Exhibit 10.1
(ALNYLAM LOGO) [b77436b7743600.gif]
July 30, 2009
Revised August 4, 2009
Further Revised August 12, 2009
Further Revised August 16, 2009
John A. Schmidt, MD
19 Fairway Drive
Green Brook, NJ 08812
Dear Jack:
     This letter agreement sets forth the terms of the termination of your
employment based upon your decision to resign your position with Alnylam
Pharmaceuticals, Inc. (the “Company”). This letter agreement also summarizes the
terms of the separation package that the Company is willing to offer you. Please
read this letter agreement, which includes a general release, carefully. If you
are willing to agree to its terms, please sign in the space provided below and
return it to me within the designated time period.
     1. By signing this letter, you confirm your intent to resign your position
as Chief Scientific Officer effective as of September 30, 2009 (“the Separation
Date”). You will be paid for time worked through the Separation Date at your
current gross bi-weekly rate of pay pursuant to the Company’s regular payroll
practices. You will also be paid for any unused and accrued vacation time (if
any) as of the Separation Date, less lawful deductions. During the period
August 10, 2009 through September 30, 2009, you will work from your home and
will use your best efforts to perform tasks that may be assigned to you from
time to time by John Maraganore, Chief Executive Officer, and otherwise keep
yourself available for consultation with the Company during regular business
hours. In the event you do not sign this letter agreement and confirm your
decision to resign effective September 30, 2009, your employment will terminate
as of August 21, 2009.

  a.   Under the terms and conditions of the Amended and Restated 2004 Stock
Incentive Plan, 25% of the stock options to purchase 200,000 shares of common
stock awarded to you on September 29, 2008 will vest and become exercisable as
of September 29, 2009. Pursuant to the terms of your stock option agreement(s),
you will have three months following the Separation Date to exercise such vested
stock options (the “Exercise Period”). Your right to exercise such stock options
will terminate on the last day of the Exercise Period, subject to your
compliance with the terms and conditions of your stock option agreement(s), and
any unexercised stock options will be immediately cancelled. Subject to
compliance with the federal securities laws relating to insider trading, there
is no restriction on the timing or manner of your sale of the underlying shares
of common stock acquired following the exercise of your vested stock options.

 

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  b.   Under the provisions of the Alnylam Pharmaceuticals, Inc. Savings and
Investment Plan, as amended, the Company matches, at its discretion, up to 50%
of the first 6% of your contributions to your account in the form of Company
common stock. The matching contributions are subject to a two-year vesting
schedule: 50% of the match vests after one year of employment and the remaining
50% vests after the second full year of employment.

     2. After the Separation Date, except as provided below, you will not be
entitled to receive any benefits paid by, or participate in any benefit programs
offered by the Company to its employees. You will receive, under separate cover,
information concerning your right to continue your health insurance benefits
after that date in accordance with COBRA and the American Recovery and
Reinvestment Act of 2009. You will not receive any monies under the Company’s
2009 Annual Incentive Program.
     3. In consideration for signing this letter agreement and general release
and in compliance with the promises made herein, and in the event you sign this
agreement and return it to me within time period set forth in the agreement and
do not revoke your acceptance pursuant to paragraph 9 below, the Company agrees
as follows:

  a.   Provided that you remain employed in good standing through the Separation
Date, the Company will pay you severance in the gross amount of two hundred
twelve thousand, five hundred dollars ($212,500), an amount equal to six
(6) months of your gross base salary. From that gross amount will be deducted
all appropriate tax and FICA withholdings. However, in order to be eligible for
the payment described in this subparagraph (a) you must sign a second General
Release, in the form attached as Exhibit 1, after your last day of employment
and not thereafter revoke that second General Release. You specifically agree
that you will not sign a General Release in the form attached as Exhibit 1 prior
to your last day of employment. Payment of the amounts described in this
subparagraph (a) will be made in twelve (12) semi-monthly installments beginning
in the first payroll cycle that is at least fifteen (15) business days after you
sign the second General Release in the form attached as Exhibit 1 and continuing
for eleven (11) subsequent semi-monthly periods.     b.   You will not be
responsible for repayment of the $175,000.00 payment you received on or about
January 15, 2009. (You are not eligible for the additional payment of
$100,000.00 you would have received had you been employed on January 15, 2010.)
    c.   You will not be responsible for repayment of any relocation benefits
previously provided by the Company. The Company will reimburse you for the cost
of temporary local housing through August 31, 2009 and furniture rental through
August 18, 2009 under your existing leases. In addition, the Company will pay
the cost of any early termination penalty under your existing leases. The

