution of
such products, to the extent included in Gross Sales, (v) credits or allowances
given or made for wastage replacement or indigent patients, and (vi) other
special sales programs agreed to by the parties for such products; and (b) is a
periodic adjustment of the provision determined in (a) to reflect amounts
actually incurred by Alnylam and/or its Affiliates for items (i), (ii), (iii),
(iv), (v), and (vi) in clause (a).
1.18 "Valid Claim" means an issued claim of an unexpired patent or a claim of a pending patent, which shall not have been withdrawn, canceled or disclaimed, or held invalid or unenforceable by a court of competent jurisdiction in an unappealed or unappealable decision.
2. GRANT OF LICENSE
2.1 License Grant to Alnylam. CSHL hereby grants to Alnylam and its Affiliates a worldwide, non-exclusive license, under CSHL Know-How and Licensed Patents (i) for all internal research and development purposes, including without limitation, the right to make, use and import CSHL Know How and inventions claimed in the Licensed Patents and (ii) to develop, make, use, market, sell, offer for sale, export and import, in the Field of Use, Licensed Products, including without limitation those covered by Valid Claims in the Licensed Patents.
2.2 Government Rights. The licenses granted in Sections 2.1 is
subject to the rights of the United States Government as set forth in 35 U.S.C.
Section 200 et seq. If there is any conflict between any rights and the rights
granted herein, such Government rights shall prevail.
2.3 Sublicenses to Contractors. Alnylam may grant sublicenses to Contractors to the extent necessary for such Contractor to perform its obligations with respect to Contract Work only, provided however, that all rights under Section 2.1 herein sublicensed to Contractors terminate concurrent with termination of the corresponding Contract. The sublicenses granted by Alnylam under this Agreement shall be subject to such third party sublicensees entering into written agreement with Alnylam that are no less protective of CSHL's rights than the terms of
this Agreement. All sublicenses granted under this Section 2.3 will have appended to them and separately signed the terms in Schedule B. In no event shall Alnylam sublicensees have the right to any grant further sublicenses to CSHL rights licensed under this Agreement without the prior written consent of CSHL. At CSHL's request, Alnylam shall provide to CSHL notice that Alnylam has granted each such sublicense. All of such information provided by Alnylam to CSHL shall be deemed to be Alnylam Confidential Information
2.4 Right to Negotiate for Licenses to Third Party Collaborators. The parties acknowledge that Alnylam has or may enter into collaborations with third parties ("Collaborator(s)") in various areas. Upon Alnylam's written documented request, CSHL agrees, to the extent that it is legally able, to promptly enter into negotiations in good faith with one or more such existing or potential Collaborators, not to exceed [**] Collaborators, for a license under Licensed Patents. Notwithstanding anything to the contrary in this Section 2.4, if for any reason whatsoever or for no reason, CSHL and such Collaborator do not conclude negotiations for such license within a period of [**] immediately following Alnylam's request to begin negotiations for such license, CSHL shall have no further obligations to Alnylam or such Collaborator with regard to any such license.
3. PAYMENTS
3.1 Upfront License Fee. As partial consideration for the license granted in this Agreement, Alnylam shall pay CSHL a one-time non-refundable upfront license fee of [**] U.S. Dollars ($[**] USD). Such fee shall be due within thirty (30) days of the full execution of this Agreement. The upfront license fee will not be creditable against any milestone or royalty due under this Agreement.
3.2 License Maintenance Fee. Alnylam shall pay CSHL an annual license maintenance fee of [**] U.S. Dollars ($[**] USD) due within thirty (30) days of the first anniversary of the Effective Date of the Agreement and within thirty (30) days of each anniversary thereafter.
3.3 Milestone Payments. Alnylam shall pay CSHL a milestone payment of [**]U.S. Dollars ($[**] USD) upon FDA Approval for Commercial Introduction of the first Licensed Product that would infringe a Valid Claim of a Licensed Patent in the United States in the absence of the license granted in this Agreement;
3.4 Earned Royalties. Alnylam shall pay CSHL a [**] Percent ([**]%) royalty on Net Sales of Licensed Products for which the development, making, use, marketing, selling, offering for sale, exporting or importing would infringe a Valid Claim under Licensed Patents in the absence of the license granted in this Agreement. Such royalty shall be payable on a Licensed Product-by-Licensed Product, and country-by-country basis beginning with the Commercial Introduction of a Licensed Product in a country and ending upon the expiration date of the last to expire in such country of the Licensed Patents referenced in the first sentence of this Section 3.4.
3.5 Royalty Payment Terms.
(a) The obligation to pay royalties under Section 3.4 of this Agreement shall be imposed only once with respect to the same unit of Licensed Product, regardless of the number of patents within Licensed Patents pertaining thereto. Net Sales referred to in Section 3.4 of this Agreement will be calculated on a calendar quarter basis. In the event that Alnylam, or its Affiliates makes any adjustments to Sales Returns and Allowances after the associated Net Sales have been reported pursuant to this Agreement, the adjustments shall be reported by Alnlyam and reconciled with the next report and payment of any royalties due. For purposes of determining when a sale of any Licensed Product occurs under this Agreement, the sale shall be deemed to occur on the date shipment of such Licensed Product is recognizable as revenue by Alnylam under U.S. GAAP. After the date of Commercial Introduction of each Licensed Product, all royalty payments for such Licensed Product shall be made within sixty (60) days after the end of each calendar quarter in which such sales were deemed to occur. All payments hereunder shall be made free and clear of any taxes, duties, levies, fees or charges, except for withholding taxes (to the extent required). All payments hereunder due to CSHL shall be made in U.S. Dollars by bank wire transfer to: JPMorgan Chase Bank, 350 Main Street Huntington, NY 11743 (Federal ABA#: 021-000-021, Account #: [**]). Notwithstanding the foregoing, CSHL may modify such bank wire transfer information upon providing prior written notice to Alnylam.
(b) For the purpose of calculating royalty payments to CSHL, Net Sales in each country shall be first determined in the currency of the country in which they are earned and shall be converted quarterly into an amount in U.S. Dollars at the closing of the average of the bid and ask prices reported by Reuters Ltd. (or, if not available, the Wall Street Journal, East Coast Edition) on the last business day in such quarter for which such payment is due. If by law, regulations or fiscal policy of a particular country, remittance of royalties in U.S. Dollars is restricted or forbidden, written notice thereof will promptly be given to CSHL, and payment of the royalty shall be made by the deposit thereof in local currency to the credit of CSHL in a recognized banking institution in such country selected by Alnylam and reasonably acceptable to CSHL. When, in any country, the law or regulations prohibit both the transmittal and deposit of royalties on sales in such country, royalty payments shall be suspended for as long as such prohibition is in effect and as soon as such prohibition ceases to be in effect, all royalties that Alnylam would have been under an obligation to transmit or deposit but for the prohibition shall forthwith be deposited or transmitted to the extent allowable. In the event that CSHL cannot arrange to have the blocked currency transferred out of the foreign country within (12) months after deposit, CSHL may notify Alnylam in writing of such event and return such blocked deposited currency to Alnylam in such country, and Alnylam shall cause such royalties to be paid to CSHL in United States Dollars to the bank account listed in Section 3.5 (a) at the exchange rate quoted by Reuters, LTD. on the day the blocked currency was deposited in the bank designated by CSHL within thirty (30) days of such notification and return.
(c) Taxes. CSHL will be responsible for any and all taxes levied on account of amounts received under this Agreement. If Alnylam or its Affiliates are required by law, rule or regulation to withhold taxes from the types of payment due CSHL hereunder, the parties shall (a) deduct those taxes from the amount otherwise remittable to CSHL hereunder, (b) pay such taxes to the proper taxing authority, and (c) send evidence of the obligation together with proof of payment to CSHL within fifteen (15) business days following that payment.
(d) Records and Bookkeeping. Alnylam and its Affiliates
shall keep books and records accurately showing all Licensed Products that
Alnylam and its Affiliates manufactured, used, and/or sold. Such books and
records must be preserved for at least three (3) years from the date of the
royalty payment to which they pertain and shall be open to inspection by an
independent public accountant selected by CSHL and reasonably acceptable to
Alnylam and its Affiliates during normal business hours, upon at least ten (10)
business days' prior notice and not more than once in each calendar year. The
parties agree that all information subject to review under this Section 3.5.1
(d) is Confidential Information of Alnylam and its Affiliates and that CSHL
shall cause the independent public accountant to execute a confidentiality
agreement reasonably acceptable to Alnylam and its Affiliates with respect to
the confidentiality and nonuse of such information; provided that the public
accountant performing the audit pursuant to this Section 3.5.1 may disclose to
CSHL the amount of any overpayment or underpayment.
The fees and expenses of CSHL's independent public accountant performing an examination shall be borne by CSHL. However, if an error in royalties of more than seven percent (7%) of the total royalties due for any year is discovered, then the fees and expenses of the independent public accountant shall be borne by Alnylam.
(e) Interest. All amounts that are not paid by Alnylarn or its Affiliates when due under the Agreement will accrue interest at a rate of the annual prime rate of interest as published in the Federal Reserve Bulletin H. 15 or successor bulletin thereto, plus an additional 1%.
4. PATENT PROSECUTION
CSHL shall be solely responsible, at its sole discretion and expense, for the prosecution, defense, and maintenance of Licensed Patents, and for enforcing Licensed Patents against actual or suspected third party infringers. CSHL will provide reasonable advance notice to Alnylam of any decision to abandon or discontinue the prosecution of Licensed Patents in any country.
5. REPRESENTATIONS AND WARRANTIES, INDEMNIFICATION, DISCLAIMERS AND LIMITATION OF LIABILITY
5.1 By Alnylam. Alnylam represents and warrants to CSHL that Alnylam has all necessary corporate power and authority to enter into and perform its obligations under this Agreement without the consent or approval of any other person or entity.
5.2 Alnylam agrees to indemnify, hold harmless and defend CSHL, its officers, directors, employees and agents, from and against any and all claims, suits, losses, damages, costs, fees and expenses (collectively, "Claims") resulting from or arising out of the development, manufacture, storage, sale or other distribution or any other use of Licensed Patents or Licensed Products by Alnylam, its Affiliates, agents and representatives or use by end users and other third parties of Licensed Products.
5.3 In all cases where CSHL seeks indemnification from Alnylam under this Section 5, CSHL will promptly notify Alnylam of receipt of any claim or lawsuit covered by such indemnification obligation and will cooperate fully with Alnylam in connection with the investigation and defense of such claim or lawsuit. Alnylam will have the right to control the
defense, with counsel of its choice, provided that CSHL will have the right to be represented by advisory counsel at its own expense. Neither party will settle or dispose of the matter in any matter that could negatively and materially affect the rights or liability of the other party without the prior written consent of such party, which will not be unreasonably withheld or delayed.
5.4 Commencing not later than the date of Commercial Introduction of a Licensed Product, Alnylam shall obtain and carry in full force and effect product liability insurance against any claims, judgments, liabilities and expenses for which it is obligated to indemnify the CSHL under Section 5.2 above, in such amounts as is reasonable at the time for similarly situated companies engaged in similar business marketing similar products.
5.5 By CSHL. CSHL represents and warrants that it has all necessary power and authority to enter into and perform its obligations under this Agreement without the consent or approval of any other person or entity, including with respect to any pre-existing contractual relationships relating to the subject matter hereof. CSHL further represents and warrants that to the knowledge of the CSHL Office of Technology Transfer and Principal Investigator, as of the Effective Date of this Agreement, CSHL is not party to an agreement or named in any judgment or judicial or administrative order that reduces the rights granted to Alnylam in Article 2 to the Licensed Patents.
5.6 THIS LICENSE IS PROVIDED WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED. CSHL MAKES NO REPRESENTATION OR WARRANTY THAT THE LICENSED PRODUCTS WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT. CSHL DOES NOT MAKE, AND ALNYLAM AND ITS AFFILIATES HEREBY WAIVES, ALL OTHER WARRANTIES EXPRESS OR IMPLIED.
IN NO EVENT WILL CSHL BE LIABLE TO ALNYLAM OR ITS AFFILIATES FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF THE LICENSED PRODUCTS.
5.7 Nothing in this Agreement should be construed as:
(a) A warranty or representation by CSHL as to the validity or scope of any Licensed Patents;
(b) A warranty or representation that anything made, used, sold or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents of third parties; or
(c) A requirement that CSHL shall file any patent application, secure any patent, or maintain any patent, including without limitation any Licensed Patents, in force.
6. CONFIDENTIAL INFORMATION
6.1 Non-Disclosure and Non-Use. The parties also agree that disclosure of CSHL Confidential Information and/or Alnylam Confidential Information to third parties could destroy
the value of such information and each hereby agrees, with respect to the Confidential Information of the other party, (i) not to use any such Confidential Information except as expressly permitted hereunder or as authorized in writing by the disclosing party; (ii) to safeguard such Confidential Information against disclosure to others with the same degree of care as it exercises with its own confidential information but in no event less than a reasonable degree of care; (iii) to mark any duplication or reproduction, in whole or in part, of such Confidential Information with a proprietary notice stating that same is the Confidential Information of the other party; and (iv) not to disclose such Confidential Information to others without the permission of the other party, all such obligations to continue until the later of (a) five years from the date of the disclosure of the corresponding Confidential Information or (b) one year from the effective date of termination of this Agreement. Notwithstanding the foregoing or anything to the contrary in this Agreement, the obligations under this Agreement shall not apply with respect to any information that the receiving party can demonstrate (a) is, as of the date of disclosure or development hereunder, known to the receiving party as evidenced by written records; (b) is, as of the date of disclosure or development hereunder, or becomes in the future, publicly available other than by act or omission of the receiving party; (c) is rightfully obtained by the receiving party from a third party without any binder of secrecy, or (d) has been independently developed by the receiving party without use of or reference to the disclosing party's Confidential Information, as demonstrated by such receiving party's independent written records contemporaneous with such development. Notwithstanding any provisions of this Agreement to the contrary, the receiving party may disclose Confidential Information of the disclosing party to the extent and to the persons or entities required under applicable governmental law, rule, regulation or order, including without limitation if required by the rules or regulations of the United States Securities and Exchange Commission or similar regulatory agency in a country other than the United States or of any stock exchange or Nasdaq, provided that such receiving party (i) first gives prompt notice of such disclosure requirement to the disclosing party so as to enable the disclosing party to seek any limitations on or exemptions from such disclosure requirement and (ii) reasonably cooperates, at the disclosing party's request and expense in any such efforts. In addition, the parties and their respective duly designated employees, agents or representatives or other agents may disclose to any and all such persons, without limitation, the United States federal tax treatment and tax structure of the transaction(s) covered by this Agreement and all materials of any kind that are provided to the parties relating to such tax treatment and tax structure.
6.2 Subject to Section 6.1 and with a further exception for disclosures to bona fide potential investors, lenders and acquirors/acquirees and to a party's consultants and advisors under a written obligation of confidentiality, neither party will disclose the specific terms of this Agreement to a third party. For clarity, Alnylam shall first disclose the existence of this Agreement, but only after providing CSHL the material language of such disclosure and an opportunity to comment at least one week prior to such disclosure.
6.3 No Implied Right. Unless expressly stated herein, the furnishing of Confidential Information hereunder does not constitute any grant, option, license or transfer of any right to, in, or under any patent or any other intellectual property rights now or hereinafter held by the disclosing party.
7. TERM AND TERMINATION
7.1 Term. Unless sooner terminated in a manner herein provided, this Agreement shall expire upon the expiration of the last-to-expire patent within the Licensed Patents. Upon expiration of this Agreement, Alnylam shall have fully paid up, royalty-free, worldwide, perpetual, irrevocable, nonexclusive licenses under Section 2.
7.2 Termination By Alnylam. Alnylam may terminate this Agreement with or without cause upon thirty (30) days advance written notification to CSHL.
7.3 Termination By A Party For Breach.
(a) In the event one party materially breaches this Agreement, then the other party may terminate this Agreement, at its option and without prejudice to any of its other legal and equitable rights and remedies, only in the event no Dispute Regarding Breach (as defined below) exists, by giving the party who committed such material breach sixty (60) days notice in writing, particularly specifying the breach and the intent to terminate, unless the notified party within such sixty (60) day period shall have rectified such breach. For clarity, the other party may not terminate this Agreement if the notified party has rectified such breach within such sixty (60) day period.
(b) In the event of a good faith dispute between the
parties as to whether a party ("Defaulting Party") has materially breached this
Agreement (a "Dispute Regarding Breach"), the parties shall submit the Dispute
Regarding Breach under the dispute resolution procedures set forth in Section
8.11. If the parties submit the Dispute Regarding Breach to an arbitration panel
as set forth in Section 8.11(b) and the decision of such arbitration panel is
that the Defaulting Party is in material breach of this Agreement (an "Adverse
Judgment"), then such arbitration panel shall specify the manner in which such
breach could be cured. If the decision of the arbitration panel is an Adverse
Judgment, then Defaulting Party shall have thirty (30) days to substantially
cure such breach in accordance with the arbitration panel's decision. If
Defaulting Party fails to substantially cure such breach within such thirty (30)
day period or as otherwise agreed, only then shall the other party have the
right to terminate this Agreement under this Section 7.3.
(c) Upon termination of this Agreement for a material breach of this Agreement by CSHL under Section 7.3(a) or 7.3(b), Alnylam shall have a perpetual, irrevocable, worldwide, nonexclusive license under Article 2.
7.4 Termination by CSHL For Bankruptcy. To the extent permitted by law, if (a) Alnylam shall become insolvent or shall suspend business without a successor or shall file a voluntary petition or answer admitting the jurisdiction of the court and the material allegations thereof or shall consent to an involuntary petition pursuant to or purporting to be pursuant to any reorganization or insolvency law of any jurisdiction or shall make an assignment for the benefit of creditors, or shall apply for or consent to the appointment of a receiver or trustee of a substantial part of its property, and such proceedings are not dismissed within one-hundred and twenty (120) days of filing and (b) no Affiliate shall undertake to assume its obligations under the provisions of this Agreement within ninety (90) days from the date on which Alnylam
becomes so disabled, then, to the extent permitted by law, CSHL may thereafter
immediately terminate this Agreement by giving written notice of termination to
Alnylam. This Agreement and all of each party's right, obligations, and licenses
hereunder shall terminate upon receipt of such notice, except with respect to
all accrued and unpaid initial license fees, annual license fee(s) and/or
Library construction, license fees, and royalties on Licensed Products under
Section 4 herein, if applicable, incurred prior to the date of termination and
except as provided in Section 8.5 herein. Alnylam shall notify CSHL in writing
within forty-five (45) days after the filing of any petition, answer, consent,
assignment, application or other document evidencing the conditions set forth in
subsection (a) of this Section 7.4.
7.5 Survival. Upon any termination or expiration, all of each
party's rights and obligations hereunder shall terminate, except as expressly
set forth herein and except that the following provisions of this Agreement
granted pursuant to this Agreement shall survive and remain in full force and
effect for as long as necessary to permit their full discharge: Sections 4
through 9. Alnylam's obligations to provide royalty payments and reports of Net
Sales of Licensed Products shall remain in effect until the end of the calendar
quarter of such termination date, and its obligation to preserve books and
records and to make them available for inspection as provided in Section 3.5.1
(d) shall continue as provided in Section 3.5.1 (d).
8. MISCELLANEOUS PROVISIONS
8.1 Notices. All notices and communications provided for hereunder
shall be in writing and shall be deemed to be properly delivered and effective
(a) on the date of delivery if delivered by hand, by telefacsimile, or by
overnight courier, or (b) three days after mailing if mailed by first-class
mail, postage paid, to the respective addresses given below, or to such other
address as either party shall designate in writing to the other:
If to CSHL: With a copy to: John Maroney [**] Director, Office of Technology Transfer Cold Spring Harbor Laboratory Box 100 1 Bungtown Road Cold Spring Harbor, NY 11724 If to Alnylam: With a copy to: Alnylam Pharmaceuticals, Inc. The Helix Law Group, P.C. 790 Memorial Drive One Broadway, 14th Floor Cambridge, MA 02139 Cambridge MA 02142 Attention: Chief Operating Officer Attention: James R. McGarrah, Esq. |
8.2 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without giving effect to any conflict of laws provisions thereof.
8.3 Independent Contractors. Nothing contained herein shall be interpreted as creating any relationship between the parties hereto except as specifically set forth herein and it
is understood and agreed that the parties hereto are and shall remain independent contractors, that neither party hereto shall be considered the agent, partner, or joint venturer of the other for any purpose and that neither party shall be responsible for or have any liability for the acts, actions, or failures to act of the other party. Nothing in this Agreement or the performance of the parties under this Agreement shall constitute (or be deemed to constitute in law or in equity) a partnership, agency, distributorship, fiduciary, employment or joint venture relationship between the parties. The parties are not affiliated and neither has any right or authority to bind the other in any way.
8.4 Severability. The invalidity of any provision or part of this Agreement shall not affect the validity of this Agreement in its entirety nor any provision or part thereof. If any provision of this Agreement shall be held by a court of competent jurisdiction to be illegal, invalid or unenforceable, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable.
8.5 Waiver. No delay or failure of either party hereto in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power, or remedy preclude other or further exercise thereof or the exercise of any other right, power, or remedy.
8.6 Headings. The headings in this Agreement are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.
8.7 Entire Understanding. This Agreement and any attachments hereto constitute the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all proposals, oral or written, all negotiations, conversations, or discussions between or among the parties relating to the subject matter of this Agreement and all past dealing or industry custom. No modifications, extensions or waiver of any provisions hereof or release of any right hereunder shall be valid, unless the same is in writing and is consented to by both parties hereto.
8.8 No Assignments. Neither this Agreement nor any of the rights, options or licenses granted to Alnylam hereunder shall be assignable to any third party without the prior written consent of CSHL; provided that Alnylam may without CSHL's consent assign this Agreement and delegate its obligations to any acquiror of all or of substantially all of Alnylam's assets or business or equity securities that relate to the licenses and rights granted herein.
8.9 No Use of Names. No right, express or implied, is granted by this Agreement to use in any manner the names "Cold Spring Harbor Laboratory", "CSHL" or "Alnylam" or any other trade name or trademark of CSHL or Alnylam without the prior written consent of the other party. Subject to Section 6, neither party shall make any public announcement, press release, or other public disclosure, advertisement or promotion concerning this Agreement or the subject matter hereof without the prior written consent of the other party.
8.10 Counterparts. This Agreement may be executed simultaneously in counterparts, each of which shall be deemed to be original but all of which together shall constitute one and the same Agreement.
8.11 Dispute Resolution.
(a) Internal Resolution. Any controversy, dispute or claim which may arise out of or in connection with this Agreement, or the interpretation, enforceability, performance, breach, termination or validity thereof, including disputes relating to- alleged breach or termination of this Agreement, but excluding any determination as to the infringement, validity or claim interpretation of the Licensed Patents ("Dispute") shall be first referred to designated senior representatives of each party for resolution prior to proceeding under the following provisions in this Section 8.11. Such dispute shall be referred to such representatives within fifteen (15) business days of one party providing the other with written notice that such dispute exists, and such representatives shall meet to attempt to resolve such dispute through good faith discussions within fifteen (15) business days thereafter.
(b) Arbitration. The parties agree that any Dispute not resolved internally by the parties within thirty (30) days after meeting pursuant to Section 8.11 (a) above, shall be resolved by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"), except as modified in this Agreement. The arbitration tribunal shall consist of three neutral arbitrators. Each party shall nominate in the request for arbitration and the answer thereto one arbitrator and the two arbitrators so named will then jointly appoint the third arbitrator as chairman of the arbitration tribunal. The parties shall have no ex-party communication with their proposed arbitrator. If one party fails to nominate its arbitrator or, if the parties' arbitrators cannot agree on the person to be named as chairman within sixty (60) days, the President of the American Arbitration Association shall make the necessary appointments for arbitrator or chairman. The arbitration shall be conducted in accordance with AAA's Commercial Dispute Resolution Procedures. The place of arbitration shall be New Haven, Connecticut and the arbitration proceedings shall be held in English. The procedural law of the State of New York shall apply where the said Arbitration Rules are silent. The decision of the arbitration tribunal must be in writing and must specify the basis on which the decision was made, and the award of the arbitration tribunal shall be final and judgment upon such an award may be entered in any competent court or application may be made to any competent court for judicial acceptance of such an award and order of enforcement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS HEREOF, the parties hereto have executed this Agreement as-of the date and year first above written.
ALNYLAM PHARMACEUTICALS, INC.
By: /s/John Maraganore
-------------------------------------------
Title: President and CEO
Date: December 30, 2003
|
COLD SPRING HARBOR LABORATORY
By: /s/ John Maroney
-------------------------------------------
Title: Director, Office of Technology Transfer
Date: 12/31/2003
|
SCHEDULE A
CSHL Patents
Serial No. Type Title Date Filed Status ------------------------------------------------------ [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
Schedule B
The sublicense for rights to make or use products or processes under the CSHL Licensed Patents conveys to the end user the limited, non-exclusive, non-transferable license under these patent rights to perform the processes in those patent applications for performance of contract work on behalf of Alnylam, only. No other license is granted to the end user whether expressly, by implication, by estoppel or otherwise. In particular, the right to make or use products or processes under the CSHL Licensed Patents does not include nor carry any right or license to sell or offer for sale products, formulations, or methods claimed in Cold Spring Harbor Laboratory patents or patent applications and no rights are conveyed to the end user to use the product or components of the product for any other purposes, including without limitation, provision of services to a third party, or selling of commercial databases.
In the event that a not-for-profit entity desires or intends to receive rights to make or use products or processes under the CSHL Licensed Patents on the behalf of Alnylam, such not-for-profit entity must contact CSHL to negotiate the appropriate interinstitutional agreement.
THE CSHL LICENSED PATENT RIGHTS ARE MADE AVAILABLE PURSUANT TO A LICENSE FROM CSHL, AND CSHL RESERVES ALL OTHER RIGHTS UNDER THESE PATENT RIGHTS. FOR INFORMATION ON PURCHASING A LICENSE TO THE PATENT RIGHTS FOR USES OTHER THAN IN CONJUNCTION WITH THIS PRODUCT OR TO USE THIS PRODUCT FOR PURPOSES OTHER THAN CONTRACT WORK ON BEHALF OF ALNYLAM, PLEASE CONTACT THE CSHL OFFICE OF TECHNOLOGY TRANSFER AT 516-367-8312.
EXHIBIT 10.19
Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.
CO-EXCLUSIVE LICENSE AGREEMENT
between
Garching Innovation GmbH,
Hofgartenstrasse 8, 80539 Munchen, Germany,
represented by the Managing Director, Dr. Bernhard Hertel,
- as licensor, hereinafter called "GI"-
and
Alnylam Pharmaceuticals Inc.,
790 Memorial Drive, Suite 202, Cambridge, MA 02139, USA
represented by the Chief Executive Officer, John Maraganore,
- as licensee, hereinafter called "COMPANY" -
PREAMBLE
WHEREAS, Massachusetts Institute of Technology ("M.I.T."), Whitehead Institute
for Biomedical Research ("WHITEHEAD"), Max-Planck-Gesellschaft zur Foerderung
der Wissenschaften e.V. ("MAX-PLANCK") and University of Massachusetts
("UMASS"), are joint owners of certain JOINT PATENT RIGHTS (as later defined
herein) relating to "RNA Sequence-Specific Mediators of RNA Interference", by
David P. Bartel, Phillip A. Sharp, Thomas Tuschl, and Phillip D. Zamore
(MAX-PLANCK Case No. GI 2716 KTM).
WHEREAS, MAX-PLANCK is the owner of certain MAX PLANCK PATENT RIGHTS (as later defined herein) relating to "RNA Interference Mediating Small RNA Molecules," by Thomas Tuschl, Sayda Elbashir and Winfried Lendeckel (MAX-PLANCK Case No. GI 2782 KTM).
WHEREAS, M.I.T., WHITEHEAD, MAX-PLANCK and UMASS have the right to grant licenses under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS, subject to a royalty-free, nonexclusive license granted to the United States and the German Governments to practice the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for government purposes.
WHEREAS, MAX-PLANCK has authorized Garching Innovation GmbH ("GI") to act as its agent for the purposes of licensing its ownership position of JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS.
WHEREAS, WHITEHEAD, M.I.T. and UMASS have not authorized GI to act as their agent for the purposes of licensing the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for therapeutic purposes, and therefore, this Agreement is not binding on each of WHITEHEAD, M.I.T. and UMASS unless and until it gives its respective individual approval.
WHEREAS, COMPANY is an early-stage therapeutics company which was founded in 2002 by an international group of scientists that helped discover the novel biological phenomenon of RNA interference.
WHEREAS, COMPANY desires to obtain one co-exclusive license, with the right to grant sublicenses, under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for the purpose of developing and commercializing therapeutic products, and GI desires to grant such license on the terms and conditions hereinafter set forth.
WHEREAS, the shareholders of COMPANY desire to found and finance EuropeRNAi (as later defined herein) under certain REQUIREMENTS (as later defined herein) as an European-based therapeutics company.
WHEREAS, GI intends to grant to EuropeRNAi, upon fulfillment of the
REQUIREMENTS, one
Alnylam; GI 2716, 2782 ZTM
Dec. 19, 2002; page 2
additional co-exclusive license, with the right to grant sublicenses, under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for the purpose of developing and commercializing therapeutic products.
NOW, THEREFORE, GI and COMPANY hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 "JOINT PATENT RIGHTS"
shall mean:
(a) the United States and international patent and provisional applications listed on Appendix A and the resulting patents,
(b) any patent applications resulting from the provisional applications listed on Appendix A, and any divisionals, continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix A and of such patent applications that result from the provisional applications listed on Appendix A, to the extent the claims are directed to subject matter specifically described in the patent applications listed on Appendix A, and the resulting patents,
(c) any patents resulting from reissues, reexaminations, or extensions (and
their relevant international equivalents) of the patents described in
(a) and (b) above, and
(d) international (non-United States) patent applications and provisional applications filed after the EFFECTIVE DATE and the relevant international equivalents to divisionals, continuations, continuations-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to subject matter specifically described in the patents or patent applications referred to in (a), (b), and (c) above, and the resulting patents.
1.2 "MAX PLANCK PATENT RIGHTS"
shall mean:
(a) the United States and international patent and provisional applications listed on Appendix B and the resulting patents,
(b) any patent applications resulting from the provisional applications listed on Appendix B, and any divisionals, continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix B and of such patent applications that result from the provisional applications listed on Appendix B, to the extent the claims are directed to subject matter specifically described in the patent applications listed on Appendix B, and the resulting patents,
(c) any patents resulting from reissues, reexaminations, or extensions (and
their relevant international equivalents) of the patents described in
(a) and (b) above, and
(d) international (non-United States) patent applications and provisional applications filed after
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 3
the EFFECTIVE DATE and the relevant international equivalents to divisionals, continuations, continuations-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to subject matter specifically described in the patents or patent applications referred to in (a), (b), and (c) above, and the resulting patents.
1.3 "PATENT RIGHTS"
shall mean the JOINT PATENT RIGHTS and MAX PLANCK PATENT RIGHTS together.
1.4 "OWNERS"
shall mean M.I.T., WHITEHEAD, UMASS and MAX-PLANCK collectively.
1.5 "LICENSED PRODUCTS"
shall mean any product or part thereof the manufacture, use or sale of which would, absent the license granted hereunder, infringe one or more issued claims of the PATENT RIGHTS or one or more pending claims of the PATENT RIGHTS that have not been pending for more than 5 (five) years after filing national patent applications in the country in question.
1.6 "FIELD"
shall mean all uses other than the commercial sale or use of the LICENSED PRODUCTS as a research reagent, including in a kit format, for research or educational purposes, including without limitation,
(i) COMPANY'S internal and collaborative research use, and
(ii) all therapeutic and prophylactic uses, and
(iii) diagnostic uses for purposes of therapeutic monitoring, but excluding all other diagnostic uses,
specifically including human and veterinary diseases, initially for all indications, but with a later split of indications according to Section 2.3.
1.7 "SUBLICENSEE"
shall mean any third party who sells or intends to commercialize LICENSED PRODUCTS under a sublicense from COMPANY to develop, make, use and sell LICENSED PRODUCTS. SUBLICENSEE shall not include a distributor which purchases LICENSED PRODUCTS (whether in packaged form or bulk form) from COMPANY and resells such LICENSED PRODUCTS to third parties in a manner consistent with normal trade practices in the pharmaceutical industry.
1.8 "NET SALES"
shall mean the gross amount invoiced by COMPANY and its SUBLICENSEES to third parties for LICENSED PRODUCTS, less the following: (i) to the extent separately stated on the document of sale, any taxes or duties imposed on the manufacture, use, sale or import of LICENSED PRODUCTS which are paid by COMPANY, (ii) outbound transportation costs and costs of insurance in transit, (iii) customary trade, cash or quantity discounts or rebates, to the extent actually allowed and taken, and (iv) amounts repaid or credited by reason of rejection or return. No deductions shall be made for commissions paid to individuals or entities, or for cost of collections. NET SALES shall occur on the date of the invoice for a
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 4
LICENSED PRODUCT.
Non-cash consideration shall not be accepted by COMPANY or any SUBLICENSEE for LICENSED PRODUCTS without the prior written consent of GI.
In the event that a LICENSED PRODUCT is sold in combination with one or more active ingredients (excluding, without limitation, any formulation, stabilisation and delivery technology) which are not LICENSED PRODUCTS, which active ingredients are also independently marketed during the royalty period in question in the FIELD (or the non-exclusive field licensed in the second paragraph of Section 2.1, as the case may be) in the country in question, then NET SALES, for purposes of determining royalty payments on the combination product, shall be calculated by multiplying the NET SALES of the combination product by the fraction A/A+B, where A is the average gross selling price of the LICENSED PRODUCT sold separately in similar quantities in the country in question during the royalty period in question, and B is the average gross selling price of the other active ingredient(s) sold separately in similar quantities in the country in question during the royalty period in question. In the event that a LICENSED PRODUCT is sold in combination with other active ingredient(s), and the LICENSED PRODUCT or one or more other active ingredients are not sold separately, GI and COMPANY shall negotiate in good faith other means of calculating NET SALES with respect to such combination product, in order to fairly reflect the value of the LICENSED PRODUCT relative to the other active ingredient(s) in such combination product.
1.9 "REQUIREMENTS"
shall mean the requirements listed on Appendix C for EuropeRNAi.
1.10 "EuropeRNAi"
shall mean the European-based therapeutics company founded and established according to the REQUIREMENTS.
1.11 "EFFECTIVE DATE"
shall mean the date of signature to this Agreement by the party last to sign.
1.12 "TERM"
shall mean the term of this Agreement, which shall commence on the EFFECTIVE DATE and shall remain in effect until the expiration or abandonment of all issued patents and filed patent applications within the PATENT RIGHTS, unless earlier terminated in accordance with the provisions of this Agreement.
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 5
ARTICLE 2 - GRANT OF RIGHTS
2.1 License Grant
GI grants to COMPANY for the TERM a worldwide royalty-bearing co-exclusive license, with the right to grant sublicenses, under the PATENT RIGHTS to develop, make, have made, use, sell and import LICENSED PRODUCTS in the FIELD.
GI grants to COMPANY for the TERM a worldwide royalty-bearing non-exclusive license, without the right to grant sublicenses, under the PATENT RIGHTS to develop, make, have made, use, sell and import LICENSED PRODUCTS for all diagnostic uses other than for purposes of therapeutic monitoring.
2.2 Co-Exclusivity
GI and the approving OWNERS (according to Appendix D) shall not grant more than a total of [**] (including the license granted hereby) worldwide royalty-bearing co-exclusive licenses, with the right to grant sublicenses, under the PATENT RIGHTS to develop, make, have made, use, sell and import LICENSED PRODUCTS in the FIELD, and shall not grant any licenses under the PATENT RIGHTS in the FIELD other than such [**] licenses.
This Section 2.2 shall not apply to the non-exclusive license stated in the second paragraph of Section 2.1.
2.3 Split of Indications within the FIELD
[**] years after the EFFECTIVE DATE, COMPANY shall provide GI with information
in sufficient detail for each relevant indication and sub-indication within the
FIELD with respect to the estimated market size and accessibility by RNAi. If GI
decides, for good reason, that the received information is not complete and/or
not accurate and/or not sufficient, GI shall give COMPANY written notice thereof
within [**] after receiving the information. COMPANY shall provide GI within
[**] after receiving GI's written notice with the necessary information. GI will
oblige Europe-RNAi accordingly.
Within [**] after GI's receipt of the necessary information from COMPANY and Europe-RNAi, GI and COMPANY shall mutually agree, jointly with EuropeRNAi, [**] according to the estimated market size and accessibility by RNAi within the FIELD between COMPANY and Europe-RNAi. After such split, the indications and sub-indications awarded to COMPANY shall be regarded as exclusively licensed to COMPANY.
If the parties do not agree within the timeframe, each party has the right to initiate arbitration procedure according to Section 12.3.
In the event that, within [**] years after the EFFECTIVE DATE, (i) COMPANY or EuropeRNAi merges with a third party in a transaction in which the shareholders of COMPANY or EuropeRNAi (who hold shares in COMPANY or EuropeRNAi immediately before such merger) own less than [**]% ([**] percent) of the shares of the resulting entity after such merger, or (ii) a third party acquires all or substantially all of the assets or shares of COMPANY or EuropeRNAi, this Section 2.3 shall not apply.
2.4 Sublicenses
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 6
Within [**] years after the EFFECTIVE DATE, COMPANY is not allowed to grant sublicenses to third parties without the prior approval of GI, which shall not unreasonably be withheld. COMPANY shall inform GI in writing in due time prior to the intended signature, of any sublicense agreement in sufficient detail to permit GI to decide whether or not to approve. GI shall inform COMPANY in writing within [**] days after receiving the information whether or not GI approves; in particular, GI may withhold its approval if GI deems the reveived information not sufficient. Notwithstanding the foregoing, COMPANY may grant, within [**] years after the EFFECTIVE DATE, [**] for a specific indication to a third party without the prior approval of GI, in which event COMPANY is obliged to reserve an indication of comparable market size and RNAi accessibility to the indication covered by the sublicense for EuropeRNAi.
After [**] years after the EFFECTIVE DATE, COMPANY is allowed to grant sublicenses to third parties without the prior approval of GI.
Immediately after the signature of each sublicense granted under this Agreement, COMPANY shall provide GI with a copy of the signed sublicense agreement, and COMPANY shall confirm in writing to GI that COMPANY shall be liable for payment of royalties on NET SALES of the SUBLICENSEE in accordance with Sections 5.2 and 5.3.
2.5 Retained Rights
OWNERS retain the right to practice under the PATENT RIGHTS for research, teaching, education, non-commercial collaboration and publication purposes. COMPANY acknowledges that the German and the U.S. federal government retain a royalty-free, non-exclusive, non-transferable license to practice any government-funded invention claimed in any PATENT RIGHTS for government purposes.
2.6 No Additional Rights
Nothing in this Agreement shall be construed to confer any rights upon COMPANY by implication, estoppel, or otherwise as to any intellectual property rights, including without limitation patents and patent applications, trademarks, copyrights and know-how, of the OWNERS other than the PATENT RIGHTS, regardless of whether such intellectual property rights shall be dominant or subordinate to any PATENT RIGHTS.
ARTICLE 3 - NO REPRESENTATIONS OR WARRANTIES
COMPANY is informed of the PATENT RIGHTS and the difficult patent situation in the field of RNAi, and that it might need additional licenses from third parties to have freedom to operate. GI and THE OWNERS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, AND THE ABSENCE OF ANY LEGAL OR ACTUAL DEFECTS, WHETHER OR NOT DISCOVERABLE. Specifically, and not to limit the foregoing, GI and the OWNERS make no warranty or representation (i) regarding the merchantability or fitness for a particular purpose of the PATENT RIGHTS, (ii) regarding the patentability, validity or scope of the PATENT RIGHTS, (iii) that the exploitation of the PATENT
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 7
RIGHTS or any LICENSED PRODUCT will not infringe any patents or other intellectual property rights of the OWNERS or of a third party, and (iv) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT will not cause any damages of any kind to COMPANY or a third party.
IN NO EVENT SHALL GI, THE OWNERS, THEIR TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER GI OR ANY OF THE OWNERS SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
ARTICLE 4 - COMPANY DILIGENCE OBLIGATIONS AND REPORTS
4.1 Activity Requirements
COMPANY shall use commercially reasonable efforts, and shall oblige its SUBLICENSEES to use commercially reasonable efforts, to develop and to introduce into the commercial market LICENSED PRODUCTS at the earliest practical date.
4.2 Development Reports
Commencing with the beginning of 2003, COMPANY shall furnish, and shall oblige its SUBLICENSEES to furnish to COMPANY for inclusion in its reports to GI, to GI in writing, within 30 (thirty) days after the end of each calendar quarter with COMPANY's standard R&D report, as provided to the investors pursuant to the Amended and Restated Investor's Rights Agreement Series B, on the progress of its efforts during the immediately preceding calendar quarter to develop and commercialize LICENSED PRODUCTS for each indication and sub-indication within the FIELD. The report shall also contain a discussion of intended R&D efforts for the calendar quarter in which the report is submitted.
4.3 Target Specific Sublicenses
[**] years after the EFFECTIVE DATE, COMPANY shall be obliged to enter into good faith negotiations on reasonable terms and conditions with a third party requesting a sublicense under the PATENT RIGHTS for the development, use and sale of products against a target gene in a specific indication or sub-indication which is covered by pending or issued patent rights of such third party, provided, however, that
(a) COMPANY has not entered into a sublicense or is in serious negotiations for a sublicense for the use of [**], or
(b) COMPANY can not demonstrate, through its standard research planning documents, significant current work which has commenced or is scheduled to commence within [**], to develop, within reasonable time, [**].
COMPANY shall inform GI on a quarterly basis of all such third party sublicense requests, and
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 8
whether or not COMPANY has granted such sublicense. In the event of non-grant, COMPANY shall, upon GI's request, provide GI, within [**] after receiving GI's request, with information in sufficient detail showing COMPANY's reason for the non-grant.
If GI decides that COMPANY did not fulfill the requirements of (a) or (b),
and/or that COMPANY's terms and conditions for the requested sublicense have
been unreasonable, GI may initiate the arbitration procedure according to
Section 12.3. If the award of the arbitration tribunal states a non-fulfillment
of the requirements of (a) or (b), COMPANY shall immediately start negotiations
with the third party; if the award of the arbitration tribunal states
unreasonable terms and conditions, COMPANY shall immediately re-negotiate
reasonable terms and conditions with the third party. In any such awards of the
arbitration tribunal, the costs for the arbitration procedure shall be borne
solely by COMPANY.
4.4 Liability for SUBLICENSEES
If SUBLICENSEES of COMPANY develop, manufacture, use and/or sell LICENSED PRODUCTS under the PATENT RIGHTS, COMPANY warrants and is liable towards GI that the SUBLICENSEES perform their sublicense agreement in accordance with this Agreement, and COMPANY shall be responsible and liable for royalty payments and reports of the SUBLICENSEES.
4.5 Effect of Failure
In the event that GI determines that COMPANY or any of its SUBLICENSEES has failed to fulfill any of its obligations under this Section 4, then GI may treat such failure as a material breach in accordance with Section 11.7.
ARTICLE 5 - SHARES, ROYALTIES AND PAYMENT TERMS
5.1 Shares
As partial consideration for the grant of rights, COMPANY shall transfer to the OWNERS cost-free 6% (six percent), or a proportionally reduced percentage according to Appendix D 1, of COMPANY's total capital stock, which is currently (post Series B) 12,200,010 shares. This translates currently, in the event of a 6% transfer, into 732,000 (seven hundred thirty two thousand) existing shares or 778,724 (seven hundred seventy eight thousand seven hundred twenty four) newly issued shares. The transfer of shares according to this Section 5.1 to the OWNERS shall be effected by COMPANY on or before March 31, 2003; such shares shall be transferred irrevocably and non-retransferably, and shall be registered as preferred shares Series B. In the event of an increase of COMPANY's total number of shares prior to the transfer to the OWNERS, the number of shares to be transferred to the OWNERS shall be increased to six percent of the increased total capital stock.
In the event that COMPANY fulfills the REQUIREMENTS of Appendix C 1 and C 2, and all of the OWNERS approve the Plan, then GI and the OWNERS shall grant a second co-exclusive license to EuropeRNAi substantially identical to this Agreement. In the event that COMPANY
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 9
fulfills the REQUIREMENTS of Appendix C 1, and any of the OWNERS does not approve the Plan, then Appendix D 2c) shall apply. In the event that COMPANY fulfills the REQUIREMENTS of Appendix C 1 and C2, and any of the OWNERS does not grant the second co-exclusive license to EuropeRNAi, then Appendix D 2c) shall apply.
5.2 Running Royalties
COMPANY shall pay to GI the following running royalties on NET SALES of therapeutic and prophylactic LICENSED PRODUCTS by COMPANY and its SUBLICENSEES:
(a) [**]% (one point five percent) of the first US$[**] ([**] US Dollars) of annual accumulated NET SALES of all LICENSED PRODUCTS ;
(b) [**]% (one point seven percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US Dollars);
(c) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US Dollars);
(d) [**]% [**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US Dollars);
(e) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US Dollars); and
(f) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS above US$[**] ([**] US Dollars).
In the event that COMPANY or a SUBLICENSEE develops diagnostic LICENSED PRODUCTS, COMPANY shall initiate negotiations with GI at least [**] prior to the intended first commercial sale of each diagnostic LICENSED PRODUCT. COMPANY and GI shall negotiate in good faith [**] for such diagnostic LICENSED PRODUCT.
If the sale of any LICENSED PRODUCT is covered by more than one of the PATENT RIGHTS, multiple royalties shall not be due.
Non-cash consideration shall not be accepted by COMPANY or any SUBLICENSEE for LICENSED PRODUCTS without the prior written consent of GI.
5.3 Royalty Stacking
(a) Third Party Licenses
In the event COMPANY or a SUBLICENSEE takes, for objective commercial and/or
legal reasons, a license from any third party under any patent applications or
patents that dominate the PATENT RIGHTS or is dominated by the PATENT RIGHTS in
order to develop, make, use, sell or import any LICENSED PRODUCT (explicitly
excluding, without limitation, any third party patents and patent applications
for formulation, stabilization and delivery), then COMPANY is allowed to deduct
[**]% ([**] percent) of any additional running royalties to be paid to such
third party up to [**]% ([**] percent) of the running royalties stated in
Section 5.2, from the date COMPANY has to pay running royalties to such third
party. However, the running royalties stated in Section 5.2 shall not be reduced
to less than a minimum of [**]% ([**] percent) of NET SALES in any case.
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For avoidance of doubt, if COMPANY or a SUBLICENSEE takes a license to a third party target, COMPANY is in no event allowed to deduct any license fees for such target from running royalties due to GI under this Agreement.
(b) PATENT RIGHTS Coverage
In the event that (i) COMPANY or its SUBLICENSEES sell a LICENSED PRODUCT in a
country where no PATENT RIGHTS are issued and no patent applications that are
part of the PATENT RIGHTS are pending that have not been pending for less than
[**] years after filing national patent applications in the country in question,
and (ii) such LICENSED PRODUCT is manufactured in a country where PATENT RIGHTS
are issued or patent applications that are part of the PATENT RIGHTS are pending
that have not been pending for more than [**] years after filing national patent
applications in the country in question, the royalties stated in Section 5.2
will be reduced by [**]% ([**] percent) for such LICENSED PRODUCT, until the
expiration or abandonment of all issued patents and filed patent applications
within the PATENT RIGHTS in the country in which the LICENSED PRODUCT is
manufactured.
5.4 Reports
Within 30 (thirty) days of the end of each calendar half year, COMPANY shall deliver a detailed report to GI for the immediately preceding calendar half year showing at least (i) the number of LICENSED PRODUCTS sold by COMPANY and its SUBLICENSEES in each country, (ii) the gross price charged by COMPANY and its SUBLICENSEES for each LICENSED PRODUCTS in each country, (iii) the calculation of NET SALES, and (iv) the resulting running royalties due to GI according to those figures. If no running royalties are due to GI, the report shall so state.
5.5 Payments
(a) Accounting and Payments
Running royalties shall be payable for each calendar half year, and shall be due to GI within 60 (sixty) days of the end of each calendar half year.
(b) Method of Payment
All payments under this Agreement shall be made payable to "Garching Innovation GmbH" to the following account: Bayerische Hypo- und Vereinsbank AG; account number [**]; bank code 700 202 70; SWIFT address: HYVEDEMMXXX. Each payment shall reference this Agreement and the obligation under this Agreement that the payment satisfies.
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(c) Payments in US Dollars
All payments due under this Agreement shall be payable in US Dollars and, if legally required, shall be paid with the additional value added tax. Conversion of foreign currency to US Dollars shall be made at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the relevant calendar half year. Such payments shall be without deduction of exchange, collection, or other charges, except for deduction of withholding or similar taxes.
(d) Late Payments
Any payments by COMPANY that are not paid on or before the date such payments are due under this Agreement shall bear interest on arrears at 2 % (two percentage points) above the Prime Rate of interest as reported in the Wall Street Journal on the date the payment is due.
5.6 Bookkeeping and Auditing
COMPANY is obliged to keep, and shall oblige its SUBLICENSEES to keep, complete and accurate books on any reports and payments due to GI under this Agreement, which books shall contain sufficient information to permit GI to confirm the accuracy of any reports and payments made to GI. GI, or GI's appointed agents, is authorized to check the books of COMPANY, and, upon GI's request, COMPANY, or agents appointed by GI for COMPANY, shall check the books of its SUBLICENSEES for GI, once a year. The charges for such a check shall be borne by GI. In the event that such check reveals an underpayment in excess of 5% (five percent), COMPANY shall bear the full cost of such check and shall remit any amounts due to GI within thirty days of receiving notice thereof from GI.
The right of auditing by GI under this Section shall expire five years after each report or payment has been made. Sublicenses granted by COMPANY shall provide that COMPANY shall have the right to check the books of its SUBLICENSEES according to this Section 5.6.
5.7 No Refund
All payments made by COMPANY or its SUBLICENSEES under this Agreement are nonrefundable and noncreditable against each other.
ARTICLE 6 - PATENT PROSECUTION AND INFRINGEMENT
6.1 Responsibility for PATENT RIGHTS
The OWNERS shall, in their sole discretion, apply for, seek issuance of, maintain, or abandon the PATENT RIGHTS during the TERM of this Agreement. GI shall (i) keep COMPANY reasonably informed as to the filing, prosecution, maintenance and abandonment of the PATENT RIGHTS, (ii) furnish COMPANY copies of documents relevant to any such filing, prosecution maintenance and abandonment, and (iii) allow COMPANY reasonable opportunity to comment and advise on patent attorneys to be used and on documents to be filed with any patent office which would affect the PATENT RIGHTS in the FIELD, and (iv) give good faith
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consideration to the comments and advice of COMPANY.
In the event that all OWNERS wish to cease prosecution or abandon any of the PATENT RIGHTS, GI shall notify COMPANY thereof in writing in due time, and shall offer COMPANY the right to continue prosecution or maintenance of such PATENT RIGHTS in its discretion, in its name and at its expense. GI will inform and offer EuropeRNAi respectively. If COMPANY does not accept GI's offer within 30 (thirty) days after receiving it, the OWNERS shall be free to cease prosecution or abandon such PATENT RIGHTS. In any event, if the manufacture and sale of a LICENSED PRODUCT is solely covered by such PATENT RIGHTS, the respective NET SALES are not royalty-bearing.
6.2 Patent Costs
COMPANY shall pay to GI [**]% ([**] percent) of all fees and costs, including attorneys fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS, which incur during the TERM. GI shall decide, in its sole discretion, if such costs shall be paid directly by COMPANY to the creditor, or if COMPANY shall reimburse GI for all amounts due pursuant to this Section within 30 (thirty) days of invoicing.
In addition, if any or all of the current and future licensees which bear patent costs cease to pay, for whatever reason, their respective patent cost share, then COMPANY shall assume [**]% ([**]percent) of such share. GI will oblige EuropeRNAi respectively.
Furthermore, if COMPANY wishes to prosecute or maintain any of the PATENT RIGHTS in countries where none of the current and future licensees want to prosecute or maintain, COMPANY shall bear [**]% ([**] percent) of all fees and costs relating to such PATENT RIGHTS.
In the event that COMPANY wishes to cease payment for any of the PATENT RIGHTS, COMPANY shall notify GI thereof in writing in due time, at least 3 months prior to any deadline. The OWNERS shall have the right to continue payment for such PATENT RIGHTS in their discretion and at their expense. In any event, such PATENT RIGHTS shall no longer be covered by this Agreement from the date COMPANY informs GI of its cessation of payments.
6.3 Infringement
COMPANY shall inform GI promptly in writing of any alleged infringement of the PATENT RIGHTS by a third party and of any available evidence thereof.
Subject to COMPANY's right to join in the prosecution of infringements set forth below, the OWNERS shall have the right, but not the obligation, to prosecute in their own discretion and at their own expense, all infringements of the PATENT RIGHTS. The total cost of any such sole infringement action shall be borne by the OWNERS, and the OWNERS shall keep any recovery or damages derived therefrom. In any such infringement suits, COMPANY shall, at the OWNERS' expense, cooperate in all respects.
COMPANY shall have the right to join the OWNERS' prosecution of any infringements of the PATENT RIGHTS: In any such joint infringement suits, the OWNERS and COMPANY will cooperate in all respects. The OWNERS and COMPANY will agree in good faith on the sharing of the total cost of any such joint infringement action and the sharing of any recovery or
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 13
damages derived therefrom.
In the event that the OWNERS decide not to prosecute infringements of the PATENT RIGHTS, neither solely nor jointly with COMPANY, GI shall offer to COMPANY to prosecute any such infringement in its own discretion and at its own expense. GI will offer EuropeRNAi respectively. The OWNERS shall, at COMPANY'S expense, cooperate. The total cost of any such sole infringement action shall be borne by COMPANY, and COMPANY shall keep any recovery or damages derived therefrom.
In the event that COMPANY intends to make any arrangements with the infringer to settle the infringement (such as sublicenses), and solely the OWNERS or the OWNERS jointly with COMPANY have prosecuted the infringement, any such settlement needs the prior written approval of GI, which shall not unreasonably be withheld; reasons to withheld include, without limitation, that the settlement is financially disadvantageous for the OWNERS or GI. Any infringer to which COMPANY grants such sublicenses shall be a SUBLICENSEE under this Agreement.
ARTICLE 7 - INDEMNIFICATION AND INSURANCE
7.1 Indemnification
COMPANY shall indemnify, defend, and hold harmless the OWNERS and their
trustees, officers, faculty, students, employees, and agents and their
respective successors, heirs and assigns (the "Indemnitees"), against any
liability, damage, loss, or expense (including reasonable attorneys fees and
expenses) incurred by or imposed upon any of the Indemnitees in connection with
any claims, suits, actions, demands or judgments arising out of any theory of
liability (including without limitation actions in the form of tort, warranty,
or strict liability and regardless of whether such action has any factual basis)
concerning (i) any use of the PATENT RIGHTS by COMPANY or its SUBLICENSEES, or
(ii) any product, process, or service that is developed, made, used, sold, or
performed pursuant to any right or license granted under this Agreement.
7.2 Insurance
COMPANY shall obtain and carry in full force and effect commercial general liability insurance, including product liability and errors and omissions insurance, which shall protect COMPANY and the Indemnitees with respect to events covered by Section 7.1 above. Such insurance shall list GI and the OWNERS as additional insured, and the limit of insurance shall not be less than 1,000,000 $ (one million US Dollars) per incident. Upon request, COMPANY shall provide GI with certificates of insurance evidencing compliance with this section.
ARTICLE 8 - CONFIDENTIALITY
8.1 Obligation for Company
The content of this Agreement and any information marked confidential which is disclosed to COMPANY under this Agreement by GI or the OWNERS shall be treated confidential by
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 14
COMPANY during the TERM and for 5 (five) years thereafter. COMPANY shall not use such information for any purposes other than those necessary to directly further the purpose of this Agreement. COMPANY may disclose such information to its actual and prospective SUBLICENSEES, investors, lenders, other financing sources, acquirors and third parties being acquired by COMPANY, provided however, that COMPANY has entered into serious discussions with such entities, and such entities have requested such information, and such entities are obliged to confidentiality to the same extent as COMPANY.
The confidentiality obligation shall not apply to information which is (i)
publicly available or becomes publicly available through no fault of COMPANY, or
(ii) obtained by COMPANY from another source without a duty of confidentiality,
or (iii) demonstrably independently developed or possessed by COMPANY, or (iv)
is required by law, regulation, accounting principles or an order of a court or
government agency to be disclosed.
8.2 Obligation for GI
The content of this Agreement and any information marked confidential which is disclosed to GI under this Agreement by COMPANY or its SUBLICENSEES shall be treated confidential by GI during the TERM and for 5 (five) years thereafter. GI shall not use such information for any purposes other than those necessary to directly further the purpose of this Agreement. GI may disclose such information to the OWNERS, provided however, that the OWNERS are obliged to confidentiality to the same extent as GI.
The confidentiality obligation shall not apply to information which is (i) publicly available or becomes publicly available through no fault of GI, or (ii) obtained by GI from another source without a duty of confidentiality, or (iii) demonstrably independently developed or possessed by GI, or (iv) is required by law, regulation, accounting principles or an order of a court or government agency to be disclosed.
ARTICLE 9 - NO ASSIGNMENT OR TRANSFER
9.1 Assignment
This Agreement is personal to COMPANY and no rights or obligations may be assigned by COMPANY to a third party or a SUBLICENSEE or EuropeRNAi without the prior written consent of GI, except that sublicenses may be granted in accordance with Section 2.4, and except that COMPANY may assign its rights and obligations under this Agreement to a successor in connection with the merger, consolidation, or sale of all or substantially all of its assets or that portion of its business to which this Agreement relates; provided, however, that this Agreement shall immediately terminate if the proposed assignee fails to agree in writing to be bound by the terms and conditions of this Agreement on or before the effective date of the assignment. After the effective date of the assignment, the assignee shall provide GI, upon GI's request, with written reports in reasonable detail on the actual and intended future activities of the assignee to develop and commercialise LICENSED PRODUCTS. If the reports are not provided to GI in due time and/or in sufficient detail, such failure will be a material breach under Section 11.7, and GI
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 15
shall have the right to terminate this Agreement in accordance with the procedures set forth in Section 11.7.
9.2 Transfer to Europe-RNAi
Notwithstanding Section 9.1, the assignment or transfer of this Agreement in whole from COMPANY to Europe-RNAi as new licensee, for example in connection with a sale or transfer of at least 50% of COMPANY's assets or that portion of its business to which this Agreement relates, needs the prior written consent of GI, if such sale or transfer is implemented within 5 (five) years after the EFFECTIVE DATE, unless such sale or transfer is in connection with an Initial Public Offering or a trade sale whereby a third party acquires both COMPANY and EuropeRNAi.
COMPANY shall inform GI immediately of any intended such sale or transfer.
ARTICLE 10 - GENERAL COMPLIANCE WITH LAWS
10.1 Compliance with Laws
COMPANY shall use commercially reasonable efforts to comply with all local, state, federal, and international laws and regulations relating to the development, manufacture, use and sale of LICENSED PRODUCTS.
10.2 Non-Use of OWNERS Names
Neither COMPANY nor its SUBLICENSEES shall use the name of "Massachusetts Institute of Technology," "University of Massachusetts", "Whitehead Institute", "Max Planck Institute", "Max Planck Society", "Garching Innovation" or any variation, adaptation, or abbreviation thereof, or of any of its trustees, officers, faculty, students, employees, or agents, or any trademark owned by any of the OWNERS, in any promotional material or other public announcement or disclosure without the prior written consent of the OWNERS or in the case of an individual, the consent of that individual. The foregoing notwithstanding, without the consent of the OWNERS, COMPANY may state generally that it is co-exclusively licensed by the OWNERS under the PATENT RIGHTS.
ARTICLE 11 - EFFECTIVENESS AND TERMINATION
11.1 Effectiveness
The effectiveness of this Agreement is subject to the approval of all OWNERS.
In the event that all OWNERS approve on or before Jan. 31, 2003, this Agreement shall become effective retroactively on the EFFECTIVE DATE.
In the event that not all OWNERS approve on or before Jan. 31, 2003, this Agreement shall be amended in writing according to Appendix D 1.
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 16
11.2 Voluntary Termination by COMPANY
COMPANY shall have the right to terminate this Agreement, for any reason, (i) upon at least 6 (six) months prior written notice to GI, such notice to state the date at least 6 (six) months in the future upon which termination is to be effective, and (ii) upon payment of all amounts due to GI through such termination effective date.
11.3 Cessation of Business
If COMPANY ceases to carry on its business related to this Agreement, COMPANY has to inform GI thereof immediately. COMPANY and GI shall have the right to terminate this Agreement immediately upon written notice to the other.
11.4 Change of Ownership
In the event that at least 50% (fifty percent) of COMPANY'S stock capital is assigned or transferred to a third party or a SUBLICENSEE, COMPANY shall provide GI, upon GI's request, with written reports in reasonable detail on the actual and intended future activities of COMPANY to develop and commercialise LICENSED PRODUCTS. If the reports are not provided to GI in due time and/or in sufficient detail, such failure will be a material breach under Section 11.7, and GI shall have the right to terminate this Agreement in accordance with the procedures set forth in Section 11.7.
GI shall have the right to terminate this Agreement immediately upon written notice to COMPANY, if at least 50% (fifty percent) of COMPANY'S stock capital is assigned or transferred to EuropeRNAi within 5 (five) years after the EFFECTIVE DATE, except in connection with an Initial Public Offering or a trade sale whereby a third party acquires both COMPANY and EuropeRNAi.
COMPANY shall inform GI immediately of the implementation of any such assignment or transfer.
11.5 Attack on PATENT RIGHTS
GI shall have the right to terminate this Agreement immediately upon written notice to COMPANY, if COMPANY attacks, or has attacked or supports an attack through a third party, the validity of any of the PATENT RIGHTS. To the extent legally enforcable, sublicenses granted by COMPANY shall provide that in the event the SUBLICENSEE attacks, or has attacked or supports an attack through a third party, the validity of any of the PATENT RIGHTS, COMPANY shall have the right to terminate the sublicense agreement immediately; upon request of GI, COMPANY shall have the obligation to terminate such sublicense agreement.
11.6 Licenses to EuropeRNAi
In the event that
(i) COMPANY does not grant to EuropeRNAi a worldwide non-exclusive unrestricted royalty-free license, with the right to grant sublicenses, to all of COMPANY'S existing and future intellectual property rights owned or controlled by COMPANY, including without limitation patents and patent applications, trademarks, copyrights and know-how, necessary or useful to perform
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 17
EuropeRNAi's business in the field of RNAi, or
(ii) COMPANY does not grant to EuropeRNAi a worldwide non-exclusive unrestricted, with royalties payable only with respect to COMPANY's royalty obligations towards its licensor, sublicense, with the right to grant further sublicenses to the greatest extent permitted by its licensor, to all intellectual property rights currently and in the future licensed to COMPANY, including without limitation patents and patent applications, trademarks, copyrights and know-how, necessary or useful to perform EuropeRNAi's business in the field of RNAi,
GI shall have the right to terminate this Agreement immediately upon written notice to COMPANY, if COMPANY fails to grant such licenses or sublicenses to EuropeRNAi within 30 (thirty) days after receiving written notice thereof from GI.
