EXHIBIT 10.1

 

EXECUTION COPY

 

 

CONFIDENTIAL TREATMENT

 

 

LICENSE AND COLLABORATION AGREEMENT

 

BY AND BETWEEN

 

 

ALNYLAM PHARMACEUTICALS, INC.

 

AND

 

CUBIST PHARMACEUTICALS, INC.

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Securities and Exchange Commission (the “Commission”).

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

ARTICLE I DEFINITIONS

1

 

 

 

Section 1.1

“Action”

1

 

Section 1.2

“Affiliate”

1

 

Section 1.3

“Alnylam Collaboration IP”

2

 

Section 1.4

“Alnylam In-License”

2

 

Section 1.5

“Alnylam Know-How”

2

 

Section 1.6

“Alnylam Patent Rights”

2

 

Section 1.7

“Alnylam Sequence Specific Patent Rights”

2

 

Section 1.8

“Alnylam Sequence Specific Know-How”

2

 

Section 1.9

“Alnylam Technology”

3

 

Section 1.10

“API Bulk Drug Substance”

3

 

Section 1.11

“Asia”

3

 

Section 1.12

“Asian Partner”

3

 

Section 1.13

“Business Day”

3

 

Section 1.14

“Calendar Quarter”

3

 

Section 1.15

“Calendar Year”

3

 

Section 1.16

“Clinical Investigation Laws”

3

 

Section 1.17

“Clinical Regulatory Filings”

3

 

Section 1.18

“Clinical Study”

4

 

Section 1.19

“CMC”

4

 

Section 1.20

“Collaboration”

4

 

Section 1.21

“Commercialization” or “Commercialize”

4

 

Section 1.22

“Commercialization Costs”

4

 

Section 1.23

“Confidential Information”

5

 

Section 1.24

“Control” or “Controlled”

5

 

Section 1.25

“Cost of Goods Sold”

5

 

Section 1.26

“Cover,” “Covering” or “Covered”

6

 

Section 1.27

“CPI”

6

 

Section 1.28

“Cubist Collaboration IP”

6

 

Section 1.29

“Cubist In-License”

6

 

Section 1.30

“Cubist Know-How”

6

 

Section 1.31

“Cubist Patent Rights”

6

 

Section 1.32

“Cubist Technology”

6

 

Section 1.33

“Development” or “Develop”

7

 

Section 1.34

“Development Costs”

7

 

Section 1.35

“Development Plan”

8

 

Section 1.36

“Diligent Efforts”

8

 

Section 1.37

“Directly Competitive Product”

8

 

Section 1.38

“Distribution Costs”

8

 

Section 1.39

“DMF”

8

 

Section 1.40

“Drug Regulation Laws”

8

 

Section 1.41

“EMEA”

9

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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TABLE OF CONTENTS

 

(continued)

 

 

 

Page

 

 

 

 

 

Section 1.42

“European Union” or “EU”

9

 

Section 1.43

“Executive Officers”

9

 

Section 1.44

“Existing Alnylam In-Licenses”

9

 

Section 1.45

“FDA”

9

 

Section 1.46

“Field”

9

 

Section 1.47

“Finished Product”

9

 

Section 1.48

“First Commercial Sale”

9

 

Section 1.49

“First Opt-Out Milestone”

9

 

Section 1.50

“FTE”

9

 

Section 1.51

“FTE Cost”

10

 

Section 1.52

“GAAP”

10

 

Section 1.53

“Generic Competition”

10

 

Section 1.54

“Generic Product”

10

 

Section 1.55

“Good Clinical Practice”

10

 

Section 1.56

“Good Laboratory Practice”

10

 

Section 1.57

“Governmental Authority”

10

 

Section 1.58

“Government Health Care Programs”

11

 

Section 1.59

“Government Order”

11

 

Section 1.60

“Health Care Laws”

11

 

Section 1.61

“ICH”

11

 

Section 1.62

“IND”

11

 

Section 1.63

“Investigator Sponsored Clinical Study”

11

 

Section 1.64

“Joint Collaboration IP”

11

 

Section 1.65

“Know-How”

12

 

Section 1.66

“Knowledge of Alnylam”

12

 

Section 1.67

“Kyowa Agreement”

12

 

Section 1.68

“Kyowa Hakko”

12

 

Section 1.69

“Law”

12

 

Section 1.70

“Legal Exclusivity Period”

12

 

Section 1.71

“Licensed Product”

12

 

Section 1.72

“Major EU Country”

12

 

Section 1.73

“Manufacturing” or “Manufacture”

12

 

Section 1.74

N.A. Pre-Tax Profit or Loss”

12

 

Section 1.75

“Necessary Third Party IP”

13

 

Section 1.76

“Net Sales”

13

 

Section 1.77

“New Drug Application” or “NDA”

15

 

Section 1.78

“North America” or “N.A.”

15

 

Section 1.79

“Parties”

15

 

Section 1.80

“Party”

15

 

Section 1.81

“Patent-Based Exclusivity Period”

15

 

Section 1.82

“Patent Rights”

15

 

Section 1.83

“Person”

15

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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TABLE OF CONTENTS

 

(continued)

 

 

 

Page

 

 

 

 

 

Section 1.84

“Phase I Clinical Study”

15

 

Section 1.85

“Phase II Clinical Study”

15

 

Section 1.86

“Phase III Clinical Study”

16

 

Section 1.87

“Pivotal Clinical Study”

16

 

Section 1.88

“Post-Approval Study”

16

 

Section 1.89

“Private Health Care Plans”

16

 

Section 1.90

“Post Approval Medical and Regulatory Activities”

16

 

Section 1.91

“Product Liability Costs”

16

 

Section 1.92

“Profit-Share Territory”

16

 

Section 1.93

“Product Trademark”

16

 

Section 1.94

“Regulatory Approval”

16

 

Section 1.95

“Regulatory Authority”

17

 

Section 1.96

“Regulatory-Based Exclusivity Period”

17

 

Section 1.97

“Related Party”

17

 

Section 1.98

“RNAi Product”

17

 

Section 1.99

“Royalty Territory”

17

 

Section 1.100

“RSV”

17

 

Section 1.101

“RSV01 Product”

17

 

Section 1.102

“RSV02 Product”

17

 

Section 1.103

“Safety Data”

17

 

Section 1.104

“Sales Representative”

18

 

Section 1.105

“Second Opt-Out Milestone”

18

 

Section 1.106

“Sublicensee”

18

 

Section 1.107

“Sublicense Income”

18

 

Section 1.108

“Territory”

19

 

Section 1.109

“Third Party”

19

 

Section 1.110

“United States” or “U.S.”

19

 

Section 1.111

“Valid Claim”

19

 

Section 1.112

Additional Definitions

19

 

 

 

 

ARTICLE II MANAGEMENT OF COLLABORATIVE ACTIVITIES

20

 

 

 

 

Section 2.1

Joint Steering Committee

20

 

Section 2.2

Appointment of Subcommittees, Project Teams and Collaboration Managers

22

 

Section 2.3

Reports and Minutes

22

 

Section 2.4

Decision-Making

23

 

Section 2.5

Deadlocks

23

 

Section 2.6

Dissolution of JSC

24

 

Section 2.7

Collaboration Guidelines

24

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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TABLE OF CONTENTS

 

(continued)

 

 

 

Page

 

 

ARTICLE III LICENSE GRANTS

25

 

 

 

 

 

Section 3.1

Alnylam Grants

25

 

Section 3.2

Cubist Grants

28

 

Section 3.3

Sublicensing Terms; Liability

29

 

Section 3.4

Joint Collaboration IP

29

 

Section 3.5

Section 365(n) of the Bankruptcy Code

29

 

Section 3.6

Retained Rights

30

 

 

ARTICLE IV  DEVELOPMENT OF LICENSED PRODUCTS; ADDITIONAL RSV PRODUCTS; OPT-OUT
RIGHTS

30

 

 

 

Section 4.1

Overview

30

 

Section 4.2

Development Plan; Amendments; Development Responsibilities

30

 

Section 4.3

Development Efforts; Manner of Performance; Records and Reports

31

 

Section 4.4

Joint Development Costs

32

 

Section 4.5

Reimbursement of Development Costs

33

 

Section 4.6

Additional RSV Products

33

 

Section 4.7

Alnylam Opt-Out Option

33

 

Section 4.8

Technology Transfer and Exchange of Know-How

40

 

 

ARTICLE V COMMERCIALIZATION AND CERTAIN OTHER RESPONSIBILITIES

40

 

 

 

Section 5.1

Diligent Efforts

40

 

Section 5.2

Joint Commercialization Team

40

 

Section 5.3

Commercialization Plan

41

 

Section 5.4

Regulatory Filings

43

 

Section 5.5

Advertising and Promotional Materials

43

 

Section 5.6

Sales and Distribution

43

 

Section 5.7

Reporting Obligations

44

 

Section 5.8

Other Responsibilities

44

 

Section 5.9

Adverse Event and Licensed Product Complaint Reporting Procedures; Notice of
Information Affecting Marketability of Licensed Product

45

 

Section 5.10

Recalls, Market Withdrawals or Corrective Actions

46

 

Section 5.11

Medical Inquiries

46

 

Section 5.12

Export Monitoring

46

 

 

 

 

ARTICLE VI MANUFACTURE AND SUPPLY

46

 

 

 

 

 

Section 6.1

Supply Obligations; Alnylam’s Existing Manufacturing Arrangements

46

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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Section 6.2

Transition of Manufacturing Responsibilities to Cubist

48

 

Section 6.3

Supply Agreement

49

 

Section 6.4

Technology Transfer

49

 

 

 

 

ARTICLE VII FINANCIAL PROVISIONS

49

 

 

 

 

 

Section 7.1

Upfront Fee

49

 

Section 7.2

Development Milestones

49

 

Section 7.3

Sales Milestones

50

 

Section 7.4

N.A. Pre-Tax Profit or Loss

51

 

Section 7.5

Licensed Product Royalties in the Royalty Territory

52

 

Section 7.6

Adjustments for Necessary Third Party IP Payments in the Royalty Territory

53

 

Section 7.7

Necessary Third Party IP in the Profit-Share Territory

54

 

Section 7.8

Royalty Adjustments for Generic Products

54

 

Section 7.9

Minimum Payments in the Royalty Territory

54

 

Section 7.10

Royalty Reports; Payments

55

 

Section 7.11

Payments from Alnylam to Cubist; Reports

55

 

Section 7.12

Audits

55

 

Section 7.13

Tax Matters

56

 

Section 7.14

United States Dollars

57

 

Section 7.15

Currency Exchange

57

 

Section 7.16

Blocked Payments

57

 

Section 7.17

Late Payments

57

 

Section 7.18

No Overlapping Royalties

57

 

Section 7.19

Reporting

57

 

Section 7.20

Resolution of Disputes

58

 

 

 

 

ARTICLE VIII INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS

58

 

 

 

 

 

Section 8.1

Inventorship

58

 

Section 8.2

Ownership

58

 

Section 8.3

Prosecution and Maintenance of Patent Rights

58

 

Section 8.4

Third Party Infringement

60

 

Section 8.5

Claimed Infringement; Third Party Challenges to Patent Rights

62

 

Section 8.6

Third Party Technology

63

 

Section 8.7

Patent Marking

64

 

Section 8.8

Trademarks

64

 

 

ARTICLE IX CONFIDENTIALITY AND PUBLICITY

65

 

 

 

Section 9.1

Confidential Information

65

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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Page

 

 

 

Section 9.2

Employee, Consultant and Advisor Obligations and Disclosure to Regulatory
Authorities

66

 

Section 9.3

Certain Disclosures by Alnylam or Cubist

67

 

Section 9.4

Publicity

67

 

Section 9.5

Publications

67

 

Section 9.6

Asian Partner

68

 

Section 9.7

Coordination with Alnylam’s Asian Partner

68

 

 

 

 

ARTICLE X REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS; INDEMNIFICATION

68

 

 

 

 

 

Section 10.1

Exclusivity Covenant

68

 

Section 10.2

Representations of Authority

68

 

Section 10.3

Consents

69

 

Section 10.4

No Conflict

69

 

Section 10.5

Enforceability

69

 

Section 10.6

Sales Representatives

69

 

Section 10.7

Additional Representations and Warranties of Alnylam

70

 

Section 10.8

Cubist Representation Regarding Cubist In-Licenses

72

 

Section 10.9

No Warranties

72

 

Section 10.10

No Debarment

72

 

Section 10.11

Indemnification

72

 

Section 10.12

Limitation of Liability

74

 

Section 10.13

Insurance

74

 

 

 

 

ARTICLE XI TERM AND TERMINATION

75

 

 

 

Section 11.1

Term

75

 

Section 11.2

Termination Rights

75

 

Section 11.3

Effect of Termination

76

 

Section 11.4

Payments to Cubist

78

 

Section 11.5

Effect of Expiration or Termination; Survival

83

 

 

 

 

ARTICLE XII FINAL DECISION-MAKING; DISPUTE RESOLUTION

84

 

 

 

 

 

Section 12.1

Disputes

84

 

Section 12.2

Arbitration

84

 

 

 

 

ARTICLE XIII MISCELLANEOUS

85

 

 

 

Section 13.1

Choice of Law

85

 

Section 13.2

Notices

85

 

Section 13.3

Severability

86

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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Page

 

 

 

Section 13.4

Captions

86

 

Section 13.5

Integration

86

 

Section 13.6

Independent Contractors; No Agency

86

 

Section 13.7

Submission to Jurisdiction

87

 

Section 13.8

Assignment; Successors

87

 

Section 13.9

No Consequential or Punitive Damages

88

 

Section 13.10

Performance by Affiliates

88

 

Section 13.11

Force Majeure

88

 

Section 13.12

Construction

88

 

Section 13.13

Execution in Counterparts; Facsimile Signatures

89

 

 

 

 

 

EXHIBITS

 

 

 

 

 

 

 

EXHIBIT A

Alnylam Patent Rights

 

 

EXHIBIT B

ALN-RSV01

 

 

EXHIBIT C

Existing Alnylam In-Licenses

 

 

EXHIBIT D

Existing Alnylam Out-Licenses That Include Rights or Options to Licensed
Products

 

 

EXHIBIT E

Development Plan

 

 

EXHIBIT F

Material Agreements Related to Licensed Products in the Territory

 

 

EXHIBIT G

Supply Agreement Term Sheet

 

 

EXHIBIT H

Milestone Payments Under the Existing Alnylam In-Licenses

 

 

EXHIBIT I

Press Release

 

 

Schedule 10.7

Disclosure Schedule

 

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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LICENSE AND COLLABORATION AGREEMENT

 

This License and Collaboration Agreement (this “Agreement”) is entered into as
of the 9th day of January, 2009 (the “Effective Date”), by and between Alnylam
Pharmaceuticals, Inc., a corporation organized and existing under the laws of
the State of Delaware and having its principal office at 300 Third Street,
Cambridge, Massachusetts 02142 (“Alnylam”), and Cubist Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 65 Hayden Avenue, Lexington, Massachusetts 02421
(“Cubist”).

 

INTRODUCTION

 

WHEREAS, Alnylam owns or controls certain fundamental intellectual properties
relating to RNA interference, and is developing therapeutic products targeting
respiratory syncytial virus that function through RNA interference, including
the proprietary Alnylam product known as ALN-RSV01;

 

WHEREAS, Cubist desires to develop and commercialize such therapeutic RNA
interference products for the treatment of respiratory infections in humans
caused by RSV, throughout the world, excluding Japan and certain other countries
in Asia;

 

WHEREAS, Alnylam and Cubist believe that a license and collaboration for such
purpose on the terms and conditions of this Agreement would be desirable.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings set forth
below:

 

SECTION 1.1  “ACTION”.  ACTION MEANS ANY THREATENED, PENDING OR COMPLETED CLAIM,
ACTION, CAUSE OF ACTION OR SUIT (WHETHER IN CONTRACT OR TORT OR OTHERWISE),
LITIGATION (WHETHER AT LAW OR IN EQUITY, WHETHER CIVIL OR CRIMINAL),
CONTROVERSY, ASSESSMENT, ARBITRATION, INVESTIGATION, HEARING, CHARGE, COMPLAINT,
DEMAND, NOTICE OR PROCEEDING OF, TO, FROM, BY OR BEFORE, OR THREATENED TO BE
BROUGHT TO, FROM, BY OR BEFORE, ANY GOVERNMENTAL AUTHORITY, INCLUDING
INTERFERENCES, OPPOSITIONS AND PATENT INVALIDITY SUITS AS DESCRIBED IN
SECTION 8.5.

 

SECTION 1.2  “AFFILIATE”.  AFFILIATE MEANS WITH RESPECT TO ANY PARTY, ANY PERSON
CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH SUCH PARTY.  FOR
PURPOSES OF THIS SECTION 1.2, “CONTROL” MEANS (A) IN THE CASE OF A PERSON THAT
IS A CORPORATE ENTITY, DIRECT OR INDIRECT OWNERSHIP OF FIFTY PERCENT (50%) OR
MORE OF THE STOCK OR SHARES HAVING THE RIGHT TO VOTE FOR THE ELECTION OF
DIRECTORS OF SUCH PERSON, AND (B) IN THE CASE OF A PERSON THAT IS AN ENTITY, BUT
IS

 

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NOT A CORPORATE ENTITY, THE POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO
DIRECT, OR CAUSE THE DIRECTION OF, THE MANAGEMENT OR POLICIES OF SUCH PERSON,
WHETHER THROUGH THE OWNERSHIP OF VOTING SECURITIES, BY CONTRACT OR OTHERWISE.

 

SECTION 1.3  “ALNYLAM COLLABORATION IP”.  ALNYLAM COLLABORATION IP MEANS (A) ANY
IMPROVEMENT, DISCOVERY OR KNOW-HOW, PATENTABLE OR OTHERWISE, FIRST IDENTIFIED,
DISCOVERED OR DEVELOPED SOLELY BY EMPLOYEES OF ALNYLAM OR ITS AFFILIATES OR
OTHER PERSONS NOT EMPLOYED BY CUBIST OR ANY OF ITS AFFILIATES ACTING ON BEHALF
OF ALNYLAM OR ANY OF ITS AFFILIATES IN THE CONDUCT OF THE COLLABORATION, AND
(B) ANY PATENT RIGHTS THAT CLAIM OR COVER SUCH IMPROVEMENTS, DISCOVERIES OR
KNOW-HOW AND ARE OWNED OR OTHERWISE CONTROLLED BY ALNYLAM OR, SUBJECT TO
SECTION 13.8, ANY OF ITS AFFILIATES, AT ANY TIME DURING THE TERM.  ALNYLAM
COLLABORATION IP EXCLUDES ALNYLAM’S INTEREST IN JOINT COLLABORATION IP.

 

SECTION 1.4  “ALNYLAM IN-LICENSE”.  ALNYLAM IN-LICENSE MEANS (A) THE EXISTING
ALNYLAM IN-LICENSES, AND (B) ANY OTHER AGREEMENT BETWEEN ALNYLAM AND A THIRD
PARTY, EXECUTED DURING THE TERM, PURSUANT TO WHICH ALNYLAM HAS RIGHTS AND
OBLIGATIONS WITH RESPECT TO, OR WHICH OTHERWISE COVER, A LICENSED PRODUCT AND
WHERE (I) THE INTELLECTUAL PROPERTY THAT IS THE SUBJECT OF SUCH AGREEMENT IS
INCLUDED WITHIN ALNYLAM TECHNOLOGY, AND (II) SUCH ALNYLAM TECHNOLOGY IS
NECESSARY OR REASONABLY USEFUL TO DEVELOP, COMMERCIALIZE OR MANUFACTURE LICENSED
PRODUCT IN THE FIELD.

 

SECTION 1.5  “ALNYLAM KNOW-HOW”.  ALNYLAM KNOW-HOW MEANS KNOW-HOW OWNED OR
OTHERWISE CONTROLLED BY ALNYLAM OR ANY OF ITS AFFILIATES AS OF THE EFFECTIVE
DATE OR AS TO WHICH ALNYLAM OR, SUBJECT TO SECTION 13.8, ANY OF ITS AFFILIATES,
OBTAINS CONTROL DURING THE TERM THAT IS NECESSARY OR REASONABLY USEFUL FOR
CUBIST AND ITS RELATED PARTIES TO PERFORM THEIR OBLIGATIONS OR EXPLOIT THEIR
RIGHTS UNDER THIS AGREEMENT WITH RESPECT TO LICENSED PRODUCT, INCLUDING THEIR
RIGHTS TO DEVELOP, MANUFACTURE, OR COMMERCIALIZE LICENSED PRODUCT (OTHER THAN
ALNYLAM’S RIGHTS IN JOINT COLLABORATION IP AND ALNYLAM COLLABORATION IP).

 

SECTION 1.6  “ALNYLAM PATENT RIGHTS”.  ALNYLAM PATENT RIGHTS MEANS THOSE PATENT
RIGHTS OWNED OR OTHERWISE CONTROLLED BY ALNYLAM OR ANY OF ITS AFFILIATES AS OF
THE EFFECTIVE DATE OR AS TO WHICH ALNYLAM OR, SUBJECT TO SECTION 13.8, ANY OF
ITS AFFILIATES, OBTAINS CONTROL DURING THE TERM THAT ARE NECESSARY OR REASONABLY
USEFUL FOR CUBIST AND ITS RELATED PARTIES TO PERFORM THEIR OBLIGATIONS OR
EXPLOIT THEIR RIGHTS UNDER THIS AGREEMENT WITH RESPECT TO LICENSED PRODUCT,
INCLUDING THEIR RIGHTS TO DEVELOP, MANUFACTURE, OR COMMERCIALIZE LICENSED
PRODUCT (OTHER THAN ALNYLAM’S RIGHTS IN JOINT COLLABORATION IP AND ALNYLAM
COLLABORATION IP), INCLUDING THE PATENT RIGHTS SET FORTH IN EXHIBIT A.

 

SECTION 1.7  “ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS”.  ALNYLAM SEQUENCE
SPECIFIC PATENT RIGHTS MEANS CLAIM(S) CONTAINED IN PATENT RIGHTS COMPRISING
ALNYLAM TECHNOLOGY THAT ARE SPECIFICALLY DIRECTED TO PARTICULAR SEQUENCES OF
LICENSED PRODUCTS IN THE TERRITORY.

 

SECTION 1.8  “ALNYLAM SEQUENCE SPECIFIC KNOW-HOW”.  ALNYLAM SEQUENCE SPECIFIC
KNOW-HOW MEANS KNOW-HOW THAT IS SPECIFIC TO RSV01 PRODUCT OR TO ANY OTHER
PARTICULAR

 

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SEQUENCE OF LICENSED PRODUCT, INCLUDING COMPOSITION INFORMATION AND ANY
PRECLINICAL AND CLINICAL TEST DATA RELATED TO ANY OF THE FOREGOING.

 

SECTION 1.9  “ALNYLAM TECHNOLOGY”.  ALNYLAM TECHNOLOGY MEANS, COLLECTIVELY,
ALNYLAM KNOW-HOW, ALNYLAM PATENT RIGHTS, ALNYLAM COLLABORATION IP AND ALNYLAM’S
INTEREST IN JOINT COLLABORATION IP, AND ANY THIRD PARTY TECHNOLOGY THAT IS
INCLUDED IN THE DEFINITION OF ALNYLAM TECHNOLOGY AFTER THE EFFECTIVE DATE IN
ACCORDANCE WITH SECTION 8.6.

 

SECTION 1.10  “API BULK DRUG SUBSTANCE”.  API BULK DRUG SUBSTANCE MEANS LICENSED
PRODUCT IN BULK FORM MANUFACTURED FOR USE AS AN ACTIVE PHARMACEUTICAL
INGREDIENT.

 

SECTION 1.11  “ASIA”.  ASIA MEANS BRUNEI, CAMBODIA, CHINA (INCLUDING HONG KONG
AND MACAO, BUT EXCLUDING TAIWAN), INDONESIA, JAPAN, LAOS, MALAYSIA, MYANMAR,
NORTH KOREA, PHILIPPINES, SINGAPORE, SOUTH KOREA, TAIWAN, THAILAND AND VIETNAM.

 

SECTION 1.12  “ASIAN PARTNER”.  ASIAN PARTNER MEANS KYOWA HAKKO OR ANY OTHER
THIRD PARTY TO WHOM ALNYLAM GRANTS LICENSES UNDER THE ALNYLAM TECHNOLOGY TO
DEVELOP OR COMMERCIALIZE LICENSED PRODUCTS FOR USE IN THE FIELD IN ASIA, BUT
SHALL NOT INCLUDE A THIRD PARTY ENGAGED BY ALNYLAM OR ANY OF ITS AFFILIATES
MERELY TO PERFORM SPECIFIC DISCREET TASKS AS CONTRACT SERVICES IN CONNECTION
WITH ALNYLAM’S DEVELOPMENT OR COMMERCIALIZATION OF LICENSED PRODUCT.

 

SECTION 1.13  “BUSINESS DAY”.  BUSINESS DAY MEANS A WEEKDAY ON WHICH BANKING
INSTITUTIONS IN BOSTON, MASSACHUSETTS ARE OPEN FOR BUSINESS.  FOR PURPOSES OF
CLARITY, A BUSINESS DAY SHALL NOT INCLUDE ANY SATURDAY OR SUNDAY OR FEDERAL OR
COMMONWEALTH OF MASSACHUSETTS HOLIDAY.

 

SECTION 1.14  “CALENDAR QUARTER”.  CALENDAR QUARTER MEANS THE RESPECTIVE PERIODS
OF THREE (3) CONSECUTIVE CALENDAR MONTHS ENDING ON MARCH 31, JUNE 30,
SEPTEMBER 30 AND DECEMBER 31; PROVIDED THAT THE FIRST CALENDAR QUARTER OF THE
TERM SHALL BEGIN ON THE EFFECTIVE DATE AND END ON MARCH 31, 2009, AND THE LAST
CALENDAR QUARTER OF THE TERM SHALL END ON THE LAST DAY OF THE TERM.

 

SECTION 1.15  “CALENDAR YEAR”.  CALENDAR YEAR MEANS EACH SUCCESSIVE PERIOD OF
TWELVE (12) MONTHS COMMENCING ON JANUARY 1 AND ENDING ON DECEMBER 31; PROVIDED
THAT THE FIRST CALENDAR YEAR OF THE TERM SHALL BEGIN ON THE EFFECTIVE DATE AND
END ON DECEMBER 31, 2009 AND THE LAST CALENDAR YEAR OF THE TERM SHALL END ON THE
LAST DAY OF THE TERM.

 

SECTION 1.16  “CLINICAL INVESTIGATION LAWS”.  CLINICAL INVESTIGATION LAWS MEANS
LAWS RELATING TO HUMAN CLINICAL INVESTIGATIONS, INCLUDING 21 C.F.R. PARTS 50,
54, 56 AND 312, AND THEN-CURRENT GOOD CLINICAL PRACTICE, EACH AS IN EFFECT AND
AS AMENDED FROM TIME TO TIME.

 

SECTION 1.17  “CLINICAL REGULATORY FILINGS”.  CLINICAL REGULATORY FILINGS MEANS
DATA, FILINGS OR MATERIALS RELATING TO LICENSED PRODUCT SUBMITTED TO THE
APPLICABLE REGULATORY AUTHORITIES, INCLUDING (A) DATA DERIVED FROM CLINICAL
STUDIES, (B) DATA DERIVED FROM NON-CLINICAL STUDIES, AND (C) DATA, FILINGS OR
MATERIALS RELATING TO OR CONTAINED IN THE CMC OR A DMF.

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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SECTION 1.18  “CLINICAL STUDY”.  CLINICAL STUDY MEANS A PHASE I CLINICAL STUDY,
PHASE II CLINICAL STUDY, PHASE III CLINICAL STUDY OR PIVOTAL CLINICAL STUDY, AS
APPLICABLE, BUT EXCLUDING ANY POST-APPROVAL STUDIES.

 

SECTION 1.19  “CMC”.  CMC MEANS THE CHEMISTRY, MANUFACTURING AND CONTROLS
SECTION OF AN IND OR NDA IN THE UNITED STATES, OR THE EQUIVALENT SECTION OF
REGULATORY FILINGS MADE OUTSIDE THE UNITED STATES.

 

SECTION 1.20  “COLLABORATION”.  COLLABORATION MEANS THE COLLABORATION OF THE
PARTIES IN THE ACTIVITIES GOVERNED BY THIS AGREEMENT, INCLUDING SUCH ACTIVITIES
RELATING TO THE DEVELOPMENT AND REGULATORY APPROVAL OF LICENSED PRODUCT.

 

SECTION 1.21  “COMMERCIALIZATION” OR “COMMERCIALIZE”.  COMMERCIALIZATION OR
COMMERCIALIZE MEANS (A) PRE-LAUNCH, LAUNCH OR POST LAUNCH ACTIVITIES DIRECTED TO
OBTAINING PRICING AND REIMBURSEMENT APPROVALS, MARKETING, PROMOTING,
DISTRIBUTING, IMPORTING OR SELLING A PRODUCT, AND (B) SOLELY FOR DEFINITIONAL
PURPOSES IN IMPLEMENTING THE TERMS OF THIS AGREEMENT, ALL POST-APPROVAL MEDICAL
AND REGULATORY ACTIVITIES.  COMMERCIALIZATION INCLUDES STRATEGIC MARKETING,
MARKET RESEARCH, SALES FORCE RECRUITMENT, TRAINING AND MEETINGS, SALES FORCE
DETAILING, SAMPLE DROPS, ACTIVITIES RELATED TO MANAGED CARE ACCOUNTS AND OTHER
SIMILAR ACCOUNTS AND GOVERNMENT PROGRAMS, ACTIVITIES RELATED TO REIMBURSEMENT,
ADVERTISING, MARKET AND PRODUCT SUPPORT, CUSTOMER SUPPORT, EDUCATIONAL
INITIATIVES, PRODUCT DISTRIBUTION, INVOICING, AND SALES ACTIVITIES. 
COMMERCIALIZATION SHALL NOT INCLUDE ANY ACTIVITIES RELATED TO MANUFACTURING.

 

SECTION 1.22  “COMMERCIALIZATION COSTS”.  COMMERCIALIZATION COSTS MEANS, WITH
RESPECT TO LICENSED PRODUCT IN THE FIELD IN THE PROFIT-SHARE TERRITORY, WHETHER
OR NOT OCCURRING DURING DEVELOPMENT OR COMMERCIALIZATION (A) THE COSTS AND
EXPENSES INCURRED BY A PARTY OR ANY OF ITS RELATED PARTIES IN THE
COMMERCIALIZATION OF LICENSED PRODUCT, INCLUDING THE COSTS OF ADVERTISING,
DETAILING, SALES, MARKETING AND PROMOTION OF LICENSED PRODUCT AND MEDICAL,
CUSTOMER OR REGULATORY SUPPORT AND A REASONABLE ALLOCATION (SUBJECT TO THE
OVERSIGHT OF THE JCT) OF []* FOR SALES FORCE MANAGEMENT AND SUPPORT,
(B) INFRASTRUCTURE REQUIRED TO SUPPORT AND MAINTAIN PATIENT/SAFETY SURVEILLANCE
AS REQUIRED BY APPLICABLE REGULATORY AUTHORITIES DIRECTLY ATTRIBUTABLE TO
LICENSED PRODUCT, INCLUDING THE COSTS OF MAINTAINING THE GLOBAL SAFETY DATABASE
CONTEMPLATED UNDER SECTION 5.9, (C) REASONABLE OUT-OF-POCKET []* COSTS AND
EXPENSES INCURRED BY A PARTY OR ANY OF ITS RELATED PARTIES WITH RESPECT TO []*,
(D) REASONABLE OUT-OF-POCKET []* INCURRED BY A PARTY OR ANY OF ITS RELATED
PARTIES REGARDING []* UNDER SECTION 8.4 TO THE EXTENT SUCH ENFORCEMENT ACTION IS
APPROVED BY THE JSC AND REASONABLE OUT-OF-POCKET COSTS AND EXPENSES INCURRED BY
A PARTY OR ANY OF ITS RELATED PARTIES AND INCLUDED IN COMMERCIALIZATION COSTS
PURSUANT TO SECTION []*, IN EACH CASE WITH RESPECT TO []* IN THE FIELD IN THE
PROFIT-SHARE TERRITORY, (E) THE REASONABLE OUT-OF-POCKET COSTS AND EXPENSES OF
MAINTAINING REGULATORY APPROVAL FOR LICENSED PRODUCT, (F) EXCEPT FOR THOSE
OBLIGATIONS TO BE PAID FULLY BY ALNYLAM UNDER SECTION 7.7, []* TO THE EXTENT
REASONABLY ALLOCABLE TO THE PROFIT-SHARE TERRITORY, (G) THE COSTS OF PRODUCT
RECALLS, WITHDRAWALS, INSURANCE, []* AND RETURNED PRODUCT DESTRUCTION, AND
(H) THE COST OF []*.  IN CALCULATED COMMERCIALIZATION COSTS, THE COSTS OF
INTERNAL PERSONNEL ENGAGED IN COMMERCIALIZATION EFFORTS SHALL BE BASED ON THE
FTE COST APPLICABLE TO SUCH EFFORTS, UNLESS ANOTHER BASIS IS OTHERWISE AGREED BY
THE PARTIES IN

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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WRITING.  FOR SAKE OF CLARITY, THE FTE COST OF A SALES REPRESENTATIVE DOES NOT
INCLUDE []* BASED ON SALES OF LICENSED PRODUCT IN THE PROFIT-SHARE TERRITORY,
WHICH SUCH []* SHALL BE SEPARATELY INCLUDED AS A COMMERCIALIZATION COSTS BUDGET
ITEM.  FOR PURPOSES OF CLARITY, COSTS AND EXPENSES INCLUDED IN THE CALCULATION
OF N.A. PRE-TAX PROFIT OR LOSS, AND THE DEDUCTIONS SPECIFIED IN THE DEFINITION
OF NET SALES OR IN DEVELOPMENT COSTS, SHALL NOT BE DOUBLE-COUNTED, AND SHALL BE
DETERMINED FROM THE BOOKS AND RECORDS OF THE APPLICABLE PARTY AND ITS AFFILIATES
MAINTAINED IN ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED.

 

SECTION 1.23  “CONFIDENTIAL INFORMATION”.  CONFIDENTIAL INFORMATION MEANS ANY
AND ALL INFORMATION AND DATA, INCLUDING INFORMATION REGARDING OR INCLUDED WITHIN
ALNYLAM TECHNOLOGY AND CUBIST TECHNOLOGY AND ALL OTHER SCIENTIFIC, PRE-CLINICAL,
CLINICAL, REGULATORY, MANUFACTURING, MARKETING, FINANCIAL OR COMMERCIAL
INFORMATION OR DATA, WHETHER COMMUNICATED IN WRITING OR ORALLY OR BY ANY OTHER
METHOD, WHICH IS PROVIDED BY ONE PARTY TO THE OTHER PARTY IN CONNECTION WITH
THIS AGREEMENT.  ALNYLAM TECHNOLOGY AND ALNYLAM COLLABORATION IP ARE
CONFIDENTIAL INFORMATION OF ALNYLAM. CUBIST TECHNOLOGY AND CUBIST COLLABORATION
IP ARE CONFIDENTIAL INFORMATION OF CUBIST.  JOINT COLLABORATION IP IS THE
CONFIDENTIAL INFORMATION OF BOTH PARTIES.

 

SECTION 1.24  “CONTROL” OR “CONTROLLED”.  CONTROL OR CONTROLLED MEANS, WITH
RESPECT TO ANY INTELLECTUAL PROPERTY RIGHT OR OTHER INTANGIBLE PROPERTY, THE
POSSESSION (WHETHER BY LICENSE OR OWNERSHIP, OR BY CONTROL OVER AN AFFILIATE
HAVING POSSESSION BY LICENSE OR OWNERSHIP) BY A PARTY OF THE ABILITY TO GRANT TO
THE OTHER PARTY ACCESS OR A LICENSE OR SUBLICENSE AS PROVIDED HEREIN WITHOUT
VIOLATING THE TERMS OF ANY AGREEMENT WITH ANY THIRD PARTY; PROVIDED THAT WITH
RESPECT TO THIRD PARTY TECHNOLOGY OBTAINED BY A PARTY DURING THE TERM, CONTROL
SHALL BE DEEMED NOT TO EXIST UNLESS SUCH THIRD PARTY TECHNOLOGY IS ADDED TO THE
ALNYLAM TECHNOLOGY OR THE CUBIST TECHNOLOGY (AS THE CASE MAY BE) IN ACCORDANCE
WITH SECTION 8.6.

 

SECTION 1.25  “COST OF GOODS SOLD”.  COST OF GOODS SOLD MEANS, WITH RESPECT TO
API BULK DRUG SUBSTANCE, FINISHED PRODUCT OR PLACEBO, AS THE CASE MAY BE,
MANUFACTURED UNDER THIS AGREEMENT, THE REASONABLE INTERNAL AND EXTERNAL COSTS OF
A PARTY OR ANY OF ITS RELATED PARTIES INCURRED IN MANUFACTURING SUCH API BULK
DRUG SUBSTANCE, FINISHED PRODUCT OR PLACEBO, INCLUDING:  (A) TO THE EXTENT THAT
SUCH API BULK DRUG SUBSTANCE, FINISHED PRODUCT OR PLACEBO IS MANUFACTURED BY A
PARTY OR ANY OF ITS RELATED PARTIES, THE COST OF GOODS SOLD OF SUCH API BULK
DRUG SUBSTANCE, FINISHED PRODUCT OR PLACEBO, CONSISTING OF DIRECT MATERIAL AND
DIRECT LABOR COSTS, []*, ALL DETERMINED IN ACCORDANCE WITH THE BOOKS AND RECORDS
OF THE APPLICABLE PARTY OR ITS RELATED PARTY(IES) MAINTAINED IN ACCORDANCE WITH
UNITED STATES GAAP, CONSISTENTLY APPLIED, AND (B) TO THE EXTENT THAT SUCH API
BULK DRUG SUBSTANCE, FINISHED PRODUCT OR PLACEBO IS MANUFACTURED BY A THIRD
PARTY MANUFACTURER, THE ACTUAL FEES PAID BY A PARTY OR ANY OF ITS RELATED
PARTIES TO THE THIRD PARTY FOR THE MANUFACTURE, SUPPLY, PACKAGING AND LABELING
OF SUCH API BULK DRUG SUBSTANCE, FINISHED PRODUCT OR PLACEBO []*, DETERMINED IN
ACCORDANCE WITH THE BOOKS AND RECORDS OF THE APPLICABLE PARTY OR ITS RELATED
PARTY(IES) MAINTAINED IN ACCORDANCE WITH UNITED STATES GAAP, CONSISTENTLY
APPLIED.  COST OF GOODS SOLD SHALL NOT INCLUDE []*, EXCEPT WITH RESPECT TO
LICENSED PRODUCT MANUFACTURED BY CUBIST FOR ALNYLAM TO SUPPLY TO ITS ASIAN
PARTNER.

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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SECTION 1.26  “COVER,” “COVERING” OR “COVERED”.  COVER, COVERING OR COVERED
MEANS THAT, WITH RESPECT TO LICENSED PRODUCT, IN THE ABSENCE OF A LICENSE
GRANTED UNDER A VALID CLAIM, THE MAKING, USE, OFFERING FOR SALE, SALE, OR
IMPORTATION OF LICENSED PRODUCT WOULD INFRINGE SUCH VALID CLAIM OR, WITH RESPECT
TO A PENDING VALID CLAIM INCLUDED IN THE PATENT RIGHTS UNDER WHICH SUCH LICENSE
IS GRANTED, THE MAKING, USE, OFFERING FOR SALE, SALE, OR IMPORTATION OF LICENSED
PRODUCT WOULD INFRINGE SUCH VALID CLAIM IF SUCH PATENT APPLICATION WERE TO ISSUE
AS A PATENT.

 

SECTION 1.27  “CPI”.  CPI MEANS THE CONSUMER PRICE INDEX — URBAN WAGE EARNERS
AND CLERICAL WORKERS, U.S. CITY AVERAGE, ALL ITEMS, 1982-84 = 100, PUBLISHED BY
THE UNITED STATES DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS (OR ITS
SUCCESSOR EQUIVALENT INDEX) IN THE UNITED STATES.

 

SECTION 1.28  “CUBIST COLLABORATION IP”.  CUBIST COLLABORATION IP MEANS (A) ANY
IMPROVEMENT, DISCOVERY OR KNOW-HOW, PATENTABLE OR OTHERWISE, FIRST IDENTIFIED,
DISCOVERED OR DEVELOPED SOLELY BY EMPLOYEES OF CUBIST OR ITS AFFILIATES OR OTHER
PERSONS NOT EMPLOYED BY ALNYLAM OR ANY OF ITS AFFILIATES ACTING ON BEHALF OF
CUBIST OR ANY OF ITS AFFILIATES, IN THE CONDUCT OF THE COLLABORATION, AND
(B) ANY PATENT RIGHTS WHICH CLAIM OR COVER SUCH IMPROVEMENTS, DISCOVERIES OR
KNOW-HOW AND ARE OWNED OR OTHERWISE CONTROLLED BY CUBIST OR, SUBJECT TO
SECTION 13.8, ANY OF ITS AFFILIATES, AT ANY TIME DURING THE TERM.  CUBIST
COLLABORATION IP EXCLUDES CUBIST’S INTEREST IN JOINT COLLABORATION IP.

