| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Delaware | 77-0602661 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| 300 Third Street, Cambridge, MA | 02142 | |
| (Address of principal executive | ||
| offices) | (Zip Code) |
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PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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| EX-3.1 Restated Certificate of Incorporation | ||||||||
| EX-10.3 Forms of Incentive Stock Option | ||||||||
| EX-10.6 Amendment No. 1 to dated August 2,2004 | ||||||||
| EX-10.8 Agreement Garching Innovation GmbH | ||||||||
| EX-31.1 Section 302 Certification of CEO | ||||||||
| EX-31.2 Section 302 Certification of CFO | ||||||||
| Ex-32.1 Section 906 Certification of CEO | ||||||||
| EX-32.2 Section 906 Certification of CFO | ||||||||
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
(In thousands, except share and per share amounts)
(Unaudited)
Table of Contents
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
$
1,108
$
131
$
2,751
$
265
9,190
4,159
14,562
14,594
3,122
2,947
6,074
5,978
12,312
7,106
20,636
20,572
(11,204
)
(6,975
)
(17,885
)
(20,307
)
258
74
522
111
(248
)
(97
)
(473
)
(305
)
49
42
91
(37
)
59
19
140
(231
)
(11,145
)
(6,956
)
(17,745
)
(20,538
)
—
(751
)
—
(2,713
)
$
(11,145
)
$
(7,707
)
$
(17,745
)
$
(23,251
)
$
(0.54
)
$
(1.10
)
$
(0.86
)
$
(5.39
)
20,605,681
6,997,479
20,551,724
4,315,860
$
(11,145
)
$
(6,956
)
$
(17,745
)
$
(20,538
)
(256
)
(106
)
(454
)
(113
)
33
—
2
—
$
(11,368
)
$
(7,062
)
$
(18,197
)
$
(20,651
)
$
568
$
(531
)
$
741
$
1,193
351
484
658
991
$
919
$
(47
)
$
1,399
$
2,184
Table of Contents
(In thousands)
(Unaudited)
Six Months Ended June 30,
2005
2004
$
(17,745
)
$
(20,538
)
1,627
965
—
(19
)
1,399
2,184
2,093
—
(91
)
—
181
(3,000
)
(265
)
(786
)
715
294
(1,700
)
3,010
(103
)
2,948
(13,889
)
(14,942
)
(975
)
(6,438
)
—
67
(14,386
)
(15,457
)
17,683
1,250
2,322
(20,578
)
47
30,100
—
10,000
762
5,705
—
(1,859
)
—
373
—
(47
)
809
44,272
(349
)
(54
)
(11,107
)
8,698
20,272
23,193
$
9,165
$
31,891
$
278
$
155
—
557
—
2,713
—
67,626
Table of Contents
Table of Contents
Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
$
(11,145
)
$
(7,707
)
$
(17,745
)
$
(23,251
)
441
852
956
1,605
(1,004
)
(898
)
(1,812
)
(1,736
)
$
(11,708
)
$
(7,753
)
$
(18,601
)
$
(23,382
)
$
(0.54
)
$
(1.10
)
$
(0.86
)
$
(5.39
)
$
(0.57
)
$
(1.11
)
$
(0.91
)
$
(5.42
)
Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
3,048,184
2,051,885
3,048,184
2,051,885
52,630
65,787
52,630
65,787
181,011
524,003
181,011
524,003
270,000
—
270,000
—
77,074
6,737
81,960
121,804
3,628,899
2,648,412
3,633,785
2,763,479
Table of Contents
June 30,
December 31,
2005
2004
$
8,606
$
8,919
2,478
2,775
$
11,084
$
11,694
Table of Contents
$
1,195
2,389
2,389
2,389
2,111
10,473
2,510
7,963
1,776
$
6,187
Table of Contents
Table of Contents
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•
our ability to progress any product candidates into preclinical and clinical trials;
•
the scope, rate and progress of our preclinical trials and other research and development activities;
•
the scope, rate of progress and cost of any clinical trials we commence;
•
clinical trial results;
•
the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
•
the terms and timing of any collaborative, licensing and other arrangements that we may establish;
•
the cost and timing of regulatory approvals;
•
the cost and timing of establishing sales, marketing and distribution capabilities;
•
the cost of establishing clinical and commercial supplies of any products that we may develop; and
•
the effect of competing technological and market developments.
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Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
$
1,108
$
131
$
2,751
$
265
12,312
7,106
20,636
20,572
(11,204
)
(6,975
)
(17,885
)
(20,307
)
$
(11,145
)
$
(6,956
)
$
(17,745
)
$
(20,538
)
Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
2005
2004
$
486
$
131
$
978
$
265
709
—
1,960
—
(87
)
—
(187
)
—
$
1,108
$
131
$
2,751
$
265
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Three
Three
Months
% of
Months
% of
Ended
total
Ended
total
June 30,
operating
June 30,
operating
Increase
2005
expenses
2004
expenses
$
%
$
9,190
75
%
$
4,159
59
%
$
5,031
121
%
3,122
25
%
2,947
41
%
175
6
%
$
12,312
100
%
$
7,106
100
%
$
5,206
73
%
Six
Six
Months
% of
Months
% of
Ended
total
Ended
total
Increase
June 30,
operating
June 30,
operating
(Decrease)
2005
expenses
2004
expenses
$
%
$
14,562
71
%
$
14,594
71
%
$
(32
)
—
6,074
29
%
5,978
29
%
96
2
%
$
20,636
100
%
$
20,572
100
%
$
64
—
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Three
Three
Months
Months
Ended
% of
Ended
% of
June 30,
expense
June 30,
expense
Increase (Decrease)
2005
category
2004
category
$
%
$
1,681
18
%
$
1,372
33
%
$
309
23
%
2,518
28
%
840
20
%
1,678
200
%
2,215
24
%
706
17
%
1,509
214
%
759
8
%
803
20
%
(44
)
(5
%)
1,117
12
%
713
17
%
404
57
%
568
6
%
(531
)
(13
%)
1,099
207
%
332
4
%
256
6
%
76
30
%
$
9,190
100
%
$
4,159
100
%
$
5,031
121
%
Six
Six Months
Months
Ended
% of
Ended
% of
Increase
June 30,
expense
June 30,
expense
(Decrease)
2005
category
2004
category
$
%
$
3,199
22
%
$
2,738
19
%
$
461
17
%
3,544
24
%
1,580
11
%
1,964
124
%
2,269
16
%
5,706
39
%
(3,437
)
(60
%)
1,927
13
%
1,619
11
%
308
19
%
2,235
15
%
1,270
9
%
965
76
%
741
5
%
1,193
8
%
(452
)
(38
%)
647
5
%
488
3
%
159
33
%
$
14,562
100
%
$
14,594
100
%
$
(32
)
—
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Three
Three
Months
Months
Ended
% of
Ended
% of
Increase
June 30,
expense
June 30,
expense
(Decrease)
2005
category
2004
category
$
%
$
873
28
%
$
658
22
%
$
215
33
%
905
29
%
820
28
%
85
10
%
476
15
%
568
19
%
(92
)
(16
%)
351
11
%
484
17
%
(133
)
(27
%)
147
5
%
66
2
%
81
123
%
370
12
%
351
12
%
19
5
%
$
3,122
100
%
$
2,947
100
%
$
175
6
%
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Six
Six Months
Months
Ended
% of
Ended
% of
Increase
June 30,
expense
June 30,
expense
(Decrease)
2005
category
2004
category
$
%
$
1,631
27
%
$
1,798
30
%
$
(167
)
(9
%)
1,719
28
%
1,672
28
%
47
3
%
984
16
%
839
14
%
145
17
%
658
11
%
991
17
%
(333
)
(34
%)
306
5
%
97
1
%
209
215
%
776
13
%
581
10
%
195
34
%
$
6,074
100
%
$
5,978
100
%
$
96
2
%
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Six Months Ended June 30,
2005
2004
$
(17,745
)
$
(20,538
)
5,028
3,130
(1,172
)
2,466
(13,889
)
(14,942
)
2,322
(20,578
)
809
44,272
(349
)
(54
)
(11,107
)
8,698
20,272
23,193
$
9,165
$
31,891
Table of Contents
•
our progress in demonstrating that siRNAs can be active as drugs;
•
our ability to develop relatively standard procedures for selecting and modifying siRNA drug candidates;
•
progress in our research and development programs, as well as the magnitude of these programs;
•
the timing, receipt, and amount of milestone and other payments, if any, from present and future collaborators, if any;
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•