This Section 11.6 shall not apply in the event that (i) COMPANY or EuropeRNAi merges with a third party in a transaction in which the shareholders of COMPANY or EuropeRNAi (who hold shares in COMPANY or EuropeRNAi immediately before such merger) own less than 50% (fifty percent) of the shares of the resulting entity after such merger, or (ii) a third party acquires all or substantially all of the assets or shares of COMPANY or EuropeRNAi.
11.7 Termination for Default
In the event COMPANY fails to pay any amounts due and payable to GI hereunder, and fails to make such payments within 30 (thirty) days after receiving written notice of such failure, GI may terminate this Agreement immediately upon written notice to COMPANY. Notwithstanding the foregoing, in the event COMPANY commits a material breach of its obligations under this Agreement, and fails to cure that breach within 60 (sixty) days after receiving written notice thereof, GI may terminate this Agreement immediately upon written notice to COMPANY.
Notwithstanding the foregoing, if COMPANY disputes any alleged failure to make a payment or alleged material breach, the matter shall be resolved in accordance with Section 12.3, and if the matter is resolved against COMPANY, COMPANY shall have 10 (ten) days from the final decision of the arbitration tribunal to make the payment, with additional interest on arrears according to Section 5.5 (d), or cure the breach.
11.8 Effect of Termination
The following provisions shall survive the expiration or termination of this Agreement: Articles 1, 3, 5.5, 7, 8, 12 and Section 11.1 and 11.8. In no event shall termination of this Agreement release COMPANY or its SUBLICENSEES from the obligation to pay any amounts that became due on or before the effective date of termination.
In the event that any license granted to COMPANY under this Agreement is terminated, any sublicense under such license granted prior to termination of said license shall remain in full fore and effect, provided that:
(a) the SUBLICENSEE is not then in breach of its sublicense agreement, and
(b) the SUBLICENSEE agrees to be bound to GI as licensor under the terms and conditions of the sublicense agreement, provided that GI shall have no other obligation than to leave the sublicense granted by COMPANY in place.
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 18
11.9 Insolvency
This Agreement shall terminate automatically, if (i) COMPANY files a petition in
bankruptcy, or (ii) COMPANY makes an assignment for the benefit of creditors, or
(iii) a petition in bankruptcy is filed against COMPANY and not dismissed within
90 (ninety) days.
ARTICLE 12 - MISCELLANEOUS
12.1 Notice
Any notices required or permitted under this Agreement and all correspondence hereunder shall be in English and in writing, shall specifically refer to this Agreement, and shall be sent by a method providing confirmation of delivery to the following addresses or facsimile numbers of the parties:
If to GI: Garching Innovation GmbH
Hofgartenstrasse 8
D-80539 Muenchen/Germany
Tel: +49/89/290919-0
Fax: +49/89/290919-99
If to COMPANY: Alnylam Pharmaceuticals Inc.
790 Memorial Drive, Suite 202,
Cambridge, MA 02139, USA
Tel: +1-617-252-0700
Fax: +1-617-252-0011
|
All notices under this Agreement shall be deemed effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section.
12.2 Governing Law
The parties explicitly agree and deem appropriate that this Agreement and all disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Federal Republic of Germany, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.
12.3 Dispute Resolution
The parties shall attempt to settle any dispute or claim arising out of or relating to this Agreement by good faith negotiations. If the parties fail to agree on a reasonable settlement within 60 (sixty) days after the affected party informed the other party in writing of such dispute or claim, either
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 19
party may initiate arbitration under the procedural Rules of the International
Chamber of Commerce upon written notice to the other party within 30 (thirty)
days after such failure. The arbitration tribunal shall be appointed as follows:
each party shall select, within 30 (thirty) days after notice to initiate
arbitration, an independent and experienced third party as its arbitrator. The
two arbitrators selected by the parties shall mutually select an independent and
experienced third party as third arbitrator. The venue for the arbitration
procedure shall be London, England, the language shall be English, and German
law shall be applied. The award of the arbitration tribunal shall be final and
binding for the parties. Notwithstanding the foregoing, each party may apply for
interlocutory relief in court.
12.4 Amendment and Waiver
This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.
12.5 Severability
Should one of the provisions of this Agreement be held void, invalid or unenforceable, the remaining provisions of this Agreement will not cease to be effective. The parties shall negotiate in good faith to replace such void, invalid or unenforceable provision by a new provision which reflects, to the extent possible, the original intent of the parties.
12.6 Headings
All headings are for convenience only and shall not affect the meaning of any provision of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.
Garching Innovation GmbH Alnylam, Inc.
By: /s/Bernhard Hertel By: /s/John Maraganore
-------------------------- -----------------------
Name: Dr. Bernhard Hertel Name: John Maraganore
Title: Managing Director Title: Chief Executive Officer
Date: 12/20/02 Date: 12/20/02
-------------------------- -----------------------
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Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 20
APPENDIX A
JOINT PATENT RIGHTS
I. United States Patents and Applications
USSN [**] entitled [**]
USSN [**] entitled [**]
II. International (non-U.S.) Patents and Applications
[**] entitled [**]
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 21
APPENDIX B
MAX-PLANCK PATENT RIGHTS
I. United States Patents and Applications USSN [**] entitled [**]
II. International (non-U.S.) Patents and Applications
European Serial Number [**] entitled [**]
[**] entitled "[**]
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 22
APPENDIX C
REQUIREMENTS
1. within three months after the EFFECTIVE DATE:
COMPANY shall provide GI and the OWNERS with the final plan for structuring EuropeRNAi for approval (the "Plan") the Plan shall address and solve, without limitation, the following issues:
a) legal and institutional policy needs of each of the OWNERS
b) initial and future identical percentage shareholding of the shareholders of COMPANY in EuropeRNAi;
c) initial financing of EuropeRNAi, and future financing of both EuropeRNAi and COMPANY;
d) EuropeRNAi must have a German AG or GmbH with comparable operational forces in terms of budget, employees, R&D and BD capacity as COMPANY;
e) problems and solutions of M&A transactions of only COMPANY or EuropeRNAi with a third party, if the third party acquires or is acquired by COMPANY or EuropeRNAi; security of fulfillment of REQUIREMENTS and access to intellectual property in such a scenario;
f) mechanism how both COMPANY and EuropeRNAi can give each other full access to all current and future intellectual property which is useful or needed to perform the business in each ones indication fields;
g) restructuring options of both COMPANY and EuropeRNAi in case of an IPO or trade sale.
2. within one month after Plan approval by one or more of the OWNERS:
incorporation of EuropeRNAi and the German AG/GmbH according to the Plan effect of non-approval of the Plan by one or more OWNERS on the EuropeRNAi-license: see Appendix D 2.
3. within three months after Plan approval
OWNERS shall receive cost-free 6% (six percent) of EuropeRNAi's total stock
capital; effect of non-approval of the Plan by one or more OWNERS on the shares:
see Appendix D 2. the transferred shares shall be registered equivalent to the
preferred shares issued to the investors (who hold preferred shares Series B in
COMPANY) in EuropeRNAi and shall be irrevocable and non-retransferable.
4. within eight months after Plan approval:
in place: laboratory and office in Germany with a minimum of six full time employees
5. after eight months after Plan approval and until two years after the EFFECTIVE DATE: EuropeRNAi and COMPANY shall use reasonable commercial efforts to build for EuropeRNAi capabilities to develop, make, use, sell or import LICENSED PRODUCTS comparable to COMPANY
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 23
6. after Plan approval and for five years after the EFFECTIVE DATE:
no direct or indirect shareholding of COMPANY in EuropeRNAi without the OWNERS's approval, except in connection with an Initial Public Offering or a trade sale whereby a third party acquires both COMPANY and EuropeRNAi
7. for as long as (i) COMPANY or EuropeRNAi does not merge with a third party in
a transaction in which the shareholders of COMPANY or EuropeRNAi (who hold
shares in COMPANY or EuropeRNAi immediately before such merger) own less than
50% (fifty percent) of the shares of the resulting entity after such merger, or
(ii) a third party does not acquire all or substantially all of the assets or
shares of COMPANY or EuropeRNAi:
both COMPANY and EuropeRNAi shall give each other full access to all current and future intellectual property which is useful or needed to perform the business in each ones indication fields, excluding the intellectual property licensed under this Agreement.
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 24
APPENDIX D
EFFECT OF NON-APPROVAL
1. In the event that one or more of the OWNERS do not approve this Agreement on or before Jan. 31, 2003,
a) the non-approving OWNERS shall be excluded from this Agreement, in particular their ownership position in the PATENT RIGHTS shall be excluded from the PATENT RIGHTS;
b) the non-approving OWNERS do not receive any shares from COMPANY; the shares stated in Section 5.1 shall be reduced according to the proportional internal ownership of the non-approving OWNERS in the PATENT RIGHTS, and COMPANY shall transfer the so determined reduced number of shares to the approving OWNERS;
c) the non-approving OWNERS shall not receive any portion of the running royalties as stated in Section 5.2, which running royalties shall remain unchanged; and
d) the approving OWNERS authorize GI to grant to COMPANY the license according to Section 2.1; in countries where it is legally impossible to grant licenses to jointly owned patent rights without the approval of all joint owners, the approving OWNERS will partial assign their ownership position in the PATENT RIGHTS in such countries to COMPANY.
2. In the event that (i) one or more of the OWNERS do not approve the Plan within 2 months after receiving the Plan, or (ii) one or more of the approving OWNERS do not grant the second co-exclusive license to EuropeRNAi within one month after incorporation of EuropeRNAi and the German AG/GmbH according to the Plan:
a) the non-approving and non-granting OWNERS shall be excluded from the EuropeRNAi-license agreement, in particular their ownership position in the PATENT RIGHTS shall be excluded from the PATENT RIGHTS;
b) the non-approving and non-granting OWNERS do not receive any shares from EuropeRNAi; the shares stated in the EuropeRNAi-license agreement (equivalent to Section 5.1 of this Agreement) shall be reduced according to the proportional internal ownership of the non-approving OWNERS in the PATENT RIGHTS, and EuropeRNAi shall transfer the so determined reduced number of shares to the approving OWNERS;
c) the non-approving and non-granting OWNERS shall retransfer to COMPANY 65% of their shares received according to Section 5.1; in this event the non-approving and non-granting
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 25
OWNERS shall be entitled to grant one co-exclusive license to their ownership position in the PATENT RIGHTS to any European-based party of their choice;
d) the non-approving and non-granting OWNERS shall not receive any portion of the running royalties according to the EuropeRNAi-license agreement (equivalent to Section 5.2 of this Agreement), which running royalties shall remain unchanged; and
e) the approving OWNERS authorize GI to grant to EuropeRNAi the license according to the EuropeRNAi-license agreement (equivalent to Section 2.1 of this Agreement); in countries where it is legally impossible to grant licenses to jointly owned patent rights without the approval of all joint owners, the approving OWNERS will partial assign their ownership position in the PATENT RIGHTS in such countries to EuropeRNAi.
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 26
AMENDMENT
OF THE LICENSE AGREEMENT DATED DEC. 20, 2002 (THE "AGREEMENT")
BETWEEN
GARCHING INNOVATION GmBH, MUNICH, GERMANY ("GI")
AND
ALNYLAM PHARMACEUTICALS INC., CAMBRIDGE, USA ("COMPANY")
PREAMBLE
COMPANY and Ribopharma AG, Kulmbach, Germany ("Ribopharma") have signed a letter of intent to combine their businesses by way of a merger, acquisition, cross investment or any other way of transaction (collectively, the "Merger") to achieve parallel equity ownership in both entities or a combined entity.
The parties to that transaction plan to have a parent holding company that will own and control directly or indirectly the two existing entities COMPANY and Ribopharma ("Hold Co."). The parent holding company shall be a US corporation. This planned structure doesn't comply with certain of the requirements set forth in Appendix C of the Agreement (the "REQUIREMENTS") on the assumption that Ribopharma will be granted the second co-exclusive license described in Appendix C. COMPANY wishes that the second co-exclusive license will be granted by GI to Ribopharma.
Hold Co. and COMPANY have expressed their strong commitment that Ribopharma shall be comparable to Alnylam, in particular in terms of growth, operational forces and business capabilities, in the next five years. GI is willing to support the Merger by amending certain REQUIREMENTS which are not in compliance with the planned structuring of the transaction, if Hold Co. and COMPANY, on the other hand, give GI greater security with respect to their commitment towards Ribopharma.
Now, therefore, GI, COMPANY, and Hold Co. agree to amend and restate the REQUIREMENTS to allow the execution of the Merger in compliance with the Agreement on the following conditions:
The words in capital letters used in this Amendment shall have the meaning defined in the Agreement.
A) GENERAL PROVISIONS
1. COMPANY and GI agree that after the execution of the Merger, Ribopharma
shall be regarded as the German AG or GmbH, which shall have comparable
operational forces in terms of budget, employees, Research &
Development and Business Development capacities as COMPANY for the next
[**] in Germany. The split of indications according to Section 2.3 of
the Agreement shall apply to COMPANY and Ribopharma.
2. Due to time restrictions in the preparation of the Merger, COMPANY was only able to provide GI with a preliminary plan, which does not fulfil sufficiently REQUIREMENT No. 1 regarding the final Plan. GI and COMPANY agree that the signature of this Amendment shall be regarded as Plan approval by MAX PLANCK and a waiver of any failure of COMPANY to comply with the REQUIREMENTS regarding the Plan. Any of the other OWNERS shall only be regarded as an approving OWNER if it approves both the Agreement and this Amendment.
3. GI agrees that the second co-exclusive license described in the Agreement will be granted by GI to Ribopharma (the "Ribopharma-License") contemporaneously with the closing of the Merger. The Ribopharma License shall include, without limitation, the following terms and conditions, and shall otherwise be comparable in scope and terms to the license granted by GI to COMPANY under the Agreement:
(a) Ribopharma shall have no right to grant sublicenses of its rights granted under the Ribopharma License to COMPANY, Hold Co. or any affiliate or other company associated with the Merger;
(b) Any and each assignment of any rights and obligations of the Ribopharma License by Ribopharma to COMPANY, Hold Co. or any affiliate or any other company associated with the Merger shall be subject to the prior written approval of GI; and
(c) Detailed definitions for "Affiliates" and for "Third Parties".
(d) In the event that one or more of the amended REQUIREMENTS of this Amendment stated in B) to D) below are not or no longer met by COMPANY, GI has the extraordinary right to terminate the Ribopharma License after compliance with the procedures set forth in REQUIREMENT No. 5 c) below.
4. All parties of the Merger acknowledge that they have each interests outside the FIELD of the Agreement. All parties of the Merger agree to maintain a periodic dialogue in good faith to discuss and potentially resolve any emerging commercial conflicts of interest outside the FIELD of the Agreement.
B) REQUIREMENT NO. 3 shall have the following wording:
"3. within three months after Plan approval:
The OWNERS shall receive cost-free non-retransferable shares in Hold
Co. of the same class that the Series B investors in COMPANY's Series B
financing round will receive in Hold Co. in the course of the Merger,
whereby the automatic conversion of Series B shares in Series B-1
shares shall not apply to the OWNERS, and the OWNERS are not subject to
the Special Mandatory Conversion as set forth in Article Fourth,
Section 2(i) of the Certificate of Incorporation of Hold Co. as amended
(the "Shares"). The Shares received by the OWNERS, as a group, shall be
equivalent to 6% of COMPANY's total capital stock and equivalent to 6%
of Ribopharma's total capital stock, each of the percentage of shares
adjusted according to Appendix D2 in the event one or more OWNERS do
not approve the Plan. For the avoidance of doubt, the approving OWNERS
(MPG, MIT and WHITEHEAD) shall receive an equivalent number of shares
in Hold-Co. as calculated in the capitalization tables of both COMPANY
(723.240 Series B
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 2
shares) and Ribopharma (142.277 Series B shares). The total number of Shares the approving OWNERS shall receive in Hold-Co. is shown in the capitalization table of Hold Co. (865.517 Shares and 32.656 Additional Shares (as defined below in b)) The total capital stock of COMPANY, Ribopharma and Hold-Co. are attached to this Amendment as Appendixes 1, 2 and 3.
The total amount of Shares to be received by the OWNERS is subject to increase in an amount to be defined in good faith by the parties in the event that COMPANY:
(a) makes any cash payments to the shareholders of Ribopharma, other than (i) payments (whether in the form of loans or cash) for the payment of taxes incurred by such stockholders, (ii) salary and bonus payments in connection with any employment agreements with such stockholders, and (iii) payments made in return for a reduction of shares having equal value to such payment received or receivable in exchange for the shareholding in Ribopharma in the Merger;
(b) executes or agrees to enter into a financing agreement prior to the share transfer to the OWNERS pursuant to which the investors in the financing receive shares at a price lower than that paid for the Series B shares offered to the OWNERS (US$ 2.50) in the Agreement.
For the avoidance of doubt, the parties already agreed that as compensation for the 1,000,000 Series A shares Abingworth receives at a price of US$ 1.00 per share prior to or in connection with the Merger, the number of Shares the OWNERS will receice shall be increased by cost-free non-retransferable additional Shares in Hold Co. (the "Additional Shares") as follows:
(i) 16,328 Additional Shares are due to the approving OWNERS (MPG, MIT and WHITEHEAD) upon signature of the Ribopharma License, and
(ii) 16,328 Additional Shares are due to the approving OWNERS (MPG, MIT and WHITEHEAD) upon issuance of patent claims of the MAX PLANCK PATENT RIGHTS in the United States which cover the application of double stranded RNA molecules with a length of 19-23 nucleotides whereas at least one strand has a 3'-prime overhang of minimum one nucleotide for the use in the field of RNA interference.
(c) Other measures decreasing the value of the Shares in connection with the transaction. If shares are allotted to investors pursuant to the Merger on any basis different from the combined capitalization table here attached, an appropriate adjustment to the shares received by the OWNERS will be made according to the above calculation.
C) REQUIREMENT NO. 5 shall have the following wording:
"5. after Plan approval and for [**] years after the EFFECTIVE DATE (the "Period"):
a) Hold Co. shall use reasonable commercial efforts to build for Ribopharma capabilities to develop, make, use, sell or import LICENSED PRODUCTS comparable to COMPANY. Ribopharma must have comparable operational forces in Germany in terms of budget, employees, Research & Development and Business Development capacities as COMPANY.
b) As an exception, and not to limit the general rule set forth in 5. a) above, COMPANY may, in extraordinary business situations (with respect to importance and volume of the deal, such
Alnylam; GI 2716, 2782 ZTM Dec. 19, 2002; page 3
as drug discovery and drug development deals with big pharma companies), make business decisions based on objective business reasons and on all reasonable care, which may have an adverse effect on the obligations set forth in 5. a) above, only if Hold Co. restores comparability at the earliest practical date and in the most efficient way. In the event that COMPANY acquires all or substantially all of the assets or shares of a third party in a transaction, the obligation to restore comparability set forth above shall not apply as to such transaction.
c) GI shall have the right to request from Hold Co., at any time during the
Period but not more than four times per year, a specific report (the
"Report") showing how COMPANY and Ribopharma has fulfilled in the past and
will fulfill within the Period its obligations specified in 5. a) and b)
above. The Report shall include the general business objectives of COMPANY
and Ribopharma and how COMPANY and Ribopharma intends to reach its
objectives. Hold Co. has to deliver the Report to GI in writing within
thirty (30) days after request in sufficient detail. GI shall notify Hold
Co. within fifteen (15) days after receiving the Report if GI believes that
COMPANY does not fulfill its obligations specified in 5. a) and b) above
(the "Deficiency Notice"). Hold Co. shall, within thirty (30) days after
receiving the Deficiency Notice, provide GI in writing with a detailed plan
describing how Hold Co. proposes to achieve the compliance to fulfill within
the Period its obligations specified in 5. a) and b) above, the specific
goals to be met in order to achieve compliance, and the measures that Hold
Co. will take in order to achieve compliance (the "Corrective Plan"). GI
shall, within fifteen (15) days following receipt, either accept or reject
the Corrective Plan. If GI accepts the Corrective Plan, Hold Co. shall
implement the Corrective Plan within three (3) months after receiving GI's
approval. If GI rejects the Corrective Plan, GI shall have the right to
initiate arbitration according to Section 12.3, with the following
modifications: all time limits shall be reduced by one half, the costs for
such arbitration shall be borne by Hold Co. and GI according to their
success. Hold Co. shall implement the award of the arbitrators within three
(3) months. If GI believes that Hold Co. has not implemented the Corrective
Plan or the award of the arbitrators, GI shall have the right to initiate
the above described arbitration procedure to determine if Hold Co. has fully
implemented the Corrective Plan or the award of the arbitrators. In the
event that Hold Co. is judged to be in default of implementing, GI shall
have the right to terminate the Ribopharma License immediately.
d) All information provided by COMPANY in connection with this Amendment shall be treated as confidential by GI under Section 8.2 of the Agreement.
D) REQUIREMENT NO. 6 shall be deleted entirely.
However, in the event that COMPANY decides, within the Period, that COMPANY and Ribopharma (or the then existing licensee of the second co-exclusive license) shall be completely separate entities (regarding legal, business, financial and any other issues), then, from the date such separation is executed, the original wording of the REQUIREMENTS No. 5 and 6 shall return to force.
In witness whereof, the parties have caused this Amendment to be executed by their duly authorized representatives.
Garching Innovation GmbH Alnylam Pharmaceuticals, Inc.
By: /s/Bernard Hertel By: /s/John Margaranore
----------------------------- -----------------------------
Name: Dr. Bernhard Hertel Name: John Maraganore
Title: Geschaftsfuhrer Title: Chief Executive Officer
Date: July 2, 2003 Date: July 8, 2003
Alnylam; GI 2716, 2782 ZTM
Dec. 19, 2002; page 4
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Hold Co., Inc. Ribopharma AG
By: /s/John Margaranore By: /s/ Roland Kreutzer /s/ Stefan Limmer
------------------------ -------------------------------------
Name: John Maraganore Name: Roland Kreutzer
Title: Chief Executive Officer Title: Vorstand
Date: July 8, 2003 Date: July 2, 2003
Alnylam; GI 2716, 2782 ZTM
Dec. 19, 2002; page 5
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INDEMNIFICATION AGREEMENT
between
Garching Innovation GmbH,
a German corporation having a principal place of business at
Hofgartenstrasse 8, 80539 Munchen, Germany,
represented by the Managing Director, Dr. Bernhard Hertel,
hereinafter called "GI"-
and
Alnylam Pharmaceuticals Inc.,
a Delaware corporation having a principal place of business at
790 Memorial Drive, Suite 202, Cambridge, MA 02139, USA,
represented by the Chief Executive Officer, John Maraganore,
hereinafter called "COMPANY" -
PREAMBLE
Massachusetts Institute of Technology ("MIT"), Whitehead Institute for Biomedical Research ("Whitehead"), Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e.V. ("MPG") and University of Massachusetts ("UMass"), are joint owners of certain patent rights relating to "RNA Sequence-Specific Mediators of RNA Interference", by David P. Bartel, Phillip A. Sharp, Thomas Tuschl, and Phillip D. Zamore (PCT Publication No. WO 01/75164, hereinafter "Tuschl I", MPG Case No. GI 2716 KTM).
MPG is the sole owner of certain patent rights relating to "RNA Interference Mediating Small RNA Molecules," by Thomas Tuschl, Sayda Elbashir, and Winfried Lendeckel (claims 1-29 of PCT Publication No. WO 02/44321, hereinafter "Tuschl II", MPG Case No. GI 2782 KTM). MPG has authorized GI to act as its agent for the purposes of licensing its ownership position of Tuschl I, and of licensing Tuschl II.
COMPANY (formerly Alnylam Holding Co.) is the parent holding company of its two subsidiaries Alnylam US, Cambridge, MA, USA (formerly Alnylam Pharmaceutical, Inc.) and Alnylam Europe, Kulmbach, Germany (formerly Ribopharma AG). GI has signed with each of Alnylam US and Alnylam Europe (collectively, the "GI Licensees") a co-exclusive license regarding the use of Tuschl I and Tuschl II for therapeutic purposes.
UMass has licensed its ownership position of Tuschl I to several licensees, including Sirna Therapeutics, Boulder, CO, USA, (collectively, the "UMass Licensees") for therapeutic purposes. In the course of the prosecution of Tuschl I, certain data of Tuschl II, including data on 3' overhangs and on mammalian cell activity, has been incorporated in Tuschl I, such incorporation was initiated by Whitehead (hereinafter "Tuschl II Data"). The UMass Licensees claim that they have rights, through their license to Tuschl I, to use the Tuschl II Data to support and make certain claims in Tuschl I.
GI and COMPANY currently discuss reasonable actions of GI, or approval of actions by GI, in connection with the ownership or inventorship of the Tuschl II Data, including without limitation
Indemnification Tuschl I/II April 22, 2004, page 1
clarification that the inventive subject matter of Tuschl II cannot be claimed in Tuschl I, and removal of the Tuschl II Data from Tuschl I, (collectively, the "Tuschl I/II Matters").
GI is willing to actively support COMPANY to solve the Tuschl I/Tuschl II Matters, but only if COMPANY bears the costs and indemnifies GI and MPG.
Now, therefore, COMPANY, acting in its own name and also in the name of Alnylam US and Alnylam Europe, and GI hereby agree as follows:
1. Indemnification and Cost-Bearing
COMPANY shall, at its sole expense, indemnify, defend, and hold harmless MPG and GI, and their trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (collectively, the "Indemnitees"), against any liability, damage, loss, costs, fees or expense (including reasonable attorneys fees and expenses) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments (collectively, the "Claims") arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether such action has any factual basis) relating to the Tuschl I/Tuschl II Matters
COMPANY shall pay to GI all reasonable costs, fees or expense (including without limitation internal costs, e.g. travel expenses of the Indemnitees, and external costs, e.g. attorneys fees) incurred by any of the Indemnitees relating to the Tuschl I/Tuschl II Matters, within 30 days after receipt of the respective invoice from GI.
COMPANY shall not be responsible for indemnifying the Indemnitees for any actions of the Indemnitees, or any actions approved by the Indemnitees, that occurred prior to the licensing of Tuschl I and Tuschl II to COMPANY.
COMPANY shall not be responsible for indemnifying the Indemnitees for any actions of the Indemnitees, or any actions approved by the Indemnitees, judged by a court of competent jurisdiction to be unlawful or fraudulent.
2. Procedures of Defense
The Indemnitees agree to provide COMPANY with written notice in due time of any Claims for which indemnification is sought under Section 1 above. COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to GI to defend against any Claims. The Indemnitees shall cooperate fully with COMPANY in such defense and will permit COMPANY to reasonably conduct such defense of Claims (including all decisions relative to litigation, appeal, and settlement); provided, however, that any Indemnitee shall have the right to retain its own counsel, at the expense of COMPANY, if representation of such Indemnitee by the counsel retained by COMPANY would be inappropriate because of actual or potential differences in the interests of such Indemnitee and any other party represented by such counsel. COMPANY shall keep GI informed of the progress in the defense of Claims and shall consult with GI with regard to any proposed settlement or any other decision on Claims. In no event may COMPANY compromise, settle or otherwise dispose of any Claim without the prior written consent of GI.
3. Term
This Agreement shall come into effect on April 1, 2004, and shall remain in effect until the sooner of (i) all potential Claims relating to the Tuschl I/Tuschl II Matters are expired, statute-barred, or otherwise finally not enforceable against the Indemnitees, or (ii) ten years after the last action of the Indemnitees, or the last action approved by the Indemnitees, relating to the Tuschl I/II Matters has occurred.
Indemnification Tuschl I/II April 22, 2004, page 2
4. Assignment and Transfer
This Agreement is personal to COMPANY and no rights or obligations may be assigned by COMPANY without the prior written consent of GI. COMPANY may assign its rights and obligations under this Agreement to a legal successor in connection with the merger, consolidation, or sale of all or substantially all of its assets or that portion of its business to which this Agreement relates; provided however that such successor has agreed towards GI in writing to be bound by the terms and conditions of this Agreement. If such successor fails to agree, COMPANY shall pay into escrow a one-time payment of USD 1.000.000 to cover potential Claims for the term of this Agreement as defined in Section 3.
5. Governing Law
The parties explicitly agree and deem appropriate that this Agreement and all disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Federal Republic of Germany, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.
6. Amendment and Waiver
This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.
7. Severability
Should one of the provisions of this Agreement be held void, invalid or unenforceable, the remaining provisions of this Agreement will not cease to be effective. The parties shall negotiate in good faith to replace such void, invalid or unenforceable provision by a new provision which reflects, to the extent possible, the original intent of the parties.
In witness whereof, the parties have caused this Agreement to be executed by their duly authorized representatives.
Garching Innovation GmbH Alnylam Pharmaceuticals, Inc.
By: /s/ I.V. Maria Pasecky, By: /s/ John Maraganore
I.V. Joem Erselius
----------------------------- -------------------
Name: I.V. Maria Pasecky, Name: John Maraganore
I.V. Joem Erselius on Title: Chief Executive Officer
behalf of Dr. Bernhard Hertel
Date: April 23, 2004
--------------
Date: April 23, 2004
--------------
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Indemnification Tuschl I/II April 22, 2004, page 3
EXHIBIT 10.20
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
CO-EXCLUSIVE LICENSE AGREEMENT
between
Garching Innovation GmbH,
Hofgartenstrasse 8, 80539 Munchen, Germany,
represented by the Geschaftsfuhrer, Dr. Bernhard Hertel,
- as licensor, hereinafter called "GI"-
and
Ribopharma AG,
Fritz-Hornschuch-Str. 9, 95326 Kulmbach, Germany,
represented by the Vorstande, Dr. Roland Kreutzer and Dr. Stefan Limmer,
- as licensee, hereinafter called "COMPANY" -
PREAMBLE
WHEREAS, Massachusetts Institute of Technology ("M.I.T."), Whitehead Institute
for Biomedical Research ("WHITEHEAD"), Max-Planck-Gesellschaft zur Foerderung
der Wissenschaften e.V. ("MAX-PLANCK") and University of Massachusetts
("UMASS"), are joint owners of certain JOINT PATENT RIGHTS (as later defined
herein) relating to "RNA Sequence-Specific Mediators of RNA Interference", by
David P. Bartel, Phillip A. Sharp, Thomas Tuschl, and Phillip D. Zamore
(MAX-PLANCK Case No. GI 2716 KTM).
WHEREAS, MAX-PLANCK is the owner of certain MAX PLANCK PATENT RIGHTS (as later defined herein) relating to "RNA Interference Mediating Small RNA Molecules," by Thomas Tuschl, Sayda Elbashir and Winfried Lendeckel (MAX-PLANCK Case No. GI 2782 KTM).
WHEREAS, M.I.T., WHITEHEAD, MAX-PLANCK and UMASS have the right to grant licenses under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS, subject to a royalty-free, nonexclusive license granted to the United States and the German Governments to practice the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for government purposes.
WHEREAS, MAX-PLANCK has authorized GARCHING INNOVATION GMBH ("GI") to act as its agent for the purposes of licensing its ownership position of JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS.
WHEREAS, MAX-PLANCK, WHITEHEAD and M.I.T. have authorized GI to act as their agent for the purposes of licensing the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for therapeutic purposes, and therefore, this Agreement is only binding on each of WHITEHEAD, M.I.T. and MAX-PLANCK.
WHEREAS, UMASS has not authorized GI to act as its agent for the purposes of licensing the JOINT PATENT RIGHTS and the MAX-PLANCK PATENT RIGHTS for therapeutic purposes, and therefore its ownership position in the JOINT PATENT RIGHTS will be excluded from the license grant hereunder, and this Agreement is not binding on UMASS, unless and until otherwise agreed upon between MAX-PLANCK, WHITEHEAD, M.I.T., UMASS and COMPANY.
WHEREAS, Alnylam Pharmaceuticals Inc., Cambridge, MA, USA ("ALNYLAM"), an early-stage therapeutics company which was founded in June 2002 by an international group of scientists that helped discover the novel biological phenomenon of RNA interference, and GI have signed the ALNYLAM LICENSE, which includes certain REQUIREMENTS (as defined in the ALNYLAM LICENSE) for ALNYLAM to found and establish a European-based therapeutics company, and, upon fulfillment of the REQUIREMENTS (as defined in the ALNYLAM LICENSE), GI shall grant a second co-exclusive license, comparable in scope and terms to the ALNYLAM LICENSE, to such company.
WHEREAS, COMPANY is an early-stage therapeutics company which was founded in June 2000 by scientists who had the idea that a modified form of the RNA interference principle might be suitable as a basis for new therapeutic agents for the treatment of diseases
accompanying an altered genetic expression.
WHEREAS, COMPANY and ALNYLAM have entered into an agreement to complete the MERGER (as later defined herein) on July 3, 2003, by which a U.S. parent holding company ("HOLD CO.") will own and control directly or indirectly COMPANY and ALNYLAM.
WHEREAS, the structure of the MERGER does not fulfil certain of the REQUIREMENTS (as defined in the ALNYLAM LICENSE) necessary for the COMPANY to be granted the second co-exclusive license. HOLD CO. and ALNYLAM have expressed their strong commitment that COMPANY shall be comparable to ALNYLAM, in particular in terms of growth, operational forces and business capabilities, for the next five years, and, therefore, GI was willing to support the MERGER, and to sign the AMENDMENT (as later defined herein).
WHEREAS, COMPANY desires to obtain the second co-exclusive license, with the right to grant sublicenses, under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for the purpose of developing and commercializing therapeutic products, and GI desires to grant such license on the terms and conditions hereinafter set forth.
NOW, THEREFORE, GI and COMPANY hereby agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 "ALNYLAM LICENSE"
shall mean the co-exclusive license to the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for therapeutic purposes signed by ALNYLAM and GI on December 20, 2002, and approved by MAX-PLANCK, WHITEHEAD and M.I.T.. The ALNYLAM LICENSE is attached to this Agreement as Appendix C.
1.2 "MERGER"
shall mean the combination of the businesses of COMPANY and ALNYLAM in July 2003 by way of a merger, acquisition, cross investment or any other way of transaction.
1.3 "AMENDMENT"
shall mean the amendment of the ALNYLAM LICENSE to amend and restate certain of the REQUIREMENTS (as defined in the ALNYLAM LICENSE) and other terms due to the MERGER, signed by GI, COMPANY, ALNYLAM and HOLD CO. on July 2, 2003, and approved by MAX-PLANCK, WHITEHEAD and M.I.T. The AMENDMENT is attached to this Agreement as Appendix D.
1.4 "JOINT PATENT RIGHTS"
shall mean:
(a) the United States and international patent and provisional applications listed on Appendix A and the resulting patents,
(b) any patent applications resulting from the provisional applications listed on Appendix A, and any divisionals, continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix A and of such patent applications that result from the provisional applications listed on Appendix A, to the extent the claims are directed to subject matter specifically described in the patent applications listed on Appendix A, and the resulting patents,
(c) any patents resulting from reissues, reexaminations, or extensions (and
their relevant international equivalents) of the patents described in
(a) and (b) above, and
(d) international (non-United States) patent applications and provisional applications filed after the EFFECTIVE DATE and the relevant international equivalents to divisionals, continuations, continuations-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to subject matter specifically described in the patents or patent applications referred to in (a), (b), and (c) above, and the resulting patents.
For the purpose of this Agreement, the ownership position of UMASS in the JOINT PATENT RIGHTS shall be explicitly excluded from the JOINT PATENT RIGHTS unless and until otherwise agreed upon between MAX-PLANCK, WHITEHEAD, M.I.T. and UMASS and COMPANY.
1.5 "MAX PLANCK PATENT RIGHTS"
shall mean:
(a) the United States and international patent and provisional applications listed on Appendix B and the resulting patents,
(b) any patent applications resulting from the provisional applications listed on Appendix B, and any divisionals, continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix B and of such patent applications that result from the provisional applications listed on Appendix B, to the extent the claims are directed to subject matter specifically described in the patent applications listed on Appendix B, and the resulting patents,
(c) any patents resulting from reissues, reexaminations, or extensions (and
their relevant international equivalents) of the patents described in
(a) and (b) above, and
(d) international (non-United States) patent applications and provisional applications filed after the EFFECTIVE DATE and the relevant international equivalents to divisionals, continuations, continuations-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to subject matter specifically described in the patents or patent applications referred to in (a), (b), and (c) above, and the resulting patents.
1.6 "PATENT RIGHTS"
shall mean the JOINT PATENT RIGHTS and MAX PLANCK PATENT RIGHTS together.
1.7 "OWNERS"
shall mean M.I.T., WHITEHEAD, UMASS and MAX-PLANCK collectively.
1.8 "APPROVING OWNERS"
shall mean M.I.T., WHITEHEAD and MAX-PLANCK collectively, each of which had approved the ALNYLAM LICENSE, the AMENDMENT and this Agreement. APPROVING OWNERS shall also mean UMASS in the event that M.I.T., WHITEHEAD, MAX-PLANCK, UMASS, and COMPANY agree that UMASS shall join as a party to this Agreement.
1.9 "LICENSED PRODUCTS"
shall mean any product or part thereof the manufacture, use or sale of which would, absent the license granted hereunder, infringe one or more issued claims of the PATENT RIGHTS or one or more pending claims of the PATENT RIGHTS that have not been pending for more than 5 (five) years after filing national patent applications in the country in question.
1.10 "FIELD"
shall mean all uses other than the commercial sale or use of the LICENSED PRODUCTS as a research reagent, including in a kit format, for research or educational purposes, including without limitation,
(i) COMPANY'S internal and collaborative research use, and
(ii) all therapeutic and prophylactic uses, and
(iii) diagnostic uses for purposes of therapeutic monitoring, but excluding all other diagnostic uses,
specifically including human and veterinary diseases, initially for all indications, but with a later split of indications according to Section 2.3.
1.11 "AFFILIATE"
shall mean any legal entity (such as a corporation, partnership, or limited
liability company) that is controlled by COMPANY. For the purposes of this
definition, the term "control" means (i) ownership of at least fifty percent
(50%) of the voting securities of a legal entity with voting securities or (ii)
a fifty percent (50%) or greater interest in the net assets or profits of a
legal entity without voting securities.
1.12 "SUBLICENSEE"
shall mean any legal entity (such as a corporation, partnership, or limited liability company)
other than AFFILIATE, ALNYLAM, HOLD CO. (including any affiliate of ALNYLAM and HOLD CO.) and any other individual or legal entity associated with the MERGER, that sells or intends to commercialize LICENSED PRODUCTS under a sublicense from COMPANY to develop, make, use and sell LICENSED PRODUCTS. SUBLICENSEE shall not include a distributor which purchases LICENSED PRODUCTS (whether in packaged form or bulk form) from COMPANY and resells such LICENSED PRODUCTS to THIRD PARTIES in a manner consistent with normal trade practices in the pharmaceutical industry.
For the purpose of this Agreement, SUBLICENSEE shall also include the assignees
of COMPANY to which COMPANY has sub-assigned its ownership position in the JOINT
PATENT RIGHTS in certain countries in accordance with the last paragraph of
Section 2.1.
1.13 "THIRD PARTY"
shall mean any individual or legal entity (such as a corporation, partnership,
or limited liability company) other than (i) COMPANY, AFFILIATE, SUBLICENSEE,
(ii) ALNYLAM, HOLD CO. (including any affiliate and sublicensee of ALNYLAM and
HOLD CO.), and (iii) any other individual or legal entity associated with the
MERGER.
1.14 "NET SALES"
shall mean the gross amount invoiced by COMPANY, its AFFILIATES and SUBLICENSEES
to THIRD PARTIES for LICENSED PRODUCTS, less the following: (i) to the extent
separately stated on the document of sale, any taxes or duties imposed on the
manufacture, use, sale or import of LICENSED PRODUCTS which are paid by COMPANY,
(ii) outbound transportation costs and costs of insurance in transit, (iii)
customary trade, cash or quantity discounts or rebates, to the extent actually
allowed and taken, and (iv) amounts repaid or credited by reason of rejection
or return.
No deductions shall be made for commissions paid to individuals or entities, or for cost of collections. NET SALES shall occur on the date of the invoice for a LICENSED PRODUCT.
Non-cash consideration shall not be accepted by COMPANY, its AFFILIATES or any SUBLICENSEE for LICENSED PRODUCTS without the prior written consent of GI.
In the event that a LICENSED PRODUCT is sold in combination with one or more active ingredients (excluding, without limitation, any formulation, stabilisation and delivery technology) which are not LICENSED PRODUCTS, which active ingredients are also independently marketed during the royalty period in question in the FIELD (or the non-exclusive field licensed in the second paragraph of Section 2.1, as the case may be) in the country in question, then NET SALES, for purposes of determining royalty payments on the combination product, shall be calculated by multiplying the NET SALES of the combination product by the fraction A/A+B, where A is the average gross selling price of the LICENSED PRODUCT sold separately in similar quantities in the country in question during the royalty period in question, and B is the average gross selling price of the other active ingredient(s) sold separately in similar quantities in the country in question during the royalty period in question. In the event that a LICENSED PRODUCT is sold in combination with other active ingredient(s), and the LICENSED PRODUCT or one or more other active ingredients are not sold separately, GI and COMPANY shall negotiate in good faith other means of calculating NET SALES with respect to such combination product, in order to fairly reflect the value of the LICENSED PRODUCT relative to the other active ingredient(s) in such combination product.
1.15 "EFFECTIVE DATE"
shall mean the date of signature to this Agreement by the party last to sign.
1.16 "TERM"
shall mean the term of this Agreement, which shall commence on the EFFECTIVE DATE and shall remain in effect until the expiration or abandonment of all issued patents and filed patent applications within the PATENT RIGHTS, unless earlier terminated in accordance with the provisions of this Agreement.
ARTICLE 2 - GRANT OF RIGHTS
2.1 License Grant
GI grants to COMPANY for the TERM a worldwide royalty-bearing co-exclusive license, with the right to grant sublicenses, under the PATENT RIGHTS to develop, make, have made, use, sell and import LICENSED PRODUCTS in the FIELD.
GI grants to COMPANY for the TERM a worldwide royalty-bearing non-exclusive license, without the right to grant sublicenses, under the PATENT RIGHTS to develop, make, have made, use, sell and import LICENSED PRODUCTS for all diagnostic uses other than for purposes of therapeutic monitoring.
In countries where it is legally impossible to grant licenses to jointly owned patent rights without the approval of all joint owners, MAX-PLANCK will partially assign its ownership position in the JOINT PATENT RIGHTS in such countries to COMPANY, restricted to develop, make, have made, use, sell and import LICENSED PRODUCTS (i) in the FIELD, whereby COMPANY is allowed to further assign such ownership position, restricted to develop, make, have made, use, sell and import LICENSED PRODUCTS in the FIELD, in such countries to THIRD PARTIES and SUBLICENSEES only with the prior written approval of GI, which shall not unreasonable be withheld, and (ii) for all diagnostic uses other than for purposes of therapeutic monitoring, whereby COMPANY is not allowed to further assign such ownership position in such countries to THIRD PARTIES and SUBLICENSEES. In any event, the ownership position assigned to COMPANY and, as the case may be, sub-assigned by COMPANY to its assignees, shall entitle neither COMPANY nor its assignees to any actions, claims or anything other which exceed the rights granted to them under the PATENT RIGHTS by this Agreement.
2.2 Co-Exclusivity
GI and the APPROVING OWNERS shall not grant more than a total of [**] (including the license granted hereby) worldwide royalty-bearing co-exclusive licenses, with the right to grant sublicenses, under the PATENT RIGHTS to develop, make, have made, use, sell and import LICENSED PRODUCTS in the FIELD, and shall not grant any licenses under the PATENT RIGHTS in the FIELD other than such [**] licenses.
This Section 2.2 shall not apply to the non-exclusive license stated in the second paragraph of Section 2.1.
2.3 Split of Indications within the FIELD
[**] years after December 20, 2002, COMPANY shall provide GI with information in
sufficient detail for each relevant indication and sub-indication within the
FIELD with respect to the estimated market size and accessibility by RNAi. If GI
decides, for good reason, that the received information is not complete and/or
not accurate and/or not sufficient, GI shall give COMPANY written notice thereof
within [**] after receiving the information. COMPANY shall provide GI within
[**] after receiving GI's written notice with the necessary information. GI will
oblige ALNYLAM accordingly.
Within [**] days after GI's receipt of the necessary information from COMPANY and ALNYLAM, GI and COMPANY shall mutually agree, jointly with ALNYLAM, [**] according to the estimated market size and accessibility by RNAi within the FIELD between COMPANY and ALNYLAM. After such split, the indications and sub-indications awarded to COMPANY shall be regarded as exclusively licensed to COMPANY.
If the parties do not agree within the timeframe, each party has the right to initiate arbitration procedure according to Section 12.3.
In the event that, within [**] years after December 20, 2002, (i) COMPANY or ALNYLAM merges with a THIRD PARTY or SUBLICENSEE in a transaction in which the shareholders of COMPANY or ALNYLAM (who hold shares in COMPANY or ALNYLAM immediately before such merger) own less than [**]% ([**] percent) of the shares of the resulting entity after such merger, or (ii) a THIRD PARTY or SUBLICENSEE acquires all or substantially all of the assets or shares of COMPANY or ALNYLAM , this Section 2.3 shall not apply.
2.4 Sublicenses
Within [**] years after December 20, 2002, COMPANY is not allowed to grant
sublicenses to THIRD PARTIES or SUBLICENSEES without the prior approval of GI,
which shall not unreasonably be withheld. COMPANY shall inform GI in writing in
due time prior to the intended signature, of any sublicense agreement in
sufficient detail to permit GI to decide whether or not to approve. GI shall
inform COMPANY in writing within 30 (thirty) days after receiving the
information whether or not GI approves; in particular, GI may withhold its
approval if GI deems the received information not sufficient. Notwithstanding
the foregoing, COMPANY may grant, within [**] years after December 20, 2002,
[**] for a specific indication to a THIRD PARTY or a SUBLICENSEE without the
prior approval of GI, in which event COMPANY is obliged to reserve an indication
of comparable market size and RNAi accessibility to the indication covered by
the sublicense for ALNYLAM.
After [**] years after December 20, 2002, COMPANY is allowed to grant sublicenses to THIRD PARTIES or SUBLICENSEES (and grant additional sublicenses to SUBLICENSEES) without the prior approval of GI.
Immediately after the signature of each sublicense granted under this Agreement, COMPANY shall provide GI with a copy of the signed sublicense agreement, and COMPANY shall confirm in writing to GI that COMPANY shall be liable for payment of royalties on NET SALES of the SUBLICENSEE in accordance with Sections 5.2 and 5.3.
2.5 Retained Rights
The APPROVING OWNERS retain the right to practice under the PATENT RIGHTS for research, teaching, education, non-commercial collaboration and publication purposes. COMPANY acknowledges that the German and the U.S. federal government retain a royalty-free, non-exclusive, non-transferable license to practice any government-funded invention claimed in any PATENT RIGHTS for government purposes.
2.6 No Additional Rights
Nothing in this Agreement shall be construed to confer any rights upon COMPANY by implication, estoppel, or otherwise as to any intellectual property rights, including without limitation patents and patent applications, trademarks, copyrights and know-how, of the APPROVING OWNERS other than the PATENT RIGHTS, regardless of whether such intellectual property rights shall be dominant or subordinate to any PATENT RIGHTS.
ARTICLE 3 - NO REPRESENTATIONS OR WARRANTIES
COMPANY is informed of the PATENT RIGHTS and the difficult patent situation in
the field of RNAi, and that it might need additional licenses from THIRD PARTIES
to have freedom to operate. GI and THE APPROVING OWNERS MAKE NO REPRESENTATIONS
OR WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, AND
THE ABSENCE OF ANY LEGAL OR ACTUAL DEFECTS, WHETHER OR NOT DISCOVERABLE.
Specifically, and not to limit the foregoing, GI and the APPROVING OWNERS make
no warranty or representation (i) regarding the merchantability or fitness for a
particular purpose of the PATENT RIGHTS, (ii) regarding the patentability,
validity or scope of the PATENT RIGHTS, (iii) that the exploitation of the
PATENT RIGHTS or any LICENSED PRODUCT will not infringe any patents or other
intellectual property rights of the APPROVING OWNERS or of a THIRD PARTY, and
(iv) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT will not
cause any damages of any kind to COMPANY or a THIRD PARTY.
IN NO EVENT SHALL GI, THE APPROVING OWNERS, THEIR TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER GI OR ANY OF THE APPROVING OWNERS SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
ARTICLE 4 - COMPANY DILIGENCE OBLIGATIONS AND REPORTS
4.1 Activity Requirements
COMPANY shall use commercially reasonable efforts, and shall oblige its AFFILIATES and SUBLICENSEES to use commercially reasonable efforts, to develop and to introduce into the commercial market LICENSED PRODUCTS at the earliest practical date.
4.2 Development Reports
Commencing with the third calendar quarter of 2003, COMPANY shall furnish, and shall oblige its AFFILIATES and SUBLICENSEES to furnish to COMPANY for inclusion in its reports to GI, to GI in writing, within 30 (thirty) days after the end of each calendar quarter with COMPANY's standard Research and Development report, as shall be provided to the investors pursuant to the Investor Rights Agreement between HOLD CO. and the investors named therein to be entered into as of the closing of the MERGER, on the progress of its efforts during the immediately preceding calendar quarter to develop and commercialize LICENSED PRODUCTS for each indication and sub-indication within the FIELD. The report shall also contain a discussion of intended Research and Development efforts for the calendar quarter in which the report is submitted.
4.3 Target Specific Sublicenses
[**] years after December 20, 2002, COMPANY shall be obliged to enter into good faith negotiations on reasonable terms and conditions with a THIRD PARTY requesting a sublicense under the PATENT RIGHTS for the development, use and sale of products against a target gene in a specific indication or sub-indication which is covered by pending or issued patent rights of such THIRD PARTY, provided, however, that
(a) COMPANY has not entered into a sublicense or is in serious negotiations for a sublicense for the use of [**] in such indication, or
(b) COMPANY can not demonstrate, through its standard research planning documents, significant current work which has commenced or is scheduled to commence within [**], to develop, within reasonable time, a product utilizing [**] in such indication.
COMPANY shall inform GI on a quarterly basis of all such THIRD PARTY sublicense requests, and whether or not COMPANY has granted such sublicense. In the event of non-grant, COMPANY shall, upon GI's request, provide GI, within [**] days after receiving GI's request, with information in sufficient detail showing COMPANY's reason for the non-grant.
If GI decides that COMPANY did not fulfill the requirements of (a) or (b),
and/or that COMPANY's terms and conditions for the requested sublicense have
been unreasonable, GI may initiate the arbitration procedure according to
Section 12.3. If the award of the arbitration tribunal states a non-fulfillment
of the requirements of (a) or (b), COMPANY shall immediately start negotiations
with the THIRD PARTY; if the award of the arbitration tribunal states
unreasonable terms and conditions, COMPANY shall immediately re-negotiate
reasonable terms and conditions with the THIRD PARTY. In any such awards of the
arbitration tribunal, the costs for the arbitration procedure shall be borne
solely by COMPANY.
4.4 Liability for AFFILIATES and SUBLICENSEES
If SUBLICENSEES or AFFILIATES of COMPANY develop, manufacture, use and/or sell LICENSED PRODUCTS under the PATENT RIGHTS, COMPANY warrants and is liable towards GI that the SUBLICENSEES and AFFILIATES perform their sublicense agreement in accordance with this Agreement, and COMPANY shall be responsible and liable for royalty
payments and reports of the SUBLICENSEES and AFFILIATES.
4.5 Effect of Failure
In the event that GI determines that COMPANY or any of its AFFILIATES and SUBLICENSEES has failed to fulfill any of its obligations under this Section 4, then GI may treat such failure as a material breach in accordance with Section 11.7.
ARTICLE 5 - SHARES, ROYALTIES AND PAYMENT TERMS
5.1 Shares
As a consequence of the MERGER, the APPROVING OWNERS do not receive shares in
both ALNYLAM and COMPANY, but they shall receive shares in HOLD CO. as stated in
Section B) of the AMENDMENT.
As partial consideration for the licenses granted to ALNYLAM and COMPANY, HOLD CO. shall transfer, by September 1st, 2003, 865,516 Shares (as defined in the AMENDMENT) and 16,328 Additional Shares (as defined in the AMENDMENT) to the APPROVING OWNERS according to Section B) of the AMENDMENT.
In addition, HOLD CO. shall transfer 16,328 Additional Shares (as defined in the
AMENDMENT) to the APPROVING OWNERS according to Section B) b) of the AMENDMENT.
Furthermore, the total amount of Shares (as defined in the AMENDMENT) to be
received by the APPROVING OWNERS shall be increased in an amount to be defined
in good faith by the parties if one or more of the events described in Section
B) of the AMENDMENT occur.
In addition and notwithstanding the foregoing, M.I.T., WHITEHEAD, MAX-PLANCK, and COMPANY acknowledge that it may be necessary for COMPANY to pay additional consideration to UMASS (in the form of cash, stock, or otherwise) in order for COMPANY to obtain a license to UMASS' ownership interest in the JOINT PATENT RIGHTS. Therefore, in the case of such an event, M.I.T., WHITEHEAD, MAX-PLANCK, and COMPANY agree on a cost sharing of such costs between them substantially identical to the cost-sharing mechanism set forth in the Letter Agreement between ALNYLAM, GI, M.I.T., and WHITEHEAD dated December 19, 2002 with respect to the ALNYLAM LICENSE, M.I.T., WHITEHEAD, MAX-PLANCK and COMPANY, ALNYLAM and HOLD CO. agree that the cost sharing mechanism set forth both in the Letter Agreement between ALNYLAM, GI, M.I.T., and WHITEHEAD dated December 19, 2002 and in this Section 5.1 shall only apply with respect to the JOINT PATENT RIGHTS, which means that the 50%-cost-sharing for M.I.T., WHITEHEAD and MAX-PLANCK shall be limited to 50% of the value of shares (to be calculated at HOLD CO.'s last round of financing, if the shares are privately held, or at the average closing price of ten trading days preceding the closing date of ALNYLAM and COMPANY with UMASS, if the shares are listed on a stock exchange) transferred to M.I.T., WHITEHEAD and MAX-PLANCK by HOLD CO. in return for the JOINT PATENT RIGHTS. The value of shares shall be calculated on the basis of 396,763 Shares and 7,485 Additional Shares and further 7,485 Additional Shares (according to Section B)b) of the AMENDMENT) attributed to the JOINT PATENT RIGHTS.
5.2 Running Royalties
COMPANY shall pay to GI the following running royalties on NET SALES of therapeutic and prophylactic LICENSED PRODUCTS by COMPANY, its AFFILIATES and SUBLICENSEES:
(a) [**]% ([**] percent) of the first US$[**] ([**] US Dollars) of annual accumulated NET SALES of all LICENSED PRODUCTS;
(b) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US Dollars);
(c) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US Dollars);
(d) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**]n ([**] US Dollars);
(e) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US Dollars); and
(f) [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED PRODUCTS above US$[**] ([**] US Dollars).
In the event that COMPANY, an AFFILIATE or a SUBLICENSEE develops diagnostic LICENSED PRODUCTS, COMPANY shall initiate negotiations with GI at least [**] prior to the intended first commercial sale of each diagnostic LICENSED PRODUCT. COMPANY and GI shall negotiate in good faith [**] terms for such diagnostic LICENSED PRODUCT.
If the sale of any LICENSED PRODUCT is covered by more than one of the PATENT RIGHTS, multiple royalties shall not be due.
Non-cash consideration shall not be accepted by COMPANY or an AFFILIATE or any SUBLICENSEE for LICENSED PRODUCTS without the prior written consent of GI.
For the avoidance of doubt, in no event shall COMPANY and ALNYLAM be responsible for paying royalties under this Agreement and the ALNYLAM LICENSE on inter-company sales of LICENSED PRODUCTS between ALNYLAM and COMPANY. ALNYLAM or COMPANY shall only pay royalties on sales of such LICENSED PRODUCTS to a THIRD PARTY. Further for the avoidance of doubt, in no event shall royalties be due under both the ALNYLAM LICENSE and this Agreement on the same NET SALE of a particular LICENSED PRODUCT.
5.3 Royalty Stacking
(a) THIRD PARTY Licenses
In the event COMPANY, an AFFILIATE or a SUBLICENSEE takes, for objective commercial and/or legal reasons, a license from any THIRD PARTY or other SUBLICENSEE under any patent applications or patents that dominate the PATENT RIGHTS or is dominated by the PATENT RIGHTS in order to develop, make, use, sell or import any LICENSED PRODUCT
(explicitly excluding, without limitation, any THIRD PARTY's, or other SUBLICENSEE's, patents and patent applications for formulation, stabilization and delivery), then COMPANY is allowed to deduct [**]% ([**] percent) of any additional running royalties to be paid to such THIRD PARTY or other SUBLICENSEE up to [**]% ([**] percent) of the running royalties stated in Section 5.2, from the date COMPANY has to pay running royalties to such THIRD PARTY or other SUBLICENSEE. However, the running royalties stated in Section 5.2 shall not be reduced to less than a minimum of [**]% ([**] percent) of NET SALES in any case.
For avoidance of doubt, if COMPANY, an AFFILIATE or a SUBLICENSEE takes a license to a THIRD PARTY's, or other SUBLICENSEE's, target, COMPANY is in no event allowed to deduct any license fees for such target from running royalties due to GI under this Agreement.
(b) PATENT RIGHTS Coverage
In the event that (i) COMPANY, its AFFILIATES or SUBLICENSEES sell a LICENSED PRODUCT in a country where no PATENT RIGHTS are issued and no patent applications that are part of the PATENT RIGHTS are pending that have not been pending for less than [**] years after filing national patent applications in the country in question, and (ii) such LICENSED PRODUCT is manufactured in a country where PATENT RIGHTS are issued or patent applications that are part of the PATENT RIGHTS are pending that have not been pending for more than [**] years after filing national patent applications in the country in question, the royalties stated in Section 5.2 will be reduced by [**]% ([**] percent) for such LICENSED PRODUCT, until the expiration or abandonment of all issued patents and filed patent applications within the PATENT RIGHTS in the country in which the LICENSED PRODUCT is manufactured.
5.4 Reports
Within 30 (thirty) days of the end of each calendar half year, COMPANY shall deliver a detailed report to GI for the immediately preceding calendar half year showing at least (i) the number of LICENSED PRODUCTS sold by COMPANY, its AFFILIATES and SUBLICENSEES in each country, (ii) the gross price charged by COMPANY, its AFFILIATES and SUBLICENSEES for each LICENSED PRODUCTS in each country, (iii) the calculation of NET SALES, and (iv) the resulting running royalties due to GI according to those figures. If no running royalties are due to GI, the report shall so state.
5.5 Payments
(a) Accounting and Payments
Running royalties shall be payable for each calendar half year, and shall be due to GI within 60 (sixty) days of the end of each calendar half year.
(b) Method of Payment
All payments under this Agreement shall be made payable to "Garching Innovation GmbH" to the following account: Bayerische Hypo- und Vereinsbank AG; account number [**]; bank code 700 202 70; SWIFT address: HYVEDEMMXXX. Each payment shall reference this
Agreement and the obligation under this Agreement that the payment satisfies.
(c) Payments in Euros
All payments due under this Agreement shall be payable in Euros and, if legally required, shall be paid with the additional value added tax. Conversion of foreign currency to Euros shall be made at the conversion rate reported in the Wall Street Journal (United States Edition) on the last working day of the relevant calendar half year. Such payments shall be without deduction of exchange, collection, or other charges, except for deduction of withholding or similar taxes.
(d) Late Payments
Any payments by COMPANY that are not paid on or before the date such payments are due under this Agreement shall bear interest on arrears at 2 % (two percentage points) above the Prime Rate of interest as reported in the Wall Street Journal on the date the payment is due.
5.6 Bookkeeping and Auditing
COMPANY is obliged to keep, and shall oblige its AFFILIATES and SUBLICENSEES to keep, complete and accurate books on any reports and payments due to GI under this Agreement, which books shall contain sufficient information to permit GI to confirm the accuracy of any reports and payments made to GI. GI, or GI's appointed agents, is authorized to check the books of COMPANY, and, upon GI's request, COMPANY, or agents appointed by GI for COMPANY, shall check the books of its AFFILIATES and SUBLICENSEES for GI, once a year. The charges for such a check shall be borne by GI. In the event that such check reveals an underpayment in excess of 5% (five percent), COMPANY shall bear the full cost of such check and shall remit any amounts due to GI within thirty days of receiving notice thereof from GI.
The right of auditing by GI under this Section shall expire five years after each report or payment has been made. Sublicenses granted by COMPANY shall provide that COMPANY shall have the right to check the books of its AFFILIATES and SUBLICENSEES according to this Section 5.6.
5.7 No Refund
All payments made by COMPANY or its AFFILIATES and SUBLICENSEES under this Agreement are nonrefundable and noncreditable against each other.
ARTICLE 6 - PATENT PROSECUTION AND INFRINGEMENT
6.1 Responsibility for PATENT RIGHTS
The APPROVING OWNERS shall, in their sole discretion, apply for, seek issuance of, maintain, or abandon the PATENT RIGHTS during the TERM of this Agreement. GI shall (i) keep COMPANY reasonably informed as to the filing, prosecution, maintenance and abandonment of the PATENT RIGHTS, (ii) furnish COMPANY copies of documents relevant to any such filing, prosecution maintenance and abandonment, and (iii) allow COMPANY reasonable opportunity to comment and advise on patent attorneys to be used and on documents to be filed with any patent office which would affect the PATENT RIGHTS in the FIELD, and (iv) give good faith
consideration to the comments and advice of COMPANY.
In the event that all OWNERS wish to cease prosecution or abandon any of the PATENT RIGHTS, GI shall notify COMPANY thereof in writing in due time, and shall offer COMPANY the right to continue prosecution or maintenance of such PATENT RIGHTS in its discretion, in its name and at its expense. GI will inform and offer ALNYLAM respectively. If COMPANY does not accept GI's offer within 30 (thirty) days after receiving it, the OWNERS shall be free to cease prosecution or abandon such PATENT RIGHTS. In any event, if the manufacture and sale of a LICENSED PRODUCT is solely covered by such PATENT RIGHTS, the respective NET SALES are not royalty-bearing.
6.2 Patent Costs
COMPANY shall pay to GI [**]% ([**] percent) of all fees and costs, including attorneys fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS, which incur during the TERM. [In addition, COMPANY shall reimburse GI [**]% ([**] percent) of all fees and costs, including attorneys fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS, which have already incurred as of December 20, 2002 until the EFFECTIVE DATE. GI shall decide, in its sole discretion, if such costs shall be paid directly by COMPANY to the creditor, or if COMPANY shall reimburse GI for all amounts due pursuant to this Section within 30 (thirty) days of invoicing.