 

SECTION 1.29  “CUBIST IN-LICENSE”.  CUBIST IN-LICENSE MEANS ANY AGREEMENT
BETWEEN CUBIST AND A THIRD PARTY EXECUTED DURING THE TERM PURSUANT TO WHICH
CUBIST HAS RIGHTS AND OBLIGATIONS WITH RESPECT TO, OR WHICH OTHERWISE COVER, A
LICENSED PRODUCT AND WHERE (A) THE INTELLECTUAL PROPERTY THAT IS THE SUBJECT OF
SUCH AGREEMENT IS INCLUDED WITHIN CUBIST TECHNOLOGY, AND (B) SUCH CUBIST
TECHNOLOGY IS NECESSARY OR REASONABLY USEFUL TO DEVELOP, COMMERCIALIZE OR
MANUFACTURE LICENSED PRODUCT IN THE FIELD.

 

SECTION 1.30  “CUBIST KNOW-HOW”.  CUBIST KNOW-HOW MEANS KNOW-HOW CONTROLLED BY
CUBIST OR, SUBJECT TO SECTION 13.8, ANY OF ITS AFFILIATES, DURING THE TERM THAT
IS NECESSARY OR REASONABLY USEFUL FOR ALNYLAM AND ITS AFFILIATES TO PERFORM
THEIR OBLIGATIONS OR EXPLOIT THEIR RIGHTS UNDER THIS AGREEMENT (OTHER THAN
CUBIST’S RIGHTS IN JOINT COLLABORATION IP AND CUBIST COLLABORATION IP).

 

SECTION 1.31  “CUBIST PATENT RIGHTS”.  CUBIST PATENT RIGHTS MEANS THOSE PATENT
RIGHTS THAT (A) CLAIM (I) CUBIST KNOW-HOW, OR (II) THE DEVELOPMENT, MANUFACTURE
OR COMMERCIALIZATION OF   LICENSED PRODUCT, AND THAT ARE NECESSARY OR REASONABLY
USEFUL TO DEVELOP, MANUFACTURE OR COMMERCIALIZE LICENSED PRODUCT IN THE FIELD,
AND (B) ARE CONTROLLED BY CUBIST OR, SUBJECT TO SECTION 13.8, ANY OF ITS
AFFILIATES, AT ANY TIME DURING THE TERM.  CUBIST PATENT RIGHTS SHALL NOT INCLUDE
PATENT RIGHTS INCLUDED IN CUBIST COLLABORATION IP OR CUBIST’S INTEREST IN JOINT
COLLABORATION IP.

 

SECTION 1.32  “CUBIST TECHNOLOGY”.  CUBIST TECHNOLOGY MEANS, COLLECTIVELY,
CUBIST KNOW-HOW AND CUBIST PATENT RIGHTS, CUBIST COLLABORATION IP AND CUBIST’S
INTEREST IN JOINT

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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COLLABORATION IP, AND ANY THIRD PARTY TECHNOLOGY THAT IS INCLUDED IN THE
DEFINITION OF CUBIST TECHNOLOGY AFTER THE EFFECTIVE DATE IN ACCORDANCE WITH
SECTION 8.6.

 

SECTION 1.33  “DEVELOPMENT” OR “DEVELOP”.  DEVELOPMENT OR DEVELOP MEANS
NON-CLINICAL AND CLINICAL RESEARCH AND DRUG DEVELOPMENT ACTIVITIES, INCLUDING
RESEARCH ACTIVITIES DIRECTED AT BACK-UP COMPOUNDS, TOXICOLOGY, PHARMACOLOGY AND
OTHER DISCOVERY EFFORTS, TEST METHOD DEVELOPMENT AND STABILITY TESTING, PROCESS
DEVELOPMENT, FORMULATION DEVELOPMENT, DELIVERY SYSTEM DEVELOPMENT, QUALITY
ASSURANCE AND QUALITY CONTROL DEVELOPMENT, STATISTICAL ANALYSIS, CLINICAL
STUDIES (INCLUDING PRE- AND POST-APPROVAL STUDIES AND INVESTIGATOR SPONSORED
CLINICAL STUDIES), REGULATORY AFFAIRS, AND REGULATORY APPROVAL AND CLINICAL
STUDY REGULATORY ACTIVITIES (EXCLUDING REGULATORY ACTIVITIES DIRECTED TO
OBTAINING PRICING AND REIMBURSEMENT APPROVALS).

 

SECTION 1.34  “DEVELOPMENT COSTS”.  DEVELOPMENT COSTS MEANS COSTS INCURRED BY
THE PARTIES OR ANY OF THEIR AFFILIATES IN DEVELOPING LICENSED PRODUCT IN THE
FIELD FOR THE PROFIT-SHARE TERRITORY, IN ACCORDANCE WITH THIS AGREEMENT AND
DETERMINED FROM THE BOOKS AND RECORDS OF THE APPLICABLE PARTY AND ITS AFFILIATES
MAINTAINED IN ACCORDANCE WITH GAAP, CONSISTENTLY APPLIED, WHETHER INCURRED
BEFORE OR AFTER REGULATORY APPROVAL, PROVIDED SUCH ACTIVITIES AND COSTS ARE
CONSISTENT WITH THE DEVELOPMENT PLAN AND RELATED BUDGET, INCLUDING:

 

(A)           ALL OUT-OF-POCKET COSTS AND EXPENSES INCURRED;

 

(B)           THE COSTS OF INTERNAL SCIENTIFIC, MEDICAL OR TECHNICAL PERSONNEL
ENGAGED IN SUCH EFFORTS, WHICH COSTS SHALL BE DETERMINED BASED ON THE FTE COST,
UNLESS ANOTHER BASIS IS OTHERWISE AGREED BY THE PARTIES IN WRITING;

 

(C)           THE COSTS AND EXPENSES FOR PRE-CLINICAL AND CLINICAL SUPPLIES
NEEDED FOR SUCH EFFORTS AS SET FORTH IN THE DEVELOPMENT PLAN, CONSISTING OF
(I) []* FOR CLINICAL SUPPLIES OF LICENSED PRODUCT AND PLACEBO; (II) COST OF
COMPARATOR OR COMBINATION DRUGS OR DEVICES; AND (III) COSTS AND EXPENSES OF
DISPOSAL OF CLINICAL SAMPLES;

 

(D)           FEES INCURRED IN CONNECTION WITH FILINGS FOR OR RELATING TO
REGULATORY APPROVALS OR PRICING OR REIMBURSEMENT APPROVAL IN THE FIELD IN THE
PROFIT-SHARE TERRITORY;

 

(E)           COSTS AND EXPENSES INCURRED IN CONNECTION WITH (I) []*; AND
(V) INTERNAL AND THIRD PARTY COSTS AND EXPENSES INCURRED IN CONNECTION WITH
(A) []*; AND

 

(F)            ANY OTHER COSTS INCURRED THAT ARE EXPLICITLY INCLUDED IN THE
BUDGETS INCLUDED IN THE DEVELOPMENT PLAN.

 

For purposes of clarity, it is understood that costs and expenses included in
the calculation of N.A. Pre-Tax Profit or Loss, and the deductions specified in
the definition of Net Sales or in Development Costs, shall not be
double-counted.

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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SECTION 1.35  “DEVELOPMENT PLAN”.  DEVELOPMENT PLAN MEANS THE WRITTEN WORKPLAN,
TIMETABLE AND BUDGET FOR THE PARTIES’ LICENSED PRODUCT DEVELOPMENT EFFORTS IN
THE PROFIT-SHARE TERRITORY, AGREED UPON BY THE PARTIES AS OF THE EFFECTIVE DATE,
AS AMENDED FROM TIME TO TIME IN ACCORDANCE WITH THIS AGREEMENT.  THE INITIAL
DEVELOPMENT PLAN IS ATTACHED AS EXHIBIT E.

 

SECTION 1.36  “DILIGENT EFFORTS”.  DILIGENT EFFORTS MEANS, WITH RESPECT TO EACH
PARTY’S OBLIGATIONS RELATING TO LICENSED PRODUCT, THE CARRYING OUT OF SUCH
OBLIGATIONS IN A DILIGENT AND SUSTAINED MANNER USING EFFORTS SUBSTANTIALLY
SIMILAR TO THE EFFORTS A BIOPHARMACEUTICAL COMPANY OF COMPARABLE SIZE AND
RESOURCES WOULD TYPICALLY DEVOTE TO A PRODUCT OF SIMILAR MARKET POTENTIAL,
PROFIT POTENTIAL, SIMILAR STAGE IN DEVELOPMENT OR COMMERCIALIZATION, OR
STRATEGIC VALUE RESULTING FROM ITS OWN RESEARCH EFFORTS, BASED ON CONDITIONS
THEN PREVAILING, AND TAKING INTO ACCOUNT OTHER RELEVANT FACTORS, INCLUDING
TECHNICAL, MEDICAL, CLINICAL EFFICACY, SAFETY, MANUFACTURING, AND DELIVERY
CONSIDERATIONS, PRODUCT LABELING OR ANTICIPATED LABELING, THE PATENT AND OTHER
PROPRIETARY POSITION OF THE PRODUCT, THE REGULATORY ENVIRONMENT AND COMPETITIVE
MARKET CONDITIONS.  DILIGENT EFFORTS WITH RESPECT TO ALNYLAM’S OBLIGATIONS, AS
SPECIFIED IN SECTIONS 3.3, 4.3(B), 5.9, 6.1(B) AND 9.6  RELATED TO THE ACTIONS
OF ITS RELATED PARTIES OR THE ACTIONS OF ANY OTHER THIRD PARTY WITH WHOM ALNYLAM
HAS ENTERED INTO AN AGREEMENT RELATED TO LICENSED PRODUCT SHALL MEAN THAT (A) TO
THE EXTENT SUCH OBLIGATION IS NOT CURRENTLY INCLUDED IN ITS AGREEMENT WITH SUCH
RELATED PARTY OR OTHER THIRD PARTY, ALNYLAM SHALL []*, (B) IN ENTERING INTO ANY
NEW AGREEMENT WITH A RELATED PARTY OR SUCH OTHER THIRD PARTY, ALNYLAM SHALL []*,
AND (C) IN EACH CASE, ALNYLAM SHALL TAKE REASONABLE ACTION TO ENFORCE SUCH
OBLIGATIONS.

 

SECTION 1.37  “DIRECTLY COMPETITIVE PRODUCT”.  DIRECTLY COMPETITIVE PRODUCT
MEANS ANY THERAPEUTIC OR PROPHYLACTIC PRODUCT THAT SPECIFICALLY TARGETS RSV. 
FOR AVOIDANCE OF DOUBT, DIRECTLY COMPETITIVE PRODUCT AS TO A PARTY SHALL NOT
INCLUDE A PRODUCT WITH []*.

 

SECTION 1.38  “DISTRIBUTION COSTS”.  DISTRIBUTION COSTS MEANS THE COSTS,
EXCLUDING []*, INCURRED BY A PARTY OR ANY OF ITS RELATED PARTIES OR FOR ITS
ACCOUNT, SPECIFICALLY IDENTIFIABLE TO THE DISTRIBUTION OF A LICENSED PRODUCT TO
A THIRD PARTY IN THE FIELD INTENDED FOR COMMERCIAL SALE IN THE PROFIT-SHARE
TERRITORY, INCLUDING (A) HANDLING, TRANSPORTATION, CUSTOMS CLEARANCE,
CONTAINERS, FREIGHT, DUTIES AND INSURANCE (INCLUDING SHIPMENTS FROM THIRD PARTY
LOGISTICS SERVICE PROVIDERS TO WHOLESALERS, AND EXCLUDING SUCH COSTS, IF ANY,
TREATED AS A DEDUCTION IN THE DEFINITION OF NET SALES), (B) CUSTOMER SERVICES
INCLUDING ORDER ENTRY, BILLING AND ADJUSTMENTS, INQUIRY AND CREDIT AND
COLLECTION, AND (C) DIRECT COST OF FACILITIES UTILIZED FOR THE STORAGE AND
DISTRIBUTION OF LICENSED PRODUCT, DETERMINED FROM THE BOOKS AND RECORDS OF THE
APPLICABLE PARTY AND ITS AFFILIATES MAINTAINED IN ACCORDANCE WITH GAAP,
CONSISTENTLY APPLIED.

 

SECTION 1.39  “DMF”.  DMF MEANS A DRUG MASTER FILE FILED WITH THE FDA, OR AN
EQUIVALENT FILING WITH ANY OTHER REGULATORY AUTHORITY.

 

SECTION 1.40  “DRUG REGULATION LAWS”.  DRUG REGULATION LAWS MEANS LAWS
REGULATING DRUGS AND PHARMACEUTICAL PRODUCTS, INCLUDING THE UNITED STATES
FEDERAL FOOD, DRUG, AND COSMETIC ACT, 21 U.S.C. § 301 ET SEQ., THE PRESCRIPTION
DRUG MARKETING ACT OF 1987, THE FEDERAL CONTROLLED SUBSTANCES ACT, 21 U.S.C. §
801 ET SEQ., AND POLICIES ISSUED BY THE FDA, AND SIMILAR

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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LAWS OF THE EMEA OR OTHER COUNTRIES OR JURISDICTIONS IN THE TERRITORY, EACH AS
IN EFFECT AND AS AMENDED FROM TIME TO TIME.

 

SECTION 1.41  “EMEA”.  EMEA MEANS THE EUROPEAN MEDICINES AGENCY OR ANY SUCCESSOR
AGENCY THERETO.

 

SECTION 1.42  “EUROPEAN UNION” OR “EU”.  EUROPEAN UNION OR EU MEANS THE
COUNTRIES OF THE EUROPEAN UNION, AS IT IS CONSTITUTED AS OF THE EFFECTIVE DATE
AND AS IT MAY BE EXPANDED FROM TIME TO TIME, AND SWITZERLAND, NORWAY AND
ICELAND.

 

SECTION 1.43  “EXECUTIVE OFFICERS”.  EXECUTIVE OFFICERS MEANS THE CHIEF
EXECUTIVE OFFICER OF ALNYLAM (OR A SENIOR EXECUTIVE OFFICER OF ALNYLAM
DESIGNATED BY ALNYLAM’S CHIEF EXECUTIVE OFFICER) AND THE CHIEF EXECUTIVE OFFICER
OF CUBIST (OR A SENIOR EXECUTIVE OFFICER OF CUBIST DESIGNATED BY CUBIST’S CHIEF
EXECUTIVE OFFICER).

 

SECTION 1.44  “EXISTING ALNYLAM IN-LICENSES”.  EXISTING ALNYLAM IN-LICENSES
MEANS THE THIRD PARTY AGREEMENTS SET FORTH ON EXHIBIT C.

 

SECTION 1.45  “FDA”.  FDA MEANS THE UNITED STATES FOOD AND DRUG ADMINISTRATION
OR ANY SUCCESSOR AGENCY THERETO.

 

SECTION 1.46  “FIELD”.  FIELD MEANS THE TREATMENT OR PROPHYLAXIS OF DISEASES IN
HUMANS.

 

SECTION 1.47  “FINISHED PRODUCT”.  FINISHED PRODUCT MEANS THE FINISHED PRODUCT
FORMULATION OF LICENSED PRODUCT, CONTAINING API BULK DRUG SUBSTANCE, FILLED INTO
UNIT PACKAGES FOR FINAL LABELING AND PACKAGING, AND AS FINALLY LABELED AND
PACKAGED IN A FORM READY FOR ADMINISTRATION.

 

SECTION 1.48  “FIRST COMMERCIAL SALE”.  FIRST COMMERCIAL SALE MEANS, WITH
RESPECT TO LICENSED PRODUCT IN A COUNTRY, THE FIRST COMMERCIAL SALE OF LICENSED
PRODUCT IN SUCH COUNTRY.  SALES FOR CLINICAL STUDY PURPOSES OR COMPASSIONATE,
NAMED PATIENT OR SIMILAR USE SHALL NOT CONSTITUTE A FIRST COMMERCIAL SALE.

 

SECTION 1.49  “FIRST OPT-OUT MILESTONE”.  FIRST OPT-OUT MILESTONE MEANS THE
EARLIER OF: (A) EACH OF THE FOLLOWING CONDITIONS HAVING BEEN MET:  (I) []*, IN
EACH CASE WITH RESPECT TO LICENSED PRODUCT IN THE FIELD AND WITH RESPECT TO THE
PROFIT-SHARE TERRITORY; OR (B) []* WITH RESPECT TO LICENSED PRODUCT IN THE FIELD
AND WITH RESPECT TO THE PROFIT-SHARE TERRITORY.  FOR PURPOSES OF CLAUSE
(A)(III) ABOVE, THE JSC SHALL MAKE THE  DETERMINATION WHETHER TO CONTINUE WITH
PLANS FOR []*.

 

SECTION 1.50  “FTE”.  FTE MEANS THE NUMBER OF FULL-TIME-EQUIVALENT PERSON-YEARS
(EACH CONSISTING OF A TOTAL OF []* HOURS) OF DEVELOPMENT, MANUFACTURING OR
COMMERCIALIZATION  WORK BY EACH PARTY’S PERSONNEL ON OR DIRECTLY RELATED TO THE
APPLICABLE ACTIVITY CONDUCTED HEREUNDER.

 

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SECTION 1.51  “FTE COST”.  FTE COST MEANS THE AMOUNT OBTAINED BY MULTIPLYING
(A) THE NUMBER OF FTES BY (B) EITHER (I) $[]* WITH RESPECT TO FTES ENGAGED IN
DEVELOPMENT ACTIVITIES OR ENGAGED IN ANY SCIENTIFIC ASPECTS OF COMMERCIALIZATION
INCLUDING DRUG SAFETY ANALYSIS, OR (II) WITH RESPECT TO FTES ENGAGED IN OTHER
COMMERCIALIZATION ACTIVITIES, SUCH RATE AS SHALL BE DETERMINED BY THE JCT IN
CONNECTION WITH PREPARATION OF THE FIRST COMMERCIALIZATION PLAN, WHICH SUCH
AMOUNT SHALL BE BASED ON []*, CONSISTENT WITH GAAP, IN EACH CASE OF CLAUSES
(I) OR (II) []* ANNUALLY BY []*, IN THE CASE OF THE FTE COST UNDER CLAUSE (I),
AND OVER THE []*, IN THE CASE OF THE FTE COST UNDER CLAUSE (II) (I.E., THE FIRST
SUCH []* WITH RESPECT TO THE FTE COST FOR FTES ENGAGED IN DEVELOPMENT WOULD
OCCUR ON []*).

 

SECTION 1.52  “GAAP”.  GAAP MEANS UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES APPLIED ON A CONSISTENT BASIS, OR ANY SUCCESSOR ACCOUNTING PRINCIPLES
GENERALLY ACCEPTED FOR PUBLIC COMPANIES IN THE UNITED STATES (SUCH AS
INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)).  UNLESS OTHERWISE DEFINED
OR STATED, FINANCIAL TERMS SHALL BE CALCULATED BY THE ACCRUAL METHOD UNDER GAAP.

 

SECTION 1.53  “GENERIC COMPETITION”.  GENERIC COMPETITION MEANS, WITH RESPECT TO
A LICENSED PRODUCT IN ANY COUNTRY IN THE ROYALTY TERRITORY IN A GIVEN CALENDAR
QUARTER, THAT, DURING SUCH CALENDAR QUARTER, ONE OR MORE GENERIC PRODUCTS SHALL
BE COMMERCIALLY AVAILABLE IN SUCH COUNTRY AND SUCH GENERIC PRODUCTS SHALL HAVE A
[]* (CALCULATED ON THE BASIS OF []*) OF []* PERCENT ([]* OF LICENSED PRODUCTS
AND GENERIC PRODUCTS (BASED ON []*, OR IF SUCH DATA IS NOT AVAILABLE, SUCH OTHER
RELIABLE DATA SOURCE AS REASONABLY DETERMINED BY CUBIST AND AGREED TO BY ALNYLAM
(SUCH AGREEMENT NOT TO BE UNREASONABLY WITHHELD OR DELAYED)); PROVIDED, HOWEVER,
THAT, IF []* DATA (OR DATA FROM ANOTHER DATA SOURCE SELECTED IN ACCORDANCE WITH
THE FOREGOING) IS UNAVAILABLE TO DETERMINE THE PERCENTAGE []* FOR A COUNTRY IN
THE ROYALTY TERRITORY WHERE A GENERIC PRODUCT IS BEING SOLD, THE AVERAGE GENERIC
COMPETITION OF THE COUNTRIES IN THE EU FOR WHICH SUCH DATA IS AVAILABLE WILL BE
DEEMED TO BE THE GENERIC COMPETITION FOR SUCH COUNTRY IN WHICH SUCH DATA IS NOT
AVAILABLE.

 

SECTION 1.54  “GENERIC PRODUCT”.  GENERIC PRODUCT MEANS ANY PHARMACEUTICAL
PRODUCT SOLD BY A THIRD PARTY NOT AUTHORIZED BY CUBIST OR ITS RELATED PARTIES
THAT IS (A) []*.

 

SECTION 1.55  “GOOD CLINICAL PRACTICE”.  GOOD CLINICAL PRACTICE MEANS THE
CURRENT GOOD CLINICAL PRACTICE APPLICABLE TO THE CLINICAL DEVELOPMENT OF
LICENSED PRODUCT UNDER APPLICABLE LAW, TO THE EXTENT SUCH STANDARDS ARE NOT LESS
STRINGENT THAN THE U.S. CURRENT GOOD CLINICAL PRACTICE, INCLUDING THE ICH
GUIDELINES.

 

SECTION 1.56  “GOOD LABORATORY PRACTICE”.  GOOD LABORATORY PRACTICE MEANS THE
CURRENT GOOD LABORATORY PRACTICE APPLICABLE TO THE DEVELOPMENT OF LICENSED
PRODUCT UNDER APPLICABLE LAW, TO THE EXTENT SUCH STANDARDS ARE NOT LESS
STRINGENT THAN THE U.S. CURRENT GOOD LABORATORY PRACTICE, INCLUDING 21 C.F.R.
PART 58.

 

SECTION 1.57  “GOVERNMENTAL AUTHORITY”.  GOVERNMENTAL AUTHORITY MEANS ANY UNITED
STATES FEDERAL, STATE OR LOCAL OR ANY FOREIGN GOVERNMENT, OR POLITICAL
SUBDIVISION THEREOF, OR ANY MULTINATIONAL ORGANIZATION OR AUTHORITY OR ANY
AUTHORITY, AGENCY OR COMMISSION ENTITLED TO

 

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EXERCISE ANY ADMINISTRATIVE, EXECUTIVE, JUDICIAL, LEGISLATIVE, POLICE,
REGULATORY OR TAXING AUTHORITY OR POWER, ANY COURT OR TRIBUNAL (OR ANY
DEPARTMENT, BUREAU OR DIVISION THEREOF), OR ANY GOVERNMENTAL ARBITRATOR OR
ARBITRAL BODY.

 

SECTION 1.58  “GOVERNMENT HEALTH CARE PROGRAMS”.  GOVERNMENT HEALTH CARE
PROGRAMS MEANS THE MEDICARE PROGRAM (TITLE XVIII OF THE SOCIAL SECURITY ACT),
THE MEDICAID PROGRAM (TITLE XIX OF THE SOCIAL SECURITY ACT), TRICARE, THE
FEDERAL EMPLOYEE HEALTH BENEFITS PROGRAM, AND OTHER FOREIGN, FEDERAL, STATE AND
LOCAL GOVERNMENTAL HEALTH CARE PLANS AND PROGRAMS.

 

SECTION 1.59  “GOVERNMENT ORDER”.  GOVERNMENT ORDER MEANS ANY ORDER, WRIT,
JUDGMENT, INJUNCTION, DECREE, STIPULATION, RULING, DETERMINATION OR AWARD
ENTERED BY OR WITH ANY GOVERNMENTAL AUTHORITY.

 

SECTION 1.60  “HEALTH CARE LAWS”.  HEALTH CARE LAWS MEANS LAWS RELATING TO
GOVERNMENT HEALTH CARE PROGRAMS, PRIVATE HEALTH CARE PLANS, PRIVACY AND
CONFIDENTIALITY OF PATIENT HEALTH INFORMATION AND HUMAN BIOLOGICAL MATERIALS,
INCLUDING:  FEDERAL AND STATE LAWS PERTAINING TO THE FEDERAL MEDICARE AND
MEDICAID PROGRAMS (INCLUDING THE MEDICAID REBATE PROGRAM); FEDERAL LAWS
PERTAINING TO THE FEDERAL EMPLOYEES HEALTH BENEFIT PROGRAM, THE TRICARE PROGRAM
AND OTHER GOVERNMENT HEALTH CARE PROGRAMS; FEDERAL AND STATE LAWS APPLICABLE TO
HEALTH CARE FRAUD AND ABUSE, KICKBACKS, PHYSICIAN SELF-REFERRAL AND FALSE CLAIMS
(INCLUDING 42 U.S.C. § 1320A-7A, 42 U.S.C. § 1320A-7B, 42 U.S.C. § 1395NN AND
THE FEDERAL CIVIL FALSE CLAIMS ACT, 31 U.S.C. § 3729 ET SEQ.); THE HEALTH
INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996; AND 45 C.F.R. PART 46,
EACH AS IN EFFECT AND AS AMENDED FROM TIME TO TIME.

 

SECTION 1.61  “ICH”.  ICH MEANS THE INTERNATIONAL CONFERENCE ON HARMONIZATION OF
TECHNICAL REQUIREMENTS FOR REGISTRATION OF PHARMACEUTICALS FOR HUMAN USE.

 

SECTION 1.62  “IND”.  IND MEANS AN INVESTIGATIONAL NEW DRUG APPLICATION FILED
WITH FDA OR A SIMILAR APPLICATION FILED WITH AN APPLICABLE REGULATORY AUTHORITY
OUTSIDE OF THE UNITED STATES SUCH AS A CLINICAL TRIAL APPLICATION (CTA) OR A
CLINICAL TRIAL EXEMPTION (CTX).

 

SECTION 1.63  “INVESTIGATOR SPONSORED CLINICAL STUDY”. INVESTIGATOR SPONSORED
CLINICAL STUDY MEANS A HUMAN CLINICAL STUDY OF LICENSED PRODUCT THAT IS
SPONSORED AND CONDUCTED BY A THIRD PARTY UNDER AN AGREEMENT WITH A PARTY
PURSUANT TO WHICH SUCH PARTY PROVIDES CLINICAL SUPPLIES OF LICENSED PRODUCT OR
FUNDING FOR SUCH CLINICAL STUDY.

 

SECTION 1.64  “JOINT COLLABORATION IP”.  JOINT COLLABORATION IP MEANS,
COLLECTIVELY, (A) ANY IMPROVEMENT, DISCOVERY OR KNOW-HOW, PATENTABLE OR
OTHERWISE, FIRST IDENTIFIED, DISCOVERED OR DEVELOPED JOINTLY BY THE PARTIES OR
THEIR AFFILIATES OR OTHERS ACTING ON BEHALF OF CUBIST AND ALNYLAM OR THEIR
AFFILIATES IN THE CONDUCT OF THE COLLABORATION, AND (B) ANY PATENT RIGHTS WHICH
CLAIM OR COVER SUCH IMPROVEMENTS, DISCOVERIES OR KNOW-HOW DURING THE TERM.

 

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SECTION 1.65  “KNOW-HOW”.  KNOW-HOW MEANS ALL BIOLOGICAL MATERIALS AND OTHER
TANGIBLE MATERIALS, INVENTIONS, PRACTICES, METHODS, PROTOCOLS, FORMULAS,
KNOWLEDGE, KNOW-HOW, TRADE SECRETS, PROCESSES, PROCEDURES, ASSAYS, SKILLS,
EXPERIENCE, TECHNIQUES AND RESULTS OF EXPERIMENTATION AND TESTING, INCLUDING
PHARMACOLOGICAL, TOXICOLOGICAL AND PRE-CLINICAL AND CLINICAL TEST DATA AND
ANALYTICAL AND QUALITY CONTROL DATA, PATENTABLE OR OTHERWISE.

 

SECTION 1.66  “KNOWLEDGE OF ALNYLAM”.  KNOWLEDGE OF ALNYLAM MEANS THE []*.

 

SECTION 1.67  “KYOWA AGREEMENT”.  KYOWA AGREEMENT MEANS THE LICENSE AND
COLLABORATION AGREEMENT ENTERED INTO BY AND BETWEEN ALNYLAM AND KYOWA HAKKO AS
OF JUNE 19, 2008, WITH RESPECT TO THE DEVELOPMENT AND COMMERCIALIZATION OF
LICENSED PRODUCT IN ASIA.

 

SECTION 1.68  “KYOWA HAKKO”.  KYOWA HAKKO MEANS KYOWA HAKKO KIRIN CO., LTD.
(FORMERLY KNOWN AS KYOWA HAKKO KOGYO CO., LTD.), A CORPORATION ORGANIZED AND
EXISTING UNDER THE LAWS OF JAPAN.

 

SECTION 1.69  “LAW”.  LAW MEANS ANY UNITED STATES FEDERAL, STATE OR LOCAL OR
FOREIGN OR MULTINATIONAL LAW, STATUTE, STANDARD, ORDINANCE, CODE, RULE,
REGULATION, RESOLUTION OR PROMULGATION, OR ANY GOVERNMENT ORDER, OR ANY LICENSE,
FRANCHISE, PERMIT OR SIMILAR RIGHT GRANTED UNDER ANY OF THE FOREGOING, OR ANY
SIMILAR PROVISION HAVING THE FORCE OR EFFECT OF LAW.

 

SECTION 1.70  “LEGAL EXCLUSIVITY PERIOD”.  LEGAL EXCLUSIVITY PERIOD MEANS, WITH
RESPECT TO A LICENSED PRODUCT, THE PERIOD BEGINNING ON THE EARLIER OF THE
COMMENCEMENT OF THE (A) PATENT-BASED EXCLUSIVITY PERIOD OR (B) REGULATORY-BASED
EXCLUSIVITY PERIOD, AND EXPIRING ON THE LATER OF THE EXPIRATION OF THE
(I) PATENT-BASED EXCLUSIVITY PERIOD OR (II) REGULATORY-BASED EXCLUSIVITY PERIOD.

 

SECTION 1.71  “LICENSED PRODUCT”.  LICENSED PRODUCTS MEANS ANY RNAI PRODUCT
DIRECTED TO RSV.

 

SECTION 1.72  “MAJOR EU COUNTRY”.  MAJOR EU COUNTRY MEANS ANY OF THE UNITED
KINGDOM, FRANCE, GERMANY, ITALY OR SPAIN.

 

SECTION 1.73  “MANUFACTURING” OR “MANUFACTURE”.  MANUFACTURING OR MANUFACTURE
MEANS, AS APPLICABLE, ALL ACTIVITIES ASSOCIATED WITH THE PRODUCTION,
MANUFACTURE, SUPPLY, PROCESSING, FILLING, FINISHING, TESTING, PACKAGING,
LABELING, SHIPPING, AND STORAGE OF LICENSED PRODUCT OR PLACEBO (INCLUDING API
BULK DRUG SUBSTANCE AND FINISHED PRODUCT), INCLUDING PROCESS AND FORMULATION
DEVELOPMENT, PROCESS VALIDATION, STABILITY TESTING, MANUFACTURING SCALE-UP,
PRE-CLINICAL, CLINICAL AND COMMERCIAL MANUFACTURE AND ANALYTICAL DEVELOPMENT,
PRODUCT CHARACTERIZATION, QUALITY ASSURANCE AND QUALITY CONTROL DEVELOPMENT,
TESTING AND RELEASE.

 

SECTION 1.74  “N.A. PRE-TAX PROFIT OR LOSS”.  N.A. PRE-TAX PROFIT OR LOSS MEANS
NET SALES OF LICENSED PRODUCT IN NORTH AMERICA BY CUBIST AND ITS AFFILIATES (BUT
NOT SUBLICENSEES) PLUS SUBLICENSE INCOME MINUS (A) COST OF GOODS SOLD,
(B) DISTRIBUTION COSTS AND (C)

 

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COMMERCIALIZATION COSTS, IN EACH CASE DETERMINED FROM THE BOOKS AND RECORDS OF
THE APPLICABLE PARTY OR ITS RELATED PARTIES, MAINTAINED IN ACCORDANCE GAAP,
CONSISTENTLY APPLIED.

 

SECTION 1.75  “NECESSARY THIRD PARTY IP”.  NECESSARY THIRD PARTY IP MEANS, ON A
COUNTRY-BY-COUNTRY BASIS, KNOW-HOW OR PATENT RIGHTS THAT ARE OWNED OR CONTROLLED
BY A THIRD PARTY AND COVER OR ARE OTHERWISE NECESSARY OR REASONABLY USEFUL FOR
THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT IN THE
FIELD IN SUCH COUNTRY, AND ARE THE SUBJECT OF AN ALNYLAM IN-LICENSE OR A CUBIST
IN-LICENSE.

 

SECTION 1.76  “NET SALES”.  NET SALES SHALL MEAN THE GROSS AMOUNT INVOICED BY
CUBIST, AND ITS AFFILIATES WITH RESPECT TO THE PROFIT-SHARE TERRITORY AND SHALL
MEAN THE GROSS AMOUNT INVOICED BY CUBIST AND ITS RELATED PARTIES WITH RESPECT TO
THE ROYALTY TERRITORY, IN EACH CASE ON SALES OR OTHER DISPOSITIONS (EXCLUDING
SALES OR DISPOSITIONS FOR USE IN CLINICAL TRIALS, OTHER SCIENTIFIC TESTING, OR
AS SAMPLES, OR AS PART OF COMPASSIONATE USE, PATIENT ASSISTANCE, NAMED PATIENT
OR TEST MARKETING PROGRAM OR ANY SIMILAR PROGRAM OR STUDY, OR OTHER SIMILAR
CASES, IN EACH CASE FOR WHICH CUBIST OR ITS RELATED PARTIES RECEIVE NO REVENUE)
OF LICENSED PRODUCT TO THIRD PARTIES, LESS THE FOLLOWING DEDUCTIONS:

 

(A)           TRADE, CASH AND QUANTITY DISCOUNTS AND ALLOWANCES ACTUALLY ALLOWED
AND TAKEN DIRECTLY WITH RESPECT TO SUCH SALES OR OTHER DISPOSITIONS;

 

(B)           TARIFFS, DUTIES, EXCISES, SALES TAXES, VALUE-ADDED OR OTHER TAXES
OR GOVERNMENTAL CHARGES IMPOSED UPON AND PAID DIRECTLY WITH RESPECT TO THE
DELIVERY, SALE OR USE OF LICENSED PRODUCT (EXCLUDING NATIONAL, STATE OR LOCAL
TAXES BASED ON INCOME);

 

(C)           AMOUNTS REPAID OR CREDITED BY REASON OF REJECTIONS, DEFECTS,
RECALLS OR RETURNS OR BECAUSE OF REASONABLE AND CUSTOMARY CHARGEBACKS, REFUNDS,
REBATES (INCLUDING REBATES TO MANAGED CARE ORGANIZATIONS, GROUP PURCHASING
ORGANIZATIONS, PHARMACY BENEFIT MANAGEMENT COMPANIES, HEALTH MAINTENANCE
ORGANIZATIONS, HEALTHCARE INSTITUTIONS, OTHER BUYING GROUPS OR PROVIDERS OF
HEALTHCARE OR SOCIAL AND WELFARE SYSTEMS, OR IN CONNECTION WITH PATIENT
ASSISTANCE OR SIMILAR PROGRAMS) OR RETROACTIVE PRICE REDUCTIONS (INCLUDING ANY
DISCOUNTS GRANTED LATER THAN AT THE TIME OF INVOICING), GOVERNMENT MANDATED
REBATES AND SIMILAR TYPES OF REBATES (E.G., PHARMACEUTICAL PRICE REGULATION
SCHEME AND MEDICAID, OR WHOLESALERS, DISTRIBUTORS AND OTHER TRADE CUSTOMERS), OR
CASH SALES INCENTIVES, OR DEDUCTIONS FOR ITEMS OF A NATURE OR SUBSTANCE SIMILAR
TO THAT OF THE FOREGOING DEDUCTIONS IN THIS CLAUSE (C) THAT MAY BECOME
CUSTOMARY;

 

(D)           []*;

 

(E)           []*;

 

(F)            POSTAGE CHARGES, SHIPPING MATERIALS, FREIGHT, INSURANCE AND OTHER
TRANSPORTATION CHARGES INCURRED IN SHIPPING SUCH LICENSED PRODUCT TO THIRD
PARTIES, INCLUDED AND SEPARATELY STATED IN THE APPLICABLE INVOICE; AND

 

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(G)           ANY ITEM SUBSTANTIALLY SIMILAR IN CHARACTER OR SUBSTANCE TO ANY OF
THE FOREGOING AND NOT SEPARATELY INVOICED TO THE CUSTOMER, TO THE EXTENT
CONSISTENT WITH THEN PREVAILING INDUSTRY STANDARDS.

 

Such amounts shall be determined from the books and records of Cubist or its
Related Parties, maintained in accordance with GAAP, consistently applied.

 

For purposes of clarity, it is understood that costs and expenses included in
the above deductions and in the calculation of N.A. Pre-Tax Profit or Loss or in
Development Costs shall not be double-counted.  In the case of pharmacy
incentive programs, hospital performance incentive program chargebacks, disease
management programs, similar programs or discounts on “bundles” of products, all
discounts and the like shall be allocated among products in proportion to the
respective list prices of such products or such other reasonable allocation
method as the Parties shall agree.

 

The transfer of Licensed Product by Cubist or any of its Affiliates to a Related
Party in the Royalty Territory for resale, and the transfer of Licensed Product
by Cubist or any of its Affiliates to an Affiliate in the Profit-Share Territory
for resale shall not be considered a sale.

 

In the case where a Licensed Product is a Combination Product, royalties with
respect to a Combination Product in a country of the Royalty Territory shall be
equal to the royalties calculated in accordance with Article VII, multiplied by
a fraction whose numerator is the average published sales price in such country
for an equivalent dosage of Licensed Product (sold separately as a stand-alone
product) contained in a given Combination Product, and whose denominator is the
sum of the average published sale prices in such country of the Royalty
Territory for all components (sold separately as a stand alone product) that are
equivalent to all components contained in the Combination Product.  If the
numerator or denominator cannot be determined in the manner set forth above, the
Parties shall negotiate in good faith and agree to an appropriate adjustment to
Net Sales to reflect the relative significance of the stand-alone Licensed
Product contained in the Combination Product and the other components contained
in the Combination Product, which agreement shall not be unreasonably withheld,
conditioned or delayed.  If the Parties are unable to reach agreement regarding
such issue within thirty (30) days after commencing good faith negotiations, the
issue shall be referred to dispute resolution in accordance with Article XII.

 

Notwithstanding the foregoing, with respect to Licensed Products that are
Combination Products, Net Sales in the Profit-Share Territory shall not be
reduced as set forth in the immediately preceding paragraph and the cost of
acquiring any other clinically active therapeutic or prophylactic ingredient or
other significant component, mechanism or device shall be included in the
calculation of the Cost of Goods Sold for purposes of calculating N.A. Pre-Tax
Profit or Loss for such Licensed Product in the Profit-Share Territory.

 

As used above, the term “Combination Product” means any pharmaceutical product
that consists of a Licensed Product and other active compounds or active
ingredients or other significant component, mechanism or device or any
combination of Licensed Product sold

 

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together with another pharmaceutical product or other significant component,
mechanism or device for a single invoiced price, and the phrases “sold as part
of a Combination Product,” “sold separately,” “Net Sales of the Combination
Product” and “average sale price” refer to sales by Cubist or its Related
Parties in the applicable country.  All references to Licensed Product in this
Agreement shall be deemed to include Combination Product, to the extent
applicable.

 

SECTION 1.77  “NEW DRUG APPLICATION” OR “NDA”.  NEW DRUG APPLICATION OR NDA
MEANS (A) AN APPLICATION SUBMITTED TO FDA PURSUANT TO 21 U.S.C. § 505(B), WHICH
CONTAINS COMPLETE DETAILS OF THE MANUFACTURE AND TESTING OF A NEW DRUG, FOR
PURPOSES OF OBTAINING REGULATORY APPROVAL FOR SUCH NEW DRUG IN THE UNITED
STATES, FOR A PARTICULAR INDICATION, AND ALSO INCLUDES ANY BIOLOGICS LICENSE
APPLICATION, OR (B) A SIMILAR APPLICATION, SUCH AS A MARKETING APPROVAL
AUTHORIZATION (“MAA”) FILED WITH THE EMEA OR OTHER REGULATORY AUTHORITY.

 

SECTION 1.78  “NORTH AMERICA” OR “N.A.”.  NORTH AMERICA OR N.A. MEANS THE UNITED
STATES, CANADA AND MEXICO.

 

SECTION 1.79  “PARTIES”.  PARTIES MEANS ALNYLAM AND CUBIST.

 

SECTION 1.80  “PARTY”.  PARTY MEANS EITHER ALNYLAM OR CUBIST.

 

SECTION 1.81  “PATENT-BASED EXCLUSIVITY PERIOD”.  PATENT-BASED EXCLUSIVITY
PERIOD MEANS, WITH RESPECT TO A COUNTRY IN THE ROYALTY TERRITORY, THAT PERIOD OF
TIME DURING WHICH AT LEAST ONE VALID CLAIM WITHIN THE ALNYLAM PATENT RIGHTS
COVERS LICENSED PRODUCT IN SUCH COUNTRY.