our ability to establish and maintain additional collaborative arrangements;
•
the resources, time and costs required to successfully initiate and complete
our preclinical and clinical trials, obtain regulatory approvals, protect our intellectual
property and obtain and maintain licenses to third-party intellectual property;
•
the cost of preparing, filing, prosecuting, maintaining, and enforcing patent claims; and
•
the timing, receipt and amount of sales and royalties, if any, from our potential products.
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•
execute product development activities using an unproven technology;
•
build and maintain a strong intellectual property portfolio;
•
gain acceptance for the development and commercialization of our products;
•
develop and maintain successful strategic relationships; and
•
manage our spending as costs and expenses increase due to clinical trials, regulatory approvals and commercialization.
Table of Contents
•
our progress in demonstrating that siRNAs can be active as drugs;
•
our ability to develop relatively standard procedures for selecting and modifying siRNA drug candidates;
•
progress in our research and development programs, as well as the magnitude of these programs;
•
the timing, receipt, and amount of milestone and other payments, if any, from present and future collaborators, if any;
•
our ability to establish and maintain additional collaborative arrangements;
•
the resources, time and costs required to initiate and complete our preclinical
and clinical trials, obtain regulatory approvals, protect our intellectual property and
obtain and maintain licenses to third-party intellectual property; and
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•
the timing, receipt and amount of sales and royalties, if any, from our
potential products.
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•
pursue alternative technologies or develop alternative products, either on its
own or jointly with others, that may be competitive with the products on which it is
collaborating with us or which could affect its commitment to the collaboration with us;
•
pursue higher-priority programs or change the focus of its development
programs, which could affect the collaborator’s commitment to us; or
•
if it has marketing rights, choose to devote fewer resources to the marketing
of our product candidates, if any are approved for marketing, than it does for product
candidates of its own development.
•
we may not be able to initiate or continue clinical trials of products that are under development;
•
we may be delayed in submitting applications for regulatory approvals for our products;
•
we may lose the cooperation of our collaborators;
Table of Contents
•
we may be required to cease distribution or recall some or all batches of our products; and
•
ultimately, we may not be able to meet commercial demands for our products.
•
we may not be able to attract and build a significant marketing or sales force;
•
the cost of establishing a marketing or sales force may not be justifiable in
light of the revenues generated by any particular product; and
•
our direct sales and marketing efforts may not be successful.
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•
fluctuations in foreign currency exchange rates that may increase the U.S.
dollar cost of our international operations;
•
difficulty managing operations in multiple locations, which could adversely
affect the progress of our product candidate development program and business prospects;
•
local regulations that may restrict or impair our ability to conduct biotechnology-based research and development;
•
foreign protectionist laws and business practices that favor local competition; and
•
failure of local laws to provide the same degree of protection against
infringement of our intellectual property, which could adversely affect our ability to
develop product candidates or reduce future product or royalty revenues, if any, from
product candidates we may develop.
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•
discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials;
•
problems in engaging IRBs to oversee trials or problems in obtaining IRB approval of studies;
•
delays in enrolling patients and volunteers into clinical trials;
•
high drop-out rates for patients and volunteers in clinical trials;
•
negative results of clinical trials;
•
inadequate supply or quality of drug candidate materials or other materials necessary for the conduct of our clinical trials;
•
serious and unexpected drug-related side effects experienced by participants in our clinical trials; or
•
unfavorable FDA inspection and review of a clinical trial site or records of any clinical or preclinical investigation.
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•
the timing of our receipt of any marketing approvals, the terms of any
approvals and the countries in which approvals are obtained;
•
the safety, efficacy and ease of administration;
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•
the willingness of patients to accept relatively new routes of administration such as injection into the eye;
•
the success of our physician education programs;
•
the availability of government and third-party payor reimbursement;
•
the pricing of our products, particularly as compared to alternative treatments; and
•
the availability of alternative effective treatments for the diseases that product candidates we develop are intended to treat.
•
warning letters;
•
recalls or public notification or medical product safety alerts;
•
restrictions on, or prohibitions against, marketing our products;
•
restrictions on importation of our products;
•
suspension of review or refusal to approve pending applications;
•
suspension or withdrawal of product approvals;
•
product seizures;
•
injunctions; and
•
civil and criminal penalties and fines.
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•
they are incident to a physician’s services;
•
they are “reasonable and necessary” for the diagnosis or treatment of the
illness or injury for which they are administered according to accepted standard of medical
practice;
•
they are not excluded as immunizations; and
•
they have been approved by the FDA.
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•
much greater financial, technical and human resources than we have at every
stage of the discovery, development, manufacture and commercialization of products;
•
more extensive experience in preclinical testing, conducting clinical trials,
obtaining regulatory approvals, and in manufacturing and marketing pharmaceutical products;
•
product candidates that are based on previously tested or accepted technologies;
•
products that have been approved or are in late stages of development; and
•
collaborative arrangements in our target markets with leading companies and research institutions.