In addition, if any or all of the current and future licensees which bear patent costs cease to pay, for whatever reason, their respective patent cost share, then COMPANY shall assume [**]% ([**] percent) of such share. GI will oblige ALNYLAM respectively.
Furthermore, if COMPANY wishes to prosecute or maintain any of the PATENT RIGHTS in countries where none of the current and future licensees, including ALNYLAM, want to prosecute or maintain, COMPANY shall bear [**]% ([**] percent) of all fees and costs relating to such PATENT RIGHTS.
In the event that COMPANY wishes to cease payment for any of the PATENT RIGHTS, COMPANY shall notify GI thereof in writing in due time, at least 3 months prior to any deadline. The APPROVING OWNERS shall have the right to continue payment for such PATENT RIGHTS in their discretion and at their expense. In any event, such PATENT RIGHTS shall no longer be covered by this Agreement from the date COMPANY informs GI of its cessation of payments.
6.3 Infringement
COMPANY shall inform GI promptly in writing of any alleged infringement of the PATENT RIGHTS by a THIRD PARTY and of any available evidence thereof.
Subject to COMPANY's right to join in the prosecution of infringements set forth below, the OWNERS shall have the right, but not the obligation, to prosecute in their own discretion and at their own expense, all infringements of the PATENT RIGHTS. The total cost of any such sole infringement action shall be borne by the OWNERS, and the OWNERS shall keep any recovery or damages derived therefrom. In any such infringement suits, COMPANY shall, at the
OWNERS' expense, cooperate in all respects.
COMPANY shall have the right to join the OWNERS' prosecution of any infringements of the PATENT RIGHTS. In any such joint infringement suits, the OWNERS and COMPANY will cooperate in all respects. The OWNERS and COMPANY will agree in good faith on the sharing of the total cost of any such joint infringement action and the sharing of any recovery or damages derived therefrom.
In the event that the OWNERS decide not to prosecute infringements of the PATENT RIGHTS, neither solely nor jointly with COMPANY, GI shall offer to COMPANY to prosecute any such infringement in its own discretion and at its own expense. GI will offer ALNYLAM respectively. The OWNERS shall, at COMPANY'S expense, cooperate. The total cost of any such sole infringement action shall be borne by COMPANY, and COMPANY shall keep any recovery or damages derived therefrom.
In the event that COMPANY intends to make any arrangements with the infringer to settle the infringement (such as sublicenses), and solely the OWNERS or the OWNERS jointly with COMPANY have prosecuted the infringement, any such settlement needs the prior written approval of GI, which shall not unreasonably be withheld; reasons to withheld include, without limitation, that the settlement is financially disadvantageous for the OWNERS or GI. Any infringer to which COMPANY grants such sublicenses shall be a SUBLICENSEE under this Agreement.
ARTICLE 7 - INDEMNIFICATION AND INSURANCE
7.1 Indemnification
COMPANY shall indemnify, defend, and hold harmless the APPROVING OWNERS and their trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the "Indemnitees"), against any liability, damage, loss, or expense (including reasonable attorneys fees and expenses) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether such action has any factual basis) concerning (i) any use of the PATENT RIGHTS by COMPANY or its AFFILIATES and SUBLICENSEES, or (ii) any product, process, or service that is developed, made, used, sold, or performed pursuant to any right or license granted under this Agreement.
7.2 Insurance
COMPANY shall obtain and carry in full force and effect commercial general liability insurance, including product liability and errors and omissions insurance, which shall protect COMPANY and the Indemnitees with respect to events covered by Section 7.1 above. Such insurance shall list GI and the APPROVING OWNERS as additional insured, and the limit of insurance shall not be less than 1,000,000 $ (one million US Dollars) per incident. Upon request, COMPANY shall provide GI with certificates of insurance evidencing compliance with this section.
ARTICLE 8 - CONFIDENTIALITY
8.1 Obligation for Company
The content of this Agreement and any information marked confidential which is disclosed to COMPANY under this Agreement by GI or the APPROVING OWNERS shall be treated confidential by COMPANY during the TERM and for 5 (five) years thereafter. COMPANY shall not use such information for any purposes other than those necessary to directly further the purpose of this Agreement. COMPANY may disclose such information to ALNYLAM, HOLD Co., and its actual and prospective AFFILIATES, SUBLICENSEES, investors, lenders, other financing sources, acquirors and THIRD PARTIES being acquired by COMPANY, provided however, that COMPANY has entered into serious discussions with such entities, and such entities have requested such information, and such entities are obliged to confidentiality to the same extent as COMPANY.
The confidentiality obligation shall not apply to information which is (i)
publicly available or becomes publicly available through no fault of COMPANY, or
(ii) obtained by COMPANY from another source without a duty of confidentiality,
or (iii) demonstrably independently developed or possessed by COMPANY, or (iv)
is required by law, regulation, accounting principles or an order of a court or
government agency to be disclosed.
8.2 Obligation for GI
The content of this Agreement and any information marked confidential which is disclosed to GI under this Agreement by COMPANY, its AFFILIATES or SUBLICENSEES shall be treated confidential by GI during the TERM and for 5 (five) years thereafter. GI shall not use such information for any purposes other than those necessary to directly further the purpose of this Agreement. GI may disclose such information to the APPROVING OWNERS, provided however, that the APPROVING OWNERS are obliged to confidentiality to the same extent as GI.
The confidentiality obligation shall not apply to information which is (i) publicly available or becomes publicly available through no fault of GI, or (ii) obtained by GI from another source without a duty of confidentiality, or (iii) demonstrably independently developed or possessed by GI, or (iv) is required by law, regulation, accounting principles or an order of a court or government agency to be disclosed.
ARTICLE 9 - NO ASSIGNMENT OR TRANSFER
9.1 Assignment
This Agreement is personal to COMPANY and no rights or obligations may be assigned by COMPANY to an AFFILIATE or a SUBLICENSEE or ALNYLAM or HOLD CO. (including any affiliate and sublicensee of ALNYLAM and HOLD CO.) or any other legal entity associated with the MERGER without the prior written consent of GI. COMPANY may grant sublicenses in accordance with Section 2.4 to THIRD PARTIES or SUBLICENSEES. COMPANY may assign its rights and obligations under this Agreement to a THIRD PARTY successor or SUBLICENSEE successor in connection with the merger, consolidation, or sale of all or substantially all of its assets or that portion of its business to which this Agreement relates; provided, however, that this Agreement shall immediately terminate if the proposed THIRD
PARTY assignee or SUBLICENSEE assignee fails to agree in writing to be bound by
the terms and conditions of this Agreement on or before the effective date of
the assignment. After the effective date of the assignment, the THIRD PARTY
assignee or SUBLICENSEE assignee shall provide GI, upon GI's request, with
written reports in reasonable detail on the actual and intended future
activities of the THIRD PARTY assignee or SUBLICENSEE assignee to develop and
commercialize LICENSED PRODUCTS. If the reports are not provided to GI in due
time and/or in sufficient detail, such failure will be a material breach under
Section 11.7, and GI shall have the right to terminate this Agreement in
accordance with the procedures set forth in Section 11.7.
9.2 Transfer to ALNYLAM
Notwithstanding Section 9.1, the assignment or transfer of this Agreement in whole from COMPANY to ALNYLAM or HOLD CO. (including any affiliate of ALNYLAM and HOLD CO.) as new licensee, for example in connection with a sale or transfer of at least 50% of COMPANY's assets or that portion of its business to which this Agreement relates, needs the prior written consent of GI, if such sale or transfer is implemented within 5 (five) years after the EFFECTIVE DATE, unless such sale or transfer is in connection with an Initial Public Offering or a trade sale whereby a THIRD PARTY or SUBLICENSEE acquires both COMPANY and ALNYLAM.
COMPANY shall inform GI immediately of any intended such sale or transfer.
ARTICLE 10 - GENERAL COMPLIANCE WITH LAWS
10.1 Compliance with Laws
COMPANY shall use commercially reasonable efforts to comply with all local, state, federal, and international laws and regulations relating to the development, manufacture, use and sale of LICENSED PRODUCTS.
10.2 Non-Use of APPROVING OWNERS Names
Neither COMPANY nor its AFFILIATES and SUBLICENSEES shall use the name of "Massachusetts Institute of Technology," "Whitehead Institute", "Max Planck Institute", "Max Planck Society", "Garching Innovation" or any variation, adaptation, or abbreviation thereof, or of any of its trustees, officers, faculty, students, employees, or agents, or any trademark owned by any of the APPROVING OWNERS, in any promotional material or other public announcement or disclosure without the prior written consent of the APPROVING OWNERS or in the case of an individual, the consent of that individual. The foregoing notwithstanding, without the consent of the APPROVING OWNERS, COMPANY may state generally that it is co-exclusively licensed by the APPROVING OWNERS under the PATENT RIGHTS.
ARTICLE 11 - TERM AND TERMINATION
11.1 Term
This Agreement shall come into effect on the EFFECTIVE DATE and shall remain in effect until the expiration or abandonment of all issued patents and filed patent applications within the
PATENT RIGHTS, unless earlier terminated in accordance with the provisions of this Agreement.
11.2 Voluntary Termination by COMPANY
COMPANY shall have the right to terminate this Agreement, for any reason, (i) upon at least 6 (six) months prior written notice to GI, such notice to state the date at least 6 (six) months in the future upon which termination is to be effective, and (ii) upon payment of all amounts due to GI through such termination effective date.
11.3 Cessation of Business
If COMPANY ceases to carry on its business related to this Agreement, COMPANY has to inform GI thereof immediately. COMPANY and GI shall have the right to terminate this Agreement immediately upon written notice to the other.
11.4 Change of Ownership
In the event that at least 50% (fifty percent) of COMPANY'S stock capital is
assigned or transferred to a THIRD PARTY or an AFFILIATE or a SUBLICENSEE,
COMPANY shall provide GI, upon GI's request, with written reports in reasonable
detail on the actual and intended future activities of COMPANY to develop and
commercialize LICENSED PRODUCTS. If the reports are not provided to GI in due
time and/or in sufficient detail, such failure will be a material breach under
Section 11.7, and GI shall have the right to terminate this Agreement in
accordance with the procedures set forth in Section 11.7. COMPANY shall inform
GI immediately of the implementation of any such assignment or transfer.
11.5 Attack on PATENT RIGHTS
GI shall have the right to terminate this Agreement immediately upon written notice to COMPANY, if COMPANY attacks, or has attacked or supports an attack through a THIRD PARTY, the validity of any of the PATENT RIGHTS. To the extent legally enforceable, sublicenses granted by COMPANY shall provide that in the event the SUBLICENSEE attacks, or has attacked or supports an attack through a THIRD PARTY, the validity of any of the PATENT RIGHTS, COMPANY shall have the right to terminate the sublicense agreement immediately; upon request of GI, COMPANY shall have the obligation to terminate such sublicense agreement.
11.6 Licenses to ALNYLAM
In the event that
(i) COMPANY does not grant to ALNYLAM a worldwide non-exclusive unrestricted royalty-free license, with the right to grant sublicenses, to all of COMPANY'S existing and future intellectual property rights owned or controlled by COMPANY, including without limitation patents and patent applications, trademarks, copyrights and know-how, necessary or useful to perform ALNYLAM's business in the field of RNAi, or
(ii) COMPANY does not grant to ALNYLAM a worldwide non-exclusive unrestricted, with
royalties payable only with respect to COMPANY's royalty obligations towards its licensor, sublicense, with the right to grant further sublicenses to the greatest extent permitted by its licensor, to all intellectual property rights currently and in the future licensed to COMPANY, including without limitation patents and patent applications, trademarks, copyrights and know-how, necessary or useful to perform ALNYLAM's business in the field of RNAi,
GI shall have the right to terminate this Agreement immediately upon written notice to COMPANY, if COMPANY fails to grant such licenses or sublicenses to ALNYLAM within 30 (thirty) days after receiving written notice thereof from GI.
This Section 11.6 shall not apply in the event that (i) COMPANY or ALNYLAM merges with a THIRD PARTY or SUBLICENSEE in a transaction in which the shareholders of COMPANY or ALNYLAM (who hold shares in COMPANY or ALNYLAM immediately before such merger) own less than 50% (fifty percent) of the shares of the resulting entity after such merger, or (ii) a THIRD PARTY or SUBLICENSEE acquires all or substantially all of the assets or shares of COMPANY or ALNYLAM.
11.7 Termination for Default
In the event COMPANY fails to pay any amounts due and payable to GI hereunder, and fails to make such payments within 30 (thirty) days after receiving written notice of such failure, GI may terminate this Agreement immediately upon written notice to COMPANY. Notwithstanding the foregoing, in the event COMPANY commits a material breach of its obligations under this Agreement, and fails to cure that breach within 60 (sixty) days after receiving written notice thereof, GI may terminate this Agreement immediately upon written notice to COMPANY.
Notwithstanding the foregoing, if COMPANY disputes any alleged failure to make a payment or alleged material breach, the matter shall be resolved in accordance with Section 12.3, and if the matter is resolved against COMPANY, COMPANY shall have 10 (ten) days from the final decision of the arbitration tribunal to make the payment, with additional interest on arrears according to Section 5.5 (d), or cure the breach.
11.8 Termination According to AMENDMENT
GI shall have the right to terminate this Agreement immediately upon written notice to COMPANY after compliance with the procedures set forth in Section c) of REQUIREMENT 5 as modified by the AMENDMENT, if one or more of the amended REQUIREMENTS stated in Section B) to D) of the AMENDMENT are not or no longer met by ALNYLAM and/or HOLD Co., as applicable.
11.9 Effect of Termination
The following provisions shall survive the expiration or termination of this Agreement: Articles 1, 3, 5.5, 7, 8, 12 and Section 11.1 and 11.9. In no event shall termination of this Agreement release COMPANY, its AFFILIATES or SUBLICENSEES from the obligation to pay any amounts that became due on or before the effective date of termination.
In the event that any license granted to COMPANY under this Agreement is terminated, any
sublicense under such license granted prior to termination of said license shall remain in full force and effect, provided that:
(a) the SUBLICENSEE is not then in breach of its sublicense agreement, and
(b) the SUBLICENSEE agrees to be bound to GI as licensor under the terms and conditions of the sublicense agreement, provided that GI shall have no other obligation than to leave the sublicense granted by COMPANY in place.
In the event that MAX-PLANCK has partially assigned its ownership position in the JOINT PATENT RIGHTS in certain countries to COMPANY according to Section 2.1, COMPANY shall cost-free re-assign such ownership position in such countries to MAX-PLANCK on or before the effective date of termination. In the event that COMPANY has further assigned its ownership position in certain countries in accordance with Section 2.1, such further assignment shall remain in full force and effect, provided that
(a) the sub-assignee is not then in breach of its sub-assignment agreement, and
(b) the sub-assignee agrees to be bound to GI as assignor under the terms
and conditions of the sub-assignment agreement, provided that GI shall have no
other obligation than to leave the sub-assignment granted by COMPANY in place.
[A SIMILAR PROVISION SHOULD ALSO BE ADDED TO THE ALNYLAM LICENSE.]
11.10 Insolvency
This Agreement shall terminate automatically, if, regarding the assets of COMPANY, a petition in insolvency is filed and not withdrawn by the petitioner or dismissed by court for inappropriateness within 90 (ninety) days of the filing, or the commencement of insolvency proceedings has been declined by court for insufficiency of assets. In addition, this Agreement shall terminate automatically, if COMPANY is in liquidation for other reasons, except for a liquidation to reorganize COMPANY, if the reorganized entity agrees in writing that this Agreement shall be continued entirely by such reorganized entity.
ARTICLE 12 - MISCELLANEOUS
12.1 Notice
Any notices required or permitted under this Agreement and all correspondence hereunder shall be in English and in writing, shall specifically refer to this Agreement, and shall be sent by a method providing confirmation of delivery to the following addresses or facsimile numbers of the parties:
If to GI: Garching Innovation GmbH
Hofgartenstrasse 8
D-80539 Muenchen/Germany
Tel: +49/89/290919-0
Fax: +49/89/290919-99
If to COMPANY: Ribopharma AG,
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Fritz-Hornschuh-Strasse 9
95326 Kulmbach/Germany
Tel: 09221/827 62 11
Fax: 09 221/827 62 99
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All notices under this Agreement shall be deemed effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section.
12.2 Governing Law
The parties explicitly agree and deem appropriate that this Agreement and all disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Federal Republic of Germany, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.
12.3 Dispute Resolution
The parties shall attempt to settle any dispute or claim arising out of or relating to this Agreement by good faith negotiations. If the parties fail to agree on a reasonable settlement within 60 (sixty) days after the affected party informed the other party in writing of such dispute or claim, either party may initiate arbitration under the procedural Rules of the International Chamber of Commerce upon written notice to the other party within 30 (thirty) days after such failure. The arbitration tribunal shall be appointed as follows: each party shall select, within 30 (thirty) days after notice to initiate arbitration, an independent and experienced THIRD PARTY as its arbitrator. The two arbitrators selected by the parties shall mutually select an independent and experienced THIRD PARTY as third arbitrator. The venue for the arbitration procedure shall be Munich, Germany, the language shall be English, and German law shall be applied. The award of the arbitration tribunal shall be final and binding for the parties. Notwithstanding the foregoing, each party may apply for interlocutory relief in court.
12.4 Amendment and Waiver
This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.
12.5 Severability
Should one of the provisions of this Agreement be held void, invalid or unenforceable, the remaining provisions of this Agreement will not cease to be effective. The parties shall negotiate in good faith to replace such void, invalid or unenforceable provision by a new provision which reflects, to the extent possible, the original intent of the parties.
12.6 Headings
All headings are for convenience only and shall not affect the meaning of any provision of this Agreement.
12.7. Effect on ALNYLAM LICENSE
To avoid any discrepancies between this Agreement and the ALNYLAM LICENSE due to the fact that the ALNYLAM LICENSE does not reflect that (i) UMASS' ownership position in the JOINT PATENT RIGHTS is excluded from the JOINT PATENT RIGHTS with respect to the ALNYLAM LICENSE and this Agreement, and (ii) ALNYLAM has not founded and established a European-based therapeutics company, but ALNYLAM and COMPANY executed the MERGER, this Agreement shall prevail the ALNYLAM LICENSE to the extent the aforementioned discrepancies occur.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives.
Garching Innovation GmbH Ribopharma AG
By: /s/Bernhard Hertel By: /s/ Roland Kreutzer /s/ Stefan Limmer
-------------------- --------------------------------------
Name: Dr. Bernhard Hertel Name: Dr. Roland Kreutzer, Dr. S. Limmer
Title: Geschaftsfuhrer Title: Vorstande
Date: July 30, 2003 Date: July 30, 2003
-------------------- --------------------------------------
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Acknowledged and agreed:
Hold Co., Inc. Alnylam Pharmaceuticals, Inc.
By: /s/ John Maraganore By: /s/ John Maraganore
-------------------- --------------------------------------
Name: John Maraganore Name: John Maraganore
Title: Chief Executive Officer Title: Chief Executive Officer
Date: August 26, 2003 Date: August 26, 2003
-------------------- --------------------------------------
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APPENDIX A
JOINT PATENT RIGHTS
I. United States Patents and Applications
USSN [**] entitled [**]
USSN [**] entitled [**]
II. International (non-U.S.) Patents and Applications
[**] entitled [**]
APPENDIX B
MAX-PLANCK PATENT RIGHTS
I. United States Patents and Applications
USSN [**] entitled "[**]II. International (non-U.S.) Patents and Applications
European Serial Number [**]
[**] entitled "[**]
APPENDIX C
ALNYLAM LICENSE
[FILED SEPARATELY AS EXHIBIT 10.19]
EXHIBIT 10.21
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
AGREEMENT
This agreement ("Agreement") is effective as of the 17th day of September, 2003 ("Effective Date") between THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY ("Stanford"), an institution of higher education having corporate powers under the laws of the State of California, and Alnylam Pharmaceuticals, Inc. ("Alnylam" or "Licensee"), a corporation having a principal place of business at 790 Memorial Drive, Suite 202, Cambridge, MA 02139. Stanford and Alnylam agree as follows:
1 BACKGROUND
1.1 Stanford has an assignment of "Efficient RNA Transfection to the Livers
of Living Mice" from the laboratory of Mark Kay ("Invention"), as
described in Stanford Docket S00-012 and any Licensed Patent, as
defined below, which may issue to the Invention.
1.2 Stanford wants to have the Invention perfected and marketed as soon as
possible so that resulting products may be available for public use and
benefit.
1.3 Alnylam wants a license under the Invention, and Licensed Patent to
develop, manufacture, use, and sell Licensed Product in the field of
use of Delivery of synthesized siRNA molecules for research and
therapeutic use.
1.4 The Technology and Invention were made in the course of research
supported by the National Institutes of Health (NIH).
2 DEFINITIONS
2.1 "Licensed Patents" means all patent applications filed on the Invention
and all patents issuing thereon including
(A) Stanford's U.S. Patent Application, Serial Number [**]
entitled [**],[**],
(B) Stanford's U.S. Patent Application, Serial Number [**]
entitled [**],
(C) [**]the Continuation-in-Part, Serial Number [**] entitled
[**], and
(D) any divisions, continuations and any foreign patent
application or equivalent corresponding thereto, and any
Letters patent or equivalent thereof issuing thereon or
reissue, reexamination or extension thereof.
(E) Continuation-in-part applications (CIPs) that are offered to
the other co-exclusive licensee will also be offered to
Alnylam for licensing in the Licensed Field of Use.
2.2 "Licensed Product" means any product or part in the Licensed Field of
Use, the manufacture, use, or sale of which:
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(A) is covered by a valid claim of an issued, unexpired Licensed
Patent directed to the Invention in the country in which it is
made, used or sold. A claim of an issued, unexpired Licensed
Patent is presumed to be valid unless it has been held to be
invalid or unenforceable by a final judgment of a court of
competent jurisdiction from which no appeal can be or is
taken; rendered unenforceable through disclaimer or otherwise;
donated to the public; or lost through an interference
proceeding; or
(B) is covered by any claim being prosecuted in a pending
application of Licensed Patents in the country in which it is
made, used or sold unless such claim has been pending in such
application or an earlier application of Licensed Patents for
greater than [**] years.
2.3 "Net Sales" means the gross commercialization revenue derived by
Alnylam and any sublicensee from Licensed Product, less the following
items but only as they actually pertain to the disposition of Licensed
Product by Alnylam and any sublicensee, are included in gross revenue,
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and are separately billed:
(A) import, export, excise and sales taxes, and custom duties;
(B) costs of insurance, packing, and transportation from the place of manufacture to the customer's premises or point of installation;
(C) costs of installation at the place of use; and
(D) credit for returns, allowances, or trades; and
(E) customary trade, quantity or cash discounts actually allowed or taken.
(F) Where Licensed Products are not sold separately, but are sold in combination with or as parts of other therapeutic products, hereinafter such combinations referred to as a "Combination Product" and the Licensed Product and each such other product being referred to as a "Component Product", the Net Sales price to be used for the purpose of calculating royalties payable in respect of Combination Products must be determined by multiplying the Net Sales price of the Combination Product by the percentage value of the Licensed Product comprising a Component Product contained in the Combination Product, such percentage value being determined by dividing the current market value of the Licensed Product comprising a Component Product by a sum of the separate current market values of each of the Component Products which are contained in the Combination Product. The current market value of each of the Component Products must be for a quantity comparable to that contained in the Combination Product and of the same class, purity and potency. When no current market value is available for a Component Product, a reasonable hypothetical market value for such Component Product based upon the allocation of the same proportions of costs, reasonable overhead and profits (all of which must be determined on the basis of generally accepted accounting principles) as are or should be allocated to similar Component Products and having an ascertainable market value.
2.4 "siRNA Molecule" means an agent that modulates expression of a target gene by an RNA interference mechanism.
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2.5 "Licensed Field of Use" means delivery of ex-vivo synthesized siRNA
Molecules for research, development and therapeutic uses (including a
diagnostic necessary for development, sale or reimbursement of a
therapeutic Licensed Product). The Licensed Field of Use specifically
excludes delivery of any system producing in vivo expressed siRNAs for
therapeutic use, including but not limited to episomal and integrated
vectors, and recombinant viruses.
2.6 "Licensed Territory" means worldwide.
2.7 "Co-Exclusive" means that, subject to Article 4, Stanford will only
grant one further license in the Licensed Territory in the Licensed
Field of Use.
2.8 "Affiliate" means any legal entity (such as a corporation, partnership,
or limited liability company) that directly, or indirectly through one
or more intermediaries, controls or is controlled by, or is under
common control with Company and that is bound by the terms and
conditions of this Agreement. For the purposes of this definition, the
term "control" means (i) beneficial ownership of at least fifty percent
(50%) of the voting securities of a corporation or other business
organization with voting securities or (ii) a fifty percent (50%) or
greater interest in the net assets or profits of a partnership or other
business organization without voting securities. For purposes of this
Agreement, the term Alnylam shall include its Affiliates, unless the
context indicates otherwise.
3 GRANT
3.1 GRANT. Stanford grants and Alnylam accepts a license in the Licensed
Field of Use to make, have made, use, have used, sell, have sold,
import and have imported Licensed Product in the Licensed Territory.
3.2 CO-EXCLUSIVITY. The license is Co-Exclusive, including the right to
sublicense pursuant to Article 13, in the Licensed Field of Use for a
term beginning on the Effective Date, and ending, on a
country-by-country basis, on the expiration of the last to expire of
Licensed Patents.
3.3 RETAINED RIGHTS. Stanford may practice the Invention and use the
Technology for its own bona fide research, including sponsored research
and collaborations. Stanford has the right to publish any information
included in Technology and Licensed Patent.
3.4 EXCLUSIVITY.
(A) If the other Co-Licensee discontinues licensing this Field of
Use, then the Field of Use will become exclusive for Alnylam.
(B) If the other Co-Licensee discontinues any other therapeutic
license under the Licensed Patents, Stanford shall so inform
Alnylam and Alnylam shall have the option to obtain an
exclusive, worldwide sublicensable license to such therapeutic
field. The terms of any such license shall be negotiated in
good faith by Stanford and Alnylam. This option may be
exercised by Alnylam by written notice to Stanford at any time
during a period of ninety (90) days after notification by
Stanford.
4 GOVERNMENT RIGHTS
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This Agreement is subject to all of the terms and conditions of Title 35 United States Code Sections 200 through 204, including an obligation that Licensed Product sold or produced in the United States be "manufactured substantially in the United States." Alnylam will take all reasonable action necessary on its part as licensee to enable Stanford to satisfy its obligations to the U.S. Government under Title 35. If Alnylam reasonably desires an exception to the government requirement of substantial manufacture in the United States then Stanford shall reasonably cooperate with Alnylam in obtaining such exception.
5 DILIGENCE
5.1 MILESTONES. As an inducement to Stanford to enter into this Agreement,
Alnylam will use all commercially reasonable efforts and diligence to
develop, manufacture, and sell or lease Licensed Product and to
diligently develop markets for the Licensed Product. In particular,
Alnylam will meet the milestones shown in Appendix A, which shall
satisfy Alnylam's diligence obligations. If Alnylam in good faith fails
to meet a milestone set forth in Appendix A, then Alnylam shall have a
[**] period of time to reestablish diligence towards its objectives,
and if Alnylam reestablishes diligence towards its objectives during
this [**] period, any prior lack of diligence will be deemed cured. If
Alnylam does not reestablish diligence towards its objectives during
this [**] period, Stanford may terminate this Agreement if Alnylam has
not met the milestones. Stanford may terminate this Agreement if
Alnylam or a sublicensee has not sold Licensed Product for any [**]
period after Alnylam's or a sublicensee's first commercial sale of
Licensed Product. Efforts by Alnylam's sublicensees or Affiliates shall
be considered efforts of Alnylam under this section.
5.2 PROGRESS REPORT. Alnylam acknowledges that diligent development of
Licensed Product is of utmost importance to Stanford. On or before
September 30 of each year until Alnylam markets a Licensed Product,
Alnylam will make a written annual report in confidence to Stanford
covering the preceding year ending June 30, regarding the progress of
Alnylam toward commercialization of Licensed Product. The report will
include, as a minimum, information (e.g., summary of work completed,
key scientific discoveries, summary of work in progress, current
schedule of anticipated events or milestones and market plans for
introduction of Licensed Product) sufficient to enable Stanford to
satisfy reporting requirements of the U.S. Government and for Stanford
to ascertain progress by Alnylam toward meeting the diligence
requirements of this Article 5.
6 ROYALTIES
6.1 ISSUE ROYALTY. Alnylam will pay to Stanford a noncreditable,
nonrefundable license issue royalty of $[**] on signing this Agreement.
6.2 MINIMUM ROYALTY. Beginning one year from the Effective Date, and each
anniversary thereafter, Alnylam will pay to Stanford a yearly royalty
of $[**]. Yearly royalty payments are nonrefundable, but they are
creditable against earned royalties to the extent provided in Section
6.4.
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6.3 EARNED ROYALTY. In addition, Alnylam will pay Stanford earned royalties
on Net Sales as follows:
(A) [**]% of Net Sales for a Licensed Product subject to the
following;
(B) Such royalty payments shall be reduced up to [**]% (from [**]%
of Net Sales down to [**]% of Net Sales) by the amount of
royalty paid to access additional intellectual property
necessary in order to sell Licensed Products ("Additional
Earned Royalties").
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(C) Such royalty payments shall be reduced as follows:
(1) [**]% if Additional Earned Royalties are [**]% or less.
(2) [**]% if Additional Earned Royalties are greater than
[**]% but less than [**]%.
(3) [**]% if Additional Earned Royalties are equal to or greater than [**]% but less than [**]%.
(4) [**]% if Additional Earned Royalties are equal to or greater than [**]% but less than [**]%.
(5) [**]% if Additional Earned Royalties are equal to or higher than [**]%.
(D) Only one royalty is due on each Licensed Product sold by Alnylam or its sublicensees regardless of whether its manufacture, use, importation or sale are or shall be covered by more than one patent or patent application included in Licensed Patents under this Agreement, and no further royalties will be due for use of such Licensed Product by Alnylam or its sublicensee's customers.
6.4 CREDITABLE PAYMENTS. Creditable payments under this Agreement will be an offset to Alnylam against each earned royalty payment which Alnylam would be required to pay under Section 6.3 until the entire credit is exhausted.
6.5 MILESTONE PAYMENTS.
(A) For the first Licensed Product, Alnylam will make the following payments for the filing of an IND, initiation of Phase II trial, initiation of Phase III trial, and approval of New Drug Application or equivalent in the U.S. ("Milestone Payments"):
(1) $[**] for filing of the first IND.
(2) $[**] for initiation of the first Phase II trial.
(3) $[**] for initiation of the first Phase III trial.
(4) $[**] for approval of the first New Drug Application or equivalent regulatory approval in the U.S.
(B) For the second Licensed Product, Alnylam will make the following Milestone Payments:
(1) $[**] for filing of the first IND.
(2) $[**] for initiation of the first Phase II trial.
(3) $[**] for initiation of the first Phase III trial.
(4) $[**] for approval of the first New Drug Application or equivalent regulatory approval in the U.S.
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(C) For the third and every subsequent Licensed Product, Alnylam will make the following Milestone Payments:
(1) $[**] for filing of the first IND.
(2) $[**] for initiation of the first Phase II trial.
(3) $[**] for initiation of the first Phase III trial.
(4) $[**] for approval of the first New Drug Application or equivalent regulatory approval in the U.S.
(D) Notwithstanding the above, at the time that Stanford receives a Milestone Payment from Alnylam on behalf of a sublicensee under Section 13.6, the corresponding Milestone Payment under this Section 6.5 will not be due.
6.6 OBLIGATION TO PAY ROYALTIES. If this Agreement is not terminated in accordance with other provisions, Alnylam will be obligated to pay royalties on all Licensed Product that is either sold or produced under the license granted in Article 3, whether or not the Licensed Product is produced before the Effective Date of this Agreement or sold after the Licensed Patent has expired.
6.7 CURRENCY. The royalty on sales in currencies other than U.S. Dollars will be calculated using the appropriate foreign exchange rate for the currency quoted by the Bank of America (San Francisco) foreign exchange desk, on the close of business on the last banking day of each calendar quarter. Royalty payments to Stanford will be in U.S. Dollars. All non-U.S. taxes related to royalty payments will be paid by Alnylam and are not deductible from the payments due Stanford. Stanford shall assist Alnylam as reasonably requested by Alnylam and at Alnylam's expense, in recovering such taxes to the extent possible under applicable tax laws and treaties.
6.8 PATENT COSTS. Within thirty days after receiving a statement from Stanford during the Co-Exclusive period, Alnylam will reimburse Stanford:
(A) [**] of the Licensed Patent patenting expenses incurred by Stanford before the Effective Date; and
(B) $[**] per year for Licensed Patent patenting expenses incurred by Stanford after the Effective Date.
(C) If the Field of Use covered in this license becomes Exclusive for Alnylam, Stanford and Alnylam will negotiate coverage of patent expenses in good faith.
6.9 PATENT PROSECUTION.
(A) Stanford will be responsible for the filing, prosecution and maintenance of the Licensed Patents. Alnylam shall be kept informed of and shall receive copies of all documentation and substantive actions pertaining to the filing, prosecution and maintenance of Licensed Patents. Alnylam shall have reasonable opportunities to participate in decision making and Stanford will use diligent efforts to incorporate Alnylam's reasonable suggestion.
(B) Throughout the term of this agreement, Alnylam will retain rights to any claims that have support in the Licensed Patents (defined in Section 2.1), whether or not they are in a CIP.
(C) If Stanford elects not to continue to seek or maintain patent prosecution on any Licensed Patent in any country during the co-exclusive term of the license despite
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Alnylam's willingness to pay its share of the prosecution
costs, Alnylam shall have the right, at its expense, to
procure, maintain and enforce in any country such Licensed
Patent.
6.10 MOST FAVORED LICENSEE Stanford warrants and represents that it has not
granted a license in the Field of Use to another party and shall not do
so in the future on terms that are more favorable than those hereby
granted to Alnylam.
7 ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
7.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the first
sale of a Licensed Product, Alnylam will make written reports (even if
there are no sales) and earned royalty payments to Stanford within
thirty days after the end of each calendar quarter. This report will be
in the form of the report of Appendix B and will state the number,
description, and aggregate Net Sales of Licensed Product during the
completed calendar quarter, and resulting calculation pursuant to
Section 6.3 of earned royalty payment due Stanford for the completed
calendar quarter. With each report, Alnylam will include payment due
Stanford of royalties for the completed calendar quarter.
7.2 TERMINATION REPORT. Alnylam will make a written report to Stanford
within ninety days after the license expires under Section 3.2. Alnylam
will continue to make reports after the license has expired, until all
Licensed Product produced under the license have been sold or
destroyed. Concurrent with the submittal of each post-termination
report, Alnylam will pay Stanford all applicable royalties.
7.3 ACCOUNTING. Alnylam will keep and maintain records for a period of
three years showing the manufacture, sale, use, and other disposition
of products sold or otherwise disposed of under the license. Records
will include general-ledger records showing cash receipts and expenses,
and records that include production records, customers, serial numbers,
and related information in sufficient detail to enable Alnylam to
determine the royalties payable under this Agreement.
7.4 AUDIT BY STANFORD. Alnylam will permit an independent certified public
accountant selected by Stanford and acceptable to Alnylam to examine
Alnylam's books and records from time to time (but no more than one
time a year) to the extent necessary to verify reports provided for in
Sections 7.1 and 7.2. Stanford will pay for the cost of such audit,
unless the results of the audit reveal an underreporting of royalties
due Stanford of five percent or more, in which case, Alnylam will pay
the audit costs.
8 NEGATION OF WARRANTIES
8.1 To the best of Stanford's OTL knowledge, Stanford is the sole owner of
Licensed Patent and has the right to enter into this Agreement and to
grant the rights and licenses set forth herein.
8.2 NEGATION OF WARRANTIES. Nothing in this Agreement is construed as:
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(A) Stanford's warranty or representation as to the validity or
scope of any Licensed Patent;
(B) A warranty or representation that anything made, used, sold,
or otherwise disposed of under any license granted in this
Agreement is or will be free from infringement of patents,
copyrights, and other rights of third parties;
(C) An obligation to bring suit against third parties for
infringement, except as described in Article 12;
(D) Granting by implication, estoppel, or otherwise any licenses
or rights under patents or other rights of Stanford or other
persons other than Licensed Patent, regardless of whether the
patents or other rights are dominant or subordinate to any
Licensed Patent; or
(E) An obligation to furnish any technology or technological
information.
8.3 NO WARRANTIES. Except as expressly set forth in this Agreement,
Stanford makes no representations and extends no warranties of any
kind, either express or implied. There are no express or implied
warranties of merchantability or fitness for a particular purpose, or
that Licensed Product will not infringe any patent, copyright,
trademark, or other rights, or any other express or implied warranties.
8.4 SPECIFIC EXCLUSION. Nothing in this Agreement grants Alnylam any
express or implied license or right under or to U.S. Patent 4,656,134
entitled "Amplification of Eucaryotic Genes" or any patent application
corresponding thereto.
9 INDEMNITY
9.1 INDEMNIFICATION. Alnylam will indemnify, hold harmless, and defend
Stanford and Stanford Hospitals and Clinics, and their respective
trustees, officers, employees, students, and agents against all claims
for death, illness, personal injury, property damage, and improper
business practices arising out of the manufacture, use, sale, or other
disposition of Invention, Licensed Patent, Licensed Product, by Alnylam
or any sublicensee, or their customers except to the extent such claims
are due to the gross negligence or willful misconduct of Stanford.
Stanford agreed to promptly notify Alnylam in writing of any such claim
and Alnylam shall manage and control, at its own expense, the defense
of such claim and its settlement. Alnylam agrees not to settle any such
claim against Stanford without Stanford's written consent where such
settlement would include any admission of liability on the part of
Stanford, where the settlement would impose any restriction on the
conduct by Stanford of any of its activities, or where the settlement
would not include an unconditional release of Stanford from all
liability for claims that are the subject matter of such claim.
9.2 NO LIABILITY. Subject to Section 9.1, neither party will be liable to
each other for any loss profit, expectation, punitive or other
indirect, special, consequential, or other damages whatsoever, in
connection with any claim arising out of or related to this Agreement
whether grounded in tort (including negligence), strict liability,
contract, or otherwise.
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9.3 WORKERS' COMPENSATION. Alnylam will at all times comply, through
insurance or self-insurance, with all statutory workers' compensation
and employers' liability requirements covering all employees with
respect to activities performed under this Agreement.
9.4 INSURANCE. Alnylam will maintain, during the term of this Agreement,
Comprehensive General Liability Insurance, including Product Liability
Insurance prior to commercialization, with a reputable and financially
secure insurance carrier to cover the activities of Alnylam and its
sublicensees. Upon initiation of human clinical trials of Licensed
Product, such insurance will provide minimum limits of liability of
Five Million Dollars and will include Stanford and Stanford Hospitals
and Clinics, and their respective trustees, directors, officers,
employees, students, and agents as additional insureds. Insurance will
be written to cover claims incurred, discovered, manifested, or made
during or after the expiration of this Agreement and must be placed
with carriers with ratings of at least A- as rated by A.M. Best.
Alnylam will furnish a Certificate of Insurance evidencing primary
coverage and additional insured requirements and requiring thirty (30)
days prior written notice of cancellation or material change to
Stanford. Alnylam will advise Stanford, in writing, that it maintains
excess liability coverage (following form) over primary insurance for
at least the minimum limits set forth above. All insurance of Alnylam
will be primary coverage; insurance of Stanford and Stanford Hospitals
and Clinics will be excess and noncontributory.
10 MARKING
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Before the issuance of Licensed Patents, Alnylam will mark Licensed Product (or their containers or labels) made, sold, or otherwise disposed of by it under the license granted in this Agreement with the words "Patent Pending," and following the issuance of one or more patents, with the numbers of the Licensed Patent.
11 STANFORD NAMES AND MARKS
Alnylam will not identify Stanford in any promotional advertising or other promotional materials to be disseminated to the public or to use the name of any Stanford faculty member, employee, or student, or any trademark, service mark, trade name, or symbol of Stanford or Stanford Hospitals and Clinics, or any that is associated with any of them, without Stanford's prior written consent, except as may be required by law. Any use of Stanford's name will be limited to statements of fact, e.g., that Stanford has co-exclusively licensed Licensed Patents to Alnylam, and will not imply endorsement of Alnylam's products or services.
12 INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS
12.1 INFRINGEMENT ACTION.
(A) The parties will promptly inform each other of any suspected infringement of any Licensed Patent by a third party.
(B) Stanford, Licensee and the other Co-Exclusive licensee will meet to discuss the matter during the Co-Exclusive period of this Agreement.
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(C) If the Field-of-Use becomes Exclusive for Licensee, Stanford and Licensee will meet to discuss the matter during the Exclusive period of this Agreement.
(D) If Stanford does not choose to institute suit against said third party within sixty days of notification, then the suit may be brought in both Licensee's and the other Co-Exclusive licensee's names, and Stanford's name if necessary and the out-of-pocket costs thereof shall be borne equally by Licensee and the other Co-Exclusive licensee and any recovery or settlement shall be shared equally between Licensee and the other Co-Exclusive licensee. In such situation, Licensee and the other Co-Exclusive licensee shall agree to the manner in which they exercise control over such action and if either party desires to also be represented by separate counsel of its own selection, the fees for such counsel shall be paid by such party.
(E) If both, Stanford and the other Co-Exclusive licensee, or Stanford if there is no other Co-Exclusive Licensee, choose not to institute suit against said third party within sixty days of notification, then Licensee shall have the right to institute suit in its own name or if necessary, in Stanford's name, to enjoin such infringement. Licensee shall bear the entire cost of such litigation and shall be entitled to retain the entire amount of any recovery or settlement. However, any recovery in excess of litigation/settlement costs will be considered Net Sales and Licensee will pay Stanford royalties as indicated in Article 6 hereof. Stanford shall provide reasonable assistance to Licensee in the prosecution of any such suit brought by Licensee, at Licensee's expense.
13 SUBLICENSING
13.1 PERMITTED SUBLICENSING FOR LICENSED CO-EXCLUSIVE FIELD OF USE. Alnylam
may grant sublicenses in the Co-exclusive Licensed Field of Use during
the Co-Exclusive period:
(A) only in conjunction with intellectual property under Alnylam's
control; and
(B) only if Alnylam is developing or selling Licensed Products in
the Co-Exclusive Licensed Field of Use.
13.2 REQUIRED SUBLICENSING FOR LICENSED CO-EXCLUSIVE FIELD OF USE.
(A) If Alnylam or its sublicensee(s) is unable or unwilling to
serve or develop a potential market or market territory for
which there is a willing sublicensee, Alnylam will, at
Stanford's request, negotiate in good faith a sublicense under
the Licensed Patents, provided that the same request has been
made of the other Co-Exclusive licensee.
(B) Bona fide business concerns of Alnylam will be considered in
any good faith negotiations for a sublicense under this
Agreement and Alnylam shall not be required to
license/sublicense any other intellectual property to such
sublicensee.
(C) If the other Co-Exclusive licensee itself or through its
sublicensees is already developing a product in the market or
market territory for which there is a willing sublicensee,
Alnylam will not be required to sublicense to such party.
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(D) In case that any other issue arises in the context of Required
Sublicensing, Stanford will discuss and try to resolve such
issue with Alnylam in good faith.
13.3 SUBLICENSE REQUIREMENTS. Any sublicense granted by Alnylam under this
Agreement will be subject and subordinate to terms and conditions of
this Agreement, except:
(A) Sublicense terms and conditions will reflect that any
sublicensee will not further sublicense, with the exception
that sublicensee may further sublicense rights under Licensed
Patents only as needed or implied in the course of
distribution or performance of service as required for the
sale to an end user of Licensed Products; and
(B) The earned royalty rate specified in the sublicense may be at
different rates than the rates in this Agreement.
13.4 SUBLICENSES REVERT TO STANFORD. Any sublicense will expressly include
the provisions of Articles 7, 8, and 9 for the benefit of Stanford. If
a sublicensee desires that its sublicense survive the termination of
this agreement, Stanford agrees that the sublicense will revert to
Stanford subject to the transfer of all obligations, including the
payment of royalties specified in the sublicense, to Stanford or its
designee, if this Agreement is terminated.
13.5 COPY OF SUBLICENSES. Alnylam will provide Stanford in confidence a copy
of all relevant portions of any sublicenses granted pursuant to this
Article 13.
13.6 SHARING OF SUBLICENSING INCOME. In addition to the earned royalties
defined in Article 6, Alnylam will pay Stanford [**] percent ([**]%) of
the amount received by Alnylam, that is specifically attributable to
the Licensed Patents, from a sublicensee in
(A) up-front license fees, and
(B) clinical Milestone Payments as defined in Article 6.5.
13.7 ROYALTY-FREE SUBLICENSES. Alnylam may grant royalty-free or noncash
sublicenses or cross-licenses if Alnylam pays all royalties due
Stanford from sublicensee's Net Sales.
14 TERMINATION
14.1 TERMINATION BY ALNYLAM - Alnylam may terminate this Agreement by giving
Stanford notice in writing at least thirty days in advance of the
effective date of termination selected by Alnylam.
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14.2 TERMINATION BY STANFORD - Stanford may terminate this Agreement if:
(A) Alnylam is:
(1) delinquent on any royalty payment or report;
(2) not diligently developing and commercializing Licensed Product in accordance with Article 5 hereof;
(3) in breach of any material provision; or
(4) provides any false report; and
(B) Alnylam fails to remedy the breach within sixty days after written notice by Stanford.
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14.3 SURVIVING PROVISIONS - Surviving any termination or expiration are:
(A) Alnylam's obligation to pay royalties accrued or accruable based on Licensed Product made, used or sold during the term of this Agreement;
(B) Any cause of action or claim of Alnylam or Stanford, accrued or to accrue, because of any breach or default by the other party; and
(C) The provisions of Articles 6, 7, 8, and 9, 18.8and any other provisions that by their nature are intended to survive.
15 ASSIGNMENT
15.1 ASSIGNMENT BY ALNYLAM - Alnylam may assign this Agreement to an
Affiliate or, subject to Section 15.2 as part of:
(A) A sale or other transfer of Alnylam's entire business; or
(B) Sale or other transfer of that part of Alnylam's business to
which the license granted hereby relates.
15.2 CONDITIONS OF ASSIGNMENT - Prior to any assignment,
(A) Alnylam must give Stanford written notice of the assignment,
including the new assignee's contact information and;
(B) The new assignee must agree in writing to Stanford to be bound
by this Agreement.
(C) If the new assignee is a pharmaceutical or biotechnology
company having aggregate annual sales revenues of at least 3
times higher than the aggregate annual sales revenues of
Alnylam, Stanford must have received a $40,000 assignment fee.
15.3 AFTER THE ASSIGNMENT - Upon assignment of this Agreement, Alnylam will
be released of liability under this Agreement and the term "Alnylam" as
used in this Agreement will mean the new assignee.
16 ARBITRATION
16.1 DISPUTE RESOLUTION BY ARBITRATION. Any controversy arising under or
related to this Agreement, and any disputed claim by either party
against the other under this Agreement excluding any dispute relating
to patent validity or infringement arising under this Agreement, will
be settled by arbitration in accordance with the Licensing Agreement
Arbitration Rules of the American Arbitration Association.
16.2 REQUEST FOR ARBITRATION. Either party may request arbitration. Stanford
and Alnylam will mutually agree in writing on a third party arbitrator
within thirty days of the arbitration request. The arbitrator's
decision will be final and nonappealable and may be entered in any
court having jurisdiction.
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16.3 DISCOVERY. The parties will be entitled to discovery as if the
arbitration were a civil suit in the California Superior Court. The
arbitrator may limit the scope, time, and issues involved in discovery.
16.4 PLACE OF ARBITRATION. The parties will mutually agree in writing to a
place where arbitration will be held.
17 NOTICES
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All notices under this Agreement will be sent by first class mail, registered or certified with return receipt requested, by reputable overnight courier or delivered personally and shall be deemed to have been fully given upon receipt:
All general notices to Alnylam will be sent to:
John Maraganore, Ph.D.
President and Chief Executive Officer
Alnylam Pharmaceuticals, Inc.
790 Memorial Drive, Suite 202
Cambridge, MA 02139
All financial invoices to Alnylam (i.e., accounting contact) will be sent in writing to:
Mary Trueblood Controller Alnylam Pharmaceuticals, Inc. 790 Memorial Drive, Suite 202 Cambridge, MA 02139
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All progress report invoices to Alnylam (i.e., technical contact) will be sent in writing to:
Nagesh Mahanthappa, Ph.D., M.BA.
Director, Corporate Development
Alnylam Pharmaceuticals, Inc.
790 Memorial Drive, Suite 202
Cambridge, MA 02139
All general notices to Stanford will be e-mailed or mailed to:
Office of Technology Licensing 900 Welch Road, Suite 350 Palo Alto, CA 94304-1080 info@otlmail.Stanford.edu
All payments to Stanford will be mailed to:
Stanford University Office of Technology Licensing Department #44439 P.O. Box 44000 San Francisco, CA 94144-4439
All progress reports to Stanford will be e-mailed or mailed to:
Office of Technology Licensing 1705 El Camino Real Palo Alto, CA 94306-1106 info@otlmail.Stanford.edu
Either party may change its address with written notice to the other party.
18 MISCELLANEOUS
18.1 WAIVER AND AMENDMENT. This Agreement may be amended, supplemented or
otherwise modified only by means of a written instrument signed by both
parties. None of the terms of this Agreement can be waived except by
the written consent of the party waiving compliance.
18.2 CHOICE OF LAW. This Agreement will be governed by the laws of the State
of California applicable to agreements negotiated, executed, and
performed within California.
18.3 HEADINGS. The headings in this Agreement are for convenience of
reference only and do not constitute a part of it. The headings do not
affect its interpretation.
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18.4 FORCE MAJEURE. Neither party will be responsible for delays resulting
from causes beyond the reasonable control of such party, including
without limitation fire, explosion, flood, war, strike, or riot,
provided that the nonperforming party uses commercially reasonable
efforts to avoid or remove such causes of nonperformance and continues
performance under this Agreement with reasonable dispatch whenever such
causes are removed.
18.5 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective permitted successors and
assigns.
18.6 SEVERABILITY In the event that any provision of this Agreement shall be
held invalid or unenforceable for any reason, such invalidity or
unenforceability shall not affect any other provision of this
Agreement, and the parties shall negotiate in good faith to modify the
Agreement to preserve (to the extent possible) their original intent.
18.7 ENTIRE AGREEMENT This Agreement constitutes the entire agreement
between the parties with respect to its subject matter and supercedes
all prior agreements or understandings between the parties relating to
its subject matter.
18.8 CONFIDENTIALITY. Stanford agrees that diligent efforts shall be used to
maintain the confidentiality of reports or documents received from
Alnylam or its Affiliate or sublicensees pursuant to this Agreement.
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The parties execute this Agreement in duplicate originals by their duly authorized officers or representatives.
THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY
/s/ Katharine Ku
Signature __________________________________
Katharine Ku
Name ____________________________________
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Director, Technology Licensing
Title ____________________________________
Sept. 17, 2003
Date ____________________________________
LICENSEE
Signature /s/John Maraganore
_________________________________
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Name John Maraganore
Title President and CEO
September 19, 2003
Date ____________________________________
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APPENDIX A: MILESTONES
1. By the end of the year [**], Alnylam will [**].
2. By the end of the year [**], Alnylam will [**].
3. By the end of the year [**], Alnylam will [**].
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EXHIBIT 10.22
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXECUTION COPY
RESEARCH COLLABORATION AND LICENSE AGREEMENT
BY AND AMONG
MERCK & CO., INC.,
ALNYLAM PHARMACEUTICALS, INC.,
AND
ALNYLAM HOLDING CO.
RESEARCH COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT effective as of September 8, 2003 (the "EFFECTIVE DATE"), by and among MERCK & CO., INC., a corporation organized and existing under the laws of New Jersey ("MERCK") on the one hand, and ALNYLAM Pharmaceuticals, Inc., a corporation organized under the laws of Delaware and ALNYLAM HOLDING CO. ("ALNYLAM HOLDING"), a corporation organized and existing under the laws of Delaware (collectively, "ALNYLAM") on the other hand.
RECITALS:
WHEREAS, MERCK and ALNYLAM desire to enter into a research collaboration to develop technology useful for in vitro and/or in vivo target identification and/or target validation using RNAi and to develop RNAi therapeutic products upon the terms and conditions set forth herein;
WHEREAS, ALNYLAM has developed ALNYLAM RNAi Technology (as hereinafter defined) and has rights to ALNYLAM RNAi Patent Rights (as hereinafter defined);
WHEREAS, MERCK desires to obtain a license under the ALNYLAM RNAi Patent Rights and the ALNYLAM RNAi Technology upon the terms and conditions set forth herein and ALNYLAM desires to grant such a license;
WHEREAS, MERCK has developed MERCK RNAi Technology (as hereinafter defined) and has rights to MERCK RNAi Patent Rights (as hereinafter defined);
WHEREAS, ALNYLAM desires to obtain a license under the MERCK RNAi Patent Rights and MERCK RNAi Technology upon the terms and conditions set forth herein and MERCK desires to grant such a license; and
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the Parties hereby agree as follows:
1. DEFINITIONS
Unless specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below:
1.1 "AAA" has the meaning set forth in Section 9.6.1 of this Agreement.
1.2 "ABANDONED MERCK RNAi NOVEL TARGET" has the meaning set forth in
Section 2.14.2 of this Agreement.
1.3 "AFFILIATE" means (except as provided for in Section 3.1.8) (i) any corporation or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by MERCK or ALNYLAM, as the case may be; (ii) any corporation or business entity, which, directly or indirectly, owns, controls or holds fifty percent (50%) (or the maximum ownership interest permitted by law) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of MERCK or ALNYLAM, as the case may be, or (iii) any corporation or business entity, fifty percent (50%) or more of the securities or other ownership interests representing the equity of which is directly or indirectly, owned, controlled or held by the same corporation, business entity or security holders, or holders of ownership interests who own, control or hold fifty percent (50%) or more of the securities or other ownership interests representing the equity or the voting stock of MERCK or ALNYLAM, as the case may be.
1.4 "ALNYLAM" has the meaning set forth in the preamble to this Agreement.
1.5 "ALNYLAM-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" has the meaning set forth in Section 2.7(d).
1.6 "ALNYLAM COLLABORATION INVENTIONS" means ALNYLAM Technology
Collaboration Inventions, ALNYLAM Therapeutic Collaboration Inventions,
ALNYLAM's interest in Joint Technology Collaboration Inventions, and
ALNYLAM's interest in Joint Therapeutic Collaboration Inventions,
collectively.
1.7 "ALNYLAM PRODUCT AGREEMENT" has the meaning set forth in Section 3.1.5(c).
1.8 "ALNYLAM RNAi PATENT RIGHTS" means any and all patents and patent applications in the Territory (which for the purposes of this Agreement shall be deemed to include certificates of invention and applications for certificates of invention and to exclude Joint Collaboration Patent Rights) which, as of the Effective Date and/or during the Collaboration Term, are Controlled by ALNYLAM or its Affiliates and which are necessary or useful to MERCK in connection with the Technology Collaboration and/or for in vitro and/or in vivo target identification and/or target validation ("ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION RNAi PATENT RIGHTS") and/or in the research, development, manufacture, marketing, use, import or sale of RNAi Therapeutic Products within the Therapeutic Collaboration ("ALNYLAM THERAPEUTIC RNAi PATENT RIGHTS"), including, but not limited to, those listed on Schedule 1.8. "ALNYLAM RNAi Patent Rights" include but are not limited to those which: (i) claim, cover or relate to RNAi Therapeutic Products including but not limited to improvements; or (ii) claim, cover or relate to ALNYLAM Collaboration Inventions; or (iii) are divisions, continuations, any portions of continuations-in-part that are themselves within the definition of ALNYLAM RNAi Patent Rights, reissues, renewals, extensions, supplementary protection certificates, and the like of any covered patents and patent applications and foreign equivalents thereof.
1.9 "ALNYLAM RNAi TECHNOLOGY" means any and all technology, information,
material, and know-how, including but not limited to inventions
(including without limitation ALNYLAM Collaboration Inventions and
ALNYLAM's rights in Joint Collaboration Inventions), discoveries,
improvements, processes, methods, protocols, formulas, data, and trade
secrets patentable or otherwise, which: (a) as of the Effective Date
and/or during the Collaboration Term, is in the Control of ALNYLAM or
its Affiliates, including without limitation, all technology,
information, and material, including inventions, discoveries and
know-how, patentable or otherwise, of ALNYLAM's scientific advisors and
consultants which are Controlled by ALNYLAM or its Affiliates, and (b)
is necessary or useful to MERCK for the Collaboration and/or for in
vitro and/or in vivo target identification and/or target validation
and/or for the research, development, manufacturing, marketing, use,
import or sale of Therapeutic Collaboration Products within the
Therapeutic Collaboration in the Territory including, but not limited
to, knowledge related to (i) the RNAi pathway and mechanism of action
in mammalian cells, (ii) informatics approaches to optimal siRNA design
for targeting specific genes and minimizing off-target effects, (iii)
optimal RNA chemistry for siRNA in vivo stability and delivery, (iv)
bio-analytical methods for measurement of pharmacokinetics and
biodistribution of siRNAs, and (v) RNAi delivery methods.
1.10 "ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION RNAi PATENT
RIGHTS" has the meaning set forth in Section 1.8 of this Agreement.
1.11 "ALNYLAM TECHNOLOGY COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Technology Collaboration and developed or invented
solely by employees of ALNYLAM or its Affiliates or other persons not
employed by MERCK acting on behalf of ALNYLAM during the Technology
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Technology Collaboration Term.
1.12 "ALNYLAM THERAPEUTIC COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Therapeutic Collaboration and developed or invented
solely by employees of ALNYLAM or its Affiliates or other persons not
employed by MERCK acting on behalf of ALNYLAM during the Therapeutic
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Therapeutic Collaboration Term,
including but not limited to ALNYLAM-Assigned Therapeutic Collaboration
Inventions (as defined in Section 2.7(d)).
1.13 "ALNYLAM THERAPEUTIC COLLABORATION IP" means any and all technology,
information, material, know-how, including, but not limited to
Inventions (including ALNYLAM Therapeutic Collaboration Inventions and
ALNYLAM's rights in Joint Therapeutic Collaboration Inventions),
discoveries, improvements, processes, methods, protocols, formulas,
data, and trade secrets, patentable or otherwise, patents and patent
applications, which: (a) are Controlled by ALNYLAM or its Affiliates as
of the Effective Date or during the Collaboration Term, and (b) are
necessary or useful to MERCK in
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connection with the Therapeutic Collaboration and/or in the research,
development, manufacture, marketing, use, import or sale of Therapeutic
Collaboration Products.
1.14 "ALNYLAM THERAPEUTIC RNAi PATENT RIGHTS" has the meaning set forth in
Section 1.8 of this Agreement.
1.15 "CALENDAR QUARTER" means the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30
and December 31.
1.16 "CALENDAR YEAR" means each successive period of twelve (12) months
commencing on January 1 and ending on December 31.
1.17 "CHANGE OF CONTROL" has the meaning set forth in Section 9.2 of this
Agreement.
1.18 "CODE" has the meaning set forth in Section 8.2.2(c) of this Agreement.
1.19 "CO-EXCLUSIVE" means with respect to any license of rights hereunder,
the grant of exclusive rights, but for the retention by the granting
Party of the same rights for itself and/or its Affiliates.
1.20 "COLLABORATION" means the Technology Collaboration and the Therapeutic
Collaboration, collectively.
1.21 "COLLABORATION TERM" means the duration of the Collaboration, as
described more fully in Section 2.8.
1.22 "COMBINATION PRODUCT" means an RNAi Therapeutic Product combined with
any other clinically active therapeutic ingredient. All references to
RNAi Therapeutic Product in this Agreement shall be deemed to include
Combination Product, to the extent applicable.
1.23 "COMPETING RNAi PRODUCT" has the meaning set forth in Section 7.3(a) of
this Agreement.
1.24 "COMPLETE MERCK NON-DRUGGABLE TARGET INFORMATION" has the meaning set
forth in Section 2.14.2(2) of this Agreement.
1.25 "CONTROL", "CONTROLS" OR "CONTROLLED BY" means, with respect to any
item of or right under ALNYLAM RNAi Patent Rights, MERCK RNAi Patent
Rights, ALNYLAM RNAi Technology, MERCK RNAi Technology, ALNYLAM
Therapeutic Collaboration IP, or MERCK RNAi Novel Target IP, the
possession of (whether by ownership or license, other than pursuant to
this Agreement) the ability by a Party to grant access to, or a license
or sublicense of, such items or right as provided for herein without
violating the terms of any agreement or other arrangement with any
Third Party existing at the time such Party would be required hereunder
to grant the other Party such access or license or sublicense.
1.26 "DISPUTE" has the meaning set forth in Section 9.6.1 of this Agreement.
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1.27 "EFFECTIVE DATE" has the meaning set forth in the preamble of this
Agreement.
1.28 "EXCLUDED CLAIM" has the meaning set forth in Section 9.6.1 of this
Agreement.
1.29 "EXTENDED THERAPEUTIC COLLABORATION TERM" has the meaning set forth in
Section 1.87 of this Agreement.
1.30 "FILING" of an NDA means the acceptance by a Regulatory Authority of an
NDA for filing.
1.31 "FIRST COMMERCIAL SALE" means, with respect to any Therapeutic
Collaboration Product, the first sale for end use or consumption of
such Therapeutic Collaboration Product in a country after all required
approvals, including Marketing Authorization, have been granted by the
Regulatory Authority of such country.
1.32 "FULL-TIME EQUIVALENT" or "FTE" means the equivalent of a full-time
scientist's work time over a twelve-month period (including normal
vacations, sick days and holidays). The portion of an FTE year devoted
by a scientist to the Technology Collaboration shall be determined by
dividing the number of full days (including full days consisting of
multiple partial days) during any twelve-month period devoted by such
scientist to the Technology Collaboration by the total number of
working days (excluding vacations, sick days and holidays) during such
twelve-month period.
1.33 "HUMAN MATERIALS" has the meaning set forth in Section 2.12 of this
Agreement.
1.34 "IND" means an Investigational New Drug application, Clinical Study
Application, Clinical Trial Exemption, or similar application or
submission for approval to conduct human clinical investigations filed
with or submitted to a Regulatory Authority in conformance with the
requirements of such Regulatory Authority.
1.35 "IND-ENABLING GLP TOXICOLOGY STUDIES" means genotoxicity, acute
toxicology, safety pharmacology, and sub-chronic toxicology studies in
species that satisfy applicable regulatory requirements using
applicable good laboratory practices which meet the standard necessary
for submission as part of an IND filing with a Regulatory Authority.
1.36 "INFORMATION" means any and all information and data, including without
limitation all ALNYLAM RNAi Technology and MERCK RNAi Technology, and
all other scientific, pre-clinical, clinical, regulatory,
manufacturing, marketing, financial and commercial information or data,
whether communicated in writing or orally or by any other method, which
is provided by one Party to the other Party in connection with this
Agreement.