 

SECTION 1.82  “PATENT RIGHTS”.  PATENT RIGHTS MEANS PATENTS AND PATENT
APPLICATIONS AND ALL SUBSTITUTIONS, DIVISIONS, CONTINUATIONS,
CONTINUATIONS-IN-PART, REISSUES, REEXAMINATIONS, SUPPLEMENTAL PROTECTION
CERTIFICATES AND EXTENSIONS AND THE LIKE THEREOF, AND ALL COUNTERPARTS THEREOF
IN ANY COUNTRY.

 

SECTION 1.83  “PERSON”.  PERSON MEANS ANY NATURAL PERSON, CORPORATION, FIRM,
BUSINESS TRUST, JOINT VENTURE, ASSOCIATION, ORGANIZATION, COMPANY, PARTNERSHIP
OR OTHER BUSINESS ENTITY, OR ANY GOVERNMENT, OR ANY AGENCY OR POLITICAL
SUBDIVISIONS THEREOF.

 

SECTION 1.84  “PHASE I CLINICAL STUDY”.  PHASE I CLINICAL STUDY MEANS A CLINICAL
STUDY OF LICENSED PRODUCT IN HUMAN VOLUNTEERS OR PATIENTS WITH THE ENDPOINT OF
DETERMINING INITIAL TOLERANCE, TOXICITY, SAFETY OR PHARMACOKINETIC INFORMATION,
WHICH SHALL BE DEEMED COMMENCED WHEN THE THIRD VOLUNTEER OR PATIENT IN SUCH
STUDY HAS RECEIVED HIS OR HER INITIAL DOSE OF LICENSED PRODUCT.

 

SECTION 1.85  “PHASE II CLINICAL STUDY”.  PHASE II CLINICAL STUDY MEANS A
PRELIMINARY EFFICACY AND SAFETY OR DOSE RANGING HUMAN CLINICAL STUDY OF LICENSED
PRODUCT IN THE TARGET PATIENT POPULATION, WHICH SHALL BE DEEMED COMMENCED WHEN
THE THIRD PATIENT IN SUCH STUDY HAS RECEIVED HIS OR HER INITIAL DOSE OF LICENSED
PRODUCT.

 

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SECTION 1.86  “PHASE III CLINICAL STUDY”.  PHASE III CLINICAL STUDY MEANS A
HUMAN CLINICAL STUDY TO CONFIRM WITH STATISTICAL SIGNIFICANCE THE EFFICACY AND
SAFETY OF LICENSED PRODUCT PERFORMED TO OBTAIN REGULATORY APPROVAL FOR LICENSED
PRODUCT IN ANY COUNTRY, WHICH SHALL BE DEEMED COMMENCED WHEN THE THIRD PATIENT
IN SUCH STUDY HAS RECEIVED HIS OR HER INITIAL DOSE OF LICENSED PRODUCT.

 

SECTION 1.87  “PIVOTAL CLINICAL STUDY”.  PIVOTAL CLINICAL STUDY MEANS A HUMAN
CLINICAL STUDY, INCLUDING ANY PHASE III CLINICAL STUDY, THE RESULTS OF WHICH, IF
THE PRE-DEFINED ENDPOINTS ARE MET, ARE INTENDED TO BE THE DATA FROM A PIVOTAL
STUDY NECESSARY TO SUPPORT REGULATORY APPROVAL FOR LICENSED PRODUCT IN ANY
COUNTRY.

 

SECTION 1.88  “POST-APPROVAL STUDY”.  POST APPROVAL STUDY MEANS A CLINICAL STUDY
OF LICENSED PRODUCT THAT IS INITIATED IN A COUNTRY IN THE TERRITORY AFTER
RECEIPT OF REGULATORY APPROVAL FOR SUCH LICENSED PRODUCT IN SUCH COUNTRY.

 

SECTION 1.89  “PRIVATE HEALTH CARE PLANS”.  PRIVATE HEALTH CARE PLANS MEANS
NON-GOVERNMENTAL THIRD PARTY HEALTH CARE PAYORS AND PLANS, INCLUDING INSURANCE
COMPANIES, HEALTH MAINTENANCE ORGANIZATIONS AND OTHER MANAGED CARE
ORGANIZATIONS, BLUE CROSS AND BLUE SHIELD PLANS AND SELF-FUNDED EMPLOYERS.

 

SECTION 1.90  “POST APPROVAL MEDICAL AND REGULATORY ACTIVITIES”.  POST APPROVAL
MEDICAL AND REGULATORY ACTIVITIES MEANS ALL MEDICAL AND REGULATORY ACTIVITIES
DIRECTED AT SUPPORT OF LICENSED PRODUCT AFTER REGULATORY APPROVAL, INCLUDING
MEDICAL EDUCATION, USE OF MEDICAL SCIENCE LIAISONS, POST APPROVAL REGULATORY
ACTIVITIES, POST APPROVAL STUDIES, AND PATIENT SAFETY/PHARMACOVIGILANCE
SURVEILLANCE.

 

SECTION 1.91  “PRODUCT LIABILITY COSTS”.  PRODUCT LIABILITY COSTS MEANS COSTS
ASSOCIATED WITH THIRD PARTY PRODUCT LIABILITY CLAIMS OR ACTIONS RESULTING FROM
THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT UNDER THIS
AGREEMENT IN THE FIELD IN THE PROFIT-SHARE TERRITORY AND PRODUCT LIABILITY
INSURANCE PREMIUMS FOR POLICIES COVERING THE DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT IN THE FIELD IN THE PROFIT-SHARE TERRITORY
(OTHER THAN LOSSES ENTITLED TO INDEMNIFICATION UNDER SECTION 10.11(C)(I) OR
(II)).

 

SECTION 1.92  “PROFIT-SHARE TERRITORY”.  PROFIT-SHARE TERRITORY MEANS, SUBJECT
TO SECTION 4.7, NORTH AMERICA.

 

SECTION 1.93  “PRODUCT TRADEMARK”.  PRODUCT TRADEMARK MEANS THE TRADEMARK(S) AND
SERVICE MARK(S) FOR USE IN CONNECTION WITH THE DISTRIBUTION, MARKETING,
PROMOTION AND SALE OF LICENSED PRODUCT, OR ACCOMPANYING LOGOS, TRADE DRESS OR
INDICIA OF ORIGIN.  PRODUCT TRADEMARKS SPECIFICALLY EXCLUDES THE CORPORATE NAMES
AND LOGOS OF THE PARTIES AND THEIR AFFILIATES.

 

SECTION 1.94   “REGULATORY APPROVAL”.  REGULATORY APPROVAL MEANS THE APPROVAL OF
THE APPLICABLE REGULATORY AUTHORITY NECESSARY FOR THE MARKETING AND SALE OF
LICENSED PRODUCT FOR A PARTICULAR INDICATION IN A COUNTRY, EXCLUDING SEPARATE
PRICING OR REIMBURSEMENT APPROVALS THAT MAY BE REQUIRED, AND INCLUDING THE
EXPANSION OR MODIFICATION OF THE LABEL FOR SUCH INDICATION.

 

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SECTION 1.95  “REGULATORY AUTHORITY”.  REGULATORY AUTHORITY MEANS ANY FEDERAL,
NATIONAL, MULTINATIONAL, STATE, PROVINCIAL OR LOCAL REGULATORY AGENCY,
DEPARTMENT, BUREAU OR OTHER GOVERNMENTAL ENTITY WITH AUTHORITY OVER THE
MANUFACTURING, MARKETING, SALE OR USE OF A PHARMACEUTICAL PRODUCT IN A COUNTRY,
INCLUDING THE FDA IN THE UNITED STATES AND THE EMEA IN THE EU.

 

SECTION 1.96  “REGULATORY-BASED EXCLUSIVITY PERIOD”.  REGULATORY-BASED
EXCLUSIVITY PERIOD MEANS, WITH RESPECT TO A LICENSED PRODUCT IN A COUNTRY IN THE
ROYALTY TERRITORY, THAT PERIOD OF TIME DURING WHICH CUBIST OR ANY OF ITS RELATED
PARTIES HAS BEEN GRANTED THE EXCLUSIVE LEGAL RIGHT BY A REGULATORY AUTHORITY (OR
IS OTHERWISE ENTITLED TO THE EXCLUSIVE LEGAL RIGHT BY OPERATION OF APPLICABLE
LAW) IN SUCH COUNTRY TO MARKET AND SELL THE ACTIVE INGREDIENT CONTAINED IN SUCH
LICENSED PRODUCT IN SUCH COUNTRY.

 

SECTION 1.97  “RELATED PARTY”.  RELATED PARTY MEANS (A) WITH RESPECT TO CUBIST,
ANY OF CUBIST’S AFFILIATES OR SUBLICENSEES, AND, (B) WITH RESPECT TO ALNYLAM,
ANY OF ALNYLAM’S AFFILIATES OR SUBLICENSEES AND ALNYLAM’S ASIAN PARTNER.

 

SECTION 1.98  “RNAI PRODUCT”.  RNAI PRODUCT MEANS A DOUBLE-STRANDED
OLIGONUCLEOTIDE MOLECULE DESIGNED TO ACT PRIMARILY THROUGH AN RNA INTERFERENCE
MECHANISM THAT IS NOT A MICRORNA, MICRORNA ANTAGONIST OR MICRORNA MIMIC AND
WHICH CONSISTS OF EITHER (A) TWO SEPARATE OLIGOMERS OF NATIVE OR CHEMICALLY
MODIFIED RNA THAT ARE HYBRIDIZABLE TO ONE ANOTHER ALONG A SUBSTANTIAL PORTION OF
THEIR LENGTHS, OR (B) A SINGLE OLIGOMER OF NATIVE OR CHEMICALLY MODIFIED RNA
THAT IS HYBRIDIZABLE TO ITSELF BY SELF-COMPLEMENTARY BASE-PAIRING ALONG A
SUBSTANTIAL PORTION OF ITS LENGTH TO FORM A HAIRPIN, IN EITHER CASE THAT
INACTIVATES, INCLUDING INACTIVATION RESULTING FROM CLEAVAGE, A TARGET MRNA,
WHICH ENCODES A PROTEIN PRODUCT, VIA A DOUBLE-STRANDED RNASE, SUCH AS THOSE
INVOLVED IN THE RNA INTERFERENCE MECHANISM.

 

SECTION 1.99  “ROYALTY TERRITORY”.  ROYALTY TERRITORY MEANS, SUBJECT TO
SECTION 4.7, THE ENTIRE TERRITORY OTHER THAN NORTH AMERICA.

 

SECTION 1.100  “RSV”. RSV MEANS ALL STRAINS OF THE RESPIRATORY SYNCYTIAL VIRUS.

 

SECTION 1.101  “RSV01 PRODUCT”.  RSV01 PRODUCT MEANS ANY PRODUCT CONTAINING
ALNYLAM’S PROPRIETARY COMPOSITION KNOWN AS ALN-RSV01.  ALN-RSV01 IS DESCRIBED ON
EXHIBIT B.

 

SECTION 1.102  “RSV02 PRODUCT”.  RSV02 PRODUCT MEANS ANY PRODUCT CONTAINING
ALNYLAM’S PROPRIETARY COMPOSITION DESIGNATED BY THE JSC AS ALN-RSV02.

 

SECTION 1.103  “SAFETY DATA”.  SAFETY DATA MEANS ADVERSE EVENT INFORMATION AND
OTHER INFORMATION (IF ANY) REQUIRED BY ONE (1) OR MORE REGULATORY AUTHORITIES TO
BE COLLECTED OR TO BE REPORTED TO SUCH REGULATORY AUTHORITIES UNDER APPLICABLE
LAWS.

 

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SECTION 1.104  “SALES REPRESENTATIVE”.  SALES REPRESENTATIVE MEANS AN
INDIVIDUAL, WHO ENGAGES IN OR MANAGES SALES CALLS AND OTHER PROMOTIONAL EFFORTS
WITH RESPECT TO LICENSED PRODUCT AND WHO IS EMPLOYED BY A PARTY OR AN AFFILIATE
OF A PARTY.

 

SECTION 1.105  “SECOND OPT-OUT MILESTONE”.  SECOND OPT-OUT MILESTONE MEANS THE
EARLIER TO OCCUR OF: (A) []*.  FOR THE AVOIDANCE OF DOUBT, IF THERE IS A
DEADLOCK AT THE JSC WITH RESPECT TO THE DETERMINATION IN CLAUSE (B), THEN []*.

 

SECTION 1.106  “SUBLICENSEE”.  SUBLICENSEE, AS TO A LICENSED PRODUCT, MEANS ANY
THIRD PARTY TO WHOM A PARTY OR ANY OF ITS AFFILIATES GRANTS A SUBLICENSE (A) IN
THE CASE OF CUBIST OR ITS AFFILIATES, UNDER ANY ALNYLAM TECHNOLOGY TO DEVELOP,
MANUFACTURE OR COMMERCIALIZE ANY LICENSED PRODUCT IN THE FIELD IN THE TERRITORY,
AND (B) IN THE CASE OF ALNYLAM OR ITS AFFILIATES, UNDER ANY CUBIST TECHNOLOGY
LICENSED TO ALNYLAM PURSUANT TO SECTION 3.2 OR SECTION 11.3; PROVIDED THAT THE
TERM “SUBLICENSEE” DOES NOT INCLUDE []*.

 

SECTION 1.107  “SUBLICENSE INCOME”.  SUBLICENSE INCOME MEANS (A) WITH RESPECT TO
CUBIST, ANY PAYMENT CUBIST OR ANY OF ITS AFFILIATES RECEIVES FROM A LICENSEE OR
SUBLICENSEE FOR THE GRANT TO SUCH LICENSEE OR SUBLICENSEE OF A SUBLICENSE TO THE
RIGHTS TO ALNYLAM TECHNOLOGY LICENSED TO CUBIST UNDER THIS AGREEMENT OR A
LICENSE TO THE CUBIST TECHNOLOGY WITH RESPECT TO LICENSED PRODUCT IN THE FIELD
IN THE PROFIT-SHARE TERRITORY, OR, IN THE EVENT ALNYLAM EXERCISES THE OPT-OUT
OPTION, ANY PAYMENT CUBIST OR ANY OF ITS AFFILIATES RECEIVES FROM A LICENSEE OR
SUBLICENSEE FOR THE GRANT TO SUCH LICENSEE OR SUBLICENSEE OF A SUBLICENSE TO THE
RIGHTS TO ALNYLAM TECHNOLOGY LICENSED TO CUBIST UNDER THIS AGREEMENT OR A
LICENSE TO THE CUBIST TECHNOLOGY WITH RESPECT TO LICENSED PRODUCT IN NORTH
AMERICA, (B) WITH RESPECT TO ALNYLAM, ANY PAYMENT ALNYLAM OR ANY OF ITS
AFFILIATES RECEIVES FROM A LICENSEE OR SUBLICENSEE FOR THE GRANT TO SUCH
LICENSEE OR SUBLICENSEE OF A SUBLICENSE TO THE RIGHTS TO CUBIST TECHNOLOGY
LICENSED TO ALNYLAM OR A LICENSE TO ALNYLAM TECHNOLOGY UNDER THIS AGREEMENT WITH
RESPECT TO LICENSED PRODUCT IN THE FIELD IN THE PROFIT-SHARE TERRITORY, IN EACH
CASE TO THE EXTENT PERMITTED BY THE JSC UNDER THIS AGREEMENT, AND (C) WITH
RESPECT TO ALNYLAM, IN THE EVENT CUBIST TERMINATES THIS AGREEMENT AFTER THE
SECOND OPT-OUT MILESTONE, ANY PAYMENT ALNYLAM OR ANY OF ITS AFFILIATES RECEIVES
FROM A LICENSEE OR SUBLICENSEE FOR THE GRANT TO SUCH LICENSEE OR SUBLICENSEE OF
A SUBLICENSE TO THE RIGHTS TO CUBIST TECHNOLOGY OR A LICENSE UNDER ALNYLAM
TECHNOLOGY WITH RESPECT TO LICENSED PRODUCT IN THE FIELD IN NORTH AMERICA, IN
EACH CASE INCLUDING []*.  AS USED IN THIS SECTION 1.107, “LICENSEE” DOES NOT
INCLUDE []*.

 

                THE FOREGOING PROVISIONS OF THIS SECTION 1.107 NOTWITHSTANDING,
SUBLICENSE INCOME SHALL NOT INCLUDE:

 

(A)           []*;

 

(B)           []*;

 

(C)           []*;

 

(D)           []*; AND

 

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(E)           []*.

 

SECTION 1.108  “TERRITORY”.  TERRITORY MEANS THE ENTIRE WORLD, EXCEPT FOR ASIA.

 

SECTION 1.109  “THIRD PARTY”.  THIRD PARTY MEANS ANY PERSON OTHER THAN A PARTY
OR ANY OF ITS AFFILIATES.

 

SECTION 1.110  “UNITED STATES” OR “U.S.”.  UNITED STATES OR U.S. MEANS THE
UNITED STATES OF AMERICA AND ITS TERRITORIES AND POSSESSIONS.

 

SECTION 1.111  “VALID CLAIM”.  VALID CLAIM MEANS A CLAIM (A) OF ANY ISSUED,
UNEXPIRED PATENT THAT HAS NOT BEEN REVOKED OR HELD UNENFORCEABLE OR INVALID BY A
DECISION OF A COURT OR GOVERNMENTAL AGENCY OF COMPETENT JURISDICTION FROM WHICH
NO APPEAL CAN BE TAKEN, OR WITH RESPECT TO WHICH AN APPEAL IS NOT TAKEN WITHIN
THE TIME ALLOWED FOR APPEAL, AND THAT HAS NOT BEEN DISCLAIMED OR ADMITTED TO BE
INVALID OR UNENFORCEABLE THROUGH REISSUE, DISCLAIMER OR OTHERWISE OR (B) OF ANY
PATENT APPLICATION THAT HAS BEEN FILED WITH A GOOD FAITH BELIEF THAT CLAIMS ARE
REASONABLY LIKELY TO ISSUE THAT COVER LICENSED PRODUCT AND WHICH SUCH
APPLICATION HAS NOT BEEN CANCELLED, WITHDRAWN OR ABANDONED OR BEEN PENDING FOR
MORE THAN []* AS MEASURED FROM THE EARLIEST CLAIMED PRIORITY DATE OF SUCH PATENT
APPLICATION.

 

SECTION 1.112  ADDITIONAL DEFINITIONS.  EACH OF THE FOLLOWING DEFINITIONS IS SET
FORTH IN THE SECTION OF THIS AGREEMENT INDICATED BELOW:

 

Definition

 

Section

 

 

 

1974 Convention

 

13.1(c)

AAA

 

12.1

Additional RSV Product

 

4.6

Agreement

 

Preamble

Alnylam

 

Preamble

Alnylam Indemnitees

 

10.11(a)

Alnylam Trademarks

 

8.8(b)

Asian Partner Payments

 

7.11

Bankruptcy Code

 

3.5

Challenging Party

 

11.2(c)

Collaboration Manager

 

2.2

Combination Product

 

1.76

Commercialization Plan

 

5.3(a)

Competitive Infringement

 

8.4(a)

Confidential Information

 

9.1

Cubist

 

Preamble

Cubist Indemnitees

 

10.11(b)

Cubist Trademarks

 

8.8(b)

Dispute

 

12.1

Effective Date

 

Preamble

 

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Definition

 

Section

 

 

 

Excluded Claim

 

12.1

IFRS

 

1.52

Indemnitee

 

10.11(d)

JCT

 

5.2

JSC

 

2.1(a)

JSC Chairperson

 

2.1(b)

Losses

 

10.11(a)

M&A Event

 

13.8

MAA

 

1.77

Negotiation Period

 

3.1(g)

Non-Challenging Party

 

11.2(c)

Option Period

 

3.1(g)

Opt-Out Option

 

4.7(a)

Patent Expenses

 

8.3(e)

Promotional Materials

 

5.5

ROFN Notice

 

3.1(g)

ROFN Right

 

3.1(g)

Royalty Term

 

7.5(d)

Safety Information Exchange Agreement

 

5.9

Severed Clause

 

13.3

Supply Agreement

 

6.3

Supply Agreement Term Sheet

 

6.3

Tax or Taxes

 

7.13(e)

Term

 

11.1

Third Party Technology

 

8.6

 

ARTICLE II

 

MANAGEMENT OF COLLABORATIVE ACTIVITIES

 

SECTION 2.1  JOINT STEERING COMMITTEE.  THE PARTIES HEREBY ESTABLISH A JOINT
COMMITTEE TO FACILITATE THE COLLABORATION IN THE PROFIT-SHARE TERRITORY AS
FOLLOWS:

 

(A)           COMPOSITION OF THE JOINT STEERING COMMITTEE.  THE COLLABORATION IN
THE PROFIT-SHARE TERRITORY SHALL BE CONDUCTED UNDER THE DIRECTION OF A JOINT
STEERING COMMITTEE (THE “JSC”) COMPRISED OF THREE (3) NAMED REPRESENTATIVES OF
CUBIST AND THREE (3) NAMED REPRESENTATIVES OF ALNYLAM OR SUCH OTHER NUMBER OF
REPRESENTATIVES AS THE PARTIES MAY FROM TIME TO TIME MUTUALLY AGREE.  EACH PARTY
SHALL APPOINT ITS RESPECTIVE REPRESENTATIVES TO THE JSC FROM TIME TO TIME, AND
MAY SUBSTITUTE ONE OR MORE OF ITS REPRESENTATIVES, IN ITS SOLE DISCRETION,
EFFECTIVE UPON NOTICE TO THE OTHER PARTY OF SUCH CHANGE.  EACH PARTY SHALL HAVE
AT LEAST ONE JSC REPRESENTATIVE WHO IS A SENIOR EMPLOYEE (VICE PRESIDENT LEVEL
OR ABOVE), AND ALL JSC REPRESENTATIVES SHALL HAVE APPROPRIATE EXPERTISE AND
ONGOING FAMILIARITY WITH THE COLLABORATION.

 

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ADDITIONAL REPRESENTATIVES OR CONSULTANTS MAY FROM TIME TO TIME, BY MUTUAL
CONSENT OF THE PARTIES, BE INVITED TO ATTEND JSC MEETINGS, PROVIDED SUCH
REPRESENTATIVES’ AND CONSULTANTS ARE SUBJECT TO WRITTEN OBLIGATIONS THAT ARE NO
LESS STRINGENT THAN THE CONFIDENTIALITY OBLIGATIONS AND RESTRICTIONS ON USE SET
FORTH IN ARTICLE IX.  ALL PROCEEDINGS FOR THE JSC SHALL TAKE PLACE IN ENGLISH. 
EACH PARTY SHALL BEAR ITS OWN EXPENSES RELATING TO ATTENDANCE AT SUCH MEETINGS
BY ITS REPRESENTATIVES.

 

(B)           JSC CHAIRPERSON.  THE CHAIRPERSON OF THE JSC (THE “JSC
CHAIRPERSON”) SHALL ROTATE EVERY TWELVE (12) MONTHS BETWEEN ALNYLAM AND CUBIST. 
THE INITIAL JSC CHAIRPERSON SHALL BE A REPRESENTATIVE OF ALNYLAM.  THE JSC
CHAIRPERSON’S RESPONSIBILITIES SHALL INCLUDE (I) SCHEDULING MEETINGS AT LEAST
[]* PER CALENDAR QUARTER, BUT MORE FREQUENTLY IF THE JSC DETERMINES IT
NECESSARY; (II) SETTING AGENDAS FOR MEETINGS WITH SOLICITED INPUT FROM OTHER
MEMBERS; AND (III) CONFIRMING AND DELIVERING MINUTES TO THE JSC FOR REVIEW AND
FINAL APPROVAL.

 

(C)           MEETINGS.  THE FIRST JSC MEETING SHALL BE HELD WITHIN []* AFTER
THE EFFECTIVE DATE, AND THE JSC SHALL MEET IN ACCORDANCE WITH A SCHEDULE
ESTABLISHED BY MUTUAL AGREEMENT OF THE PARTIES, BUT NO LESS FREQUENTLY THAN []*
EACH CALENDAR QUARTER, WITH THE LOCATION FOR SUCH MEETINGS ALTERNATING BETWEEN
ALNYLAM AND CUBIST FACILITIES IN MASSACHUSETTS (OR SUCH OTHER LOCATIONS AS ARE
DETERMINED BY THE JSC).  ALTERNATIVELY, THE JSC MAY MEET BY MEANS OF
TELECONFERENCE, VIDEOCONFERENCE OR OTHER SIMILAR COMMUNICATIONS EQUIPMENT, BUT
AT LEAST []* MEETINGS PER CALENDAR YEAR SHALL BE CONDUCTED IN PERSON.

 

(D)           JSC RESPONSIBILITIES.  THE JSC SHALL HAVE THE FOLLOWING
RESPONSIBILITIES WITH RESPECT TO THE COLLABORATION:

 

(I)            PROVIDING UPDATES REGARDING THE DEVELOPMENT OF LICENSED PRODUCT
IN THE TERRITORY;

 

(II)           MONITORING, PLANNING AND COORDINATING THE DEVELOPMENT OF LICENSED
PRODUCT IN THE PROFIT-SHARE TERRITORY AND THE PARTIES’ RESPECTIVE COMMITMENTS
RELATING TO SHARED DEVELOPMENT COSTS;

 

(III)          REVIEWING AND APPROVING (A) EACH ANNUAL UPDATE TO THE DEVELOPMENT
PLAN, AND (B) ANY MODIFICATIONS TO THE DEVELOPMENT PLAN WITHIN []* AFTER EACH
SUBMISSION THEREOF TO THE JSC (OR SOONER AS CIRCUMSTANCES WARRANT);

 

(IV)          REGULARLY ASSESSING THE PROGRESS OF THE PARTIES IN THEIR CONDUCT
OF THE DEVELOPMENT PLAN AGAINST THE TIMELINES AND BUDGETS CONTAINED THEREIN,
REVIEWING RELEVANT DATA, AND CONSIDERING ISSUES OF PRIORITY;

 

(V)           OVERSEEING MANUFACTURING ACTIVITIES RELATED TO THE DEVELOPMENT OF
LICENSED PRODUCT FOR THE TERRITORY;

 

(VI)          REVIEWING INFORMATION AND DATA RELATING TO THE DEVELOPMENT OF
LICENSED PRODUCTS BY ALNYLAM AND ITS RELATED PARTIES FOR ASIA;

 

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(VII)         COORDINATING WITH THE JCT REGARDING COMMERCIALIZATION MATTERS
RELATED TO THE PROFIT-SHARE TERRITORY, AS NECESSARY OR APPROPRIATE;

 

(VIII)        []*.

 

(IX)           PERFORMING SUCH OTHER ACTIVITIES AS THE PARTIES AGREE IN WRITING
SHALL BE THE RESPONSIBILITY OF THE JSC; AND

 

(X)            ATTEMPTING TO RESOLVE ANY AND ALL DISPUTES RELATING TO THE
CONDUCT OF THE COLLABORATION IN THE PROFIT-SHARE TERRITORY BY CONSENSUS.

 

For purposes of clarity, it is expected that with respect to the sharing of
information regarding Licensed Product, (A) each Party will, through the JSC and
through regular communication between each Party’s designated Collaboration
Manager, keep the other Party informed at a detailed level about all activities
related to the Development, Manufacture and Commercialization of Licensed
Product in the Field in the Profit-Share Territory, and will provide all
information requested of such Party by the other Party related to the
Development, Manufacture and Commercialization of Licensed Product in the Field
in the Profit-Share Territory, (B) Cubist will regularly share information with
Alnylam through the JSC regarding its activities in the Royalty Territory,
consistent with keeping Alnylam reasonably informed of the progress and results
of Development, Manufacture and Commercialization in the Royalty Territory, and
(C) Alnylam will regularly share information with Cubist through the JSC
regarding the activities of Alnylam and its Related Parties with respect to
Development, Manufacture and Commercialization of Licensed Product for Asia
consistent with keeping Cubist reasonably informed of the progress and results
of Development, Manufacture and Commercialization of Licensed Product for Asia.

 

For purposes of clarity, the JSC shall not have the authority to modify the
terms of this Agreement.

 

SECTION 2.2  APPOINTMENT OF SUBCOMMITTEES, PROJECT TEAMS AND COLLABORATION
MANAGERS.  THE JSC SHALL BE EMPOWERED TO CREATE SUCH SUBCOMMITTEES OF ITSELF AND
PROJECT TEAMS AS IT MAY DEEM APPROPRIATE OR NECESSARY. EACH SUCH SUBCOMMITTEE
AND PROJECT TEAM SHALL REPORT TO THE JSC, WHICH SHALL HAVE AUTHORITY TO APPROVE
OR REJECT RECOMMENDATIONS OR ACTIONS PROPOSED THEREBY SUBJECT TO THE TERMS OF
THIS AGREEMENT.  EACH PARTY SHALL ALSO DESIGNATE A COLLABORATION MANAGER (EACH A
“COLLABORATION MANAGER”), WHO SHALL BE RESPONSIBLE FOR THE DAY-TO-DAY
COORDINATION OF THE COLLABORATION AND WILL SERVE TO FACILITATE COMMUNICATION
BETWEEN THE PARTIES WITH RESPECT TO BOTH THE PROFIT-SHARE TERRITORY AND THE
ROYALTY TERRITORY.  EACH PARTY MAY CHANGE ITS DESIGNATED COLLABORATION MANAGER
FROM TIME TO TIME UPON WRITTEN NOTICE TO THE OTHER PARTY.

 

SECTION 2.3  REPORTS AND MINUTES.  EACH PARTY SHALL PREPARE AND DELIVER TO THE
JSC, BY NO LATER THAN EACH []* (FOR THE PERIOD ENDING DECEMBER 31 OF THE PRIOR
CALENDAR YEAR), WRITTEN REPORTS SUMMARIZING SUCH PARTY’S DEVELOPMENT ACTIVITIES
FOR LICENSED PRODUCT IN THE FIELD FOR THE TERRITORY PERFORMED TO DATE (OR
UPDATING SUCH REPORT FOR ACTIVITIES PERFORMED SINCE THE LAST SUCH REPORT
SUBMITTED HEREUNDER, AS APPLICABLE).  SUCH REPORTS MAY BE PROVIDED IN ANY
REASONABLE

 

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WRITTEN FORM DETERMINED BY THE REPORTING PARTY, INCLUDING IN A PRESENTATION
SLIDE FORMAT THAT REASONABLY SUMMARIZES SUCH ACTIVITIES.  ALNYLAM SHALL ALSO, AT
THE SAME TIME IT SUBMITS A WRITTEN REPORT UNDER THIS SECTION 2.3 REGARDING
ACTIVITIES IN THE TERRITORY, ALSO PROVIDE A WRITTEN REPORT TO THE JSC
SUMMARIZING THE STATUS, PROGRESS AND RESULTS OF ACTIVITIES PERFORMED BY ALNYLAM
AND ITS ASIAN PARTNER WITH RESPECT TO DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT FOR ASIA.  IN ADDITION, CUBIST SHALL
PROVIDE ALNYLAM WITH PROMPT WRITTEN NOTICE OF THE ACHIEVEMENT BY CUBIST OF ANY
MILESTONE EVENT SET FORTH IN SECTION 7.2.  EACH PARTY WILL PROVIDE THE MEMBERS
OF THE JSC WITH COPIES, WHICH MAY BE IN ELECTRONIC FORMAT, OF ALL MATERIALS IT
INTENDS TO PRESENT AT A JSC MEETING.  THE JSC MAY ALSO REQUEST AT ANY TIME
SPECIFIC DATA OR INFORMATION RELATED TO COLLABORATION ACTIVITIES OR ANY OTHER
DATA TO WHICH THE JSC IS ENTITLED UNDER THIS AGREEMENT OR THAT A WRITTEN REPORT
BE PREPARED IN ADVANCE OF ANY MEETING SUMMARIZING CERTAIN MATERIAL DATA AND
INFORMATION ARISING OUT OF THE CONDUCT OF THE COLLABORATION ANY OTHER DATA TO
WHICH THE JSC IS ENTITLED UNDER THIS AGREEMENT AND THE PARTY OR APPROPRIATE
COMMITTEE TO WHOM SUCH REQUEST IS MADE SHALL PROMPTLY PROVIDE TO THE OTHER PARTY
OR THE JSC SUCH REPORT, DATA OR INFORMATION.  A SECRETARY SHALL BE APPOINTED FOR
EACH MEETING AND SHALL PREPARE MINUTES OF THE MEETING, IT BEING UNDERSTOOD THAT
THE SECRETARY AND THE JSC CHAIRPERSON SHALL NOT BE REPRESENTATIVES OF THE SAME
PARTY (THAT IS, IF THE JSC CHAIRPERSON IS A REPRESENTATIVE OF CUBIST, THE
SECRETARY SHALL BE A REPRESENTATIVE OF ALNYLAM, AND VICE VERSA).

 

SECTION 2.4  DECISION-MAKING.  DECISIONS WITHIN THE PURVIEW OF THE JSC SHALL BE
MADE BY THE JSC BY CONSENSUS, WITH THE REPRESENTATIVES OF EACH PARTY
COLLECTIVELY HAVING ONE VOTE ON BEHALF OF SUCH PARTY.  FOR EACH MEETING OF THE
JSC, AT LEAST TWO (2) REPRESENTATIVES OF EACH PARTY SHALL CONSTITUTE A QUORUM. 
ACTION ON ANY MATTER MAY BE TAKEN AT A MEETING, BY TELECONFERENCE,
VIDEOCONFERENCE OR BY WRITTEN AGREEMENT.

 

SECTION 2.5  DEADLOCKS.  THE JSC SHALL ATTEMPT TO RESOLVE ANY AND ALL DISPUTES
RELATING TO THE COLLABORATION BY CONSENSUS.  IF THE JSC IS UNABLE TO REACH A
CONSENSUS WITH RESPECT TO A DISPUTE, THEN THE DISPUTE SHALL BE SUBMITTED TO
ESCALATING LEVELS OF ALNYLAM AND CUBIST SENIOR MANAGEMENT FOR REVIEW.  IF SUCH
DISPUTE CANNOT BE RESOLVED DESPITE ESCALATION, THEN THE CHIEF EXECUTIVE OFFICERS
OF ALNYLAM AND CUBIST SHALL ATTEMPT TO RESOLVE SUCH DISPUTE.  IF THE CHIEF
EXECUTIVE OFFICERS CANNOT REACH AN AGREEMENT REGARDING SUCH DISPUTE WITHIN []*
DAYS AFTER SUBMISSION TO THEM FOR RESOLUTION, THEN IF THE DISPUTE IS ONE OVER
WHICH THE JSC HAS AUTHORITY PURSUANT TO SECTION 2.1(D) OR IF THE DISPUTE RELATES
TO THE ROYALTY TERRITORY, THEN CUBIST SHALL HAVE THE FINAL DECISION-MAKING
AUTHORITY SUBJECT TO SECTIONS 2.5(A) AND (B).  NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, ANY DECISION WITHIN THE PURVIEW OF THE JSC FOR WHICH
CUBIST HAS EXERCISED ITS FINAL DECISION-MAKING AUTHORITY SHALL BE CONSIDERED A
DECISION OR APPROVAL OF THE JSC.

 

(A)           NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, CUBIST
(I) HAS NO FINAL DECISION-MAKING AUTHORITY OVER THE DEVELOPMENT OR
COMMERCIALIZATION OF LICENSED PRODUCT FOR ASIA OR OUTSIDE THE FIELD, OR THE
MANUFACTURE OF LICENSED PRODUCT BY ALNYLAM OR ITS RELATED PARTIES FOR SUCH
PURPOSES, (II) MAY NOT CONDUCT, SPONSOR, FUND OR OTHERWISE SUPPORT A CLINICAL
STUDY OR POST-APPROVAL STUDY OF LICENSED PRODUCT THAT WOULD []* THE DEVELOPMENT
OR COMMERCIALIZATION OF LICENSED PRODUCT IN THE FIELD IN ASIA WITHOUT ALNYLAM’S
PRIOR WRITTEN

 

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CONSENT; (III) MAY NOT EFFECT A TRANSFER OF RESPONSIBILITY FOR THE MANUFACTURE
OF API BULK DRUG SUBSTANCE OR FINISHED PRODUCT FROM ALNYLAM TO CUBIST, IT BEING
UNDERSTOOD THAT ANY SUCH DECISIONS SHALL BE MADE BY THE PARTIES IN ACCORDANCE
WITH ARTICLE VI; (IV) MAY NOT EXERCISE ITS FINAL DECISION-MAKING AUTHORITY TO
RESOLVE ANY DISPUTES BETWEEN THE PARTIES REGARDING THE []*; (V) MAY NOT EXERCISE
ITS FINAL DECISION-MAKING AUTHORITY TO []*; (VI) MAY NOT EXERCISE ITS FINAL
DECISION-MAKING AUTHORITY WITH RESPECT TO DECISIONS ABOUT WHETHER []*, (VII) MAY
NOT EXERCISE ITS FINAL DECISION-MAKING AUTHORITY TO RESOLVE ANY DISPUTE
REGARDING []*; AND (VIII) MAY NOT EXERCISE ITS FINAL DECISION-MAKING AUTHORITY
TO (A) REQUIRE ALNYLAM TO USE OTHER THAN DILIGENT EFFORTS TO PERFORM ITS
OBLIGATIONS UNDER THE COLLABORATION, (B) REQUIRE ALNYLAM TO PERFORM ANY
ACTIVITIES FOR WHICH IT IS NOT RESPONSIBLE UNDER THIS AGREEMENT, TO AMEND THE
DEVELOPMENT PLAN OR COMMERCIALIZATION PLAN TO IMPOSE ADDITIONAL OBLIGATIONS ON
ALNYLAM WITHOUT ALNYLAM’S CONSENT, INCLUDING FOR PURPOSES OF CLARITY, TO APPROVE
ANY CHANGE IN THE BUDGETS FOR THE DEVELOPMENT PLAN OR THE COMMERCIALIZATION PLAN
PURSUANT TO SECTION 4.5 OR SECTION 5.3(B), IT BEING UNDERSTOOD THAT CUBIST SHALL
HAVE FINAL DECISION-MAKING AUTHORITY REGARDING IMPLEMENTATION OF THE ACTIVITIES
SET FORTH IN THE DEVELOPMENT PLAN AND THE COMMERCIALIZATION PLAN, INCLUDING
PRICING OF LICENSED PRODUCT IN THE TERRITORY; (C) RESOLVE ANY DISPUTE AS TO WHAT
LEVEL OF EFFORT CONSTITUTES DILIGENT EFFORTS, (D) REQUIRE ALNYLAM TO TAKE ANY
ACTION THAT WOULD, OR FAIL TO TAKE ANY ACTION WHERE THE FAILURE TO TAKE SUCH
ACTION WOULD, VIOLATE ANY APPLICABLE LAW, RULE OR REGULATION OR ANY AGREEMENT
WITH ANY THIRD PARTY (PROVIDED, THAT, IN ENTERING INTO ANY SUCH AGREEMENT,
ALNYLAM IS NOT IN BREACH OF ITS OBLIGATION UNDER THIS AGREEMENT) OR INFRINGE THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, OR (E) EXPAND OR NARROW THE
RESPONSIBILITIES OF THE JSC OR JCT; AND

 

(B)           WITH RESPECT TO ALL DISPUTES BETWEEN THE PARTIES UNDER THIS
AGREEMENT THAT ARE NOT SUBJECT TO CUBIST’S FINAL DECISION-MAKING AUTHORITY, THE
DISPUTE RESOLUTION PROVISIONS OF ARTICLE XII SHALL APPLY.

 

SECTION 2.6  DISSOLUTION OF JSC.  THE JSC SHALL BE DISSOLVED UPON THE EARLIER TO
OCCUR OF (A) []*; PROVIDED THAT, AFTER THE []* OF THE EFFECTIVE DATE, ALNYLAM
SHALL HAVE THE RIGHT, BUT SHALL NOT BE OBLIGATED, TO PARTICIPATE ON THE JSC.  IN
THE EVENT THE JSC IS DISSOLVED OR ALNYLAM ELECTS NOT PARTICIPATE UNDER THE
PRECEDING SENTENCE, (I) DECISIONS WITHIN THE PURVIEW OF THE JSC SHALL BE MADE BY
CUBIST SUBJECT TO THE LIMITS ON CUBIST’S DECISION-MAKING AUTHORITY SET FORTH IN
SECTION 2.5 (A) AND SUBJECT TO SECTION 2.5(B), AND (II) INFORMATION SHARING
SHALL CONTINUE AS SET FORTH IN SECTION 4.8

 

SECTION 2.7  COLLABORATION GUIDELINES.