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•
the safety and effectiveness of our products;
•
the ease with which our products can be administered and the extent to which
patients accept relatively new routes of administration such as injection into the eye;
•
the timing and scope of regulatory approvals for these products;
•
the availability and cost of manufacturing, marketing and sales capabilities;
•
price;
•
reimbursement coverage; and
•
patent position.
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•
delaying, deferring or preventing a change in control of our company;
•
impeding a merger, consolidation, takeover or other business combination involving our company; or
•
discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.
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•
a classified board of directors;
•
a prohibition on actions by our stockholders by written consent;
•
limitations on the removal of directors; and
•
advance notice requirements for election to our board of directors and for
proposing matters that can be acted upon at stockholder meetings.
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38
39
40
(i)
$1,929,000 in legal, accounting and printing fees;
(ii)
$2,415,000 in underwriters discounts, fees and commissions; and
(iii)
$272,000 in miscellaneous expenses.
1.
Our stockholders elected the three persons listed below as Class I directors,
each to serve until our 2008 annual meeting of stockholders and until their successors
are duly elected and qualified. The table set forth below lists the number of shares of
our common stock voted in favor of the election of each such person, as well as the
number of votes withheld from such person.
Number of Shares
Number of Shares
For
Withheld
19,579,380
36,628
18,466,061
1,149,947
18,566,561
1,049,447
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2.
Our stockholders approved the compensation to be paid to members of our board of
directors, as described in the proxy statement relating to the annual meeting. The
holders of 18,199,997 shares of our common stock voted in favor of this proposal. The
holders of 1,368,397 shares of our commons stock voted against this proposal. The
holders of 47,614 shares of our common stock abstained from voting on this matter.
3.
Our stockholders ratified the appointment by our board of directors of
PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending
December 31, 2005. The holders of 19,595,931 shares of our common stock voted in favor
of this proposal. The holders of 13,977 shares voted against this proposal. The
holders of 6,100 shares abstained from voting on this matter.
Restated Certificate of Incorporation of the Registrant
Right Agreement dated as of July 13, 2005 between the Registrant and EquiServe
Trust Company, N.A., as Rights Agent, which includes as Exhibit A the Form of
Certificate of Designations of Series A Junior Participating Preferred Stock, as Exhibit
B the Form of Rights Certificate and as Exhibit C the Summary of Rights to Purchase
Preferred Stock (filed with the Securities and Exchange Commission as an Exhibit to the
Registrant’s Current Report on Form 8-K filed on July 14, 2005 (File No. 000-50743) and
incorporated herein by reference).
Summary of Cash Compensation for Directors (filed with the Securities and
Exchange Commission as an Exhibit to the Registrant’s Current Report on Form 8-K filed
on June 10, 2005 (File No. 000-50743) and incorporated herein by reference).
2004 Stock Incentive Plan, as amended (filed with the Securities and Exchange
Commission as an Exhibit to the Registrant’s Current Report on Form 8-K filed on June
10, 2005 (File No. 000-50743) and incorporated herein by reference).
Forms of Incentive Stock Option Agreement and Nonstatutory Stock Option Agreement
under 2004 Stock Incentive Plan, as amended.
Form of Nonstatutory Stock Option Agreement under 2004 Stock Incentive Plan
Granted to James L. Vincent on July 12, 2005 (filed with the Securities and Exchange
Commission as an Exhibit to the Registrant’s Current Report on Form 8-K filed on July
13, 2005 (File No. 000-50743) and incorporated herein by reference).
Form of Restricted Stock Agreement under 2004 Stock Incentive Plan Issued to
James L. Vincent on July 12, 2005 (filed with the Securities and Exchange Commission as
an Exhibit to the Registrant’s Current Report on Form 8-K filed on July 13, 2005 (File
No. 000-50743) and incorporated herein by reference).
Amendment No. 1 to dated August 2, 2004 to Loan and Security Agreement dated as
of March 26, 2004 by and between the Registrant and Lighthouse Capital Partners V, L.P.
Amendment No. 02 dated June 20, 2005 to Loan and Security Agreement dated as of
March 26, 2004, as amended, by and between the Registrant and Lighthouse Capital
Partners V, L.P. (filed with the Securities and Exchange Commission as an Exhibit to the
Registrant’s Current Report on Form 8-K filed on June 24, 2005 (File No. 000-50743) and
incorporated herein by reference).
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Agreement between the Registrant, Garching Innovation GmbH, Alnylam U.S., Inc., a
wholly-owned subsidiary of the Registrant, and Alnylam Europe AG, a wholly-owned
subsidiary of the Registrant, dated June 14, 2005.
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule
13a-14(a)/15d-14(a), by Principal Executive Officer.
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule
13a-14(a)/15d-14(a), by Principal Financial Officer.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, by Principal Executive Officer.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, by Principal Financial Officer.
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41
ALNYLAM PHARMACEUTICALS, INC.
By:
/s/ John M. Maraganore
John M. Maraganore
President and Chief Executive Officer
By:
/s/ Barry E. Greene
Barry E. Greene
Chief Operating Officer and Treasurer
(Principal Financial and Accounting Officer)
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
ALNYLAM PHARMACEUTICALS, INC.
(originally incorporated under the name Alnylam Holding Co. on May 8, 2003)
FIRST: The name of the Corporation is Alnylam Pharmaceuticals, Inc.
SECOND: The address of the Corporation's 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 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 all classes of stock which the Corporation shall have authority to issue is One Hundred Thirty Million (130,000,000) shares, consisting of (i) One Hundred Twenty-Five Million (125,000,000) shares of Common Stock, par value $.01 per share (the "Common Stock"), and (ii) Five Million (5,000,000) shares of Preferred Stock, par value $.01 per share (the "Preferred Stock").
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
A COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock shall have voting rights at all meetings of stockholders, each such holder being entitled to one vote for each share thereof held by such holder; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation (which, as used herein, shall mean the certificate of incorporation of the Corporation, as amended from time to time, including the terms of any certificate of designation of any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together
as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation. There shall be no cumulative voting.
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.
3. Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend or other rights of any then outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential or other rights of any then outstanding Preferred Stock.
B PREFERRED STOCK.
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 Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from time to time to issue the 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 Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law.
The number of authorized shares of 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.
FIFTH: Except as otherwise provided herein, 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.
SIXTH: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, and subject to the terms of any series of Preferred Stock, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation's Bylaws. The affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present shall be required to adopt, amend, alter or repeal the Corporation's Bylaws. The Corporation's Bylaws also may be adopted, amended, altered or repealed 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, in addition to any other vote required by this Certificate of Incorporation. 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 SIXTH.