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      Company will also pay you an additional amount to offset any income taxes
associated with these payments.     d.   The Company will pay the full cost of
your COBRA premiums until the earlier of (i) March 31, 2010 or (ii) the date you
become eligible for coverage under the group health plan of another employer;
provided that you properly elect to continue such coverage under COBRA.
Thereafter, you will be responsible for the full cost of COBRA coverage. You
agree to promptly notify the Company if you become eligible for coverage under
the group health plan of another employer prior to March 31, 2010.     e.   The
Company will pay for your use of outplacement services up to a maximum amount of
ten thousand dollars ($10,000). The provider of the outplacement services
selected by you shall submit invoice(s) for services directly to the Company,
and payments made by the Company for your outplacement services shall not be
attributable to you by the Company as income. The Company can assist you in
identifying an outplacement service provider.

     4. You understand and agree that you would not receive the monies and/or
benefits specified in Paragraph No. 3 above, except for your execution of this
letter agreement and general release and the fulfillment of the promises
contained therein.
     5. In consideration of the payments to be made by the Company to you as set
forth in Paragraph No. 3 above and the promises contained in this letter
agreement and general release, you voluntarily, and of your own free will,
release, forever discharge and hold harmless Alnylam Pharmaceuticals, Inc., its
parent corporation, affiliates, subsidiaries, divisions, predecessors, insurers,
successors and assigns, and their current and former employees, attorneys,
officers, directors and agents thereof, both individually and in their business
capacities, and their employee benefit plans and programs and their
administrators and fiduciaries (collectively referred to throughout the
remainder of this Agreement as “Releasees”) of and from any and all claims,
demands, rules or regulations, or any other causes of action of whatever nature,
whether known or unknown, which the you have or may have against Releasees as of
the date you sign this letter agreement including, but not limited to, The
National Labor Relations Act, as amended; Title VII of the Civil Rights Act of
1964, as amended; Sections 1981 through 1988 of Title 42 of the United States
Code, as amended; the Age Discrimination in Employment Act of 1967, as amended;
the Older Workers Benefit Protection Act; the Immigration Reform Control Act, as
amended; the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001,
et seq.; the Occupational Safety and Health Act, as amended; the Civil Rights
Act of 1866, 29 U.S.C. § 1981, et seq; the Rehabilitation Act of 1973, 29 U.S.C.
§ 701, et seq.; the Americans With Disabilities Act of 1990, as amended; the
Family and Medical Leave Act; the Civil Rights Act of 1991; the Massachusetts
Law Against Discrimination, G.L. c. 151B; the Massachusetts Wage and Hour Laws,
G.L. c. 151; the Massachusetts Privacy Statute, G.L. c. 214, § 1B; the
Massachusetts Wage Payment Statute, G.L. c. 149, § 148 et seq.; the
Massachusetts Sexual Harassment Statute, G.L. c. 214 § 1C; the Massachusetts
Civil Rights Act, G.L. c. 12, § 11H, the Massachusetts Equal Rights Act, G.L. c.
93, § 102; or any other federal or state law, regulation, or ordinance; any
public policy, contract, tort, or common law; or any