 

(A)           IN CONDUCTING ACTIVITIES UNDER THIS AGREEMENT, NEITHER PARTY SHALL
PREJUDICE THE VALUE OF LICENSED PRODUCT BY REASON OF SUCH PARTY’S ACTIVITIES
OUTSIDE OF THE COLLABORATION.  EXCEPT AS SPECIFICALLY PROVIDED IN ARTICLE III OR
SECTION 10.1, THE FOREGOING SHALL NOT REQUIRE EITHER PARTY TO LIMIT THE
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF PRODUCTS OTHER THAN LICENSED
PRODUCT.  WITHOUT LIMITING THE PROVISIONS OF THIS SECTION 2.7(A), ALNYLAM AGREES
THAT IT WILL NOT CONDUCT, SPONSOR, FUND OR OTHERWISE SUPPORT WITHOUT CUBIST’S
PRIOR WRITTEN CONSENT, AND WILL USE DILIGENT EFFORTS TO PREVENT ANY RELATED
PARTY FROM, CONDUCTING, SPONSORING,

 

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FUNDING OR OTHERWISE SUPPORTING, A CLINICAL STUDY OF ANY LICENSED PRODUCT FOR
ASIA THAT WOULD []* THE DEVELOPMENT OR COMMERCIALIZATION OF LICENSED PRODUCTS IN
THE TERRITORY.  IN ALL MATTERS RELATING TO THIS AGREEMENT, THE PARTIES SHALL
SEEK TO COMPLY WITH GOOD PHARMACEUTICAL AND ENVIRONMENTAL PRACTICES.

 

(B)           SUBJECT TO THE TERMS OF THIS AGREEMENT, THE ACTIVITIES AND
RESOURCES OF EACH PARTY SHALL BE MANAGED BY SUCH PARTY, ACTING INDEPENDENTLY AND
IN ITS INDIVIDUAL CAPACITY.

 

ARTICLE III

 

LICENSE GRANTS

 

SECTION 3.1  ALNYLAM GRANTS.

 

(A)           DEVELOPMENT LICENSE.  SUBJECT TO THE TERMS OF THIS AGREEMENT,
ALNYLAM HEREBY GRANTS TO CUBIST (I) A CO-EXCLUSIVE (WITH ALNYLAM, TO THE EXTENT
OF ALNYLAM’S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT) RIGHT AND LICENSE,
WITH THE RIGHT TO GRANT SUBLICENSES, UNDER THE ALNYLAM TECHNOLOGY, TO DEVELOP
LICENSED PRODUCTS IN THE FIELD FOR THE PROFIT-SHARE TERRITORY, AND (II) AN
EXCLUSIVE RIGHT AND LICENSE, WITH THE RIGHT TO GRANT SUBLICENSES, UNDER THE
ALNYLAM TECHNOLOGY, TO DEVELOP LICENSED PRODUCTS IN THE FIELD FOR THE ROYALTY
TERRITORY.  SUCH LICENSES SHALL BE (A) ROYALTY-BEARING FOR THE ROYALTY TERM OF
LICENSED PRODUCT IN EACH COUNTRY OF THE ROYALTY TERRITORY, AND (B) SUBJECT TO
THE PARTIES’ RIGHTS AND OBLIGATIONS WITH RESPECT TO N.A. PRE-TAX PROFIT OR LOSS
IN THE PROFIT-SHARE TERRITORY FOR THE TERM IN ACCORDANCE WITH SECTION 7.4.  UPON
EXPIRATION OF THE ROYALTY TERM IN THE CASE OF A COUNTRY IN THE ROYALTY
TERRITORY, THE LICENSE GRANTED UNDER CLAUSE (II) SHALL CONVERT TO AN EXCLUSIVE,
PERPETUAL, FULLY PAID-UP, NON-ROYALTY-BEARING LICENSES TO DEVELOP LICENSED
PRODUCTS IN THE FIELD IN THE APPLICABLE COUNTRY(IES).  NOTWITHSTANDING ANYTHING
IN THIS AGREEMENT TO THE CONTRARY, ALNYLAM SHALL NOT BE ENTITLED TO MULTIPLE
ROYALTY OR OTHER PAYMENTS BY REASON OF THE SPLIT OF THE LICENSE GRANTED TO
CUBIST UNDER THIS ARTICLE III INTO A DEVELOPMENT, COMMERCIALIZATION AND A
MANUFACTURING LICENSE.

 

(B)           COMMERCIALIZATION LICENSE.  SUBJECT TO THE TERMS OF THIS
AGREEMENT, ALNYLAM HEREBY GRANTS TO CUBIST AN EXCLUSIVE RIGHT AND LICENSE, WITH
THE RIGHT TO GRANT SUBLICENSES, UNDER THE ALNYLAM TECHNOLOGY TO COMMERCIALIZE
LICENSED PRODUCTS IN THE FIELD IN THE TERRITORY.  SUCH LICENSE SHALL BE
(I) ROYALTY-BEARING FOR THE ROYALTY TERM OF LICENSED PRODUCT IN EACH COUNTRY OF
THE ROYALTY TERRITORY, AND (II) SUBJECT TO THE PARTIES’ RIGHTS AND OBLIGATIONS
WITH RESPECT TO N.A. PRE-TAX PROFIT OR LOSS IN THE PROFIT-SHARE TERRITORY FOR
THE TERM.  UPON EXPIRATION OF THE ROYALTY TERM IN THE CASE OF A COUNTRY IN THE
ROYALTY TERRITORY, THE LICENSE GRANTED UNDER CLAUSE (I) SHALL CONVERT TO AN
EXCLUSIVE, PERPETUAL, FULLY PAID-UP, NON-ROYALTY-BEARING LICENSE TO
COMMERCIALIZE LICENSED PRODUCTS IN THE FIELD IN SUCH COUNTRY(IES).

 

(C)           MANUFACTURING LICENSE.  SUBJECT TO THE TERMS OF THIS AGREEMENT,
INCLUDING ALNYLAM’S RIGHTS AS SET FORTH IN ARTICLE VI, ALNYLAM HEREBY GRANTS TO
CUBIST A CO-EXCLUSIVE (WITH ALNYLAM, TO THE EXTENT OF ALNYLAM’S RIGHTS AND
OBLIGATIONS UNDER ARTICLE VI) RIGHT AND LICENSE, WITH THE RIGHT TO GRANT
SUBLICENSES, TO THE EXTENT CONSISTENT WITH ARTICLE VI, UNDER THE ALNYLAM

 

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TECHNOLOGY, TO MANUFACTURE OR HAVE MANUFACTURED LICENSED PRODUCTS FOR
DEVELOPMENT AND COMMERCIALIZATION IN THE FIELD FOR THE TERRITORY.

 

(D)           LIMITATION ON EXCLUSIVITY.  FOR PURPOSES OF CLARITY,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 3.1(A), 3.1(B) OR 10.1,
ALNYLAM HAS PREVIOUSLY AND RETAINS THE RIGHT AFTER THE EFFECTIVE DATE TO GRANT
NON-EXCLUSIVE LICENSES TO THIRD PARTIES TO DEVELOP, MANUFACTURE AND
COMMERCIALIZE RNAI PRODUCTS FOR THE TERRITORY UNDER ALNYLAM TECHNOLOGY OTHER
THAN UNDER THE ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS OR ALNYLAM SEQUENCE
SPECIFIC KNOW-HOW; PROVIDED, THAT, NEITHER ALNYLAM NOR ANY OF ITS AFFILIATES
(I) WILL LICENSE OR WILL DISCLOSE  LICENSED PRODUCT-SPECIFIC DATA, SEQUENCE
INFORMATION OR OTHER LICENSED PRODUCT-SPECIFIC KNOW-HOW TO ANY THIRD PARTY OTHER
THAN TO A RELATED PARTY FOR PURPOSES OF ENABLING ALNYLAM TO FULFILL ITS
OBLIGATIONS UNDER THIS AGREEMENT OR WITH RESPECT TO THE DEVELOPMENT AND
COMMERCIALIZATION OF LICENSED PRODUCTS IN ASIA, (II) HAS OR WILL ALLOW ANY THIRD
PARTY TO RELY ON LICENSED PRODUCT-SPECIFIC REGULATORY FILINGS OR PRE-CLINICAL OR
CLINICAL WORK, OR, EXCEPT AS SPECIFIED IN A DEVELOPMENT PLAN FOR PURPOSES OF THE
COLLABORATION, COLLABORATE WITH ANY THIRD PARTY OTHER THAN A RELATED PARTY
REGARDING LICENSED PRODUCTS IN ANY MANNER, INCLUDING IN ANY MANNER THAT
CONFLICTS WITH SECTION 3.1(A), 3.1(B) OR 10.1, OR (III) WILL, AFTER THE
EFFECTIVE DATE, GRANT A RIGHT OR LICENSE TO ANY THIRD PARTY UNDER ANY PATENT
RIGHTS OR KNOW-HOW THAT WOULD ALLOW SUCH THIRD PARTY TO DEVELOP, MANUFACTURE AND
COMMERCIALIZE LICENSED PRODUCTS OTHER THAN PURSUANT TO OPTIONS OR OTHER RIGHTS
EXISTING ON THE EFFECTIVE DATE UNDER THE AGREEMENTS LISTED IN EXHIBIT D.

 

(E)           AFFILIATES; SUBLICENSES.

 

(I)            CUBIST SHALL HAVE THE RIGHT TO GRANT SUBLICENSES UNDER THE
LICENSES GRANTED TO IT PURSUANT TO SECTIONS 3.1(A), (B) AND (C), AND THE RIGHT
TO GRANT LICENSES OF ITS RIGHTS UNDER ANY JOINT COLLABORATION IP, TO AN ENTITY
THAT IS ITS AFFILIATE FOR SO LONG AS SUCH ENTITY REMAINS AN AFFILIATE OF CUBIST
AND COMPLIES IN ALL MATERIAL RESPECTS WITH THE OBLIGATIONS OF CUBIST UNDER THIS
AGREEMENT.  CUBIST HEREBY GUARANTEES THE FULL PAYMENT AND PERFORMANCE OF ITS
AFFILIATES UNDER THIS AGREEMENT.

 

(II)           SUBJECT TO SECTIONS 3.1(F), 3.3 AND 10.1, AND FOR THE
PROFIT-SHARE TERRITORY []*, CUBIST HAS THE RIGHT TO GRANT SUBLICENSES OF ITS
RIGHTS AND THE LICENSES GRANTED TO IT UNDER THIS AGREEMENT (AND THE RIGHT TO
GRANT SUBLICENSES UNDER ALNYLAM’S INTEREST IN ANY JOINT COLLABORATION IP) TO
THIRD PARTIES TO DEVELOP AND COMMERCIALIZE LICENSED  PRODUCT IN THE FIELD IN THE
TERRITORY (A) []*.

 

(III)          SUBJECT TO SECTIONS 3.1(F) AND 3.3 AND ARTICLE VI, CUBIST SHALL
HAVE THE RIGHT TO GRANT SUBLICENSES OF ITS RIGHTS AND THE LICENSE GRANTED UNDER
SECTION 3.1(C) (AND THE RIGHT TO GRANT SUBLICENSES UNDER ALNYLAM’S INTEREST IN
ANY JOINT COLLABORATION IP) TO THIRD PARTIES TO MANUFACTURE THE RSV01  PRODUCT,
THE RSV02 PRODUCT, ANY ADDITIONAL RSV PRODUCT, OR A LICENSED PRODUCT SUBLICENSED
UNDER SECTION 3.1(E)(II) FOR DEVELOPMENT AND COMMERCIALIZATION IN THE FIELD FOR
THE TERRITORY.

 

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(F)            ALNYLAM IN-LICENSES.  ALL LICENSES AND OTHER RIGHTS GRANTED TO
CUBIST HEREUNDER ARE SUBJECT TO THE RIGHTS AND OBLIGATIONS OF ALNYLAM UNDER THE
ALNYLAM IN-LICENSES AND THE KYOWA AGREEMENT.  CUBIST SHALL COMPLY WITH ALL TERMS
AND CONDITIONS OF THE ALNYLAM IN-LICENSES AND THE KYOWA AGREEMENT IN THE
TERRITORY APPLICABLE TO A SUBLICENSEE OF ALNYLAM, AND SHALL PERFORM AND TAKE
SUCH ACTIONS IN THE TERRITORY AS MAY BE REQUIRED OF A SUBLICENSEE (AND, WITH
RESPECT TO THE KYOWA AGREEMENT AND THE []*, AS MAY BE REQUIRED OF ALNYLAM, WITH
RESPECT TO DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION OF LICENSED PRODUCT
FOR THE TERRITORY) TO ALLOW ALNYLAM TO COMPLY WITH ITS OBLIGATIONS THEREUNDER,
INCLUDING OBLIGATIONS RELATING TO SUBLICENSING, PATENT MATTERS, CONFIDENTIALITY,
REPORTING, AUDIT RIGHTS, INDEMNIFICATION AND DILIGENCE; PROVIDED THAT IN NO
EVENT SHALL CUBIST BE RESPONSIBLE FOR ANY PAYMENT OBLIGATIONS OR OTHER FINANCIAL
OBLIGATIONS OF ANY KIND OF ALNYLAM UNDER SUCH AGREEMENTS EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN SECTIONS 4.7, 7.6, 7.7, 7.9 AND  8.6.  IN ORDER TO
FACILITATE CUBIST’S COMPLIANCE WITH THIS SECTION 3.1(F), ALNYLAM WILL PROVIDE
CUBIST WITH REASONABLE NOTICE IN ADVANCE OF ANY ACTION OR INFORMATION REQUIRED
OF CUBIST IN RESPECT OF THE ALNYLAM IN-LICENSES, INCLUDING A DESCRIPTION
REGARDING ALNYLAM’S INTERPRETATION OF SUCH REQUIREMENTS, AND CUBIST WILL, TO THE
EXTENT REQUIRED UNDER THIS SECTION 3.1(F), PERFORM SUCH ACTIONS AND PROVIDE SUCH
INFORMATION IN ACCORDANCE WITH SUCH REQUIREMENTS AS REASONABLY INTERPRETED BY
ALNYLAM.

 

(G)           RIGHT OF FIRST NEGOTIATION FOR ASIA.  ALNYLAM HEREBY GRANTS TO
CUBIST A RIGHT OF FIRST NEGOTIATION TO ADD ASIA TO THE ROYALTY TERRITORY
HEREUNDER (THE “ROFN RIGHT”) IF, DURING THE TERM, (I) THE KYOWA AGREEMENT
TERMINATES AND (II) ALNYLAM DETERMINES TO SEEK AN ASIAN PARTNER OTHER THAN KYOWA
HAKKO FOR LICENSED PRODUCTS IN THE FIELD IN ASIA.  PRIOR TO INITIATING FORMAL
BUSINESS DISCUSSIONS WITH ONE OR MORE THIRD PARTIES OTHER THAN KYOWA HAKKO
REGARDING SUCH OPPORTUNITY, ALNYLAM SHALL NOTIFY CUBIST OF ALNYLAM’S
DETERMINATION TO SEEK AN ASIAN PARTNER OTHER THAN KYOWA HAKKO (THE “ROFN
NOTICE”), AND CUBIST SHALL HAVE []* AFTER RECEIPT OF THE ROFN NOTICE (THE
“OPTION PERIOD”) TO NOTIFY ALNYLAM IN WRITING THAT EITHER (A) CUBIST IS
EXERCISING ITS ROFN RIGHT AND IS INTERESTED IN ADDING ASIA TO THE ROYALTY
TERRITORY HEREUNDER, OR (B) CUBIST IS NOT INTERESTED IN ADDING ASIA TO THE
ROYALTY TERRITORY HEREUNDER AND THEREFORE WAIVES ITS ROFN RIGHT.  FAILURE BY
CUBIST TO PROVIDE WRITTEN NOTICE OF ITS EXERCISE OF THE ROFN RIGHT WITHIN THE
OPTION PERIOD SHALL CONSTITUTE A WAIVER BY CUBIST OF ITS ROFN RIGHT.  IF CUBIST
PROVIDES WRITTEN NOTICE TO ALNYLAM EXERCISING ITS ROFN RIGHT WITHIN THE OPTION
PERIOD, THE PARTIES SHALL NEGOTIATE EXCLUSIVELY IN GOOD FAITH FOR A PERIOD OF UP
TO []* FROM THE DATE THE ROFN NOTICE WAS RECEIVED BY CUBIST (OR SUCH LONGER
PERIOD AS THE PARTIES MAY MUTUALLY AGREE) (THE “NEGOTIATION PERIOD”) REGARDING
MUTUALLY AGREEABLE TERMS AND CONDITIONS, INCLUDING MUTUALLY AGREEABLE FINANCIAL
TERMS AND CONDITIONS, ON WHICH THIS AGREEMENT WOULD BE AMENDED TO ADD ASIA TO
THE ROYALTY TERRITORY HEREUNDER.  IF, DESPITE SUCH GOOD FAITH NEGOTIATIONS, THE
PARTIES DO NOT EXECUTE SUCH AN AMENDMENT WITHIN THE NEGOTIATION PERIOD, OR IF
CUBIST WAIVES ITS ROFN RIGHT, THEN ALNYLAM SHALL THEREAFTER BE FREE TO NEGOTIATE
AND EXECUTE AGREEMENT(S) WITH ONE OR MORE THIRD PARTIES WITH RESPECT TO SUCH
OPPORTUNITY; PROVIDED THAT FOR A PERIOD OF []* AFTER THE EARLIER OF CUBIST’S
WAIVER OF ITS ROFN RIGHT OR THE EXPIRATION OF THE NEGOTIATION PERIOD, ALNYLAM
SHALL NOT ENTER INTO AN AGREEMENT REGARDING SUCH OPPORTUNITY ON TERMS THAT, IN
THE AGGREGATE, ARE MATERIALLY MORE FAVORABLE TO THE THIRD PARTY THAN THOSE LAST
OFFERED BY ALNYLAM TO CUBIST.

 

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SECTION 3.2  CUBIST GRANTS.

 

(A)           MANUFACTURING LICENSE.  SUBJECT TO THE TERMS AND CONDITIONS OF
THIS AGREEMENT, CUBIST HEREBY GRANTS TO ALNYLAM A NON-EXCLUSIVE, FULLY PAID-UP,
NON-ROYALTY-BEARING WORLDWIDE RIGHT AND LICENSE, WITH THE RIGHT TO GRANT
SUBLICENSES, SUBJECT TO SECTION 3.2(C), UNDER THE CUBIST TECHNOLOGY, TO
MANUFACTURE OR HAVE MANUFACTURED LICENSED PRODUCTS, BUT SOLELY TO THE EXTENT
NECESSARY (I) DURING THE TERM, TO ENABLE ALNYLAM TO FULFILL ITS OBLIGATIONS
UNDER THIS AGREEMENT WITH RESPECT TO THE COLLABORATION, AND (II) DURING AND
AFTER THE TERM, FOR THE DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS
FOR ASIA BUT ONLY TO THE EXTENT THAT SUCH []*.

 

(B)           CUBIST TECHNOLOGY LICENSE.  SUBJECT TO THE TERMS AND CONDITIONS OF
THIS AGREEMENT, CUBIST HEREBY GRANTS TO ALNYLAM A NON-EXCLUSIVE, FULLY PAID-UP,
NON-ROYALTY-BEARING LICENSE, WITH THE RIGHT TO GRANT SUBLICENSES, SUBJECT TO
SECTION 3.2(C), UNDER ANY CUBIST TECHNOLOGY BUT SOLELY TO THE EXTENT NECESSARY
(I) DURING THE TERM, TO ENABLE ALNYLAM TO FULFILL ITS OBLIGATIONS UNDER THIS
AGREEMENT WITH RESPECT TO THE COLLABORATION, AND (II) DURING AND AFTER THE TERM,
TO DEVELOP AND COMMERCIALIZE LICENSED PRODUCTS FOR ASIA BUT ONLY TO THE EXTENT
THAT SUCH []*.

 

(C)           AFFILIATES; SUBLICENSES.

 

(I)            ALNYLAM SHALL HAVE THE RIGHT TO GRANT SUBLICENSES UNDER THE
LICENSES GRANTED TO IT PURSUANT TO SECTIONS 3.2(A) AND (B), AND, SUBJECT TO THE
LICENSES GRANTED TO CUBIST UNDER SECTIONS 3.1(A), (B) AND (C), THE RIGHT TO
GRANT LICENSES OF ITS RIGHTS UNDER ANY JOINT COLLABORATION IP, TO AN ENTITY THAT
IS AN AFFILIATE FOR SO LONG AS SUCH ENTITY REMAINS AN AFFILIATE OF ALNYLAM AND
COMPLIES IN ALL MATERIAL RESPECTS WITH THE OBLIGATIONS OF ALNYLAM UNDER THIS
AGREEMENT.  ALNYLAM HEREBY GUARANTEES THE FULL PAYMENT AND PERFORMANCE OF ITS
AFFILIATES UNDER THIS AGREEMENT.

 

(II)           SUBJECT TO ARTICLE VI, ALNYLAM SHALL HAVE THE RIGHT TO GRANT
SUBLICENSES TO THIRD PARTIES UNDER THE LICENSES GRANTED TO IT PURSUANT TO
SECTIONS 3.2(A)(I).

 

(III)          ALNYLAM SHALL HAVE THE RIGHT TO GRANT SUBLICENSES TO THIRD
PARTIES UNDER THE LICENSES GRANTED TO IT UNDER SECTION 3.2(B)(I); PROVIDED THAT
[]*.

 

(IV)          ALNYLAM SHALL HAVE THE RIGHT TO GRANT SUBLICENSES TO THIRD PARTIES
UNDER THE LICENSES GRANTED TO IT PURSUANT TO SECTIONS 3.2(A)(II) AND 3.2(B)(II).

 

(D)           PAYMENTS OWED BY CUBIST.  ALNYLAM SHALL PROMPTLY REIMBURSE CUBIST
FOR ANY AMOUNTS THAT CUBIST OR ANY OF ITS AFFILIATES SHALL OWE TO ANY THIRD
PARTY BY REASON OF THE LICENSE GRANTED BY CUBIST TO ALNYLAM UNDER THIS
SECTION 3.2 OR UNDER SECTION 11.3(A) AND ANY SUBLICENSE GRANTED BY ALNYLAM OR
ANY OF ITS AFFILIATES WITH RESPECT TO DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT UNDER ANY SUCH LICENSE, IF SUCH THIRD
PARTY TECHNOLOGY WAS INCLUDED IN THE DEFINITION OF CUBIST TECHNOLOGY IN
ACCORDANCE WITH SECTION 8.6.

 

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SECTION 3.3  SUBLICENSING TERMS; LIABILITY.

 

(A)           EACH SUBLICENSE GRANTED BY A PARTY PURSUANT TO THIS ARTICLE III
SHALL BE SUBJECT AND SUBORDINATE TO THE TERMS AND CONDITIONS OF THIS AGREEMENT
AND SHALL CONTAIN TERMS AND CONDITIONS CONSISTENT WITH THOSE IN THIS AGREEMENT. 
EACH PARTY SHALL PROMPTLY PROVIDE THE OTHER PARTY WITH A COPY OF THE FULLY
EXECUTED SUBLICENSE AGREEMENT COVERING ANY SUBLICENSE GRANTED HEREUNDER, AND
SUCH SUBLICENSE AGREEMENT SHALL CONTAIN THE FOLLOWING PROVISIONS:  (I) A
REQUIREMENT THAT SUCH SUBLICENSEE SUBMIT APPLICABLE SALES OR OTHER REPORTS TO
THE PARTY GRANTING THE SUBLICENSE TO THE EXTENT NECESSARY OR RELEVANT TO THE
REPORTS REQUIRED TO BE MADE OR RECORDS REQUIRED TO BE MAINTAINED UNDER THIS
AGREEMENT; (II) THE AUDIT REQUIREMENT SET FORTH IN SECTION 7.12; (III) A
REQUIREMENT THAT SUCH SUBLICENSEE COMPLY WITH THE CONFIDENTIALITY AND NON-USE
PROVISIONS OF ARTICLE IX WITH RESPECT TO BOTH PARTIES’ CONFIDENTIAL INFORMATION;
AND (IV) ANY OTHER PROVISIONS APPLICABLE TO A SUBLICENSEE REQUIRED UNDER ANY
ALNYLAM IN-LICENSE OR CUBIST IN-LICENSE, AS THE CASE MAY BE, OF WHICH THE OTHER
PARTY IS NOTIFIED IN WRITING.  IF A GRANTING PARTY BECOMES AWARE OF A MATERIAL
BREACH OF ANY SUBLICENSE BY A SUBLICENSEE OF THE RIGHTS GRANTED TO SUCH PARTY
UNDER THIS ARTICLE III, THE GRANTING PARTY SHALL PROMPTLY NOTIFY THE OTHER PARTY
OF THE PARTICULARS OF THE SAME AND USE DILIGENT EFFORTS TO ENFORCE THE TERMS OF
SUCH SUBLICENSE.

 

(B)           EACH PARTY SHALL AT ALL TIMES BE RESPONSIBLE FOR THE PERFORMANCE
OF ITS SUBLICENSEES UNDER THIS AGREEMENT.

 

SECTION 3.4  JOINT COLLABORATION IP.  SUBJECT TO (I) THE RIGHTS GRANTED TO EACH
PARTY UNDER THIS AGREEMENT, INCLUDING THE EXCLUSIVE LICENSES GRANTED TO CUBIST
UNDER SECTION 3.1, (II) THE OBLIGATIONS OF THE PARTIES’ SET FORTH IN
SECTION 10.1 AND (III) THE PAYMENT OBLIGATIONS SET FORTH IN ARTICLE VII, EACH
PARTY SHALL HAVE THE RIGHT TO USE, SELL, KEEP, LICENSE, SUBLICENSE OR ASSIGN ITS
INTEREST IN JOINT COLLABORATION IP AND OTHERWISE UNDERTAKE ALL ACTIVITIES A SOLE
OWNER MIGHT UNDERTAKE WITH RESPECT TO SUCH JOINT COLLABORATION IP WITHOUT THE
CONSENT OF AND WITHOUT ACCOUNTING TO THE OTHER PARTY.

 

SECTION 3.5  SECTION 365(N) OF THE BANKRUPTCY CODE.  ALL RIGHTS AND LICENSES
GRANTED UNDER OR PURSUANT TO ANY SECTION OF THIS AGREEMENT, INCLUDING
SECTIONS 3.1 AND 3.2 HEREOF, ARE RIGHTS TO “INTELLECTUAL PROPERTY” (AS DEFINED
IN SECTION 101(35A) OF TITLE 11 OF THE UNITED STATES CODE, AS AMENDED (SUCH
TITLE 11, THE “BANKRUPTCY CODE”)).  EACH PARTY HEREBY ACKNOWLEDGES THAT
(A) COPIES OF RESEARCH DATA, (B) LABORATORY SAMPLES, (C) PRODUCT SAMPLES AND
INVENTORY, (D) FORMULAS, (E) LABORATORY NOTES AND NOTEBOOKS, (F) DATA AND
RESULTS RELATED TO CLINICAL TRIALS, (G) REGULATORY FILINGS AND APPROVALS,
(H) RIGHTS OF REFERENCE IN RESPECT OF REGULATORY FILINGS AND APPROVALS,
(I) PRE-CLINICAL RESEARCH DATA AND RESULTS, AND (J) MARKETING, ADVERTISING AND
PROMOTIONAL MATERIALS, CONSTITUTE “EMBODIMENTS” OF INTELLECTUAL PROPERTY
PURSUANT TO SECTION 365(N) OF THE BANKRUPTCY CODE.  EACH PARTY AGREES NOT TO
INTERFERE WITH THE OTHER PARTY’S EXERCISE OF RIGHTS AND LICENSES TO INTELLECTUAL
PROPERTY LICENSED HEREUNDER AND EMBODIMENTS THEREOF IN ACCORDANCE WITH THIS
AGREEMENT AND AGREES TO USE REASONABLE EFFORTS TO ASSIST THE OTHER PARTY TO
OBTAIN SUCH INTELLECTUAL PROPERTY AND EMBODIMENTS THEREOF IN THE POSSESSION OR
CONTROL OF THIRD PARTIES AS REASONABLY NECESSARY FOR THE OTHER PARTY TO EXERCISE
SUCH RIGHTS AND LICENSES IN ACCORDANCE WITH THIS AGREEMENT.

 

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SECTION 3.6  RETAINED RIGHTS.  ANY RIGHTS OF A PARTY NOT EXPRESSLY GRANTED UNDER
THIS AGREEMENT SHALL BE RETAINED BY SUCH PARTY.

 

ARTICLE IV

 

DEVELOPMENT OF LICENSED PRODUCTS;
ADDITIONAL RSV PRODUCTS; OPT-OUT RIGHTS

 

SECTION 4.1  OVERVIEW.  THE PARTIES WILL COLLABORATE IN THE FURTHER DEVELOPMENT
OF LICENSED PRODUCT; PROVIDED, HOWEVER, THAT THE PARTIES WILL DEVELOP LICENSED
PRODUCT IN THE FIELD IN THE PROFIT-SHARE TERRITORY IN ACCORDANCE WITH THE
ALLOCATIONS OF DEVELOPMENT RESPONSIBILITIES SET FORTH IN THE DEVELOPMENT PLAN AS
AMENDED FROM TIME-TO-TIME IN ACCORDANCE WITH SECTION 4.2, AND, SUBJECT TO THE
OBLIGATION TO UPDATE THE JSC, CUBIST WILL BE SOLELY RESPONSIBLE FOR, AND WITH
RESPECT TO THE MAJOR EU COUNTRIES SHALL USE DILIGENT EFFORTS WITH RESPECT TO,
THE DEVELOPMENT OF LICENSED PRODUCT IN THE FIELD IN THE ROYALTY TERRITORY.

 

SECTION 4.2  DEVELOPMENT PLAN; AMENDMENTS; DEVELOPMENT RESPONSIBILITIES.

 

(A)           THE DEVELOPMENT OF LICENSED PRODUCT IN THE PROFIT-SHARE TERRITORY
SHALL BE GOVERNED BY THE DEVELOPMENT PLAN, AND THE PARTIES SHALL USE DILIGENT
EFFORTS TO CONDUCT ALL THEIR DEVELOPMENT ACTIVITIES RELATING TO LICENSED PRODUCT
IN ACCORDANCE WITH THE DEVELOPMENT PLAN.  AS OF THE EFFECTIVE DATE, THE
DEVELOPMENT PLAN INCLUDES AN INITIAL OVERALL PLAN FOR THE DEVELOPMENT OF
LICENSED PRODUCT IN THE UNITED STATES.  THE DEVELOPMENT PLAN AS OF THE EFFECTIVE
DATE ALSO INCLUDES THE INITIAL FUNDING BUDGETED FOR EACH STAGE OF DEVELOPMENT IN
THE UNITED STATES.

 

(B)           THE JSC SHALL REVIEW THE DEVELOPMENT PLAN NOT LESS FREQUENTLY THAN
ANNUALLY AND SHALL DEVELOP DETAILED AND SPECIFIC DEVELOPMENT PLAN UPDATES, WHICH
SHALL UPDATE OR INCLUDE ANNUAL DEVELOPMENT BUDGETS FOR THE PROFIT-SHARE
TERRITORY FOR EACH CALENDAR YEAR UNTIL THE COMPLETION OF LICENSED PRODUCT
DEVELOPMENT ACTIVITIES IN THE PROFIT-SHARE TERRITORY.  NO LATER THAN []* OF EACH
CALENDAR YEAR, THE JSC SHALL PREPARE A PRELIMINARY DRAFT OF THE UPDATE TO THE
DEVELOPMENT PLAN AND BUDGET FOR THE FOLLOWING CALENDAR YEAR.  THE JSC SHALL
REVIEW AND AGREE (SUBJECT TO THE FINAL BOARD APPROVAL OF EACH PARTY) ON A FINAL
VERSION OF EACH ANNUAL UPDATED DEVELOPMENT PLAN AND BUDGET NO LATER THAN EACH
[]* FOR THE IMMEDIATELY FOLLOWING CALENDAR YEAR.  THE PARTIES MAY ALSO DEVELOP
AND SUBMIT TO THE JSC FROM TIME TO TIME OTHER PROPOSED SUBSTANTIVE AMENDMENTS TO
THE DEVELOPMENT PLAN.  THE JSC SHALL REVIEW SUCH PROPOSED AMENDMENTS AND MAY
APPROVE SUCH PROPOSED AMENDMENTS OR ANY OTHER PROPOSED AMENDMENTS THAT THE JSC
MAY CONSIDER FROM TIME TO TIME IN ITS DISCRETION AND, UPON SUCH APPROVAL BY THE
JSC, THE DEVELOPMENT PLAN SHALL BE AMENDED ACCORDINGLY.  AMENDMENTS AND UPDATES
TO THE DEVELOPMENT PLAN, INCLUDING ANY BUDGETS FOR THE PROFIT-SHARE TERRITORY
CONTAINED IN THE DEVELOPMENT PLAN, SHALL NOT BE EFFECTIVE WITHOUT THE APPROVAL
OF THE JSC.  IN CONNECTION WITH EACH ANNUAL UPDATE TO THE DEVELOPMENT PLAN, THE
JSC SHALL REVIEW THE FTE COST, AND SHALL RECOMMEND TO THE PARTIES WHETHER ANY
AMENDMENT SHOULD BE MADE TO THE PROSPECTIVE FTE COST TO REFLECT UPDATED
BENCHMARKING INFORMATION OR ADJUSTMENTS TO ACCOUNT FOR FTE SKILL SETS THAT

 

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WERE NOT INCLUDED IN THE ORIGINAL FTE COST CALCULATION.  NO CHANGE TO THE FTE
COST SHALL BE EFFECTIVE WITHOUT THE WRITTEN AGREEMENT OF BOTH PARTIES.

 

(C)           THE PARTIES ANTICIPATE THAT RESPONSIBILITIES FOR DEVELOPMENT
ACTIVITIES FOR THE PROFIT-SHARE TERRITORY WILL INITIALLY BE ALLOCATED BETWEEN
THE PARTIES SUBSTANTIALLY AS SET FORTH IN EXHIBIT E.

 

(D)           NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, CUBIST
SHALL NOT HAVE AN OBLIGATION TO SEEK JSC APPROVAL OF DEVELOPMENT PLANS AND
BUDGETS IN THE ROYALTY TERRITORY, BUT WILL KEEP THE JSC APPRISED OF SUCH PLANS.

 

SECTION 4.3  DEVELOPMENT EFFORTS; MANNER OF PERFORMANCE; RECORDS AND REPORTS.

 

(A)           EACH OF ALNYLAM AND CUBIST SHALL USE DILIGENT EFFORTS TO EXECUTE
AND TO PERFORM, OR CAUSE TO BE PERFORMED, THE ACTIVITIES ASSIGNED TO IT RELATING
TO THE DEVELOPMENT PLAN AND TO COOPERATE WITH THE OTHER IN CARRYING OUT THE
DEVELOPMENT PLAN, IN EACH CASE IN GOOD SCIENTIFIC MANNER AND IN COMPLIANCE WITH
APPLICABLE LAW, GOOD CLINICAL PRACTICE AND GOOD LABORATORY PRACTICE. 
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER PARTY WILL
ENGAGE OR USE A THIRD PARTY TO PERFORM ANY OF THE DEVELOPMENT ACTIVITIES
ALLOCATED TO IT UNDER THE DEVELOPMENT PLAN OR PROVIDE ANY LICENSED PRODUCT TO
ANY THIRD PARTY IN THE PROFIT-SHARE TERRITORY UNLESS SUCH ACTION, AND THE FORM
OF AGREEMENT WITH SUCH THIRD PARTY, HAVE BEEN APPROVED IN ADVANCE BY THE JSC.

 

(B)           EACH PARTY WILL MAINTAIN SCIENTIFIC RECORDS, IN SUFFICIENT DETAIL
AND IN GOOD SCIENTIFIC MANNER APPROPRIATE FOR PATENT AND REGULATORY PURPOSES,
WHICH WILL FULLY AND PROPERLY REFLECT ALL WORK DONE AND RESULTS ACHIEVED IN THE
PERFORMANCE OF THE DEVELOPMENT ACTIVITIES WITH RESPECT TO LICENSED PRODUCT BY
SUCH PARTY AND ITS PERMITTED CONTRACTORS AND PERMITTED SUBLICENSEES.  EACH PARTY
WILL HAVE THE RIGHT, DURING NORMAL BUSINESS HOURS AND UPON REASONABLE NOTICE, TO
INSPECT AND COPY (OR REQUEST THE OTHER PARTY TO COPY) ALL RECORDS OF THE OTHER
PARTY MAINTAINED IN CONNECTION WITH THE WORK DONE AND RESULTS ACHIEVED IN THE
PERFORMANCE OF SUCH DEVELOPMENT ACTIVITIES, BUT SOLELY TO THE EXTENT SUCH
RECORDS RELATE TO LICENSED PRODUCT OR TO THE EXTENT ACCESS TO SUCH RECORDS IS
NECESSARY FOR A PARTY TO EXERCISE ITS RIGHTS UNDER THIS AGREEMENT.  ALL SUCH
RECORDS, AND THE INFORMATION DISCLOSED THEREIN, AS WELL AS ALL DISCLOSURES MADE
PURSUANT TO SECTIONS 4.3(C) AND 4.8, WILL BE MAINTAINED IN CONFIDENCE BY THE
RECIPIENT IN ACCORDANCE WITH ARTICLE IX AND WILL ONLY BE USED FOR PURPOSES OF
THE COLLABORATION; PROVIDED THAT ALNYLAM SHALL BE PERMITTED TO DISCLOSE ANY SUCH
INFORMATION OBTAINED FROM CUBIST TO ITS ASIAN PARTNER FOR THE PURPOSE OF
ASSISTING SUCH ASIAN PARTNER TO DEVELOP, MANUFACTURE AND COMMERCIALIZE LICENSED
PRODUCTS FOR ASIA, SUBJECT TO THE REQUIREMENT THAT, TO THE EXTENT PERMISSIBLE
UNDER ALNYLAM’S AGREEMENTS WITH ITS ASIAN PARTNER, THE ASIAN PARTNER HAS AN
OBLIGATION TO DISCLOSE TO ALNYLAM, AND TO PERMIT ALNYLAM TO DISCLOSE TO CUBIST,
AND PERMIT CUBIST TO USE FOR THE PURPOSES SET FORTH IN THIS AGREEMENT,
INFORMATION AND RECORDS OF ALL WORK DONE AND RESULTS ACHIEVED BY SUCH ASIAN
PARTNER IN THE PERFORMANCE OF DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF
LICENSED PRODUCTS FOR ASIA, INCLUDING THE INFORMATION SPECIFIED IN THIS
SECTION 4.3(B) AND THE INFORMATION SPECIFIED IN SECTION 4.3(C) AND SECTION 4.8. 
ALNYLAM SHALL USE DILIGENT EFFORTS TO REQUIRE ITS

 

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Asian Partner to permit the disclosures of information and records to Cubist
contemplated by the preceding sentence.

 

(C)           IN ADDITION TO THE OTHER DISCLOSURE OBLIGATIONS SET FORTH IN THIS
SECTION 4.3, AT TIMES AND IN A MANNER TO BE REASONABLY AGREED BY THE PARTIES,
EACH PARTY SHALL DISCLOSE TO THE OTHER PARTY A WRITTEN SUMMARY, IN A FORM
MUTUALLY AGREED BY THE PARTIES, OF CLINICAL DATA WITH RESPECT TO LICENSED
PRODUCTS GENERATED BY OR UNDER AUTHORITY OF SUCH PARTY OR ANY RELATED PARTY
SINCE THE LAST SUCH DISCLOSURE.  UPON THE REQUEST OF EITHER PARTY, THE OTHER
PARTY SHALL PROVIDE PROMPT AND COMPLETE ACCESS TO, AND THE RIGHT TO USE FOR
PURPOSES OF THE ACTIVITIES FOR WHICH SUCH REQUESTING PARTY IS LICENSED
HEREUNDER, ANY CLINICAL REGULATORY FILINGS AND SAFETY DATA GENERATED BY SUCH
PARTY OR ITS RELATED PARTIES; PROVIDED THAT IN ANY SUCH CASE THE REQUESTING
PARTY PROVIDES NOTICE TO THE OTHER PARTY REASONABLY IN ADVANCE AND REIMBURSES
THE OTHER PARTY FOR ANY REASONABLY INCURRED COPYING COSTS OF PROVIDING SUCH
ACCESS.  EACH PARTY MUST PROVIDE ACCESS TO ITS RELATED PARTY’S CLINICAL
REGULATORY FILINGS AND SAFETY DATA ON THE SAME BASIS AS IF THE RELATED PARTIES
WERE SUCH PARTY.  IF REQUESTED BY EITHER PARTY OR THE JSC, THE PARTIES SHALL
DISCUSS ANY ISSUES RELATING TO SUCH CLINICAL REGULATORY FILINGS OR SAFETY DATA
PROVIDED BY A PARTY TO THE OTHER PARTY.  IN ADDITION TO THE FOREGOING, IF
REQUIRED BY A REGULATORY AUTHORITY(IES) OR IF IT IS REASONABLY NECESSARY FOR A
PARTY OR ITS RELATED PARTY(IES) TO HAVE ACCESS TO THE UNDERLYING RAW DATA, CASE
REPORT FORMS OR OTHER ORIGINAL DOCUMENTS (INCLUDING LABORATORY NOTEBOOKS)
GENERATED BY OR ON BEHALF OF THE OTHER PARTY OR ITS RELATED PARTY(IES), THEN
SUCH OTHER PARTY SHALL PROVIDE, OR CAUSE TO BE PROVIDED, ACCESS TO THE
ORIGINALS, OF SUCH ITEMS.

 

SECTION 4.4  JOINT DEVELOPMENT COSTS.