1.37 "INITIAL MERCK NON-DRUGGABLE TARGET INFORMATION" has the meaning set
forth in Section 2.14.2(1) of this Agreement.
1.38 "INITIAL OPT-IN NEGOTIATION PERIOD" has the meaning set forth in
Section 2.14.3.3 of this Agreement.
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1.39 "INVENTION" means any process, method, composition of matter, article
of manufacture, discovery or finding that is conceived and/or reduced
to practice in the course of the Collaboration.
1.40 "JOINT COLLABORATION INVENTIONS" means Joint Technology Collaboration
Inventions and Joint Therapeutic Collaboration Inventions,
collectively.
1.41 "JOINT COLLABORATION PATENT RIGHTS" means any and all patent
applications and patents in the Territory (which for the purposes of
this Agreement shall be deemed to include certificates of invention and
applications for certificates of invention) which claim, cover or
relate to any Joint Collaboration Inventions. "Joint Collaboration
Patent Rights" include, but are not limited to, those patent
applications and patents which claim, cover or relate to Joint
Technology Collaboration Inventions or Joint Therapeutic Collaboration
Inventions; or are divisions, continuations, any portion of
continuations-in-part that are themselves within the definition of
Joint Collaboration Patent Rights, reissues, renewals, extensions,
supplementary protection certificates, and the like of any covered
patents and patent applications and foreign equivalents thereof.
1.42 "JOINT STEERING COMMITTEE" or "JSC" means the joint steering committee
as more fully described in Section 2.4.
1.43 "JOINT TECHNOLOGY COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Technology Collaboration and developed or invented
jointly by employees of MERCK and ALNYLAM or their Affiliates or others
acting on behalf of MERCK and ALNYLAM during the Technology
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Technology Collaboration Term.
1.44 "JOINT THERAPEUTIC COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Therapeutic Collaboration and developed or invented
jointly by employees of MERCK and ALNYLAM or their Affiliates or others
acting on behalf of MERCK and ALNYLAM during the Therapeutic
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Therapeutic Collaboration Term.
1.45 "LIMMER PATENTS" means those patent rights set forth on Schedule 1.45
of this Agreement.
1.46 "MARKETING AUTHORIZATION" means any and all approvals (including
without limitation all applicable pricing and governmental
reimbursement approvals) necessary to receive permission from the
relevant Regulatory Authority to market and sell an RNAi Therapeutic
Product in any country.
1.47 "MATERIALS" has the meaning set forth in Section 2.10 of this
Agreement.
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1.48 "MERCK-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" has the meaning
set forth in Section 2.7(d).
1.49 "MERCK BROAD RNAi PATENT RIGHTS" means any and all patent applications
and patents in the Territory (which for the purposes of this Agreement
shall be deemed to include certificates of invention and applications
for certificates of invention and to exclude Joint Collaboration Patent
Rights), which, as of the Effective Date and/or during the
Collaboration Term, are Controlled by MERCK or Rosetta Inpharmatics LLC
("ROSETTA") or their wholly-owned subsidiaries and which are necessary
or useful to ALNYLAM for the Technology Collaboration and/or for in
vitro and/or in vivo target identification and/or target validation.
MERCK Broad RNAi Patent Rights include but are not limited to those
which: (i) claim, cover or relate to MERCK Technology Collaboration
Inventions; or (ii) are divisions, continuations, any portions of
continuations-in-part that are themselves within the definition of
MERCK Broad RNAi Patent Rights, reissues, renewals, extensions,
supplementary protection certificates, and the like of any covered
patents and patent applications and foreign equivalents thereof. "MERCK
Broad RNAi Patent Rights" shall include, without limitation, those
patents and patent applications set forth in Schedule 1.49. The term
"MERCK Broad RNAi Patent Rights" does not include any patents or patent
applications relating to MERCK Non-Druggable Targets, including but not
limited to patents or patent applications relating to MERCK RNAi Novel
Target IP.
1.50 "MERCK BROAD RNAi TECHNOLOGY" means any and all technology,
information, material, and know-how, including, but not limited to
inventions (including MERCK Technology Collaboration Inventions and
MERCK's rights in Joint Technology Collaboration Inventions),
discoveries, improvements, processes, methods, protocols, formulas,
data, and trade secrets, patentable or otherwise which: (a) as of the
Effective Date and/or during the Collaboration Term, is in the Control
of MERCK or ROSETTA or their wholly-owned subsidiaries, and (b) is
necessary or useful to ALNYLAM for the Technology Collaboration and/or
for in vitro and/or in vivo target identification and/or target
validation including (i) data and methods for monitoring RNAi
selectivity and potency, and (ii) approaches to optimal design of
siRNAs, including but not limited to informatics approaches. "MERCK
Broad RNAi Technology" does not include technology, information, or
material, including inventions, discoveries and know-how, patentable or
otherwise, relating to MERCK Non-Druggable Targets, including but not
limited to MERCK RNAi Novel Target IP.
1.51 "MERCK COLLABORATION INVENTIONS" means MERCK Technology Collaboration
Inventions and MERCK Therapeutic Collaboration Inventions, MERCK's
interest in Joint Technology Collaboration Inventions, and MERCK's
interest in Joint Therapeutic Collaboration Inventions, collectively.
1.52 "MERCK NON-DRUGGABLE TARGETS" means [**] Controlled by MERCK or its
Affiliates and which MERCK deems to be [**]. Such targets [**] include
targets for which [**].
A MERCK Non-Druggable Target may also include:
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1. [**] for which [**] have been i[**], for example in [**];
2. [**] whereby [**] has been [**]; and
3. [**] where [**] in the [**].
MERCK Non-Druggable Targets must be [**]; that is they must be targets
for which: (a) MERCK [**] the target that is [**] which, [**], provides
[**] the MERCK Non-Druggable Target, [**] (b) MERCK believes there are
[**] of which would be [**] (i) by [**] the MERCK Non-Druggable Target
[**], or (ii) by the [**] MERCK Non-Druggable Target [**] in the [**].
1.53 "MERCK PRODUCT AGREEMENT" has the meaning set forth in Section
3.1.6(c).
1.54 "MERCK PRODUCT-SPECIFIC RNAi PATENT RIGHTS" means any and all patent
applications and patents in the Territory (which for the purposes of
this Agreement shall be deemed to include certificates of invention and
applications for certificates of invention and exclude Joint
Collaboration Patent Rights) which: (a) as of the Effective Date and/or
during the Collaboration Term, are Controlled by MERCK or ROSETTA or
their wholly-owned subsidiaries, and (b) are necessary or useful to
ALNYLAM in connection with the research, development, manufacture,
marketing, use, import or sale of a specific RNAi Therapeutic Product
within the Therapeutic Collaboration. MERCK Product-Specific RNAi
Patent Rights include but are not limited to those which: (i) claim,
cover or relate to a specific RNAi Therapeutic Product within the
Therapeutic Collaboration; or (ii) claim, cover or relate to MERCK
Therapeutic Collaboration Inventions; or (iii) are divisions,
continuations, any portions of continuations-in-part that are
themselves within the definition of MERCK Product-Specific RNAi Patent
Rights, reissues, renewals, extensions, supplementary protection
certificates, and the like of any covered patents and patent
applications and foreign equivalents thereof. "MERCK Product-Specific
RNAi Patent Rights" include, without limitation, those patents and
patent applications set forth in Schedule 1.54. The term "MERCK
Product-Specific RNAi Patent Rights" does not include any patents or
patent applications relating to MERCK Non-Druggable Targets, including
but not limited to patents or patent applications relating to MERCK
RNAi Novel Target IP.
1.55 "MERCK PRODUCT-SPECIFIC RNAi TECHNOLOGY" means any and all technology,
information, material, and know-how, including, but not limited to
inventions (including MERCK Therapeutic Collaboration Inventions and
MERCK's rights in Joint Therapeutic Collaboration Inventions),
discoveries, improvements, processes, methods, protocols, formulas,
data, and trade secrets, patentable or otherwise which: (a) as of the
Effective Date and/or during the Collaboration Term, is in the Control
of MERCK or ROSETTA or their wholly-owned subsidiaries, and (b) is
necessary or useful to ALNYLAM for the research, development,
manufacturing, marketing, use, sale or import of a specific RNAi
Therapeutic Product within the Therapeutic Collaboration, and (c) is
not included in MERCK Broad RNAi Technology. The term "MERCK
Product-Specific Technology" does not include technology, information,
or material, including but not limited to
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inventions, discoveries and know-how, patentable or otherwise, relating
to MERCK Non-Druggable Targets, including but not limited to MERCK RNAi
Novel Target IP.
1.56 "MERCK RNAi NOVEL TARGET" means a MERCK Non-Druggable Target that
ALNYLAM, in its sole discretion, deems to be of sufficient scientific
interest and possesses sufficient intellectual property such that
ALNYLAM elects to develop an RNAi Therapeutic Product directed at such
MERCK Non-Druggable Target under the Therapeutic Collaboration. For
purposes of clarity, the term "MERCK RNAi Novel Target," shall not
include any Abandoned MERCK RNAi Novel Target.
1.57 "MERCK RNAi NOVEL TARGET IP" means any and all information, material,
know-how, patents and patent applications Controlled by MERCK or
ROSETTA or their wholly-owned subsidiaries as of the Effective Date
and/or during the Collaboration Term, and that both: (i) are necessary
or useful to ALNYLAM for research, development, manufacturing,
marketing, use, import or sale of RNAi Therapeutic Products within the
Therapeutic Collaboration, and (ii) claim, cover or relate to specific
MERCK RNAi Novel Targets.
1.58 "MERCK RNAi PATENT RIGHTS" means MERCK Broad RNAi Patent Rights and
MERCK Product-Specific Patent Rights, collectively. The term "MERCK
RNAi Patent Rights" shall not include patents or patent applications
that claim, cover or relate to MERCK Non-Druggable Targets or MERCK
RNAi Novel Target IP.
1.59 "MERCK RNAi TECHNOLOGY" means MERCK Broad RNAi Technology and MERCK
Product-Specific RNAi Technology, collectively.
1.60 "MERCK TECHNOLOGY COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Technology Collaboration and developed or invented
solely by employees of MERCK or its Affiliates or other persons not
employed by ALNYLAM acting on behalf of MERCK during the Technology
Collaboration Term and/or during the one (1) year period following the
expiration or termination of the Technology Collaboration Term.
1.61 "MERCK THERAPEUTIC COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Therapeutic Collaboration and developed or invented
solely by employees of MERCK or its Affiliates or other persons not
employed by ALNYLAM acting on behalf of MERCK during the Therapeutic
Collaboration Term and/or during the one (1) year period following the
expiration or termination of the Therapeutic Collaboration Term,
including but not limited to MERCK-Assigned Therapeutic Collaboration
Inventions (as defined in Section 2.7(d)).
1.62 "NDA" means a New Drug Application, Biologics License Application,
Worldwide Marketing Application, Marketing Application Authorization,
Section 510(k) filing or similar application or submission for
Marketing Authorization of a Therapeutic Collaboration Product filed
with a Regulatory Authority in a country or group of
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countries to obtain marketing approval for a biological, pharmaceutical
or other therapeutic product in that country or in that group of
countries.
1.63 "NET SALES" means the gross invoice price of a Therapeutic
Collaboration Product sold by MERCK or its Related Parties or by
ALNYLAM or its Related Parties to the first Third Party (other than a
sublicensee of a Party) after deducting, if not previously deducted,
from the amount invoiced or received:
(a) trade and quantity discounts actually given other than early
pay cash discounts;
(b) returns, rebates, chargebacks and other allowances actually
given;
(c) retroactive price reductions that are actually granted; and
(d) a fixed amount equal to [**] percent ([**]%) of the amount
invoiced to cover bad debt, sales or excise taxes, early
payment cash discounts, transportation and insurance, custom
duties, and other governmental charges.
With respect to sales of Combination Products, Net Sales shall be
calculated on the basis of the gross invoice price of the Therapeutic
Collaboration Product(s) containing the same composition and
concentration of RNAi oligonucleotide(s) or oligonucleotide-derivatives
sold without other clinically active ingredients.
In the event that the Therapeutic Collaboration Product is sold only as
a Combination Product and not sold without other clinically active
therapeutic ingredients, the Parties shall negotiate in good faith
another basis on which to calculate Net Sales with respect to a
Combination Product that fairly reflects the value of the Therapeutic
Collaboration Product relative to the other clinically active
therapeutic ingredients in the Combination Product, but in no event
shall such calculation result in the gross invoice price on which to
base Net Sales being less than [**] percent ([**]%) of the gross
invoice price of such Therapeutic Combination Product.
A percentage of the deductions set forth in paragraphs (a) through (d)
above equal to the ratio of the Net Sales for the Therapeutic
Collaboration Product to the Net Sales of the entire Combination
Product will be applied in calculating Net Sales for a Combination
Product.
1.64 "OPT-IN FEE" has the meaning set forth in Section 2.14.3.2.
1.65 "OPT-IN INFORMATION" has the meaning set forth in Section 2.14.3.2 and
as provided in Schedule 2.14.3.2.
1.66 "OPT-IN NEGOTIATION PERIOD" has the meaning set forth in Section
2.14.3.3.
1.67 "OPT-IN NOTICE" has the meaning set forth in Section 2.14.3.2.
1.68 "OPT-IN RIGHT" means MERCK's right, to be exercised upon the completion
of IND-Enabling GLP Toxicology Studies and MERCK's receipt of all
Opt-In Information from
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ALNYLAM, to elect to enter into a Therapeutic Collaboration Product
Agreement with ALNYLAM for a Therapeutic Collaboration Product as part
of the Therapeutic Collaboration, as described in Section 2.14.3.2.
1.69 "PARTY" means MERCK and/or ALNYLAM.
1.70 "PROVIDERS" has the meaning set forth in Section 2.12 of this
Agreement.
1.71 "R&D COSTS" has the meaning set forth in Section 2.14.3.2.
1.72 "REGULATORY AUTHORITY" means any applicable government regulatory
authority involved in granting approvals for the manufacturing,
marketing, reimbursement and/or pricing of an RNAi Therapeutic Product
in the Territory, including, in the United States, the United States
Food and Drug Administration and any successor governmental authority
having substantially the same function.
1.73 "RELATED PARTY" means the Party, its Affiliates and permitted
sublicensees ,which term does not include wholesale distributors of the
Party or its Affiliates who purchase Therapeutic Collaboration Products
from such Party or its Affiliates in an arm's length transaction and
who have no other obligation, including but not limited to a reporting
obligation, to such Party or its Affiliates. For purposes of clarity,
such wholesale distributors do not include those distributors whose
obligations to such Party or Affiliate include responsibility for sales
and/or marketing efforts in a Territory or sharing of costs and
expenses with respect to sales and/or marketing on behalf of a Party or
its Affiliates, which distributors shall be deemed to be permitted
sublicensees for purposes of this definition.
1.74 "RIBOPHARMA" means RIBOPHARMA AG, a company organized under the laws of
Germany and an Affiliate of ALNYLAM.
1.75 "RNAi TECHNOLOGY" means technology useful for in vitro and/or in vivo
target identification and/or target validation using RNA interference.
1.76 "RNAi THERAPEUTIC PRODUCTS" means oligonucleotide- or oligonucleotide
derivative-based therapeutic modalities for gene function modulation or
other moieties effective in gene function modulation that function
through RNA interference and which are discovered, derived or developed
by ALNYLAM or any person or entity acting on its behalf, including its
Affiliates, consultants and scientific advisors during the
Collaboration, and which are directed at MERCK RNAi Novel Targets.
"RNAi Therapeutic Products" include, but are not limited to, any and
all: (i) ALNYLAM Therapeutic Collaboration Inventions that are (a)
oligonucleotide- or oligonucleotide derivative-based therapeutic
modalities for gene function modulation or (b) moieties which are
effective in gene function modulation, and (c) function through RNA
interference and are directed at MERCK RNAi Novel Targets; and (ii)
therapeutic preparations of the RNAi Therapeutic Product in final form
for sale by prescription, over-the-counter or any other method for
therapeutic use, including, without limitation, any Combination
Product.
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1.77 "STOCK PURCHASE AGREEMENT" has the meaning set forth in Section 5.1.3
of this Agreement.
1.78 "SUBSEQUENT OPT-IN NEGOTIATION PERIODS" has the meaning set forth in
Section 2.14.3.3 of this Agreement.
1.79 "TECHNOLOGY COLLABORATION" means the research activities undertaken by
the Parties hereto as set forth in Article 2 and Schedule 2.1.
1.80 "TECHNOLOGY COLLABORATION MILESTONE" means the [**], as provided in
Section 5.1.4, by ALNYLAM, or its Affiliates, or its permitted
collaborators (as provided for in Sections 2.2 and 2.13) if but only if
MERCK receives the same rights for in vitro and/or in vivo target
identification and/or target validation as ALNYLAM and its Affiliates
to any intellectual property relating to the Collaboration which is
developed by ALNYLAM or its Affiliates or such permitted collaborators,
during the Technology Collaboration Term, of [**] where [**] through
[**], excluding, however, [**].
1.81 "TECHNOLOGY COLLABORATION TERM" means the duration of the Technology
Collaboration and "Extended Technology Collaboration Term" means any
period of the Technology Collaboration as it may be extended by mutual
agreement of the Parties, as described more fully in Section 2.8.
1.82 "TECHNOLOGY MILESTONE DISPUTE" has the meaning set forth in Section
5.1.4.
1.83 "TERRITORY" means all of the countries in the world, and their
territories and possessions.
1.84 "THERAPEUTIC COLLABORATION" means the research, development and
commercialization activities undertaken by the Parties as set forth in
Article 2.
1.85 "THERAPEUTIC COLLABORATION PRODUCT" has the meaning set forth in
Section 2.14.3.2.
1.86 "THERAPEUTIC COLLABORATION PRODUCT AGREEMENT" has the meaning set forth
in Section 2.14.3.3 of this Agreement.
1.87 "THERAPEUTIC COLLABORATION TERM" means the duration of the Therapeutic
Collaboration and "Extended Therapeutic Collaboration Term" means any
period of the Therapeutic Collaboration as it may be extended by mutual
agreement of the Parties, as described more fully in Section 2.8.
1.88 "THIRD PARTY" means an entity other than a Party and its Affiliates.
1.89 "THIRD PARTY PATENT LICENSES" has the meaning set forth in Section
5.2.5 of this Agreement.
1.90 "VALID PATENT CLAIM" means a claim of: (a) an issued and unexpired
patent included within the ALNYLAM RNAi Patent Rights, the MERCK RNAi
Patent Rights, or the Joint Collaboration Patent Rights which (i)
covers the manufacture, use, sale or import of a Therapeutic
Collaboration Product; (ii) has not been revoked or held unenforceable
or
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invalid by a decision of a court or other governmental agency of
competent jurisdiction, which is not appealable or has not been
appealed within the time allowed for appeal, and (iii) has not been
abandoned, disclaimed, denied or admitted to be invalid or
unenforceable through reissue, re-examination or disclaimer or
otherwise, or (b) a patent application within the Territory, which
covers the manufacture, use, sale or import of a Therapeutic
Collaboration Product, included within the ALNYLAM RNAi Patent Rights,
the MERCK RNAi Patent Rights or the Joint Collaboration Patent Rights
that has been pending less than [**] years from the earliest date on
which such patent application claims priority and such patent claim has
not been cancelled, withdrawn or abandoned.
2. COLLABORATION
2.1 GENERAL. ALNYLAM and MERCK shall engage in the Collaboration upon the
terms and conditions set forth in this Agreement. The activities to be
undertaken in the course of the Technology Collaboration are set forth
in the workplan attached hereto as Schedule 2.1, which may be amended
from time to time upon the mutual written agreement of authorized
representatives of the Parties.
2.2 CONDUCT OF RESEARCH. Each Party or its Affiliates shall commit the
following resources to carry out the activities set forth in Schedule
2.1:
- First year of the Technology Collaboration Term - [**] FTEs
- Second year of the Technology Collaboration Term - [**] FTEs
- Third year of the Technology Collaboration Term - [**] FTEs
ALNYLAM and MERCK shall be entitled to utilize the services of Third
Parties (including Third Party contract research organizations) to
perform their respective Technology Collaboration activities; provided
that each Party shall remain at all times fully liable for its
respective responsibilities under the Technology Collaboration. Neither
Party shall use Third Party contract resources to conduct part or all
of its obligations under the Technology Collaboration unless the other
Party's rights under the agreement with the Third Party contract
research organization guarantee the non-contracting Party the same
rights under this Agreement as if the contracting Party had done the
work itself. Third Party collaborations shall be governed by the terms
of Section 2.13.
2.2.1 MERCK FTE SUPPORT. Notwithstanding the above, MERCK may cease to
provide FTEs commencing one year after the Effective Date by written
notice to ALNYLAM specifying the date on which MERCK's FTEs will cease
work, in which event the license grant from ALNYLAM to MERCK shall be
modified as set forth in Section 3.1.1.1.
2.3 PRINCIPAL SCIENTISTS. The principal scientists for the Technology
Collaboration are Dr. [**] for ALNYLAM and Dr. [**] for MERCK. The
Technology Collaboration and all work assignments to be performed by
ALNYLAM and MERCK shall be carried out under the direction and
supervision of the principal scientists noted above. Each Party
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shall immediately notify the other Party in the event that the Party's
principal scientist is not or will not direct or supervise the
Technology Collaboration or leaves the Party's employ.
2.4 JOINT STEERING COMMITTEE. The Parties hereby establish a committee to
facilitate the Technology Collaboration as follows:
2.4.1 COMPOSITION OF THE JOINT STEERING COMMITTEE. The Technology
Collaboration shall be conducted under the direction of a joint
steering committee (the "JSC") comprised of two (2) named
representatives of MERCK and two (2) named representatives of ALNYLAM,
one of whom shall be the Senior Vice President, Research and
Development of ALNYLAM. Each Party shall appoint its respective
representatives to the JSC from time to time, and may substitute one or
more of its representatives, in its sole discretion, effective upon
notice to the other Party of such change. These representatives shall
have appropriate technical credentials, experience and knowledge, and
ongoing familiarity with the Technology Collaboration. Additional
representatives or consultants may from time to time, by mutual consent
of the Parties, be invited to attend JSC meetings, subject to such
representative's and consultant's written agreement to comply with the
requirements of Section 4.1. Each Party shall bear its own expenses
relating to attendance at such meetings by its representatives.
2.4.2 JSC CHAIRPERSON. The JSC Chairperson shall rotate every six (6) months
between ALNYLAM and MERCK. The initial JSC Chairperson shall be a
representative of ALNYLAM. The Chairperson's responsibilities shall
include:
1. scheduling meetings at least quarterly, but more frequently if
the JSC determines it necessary;
2. setting agenda for meetings with solicited input from other
members;
3. delivering minutes to the JSC for review and approval; and
4. conducting effective meetings, including ensuring that
objectives for each meeting are set and achieved.
2.4.3 MEETINGS. The JSC shall meet in accordance with a schedule established
by mutual written agreement of the Parties, but no less frequently than
once per Calendar Quarter, with the location for such meetings
alternating between ALNYLAM and MERCK facilities (or such other
locations as is determined by the JSC). Alternatively, the JSC may meet
by means of teleconference, videoconference or other similar
communications equipment, but at least two meetings per year shall be
conducted in person.
2.4.4 JSC RESPONSIBILITIES. The JSC shall have the following responsibilities
with respect to the Technology Collaboration:
1. oversight of all activities relating to the Technology
Collaboration;
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2. approving annual workplans, timelines, goals and objectives;
3. determining each Party's responsibilities under the workplans;
4. monitoring the progress of the Technology Collaboration, including reviewing relevant data;
5. considering issues of priority;
6. monitoring the diligence of each Party in performing its obligations hereunder;
7. identifying and prioritizing academic collaborations for review by the appropriate level of management of ALNYLAM and MERCK;
8. approving any material changes to workplans;
9. discussing the content of the data package to be provided to the JSC to enable the JSC to determine if the Technology Collaboration Milestone has been achieved pursuant to Section 5.1.4, provided, however, that there is no obligation on the JSC to agree to the final content of the data package prior to submission to the JSC; and
10. considering and advising on technical issues that arise.
The JSC shall attempt to resolve any and all disputes relating to the Technology Collaboration by unanimous consensus; provided, however, that all issues relating to budgets, expenditures or other economic matters shall be made by the appropriate level of management of the Parties and the JSC shall not have final decision-making authority regarding such matters.
In the event the JSC is unable to reach a unanimous consensus with respect to any Dispute, then the two (2) senior members of the JSC, one from MERCK and one from ALNYLAM, shall attempt to resolve such Dispute. If the senior members of the JSC are unable to resolve such Dispute, then the Dispute shall be resolved in accordance with Section 9.6.1.
2.5 EXCHANGE OF INFORMATION. In accordance with the provisions of Article 3, upon execution of this Agreement and on an ongoing basis during the Collaboration Term:
(a) ALNYLAM shall disclose to MERCK all ALNYLAM RNAi Technology
that is Controlled by ALNYLAM or its Affiliates as of the
Effective Date and/or during the first [**] years of the
Collaboration Term which has not been previously disclosed and
shall provide updates, at least quarterly, with regard to
ALNYLAM RNAi Technology that is Controlled by ALNYLAM or its
Affiliates as of the Effective Date and/or during the first
[**] years of the Collaboration Term, and ALNYLAM RNAi Patent
Rights that are Controlled by ALNYLAM or its Affiliates as of
the Effective Date and/or during the first [**] years of the
Collaboration Term, including but not limited to any and all
ALNYLAM RNAi Patent Rights filings related thereto, and
ALNYLAM Therapeutic Collaboration IP that is Controlled by
ALNYLAM or its Affiliates as of the Effective Date and/or
during the first [**] years of the Collaboration Term,
including but not limited to any and all ALNYLAM RNAi Patent
Rights filings related thereto;
(b) MERCK shall disclose to ALNYLAM all MERCK Broad RNAi Technology that is Controlled by MERCK or ROSETTA or their wholly-owned subsidiaries as of the Effective Date and/or during the first [**] years of the Collaboration Term and
MERCK Product-Specific RNAi Technology that is Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Effective Date and/or during the first [**] years of the
Collaboration Term which has not been previously disclosed and
shall provide updates, at least quarterly, with regard to such
MERCK Broad RNAi Technology that is Controlled by MERCK or
ROSETTA or their wholly-owned subsidiaries as of the Effective
Date and/or during the first [**] years of the Collaboration
Term and MERCK Product-Specific RNAi Technology that is
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term and MERCK Broad RNAi
Patent Rights that are Controlled by MERCK or ROSETTA or their
wholly-owned subsidiaries as of the Effective Date and/or
during the first [**] years of the Collaboration Term,
including but not limited to any and all MERCK RNAi Patent
Rights filings related thereto; and
(c) each Party shall disclose to the other any and all Joint Collaboration Inventions and Joint Collaboration Patent Rights not previously disclosed and shall provide updates, at least quarterly, with regard to such Joint Collaboration Inventions. Disclosures required by this Section 2.5 shall be subject to the confidentiality and non-use obligations of Third Party agreements and the confidentiality provisions of Section 4.1 of this Agreement.
2.6 RECORDS AND REPORTS.
2.6.1 RECORDS. Each Party shall maintain records, in sufficient detail and in
good scientific manner appropriate for patent and regulatory purposes,
which shall fully and properly reflect all work done and results
achieved in the performance of the Collaboration by such Party.
2.6.2 COPIES AND INSPECTION OF RECORDS. Each Party shall have the right,
during normal business hours and upon reasonable notice, to inspect and
copy all records of the other Party referred to in Section 2.6.1
related to the Technology Collaboration and/or each Therapeutic
Collaboration Product with respect to which such Party has elected to
co-develop and co-promote pursuant to Section 2.14.3 or for which such
Party has received an exclusive license pursuant to Section 3.1.5 or
Section 3.1.6. The record-reviewing Party shall maintain such records
and the information disclosed therein in confidence in accordance with
Section 4.1. The record-reviewing Party shall have the right to arrange
for its employees and/or consultants involved in the activities
contemplated hereunder to visit the offices and laboratories of the
record-keeping Party, and any of its Third Party contractors as
permitted under Section 2.2, during normal business hours and upon
reasonable notice, to discuss the Technology Collaboration work and its
results in detail with the technical personnel and consultants of the
record-keeping Party. Upon request, the record-keeping Party shall
provide copies of the records described in Section 2.6.1 above.
2.6.3 REPORTS.
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2.6.3.1 TECHNOLOGY COLLABORATION. Within thirty (30) days following the end of
each Calendar Quarter during the Technology Collaboration Term, each
Party shall provide to the other Party a written progress report in
English which shall describe the work performed to date by such Party
on the Technology Collaboration, provide an evaluation of the work by
such Party performed in relation to the goals, deliverables and
timelines of the Technology Collaboration, and provide such other
information required by the Technology Collaboration or reasonably
requested by the other Party relating to the progress of the goals,
deliverables, timelines or performance of the Technology Collaboration,
including the status and results of Third Party Collaborations covered
by Section 2.13.
2.6.3.2 THERAPEUTIC COLLABORATION. At least two (2) times a year during the
Therapeutic Collaboration Term, two (2) named representatives of MERCK
and two (2) named representatives of ALNYLAM shall meet to exchange
information relating to the Therapeutic Collaboration, to discuss
possible changes to Schedule 2.14.3.2 based on interactions with
Regulatory Authorities, and the provision by ALNYLAM to MERCK of a
brief, written summary progress report in English which shall describe
the work performed to date on the Therapeutic Collaboration, the
progress of the development of all RNAi Therapeutic Products and
Therapeutic Collaboration Products that are not yet the subject of a
Therapeutic Collaboration Product Agreement, a MERCK Product Agreement
or an ALNYLAM Product Agreement. Each Party shall appoint its
respective representatives from time to time, and may substitute one or
more of its representatives, in its sole discretion, effective upon
notice to the other Party of such change. These representatives shall
have appropriate technical credentials, experience and knowledge, and
ongoing familiarity with the Therapeutic Collaboration. Additional
representatives or consultants may from time to time, by mutual consent
of the Parties, be invited to attend meetings, subject to such
representative's and consultant's written agreement to comply with the
requirements of Section 4.1.
2.7 COLLABORATION INVENTIONS.
The entire right, title and interest in:
(a) ALNYLAM Technology Collaboration Inventions and ALNYLAM
Therapeutic Collaboration Inventions shall be owned solely by
ALNYLAM;
(b) MERCK Technology Collaboration Inventions and MERCK
Therapeutic Collaboration Inventions shall be owned solely by
MERCK;
(c) Joint Collaboration Inventions shall be owned jointly by
ALNYLAM and MERCK; and
(d) In the event MERCK, solely or jointly with ALNYLAM, makes any
discovery, improvement, or Invention with respect to a
Therapeutic Collaboration Product after receiving the Opt-In
Information for such Therapeutic Collaboration Product, and
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prior to the earlier of ALNYLAM's opt-out pursuant to Section
2.14.3.3.1 or the execution of a Therapeutic Collaboration
Agreement or an ALNYLAM Product Agreement or a MERCK Product
Agreement or the expiration or termination of the Therapeutic
Collaboration Term, then MERCK shall assign the same to
ALNYLAM and it shall be an "ALNYLAM-ASSIGNED THERAPEUTIC
COLLABORATION INVENTION" and shall be included within the
definition of an ALNYLAM Therapeutic Collaboration Invention.
In the event ALNYLAM, solely or jointly with MERCK, makes any
discovery, improvement, or Invention with respect to a MERCK
Non-Druggable Target after receiving the Initial MERCK
Non-Druggable Target Information for such MERCK Non-Druggable
Target, and prior to its election either: (i) to select such
MERCK Non-Druggable Target as a MERCK RNAi Novel Target or
(ii) to decline to do so and ALNYLAM's return to MERCK of all
information and materials relating to the MERCK Non-Druggable
Target (as provided in Section 2.14.2), then ALNYLAM shall
assign the same to MERCK and it shall be a "MERCK-ASSIGNED
THERAPEUTIC COLLABORATION INVENTION" and shall be included
within the definition of a MERCK Therapeutic Collaboration
Invention.
ALNYLAM shall promptly disclose to MERCK the development, making,
conception or reduction to practice of ALNYLAM Technology Collaboration
Inventions and Joint Collaboration Inventions and MERCK shall promptly
disclose to ALNYLAM the development, making, conception or reduction to
practice of MERCK Technology Collaboration Inventions and Joint
Collaboration Inventions.
2.8 COLLABORATION TERM. Except as otherwise provided herein, the term of
the Collaboration shall commence on the Effective Date and continue
until the end of the Therapeutic Collaboration Term as set forth below
("COLLABORATION TERM"). The Technology Collaboration shall commence on
the Effective Date and continue for a period of three years
("TECHNOLOGY COLLABORATION TERM"), and the term of the Therapeutic
Collaboration shall commence on the one year anniversary of the
Effective Date and continue for a period of four years and thereafter
until (a) all Opt-In Negotiation Periods with respect to all
Therapeutic Collaboration Products hereunder have expired and/or
resulted in the execution of a Therapeutic Collaboration Agreement, a
MERCK Product Agreement or an ALNYLAM Product Agreement, and (b)
ALNYLAM has notified MERCK that there are no MERCK RNAi Novel Targets
that have not either become the subject of such an agreement or become
an Abandoned MERCK RNAi Novel Target ("THERAPEUTIC COLLABORATION
TERM"). The Parties may extend the term of the Collaboration, the
Technology Collaboration and/or the Therapeutic Collaboration by mutual
written agreement of authorized representatives of the Parties, and
shall, in such case, amend Schedule 2.1 as applicable.
2.9 COMPLIANCE. Each Party shall conduct the Collaboration in accordance
with all applicable laws, rules and regulations, including, without
limitation, all current governmental regulatory requirements concerning
good laboratory practices. In addition, if animals are used in research
hereunder, each Party shall comply with the Animal Welfare Act or any
other applicable local, state, national and international laws or
regulations relating to the care and use of laboratory animals. The
Parties encourage each other to use the highest standards, such as
those set forth in the Guide for the Care
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and Use of Laboratory Animals (NRC, 1996), for the humane handling,
care and treatment of such research animals. Any animals which are used
in the course of the Collaboration, or products derived from those
animals, such as eggs or milk, will not be used for food purposes, nor
will these animals be used for commercial breeding purposes. Each Party
shall notify the other Party in writing of any deviations from
applicable regulatory or legal requirements. Each Party hereby
certifies that it will not and has not employed or otherwise used in
any capacity the services of any person debarred under Section 21 USC
335a in performing any services hereunder.
2.10 MATERIALS. Each Party shall provide the other Party with sufficient
quantities of the materials set forth in Schedule 2.10 ("MATERIALS"),
as updated from time to time, solely for the purposes of carrying out
the Parties' respective activities under the Technology Collaboration
in accordance with the terms of this Agreement. Each Party acknowledges
and agrees that Materials received from the other Party are not to be
used in humans. In addition, none of the Materials received from the
other Party, or any derivatives, analogs, modifications or components
thereof, shall be transferred, delivered or disclosed to any Third
Party, without the prior written approval of the Party which provided
the Materials, other than a permitted collaborator under Section 2.13,
a permitted Third Party under Section 2.2, or a Third Party performing
services on behalf of a Party in the development of a Therapeutic
Collaboration Product. Any unused Materials shall be, at the providing
Party's option, either returned to the providing Party or destroyed in
accordance with the providing Party's instructions.
2.11 EXCLUSIVE EFFORTS. Except as provided in Sections 2.13 and 3.1.1,
during the Technology Collaboration Term, ALNYLAM and RIBOPHARMA and
their Affiliates shall not enter into any agreement with a Third Party
to develop RNAi Technology for use in in vitro and/or in vivo target
identification and/or target validation; provided, however, that
ALNYLAM and RIBOPHARMA and their Affiliates may enter into a
collaboration with a Third Party, the primary purpose of which is the
development of therapeutic products using RNA interference and, if RNAi
Technology is developed therein for use in in vitro and/or in vivo
target identification and/or target validation, then it may only be
developed in the course of developing such therapeutic products.
Notwithstanding the foregoing, each of ALNYLAM and RIBOPHARMA and their
wholly-owned subsidiaries may, in its sole discretion, grant
non-exclusive licenses under the Limmer Patents for the purpose of in
vitro and/or in vivo target identification and/or target validation
solely to Third Parties:
(i) with whom neither ALNYLAM nor RIBOPHARMA nor any of their
Affiliates has a collaboration or strategic alliance
agreement, or
(ii) with whom ALNYLAM or RIBOPHARMA or any of their Affiliates has
a collaboration or strategic alliance agreement, which has as
its primary purpose the development of therapeutic products
using RNA interference and, if RNAi Technology is developed
therein for use in in vitro and/or in vivo target
identification and/or target validation, then it may only be
developed in the course of developing such therapeutic
products, or
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(iii) with whom ALNYLAM or RIBOPHARMA or any of their Affiliates has
a collaboration or strategic alliance agreement which does not
have in vitro and/or in vivo target identification and/or
target validation as a purpose.
2.12 USE OF HUMAN MATERIALS. If any human cell lines, tissue, human
clinical isolates or similar human-derived materials ("HUMAN
MATERIALS") have been or are to be collected and/or used in the
Collaboration, each Party represents and warrants (i) that it has
complied, or shall comply, with all applicable laws, guidelines and
regulations relating to the collection and/or use of the Human
Materials, and (ii) that it has obtained, or shall obtain, all
necessary approvals and appropriate informed consents, in writing, for
the collection and/or use of such Human Materials. Each Party shall
provide documentation of such approvals and consents upon the other
Party's request. Each Party further represents and warrants that such
Human Materials may be used as contemplated in this Agreement without
any obligation to the individuals or entities ("PROVIDERS") who
contributed the Human Materials, including, without limitation, any
obligation of compensation to such Providers or any other Third Party
for the intellectual property associated with, or commercial use of,
the Human Materials for any purposes.
2.13 THIRD PARTY COLLABORATIONS. In addition to the right to utilize the
services of Third Parties to perform Technology Collaboration
activities pursuant to Section 2.2, during the Technology Collaboration
Term, ALNYLAM and MERCK agree that it may be necessary or useful to
enter into Third Party collaborations which provide technology,
information, data or know-how, patentable or otherwise, which is
necessary or useful for MERCK and/or ALNYLAM to perform its obligations
under the Technology Collaboration. Such Third Party collaborations
shall not conflict with the terms and conditions of this Agreement,
including but not limited to Sections 2.11, 2.13 and 3.1.1, and shall
be structured consistently with ALNYLAM and RIBOPHARMA's obligations
and rights pursuant to this Agreement, including but not limited to
Sections 2.11, 2.13 and 3.1.1. In the event that any such Third Party
collaborations are contemplated in connection with the Technology
Collaboration, the JSC shall discuss, subject to Third Party
confidentiality obligations, whether to enter into such Third Party
collaborations. The costs of such Third Party collaborations shall be
borne by the Party(ies) entering into the agreement and such agreements
shall include confidentiality and non-use provisions which are no less
stringent than those set forth in Section 4.1 of this Agreement.
The Parties shall use good faith efforts to ensure that, to the extent
possible, all such Third Party collaborations shall provide that any
and all data and results, discoveries and inventions, whether
patentable or not, arising out of the Third Party collaboration may be
used by bona fide collaborators of the Party entering into the Third
Party collaboration agreement. In addition, the Party entering into
such Third Party collaborations shall use reasonable efforts to obtain
a right to sublicense to the other Party and its Affiliates any
intellectual property arising out of the Third Party collaboration for
use in connection with the Collaboration.
2.14 THERAPEUTIC COLLABORATION.
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2.14.1 GOAL. The goal of the Therapeutic Collaboration is to develop RNAi
Therapeutic Products for disease-associated targets which are not
amenable to therapeutic intervention by conventional small molecule
chemistry. The activities to be undertaken in the course of the
Therapeutic Collaboration for each MERCK RNAi Novel Target shall be set
forth in a detailed workplan promptly after ALNYLAM has selected such
MERCK RNAi Novel Target as provided in Section 2.14.2(3).
2.14.2 PROVISION, SELECTION AND ABANDONMENT OF MERCK NON-DRUGGABLE TARGETS.
During the Therapeutic Collaboration Term, MERCK shall provide to
ALNYLAM a minimum of [**] MERCK Non-Druggable Targets which are
candidates for RNAi Therapeutic Products during the first [**] of each
of the first [**] years of the Therapeutic Collaboration Term,
beginning with the year starting September 1, 2004, in accordance with
the procedures set forth below. ALNYLAM shall notify MERCK, within [**]
of receiving the Complete MERCK Non-Druggable Target Information (as
defined below) for the last MERCK Non-Druggable Target received by
ALNYLAM during each year of the Therapeutic Collaboration Term for
which ALNYLAM requests the Complete MERCK Non-Druggable Target
Information, if it chooses to develop an RNAi Therapeutic Product
directed at any or all of such MERCK Non-Druggable Targets (whereupon
such MERCK Non-Druggable Target chosen by ALNYLAM for development shall
be a "MERCK RNAi NOVEL TARGET"). After selecting a MERCK RNAi Novel
Target, ALNYLAM shall use commercially reasonable efforts to develop an
RNAi Therapeutic Product directed at such MERCK RNAi Novel Target.
ALNYLAM may at any time notify MERCK that it has stopped work on a
particular MERCK RNAi Novel Target because the target is no longer
scientifically or commercially interesting to ALNYLAM ("ABANDONED MERCK
RNAi NOVEL TARGET"). Upon such abandonment, ALNYLAM and its Affiliates:
(a) shall immediately return to MERCK all information (including
Information), data and materials (including all MERCK intellectual
property) relating to the Abandoned MERCK RNAi Novel Target, including,
but not limited to that which was provided pursuant to Schedules
2.14.2(1) and 2.14.2(2), (b) shall have no rights to the Abandoned
MERCK RNAi Novel Target, and (c) shall be prohibited from researching,
developing or commercializing products, either alone or in
collaboration with another party, directed at the Abandoned MERCK RNAi
Novel Target or any fragment or common genetic variant thereof that
results from a point mutation in, or a single nucleotide polymorphism
with respect to, such Abandoned MERCK RNAi Novel Target for a period of
[**] commencing on the date of notification to MERCK of the abandonment
by ALNYLAM.
With regard to the provision of MERCK Non-Druggable Targets to ALNYLAM
by MERCK and notification to MERCK by ALNYLAM of its interest in
selecting such MERCK Non-Druggable Targets, the following step-wise
process shall apply:
(1) For each MERCK Non-Druggable Target provided by MERCK to
ALNYLAM, MERCK shall initially disclose to an individual
specified by ALNYLAM a limited amount of information as
provided in Schedule 2.14.2(1) ("INITIAL MERCK NON-DRUGGABLE
TARGET INFORMATION").
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(2) Within [**] of receiving the Initial MERCK Non-Druggable Target Information for the third MERCK Non-Druggable Target, ALNYLAM shall notify MERCK if it wants to view the complete MERCK Non-Druggable Target information relating to any or all of the [**] MERCK Non-Druggable Targets provided in such year as provided in Schedule 2.14.2(2) ("COMPLETE MERCK NON-DRUGGABLE TARGET INFORMATION"), and MERCK will provide the Complete MERCK Non-Druggable Target Information to an individual specified by ALNYLAM within [**] of receipt of such notice from ALNYLAM. If ALNYLAM has not received all Complete MERCK Non-Druggable Target Information set forth in Schedule 2.14.2(2), or any portion thereof, ALNYLAM shall notify MERCK of same, which notice shall specify any missing Complete MERCK Non-Druggable Target Information or any portion thereof; and MERCK shall, promptly after receipt of such notice, provide any missing Complete MERCK Non-Druggable Target Information identified in the notice to ALNYLAM. "Complete MERCK Non-Druggable Target Information" shall include all information, materials and/or data listed on Schedule 2.14.2(2) which is in MERCK's or ROSETTA's or their fully-owned subsidiaries' possession (either by ownership or license) and is directly relevant to the MERCK Non-Druggable Target.
(3) Within [**] of receiving the Complete MERCK Non-Druggable Target Information for the last MERCK Non-Druggable Target received by ALNYLAM during each year for which ALNYLAM requests the Complete MERCK Non-Druggable Target Information, ALNYLAM shall notify MERCK in writing if it selects any of the MERCK Non-Druggable Targets as a MERCK RNAi Novel Target.
In the event that ALNYLAM reviews the Complete MERCK Non-Druggable Target Information for a MERCK Non-Druggable Target and then elects not to select it as a MERCK RNAi Novel Target, ALNYLAM and its Affiliates shall (a) immediately return to MERCK all information (including Information), data and materials (including all MERCK intellectual property) relating to the MERCK Non-Druggable Target, including, but not limited to that which was provided pursuant to Schedules 2.14.2(1) and 2.14.2(2), (b) have no rights to the MERCK Non-Druggable Target, and (c) be prohibited from researching, developing or commercializing products, either alone or in collaboration with another party, directed at such MERCK Non-Druggable Target or any fragment or common genetic variant thereof that results from a point mutation in, or a single nucleotide polymorphism with respect to, such MERCK Non-Druggable Target, for a period of [**] commencing on the date of notification to MERCK of ALNYLAM's decision not to select such MERCK Non-Druggable Target as a MERCK RNAi Novel Target.
In the event that ALNYLAM selects a MERCK Non-Druggable Target as a MERCK RNAi Novel Target, MERCK shall be prohibited from researching, developing or commercializing therapeutic products that involve the use of RNA interference against such MERCK RNAi Novel Target, either alone or in collaboration with another party, unless and until the earlier of: (1) ALNYLAM has notified MERCK that such MERCK RNAi Novel Target is an Abandoned MERCK RNAi Novel Target, or (2) the Agreement has been terminated by MERCK pursuant to Section 8.2.1(a), or (3) ALNYLAM fails to use commercially reasonable efforts to develop an RNAi Therapeutic Product directed at
such MERCK RNAi Novel Target as provided for in Section 2.14.2, or (4)
[**] years following ALNYLAM's provision to MERCK of Opt-In Information
and MERCK's decision not to "opt-in" on co-development of such
Therapeutic Collaboration Product, provided, however, that nothing in
this paragraph shall limit the rights granted to ALNYLAM in Section
3.1.3.
2.14.3 OPT-IN.
2.14.3.1 DEVELOPMENT OF MERCK RNAi NOVEL TARGETS. ALNYLAM shall fund and be
responsible for conducting all research and development of MERCK RNAi
Novel Targets for discovery and development of RNAi Therapeutic
Products as set forth herein and in the workplan developed pursuant to
Section 2.14.1 through the completion of IND-Enabling GLP Toxicology
Studies, at which time MERCK may exercise its Opt-In Right as set forth
below. ALNYLAM shall not use Third Party contract resources to conduct
part or all of its research obligations under the Therapeutic
Collaboration unless ALNYLAM's rights under the agreement with the
Third Party contract research organization are sufficient to guarantee
MERCK the same rights under this Agreement as if ALNYLAM had done the
work itself. At the time of negotiating an agreement for Third Party
contract resources, the Parties agree to discuss a possible royalty due
to a Third Party contract manufacturer for development and transfer of
a manufacturing process.
2.14.3.2 OPT-IN PROCESS. Within [**] of completing the IND-Enabling GLP Toxicology Studies for any RNAi Therapeutic Product, ALNYLAM shall provide MERCK with all information, materials and data listed on Schedule 2.14.3.2 (provided that, with respect to those categories normally required for an IND filing, such information, materials or data may be omitted if the omission is approved by the relevant Regulatory Authority for an IND filing) ("OPT-IN INFORMATION") to enable MERCK to evaluate and decide whether to "opt-in" on co-development of such RNAi Therapeutic Product discovered by ALNYLAM (any RNAi Therapeutic Product for which ALNYLAM provides the Opt-In Information, whether or not chosen by MERCK, a "THERAPEUTIC COLLABORATION PRODUCT"). Notwithstanding the above, "Opt-In Information" shall include all information, materials and/or data listed on Schedule 2.14.3.2 which is in ALNYLAM's or its Affiliate's possession (either by ownership or license) and relating to the RNAi Therapeutic Product.
MERCK shall have a period of [**] after receiving from ALNYLAM all Opt-In Information relating to the Therapeutic Collaboration Product in which to exercise its Opt-In Right with regard to such Therapeutic Collaboration Product by written notice ("OPT-IN NOTICE") to ALNYLAM. If MERCK has not received all Opt-In Information set forth in Schedule 2.14.3.2, or any portion thereof (other than the materials and data which may be omitted pursuant to the first sentence of this Section 2.14.3.2), MERCK shall notify ALNYLAM of same, which notice shall specify any missing Opt-In Information or any portion thereof; and ALNYLAM shall, promptly after receipt of such notice, provide any missing Opt-In Information identified in the notice to MERCK. If MERCK does not deliver such Opt-In Notice to ALNYLAM in such [**] period, then MERCK shall be deemed to have declined to exercise its Opt-
In Right and ALNYLAM shall have no further obligation to MERCK with
respect to such Therapeutic Collaboration Product, except as set forth
in Section 5.2.1(a) of this Agreement. In the event that MERCK does not
deliver such Opt-In Notice to Alnylam, MERCK and its Affiliates shall
(a) immediately return to ALNYLAM all information (including
Information), data and materials (including all ALNYLAM intellectual
property) relating to the Therapeutic Collaboration Product, including,
but not limited to that which was provided pursuant to Schedule
2.14.3.2.
Upon MERCK's giving an Opt-In Notice to ALNYLAM, MERCK shall deposit into an escrow account a fee of [**] Dollars ($[**]) (the "OPT-IN-FEE") plus [**] percent ([**]%) of the FTE and out-of-pocket research costs which ALNYLAM incurred in developing the MERCK RNAi Novel Target from the date ALNYLAM elected to develop the MERCK RNAi Novel Target until the date of delivery of the Opt-In Information to MERCK ("R&D COSTS"). If the Parties fail to enter into a Therapeutic Collaboration Product Agreement or a MERCK Product Agreement, then the total Opt-In Fee and R&D Costs shall be returned promptly to MERCK. If the Parties enter into a Therapeutic Collaboration Product Agreement or if the Parties enter into a MERCK Product Agreement, then MERCK: (1) shall cause the Opt-In Fee and the R&D Costs to be promptly released within [**] of the execution thereof from such escrow account and delivered to ALNYLAM, and (2) shall pay to ALNYLAM [**]percent ([**]%) of the FTE and out-of-pocket research costs incurred by ALNYLAM from the date of delivery of all Opt-In Information to MERCK until the effective date of the Therapeutic Collaboration Product Agreement or MERCK Product Agreement, as the case may be, within [**] of receiving such information from ALNYLAM.
2.14.3.3 THERAPEUTIC COLLABORATION PRODUCT AGREEMENT. After MERCK provides ALNYLAM with the applicable Opt-In Notice, the Parties shall negotiate in good faith a definitive agreement to co-develop and co-promote a Therapeutic Collaboration Product ("THERAPEUTIC COLLABORATION PRODUCT AGREEMENT"). The provisions of any Therapeutic Collaboration Product Agreement shall address the sharing of expenses and of net profits. Such Therapeutic Collaboration Product Agreement shall contain terms substantially similar to those set forth in Schedule 2.14.3.3. The Therapeutic Collaboration Product Agreement with respect to the first Therapeutic Collaboration Product that is entered into by the Parties shall be completed and executed within [**] of ALNYLAM's receipt of MERCK's Opt-In Notice ("INITIAL OPT-IN NEGOTIATION PERIOD"). The Parties may mutually agree to extend the Initial Opt-In Negotiation Period. Each additional Therapeutic Collaboration Product Agreement entered into by the Parties, subsequent to the first Therapeutic Collaboration Product Agreement between the Parties shall be completed and executed by the Parties within [**] of ALNYLAM's receipt of the relevant MERCK Opt-In Notice, unless otherwise agreed by the Parties ("SUBSEQUENT OPT-IN NEGOTIATION PERIODS") (the Initial and Subsequent Opt-In Negotiation Periods shall each be referred to as an "OPT-IN NEGOTIATION PERIOD" and collectively referred to as the "OPT-IN NEGOTIATION PERIODS").
During each Opt-In Negotiation Period, the Parties shall establish an Interim Joint Development Committee, comprised of an equal number of representatives from MERCK and ALNYLAM, to monitor and advise on the development of the relevant Therapeutic Collaboration Product; provided, however, that ALNYLAM shall be responsible for continuing the development of the Therapeutic Collaboration Product, including filing the IND and initiating clinical trials, and ALNYLAM shall have final decision-making authority with respect thereto during the relevant Opt-In Negotiation Period and may proceed with continuing development of the Therapeutic Collaboration Product without requiring a decision of the Interim Joint Development Committee.
The Parties shall act in good faith to reach reasonable commercial terms during the Opt-In Negotiation Periods. If the Parties do not enter into a Therapeutic Collaboration Product Agreement during any Opt-In Negotiation Period, then the unresolved issues shall be submitted to the President of MERCK Research Laboratories and the CEO of ALNYLAM for resolution. If such President and CEO cannot reach an agreement regarding the unresolved issues, then such issues shall be submitted to arbitration in accordance with Section 9.6.3.
2.14.3.3.1 ALNYLAM'S OPT-OUT RIGHT. With respect to each Therapeutic
Collaboration Product, during the first [**] of any Initial Opt-In
Negotiation Period or Subsequent Opt-In Negotiation Period, ALNYLAM
shall have the right to "opt-out" of co-developing and co-promoting
such Therapeutic Collaboration Product, in which case MERCK may
proceed to develop and promote such Therapeutic Collaboration Product
independently without ALNYLAM, subject to Sections 5.2.1(b) and 3.1.6
and the other terms and conditions of this Agreement and ALNYLAM
shall: (a) immediately cease development of such Therapeutic
Collaboration Product, (b) immediately return to MERCK all
information (including Information), data and materials (including
all MERCK intellectual property) relating to such Therapeutic
Collaboration Product, (c) have no rights to the MERCK RNAi Novel
Target against which such Therapeutic Collaboration Product is
directed, (d) be prohibited from researching, developing or
commercializing products, either alone or in collaboration with
another party, directed at such MERCK RNAi Novel Target until the
earlier of: (1) the Agreement has been terminated by ALNYLAM pursuant
to Section 8.2.1(a), or (2) MERCK fails to use commercially
reasonable efforts to develop such Therapeutic Collaboration Product
directed at such MERCK RNAi Novel Target, or (3) [**] years following
its notice to MERCK that it has elected to "opt-out" of the
co-development and co-promotion of such Therapeutic Collaboration
Product, provided, however, that nothing in this paragraph shall
limit the rights granted to MERCK in Article 3.
2.15 PAYMENTS TO THIRD PARTIES RESULTING FROM SUBLICENSES. During the
Collaboration Term, ALNYLAM and MERCK agree that it may be necessary or
useful to enter into license agreements with a Third Party which
provide technology, patentable or otherwise, which is necessary or
useful for MERCK and/or ALNYLAM to perform its obligations under the
Collaboration. Such Third Party license agreements shall not grant
rights to any Third Party that conflict with the terms and conditions
of this Agreement, including
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but not limited to Sections 2.11, 2.15 and 3.1.1, and shall be
structured consistently with the Parties' obligations and rights
hereunder. The costs of such Third Party license agreements shall be
borne by the Party(ies) entering into the agreement and such agreements
shall include confidentiality and non-use provisions which are no less
stringent than those set forth in Section 4.1 of this Agreement. The
Party entering into such Third Party license agreement shall use
commercially reasonable efforts to obtain a right to sublicense to the
other Party and its Affiliates any intellectual property licensed under
or arising out of the Third Party license agreement for use in
connection with the Collaboration and shall offer the other Party such
a sublicense. In the event that either Party is obligated to make a
payment (other than a royalty payment) to a Third Party under a license
agreement with respect to the sublicense of rights to the other Party
hereunder, the Party receiving the sublicense shall reimburse the other
Party for such payments which are solely attributable to the grant of
such sublicense. The Parties agree that this Section 2.15 shall not
apply to any agreement entered into by either Party or its Affiliates
prior to the Effective Date of this Agreement.
3. LICENSES
3.1 LICENSE GRANTS.
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3.1.1 ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION PATENT RIGHTS,
ALNYLAM RNAi PATENT RIGHTS AND ALNYLAM RNAi TECHNOLOGY. ALNYLAM hereby
grants to MERCK a royalty-free license in the Territory, with a right
to sublicense to its Affiliates, to the rights set forth below:
(a) under ALNYLAM Target Identification and Target Validation RNAi
Patent Rights, and
(b) under ALNYLAM's interest in Joint Collaboration Patent Rights
and Joint Collaboration Inventions, and
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(c) under ALNYLAM Technology Collaboration Inventions, and
(d) to ALNYLAM RNAi Technology, and
(e) under ALNYLAM-Assigned Therapeutic Collaboration Inventions;
which license: (1) shall include and be Co-exclusive for (a) through
(e) that are Controlled by ALNYLAM or its Affiliates: (A) during the
Technology Collaboration Term, and (B) with regard to Joint
Collaboration Inventions and ALNYLAM Collaboration Inventions, during
the one (1) year period following the termination or expiration of the
Technology Collaboration Term, and (2) shall include and, to the extent
not Co-exclusive under (1) (A), be non-exclusive for (a) through (e)
that are owned and Controlled by ALNYLAM or its Affiliates during the
fourth and fifth years following the Effective Date:
(i) during the Collaboration Term to perform its obligations under the Collaboration; and
(ii) during and after the Collaboration Term for the sole purpose of in vitro and/or in vivo target identification and/or target validation research relating to drug discovery and/or development activities of MERCK and/or its Affiliates, including in collaborations with Third Parties in which MERCK and/or its Affiliates has any rights to discoveries made;
provided, however, that ALNYLAM shall retain the right, during and after the Collaboration Term, including the right to sublicense to its Affiliates (except as otherwise set forth in Section 3.1.8), to practice the ALNYLAM RNAi Patent Rights, ALNYLAM's interest in Joint Collaboration Patent Rights and under ALNYLAM Technology Collaboration Inventions and ALNYLAM RNAi Technology (excluding ALNYLAM Therapeutic Collaboration Inventions which are RNAi Therapeutic Products) for: (1) internal research purposes, including without limitation, in vitro and/or in vivo target identification and/or target validation research, and (2) in collaborations with Third Parties the primary purpose of which is the development of therapeutic products using RNA interference and, if RNAi Technology is developed therein for use in in vitro and/or in vivo target identification and/or target validation, then it may only be developed in the course of developing such therapeutic products.
Notwithstanding the foregoing, ALNYLAM's retained rights during the
Collaboration Term to practice any and all of such ALNYLAM Target
Identification and Target Validation RNAi Patent Rights, ALNYLAM RNAi
Patent Rights, ALNYLAM's interest in Joint Collaboration Patent Rights,
ALNYLAM Technology Collaboration Inventions, and/or ALNYLAM RNAi
Technology in collaboration with Third Parties shall not include the
right to perform in vitro and/or in vivo target identification and/or
target validation research for Third Parties unless such research is
performed in the course of a Third Party collaboration permitted under
subsection (2) of the preceding paragraph.
Notwithstanding any other provisions of this Agreement, the license
grant to MERCK under ALNYLAM-Assigned Collaboration Inventions shall be
perpetual.
3.1.1.1 TERMINATION OF MERCK FTE SUPPORT. If MERCK ceases to provide the
required FTEs commencing [**] after the Effective Date as provided in
Section 2.2.1, then: (1) the license grants provided by ALNYLAM to
MERCK under Section 3.1.1 shall become non-exclusive, and (2) if MERCK
has not paid the Technology Collaboration Milestone, then the license
grant provided by ALNYLAM to MERCK in Section 3.1.1 shall be modified
as follows: the definitions of ALNYLAM RNAi Patent Rights, ALNYLAM RNAi
Technology and ALNYLAM Technology Collaboration Inventions shall be
modified to exclude intellectual property rights Controlled by ALNYLAM
or its Affiliates which come into the Control of Alnylam or its
Affiliates more than one (1) year after the date specified in MERCK's
notice under Section 2.2.1 of this Agreement; provided, however, that,
if MERCK pays the Technology Collaboration Milestone at any time after
MERCK ceases to provide the required FTEs as set forth in the first
sentence of this paragraph, then the definitions of ALNYLAM RNAi Patent
Rights, ALNYLAM RNAi Technology and ALNYLAM Technology Collaboration
Inventions shall be modified to only exclude intellectual property
rights Controlled by ALNYLAM or its Affiliates which come into the
Control of ALNYLAM or its Affiliates after the later of: (1) the
earlier of: (a) the date upon which MERCK paid the Technology
Collaboration Milestone, or (b) the date upon which a Technology
Milestone Dispute relating to the Technology Collaboration Milestone
which was paid by MERCK was submitted to arbitration pursuant to
Section 9.7, or (2) [**] after the date specified in MERCK's notice
under Section 2.2.1 of this Agreement, and ALNYLAM and its Affiliates
shall immediately disclose and provide to MERCK all applicable
intellectual property not previously disclosed, including ALNYLAM RNAi
Patent Rights, ALNYLAM RNAi Technology, and ALNYLAM Technology
Collaboration Inventions.
3.1.2 MERCK BROAD RNAi PATENT RIGHTS, MERCK BROAD RNAi TECHNOLOGY, MERCK
PRODUCT-SPECIFIC RNAi PATENT RIGHTS AND MERCK PRODUCT-SPECIFIC RNAi
TECHNOLOGY. MERCK hereby grants to ALNYLAM a non-exclusive,
royalty-free license in the Territory with a right to sublicense its
Affiliates (except as set forth in Section 3.1.8):
(i) under MERCK Broad RNAi Patent Rights that are Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Effective Date and/or during the first [**] years of the
Collaboration Term; MERCK-Assigned Therapeutic
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Collaboration Inventions; MERCK's interest in Joint
Collaboration Patent Rights; and MERCK Broad RNAi Technology
that is Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term, during the Collaboration
Term solely to perform its obligations under the
Collaboration; and
(ii) under MERCK Product-Specific RNAi Patent Rights that are
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term, MERCK Product-Specific
RNAi Technology that is Controlled by MERCK or ROSETTA or
their wholly-owned subsidiaries as of the Effective Date
and/or during the first [**] years of the Collaboration Term,
and MERCK's interest in Joint Therapeutic Collaboration Patent
Rights, during the Therapeutic Collaboration Term solely to
perform its obligations under the Therapeutic Collaboration
with regard to a specific RNAi Therapeutic Product within the
Therapeutic Collaboration; and
(iii) under MERCK Broad RNAi Patent Rights that are Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Effective Date and/or during the first [**] years of the
Collaboration Term, MERCK Broad RNAi Technology that is
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term, MERCK's interest in
Joint Collaboration Patent Rights, and MERCK-Assigned
Therapeutic Collaboration Inventions, during and after the
Collaboration Term for the sole purpose of research
(including, without limitation, for internal in vitro and/or
in vivo target validation and/or target identification
research), development, manufacture, use, import or sale of
therapeutic products based on RNA interference by ALNYLAM, its
Affiliates, or its Third Party collaborators.
For the avoidance of doubt, it is acknowledged that, with regard to
research and development activities under Sections 3.1.2(i)-(iii), such
license grant shall apply only to research and development activities
using RNA interference.