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allegation for costs, fees, or other expenses including attorneys’ fees incurred
in these matters. You agree that neither this letter agreement and general
release, nor the furnishing of consideration for this letter agreement and
general release, shall be deemed or construed at anytime for any purpose as an
admission by the Company of any liability or unlawful conduct of any kind.
     6. You agree not to disclose to anyone, either directly or indirectly, any
information whatsoever regarding the existence or substance of this letter
agreement and general release, except your immediate family, attorneys,
financial advisors, accountants, and tax preparation professionals, provided
that they agree to keep such information strictly confidential. This includes,
but is not limited to, present or former employees of the Company and other
members of the public. You further agree not to make or publish any written or
oral disparaging or defamatory statements regarding the Company (including,
without limitation, its research and product development), and its current and
former employees, officers, directors and agents. Violation of this paragraph
shall be deemed a material breach of this agreement.
     7. You hereby acknowledge and reaffirm the validity of the Employee
Nondisclosure, Noncompetition and Assignment of Intellectual Property Agreement
between you and the Company, the terms and conditions of which are incorporated
herein by reference and remain in full force and effect for the full term stated
therein and which survives the Separation Date. Notwithstanding the foregoing,
in consideration of your fulfillment of the promises contained herein and the
continued compliance with your obligations hereunder, the Company hereby agrees
to limit the scope of Paragraph 6 of such Employee Nondisclosure, Noncompetition
and Assignment of Intellectual Property Agreement as follows: “participate,
directly or indirectly, in any capacity, in any business involving the
modulation of gene expression using RNA and RNA analogs” or any “other business
of developing, designing, producing, marketing, selling or rendering (or
assisting any other person in developing, designing, producing, marketing,
selling or rendering) products or services competitive with those being
developed, designed, produced, marketed, sold or rendered by the Company” shall
be understood to cover only your employment, working directly with or for, any
direct competitors of the Company (which shall include, in each case in the form
established and subsisting as of the date of this Agreement, Sirna Therapeutics,
Inc., a subsidiary of Merck & Co., Inc., the RNAi division of Pfizer Inc./Wyeth,
RXi Pharmaceuticals Corporation, Silence Therapeutics plc, MDRNA, Inc., Dicerna
Pharmaceuticals, Inc. and AiRNA Pharmaceuticals, Inc.), and any affiliate of the
preceeding companies engaged in a similar business. You understand that the
Company would not provide you with the benefits under this letter agreement but
for your reaffirmation of your obligations under the Employee Nondisclosure,
Noncompetition and Assignment of Intellectual Property Agreement, as modified
herein. You further understand and agree that your obligations under this
paragraph are material terms of this agreement, and that the Company shall have
the right, in addition to any other damages, to discontinue the salary
continuation payments and seek and obtain the return of the consideration
already paid hereunder (without impacting the validity or enforceability of the
general release contained herein) in the event you breach any of your
obligations under this paragraph. By signing this Agreement, you affirm that you
have not divulged any proprietary or confidential information of the Company and
will continue to maintain the confidentiality of such information consistent
with the Company’s policies and your Employee Nondisclosure, Noncompetition and
Assignment of Intellectual Property Agreement.

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     8. You will be afforded a period of up to (21) twenty-one days to consider
the meaning and effect of this letter agreement and general release. You are
advised to consult with an attorney and you acknowledge that you have had the
opportunity to do so. You agree that any modifications, material or otherwise,
do not restart or affect in any manner the original 21-day consideration period
for the separation proposal made to you.
     9. You may revoke this letter agreement and general release for a period of
seven (7) days following the day you execute this letter agreement and general
release. Any revocation within this period must be submitted, in writing, to
Eric Raichle, Vice President of Human Resources and state, “I hereby revoke my
acceptance of the letter agreement and general release.” The revocation must be
personally delivered to Eric Raichle, Vice President of Human Resources, Alnylam
Pharmaceuticals, Inc., 300 Third Street, Cambridge, MA 02142, or postmarked
within seven (7) days of execution of this letter agreement and general release.
This letter agreement and general release shall not become effective or
enforceable until the revocation period has expired. If the last day of the
revocation period is a Saturday, Sunday, or legal holiday in Massachusetts, then
the revocation period shall not expire until the next following day which is not
a Saturday, Sunday, or legal holiday.
     10. This letter agreement and general release, which will be construed
under Massachusetts law, may not be modified, altered, or changed except upon
express written consent of both parties wherein specific reference is made to
this letter agreement and general release.
     11. Nothing herein limits your right, where applicable, to file or
participate in an investigative proceeding of any federal, state or local
governmental agency, provided however, that by signing this Agreement, you waive
the right to seek or receive any money damages based upon any claim that might
be asserted arising out of your employment at the Company. You further affirm
that you have been paid and have received all leave (paid or unpaid),
compensation, wages, bonuses, commissions, and/or benefits to which you may be
entitled and that no other leave (paid or unpaid), compensation, wages, bonuses,
commissions and/or benefits are due to you, except as provided in this letter
agreement. You furthermore affirm that you have no known workplace injuries or
occupational diseases and have been provided and/or have not been denied any
leave requested under the Family and Medical Leave Act. You also affirm that you
have not been retaliated against for reporting any allegations of wrongdoing by
the Company or its officers, including any allegations of corporate fraud.
     12. You agree to timely complete any questionnaire and provide any other
information requested by the Company that is required to be disclosed as part of
its corporate reporting obligations, which request may come after the expiration
of the salary continuation period.
     13. This letter agreement, which includes a general release, represents the
complete agreement between you and the Company, and fully supersedes any prior
agreements or understandings between the parties (including, without limitation,
your offer letter dated September 5, 2008), other than your Employee
Nondisclosure, Noncompetition and Assignment of Intellectual Property Agreement
as set forth and referred to in paragraph 7, as so modified by paragraph 7. You
acknowledge that you have not relied on any representations, promises, or
agreements of any kind