 

(A)           THE PARTIES SHALL SHARE DEVELOPMENT COSTS AS FOLLOWS:  (I) ALL
DEVELOPMENT COSTS SOLELY FOR THE PROFIT-SHARE TERRITORY SHALL BE SHARED EQUALLY
BY THE PARTIES, AND (II) ALL DEVELOPMENT COSTS INCURRED WITH RESPECT TO
DEVELOPMENT OF LICENSED PRODUCT FOR THE PROFIT-SHARE TERRITORY BUT GENERATING
DATA OR OTHER KNOW-HOW THAT ALSO HAS APPLICABILITY IN THE ROYALTY TERRITORY
SHALL BE CONTINUE TO BE SHARED EQUALLY BY THE PARTIES EXCEPT THAT ANY
INCREMENTAL COSTS ASSOCIATED SPECIFICALLY WITH ANY DEVELOPMENT ACTIVITIES NOT
REQUIRED FOR THE PROFIT-SHARE TERRITORY SHALL BE []*.  THE PARTIES SHALL DISCUSS
AND ATTEMPT TO MUTUALLY DETERMINE IN GOOD FAITH HOW SPECIFIC DEVELOPMENT COSTS
ARE ALLOCATED IN ACCORDANCE WITH THE FOREGOING SENTENCE.  EXCEPT AS OTHERWISE
SET FORTH IN THIS SECTION 4.4(A), CUBIST SHALL BE RESPONSIBLE FOR ITS COSTS
ASSOCIATED WITH DEVELOPMENT OF LICENSED PRODUCT FOR THE ROYALTY TERRITORY.

 

(B)           DEVELOPMENT COSTS SHALL INITIALLY BE BORNE BY THE PARTY INCURRING
THE COST OR EXPENSE, SUBJECT TO REIMBURSEMENT AS PROVIDED IN SECTION 4.5.  EACH
PARTY SHALL CALCULATE AND MAINTAIN RECORDS OF DEVELOPMENT COSTS INCURRED BY IT
IN ACCORDANCE WITH PROCEDURES TO BE ESTABLISHED BY THE JSC.  ALNYLAM AND CUBIST
SHALL REPORT []* TO EACH OTHER ON THEIR DEVELOPMENT COSTS, WITH SUCH REPORTS TO
BE SUBMITTED WITHIN []* AFTER THE []* OF EACH CALENDAR YEAR.  NOTWITHSTANDING
THE FOREGOING, WITHIN []* AFTER THE END OF THE []*, ALNYLAM AND CUBIST SHALL
EACH PROVIDE TO THE OTHER AN ESTIMATE OF SUCH PARTY’S DEVELOPMENT COSTS FOR SUCH
[]*. THE PARTIES SHALL SEEK TO RESOLVE ANY QUESTIONS RELATED TO SUCH ACCOUNTING
STATEMENTS WITHIN []* AFTER RECEIPT.

 

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SECTION 4.5  REIMBURSEMENT OF DEVELOPMENT COSTS.

 

(A)                                THE PARTY THAT INCURS MORE THAN ITS SHARE OF
THE TOTAL ACTUAL DEVELOPMENT COSTS FOR LICENSED PRODUCT, AS ALLOCATED UNDER
SECTION 4.4(A), SHALL BE PAID BY THE OTHER PARTY AN AMOUNT OF CASH SUFFICIENT TO
RECONCILE TO ITS AGREED PERCENTAGE OF ACTUAL DEVELOPMENT COSTS IN EACH CALENDAR
QUARTER; PROVIDED THAT, EXCEPT AS SET FORTH IN SECTION 4.5(B) TOTAL ACTUAL
DEVELOPMENT COSTS FOR A PARTY FOR A CALENDAR YEAR SHALL NOT EXCEED []* PERCENT
([]*%) OF THE BUDGETED DEVELOPMENT COSTS FOR SUCH PARTY FOR SUCH CALENDAR YEAR,
AS SHOWN IN THE THEN CURRENT VERSION OF THE DEVELOPMENT PLAN, EXCEPT TO THE
EXTENT THE JSC APPROVES THE INCREASE OVER []* PERCENT ([]*%) OF THE BUDGETED
DEVELOPMENT COSTS FOR SUCH PARTY BEFORE THE ADDITIONAL COSTS ARE INCURRED. 
SUBJECT TO SECTION 4.5(B), IF ACTUAL DEVELOPMENT COSTS FOR A CALENDAR YEAR TO
DATE INCURRED BY EITHER PARTY EXCEED BUDGETED DEVELOPMENT COSTS FOR SUCH PARTY
FOR SUCH CALENDAR YEAR BY MORE THAN []* PERCENT ([]*%) AND THE JSC DID NOT
APPROVE SOME OR ALL OF SUCH INCREASE BEFORE THE COSTS WERE INCURRED, THE
DEVELOPMENT COSTS DEEMED TO HAVE BEEN INCURRED BY SUCH PARTY FOR PURPOSES OF
DETERMINING THE BALANCING PAYMENT UNDER THE FIRST SENTENCE OF THIS
SECTION 4.5(A) SHALL BE LIMITED TO []* PERCENT ([]*%) OF SUCH PARTY’S BUDGETED
DEVELOPMENT COSTS PLUS ANY PORTION OF THE INCREASE OVER SUCH AMOUNT THAT WAS
APPROVED IN ADVANCE BY THE JSC OR APPROVED UNDER SECTION 4.5(B).  DECISIONS OF
THE JSC WITH RESPECT TO DEVELOPMENT COST OVERRUNS SHALL BE MADE IN ACCORDANCE
WITH SECTION 2.5.  RECONCILING PAYMENTS UNDER THIS SECTION 4.5 FOR ANY CALENDAR
QUARTER SHALL BE MADE WITHIN []* AFTER THE END OF SUCH CALENDAR QUARTER.

 

(B)                               NOTWITHSTANDING ANYTHING IN SECTION 4.5(A) TO
THE CONTRARY, THE PARTIES AGREE TO APPROVE A PARTY’S ACTUAL DEVELOPMENT COSTS IN
EXCESS OF []* PERCENT ([]*%) OF SUCH PARTY’S BUDGETED DEVELOPMENT COSTS TO THE
EXTENT THE OVERRUN IS ATTRIBUTABLE []*, PROVIDED THAT A CONTINGENCY FOR SUCH
ISSUE IS NOT ALREADY INCLUDED IN THE BUDGET FOR DEVELOPMENT COSTS FOR SUCH
CALENDAR YEAR.

 

SECTION 4.6  ADDITIONAL RSV PRODUCTS.  IF, AT ANY TIME DURING THE TERM, THE JSC
DETERMINES TO COMMENCE DEVELOPMENT OF A LICENSED PRODUCT OTHER THAN THE RSV01
PRODUCT OR THE RSV02 PRODUCT (AN “ADDITIONAL RSV PRODUCT”), THEN THE ADDITIONAL
RSV PRODUCT SHALL BE INCLUDED IN THE COLLABORATION AND THE PARTIES WILL PROMPTLY
UPDATE THE DEVELOPMENT PLAN ACCORDINGLY.

 

SECTION 4.7  ALNYLAM OPT-OUT OPTION.

 

(A)           EXERCISE OF OPTION.  AT ANY TIME AFTER THE FIRST OPT-OUT
MILESTONE, ALNYLAM, BY WRITTEN NOTICE TO CUBIST, SHALL HAVE THE RIGHT, IN ITS
SOLE DISCRETION, TO OPT-OUT OF FURTHER DEVELOPMENT OF ALL LICENSED PRODUCTS BY
PROVIDING WRITTEN NOTICE TO CUBIST CITING THIS SECTION 4.7 (THE “OPT-OUT
OPTION”), WHICH OPT-OUT OPTION SHALL, SUBJECT TO SECTION 4.7(B), TAKE EFFECT []*
AFTER THE DATE OF SUCH WRITTEN NOTICE.  UPON THE EFFECTIVE DATE OF ALNYLAM’S
EXERCISE OF ITS OPT-OUT OPTION, THE FOLLOWING CONSEQUENCES SHALL OCCUR:

 

(I)            THE ROYALTY TERRITORY SHALL THEREAFTER BE EXPANDED TO COMPRISE
THE ENTIRE TERRITORY;

 

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(II)           THE PROFIT-SHARE TERRITORY SHALL CEASE TO EXIST;

 

(III)          THE PARTIES SHALL CEASE TO SHARE IN N.A. PRE-TAX PROFIT OR LOSS;

 

(IV)          EXCEPT AS SET FORTH IN 4.7(A)(V) AND 4.7(A)(XII) AND SUBJECT TO
SECTION 4.7(B), ALNYLAM SHALL CEASE TO SHARE IN DEVELOPMENT COSTS PURSUANT TO
SECTIONS 4.4 AND 4.5;

 

(V)           FOR A PERIOD OF []* FOLLOWING THE EFFECTIVE DATE OF ALNYLAM’S
OPT-OUT OPTION, ALNYLAM SHALL CONTINUE TO BE RESPONSIBLE FOR FIFTY PERCENT (50%)
OF DEVELOPMENT COSTS INCURRED BY CUBIST UNDER THE THEN CURRENT DEVELOPMENT PLAN;
PROVIDED THAT THE CUMULATIVE DEVELOPMENT COSTS PAID BY ALNYLAM FOR LICENSED
PRODUCT UNDER THIS SECTION 4.7(A)(V) AFTER ALNYLAM HAS EXERCISED THE OPT-OUT
OPTION SHALL NOT EXCEED:  (A) []* DOLLARS ($[]*) IF ALNYLAM EXERCISED THE
OPT-OUT OPTION AFTER THE FIRST OPT-OUT MILESTONE AND PRIOR TO THE SECOND OPT-OUT
MILESTONE AND (B) []* DOLLARS ($[]*) IF ALNYLAM EXERCISED THE OPT-OUT OPTION
AFTER THE SECOND OPT-OUT MILESTONE.

 

(VI)          WITHOUT LIMITING CUBIST’S OBLIGATIONS UNDER SECTION 7.2, AND
SUBJECT TO SECTIONS 4.7(A)(IX) 4.7(A)(XII), CUBIST SHALL MAKE THE
NON-REFUNDABLE, NON-CREDITABLE MILESTONE PAYMENTS SET FORTH BELOW TO ALNYLAM NOT
LATER THAN []* AFTER THE EARLIEST DATE ON WHICH THE CORRESPONDING MILESTONE
EVENT SET FORTH BELOW HAS BEEN ACHIEVED:

 

Milestone Event

 

Payment if
Alnylam’s
Exercise of the
Opt-Out Option
Takes Effect After
the First Opt-Out
Milestone and
Prior to the
Second Opt-Out
Milestone

 

Payment if
Alnylam’s
Exercise of the
Opt-Out Option
Takes Effect After
the Second Opt-
Out
Milestone

 

Section
4.7(a)(xii)
Option I

 

 

 

 

 

 

 

 

 

(A)  Acceptance for filing of an application for Regulatory Approval for a
Licensed Product for any indication in the United States

 

$[]*

 

$[]*

 

$[]*

 

 

 

 

 

 

 

 

 

(B)  First Commercial Sale of a Licensed Product in any indication in the United
States

 

$[]*

 

$[]*

 

$[]*

 

 

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Milestone Event

 

Payment if
Alnylam’s
Exercise of the
Opt-Out Option
Takes Effect After
the First Opt-Out
Milestone and
Prior to the
Second Opt-Out
Milestone

 

Payment if
Alnylam’s
Exercise of the
Opt-Out Option
Takes Effect After
the Second Opt-
Out
Milestone

 

Section
4.7(a)(xii)
Option I

 

 

 

 

 

 

 

 

 

(C)  Acceptance for filing of an application for Regulatory Approval for a
Licensed Product for any indication other than the indication with respect to
which the milestone event described in Section 4.7(a)(vi)(A) above was achieved
in the United States

 

$[]*

 

$[]*

 

$[]*

 

 

 

 

 

 

 

 

 

(D)  Regulatory Approval of a Licensed Product for any indication other than the
indication with respect to which the milestone event described in
Section 4.7(a)(vi)(A) above was achieved in the United States

 

$[]*

 

$[]*

 

$[]*

 

 

The milestone payments set forth in this Section 4.7(a)(vi) shall be paid only
once, upon the first achievement of the applicable milestone event by the first
Licensed Product to achieve such milestone event.

 

(VII)         WITHOUT LIMITING CUBIST’S OBLIGATIONS UNDER SECTION 7.3 (WHICH
SHALL CONTINUE TO APPLY TO NET SALES OF LICENSED PRODUCT IN THE ROYALTY
TERRITORY BUT ONLY AS THE ROYALTY TERRITORY WAS DEFINED IMMEDIATELY PRIOR TO
ALNYLAM’S EXERCISE OF THE OPT-OUT OPTION), AND SUBJECT TO SECTIONS
4.7(A)(IX) AND 4.7(A)(XII), IN ADDITION TO ALL OTHER AMOUNTS PAYABLE UNDER THIS
AGREEMENT, CUBIST SHALL MAKE THE NON-REFUNDABLE, NON-CREDITABLE MILESTONE
PAYMENTS SET FORTH BELOW TO ALNYLAM UPON THE ACHIEVEMENT OF THE MILESTONE EVENTS
SET FORTH BELOW, SUCH PAYMENT TO BE MADE AS SET FORTH BELOW:

 

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Milestone Event

 

Payment if
Alnylam’s Exercise
of the Opt-Out
Option Takes
Effect After the
First Opt-Out
Milestone and
Prior to the Second
Opt-Out Milestone

 

Payment if
Alnylam’s
Exercise of the
Opt-Out Option
Takes Effect After
the Second Opt-
Out
Milestone

 

Section
4.7(a)(xii)
Option I

 

 

 

 

 

 

 

 

 

Aggregate Calendar Year Net Sales of Licensed Products in North America greater
than $[]*

 

$[]*

 

$[]*

 

$[]*

 

 

 

 

 

 

 

 

 

Aggregate Calendar Year Net Sales of Licensed Products in North America greater
than $[]*

 

$[]*

 

$[]*

 

$[]*

 

 

 

 

 

 

 

 

 

Aggregate Calendar Year Net Sales of Licensed Products in North America greater
than $[]*

 

$[]*

 

$[]*

 

$[]*

 

 

The milestone payments set forth in this Section 4.7(a)(vii) shall be paid only
once, upon the first achievement of the applicable milestone event.  For
purposes of determining whether a milestone event set forth in this
Section 4.7(a)(vii) has occurred (and without creating an obligation to pay the
milestone more than once as set forth in the preceding sentence), Calendar Year
Net Sales shall be aggregated for all Licensed Products sold in North America
during the relevant Calendar Year.

 

If more than one of such milestone events first occurs based on sales of
Licensed Products in the same Calendar Year, all of such milestone payments
shall be paid for such Calendar Year.  If a milestone payment set forth above is
earned based on Net Sales over a period that is shorter in duration than a full
Calendar Year, such payment shall become due and payable []* after the end of
the Calendar Quarter in which the milestone event is achieved.

 

(VIII)        WITHOUT LIMITING CUBIST’S OBLIGATIONS UNDER SECTION 7.5 (WHICH
SHALL CONTINUE TO APPLY TO NET SALES OF LICENSED PRODUCT IN THE ROYALTY
TERRITORY AS THE ROYALTY TERRITORY WAS DEFINED IMMEDIATELY PRIOR TO ALNYLAM’S
EXERCISE OF THE OPT-OUT OPTION), AND SUBJECT TO SECTIONS 4.7(A)(IX),
4.7(A)(XII), 7.5(C), 7.5(D), 7.6 AND 7.8 THROUGH 7.20 (INCLUSIVE) (WHICH, FOR
SUCH PURPOSE, SHALL BE MODIFIED AS NECESSARY TO APPLY TO THE ROYALTY OBLIGATIONS
DESCRIBED IN THIS SECTION 4.7(A)(VIII)), CUBIST SHALL PAY TO ALNYLAM ROYALTIES
ON THE AGGREGATE NET SALES OF ALL LICENSED PRODUCTS IN NORTH AMERICA BY CUBIST
OR ITS RELATED PARTIES AS FOLLOWS:

 

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Aggregate Calendar Year Net
Sales of Licensed Products in
North America

 

Royalty Rate (as
a Percentage of
Net Sales) if
Alnylam’s
Exercise of the
Opt-Out Option
Takes Effect
After the First
Opt-Out
Milestone and
Prior to the
Second Opt-Out
Milestone

 

Royalty Rate (as
a Percentage of
Net Sales) if
Alnylam’s
Exercise
of the Opt-Out
Option Takes
Effect
After the Second
Opt-Out
Milestone

 

Section 4.7(a)(xii)
Option I

 

 

 

 

 

 

 

 

 

$[]* - $[]*

 

[]%*

 

[]%*

 

[]%*

 

 

 

 

 

 

 

 

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

[]%*

 

 

 

 

 

 

 

 

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

[]%*

 

 

 

 

 

 

 

 

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

[]%*

 

 

 

 

 

 

 

 

 

Greater than $[]*

 

[]%*

 

[]%*

 

[]%*

 

 

The foregoing provisions of this Section 4.7 and Section 7.6(a) notwithstanding,
and in addition to the amounts set forth above in this Section 4.7, Cubist shall
pay to Alnylam (A) []* percent ([]*%) of the allocated milestone amounts under
the Existing Alnylam In-Licenses that are identified on Exhibit H, and (B) []*
percent ([]*%) of all royalties on the Net Sales of Licensed Products in North
America payable under the Existing Alnylam In-Licenses up to a maximum of []*
percent ([]*%) of such Net Sales (i.e., Cubist’s maximum []* percent ([]*%)
share would be []* percent ([]*%) of such Net Sales).

 

(IX)           THE FOREGOING PROVISIONS OF THIS SECTION 4.7(A) NOTWITHSTANDING,
IF  ALNYLAM HAS EXERCISED ITS OPT-OUT OPTION AND CUBIST OR ANY OF ITS
AFFILIATES, PRIOR TO OR AFTER  ALNYLAM’S EXERCISE OF ITS OPT-OUT OPTION, 
GRANTED OR GRANTS ONE OR MORE THIRD PARTY LICENSEES OR SUBLICENSEES A SUBLICENSE
UNDER THE ALNYLAM TECHNOLOGY OR A LICENSE UNDER THE CUBIST TECHNOLOGY TO DEVELOP
OR COMMERCIALIZE ANY LICENSED PRODUCT IN THE FIELD IN A COUNTRY OR

 

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COUNTRIES IN NORTH AMERICA, THEN CUBIST SHALL HAVE NO PAYMENT OBLIGATIONS UNDER
SECTIONS 4.7(A)(VI), 4.7(A)(VII) OR 4.7(A)(VIII) WITH RESPECT TO DEVELOPMENT OR
SALES MILESTONES ACHIEVED, OR NET SALES OF LICENSED PRODUCTS, BY SUCH CUBIST
LICENSEE  OR SUBLICENSEE IN SUCH COUNTRY(IES) IN NORTH AMERICA, AND, IN LIEU OF
SUCH PAYMENTS AND SUBJECT TO SECTION 7.9(C), CUBIST SHALL INSTEAD PAY ALNYLAM A
PORTION OF SUBLICENSE INCOME RECEIVED FROM SUCH THIRD PARTY LICENSEE OR
SUBLICENSEE WITH RESPECT TO SUCH COUNTRY(IES) IN NORTH AMERICA IN ACCORDANCE
WITH THE FOLLOWING:

 

Opt-Out Point

 

Percentage of Sublicense Income

 

 

 

 

 

After the First Opt-Out Milestone and prior to the Second Opt-Out Milestone

 

[]%*

 

 

 

 

 

After the Second Opt-Out Milestone

 

[]%*

 

 

For purposes of clarity, if Alnylam exercises its Opt-Out Option Cubist’s
payment obligations under Sections 4.7(a)(vi), 4.7(a)(vii) and
4.7(a)(viii) shall apply with respect to development and sales milestones
achieved, and the Net Sales of Licensed Products sold, by Cubist and its
Affiliates in such country(ies) in North America.

 

(X)                               THE JSC AND JCT SHALL BE DISSOLVED, AND,
EXCEPT AS SET FORTH IN ARTICLE VI, ALL DECISIONS REGARDING DEVELOPMENT,
COMMERCIALIZATION AND MANUFACTURE OF LICENSED PRODUCT SHALL BECOME SUBJECT TO
CUBIST’S FINAL DECISION-MAKING AUTHORITY, EXCEPT THAT:  (A) CUBIST MAY NOT
CONDUCT, SPONSOR, FUND OR OTHERWISE SUPPORT A CLINICAL STUDY OR POST-APPROVAL
STUDY OF LICENSED PRODUCT THAT WOULD []* THE DEVELOPMENT OR COMMERCIALIZATION OF
LICENSED PRODUCT IN THE FIELD IN ASIA, WITHOUT ALNYLAM’S PRIOR WRITTEN CONSENT,
(B) CUBIST MAY NOT RESOLVE ANY DISPUTE AS TO WHAT CONSTITUTES DILIGENT EFFORTS
OR AS TO WHETHER THE FIRST OPT-OUT MILESTONE OR THE SECOND OPT-OUT MILESTONE HAS
BEEN ACHIEVED, AND (C) CUBIST MAY NOT UNILATERALLY AMEND THIS AGREEMENT.

 

(XI)                            THIS AGREEMENT SHALL OTHERWISE REMAIN IN EFFECT.

 

(XII)                         NOTWITHSTANDING THE FOREGOING PROVISIONS OF THIS
SECTION 4.7(A), IF (1) ALNYLAM EXERCISES THE OPT-OUT OPTION AFTER THE SECOND
OPT-OUT MILESTONE AND (2) []*, THEN:

 

A.                                   CUBIST SHALL PROMPTLY PROVIDE ALNYLAM WITH
A COPY OF SUCH []* AND WITH A SUMMARY OF ALL RELEVANT INFORMATION RELATING TO
SUCH []*;

 

B.                                     ADDITIONALLY, CUBIST SHALL PROVIDE
ALNYLAM WITH SUCH ADDITIONAL INFORMATION REGARDING SUCH []* AND PLANNED []* AS
ALNYLAM MAY REASONABLY REQUEST;

 

C.                                     WITHIN []* AFTER RECEIPT OF THE
INFORMATION AND DOCUMENTS PROVIDED BY CUBIST PURSUANT TO CLAUSE (A); PROVIDED
HOWEVER IN NO EVENT SHALL SUCH TIME PERIOD EXPIRE EARLIER THAN []* AFTER
DELIVERY OF ANY

 

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INFORMATION REQUESTED BY ALNYLAM PURSUANT TO CLAUSE (B), ALNYLAM SHALL MAKE ONE
OF THE FOLLOWING TWO ELECTIONS AND NOTIFY CUBIST OF SUCH ELECTION:  (I) ELECT TO
ACCEPT THE MILESTONES AND ROYALTIES SET FORTH IN THE COLUMN ENTITLED
“SECTION 4.7(A)(XII) OPTION I” IN SECTIONS 4.7(A)(VI), 4.7(A)(VII) AND
4.7(A)(VIII), IN LIEU OF THE OTHERWISE APPLICABLE OPT-OUT ECONOMICS SET FORTH
ABOVE IN SECTIONS 4.7(A)(VI), 4.7(A)(VII) AND 4.7(A)(VIII) (PROVIDED THAT SUCH
REDUCED ECONOMICS SHALL REMAIN SUBJECT TO THE APPLICABLE PROVISIONS OF
SECTION 7.9 REFERENCED IN SECTION 4.7(A)(VIII)) OR (II) AGREE TO FUND []*
PERCENT ([]*%) OF THE []*, IN WHICH CASE THERE SHALL BE NO REDUCTION TO THE
APPLICABLE OPT-OUT ECONOMICS SET FORTH ABOVE IN SECTIONS 4.7(A)(VI),
4.7(A)(VII) AND 4.7(A)(VIII);

 

D.                                    IF ALNYLAM MAKES THE ELECTION SET FORTH IN
CLAUSE (C)(I) ABOVE AND CUBIST SUBSEQUENTLY ACHIEVES A []* PROVIDED TO ALNYLAM
BY CUBIST PURSUANT TO CLAUSE (A) ABOVE, CUBIST SHALL NOTIFY ALNYLAM OF SUCH
OCCURRENCE PROMPTLY AFTER RECEIPT OF SUCH []* AND ALNYLAM SHALL THEREAFTER HAVE
AN OPTION, EXERCISABLE BY PROVIDING CUBIST WITH NOTICE OF SUCH EXERCISE WITHIN
[]* AFTER ALNYLAM’S RECEIPT OF CUBIST’S NOTIFICATION, TO PAY CUBIST []* PERCENT
([]*%) OF THE AMOUNT OF THE ADDITIONAL []* ACTUALLY INCURRED BY CUBIST IN []*
AND, IF ALNYLAM EXERCISES SUCH OPTION AND THEREAFTER MAKES SUCH PAYMENT WITHIN
[]* AFTER ALNYLAM’S RECEIPT OF CUBIST’S NOTIFICATION, THE REDUCTION TO ALNYLAM’S
OPT-OUT ECONOMICS SET FORTH IN CLAUSE (C)(I) ABOVE SHALL NOT APPLY; AND

 

E.                                      IF ALNYLAM MAKES THE ELECTION SET FORTH
IN CLAUSE (C)(II) ABOVE, THEN THE JSC SHALL BE RECONSTITUTED AND, []*, ALL
DEVELOPMENT AND MANUFACTURE FOR THE PURPOSES OF DEVELOPMENT OF LICENSED PRODUCT
FOR THE PROFIT-SHARE TERRITORY SHALL []*.  FOR PURPOSES OF CLARITY, (I) AT THE
TIME []*, THE JSC WILL BE DISSOLVED AGAIN AND ALNYLAM WILL, FROM THAT POINT
FORWARD, RECEIVE MILESTONES AND ROYALTIES BASED UPON THE EXERCISE OF ITS OPT-OUT
OPTION AFTER THE SECOND OPT-OUT MILESTONE AND (II) AT NO TIME SHALL ALNYLAM
RESUME SHARING IN N.A. PRE-TAX PROFIT OR LOSS.

 

(B)                                 CUBIST TERMINATION.  NOTWITHSTANDING
ANYTHING IN THIS SECTION 4.7 TO THE CONTRARY, ALNYLAM’S EXERCISE OF ITS OPT-OUT
OPTION SHALL NOT TAKE EFFECT IF, PRIOR TO THE EFFECTIVE DATE OF SUCH OPT-OUT
OPTION UNDER THIS SECTION 4.7, CUBIST PROVIDES WRITTEN NOTICE TO ALNYLAM OF
CUBIST’S DECISION TO TERMINATE THIS AGREEMENT UNDER SECTION 11.2(A).

 

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SECTION 4.8  TECHNOLOGY TRANSFER AND EXCHANGE OF KNOW-HOW.

 

(A)           EXCHANGE OF KNOW-HOW.  PROMPTLY FOLLOWING THE EFFECTIVE DATE,
ALNYLAM WILL MAKE AVAILABLE TO CUBIST, AT NO COST OR EXPENSE TO CUBIST, SUCH
ALNYLAM KNOW-HOW AS IS REQUESTED BY CUBIST IN CONNECTION WITH CUBIST’S
DEVELOPMENT EFFORTS, INCLUDING ALL DATA FROM ANY AND ALL CLINICAL TRIALS AND
PRECLINICAL STUDIES AND NON-CLINICAL DEVELOPMENT WORK FOR LICENSED PRODUCTS THAT
ARE IN EXISTENCE AS OF THE EFFECTIVE DATE.  DURING THE TERM, ALNYLAM SHALL
PROMPTLY UPDATE CUBIST AS TO ALL ALNYLAM KNOW-HOW THAT HAS NOT PREVIOUSLY BEEN
PROVIDED UNDER THIS AGREEMENT, AND SHALL PROVIDE TO CUBIST ANY SUCH ADDITIONAL
ALNYLAM KNOW-HOW PROMPTLY UPON CUBIST’S REQUEST.

 

(B)           UPDATES IF JSC CEASES TO EXIST.  IN THE EVENT DURING THE TERM THE
JSC CEASES TO EXIST, THEN NO LATER THAN []* OF EACH CALENDAR YEAR THEREAFTER
(FOR THE PERIOD ENDING DECEMBER 31 OF THE PRIOR CALENDAR YEAR), (I) CUBIST SHALL
PREPARE AND DELIVER TO ALNYLAM A WRITTEN REPORT SUMMARIZING THE STATUS, PROGRESS
AND RESULTS OF ACTIVITIES PERFORMED BY CUBIST AND ITS RELATED PARTIES WITH
RESPECT TO THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT
IN THE FIELD FOR THE TERRITORY PERFORMED SINCE THE LAST SUCH REPORT SUBMITTED
UNDER THIS AGREEMENT, AND (II) ALNYLAM SHALL SUBMIT TO CUBIST A WRITTEN REPORT
SUMMARIZING THE STATUS, PROGRESS AND RESULTS OF ACTIVITIES PERFORMED BY ALNYLAM
AND ITS RELATED PARTIES WITH RESPECT TO DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT FOR ASIA SINCE THE LAST REPORT SUBMITTED
UNDER THIS AGREEMENT.  SUCH REPORTS MAY BE PROVIDED IN ANY REASONABLE WRITTEN
FORM DETERMINED BY THE PARTY MAKING SUCH REPORT, INCLUDING IN A PRESENTATION
SLIDE FORMAT THAT REASONABLY SUMMARIZES SUCH ACTIVITIES.

 

ARTICLE V

 

COMMERCIALIZATION AND CERTAIN OTHER RESPONSIBILITIES

 

SECTION 5.1  DILIGENT EFFORTS.  CUBIST SHALL HAVE THE SOLE RIGHT TO
COMMERCIALIZE LICENSED PRODUCT IN THE FIELD IN THE TERRITORY.  THE COSTS OF
COMMERCIALIZATION IN THE ROYALTY TERRITORY SHALL BE BORNE ONE HUNDRED PERCENT
(100%) BY CUBIST.  THE COSTS OF COMMERCIALIZATION IN THE PROFIT-SHARE TERRITORY
SHALL BE SHARED EQUALLY BY THE PARTIES THROUGH THE SHARING OF N.A. PRE-TAX
PROFIT OR LOSS UNDER SECTION 7.4 EVEN IF THERE ARE NO NET SALES. CUBIST SHALL
USE DILIGENT EFFORTS TO COMMERCIALIZE LICENSED PRODUCTS IN THOSE COUNTRIES IN
THE TERRITORY IN WHICH CUBIST HAS OBTAINED REGULATORY APPROVAL AND WHERE
COMMERCIALIZATION IS COMMERCIALLY REASONABLE, INCLUDING BY PROVIDING APPROPRIATE
INCENTIVES CONSISTENT WITH ITS NORMAL BUSINESS PRACTICES TO SALES
REPRESENTATIVES INVOLVED IN THE COMMERCIALIZATION OF LICENSED PRODUCTS IN THE
TERRITORY.

 

SECTION 5.2  JOINT COMMERCIALIZATION TEAM.  COMMENCING WITH THE EARLIER OF
(I) []* AND (II) THE DATE []* PRIOR TO THE ANTICIPATED LAUNCH OF THE FIRST
LICENSED PRODUCT IN THE TERRITORY, AND PROVIDED ALNYLAM HAS NOT EXERCISED ITS
OPT-OUT OPTION, THE PARTIES WILL ESTABLISH A JOINT COMMERCIALIZATION TEAM
(“JCT”) TO COORDINATE THE COMMERCIALIZATION OF LICENSED PRODUCT IN THE FIELD IN
THE PROFIT-SHARE TERRITORY.  THE PROVISIONS OF SECTIONS 2.1(A), 2.1(B) AND
2.1(C) RELATING TO THE OPERATION OF THE JSC SHALL ALSO APPLY TO THE JCT;
PROVIDED, HOWEVER, THAT ALNYLAM SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO
PARTICIPATE IN THE JCT.  THE RESPONSIBILITIES OF THE JCT INCLUDE:

 

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(A)           PROVIDING UPDATES REGARDING THE COMMERCIALIZATION OF LICENSED
PRODUCT IN THE PROFIT-SHARE TERRITORY;

 

(B)           REVIEWING, COMMENTING ON AND APPROVING THE COMMERCIALIZATION PLAN
AND ALL UPDATES TO THE COMMERCIALIZATION PLAN;

 

(C)           COORDINATING WITH THE JSC REGARDING DEVELOPMENT MATTERS AS
NECESSARY OR APPROPRIATE TO COMMERCIALIZATION OF LICENSED PRODUCT IN THE
PROFIT-SHARE TERRITORY;

 

(D)           OVERSEEING MANUFACTURING ACTIVITIES RELATED TO THE
COMMERCIALIZATION OF LICENSED PRODUCT IN THE TERRITORY;

 

(E)           RECEIVING UPDATES FROM CUBIST ON THE STATUS OF COMMERCIALIZATION
ACTIVITIES IN THE ROYALTY TERRITORY;

 

(F)            PERFORMING SUCH OTHER ACTIVITIES AS THE PARTIES AGREE IN WRITING
SHALL BE THE RESPONSIBILITY OF THE JCT; AND

 

(G)           ATTEMPTING TO RESOLVE ANY AND ALL DISPUTES RELATING TO THE
COMMERCIALIZATION OF LICENSED PRODUCT IN THE TERRITORY BY CONSENSUS.

 

For purposes of clarity, the JCT shall not have the authority to modify the
terms of this Agreement.

 

Cubist shall have final decision-making authority with respect to all decisions
related to Commercialization in the Territory, including those decisions within
the purview of the JCT, subject in each case to the specific limitations set
forth in Sections 2.5(a) and (b), but not including the escalation procedures
contained in Section 2.5, and subject to the limitations in Section 5.3.

 

SECTION 5.3  COMMERCIALIZATION PLAN.

 

(A)           COMMENCING NO LATER THAN []* PRIOR TO THE ANTICIPATED LAUNCH OF
THE FIRST LICENSED PRODUCT, CUBIST SHALL PREPARE AND DELIVER TO THE JCT, BY NO
LATER THAN  []* OF EACH CALENDAR YEAR, A WRITTEN PLAN AND BUDGET THAT DESCRIBES
IN DETAIL THE COMMERCIALIZATION ACTIVITIES (INCLUDING PRE-LAUNCH AND LAUNCH
ACTIVITIES, IF APPLICABLE) TO BE UNDERTAKEN WITH RESPECT TO LICENSED PRODUCT IN
THE PROFIT-SHARE TERRITORY IN THE NEXT CALENDAR YEAR AND THE DATES BY WHICH SUCH
ACTIVITIES ARE TARGETED TO BE ACCOMPLISHED (EACH, A “COMMERCIALIZATION PLAN”). 
THE COMMERCIALIZATION PLAN (INCLUDING THE BUDGET) SHALL CONTAIN SUFFICIENT
DETAIL WITH RESPECT TO COMMERCIALIZATION TACTICS AND OTHER MATTERS TO ENABLE THE
JCT TO CONDUCT A MEANINGFUL REVIEW OF THE COMMERCIALIZATION PLAN, AND THE JCT
SHALL APPROVE THE FIRST COMMERCIALIZATION PLAN FOR THE PROFIT-SHARE TERRITORY NO
LATER THAN []* PRIOR TO LAUNCH OF THE FIRST LICENSED PRODUCT IN THE PROFIT-SHARE
TERRITORY.  THEREAFTER, THE JCT SHALL REVIEW THE COMMERCIALIZATION PLAN NOT LESS
FREQUENTLY THAN ANNUALLY AND SHALL DEVELOP COMMERCIALIZATION PLAN UPDATES, WHICH
SHALL INCLUDE UPDATED BUDGETS FOR THE PROFIT-SHARE TERRITORY, FOR EACH CALENDAR
YEAR.  CUBIST MAY ALSO DEVELOP AND

 

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submit to the JCT for review from time to time other proposed substantive
amendments to the Commercialization Plan.  Amendments and updates to the
Commercialization Plan, including any budgets for the Profit-Share Territory
contained in the Commercialization Plan, shall not be effective without the
approval of the JCT.  Notwithstanding anything in this Agreement to the
contrary, if Cubist engages or uses a Third Party to perform any
Commercialization activities in the Profit-Share Territory under circumstances
where such Third Party will be granted a sublicense under Alnylam Technology or
where there will be a material penalty for early termination that is
inconsistent with industry standards, []*.

 

(B)           THE AMOUNT BY WHICH THE COMMERCIALIZATION COSTS ACTUALLY INCURRED
BY A PARTY IN ANY CALENDAR YEAR EXCEEDS SUCH PARTY’S ALLOCATED SHARE, UNDER
SECTION 7.4(A), OF THE TOTAL COMMERCIALIZATION COSTS FOR SUCH PERIOD, AS SHOWN
ON THE APPLICABLE COMMERCIALIZATION PLAN, SHALL BE TAKEN INTO ACCOUNT IN THE
CALCULATION OF THE BALANCING PAYMENT TO BE MADE UNDER SECTION 7.4(B) SO AS TO
RECONCILE EACH PARTY TO ITS AGREED PERCENTAGE OF ACTUAL COMMERCIALIZATION COSTS
IN ACCORDANCE WITH SECTION 7.4(B); PROVIDED THAT, EXCEPT AS SET FORTH IN
SECTION 5.3(C), THE TOTAL ACTUAL COMMERCIALIZATION COSTS FOR A PARTY FOR A
CALENDAR YEAR SHALL NOT EXCEED []* PERCENT ([]*%) OF THE BUDGETED
COMMERCIALIZATION COSTS FOR SUCH PARTY FOR SUCH CALENDAR YEAR, AS SHOWN IN THE
THEN CURRENT VERSION OF THE COMMERCIALIZATION PLAN, EXCEPT TO THE EXTENT THE JCT
APPROVES THE INCREASE OVER []* PERCENT ([]*%) OF THE BUDGETED COMMERCIALIZATION
COSTS FOR SUCH PARTY BEFORE THE ADDITIONAL COSTS ARE INCURRED.  EXCEPT AS SET
FORTH IN SECTION 5.3(C), IF ACTUAL COMMERCIALIZATION COSTS FOR THE CALENDAR YEAR
TO DATE INCURRED BY EITHER PARTY EXCEED BUDGETED COMMERCIALIZATION COSTS FOR
SUCH PARTY FOR SUCH CALENDAR YEAR BY MORE THAN []* PERCENT ([]*%) AND THE JCT
DID NOT APPROVE SOME OR ALL OF SUCH INCREASE BEFORE THE COSTS WERE INCURRED, THE
COMMERCIALIZATION COSTS DEEMED TO HAVE BEEN INCURRED BY SUCH PARTY FOR PURPOSES
OF DETERMINING THE BALANCING PAYMENTS PURSUANT TO SECTION 7.4(B) SHALL BE
LIMITED TO []* PERCENT ([]*%) OF SUCH PARTY’S BUDGETED COMMERCIALIZATION COSTS
PLUS ANY PORTION OF THE INCREASE OVER SUCH AMOUNT THAT WAS APPROVED IN ADVANCE
BY THE JCT OR THAT IS APPROVED OR PERMITTED UNDER SECTION 5.3(C).  DECISIONS OF
THE JCT WITH RESPECT TO COMMERCIALIZATION COST OVERRUNS SHALL BE MADE IN
ACCORDANCE WITH SECTION 2.5.  ALNYLAM AND CUBIST SHALL REPORT []* TO EACH OTHER
ON THEIR COMMERCIALIZATION COSTS, WITH SUCH REPORTS TO BE SUBMITTED WITHIN []*
AFTER THE []*.  NOTWITHSTANDING THE FOREGOING, WITHIN []* AFTER THE END OF THE
[]*, ALNYLAM AND CUBIST SHALL EACH PROVIDE TO THE OTHER AN ESTIMATE OF SUCH
PARTY’S COMMERCIALIZATION COSTS FOR SUCH []*. THE PARTIES SHALL SEEK TO RESOLVE
ANY QUESTIONS RELATED TO SUCH ACCOUNTING STATEMENTS WITHIN []* AFTER RECEIPT.

 

(C)           NOTWITHSTANDING ANYTHING IN SECTION 5.3(B) TO THE CONTRARY, []*,
REASONABLE OUT-OF-POCKET COSTS OF []* INCURRED BY A PARTY OR ANY OF ITS RELATED
PARTIES UNDER SECTION []* IS APPROVED BY THE JSC AND REASONABLE OUT-OF-POCKET
COSTS  INCURRED BY A PARTY OR ANY OF ITS RELATED PARTIES UNDER SECTION []*, IN
EACH CASE WITH RESPECT TO ACTIONS IN THE FIELD IN THE PROFIT-SHARE TERRITORY
SHALL BE INCLUDED AS COMMERCIALIZATION COSTS REGARDLESS OF WHETHER SUCH COSTS
ARE INCLUDED IN THE COMMERCIALIZATION PLAN, PROVIDED THAT THE PARTIES SHALL USE
GOOD FAITH EFFORTS TO INCLUDE ESTIMATES OF SUCH COSTS IN THE COMMERCIALIZATION
PLAN.  IN ADDITION, THE LIMITATIONS IN SECTION 5.3(B) WITH RESPECT TO
COMMERCIALIZATION COSTS IN EXCESS OF []* PERCENT ([]*%) OF BUDGET SHALL NOT
APPLY TO []*, INCLUDING []*, WHICH SUCH AMOUNTS SHALL BE INCLUDED IN
COMMERCIALIZATION

 

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COSTS IN THE AMOUNTS ACTUALLY INCURRED IN ACCORDANCE WITH CUBIST’S THEN-CURRENT
[]*, AS COMMUNICATED BY CUBIST TO ALNYLAM FOR THE APPLICABLE CALENDAR YEAR.  THE
PARTIES FURTHER AGREE THAT THE JCT SHALL APPROVE A PARTY’S COMMERCIALIZATION
COSTS IN EXCESS OF []* PERCENT ([]*%) OF SUCH PARTY’S BUDGETED COMMERCIALIZATION
COSTS TO THE EXTENT THE OVERRUN IS ATTRIBUTABLE TO []*, PROVIDED THAT A
CONTINGENCY FOR SUCH ISSUE IS NOT ALREADY INCLUDED IN THE BUDGET FOR
COMMERCIALIZATION COSTS FOR SUCH CALENDAR YEAR.