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 or repeal.
EIGHTH: The Corporation shall provide indemnification as follows:
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.
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 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.
3. Indemnification for Expenses of Successful Party. Notwithstanding any
other provisions of this Article, 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 plea
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.
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. 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.
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) 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.
6. Procedure for Indemnification. In order to obtain indemnification or advancement of expenses pursuant to Section 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 Section 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 Section 1 or 2 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 Section 1 or 2, 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.
7. Remedies. The right to indemnification or advancement of expenses as granted by this Article 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.
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 EIGHTH 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; provided, however, that nothing contained in this Section 8 shall be construed to require any Indemnitee to seek reimbursement under any insurance policy.
9. Subsequent Amendment. No amendment, termination or repeal of this Article 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.
10. Other Rights. The indemnification and advancement of expenses provided by this Article 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 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. 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.
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.
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.
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.
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).
NINTH: This Article is inserted for the management of the business and for the conduct of the affairs of the Corporation.
1. General Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Corporation's Board of Directors.
2. 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.
3. 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.
4. 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.
5. 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 NINTH 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.
6. 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.
7. Removal. Subject to the rights of holders of any series of Preferred Stock, directors of the Corporation may be removed only for cause and only 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.
8. 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 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.
9. 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.
10. 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 NINTH.
TENTH: 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 Article TENTH.
ELEVENTH: 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 Chief Executive Officer, 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 Article ELEVENTH.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which restates, integrates and amends the certificate of incorporation of the Corporation, and which has been duly adopted in accordance with Sections 228, 242 and 245 of the Delaware General Corporation Code, has been executed by its duly authorized officer this 3rd day of June, 2004.
ALNYLAM PHARMACEUTICALS, INC.
By: /s/ John M. Maraganore
------------------------------------
John M. Maraganore
President and Chief Executive Officer
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CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
ALNYLAM PHARMACEUTICALS, INC.
Alnylam Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware (hereinafter called the "Corporation"), hereby certifies that the following resolution was adopted by the Board of Directors of the Corporation at a meeting duly called and held on July 13, 2005:
RESOLVED: That pursuant to the authority granted to and vested in the Board of Directors of the Corporation (hereinafter called the "Board") in accordance with the provisions of the Certificate of Incorporation, as amended, the Board hereby creates a series of Preferred Stock, $.01 par value per share (the "Preferred Stock"), of the Corporation and hereby states the designation and number of shares, and fixes the relative rights, preferences and limitations thereof as follows:
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK:
Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock" (the "Series A Preferred Stock") and the number of shares constituting the Series A Preferred Stock shall be one hundred twenty-five thousand (125,000). Such number of shares may be increased or decreased by resolution of the Board prior to issuance; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series A Preferred Stock with respect to dividends, the holders of shares of Series A Preferred Stock, in preference to the holders of Common Stock, par value $.01 per share (the "Common Stock"), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board out of funds of the Corporation legally available for the payment of dividends, quarterly dividends payable in cash on the last day of each fiscal quarter of the Corporation in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10 or (b) subject to the provision for adjustment hereinafter set forth, 1000 times the aggregate per share amount of all cash dividends, and 1000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under clause (b) of the first sentence of this Section 2(A) shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.
(B) The Corporation shall declare a dividend or distribution on the Series A Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock) and the Corporation shall pay such dividend or distribution on the Series A Preferred Stock before the dividend or distribution declared on the Common Stock is paid or set apart; provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10 per share on the Series A Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board may fix a record date for the determination of holders of shares of Series A Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 1000 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the number of votes per share to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.
(B) Except as otherwise provided herein, in the Certificate of Incorporation or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the holders of the Series A Preferred Stock, voting as a separate series from all other series of Preferred Stock and classes of capital stock, shall be entitled to elect two members of the Board in addition to any Directors elected by any other series, class or classes of securities and the authorized number of Directors will automatically be increased by two. Promptly thereafter, the Board of the Corporation shall, as soon as may be practicable, call a special meeting of holders of Series A Preferred Stock for the
purpose of electing such members of the Board. Such special meeting shall in any event be held within 45 days of the occurrence of such arrearage.
(ii) During any period when the holders of Series A Preferred Stock, voting as a separate series, shall be entitled and shall have exercised their right to elect two Directors, then, and during such time as such right continues, (a) the then authorized number of Directors shall be increased by two, and the holders of Series A Preferred Stock, voting as a separate series, shall be entitled to elect the additional Directors so provided for, and (b) each such additional Director shall not be a member of any existing class of the Board, but shall serve until the next annual meeting of stockholders for the election of Directors, or until his successor shall be elected and shall qualify, or until his right to hold such office terminates pursuant to the provisions of this Section 3(C).
(iii) A Director elected pursuant to the terms hereof may be removed with or without cause by the holders of Series A Preferred Stock entitled to vote in an election of such Director.
(iv) If, during any interval between annual meetings of stockholders for the election of Directors and while the holders of Series A Preferred Stock shall be entitled to elect two Directors, there is no such Director in office by reason of resignation, death or removal, then, promptly thereafter, the Board shall call a special meeting of the holders of Series A Preferred Stock for the purpose of filling such vacancy and such vacancy shall be filled at such special meeting. Such special meeting shall in any event be held within 45 days of the occurrence of such vacancy.
(v) At such time as the arrearage is fully cured, and all dividends accumulated and unpaid on any shares of Series A Preferred Stock outstanding are paid, and, in addition thereto, at least one regular dividend has been paid subsequent to curing such arrearage, the term of office of any Director elected pursuant to this Section 3(C), or his successor, shall automatically terminate, and the authorized number of Directors shall automatically decrease by two, the rights of the holders of the shares of the Series A Preferred Stock to vote as provided in this Section 3(C) shall cease, subject to renewal from time to time upon the same terms and conditions, and the holders of shares of the Series A Preferred Stock shall have only the limited voting rights elsewhere herein set forth.
(D) Except as set forth herein, or as otherwise provided by law, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except dividends paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board) to all holders of such shares upon such terms as the Board, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless, prior thereto, the holders of shares of Series A Preferred Stock shall have received $1000 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series A Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 1000 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, except distributions made ratably on the Series A Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up.
(B) Neither the consolidation, merger or other business combination of the Corporation with or into any other corporation nor the sale, lease, exchange or conveyance of all or any part of the property, assets or business of the Corporation shall be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section 6.
(C) In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the aggregate amount to which holders of shares of Series A Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of paragraph (A) of this Section 6 shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.