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made to you in connection with your decision to sign this letter agreement and
general release, except those set forth herein.
The Company would like to extend its appreciation to you for your past service,
and its sincere hope for success in your future endeavors.

            Very truly yours,
      /s/ Eric Raichle       Eric Raichle      Vice President, Human Resources 
   

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ACKNOWLEDGMENT AND AGREEMENT
I acknowledge and agree that I have been advised in writing that I have a period
of up to 21 calendar days to consider this letter agreement and general release
and to consult with an attorney prior to signing this letter agreement and
general release.
Having elected to execute this letter agreement and general release, to fulfill
the promises set forth herein, and to receive thereby the sums and benefits set
forth in Paragraph No. 3 above, I freely and knowingly, and after due
consideration, enter into this letter agreement and general release intending to
waive, settle, and release all claims I have or might have against the Company
and Releasees.

                Date: August 21, 2009  /s/ John A. Schmidt, MD       John A.
Schmidt, MD           

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EXHIBIT 1
GENERAL RELEASE
     In consideration for the promises made to John A. Schmidt, MD by Alnylam
Pharmaceuticals (“the Company”) in a letter agreement and general release signed
by the Company on July 30, 2009, including but not limited to the promise in
that letter agreement and general release to pay to Dr. Schmidt the gross amount
of two hundred twelve thousand, five hundred ($212,500), an amount equal to six
(6) months of Dr. Schmidt’s gross base salary and the full cost of any COBRA
premiums for the period October 1, 2009 to March 31, 2010, unless eligible for
group health insurance coverage through another employer prior to March 31, 2010
(and provided that Dr. Schmidt does not revoke this General Release), John A.
Schmidt, MD agrees that by signing this General Release, he voluntarily and of
his own free will releases, forever discharges and holds harmless Alnylam
Pharmaceuticals, Inc., its parent corporation, affiliates, subsidiaries,
divisions, predecessors, insurers, successors and assigns, and their current and
former employees, attorneys, officers, directors and agents thereof, both
individually and in their business capacities, and their employee benefit plans
and programs and their administrators and fiduciaries (collectively referred to
throughout the remainder of this Agreement as “Releasees”) of and from any and
all claims, demands, rules or regulations, or any other causes of action of
whatever nature, whether known or unknown, which the you have or may have
against Releasees as of the date you sign this letter agreement including, but
not limited to, The National Labor Relations Act, as amended; Title VII of the
Civil Rights Act of 1964, as amended; Sections 1981 through 1988 of Title 42 of
the United States Code, as amended; the Age Discrimination in Employment Act of
1967, as amended; the Older Workers Benefit Protection Act; the Immigration
Reform Control Act, as amended; the Employee Retirement Income Security Act of
1974, 29 U.S.C. § 1001, et seq.; the Occupational Safety and Health Act, as
amended; the Civil Rights Act of 1866, 29 U.S.C. § 1981, et seq; the
Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq.; the Americans With
Disabilities Act of 1990, as amended; the Family and Medical Leave Act; the
Civil Rights Act of 1991; the Massachusetts Law Against Discrimination, G.L. c.
151B; the Massachusetts Wage and Hour Laws, G.L. c. 151; the Massachusetts
Privacy Statute, G.L. c. 214, § 1B; the Massachusetts Wage Payment Statute, G.L.
c. 149, § 148 et seq.; the Massachusetts Sexual Harassment Statute, G.L. c. 214
§ 1C; the Massachusetts Civil Rights Act, G.L. c. 12, § 11H, the Massachusetts
Equal Rights Act, G.L. c. 93, § 102; The New Jersey Law Against Discrimination;
The New Jersey Civil Rights Act; The New Jersey Family Leave Act; The New Jersey
State Wage and Hour Law; The New Jersey Conscientious Employee Protection Act;
The New Jersey Equal Pay Law; The New Jersey Occupational Safety and Health Law;
The New Jersey Smokers’ Rights Law; The New Jersey Genetic Privacy Act; The New
Jersey Fair Credit Reporting Act; The New Jersey Statutory Provision Regarding
Retaliation/Discrimination for Filing A Workers’ Compensation Claim; The New
Jersey Public Employees’ Occupational Safety and Health Act; New Jersey laws
regarding Political Activities of Employees, Lie Detector Tests, Jury Duty,
Employment Protection, and Discrimination. or any other federal or state law,
regulation, or ordinance; any public policy, contract, tort, or common law; or
any allegation for costs, fees, or other expenses including attorneys’ fees
incurred in these matters.