 

SECTION 5.4  REGULATORY FILINGS.  EXCEPT AS MAY BE OTHERWISE SPECIFIED BY THE
JSC OR SET FORTH IN EXHIBIT E OR AS OTHERWISE REQUIRED FOR ALNYLAM TO PERFORM
ITS OBLIGATIONS UNDER THIS AGREEMENT, CUBIST (OR ITS RELATED PARTIES) SHALL BE
THE HOLDER OF ALL INDS AND REGULATORY APPROVALS (INCLUDING IND AND NDA
SUBMISSIONS) FOR LICENSED PRODUCT IN THE TERRITORY, AND CUBIST SHALL HAVE THE
RIGHT TO (A) OVERSEE, MONITOR AND COORDINATE ALL REGULATORY ACTIONS,
COMMUNICATIONS AND FILINGS WITH, AND SUBMISSIONS TO, EACH REGULATORY AUTHORITY,
(B) BE RESPONSIBLE FOR INTERFACING, CORRESPONDING AND MEETING WITH EACH
REGULATORY AUTHORITY AND (C) BE RESPONSIBLE FOR MAINTAINING ALL REGULATORY
FILINGS.  ALNYLAM OR ITS ASIAN PARTNER SHALL HAVE THE RIGHT TO CROSS-REFERENCE
ALL INDS, REGULATORY APPROVALS AND ALL OTHER REGULATORY FILINGS FILED BY ALNYLAM
OR CUBIST OR THEIR RESPECTIVE RELATED PARTIES IN THE TERRITORY WITH RESPECT TO
THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCTS FOR ASIA.

 

SECTION 5.5  ADVERTISING AND PROMOTIONAL MATERIALS.  AS BETWEEN THE PARTIES,
CUBIST WILL BE RESPONSIBLE FOR THE CREATION, PREPARATION, PRODUCTION,
REPRODUCTION AND FILING WITH THE APPLICABLE REGULATORY AUTHORITIES, OF RELEVANT
WRITTEN SALES, PROMOTION AND ADVERTISING MATERIALS RELATING TO LICENSED PRODUCT
(“PROMOTIONAL MATERIALS”) FOR USE IN THE TERRITORY.  ALL SUCH PROMOTIONAL
MATERIALS WILL BE COMPLIANT WITH ALL APPLICABLE LAWS, AND IN THE PROFIT SHARE
TERRITORY SHALL BE CONSISTENT WITH THE COMMERCIALIZATION PLAN.  SUBJECT TO ANY
LIMITATIONS IMPOSED BY APPLICABLE LAW, ALL SUCH PROMOTIONAL MATERIALS AND ALL
DOCUMENTARY INFORMATION AND ORAL PRESENTATIONS (WHERE PRACTICABLE) REGARDING THE
MARKETING AND PROMOTION OF LICENSED PRODUCT IN THE FIELD IN THE TERRITORY SHALL
(A) ACKNOWLEDGE THE PARTIES’ LICENSE ARRANGEMENT AND COLLABORATION ON LICENSED
PRODUCT, AND (B) IN THE PROFIT-SHARE TERRITORY, SHALL DISPLAY THE CUBIST AND
ALNYLAM NAMES AND LOGOS WITH EQUAL PROMINENCE.  COPIES OF ALL PROMOTIONAL
MATERIALS USED IN THE TERRITORY WILL BE ARCHIVED BY CUBIST IN ACCORDANCE WITH
APPLICABLE LAW.  UPON ALNYLAM’S REASONABLE REQUEST, COPIES OF THE CORE
PROMOTIONAL MATERIALS USED BY CUBIST IN THE PROFIT-SHARE TERRITORY SHALL BE
TRANSLATED INTO ENGLISH (WHERE APPLICABLE) AND PROVIDED TO ALNYLAM, AND THE
COSTS OF SUCH TRANSLATIONS SHALL BE COMMERCIALIZATION COSTS.  UPON ALNYLAM’S
REASONABLE REQUEST AND COST, COPIES OF THE CORE PROMOTIONAL MATERIALS USED BY
CUBIST IN THE ROYALTY TERRITORY SHALL BE TRANSLATED INTO ENGLISH (WHERE
APPLICABLE) AND PROVIDED TO ALNYLAM. UPON CUBIST’S REASONABLE REQUEST AND COST,
COPIES OF THE CORE PROMOTIONAL MATERIALS FOR LICENSED PRODUCT USED BY ALNYLAM OR
ANY OF ITS RELATED PARTIES IN THE FIELD FOR ASIA SHALL BE TRANSLATED INTO
ENGLISH (WHERE APPLICABLE) AND PROVIDED TO CUBIST.

 

SECTION 5.6  SALES AND DISTRIBUTION.  CUBIST SHALL BE RESPONSIBLE FOR BOOKING
SALES AND SHALL WAREHOUSE AND DISTRIBUTE LICENSED PRODUCT IN THE TERRITORY.  IF
ALNYLAM RECEIVES ANY ORDERS FOR LICENSED PRODUCT IN THE FIELD FOR THE TERRITORY,
IT SHALL REFER SUCH ORDERS TO CUBIST.

 

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SECTION 5.7  REPORTING OBLIGATIONS.

 

(A)           WITHIN TERRITORY.  CUBIST SHALL PREPARE AND DELIVER TO THE JCT
(OR, IF THE JCT DOES NOT EXIST, SHALL DELIVER TO ALNYLAM), BY NO LATER THAN EACH
[]* (FOR THE PERIOD ENDING DECEMBER 31 OF THE PRIOR CALENDAR YEAR), WRITTEN
REPORTS SUMMARIZING CUBIST’S COMMERCIALIZATION ACTIVITIES FOR LICENSED PRODUCT
IN THE FIELD IN THE TERRITORY PERFORMED TO DATE (OR UPDATING SUCH REPORT FOR
ACTIVITIES PERFORMED SINCE THE LAST SUCH REPORT SUBMITTED HEREUNDER, AS
APPLICABLE).  IN ADDITION, CUBIST SHALL PROVIDE ALNYLAM WITH WRITTEN NOTICE OF
(I) ALL FILINGS AND SUBMISSIONS FOR REGULATORY APPROVAL REGARDING LICENSED
PRODUCT IN THE TERRITORY IN A TIMELY MANNER; (II) ALL REGULATORY APPROVALS
OBTAINED OR DENIED, THE FILING OF ANY IND FOR LICENSED PRODUCT, THE FIRST
COMMERCIAL SALE OF LICENSED PRODUCT IN EACH COUNTRY IN THE TERRITORY AND THE
ACHIEVEMENT BY CUBIST OF ANY MILESTONE EVENT SET FORTH IN SECTION 7.2 OR 7.3,
WITHIN []* AFTER CUBIST LEARNS SUCH EVENT HAS OCCURRED; PROVIDED, HOWEVER, THAT
IN ALL CIRCUMSTANCES, CUBIST SHALL INFORM ALNYLAM OF SUCH EVENT PRIOR TO PUBLIC
DISCLOSURE OF SUCH EVENT BY CUBIST. MOREOVER, TO THE EXTENT CONSISTENT WITH THE
PROVISIONS OF SECTION 3.1(F) AND SUBJECT TO SECTION 7.4, CUBIST SHALL PREPARE
AND DELIVER TO ALNYLAM ANY ADDITIONAL REPORTS REQUIRED UNDER THE ALNYLAM
IN-LICENSES, IN EACH CASE SUFFICIENTLY IN ADVANCE TO ENABLE ALNYLAM TO COMPLY
WITH ITS OBLIGATIONS UNDER THE ALNYLAM IN-LICENSES.  CUBIST SHALL ALSO PROVIDE
TO THE JCT SUCH OTHER INFORMATION AS ALNYLAM MAY REASONABLY REQUEST RELATED TO
COMMERCIALIZATION OF LICENSED PRODUCT IN THE TERRITORY AND SHALL KEEP THE JCT
REASONABLY INFORMED OF CUBIST’S COMMERCIALIZATION ACTIVITIES WITH RESPECT TO
LICENSED PRODUCT IN THE FIELD IN THE TERRITORY.

 

(B)           ASIA.  ALNYLAM SHALL PREPARE AND DELIVER TO THE JCT (OR, IF THE
JCT DOES NOT EXIST, SHALL DELIVER TO CUBIST), BY NO LATER THAN EACH []* (FOR THE
PERIOD ENDING DECEMBER 31 OF THE PRIOR CALENDAR YEAR), WRITTEN REPORTS
SUMMARIZING THE COMMERCIALIZATION ACTIVITIES OF ALNYLAM AND ITS RELATED PARTIES
WITH RESPECT TO LICENSED PRODUCT IN THE FIELD FOR ASIA PERFORMED TO DATE (OR
UPDATING SUCH REPORT FOR ACTIVITIES PERFORMED SINCE THE LAST SUCH REPORT
SUBMITTED HEREUNDER, AS APPLICABLE).  IN ADDITION, ALNYLAM SHALL PROVIDE CUBIST
WITH WRITTEN NOTICE WITHIN []* AFTER ALNYLAM BECOMES AWARE (BUT IN ANY EVENT
PRIOR TO PUBLIC DISCLOSURE BY ALNYLAM) OF (I) ALL FILINGS AND SUBMISSIONS FOR
REGULATORY APPROVALS REGARDING LICENSED PRODUCT IN ASIA; AND (II) ALL REGULATORY
APPROVALS OBTAINED OR DENIED, THE FILING OF ANY IND FOR LICENSED PRODUCT OR THE
FIRST COMMERCIAL SALE OF LICENSED PRODUCT, IN EACH CASE IN EACH COUNTRY IN
ASIA.  ALNYLAM SHALL ALSO PROVIDE SUCH OTHER INFORMATION TO CUBIST AS CUBIST MAY
REASONABLY REQUEST AND SHALL KEEP CUBIST REASONABLY INFORMED OF
COMMERCIALIZATION ACTIVITIES OF ALNYLAM AND ITS ASIAN PARTNER WITH RESPECT TO
LICENSED PRODUCT IN THE FIELD IN ASIA.

 

SECTION 5.8  OTHER RESPONSIBILITIES.  WITHOUT INTENDING TO LIMIT IN ANY WAY
CUBIST’S OVERALL RESPONSIBILITY FOR COMMERCIALIZATION OF LICENSED PRODUCTS IN
THE TERRITORY, THE PARTIES AGREE THAT CUBIST SHALL BE SOLELY RESPONSIBLE FOR
(A) HANDLING ALL RETURNS OF LICENSED PRODUCT, IN THE TERRITORY, IT BEING
UNDERSTOOD THAT IF LICENSED PRODUCT IS RETURNED TO ALNYLAM, IT SHALL PROMPTLY BE
SHIPPED TO A FACILITY DESIGNATED BY CUBIST; AND (B) HANDLING ALL ASPECTS OF
LICENSED PRODUCT ORDER PROCESSING, INVOICING AND COLLECTION, DISTRIBUTION,
INVENTORY AND RECEIVABLES IN THE TERRITORY; PROVIDED THAT IN THE PROFIT-SHARE
TERRITORY, THE COSTS OF SUCH ACTIVITIES SHALL BE INCLUDED AS COMMERCIALIZATION
COSTS OR DISTRIBUTION COSTS, AS THE CASE MAY BE, IN THE CALCULATION AND

 

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RECONCILIATION OF N.A. PRE-TAX PROFIT OR LOSS IN ACCORDANCE WITH SECTION 7.4. 
ALL RETURNS WILL BE REQUIRED TO BE MADE IN ACCORDANCE WITH CUBIST’S STANDARD
RETURN PROCEDURES WHICH REQUIRE A RETURN AUTHORIZATION TO BE ISSUED BY CUBIST OR
ITS DESIGNEE.

 

SECTION 5.9  ADVERSE EVENT AND LICENSED PRODUCT COMPLAINT REPORTING PROCEDURES;
NOTICE OF INFORMATION AFFECTING MARKETABILITY OF LICENSED PRODUCT.  EACH PARTY
WILL MAINTAIN A RECORD OF ANY AND ALL COMPLAINTS IT RECEIVES WITH RESPECT TO
LICENSED PRODUCTS, AND WILL USE DILIGENT EFFORTS TO ENSURE THAT ITS RELATED
PARTIES MAINTAIN SUCH RECORDS.  EACH PARTY WILL NOTIFY THE OTHER PARTY IN
REASONABLE DETAIL OF ANY COMPLAINT IT RECEIVES WITH RESPECT TO LICENSED PRODUCT
WITHIN SUFFICIENT TIME TO ALLOW THE OTHER PARTY AND ITS RELATED PARTIES TO
COMPLY WITH ANY AND ALL REGULATORY AND OTHER REQUIREMENTS IMPOSED UPON THEM IN
ANY JURISDICTION IN WHICH LICENSED PRODUCT IS BEING MARKETED OR TESTED IN
CLINICAL STUDIES OR POST-APPROVAL STUDIES.  CUBIST WILL MAINTAIN A GLOBAL SAFETY
DATABASE FOR LICENSED PRODUCT.  THE REASONABLE COSTS OF IMPLEMENTING AND
MAINTAINING THE GLOBAL SAFETY DATABASE SHALL BE INCLUDED AS COMMERCIALIZATION
COSTS IN THE CALCULATION AND RECONCILIATION OF N.A. PRE-TAX PROFIT OR LOSS IN
ACCORDANCE WITH SECTION 7.4 EVEN THOUGH THE GLOBAL SAFETY DATABASE WILL ALSO BE
USED WITH RESPECT TO THE ROYALTY TERRITORY.  IN THE EVENT ALNYLAM ELECTS TO
EXERCISE ITS OPT-OUT OPTION UNDER SECTION 4.7, NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN SECTION 4.7 OR OTHERWISE IN THIS AGREEMENT, ALNYLAM SHALL
CONTINUE TO PAY []* OF THE REASONABLE COSTS OF MAINTAINING THE GLOBAL SAFETY
DATABASE, AND SHALL REIMBURSE CUBIST FOR SUCH COSTS ON A MONTHLY BASIS WITHIN
[]* AFTER RECEIPT OF AN INVOICE FROM CUBIST.  ALNYLAM AND THE ASIAN PARTNER WILL
HAVE ACCESS TO ALL DATA IN THE GLOBAL ADVERSE EVENT DATABASE, SUBJECT TO
REASONABLE PROCEDURES TO BE MUTUALLY AGREED UPON BY THE PARTIES AND SUCH ASIAN
PARTNER AND SET FORTH IN THE SAFETY INFORMATION EXCHANGE AGREEMENT, AS DEFINED
BELOW.  CUBIST WILL PROVIDE ALNYLAM AND THE ASIAN PARTNER WITH ALL ADVERSE EVENT
INFORMATION AND SAFETY DATA RELATING TO LICENSED PRODUCT IN ITS CONTROL THROUGH
ACCESS TO THE GLOBAL ADVERSE EVENT DATABASE.  ALNYLAM WILL USE DILIGENT EFFORTS
TO REQUIRE THAT ITS ASIAN PARTNER WILL REPORT TO ALNYLAM OR DIRECTLY TO CUBIST
THE DETAILS AROUND ANY ADVERSE EVENTS AND SERIOUS ADVERSE EVENTS RELATING TO
LICENSED PRODUCT IN ITS CONTROL WITHIN THE TIME PERIODS FOR SUCH REPORTING AS
SPECIFIED IN THE SAFETY INFORMATION EXCHANGE AGREEMENT.  CUBIST SHALL BE
RESPONSIBLE FOR SUBMITTING ADVERSE EVENT REPORTS WITH RESPECT TO LICENSED
PRODUCTS TO THE APPLICABLE REGULATORY AUTHORITIES IN THE TERRITORY.  CUBIST’S
REASONABLE COSTS ASSOCIATED WITH SUBMITTING ADVERSE EVENT REPORTS IN THE ROYALTY
TERRITORY SHALL BE BORNE BY CUBIST.  CUBIST’S REASONABLE COSTS ASSOCIATED WITH
SUBMITTING ADVERSE EVENT REPORTS IN THE PROFIT-SHARE TERRITORY SHALL BE INCLUDED
AS COMMERCIALIZATION COSTS IN THE CALCULATION AND RECONCILIATION OF N.A. PRE-TAX
PROFIT OR LOSS IN ACCORDANCE WITH SECTION 7.4.  IN ADDITION, EACH PARTY SHALL
PROMPTLY NOTIFY THE OTHER PARTY IF SUCH PARTY BECOMES AWARE OF ANY INFORMATION
OR CIRCUMSTANCE THAT IS LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCTS IN THE
TERRITORY.  WITHIN []* AFTER THE EFFECTIVE DATE, THE PARTIES WILL DEVELOP AND
AGREE IN WRITING UPON A SAFETY INFORMATION EXCHANGE AGREEMENT (THE “SAFETY
INFORMATION EXCHANGE AGREEMENT”) THAT WILL INCLUDE SAFETY DATA EXCHANGE
PROCEDURES GOVERNING THE COORDINATION OF COLLECTION, INVESTIGATION, REPORTING,
AND EXCHANGE OF INFORMATION CONCERNING ANY ADVERSE EXPERIENCES, AND ANY PRODUCT
QUALITY AND PRODUCT COMPLAINTS INVOLVING ADVERSE EXPERIENCES, RELATED TO
LICENSED PRODUCT, SUFFICIENT TO ENABLE EACH PARTY TO COMPLY WITH ITS LEGAL AND
REGULATORY OBLIGATIONS AND CONSISTENT WITH THE TERMS OF THIS AGREEMENT.  AT
CUBIST’S REQUEST, ALNYLAM SHALL USE DILIGENT

 

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EFFORTS TO REQUIRE THAT ITS ASIAN PARTNER BECOME A PARTY TO THE SAFETY
INFORMATION EXCHANGE AGREEMENT.

 

SECTION 5.10  RECALLS, MARKET WITHDRAWALS OR CORRECTIVE ACTIONS.  IF ANY
REGULATORY AUTHORITY ISSUES OR REQUESTS A RECALL OR TAKES A SIMILAR ACTION IN
CONNECTION WITH LICENSED PRODUCT IN THE TERRITORY, OR IF EITHER PARTY DETERMINES
THAT AN EVENT, INCIDENT OR CIRCUMSTANCE HAS OCCURRED THAT MAY RESULT IN THE NEED
FOR A RECALL OR MARKET WITHDRAWAL IN THE TERRITORY, THE PARTY NOTIFIED OF SUCH
RECALL OR SIMILAR ACTION, OR THE PARTY THAT DESIRES SUCH RECALL, WITHDRAWAL OR
SIMILAR ACTION, SHALL, WITHIN []*, ADVISE THE OTHER PARTY THEREOF BY TELEPHONE
OR FACSIMILE.  CUBIST, IN CONSULTATION WITH ALNYLAM, SHALL DECIDE WHETHER TO
CONDUCT A RECALL OR PRODUCT WITHDRAWAL IN THE TERRITORY (EXCEPT IN THE CASE OF A
GOVERNMENT MANDATED RECALL, WHEN CUBIST MAY ACT WITHOUT SUCH ADVANCE NOTICE, BUT
SHALL NOTIFY ALNYLAM AS SOON AS POSSIBLE) AND THE MANNER IN WHICH ANY SUCH
RECALL OR WITHDRAWAL SHALL BE CONDUCTED.  ALNYLAM WILL MAKE AVAILABLE TO CUBIST,
UPON REQUEST, ALL OF ALNYLAM’S PERTINENT RECORDS THAT CUBIST MAY REASONABLY
REQUEST TO ASSIST CUBIST IN EFFECTING ANY RECALL.

 

SECTION 5.11  MEDICAL INQUIRIES.  CUBIST SHALL HANDLE ALL MEDICAL QUESTIONS OR
INQUIRIES FROM MEMBERS OF THE MEDICAL PROFESSION IN THE TERRITORY REGARDING
LICENSED PRODUCT IN THE FIELD. CUBIST’S REASONABLE COSTS ASSOCIATED WITH
HANDLING MEDICAL QUESTIONS OR INQUIRIES FROM MEMBERS OF THE MEDICAL PROFESSION
IN THE PROFIT-SHARE TERRITORY SHALL BE INCLUDED AS COMMERCIALIZATION COSTS IN
THE CALCULATION AND RECONCILIATION OF N.A. PRE-TAX PROFIT OR LOSS IN ACCORDANCE
WITH SECTION 7.4.

 

SECTION 5.12  EXPORT MONITORING.  CUBIST AND ITS RELATED PARTIES WILL USE
DILIGENT EFFORTS TO MONITOR AND PREVENT EXPORTS OF LICENSED PRODUCT FROM THE
TERRITORY TO COUNTRIES IN ASIA, USING METHODS COMMONLY USED IN THE INDUSTRY FOR
SUCH PURPOSE, AND SHALL PROMPTLY INFORM ALNYLAM OF ANY SUCH EXPORTS OF LICENSED
PRODUCT FROM THE TERRITORY TO COUNTRIES IN ASIA, AND THE ACTIONS TAKEN TO
PREVENT SUCH EXPORTS.  CUBIST AGREES TO TAKE ANY ACTIONS REASONABLY REQUESTED IN
WRITING BY ALNYLAM THAT ARE CONSISTENT WITH APPLICABLE LAW TO PREVENT EXPORTS OF
LICENSED PRODUCT FROM THE TERRITORY TO COUNTRIES IN ASIA.  ALNYLAM SHALL USE
DILIGENT EFFORTS TO EFFECT PROVISIONS WITH ITS ASIAN PARTNER THAT REQUIRE THE
ASIAN PARTNER TO USE EFFORTS CONSISTENT WITH THOSE REQUIRED OF CUBIST UNDER THIS
SECTION 5.12 TO INFORM CUBIST OF, AND TO PREVENT, EXPORTS OF LICENSED PRODUCTS
FROM COUNTRIES IN ASIA INTO COUNTRIES IN THE TERRITORY.

 

ARTICLE VI

 

MANUFACTURE AND SUPPLY

 

SECTION 6.1  SUPPLY OBLIGATIONS; ALNYLAM’S EXISTING MANUFACTURING ARRANGEMENTS.

 

(A)           SUBJECT TO SECTION 6.2, FROM AND AFTER THE EFFECTIVE DATE, ALNYLAM
WILL USE DILIGENT EFFORTS, EITHER ITSELF OR THROUGH THIRD PARTIES, TO
MANUFACTURE, IN ACCORDANCE WITH APPLICABLE CGMP (AS DEFINED IN THE SUPPLY
AGREEMENT TERM SHEET), AND SUPPLY TO CUBIST API BULK DRUG SUBSTANCE AND FINISHED
PRODUCT (AS APPLICABLE) IN QUANTITIES THAT ARE REASONABLY SUFFICIENT FOR THE
CONDUCT OF DEVELOPMENT AND COMMERCIALIZATION BY CUBIST WITH RESPECT TO THE

 

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PROFIT-SHARE  TERRITORY UNDER THE DEVELOPMENT PLAN AND COMMERCIALIZATION PLAN,
RESPECTIVELY, AND FOR DEVELOPMENT AND COMMERCIALIZATION IN THE ROYALTY
TERRITORY. CUBIST SHALL PAY ALNYLAM AN AMOUNT EQUAL TO ALNYLAM’S COST OF GOODS
SOLD FOR API BULK DRUG SUBSTANCE AND FINISHED PRODUCT (AS APPLICABLE) SUPPLIED
BY ALNYLAM TO CUBIST PURSUANT TO THIS SECTION 6.1 WITH RESPECT TO THE
DEVELOPMENT AND COMMERCIALIZATION IN THE ROYALTY TERRITORY, PAYABLE WITHIN []*
AFTER RECEIPT OF AN INVOICE THEREFOR IN ACCORDANCE WITH THE SUPPLY AGREEMENT. 
ALNYLAM’S COST OF GOODS SOLD FOR API BULK DRUG SUBSTANCE AND FINISHED PRODUCT
(AS APPLICABLE) SUPPLIED BY ALNYLAM TO CUBIST PURSUANT TO THIS SECTION 6.1 FOR
DEVELOPMENT IN THE PROFIT-SHARE TERRITORY SHALL BE INCLUDED AS DEVELOPMENT
COSTS. ALNYLAM’S COST OF GOODS SOLD FOR API BULK DRUG SUBSTANCE AND FINISHED
PRODUCT (AS APPLICABLE) SUPPLIED BY ALNYLAM TO CUBIST PURSUANT TO THIS
SECTION 6.1 FOR COMMERCIALIZATION IN THE PROFIT-SHARE TERRITORY SHALL BE SHARED
BY THE PARTIES  THROUGH THE CALCULATION OF N.A. PRE-TAX PROFIT OR LOSS.

 

(B)           PRIOR TO THE EFFECTIVE DATE, ALNYLAM ENTERED INTO THE MASTER
SERVICES AGREEMENTS IDENTIFIED ON EXHIBIT F WITH RESPECT TO THE SUPPLY OF API
BULK DRUG SUBSTANCE AND FINISHED PRODUCT FOR CLINICAL TRIALS, AND SUCH
AGREEMENTS ARE HEREBY DEEMED APPROVED BY CUBIST. SUBJECT TO SECTIONS 6.2 AND
6.3, ALNYLAM SHALL BE RESPONSIBLE FOR THE DAY-TO-DAY MANAGEMENT OF SUCH
SUPPLIERS ON BEHALF OF THE PARTIES, UNDER THE DIRECTION OF THE JSC; PROVIDED
THAT IN NO EVENT SHALL ALNYLAM AMEND ANY OF THE AGREEMENTS IDENTIFIED ON
EXHIBIT F WITH RESPECT TO ANY LICENSED PRODUCT WITHOUT CUBIST’S PRIOR WRITTEN
APPROVAL OF THE FORM OF THE AMENDMENT, WHICH APPROVAL SHALL NOT BE UNREASONABLY
WITHHELD OR DELAYED.  AFTER THE EFFECTIVE DATE, ALNYLAM, IN CONSULTATION WITH
CUBIST, SHALL USE DILIGENT EFFORTS TO ENTER INTO SUCH ADDITIONAL AGREEMENTS (IF
ANY, AS DETERMINED BY THE PARTIES) WITH SUPPLIERS OF API BULK DRUG SUBSTANCE OR
FINISHED PRODUCT (AS APPLICABLE) TO SUPPLY THE PARTIES WITH API BULK DRUG
SUBSTANCE OR FINISHED PRODUCT IN QUANTITIES THAT ARE REASONABLY SUFFICIENT FOR
THE CONDUCT OF DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES FOR THE TERRITORY
PURSUANT TO THIS AGREEMENT.  THE SELECTION OF SUCH THIRD PARTY SUPPLIERS AND THE
TERMS OF THE AGREEMENTS WITH SUCH THIRD PARTY SUPPLIERS WITH RESPECT TO LICENSED
PRODUCTS SHALL BE SUBJECT TO PRIOR APPROVAL BY BOTH PARTIES, WHICH APPROVAL
SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  THE TERMS OF ANY SUCH AGREEMENTS
SHALL INCLUDE THE RIGHT OF BOTH PARTIES TO AUDIT ANY SUCH THIRD PARTY SUPPLIERS
OF API BULK DRUG SUBSTANCE OR FINISHED PRODUCT BEING SUPPLIED FOR THE
TERRITORY.  IN THE CASE OF THE AGREEMENTS IDENTIFIED ON EXHIBIT F, TO THE EXTENT
PERMITTED BY SUCH AGREEMENTS AND UPON THE REASONABLE REQUEST OF CUBIST, ALNYLAM
SHALL AUDIT SUCH EXISTING THIRD PARTY SUPPLIERS WITH RESPECT TO ACTIVITIES
RELATED TO LICENSED PRODUCTS AND, TO THE EXTENT PERMITTED BY SUCH AGREEMENTS,
SHALL PERMIT CUBIST REPRESENTATIVES TO PARTICIPATE AS PART OF THE AUDIT TEAM. 
THE RESULTS OF ANY SUCH AUDIT SHALL BE REPORTED TO ALNYLAM AS PROVIDED IN SUCH
AGREEMENTS AND ALNYLAM SHALL REPORT SUCH RESULTS TO CUBIST TO THE EXTENT
PERMITTED BY SUCH AGREEMENTS.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, ALNYLAM SHALL USE DILIGENT EFFORTS TO AMEND THE AGREEMENTS LISTED ON
EXHIBIT F TO THE EXTENT NECESSARY TO PERMIT CUBIST REPRESENTATIVES TO
PARTICIPATE IN AUDITS OF SUCH THIRD PARTIES WITH RESPECT TO LICENSED PRODUCT AND
TO HAVE ACCESS TO AUDIT RESULTS.

 

(C)           THE JSC SHALL NOT TAKE ANY ACTION OR DIRECT ALNYLAM TO TAKE ANY
ACTION THAT WOULD RESULT IN THE BREACH OF ANY AGREEMENT SET FORTH ON EXHIBIT F,
OR OF ANY SUBSEQUENT AGREEMENT BETWEEN ALNYLAM AND AN API BULK DRUG SUBSTANCE OR
FINISHED PRODUCT SUPPLIER,

 

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INCLUDING ANY MINIMUM PURCHASE OBLIGATION OR NON-CANCELABLE ORDER OBLIGATION
CONTAINED IN ANY SUCH AGREEMENT.

 

SECTION 6.2  TRANSITION OF MANUFACTURING RESPONSIBILITIES TO CUBIST.

 

(A)           THE PARTIES CONTEMPLATE THAT, AT A SUITABLE TIME AFTER THE
EFFECTIVE DATE, THE PARTIES MAY AGREE TO TRANSFER RESPONSIBILITY FOR
MANUFACTURING API BULK DRUG SUBSTANCE AND FINISHED PRODUCT FOR THE TERRITORY (AS
APPLICABLE) TO CUBIST OR A DESIGNATED THIRD PARTY MANUFACTURER.  THE SUPPLY
AGREEMENT TERM SHEET ALSO CONTAINS PROVISIONS UNDER WHICH CUBIST MAY ASSUME
RESPONSIBILITY FOR THE MANUFACTURE OF  LICENSED PRODUCT.

 

(B)           IF, AND AT SUCH TIME AS A TRANSITION OF MANUFACTURING TO CUBIST IS
TO OCCUR UNDER SECTION 6.2(A), CUBIST WILL EITHER (I) ENTER INTO
AGREEMENT(S) WITH API BULK DRUG SUBSTANCE SUPPLIER(S) OR FINISHED PRODUCT
SUPPLIERS OR (II) SUPPLY API BULK DRUG SUBSTANCE OR FINISHED PRODUCT (AFTER
COMPLETION OF TRANSFER OF RESPONSIBILITIES), IN EITHER CASE TO REPLACE THE
AGREEMENT(S) REFERENCED IN SECTION 6.1 OR TO PROVIDE A SECOND SOURCE OF SUPPLY
FOR API BULK DRUG SUBSTANCE OR FINISHED PRODUCT, THE TERMS OF ANY SUCH
AGREEMENTS OR ARRANGEMENTS INVOLVING CUBIST SHALL BE SUBJECT TO BOTH PARTIES’
PRIOR WRITTEN APPROVAL, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR
DELAYED.  AFTER SUCH TRANSITION, CUBIST’S COST OF GOODS SOLD FOR API BULK DRUG
SUBSTANCE AND FINISHED PRODUCT (AS APPLICABLE) SUPPLIED BY CUBIST FOR
DEVELOPMENT IN THE PROFIT-SHARE TERRITORY SHALL BE INCLUDED AS DEVELOPMENT
COSTS, AND CUBIST’S COST OF GOODS SOLD FOR API BULK DRUG SUBSTANCE AND FINISHED
PRODUCT (AS APPLICABLE) SUPPLIED BY CUBIST FOR COMMERCIALIZATION IN THE
PROFIT-SHARE TERRITORY SHALL BE SHARED BY THE PARTIES THROUGH THE CALCULATION OF
N.A. PRE-TAX PROFIT OR LOSS.

 

(C)           FROM AND AFTER SUCH TIME, IF ANY, AS RESPONSIBILITY FOR
MANUFACTURING API BULK DRUG SUBSTANCE OR FINISHED PRODUCT IS TRANSITIONED TO
CUBIST, CUBIST SHALL USE DILIGENT EFFORTS TO MANUFACTURE OR HAVE MANUFACTURED
AND SUPPLY SUFFICIENT QUANTITIES OF THE API BULK DRUG SUBSTANCE OR FINISHED
PRODUCT (AS APPLICABLE) TO ENABLE CUBIST TO RESPOND ON A TIMELY BASIS TO
CUSTOMER DEMAND FOR LICENSED PRODUCTS IN THE FIELD IN THE TERRITORY.

 

(D)           CUBIST ACKNOWLEDGES THAT ALNYLAM HAS CERTAIN SUPPLY OBLIGATIONS TO
KYOWA HAKKO UNDER THE KYOWA AGREEMENT, AND THAT, IF ANY SUCH OBLIGATIONS TO
KYOWA HAKKO OR TO ANOTHER ASIAN PARTNER REMAIN AT THE TIME OF ANY TRANSITION OF
RESPONSIBILITY FOR SUPPLY TO CUBIST PURSUANT TO SECTION 6.2(A), THE PARTIES
SHALL USE DILIGENT EFFORTS TO STRUCTURE SUCH TRANSITION IN A MANNER THAT ENABLES
ALNYLAM TO SATISFY SUCH SUPPLY OBLIGATIONS TO KYOWA HAKKO (OR ANOTHER ASIAN
PARTNER, AS APPLICABLE) AFTER SUCH TRANSITION IN A REASONABLE MANNER, PROVIDED
IN NO EVENT SHALL CUBIST HAVE ANY OBLIGATION TO SUPPLY ALNYLAM WITH ANY LICENSED
PRODUCT OTHER THAN THE LICENSED PRODUCT CUBIST IS MANUFACTURING FOR ITSELF.

 

(E)           ALNYLAM SHALL PAY CUBIST AN AMOUNT EQUAL TO []* FOR ANY API BULK
DRUG SUBSTANCE AND FINISHED PRODUCT (AS APPLICABLE) SUPPLIED BY CUBIST TO
ALNYLAM (OR ITS DESIGNEE) PURSUANT TO SECTION 6.2(D) []* TO WHICH ALNYLAM IS
ENTITLED UNDER ITS AGREEMENT WITH ITS ASIAN PARTNER, WHICH SUCH AMOUNT SHALL BE
PAID WITHIN []* AFTER RECEIPT OF AN INVOICE THEREFOR.  SALE BY

 

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CUBIST OF API BULK DRUG SUBSTANCE OR FINISHED PRODUCT TO ALNYLAM UNDER THIS
AGREEMENT SHALL NOT BE INCLUDED IN THE CALCULATION OF NET SALES.

 

SECTION 6.3  SUPPLY AGREEMENT.  THE TERMS OF EXHIBIT G HEREOF (THE “SUPPLY
AGREEMENT TERM SHEET”) SHALL GOVERN THE MANUFACTURE AND SUPPLY OF LICENSED
PRODUCT HEREUNDER UNTIL SUCH TIME AS THE PARTIES ENTER INTO A SUPPLY AGREEMENT
(THE “SUPPLY AGREEMENT”), AFTER WHICH TIME, THE TERMS OF THE SUPPLY AGREEMENT
SHALL GOVERN.  THE PARTIES WILL USE THEIR COMMERCIALLY REASONABLE EFFORTS TO
ENTER INTO, WITHIN []* AFTER THE EFFECTIVE DATE, A SUPPLY AGREEMENT AMONG
ALNYLAM, CUBIST AND KYOWA HAKKO, CONSISTENT WITH THE TERMS SET FORTH IN
EXHIBIT G, AND CONTAINING SUCH OTHER TERMS AS SHALL BE CONSISTENT WITH THIS
AGREEMENT, THE KYOWA AGREEMENT AND INDUSTRY STANDARDS FOR A CONTRACT
MANUFACTURING AGREEMENT IN THE CONTEXT OF A COLLABORATIVE EFFORT.  FOR PURPOSES
OF CLARITY, IF CUBIST ASSUMES RESPONSIBILITY FOR THE MANUFACTURE AND SUPPLY OF
LICENSE PRODUCT PURSUANT HERETO OR PURSUANT TO THE SUPPLY AGREEMENT TERM SHEET
OR THE SUPPLY AGREEMENT, IT IS THE INTENTION OF THE PARTIES THAT CUBIST WILL
HAVE THE SAME RIGHTS AND OBLIGATIONS AS THE MANUFACTURER AND SUPPLIER THAT
ALNYLAM HELD PRIOR TO SUCH TIME UNDER THE SUPPLY AGREEMENT TERM SHEET OR THE
SUPPLY AGREEMENT, AS THE CASE MAY BE.

 

SECTION 6.4  TECHNOLOGY TRANSFER.  PROMPTLY AFTER A DECISION OF THE PARTIES  OR
ELECTION BY CUBIST UNDER SECTION 6.2 TO TRANSFER MANUFACTURE OF THE API BULK
DRUG SUBSTANCE OR FINISHED PRODUCT (AS APPLICABLE) TO CUBIST OR TO A THIRD PARTY
API BULK DRUG SUBSTANCE SUPPLIER OR FINISHED PRODUCT SUPPLIER WITH WHOM CUBIST
ENTERS INTO AN AGREEMENT, AS PERMITTED UNDER SECTION 6.2, ALNYLAM WILL TRANSFER
TO CUBIST OR TO SUCH THIRD PARTY SUPPLIER ALL DOCUMENTS AND MANUFACTURING
INFORMATION AND OTHER KNOW-HOW NECESSARY OR REASONABLY USEFUL TO ENABLE CUBIST
TO MANUFACTURE OR HAVE MANUFACTURED THE API BULK DRUG SUBSTANCE AND FINISHED
PRODUCT (AS APPLICABLE).  ALNYLAM’S COSTS AND EXPENSES INCURRED IN CONNECTION
WITH ANY SUCH TRANSFER OF TECHNOLOGY UNDER THIS SECTION 6.4 SHALL []*, TO THE
EXTENT CONSISTENT WITH THIS AGREEMENT.

 

ARTICLE VII

 

FINANCIAL PROVISIONS

 

SECTION 7.1  UPFRONT FEE.  WITHIN FIVE (5) BUSINESS DAYS AFTER THE EFFECTIVE
DATE, CUBIST SHALL PAY ALNYLAM A NON-REFUNDABLE, NON-CREDITABLE INITIAL PAYMENT
OF TWENTY MILLION DOLLARS ($20,000,000).

 

SECTION 7.2  DEVELOPMENT MILESTONES.  CUBIST SHALL MAKE THE NON-REFUNDABLE,
NON-CREDITABLE MILESTONE PAYMENTS SET FORTH BELOW TO ALNYLAM NOT LATER THAN []*
AFTER THE EARLIEST DATE ON WHICH THE CORRESPONDING MILESTONE EVENT SET FORTH
BELOW HAS BEEN ACHIEVED:

 

Milestone Event

 

Payment*

 

 

 

 

 

(a) Acceptance for filing of an application for Regulatory Approval for a
Licensed Product for any indication in the EMEA or in a Major EU Country

 

$[]*

 

 

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Milestone Event

 

Payment*

 

 

 

 

 

(b)  First Commercial Sale of a Licensed Product in any indication in a Major EU
Country

 

$[]*

 

 

 

 

 

(c)  Acceptance for filing of an application for Regulatory Approval for a
Licensed Product for any indication other than the indication with respect to
which the milestone event described in Section 7.2(a) above was achieved in the
EMEA or in a Major EU Country

 

$[]*

 

 

 

 

 

(d)  Regulatory Approval of a Licensed Product for any indication other than the
indication with respect to which the milestone event described in
Section 7.2(a) above was achieved in the EMEA or in a Major EU Country

 

$[]*

 

 

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*The milestone payments for RSV02 Products and Additional RSV Products shall be
[]* percent ([]*%) of the amounts set forth in the chart above.

 

The milestone payments set forth in this Section 7.2 shall be paid only once,
upon the first achievement of the applicable milestone event by the first
Licensed Product to achieve such milestone event; provided that if any such
milestone event is first achieved by an RSV02 Product or an Additional RSV
Product such that Cubist pays []* percent ([]*%) of the amount set forth in the
table above in connection with the achievement of such milestone, then []*
percent ([]*%) of such milestone amount shall be paid by Cubist if such
milestone event is subsequently achieved by an RSV01 Product.