ALNYLAM's license under MERCK-Assigned Therapeutic Collaboration
Inventions shall be perpetual.
The Parties agree that neither ALNYLAM nor its Affiliates have the
right to sublicense any MERCK intellectual property, including MERCK
RNAi Patent Rights, MERCK's interest in Joint Collaboration Patent
Rights, and/or MERCK RNAi Technology to any Third Party other than as
provided in Section 3.1.5. The Parties further agree that neither
ALNYLAM nor its Affiliates have the right to provide any Third Party
with MERCK RNAi Technology, MERCK RNAi Patent Rights, or MERCK's
interest in Joint Collaboration Patent Rights as part of a research
collaboration unless the primary purpose of such collaboration is the
development of therapeutic products using RNA interference and, if RNAi
Technology is developed therein for use in in vitro and/or in vivo
target identification and/or target validation, then it may only be
developed in the course of developing such therapeutic products;
provided, further that, under no circumstance other than pursuant to
Section 3.1.5(a) or an ALNYLAM Product
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Agreement, shall ALNYLAM or its Affiliates provide any Third Party with
MERCK Product-Specific RNAi Technology or MERCK Product-Specific RNAi
Patent Rights.
3.1.3 MERCK RNAi NOVEL TARGET IP. MERCK hereby grants ALNYLAM a worldwide,
royalty-free, Co-exclusive license, with the right to sublicense its
Affiliates (except as otherwise set forth in Section 3.1.8), to MERCK
RNAi Novel Target IP Controlled by MERCK or ROSETTA or their
wholly-owned subsidiaries solely to perform its obligations under the
Therapeutic Collaboration during the Therapeutic Collaboration Term
(for the avoidance of doubt, it is acknowledged that, with regard to
research and development activities, such license grant shall apply
only to research and development activities using RNA interference).
3.1.4 MERCK AND ALNYLAM CO-DEVELOP AND CO-COMMERCIALIZE A THERAPEUTIC
COLLABORATION PRODUCT. If MERCK exercises its Opt-In Right pursuant to
Section 2.14.3 and the Parties enter into a Therapeutic Collaboration
Product Agreement for a specific Therapeutic Collaboration Product,
then, as part of the Therapeutic Collaboration Product Agreement:
(a) ALNYLAM will grant to MERCK a worldwide, royalty-free,
Co-exclusive license, sublicensable to its Affiliates, to any
and all ALNYLAM RNAi Technology, ALNYLAM Collaboration
Inventions, ALNYLAM Therapeutic Collaboration IP, and ALNYLAM
RNAi Patent Rights, solely to perform its obligations under
the Therapeutic Collaboration Product Agreement to develop and
commercialize such Therapeutic Collaboration Product; and
(b) MERCK will grant to ALNYLAM a worldwide, royalty-free,
Co-exclusive license, sublicenseable to its Affiliates (except
as otherwise set forth in Section 3.1.8), to any and all MERCK
RNAi Technology, MERCK RNAi Patent Rights, MERCK Collaboration
Inventions and MERCK RNAi Novel Target IP which are Controlled
by MERCK or ROSETTA or their wholly-owned subsidiaries, solely
to perform its obligations under the Therapeutic Collaboration
Product Agreement to develop and commercialize such
Therapeutic Collaboration Product (for the avoidance of doubt,
it is acknowledged that, with regard to research and
development activities, such license grant shall apply only to
research and development activities using RNA interference).
3.1.5 ALNYLAM DEVELOPS THERAPEUTIC COLLABORATION PRODUCT WITHOUT MERCK. If
MERCK elects, pursuant to Section 2.14.3, not to opt-in on development
and commercialization of a specific Therapeutic Collaboration Product
with ALNYLAM or if the relevant Opt-In Negotiation Periods expire
without any action taken by MERCK, then:
(a) MERCK will grant to ALNYLAM a worldwide, royalty-bearing,
exclusive license, with the right to sublicense, to any and
all MERCK Product-Specific RNAi Technology, MERCK Broad RNAi
Technology, MERCK RNAi Novel Target IP, MERCK Product-Specific
RNAi Patent Rights and MERCK Broad RNAi Patent Rights which
are Controlled by MERCK or ROSETTA or their wholly-owned
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subsidiaries and MERCK's interest in Joint Collaboration
Patent Rights which are applicable to the specific Therapeutic
Collaboration Product solely to research, develop,
manufacture, use, import, sell and commercialize such
Therapeutic Collaboration Product (for the avoidance of doubt,
it is acknowledged that such license grant shall apply only to
such Therapeutic Collaboration Product and shall not apply to
any other product, and shall apply only to research and
development activities using RNA interference); and
(b) ALNYLAM shall pay MERCK the royalties as provided in Section
5.2.1(a); and
(c) The Parties shall enter into an agreement with respect to such
license and royalties and patent ownership, patent
prosecution, patent enforcement and such other matters as the
Parties may agree upon (an "ALNYLAM PRODUCT AGREEMENT"). Such
agreement will contain the terms set forth in Sections
3.1.5(a), 5.2.1(a), 5.2.1(c) and 5.2.2 through 5.5 and will be
negotiated in the manner set forth in the last paragraph of
Section 2.14.3.3, with unresolved issues resolved as set forth
therein.
3.1.6 MERCK DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT ALNYLAM. If
MERCK elects, pursuant to Section 2.14.3, to opt-in on development and
commercialization of a specific Therapeutic Collaboration Product but
ALNYLAM "opts-out" of developing and commercializing such Therapeutic
Collaboration Product with MERCK pursuant to Section 2.14.3.3.1, then
with respect to each such Therapeutic Collaboration Product:
(a) ALNYLAM will grant to MERCK a worldwide, royalty-bearing,
exclusive license, with the right to sublicense, to any and
all ALNYLAM RNAi Technology, ALNYLAM Collaboration Inventions,
ALNYLAM Therapeutic Collaboration IP, ALNYLAM RNAi Patents and
ALNYLAM's interest in Joint Collaboration Patent Rights which
are applicable to the Therapeutic Collaboration Product solely
to research, develop, manufacture, use, import, sell and
commercialize such Therapeutic Collaboration Product (for the
avoidance of doubt, it is acknowledged that such license shall
apply only to such Therapeutic Collaboration Product and shall
not apply to any other product);
(b) MERCK shall pay ALNYLAM the royalties as provided in Section
5.2.1(b); and
(c) The Parties will enter into an agreement with respect to such
license and royalties and patent ownership, patent
prosecution, patent enforcement and such other matters as the
Parties may agree upon (a "MERCK PRODUCT AGREEMENT"). Such
agreement will contain the terms set forth in Sections
3.1.6(a), 5.2.1(b), 5.2.1(c) and 5.2.2 through 5.5 and will be
negotiated in the manner set forth in the last paragraph of
Section 2.14.3.3, with unresolved issues resolved as set forth
therein.
3.1.7 JOINT COLLABORATION INVENTIONS. Each Party shall have the right to
practice and to license to Third Parties any Joint Collaboration
Inventions except to the extent either has Co-exclusive or exclusive
rights hereunder, and/or under a Therapeutic Collaboration Product
Agreement, an ALNYLAM Product Agreement or a MERCK Product
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Agreement; provided, however, that ALNYLAM does not have the right to
license to Third Parties or to any Affiliate excluded under Section
3.1.8 any Joint Collaboration Invention for the purpose of target
identification and/or target validation research except in a
collaboration with Third Parties in which the primary purpose of such
collaboration is the development of therapeutic products using RNA
interference and, if RNAi Technology is developed therein for use in in
vitro and/or in vivo target identification and/or target validation,
then it may only be developed in the course of developing such
therapeutic products.
3.1.8 ALNYLAM AFFILIATE RESTRICTIONS. For purposes of subsections 3.1.1 (but
not 3.1.1.1), 3.1.2, 3.1.3, 3.1.4 and 3.1.7, where noted, the term
"Affiliate" with respect to ALNYLAM shall not include any corporation
or business entity of which any of the securities or other ownership
interests representing the equity, the voting stock or general
partnership interest are owned, controlled or held, directly or
indirectly, by ALNYLAM and of which [**] percent ([**]%) or more of the
securities or other ownership interests representing the equity or
voting stock or general partnership interest are owned, controlled or
held by a pharmaceutical company, a biotechnology company, or a group
of such companies acting in concert, having annual sales revenues in
the aggregate amount of [**] U.S. dollars ($[**]) or by any investment
entity affiliated with any such pharmaceutical or biotechnology
company.
4. CONFIDENTIALITY AND PUBLICATION
4.1 NONDISCLOSURE OBLIGATION. All Information disclosed by one Party to the
other Party hereunder shall be maintained in confidence by the
receiving Party and shall not be disclosed to a non-Party or used for
any purpose except as set forth herein without the prior written
consent of the disclosing Party, except to the extent that such
Information:
(a) is known by receiving Party at the time of its receipt, and
not through a prior disclosure by the disclosing Party, as
documented by the receiving Party's business records;
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(b) is properly in the public domain;
(c) is subsequently disclosed to the receiving Party by a Third Party who may lawfully do so and is not under an obligation of confidentiality to the disclosing Party;
(d) is developed by the receiving Party independently of Information received from the disclosing Party, as documented by the receiving Party's business records;
(e) is deemed necessary by a Party to be disclosed to Related Parties, agents, consultants, and/or other Third Parties for any and all purposes such Party and its Affiliates deem necessary or advisable in the ordinary course of business in accordance with this Agreement on the condition that such Third Parties agree to be bound by the confidentiality and non-use obligations contained this Agreement; provided the term of confidentiality for such Third Parties shall be no less than seven (7) years.
Any combination of features or disclosures shall not be deemed to fall within the foregoing exclusions merely because individual features are published or available to the general public or in the rightful possession of the receiving Party unless the combination itself and principle of operation are published or available to the general public or in the rightful possession of the receiving party.
Notwithstanding the obligations of confidentiality and non-use set
forth above, a receiving Party may provide Information disclosed to it
to (a) governmental or other regulatory agencies in order to obtain
patents or to gain or maintain approval to conduct clinical trials or
to market Therapeutic Collaboration Products; provided, that, such
disclosure shall be subject to the prior written consent of the Party
whose Information is intended to be disclosed (which consent shall not
be unreasonably withheld), and such Information shall be disclosed only
to the extent reasonably necessary to obtain patents or authorizations,
(b) governmental or other regulatory agencies to the extent required by
law or by the requirements of any nationally-recognized securities
exchange, quotation system or over-the-counter market on which such
Party has its securities listed or traded, (c) any actual or
prospective investors, lenders and other financing sources, provided,
however, that neither the Party nor its Affiliates shall disclose the
work plan or any portion thereof to such persons or entities, and (d)
actual or prospective collaborators or strategic partners who are
obligated to keep such information confidential; provided, however,
that the Party and/or its Affiliates shall only disclose to actual or
prospective collaborators and strategic partners the general subject
matter of this Agreement, the licenses granted hereunder, the
exclusivity provision set forth in Section 2.11, the provisions of
Article 4 and the patent provisions as set forth in Article 7.
If a Party is required by judicial or administrative process to disclose Information that is subject to the non-disclosure provisions of this Section 4.1 or Section 4.2, such Party shall promptly inform the other Party of the disclosure that is being sought in order to provide the other Party an opportunity to challenge or limit the disclosure obligations. Information that is disclosed by judicial or administrative process shall remain otherwise subject to the confidentiality and non-use provisions of this Section 4.1 and Section 4.2, and the Party disclosing Information pursuant to law or court order shall take all steps reasonably practical, including without limitation seeking an order of confidentiality, to ensure the continued confidential treatment of such Information.
4.2 PUBLICATION. MERCK and ALNYLAM each acknowledge the other Party's
interest in publishing the results of its research in order to obtain
recognition within the scientific community and to advance the state of
scientific knowledge. Each Party also recognizes the mutual interest in
obtaining valid patent protection and in protecting business interests
and trade secret information. Consequently, except for disclosures
permitted pursuant to Section 4.1, either Party, its employees or
consultants wishing to make a publication, or a disclosure to a Third
Party relating to the Collaboration, shall deliver to the other Party a
copy of the proposed written publication or an outline of an oral
disclosure at least thirty (30) days prior to submission for
publication or presentation. The reviewing Party shall have the right
(a) to propose modifications to the publication or presentation for
patent reasons, trade secret reasons or business reasons, or (b) to
request a reasonable delay in publication or presentation in order to
protect patentable
information. If the reviewing Party requests a delay, the publishing Party shall delay submission or presentation for a period of sixty (60) days to enable patent applications protecting each Party's rights in such information to be filed in accordance with Article 7 below. Upon expiration of such sixty (60) days, the publishing Party shall be free to proceed with the publication or presentation. If the reviewing Party requests modifications to the publication or presentation, the publishing Party shall edit such publication to prevent disclosure of trade secret or proprietary business information prior to submission of the publication or presentation.
4.3 PUBLICITY/USE OF NAMES. No disclosure of the existence of, or the terms of, this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by law or expressly permitted by the terms hereof.
Notwithstanding the foregoing, within five (5) business days following the execution of this Agreement by both Parties, the Parties shall agree in writing upon a press release and ALNYLAM may thereafter issue such press release publicizing the Collaboration. Upon MERCK's prior written agreement as to the text of the release, which agreement shall be executed within ten (10) business days of MERCK's receipt of such press release and shall not be unreasonably withheld, ALNYLAM may also issue a press release announcing the achievement of the Technology Collaboration Milestone. Once any press release or any other written statement is approved in writing by both Parties, either Party may make subsequent public disclosure of the information contained in such press release or other written statement without the further approval of the other Party.
5. PAYMENTS; ROYALTIES AND REPORTS
5.1 PAYMENTS.
5.1.1 SIGNATURE PAYMENT. Within twenty (20) days of the Effective Date, MERCK
shall pay ALNYLAM HOLDING Two Million Dollars ($2,000,000.00).
5.1.2 MAINTENANCE FEE. MERCK shall pay ALNYLAM HOLDING a maintenance fee of
[**] Dollars ($[**]) per annum for a period of [**] years upon the
terms and conditions contained herein. The first installment of [**]
Dollars ($[**]) shall be payable within [**] of the Effective Date and
the second installment of [**] Dollars ($[**]) shall be payable within
[**] of the Effective Date.
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5.1.3 EQUITY INVESTMENT. Upon the terms and conditions set forth in the Stock
Purchase Agreement between the Parties and dated as of the Effective
Date (the "STOCK PURCHASE AGREEMENT"), MERCK shall purchase Five
Million Dollars ($5,000,000.00) of ALNYLAM HOLDING Series C Convertible
Preferred Stock at the purchase price per share set forth in the Stock
Purchase Agreement.
5.1.4 MILESTONE PAYMENTS. Subject to the terms and conditions of this
Agreement, MERCK shall pay to ALNYLAM HOLDING a milestone payment of
[**] Dollars ($[**]), and shall purchase [**] Dollars ($[**]) of
ALNYLAM HOLDING Series C Convertible Preferred Stock upon the terms and
conditions set forth in the Stock Purchase Agreement upon ALNYLAM's
achievement of the Technology Collaboration Milestone.
ALNYLAM shall notify the JSC and shall prepare and deliver a data
package for presentation to the JSC when ALNYLAM determines that it has
achieved the Technology Collaboration Milestone. Within fifteen (15)
business days following receipt of such data package, the JSC shall
convene to review the data package and determine whether the data is
sufficient to conclude that the Technology Collaboration Milestone has
been achieved. If the JSC determines that there is not sufficient data
to support the conclusion that the Technology Collaboration Milestone
has been achieved, the JSC shall provide written notice to ALNYLAM of
same, which notice shall specify all additional data that the JSC
determines in good faith is necessary to make the data package
sufficient to conclude that the Technology Collaboration Milestone has
been achieved. Thereafter, ALNYLAM shall either submit the additional
data to the JSC or notify the JSC that the sufficiency of the data is
in dispute. Any additional data provided by ALNYLAM at the JSC's
request shall be reviewed by the JSC within ten (10) business days
following the JSC's receipt thereof.
If the JSC determines there is sufficient data to support the
conclusion that the Technology Collaboration Milestone has been
achieved, the MERCK members of the JSC shall have thirty (30) days to
conduct an internal review of the data package with MERCK's management
and promptly thereafter and in any event no later than ten (10)
business days following the expiration of MERCK's internal review
period, the JSC shall determine whether the Technology Collaboration
Milestone has been achieved. If the JSC determines that the Technology
Milestone has been achieved, then MERCK shall make the milestone
payment and purchase the Series C Convertible Preferred Stock as set
forth in this Section 5.1.4 within ten (10) business days of such
determination. If MERCK or ALNYLAM disputes the sufficiency of the data
presented to the JSC or the determination of the JSC as to whether the
Technology Collaboration Milestone has been achieved or the JSC fails,
or the MERCK members of the JSC fail, to take action within the time
periods above, then the Parties shall be deemed to have a Technology
Milestone Dispute (the "TECHNOLOGY MILESTONE DISPUTE") which shall be
resolved as follows: In the event of a Technology Milestone Dispute,
the Parties agree that such Technology Milestone Dispute shall be
submitted to the President of MERCK Research Laboratories and the CEO
of ALNYLAM for resolution. If such President and CEO cannot reach an
agreement regarding the Technology Milestone Dispute within thirty (30)
days, then it shall be submitted to arbitration by either Party
pursuant to Section 9.7 of this Agreement. The milestone payments shall
be payable only upon the initial achievement
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of the Technology Collaboration Milestone and no amounts shall be due
hereunder for subsequent or repeated achievement of such milestone.
5.1.5 USE OF PROCEEDS. ALNYLAM shall use all payments received from MERCK
pursuant to this Section 5.1 solely for the purpose of funding its
proposed business operations, including the subject matter of this
Agreement, which focus on RNAi Technology and development of drugs
based on RNA interference. Such payments are not creditable against any
future payments by MERCK to ALNYLAM.
5.2 ROYALTIES.
5.2.1 ROYALTIES PAYABLE BY THE PARTIES. Subject to the terms and conditions
of this Agreement, the royalty-paying Party shall pay to the
royalty-receiving Party the following royalties on a country-by-country
basis for Net Sales of each Therapeutic Collaboration Product by the
royalty-paying Party or its Related Parties pursuant to the provisions
of Section 5.2.1(c):
(a) ALNYLAM DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT
MERCK. If MERCK elects, pursuant to Section 2.14.3, not to
opt-in on development and commercialization of a Therapeutic
Collaboration Product with ALNYLAM or the relevant Opt-In
Negotiation Period expires, then (1) in the event that the
MERCK Non-Druggable Target against which the Therapeutic
Collaboration Product is directed satisfies clause (a) of the
definition of MERCK Non-Druggable Target and MERCK has the
belief set forth in clause (b) of such definition, then
ALNYLAM shall pay MERCK the following royalty rates with
respect to such Therapeutic Collaboration Product and (2) in
the event that such MERCK Non-Druggable Target satisfies
clause (a) of the definition, but MERCK does not have the
belief set forth in clause (b) of such definition, then
ALNYLAM shall pay MERCK one-half of the applicable royalty
rate set forth below with respect to such Therapeutic
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Collaboration Product:
Annual Net Sales of Therapeutic
Collaboration Product Royalty on Annual Net Sales
--------------------- ---------------------------
Portion of Annual Net Sales < or = $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
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(b) MERCK DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT ALNYLAM. If MERCK elects pursuant to Section 2.14.3, to opt-in on development and commercialization of a Therapeutic Collaboration Product but ALNYLAM opts-out of development and commercialization of such Therapeutic Collaboration Product
with MERCK, then MERCK shall pay ALNYLAM the following royalty rates with respect to such Therapeutic Collaboration Product:
Annual Net Sales of Therapeutic
Collaboration Product Royalty on Annual Net Sales
--------------------- ---------------------------
Portion of Annual Net Sales < or = $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
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(c) GENERAL TERMS. Royalties on each Therapeutic Collaboration
Product at the rates set forth in Section 5.2.1(a) and (b)
shall be effective as of the date of First Commercial Sale of
such Therapeutic Collaboration Product in a country and shall
continue until the later of (i) the expiration of the last
Valid Patent Claim covering the manufacture, use, sale or
import of the Therapeutic Collaboration Product in the country
of sale, or (ii) the tenth (10th) anniversary of the First
Commercial Sale in such country, subject to the following
conditions:
(x) that only one royalty shall be due with respect to
the same unit of Therapeutic Collaboration Product;
(y) that no royalties shall be due upon the sale or other
transfer among a Party or its Related Parties, but in
such cases the royalty shall be due and calculated
upon the Party's or its Related Party's Net Sales to
the first independent Third Party; and
(z) no royalties shall accrue on the disposition of
Therapeutic Collaboration Product in reasonable
quantities by a Party or its Related Parties as
samples (promotion or otherwise) or as donations (for
example, to non-profit institutions or government
agencies for a non-commercial purpose).
5.2.2 ROYALTY PAYABLE UNDER MANAGED PHARMACEUTICAL CONTRACT. It is understood
by the Parties that a Party may sell Therapeutic Collaboration Product
to an independent Third Party (such as a retailer or wholesaler) and
may subsequently perform services relating to a Therapeutic
Collaboration Product and other products under a managed pharmaceutical
benefits contract or other similar contract. In such cases, it is
agreed by the Parties that Net Sales shall be based on the average
invoice price at which similar quantities of such Therapeutic
Collaboration Product are sold in the country in question to Third
Parties without providing such services.
5.2.3 CHANGE IN SALES PRACTICES. The Parties acknowledge that during the term
of this Agreement, the royalty-paying Party's sales practices for the
marketing and distribution of Therapeutic Collaboration Product may
change to the extent to which the calculation of the payment for
royalties on Net Sales may become impractical or even impossible. In
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such event the Parties agree to meet and discuss in good faith new ways
of compensating the royalty-receiving Party to the extent currently
contemplated under Section 5.2.1.
5.2.4 COMPULSORY LICENSES. If a compulsory license is granted to a Third
Party with respect to a Therapeutic Collaboration Product in any
country in the Territory with a royalty rate lower than the applicable
royalty rate set forth in Section 5.2.1, then the royalty rate to be
paid by the royalty-paying Party on Net Sales in that country under
Section 5.2.1 shall be reduced to the rate paid by the compulsory
licensee.
5.2.5 THIRD PARTY LICENSES. In the event the sale by one Party or its Related
Parties of a Therapeutic Collaboration Product results in an obligation
of the other Party to pay royalties or milestones to a Third Party
under a license that is sublicensed hereunder, then the selling Party
shall reimburse the other Party for such royalty or milestone. In the
event that (i) a Party is required to reimburse the other pursuant to
the preceding sentence, or (ii) one or more patent licenses (other than
patent licenses for delivery devices, delivery systems, formulations,
excipients and product components other than the active pharmaceutical
ingredients), from Third Parties are required by MERCK or its Related
Parties or ALNYLAM or its Related Parties in order to make, have made,
use, offer to sell, sell or import a Therapeutic Collaboration Product
(hereinafter "THIRD PARTY PATENT LICENSES"), [**]percent ([**]%) of the
consideration: (1) required to be reimbursed pursuant to the first
sentence of this section or actually paid under such Third Party Patent
Licenses by MERCK or its Related Parties or ALNYLAM or its Related
Parties for sale of such Therapeutic Collaboration Product in a
country, or (2) by a Party pursuant to the last sentence of Section
2.14.3.1 of this Agreement, for a Calendar Quarter shall be creditable
against the royalty payments due the royalty-receiving Party by the
royalty-paying Party with respect to the sale of such Therapeutic
Collaboration Products in such country in such Calendar Quarter;
provided, however, that in no event shall the royalties owed by the
royalty-paying Party to the royalty-receiving Party for such Calendar
Quarter in such country be reduced by more than [**] percent ([**]%).
5.2.6 REPORTS; PAYMENT OF ROYALTY. During the term of the Agreement following
the First Commercial Sale of each Therapeutic Collaboration Product,
the royalty-paying Party shall furnish to the royalty-receiving Party a
quarterly written report for the Calendar Quarter showing the quantity
of each Therapeutic Collaboration Product sold in each country (as
measured in grams of active pharmaceutical ingredient), the gross sales
of such Therapeutic Collaboration Product in each country, total
deductions for such Therapeutic Collaboration Product for each country
permitted by Section 1.63, the Net Sales in each country of such
Therapeutic Collaboration Product subject to royalty payments sold by
the royalty-paying Party or its Related Parties in the Territory during
the reporting period and the royalties payable under this Agreement.
Reports shall be due on the forty-fifth (45th) day following the close
of each Calendar Quarter. Royalties shown to have accrued by each
royalty report shall be due and payable on the date such royalty report
is due. The royalty-paying Party shall keep complete and accurate
records in sufficient detail to enable the royalties payable hereunder
to be determined.
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5.3 AUDITS.
(a) Upon the written request of the royalty-receiving Party and
not more than once in each Calendar Year, the royalty-paying
Party and/or its Related Parties shall permit an independent
certified public accounting firm of nationally-recognized
standing selected by the royalty-receiving Party and
reasonably acceptable to the royalty-paying Party, at the
royalty-receiving Party's expense except as set forth below,
to have access during normal business hours to such of the
records of the royalty-paying Party as may be reasonably
necessary to verify the accuracy of the royalty reports
hereunder for any year ending not more than thirty-six (36)
months prior to the date of such request. The accounting firm
shall disclose to the royalty-receiving Party only whether the
royalty reports are correct or incorrect and the specific
details concerning any discrepancies. No other information
shall be provided to the royalty-receiving Party.
(b) If such accounting firm identifies a discrepancy made during
such period, the appropriate Party shall pay the other Party
the amount of the discrepancy within twenty (20) days of the
date the royalty-receiving Party delivers to the
royalty-paying Party such accounting firm's written report so
concluding, or as otherwise agreed by the Parties in writing.
Such written report shall be binding upon the Parties. The
fees charged by such accounting firm shall be paid by the
royalty-receiving Party, unless such discrepancy represents an
underpayment of the lesser of one million U.S. dollars
($1,000,000) or five percent (5%) of the total amounts due
hereunder, in which case such fees shall be paid by the
royalty-paying Party.
(c) The royalty-paying Party shall include in each sublicense
granted by it pursuant to this Agreement a provision requiring
the sublicensee to make reports to the royalty-paying Party,
to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by the
royalty-receiving Party's independent accountant to the same
extent required of the royalty-paying Party under this
Agreement. Upon the expiration of thirty-six (36) months
following the end of any year, the calculation of royalties
payable with respect to such year shall be binding and
conclusive upon the royalty-receiving Party, and the
royalty-paying Party and its sublicensees shall be released
from any further liability or accountability with respect to
royalties for such year.
(d) Unless an audit for such year has been commenced upon the
expiration of thirty-six (36) months following the end of any
year, the calculation of royalties payable with respect to
such year shall be binding and conclusive upon both the
royalty-receiving Party and the royalty-paying Party, and the
royalty-paying Party and its Related Parties shall be released
from any further liability or accountability with respect to
royalties for such year.
(e) The royalty-receiving Party shall treat all financial
information subject to review under this Section 5.3 or under
any sublicense agreement in accordance with the
confidentiality and non-use provisions of this Agreement, and
shall cause its accounting firm to enter into an acceptable
confidentiality agreement with the
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royalty-paying Party and/or its Related Parties obligating it
to retain all such information in confidence pursuant to such
confidentiality agreement.
5.4 PAYMENT EXCHANGE RATE. All payments to be made under this Agreement
shall be made in United States dollars and may be paid by check made to
the order of the receiving Party or bank wire transfer in immediately
available funds to such bank account in the United States designated in
writing by the receiving Party from time to time. In the case of sales
outside the United States (i) by MERCK and its Related Parties, the
rate of exchange to be used in computing the amount of currency
equivalent in United States dollars due shall be made at the rate of
exchange utilized by MERCK in its worldwide accounting system,
prevailing on the third to the last business day of the month preceding
the month in which such sales are recorded, and (ii) by ALNYLAM and its
Related Parties, the rate of exchange to be used in computing the
amount of currency equivalent in United States dollars due shall be
made at the prevailing commercial rate of exchange for purchasing
dollars with such foreign currency as published in the Wall Street
Journal for the close of the last business day of the calendar quarter
for which the relevant royalty payment is to be made by ALNYLAM.
5.5 INCOME TAX WITHHOLDING. If laws, rules or regulations require
withholding of income taxes or other taxes imposed upon payments set
forth in this Article 5, the paying Party shall make such withholding
payments as required and subtract such withholding payments from the
payments set forth in this Article 5. The paying Party shall submit
appropriate proof of payment of the withholding taxes to the receiving
Party within a reasonable period of time. At the request of the
receiving Party, the royalty-paying Party shall, at its cost, give the
royalty-receiving Party such reasonable assistance, which shall include
the provision of appropriate certificates of such deductions made
together with other supporting documentation as may be required by the
relevant tax authority, to enable the royalty-receiving Party to claim
exemption from such withholding or other tax imposed or obtain a
repayment thereof or reduction thereof and shall upon request provide
such additional documentation from time to time as is reasonably
required to confirm the payment of tax.
6. REPRESENTATIONS AND WARRANTIES
6.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to the other Party that as of the Effective Date of this
Agreement:
(a) It is duly-organized and validly existing under the laws of
its jurisdiction of incorporation or formation, and has full
corporate or other power and authority to enter into this
Agreement and to carry out the provisions hereof.
(b) It is duly-authorized to execute and deliver this Agreement
and to perform its obligations hereunder, and the person or
persons executing this Agreement on its behalf has been
duly-authorized to do so by all requisite corporate action.
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(c) This Agreement is legally binding upon it, enforceable in accordance with its terms. Except as set forth in Section 6.1(c) of Schedule 6 to this Agreement, the execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound.
(d) Except as set forth in Section 6.1(d) of Schedule 6 to this Agreement, It has not, and will not during the term of this Agreement, grant any right to any Third Party which would conflict with the rights granted to the other Party hereunder. It has (or will have at the time performance is due) maintained and will maintain and keep in full force and effect all agreements (including license agreements) and filings (including patent filings) necessary to perform its obligations hereunder.
6.2 ALNYLAM REPRESENTATIONS AND WARRANTIES. ALNYLAM represents and warrants to MERCK that as of the Effective Date of this Agreement:
(a) To the best of ALNYLAM's knowledge, the ALNYLAM RNAi Patent Rights and ALNYLAM RNAi Technology exist and are not invalid or unenforceable, in whole or in part;
(b) Except as set forth in Section 6.2(b) of Schedule 6 to this Agreement, it has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the ALNYLAM RNAi Patent Rights or the ALNYLAM RNAi Technology in a manner that conflicts with any rights granted to MERCK hereunder; and
(c) Except as set forth in Section 6.2(c) of Schedule 6, there are no claims, judgments or settlements against or owed by ALNYLAM or pending or threatened claims or litigation relating to the ALNYLAM RNAi Patent Rights or the ALNYLAM RNAi Technology.
6.3 MERCK REPRESENTATIONS AND WARRANTIES. MERCK represents and warrants to ALNYLAM that as of the Effective Date of this Agreement:
(a) to the best of MERCK's knowledge, the MERCK RNAi Patent Rights and the patent rights within the MERCK RNAi Novel Target IP and MERCK RNAi Technology exist and are not invalid or unenforceable, in whole or in part;
(b) it has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the MERCK RNAi Patent Rights, MERCK Novel Target IP or the MERCK RNAi Technology in a manner that conflicts with the rights granted to ALNYLAM hereunder; and
(c) there are no claims, judgments or settlements against or owed by MERCK or pending or threatened claims or litigation relating to the MERCK RNAi Patent Rights, MERCK RNAi Novel Target IP or the MERCK RNAi Technology.
6.4 ASSIGNMENT BY INVENTORS. ALNYLAM shall cause and ensure that each and every ALNYLAM employee, agent or representative, including consultants and scientific advisors, working on the Collaboration has assigned or will assign to ALNYLAM his/her rights to Inventions. MERCK shall cause and ensure that each and every MERCK employee, agent or representative, including consultants and scientific advisors, working on the Collaboration has assigned or will assign to MERCK his/her rights to Inventions.
6.5 INDEMNIFICATION.
(a) MERCK shall indemnify, hold harmless, and defend ALNYLAM, its Affiliates and their respective directors, officers, employees and agents from and against any and all claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys' fees) arising out of or resulting from the exercise of any rights, under this Agreement by MERCK, its Affiliates and their respective sublicensees. This indemnification shall include, but is not limited to, any and all claims alleging product liability in connection with Therapeutic Collaboration Products. This indemnification excludes claims against ALNYLAM by any Third Party for infringement of such Third Party's intellectual property rights resulting from MERCK's exercise in accordance with the terms of this Agreement of any intellectual property rights granted by ALNYLAM hereunder. Furthermore, MERCK shall have no obligation to indemnify ALNYLAM to the extent that the claim, suit, loss, liability, damage, cost, fee or expense arises out of or results from the negligence, willful misconduct or breach of the terms of this Agreement of or by ALNYLAM, its Affiliates, or their directors, officers, employees, consultants, scientific advisors or agents.
(b) ALNYLAM shall indemnify, hold harmless, and defend MERCK, its Affiliates and their respective directors, officers, employees and agents from and against any and all claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys' fees) arising out of or resulting from the exercise of any rights under this Agreement by ALNYLAM, its Affiliates and their respective sublicensees. This indemnification shall include, but is not limited to, any and all claims alleging product liability in connection with Therapeutic Collaboration Products. This indemnification excludes claims against MERCK by any Third Party for infringement of such Third Party's intellectual property rights resulting from ALNYLAM's exercise in accordance with the terms of this Agreement of any intellectual property rights granted by MERCK hereunder. Furthermore, ALNYLAM shall have no obligation to indemnify MERCK to the extent that the claim, suit, loss, liability, damage, cost, fee or expense arises out of or results from the negligence, willful misconduct or breach of the terms of this Agreement of or by MERCK, its Affiliates, or their directors, officers, employees, consultants, scientific advisors or agents.
7. PATENT PROVISIONS
7.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS. Except as otherwise provided in Schedule 2.14.3.3, the Parties agree that:
(a) ALNYLAM or RIBOPHARMA has the sole responsibility, to, at ALNYLAM's or RIBOPHARMA's discretion, file, conduct ex parte and inter partes prosecution and maintain in the Territory, the ALNYLAM RNAi Patent Rights owned by ALNYLAM or licensed by RIBOPHARMA to ALNYLAM and licensed to MERCK under this Agreement; and
(b) MERCK has the sole responsibility, to, at its discretion, file, conduct ex parte and inter partes prosecution and maintain in the Territory the MERCK RNAi Patent Rights and the patent rights contained in the MERCK RNAi Novel Target IP licensed to ALNYLAM under this Agreement.
provided, however, that, with respect to Joint Collaboration Inventions, ALNYLAM shall have the first right to file, conduct ex parte and inter partes prosecution and maintain patent applications and patents for such Joint Collaboration Inventions. With respect to Joint Collaboration Inventions, ALNYLAM may elect not to file, conduct ex parte and inter partes prosecution and/or maintain patent applications and patents and, if so, MERCK, and/or a law firm acting on its behalf, shall have the right to file, conduct ex parte and inter partes prosecution and maintain/or patent applications and patents, as applicable.
In each case above, with respect to Joint Collaboration Inventions, (a) the filing Party shall: (i) give the non-filing Party an opportunity to review the text of the applications, (ii) consult with the non-filing Party with respect thereto and give good faith consideration to the requests and suggestions of the non-filing Party with respect to the filing thereof, (iii) supply the non-filing Party with a copy of the application as filed, together with notice of its filing date and serial number, and (iv) shall keep the other Party advised on at least a quarterly basis of the status of the actual and prospective patent filings; and (b) the prosecuting Party shall give the non-prosecuting Party copies of all correspondence from and to the U.S. and all other patent offices related to the prosecution of patents or patent applications covering such Joint Collaboration Inventions and give good faith consideration to the requests and suggestions of the non-prosecuting Party with respect to the prosecution thereof.
ALNYLAM shall promptly give notice to MERCK of the grant, lapse, revocation, surrender, invalidation or abandonment of any ALNYLAM RNAi Patent Rights licensed to MERCK.
MERCK shall promptly give notice to ALNYLAM of the grant, lapse, revocation, surrender, invalidation or abandonment of any MERCK RNAi Patent Rights and patent rights contained in MERCK RNAi Novel Target IP licensed to ALNYLAM.
With respect to all filings, ex parte and inter partes prosecution and maintenance hereunder (including, without limitation, any interference, opposition, reexamination or reissue proceeding), the filing, prosecuting or maintaining Party shall be responsible for payment of all costs and expenses related to such filings, prosecution or maintenance; provided, however, that, with respect to Joint Technology Collaboration Inventions, the Parties shall equally share all costs and expenses related to such filings, prosecution or
maintenance. With respect to patent applications or patents for Joint Collaboration Inventions, if the Party which files, begins ex parte or inter partes prosecution or maintenance, elects to abandon or otherwise cease filing, ex parte or inter partes prosecution or maintenance, and the other Party elects to continue, then the continuing Party shall bear all expenses from the time it takes over the filing, ex parte or inter partes prosecution or maintenance.
7.2 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE. Except as otherwise provided in Schedule 2.14.3.3, the Parties agree that:
(a) ALNYLAM shall, within ten (10) days of learning of such event, inform MERCK of any request for, or filing or declaration of, any interference, opposition or reexamination or reissue relating to ALNYLAM RNAi Patent Rights.
(b) MERCK shall, within ten (10) days of learning of such event, inform ALNYLAM of any request for, or filing or declaration of, any interference, opposition, or reexamination or reissue relating to MERCK RNAi Patent Rights and patent rights contained in MERCK RNAi Novel Target IP.
(c) In connection with any interference with a Third Party patent or patent application, opposition by a Third Party and not on behalf of the other Party, reissue, or reexamination proceeding (other than one instituted by the other Party) relating to ALNYLAM RNAi Patent Rights, MERCK RNAi Patent Rights, MERCK RNAi Novel Target IP, or Joint Collaboration Patent Rights, MERCK and ALNYLAM shall cooperate fully and shall provide each other with any information or assistance that either may reasonably request. Each Party shall keep the other Party informed of developments in any such action or proceeding to the extent permissible by law and to the extent allowed by a written agreement with a Third Party under which a Party has obtained rights to the applicable patent rights.
7.3 ENFORCEMENT AND DEFENSE.
(a) ALNYLAM shall give MERCK notice of: (i) any infringement of
(x) Joint Collaboration Patent Rights relating to in vitro
and/or in vivo target validation and/or target identification;
and/or (y) ALNYLAM RNAi Patent Rights relating to in vitro
and/or in vivo target validation and/or target identification
that are (A) Controlled by ALNYLAM or its Affiliates and (B)
licensed co-exclusively or exclusively hereunder to MERCK by
ALNYLAM, and/or (ii) any misappropriation or misuse of ALNYLAM
RNAi Technology relating to in vitro and/or in vivo target
validation and/or target identification that is (A) Controlled
by ALNYLAM or its Affiliates and (B) licensed co-exclusively
or exclusively hereunder to MERCK by ALNYLAM, that may come to
ALNYLAM's attention. MERCK and ALNYLAM shall thereafter
consult and cooperate fully to determine a course of action,
including, but not limited to, the commencement of legal
action by either or both MERCK and/or ALNYLAM, to terminate
any infringement of such ALNYLAM RNAi Patent Rights or such
Joint Collaboration Patent Rights or any misappropriation or
misuse of such ALNYLAM RNAi Technology. However, ALNYLAM, upon
prompt written notice to MERCK,
shall have the first right to initiate and prosecute such legal action at its own expense and in the name of ALNYLAM and MERCK, and to control the defense of any declaratory judgment action relating to such ALNYLAM RNAi Patent Rights or such Joint Collaboration Patent Rights or such ALNYLAM RNAi Technology at its own expense. ALNYLAM shall promptly inform MERCK if it elects not to exercise such first right and MERCK shall thereafter have the right to either initiate and prosecute such action or to control the defense of such declaratory judgment action in the name of MERCK and, if necessary, ALNYLAM, only with respect to an infringement of Joint Collaboration Patent Rights through the conduct of in vitro and/or in vivo target identification and/or target validation. Each Party shall have the right to be represented by counsel of its own choice. For the avoidance of doubt, it is agreed that MERCK shall have no right to initiate or prosecute any action or control the defense of any declaratory judgment action with respect to any ALNYLAM RNAi Patent Right or misuse or misappropriation of ALNYLAM RNAi Technology.
ALNYLAM agrees that, in the event a Therapeutic Collaboration Product becomes subject to a MERCK Product Agreement, and an ALNYLAM RNAi Patent Right is infringed by a Third Party by the sale of a therapeutic product using RNA interference against the same MERCK RNAi Novel Target as such Therapeutic Collaboration Product (a "COMPETING RNAi PRODUCT") then if (a) there is no patent right Controlled by MERCK and no Joint Collaboration Patent Right that can be asserted against the alleged infringement, and (b) ALNYLAM does not assert at least one ALNYLAM RNAi Patent Right against such alleged infringement, then MERCK's license to such Therapeutic Collaboration Product will become royalty-free in countries in which the Competing RNAi Product is sold, for as long as such Competing RNAi Product is being sold in such country. The foregoing provision will be reflected in each MERCK Product Agreement.
With respect to any action or defense provided for in this paragraph (a), ALNYLAM shall not admit the invalidity or unenforceability of any MERCK RNAi Patent Rights, MERCK RNAi Novel Target IP or Joint Collaboration Patent Rights without the prior written consent of MERCK.
(b) In the event that ALNYLAM elects not to initiate and prosecute an action as provided in paragraph (a), and MERCK elects to do so, the costs of any action to terminate such infringement of Joint Collaboration Patent Rights, including without limitation the costs of any legal action commenced or the defense of any declaratory judgment, shall be borne by MERCK. No suit or negotiation arising from such action may be settled by MERCK without prior written notice to ALNYLAM. With respect to any action or defense provided for in this paragraph (b), MERCK shall not admit the invalidity or unenforceability of any ALNYLAM RNAi Patent Rights or Joint Collaboration Patent Rights without the written consent of ALNYLAM.
(c) For any such action to terminate any infringement of Joint Collaboration Patent Rights relating to in vitro and/or in vivo target validation and/or target identification, in the event that MERCK is unable to initiate or prosecute such action solely in its
own name, ALNYLAM will join such action voluntarily and will execute and cause its Affiliates to execute all documents necessary for MERCK to initiate litigation to prosecute and maintain such action, at the expense of MERCK. In connection with any action, MERCK and ALNYLAM will cooperate fully and will provide each other with any information or assistance that either may reasonably request. Each Party shall keep the other informed of developments in any action or proceeding, to the extent permissible by law.
(d) Any recovery obtained by either or both MERCK and ALNYLAM in connection with or as a result of any action contemplated by this section, whether by settlement or otherwise, shall be shared in order as follows:
(i) the Party which initiated and prosecuted the action shall recoup all of its costs and expenses incurred in connection with the action;
(ii) the other Party shall then, to the extent possible, recover its costs and expenses incurred in connection with the action; and
(iii) the amount of any recovery remaining shall then be allocated between the Parties as follows: (1) [**] percent ([**]%) of the remaining amount to the Party prosecuting such action and (2) [**] percent ([**]%) to the other Party.
7.4 PATENT TERM RESTORATION. The Parties hereto shall cooperate with each other in obtaining patent term restoration or supplemental protection certificates or their equivalents in any country in the Territory where applicable to ALNYLAM RNAi Patent Rights, Joint Collaboration Patent Rights, and patent rights contained in MERCK RNAi Novel Target IP and MERCK RNAi Patent Rights. The Parties shall mutually agree upon any elections to be made with respect to obtaining such patent term restoration with regard to Joint Collaboration Patent Rights.
8. TERM AND TERMINATION
8.1 TERM AND EXPIRATION. This Agreement shall be effective as of the Effective Date and, unless terminated earlier pursuant to Sections 8.2 or 8.3 below, this Agreement shall continue in effect until expiration of all royalty obligations hereunder and under all Therapeutic Collaboration Product Agreements, ALNYLAM Product Agreements and MERCK Product Agreements. Upon expiration of this Agreement, the Parties' licenses pursuant to Section 3.1 shall become fully paid-up, perpetual licenses.
8.2 TERMINATION FOR CAUSE.
8.2.1 CAUSE FOR TERMINATION. This Agreement may be terminated at any time
during the term of the Agreement:
(a) upon written notice by either Party if the other Party is in
breach of its material obligations hereunder by causes and
reasons within its control and has not cured such breach
within ninety (90) days after notice requesting cure of the
breach; provided,
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however, in the event of a good faith dispute with respect to
the existence of a material breach, the ninety (90) day cure
period shall be tolled until such time as the Dispute is
resolved pursuant to Section 9.6 hereof; or
(b) by either Party upon the filing or institution of bankruptcy,
reorganization, liquidation or receivership proceedings, or
upon an assignment of a substantial portion of the assets for
the benefit of creditors by the other Party; provided,
however, in the case of any involuntary bankruptcy or
receivership proceeding such right to terminate shall only
become effective if the Party consents to the involuntary
bankruptcy, receivership or such proceeding is not dismissed
within ninety (90) days after the filing thereof.
8.2.2 EFFECT OF TERMINATION FOR CAUSE OR FOR CHANGE OF CONTROL.
(a) If MERCK terminates this Agreement under Section 8.2.1(a) or
terminates the Technology Collaboration or the Therapeutic
Collaboration or both pursuant to Section 9.2, the licenses
granted by ALNYLAM to MERCK pursuant to Section 3.1.1 shall
survive such termination. In addition,
(i) not later than thirty (30) days after the date of
such termination, each Party shall return or cause to
be returned to the other Party all Information in
tangible form received from the other Party and all
copies thereof and ALNYLAM shall return to or cause
to be returned to MERCK all substances or
compositions delivered or provided by MERCK, as well
as any other Materials provided by MERCK in any
medium, except that each Party may retain all
Information, substances, compositions and materials
relevant to licenses and rights it retains hereunder
and may retain one copy of Information in its
confidential files for record purposes;
(ii) MERCK shall have the right to continue to exercise
its rights to opt-in to develop any and all
Therapeutic Collaboration Products as set forth in
Section 2.14.3 and the licenses granted by MERCK to
ALNYLAM in Sections 3.1.2 and 3.1.3 shall survive
solely with respect to such Therapeutic Collaboration
Products;
(iii) all then-existing Therapeutic Collaboration Product
Agreements, ALNYLAM Product Agreements or MERCK
Product Agreements shall continue in effect;
(iv) with regard to termination pursuant to Section
8.2.1(a), ALNYLAM shall return to MERCK and cease to
work on, all MERCK RNAi Novel Targets and RNAi
Therapeutic Products for which the Opt-In Information
has not yet been provided by ALNYLAM to MERCK; and,
(v) with regard to termination pursuant to Section 9.2,
then: (x) ALNYLAM may continue to work on MERCK RNAi
Novel Targets that it has designated as such pursuant
to Section 2.14.2(3) by notice to MERCK prior to the
date on which ALNYLAM notified MERCK of such Change
of Control, subject to MERCK's Opt-In Rights, and the
licenses granted by MERCK to
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ALNYLAM in Sections 3.1.2 and 3.1.3 shall survive
with respect to such MERCK RNAi Novel Targets, and
(y) all Opt-In Negotiation Periods shall continue,
and the licenses granted by MERCK to ALNYLAM in
Sections 3.1.2 and 3.1.3 shall survive with respect
to Therapeutic Collaboration Products subject to such
Opt-In Negotiation Periods.
(b) If ALNYLAM terminates this Agreement under Section 8.2.1(a),
the licenses granted by MERCK to ALNYLAM pursuant to Section
3.1.2 and 3.1.3 shall survive such termination. In addition,
(i) not later than thirty (30) days after the date of
such termination, each Party shall return or cause to
be returned to the other Party all Information,
substances, compositions and materials in tangible
form received from the other Party and all copies
thereof, except that each Party may retain all
Information relevant to licenses and rights it
retains hereunder and may retain one copy of
Information in its confidential files for record
purposes;
(ii) ALNYLAM shall continue to have the right to develop
without MERCK, but subject to royalty payments to
MERCK, as specified in Section 5.2.1(a), Therapeutic
Collaboration Products then subject to an Opt-In
Negotiation Period;
(iii) all then existing Therapeutic Collaboration Product
Agreements, ALNYLAM Product Agreements and MERCK
Product Agreements shall continue in effect; and
(iv) ALNYLAM shall have the right to develop without MERCK
any and all MERCK RNAi Novel Targets which ALNYLAM
has designated as such pursuant to Section 2.14.2(3)
by notice to MERCK prior to the termination date,
subject to royalty payments to MERCK as specified in
Section 5.2.1(a) on the same basis as if the product
was a Therapeutic Collaboration Product.
(c) If this Agreement is terminated by MERCK pursuant to Section
8.2.1(b) due to the rejection of this Agreement by or on
behalf of ALNYLAM under Section 365 of the United States
Bankruptcy Code (the "CODE"), all licenses and rights to
licenses granted under or pursuant to this Agreement by
ALNYLAM to MERCK are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the Code, licenses of rights to
"intellectual property" as defined under Section 101(35A) of
the Code. The Parties agree that MERCK, as a licensee of such
rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the Code, and
that upon commencement of a bankruptcy proceeding by or
against ALNYLAM under the Code, MERCK shall be entitled to a
complete duplicate of or complete access to (as MERCK deems
appropriate) any such intellectual property and all
embodiments of such intellectual property. Such intellectual
property and all embodiments thereof shall be promptly
delivered to MERCK (i) upon any such commencement of a
bankruptcy proceeding upon written request therefore by MERCK,
unless ALNYLAM elects to continue to perform all of its
obligations under
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this Agreement, or (ii) if not delivered under (i) above, upon
the rejection of this Agreement by or on behalf of ALNYLAM
upon written request therefore by MERCK. The foregoing
provisions of subsection 8.2.2(c) are without prejudice to any
rights MERCK may have arising under the Code or other
applicable law.
(d) If this Agreement is terminated by ALNYLAM pursuant to Section
8.2.1(b) due to the rejection of this Agreement by or on
behalf of MERCK under Section 365 of the Code, the provisions
of subparagraph (c) shall apply mutatis mutandis.
8.3 EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL. Expiration or
termination of the Agreement shall not relieve the Parties of any
obligation accruing prior to such expiration or termination. Any
expiration or termination of this Agreement shall be without prejudice
to the rights of either Party against the other accrued or accruing
under this Agreement prior to expiration or termination, including,
without limitation, the obligation to pay royalties for Therapeutic
Collaboration Products sold prior to such expiration or termination.
The provisions of Section 4.1 shall survive the expiration or
termination of the Agreement and with respect to the obligations of the
Parties shall continue in effect for seven (7) years. In addition, the
provisions of Articles 1, 7 and 8, and Sections 2.7, 2.10, 2.15, 5.4,
5.5, 9.3 through 9.18 shall survive any expiration or termination of
this Agreement. Except as set forth in this Article 8, upon termination
or expiration of this Agreement all other rights and obligations cease.
9. MISCELLANEOUS
9.1 FORCE MAJEURE. Neither Party shall be held liable to the other Party
nor be deemed to have defaulted under or breached the Agreement for
failure or delay in performing any obligation under this Agreement when
such failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party including, but not limited to,
embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other
labor disturbances, fire, floods, or other acts of God, or acts,
omissions or delays in acting by any governmental authority or the
other Party. The affected Party shall notify the other Party of such
force majeure circumstances as soon as reasonably practical, and shall
promptly undertake all reasonable efforts necessary to cure such force
majeure circumstances.
9.2 ASSIGNMENT/CHANGE OF CONTROL. Except as provided in this Section 9.2,
this Agreement may not be assigned or otherwise transferred, nor may
any right or obligation hereunder be assigned or transferred, by either
Party without the consent of the other Party. MERCK may, without
ALNYLAM's consent, assign this Agreement and its rights and obligations
hereunder in whole or in part to a MERCK Affiliate or in whole in
connection with a Change of Control (as defined below) upon twenty (20)
days prior written notification to ALNYLAM. ALNYLAM may, without
MERCK's consent, assign this Agreement and its rights and obligations
hereunder in whole or in part to any wholly-owned subsidiary of ALNYLAM
or RIBOPHARMA (except as provided below) or in whole (except as
provided below) in connection with a Change of Control; provided,
however, that: (a) ALNYLAM must notify MERCK at least twenty (20) days
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prior to completion of any such Change of Control, (b) MERCK shall have
the right, at any time after receipt of such notice but prior to the
end of the twenty (20) day period, to notify ALNYLAM of the termination
of the Technology Collaboration, the Therapeutic Collaboration
(including MERCK's obligation to deliver additional MERCK Non-Druggable
Targets), or both, (c) all ALNYLAM Product Agreements and MERCK Product
Agreements shall continue and each Therapeutic Collaboration Product
Agreement shall remain in effect or terminate as provided therein, (d)
ALNYLAM may continue to work on MERCK RNAi Novel Targets which it
designated as such pursuant to Section 2.14.2(3) by notice to MERCK
prior to the date on which ALNYLAM notified MERCK of the Change of
Control, subject to MERCK's Opt-In Rights, and (e) all Opt-In
Negotiation Periods shall continue. Upon such assignment or Change of
Control, MERCK's obligation to provide royalty reports pursuant to
Section 5.2.6 shall be limited to reporting Net Sales for each country
and MERCK's total worldwide royalty obligations.
Notwithstanding the foregoing, the rights of any permitted assignee of
ALNYLAM's rights to practice any of MERCK's intellectual property,
including but not limited to MERCK RNAi Patent Rights, MERCK RNAi
Technology and MERCK RNAi Novel Target IP, shall remain subject to the
limitations set forth in this Agreement. Any permitted assignee shall
assume all obligations of its assignor under this Agreement. Any
attempted assignment not in accordance with this Section 9.2 shall be
void. For purposes of this Section 9.2, a "CHANGE OF CONTROL" of a
Party shall be deemed to occur if such Party is involved in a merger,
reorganization or consolidation in which its shareholders immediately
prior to such transaction would hold less than fifty percent (50%) of
the securities or other ownership or voting interests representing the
equity of the surviving entity immediately after such merger,
reorganization or consolidation, or if there is a sale of all or
substantially all of such Party's assets or business relating to this
Agreement, or if a "Health Company Acquirer" (as defined below)
effectively acquires control of the management and policies of such
Party. A "HEALTH COMPANY ACQUIRER" is a pharmaceutical company,
biotechnology company, or group of such companies acting in concert,
with annual sales of human pharmaceutical products greater than [**]
U.S. dollars ($[**]).
9.3 SEVERABILITY. If any one or more of the provisions contained in this
Agreement is held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby,
unless the absence of the invalidated provision(s) adversely affects
the substantive rights of the Parties. The Parties shall in such an
instance use their best efforts to replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable
provision(s) which, insofar as practical, implement the purposes of
this Agreement.
9.4 NOTICES. All notices which are required or permitted hereunder shall be
in writing and sufficient if delivered personally, sent by facsimile
(and promptly confirmed by personal delivery, registered or certified
mail or overnight courier), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to ALNYLAM, to: ALNYLAM PHARMACEUTICALS, INC. and
ALNYLAM HOLDING CO.
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790 Memorial Drive
Suite 202
Cambridge, MA 02139
Attention: Chief Executive Officer
Facsimile No.: (617) 252-0011
and: MINTZ, LEVIN, COHN, FERRIS, GLOVSKY
AND POPEO, P.C.
One Financial Center
Boston, MA 02111
Attention: Jeffrey M. Wiesen
Facsimile No.: (617) 542-2241
If to MERCK, to: MERCK & CO., INC.
One Merck Drive
P.O. Box 100, WS3A-65
Whitehouse Station, NJ 08889-0100
Attention: Office of Secretary
Facsimile No.: (908) 735-1246
and: MERCK & CO., INC.
One Merck Drive
P.O. Box 100, WS2A-30
Whitehouse Station, NJ 08889-0100
Attention: Chief Licensing Officer
Facsimile: (908) 735-1214
or to such other address as the Party to whom notice is to be given may
have furnished to the other Party in writing in accordance herewith.
Any such notice shall be deemed to have been given: (a) when delivered
if personally delivered or sent by facsimile on a business day; (b) on
receipt if sent by nationally-recognized overnight courier; and/or (c)
on receipt if sent by mail.
9.5 APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the patent laws
of the United States without reference to any rules of conflict of laws
or renvoi.
9.6 DISPUTE RESOLUTION.
9.6.1 The Parties shall negotiate in good faith and use reasonable efforts to
settle any dispute, controversy or claim arising from, or related to,
this Agreement or to the breach hereof, and to resolve any disagreement
between the Parties with respect to any Therapeutic Collaboration
Product Agreement, MERCK Product Agreement or ALNYLAM Product
Agreement, except as provided below and in Section 9.7 (collectively,
"DISPUTE"). In particular, the CEO of ALNYLAM and the Executive
Vice-President of Worldwide Basic Research for MERCK shall attempt to
resolve all Disputes except as otherwise provided for in Section 9.7
below. In the event that the CEO and the Executive Vice-
52
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President cannot reach an agreement regarding a Dispute, and a Party
wishes to pursue the matter, each such Dispute that is not an "Excluded
Claim" shall be finally resolved by binding arbitration in accordance
with the Commercial Arbitration Rules and Supplementary Procedures for
Large Complex Disputes of the American Arbitration Association ("AAA")
and Section 9.6.2 below, and judgment on the arbitration award may be
entered in any court having jurisdiction thereof. As used in this
Section 9.6, the term "EXCLUDED CLAIM" shall mean a dispute that
concerns (a) the validity or infringement of a patent, trademark or
copyright, or (b) any antitrust, anti-monopoly or competition law or
regulation, whether or not statutory.
9.6.2 FULL ARBITRATION. Except as provided in Section 9.6.3, the arbitration
shall be conducted by a panel of three (3) persons experienced in the
pharmaceutical business who are independent of both Parties and neutral
with respect to the Dispute presented for arbitration. Within thirty
(30) days after initiation of arbitration, each Party shall select one
person to act as arbitrator and the two Party-selected arbitrators
shall select a third arbitrator within thirty (30) days of their
appointment. If the arbitrators selected by the Parties are unable or
fail to agree upon the third arbitrator, the third arbitrator shall be
appointed by the AAA. The place of arbitration shall be New York, New
York, and all proceedings and communications shall be in English.
(a) Either Party may apply to the arbitrators for interim
injunctive relief until the arbitration award is rendered or
the controversy is otherwise resolved. Either Party also may,
without waiving any remedy under this Agreement, seek from any
court having jurisdiction any injunctive or provisional relief
necessary to protect the rights or property of that Party
pending the arbitration award. The arbitrators shall have no
authority to award punitive or any other type of damages not
measured by a Party's compensatory damages. Each Party shall
bear its own costs and expenses and attorneys' fees, and the
Party that does not prevail in the arbitration proceeding
shall pay the arbitrators' and any administrative fees of
arbitration.
(b) Except to the extent necessary to confirm an award or as may
be required by law, neither a Party nor an arbitrator may
disclose the existence, content, or results of an arbitration
without the prior written consent of both Parties. In no event
shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the
dispute, controversy or claim would be barred by the
applicable New York statute of limitations.
(c) The Parties agree that, in the event of a Dispute over the
nature or quality of performance under this Agreement, neither
Party may terminate the Agreement until final resolution of
the Dispute through arbitration or other judicial
determination. The Parties further agree that any payments
made pursuant to this Agreement pending resolution of the
Dispute shall be refunded if an arbitrator or court determines
that such payments are not due.
(d) The Parties hereby agree that any disputed performance or
suspended performances pending the resolution of the
arbitration that the arbitrator determines to be required
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to be performed by a Party must be completed within a
reasonable time period following the final decision of the
arbitrator.
(e) The Parties hereby agree that any monetary payment to be made
by a Party pursuant to a decision of the arbitrator shall be
made in United States dollars, free of any tax or other
deduction. The Parties further agree that the decision of the
arbitrator shall be the sole, exclusive and binding remedy
between them regarding determination of the matters presented
to the arbitrator.
9.6.3 "BASEBALL STYLE" ARBITRATION. If the Parties cannot otherwise agree
upon reasonable commercial terms during the Opt-In Negotiation Periods
for any Therapeutic Collaboration Agreement as provided in Section
2.14.3.3, or any MERCK Product Agreement or ALNYLAM Product Agreement,
then such matters, shall be determined by binding arbitration pursuant
to this Section 9.6.3 by one (1) independent, neutral arbitrator who is
(i) mutually-acceptable to the Parties, and (ii) an expert in the
pharmaceutical industry. If the Parties are unable to agree upon a
mutually-acceptable arbitrator, the arbitrator shall be an independent
expert as described in the preceding sentence selected by the AAA
encompassing New York, New York. Except as set forth in this Section
9.6.3, any arbitration of a Dispute pursuant to this Section 9.6.3
shall be governed by the Commercial Arbitration Rules and Supplementary
Procedures for Large Complex Disputes of the AAA. The place of
arbitration shall be New York, New York, and all proceedings and
communications shall be in English.
(a) Either Party may apply to the arbitrator for interim
injunctive relief until the arbitration award is rendered or
the controversy is otherwise resolved. Either Party also may,
without waiving any remedy under this Agreement, seek from any
court having jurisdiction any injunctive or provisional relief
necessary to protect the rights or property of that Party
pending the arbitration award. Each Party shall bear its own
attorneys' fees. Except to the extent necessary to confirm an
award or as may be required by law, neither a Party nor an
arbitrator may disclose the existence, content, or results of
an arbitration without the prior written consent of both
Parties. In no event shall an arbitration be initiated after
the date when commencement of a legal or equitable proceeding
based on the dispute, controversy or claim would be barred by
the applicable New York statute of limitations.
(b) The Parties hereby agree that any disputed performance or
suspended performances pending the resolution of the
arbitration that the arbitrator determines to be required to
be performed by a Party must be completed within a reasonable
time period following the final decision of the arbitrator.
(c) The Parties further agree that the decision of the arbitrator
shall be the sole, exclusive and binding remedy between them
regarding determination of the matters presented to the
arbitrator.
9.6.4 For arbitration of Disputes subject to Section 9.6.3, each Party to the
arbitration shall prepare and submit a written proposal setting forth
its proposed commercial terms, which must include, without change, the
terms set forth in Schedule 2.14.3.3, Section 3.1.5 or
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3.1.6, as applicable, Section 5.2.1 (a) or (b) as applicable, and other
terms agreed upon hereunder in the negotiation preceding the submission
to arbitration, together with a written explanation setting forth the
reasons for its position. After the arbitrator has received written
proposals from both Parties, the arbitrator shall forward a copy of the
other Party's proposal to each. Each Party shall have thirty (30) days
to prepare and submit a written rebuttal to such proposal and may then
amend its original proposal. Each Party shall have the right to make
oral presentations or present evidence as determined by the arbitrator
during the arbitration proceeding. The arbitrator shall select the
proposal of one of the Parties as his/her decision, and shall not have
the authority to render any substantive decision other than to so
select in its entirety the summary or proposal of one Party or the
other. Each Party shall bear its own costs and expenses and attorneys
fees. The administrative and arbitrator's fees shall be paid by the
non-prevailing Party. The arbitrator shall be directed that any
arbitration subject to Section 9.6.3 shall be completed within three
(3) months from the filing of notice of a request for such arbitration.