Section 7. Consolidation, Merger, etc. Notwithstanding anything to the contrary contained herein, in case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series A Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 1,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. In the event the Corporation shall at any time declare or pay any dividend on the Series A Preferred Stock payable in shares of Series A Preferred Stock, or effect a subdivision, combination or consolidation of the outstanding shares of Series A Preferred Stock (by reclassification or otherwise than by payment of a dividend in shares of Series A Preferred Stock) into a greater or lesser number of shares of Series A Preferred Stock, then in each such case the amount set forth in the first sentence of this Section 7 with respect to the exchange or change of shares of Series A Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Series A Preferred Stock that were outstanding immediately prior to such event and the denominator of which is the number of shares of Series A Preferred Stock outstanding immediately after such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Preferred Stock issued either before or after the issuance of the Series A Preferred Stock, unless the terms of any such series shall provide otherwise.
Section 10. Amendment. At such time as any shares of Series A Preferred Stock are outstanding, the Certificate of Incorporation, as amended, of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series A Preferred Stock, voting together as a single class.
Section 11. Fractional Shares. Series A Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of holders of Series A Preferred Stock.
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of the Corporation by its Chief Executive Officer this 14th day of July, 2005.
ALNYLAM PHARMACEUTICALS, INC.
By: /s/ John M. Maraganore
----------------------------------------
Name: John M. Maraganore
Title: President and Chief Executive Officer
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EXHIBIT 10.3
ALNYLAM PHARMACEUTICALS, INC.
Incentive Stock Option Agreement
Granted Under 2004 Stock Incentive Plan
1. Grant of Option.
This agreement evidences the grant by Alnylam Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), on ________, 200[ ] (the "Grant Date") to
[______], an employee of the Company (the "Participant"), of an option to
purchase, in whole or in part, on the terms provided herein and in the Company's
2004 Stock Incentive Plan (the "Plan"), a total of [__] shares (the "Shares") of
common stock, $.01 par value per share, of the Company ("Common Stock") at $[__]
per Share. Unless earlier terminated, this option shall expire at 5:00 p.m.,
Eastern time, on [the date that is ten years from the Grant Date] (the "Final
Exercise Date").
It is intended that the option evidenced by this agreement shall be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code"). Except as otherwise indicated by the context, the term "Participant", as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.
2. Vesting Schedule.
This option will become exercisable ("vest") as to [____________________].
The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all Shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he or she exercises this option, is, and has been at
all times since the Grant Date, an employee or officer of, or consultant or
advisor to, the Company or any parent or subsidiary of the Company as defined in
Section 424(e) or (f) of the Code (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Final Exercise Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this option shall terminate immediately upon such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Participant and the Company has not terminated such relationship for "cause" as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final Exercise Date, is discharged by the Company for "cause" (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such discharge. "Cause" shall mean willful misconduct by the Participant or willful failure by the Participant to perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the Company, which determination shall be conclusive. The Participant shall be considered to have been discharged for "Cause" if the Company determines, within 30 days after the Participant's resignation, that discharge for cause was warranted.
4. Tax Matters.
(a) Withholding. No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.
(b) Disqualifying Disposition. If the Participant disposes of Shares acquired upon exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of this option, the Participant shall notify the Company in writing of such disposition.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent
and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.
6. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal by its duly authorized officer. This option shall take effect as a sealed instrument.
ALNYLAM PHARMACEUTICALS, INC.
Dated: _________ By: ____________________________________
Name: _____________________________
Title: ____________________________
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PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 2004 Stock Incentive Plan.
Address: _________________________
ALNYLAM PHARMACEUTICALS, INC.
Nonstatutory Stock Option Agreement
Granted Under 2004 Stock Incentive Plan
1. Grant of Option.
This agreement evidences the grant by Alnylam Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), on ________, 200[ ] (the "Grant Date") to
[________], an [employee], [consultant], [director] of the Company (the
"Participant"), of an option to purchase, in whole or in part, on the terms
provided herein and in the Company's 2004 Stock Incentive Plan (the "Plan"), a
total of [____] shares (the "Shares") of common stock, $.01 par value per
share, of the Company ("Common Stock") at $[_____] per Share. Unless earlier
terminated, this option shall expire at 5:00 p.m., Eastern time, on [the date
that is ten years from the Grant Date] (the "Final Exercise Date").
It is intended that the option evidenced by this agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the "Code"). Except as otherwise indicated by the context, the term "Participant", as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.
2. Vesting Schedule.
This option will become exercisable ("vest") as to [____________________].
The right of exercise shall be cumulative so that to the extent the option is not exercised in any period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all Shares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.
3. Exercise of Option.
(a) Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at its principal office, accompanied by this agreement, and payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby, provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares.
(b) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an [employee or officer of], or consultant or advisor to, the Company or any other entity the employees, officers, directors, consultants, or advisors of which are eligible to receive option grants under the Plan (an "Eligible Participant").
(c) Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the Final Exercise Date), provided that this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this option shall terminate immediately upon such violation.
(d) Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Participant and the Company has not terminated such relationship for "cause" as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the case of death by an authorized transferee), provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that this option shall not be exercisable after the Final Exercise Date.
(e) Discharge for Cause. If the Participant, prior to the Final Exercise Date, is discharged by the Company for "cause" (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such discharge. "Cause" shall mean willful misconduct by the Participant or willful failure by the Participant to perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the Company, which determination shall be conclusive. The Participant shall be considered to have been discharged for "Cause" if the Company determines, within 30 days after the Participant's resignation, that discharge for cause was warranted.
4. Withholding.
No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option.
5. Nontransferability of Option.
This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant.
6. Provisions of the Plan.
This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option.
IN WITNESS WHEREOF, the Company has caused this option to be executed under its corporate seal by its duly authorized officer. This option shall take effect as a sealed instrument.
ALNYLAM PHARMACEUTICALS, INC.
Dated: _________ By: ____________________________________
Name: _____________________________
Title: ____________________________
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PARTICIPANT'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company's 2004 Stock Incentive Plan.
PARTICIPANT:
Address: _________________________
EXHIBIT 10.6
AMENDMENT NO. 01
Dated August 2, 2004
TO
that certain Loan and Security Agreement No. 3861 dated as of March 26, 2004
("Loan Agreement") by and between LIGHTHOUSE CAPITAL PARTNERS V, L.P.
("Lender") and ALNYLAM PHARMACEUTICALS, INC., ("Borrower").
(All capitalized terms not otherwise defined herein shall have the meanings given to such terms in the Loan Agreement.)
Without limiting or amending any other provisions of the Loan Agreement, Lender and Borrower agree to the following:
SECTION 1.1 - The definition of "Basic Rate" shall be deleted and replaced with the following:
"Basic Rate" means a per annum rate of interest (based on a year of three hundred and sixty (360) days and actual days elapsed) equal to the Prime Rate as quoted in the western edition of The Wall Street Journal plus 300 basis points.