 

SECTION 7.3  SALES MILESTONES.  IN ADDITION TO ALL OTHER AMOUNTS PAYABLE UNDER
THIS AGREEMENT, CUBIST SHALL MAKE NON-REFUNDABLE, NON-CREDITABLE MILESTONE
PAYMENTS SET FORTH BELOW TO ALNYLAM  UPON THE ACHIEVEMENT OF THE MILESTONE
EVENTS SET FORTH BELOW, SUCH PAYMENT TO BE MADE AS SET FORTH BELOW:

 

Milestone Event

 

Payment*

 

 

 

 

 

Calendar Year Net Sales of Licensed Product in the Royalty Territory greater
than $[]*

 

$[]*

 

 

 

 

 

Calendar Year Net Sales of Licensed Product in the Royalty Territory greater
than $[]*

 

$[]*

 

 

 

 

 

Calendar Year Net Sales of Licensed Product in the Royalty Territory greater
than $[]*

 

$[]*

 

 

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*The milestone payments for RSV02 Products and Additional RSV Products shall be
[]* percent ([]*%) of the amounts set forth in the chart above.

 

The milestone payments set forth in this Section 7.3 shall each be payable only
once, upon the first achievement of the applicable Net Sales threshold in a
given Calendar Year; provided that if any such success milestone is first
achieved by an RSV02 Product or an Additional RSV Product such that Cubist pays
[]* percent ([]*%) of the amount set forth in the table above in connection with
the achievement of such milestone, then []* percent ([]*%) of such milestone
amount shall be paid by Cubist if the milestone event is subsequently achieved
by an RSV01 Product.

 

For purposes of determining whether a milestone event set forth in this
Section 7.3 has occurred (and without creating an obligation to pay the
milestone more than once as set forth in the preceding paragraph of this
Section 7.3), Calendar Year Net Sales shall be calculated for each Licensed
Product separately.

 

If more than one of such milestone events first occurs based on sales of
Licensed Product in the same Calendar Year, all of such milestone payments shall
be paid for such Calendar Year.  If a milestone payment set forth above is
earned based on Net Sales over a period that is shorter in duration than a full
Calendar Year, such payment shall become due and payable []* after the end of
the Calendar Quarter in which the milestone event is achieved.

 

SECTION 7.4  N.A. PRE-TAX PROFIT OR LOSS.

 

(A)                                  ALLOCATION OF N.A. PRE-TAX PROFIT OR LOSS. 
SUBJECT TO SECTION 5.3(B), THE PARTIES SHALL SHARE IN N.A. PRE-TAX PROFIT OR
LOSS FOR THE PROFIT-SHARE TERRITORY AS FOLLOWS:  FIFTY PERCENT (50%) TO ALNYLAM
AND FIFTY PERCENT (50%) TO CUBIST.  N.A. PRE-TAX PROFIT OR LOSS SHALL BE
CALCULATED IN ACCORDANCE WITH SECTION 7.4(B).  IT IS UNDERSTOOD THAT COSTS AND
EXPENSES INCLUDED IN COMPONENTS OF N.A. PRE-TAX PROFIT OR LOSS SHALL NOT BE
DOUBLE COUNTED AND SHALL NOT ALSO BE INCLUDED IN DEVELOPMENT COSTS.

 

(B)                                 QUARTERLY RECONCILIATION OF N.A. PRE-TAX
PROFIT OR LOSS.

 

(I)            WITHIN []* AFTER THE END OF EACH CALENDAR QUARTER AFTER THE
EFFECTIVE DATE, CUBIST SHALL SUBMIT TO ALNYLAM A WRITTEN REPORT SETTING FORTH
(A) ALL NET SALES OF LICENSED PRODUCTS IN THE PROFIT-SHARE TERRITORY MADE BY
CUBIST OR ITS RELATED PARTIES DURING SUCH CALENDAR QUARTER, TOGETHER WITH AN
ACCOUNTING OF THE DEDUCTIONS FROM GROSS INVOICE PRICE TO NET SALES IN ACCORDANCE
WITH SECTION 1.76, (B) ALL SUBLICENSE INCOME RECEIVED DURING SUCH CALENDAR
QUARTER, AND (C) THE COST OF GOODS SOLD, COMMERCIALIZATION COSTS AND
DISTRIBUTION COSTS INCURRED BY CUBIST WITH RESPECT TO LICENSED PRODUCTS IN THE
FIELD IN THE PROFIT-SHARE TERRITORY.

 

(II)           WITHIN []* AFTER THE END OF EACH CALENDAR QUARTER AFTER THE
EFFECTIVE DATE, ALNYLAM SHALL SUBMIT TO CUBIST A WRITTEN REPORT SETTING FORTH
THE COST OF GOODS SOLD, COMMERCIALIZATION COSTS AND DISTRIBUTION COSTS INCURRED
BY ALNYLAM WITH RESPECT TO LICENSED PRODUCTS IN THE FIELD IN THE PROFIT-SHARE
TERRITORY.

 

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(III)                               IN SUBMITTING THE REPORTS CONTEMPLATED BY
SECTIONS 7.4(B)(I) AND 7.4(B)(II), SUBJECT TO SECTION 5.3(C), THE PARTIES SHALL
SUBMIT COSTS AND EXPENSES FOR INCLUSION IN THE RECONCILIATION OF N.A. PRE-TAX
PROFIT OR LOSS ONLY TO THE EXTENT SUCH COSTS AND EXPENSES WERE MADE OR INCURRED
BY SUCH PARTY FOR ACTIVITIES DESCRIBED IN THE THEN CURRENT COMMERCIALIZATION
PLAN, OR (B) AS OTHERWISE APPROVED BY THE JSC OR JCT.

 

(IV)                              WITHIN []* AFTER THE RECEIPT OF ALNYLAM’S
REPORT PURSUANT TO SECTION 7.4(B)(II), CUBIST SHALL SUBMIT TO ALNYLAM A WRITTEN
REPORT SETTING FORTH IN REASONABLE DETAIL THE CALCULATION OF N.A. PRE-TAX PROFIT
OR LOSS AND THE CALCULATION OF THE NET AMOUNT OWED BY CUBIST TO ALNYLAM, OR BY
ALNYLAM TO CUBIST, IN ORDER TO ENSURE THE SHARING OF N.A. PRE-TAX PROFIT OR LOSS
SET FORTH IN SECTION 7.4(A).  THE NET AMOUNT PAYABLE SHALL BE PAID BY CUBIST OR
BY ALNYLAM (AS THE CASE MAY BE) WITHIN []* AFTER THE END OF THE APPLICABLE
CALENDAR QUARTER.

 

SECTION 7.5  LICENSED PRODUCT ROYALTIES IN THE ROYALTY TERRITORY.

 

(A)                                  ROYALTY RATES.  SUBJECT TO SECTIONS 7.5(B),
7.5(C), 7.5(D), 7.6, 7.7, 7.8 AND 7.9, CUBIST SHALL PAY TO ALNYLAM ROYALTIES ON
THE AGGREGATE NET SALES IN THE ROYALTY TERRITORY OF EACH LICENSED PRODUCT BY
CUBIST OR ITS RELATED PARTIES, DETERMINED ON A LICENSED PRODUCT-BY-LICENSED
PRODUCT BASIS, AS FOLLOWS:

 

Calendar Year Net Sales
of Licensed Product

 

Royalty Rate for
RSV01 Products
(as a percentage
of such Net Sales)

 

Royalty Rate for
Licensed Products
other than RSV01
Products (as a
percentage of
such Net Sales)

 

$[]* - $[]*

 

[]%*

 

[]%*

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

Greater than $[]*

 

[]%*

 

[]%*

 

 

(B)                                 APPLICABILITY OF ROYALTY RATES TO NET SALES
IN THE ROYALTY TERRITORY.  ROYALTIES ON AGGREGATE NET SALES OF LICENSED PRODUCT
IN THE ROYALTY TERRITORY IN A CALENDAR YEAR SHALL BE PAID AT THE RATE APPLICABLE
TO THE PORTION OF NET SALES WITHIN EACH OF THE NET SALES LEVELS ABOVE DURING
SUCH CALENDAR YEAR.  FOR EXAMPLE, SUBJECT TO SECTIONS 7.5(C), 7.5(D), 7.6,

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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7.7, 7.8 AND 7.9, IF, DURING A CALENDAR YEAR, NET SALES OF AN RSV01 PRODUCT WERE
EQUAL TO $[]*, THE ROYALTY PAYABLE BY CUBIST WOULD BE CALCULATED BY []*.

 

(C)                                  ROYALTIES IN NORTH AMERICA AFTER EXERCISE
OF THE OPT-OUT OPTION.  IN THE EVENT ALNYLAM EXERCISES ITS OPT-OUT OPTION UNDER
SECTION 4.7, (I) THE ROYALTY TERRITORY SHALL BE EXPANDED TO INCLUDE NORTH
AMERICA, AND (II) NET SALES OF LICENSED PRODUCTS FOR PURPOSES OF CALCULATING THE
ROYALTY TIERS SHALL BE DETERMINED SEPARATELY FOR NORTH AMERICA AND THE REST OF
THE TERRITORY IN ACCORDANCE WITH SECTION 4.7(A), PROVIDED THAT THE ROYALTY RATES
APPLICABLE TO NORTH AMERICA SHALL BE THOSE SET FORTH IN SECTION 4.7(A).

 

(D)                                 ROYALTY TERM AND ADJUSTMENTS.  THE
OBLIGATIONS OF CUBIST TO MAKE ROYALTY PAYMENTS AT THE FULL RATES RECITED IN
SECTION 7.5(A) SHALL COMMENCE ON THE EFFECTIVE DATE AND SHALL EXPIRE ON A
LICENSED PRODUCT-BY-LICENSED PRODUCT AND COUNTRY-BY-COUNTRY BASIS ON THE LATER
OF:  (I) THE EXPIRATION OF THE LEGAL EXCLUSIVITY PERIOD OR (II) THE TENTH (10TH)
ANNIVERSARY OF THE DATE OF THE FIRST COMMERCIAL SALE OF SUCH LICENSED PRODUCT IN
SUCH COUNTRY BY CUBIST OR ITS RELATED PARTIES (THE “ROYALTY TERM”).  THE
FOREGOING PROVISIONS OF THIS SECTION 7.5(D) NOTWITHSTANDING, THE ROYALTIES
PAYABLE WITH RESPECT TO NET SALES OF A LICENSED PRODUCT SOLD IN ANY COUNTRY IN
THE ROYALTY TERRITORY SHALL BE REDUCED TO []* PERCENT ([]*%) OF THE AMOUNTS
OTHERWISE PAYABLE PURSUANT TO SECTION 7.5(A) (AS FURTHER ADJUSTED BY THE OTHER
PROVISIONS OF THIS ARTICLE VII), DURING ANY PORTION OF THE ROYALTY TERM WHEN
THERE IS NOT AN APPLICABLE LEGAL EXCLUSIVITY PERIOD IN EFFECT WITH RESPECT TO
SUCH LICENSED PRODUCT IN SUCH COUNTRY.

 

SECTION 7.6  ADJUSTMENTS FOR NECESSARY THIRD PARTY IP PAYMENTS IN THE ROYALTY
TERRITORY.

 

(A)                                  WITH RESPECT TO LICENSED PRODUCTS IN THE
ROYALTY TERRITORY, (I) SUBJECT TO SECTION 7.9, ALNYLAM SHALL BEAR []* PERCENT
([]*%) OF ANY ROYALTIES, UPFRONT FEES, MILESTONES OR OTHER PAYMENTS OWED UNDER
THE EXISTING ALNYLAM IN-LICENSES WITH RESPECT TO THE DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF A LICENSED PRODUCT IN THE FIELD IN THE ROYALTY TERRITORY;
(II) SUBJECT TO SECTIONS 7.6(B) AND 7.9, CUBIST SHALL BEAR []* PERCENT ([]*%) OF
ANY ROYALTIES UPFRONT FEES, MILESTONES OR OTHER PAYMENTS UNDER THE ALNYLAM
IN-LICENSES, OTHER THAN THE EXISTING ALNYLAM IN-LICENSES, TO THE EXTENT
REASONABLY ALLOCABLE TO NECESSARY THIRD PARTY IP FOR THE DEVELOPMENT,
MANUFACTURE OR COMMERCIALIZATION OF A LICENSED PRODUCT IN THE FIELD IN THE
ROYALTY TERRITORY; AND (III) SUBJECT TO SECTIONS 7.6(B) AND 7.9, CUBIST SHALL
BEAR []* PERCENT ([]*%) OF ANY ROYALTIES UPFRONT FEES, MILESTONES OR OTHER
PAYMENTS UNDER THE CUBIST IN-LICENSES, TO THE EXTENT REASONABLY ALLOCABLE TO
NECESSARY THIRD PARTY IP FOR THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION
OF A LICENSED PRODUCT IN THE FIELD IN THE ROYALTY TERRITORY.  ANY SUCH AMOUNTS
SHALL BE PAID BY CUBIST OR PAID BY ALNYLAM AND REIMBURSED BY CUBIST; PROVIDED
THAT IF SUCH AMOUNTS ARE PAID BY ALNYLAM, ALNYLAM SHALL INVOICE CUBIST FOR THE
AMOUNTS IDENTIFIED ON A CALENDAR QUARTER BASIS, AND CUBIST SHALL PAY SUCH
INVOICES WITHIN []* AFTER RECEIPT OF ALNYLAM’S INVOICE.

 

(B)                                 SUBJECT TO SECTION 7.9, []* PERCENT ([]*%)
OF ALL ROYALTIES, UPFRONT FEES, MILESTONES OR OTHER PAYMENTS UNDER THE ALNYLAM
IN-LICENSES AND THE CUBIST IN-LICENSES ACTUALLY

 

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*CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED SEPARATELY WITH THE
COMMISSION.

 

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PAID BY CUBIST PURSUANT TO SECTION 7.6(A)(II) OR 7.6(A)(III) SHALL BE FULLY
CREDITABLE AGAINST ROYALTIES PAYABLE BY CUBIST TO ALNYLAM PURSUANT TO
SECTION 7.5(A) OR SECTION 4.7.  []*.

 

SECTION 7.7  NECESSARY THIRD PARTY IP IN THE PROFIT-SHARE TERRITORY.  WITH
RESPECT TO  LICENSED PRODUCT IN THE PROFIT-SHARE TERRITORY, (A) []* PERCENT
([]*%) OF ANY ROYALTIES, UPFRONT FEES, MILESTONES OR OTHER PAYMENTS UNDER THE
ALNYLAM IN-LICENSES (OTHER THAN EXISTING ALNYLAM IN-LICENSES), (B) []* PERCENT
([]*%) OF ROYALTIES PAYABLE UNDER EXISTING ALNYLAM IN-LICENSES UP TO []* PERCENT
([]*%) OF NET SALES, (C) []* PERCENT ([]*%) OF THE ALLOCATED MILESTONES UNDER
EXISTING ALNYLAM IN-LICENSES THAT ARE IDENTIFIED ON EXHIBIT H, AND (D) ([]*%) OF
ANY ROYALTIES, UPFRONT FEES, MILESTONES OR OTHER PAYMENTS UNDER THE CUBIST
IN-LICENSES, IN EACH CASE UNDER CLAUSES (A), (B), (C) AND (D), TO THE EXTENT
REASONABLY ALLOCABLE TO NECESSARY THIRD PARTY IP FOR THE DEVELOPMENT,
MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCTS IN THE FIELD FOR THE
PROFIT-SHARE TERRITORY, SHALL BE INCLUDED IN COMMERCIALIZATION COSTS OR
DEVELOPMENT COSTS, AS APPLICABLE; PROVIDED THAT IT IS UNDERSTOOD THAT []*
PERCENT ([]*%) OF THE ALLOCATED MILESTONES IDENTIFIED ON EXHIBIT H SHALL BE
INCLUDED IN COMMERCIALIZATION COSTS OR DEVELOPMENT COSTS, AS THE CASE MAY BE,
WITH RESPECT TO LICENSED PRODUCTS FOR THE PROFIT-SHARE TERRITORY.  ALNYLAM SHALL
BEAR []* PERCENT ([]*%) OF ANY ROYALTIES, UP-FRONT FEES, MILESTONES OR OTHER
PAYMENTS OWED UNDER THE EXISTING ALNYLAM IN-LICENSES WITH RESPECT TO
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT IN THE FIELD
IN THE PROFIT-SHARE TERRITORY TO THE EXTENT NOT COVERED UNDER THE PRECEDING
SENTENCE.

 

SECTION 7.8  ROYALTY ADJUSTMENTS FOR GENERIC PRODUCTS.  IF, DURING A GIVEN
CALENDAR QUARTER, THERE IS GENERIC COMPETITION IN A PARTICULAR COUNTRY OF THE
ROYALTY TERRITORY WITH RESPECT TO A LICENSED PRODUCT, THEN SUBJECT TO
SECTION 7.9, THE ROYALTIES PAYABLE ON THE NET SALES OF SUCH LICENSED PRODUCT IN
SUCH COUNTRY DURING SUCH CALENDAR QUARTER SHALL BE REDUCED TO (A) []* PERCENT
([]*%) OF THE AMOUNTS OTHERWISE PAYABLE PURSUANT TO SECTION 7.5(A), AS ADJUSTED
BY THE OTHER PROVISIONS OF THIS ARTICLE VII, WITH RESPECT TO SUCH LICENSED
PRODUCT IN SUCH COUNTRY FOR SUCH CALENDAR QUARTER, AND (B) []* PERCENT ([]*%) OF
THE AMOUNTS OTHERWISE PAYABLE PURSUANT TO SECTION 7.5(A), AS ADJUSTED BY THE
OTHER PROVISIONS OF THIS ARTICLE VII, WITH RESPECT TO SUCH LICENSED PRODUCT IN
SUCH COUNTRY FOR SUCH CALENDAR QUARTER WHERE THE MARKET SHARE IN SUCH COUNTRY
FOR THE GENERIC PRODUCT (DETERMINED IN ACCORDANCE WITH SECTION 1.54) IS GREATER
THAN []* PERCENT ([]*%).

 

SECTION 7.9  MINIMUM PAYMENTS IN THE ROYALTY TERRITORY.

 

(A)                                  UNLESS THE REDUCTIONS IN
SECTION 7.8(B) APPLY, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 7.5,
7.6 OR 7.8, WITH RESPECT TO ANY LICENSED PRODUCT IN ANY COUNTRY IN THE ROYALTY
TERRITORY IN ANY CALENDAR QUARTER, IF THE ROYALTY PAYMENTS (AFTER ALL
ADJUSTMENTS AND REDUCTIONS) TO BE MADE TO ALNYLAM BY CUBIST WOULD OTHERWISE BE
LESS THAN THE ROYALTY AMOUNTS PAYABLE BY ALNYLAM (AND NOT REIMBURSED BY CUBIST)
TO THIRD PARTIES UNDER THE ALNYLAM IN-LICENSES WITH RESPECT TO SUCH NET SALES OF
LICENSED PRODUCT IN THE ROYALTY TERRITORY PLUS []*  PERCENT ([]*%) OF THE NET
SALES OF SUCH LICENSED PRODUCT IN THE ROYALTY TERRITORY IN SUCH CALENDAR
QUARTER, THEN ALNYLAM SHALL INVOICE CUBIST FOR SUCH SHORTFALL AMOUNTS ON A
CALENDAR QUARTER BASIS, AND CUBIST SHALL PAY SUCH INVOICES WITHIN []* AFTER
RECEIPT OF ALNYLAM’S INVOICE.

 

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*CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED SEPARATELY WITH THE
COMMISSION.

 

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(B)                                 IF THE REDUCTIONS IN SECTION 7.8(B) APPLY,
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 7.5, 7.6 OR 7.8, WITH
RESPECT TO ANY LICENSED PRODUCT IN ANY COUNTRY IN THE ROYALTY TERRITORY IN ANY
CALENDAR QUARTER, IF THE ROYALTY PAYMENTS (AFTER ALL ADJUSTMENTS AND REDUCTIONS)
TO BE MADE TO ALNYLAM BY CUBIST WOULD OTHERWISE BE LESS THAN THE AMOUNTS PAYABLE
BY ALNYLAM TO THIRD PARTIES UNDER THE ALNYLAM IN-LICENSES PLUS []* PERCENT
([]*%) OF THE NET SALES OF SUCH LICENSED PRODUCT IN SUCH CALENDAR QUARTER IN THE
ROYALTY TERRITORY, THEN ALNYLAM SHALL INVOICE CUBIST FOR SUCH SHORTFALL AMOUNTS
ON A CALENDAR QUARTER BASIS, AND CUBIST SHALL PAY SUCH INVOICES WITHIN []* AFTER
RECEIPT OF ALNYLAM’S INVOICE.

 

(C)                                  IF THE PROVISIONS OF
SECTION 4.7(A)(IX) APPLY, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
SECTION 4.7(A)(IX) OR THIS ARTICLE VII, IF THE PORTION OF SUBLICENSE INCOME
ATTRIBUTABLE TO THE NET SALES OF LICENSED PRODUCTS BY SUCH CUBIST SUBLICENSEE IN
SUCH COUNTRY(IES) IN NORTH AMERICA IN ANY CALENDAR QUARTER WOULD OTHERWISE BE
LESS THAN THE ROYALTY AMOUNTS PAYABLE BY ALNYLAM TO THIRD PARTIES UNDER THE
ALNYLAM IN-LICENSES WITH RESPECT TO SUCH NET SALES OF LICENSED PRODUCT IN SUCH
COUNTRY(IES) IN NORTH AMERICA IN SUCH CALENDAR QUARTER PLUS []* PERCENT ([]*%)
OF SUCH NET SALES, THEN ALNYLAM SHALL INVOICE CUBIST FOR SUCH SHORTFALL AMOUNTS
ON A CALENDAR QUARTER BASIS, AND CUBIST SHALL PAY SUCH INVOICES WITHIN []* AFTER
RECEIPT OF ALNYLAM’S INVOICE.

 

SECTION 7.10  ROYALTY REPORTS; PAYMENTS.  WITHIN []* AFTER THE END OF EACH
CALENDAR QUARTER FOR WHICH ROYALTIES ARE PAYABLE BY CUBIST TO ALNYLAM WITH
RESPECT TO NET SALES OF LICENSED PRODUCTS IN THE ROYALTY TERRITORY PURSUANT TO
SECTION 7.5, CUBIST SHALL SUBMIT TO ALNYLAM A REPORT, ON A COUNTRY-BY-COUNTRY
BASIS, PROVIDING IN REASONABLE DETAIL AN ACCOUNTING OF ALL NET SALES (INCLUDING
AN ACCOUNTING OF ALL UNIT SALES OF LICENSED PRODUCT AND CALCULATION OF THE
DEDUCTIONS FROM GROSS INVOICE PRICE TO NET SALES IN ACCORDANCE WITH
SECTION 1.76) MADE DURING SUCH CALENDAR QUARTER AND THE CALCULATION OF THE
APPLICABLE ROYALTIES UNDER SECTION 7.5(A).  CUBIST SHALL PAY TO ALNYLAM ALL
AMOUNTS PAYABLE BY IT UNDER SECTION 7.5 AS INDICATED IN THE REPORT AT THE TIME
CUBIST SUBMITS THE REPORT.

 

SECTION 7.11  PAYMENTS FROM ALNYLAM TO CUBIST; REPORTS.  ALNYLAM WILL PAY CUBIST
[]* PERCENT ([]*%) OF ANY ASIAN PARTNER PAYMENTS RECEIVED BY ALNYLAM FROM ITS
ASIAN PARTNER AFTER THE EFFECTIVE DATE, IN ACCORDANCE WITH THIS SECTION 7.11. 
NO SOONER THAN []* AND NO LATER THAN []* AFTER THE END OF EACH CALENDAR QUARTER
IN WHICH ALNYLAM RECEIVES ASIAN PARTNER PAYMENTS, ALNYLAM SHALL SUBMIT TO CUBIST
A REPORT, PROVIDING IN REASONABLE DETAIL AN ACCOUNTING OF ALL ASIAN PARTNER
PAYMENTS RECEIVED BY ALNYLAM DURING SUCH CALENDAR QUARTER AND THE CALCULATION OF
THE APPLICABLE PAYMENT UNDER THIS SECTION 7.11.  ALNYLAM SHALL PAY TO CUBIST ALL
AMOUNTS PAYABLE BY IT UNDER THIS SECTION 7.11 AS INDICATED IN THE REPORT AT THE
TIME ALNYLAM SUBMITS THE REPORT.  AS USED IN THIS SECTION 7.11, “ASIAN PARTNER
PAYMENTS” MEANS ANY OF THE FOLLOWING RECEIVED BY ALNYLAM FROM ITS ASIAN
PARTNER:  (A) []*.  FOR AVOIDANCE OF DOUBT, THIS SECTION 7.11 SURVIVES ANY
TERMINATION OF THIS AGREEMENT AS LONG AS SUCH TERMINATION OCCURS AFTER NDA
SUBMISSION IN THE UNITED STATES.

 

SECTION 7.12  AUDITS.  EACH PARTY SHALL KEEP COMPLETE AND ACCURATE RECORDS OF
THE ITEMS UNDERLYING DEVELOPMENT COSTS, COMMERCIALIZATION COSTS, DISTRIBUTION
COSTS, NET SALES, COST OF

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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GOODS SOLD, NECESSARY IP RIGHTS, ROYALTIES, MILESTONES, OTHER LICENSE FEES AND
OTHER PAYMENTS AND THE ELEMENTS REQUIRED TO CALCULATE N.A. PRE-TAX PROFIT OR
LOSS RELATING TO THE REPORTS AND PAYMENTS REQUIRED BY SECTIONS 4.4, 4.5, 4.7,
7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 AND 7.11.  EACH PARTY WILL HAVE THE
RIGHT []* AT ITS OWN EXPENSE TO HAVE AN INDEPENDENT, CERTIFIED PUBLIC
ACCOUNTANT, SELECTED BY SUCH PARTY AND REASONABLY ACCEPTABLE TO THE OTHER PARTY,
REVIEW ANY SUCH RECORDS OF THE OTHER PARTY IN THE LOCATION(S) WHERE SUCH RECORDS
ARE MAINTAINED BY THE OTHER PARTY UPON REASONABLE NOTICE AND DURING REGULAR
BUSINESS HOURS AND UNDER OBLIGATIONS OF CONFIDENCE, FOR THE SOLE PURPOSE OF
VERIFYING THE BASIS AND ACCURACY OF PAYMENTS MADE UNDER SECTIONS 4.4, 4.5, 4.7,
7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 AND 7.11 WITHIN THE PRIOR []*
PERIOD.  IF THE REVIEW OF SUCH RECORDS REVEALS THAT THE OTHER PARTY HAS FAILED
TO ACCURATELY REPORT INFORMATION PURSUANT TO SECTIONS 4.4, 4.5, 4.7, 7.2, 7.3,
7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 AND 7.11, THEN THE OTHER PARTY SHALL PROMPTLY
PAY TO THE AUDITING PARTY ANY RESULTING AMOUNTS DUE UNDER SUCH SECTIONS,
TOGETHER WITH INTEREST CALCULATED IN THE MANNER PROVIDED IN SECTION 7.17.  IF
ANY SUCH DISCREPANCIES ARE GREATER THAN FIVE PERCENT (5%) OF THE AMOUNTS
ACTUALLY DUE FOR ANY CALENDAR QUARTER UNDER SECTIONS 4.4, 4.5, 4.7, 7.2, 7.3,
7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10  AND 7.11, THE OTHER PARTY SHALL PAY ALL OF
THE COSTS OF SUCH REVIEW.

 

SECTION 7.13  TAX MATTERS.

 

(A)                                  CUBIST WILL MAKE ALL PAYMENTS TO ALNYLAM
UNDER THIS AGREEMENT WITHOUT DEDUCTION OR WITHHOLDING EXCEPT TO THE EXTENT THAT
ANY SUCH DEDUCTION OR WITHHOLDING IS REQUIRED BY APPLICABLE LAW TO BE MADE ON
ACCOUNT OF TAXES (AS THAT TERM IS DEFINED IN SECTION 7.13(E) BELOW).

 

(B)                                 ANY TAX REQUIRED TO BE WITHHELD UNDER
APPLICABLE LAW ON AMOUNTS PAYABLE UNDER THIS AGREEMENT WILL PROMPTLY BE PAID BY
CUBIST ON BEHALF OF ALNYLAM TO THE APPROPRIATE GOVERNMENTAL AUTHORITY, AND
CUBIST WILL FURNISH ALNYLAM WITH PROOF OF PAYMENT OF SUCH TAX.  ANY SUCH TAX
REQUIRED TO BE WITHHELD WILL BE AN EXPENSE OF AND BORNE BY ALNYLAM.  CUBIST WILL
GIVE NOTICE OF ITS INTENTION TO BEGIN WITHHOLDING ANY SUCH TAX IN ADVANCE AND
COOPERATE TO USE REASONABLE AND LEGAL EFFORTS TO REDUCE SUCH TAX ON PAYMENTS
MADE TO ALNYLAM HEREUNDER.

 

(C)                                  CUBIST AND ALNYLAM WILL COOPERATE WITH
RESPECT TO ALL DOCUMENTATION REQUIRED BY ANY RELEVANT GOVERNMENT AUTHORITY OR
REASONABLY REQUESTED BY CUBIST TO SECURE A REDUCTION IN THE RATE OF APPLICABLE
WITHHOLDING TAXES.

 

(D)                                 IF CUBIST HAD A DUTY TO WITHHOLD TAXES IN
CONNECTION WITH ANY PAYMENT IT MADE TO ALNYLAM UNDER THIS AGREEMENT BUT CUBIST
FAILED TO WITHHOLD, AND SUCH TAXES WERE ASSESSED AGAINST AND PAID BY CUBIST,
THEN ALNYLAM WILL INDEMNIFY AND HOLD HARMLESS CUBIST FROM AND AGAINST SUCH TAXES
(INCLUDING INTEREST).  IF CUBIST MAKES A CLAIM UNDER THIS SECTION 7.13(D), IT
WILL COMPLY WITH THE OBLIGATIONS IMPOSED BY SECTION 7.13(B) AS IF CUBIST HAD
WITHHELD TAXES FROM A PAYMENT TO ALNYLAM.

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
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(E)                                  SOLELY FOR PURPOSES OF THIS SECTION 7.13,
“TAX” OR “TAXES” MEANS ANY PRESENT OR FUTURE TAXES, LEVIES, IMPOSTS, DUTIES,
CHARGES, ASSESSMENTS OR FEES OF ANY NATURE (INCLUDING INTEREST, PENALTIES AND
ADDITIONS THERETO) THAT ARE IMPOSED BY A GOVERNMENT AUTHORITY.

 

SECTION 7.14  UNITED STATES DOLLARS.  ALL DOLLAR ($) AMOUNTS SPECIFIED IN THIS
AGREEMENT ARE UNITED STATES DOLLAR AMOUNTS.

 

SECTION 7.15  CURRENCY EXCHANGE.  ALL PAYMENTS TO BE MADE BY CUBIST TO ALNYLAM
SHALL BE MADE IN U.S. DOLLARS, TO AN ALNYLAM BANK ACCOUNT ABLE TO RECEIVE U.S.
DOLLARS.  IN THE CASE OF SALES OUTSIDE THE UNITED STATES, ROYALTY PAYMENTS BY
CUBIST TO ALNYLAM SHALL BE CONVERTED TO U.S. DOLLARS IN ACCORDANCE WITH THE
FOLLOWING:  THE RATE OF CURRENCY CONVERSION SHALL BE CALCULATED USING A SIMPLE
AVERAGE OF MID-MONTH AND MONTH-END SPOT RATES AS PUBLISHED BY THE WALL STREET
JOURNAL, EASTERN EDITION.  THIS METHOD OF CONVERSION IS AND SHALL BE CONSISTENT
WITH CUBIST’S THEN CURRENT METHODS.  CUBIST SHALL GIVE ALNYLAM PROMPT WRITTEN
NOTICE OF ANY CHANGES TO CUBIST’S CUSTOMARY AND USUAL PROCEDURES FOR CURRENCY
CONVERSION, WHICH SHALL ONLY APPLY AFTER SUCH NOTICE HAS BEEN DELIVERED AND
PROVIDED THAT SUCH CHANGES CONTINUE TO MAINTAIN A SET METHODOLOGY FOR CURRENCY
CONVERSION.

 

SECTION 7.16  BLOCKED PAYMENTS.  IF, BY REASON OF APPLICABLE LAW IN ANY COUNTRY,
IT BECOMES IMPOSSIBLE OR ILLEGAL FOR CUBIST OR ITS RELATED PARTY(IES) TO
TRANSFER, OR HAVE TRANSFERRED ON ITS BEHALF, ROYALTIES OR OTHER PAYMENTS TO
ALNYLAM, CUBIST SHALL PROMPTLY NOTIFY ALNYLAM OF THE CONDITIONS PREVENTING SUCH
TRANSFER AND SUCH ROYALTIES OR OTHER PAYMENTS SHALL BE DEPOSITED IN LOCAL
CURRENCY IN THE RELEVANT COUNTRY TO THE CREDIT OF ALNYLAM IN A RECOGNIZED
BANKING INSTITUTION DESIGNATED BY ALNYLAM OR, IF NONE IS DESIGNATED BY ALNYLAM
WITHIN A PERIOD OF []*, IN A RECOGNIZED BANKING INSTITUTION SELECTED BY CUBIST
OR ITS RELATED PARTY(IES), AS THE CASE MAY BE, AND IDENTIFIED IN A NOTICE GIVEN
TO ALNYLAM.

 

SECTION 7.17  LATE PAYMENTS.  THE PAYING PARTY SHALL PAY INTEREST TO THE
RECEIVING PARTY ON THE AGGREGATE AMOUNT OF ANY PAYMENTS THAT ARE NOT PAID ON OR
BEFORE THE DATE SUCH PAYMENTS ARE DUE UNDER THIS AGREEMENT AT A RATE PER ANNUM
EQUAL TO THE LESSER OF ONE PERCENT (1%) PER MONTH OR THE HIGHEST RATE PERMITTED
BY APPLICABLE LAW, CALCULATED ON THE NUMBER OF DAYS SUCH PAYMENTS ARE PAID AFTER
THE DATE SUCH PAYMENTS ARE DUE.

 

SECTION 7.18  NO OVERLAPPING ROYALTIES.  NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, IN NO EVENT SHALL ANY ROYALTY PAYMENT PROVIDED FOR UNDER ANY
SECTION OF THIS AGREEMENT BE PAID WITH RESPECT TO ANY SALE OF A SPECIFIC
LICENSED PRODUCT TO THE EXTENT A ROYALTY HAS BEEN PAID PURSUANT TO ANY OTHER
SECTION OF THIS AGREEMENT WITH RESPECT TO SUCH SALE OF THE SAME SPECIFIC
LICENSED PRODUCT; PROVIDED THAT THE HIGHER ROYALTY AMOUNT IS PAID, AND PROVIDED
FURTHER THAT THE FOREGOING SHALL NOT APPLY TO THE PAYMENT OF SALES MILESTONES
UNDER SECTIONS 4.7, 7.3 AND 11.4.

 

SECTION 7.19  REPORTING.  THE PARTIES WILL USE THE CALENDAR YEAR TO ESTABLISH
MONTHLY, QUARTERLY AND ANNUAL TIME PERIODS FOR ALL OF THEIR FINANCIAL BUDGETING
AND ACTUAL REPORTING REQUIREMENTS, INCLUDING N.A. PRE-TAX PROFIT OR LOSS
REPORTING.

 

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*CONFIDENTIAL TREATMENT REQUESTED.  OMITTED PORTIONS FILED SEPARATELY WITH THE
COMMISSION.

 

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SECTION 7.20  RESOLUTION OF DISPUTES.  IF THERE IS A DISPUTE, CLAIM OR
CONTROVERSY RELATING TO ANY FINANCIAL OBLIGATION BY ONE PARTY TO THE OTHER PARTY
PURSUANT TO THIS AGREEMENT, SUCH PARTY SHALL PROVIDE SUCH OTHER PARTY WITH
WRITTEN NOTICE SETTING FORTH IN REASONABLE DETAIL THE NATURE AND FACTUAL BASIS
FOR SUCH GOOD-FAITH DISPUTE AND EACH PARTY AGREES THAT IT SHALL SEEK TO RESOLVE
SUCH DISPUTE WITHIN []* AFTER THE DATE SUCH WRITTEN NOTICE IS RECEIVED.  IF NO
SUCH RESOLUTION IS REACHED BY THE PARTIES, THE DISPUTE SHALL BE RESOLVED THROUGH
THE PROCEDURES SET FORTH IN ARTICLE XII.  NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT TO THE CONTRARY, THE OBLIGATION TO PAY ANY REASONABLY DISPUTED
AMOUNT SHALL NOT BE DEEMED TO HAVE BEEN TRIGGERED UNTIL SUCH DISPUTE IS RESOLVED
HEREUNDER; PROVIDED THAT ALL AMOUNTS THAT ARE NOT IN DISPUTE SHALL BE PAID IN
ACCORDANCE WITH THIS AGREEMENT.

 

ARTICLE VIII

 

INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS

 

SECTION 8.1  INVENTORSHIP.  INVENTORSHIP FOR PATENTABLE INVENTIONS CONCEIVED OR
REDUCED TO PRACTICE DURING THE COURSE OF THE PERFORMANCE OF ACTIVITIES PURSUANT
TO THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH UNITED STATES PATENT
LAWS FOR DETERMINING INVENTORSHIP.

 

SECTION 8.2  OWNERSHIP.  SUBJECT TO THE LICENSES AND RIGHTS GRANTED TO CUBIST
UNDER THIS AGREEMENT, ALNYLAM SHALL OWN THE ENTIRE RIGHT, TITLE AND INTEREST IN
AND TO ALL INVENTIONS AND DISCOVERIES (AND PATENT RIGHTS CLAIMING PATENTABLE
INVENTIONS THEREIN) FIRST MADE OR DISCOVERED SOLELY BY EMPLOYEES OR CONSULTANTS
OF ALNYLAM OR ACQUIRED SOLELY BY ALNYLAM IN THE COURSE OF CONDUCTING THE
COLLABORATION.  SUBJECT TO THE LICENSES AND RIGHTS GRANTED TO ALNYLAM UNDER THIS
AGREEMENT, CUBIST SHALL OWN THE ENTIRE RIGHT, TITLE AND INTEREST IN AND TO ALL
INVENTIONS AND DISCOVERIES (AND PATENT RIGHTS CLAIMING PATENTABLE INVENTIONS
THEREIN) FIRST MADE OR DISCOVERED SOLELY BY EMPLOYEES OR CONSULTANTS OF CUBIST
OR ACQUIRED SOLELY BY CUBIST IN THE COURSE OF CONDUCTING THE COLLABORATION.  THE
PARTIES SHALL JOINTLY OWN ANY INVENTIONS AND DISCOVERIES (AND PATENT RIGHTS
CLAIMING PATENTABLE INVENTIONS THEREIN) FIRST MADE OR DISCOVERED JOINTLY IN THE
COURSE OF CONDUCTING THE COLLABORATION.

 

SECTION 8.3  PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.

 

(A)                                  CUBIST TECHNOLOGY.  CUBIST SHALL HAVE THE
SOLE RIGHT TO, AT CUBIST’S DISCRETION, FILE, CONDUCT PROSECUTION, AND MAINTAIN
(INCLUDING THE DEFENSE OF ANY INTERFERENCE OR OPPOSITION PROCEEDINGS), ALL
PATENT RIGHTS COMPRISING CUBIST TECHNOLOGY (OTHER THAN JOINT COLLABORATION IP),
IN CUBIST’S NAME.

 

(B)                                 ALNYLAM TECHNOLOGY.  ALNYLAM SHALL HAVE THE
SOLE RIGHT TO, AT ALNYLAM’S DISCRETION, FILE, CONDUCT PROSECUTION, AND MAINTAIN
(INCLUDING THE DEFENSE OF ANY INTERFERENCE OR OPPOSITION PROCEEDINGS), ALL
PATENT RIGHTS COMPRISING ALNYLAM TECHNOLOGY (OTHER THAN JOINT COLLABORATION IP),
IN ALNYLAM’S NAME.  ALNYLAM SHALL PROVIDE TO CUBIST COPIES OF ALL PROSECUTION
FILINGS RELATED TO ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS SENT TO OR RECEIVED
FROM PATENT OFFICES IN THE TERRITORY, UNLESS OTHERWISE DIRECTED BY CUBIST, AND,
WITH RESPECT TO PATENT APPLICATIONS CONTAINING ALNYLAM SEQUENCE SPECIFIC PATENT
RIGHTS HAVING INFORMATION NOT PREVIOUSLY FILED THAT

 

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IS INTENDED TO BE SUBMITTED TO PATENT OFFICES IN THE TERRITORY, SHALL USE
REASONABLE EFFORTS TO PROVIDE CUBIST WITH A DRAFT OF EACH SUCH FILING REASONABLY
IN ADVANCE OF SUBMISSION AND SHALL CONSIDER IN GOOD FAITH ANY COMMENTS REGARDING
SUCH DRAFT APPLICATION THAT CUBIST MAY TIMELY PROVIDE.  IN ADDITION, ALNYLAM
SHALL PROVIDE TO CUBIST SUCH OTHER INFORMATION RELATED TO PROSECUTION OF THE
ALNYLAM PATENT RIGHTS AS CUBIST MAY FROM TIME TO TIME REASONABLY REQUEST TO
ALLOW CUBIST TO TRACK PROSECUTION AND MAINTENANCE OF ALNYLAM PATENT RIGHTS.  IN
THE EVENT ALNYLAM DECIDES NOT TO FILE A PATENT APPLICATION ON ALNYLAM KNOW-HOW
THAT WOULD CONTAIN ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS, OR DECIDES TO
ABANDON PROSECUTION OF ANY ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS OR DECIDES TO
NOT OTHERWISE MAINTAIN OR EXTEND ANY ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS,
ALNYLAM SHALL GIVE CUBIST WRITTEN NOTICE SUFFICIENTLY IN ADVANCE OF ANY LOSS OF
RIGHTS TO ALLOW CUBIST TO FILE, PROSECUTE, MAINTAIN OR EXTEND, AS THE CASE MAY
BE, SUCH ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS, IN ALNYLAM’S NAME.