The arbitration proceedings and the decision shall not be made public
without the joint consent of the Parties and each Party shall maintain
the confidentiality of such proceedings and decision unless otherwise
permitted by the other Party.
9.7 TECHNOLOGY MILESTONE ARBITRATION. In the event of a Technology
Milestone Dispute, the Parties shall mutually select a single,
independent, neutral arbitrator who shall have sufficient scientific
background and experience, including, without limitation, expertise in
RNA interference, to make a reasonable scientific determination as to
whether the Technology Milestone has been achieved. If the Parties are
unable to reach agreement within fifteen (15) business days after
submission to arbitration under Section 5.1.4 on the selection of an
arbitrator, then either or both Parties shall immediately request the
AAA of New York, New York to select an arbitrator with such scientific
background, experience and expertise as set forth herein. Except as set
forth in this Section 9.7, any arbitration of the Technology Milestone
Dispute shall be governed by the Commercial Arbitration Rules and
Supplementary Procedures for Large Complex Disputes of the AAA. The
place of arbitration shall be New York, New York, and all proceedings
and communications shall be in English.
For arbitration of the Technology Milestone Dispute subject to this
Section 9.7, each Party shall prepare and submit one written summary of
such Party's position and any relevant evidence with respect to the
Technology Milestone Dispute to the arbitrator within thirty (30) days
of the selection of the arbitrator. Upon receipt of such summaries from
each Party, the arbitrator shall provide copies of the same to the
other Party. Within fifteen (15) days of the delivery of such
summaries, each Party shall submit a written rebuttal of the other
Party's summary and may then amend its original summary. Oral
presentations during the arbitration proceeding for any Technology
Milestone Dispute shall not be permitted unless otherwise requested by
the arbitrator. The arbitrator shall make a final decision with respect
to a Technology Milestone Dispute within thirty (30) days following
receipt of the last of such rebuttal statements submitted by the
Parties.
(a) Either Party may apply to the arbitrator for interim
injunctive relief until the arbitration award is rendered or
the controversy is otherwise resolved. Either Party also may,
without waiving any remedy under this Agreement, seek from any
court
55
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having jurisdiction any injunctive or provisional relief
necessary to protect the rights or property of that Party
pending the arbitration award. Each Party shall bear its own
costs and expenses and attorneys' fees. The administrative and
arbitrator's fees shall be reimbursed and/or paid by the
non-prevailing Party.
(b) Except to the extent necessary to confirm an award or as may
be required by law, neither Party nor the arbitrator may
disclose the existence, content, or results of an arbitration
without the prior written consent of both Parties. In no event
shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the
dispute, controversy or claim would be barred by the
applicable New York statute of limitations.
(c) The Parties agree that, in the event of a Technology Milestone
Dispute, neither Party may terminate the Agreement until final
resolution of the Technology Milestone Dispute through
arbitration or other judicial determination. The Parties
further agree that any payments made pursuant to this
Agreement made pending resolution of the Dispute shall be
refunded if the arbitrator or court determines that such
payments are not due.
(d) The Parties hereby agree that if the arbitrator determines
that the Technology Collaboration Milestone has been met,
MERCK shall pay the milestone payment under Section 5.1.4
within ten (10) business days of the arbitrator's
determination.
(e) The Parties hereby agree that any payment to be made by a
Party pursuant to a decision of the arbitrator shall be made
in United States dollars, free of any tax or other deduction.
The Parties further agree that the decision of the arbitrator
shall be the sole, exclusive and binding remedy between them
regarding determination of the matters presented to the
arbitrator.
9.8 ENTIRE AGREEMENT; AMENDMENTS. The Agreement contains the entire
understanding of the Parties with respect to the Collaboration and
licenses granted hereunder. All express or implied agreements and
understandings, either oral or written, with regard to the
Collaboration and the licenses granted hereunder are superseded by the
terms of this Agreement. The Agreement (including Schedules hereto) may
be amended, or any term hereof modified, only by a written instrument
duly-executed by authorized representatives of both Parties hereto.
9.9 HEADINGS. The captions to the Articles and Sections hereof are not a
part of the Agreement, but are merely for convenience to assist in
locating and reading the several Articles and Sections hereof.
9.10 INDEPENDENT CONTRACTORS. It is expressly agreed that ALNYLAM and MERCK
shall be independent contractors and that the relationship between
ALNYLAM and MERCK shall not constitute a partnership, joint venture or
agency. ALNYLAM shall not have the authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on MERCK, without the prior written consent of
MERCK, and MERCK shall not have the authority to make any statements,
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representations or commitments of any kind, or to take any action,
which shall be binding on ALNYLAM without the prior written consent of
such Party.
9.11 WAIVER. The waiver by either Party hereto of any right hereunder, or of
the failure of the other Party to perform, or of a breach by the other
Party, shall not be deemed a waiver of any other right hereunder or of
any other breach or failure by such other Party whether of a similar
nature or otherwise.
9.12 CUMULATIVE REMEDIES. No remedy referred to in this Agreement is
intended to be exclusive, but each shall be cumulative and in addition
to any other remedy referred to in this Agreement or otherwise
available under law.
9.13 WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity to
consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction
that any ambiguity in this Agreement shall be construed against the
drafting Party shall not apply.
9.14 COUNTERPARTS. The Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.15 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY
TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS
AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT
WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
9.16 LIMITATION OF LIABILITY. UNLESS RESULTING FROM A PARTY'S WILLFUL
MISCONDUCT OR EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, SPECIAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS, OR (II) COST OF
PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
9.17 BINDING EFFECT. As of the Effective Date, this Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective permitted successors and permitted assigns.
9.18 NO THIRD PARTY BENEFICIARIES. Except as expressly contemplated herein,
no Third Party, including any employee of any Party to this Agreement,
shall have or acquire any rights by reason of this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
|
date first set forth above.
MERCK & CO., INC. ALNYLAM HOLDING CO.
BY: Raymond V. Gilmartin BY: /s/ John Maraganore
__________________________ __________________________
[NAME] [NAME]
TITLE: Chairman, President & CEO TITLE: President and CEO
DATE:_________________________ DATE:_________________________
ALNYLAM PHARMACEUTICALS, INC.
BY: /s/ John Maraganore
__________________________
[NAME]
TITLE: President and CEO
DATE:_________________________
|
SCHEDULE 1.8
ALNYLAM RNAi PATENT RIGHTS
A. ALNYLAM Therapeutic RNAi Patent Rights
CASE NO. FILING DATE INT. PUB. NO. SERIAL NO. ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- |
[**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- |
[**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- |
[**]* Under ALNYLAM's rights from MIT, Whitehead Institute for Biomedical Research, and Garching Innovation GmbH.
** Explicitly excluding claims No. 30-47 and the equivalent claims in any patent applications and patents resulting from this PCT application.
*** Under ALNYLAM's co-ownership rights.
**** Licenses for applicable ALNYLAM Therapeutic RNAi Patent Rights shall be granted for each specific Therapeutic Collaboration Product under each Therapeutic Collaboration Product Agreement or MERCK Product Agreement upon the execution thereof pursuant to Section 3.1.4 or 3.1.6, respectively.
SCHEDULE 1.8 (CONT'D)
ALNYLAM RNAi PATENT RIGHTS
B. ALNYLAM Target Identification and Target Validation RNAi Patent Rights
EXCLUDED FROM THESE PATENT RIGHTS ARE THE SHARP, TUSCHL, ZAMORE & BARTEL PATENT APPLICATION WO 01/75164, AND ITS FAMILY MEMBERS AND THE TUSCHL, ELBASHIR & LENDECKEL PATENT APPLICATION WO 02/44321 AND ITS FAMILY MEMBERS
CASE NO. FILING DATE INT. PUB. NO. SERIAL NO. ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- |
------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- |
SCHEDULE 1.45
LIMMER PATENTS
CASE NO. FILING DATE INT. PUB. NO. SERIAL NO. ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- |
------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- [**] [**] [**] [**] ------------------------------------------------------- |
any divisions, continuations, continuations-in-part thereof, any patents issuing thereon and any reissues, reexams, renewals, extensions, supplementary protection certificates and the like of any such patents or patent applications and all foreign equivalents thereof
SCHEDULE 1.49
MERCK BROAD RNAi PATENT RIGHTS
TITLE FILING DATE INT. PUB. NO. SERIAL NO. ---------------------------------------------------------- [**] [**] [**] ---------------------------------------------------------- |
SCHEDULE 1.54
MERCK PRODUCT-SPECIFIC RNAi PATENT RIGHTS
[**]
SCHEDULE 2.1
TECHNOLOGY COLLABORATION WORKPLAN
BACKGROUND:
MERCK is interested in developing and exploiting genetic knockdown technologies to validate potential therapeutic targets in vivo. ALNYLAM is developing RNA interference (RNAi) technology to use directly as a therapeutic. Both parties could benefit from a collaborative effort that seeks to improve RNAi technology. The collaboration will consist of two phases: an optimization phase and an implementation phase. The aims of this collaboration are:
Phase I: Optimization (Years [**])
1) Understand the [**] in vitro.
2) Develop [**] in vivo.
3) Develop [**].
4) Develop [**] in vivo.
5) [**] in vitro and in vivo [**].
Phase II: Implementation (Years [**])
1) Continue [**] in vitro. (if necessary)
2) Apply knowledge [**] in vivo.
3) Continue [**] in vivo.
4) Develop [**] in vivo.
5) Evaluation of [**] efficacy.
PHASE I
IN VITRO [**] (MERCK AND ALNYLAM)
Aim 1a. Identification of [**] efficacy and specificity [**]
The current rules for [**] of the specific target. Efforts will be made [**].
MERCK proposes to [**] based on MERCK's prior experience. [**] will likely have
[**]. [**] will be designed [**] will be performed by MERCK's [**]. [**] will be
provided by ALNYLAM, who will [**]. [**] will be assessed by [**]. [**] will be
determined by [**] by MERCK. [**] will be quantitated by [**]. In addition, the
[**] will be assessed by [**]. All data will be evaluated by [**] the most [**]
amount [**].
In addition to the [**]indicated above, MERCK will [**]. [**] will be developed to [**]. This [**] allows [**]. As this system is [**] can be [**]. [**] will be subjected to [**]. These studies will [**] for in vivo studies, as well as [**] to subject to [**] in vitro.
Aim 1b. (cont.) [**].
ALNYLAM's [**] will introduce [**]. Such [**]include, but are not limited to,
[**] that may [**] to the [**]. [**]will be subjected to [**]. [**] will
determine whether [**]. [**] of the [**] will determine whether these [**].
1. [**]
[**] will improve the [**]. This approach will be [**]. [**] will also [**].
[**] will be [**]. [**] will be [**] with the [**]. To this end, we will
determine the [**].
2. [**]
[**] will improve the [**]. [**] will include [**].
3. [**]
ALNYLAM will also determine the [**] (such as [**] etc.,), [**], on the
[**] achieved.
IN VIVO OPTIMIZATION (ALNYLAM)
Aim 2. [**] in vivo [**].
The development of [**]. [**] will include [**]. To identify [**], we will generate [**]s. These will be [**]. The most [**] in vivo is to [**].
[**] that the [**] to the [**] and to the [**] of the [**]. Additionally, the
[**] for the [**]. Finally, the [**]can be [**], allowing for [**] in the [**].
[**] and will be used for [**] will be performed, by MERCK, [**] in vitro [**] will be obtained. [**] in vitro [**] will be [**] with [**] will be tested for efficacy in vivo [**]. Initial studies will utilize [**]. [**] activities in Aim 1 of in vitro [**] will be applied to the [**] for in vivo analysis.
For in vivo experiments, techniques will be developed[**]. These [**] techniques will be developed in consultation with MERCK.
1. [**]
This [**] is distributed throughout [**] in the [**] in the [**].
2. [**]
This [**] which is [**] to the [**] in the liver [**] such as [**].
3. [**]
This [**] and shows [**] in the [**] can be [**] in the [**] can be [**] in the
[**] such as [**] in the [**].
4. [**]
This [**] and shows [**] in the [**] can be [**] in these [**] making [**]Recent published reports have demonstrated in vivo efficacy [**] could be [**], as was described in the literature, [**].
5. [**]
[**] can be generated [**]. Upon [**] can be monitored [**]. As is true for the above models, the [**].
Aim 3. Identify [**] in vitro and in vivo models.
As a first step, [**] will be tested for their stability in vitro. [**] will be
[**] and possibly [**].
1. [**]
Will introduce [**] at the end of each strand
2. [**]
These [**] are more [**] than the [**] having [**] will be [**].
3. [**]
[**] are expected to [**]. Appropriate [**]will be placed at the [**].
4. [**]
Placement of [**] such as [**] and will be [**].
Aim 4a. [**].
Additional [**] will be used to [**] that will [**]. These [**] and will be [**] with an [**] will be evaluated [**] in vivo.
1. [**]
[**] is expected to improve [**] will deliver [**] may be required [**].
2. [**]
[**] are expected to have [**] is expected to [**]. [**] should be sufficient.
3. [**] will be used to deliver [**] should be sufficient.
Aim 4b. Identify [**] as well as [**]
[**]
[**] are expected to target [**]. With appropriate [**] such as [**] is expected. Similarly, [**] is expected to [**]
2. [**]
[**] will improve the [**] from the [**].
Aim 5. Correlate [**]effectiveness in vitro and in vivo with [**].
[**] as proposed in Aims 1, 3 and 4 above will be evaluated for [**].
PHASE II
IN VITRO [**]
Aim 1. Identification of [**]. (Will be continued from Phase I only if necessary.)
The experiments described in Phase I are designed to cover [**]. Based on the results of Phase I, it may be desirable to [**].
IN VIVO [**]
Aim 2. Develop in vivo models to [**].
In the second phase of the work ALNYLAM will introduce [**] into the program. Stability chemistries developed in Phase I will be incorporated into [**]will be made as in Phase I.
[**] will be designed using knowledge gained in Phase I. [**] the in vivo [**] will be assessed for efficacy in vitro [**]. If the [**] will be employed for determination of [**] will determine the best [**].
Once [**] issues have been addressed in [**] in Phase I, ALNYLAM will move to
[**]. Discoveries in Phase I will help determine the best model system and
target for these Phase II studies. [**] is a therapeutic area of interest to
both parties, Phase II studies may include [**]. If so, ALNYLAM will investigate
[**].
Aim 3. Continue investigation of [**]in vivo.
1. [**] will direct [**] which are [**] on many [**] of the [**] of these [**] but the [**] for the [**] may be of value. [**] should be sufficient.
Aim 4. Develop [**] in vivo.
[**] methods will be developed using [**] will be useful in developing methods for [**] and these will be analyzed by [**]. Additionally, these [**] will be used for [**], to determine [**]
Aim 5. Evaluation of [**].
ALNYLAM will determine the [**] and the [**] caused by the [**]. This knowledge will help us to understand the factors [**]. This information will help to design and develop [**]. ALNYLAM will determine the [**] and also by [**] with the [**]
SPECIFIC RESPONSIBILITIES OF ALNYLAM:
- ALNYLAM will provide all [**] required in this study, including [**]. ALNYLAM will do [**] (in vitro and in vivo), on all [**] developed for in vivo delivery and supply RNA to MERCK for [**].
- ALNYLAM will perform all in vivo [**], and provide RNA to MERCK for expression profiling.
SPECIFIC RESPONSIBILITIES OF MERCK:
- MERCK will design [**] in vitro [**].
- MERCK will perform all [**] data.
PROJECT SCHEDULE:
Diagram of project phases and projected completion dates has been deleted.
SCHEDULE 2.10
MATERIALS
Materials to be provided by MERCK:
PHASE I - OPTIMIZATION TECHNOLOGY COLLABORATION WORKPLAN
[**]
Materials to be provided by ALNYLAM:
PHASE I - OPTIMIZATION TECHNOLOGY COLLABORATION WORKPLAN
[**]5-Me-C
[**]
PHASE II - IMPLEMENTATION TECHNOLOGY COLLABORATION WORK PLAN
[To be completed and updated pursuant to Section 2.10 at the appropriate time]
SCHEDULE 2.14.2(1)
INITIAL MERCK NON-DRUGGABLE TARGET INFORMATION
1. General project description
2. Target name or gene accession number
3. [**]
4. [**]
5. [**]
6. Brief description [**], as applicable.
7. [**].
Notwithstanding the above, MERCK shall not provide any data, information, patents, opinions or know-how which MERCK believes may be subject to attorney/client privilege.
SCHEDULE 2.14.2(2)
COMPLETE MERCK NON-DRUGGABLE TARGET INFORMATION
1. Executive Summary providing [**] the MERCK Non-Druggable Target.
- Supporting data [**] as may be available.
- [**], which is directly relevant to the MERCK Non-Druggable Target.
- [**] the MERCK Non-Druggable Target [**].
2. MERCK Non-Druggable Target [**].
- Copies of [**] relating to the MERCK Non-Druggable Target.
- Copies of [**] with regard to the MERCK Non-Druggable Target.
3. [**] the MERCK Non-Druggable Target and which is [**] a MERCK Non-Druggable Target [**].
Notwithstanding the above, MERCK shall not provide any data, information, patents, opinions or know-how which MERCK believes may be subject to attorney/client privilege.
SCHEDULE 2.14.3.2
OPT-IN INFORMATION
1. Product description
2. Chemical structure (RNAi sequence)
3. Physicochemical properties
4. Patent status
5. Biochemical mechanism (activity, specificity)
- In vitro
- Animal model data (disease relevant)
6. Preclinical pharmacology (PK, PD, biodistribution)
7. Toxicology studies status
- Genotoxicity tests
- Acute and chronic toxicity tests
- Safety pharmacology tests
8. Dosage forms and formulations
9. Preclinical ADME
10. Projected dose regimen
11. Anticipated clinical safety issues, including expected adverse events, anticipated precautions, and drug interactions
12. Anticipated product claims at launch
13. Known or suspected competitive agents
14. Possible promotable advantages over available agents in development, to the extent known
15. Chemistry/manufacturing
- Raw materials
- Process & product development
- Chemical manufacturing
16. Total research and development expenses incurred by ALNYLAM on the MERCK RNAi Novel Target from the date MERCK presented the MERCK RNAi Novel Target to ALNYLAM until the date on which ALNYLAM provided MERCK with Opt-In Information, including but not limited to all expenses incurred relating to FTEs and all out-of-pocket expenses.
SCHEDULE 2.14.3.3
THERAPEUTIC COLLABORATION PRODUCT AGREEMENT TEMPLATE
Note: These terms are non-binding and are subject to further due diligence, MERCK Senior Management approval and the negotiation and execution of the definitive agreements.
Purpose:
MERCK and ALNYLAM mutually agree to co-develop and co-commercialize a
Therapeutic Collaboration Product for therapeutic use in the field of
[insert indications].
Territory:
Worldwide, as applicable.
Licenses:
ALNYLAM shall provide MERCK with a worldwide, royalty-free, Co-exclusive license, sublicensable to Affiliates, to ALNYLAM RNAi Technology, ALNYLAM Collaboration Inventions, ALNYLAM Therapeutic Collaboration IP, and ALNYLAM RNAi Patent Rights, solely to perform its obligations under the Therapeutic Collaboration to develop and commercialize the Therapeutic Collaboration Product.
MERCK shall provide ALNYLAM with a worldwide, royalty-free, Co-exclusive license, sublicensable to Affiliates, MERCK Collaboration Inventions to MERCK RNAi Novel Target IP solely to perform its obligations under the Therapeutic Collaboration to develop and commercialize the Therapeutic Collaboration Product.
Co-Development:
The Parties agree to co-develop an Therapeutic Collaboration Product according to the Therapeutic Collaboration Workplan. Such Workplan shall be agreed upon by the Parties prior to execution of the Therapeutic Collaboration Product Agreement. The Workplan will define specific roles and responsibilities of each Party in the development of the Therapeutic Collaboration Product. Upon execution of the Therapeutic Collaboration Product Agreement, the Parties shall establish a Joint Development Committee, which shall be comprised of an equal number of representatives from MERCK and ALNYLAM, to work collaboratively through final regulatory approval on issues relating to clinical development, including regulatory issues, of the Therapeutic Collaboration Product.
Commercialization:
- MERCK shall be responsible for the worldwide commercialization of Therapeutic Collaboration Products.
- ALNYLAM shall have the option to co-promote Therapeutic Collaboration Products in the US by providing a minimum number of representatives, such minimum number to be determined by the Parties based upon the physician audience to which the Therapeutic Collaboration Products will be marketed and to be set forth in the Therapeutic Collaboration Product Agreement. ALNYLAM must exercise its option to co-promote within the required time period, set by MERCK, prior to launch, but no sooner than [**] prior to filing the US NDA or equivalent.
- The Parties shall establish a Joint Commercialization Committee, which shall be led by MERCK, responsible for all strategic decisions relating to the commercialization of RNAi Therapeutic Products.
- ALNYLAM's US co-promotion activity shall be fully-integrated into MERCK's US promotion effort.
Development and Commercial Expenses:
- Parties shall equally share all development expenses applicable to a US NDA through FDA approval.
- Parties shall equally share all US commercialization expenses.
- Each Party has the option to reduce its respective US-applicable expense obligation, but in no event shall either Party reduce its obligation to below [**]% of the total expenses applicable to a US NDA approval and US commercialization. This election shall be made prior to execution of the Therapeutic Collaboration Product Agreement.
- MERCK shall bear all ex-US development and commercial expenses.
Profit-Sharing:
- The Parties shall allocate the US net operating profits in the percentage equal to the US-applicable development and commercialization expenses contributed by each Party. "US Net Operating Profits", "US Development Expenses," "US Commercialization Expenses," "ex-US Development Expenses" and "ex-US Commercialization Expenses" shall be defined in the Therapeutic Collaboration Product Agreement.
- MERCK shall realize all operating profits ex-U.S. MERCK shall pay to ALNYLAM a royalty of [**]%-[**]% on ex-US net product sales as follows:
For incremental net product sales of:
< or = to $[**], royalty shall be [**]%
> $[**] to < or = to $[**], royalty shall be [**] %
$[**] to < or = to $[**], royalty shall be [**]%
$[**], royalty shall be [**]%
There shall be a maximum offset of [**]% to the above royalties in the event that additional third party licenses are required to appropriately protect and/or commercialize the Therapeutic Collaboration Product.
Manufacturing:
The Parties shall agree on a cost-effective strategy for commercial manufacturing of the Therapeutic Collaboration Product, taking into full consideration the expertise and cost of goods offered by Third Party contractors.
Regulatory Filings:
- The Parties, through the Joint Development Committee, shall work together collaboratively on all regulatory issues and filings.
- Specific regulatory roles and responsibilities of each Party during the various phases of development will be defined in the Therapeutic Collaboration Workplan. MERCK shall be the worldwide holder of the marketing authorization, and each Party shall provide all relevant data and information in its possession to assist MERCK in its regulatory filings worldwide.
Intellectual Property:
- MERCK shall have full responsibility for all intellectual property filings of Therapeutic Collaboration Products.
- All costs associated with any intellectual property filings relating to Therapeutic Collaboration Products will be treated as development expenses and shared as such by the Parties.
All terms not defined herein shall have the meaning set forth in the Agreement.
SCHEDULE 6
EXCEPTIONS
Section 6.1(c):
Pursuant to a certain License and Cooperation Agreement with a third party (the "License and Cooperation Agreement"), RIBOPHARMA has granted a non-exclusive license to such third party under the Limmer Patents for use in target identification and validation and has agreed to provide a specific quantity of siRNAs to such third party.
Pursuant to a certain Feasibility Agreement with a third party (the "FEASIBILITY AGREEMENT"), RIBOPHARMA has granted a non-exclusive license to such third party under the Limmer Patents for use in in vitro studies for target validation and has agreed to provide a limited number of RNAi molecules against a limited number of such third party's targets.
Section 6.1(d):
Pursuant to the License and Cooperation Agreement, RIBOPHARMA has granted a non-exclusive license to a third party under the Limmer Patents for use in target identification and validation and has agreed to provide a specific quantity of siRNAs to such third party.
Pursuant to the Feasibility Agreement, RIBOPHARMA has granted a non-exclusive license to a third party under the Limmer Patents for use in in vitro studies for target validation and has agreed to provide a limited number of RNAi molecules against a limited number of such third party's targets.
Section 6.2(b):
Pursuant to the License and Cooperation Agreement, RIBOPHARMA has granted a non-exclusive license to a third party under the Limmer Patents for use in target identification and validation and has agreed to provide a specific quantity of siRNAs to such third party.
Pursuant to the Feasibility Agreement, RIBOPHARMA has granted a non-exclusive license to a third party under the Limmer Patents for use in in vitro studies for target validation and has agreed to provide a limited number of RNAi molecules against a limited number of such third party's targets.
Section 6.2(c):
There are currently multi-party oppositions against RIBOPHARMA European patent 1144623.
ALNYLAM has received a letter from Isis Pharmaceuticals dated July 28, 2003 regarding a licensing opportunity for RNA chemistry modifications, a copy of which has been furnished to MERCK.
EXHIBIT 10.23
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
SPONSORED RESEARCH AGREEMENT
Effective as of 1 OCTOBER 2003, MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH, a Minnesota charitable corporation (MAYO), 200 First Street SW, Rochester, MN 55905-0001 and MAYO CLINIC JACKSONVILLE, 4500 San Pablo Road, Jacksonville, FL 32224 (collectively "MAYO") with Matthew J. Farrer, Ph.D., a MAYO employee, as principal investigator (INVESTIGATOR) and Alnylam Pharmaceuticals, Inc. (including its affiliated companies), a corporation having its principal place of business at 790 Memorial Drive, Cambridge, MA 02139 (SPONSOR) agree as follows:
ARTICLE 1. PROJECT SUMMARY
1.1 -- MAYO will undertake a research project ("Project") described in the research plan attached hereto and incorporated herein as Exhibit A. Summary data about the Project are forth as follows:
(a) TITLE: Alpha-Synuclein as a Target for siRNA Therapy
(b) START DATE: 1 October 2003
(c) PROJECTED COMPLETION DATE: [**]
(d) FUNDING AMOUNT: $[**] pursuant to budget attached as Exhibit C
(e) PAYMENT PLAN: Quarterly in advance
(f) CHECKS PAYABLE TO: Mayo Foundation for Medical Education and Research
(g) CHECKS MAILED TO: Mayo Medical Ventures Office of Technology Commercialization 200 First Street S.W.
Rochester, Minnesota 55905
Taxpayer ID No. 41-1506440
(h) MAYO ADMINISTRATIVE CONTACT: Mayo Medical Ventures Office of Technology Commercialization 200 First Street S.W.
Rochester, Minnesota 55905
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507-284-8878
|
Attn: Susan L. Stoddard, Ph.D.
sstoddard@mayo.edu
(i) Sponsor ADMINISTRATIVE CONTACT: Nagesh Mahanthappa Alnylam Pharmaceuticals, Inc. 790 Memorial Drive Cambridge, MA 02139
1.2 -- Anything contained in Exhibit A which is in conflict with anything in this Agreement is superseded by this Agreement.
ARTICLE 2. CONFIDENTIALITY AND PROPRIETARY DATA
2.1 -- SPONSOR or a party on SPONSOR's behalf may provide MAYO and INVESTIGATOR with proprietary information and materials ("Sponsor Information") relevant to the work under this Agreement. MAYO and INVESTIGATOR understand that any materials provided to it by or on behalf of SPONSOR ("Sponsor Materials") remain the sole property of SPONSOR and are experimental materials intended exclusively for investigative use only in laboratory animals and for in vitro use and are not for use in humans. MAYO and INVESTIGATOR agree to use the Sponsor Materials in compliance with all local laws and regulations, including current guidelines of the National Institutes of Health of the United States. SPONSOR agrees to furnish MAYO with sufficient information, to the extent that it is in possession of such information, to identify precautions needed to help protect the health and safety of personnel using the chemicals. MAYO's and INVESTIGATOR's obligations with respect to such Sponsor Information (excluding Sponsor Materials) shall be subject to the following:
(a) SPONSOR must mark or designate in writing any Sponsor Information provided to MAYO or INVESTIGATOR which it deems to be proprietary or confidential. Confidential information disclosed orally must be identified as confidential or proprietary at the time of disclosure and confirmed in writing as confidential or proprietary within thirty (30) days of such disclosure.
2.2 -- MAYO and INVESTIGATOR agree to exercise their best efforts not to publish or otherwise reveal or make available the Sponsor Information to others outside Mayo without the prior written permission of the SPONSOR. Additionally, MAYO and INVESTIGATOR agree:
(a) not to use Sponsor Information for any purpose other than as advised or directed in writing by SPONSOR (which writing shall include the research plan attached hereto as Exhibit A);
(b) to only disclose Sponsor Information to employees of MAYO participating in the Project who have a need to receive such Sponsor Information in the course of the performance of their duties, and who are bound by the terms of this Agreement;
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(c) to not evaluate or analyze the Sponsor Materials for any purpose other than as agreed to in the Project; and
(d) that the results of any evaluation or analysis of the Sponsor Materials shall be treated as Sponsor Information, subject to MAYO's publication rights under Article 4.
MAYO and INVESTIGATOR further agree that upon the termination of this Agreement, completion of work performed under the Project or at the request of Sponsor, MAYO and INVESTIGATOR will, at SPONSOR's option, either destroy or promptly return, at SPONSOR's expense, to SPONSOR, all Sponsor Information and Sponsor Material.
2.3 -- Any data and materials generated solely or jointly by MAYO or INVESTIGATOR pursuant to the Project will be made available to SPONSOR and are collectively referred to as "Project Information." MAYO and INVESTIGATOR agree that:
(a) they shall use Project Information only for internal, non-commercial, non-commercially sponsored research purposes;
(b) they shall not disclose or make available any Project Information to any third party, except in accordance with the publication provisions of Section 4 below, without the prior written consent of SPONSOR; and
(c) they shall disclose Project Information only to employees of MAYO who are aware of the terms of this Agreement.
If one year following the expiration or termination of this Agreement, SPONSOR
is not commercially using Project Information, the obligations set forth in this
Section 2.3 shall no longer apply.
Sponsor Information and Project Information are collectively referred to as "Information."
2.4 -- Notwithstanding the above, the confidentiality obligation shall not apply to Information which:
(a) at the time of receipt by MAYO or INVESTIGATOR is in the public domain;
(b) comes into the public domain through no fault of MAYO or INVESTIGATOR; or
(c) was known to MAYO or INVESTIGATOR before disclosure by SPONSOR or was acquired from a source wholly independent from SPONSOR who was not under an obligation of confidentiality to SPONSOR with regard to such Information.
Additionally, MAYO or INVESTIGATOR may disclose to the appropriate legal authority Information that is the subject of a valid subpoena or is otherwise required by law to be disclosed, provided that advance notice is given to SPONSOR of the requirement of such
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disclosure to permit SPONSOR to oppose such disclosure by appropriate legal action or to evaluate whether means can be taken to provide such disclosure on a confidential basis.
2.5 -- SPONSOR shall have the unrestricted right to use, disclose and make available Project Information, subject to the following. Prior to any disclosure of nonpublic Project Information, with the exception of disclosures required by law or disclosures made under confidence, SPONSOR shall provide MAYO and INVESTIGATOR with an advance copy of such disclosure. SPONSOR shall also not submit a manuscript for publication in a peer-reviewed scientific journal disclosing the research results without the prior agreement of MAYO; provided that at the expiration of ninety (90) days following receipt of the proposed manuscript by MAYO, SPONSOR shall have the right to submit such manuscript for publication. Proper acknowledgement will be made for the contributions of each party to the research results being published.
ARTICLE 3. INVENTIONS, DISCOVERIES AND PATENTS
3.1 -- MAYO filed U.S. Provisional Patent Application No. [**] and U.S. Provisional Patent Application No. [**] and is the owner of any and all rights therein with respect to any MAYO employee, which together with all divisions, continuations, continuations-in-part thereof, all patents issuing thereon, any reexams, reissues or extensions thereof and any foreign counterparts thereon are collectively referred to herein as "Background IP."
3.2 -- MAYO and INVESTIGATOR agree to promptly disclose to SPONSOR in writing all inventions, innovations and discoveries and all modifications, enhancements and improvements developed by MAYO or INVESTIGATOR during the term of this Agreement and the term of any Option, as defined below and arising out of or based upon the performance of research carried out under the provisions of this Agreement (individually Discovery and collectively "Discoveries"). MAYO shall own all of its Discoveries. Any inventions, innovations and discoveries made solely by SPONSOR shall be the sole property of SPONSOR. Any inventions, innovations and discoveries made jointly by one or more employees of MAYO and one or more employees of SPONSOR arising out of or based upon the performance of research carried out under the provisions of this Agreement shall be jointly owned ("Joint Discovery").
3.3 -- Other than as specified in Sections 2.1 and 2.2 hereto with regard to performing research under this Agreement, MAYO and INVESTIGATOR receive no right to a license, implied or otherwise, under any patent or other right now or hereafter owned or controlled by SPONSOR.
3.4 -- MAYO and INVESTIGATOR hereby grant to SPONSOR:
(a) a worldwide, sub licensable, paid-up, exclusive license under their right, title and interest in and to Discoveries and Joint Discoveries incorporating Sponsor Material(s) or modifications to the Sponsor Material(s) ("Material Discoveries");
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(b) a worldwide, non-sub licensable (except to entities with whom SPONSOR is jointly researching, developing and/or commercializing a product) paid-up, non-exclusive license under their interest in and to all Joint Discoveries relating to uses of Sponsor Material(s) or uses of modifications to the Sponsor Materials including the right to make, have made, and use such Joint Discoveries and have others use such Joint Discoveries ;
(c) a worldwide, non-sub licensable, non-exclusive, paid-up license solely for research purposes under their interest in and to all Discoveries and Joint Discoveries other than those set forth in 3.4(a) and (b) above ("Other Discoveries") including the right to have others use such Other Discoveries to perform direct services for SPONSOR; and
(d) an option ("Option") to acquire an exclusive, worldwide, royalty bearing, sub licensable license to Background IP, Joint Discoveries set forth in 3.4(b) above, and Other Discoveries desired by SPONSOR on the terms set forth in Exhibit B.
The Option set forth in 3.4(d) above shall extend for a period of [**] following the completion of the Project or earlier termination of this Agreement. If SPONSOR exercises the Option and a third party has any rights in the Background IP, MAYO shall use reasonable efforts to negotiate in good faith with such third party to obtain such third party's rights so that SPONSOR shall receive an exclusive license to the Background IP.
3.5 -- MAYO and the INVESTIGATOR shall provide SPONSOR with the information SPONSOR reasonably needs to exercise its Option.
3.6 -- If SPONSOR exercises its Option, then MAYO and SPONSOR shall
negotiate in good faith towards achieving a mutually agreeable license agreement
on the terms set forth in Exhibit B. Said negotiations must be concluded within
[**] from the date SPONSOR exercises its Option, unless the time period for
negotiations is extended in writing by mutual agreement.
3.7 -- Upon the expiration of the unexercised Option or the license
agreement negotiation period (which did not result in an executed license
agreement), whichever event occurs later, MAYO shall have no further obligation
to SPONSOR with regard to the Discoveries and Project Information, other than
the licenses set forth in Section 3.3 hereto and obligations set forth in
Section 2.3.
3.8 -- MAYO shall retain a royalty-free right to use any of its Discoveries and Joint Discoveries in connection with its own internal, non-commercial, non-commercially sponsored research, education and clinical programs.
3.9 -- MAYO warrants that all persons associated with the performance of the Project have obligations to assign their ownership rights in any Discoveries and Joint Discoveries to MAYO and to be bound by the confidentiality provisions of this Agreement.
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3.10 -- At its option, SPONSOR shall have the right to obtain patent protection in the United States and foreign countries for any Discoveries and Joint Discoveries, at its expense. In such situation, SPONSOR shall keep MAYO informed of the course of the patent prosecution and will give MAYO the right to review and comment on all substantive filings and correspondence with patent authorities and shall in good faith consider all comments of MAYO with respect to such prosecution efforts. MAYO and INVESTIGATOR hereby undertake and agree to execute such papers which are necessary at any time to permit the filing and prosecution of applications for patent applications covering the Discoveries and Joint Discoveries.
ARTICLE 4. PUBLICATION
4.1 -- MAYO and INVESTIGATOR reserve the right to publish the results of work completed under this Agreement. Review by SPONSOR of the proposed publication prior to submission will be provided, but in the interest of free exchange of scientific information, MAYO and INVESTIGATOR may publish after the expiration of ninety (90) days following receipt of the proposed publication by SPONSOR. Publication of the results will not include SPONSOR Information as defined in Article 2 without the written permission of SPONSOR.
ARTICLE 5. USE OF NAME
5.1 -- Except as required by law, SPONSOR and MAYO shall not use, expressly or by implication,
(a) Any trademark, trade name, or any contraction, abbreviation, simulation, or adaptation thereof of the other party; or
(b) The name of any of other party's staff;
in any news release, publicity, policy recommendation, advertising, product promotion or any commercial communication without the express written approval of the other party.
ARTICLE 6. INDEMNIFICATION AND NEGATION OF WARRANTIES
6.1 -- SPONSOR agrees to indemnify, defend and hold harmless MAYO, its trustees, officers, employees and agents from any third party claims, loss, damage, arising from SPONSOR'S use of the research performed under this agreement. Notwithstanding the above, SPONSOR shall not be responsible for indemnifying MAYO, its trustees, officers, employees or agents for any liability to the extent due to MAYO's negligence, willful misconduct or research contrary to the Project. In the event that SPONSOR defends MAYO and proof of the foregoing is established, MAYO shall reimburse SPONSOR for all costs and expenses incurred by SPONSOR in such defense. MAYO shall provide prompt written notice to SPONSOR of any such claim or liability and SPONSOR shall control the defense and/or settlement of any such claim or liability, provided that SPONSOR agrees not to settle any such claim against MAYO without MAYO's consent where such settlement would include any admission of liability on the part of MAYO or MAYO would incur any financial liability; where the settlement would impose any restriction on the conduct by MAYO of any of its activities, or where the settlement would
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not include an unconditional release of MAYO from all liability for claims that are the subject matter of such claim.
Mayo agrees to be responsible for its acts of negligence or willful misconduct in the performance of its duties and shall be financially and legally responsible for all expenses, liabilities and attorneys fees resulting from or attributable to any such negligence or willful misconduct. Mayo agrees to maintain adequate insurance or a program of self-insurance to cover its liabilities.
6.2 -- Except as may be specifically stated in this Agreement, MAYO makes no representations or warranties, expressed or implied, regarding the intellectual property licensed hereunder or its performance under this Agreement, including but not limited to, the marketability, use or fitness for any particular purpose of the research results developed under this work, or that such results do not infringe upon any third party property rights. Further, neither party shall be liable under this Agreement for special, consequential, or incidental damages.
ARTICLE 7. CONDUCT OF PROJECT AND FISCAL MANAGEMENT
7.1 -- MAYO and INVESTIGATOR shall perform those research activities as described in Exhibit A for the Project. MAYO and INVESTIGATOR shall not make any changes to the Project or deviate there from, without first consulting with SPONSOR and receiving appropriate written authorization to implement the modification. SPONSOR, in consultation with the INVESTIGATOR, may modify the Project; provided that any modification requiring an increase in the payments to be made hereunder shall not be effected, without the agreement of the parties in writing. MAYO shall ensure that all employees of MAYO who are assigned to perform research under this Agreement are made aware of the obligations contained in this Agreement and are bound by such obligations. MAYO and INVESTIGATOR shall not subcontract with any third party to perform any services included in the Project without the express prior written consent of SPONSOR. MAYO and INVESTIGATOR will provide status reports upon reasonable request and shall provide a comprehensive, final written report upon conclusion of the Project. Additionally, SPONSOR shall designate representatives to participate in meetings to review performance of the research hereunder, which meetings shall take place at least once each quarter, at the convenience of MAYO and the INVESTIGATOR. SPONSOR's designated representatives shall have access at reasonable times to observe the services in progress or review any and all records generated as a result of MAYO and INVESTIGATOR's performance of services. MAYO's relation to SPONSOR shall be that of an independent contractor and neither this Agreement nor the research to be conducted hereunder shall for any purpose whatsoever or in any way or manner create any employer employee relationship between the parties. MAYO shall not be deemed an agent of SPONSOR for any purpose and shall have no authority to bind SPONSOR.
7.2 -- MAYO and INVESTIGATOR shall devote their reasonable efforts and ability to the performance of the research hereunder, devoting an amount of time as mutually agreed. MAYO hereby represents that it has the experience, capability and resources, including but not limited to sufficient personnel and supervisors, to efficiently and expeditiously perform the research to be conducted under the Project hereunder in a professional and competent manner.
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MAYO further represents that it will at all times devote the necessary personnel and supervisors to perform such research hereunder in such a manner. MAYO and INVESTIGATOR shall perform all services under the Project hereunder in accordance with the current state of the art and this Agreement. All information provided to SPONSOR pursuant to this Agreement shall be accurate in accordance with scientifically accepted standards. MAYO and INVESTIGATOR shall also comply with all current government regulatory requirements as appropriate to such research and all other applicable federal, state and local laws and regulations. To the best of their knowledge, without the obligation to inquire, MAYO and INVESTIGATOR warrant and represent that no trade secrets or other confidential information of any other person, firm, corporation, institution or other entity will be wrongfully disclosed by them to SPONSOR in connection with any of the research services called for hereunder. MAYO and INVESTIGATOR further warrant and represent that none of the provisions of this Agreement, nor the services which will be performed by MAYO and INVESTIGATOR hereunder, contravenes or is in conflict with any agreement of MAYO or INVESTIGATOR with, or obligation to, any other person, firm, corporation, institution or other entity including, without limiting the generality of the foregoing, employment agreements, consulting agreements, service agreements, disclosure agreements or agreements for assignment of inventions.
7.3 -- In consideration for the completion of the Project by MAYO and
INVESTIGATOR, and as detailed in the budget that is part of Exhibit A, SPONSOR
shall pay MAYO [**] (US $[**]) such amount to be paid in quarterly payments of
[**] (US $[**]), the first payment to be made within thirty (30) days of the
execution of this Agreement and the initiation of the Project. Such amount shall
include all costs associated with the Project.
7.4 -- MAYO shall maintain complete and accurate accounting records in accordance with accepted accounting practices. These records shall be available for inspection, review and audit at reasonable times by SPONSOR, or its duly authorized representative, at SPONSOR's expense, for three (3) years following the end of the calendar year in which such costs are incurred. This section shall survive termination of this Agreement.
7.5 -- MAYO shall retain title to equipment and all other items purchased with funds provided by SPONSOR.
7.6 -- In consideration for the option grant set forth in Article 3, SPONSOR shall pay MAYO [**] DOLLARS (US $[**]), such payment to be made within thirty (30) days of the execution of this Agreement.
ARTICLE 8. TERMINATION
8.1 -- If for any reason INVESTIGATOR becomes unavailable to direct the performance of the work under this Agreement, MAYO shall notify SPONSOR. If the parties are unable to identify a mutually acceptable successor, this Agreement may be terminated by either party upon ten (10) days written notice.
8.2 -- Either party may terminate this Agreement in the event of a breach of a material obligation of the other if such breach remains uncured after thirty (30) days notice.
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8.3 -- This Agreement may be terminated by either party giving to the other a minimum of sixty (60) days prior written notice provided, however, that MAYO shall not terminate the Agreement until the Project is completed. MAYO and INVESTIGATOR will take all reasonable efforts to minimize further costs upon issuing or receiving such notice.
8.4 -- In the event of any notice of termination of this Agreement by SPONSOR, MAYO shall immediately terminate work and use its best efforts to reduce costs to SPONSOR, and, if MAYO is not in default by having breached a material obligation of the Agreement, SPONSOR shall pay MAYO upon receipt of MAYO's invoice, all of its reasonable costs incurred under the Project including applicable indirect costs and agreed-upon noncancellable obligations made before receipt of notice of termination, reduced by all prior payments made by SPONSOR, which shall in no event exceed on a pro rata basis the agreed-upon price for performance of the research as stated in Section 7.3 hereof.
8.5 -- In the event of termination of the Project or the Agreement itself, MAYO and INVESTIGATOR agree to provide SPONSOR with all reports, materials or other deliverable items, in whatever state of completion, as of the date of termination. The provisions of Articles 2,3,4,5,6,8 and 9 shall survive termination or expiration of this Agreement.
ARTICLE 9. GENERAL
9.1 -- This document sets forth the entire Agreement between the parties hereto with respect to the subject matter hereof and will supersede all prior and contemporaneous negotiations, agreements, representations, understandings and commitments with respect thereto. This Agreement shall not be changed or modified in any manner except by an instrument signed by the duly authorized officers of each of the parties hereto, and specifically referencing this Agreement.
9.2 -- This Agreement and any interest herein may not be assigned by MAYO or SPONSOR without the prior written consent of the other, which shall not be unreasonably withheld or delayed; provided, however, that SPONSOR may assign this Agreement to an affiliated company or to any entity with which SPONSOR may merge or consolidate or to which SPONSOR may assign substantially all of its assets or that portion of its business to which this Agreement pertains (as long as the reputation of such entity would not negatively impact MAYO's reputation as a health care institution), without obtaining the agreement of MAYO.
9.3 -- The captions and headings used in this Agreement are for convenience and reference only and are not a part of this Agreement.
9.4 -- All notices shall be in writing and shall be effective upon receipt. Notices should be sent to the respective administrative contacts set forth in Section 1.1 of this Agreement.
9.5 -- Either party's failure to require the other party to comply with any provision of this Agreement shall not be deemed a waiver of such provision or any other provision of this Agreement.
Sponsored Research Agreement and Option page 10 of 19 Farrer / Alnylam 9/29/2003
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9.6 -- If any clause, section or paragraph of this Agreement is determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, it will be deemed severed from the remainder of this Agreement and will have no effect on the legality, validity or enforceability of the remaining provisions of this Agreement provided that a party's rights under this Agreement are not materially affected. The parties hereto covenant and agree to renegotiate any such provision in good faith in order to provide a reasonably acceptable alternative to such provision, it being the intent of the parties that the basic purposes of this Agreement are to be effectuated.
MAYO FOUNDATION FOR MEDICAL MAYO CLINIC JACKSONVILLE
EDUCATION AND RESEARCH
/s/ Rick F. Colvin /s/ Jeff Schultz
-------------------------------- --------------------------------
RICK F. COLVIN NAME:
ASSISTANT TREASURER TITLE:
9/29/03 10/2/03
-------------------------------- --------------------------------
DATE DATE
READ AND UNDERSTOOD:
/s/ DEMETRIUS M. MARAGANORE /s/ MATTHEW J. FARRER
-------------------------------- --------------------------------
DEMETRIUS M. MARAGANORE, M.D. MATTHEW J. FARRER, PH.D.
ALNYLAM PHARMACEUTICALS, INC.
/s/ John G. Conley
--------------------------------
NAME: John G. Conley
TITLE: CFO
10/6/03
--------------------------------
DATE
|
Sponsored Research Agreement and Option page 11 of 19 Farrer / Alnylam 9/29/2003 |
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EXHIBIT A
RESEARCH PLAN
ALPHA-SYNUCLEIN AS A TARGET FOR SIRNA THERAPY
Technical aspects of starting plan:
[**]:
(1) [**] to initially be performed [**] from Matt Farrer lab with
[**]. Dr. Basir will provide protocol from Alnylam.
(2) [**] will be performed [**], in conditions identical to those provided by the company.
(3) Alnylam estimates that [**] will be sufficient [**], this may be as many as [**]. [**] at an initial [**] will be [**].
(4) Expected results [**] will be [**]y.
(5) [**] will be [**].
[**]:
(1) [**] will then be [**] and/or [**].
(2) [**] will be initially [**] which Alnylam will provide. This will help us [**].[**] may be used [**], as needed. Based on the [**], it may not be necessary [**].
(3) [**] will be performed [**].
TIMELINE:
[**]: [**] Months [**]: [**] Months [**]: [**] Months [**] [**] |
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control mice
Months [**]: [**]
|
Sponsored Research Agreement and Option page 13 of 19 Farrer / Alnylam 9/29/2003 |
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BUDGET JUSTIFICATION
REFER TO EXHIBIT C FOR DETAILED BUDGET
SALARIES AND FRINGE BENEFITS ($[**]):
Technician=$[**]
Post-doctoral fellow=$[**]
MOUSE COSTS ($[**]):
Importation and Quarantine of mice: $[**]
Breeders at 0M and 6M: $[**]
Breeding cages: $[**] (based on [**] breeding cages maintained for app. [**] at $[**]/day)
-- This should allow [**] at any one time for both [**] purposes
Weaning and Aging: approximately $[**]
MANY ANIMALS WILL [**] AND FOR SHORT TERM STUDIES. MUCH OF THIS COST COVERS
[**].[**]MOLECULAR BIOLOGY AND BIOCHEMISTRY ($[**])
Genotyping supplies ($[**]):
Tail prep: $[**]
PCR supplies (Taq, plates, sealers, primers, film, etc.): $[**]Avid Chips: $[**]
Expression supplies:
RNA (RT-PCR, primers, Taqman, etc.): $[**]
Westerns (gels, antibodies, film, ECL, etc.): $[**]
IMMUNOHISTOCHEMISTRY/TISSUE STAINING ($[**])
Antibodies, slides, sectioning, etc.
CELL CULTURE AND INFUSION SUPPLIES ($[**])
Cell Culture ($[**]) could vary depending [**]. This should allow adequate supplies for [**] of cell/neuronal/embryo culture.
Infusion pumps/Hamiltons/drill bits, etc. ($[**])
Infusion pumps run $[**]/mouse and will have to be replaced in trials longer than app. 2 weeks 1. DIRECT COSTS: $[**] INDIRECT COSTS: $[**] (INDIRECTS ONLY ON NON-PERSONNEL) TOTAL COSTS: $[**] |
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EXHIBIT B
I. IAn exclusive, worldwide, sub licensable license under desired Background IP, Joint Discoveries set forth in Section 3.4(b) above and Other Discoveries to make, have made, use, have used, market, sell, import and offer products or methods in all fields until the expiration of all patents covering such Background IP, Joint Discoveries and Other Discoveries ("Licensed Patents"). In return for such license, SPONSOR will make the following payments to MAYO:
II. For the indications stated below, the following clinical milestones will be paid for product covered by an issued, unexpired claim of Licensed Patents ("Licensed Product").
MILESTONE PD [**] PD [**] EACH ADDITIONAL [**] ---------------------------------------------------------------------- Filing of first IND $[**] [**] $[**] ---------------------------------------------------------------------- Phase II initiation $[**] $[**] $[**] ---------------------------------------------------------------------- NDA Filing, or equivalent, in the US or EU $[**] $[**] $[**] ---------------------------------------------------------------------- Market approval in the US or EU $[**] $[**] $[**] ---------------------------------------------------------------------- |
In addition, upon first issuance of a valid claim of the Licensed Patents that covers an Alnylam Licensed Product -- $[**]
III. For a Licensed Product that is marketed by SPONSOR or its Sub licensees, a royalty of:
[**]% of Net Sales < or = $[**]
[**]% of Net Sales > $[**]
Such royalty payments shall be reduced up to [**]% by amounts paid to access additional intellectual property believed to be necessary in order to sell Licensed Products.
IV. An annual license maintenance fee of $[**] per year (creditable to milestones and royalties).
V. SPONSOR will be responsible for and will incur the cost for future patent filings and prosecution. SPONSOR will inform MAYO of all substantive activities. In the event that SPONSOR exercises its Option for an exclusive license, SPONSOR shall reimburse MAYO for the past costs of filing and prosecution for Licensed Patents.
VI. Both parties can terminate for material breach upon written notice and a 90 day cure period. Alnylam can terminate upon 30 days notice.
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EXHIBIT C
BUDGET
|
BUDGET IS ON THE FOLLOWING THREE PAGES.
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Principal Investigator: FARRER, M .J. PhD
Funding Source: Alnylam Pharmaceuticals
External Grant Id:
Title: a-Synuclein as a Target for siRNA Therapy
|
09/01/2003
% Base 08/31/2004 Total
Effort Salary Amount Amount
PERSONNEL
FARRER, M.J. PHD
Principal Investigator
LEWIS, J. PHD
Principal Investigator
TO BE NAMED
Technician 100%
TO BE NAMED
Postdoctoral Fellow 100%
------ ------
Total PERSONNEL $ [**] $ [**]
Benefits $ [**] $ [**]
------ ------
Total PERSONNEL (including benefits) $ [**] $ [**]
------ ------
SUPPLIES
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
------ ------
Total SUPPLIES $ [**] $ [**]
OTHER EXPENSES
[**] [**] [**]
[**] [**] [**]
------ ------
Total OTHER EXPENSES $ [**] $ [**]
TOTAL DIRECT COST $ [**] $ [**]
INDIRECT COST [**]% of MTDC $ [**] $ [**]
------ ------
TOTAL COST $ [**] $ [**]
====== ======
|
Budget Id: 19306 Grant Id: 0 Administrator Name: SCHEFFEL, J.G. Finance Specialist: TETZLAFF, L.M. Grant Specialist: Printed On: 08/20/2003 Last Modified: 08/20/2003 |
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FOOT NOTE:
Sponsored Research Agreement and Option page 18 of 19
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Principal Investigator: FARRER, M .J. PhD
Funding Source: Alnylam Pharmaceuticals
External Grant Id:
Title: a-Synuclein as a Target for siRNA Therapy
|
09/01/2003
08/31/2004 Total
Amount Amount
PERSONNEL EFFORT BY PERIOD
FARRER, M.J. PhD Principal Investigator
Salary
EOE 0.00
FB Rate
FB
LEWIS, J. PhD Principal Investigator
Salary
EOE 0.00
FB Rate
FB
TO BE NAMED Technician
Salary
EOE 100.00
FB Rate
FB
TO BE NAMED Postdoctoral Fellow
Salary
EOE 100.00
FB Rate
FB
------------------------------------------------------------------------
Total FB [**]
|
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Principal Investigator: FARRER, M .J. PhD
Funding Source: Alnylam Pharmaceuticals
External Grant Id:
Title: a-Synuclein as a Target for siRNA Therapy
|
09/01/2003
08/31/2004 Total
Amount Amount
Rate
Frequency
Patients #
Cost
------------------------------------------------------------------------
Total Cost
|
EXHIBIT 10.24
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
STRATEGIC COLLABORATION AND
LICENSE AGREEMENT
This Strategic Collaboration and License Agreement (the "Agreement") is effective as of March 11, 2004 (the "Effective Date") between Isis Pharmaceuticals, Inc., a Delaware corporation having an address at 2292 Faraday Avenue, Carlsbad, CA 92008 ("Isis") and Alnylam Pharmaceuticals, Inc., a Delaware corporation having an address at 790 Memorial Drive, Suite 202, Cambridge, MA 02139 (together with its wholly owned subsidiaries Alnylam U.S., Inc., a Delaware corporation, and Alnylam Europe AG, a company organized under the laws of Germany, "Alnylam"). Isis and Alnylam may be referred to herein as the "Parties," or each individually as a "Party."
GUIDING PRINCIPLES
Isis is the leader in RNA-based drug discovery, has created technology, intellectual property, expertise, facilities and resources to discover and develop oligonucleotide drugs;
Alnylam is the leader in RNAi therapeutics, has developed and acquired intellectual property, expertise and technology in RNAi therapeutics, and is conducting research and drug discovery focused on Double Stranded RNA drugs;
Isis and Alnylam desire to create a long-term strategic relationship that will enhance the positions of both companies in RNA-based drug discovery;
Isis will continue to pursue RNA-based drug discovery technology very broadly including all potential mechanisms of action. Isis will work with Alnylam as Isis' primary means of participating in the potential value of Double Stranded RNA Products, and will not enter into any collaborations with Third Parties the primary purpose of which is to discover Double Stranded RNA Products; and
Alnylam will focus on RNAi therapeutics and the use of Double Stranded RNA.
The objectives of the strategic relationship are to:
- Enhance the leadership of Alnylam in RNAi therapeutics.
- Enhance the potential of Alnylam to develop Double Stranded RNA drugs.
- Defer Alnylam investments in Chemistry, Manufacturing and Controls (CMC).
- Enhance the patent positions of each Party with respect to Double Stranded RNA drugs.
- Provide Isis with a means for participating in the success of RNAi therapeutics.
ARTICLE 1
DEFINITIONS; EXHIBITS AND SCHEDULES
1.1 Capitalized terms used herein and not defined elsewhere herein have the meanings set forth in Exhibit 1.1.
1.2 On or before March 19, 2004, the Parties shall both execute a mutually satisfactory addendum transmittal instrument (the "Addendum Transmittal") delivering all Exhibits and Schedules identified herein as attached to the Addendum Transmittal.
ARTICLE 2
EQUITY INVESTMENT
2.1 Isis will purchase from Alnylam Pharmaceuticals, Inc., and Alnylam Pharmaceuticals, Inc. will sell to Isis, 1,666,667 shares of Series D Preferred Stock, at $6.00 per share (i.e., at an aggregate purchase price of $10,000,002), on the terms contained in the Equity Documents.
ARTICLE 3
MANUFACTURING SERVICES RELATIONSHIP
3.1 At Alnylam's request, on the terms and conditions of the Manufacturing Services Term Sheet attached hereto as Exhibit 3.1 attached to the Addendum Transmittal, Isis and Alnylam will negotiate in good faith a manufacturing services agreement (the "Manufacturing Services Agreement"), pursuant to which Isis will provide Alnylam with manufacturing and related services relating to Double Stranded RNA Products.
ARTICLE 4
COLLABORATIVE RESEARCH EFFORTS
4.1 Research Management Committee.
(A) To promote the success of the collaboration objectives and RNAi technology, the Parties will establish a Research Management Committee ("RMC"), which will be comprised of equal numbers of representatives of each of the Parties and will meet at least twice per calendar year, alternating venues between the vicinities of Cambridge, Massachusetts and Carlsbad, California, to share scientific direction and data, to coordinate basic research experiments, and to facilitate the guiding principles of the collaboration.
(B) Intellectual property representatives of each Party will be invited to participate in RMC meetings and such meetings will provide a forum to discuss patent prosecution and enforcement issues and to allocate responsibility for the filing and prosecution of any Joint Patents.
(C) The Parties will use the RMC as a forum to update one another regarding their respective Future Chemistry and Motif and Mechanism Patents.
(D) The RMC will establish a clearance policy that will govern any publication or presentation by a Party in which such Party proposes to include any previously undisclosed information or intellectual property Controlled by the other Party.
(E) The RMC will continue in existence for three (3) years after the Effective Date, subject to extension by mutual agreement of the Parties. Upon termination of the RMC, the Parties will agree upon a strategy to make decisions about the items in Sections 4.1 (b), (c), and (d).
ARTICLE 5
LICENSES GRANTED BY ISIS TO ALNYLAM
5.1 License Grants. Subject to the terms and conditions of this Agreement, including, but not limited to, the restrictions set forth in Section 5.3, Isis grants Alnylam the following licenses:
(A) Under Isis Current Motif and Mechanism Patents and Isis Current Chemistry Patents, a license to research, develop, make, have made, use, import, offer to sell and sell Double Stranded RNA and Double Stranded RNA Products.
(B) Subject to the terms of Section 11.8, under Isis Future Motif and Mechanism Patents, Isis Future Chemistry Patents and Isis' rights in Joint Patents, a license to research, develop, make, have made, use, import, offer to sell and sell Double Stranded RNA and Double Stranded RNA Products.
(C) Under the Isis Current Motif and Mechanism Patents and Isis Current Chemistry Patents, a license to research, develop, make, have made, use, import, offer to sell and sell MicroRNA Products.
(D) Subject to the terms of Section 11.8, under the Isis Future Motif and Mechanism Patents and Isis Future Chemistry Patents, a license to research, develop, make, have made, use, import, offer to sell and sell MicroRNA Products.
(E) A royalty-free, fully paid, license to practice any Know-How disclosed to Alnylam during the performance of this Agreement, subject to the non-disclosure but not the non-use provisions contained in Article 12.
(F) A fully paid, royalty-free nonexclusive license under Isis Manufacturing Patents to research, develop, make, have made, use and import Alnylam Products for Research Use.
5.2 License Exclusivity, Territory and Sublicenses.
(A) Subject to the terms and conditions of this Agreement, including
the restrictions set forth in Section 5.3, the licenses from Isis to Alnylam
granted in Sections 5.1(a) and (b) are worldwide and co-exclusive (with Isis),
with the exclusive right to grant Naked Sublicenses, and the licenses from Isis
to Alnylam granted in Sections 5.1 (c), (d), (e) and (f) are worldwide and
nonexclusive. Alnylam is not permitted to grant sublicenses under the licenses
granted in Sections 5.1(a) through 5.1(e), except that Alnylam is permitted to
grant (i) sublicenses in connection with a Bona Fide Drug Discovery
Collaboration, (ii) sublicenses in connection with a Development Collaboration,
(iii) Naked Sublicenses and (iv) sublicenses under the license granted in
Section 5.1(e) in connection with the discovery, development or
commercialization of any product. Alnylam is not permitted to grant sublicenses
under the licenses granted in Section 5.1(f).
(B) If Alnylam, on its own or through an Affiliate or collaborator in a Bona Fide Drug Discovery Collaboration, has not reached the [**] stage of development with any Alnylam Product by [**], the exclusive right to grant Naked Sublicenses under the licenses granted in Sections 5.1(a) and 5.1(b) will convert to a nonexclusive right.
(C) Alnylam cannot sublicense its right to grant Naked Sublicenses under this Agreement except that Alnylam may permit its sublicensees to grant further sublicenses in connection with an Alnylam Product.
(D) Notwithstanding the foregoing, Isis may (i) complete its pending
transaction with [**], provided that in such transaction Isis only grants to
[**] a nonexclusive license under Isis Current Motif and Mechanism Patents and
Isis Current Chemistry Patents for the manufacture and sale of chemically
modified oligonucleotides for research use only and (ii) continue to grant
licenses to Third Parties for the purpose of manufacturing and selling
oligonucleotides; provided that, to the extent such licenses cover Double
Stranded RNA, Isis will restrict such licenses to non-therapeutic uses.
5.3 Limitations on Licenses.
(A) The licenses granted under Section 5.1 above are not intended to grant any rights to Alnylam to practice the Isis Excluded Technology. If Alnylam wishes to license any Isis Excluded Technology for which Isis has the right to grant a license or sublicense, Isis will negotiate in good faith an appropriate license.
(B) Notwithstanding the licenses granted to Alnylam under Section
5.1, Isis retains its rights in the Isis Patent Rights and in the Joint Patents
(i) exclusively for the Isis Exclusive Targets and (ii) exclusively for the Isis
Encumbered Targets. Once a particular contractual restriction expires on an Isis
Encumbered Target, Alnylam's licenses under Section 5.1 will no longer be
limited under this Section 5.3(b) for such target and such target shall no
longer be an Isis Encumbered Target. Isis will update the [**] (as defined in
the letter agreement dated March 9, 2004 between Alnylam and Isis) provided to
Alnylam prior to the Effective Date and subsequent [**] provided to Alnylam
from time to time to remove targets that are no longer Isis Encumbered Targets
promptly upon receipt of a written request from Alnylam to update such [**],
but will not be required to update such [**] more frequently than once a
calendar quarter.