SECTION 2.3(b) - This section shall be deleted and replaced with the following:
LOAN INTEREST RATE. Borrower shall pay interest on each Loan from the Funding Date until such Loan has been paid in full, at a per annum rate of interest equal to the Basic Rate. The Basic Rate applicable to each Loan shall be initially determined on the Funding Date and will thereafter be recalculated (if necessary) on the first day of each month during the Interim Payment period. On the Loan Commencement Date, the Basic rate applicable to each Loan shall be fixed and shall not be subject to change in the absence of a manifest error. All computations of interest on each Loan shall be based on a year of three hundred and sixty (360) days for actual days elapsed. Notwithstanding any other provision hereof, the amount of interest payable hereunder shall not in any event exceed the maximum amount permitted by the law applicable to interest charged on commercial loans.
SECTION 11 - The addresses for notices to the Borrower shall be deleted and replaced with the following:
If to Borrower: Alnylam Pharmaceuticals, Inc.
300 Third Street
Cambridge, MA 02142
Attention: Chief Financial Officer
FAX: (617) 551-8101
With a copy to: Faber Daeufer & Rosenberg PC
One Broadway, 14th Floor
Cambridge, MA 02142
Attention: Joseph L. Faber
FAX: (617) 507-5858
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Except as amended hereby, the Loan Agreement shall remain unmodified and unchanged.
BORROWER: LENDER:
ALNYLAM PHARMACEUTICALS, INC. LIGHTHOUSE CAPITAL PARTNERS V, L.P.
By: /s/ David Neafus By: LIGHTHOUSE MANAGEMENT
---------------------------------- PARTNERS V, L.L.C., its general
partner
Name: David Neafus
Title: Interim Vice President, Finance By: /s/ Thomas Conneely
----------------------------------
Name: Thomas Conneely
Title: Vice President
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EXHIBIT 10.8
AGREEMENT
(THE "REQUIREMENT AMENDMENT")
between
GARCHING INNOVATION GMBH MUNICH, GERMANY
("GI")
and
ALNYLAM PHARMACEUTICALS, INC., CAMBRIDGE, USA (FORMERLY KNOWN AS ALNYLAM HOLDING
CO., INC.)
("Alnylam Pharma")
and
ALNYLAM US, INC., CAMBRIDGE, USA (FORMERLY KNOWN AS ALNYLAM PHARMACEUTICALS,
INC.)
("Alnylam US")
and
ALNYLAM EUROPE AG, KULMBACH, GERMANY (FORMERLY KNOWN AS RIBOPHARMA AG)
("Alnylam Germany")
(GI, Alnylam Pharma, Alnylam US and Alnylam Germany are hereinafter referred to as the "Parties")
- 2
PREAMBLE
WHEREAS, Alnylam US and GI are parties to the Alnylam Co-Exclusive License Agreement dated as of December 20, 2002 (the "Alnylam License Agreement"), pursuant to which Alnylam US received one of two proposed co-exclusive licenses from GI to the patents described therein;
WHEREAS, Max Planck Gesellschaft zur Foerderung der Wissenschaften e.V. ("MPG"), co-owner of the patents licensed under the Alnylam License Agreement (and only MPG but none of the other co-owners of the licensed patents), established the requirement to develop and commercialize the licensed patents also in Germany, due to the fact that Tom Tuschl, a main inventor of the licensed patents, made his inventions at a Max Planck Institute in Germany in the course of a project funded by the German government; MPG (and only MPG but none of the other co-owners of the licensed patents) requested from GI to negotiate and implement in the respective agreements a Comparability Requirement (as defined below) and a Split of Indications Requirement (as defined below);
WHEREAS, the Alnylam License Agreement provides for the grant of a second co-exclusive license to a European-based therapeutics company consisting of, among other things, a German company that must have comparable operational forces in terms of budget, employees, R&D and BD capacities as Alnylam US ("Europe RNAi") to be established by Alnylam US;
WHEREAS, Alnylam US and Alnylam Germany entered into a share exchange agreement dated as of July 3, 2003 (the "Share Exchange Agreement") pursuant to which both entities became wholly-owned subsidiaries of Alnylam Pharma;
WHEREAS, the equity ownership structure provided for under the Share Exchange Agreement did not comply with certain of the requirements set forth in Appendix C of the Alnylam License Agreement;
WHEREAS, under an Amendment to the Alnylam License Agreement dated as of July 2, 2003 (the "Garching Amendment"), GI agreed that Alnylam Germany qualifies as Europe RNAi as described in the Alnylam License Agreement, provided that, among other terms and conditions set forth in the Garching Amendment, for a period of 5 years after the effective date as defined in the Alnylam License Agreement (i) Alnylam Pharma is required to use reasonable commercial efforts to build for Alnylam Germany capabilities to develop, make, use, sell or import license products comparable to Alnylam US and (ii) Alnylam Germany must have comparable operational forces in Germany in terms of budget, employees, research and development and business development capabilities as Alnylam US (conditions (i) and (ii) above are hereinafter jointly referred to as the "Comparability Requirement");
Requirement Amendment
Execution Copy
WHEREAS, GI and Alnylam Germany are parties to a Ribopharma Co-Exclusive License Agreement dated as of July 30, 2003 (the "Ribopharma License Agreement") pursuant to which GI granted a second co-exclusive license to Alnylam Germany (formerly known as Ribopharma AG);
WHEREAS, under Section 2.3 of each the Alnylam License Agreement and the Ribopharma License Agreement, Alnylam US, Alnylam Germany and GI have undertaken to mutually agree on a reasonable and equal split of indications and sub-indications according to the estimated market size and accessibility by RNAi within the field between Alnylam US and Alnylam Germany (hereinafter referred to as the "Split of Indications Requirement");
WHEREAS, Alnylam US and Alnylam Germany issued to GI a confidential report dated as of January 10, 2005, pursuant to which Alnylam US and Alnylam Germany asserted their compliance with the Comparability Requirement and the Split of Indications Requirement;
WHEREAS, on January 20, 2005 GI issued to Alnylam US and Alnylam Germany a
deficiency notice regarding the Comparability Requirement, according to Section
C) 5.c) of the Garching Amendment (the "Deficiency Notice"), and an
insufficiency notice regarding the Split of Indications Requirement according to
Section 2.3 of the Alnylam License Agreement and Section 2.3 of the Ribopharma
License Agreement (the "Insufficiency Notice"); and
WHEREAS, without prejudice to, and/or acknowledging any default under, any of the contractual obligations described above, the Parties engaged into further discussions intended to reach amicable agreement with respect to the matters cited below and to settle any controversy arising out of the Comparability Requirement and the Split of Indications Requirement;
NOW THEREFORE, the Parties agree with respect to the foregoing as follows:
1. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that with respect
to the scope, content, reporting, failure, cure and termination procedure,
and any other terms and conditions (including without limitation Sections
A) 1., A) 3. d), and C) 5. a) through c) of the Garching Amendment) in
connection with the Comparability Requirement set forth in the Alnylam
License Agreement, the Garching Amendment and the Ribopharma License
Agreement as well as the requirements set out in Sec. 10.2 of the Share
Exchange Agreement (collectively, the "Comparability Requirement Terms and
Conditions"), the Comparability Requirement Terms and Conditions shall be
amended as follows (the amended Comparability Requirement Terms and
Conditions set forth in (i) through (vi) below collectively the "Amended
Comparability Requirement Terms and Conditions"):
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(i) For a period until December 20, 2007 (the "Period"), Alnylam Pharma (or any successor or assignee of Alnylam Pharma) is obliged to maintain Alnylam Germany as an operating company in Germany with at least a number of employees collectively equal to 25 full-time equivalent employees ("FTEs") (such number may include the management of Alnylam Germany and incoming employees who have signed their employment contracts with Alnylam Germany but have not yet commenced their employment) having their legal and habitual residence in Germany and working at least 75% of their working time in Germany, and
(ii) Alnylam Pharma (or any successor or assignee of Alnylam Pharma) shall ensure for the Period that 10 of the 25 FTEs as defined under (i) above are scientists with at least a doctoral-level degree, and a further 4 of these 25 FTEs are diploma scientists ("Academic Quota"), unless the Parties have agreed on a different Academic Quota, it being understood that Alnylam Pharma may propose - at any time - adjustments to the Academic Quota subject to GI's approval, which approval shall not be unreasonably withheld by GI, provided that Alnylam Pharma has given sufficient reasons for its proposed adjustments.