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     By signing this General Release, Dr. Schmidt affirms that he has not filed,
caused to be filed, or presently is a party to any claim against any of the
Releasees. Dr. Schmidt also affirms that he has been paid and/or has received
all compensation, wages, bonuses, commissions, and/or benefits to which he may
be entitled. Dr. Schmidt affirms that he has been granted any leave to which he
was entitled under the Family and Medical Leave Act or related state or local
leave or disability accommodation laws, and that he has no known workplace
injuries or occupational diseases.
     By signing this Agreement, Dr. Schmidt affirms that he has not divulged any
proprietary or confidential information of the Company and will continue to
maintain the confidentiality of such information consistent with the Company’s
policies and his Employee Nondisclosure, Noncompetition and Assignment of
Intellectual Property Agreement.
     Dr. Schmidt further affirms that he has not been retaliated against for
reporting any allegations of wrongdoing by the Company or its officers,
including any allegations of corporate fraud. Both Parties acknowledge that this
Agreement does not limit either party’s right, where applicable, to file or
participate in an investigative proceeding of any federal, state or local
governmental agency. To the extent permitted by law, Dr. Schmidt agrees that if
such an administrative claim is made, he shall not be entitled to recover any
individual monetary relief or other individual remedies. Dr. Schmidt also
affirms that he is in possession of all of his property that he had at the
Company’s premises and that the Company is not in possession of any of
Dr. Schmidt’s property.
     Dr. Schmidt will be afforded a period of up to (21) twenty-one days to
consider the meaning and effect of this General Release. Dr. Schmidt is advised
to consult with an attorney before signing this General Release and he
acknowledges that he has had the opportunity to do so. Dr. Schmidt agrees that
any modifications, material or otherwise, do not restart or affect in any manner
the original 21-day consideration period for the separation proposal made to
Dr. Schmidt. Dr. Schmidt may revoke this General Release for a period of seven
(7) days following the day he signs it. Any revocation within this period must
be submitted, in writing, to Eric Raichle, Vice President of Human Resources and
state, “I hereby revoke my acceptance of the letter agreement and general
release.” The revocation must be personally delivered to Eric Raichle, Vice
President of Human Resources, Alnylam Pharmaceuticals, Inc., 300 Third Street,
Cambridge, MA 02142, or postmarked within seven (7) days of execution of this
letter agreement and general release. This General Release shall not become
effective or enforceable until the revocation period has expired. If the last
day of the revocation period is a Saturday, Sunday, or legal holiday in
Massachusetts, then the revocation period shall not expire until the next
following day which is not a Saturday, Sunday,

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or legal holiday. Dr. Schmidt is also advised that he should not sign this
General Release until after September 30, 2009 unless his employment ends
involuntarily prior to that date and an authorized representative of the Company
notifies him in writing that he may do so.

          ACKNOWLEDGED AND AGREED TO:
    /s/ John A. Schmidt, MD       John A. Schmidt, MD        Date: October 1,
2009        Alnylam Pharmaceuticals, Inc.
      By:   /s/ Eric Raichle                 Date: October 5, 2009     

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