(C) Licenses to Isis Patent Rights that are joint patents with Third Parties (i.e., invented by one or more Isis inventors and one or more non-Isis inventors) are licensed subject to the retained rights of any non-Isis inventors and their assignees and licensees. Any
such retained rights of non-Isis inventors and their assignees and licensees existing as of the Effective Date are set forth in Exhibit 5.3(c) attached to the Addendum Transmittal.
(D) Licenses to Isis Patent Rights that are subject to contractual obligations between Isis and Third Parties in effect as of the Effective Date are licensed subject to the restrictions and other terms described in Exhibit 5.3(d) attached to the Addendum Transmittal. Alnylam hereby agrees to comply, and to cause its sublicensees to comply, with such restrictions and other terms.
5.4 Alnylam Covenant Regarding Sublicensing of Isis Patent Rights. Alnylam shall use good faith efforts to include sublicenses under the licenses under the Isis Patent Rights granted to Alnylam in Sections 5.1(a) and 5.1(b) in any Third Party collaboration or license agreement in which Alnylam grants rights to develop and commercialize Double Stranded RNA Products, unless the technology covered by such licensed Isis Patent Rights would not reasonably be expected to advance the goals of such Third Party collaboration or license relationship.
ARTICLE 6
LICENSES GRANTED BY ALNYLAM TO ISIS
6.1 License Grants. Subject to the terms and conditions of this Agreement, including, but not limited to, the restrictions set forth in Section 6.5, Alnylam grants Isis the following licenses:
(A) A fully-paid, royalty-free, nonexclusive license under Alnylam Current Motif and Mechanism Patents and Alnylam Current Chemistry Patents to research, develop, make, have made, use and import Isis Products for Research Use.
(B) Subject to the terms of Section 11.8, a fully paid, royalty-free nonexclusive license under Alnylam Future Motif and Mechanism Patents and Alnylam Future Chemistry Patents to research, develop, make, have made, use and import Isis Products for Research Use.
(C) A nonexclusive license under Alnylam Current Motif and Mechanism Patents and Alnylam Current Chemistry Patents to research, develop, make, have made, use, import, offer to sell and sell Isis Single Stranded Products
(D) Subject to the terms of Section 11.8, a nonexclusive license under Alnylam Future Motif and Mechanism Patents and Alnylam Future Chemistry Patents to research, develop, make, have made, use, import, offer to sell and sell Isis Single Stranded Products.
(E) Under the Alnylam Current Motif and Mechanism Patents and Alnylam Current Chemistry Patents, a nonexclusive license to research, develop, make, have made, use, import, offer to sell and sell MicroRNA Products.
(F) Subject to the terms of Section 11.8, under the Alnylam Future Motif and Mechanism Patents and Alnylam Future Chemistry Patents, a nonexclusive license to research, develop, make, have made, use, import, offer to sell and sell MicroRNA Products.
(G) A worldwide, royalty-free, fully paid, nonexclusive license to practice any Know-How disclosed to Isis during the performance of this Agreement, subject to the non-disclosure but not the non-use provisions contained in Article 12.
6.2 License Option. For each Gene Target in the Isis Target Pool (as
further described below) Alnylam grants Isis an exclusive option to obtain (on a
Reserved Target-by-Reserved Target basis), subject to the terms and conditions
of this Agreement, including, but not limited to, the restrictions set forth in
Section 6.5, a license under (i) Alnylam Current Motif and Mechanism Patents and
Alnylam Current Chemistry Patents and (ii) subject to the terms of Section 11.8,
Alnylam Future Motif and Mechanism Patents, Alnylam Future Chemistry Patents and
Alnylam's rights in Joint Patents, to research, develop, make, have made, use,
import, offer for sale and sell Double Stranded RNA and Double Stranded RNA
Products.
(A) This license, when the option is exercised, will be exclusive with respect to Isis Exclusive Targets and co-exclusive (with Alnylam) with respect to Isis Co-Exclusive Targets.
(B) This option will expire on a Reserved Target-by-Reserved Target
basis if Isis has not paid Alnylam the option fee set forth in Section 8.1 below
before the earlier of (i) [**] with respect to such Reserved Target, (ii) the
[**] anniversary of the date such Reserved Target [**] or the [**] anniversary
of the date such Reserved Target [**] and Isis is [**] or (iii) the date [**]
with respect to such Reserved Target.
(C) For any Reserved Target for which Isis obtains a license from Alnylam under this Section 6.2, Isis will use Commercially Reasonable Efforts (either on its own or in an Antisense Drug Discovery Program or Development Collaboration) to develop and commercialize Double Stranded RNA Products that modulate such Reserved Target.
6.3 Sublicenses.
(A) With respect to any license granted by Alnylam pursuant to
Section 6.1(a), 6.1(b) or 6.2, Isis may only grant a sublicense to a Third Party
solely for the purpose of enabling such Third Party to collaborate with Isis in
an Antisense Drug Discovery Program or to develop and commercialize an Isis
Product in a Development Collaboration. With respect to any license granted by
Alnylam pursuant to Section 6.1(c), 6.1(d), 6.1(e), 6.1(f) or 6.1(g), Isis may
grant a sublicense to a Third Party in connection with the discovery,
development or commercialization of any product.
(B) Notwithstanding anything in this Agreement to the contrary, Isis may not enter into any drug discovery collaboration the primary purpose of which is to discover Double Stranded RNA Products and/or to develop Double Stranded RNA Products to any point up to the [**].
6.4 Target Pool.
(A) Reserved Target Slots. Initially, Isis will have a pool (the
"Isis Target Pool") containing up to [**] slots for which Isis can designate
certain Gene Targets solely for Antisense Drug Discovery Programs (each such
slot, a "Target Slot" and any Gene Target occupying such a slot, a "Reserved
Target"); provided, however, that on January 1 of each year starting with
January 1, [**], Isis will gain the right to purchase one additional Target Slot
by paying Alnylam [**] per each additional Target Slot, which additional Target
Slot shall be a Co-Exclusive Target Slot except as otherwise provided in Section
6.4(f). These rights are cumulative and, subject to Section 17.2(c) do not
expire during the License Term. Furthermore, in the event that Isis pays the
$[**] license option fee for a Reserved Target pursuant to section 8.1, such
Reserved Target will be considered to have graduated from the Isis Target Pool,
and, subject to Section 6.4(e), Isis will be permitted to designate a new
Reserved Target to fill the open Target Slot in the Isis Target Pool.
(B) Initial Designations; Conversion of Target Slots. Initially, subject to Section 6.4(e), Isis can designate up to [**] Reserved Targets as Isis Exclusive Targets (the "Isis Exclusive Targets", and each Target Slot occupied by an Isis Exclusive Target, an "Exclusive Target Slot") and up to [**] Reserved Targets as Isis Co-Exclusive Targets (the "Isis Co-Exclusive Targets", and each Target Slot occupied by an Isis Co-Exclusive Target, a "Co-Exclusive Target Slot"). On January 1 of each year starting with January 1, [**], one of the [**] initial Co-Exclusive Target Slots will convert into an Exclusive Target Slot such that the initial [**] Target Slots will all be Exclusive Target Slots by January 1, [**]. Subject to section 6.4(f), the Isis Co-Exclusive Target in a Co-Exclusive Target Slot that converts to an Exclusive Target Slot will become an Isis Exclusive Target.
(C) Removing/Adding/Redesignating Targets. After the Effective Date and no more than [**] period (a "Target Reallocation Period"), Isis may do any of the following:
(i) Remove a Gene Target from the Isis Target Pool (which, following such removal will create an open Target Slot);
(ii) Add a new Gene Target to any open Target Slot (subject to the procedures and provisions of Section 6.4(e); or
(iii) Redesignate an Isis Co-Exclusive Target as an Isis Exclusive Target, provided that (A) an open Exclusive Target Slot is available, which may be made available by Isis's simultaneous redesignation of an Isis Exclusive Target as an Isis Co-Exclusive Target, and (B) Alnylam does not have an Active Program with respect to such Isis Co-Exclusive Target or has not entered into a Bona Fide Drug Discovery Collaboration or Development Collaboration that prevents Alnylam from granting Isis an exclusive license with respect to such Isis Co-Exclusive Target.
Notwithstanding the foregoing provisions of this Section 6.4(c), in any Target Reallocation Period, Isis cannot remove or redesignate, or any combination thereof, a number of Reserved Targets that exceeds the number calculated by dividing the then current number of Target Slots by [**]and rounding down to the nearest whole number. For the purpose of the limitation described in the immediately preceding sentence, (x) removing a Gene Target from the Isis Target Pool and then filling the open Target Slot created by such removal shall
count as a single removal and (y) redesignating an Isis Co-Exclusive Target as an Isis Exclusive Target and simultaneously redesignating an Isis Exclusive Target as an Isis Co-Exclusive Target in order to make available an open Exclusive Target Slot to permit the former redesignation shall count as a single redesignation. Once Isis removes a Gene Target from the Isis Target Pool, Isis will be prevented from later adding such Gene Target to the Isis Target Pool until [**] have passed from the date Isis removed such Gene Target.
(D) New Target Request. When Isis wishes to add a new Gene Target to occupy a vacant Target Slot, it will provide Alnylam with written notice (the "Request Notice") of the Gene Target it wishes to add (the "Proposed Reserved Target"). The Request Notice will include the gene name, the NCBI accession number or nucleic acid sequence for the Proposed Reserved Target and whether Isis wants the Proposed Reserved Target, if accepted, to be an Isis Exclusive Target or an Isis Co-Exclusive Target.
(E) New Target Rejection/Approval. Within [**] of receipt of the
Request Notice, Alnylam will give Isis written notice if any of the criteria set
forth below applied to such Proposed Reserved Target at the time of Alnylam's
receipt of the Request Notice. If, at such time, the Proposed Reserved Target is
(i) subject to Alnylam's own Active Program [**], (ii) encumbered by a
contractual obligation between Alnylam and a Third Party that would preclude
Alnylam from granting a license under Section 6.2 with respect to the Proposed
Reserved Target or (iii) the subject of Alnylam's good faith negotiations to
enter into a contractual obligation within the [**] following receipt of the
Request Notice with a Third Party (as supported by a written request from such
Third Party) that would preclude Alnylam from granting a license under Section
6.2 with respect to the Proposed Reserved Target, then the Proposed Reserved
Target will be rejected and will not become a Reserved Target. If the Proposed
Reserved Target is not rejected under this subsection (e), the Proposed Reserved
Target will become an Isis Co-Exclusive Target or an Isis Exclusive Target (as
set forth in the Request Notice). If Alnylam can only grant a license to a
Proposed Reserved Target on a co-exclusive basis, it will notify Isis in
writing. Isis will then have the option to accept the Proposed Reserved Target
as one of its Isis Co-Exclusive Targets. Alnylam will promptly notify Isis in
writing if a rejected Proposed Reserved Target later becomes available to be
designated as a Reserved Target or if an Isis Co-Exclusive Target later becomes
available to be designated as an Isis Exclusive Target.
(F) Target Redesignation Procedures. In each year that a Co-Exclusive Target Slot converts to an Exclusive Target Slot pursuant to section 6.4(b), Isis will provide Alnylam with written notice designating which Isis Co-Exclusive Target (the "Proposed Redesignated Target") it wishes to become an Isis Exclusive Target occupying the new Exclusive Target Slot. Alnylam will have [**] after the receipt of such notice either to confirm that the Proposed Redesignated Target has become an Isis Exclusive Target or to disallow such redesignation. Alnylam may only disallow such redesignation if, at the time of Alnylam's receipt of Isis' notice regarding the Proposed Redesignated Target, Alnylam has an Active Program with respect to such Proposed Redesignated Target or has entered into a contractual obligation with a Third Party that prevents Alnylam from granting Isis an exclusive license with respect to such Proposed Redesignated Target. In the event that Alnylam disallows the redesignation of a Proposed Redesignated Target, Isis will use the same procedure to designate another Isis Co-Exclusive Target as a Proposed Redesignated Target, and Alnylam will follow the same procedure to confirm or disallow the redesignation
of such Proposed Redesignated Target as an Isis Exclusive Target. In the event
that Isis has proposed all of the then-existing Isis Co-Exclusive Targets as the
Proposed Redesignated Target and Alnylam has disallowed each such proposal, then
(i) if the calendar year is [**], Isis will have the right to purchase an
additional [**] Target Slot in [**], or (ii) if the calendar year is [**] Isis'
right to purchase a [**] Target Slot in pursuant to section 6.4(a) will become a
right to purchase an Exclusive Target Slot in such year, or (iii) if the
calendar year is [**] or later, Isis's right to purchase a [**] pursuant to
section 6.4(a) will become a right to purchase a [**], provided, however, that
in no event shall the number of Exclusive Target Slots held by Isis exceed [**].
(G) Diligence on Rejected Targets. If (i) Alnylam rejects a Proposed Reserved Target under Section 6.4(e) above and (ii) Alnylam has [**] with respect to such rejected Proposed Reserve Target by the [**] anniversary of the date Alnylam rejected such Proposed Reserved Target if Alnylam is working on such target alone, or the [**] anniversary of the date Alnylam rejected such Proposed Reserved Target if such rejected Proposed Reserved Target is subject to a contractual obligation between Alnylam and a Third Party that would preclude Alnylam from granting a license under Section 6.2 with respect to the rejected Proposed Reserved Target but Alnylam is [**], then [**] such rejected Proposed Reserved Target [**].
(H) Diligence Obligations in Third Party Contractual Obligations. With the goal of minimizing contractual encumbrances on Alnylam Patent Rights with respect to Gene Targets in the absence of a reasonable intent to discover and develop products that modulate such Gene Targets by Third Parties with which Alnylam enters into such contractual obligations, Alnylam intends to seek reasonable diligence obligations from Third Parties in negotiating contracts between Alnylam and such Third Parties that would constitute contractual obligations of Alnylam that would preclude Alnylam from granting licenses to Isis under Section 6.2 with respect to Proposed Reserved Targets or that would prevent Alnylam from granting Isis exclusive licenses with respect to Proposed Redesignated Targets; provided that Isis hereby acknowledges that such diligence obligations are often heavily negotiated in biotechnology license and collaboration agreements and that this Section 6.4(h) shall not prevent Alnylam from entering into contracts between Alnylam and Third Parties in accordance with Alnylam's reasonable business judgment.
(I) Confidentiality. The fact that Isis has designated or removed a particular Gene Target within the Isis Target Pool is Confidential Information of Isis, or that Alnylam has rejected a particular Gene Target proposed for a Target Slot or disallowed the redesignation of a particular Gene Target is Confidential Information of Alnylam, subject to the provisions of Article 12. Neither Party shall disclose such Confidential Information of the other Party to any Third Party, including its Third Party collaborators, or use such Confidential Information of the other Party to guide its own (or its Third Party collaborators') decisions to pursue particular Gene Targets, but Alnylam can use such Confidential Information of Isis to decline a Third Party's request for a license to such Gene Target.
6.5 Limitations on Licenses.
(A) The licenses granted under Sections 6.1 and 6.2 above are not intended to grant any rights to Isis to practice the Alnylam Excluded Technology. If Isis wishes to license any Alnylam Excluded Technology for which Alnylam has the right to grant a sublicense, Alnylam will negotiate in good faith an appropriate license.
(B) Licenses to Alnylam Patent Rights that are joint patents with Third Parties (i.e., invented by one or more Alnylam inventors and one or more non-Alnylam inventors)
are licensed subject to the retained rights of any non-Alnylam inventors and their assignees and licensees. There are no Alnylam Current Chemistry Patents or Alnylam Current Motif and Mechanism Patents subject to such retained rights.
(C) Licenses to Alnylam Patent Rights that are subject to contractual obligations between Alnylam and Third Parties in effect as of the Effective Date are licensed subject to the restrictions and other terms described in Exhibit 6.5(c) attached to the Addendum Transmittal. Isis hereby agrees to comply, and to cause its sublicensees to comply, with such restrictions and other terms.
(D) Notwithstanding anything to the contrary herein, the licenses to Alnylam Patent Rights hereunder initially shall not include licenses to Patents licensed by Alnylam from Stanford University under any agreement between Alnylam and Stanford University in effect as of the Effective Date; provided that if any such licensed Patents become issued Patents, Isis shall have the option of expanding its licenses to Alnylam Patent Rights hereunder to include such issued Patents by notifying Alnylam of such election and agreeing to pay to Alnylam, in addition to all amounts otherwise payable to Alnylam hereunder (and without any right under Section 8.2 to reduce such otherwise payable amounts as a consequence of such additional payment amounts), all amounts that (i) become payable by Alnylam to Stanford University as a result of such expansion of Isis' licenses and Isis' (and its Affiliates' and sublicensees') exercise of its rights thereunder and (ii) are described on Exhibit 6.5(d) attached hereto.
ARTICLE 7
LICENSE FEES AND ROYALTIES PAYABLE TO ISIS
7.1 License Fees. Alnylam will pay an initial, irrevocable, noncreditable and non-refundable license fee of $5,000,000 to Isis, $3,000,000 of which will be due within 5 business days of the Effective Date and the remaining $2,000,000 of which will be due on January 3, 2005.
7.2 Royalties. Subject to the terms and conditions of, and during the term of, this Agreement, Alnylam will pay to Isis royalties on sales of Alnylam Products by Alnylam, its Affiliates or sublicensees (except Naked Sublicensees) equal to [**]% of Net Sales. Alnylam may reduce the royalty due under this section by [**]% of any additional royalties that Alnylam owes to Third Parties on such Alnylam Product that arise from Alnylam acquiring access to new technologies after the Effective Date; provided, however that (a) the royalty due under this section can never be less than a floor of [**]% and (b) additional royalties arising as the result of the addition, pursuant to Section 11.8, of Isis Future Chemistry Patents or Isis Future Motif and Mechanism Patents to the Isis Patent Rights licensed to Alnylam cannot be used to reduce the royalty.
7.3 Development Milestones.
(A) Alnylam, its Affiliates or sublicensees (except Naked Sublicensees) will pay to Isis the following milestone payments for each Alnylam Product within [**] after the first achievement of each of the following events:
MILESTONE EVENT MILESTONE PAYMENT
--------------- -----------------
Initiation of Phase I Trial US$[**]
Initiation of Phase III Trial US$[**]
Filing IND US$[**]
Marketing Approval US$[**]
|
Each milestone payment under this Section 7.3(a) will only be due on [**] Alnylam Product that modulates a particular Gene Target to trigger such milestone payment, whether such milestone is achieved by Alnylam or an Affiliate or sublicensee of Alnylam.
(B) Alnylam, its Affiliates or sublicensees will pay to Isis a milestone payment of US$[**] for the [**] MicroRNA Product that is an Alnylam Product that modulates a particular Gene Target within [**] after such MicroRNA Product reaches the initiation of [**], and not for any other MicroRNA Product that is an Alnylam Product that modulates the particular Gene Target.
7.4 Sublicensing Revenue on Naked Sublicenses. Alnylam will pay Isis [**]% of Sublicense Revenue from Naked Sublicenses granted by Alnylam and its Affiliates under this Agreement.
7.5 Technology Access Fees from Bona Fide Collaborations.
(A) Alnylam will pay Isis a percentage of Technology Access Fees received by Alnylam and its Affiliates pursuant to Bona Fide Drug Discovery Collaborations and Development Collaborations entered into between Alnylam and a Third Party. Such percentage will be calculated based on the year in which Alnylam executes such Bona Fide Drug Discovery Collaboration or Development Collaboration agreement using the following table:
YEAR 2004/2005 2006 2007 2008+
---- --------- ---- ---- -----
APPLICABLE PERCENTAGE [**]% [**]% [**]% [**]%
|
(B) Notwithstanding the foregoing, for any Bona Fide Drug Discovery Collaboration or Development Collaboration agreement, Alnylam will pay Isis a minimum fee, payable upon the first Alnylam Product developed pursuant to such Bona Fide Drug Discovery Collaboration agreement reaching [**] or within [**] after the execution of such Development Collaboration agreement, equal to the lesser of (i) $[**] or (ii) [**]% of the Technology Access Fees from such collaboration; provided, however that Alnylam may credit any amounts paid Isis pursuant to Section 7.5(a) above as the result of the same Bona Fide Drug Discovery Collaboration or Development Collaboration agreement against this minimum fee with such amounts credited only once, and provided further that if following such payment, additional Technology Access Fees are owed to Isis for such Bona Fide Drug Discovery Collaboration or Development Collaboration, the amounts paid under this Section 7.5(b) (after crediting of any previous Technology Access Fees paid under Section 7.5(a) in accordance with the immediately preceding proviso) will be creditable against such future Technology Access Fees. In addition, for each of (i) the Research Collaboration and License Agreement between Merck and Co. and Alnylam dated September 8, 2003, as amended through the Effective Date (the "Merck Agreement") and (ii) the Bona Fide Drug Discovery Collaboration agreement currently being negotiated by Alnylam (the "Pending Agreement"), if such agreement is executed within [**] the Effective Date, [**] any Technology Access Fees [**] a fee of $1,000,000 for the [**] Alnylam Product for a particular Gene Target from each such agreement that reaches [**]; provided, however, that if Alnylam and Merck or Alnylam and the potential new collaboration partner [**] Agreement or the Pending Agreement after the Effective Date, then such [**] Agreement or Pending Agreement [**] subject to all the terms and conditions of this Agreement, including but not limited to the terms of this Section 7.5; provided further, however, that if the inclusion by Alnylam of a sublicense under Isis Patent Rights licensed to Alnylam in this Agreement plays a material role in increasing [**] Alnylam pursuant to the Pending [**] Agreement, any such increase [**] shall be considered to be Technology Access Fees subject to the provisions of section 7.5(a).
ARTICLE 8
LICENSE FEES AND ROYALTIES PAYABLE TO ALNYLAM
8.1 Option Fee. For each Isis Reserved Target for which Isis exercises its option granted pursuant to Section 6.2, Isis will pay Alnylam an irrevocable, noncreditable and non-refundable option fee of $[**] due upon the date of exercise. Isis may credit any $[**] payment made under Section 6.4(a) for the Target Slot occupied by such Reserved Target against this option fee. The option fee is only payable once per Gene Target.
8.2 Royalties. Subject to the terms and conditions of, and during the term
of, this Agreement, Isis will pay to Alnylam royalties on sales of Isis Products
by Isis, its Affiliates or sublicensees equal to [**]% of Net Sales. Isis may
reduce the royalty due under this section by [**]% of any additional royalties
that Isis owes to Third Parties on such Isis Product that arise from Isis
acquiring access to new technologies after the Effective Date; provided, however
that that (a) the royalty due under this section can never be less than a floor
of [**]%, (b) additional royalties arising as the result of the addition,
pursuant Section 11.8, of Alnylam Future Chemistry Patents or Alnylam Future
Motif and Mechanism Patents to the Alnylam Patent Rights licensed to Isis, or as
the result of an expansion of Isis' licenses pursuant to Section 6.5(d), cannot
be used to reduce the royalty and (c) Isis shall not be entitled to reduce,
pursuant to this sentence, its royalty obligation to Alnylam below a royalty
obligation equal to the lesser of (i) Alnylam's aggregate royalty obligations
[**] existing as of the Effective Date [**] and (ii) Alnylam's aggregate royalty
obligations [**] as such obligations may be reduced from time to time after the
Effective Date.
8.3 Development Milestones.
(A) Isis, its Affiliates or sublicensees will pay to Alnylam the following milestone payments for each Isis Product within [**] after the first achievement of each of the following events:
MILESTONE EVENT MILESTONE PAYMENT
--------------- -----------------
Initiation of Phase I Trial US$[**]
Initiation of Phase II Trial US$[**]
Filing NDA US$[**]
Marketing Approval US$[**]
|
Each milestone payment under this Section 8.3(a) will only be due on [**] Isis Product that modulates a particular Gene Target to trigger such milestone payment, whether such milestone is achieved by Isis or an Affiliate or sublicensee of Isis.
(B) Isis, its Affiliates or sublicensees will pay to Alnylam a milestone payment of US$[**] for the [**] Isis Single Stranded Product that is an Isis Product that modulates a particular Gene Target within [**] after such Isis Single Stranded Product reaches the initiation of IND-Enabling Studies and not for any other Isis Single Stranded Product that modulates the particular Gene Target.
(C) Isis, its Affiliates or sublicensees will pay to Alnylam a milestone payment of US$[**] for the [**] MicroRNA Product that is an Isis Product that modulates a particular Gene Target within [**] after such MicroRNA product reaches the initiation of [**], and not for any other MicroRNA Product that is an Isis Product that modulates the particular Gene Target.
ARTICLE 9
OTHER PAYMENT TERMS
9.1 Payments. All payments by a Party under this Agreement will be made in United States dollars by bank wire transfer in next day available funds to such bank account in the United States designated in writing by Alnylam or Isis, from time to time. Royalties payable under Sections 7.2 and 8.2 shall be payable on a quarterly basis within 45 days after the end of each calendar quarter. The Party with such royalty obligation (the "Royalty-Paying Party") shall provide the other Party with a report setting forth (i) gross sales of Alnylam Products or Isis Products, as applicable, by the Royalty-Paying Party, its Affiliates and sublicensees, (ii) all deductions from such gross sales taken in calculating Net Sales, (iii) Net Sales of Alnylam Products or Isis Products, as applicable, by the Royalty-Paying Party, its Affiliates and sublicensees, (iv) royalties payable based on such Net Sales and (v) all other information relevant to the calculation of such royalties, on a product-by-product and country-by-country basis, for each calendar quarter within [**] after the end of such calendar quarter.
9.2 Late Payments; Collections. In the event that any payment, including royalty, milestone, Sublicense Revenue or Technology Access Fee payments, due hereunder is not made when due, the payment will bear interest from the date due at the lesser of (i) 1.5% per month, compounded monthly, or (ii) the highest rate permitted by law; provided, however, that in no event will such rate exceed the maximum legal annual interest rate. If a Party disputes in writing the amount of an invoice presented by the other Party within [**] of receipt of such invoice, interest will only be due on the correct amount as later determined or agreed. The payment of such interest will not limit a Party from exercising any other rights it may have as a consequence of the lateness of any payment. In addition, each Party agrees to pay all external costs of collection, including reasonable attorneys' fees, incurred by the other Party in enforcing the payment obligations after a due date has passed under this Agreement.
9.3 Audit Rights.
(A) Upon the written request of Isis or Alnylam, as the case may be, and not more than once in each calendar year, Isis or Alnylam will permit the other Party's independent certified public accountant to have access upon reasonable advance notice and during normal business hours to its records as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for the current year and the preceding 2 years prior to the date of such request. The accounting firm will disclose to the auditing Party only whether the royalty reports are correct or incorrect, the specific details concerning any discrepancies, and the corrected amount of Net Sales and royalty payments. No other information will be provided to the auditing Party. Once a Party has audited a particular calendar year under this section, the Party will be precluded from subsequently auditing such calendar year. In any sublicense granted by a Party under this Agreement, such Party will
endeavor to secure a similar audit right and if reasonably requested by the other Party will enforce such audit right.
(B) If such accounting firm concludes that additional royalties were owed during such period, the delinquent Party will pay the additional royalties within 90 days of the date such Party receives the accounting firm's written report. The fees charged by such accounting firm will be paid by the auditing Party unless the additional royalties, milestones or other payments owed by the audited Party exceed 5% of the royalties, milestones or other payments paid for the time period subject to the audit, in which case the audited Party will pay the reasonable fees and expenses charged by the accounting firm.
(C) Each Party will treat all financial information subject to review under this Section 9.3 or under any sublicense agreement in accordance with the confidentiality provisions of Article 12, and will cause its accounting firm to enter into an acceptable confidentiality agreement obligating such firm to retain all such financial information in confidence pursuant to such confidentiality agreement.
9.4 Taxes. If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in Article 7 or 8, each Party will make such withholding payments as required and subtract such withholding payments from the payments set forth in Article 7 or 8. Each Party will submit appropriate proof of payment of the withholding taxes to the other Party within a reasonable period of time. The Parties will cooperate to obtain the appropriate tax clearance and/or recover any such withholdings if possible.
ARTICLE 10
ALNYLAM RIGHT OF FIRST NEGOTIATION; PREFERRED LICENSEE
10.1 Right of First Negotiation. Isis will notify Alnylam in writing once
(i) Isis, on its own with no subsequent rights to Third Parties, intends to
initiate [**]or (ii) if a Third Party with which Isis has a Development
Collaboration or a collaboration on [**] before or during clinical development
or commercialization with no subsequent rights to Third Parties. Alnylam will
have [**] from the receipt of such notice to notify Isis in writing whether or
not Alnylam wishes to negotiate with Isis regarding the development and/or
commercialization of such Isis Product. If Alnylam fails to respond to Isis'
notice within the [**] or if Alnylam declines in writing to exercise its right
of first negotiation, then Isis will be free to develop and commercialize
(either on its own or with a Third Party) the Isis Product. If Alnylam wishes to
negotiate a license or development or commercialization rights in such Isis
Product, the Parties will negotiate in good faith the terms of the license or
collaboration agreement. If, despite good faith negotiations, Alnylam and Isis
do not reach agreement within [**] from Alnylam's exercise of its right of first
negotiation, then Isis will be free to develop and commercialize (either on its
own or with a Third Party) the Isis Product; provided that during the period
prior to the latest of (x) the initiation of [**] the Isis Product, (y) the [**]
anniversary of the commencement of [**] for the Isis Product or (z) in the case
of an Isis Product [**] after the commencement of [**], Isis shall not enter
into a license or collaboration agreement with a Third Party for such Isis
Product on terms (the "More Favorable Terms") that are in the aggregate
materially more favorable to the Third Party than
the terms on which Isis most recently offered in writing to grant such rights to Alnylam without first offering the More Favorable Terms to Alnylam.
10.2 Preferred Licensee. If, after the Effective Date, Alnylam grants to
any Third Party that is not a Major Pharmaceutical Company a license under the
Alnylam Patent Rights to develop and commercialize Double Stranded RNA Products,
then if (a) either (i) the [**] terms of such license are more favorable to the
Third Party than the [**] terms hereunder with respect to Isis Products are to
Isis or (ii) the [**] covered by such license exceeds the [**] potentially
licensed to Isis hereunder for development and commercialization of Double
Stranded RNA Products, and (b) the roles to be played by Alnylam and such Third
Party in the development and commercialization of Double-Stranded RNA Products
under such Third Party license, the nature of the Gene Targets covered by such
Third Party license and any other relevant terms of such Third Party license do
not collectively justify the conditions described in the preceding clauses
(a)(i) and/or (a)(ii), then Alnylam shall modify the terms of its licenses to
Isis hereunder with respect to such conditions so that they are reasonably
equivalent to those granted to the Third Party.
ARTICLE 11
INTELLECTUAL PROPERTY
11.1 Ownership of Inventions.
(A) Each Party will solely own all inventions, technology, discoveries, or other proprietary property (collectively, "Inventions") that are made (as determined by U.S. rules of inventorship) solely by employees of or consultants to that Party under this Agreement.
(B) Isis and Alnylam will jointly hold title to all Inventions, whether or not patentable, that are made (as determined by the U.S. rules of inventorship) jointly by employees of or consultants to Isis and Alnylam, as well as to Patents filed thereon. Such Inventions will be "Joint Inventions," and Patents claiming such Joint Inventions will be "Joint Patents." Isis and Alnylam will promptly provide each other with notice whenever a Joint Invention is made. The Parties agree and acknowledge that, except insofar as this Agreement provides otherwise, the default rights conferred on joint owners under US patent law, including the right of each Party to independently practice, license and use a Joint Patent, will apply in relation to the Joint Patents throughout the world as though US patent law applied worldwide.
(C) The Parties agree, upon reasonable request, to execute any documents reasonably necessary to effect and perfect each other's ownership of any Invention.
11.2 Filing and Prosecution of Isis and Alnylam Patent Rights.
(A) Isis and Alnylam will work closely, through their interactions on the RMC to ensure that, to the greatest degree permitted by United States and foreign patent laws, Patents for inventions relating to all aspects of Double Stranded RNA are obtained and shared.
(B) Isis will be responsible for preparing, filing, prosecuting, maintaining and taking such other actions as are reasonably necessary or appropriate with respect to the Isis Patent Rights.
(C) Alnylam will be responsible for preparing, filing, prosecuting, maintaining and taking such other actions as are reasonably necessary or appropriate with respect to the Alnylam Patent Rights.
(D) Each Party will endeavor in good faith to coordinate its efforts with those of the other Party to minimize or avoid interference with the prosecution of the other Party's Patents. Neither Party will initiate or participate in any opposition, reexamination, interference, litigation or other proceeding for the purpose of narrowing or invalidating any claim in a Patent of the other Party. Promptly after the Effective Date, Isis shall discontinue its participation in the opposition proceeding relating to the following Patent Controlled by Alnylam: EP 1,144,623 (Inventors: R. Kreutzer and S. Limmer).
(E) At either Party's request, the other Party will keep the requesting Party continuously informed of and provide documentation of all significant matters relating to the preparation, filing, prosecution and maintenance of any designated Patent.
11.3 Filing and Prosecution of Jointly Owned Patents.
(A) The Research Management Committee will designate one of the Parties as being the responsible Party for preparing, filing, prosecuting, maintaining and taking such other actions as are reasonably necessary or appropriate with respect to any Joint Patent.
(B) Each Party will keep the other Party continuously informed of all significant matters relating to the preparation, filing, prosecution and maintenance of Joint Patents, and shall provide the other Party with copies of any substantial prosecution papers within thirty days of receipt.
11.4 Costs and Expenses.
(A) Each Party will bear its own costs and expenses in filing, prosecuting, maintaining and extending the Alnylam Patent Rights and Isis Patent Rights, respectively.
(B) The Parties will pay equal shares of all costs and expenses in filing, prosecuting, maintaining and extending the Joint Patents.
11.5 Enforcement.
(A) Each Party will promptly advise the other of any suspected or actual infringement of the Isis Patent Rights, Alnylam Patent Rights, or Joint Patents by any person that reasonably affects the other Party's business. The notice shall set forth the facts of such infringement or misappropriation in reasonable detail.
(B) Subject to subsections (c) and (h) below, Alnylam will have the sole and exclusive right, in its sole discretion and at its expense, to assert and enforce any Isis Patent Rights, Alnylam Patent Rights or Joint Patents against any party engaging in an unlicensed or
unauthorized making, having made, using, selling, offering for sale or importing of any allegedly infringing Double Stranded RNA.
(C) For any enforcement by Alnylam under subsection (b) above that includes Isis Patent Rights covering a [**] chemical modification, Isis will actively participate in the planning and conduct of such enforcement and will take the lead of such enforcement to the extent that the scope or validity of any such Isis Patent Rights covering a [**] chemical modification is at risk.
(D) Except as set forth in Sections 11.5(b) and (h),
(I) Isis will have the sole and exclusive right, in its sole discretion and at its expense, to assert and enforce any Isis Patent Rights;
(II) Alnylam will have the sole and exclusive right, in its sole discretion and at its expense, to assert and enforce any Alnylam Patent Rights; and
(III) The RMC will agree in advance on the enforcement of any Joint Patent and will apportion enforcement responsibilities and recoveries amongst the parties.
(E) The rights granted hereunder to Alnylam to enforce certain licensed in or jointly owned Isis Patent Rights are further limited as described in Exhibit 5.3(d) attached to the Addendum Transmittal. The rights granted hereunder to Isis to enforce certain licensed in or jointly owned Alnylam Patent Rights are further limited as described in Exhibit 6.5(c) attached to the Addendum Transmittal.
(F) The nonenforcing Party will have the right, at its own expense, to participate in the conduct of the enforcement action and to be represented in such action by its own counsel.
(G) The enforcing Party will not enter into any settlement that impacts the scope or interpretation of any claim of any Joint Patent or of any Patent of the nonenforcing Party without prior written authorization of the nonenforcing Party.
(H) If the Party with enforcement rights under section (b) or (d)
above (the "Enforcing Party") fails to initiate proceedings against any actual
or suspected infringement within [**] of receipt of written request for
enforcement from the other Party (the "Nonenforcing Party") and if the infringer
is directly competing with a Product (the "Affected Product") of such
Nonenforcing Party, then (i) if the license granted in this Agreement under
which the Nonenforcing Party is selling the Affected Product is exclusive or
co-exclusive, the Nonenforcing Party will have the right to assert and enforce
the patents that are allegedly being infringed, or (ii) if the license granted
in this Agreement under which the Nonenforcing Party is selling the Affected
Product is non-exclusive, the Nonenforcing Party will have obligation to pay
royalties during the period for which the Enforcing Party fails to initiate
proceedings or take other action (including without limitation entering into a
licensing arrangement) to eliminate such infringement; provided that the
provisions of the immediately preceding clause (ii) shall not apply if the
Enforcing Party elects to grant the Nonenforcing Party enforcement rights with
respect to such infringement. The Enforcing Party will not grant a license to
any such infringing Third Party with respect to any directly competitive
infringing product on terms materially more favorable (milestones and royalties)
than the terms of the license granted hereunder to the Nonenforcing Party or,
solely with
respect to the Affected Product, will adjust the terms of such license so that they are not materially less favorable than the terms of the license granted to the infringing Third Party.
(I) Except as otherwise agreed to by the Parties as part of a cost-sharing arrangement, any recovery realized as a result of such litigation, after reimbursement of any reasonable litigation expenses of Isis and Alnylam, shall be retained by the Party or Parties that brought and controlled such litigation for purposes of this Agreement, except that any recovery realized as a result of such litigation shall be treated as Net Sales of Isis Products or Net Sales of Alnylam Products and distributed as such Net Sales would have been distributed.
11.6 Manufacturing Patents. All provisions relating to Manufacturing Patents shall be governed by the Manufacturing Services Agreement.
11.7 Third Party Patents. The Parties will consult about the need to
license any patents Controlled by Third Parties that would be useful or
necessary for either Party to research, develop, make, have made, use, sell,
offer for sale or import Double Stranded RNA Products. If it is agreed that
there is a desire to obtain a license or to acquire any such patent, the Parties
will negotiate in good faith regarding (i) the share of the financial
obligations relating to the license or acquisition that each Party will bear;
(ii) the compensation of any acquisition costs incurred in connection with
obtaining the Patent rights; and (iii) an agreement by the Parties to abide by
all terms of the agreement under which the patent rights are granted.
11.8 Future Licenses. If after the Effective Date, a Party (the "Controlling Party") later invents or acquires rights or title to an invention claimed by a Patent that (i) would be included in the Isis Future Chemistry Patents or Isis Future Motif and Mechanism Patents if such Party is Isis or in the Alnylam Future Chemistry Patents or Alnylam Future Motif and Mechanism Patents if such Party is Alnylam (the "Additional Rights") and (ii) carry financial or other obligations, then the Controlling Party must promptly notify the non-Controlling Party of such acquisition or invention. If the non-Controlling Party wishes to include such Additional Rights under the licenses granted pursuant to Article 5 or 6, as applicable, the non-Controlling Party will notify the Controlling Party of its desire to do so and will assume all financial and other obligations to the Controlling Party's licensors or collaborators, if any, arising from the grant to the non-Controlling Party of such license. Any Additional Rights that do not carry financial or other obligations shall be automatically included under the licenses granted pursuant to Article 5 or 6, as applicable. If a Party pays any upfront payments or similar acquisition costs to access Additional Rights, the Parties will negotiate in good faith regarding sharing such acquisition costs and payments. When acquiring or creating such Additional Rights, each Party will endeavor in good faith to secure the right to sublicense such Additional Rights to the other Party.
ARTICLE 12
CONFIDENTIALITY
12.1 Nondisclosure Obligation. All Confidential Information disclosed by one Party to the other Party hereunder will be maintained in confidence by the receiving Party and will not be disclosed to a Third Party or Affiliate or used for any purpose except as set forth below.
12.2 Permitted Disclosures. Except as otherwise provided herein, a Party may disclose Confidential Information received from the other Party:
(A) to governmental or other regulatory agencies in order to obtain Patents or approval to conduct clinical trials, or to gain Marketing Approval; provided that such disclosure may be made only to the extent reasonably necessary to obtain such Patents or approvals;
(B) to any adjudicative body as required by law, provided that prior to such disclosure, the Party subject to such disclosure obligation (the "Notifying Party") promptly notifies the other Party of such requirement so that such other Party can seek a protective order, confidential treatment or other appropriate remedy; and provided, further, that in the event that no such protective order, confidential treatment or other remedy is obtained, or that such other Party waives compliance with this section, the Notifying Party will furnish only that portion of the other Party's Confidential Information that it is advised by counsel it is legally required to furnish;
(C) to Affiliates, sublicensees, agents, consultants, and/or other Third Parties for the development, manufacturing and/or marketing of Isis Products or Alnylam Products (or for such parties to determine their interest in performing such activities) in accordance with this Agreement on the condition that such Affiliates, sublicensees and Third Parties agree to be bound by the confidentiality obligations contained in this Agreement;
(D) if such disclosure is required by law or regulation (including without limitation by rules or regulations of any securities exchange or NASDAQ), provided that prior to such disclosure, the Notifying Party promptly notifies the other Party of such requirement so that such other Party can seek a protective order, confidential treatment or other appropriate remedy; and provided, further, that in the event that no such protective order, confidential treatment or other remedy is obtained, or that such other Party waives compliance with this section, the Notifying Party will furnish only that portion of the other Party's Confidential Information that it is advised by counsel it is legally required to furnish; or
(E) as necessary if embodied in products to develop and commercialize such products.
Either Party may disclose (i) a copy of this Agreement on a confidential basis to prospective lenders and investors, (ii) a mutually agreed upon redacted copy of this Agreement on a confidential basis to prospective collaborators and (iii) the terms of this Agreement as required under applicable securities laws or regulations (including without limitation under rules or regulations of any securities exchange or NASDAQ); provided, however, that,
subject to Section 6.4(i), Alnylam shall not disclose Isis' past or current Reserved Targets without the express prior written consent of Isis.
12.3 Announcements; Publicity.
(A) Each Party understands that this Agreement is likely to be of significant interest to investors, analysts and others, and that either Party therefore may make public announcements with respect to this Agreement. The Parties agree that any such announcement will not contain confidential business or technical information unless disclosure of confidential business or technical information is required by law or regulation, in which case they will make reasonable efforts to minimize such disclosure of confidential business or technical information to that required by law or regulation. Each Party agrees to provide to the other Party a copy of any such public announcement as soon as reasonably practicable under the circumstances prior to its scheduled release. Except under extraordinary circumstances, each Party shall provide the other with an advance copy of any press release at least two (2) business days prior to the scheduled disclosure. The other Party shall have the right to expeditiously review and recommend changes to any announcement regarding this Agreement or the subject matter of this Agreement, provided that such right of review and recommendation shall only apply for the first time that specific information is to be disclosed, and shall not apply to the subsequent disclosure of information that (i) is substantially similar to a previously reviewed disclosure and (ii) in the context of the subsequent disclosure, does not carry a substantially different qualitative message than that carried by the previously reviewed disclosure. The Party whose press release has been reviewed shall in good faith consider any changes that are timely recommended by the reviewing Party.
(B) Each Party will (i) use reasonable, good faith efforts to provide the other Party with at least 5 business days' prior notice (which notice may be given orally to a senior executive officer of the other Party) before such Party publicly announces the execution of a Naked Sublicense, Bona Fide Drug Discovery Collaboration agreement or Development Collaboration agreement (or any material amendments thereto) that could reasonably be expected to be of strategic or financial importance to the other Party's business and (ii) cooperate with the other Party to enable the other Party to develop appropriate mutually beneficial public announcements regarding such transactions.
ARTICLE 13
INDEMNIFICATION
13.1 Indemnification by Alnylam. Alnylam will indemnify, defend and hold Isis and its agents, employees, officers and directors (the "Isis Indemnitees") harmless from and against any and all liability, damage, loss, cost or expense (including reasonable attorneys' fees) arising out of Third Party claims or suits related to (a) Alnylam's performance of its obligations under this Agreement; (b) breach by Alnylam of its representations and warranties set forth in Article 15; or (c) the discovery, development, manufacture, use, importation or commercialization (including marketing and sale) of Alnylam Products.
13.2 Indemnification by Isis. Isis will indemnify, defend and hold Alnylam and its Affiliates and each of their respective agents, employees, officers and directors (the "Alnylam Indemnitees") harmless from and against any and all liability, damage, loss, cost or expense (including reasonable attorneys' fees) arising out of Third Party claims or suits related to (a) Isis' performance of its obligations under this Agreement; (b) breach by Isis of its representations and warranties set forth in Article 15; or (c) the discovery, development, manufacture, use, importation or commercialization (including marketing and sale) of Isis Products.
13.3 Notification of Claims; Conditions to Indemnification Obligations. A Party entitled to indemnification under this Article 13 shall (a) promptly notify the other Party as soon as it becomes aware of a claim or action for which indemnification may be sought pursuant hereto, (b) cooperate with the indemnifying Party in the defense of such claim or suit, and (c) permit the indemnifying Party to control the defense of such claim or suit, including without limitation the right to select defense counsel; provided that if the Party entitled to indemnification fails to promptly notify the indemnifying Party pursuant to the foregoing clause (a), the indemnifying Party shall only be relieved of its indemnification obligation to the extent prejudiced by such failure. In no event, however, may the indemnifying Party compromise or settle any claim or suit in a manner which admits fault or negligence on the part of the indemnified Party, or which imposes obligations on the indemnified Party other than financial obligations that are covered by the indemnifying Party's indemnification obligation, without the prior written consent of the indemnified Party. The indemnifying Party will have no liability under this Article 13 with respect to claims or suits settled or compromised without its prior written consent.
ARTICLE 14
TERM AND TERMINATION OF AGREEMENT
14.1 Term and Termination of Agreement. This Agreement will be effective as of the Effective Date and unless terminated earlier pursuant to Sections 14.2 or 14.3 below, the term of this Agreement will continue in effect until expiration of the License Term.
14.2 Termination upon Material Breach. This Agreement may be terminated upon written notice by either Party to the other at any time during the term of this Agreement if the other Party is in material breach of its obligations hereunder and has not cured such breach within 90 days after written notice requesting cure of the breach; provided, however, that (a) in the event of a good faith dispute with respect to the existence of such a material breach, the 90-day cure period will be stayed until such time as the dispute is resolved pursuant to Section 17.6 hereof, (b) so long as the breaching Party takes substantial steps to cure the breach promptly after receiving notice of the breach from the non-breaching Party and thereafter diligently prosecutes the cure to completion as soon as is practicable, the non-breaching Party may not terminate this Agreement, and (c) any license granted under this Agreement with respect to an Isis or Alnylam Product that has at least reached IND-Enabling Studies may not be terminated for a material breach under this Section 14.2 (except for an uncured failure to make any undisputed portion of any payment obligation under Article 7 or
8 with respect to such Isis or Alnylam Product) to the extent such license is necessary to develop, make and have made, sell and import such Isis or Alnylam Product.
14.3 Termination upon Bankruptcy; Rights in Bankruptcy.
(A) This Agreement may be terminated with written notice by either Party at any time during the term of this Agreement upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings by or against the other Party or upon an assignment of a substantial portion of its assets for the benefit of creditors by the other Party; provided, however, in the case of any involuntary bankruptcy proceeding such right to terminate will only become effective if the Party consents to the involuntary bankruptcy or such proceeding is not dismissed within 90 days of the filing thereof.
(B) All rights and licenses granted under or pursuant to this Agreement by Isis or Alnylam are, and will otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to "intellectual property" as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that the Parties, as licensees of such rights under this Agreement, will retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding-by or against either Party under the U.S. Bankruptcy Code, the Party hereto which is not a Party to such proceeding will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in their possession, will be promptly delivered to them (i) upon any such commencement of a bankruptcy proceeding upon their written request therefore, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement, or (ii) if not delivered under (i) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefore by the non-subject Party.
14.4 Accrued Rights and Surviving Obligations.
(A) Expiration or termination of the Agreement will not relieve the Parties of any obligation accruing prior to such expiration or termination, including, but not limited to, financial obligations under Article 7 or 8. Sections 9.2, 9.3 and 11.1, and Articles 1, 12, 13, 14 and 17 will survive expiration or termination of the Agreement. Provisions concerning reporting requirements will continue in effect in accordance with any applicable timetables set forth herein. Any expiration or early termination of this Agreement will be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement prior to termination. No expiration of this Agreement will relieve a Party of its obligation to pay milestones, royalties, or a percentage of Technology Access Fees or Sublicense Revenue.
(B) The rights of any sublicensee under any permitted sublicense granted in accordance with Section 5.2 or 6.3 will survive the termination of this Agreement.
ARTICLE 15
REPRESENTATIONS AND WARRANTIES; DISCLAIMER
15.1 Representations and Warranties of the Parties. Each Party represents and warrants to the other Party that, as of the date of this Agreement:
(A) Such Party is duly organized and validly existing under the laws of the state of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;
(B) Such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;
(C) This Agreement is a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement. The execution, delivery and performance of this Agreement by such Party does not conflict with any agreement, instrument or understanding, oral or written, to which such Party is a Party or by which such Party may be bound, and does not violate any law or regulation of any court, governmental body or administrative or other agency having authority over such Party. All consents, approvals and authorizations from all governmental authorities or other Third Parties required to be obtained by such Party in connection with this Agreement have been obtained;
(D) Such Party has sufficient right, power and authority to enter into this Agreement, to perform its obligations under this Agreement and to grant the licenses granted hereunder.
15.2 Disclaimers. THE PARTIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.
ARTICLE 16
NOTICE
16.1 Notice. All notices which are required or permitted hereunder will be in writing and sufficient if delivered personally, sent by facsimile (and confirmed by telephone), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
if to Isis, to: Isis Pharmaceuticals, Inc.
Carlsbad Research Center
2292 Faraday Avenue
Carlsbad, CA 92008
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Attention: Executive Vice President
Fax No.: +1 (760) 603-4652
with a copy to: Attention: General Counsel
Fax No.: +1 (760) 268-4922
if to Alnylam, to: Alnylam Pharmaceuticals, Inc.
790 Memorial Drive, Suite 202
Cambridge, MA 02139
Attention: President
Fax No.: +1 (617) 252-0011
with a copy to: Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention: Steven D. Singer, Esq.
Fax No.: +1 (617) 526-5000
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or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith. Any such notice will be deemed to have been given when delivered if personally delivered or sent by facsimile on a business day, on the business day after dispatch if sent by nationally-recognized overnight courier and on the third business day following the date of mailing if sent by mail.
ARTICLE 17
MISCELLANEOUS PROVISIONS
17.1 Relationship of the Parties. It is expressly agreed that Isis and Alnylam will be independent contractors and that the relationship between the two Parties will not constitute a partnership, joint venture or agency. Neither Isis nor Alnylam will have the authority to make any statements, representations or commitments of any kind, or to take any action, which will be binding on the other, without the prior consent of the other Party.
17.2 Successors and Assigns.
(A) Neither this Agreement nor any interest hereunder may be assigned or otherwise transferred (whether by sale of stock, sale of assets or merger), nor, except as expressly provided hereunder, may any right or obligations hereunder be assigned or transferred by either Party without the prior written consent of the other Party; provided, however, that a Party may, without such consent, assign this Agreement and its rights and obligations hereunder to an Affiliate or in connection with an Acquisition.
(B) Notwithstanding the provisions of Section 17.2(a), if Alnylam is
the subject of an Acquisition and the entity surviving the acquisition does not
maintain [**] that is substantially similar or greater [**] after the time of
the Acquisition, then (i) the limit on the [**] that Isis can [**] pursuant to
Section 6.4(a) will [**] and (ii) the exclusive right to grant Naked
Sublicenses under Section 5.2 will [**].
(C) Notwithstanding the provision of Section 17.2(a), if Isis is the subject of an Acquisition, (i) the entity surviving such Acquisition will no longer [**] under Section 6.4(a) and (ii) the number of [**] such Acquisition will be permitted to [**] pursuant to Section 6.4(a) shall be limited to [**] per calendar year.
(D) Any permitted assignee will assume all obligations of its assignor under this Agreement. Any attempted assignment not in accordance with this Section 17.2 will be void.
17.3 Entire Agreement; Amendments. This Agreement, together with the Equity Documents, contains the entire understanding of the Parties with respect to the license, development and commercialization of Products hereunder. All express or implied agreements and understandings, either oral or written, heretofore made by the Parties on the same subject matter are expressly superseded by this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both Parties hereto.
17.4 Force Majeure. Neither Party will be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including, without limitation, embargoes, acts of war (whether war be declared or not), insurrections, riots, civil commotions, acts of terrorism, strikes, lockouts or other labor disturbances, or acts of God. The affected Party will notify the other Party of such force majeure circumstances as soon as reasonably practical and will make every reasonable effort to mitigate the effects of such force majeure circumstances.
17.5 Applicable Law. The Agreement will be governed by and construed in accordance with the laws of the State of Delaware without reference to any rules of conflict of laws.
17.6 Dispute Resolution.
(A) The Parties recognize that disputes may from time to time arise between the Parties during the term of this Agreement. In the event of such a dispute, either Party, by written notice to the other Party, may have such dispute referred to the Parties' respective executive officers designated below or their successors, for attempted resolution by good faith negotiations within 30 days after such notice is received. Said designated officers are as follows:
For Isis: Executive Vice President For Alnylam: Senior Vice President of Business Development |
If the dispute is not resolved as provided above, the President of Isis and the President of Alnylam will meet for attempted resolution by good faith negotiations within 15 days after the expiration of the preceding 30 day period.
(B) In the event the designated executive officers are not able to resolve such dispute during such 15-day period, then any such dispute shall be resolved through binding arbitration under the Commercial Arbitration Rules of the American Arbitration Association by a panel of three arbitrators appointed in accordance with such rules. The Parties shall be entitled to the same discovery as permitted under the U.S. Federal Rules of Civil Procedure; provided that the panel shall be entitled in its discretion to grant a request
from a Party for expanded or more limited discovery. The award of the arbitrators shall be the sole and exclusive remedy between the Parties regarding any such dispute. An award rendered in connection with an arbitration pursuant to this Section 17.6 shall be final and binding upon the Parties and any judgment upon such award may be entered and enforced in any court of competent jurisdiction. Any arbitration pursuant to this Section 17.6 shall be conducted in San Diego, California if Alnylam initiates the arbitration or in Boston, Massachusetts if Isis initiates the arbitration. Nothing in this Section 17.6 shall be construed as limiting in any way the right of a Party to seek an injunction or other equitable relief with respect to any actual or threatened breach of this Agreement or to bring an action in aid of arbitration. Should any Party seek an injunction or other equitable relief, or bring an action in aid of arbitration, then for purposes of determining whether to grant such injunction or other equitable relief, or whether to issue any order in aid of arbitration, the dispute underlying the request for such injunction or other equitable relief, or action in aid of arbitration, may be heard by the court in which such action or proceeding is brought.
17.7 No Consequential Damages. IN NO EVENT WILL EITHER PARTY OR ANY OF ITS
RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR
SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT,
WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING, BUT NOT
LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR
OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES.
17.8 Captions. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely a convenience to assist in locating and reading the several Articles and Sections hereof.
17.9 Waiver. The waiver by either Party hereto of any right hereunder, or the failure to perform, or a breach by the other Party will not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.
17.10 Compliance with Law. Nothing in this Agreement will be deemed to permit a Party to export, re-export or otherwise transfer any Product sold under this Agreement without compliance with applicable laws.
17.11 Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affect the substantive rights of the Parties. The Parties will in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, maintains the balance of the rights and obligations of the Parties under this Agreement.
17.12 Waiver of Rule of Construction. Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this
Agreement. Accordingly, the rule of construction that any ambiguity in this Agreement will be construed against the drafting Party will not apply.
17.13 Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.
17.14 Performance by Affiliates. To the extent that this Agreement imposes obligations on Affiliates of a Party, such Party agrees to cause its Affiliates to perform such obligations.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
ISIS PHARMACEUTICALS, INC. ALNYLAM PHARMACEUTICALS, INC.
By: /s/ B. Lynne Parshall By: /s/ Vincent J. Miles
-------------------------------- ---------------------------------
Name: B. Lynne Parshall Name: Vincent J. Miles
------------------------------- -------------------------------
Title: Executive Vice President Title: Senior Vice President,
------------------------------ ------------------------------
Business Development
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EXHIBIT 1.1
DEFINITIONS
1. "Acquisition" means any of the following events: (a) the acquisition by
any Person or group, other than a Person or group controlling such Party
as of the Effective Date, of "beneficial ownership" (as defined in Rule
13d-3 under the United States Securities Exchange Act of 1934, as
amended), directly or indirectly, of fifty percent (50%) or more of the
shares of such Party's voting stock; (b) the approval by the shareholders
of such Party of a merger, share exchange, reorganization, consolidation
or similar transaction of such Party (a "Transaction"), other than a
Transaction which would result in the voting stock of such Party
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the voting stock of
such Party or such surviving entity immediately after such Transaction; or
(c) approval by the shareholders of such Party of a complete liquidation
of such Party or a sale or disposition of all or substantially all of the
assets of such Party.
2. "Active Program" means with respect to a Gene Target, any ongoing drug discovery, development, or commercialization of a compound directed to such Gene Target.
3. "Affiliate" with respect to either Party means Person controlling, controlled by, or under common control with such Party. For purposes of this definition, "control" refers to the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, of a Person.
4. "Alnylam Current Chemistry Patents" means all Chemistry Patents Controlled by Alnylam as of the Effective Date, including without limitation the Patents listed on Schedule 1-4 attached to the Addendum Transmittal, except Patents that constitute Alnylam Excluded Technology.
5. "Alnylam Current Motif and Mechanism Patents" means all Motif and Mechanism Patents Controlled by Alnylam as of the Effective Date, including without limitation the Patents listed on Schedule 1-5 attached to the Addendum Transmittal, except Patents that constitute Alnylam Excluded Technology.
6. "Alnylam Excluded Technology" means inhibitors to specific genes or gene families, manufacturing and analytical technologies, formulation and delivery technologies and the specific technology listed on Schedule 1-6 attached to the Addendum Transmittal.
7. "Alnylam Future Chemistry Patents" means all Chemistry Patents Controlled by Alnylam after the Effective Date and having an earliest priority date of no later than [**] years from the Effective Date or that is necessary to practice a Patent licensed hereunder; provided, however that (a) for any such Chemistry Patents
that are acquired, licensed or invented that include financial or other obligations to a Third Party, the provisions of Section 11.8 will govern whether such Patent will be included as an Alnylam Future Chemistry Patent and (b) Alnylam Future Chemistry Patents do not include Patents that constitute Alnylam Excluded Technology.
8. "Alnylam Future Motif and Mechanism Patents" means all Motif and Mechanism Patents Controlled by Alnylam after the Effective Date and having an earliest priority date of no later than [**] years from the Effective Date or that is necessary to practice a Patent licensed hereunder; provided, however that (a) for any such Motif and Mechanism Patents that are acquired, licensed or invented that include financial or other obligations to a Third Party, the provisions of Section 11.8 will govern whether such Patent will be included as an Alnylam Future Motif and Mechanism Patent and (b) Alnylam Future Motif and Mechanism Patents do not include Patents that constitute Alnylam Excluded Technology.
9. "Alnylam Patent Rights" means Alnylam Current Motif and Mechanism Patents, Alnylam Future Motif and Mechanism Patents, Alnylam Current Chemistry Patents and Alnylam Future Chemistry Patents.
10. "Alnylam Product" means a Double Stranded RNA Product or MicroRNA Product discovered or developed by Alnylam, its Affiliates or sublicensees, the manufacture, sale or use of which is covered by a Valid Claim within the Isis Patent Rights.
11. "Antisense Drug Discovery Program" means an antisense drug discovery program that investigates multiple different mechanisms of modulating a Gene Target to identify a drug candidate, with a predominant emphasis on potential drug candidates that are single-stranded.
12. "Bona Fide Drug Discovery Collaboration" means a collaboration involving the discovery and development of Double Stranded RNA Products in which a Party plays an integral role in the experimentation and an important, though not necessarily dominant or co-equal, role in the decision-making, relating to the discovery and development of Double Stranded RNA Products from the point in time at which the relevant Gene Target has been designated through the initiation of [**]. A Bona Fide Drug Discovery Collaboration may continue beyond the initiation of such [**]. For Isis Products that are Double Stranded RNA Products, a Bona Fide Drug Discovery Collaboration must be an Antisense Drug Discovery Program. For each Party, collaborations that do not include or involve Patents licensed from the other Party hereunder shall not constitute Bona Fide Drug Discovery Collaborations. A Party's experimentation relating to the discovery and development of Double Stranded RNA Products that modulate a relevant Gene Target prior to the commencement of a collaboration shall be deemed to have been conducted in the course of the collaboration for purposes of determining whether the collaboration is a Bona Fide Drug Discovery Collaboration. A series of related collaborations and/or license agreements involving the discovery and development of Double
Stranded RNA Products with the same sublicensee or related sublicensees that includes a Bona Fide Drug Discovery Collaboration agreement will be aggregated to constitute a single Bona Fide Drug Discovery Collaboration.
13. "Chemistry Patent" means any Patent that covers (a) an oligomeric compound having a chemical composition that differs from a native oligonucleotide composition or (b) any modification to the base, sugar or internucleoside linkage of the oligomeric compound, and specifically, but without limitation, includes covalently linked conjugates and other such moieties.
14. "Commercially Reasonable Efforts" means the diligent efforts, expertise and resources normally used by a Party to develop, manufacture and commercialize a product or compound owned by it or to which it has rights, which is of similar market potential at a similar stage in its development or product life, taking into account issues of safety, and efficacy, product profile, difficulty in developing the product or compound, competitiveness of the marketplace for the product, the proprietary position of the compound or product, the regulatory structure involved, the potential total profitability of the applicable product(s) marketed or to be marketed and other relevant factors affecting the cost, risk and timing of development and the total potential reward to be obtained if a product is commercialized, but not less than reasonably diligent efforts. In determining whether Commercially Reasonable Efforts have been satisfied, the fact that a Party is required to pay the other Party a royalty or milestones shall not be a factor weighed (i.e., a Party may not apply lesser resources or effort to a Product because it must pay a royalty or milestones to the other Party).
15. "Control" or "Controlled" means, with respect to any Patent or other intellectual property right, possession of the right (whether by ownership, license or otherwise), to assign, or grant a license, sublicense or other right to or under, such Patent or right as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.
16. "Confidential Information" means information which is (a) of a confidential and proprietary nature; and (b) not readily available to that Party's competitors and which, if known by a competitor of that Party, might lessen any competitive advantage of that Party or give such competitor a competitive advantage.
Confidential Information includes, without limitation, (x) information that is proprietary or confidential or which is treated by that Party as confidential and which relates either directly or indirectly to the business of that Party regardless of the form in which that information is constituted, and which is not lawfully in the public domain; and (y) any confidential information in relation to Patents, technology, know-how, or any improvements owned or Controlled by a Party hereto.