(iii) Alnylam Pharma (or any successor or assignee of Alnylam Pharma)
shall provide GI, within 30 days after the end of each calendar quarter,
with calendar quarterly reports (the "Reports") showing in sufficient
detail how Alnylam Pharma has fulfilled during the immediately preceding
calendar quarter and intends to fulfil in the calendar quarter in which
the respective Report is submitted, its obligations set forth in (i) and
(ii) above; the first Report shall be delivered to GI for the first
calendar quarter 2005, and
(iv) In the event GI informs Alnylam Pharma in writing, within 30 (thirty) days after receipt of the respective Report, that Alnylam Pharma failed to comply with one or more of its obligations set forth in (i) and (ii) above (the "Failure Notice"), and Alnylam Pharma fails to cure that breach within 90 days after receiving the Failure Notice or, if such breach is the result of one or more employees leaving their employment with Alnylam Germany, within 180 days after the final date of employment of such employee, whichever period is longer ("Grace Period"), GI shall have the extraordinary right, but subject to the procedure set forth in clause 1(v) below, to terminate the Ribopharma License Agreement in writing with 30 days prior notice to Alnylam Pharma. In the event of such termination, Sections 11.7, 11.8 and 12.3 of the Ribopharma License Agreement shall not apply, and such termination of the Ribopharma License Agreement shall be GI's sole remedy under any or all of this Requirement Amendment, the Ribopharma License Agreement, the Alnylam License Agreement and the Garching Amendment for failure by Alnylam Pharma (or any successor or Assignee of Alnylam Pharma) to comply with the obligations set forth in 1(i) and 1(ii) above.
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(v) Within 30 days after the end of the Grace Period, Alnylam Pharma may provide written notice to GI in sufficient detail to demonstrate that the Amended Comparability Requirement Terms and Conditions were fulfilled within the Grace Period, or, despite diligent efforts to fulfill them, were not fulfilled within the Grace Period for reasons outside the reasonable control of Alnylam Pharma, e.g. because it has not been possible within such Grace Period to recruit an appropriate individual for a vacant position. In the event that, after giving reasonable consideration to such written notice from Alnylam, GI does not agree that Alnylam Pharma has fulfilled, or used diligent efforts to fulfill, the Amended Comparability Requirement Terms and Conditions within the Grace Period, GI shall have the right to seek termination of the Ribopharma License Agreement by initiating arbitration in accordance with Section 12.3 of the Ribopharma License Agreement, with the following modifications:
(a) the only matter on which the arbitrators will be asked to rule is whether Alnylam Pharma has met, or has used diligent efforts to meet, the Amended Comparability Requirement Terms and Conditions;
(b) if the arbitrators rule that Alnylam Pharma has met, or has used diligent efforts to meet, the Amended Comparability Requirement Terms and Conditions, GI shall not have the right to terminate the Ribopharma License Agreement and shall bear all costs of the arbitration; and
(c) if the arbitrators rule that Alnylam Pharma has not met, or has not used diligent efforts to meet, the Amended Comparability Requirement Terms and Conditions, GI shall have the right to terminate the Ribopharma License Agreement immediately, and Alnylam Pharma shall bear all costs of the arbitration.
(vi) GI shall herewith waive and Alnylam Pharma, Alnylam US and Alnylam Germany shall herewith accept such waiver of any and all rights including but not limited to any right of GI to terminate the Alnylam License Agreement and/or the Ribopharma License Agreement based on an asserted default under the Comparability Requirement Terms and Conditions.
2. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that with respect to the Split of Indications Requirement set forth in the Alnylam License Agreement and the Ribopharma License Agreement (i) Alnylam US and Alnylam Germany shall be fully and irrevocably released from the Split of Indications Requirement and all and any pending, threatened or asserted claims arising out of any asserted default under the Split of Indications Requirement, and (ii) GI shall herewith waive and Alnylam Pharma, Alnylam US and Alnylam Germany shall herewith accept such waiver of any and all rights including but not limited to any
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right of GI to terminate the Alnylam License Agreement and/or the Ribopharma License Agreement based on an asserted default under the Split of Indications Requirement.
3. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that in each of
the Alnylam License Agreement and the Ribopharma License Agreement,
Section 4.2 shall be amended to read as follows:
"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 year, with COMPANY's standard R&D report, on the progress of its efforts during the immediately preceding calendar year 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 year in which the report is submitted."
4. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that in each of the Alnylam License Agreement and the Ribopharma License Agreement, the final paragraph of Section 4.3 shall be amended to read as follows:
"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 (in either case, a "Sublicensing
Deficiency"), GI may provide COMPANY with notice in writing
("Sublicensing Deficiency Notice") of such decision. Within thirty
(30) days of receiving such Sublicensing Deficiency Notice, COMPANY
shall provide GI within a written reply proposing a plan to correct
such Sublicensing Deficiency, and/or explaining COMPANY's reasonable
belief that no such Sublicensing Deficiency exists. If COMPANY does
not provide a written reply to GI within thirty (30) days after
receiving such Sublicensing Deficiency Notice, or if after giving
such reply due consideration, including discussing such reply with
COMPANY, GI reasonably concludes that such Sublicensing Deficiency
does exist and/or that COMPANY's proposed corrective plan is
inadequate, 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."