Confidential Information will not include any information that the receiving Party can establish by written records:
(i) was known by it prior to the receipt of Confidential Information from the disclosing Party;
(ii) was disclosed to the receiving Party by a Third Party having the right to do so;
(iii) was, or subsequently became, in the public domain through no fault of the receiving Party, its officers, directors, employees or agents; or
(iv) was concurrently or subsequently developed by personnel of the receiving Party without having had access to the disclosing Party's Confidential Information.
17. "Development Collaboration" means a collaboration by either Party with a Third Party whose purpose is the further development and/or commercialization of a Double Stranded RNA Product and that begins at or after the initiation of IND-Enabling Studies for such Product. For each Party, collaborations that do not include or involve Patents licensed from the other Party hereunder shall not constitute Development Collaborations.
18. "Double Stranded RNA" means a composition designed to act primarily through an RNAi mechanism that is not a MicroRNA Construct and which consists of either (a) two separate oligomers of native or chemically modified RNA that are hybridized to one another along a substantial portion greater than or equal to [**] of their lengths, or (b) a single oligomer of native or chemically modified RNA that is hybridized to itself by self-complementary base-pairing along a substantial portion (greater than or equal to) [**] of its length to form a hairpin.
19. "Double Stranded RNA Product" means a pharmaceutical composition that contains a Double Stranded RNA.
20. "Equity Documents" means the Series D Convertible Preferred Stock Purchase Agreement and the Investor Rights Agreement by and between the Parties executed as of the Effective Date.
21. "Gene Target" means a transcriptional unit of a gene, including any protein product of such transcriptional unit, and including all splice variants.
22. "IND" means an Investigational New Drug Application or similar foreign application or submission for approval to conduct human clinical investigations.
23. "IND-Enabling Studies" means the pharmacokinetic and toxicology studies required to meet the regulations for filing an IND.
24. "Initiation of Phase I Trial" means the dosing of the first patient in the first human clinical trial conducted and designed to evaluate safety of a product.
25. "Initiation of Phase III Trial" means the dosing of the first patient in the first pivotal human clinical trial the results of which could be used to establish safety and efficacy of a Product as a basis for an application for marketing approval or that would otherwise satisfy the requirements of 21 CFR 3 12.21I or its foreign equivalent.
26. "Isis Co-Exclusive Target" has the meaning set forth in Section 6.4(b).
27. "Isis Current Chemistry Patents" means all Chemistry Patents Controlled by Isis as of the Effective Date, including without limitation the Patents listed on Schedule 1-27 attached to the Addendum Transmittal, except Patents that constitute Isis Excluded Technology.
28. "Isis Current Motif and Mechanism Patents" means all Motif and Mechanism Patents Controlled by Isis as of the Effective Date, including without limitation the Patents listed on Schedule 1-28 attached to the Addendum Transmittal, except Patents that constitute Isis Excluded Technology.
29. "Isis Encumbered Target" means a Gene Target (a) to which Isis has a contractual obligation to a Third Party existing as of the Effective Date that precludes Isis from granting a license under Section 5 with respect to such Gene Target and (b) that is identified and described on a [**] (as defined in the letter agreement dated March 9, 2004 between Alnylam and Isis). When and if such restrictions lapse a Gene Target will cease to be an Isis Encumbered Target. When and if such restrictions lapse a Gene Target will cease to be an Isis Encumbered Target.
30. "Isis Excluded Technology" means (a) RNase H mechanisms, RNase H motifs and RNase H oligonucleotides when utilized in an RNase H mechanism, assays and methods thereof; (b) modulators of specific genes, gene families or proteins; (c) manufacturing technologies; (d) analytical technologies, kits and assays, including without limitation methods, systems and compositions of matter for amplifying, quantifying, detecting, characterizing or identifying nucleic acids or nonoligomeric ligands thereto; (e) formulation and delivery technologies; and (f) the specific technology listed on Schedule 1-30 attached to the Addendum Transmittal.
31. "Isis Exclusive Target" has the meaning set forth in Section 6.4(b).
32. "Isis Future Motif and Mechanism Patents" means all Motif and Mechanism Patents Controlled by Isis after the Effective Date and having an earliest priority date of no later than [**] years from the Effective Date or that is necessary to practice a Patent licensed hereunder; provided, however that (a) for any such Motif and Mechanism Patents that are acquired, licensed or invented that include financial or other obligations to a Third Party, the provisions of Section 11.8 will govern whether such Patent will be included as an Isis Future Motif Mechanism Patent and (b) Isis Future Motif and Mechanism Patents do not include Patents that constitute Isis Excluded Technology.
33. "Isis Future Chemistry Patents" means the Chemistry Patents Controlled by Isis after the Effective Date and having an earliest priority date of no later than [**]
years from the Effective Date or that is necessary to practice a Patent licensed hereunder; provided, however that (a) for any such Chemistry Patents that are acquired, licensed or invented that include financial or other obligations to a Third Party, the provisions of Section 11.8 will govern whether such Chemistry Patents will be included as an Isis Future Chemistry Patent, except Patents that constitute Isis Excluded Technology and (b) Isis Future Chemistry Patents do not include Patents that constitute Isis Excluded Technology.
34. "Isis Manufacturing Patents" means the Patents specifically listed on Schedule 1-34 attached to the Addendum Transmittal. The Parties may agree in writing from time to time to add additional Patents to Schedule 1-34 attached to the Addendum Transmittal.
35. "Isis Patent Rights" means Isis Current Motif and Mechanism Patents, Isis Future Motif and Mechanism Patents, Isis Current Chemistry Patents and Isis Future Chemistry Patents.
36. "Isis Product" means any Isis Single Stranded Product, MicroRNA Product or Double Stranded RNA Product, discovered or developed by Isis, its Affiliates or sublicensees, the manufacture, sale or use of which is covered by a Valid Claim within the Alnylam Patent Rights.
37. "Isis Single Stranded Product" means any single stranded oligomeric compound (a) that hybridizes in whole or in part with a target RNA and modulates the Gene Target, (b) is not a Double Stranded RNA or Double Stranded RNA Product and (c) the manufacture, sale or use of which is covered by a Valid Claim within the Alnylam Patent Rights.
38. "Joint Invention" has the meaning set forth in Section 11.1(b).
39. "Joint Patent" has the meaning set forth in Section 11.1(b).
40. "Know-How" means all tangible or intangible know-how, discoveries, processes, formulas, data, clinical and preclinical results, non-Patented Inventions, Inventions for which Patents are in preparation, trade secrets, and any physical, chemical, or biological material or any replication of any such material in whole or in part that are not otherwise covered by the Isis Patent Rights or the Alnylam Patent Rights
41. "License Term" means the period from the Effective Date until the date of expiry of the last to expire of the Patents licensed hereunder.
42. "Major Pharmaceutical Company" means a Person that, together with all of its affiliated Persons, had annual pharmaceutical product sales during the most recently completed calendar year in excess of $[**].
43. "Manufacturing Services Agreement" has the meaning set forth in Section 3.1.
44. "Marketing Approval" means the act of a Regulatory Authority necessary for the marketing and sale of the Product in a country or regulatory jurisdiction, including, without limitation, the approval of the NDA by the FDA, EC Approval, and Japanese Approval.
45. "MicroRNA Construct" is a construct having the chemical and physical description of a Double Stranded RNA that is either (a) designed to target a[**]precursor microRNA or a microRNA, thereby to inhibit the production or function of the microRNA, or (b) designed to function by mimicking the translational repressor function of a naturally occurring microRNA, and which, in relation to its target RNA, has been demonstrated in vitro and, to the extent reasonably feasible, in vivo, to function solely as a translational repressor and not via cleavage of such target RNA.
46. "MicroRNA Product" means a pharmaceutical product that contains a MicroRNA Construct.
47. "Motif and Mechanism Patents" means any Patent that covers an oligomeric structure or composition of matter, or any method of using or incorporating such oligomeric structure or composition of matter in vitro or in vivo, including without limitation for therapeutic use, in which target RNA levels are modulated by any mechanism other than RNase H.
48. "Naked Sublicense" means a license for Double Stranded RNA that includes
rights to the Isis Patent Rights that is not a license in connection with
(a) a Development Collaboration or (b) a Bona Fide Drug Discovery
Collaboration. A series of Naked Sublicenses to the same sublicensee or
related sublicensees will be aggregated to constitute a single Naked
Sublicense. For the avoidance of doubt, where this Agreement grants
Alnylam exclusive rights to grant Naked Sublicenses, such exclusive rights
preclude Isis from granting licenses to the Isis Patent Rights to Third
Parties for Double Stranded RNA even though such license grants by Isis
would technically be license grants and not sublicense grants. Licenses
that do not include or involve rights to Isis Patents shall not constitute
Naked Sublicenses.
49. "Naked Sublicensee" means a Third Party that obtains a Naked Sublicense from Alnylam in accordance with the terms of this Agreement.
50. "NDA" means New Drug Application or similar application or submission for approval to market and sell a new pharmaceutical product filed with or submitted to a Regulatory Authority.
51. "Net Sales" will mean the gross invoice price of Products sold by Alnylam or Isis (as applicable), their respective Affiliates and sublicensees (but with respect to Alnylam does not include Naked Sublicensees) to a Third Party less the following items: (i) trade discounts, credits or allowances, (ii) credits or allowances additionally granted upon returns, rejections or recalls, (iii) freight, shipping and insurance charges, (iv) taxes, duties or other governmental tariffs (other than
income taxes) and (v) government-mandated rebates and (vi) a reasonable reserve for bad debts. Except in the cases of Products used to conduct clinical trials, reasonable amounts of Products used as marketing samples and Product provided without charge for compassionate or similar uses, a Party, its Affiliates or sublicensees will be treated as having sold Products for an amount equal to the fair market value of Products if: (a) Products are used by such Party, its Affiliates or sublicensees without charge or provision of invoice, or (b) Products are provided to a Third Party by such Party, its Affiliates or sublicensees without charge or provision of invoice and used by such third party.
In the event the Product is sold as part of a Combination Product (as defined below), the Net Sales from the Combination Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales (as determined without reference to this paragraph) of the Combination Product, during the applicable royalty reporting period, by the fraction, A/A+B, where A is the average sale price of the Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred. In the event that such average sale price cannot be determined for both the Product and all other products(s) included in the Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of C/C+D where C is the fair market value of the Product and D is the fair market value of all other product(s) included in the Combination Product. As used above, the term "Combination Product" means any pharmaceutical product which consists of a Product and other therapeutically active pharmaceutical compound or any delivery technology that embodies substantial intellectual property rights Controlled by the selling Party (e.g., a common syringe would not constitute a delivery technology that embodies substantial intellectual property rights Controlled by the selling Party, but an implantable delivery device such as a stent would constitute such a delivery technology).
52. "Patent" or "Patents" means (a) patent applications (including provisional applications and applications for certificates of invention); (b) any patents issuing from such patent applications (including certificates of invention); (c) all patents and patent applications based on, corresponding to, or claiming the priority date(s) of any of the foregoing; (d) any substitutions, extensions (including supplemental protection certificates), registrations, confirmations, reissues, divisionals, continuations, continuations-in-part, re-examinations, renewals and foreign counterparts thereof; and (e) all patents claiming overlapping priority therefrom.
53. "Person" means any person, organization, corporation or other business entity.
54. "Product" means either an Alnylam Product or an Isis Product as the case may be.
55. "Regulatory Authority" means any applicable government regulatory authority involved in granting approvals for the marketing and/or pricing of a Product
worldwide including, without limitation, the United States Food and Drug Administration ("FDA") and any successor government authority having substantially the same function, and foreign equivalents thereof.
56. "Research Use" means discovering, developing and optimizing an Alnylam Product or an Isis Product, as applicable, up to, but not including, [**], and/or conducting pilot manufacturing studies of an Alnylam Product or an Isis Product, as applicable. Research Use may include small pilot toxicology studies. With respect to Isis, Research Use does not include studies [**] for potential drug targets, but does include studies [**] for development of Double Stranded RNA Products from among potential targets for which a reasonable scientific basis exists for believing that such potential targets are associated with a particular disease or condition.
57. "Reserved Target" has the meaning set forth in Section 6.4(a).
58. "Series D Preferred Stock" means Series D Convertible Preferred Stock of Alnylam as further defined in the Equity Documents.
59. "Sublicense Revenue" means any payments that Alnylam receives from a sublicensee in consideration of a Naked Sublicense, including, but not limited to, license fees, royalties, milestone payments, and license maintenance fees, but excluding: (i) payments made in consideration of equity or debt securities of Alnylam at fair market value and (ii) payments specifically committed to reimburse Alnylam for the fully-burdened cost of research and development. If Alnylam receives any non-cash Sublicense Revenue, Alnylam will pay Isis, at Isis' election, either (x) a cash payment equal to the fair market value of Isis' appropriate portion of the Sublicense Revenue or (y) the in-kind portion, if practicable, of the Sublicense Revenue.
60. "Technology Access Fee" means any payments that Alnylam receives from
granting a Third Party access (through sublicense or otherwise) to the
Isis Patent Rights as part of a Bona Fide Collaboration or Development
Collaboration agreement, including, but not limited to, license fees,
collaboration fees, option fees, payments made in consideration for the
issuance of equity or debt securities above fair market value, payments
made for research and development support above Alnylam's fully-burdened
cost, but excluding the following payments: (i) payments made in
consideration for equity or debt securities of Alnylam at fair market
value, (ii) payments made in consideration for thirty-five percent (35%)
or more of Alnylam's equity securities at fair market value plus a
reasonable control premium, (iii) payments specifically committed to
reimburse Alnylam for the fully-burdened cost of research and development,
including without limitation the fully-burdened cost of products
transferred by Alnylam in connection with such research and development,
(iv) milestone payments, (v) payments associated with the sale of
commercial products, and (vi) payments that count as Sublicense Revenue
under a Naked Sublicense subject to Alnylam's payment obligations to Isis
under Section 7.4. If Alnylam receives any non-cash Technology Access
Fees, Alnylam will pay Isis, at Isis' election, either (x) a cash payment
equal to the fair market value of Isis' appropriate portion of the
Technology Access Fee or (y) the in-kind portion, if practicable, of the
Technology Access Fee.
61. "Third Party" means any party other than Isis or Alnylam and their respective Affiliates.
62. "Valid Claim" means (i) an issued claim of an unexpired Patent that has not been withdrawn, canceled or disclaimed, or held invalid or unenforceable by a court of competent jurisdiction in an unappealed or unappealable decision, or (ii) a claim
of a patent application which has been pending for less than [**] years from the earliest priority date for such application.
EXHIBIT 6.5(D)
DESCRIPTION OF POTENTIAL PASS-THROUGH AMOUNTS PAYABLE TO STANFORD UNIVERSITY
The passages shown below are excerpted from the License Agreement between The Board of Trustees of the Leland Stanford Junior University ("Stanford") and Alnylam Pharmaceuticals, Inc. dated September 17, 2003. These passages were selected to provide Isis with sufficient information to understand its potential obligation to Stanford pursuant to Section 6.5(d) of the Agreement.
DEFINITIONS
2.5 "Licensed Field of Use" means delivery of ex-vivo synthesized siRNA Molecules for research, development and therapeutic uses (including a diagnostic necessary for development, sale or reimbursement of a therapeutic Licensed Product). The Licensed Field of Use specifically excludes delivery of any system producing in vivo expressed siRNAs for therapeutic use, including but not limited to episomal and integrated vectors, and recombinant viruses.
2.7 "Co-Exclusive" means that, subject to Article 4, Stanford will only grant one further license in the Licensed Territory in the Licensed Field of Use.
GRANT
3.2 CO-EXCLUSIVITY. The license is Co-Exclusive, including the right to sublicense pursuant to Article 13, in the Licensed Field of Use for a term beginning on the Effective Date, and ending, on a country-by-country basis, on the expiration of the last to expire of Licensed Patents.
3.4 EXCLUSIVITY.
(A) If the other Co-Licensee discontinues licensing this Field of Use, then the Field of Use will become exclusive for Alnylam.
(B) If the other Co-Licensee discontinues any other therapeutic license under the Licensed Patents, Stanford shall so inform Alnylam and Alnylam shall have the option to obtain an exclusive, worldwide sublicensable license to such therapeutic field. The terms of any such license shall be negotiated in good faith by Stanford and Alnylam. This option may be exercised by Alnylam by written notice to Stanford at any time during a period of ninety (90) days after notification by Stanford.
ROYALTIES
6.3 EARNED ROYALTY. In addition, Alnylam will pay Stanford earned royalties on Net Sales as follows:
(A) [**]% of Net Sales for a Licensed Product subject to the following;.
(B) Such royalty payments shall be reduced up to [**]% (from [**]% of Net Sales down to [**]% of Net Sales) by the amount of royalty paid to access additional intellectual property necessary in order to sell Licensed Products ("Additional Earned Royalties").
(C) Such royalty payments shall be reduced as follows:
(1) [**]% if Additional Earned Royalties are [**]% or less.
(2) [**]% if Additional Earned Royalties are greater than [**]% but less than [**]%.
(3) [**]% if Additional Earned Royalties are equal to or greater than [**]% but less than [**]%.
(4) [**]% if Additional Earned Royalties are equal to or greater than [**]% but less than [**]%.
(5) [**]% if Additional Earned Royalties are equal to or higher than [**]%.
(D) Only one royalty is due on each Licensed Product sold by Alnylam or its sublicensees regardless of whether its manufacture, use, importation or sale are or shall be covered by more than one patent or patent application included in Licensed Patents under this Agreement, and no further royalties will be due for use of such Licensed Product by Alnylam or its sublicensee's customers.
6.4 CREDITABLE PAYMENTS. Creditable payments under this Agreement will be an offset to Alnylam against each earned royalty payment which Alnylam would be required to pay under Section 6.3 until the entire credit is exhausted.
6.5 MILESTONE PAYMENTS.
(A) For the first Licensed Product, Alnylam will make the following payments for the filing of an IND initiation of Phase II trial, initiation of Phase III trial, and approval of New Drug Application or equivalent in the U.S. ("Milestone Payments"):
(1) $[**] for filing of first IND.
(2) $[**] for initiation of the First Phase II trial.
(3) $[**] for initiation of the First Phase III trial.
(4) $[**] for approval of the First New Drug Application or equivalent regulatory approval in the U.S.
(B) For the second Licensed Product, Alnylam will make the following Milestone Payments:
(1) $[**] for filing of first IND.
(2) $[**] for initiation of the First Phase II trial.
(3) $[**] for initiation of the First Phase III trial.
(4) $[**] for approval of the First New Drug Application or equivalent regulatory approval in the U.S.
(C) For the third and every subsequent Licensed Product, Alnylam will make the following Milestone Payments:
(1) $[**] for filing of first IND.
(2) $[**] for initiation of the First Phase II trial.
(3) $[**] for initiation of the First Phase III trial.
(4) $[**] for approval of the First New Drug Application or equivalent regulatory approval in the U.S.
(D) Notwithstanding the above, at the time that Stanford receives a Milestone Payment from Alnylam on behalf of a sublicensee under 13.6, the corresponding Milestone Payment under this Section 6.5 will not be due.
6.6 OBLIGATION TO PAY ROYALTIES. If this Agreement is not terminated in accordance with other provisions, Alnylam will be obligated to pay royalties on all Licensed Product that is either sold or produced under the license granted in Article 3, whether or not the Licensed Product is produced before the Effective Date of this Agreement or sold after the Licensed Patent has expired.
13 SUBLICENSING
13.1 PERMITTED SUBLICENSING FOR LICENSED CO-EXCLUSIVE FIELD OF USE. Alnylam may
grant sublicenses in the Co-exclusive Licensed Field of Use during the
Co-Exclusive period:
(A) only in conjunction with intellectual property under Alnylam's
control; and
(B) only if Alnylam is developing or selling Licensed Products in the
Co-Exclusive Licensed Field of Use.
13.3 SUBLICENSE REQUIREMENTS. Any sublicense granted by Alnylam under this
Agreement will be subject and subordinate to terms and conditions of this
Agreement, except:
(A) Sublicense terms and conditions will reflect that any sublicensee
will not further sublicense, with the exception that sublicensee may
further sublicense rights under Licensed Patents only as needed or
implied in the course of distribution or performance of service as
required for the sale to an end user of Licensed Products; and
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(B) The earned royalty rate specified in the sublicense may be at
different rates than the rates in this Agreement.
13.4 SUBLICENSES REVERT TO STANFORD. Any sublicense will expressly include the
provisions of Articles 7, 8, and 9 for the benefit of Stanford [Note:
these provisions are detailed in Exhibit 6.5(c)]. If a sublicensee desires
that its sublicense survive the termination of this agreement, Stanford
agrees that the sublicense will revert to Stanford subject to the transfer
of all obligations, including the payment of royalties specified in the
sublicense, to Stanford or its designee, if this Agreement is terminated.
13.5 COPY OF SUBLICENSES. Alnylam will provide Stanford in confidence a copy of
all relevant portions of any sublicenses granted pursuant to this Article
13.
13.6 SHARING OF SUBLICENSING INCOME. In addition to the earned royalties
defined in Article 6, Alnylam will pay Stanford [**] percent ([**]%) of
the amount received by Alnylam, that is specifically attributable to the
Licensed Patents, from a sublicensee in
(A) up-front license fees, and
(B) clinical Milestone Payments as defined in Article 6.5.
13.7 ROYALTY-FREE SUBLICENSES. Alnylam may grant royalty-free or noncash
sublicenses or cross-licenses if Alnylam pays all royalties due Stanford
from sublicensee's Net Sales.
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EXHIBIT 8.2(C)
DESCRIPTION OF ALNYLAM ROYALTY OBLIGATIONS TO [**]EXISTING AS OF THE
EFFECTIVE DATE
As of the Effective Date, Alnylam has the following royalty obligations to [**]:
Alnylam is obligated to pay [**] running royalties on NET SALES (as defined in
Alnylam's agreements with [**]) of therapeutic and prophylactic LICENSED
PRODUCTS (as defined in Alnylam's agreements with [**]) by Alnylam and its
SUBLICENSEES (as defined in Alnylam's agreements with [**]) that range from
[**]% ([**] percent) to [**]% ([**] percent) of NET SALES, depending on the
level of NET SALES. Royalties payable by Alnylam to [**] are subject to the
following Royalty Stacking provision:
"5.3 Royalty Stacking
(a) Third Party Licenses
In the event COMPANY or a SUBLICENSEE takes, for objective commercial and/or
legal reasons, a license from any third party under any patent applications or
patents that dominate the PATENT RIGHTS or is dominated by the PATENT RIGHTS in
order to develop, make, use, sell or import any LICENSED PRODUCT (explicitly
excluding, without limitation, any third party patents and patent applications
for formulation, stabilization and delivery), then COMPANY is allowed to deduct
[**]% ([**] percent) of any additional running royalties to be paid to such
third party up to [**]% ([**] percent) of the running royalties stated in
Section 5.2, from the date COMPANY has to pay running royalties to such third
party. However, the running royalties stated in Section 5.2 shall not be reduced
to less than a minimum of [**]% ([**] percent) of NET SALES in any case.
For avoidance of doubt, if COMPANY or a SUBLICENSEE takes a license to a third party target, COMPANY is in no event allowed to deduct any license fees for such target from running royalties due to [**] under this Agreement."
Because Alnylam's right to reduce its royalty obligations to [**] pursuant to
the foregoing royalty stacking provision is not co-extensive with Isis' right to
reduce its royalty obligations to Alnylam pursuant to Section 8.2 of this
Agreement, Isis' right to reduce its royalty obligations to Alnylam pursuant to
Section 8.2 of this Agreement is limited, pursuant to Section 8.2(c) of this
Agreement, to the extent necessary to ensure that Isis' royalty obligations to
Alnylam are never less than Alnylam's royalty obligations to [**] with respect
to sales by Isis, its Affiliates and its sublicensees of any Isis Product.
ADDENDUM TRANSMITTAL
Reference is hereby made to the Strategic Collaboration and License Agreement executed as of March 11, 2004 (the "Agreement"), between Isis Pharmaceuticals, Inc., a Delaware corporation, and Alnylam Pharmaceuticals, Inc., a Delaware corporation.
Capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement.
The Parties hereby acknowledge and agree that this document constitutes the Addendum Transmittal.
Attached hereto are the following Exhibits and Schedules:
Exhibit 3.1
Exhibit 5.3(c)
Exhibit 5.3(d)
Exhibit 6.5(c)
Schedule 1-4
Schedule 1-5
Schedule 1-6
Schedule 1-27
Schedule 1-28
Schedule 1-30
Schedule 1-34
IN WITNESS WHEREOF, the Parties have executed this Addendum Transmittal as of this 19th day of March, 2004.
ISIS PHARMACEUTICALS, INC. ALNYLAM PHARMACEUTICALS, INC.
By: /s/ B. Lynne Parshall By: /s/ Vincent J. Miles
------------------------------------ --------------------------------
Name: B. Lynne Parshall Name: Vincent J. Miles
---------------------------------- ------------------------------
Title: Executive Vice President Title: Senior Vice President,
--------------------------------- -----------------------------
Business Development
-----------------------------
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SCHEDULE 1-4
ALNYLAM CURRENT CHEMISTRY PATENTS
Alnylam Current Chemistry Patents include all claims of the patents and patent applications listed below that do not claim inhibitors to specific genes or gene families.
Case No. Filing Date Country Serial No. Status Title -------- ----------- ------- ---------- ------ ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
SCHEDULE 1-5
ALNYLAM CURRENT MOTIF AND MECHANISM PATENTS
Alnylam Current Motif and Mechanism Patents include all claims of the patents and patent applications listed below that do not claim inhibitors to specific genes or gene families.
Case No. Filing Date Country Serial No. Status Title -------- ----------- ------- ---------- ------ ----- [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
[**]+ Note that Alnylam's license to this series of patent applications specifically excludes claims [**] and the equivalent claims in any patent applications and patents
resulting from this PCT application. The application contains claims relating to [**]. The claims excluded from Alnylam's license are those that [**].
* Subject to the provisions of section 6.5(d).
SCHEDULE 1-6
ALNYLAM EXCLUDED TECHNOLOGY
1. All Patent rights licensed to Alnylam under the license agreements between [**] dated [**], and between [**] and Alnylam dated [**].
2. All Patent rights licensed to Alnylam under the license agreement between [**] and Alnylam dated [**].
3. All Patent rights licensed to Alnylam under the license agreement between [**] and Alnylam dated [**].
EXHIBIT 6.5(c)
RESTRICTIONS IMPOSED BY AGREEMENTS BETWEEN ALNYLAM AND THIRD PARTIES EXECUTED
PRIOR TO THE EFFECTIVE DATE
Because of agreements in effect with Third Parties as of the Effective Date, the following restrictions and other terms apply to Alnylam Patent Rights with respect to which Isis is granted a license, or option to obtain a license, under this Agreement.
RIGHTS LICENSED FROM [**]
The rights licensed from [**] ("**") relate to the "[**]" and "[**]" patents.
"[**] patent" means the pending patent applications listed in Schedule 1-5 with the following case numbers: [**].
"[**] patent" means the pending patent applications listed in Schedule 1-5 with the following case numbers, excluding claims [**] (case number [**]) and the equivalent claims in any patent applications and patents resulting from this PCT application: [**].
The restrictions on, and other terms relating to, the rights available to Isis under the Agreement are described in the following clauses excerpted from the Co-Exclusive License executed between Alnylam and [**] on [**].
"ARTICLE 2 - GRANT OF RIGHTS
2.4 Sublicenses
.... Immediately after the signature of each sublicense granted under this Agreement, COMPANY shall provide [**] with a copy of the signed sublicense agreement, and COMPANY shall confirm in writing to [**] that COMPANY shall be liable for payment of royalties on NET SALES of the SUBLICENSEE in accordance with Sections 5.2 and 5.3.
ARTICLE 4 - COMPANY DILIGENCE OBLIGATIONS AND REPORTS
4.1 Activity Requirements
COMPANY shall use commercially reasonable efforts, and shall oblige its SUBLICENSEES to use commercially reasonable efforts, to develop and to introduce into the commercial market LICENSED PRODUCTS at the earliest practical date.
4.2 Development Reports
Commencing with the beginning of 2003, COMPANY shall furnish, and shall oblige its SUBLICENSEES to furnish to COMPANY for inclusion in its reports to [**], to [**] in writing, within 30 (thirty) days after the end of each calendar quarter with COMPANY's standard R&D report, as provided to the investors
pursuant to the Amended and Restated Investor's Rights Agreement Series B, on the progress of its efforts during the immediately preceding calendar quarter to develop and commercialize LICENSED PRODUCTS for each indication and sub-indication within the FIELD. The report shall also contain a discussion of intended R&D efforts for the calendar quarter in which the report is submitted.
4.4 Liability for SUBLICENSEES
If SUBLICENSEES of COMPANY develop, manufacture, use and/or sell LICENSED
PRODUCTS under the PATENT RIGHTS, COMPANY warrants and is liable towards
[**] that the SUBLICENSEES perform their sublicense agreement in
accordance with this Agreement, and COMPANY shall be responsible and
liable for royalty payments and reports of the SUBLICENSEES.
4.5 Effect of Failure
In the event that [**] determines that COMPANY or any of its SUBLICENSEES
has failed to fulfill any of its obligations under this Section 4, then
[**] may treat such failure as a material breach in accordance with
Section 11.7.
ARTICLE 5 - SHARES, Royalties and Payment Terms
5.2 Running Royalties
COMPANY shall pay to [**] the following running royalties on NET SALES of therapeutic and prophylactic LICENSED PRODUCTS by COMPANY and its SUBLICENSEES:
[[**]% ([**] percent) to [**]% ([**]%) of NET SALES depending on level of NET SALES].
In the event that COMPANY or a SUBLICENSEE develops [**] LICENSED PRODUCTS, COMPANY shall initiate negotiations with [**] at least 3 (three) months prior to the intended first commercial sale of each [**] LICENSED PRODUCT. COMPANY and [**] shall negotiate in good faith royalties on reasonable market terms for such [**] LICENSED PRODUCT.
.... Non-cash consideration shall not be accepted by COMPANY or any SUBLICENSEE for LICENSED PRODUCTS without the prior written consent of [**].
5.3 Royalty Stacking
(a) Third Party Licenses
In the event COMPANY or a SUBLICENSEE takes, for objective commercial and/or legal reasons, a license from any third party under any patent applications or patents that dominate the PATENT RIGHTS or is dominated by the PATENT RIGHTS in order to develop, make, use, sell or import any LICENSED PRODUCT [**], then COMPANY is allowed to deduct [**]% ([**] percent) of
any additional running royalties to be paid to such third party up to
[**]% ([**] percent) of the running royalties stated in Section 5.2, from
the date COMPANY has to pay running royalties to such third party.
However, the running royalties stated in Section 5.2 shall not be reduced
to less than a minimum of [**]% ([**] percent) of NET SALES in any case.
For avoidance of doubt, if COMPANY or a SUBLICENSEE takes a license [**], COMPANY is in no event allowed to deduct any license fees [**] from running royalties due to [**] under this Agreement.
(b) PATENT RIGHTS Coverage
In the event that (i) COMPANY or its SUBLICENSEES sell a LICENSED PRODUCT in a country where no PATENT RIGHTS are issued and no patent applications that are part of the PATENT RIGHTS are pending that have not been pending for less than [**] years after filing national patent applications in the country in question, and (ii) such LICENSED PRODUCT is manufactured in a country where PATENT RIGHTS are issued or patent applications that are part of the PATENT RIGHTS are pending that have not been pending for more than [**] years after filing national patent applications in the country in question, the royalties stated in Section 5.2 will be reduced by [**]% ([**] percent) for such LICENSED PRODUCT, until the expiration or abandonment of all issued patents and filed patent applications within the PATENT RIGHTS in the country in which the LICENSED PRODUCT is manufactured.
5.4 Reports
Within 30 (thirty) days of the end of each calendar half year, COMPANY shall deliver a detailed report to [**] for the immediately preceding calendar half year showing at least (i) the number of LICENSED PRODUCTS sold by COMPANY and its SUBLICENSEES in each country, (ii) the gross price charged by COMPANY and its SUBLICENSEES for each LICENSED PRODUCTS in each country, (iii) the calculation of NET SALES, and (iv) the resulting running royalties due to [**] according to those figures. If no running royalties are due to [**], the report shall so state.
5.6 Bookkeeping and Auditing
COMPANY is obliged to keep, and shall oblige its SUBLICENSEES to keep,
complete and accurate books on any reports and payments due to [**] under
this Agreement, which books shall contain sufficient information to permit
[**] to confirm the accuracy of any reports and payments made to [**].
[**], or [**] appointed agents, is authorized to check the books of
COMPANY, and, upon [**] request, COMPANY, or agents appointed by [**] for
COMPANY, shall check the books of its SUBLICENSEES for [**], [**]. The
charges for such a check shall be borne by [**]. In the event that such
check reveals an underpayment in excess of 5% (five percent), COMPANY
shall bear the full cost of such check and shall remit any amounts due to
[**] within thirty days of receiving notice thereof from [**].
The right of auditing by [**] under this Section shall expire five years after each report or payment has been made. Sublicenses granted by COMPANY shall provide that COMPANY shall have the right to check the books of its SUBLICENSEES according to this Section 5.6.
5.7 No Refund
All payments made by COMPANY or its SUBLICENSEES under this [**] Agreement are nonrefundable and noncreditable against each other.
ARTICLE 6 - Patent Prosecution AND Infringement
6.3 Infringement
COMPANY shall inform [**] promptly in writing of any alleged infringement of the PATENT RIGHTS by a third party and of any available evidence thereof.
Subject to COMPANY's right to join in the prosecution of infringements set forth below, the OWNERS shall have the right, but not the obligation, to prosecute in their own discretion and at their own expense, all infringements of the PATENT RIGHTS. The total cost of any such sole infringement action shall be borne by the OWNERS, and the OWNERS shall keep any recovery or damages derived therefrom. In any such infringement suits, COMPANY shall, at the OWNERS' expense, cooperate in all respects.
COMPANY shall have the right to join the OWNERS' prosecution of any infringements of the PATENT RIGHTS: In any such joint infringement suits, the OWNERS and COMPANY will cooperate in all respects. The OWNERS and COMPANY will agree in good faith on the sharing of the total cost of any such joint infringement action and the sharing of any recovery or damages derived therefrom.
In the event that the OWNERS decide not to prosecute infringements of the PATENT RIGHTS, neither solely nor jointly with COMPANY, GI shall offer to COMPANY to prosecute any such infringement in its own discretion and at its own expense. .... The OWNERS shall, at COMPANY'S expense, cooperate. The total cost of any such sole infringement action shall be borne by COMPANY, and COMPANY shall keep any recovery or damages derived therefrom.
In the event that COMPANY intends to make any arrangements with the infringer to settle the infringement (such as sublicenses), and solely the OWNERS or the OWNERS jointly with COMPANY have prosecuted the infringement, any such settlement needs the prior written approval of GI, which shall not unreasonably be withheld; reasons to withheld include, without limitation, that the settlement is financially disadvantageous for the OWNERS or [**]. Any infringer to which COMPANY grants such sublicenses shall be a SUBLICENSEE under this Agreement.
ARTICLE 8 - CONFIDENTIALITY
8.2 Obligation for [**]
The content of this Agreement and any information marked confidential
which is disclosed to [**] under this Agreement by COMPANY or its
SUBLICENSEES shall be treated confidential by [**] during the TERM and for
[**] years thereafter. [**] shall not use such information for any
purposes other than those necessary to directly further the purpose of
this Agreement. [**] may disclose such information to the OWNERS, provided
however, that the OWNERS are obliged to confidentiality to the same extent
as [**].
The confidentiality obligation shall not apply to information which is (i) publicly available or becomes publicly available through no fault of [**], or (ii) obtained by [**] from another source without a duty of confidentiality, or (iii) demonstrably independently developed or possessed by [**], or (iv) is required by law, regulation, accounting principles or an order of a court or government agency to be disclosed.
ARTICLE 10 - General Compliance with Laws
10.2 Non-Use of OWNERS Names
Neither COMPANY nor its SUBLICENSEES shall use the name of [**] or any variation, adaptation, or abbreviation thereof, or of any of its trustees, officers, faculty, students, employees, or agents, or any trademark owned by any of the OWNERS, in any promotional material or other public announcement or disclosure without the prior written consent of the OWNERS or in the case of an individual, the consent of that individual. The foregoing notwithstanding, without the consent of the OWNERS, COMPANY may state generally that it is co-exclusively licensed by the OWNERS under the PATENT RIGHTS.
ARTICLE 11 - EFFECTIVENESS AND TERMINATION
11.5 Attack on PATENT RIGHTS
[**] shall have the right to terminate this Agreement immediately upon written notice to COMPANY, if COMPANY attacks, or has attacked or supports an attack through a third party, the validity of any of the PATENT RIGHTS. To the extent legally enforcable, sublicenses granted by COMPANY shall provide that in the event the SUBLICENSEE attacks, or has attacked or supports an attack through a third party, the validity of any of the PATENT RIGHTS, COMPANY shall have the right to terminate the sublicense agreement immediately; upon request of [**], COMPANY shall have the obligation to terminate such sublicense agreement.
11.8 Effect of Termination
.... In no event shall termination of this Agreement release COMPANY or its SUBLICENSEES from the obligation to pay any amounts that became due on or before the effective date of termination.
In the event that any license granted to COMPANY under this Agreement is terminated, any sublicense under such license granted prior to termination of said license shall remain in full fore and effect, provided that:
(a) the SUBLICENSEE is not then in breach of its sublicense agreement, and
(b) the SUBLICENSEE agrees to be bound to [**] as licensor under the terms and conditions of the sublicense agreement, provided that [**] shall have no other obligation than to leave the sublicense granted by COMPANY in place."
RIGHTS LICENSED FROM [**]
The rights licensed from [**] ("[**]") relate to the pending patent applications listed in Schedule 1-5 with the following case numbers: [**].
The restrictions on, and other terms relating to, the rights available to Isis under the Agreement are described in the following clauses excerpted from the agreement executed between Alnylam and [**] on [**]. Articles 7, 8 and 9 of such agreement are included in these excerpts because clause 13.4 of such agreement states that "Any sublicense will expressly include the provisions of Articles 7, 8, and 9 for the benefit of [**]."
"7 ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING
7.1 QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the first sale of a Licensed Product, Alnylam will make written reports (even if there are no sales) and earned royalty payments to [**] within thirty days after the end of each calendar quarter. This report will be in the form of the report of Appendix B and will state the number, description, and aggregate Net Sales of Licensed Product during the completed calendar quarter, and resulting calculation pursuant to Section 6.3 of earned royalty payment due [**] for the completed calendar quarter. With each report, Alnylam will include payment due [**] of royalties for the completed calendar quarter."
7.2 TERMINATION REPORT. Alnylam will make a written report to [**] within ninety days after the license expires under Section 3.2. Alnylam will continue to make reports after the license has expired, until all Licensed Product produced under the license have been sold or destroyed. Concurrent with the submittal of each post-termination report, Alnylam will pay [**] all applicable royalties.
7.3 ACCOUNTING. Alnylam will keep and maintain records for a period of three years showing the manufacture, sale, use, and other disposition of products sold or otherwise disposed of under the license. Records will include general-ledger records showing cash receipts and expenses, and records that include production records, customers, serial numbers, and related information in sufficient detail to enable Alnylam to determine the royalties payable under this Agreement.
7.4 AUDIT BY [**]. Alnylam will permit an independent certified public
accountant selected by [**] and acceptable to Alnylam to examine Alnylam's
books and records from time to time (but no more than one time a year) to
the extent necessary to verify reports provided for in Sections 7.1 and
7.2. [**] will pay for the cost of such audit, unless the results of the
audit reveal an underreporting of royalties due [**] of five percent or
more, in which case, Alnylam will pay the audit costs.
8 NEGATION OF WARRANTIES
8.1 To the best of [**] OTL knowledge, [**] is the sole owner of Licensed Patent and has the right to enter into this Agreement and to grant the rights and licenses set forth herein.
8.2 NEGATION OF WARRANTIES. Nothing in this Agreement is construed as:
(A) [**] warranty or representation as to the validity or scope of any Licensed Patent;
(B) A warranty or representation that anything made, used, sold, or otherwise disposed of under any license granted in this Agreement is or will be free from infringement of patents, copyrights, and other rights of third parties;
(C) An obligation to bring suit against third parties for infringement, except as described in Article 12;
(D) Granting by implication, estoppel, or otherwise any licenses or rights under patents or other rights of [**] or other persons other than Licensed Patent, regardless of whether the patents or other rights are dominant or subordinate to any Licensed Patent; or
(E) An obligation to furnish any technology or technological information.
8.3 NO WARRANTIES. Except as expressly set forth in this Agreement, [**] makes no representations and extends no warranties of any kind, either express or implied. There are no express or implied warranties of merchantability or fitness for a particular purpose, or that Licensed Product will not infringe any patent, copyright, trademark, or other rights, or any other express or implied warranties.
8.4 SPECIFIC EXCLUSION. Nothing in this Agreement grants Alnylam any express or implied license or right under or to [**] entitled [**] or any patent application corresponding thereto.
9 INDEMNITY
9.1 INDEMNIFICATION. Alnylam will indemnify, hold harmless, and defend
[**] and [**] Hospitals and Clinics, and their respective trustees,
officers, employees, students, and agents against all claims for death,
illness, personal injury, property damage, and improper business practices
arising out of the manufacture, use, sale, or other disposition of
Invention, Licensed Patent, Licensed Product, by Alnylam or any
sublicensee, or their customers except to the extent such claims are due
to the gross negligence or willful misconduct of [**]. [**] agreed to
promptly notify Alnylam in writing of any such claim and Alnylam shall
manage and control, at its own expense, the defense of such claim and its
settlement. Alnylam agrees not to settle any such claim against [**]
without [**] written consent where such settlement would include any
admission of liability on the part of [**], where the settlement would
impose any restriction on the conduct by [**] of any of its activities, or
where the settlement would not include an unconditional release of [**]
from all liability for claims that are the subject matter of such claim.
9.2 NO LIABILITY. Subject to Section 9.1, neither party will be liable to each other for any loss profit, expectation, punitive or other indirect, special, consequential, or other damages whatsoever, in connection with any claim arising out of or related to this Agreement whether grounded in tort (including negligence), strict liability, contract, or otherwise.
9.3 WORKERS' COMPENSATION. Alnylam will at all times comply, through insurance or self-insurance, with all statutory workers' compensation and employers' liability requirements covering all employees with respect to activities performed under this Agreement.
9.4 INSURANCE. Alnylam will maintain, during the term of this Agreement, Comprehensive General Liability Insurance, including Product Liability Insurance prior to commercialization, with a reputable and financially secure insurance carrier to cover the activities of Alnylam and its sublicensees. Upon initiation of human clinical trials of Licensed Product, such insurance will provide minimum limits of liability of Five Million Dollars and will include [**] and [**] Hospitals and Clinics, and their respective trustees, directors, officers, employees, students, and agents as additional insureds. Insurance will be written to cover claims incurred, discovered, manifested, or made during or after the expiration of this Agreement and must be placed with carriers with ratings of at least A- as rated by A.M. Best. Alnylam will furnish a Certificate of Insurance evidencing primary coverage and additional insured requirements and requiring thirty (30) days prior written notice of cancellation or material change to [**]. Alnylam will advise [**], in writing, that it maintains excess liability coverage (following form) over primary insurance for at least the minimum limits set forth above. All insurance of Alnylam will be primary coverage; insurance of [**] and [**] Hospitals and Clinics will be excess and noncontributory.
12 INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS
12.1 INFRINGEMENT ACTION.
(A) The parties will promptly inform each other of any suspected infringement of any Licensed Patent by a third party.
(B) [**], Licensee and the other Co-Exclusive licensee will meet to discuss the matter during the Co-Exclusive period of this Agreement.
(C) If the Field-of-Use becomes Exclusive for Licensee, [**] and Licensee will meet to discuss the matter during the Exclusive period of this Agreement.
(D) If [**] does not choose to institute suit against said third party within sixty days of notification, then the suit may be brought in both Licensee's and the other Co-Exclusive licensee's names, and [**] name if necessary and the out-of-pocket costs thereof shall be borne equally by Licensee and the other Co-Exclusive licensee and any recovery or settlement shall be shared equally between Licensee and the other Co-Exclusive licensee. In such situation, Licensee and the other Co-Exclusive licensee shall agree to the manner in which they exercise control over such action and if either party desires to also be represented by separate counsel of its own selection, the fees for such counsel shall be paid by such party.
(E) If both [**] and the other Co-Exclusive licensee, or
[**] if there is no other Co-Exclusive Licensee, choose
not to institute suit against said third party within sixty
days of notification, then Licensee shall have the right to
institute suit in its own name or if necessary, in [**]
name, to enjoin such infringement. Licensee shall bear the
entire cost of such litigation and shall be entitled to retain
the entire amount of any recovery or settlement. However, any
recovery in excess of litigation/settlement costs will be
considered Net Sales and Licensee will pay [**] royalties
as indicated in Article 6 hereof. [**] shall provide
reasonable assistance to Licensee in the prosecution of any
such suit brought by Licensee, at Licensee's expense.
13 SUBLICENSING
13.1 PERMITTED SUBLICENSING FOR LICENSED CO-EXCLUSIVE FIELD OF USE. Alnylam may grant sublicenses in the Co-exclusive Licensed Field of Use during the Co-Exclusive period:
(A) only in conjunction with intellectual property under Alnylam's control; and
(B) only if Alnylam is developing or selling Licensed Products in the Co-Exclusive Licensed Field of Use.
13.2 REQUIRED SUBLICENSING FOR LICENSED CO-EXCLUSIVE FIELD OF USE.
(A) If Alnylam or its sublicensee(s) is unable or unwilling to serve or develop a potential market or market territory for which there is a willing sublicensee, Alnylam will, at [**] request, negotiate in good faith a sublicense under the Licensed Patents, provided that the same request has been made of the other Co-Exclusive licensee.
(B) Bona fide business concerns of Alnylam will be considered in any good faith negotiations for a sublicense under this Agreement and Alnylam shall not be required to license/sublicense any other intellectual property to such sublicensee.
(C) If the other Co-Exclusive licensee itself or through its sublicensees is already developing a product in the market or market territory for which there is a willing sublicensee, Alnylam will not be required to sublicense to such party.
(D) In case that any other issue arises in the context of Required Sublicensing, [**] will discuss and try to resolve such issue with Alnylam in good faith.
13.3 SUBLICENSE REQUIREMENTS. Any sublicense granted by Alnylam under this Agreement will be subject and subordinate to terms and conditions of this Agreement, except:
(A) Sublicense terms and conditions will reflect that any sublicensee will not further sublicense, with the exception that sublicensee may further sublicense rights under Licensed Patents only as needed or implied in the course of distribution or performance of service as required for the sale to an end user of Licensed Products; and
(B) The earned royalty rate specified in the sublicense [**] in this Agreement.
13.4 SUBLICENSES REVERT TO [**]. Any sublicense will expressly
include the provisions of Articles 7, 8, and 9 for the benefit of
[**]. If a sublicensee desires that its sublicense survive the
termination of this
agreement, [**] agrees that the sublicense will revert to
[**] subject to the transfer of all obligations, including the
payment of royalties specified in the sublicense, to [**] or its
designee, if this Agreement is terminated.
13.5 COPY OF SUBLICENSES. Alnylam will provide [**] in confidence a copy of all relevant portions of any sublicenses granted pursuant to this Article 13.
13.6 SHARING OF SUBLICENSING INCOME. In addition to the earned royalties defined in Article 6, Alnylam will pay [**] [**] percent ([**]%) of the amount received by Alnylam, that is specifically attributable to the Licensed Patents, from a sublicensee in
(A) [**], and
(B) [**] as defined in [**].
13.7 ROYALTY-FREE SUBLICENSES. Alnylam may grant royalty-free or noncash
sublicenses or cross-licenses if Alnylam pays all royalties due
[**] from sublicensee's Net Sales."
EXHIBIT 5.3(D)
ISIS ENCUMBERED PATENT RIGHTS
The following schedule of encumbered Patents is provided by Isis Pharmaceuticals, Inc. to Alnylam Pharmaceuticals, Inc., in connection with the Strategic Collaboration and License Agreement between Alnylam and Isis (the "AGREEMENT"). Capitalized terms used but not otherwise defined herein have the meanings given to such terms in the Agreement.
This schedule and the information and disclosures contained in this schedule are intended only to qualify and limit the licenses granted by Isis to Alnylam in the Agreement and do not expand in any way the scope or effect of any such licenses.
1. MERCK
The Patents identified by Isis docket numbers [**] cover the incorporation of certain Merck-proprietary [**].
The licenses from Isis to Alnylam with respect to these Patents are limited to the Isis Field. In addition, Merck has a research license to practice these Patents in the Isis Field.
"Isis Field" means the use of [the Merck [**]] solely for the purposes of developing [**].
Reference is made to the discussion regarding Merck nucleosides on the Excluded Technology schedule.
2. GILEAD SCIENCES, INC.
Gilead has retained exclusive rights in the Patents identified by a "Gilead" in the Third Party column to make, have made, use, import, export or sell compounds and other subject matter claimed within the scope of the patents which are [**].
In addition, Gilead has a non-exclusive, non-sublicensable, non-assignable license under such Patents to make and use CodeBlocker Compounds and Oligonucleotide Delivery Systems for internal research purposes, but not for any commercial purpose.
"Codeblocker Compound" means an oligonucleotide that binds directly to DNA or RNA within a cell on a selective basis determined by the nucleotide sequence of the target DNA or RNA and exerts its biological activity predominantly through binding to DNA or RNA to inhibit the transcription or replication of the target DNA or RNA or binding to RNA to inhibit the translation, processing, packaging or regulatory activity of the target RNA. A Codeblocker Compound may also have a mechanism of action or biological activity other than one conferred through direct binding to RNA or DNA provided that (i) the compound originally was designed to bind a target DNA or RNA and (ii) the final
compound or any compounds used to derive the final compound were not identified using selective purification and polymerase amplification in any fashion. An oligonucleotide, is [**]. An oligonucleotide includes RNA or DNA fragments, and may be composed of naturally occurring or non-naturally occurring bases, sugars or intersugar linkages. An oligonucleotide may have [**]. Oligonucleotides may be made such that adjacent nucleoside or nucleoside fragments are linked together by [**] linkages to form the [**] in the linkage.
"Oligonucleotide Delivery System" means any [**] which was developed by Gilead
on or prior to [**], and which (i) enhances the [**] of a Codeblocker Compound,
(ii) selectively delivers a Codeblocker compound to the intended [**], (iii)
provides [**], or (iv) otherwise favorably alters the [**] so as to enhance its
pharmacological activity of clinical value. "Oligonucleotide Delivery System"
includes [**].
Glaxo Smith Kline has retained rights (originally granted from Gilead to GSK) in the Patents identified by a "Gilead" in the Third Party column to (i) conduct research and development within the GSK Field and (ii) make, have made, use, offer for sale, sell, supply and import within the GSK Field any form or dosage of a GSK Codeblocker Compound and any GSK Codeblocker Delivery System used in connection therewith.
GSK may grant sublicenses only (a) to affiliates, for any use within the GSK Field, and (b) to non-affiliates only to the extent necessary to enable such sublicensee to make, have made, use, offer for sale, sell, supply and import a GSK Codeblocker Compound developed by GSK or a research or development collaborator of GSK during the term of such collaboration and for which GSK (alone or in conjunction with a commercialization partner for such compound) has commenced or is prepared to commence human clinical trials.
"GSK Field" means research with respect to, and the development and use of, GSK Codeblocker Compounds for the diagnosis, prevention or treatment of conditions or diseases in humans.
"GSK Codeblocker Compound" means any material which (i) binds directly to DNA or
RNA within a cell on a selective basis determined by the nucleotide sequence of
the target DNA or RNA and exerts its biological activity predominantly through
binding to DNA or RNA to inhibit the transcription or replication of the target
DNA or RNA or binding to RNA to inhibit the translation, processing, packaging
or regulatory activity of the target RNA, and (ii) is a molecule [**], and (iii)
is not a naturally occurring protein that binds to DNA to regulate
transcription, or a peptide derived from such a naturally occurring protein, and
(iv) is [**], and (v) was not known by GSK prior to [**].
"GSK Codeblocker Delivery System" means any [**] which is developed by GSK or
Gilead pursuant to their Collaborative Research Agreement dated March 25, 1996,
and which (i) [**] a GSK Codeblocker Compound, (ii) [**] to the intended target
[**], (iii) provides [**] a GSK Codeblocker Compound from [**], or (iv)
otherwise [**] a GSK Codeblocker Compound so as to [**].
3. [**], INC.
Alnylam cannot grant Naked Sublicenses with respect to the Patents identified by a "[**]" in the Third Party column or the Patents listed on Annex 3. In addition, [**] has the first right to defend and enforce such Patents if it is facing the greatest competitive threat from infringement.
Alnylam must notify Isis if it grants a sublicense of any kind to a Third Party with respect to such Patents.
The [**] has the first right to defend and maintain the Patents with a docket number containing "[**]."
Isis also has access to certain other [**] technology to the extent it is useful for Antisense Products and Antisense Technology (both as defined in Annex 3). However, in addition to the restrictions described above, this technology carries certain other use restrictions depending on how the technology is characterized under the in-license agreement. We do not believe that such technology will be useful to Alnylam, but have provided a description of the technology and its related encumbrances on Annex 3 attached hereto.
4. TULLIS PATENTS.
The Patents identified by a "Tullis" in the Third Party column can only be sublicensed in combination with a product that (i) uses such Patents and (ii) employs as a material element other Isis Patent Rights.
5. AMGEN, GSK, CHIRON AND PFIZER.
Amgen, Inc., Glaxo Smith Kline, Chiron Corporation and Pfizer, Inc. each have a license to use some or all of the Patents identified by a "TV" in the Third Party column for their own internal target validation research.
6. INTEGRATED DNA TECHNOLOGIES, INC.
With respect to the Patents identified by an "IDT" in the Third Party column, Integrated DNA Technologies, Inc. has a nonexclusive license to make, have made, use, import, offer to sell, sell and have sold oligonucleotides and other related research products to the Academic Market.
"Academic Market" means end-users employed by and located at or in academic, university, government, and other 501(c)(3) registered not-for-profit organizations; provided however that specifically excluded from this definition shall be those end-users at such institutions whose research is directly funded by a for-profit corporation for the purpose of drug discovery, drug development, or target validation/gene functionalization
wherein the funding corporation has a specific legal interest or right to the data and information of the funded research
7. TRILINK BIOTECHNOLOGIES, INC.
TriLink Biotechnologies, Inc. has a non-exclusive license to the Patents identified by a "TriLink" in the Third Party column to (i) make, use, distribute and sell Licensed Products to purchasers who have signed a form license agreement and (ii) have [**] in the manufacture of Licensed Products.
"Licensed Product" means [**]
- "Propyne" means any of the following [**]
[**]
ANNEX 3
If the Patents marked with either a B1 or B2 restriction are [**] prevails in the [**] and [**] for such Patents broadly cover [**], the licenses under such Patents are limited to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and to practice Antisense Technology; provided that the license will only extend to the issued claims corresponding to the [**] and shall not extend to any other claim of such Patents.
The licenses under the Patents marked with an F restriction are limited (i) to
discover, develop, make, have made, use, sell, have sold, offer to sell, import
and have imported Antisense Products which contain modifications which have
[**], (ii) to practice Antisense Technology using oligonucleotides [**] in such
oligonucleotides, and (iii) to discover, develop, make, have made, use, sell,
have sold, offer to sell, import and have imported Antisense Products which
target genes involved in [**].
The licenses under the Patents marked with a C or D restriction are limited to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology, provided that neither such Antisense Products nor such Antisense Technology use, or are used with, [**].
The licenses under the Patents marked with an A restriction are limited to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology, provided that such Antisense Products and Antisense Technology use, or are used with, the technology covered by the claims of such Patents solely for the [**] purposes only.
The licenses under the Patents marked with an M restriction are limited to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology, which Antisense Products and Antisense Technology primarily act [**].
The licenses under the Patents marked with a K restriction are limited to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology; provided, however, that such licenses will not extend to [**].
For purposes of this description:
- Antisense Products means oligonucleotides or oligonucleotide analogs or mimics thereof targeted to a specific sequence of RNA that hybridize to such sequence and through such hybridization modulate the production of the targeted gene product. The term Antisense Products shall not include Ribozymes."
- Antisense Technology means the use of any oligonucleotide or oligonucleotide analog or mimic thereof targeted to a specific sequence of RNA that hybridizes to such sequence and through such hybridization modulates the production of the targeted gene product. The term Antisense Technology shall not include Ribozyme technology.
- Ribozymes means oligonucleotides or oligonucleotide analogs or mimics containing a catalytic core having a bulge or stem loop and regions flanking the catalytic core that hybridize to a targeted RNA and modulate the targeted RNA by cleavage at a site next to a specific ribonucleotide triplet by an oligonucleotide catalyzed transesterification reaction.
- Ribozyme Technology means the use of any oligonucleotides or oligonucleotide analogs or mimics thereof containing a catalytic core having a bulge or stem loop and regions flanking the catalytic core that hybridize to a targeted RNA and modulate the targeted RNA by cleavage at a site next to a specific ribonucleotide triplet by an oligonucleotide catalyzed transesterification reaction.
PATENT # HYBN # TITLE PATENT GROUP INVENTORS RESTRICTION -------- ------ ----- ------------ --------- ----------- [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
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SCHEDULE 1-30
EXCLUDED TECHNOLOGY
The following schedule of Excluded Technology is provided by Isis Pharmaceuticals, Inc. to Alnylam Pharmaceuticals, Inc., in connection with the Strategic Collaboration and License Agreement between Alnylam and Isis (the "AGREEMENT"). Capitalized terms used but not otherwise defined herein have the meanings given to such terms in the Agreement.
This schedule and the information and disclosures contained in this schedule are intended only to qualify and limit the licenses granted by Isis to Alnylam in the Agreement and do not expand in any way the scope or effect of any such licenses.
In the event of a conflict between this schedule of Excluded Technology and any other schedule or terms of the Agreement, this schedule will govern.
1. INTELLECTUAL PROPERTY COVERING:
- RNA processing, including modulation of [**]
- PNA chemistry licensed or acquired from (i) [**];
- [**] chemistry licensed or acquired from [**];
- [**] a Gene Target.
2. [**]/4'-THIO CHEMISTRY.
4'-thio chemistries including patents licensed in from [**]
In addition, the following Patents in-licensed from the Centre National De La Recherche Scientifique are excluded:
ISIS DOCKET PATENT GRANTED NUMBER COUNTRY STATUS NUMBER DATE TITLE [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
[**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] [**] |
3. GEN-PROBE AND NIH. (A)
The following Patents in-licensed from Gen-Probe Inc. and the National Institute of Health are excluded:
U.S. Patent No. [**] entitled: [**];
U.S. Patent No. [**] entitled: [**]; and
U.S. Patent No. [**] entitled: [**]
4. MCGILL UNIVERSITY (B)
In addition to certain manufacturing technology excluded by definition, the following Patents in-licensed from McGill University are excluded:
ISIS DOCKET NUMBER COUNTRY STATUS TITLE [**] [**] [**] [**] [**] [**] [**] [**] |
5. UNIVERSITY OF MASSACHUSETTS (B)
The following Patents in-licensed from the University of Massachusetts are excluded:
[**] Patent No. [**] entitled [**];
[**] Patent Application [**] entitled "[**];
[**] Patent Application [**] entitled [**]; and
[**] Patent No. [**] entitled [**].
6. WALDER PATENTS (B)
The Walder Patents are excluded. "Walder Patents" means and includes [**]. Patent Nos. [**]; [**] Patent No. [**], and [**] Patent Application No. [**] (allowed).
7. MERCK NUCLEOSIDE
Single nucleosides, nucleotides or monomers claimed in Patents filed as of the
Effective Date which are prosecuted by Merck and Co. are excluded. However if
such Patents are necessary for Alnylam to practice the licenses granted under
Section 5.1 with respect to a specific Alnylam Product, then Isis will include
such necessary Patents in the licenses granted under Section 5.1.
8. AJINOMOTO
Isis believes the agreement under which Isis received a license to the Ajinomoto Patents listed below [**]. However, there is a dispute regarding [**].
ISIS DOCKET COUNTRY STATUS PATENT GRANT DATE TITLE
NUMBER NUMBER
[**] [**] [**] [**] [**]
[**] [**] [**] [**] [**] [**]
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(B) Although, Isis can sublicense the technologies marked with this footnote, such a sublicense carries additional financial and other obligations. Isis is willing to negotiate a separate sublicense agreement for these technologies.
EXHIBIT 3.1
ISIS PHARMACEUTICALS
ALNYLAM PHARMACEUTICALS
CLINICAL SUPPLY AGREEMENT
MANUFACTURING SERVICES TERM SHEET
At Alnylam's request, Isis will provide Alnylam services in the categories
described below. Alnylam will compensate Isis for such services on a cost plus
[**]% basis.
1. For each drug candidate for which Alnylam wishes to engage Isis's services, Isis and Alnylam will enter into a Manufacturing Agreement pursuant to which Isis will [**] as may be mutually agreed by the parties.
2. Each year, in advance, Isis and Alnylam will detail a mutually agreed plan of the services, if any, to be provided by Isis to Alnylam, including a written estimate of the amount of API Alnylam will require for the drug candidate during the subsequent calendar year.
3. Such plan will also detail manufacturing support services to be provided by Isis in connection with the drug candidate, including process development, analytical methods development and formulation services.
4. The Manufacturing Agreement will also specify which party will be responsible for the Drug Master File for the drug candidate.
5. At the end of [**] or such other stage mutually agreed under paragraph (1) above, the parties will agree either that Isis will continue to manufacture the drug candidate or that Isis will transfer the manufacturing process for such drug candidate to a third party manufacturer designated by Alnylam on commercially reasonable license terms.
SCHEDULE 1-27 ISIS CURRENT CHEMISTRY PATENTS
ISIS
DOCKET COUNTRY PATENT GRANT 3RD 3RD
NUMBER NAME STATUS NUMBER DATE ISISCASETYPE CURRENTOWNER ISISATTYAGENT TITLE PARTY PARTY
DELETED
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SCHEDULE 1-28 ISIS CURRENT MOTIF AND MECHANISM PATENTS
ISIS DOCKET PATENT GRANT ISIS CURRENT ISIS 3RD 3RD
NUMBER COUNTRY STATUS NUMBER DATE CASE OWNER ATTY CODE COMMENTS TITLE PARTY PARTY
DELETED
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SCHEDULE 1-34
ISIS MANUFACTURING PATENTS
The Parties have not yet agreed to a specific list of Manufacturing Patents as of the date of the Addendum Transmittal. However, the Parties agree to work together to develop a list of Manufacturing Patents by [**].
SCHEDULE 1-34
ISIS MANUFACTURING PATENTS
The Parties have not yet agreed to a specific list of Manufacturing Patents as of the date of the Addendum Transmittal. However, the Parties agree to work together to develop a list of Manufacturing Patents by [**].