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5. In consideration for the agreements of GI set out in paragraphs 1 through 4 above, Alnylam Pharma shall issue and transfer, within 30 days after the Amendment Execution Date, a total of 270,000 (two hundred seventy thousand) fully-paid shares of Alnylam Pharma Common Stock, such shares to be free of any restrictions on transfer other than any restrictions required under applicable U.S. securities laws (the "Compensation Shares"). The Compensation Shares shall be distributed in accordance with written instructions (the "Distribution Instructions") to be provided by GI to Alnylam Pharma within 5 days after the Amendment Execution Date, instructing Alnylam Pharma to issue and transfer such Compensation Shares either
(i) in total to MPG, in which case it shall be GI's sole and exclusive responsibility to split the Compensation Shares and to cause MPG to assign and transfer any part of the Compensation Shares to any of the Massachusetts Institute of Technology ("MIT") and/or the Whitehead Institute ("WI") (MIT, WI and MPG collectively the "Approving Owners" as defined in the Ribopharma License Agreement). In such case, however, Alnylam Pharma shall diligently assist and support MPG in connection with any further assignment and transfer of any portion of the Compensation Shares; in particular, Alnylam Pharma shall, and, as necessary or useful, shall instruct its respective consultants or agents (e.g., EquiServe Trust) to, execute any documents or take any other action required under applicable U.S. securities law in order to implement any further assignment and transfer of any portion of the Compensation Shares in the most expeditious manner;
or
(ii) in portions to the Approving Owners in accordance with a share distribution scheme set forth by GI in the Distribution Instructions.
The Distribution Instructions shall also include written confirmation from each Approving Owner that it approves this Requirement Amendment.
MPG (or any of its successors or assignees) and the Approving Owners shall be and remain the owner of the Compensation Shares, including without limitation in the event that this Requirement Amendment or any of the Alnylam License Agreement, the Garching Amendment or the Ribopharma License Agreement is terminated.
6. GI shall represent and warrant that it has the right and authority to enter into this Requirement Amendment and that such Requirement Agreement, in particular the Amended Comparability Requirement Terms and Conditions and the release from the Split of Indications Requirements as agreed in this Requirement Amendment, does not conflict with any rights and claims of third parties, in particular of the
Requirement Amendment
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Approving Owners. GI shall defend, indemnify and hold harmless Alnylam Pharma, Alnylam US and Alnylam Germany, as well as its directors and officers against any claims of third parties, in particular the Approving Owners, irrespective on what basis, against Alnylam Pharma, Alnylam US and/or Alnylam Germany because of this Requirement Amendment or any of the Amended Comparability Requirement Terms and Conditions or the release from the Split of Indications Requirement as agreed in this Requirement Amendment.
7. This Requirement Amendment shall come into effect on June 15, 2005 (the "Amendment Execution Date") and shall remain in effect for the term of the Alnylam License Agreement and the Ribopharma License Agreement. Until the Amendment Execution Date, GI herewith agreed to suspend the Deficiency Notice and the Insufficiency Notice.
8. This Requirement Amendment shall be governed by and construed in accordance with the laws of Federal Republic of Germany. Any controversy arising out of or in connection with this Requirement Amendment shall be subject to arbitration under the procedural Rules of the International Chamber of Commerce. The arbitration tribunal shall be appointed as follows: GI, on the one hand, and collectively Alnylam Pharma, Alnylam US and Alnylam Germany, on the other hand, shall each select, within 30 (thirty) days after receipt of notice that arbitration is initiated, an independent and experienced third party as arbitrator. Such two selected arbitrators shall mutually select an independent and experienced third party as third arbitrator. The venue for such arbitration procedure shall be Munich, Germany, the language shall be English. The award of the arbitration shall be final and binding for the parties. Notwithstanding the foregoing, each party may apply for interlocutory relief in court.
9. This Requirement Amendment may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same instrument.
In witness thereof the parties have caused this agreement to be executed by their duly authorized representatives.
Garching Innovation GmbH
By: /s/ Dr. Bernhard Hertel
-------------------------------------
Name: Dr. Bernhard Hertel
Title: Geschaftsfuhrer/Managing Director
Date: June 14, 2005
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Requirement Amendment
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Alnylam Pharmaceuticals, Inc.
By: /s/ Barry Greene
----------------------------
Name: Barry Greene
Title: Chief Operating Officer
Date: June 7, 2005
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Alnylam US, Inc.
By: /s/ Vincent J. Miles
----------------------------
Name: Vincent J. Miles
Title: Sr. Vice President Business Development
Date: June 7, 2005
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Alnylam Europe AG
By: /s/ Roland Kreutzer
------------------------------
Name: Roland Kreutzer
Title: Managing Director
Date: June 13, 2005
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Alnylam Europe AG
By: /s/ Andreas Bossko
-----------------------
Name: Andreas Bossko
Title: Vice President, Finance
Date: June 13, 2005
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Requirement Amendment
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EXHIBIT 31.1
CERTIFICATION
I, John M. Maraganore, Ph.D., certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of Alnylam Pharmaceuticals, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC Release 34-47986]
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 11, 2005 /s/ John M. Maraganore, Ph.D.
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John M. Maraganore, Ph.D.
President and Chief Executive Officer
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EXHIBIT 31.2
CERTIFICATION
I, Barry E. Greene, certify that:
1) I have reviewed this Quarterly Report on Form 10-Q of Alnylam Pharmaceuticals, Inc.;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC Release 34-47986]
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: August 11, 2005 /s/ Barry E. Greene
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Barry E. Greene
Chief Operating Officer and Treasurer
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Alnylam Pharmaceuticals, Inc. (the "Company") for the fiscal quarter ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, John M. Maraganore, Ph.D., President and Chief Executive Officer of the Company, hereby certifies, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 11, 2005 /s/ John M. Maraganore, Ph.D.
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John M. Maraganore, Ph.D.
President and Chief Executive Officer
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EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Alnylam Pharmaceuticals, Inc. (the "Company") for the fiscal quarter ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Barry E. Greene, Chief Operating Officer and Treasurer of the Company, hereby certifies, pursuant to Section 1350 of Chapter 63 of Title 18, United States Code, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: August 11, 2005 /s/ Barry E. Greene
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Barry E. Greene
Chief Operating Officer and Treasurer
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