 

(C)                                  JOINT COLLABORATION IP.

 

(I)                                     ALNYLAM SHALL HAVE THE FIRST RIGHT TO,
AT ALNYLAM’S DISCRETION, FILE, CONDUCT PROSECUTION, AND MAINTAIN (INCLUDING THE
DEFENSE OF ANY INTERFERENCE OR OPPOSITION PROCEEDINGS), ALL PATENT RIGHTS
INCLUDED IN JOINT COLLABORATION IP, IN THE NAMES OF BOTH ALNYLAM AND CUBIST. 
CUBIST SHALL USE DILIGENT EFFORTS TO MAKE AVAILABLE TO ALNYLAM OR ITS AUTHORIZED
ATTORNEYS, AGENTS OR REPRESENTATIVES, SUCH OF ITS EMPLOYEES AS ALNYLAM IN ITS
REASONABLE JUDGMENT DEEMS NECESSARY IN ORDER TO ASSIST IT IN OBTAINING PATENT
PROTECTION FOR SUCH JOINT COLLABORATION IP.  EACH PARTY SHALL SIGN, OR USE
DILIGENT EFFORTS TO HAVE SIGNED, ALL LEGAL DOCUMENTS NECESSARY TO FILE AND
PROSECUTE PATENT APPLICATIONS OR TO OBTAIN OR MAINTAIN PATENTS IN RESPECT OF
SUCH JOINT COLLABORATION IP, AT ITS OWN COST.

 

(II)                                  IF ALNYLAM ELECTS NOT TO SEEK OR CONTINUE
TO SEEK OR MAINTAIN PATENT PROTECTION ON ANY JOINT COLLABORATION IP IN THE
TERRITORY, CUBIST SHALL HAVE THE RIGHT TO, AT CUBIST’S DISCRETION, TO SEEK,
PROSECUTE AND MAINTAIN IN ANY COUNTRY IN THE TERRITORY PATENT PROTECTION ON SUCH
JOINT COLLABORATION IP IN THE NAMES OF BOTH ALNYLAM AND CUBIST.  ALNYLAM SHALL
USE DILIGENT EFFORTS TO MAKE AVAILABLE TO CUBIST ITS AUTHORIZED ATTORNEYS,
AGENTS OR REPRESENTATIVES, SUCH OF ALNYLAM’S EMPLOYEES AS ARE REASONABLY
NECESSARY TO ASSIST CUBIST IN OBTAINING AND MAINTAINING THE PATENT PROTECTION
DESCRIBED UNDER THIS SECTION 8.3(C)(II).  ALNYLAM SHALL SIGN OR USE DILIGENT
EFFORTS TO HAVE SIGNED ALL LEGAL DOCUMENTS NECESSARY TO FILE AND PROSECUTE SUCH
PATENT APPLICATIONS OR TO OBTAIN OR MAINTAIN SUCH PATENTS.

 

(III)                               WITH RESPECT TO PATENT RIGHTS INCLUDED IN
THE JOINT COLLABORATION IP, THE PARTY FILING, PROSECUTING AND MAINTAINING SUCH
PATENT RIGHTS SHALL PROVIDE THE OTHER PARTY, WITHIN []* AFTER SUBMITTING OR
RECEIVING SUCH FILINGS OR CORRESPONDENCE, WITH COPIES OF ALL FILINGS AND
CORRESPONDENCE SUBMITTED TO AND RECEIVED FROM PATENT OFFICES IN THE TERRITORY
AND, WITH RESPECT TO SUBSTANTIVE FILINGS AND CORRESPONDENCE TO BE SUBMITTED TO
PATENT OFFICES IN THE TERRITORY, SHALL USE REASONABLE EFFORTS TO PROVIDE THE
OTHER PARTY WITH DRAFTS OF SUCH FILINGS AND CORRESPONDENCE REASONABLY IN ADVANCE
OF SUBMISSION AND SHALL CONSIDER IN GOOD FAITH ANY COMMENTS REGARDING SUCH
FILINGS AND CORRESPONDENCE THAT THE OTHER PARTY MAY TIMELY PROVIDE.

 

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(D)                                 PATENT TERM EXTENSIONS.  THE PARTIES SHALL
COOPERATE, IF NECESSARY AND APPROPRIATE, WITH EACH OTHER IN GAINING PATENT TERM
EXTENSIONS (INCLUDING THOSE EXTENSIONS AVAILABLE UNDER U.S. DRUG PRICE
COMPETITION AND PATENT TERM RESTORATION ACT OF 1984, THE SUPPLEMENTARY
CERTIFICATE OF PROTECTION OF MEMBER STATES OF THE EU AND OTHER SIMILAR MEASURES
IN ANY OTHER COUNTRY) WHEREVER APPLICABLE TO PATENT RIGHTS CONTROLLED BY EITHER
PARTY THAT COVER LICENSED PRODUCT IN THE TERRITORY.  THE PARTIES SHALL, IF
NECESSARY AND APPROPRIATE, USE REASONABLE EFFORTS TO AGREE UPON A JOINT STRATEGY
RELATING TO PATENT TERM EXTENSIONS, BUT, IN THE ABSENCE OF MUTUAL AGREEMENT WITH
RESPECT TO ANY EXTENSION ISSUE, THE PATENT OR THE CLAIMS OF THE PATENT SHALL BE
SELECTED ON THE BASIS OF THE SCOPE, ENFORCEABILITY AND REMAINING TERM OF THE
PATENT IN THE RELEVANT COUNTRY OR REGION.  ALL FILINGS FOR SUCH EXTENSIONS SHALL
BE MADE BY THE PARTY CONTROLLING SUCH PATENT OR, IN THE CASE OF PATENT RIGHTS
INCLUDED IN THE JOINT COLLABORATION IP, BY THE PARTY RESPONSIBLE FOR FILING,
PROSECUTING AND MAINTAINING SUCH PATENT RIGHTS IN ACCORDANCE WITH THIS
SECTION 8.3.

 

(E)                                  PATENT EXPENSES.  THE PATENT FILING,
PROSECUTION AND MAINTENANCE EXPENSES INCURRED AFTER THE EFFECTIVE DATE WITH
RESPECT TO PATENT RIGHTS COMPRISED OF ALNYLAM TECHNOLOGY AND CUBIST TECHNOLOGY
(“PATENT EXPENSES”) SHALL BE BORNE BY THE PARTY RESPONSIBLE FOR FILING,
PROSECUTING AND MAINTAINING SUCH PATENT RIGHTS UNDER THIS SECTION 8.3; PROVIDED
THAT []*.

 

SECTION 8.4  THIRD PARTY INFRINGEMENT.

 

(A)                                  NOTICES.  EACH PARTY SHALL PROMPTLY REPORT
IN WRITING TO THE OTHER PARTY ANY (I) KNOWN OR SUSPECTED INFRINGEMENT OF ANY
ALNYLAM TECHNOLOGY OR CUBIST TECHNOLOGY BEING USED IN THE COLLABORATION,
INCLUDING ANY JOINT COLLABORATION IP OR (II) UNAUTHORIZED USE OR
MISAPPROPRIATION OF ANY CONFIDENTIAL INFORMATION OR KNOW-HOW OF A PARTY BY A
THIRD PARTY OF WHICH IT BECOMES AWARE, IN EACH CASE ONLY TO THE EXTENT RELEVANT
TO THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT AND
INVOLVING A COMPETING PRODUCT (“COMPETITIVE INFRINGEMENT”) IN THE TERRITORY, AND
SHALL PROVIDE THE OTHER PARTY WITH ALL AVAILABLE EVIDENCE SUPPORTING SUCH
INFRINGEMENT, OR UNAUTHORIZED USE OR MISAPPROPRIATION.

 

(B)                                 RIGHTS TO ENFORCE.

 

(I)                                     CUBIST’S FIRST RIGHT.  SUBJECT TO THE
PROVISIONS OF ANY THIRD PARTY AGREEMENT UNDER WHICH CUBIST’S RIGHTS IN CUBIST
TECHNOLOGY ARE GRANTED, CUBIST SHALL HAVE THE SOLE AND EXCLUSIVE RIGHT TO
INITIATE AN INFRINGEMENT OR OTHER APPROPRIATE SUIT ANYWHERE IN THE WORLD AGAINST
ANY THIRD PARTY WHO AT ANY TIME HAS INFRINGED, OR IS SUSPECTED OF INFRINGING,
ANY PATENT RIGHTS, OR OF USING WITHOUT PROPER AUTHORIZATION ANY KNOW-HOW,
COMPRISING CUBIST PATENT RIGHTS, CUBIST KNOW-HOW, OR CUBIST COLLABORATION IP.

 

(II)                                  ALNYLAM’S FIRST RIGHT.  SUBJECT TO THE
PROVISIONS OF ANY THIRD PARTY AGREEMENT UNDER WHICH ALNYLAM’S RIGHTS IN ALNYLAM
TECHNOLOGY ARE GRANTED AND SUBJECT TO SECTION 8.4(B)(III) BELOW, ALNYLAM SHALL
HAVE THE SOLE AND EXCLUSIVE RIGHT TO INITIATE AN INFRINGEMENT OR OTHER
APPROPRIATE SUIT ANYWHERE IN THE WORLD AGAINST ANY THIRD PARTY WHO AT ANY TIME
HAS INFRINGED, OR IS SUSPECTED OF INFRINGING, ANY PATENT RIGHTS, OR OF USING
WITHOUT PROPER

 

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AUTHORIZATION ANY KNOW-HOW, COMPRISING ALNYLAM PATENT RIGHTS, ALNYLAM KNOW-HOW,
ALNYLAM COLLABORATION IP OR JOINT COLLABORATION IP.

 

(III)                               REQUESTS TO INITIATE ENFORCEMENT ACTION. 
ALNYLAM WILL CONSIDER IN GOOD FAITH ANY REQUEST FROM CUBIST TO INITIATE AN
INFRINGEMENT OR OTHER APPROPRIATE SUIT AGAINST ANY THIRD PARTY WITH RESPECT TO A
COMPETITIVE INFRINGEMENT IN THE TERRITORY OF ALNYLAM PATENT RIGHTS, ALNYLAM
KNOW-HOW, ALNYLAM COLLABORATION IP OR JOINT COLLABORATION IP; PROVIDED, HOWEVER,
THAT ALNYLAM SHALL NOT BE REQUIRED TO INITIATE ANY SUCH SUIT.  IF, HOWEVER,
ALNYLAM ELECTS NOT TO INITIATE SUCH SUIT WITH RESPECT TO ALNYLAM SEQUENCE
SPECIFIC PATENT RIGHTS OR ALNYLAM SEQUENCE SPECIFIC KNOW-HOW, OR OTHERWISE DOES
NOT COMMENCE SUIT WITH RESPECT TO ALNYLAM SEQUENCE SPECIFIC PATENT RIGHTS WITHIN
[]* AFTER CUBIST’S REQUEST MADE UNDER THE PRECEDING SENTENCE, CUBIST SHALL HAVE
THE RIGHT TO INITIATE SUCH SUIT WITH RESPECT TO THE ALNYLAM SEQUENCE SPECIFIC
PATENT RIGHTS AND TO JOIN ALNYLAM AS A PARTY.

 

(C)                                  PROCEDURES; EXPENSES AND RECOVERIES.  THE
PARTY HAVING THE RIGHT TO INITIATE ANY INFRINGEMENT SUIT UNDER
SECTION 8.4(B) ABOVE SHALL HAVE THE SOLE AND EXCLUSIVE RIGHT TO SELECT COUNSEL
FOR ANY SUCH SUIT AND SHALL PAY ALL EXPENSES OF THE SUIT, INCLUDING ATTORNEYS’
FEES AND COURT COSTS AND REIMBURSEMENT OF THE OTHER PARTY’S REASONABLE
OUT-OF-POCKET EXPENSE IN RENDERING ASSISTANCE REQUESTED BY THE INITIATING PARTY;
PROVIDED THAT WITH RESPECT TO ANY SUCH SUIT, THE PARTIES MAY MUTUALLY AGREE TO
JOINTLY BEAR SUCH COSTS AND EXPENSES, IN WHICH CASE THE ALLOCATION OF RECOVERIES
DESCRIBED BELOW MAY BE ADJUSTED AS MUTUALLY AGREED BY THE PARTIES.  IF REQUIRED
UNDER APPLICABLE LAW IN ORDER FOR THE INITIATING PARTY TO INITIATE OR MAINTAIN
SUCH SUIT, OR IF EITHER PARTY IS UNABLE TO INITIATE OR PROSECUTE SUCH SUIT
SOLELY IN ITS OWN NAME OR IT IS OTHERWISE ADVISABLE TO OBTAIN AN EFFECTIVE LEGAL
REMEDY, IN EACH CASE, THE OTHER PARTY SHALL JOIN AS A PARTY TO THE SUIT AND WILL
EXECUTE AND CAUSE ITS AFFILIATES TO EXECUTE ALL DOCUMENTS NECESSARY FOR THE
INITIATING PARTY TO INITIATE LITIGATION TO PROSECUTE AND MAINTAIN SUCH ACTION. 
IN ADDITION, AT THE INITIATING PARTY’S REQUEST, THE OTHER PARTY SHALL PROVIDE
REASONABLE ASSISTANCE TO THE INITIATING PARTY IN CONNECTION WITH AN INFRINGEMENT
SUIT AT NO CHARGE TO THE INITIATING PARTY EXCEPT FOR REIMBURSEMENT BY THE
INITIATING PARTY OF REASONABLE OUT-OF-POCKET EXPENSES INCURRED IN RENDERING SUCH
ASSISTANCE.  THE NON-INITIATING PARTY SHALL HAVE THE RIGHT TO PARTICIPATE AND BE
REPRESENTED IN ANY SUCH SUIT BY ITS OWN COUNSEL AT ITS OWN EXPENSE.  IF THE
PARTIES OBTAIN FROM A THIRD PARTY, IN CONNECTION WITH SUCH SUIT, ANY DAMAGES,
LICENSE FEES, ROYALTIES OR OTHER COMPENSATION (INCLUDING ANY AMOUNT RECEIVED IN
SETTLEMENT OF SUCH LITIGATION) IN RESPECT OF A COMPETITIVE INFRINGEMENT IN THE
ROYALTY TERRITORY, SUCH AMOUNTS SHALL BE ALLOCATED, SUBJECT TO ANY ADJUSTMENT TO
SUCH ALLOCATION AGREED BY THE PARTIES IN CONNECTION WITH AN AGREEMENT TO JOINTLY
BEAR THE COSTS AND EXPENSES OF THE INFRINGEMENT ACTION AS DESCRIBED ABOVE, AS
FOLLOWS:

 

(I)                                     FIRST, TO REIMBURSE EACH PARTY FOR ALL
EXPENSES OF THE SUIT INCURRED BY SUCH PARTY, INCLUDING ATTORNEYS’ FEES AND
DISBURSEMENTS, COURT COSTS AND OTHER LITIGATION EXPENSES;

 

(II)                                  SECOND, []* PERCENT ([]*%) OF THE BALANCE
TO BE PAID TO THE PARTY INITIATING THE SUIT; AND

 

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(III)                               THIRD, THE REMAINDER TO BE PAID TO THE OTHER
PARTY.

 

With respect to any such suit in the Profit-Share Territory, any damages,
license fees, royalties or other compensation (including any amount received in
settlement of such litigation) in respect of a Competitive Infringement in the
Profit-Share Territory, shall []*.

 

SECTION 8.5  CLAIMED INFRINGEMENT; THIRD PARTY CHALLENGES TO PATENT RIGHTS.  IF
A PARTY (A) BECOMES AWARE OF ANY CLAIM THAT THE DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT IN THE TERRITORY INFRINGES THE PATENT
RIGHTS OF ANY THIRD PARTY OR (B) RECEIVES ANY NOTICES REGARDING OR BECOMES PARTY
TO ANY ACTION IN WHICH A THIRD PARTY CHALLENGES OR DENIES THE VALIDITY OR
ENFORCEABILITY OF ANY PATENT RIGHTS LICENSED TO THE OTHER PARTY HEREUNDER, OR
ANY CLAIM THEREOF (I) CONTROLLED BY SUCH PARTY IN THE PROFIT-SHARE TERRITORY,
(II) COVERING LICENSED PRODUCT, (III) SPECIFIC TO LICENSED PRODUCT IN THE FIELD
AND (IV) NOT BROADLY APPLICABLE TO RNAI PRODUCTS, SUCH PARTY SHALL PROMPTLY
NOTIFY THE OTHER PARTY.  WITH RESPECT TO ANY MATTER DESCRIBED IN THE FOREGOING
CLAUSE (A), IN ANY SUCH INSTANCE, THE PARTIES SHALL COOPERATE AND SHALL MUTUALLY
AGREE UPON AN APPROPRIATE COURSE OF ACTION, WHICH MAY INCLUDE SETTLEMENT OF SUCH
CLAIM.  EACH PARTY SHALL HAVE AN EQUAL RIGHT TO PARTICIPATE IN ANY SETTLEMENT
DISCUSSIONS THAT ARE HELD WITH SUCH THIRD PARTIES.  IF THERE IS A DISPUTE
BETWEEN THE PARTIES AS TO WHETHER OR NOT THIRD PARTY PATENT RIGHTS AT ISSUE IN
SUCH MATTER DESCRIBED IN THE FOREGOING CLAUSE (A) COVER LICENSED PRODUCT, THE
PARTIES AGREE TO SELECT AN INDEPENDENT PATENT COUNSEL TO DECIDE WHETHER OR NOT
THE SUBJECT THIRD PARTY PATENT RIGHTS COVER LICENSED PRODUCT.  THE PARTIES AGREE
THAT IF SUCH PATENT COUNSEL DETERMINES THAT SUCH THIRD PARTY PATENT RIGHTS COVER
LICENSED PRODUCT, THEY WILL ACCEPT SUCH DETERMINATION FOR PURPOSES OF SECTIONS
7.6 AND 7.7.  IF THE DECISION IS THAT SUCH THIRD PARTY PATENT RIGHTS DO NOT
COVER LICENSED PRODUCT, EITHER PARTY MAY STILL OBTAIN A LICENSE, BUT SHALL BE
SOLELY RESPONSIBLE FOR ANY PAYMENT OBLIGATIONS TO THE THIRD PARTY.  WITH RESPECT
TO ANY MATTER DESCRIBED IN THE FOREGOING CLAUSE (B), THE PARTIES SHALL COOPERATE
AND SHALL MUTUALLY AGREE UPON AN APPROPRIATE COURSE OF ACTION, AND THE PARTY
RESPONSIBLE FOR FILING, PROSECUTING AND MAINTAINING SUCH PATENT RIGHTS PURSUANT
TO SECTION 8.3 SHALL HAVE RESPONSIBILITY FOR DEFENDING THE PATENTABILITY,
VALIDITY AND/OR ENFORCEABILITY OF SUCH PATENT RIGHTS IN SUCH ACTION.  THE
REASONABLE OUT-OF-POCKET COSTS INCURRED BY THE DEFENDING PARTY OR ANY OF ITS
RELATED PARTIES WITH RESPECT TO SUCH ACTION DESCRIBED IN THE FOREGOING CLAUSE
(B) []*.  FOR THE AVOIDANCE OF DOUBT, THE COSTS INCURRED BY A DEFENDING PARTY OR
ANY OF ITS RELATED PARTIES WITH RESPECT TO AN ACTION OF THE KIND DESCRIBED IN
THE FOREGOING CLAUSE (B), BUT WITH RESPECT TO PATENT RIGHTS OUTSIDE THE
PROFIT-SHARE TERRITORY, []*; PROVIDED THAT, IF SUCH MATTER ARISES IN THE CONTEXT
OF AN ACTION BROUGHT BY A PARTY PURSUANT TO SECTION 8.4, THE COSTS OF SUCH
ACTION SHALL BE BORNE AS PROVIDED IN SECTION 8.4.  EACH PARTY SHALL ALSO PROVIDE
TO THE OTHER PARTY COPIES OF ANY OTHER NOTICES IT RECEIVES OR HAS RECEIVED FROM
THIRD PARTIES REGARDING ANY PATENT NULLITY ACTIONS, ANY DECLARATORY JUDGMENT
ACTIONS AND ANY ALLEGED INFRINGEMENT OR MISAPPROPRIATION OF THIRD PARTY
INTELLECTUAL PROPERTY RELATING TO THE DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT IN THE TERRITORY.  SUCH NOTICES SHALL BE
PROVIDED PROMPTLY, BUT IN NO EVENT AFTER MORE THAN []* AFTER RECEIPT THEREOF.

 

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SECTION 8.6  THIRD PARTY TECHNOLOGY.

 

(A)                                  IF AFTER THE EFFECTIVE DATE, (I) ALNYLAM OR
ANY OF ITS AFFILIATES ACQUIRES FROM A THIRD PARTY KNOW-HOW OR PATENT RIGHTS THAT
WOULD FALL WITHIN THE DEFINITION OF ALNYLAM TECHNOLOGY BUT FOR THE PROVISO OF
SECTION 1.24 AND THAT IS SUBJECT TO PAYMENT OBLIGATIONS TO SUCH THIRD PARTY, OR
(II) CUBIST OR ANY OF ITS AFFILIATES ACQUIRES FROM A THIRD PARTY KNOW-HOW OR
PATENT RIGHTS WITHIN THE DEFINITION OF CUBIST TECHNOLOGY BUT FOR THE PROVISO OF
SECTION 1.24 AND THAT IS SUBJECT TO PAYMENT OBLIGATIONS TO SUCH THIRD PARTY
(COLLECTIVELY, “THIRD PARTY TECHNOLOGY”) THEN THE PARTY ACQUIRING THE THIRD
PARTY TECHNOLOGY SHALL PROMPTLY SO NOTIFY THE OTHER PARTY AND PROVIDE TO SUCH
OTHER PARTY A COPY OF THE AGREEMENT AND A WRITTEN DESCRIPTION OF THE PAYMENT
OBLIGATIONS THAT WOULD BE ALLOCATED TO []* IN THE ROYALTY TERRITORY, OR []*, OR
PAID BY ALNYLAM UNDER SECTION 3.2(D) WITH RESPECT TO THE DEVELOPMENT,
MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT FOR ASIA (AS THE CASE MAY
BE), IN EACH CASE WHICH ALLOCATION SHALL BE DETERMINED []*.

 

(B)                                 CUBIST MAY ELECT TO INCLUDE THIRD PARTY
TECHNOLOGY ACQUIRED BY ALNYLAM OR ANY OF ITS AFFILIATES IN THE RIGHTS AND
LICENSES GRANTED TO CUBIST UNDER SECTION 3.1 WITH RESPECT TO THE DEVELOPMENT,
MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCTS IN THE ROYALTY TERRITORY
BY PROVIDING WRITTEN NOTICE TO ALNYLAM OF SUCH ELECTION PRIOR TO
COMMERCIALIZATION OF SUCH LICENSED PRODUCT IN THE ROYALTY TERRITORY, AND, IN
SUCH EVENT, SUCH THIRD PARTY TECHNOLOGY SHALL BE DEEMED INCLUDED WITHIN THE
DEFINITION OF ALNYLAM PATENT RIGHTS, ALNYLAM KNOW-HOW AND ALNYLAM TECHNOLOGY, AS
APPLICABLE, AND THE AGREEMENT WITH THE THIRD PARTY UNDER WHICH SUCH THIRD PARTY
TECHNOLOGY WAS ACQUIRED SHALL BE INCLUDED IN THE DEFINITION OF ALNYLAM
IN-LICENSE, IN EACH CASE SOLELY WITH RESPECT TO THE ROYALTY TERRITORY.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NEITHER ALNYLAM NOR
ANY OF ITS AFFILIATES SHALL ENTER INTO ANY AGREEMENT WITH ANY THIRD PARTY OR
TAKE ANY OTHER ACTION THAT WOULD PREVENT SUCH THIRD PARTY TECHNOLOGY ACQUIRED BY
ALNYLAM OR ANY OF ITS AFFILIATES FROM BECOMING ALNYLAM TECHNOLOGY UPON CUBIST’S
ELECTION IN ACCORDANCE WITH THIS SECTION 8.6(B) OR THE ELECTION OF THE JSC OR
JCT UNDER SECTION 8.6(C).

 

(C)                                  THE JSC OR JCT MAY ELECT TO INCLUDE THIRD
PARTY TECHNOLOGY ACQUIRED BY ALNYLAM OR ANY OF ITS AFFILIATES WITHIN THE RIGHTS
AND LICENSES GRANTED TO CUBIST PURSUANT TO SECTION 3.1, OR BY CUBIST OR ANY OF
ITS AFFILIATES WITHIN THE RIGHTS AND LICENSES GRANTED TO ALNYLAM PURSUANT TO
SECTION 3.2, IN EACH CASE WITH RESPECT TO DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCTS IN THE PROFIT-SHARE TERRITORY BY
PROVIDING WRITTEN NOTICE TO ALNYLAM OR CUBIST (AS THE CASE MAY BE) OF SUCH
ELECTION PRIOR TO THE COMMERCIALIZATION OF SUCH LICENSED PRODUCT IN THE
PROFIT-SHARE TERRITORY, AND, IN SUCH EVENT, SUCH THIRD PARTY TECHNOLOGY SHALL BE
DEEMED INCLUDED IN THE DEFINITION OF ALNYLAM PATENT RIGHTS, ALNYLAM KNOW-HOW AND
ALNYLAM TECHNOLOGY, OR CUBIST PATENT RIGHTS, CUBIST KNOW-HOW AND CUBIST
TECHNOLOGY, AS THE CASE MAY BE, AND THE AGREEMENT WITH THE THIRD PARTY UNDER
WHICH SUCH THIRD PARTY TECHNOLOGY WAS ACQUIRED SHALL BE INCLUDED IN THE
DEFINITION OF ALNYLAM IN-LICENSE OR CUBIST IN-LICENSE (AS APPLICABLE), IN EACH
CASE SOLELY WITH RESPECT TO THE PROFIT-SHARE TERRITORY.

 

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(D)                                 ALNYLAM MAY ELECT TO INCLUDE THIRD PARTY
TECHNOLOGY ACQUIRED BY CUBIST OR ANY OF ITS AFFILIATES IN THE RIGHTS AND
LICENSES GRANTED TO ALNYLAM PURSUANT TO SECTION 3.2 WITH RESPECT TO (I) THE
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCTS FOR ASIA,
(II) THE FULFILLMENT OF ITS OBLIGATIONS UNDER THIS AGREEMENT WITH RESPECT TO THE
COLLABORATION, AND (III) THE MANUFACTURE OF LICENSED PRODUCTS FOR THE ROYALTY
TERRITORY BY PROVIDING WRITTEN NOTICE TO CUBIST OF SUCH ELECTION PRIOR TO THE
COMMERCIALIZATION OF SUCH LICENSED PRODUCT IN ASIA, AND, IN SUCH EVENT, SUCH
THIRD PARTY TECHNOLOGY SHALL BE DEEMED INCLUDED WITHIN THE DEFINITION OF CUBIST
PATENT RIGHTS, CUBIST KNOW-HOW AND CUBIST TECHNOLOGY, AS THE CASE MAY BE, AND
THE AGREEMENT WITH THE THIRD PARTY UNDER WHICH SUCH THIRD PARTY TECHNOLOGY WAS
ACQUIRED SHALL BE INCLUDED IN THE DEFINITION OF CUBIST IN-LICENSE.  NEITHER
CUBIST NOR ANY OF ITS AFFILIATES SHALL ENTER INTO ANY AGREEMENT WITH ANY THIRD
PARTY OR TAKE ANY OTHER ACTION THAT WOULD PREVENT THIRD PARTY TECHNOLOGY
ACQUIRED BY CUBIST OR ANY OF ITS AFFILIATES FROM BECOMING CUBIST TECHNOLOGY,
UPON ALNYLAM’S ELECTION IN ACCORDANCE WITH THIS SECTION 8.6(D) OR THE ELECTION
OF THE JSC OR JCT UNDER SECTION 8.6(C).

 

SECTION 8.7  PATENT MARKING.  EACH PARTY AGREES TO COMPLY WITH THE PATENT
MARKING STATUTES IN EACH COUNTRY IN WHICH LICENSED PRODUCT IS SOLD BY SUCH PARTY
OR ITS RELATED PARTIES.

 

SECTION 8.8  TRADEMARKS.

 

(A)                                  EACH PARTY AND ITS AFFILIATES SHALL RETAIN
ALL RIGHT, TITLE AND INTEREST IN AND TO ITS AND THEIR RESPECTIVE CORPORATE NAMES
AND LOGOS.

 

(B)                                 CUBIST WILL DEVELOP AND PROPOSE, AND THE JCT
SHALL REVIEW AND COMMENT ON, ONE OR MORE PRODUCT TRADEMARK(S) FOR USE BY CUBIST
AND ITS RELATED PARTIES THROUGHOUT THE TERRITORY.  SUCH PRODUCT
TRADEMARK(S) CONSIDERED BY THE JCT MAY, WITH ALNYLAM’S CONSENT, NOT TO BE
UNREASONABLY WITHHELD OR DELAYED, INCLUDE THE PRODUCT TRADEMARK(S) DEVELOPED OR
USED BY ALNYLAM WITH RESPECT TO LICENSED PRODUCT IN ASIA (THE “ALNYLAM
TRADEMARKS”).  ANY PRODUCT TRADEMARK(S) (OTHER THAN THE ALNYLAM TRADEMARKS) THAT
ARE USED BY CUBIST TO PROMOTE AND SELL LICENSED PRODUCT IN THE TERRITORY ARE
HEREINAFTER REFERRED TO AS THE “CUBIST TRADEMARKS”.  ALNYLAM (OR ITS RELATED
PARTIES, AS APPROPRIATE) SHALL OWN ALL RIGHTS TO ALNYLAM TRADEMARKS, AND ALL
GOODWILL ASSOCIATED THEREWITH, THROUGHOUT THE WORLD.  CUBIST (OR ITS RELATED
PARTIES, AS APPROPRIATE) SHALL OWN ALL RIGHTS TO CUBIST TRADEMARKS AND ALL
GOODWILL ASSOCIATED THEREWITH, THROUGHOUT THE WORLD.  ALNYLAM SHALL ALSO OWN
RIGHTS TO ANY INTERNET DOMAIN NAMES INCORPORATING THE APPLICABLE ALNYLAM
TRADEMARKS OR ANY VARIATION OR PART OF SUCH ALNYLAM TRADEMARKS USED AS ITS URL
ADDRESS OR ANY PART OF SUCH ADDRESS; AND CUBIST SHALL ALSO OWN RIGHTS TO ANY
INTERNET DOMAIN NAMES INCORPORATING THE APPLICABLE CUBIST TRADEMARKS OR ANY
VARIATION OR PART OF SUCH CUBIST TRADEMARKS USED AS ITS URL ADDRESS OR ANY PART
OF SUCH ADDRESS.

 

(C)                                  IF ALNYLAM TRADEMARKS ARE USED TO PROMOTE
AND SELL LICENSED PRODUCT IN THE TERRITORY, THEN THE FOLLOWING PROVISIONS SHALL
APPLY:  ALNYLAM SHALL GRANT CUBIST AN EXCLUSIVE LICENSE TO USE SUCH ALNYLAM
TRADEMARKS TO COMMERCIALIZE LICENSED PRODUCT IN THE TERRITORY.  CUBIST AGREES
THAT THE QUALITY OF LICENSED PRODUCT AND THE MANUFACTURE AND COMMERCIALIZATION
THEREOF SHALL BE CONSISTENT WITH THE QUALITY STANDARDS APPLIED BY ALNYLAM
THERETO.  IN ADDITION,

 

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CUBIST SHALL COMPLY STRICTLY WITH ALNYLAM’S TRADEMARK STYLE AND USAGE STANDARDS
THAT ALNYLAM COMMUNICATES TO CUBIST FROM TIME TO TIME WITH RESPECT TO THE
ALNYLAM TRADEMARKS.  CUBIST SHALL, AT []* EXPENSE IN THE ROYALTY TERRITORY AND
SUBJECT TO []* FOR THE PROFIT-SHARE TERRITORY, AT THE REQUEST OF ALNYLAM FROM
TIME TO TIME, SUBMIT TO ALNYLAM FOR APPROVAL A REASONABLE NUMBER OF PRODUCTION
SAMPLES OF LICENSED PRODUCT AND RELATED PACKAGING MATERIALS.  IF ALNYLAM
REASONABLY OBJECTS TO THE QUALITY OF LICENSED PRODUCT OR THE USAGE OF THE
ALNYLAM TRADEMARKS IN CONNECTION WITH ANY SAMPLE, IT SHALL GIVE WRITTEN NOTICE
OF SUCH OBJECTION TO CUBIST WITHIN []* AFTER RECEIPT BY ALNYLAM OF THE SAMPLE,
SPECIFYING THE WAY IN WHICH SUCH USAGE OF THE ALNYLAM TRADEMARKS FAILS TO MEET
THE STYLE, USAGE OR QUALITY STANDARDS FOR LICENSED PRODUCT SET FORTH IN THE
SECOND AND THIRD SENTENCES OF THIS SECTION 8.8(C), AND CUBIST SHALL []* CEASE
SALE AND DISTRIBUTION OF LICENSED PRODUCT.  IF CUBIST WISHES TO CONTINUE TO
DISTRIBUTE AND SELL LICENSED PRODUCT, IT MUST REMEDY THE FAILURE AND SUBMIT
FURTHER SAMPLES TO ALNYLAM FOR APPROVAL.

 

(D)                                 IF ALNYLAM TRADEMARKS ARE USED TO PROMOTE
AND SELL LICENSED PRODUCT IN THE TERRITORY, THEN ALNYLAM WILL USE DILIGENT
EFFORTS TO ESTABLISH, MAINTAIN AND ENFORCE SUCH ALNYLAM TRADEMARKS IN THE
APPLICABLE COUNTRIES IN THE TERRITORY.  CUBIST SHALL BE RESPONSIBLE FOR []*
PERCENT ([]*%) OF THE COSTS OF SUCH EFFORTS IN THE ROYALTY TERRITORY AND CUBIST
SHALL REIMBURSE ALNYLAM FOR []* SUCH COSTS INCURRED BY ALNYLAM WITHIN []* AFTER
RECEIVING ANY INVOICE FROM ALNYLAM FOR SUCH COSTS.  []* IN THE COSTS OF SUCH
EFFORTS IN THE PROFIT-SHARE TERRITORY AND CUBIST SHALL REIMBURSE ALNYLAM FOR []*
PERCENT ([]*%) OF SUCH COSTS INCURRED BY ALNYLAM WITHIN []* AFTER RECEIVING ANY
INVOICE FROM ALNYLAM FOR SUCH SHARE OF SUCH COSTS.  CUBIST WILL USE DILIGENT
EFFORTS TO ESTABLISH, MAINTAIN AND ENFORCE THE CUBIST TRADEMARKS IN THE
TERRITORY, AT ITS EXPENSE, SUBJECT TO THE APPLICABLE COST SHARING PROVISIONS FOR
THE PROFIT-SHARE TERRITORY.

 

(E)                                  IF EITHER PARTY BECOMES AWARE OF ANY
INFRINGEMENT OF ANY PRODUCT TRADEMARK BY A THIRD PARTY, SUCH PARTY SHALL
PROMPTLY NOTIFY THE OTHER PARTY AND THE PARTIES SHALL CONSULT WITH EACH OTHER
AND JOINTLY DETERMINE THE BEST WAY TO PREVENT SUCH INFRINGEMENT, INCLUDING BY
THE INSTITUTION OF LEGAL PROCEEDINGS AGAINST SUCH THIRD PARTY.

 

ARTICLE IX

 

CONFIDENTIALITY AND PUBLICITY

 

SECTION 9.1  CONFIDENTIAL INFORMATION.  DURING THE TERM AND FOR A PERIOD OF []*
AFTER ANY TERMINATION OR EXPIRATION HEREOF, EACH PARTY AGREES TO KEEP IN
CONFIDENCE AND NOT TO DISCLOSE TO ANY THIRD PARTY, OR USE FOR ANY PURPOSE,
EXCEPT PURSUANT TO, AND IN ORDER TO CARRY OUT, THE TERMS AND OBJECTIVES OF THIS
AGREEMENT, ANY CONFIDENTIAL INFORMATION OF THE OTHER PARTY.  THE TERMS OF THIS
AGREEMENT SHALL BE CONSIDERED CONFIDENTIAL INFORMATION OF BOTH PARTIES
HEREUNDER.  THE RESTRICTIONS ON THE DISCLOSURE AND USE OF CONFIDENTIAL
INFORMATION SET FORTH IN THE FIRST SENTENCE OF THIS SECTION 9.1 SHALL NOT APPLY
TO ANY CONFIDENTIAL INFORMATION THAT:

 

(A)                                  WAS KNOWN BY THE RECEIVING PARTY PRIOR TO
DISCLOSURE BY THE DISCLOSING PARTY HEREUNDER (AS EVIDENCED BY THE RECEIVING
PARTY’S WRITTEN RECORDS OR OTHER COMPETENT EVIDENCE);

 

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(B)                                 IS OR BECOMES PART OF THE PUBLIC DOMAIN
THROUGH NO FAULT OF THE RECEIVING PARTY;

 

(C)                                  IS DISCLOSED TO THE RECEIVING PARTY BY A
THIRD PARTY HAVING A LEGAL RIGHT TO MAKE SUCH DISCLOSURE WITHOUT VIOLATING ANY
CONFIDENTIALITY OR NON-USE OBLIGATION THAT SUCH THIRD PARTY HAS TO THE
DISCLOSING PARTY AND PROVIDED SUCH THIRD PARTY IS NOT DISCLOSING SUCH
INFORMATION ON BEHALF OF THE DISCLOSING PARTY; OR

 

(D)                                 IS INDEPENDENTLY DEVELOPED BY PERSONNEL OF
THE RECEIVING PARTY WHO DID NOT HAVE ACCESS TO THE CONFIDENTIAL INFORMATION (AS
EVIDENCED BY THE RECEIVING PARTY’S WRITTEN RECORDS OR OTHER COMPETENT EVIDENCE).

 

In addition, if either Party is required to disclose Confidential Information of
the other Party by regulation, law or legal process, including by the rules or
regulations of the United States Securities and Exchange Commission or similar
regulatory agency in a country other than the United States or of any stock
exchange or Nasdaq, such Party shall provide prior written notice and a copy of
such intended disclosure to such other Party if possible under the
circumstances, shall consider in good faith the other Party’s comments, and
shall disclose only such Confidential Information of such other Party as is
required to be disclosed.  In addition, either Party may disclose to bona fide
potential investors, lenders, potential acquirors/acquirees, and potential and
existing collaborators, and to such Party’s consultants and advisors, the
existence and terms of this Agreement to the extent necessary in connection with
a proposed equity or debt financing of such Party, or a proposed acquisition or
business combination or transaction, so long as such recipients are bound in
writing to maintain the confidentiality of such information in accordance with
the terms of this Agreement.

 

SECTION 9.2  EMPLOYEE, CONSULTANT AND ADVISOR OBLIGATIONS AND DISCLOSURE TO
REGULATORY AUTHORITIES.  EACH PARTY AGREES THAT IT AND ITS AFFILIATES SHALL
PROVIDE OR PERMIT ACCESS TO CONFIDENTIAL INFORMATION RECEIVED FROM THE OTHER
PARTY AND SUCH PARTY’S AFFILIATES AND REPRESENTATIVES ONLY TO THE RECEIVING
PARTY’S EMPLOYEES, CONSULTANTS, ADVISORS AND PERMITTED SUBCONTRACTORS,
SUBLICENSEES, ALNYLAM’S ASIAN PARTNER AND SUB-DISTRIBUTORS, AND TO THE
EMPLOYEES, CONSULTANTS, ADVISORS AND PERMITTED SUBCONTRACTORS, SUBLICENSEES AND
SUB-DISTRIBUTORS OF THE RECEIVING PARTY’S AFFILIATES, WHO IN SUCH PARTY’S
REASONABLE JUDGMENT HAVE A NEED TO KNOW SUCH CONFIDENTIAL INFORMATION TO ASSIST
THE RECEIVING PARTY WITH THE ACTIVITIES CONTEMPLATED BY THIS AGREEMENT AND WHO
ARE SUBJECT TO OBLIGATIONS OF CONFIDENTIALITY AND NON-USE WITH RESPECT TO SUCH
CONFIDENTIAL INFORMATION SIMILAR TO THE OBLIGATIONS OF CONFIDENTIALITY AND
NON-USE OF THE RECEIVING PARTY PURSUANT TO SECTION 9.1; PROVIDED THAT ALNYLAM
AND CUBIST SHALL EACH REMAIN RESPONSIBLE FOR ANY FAILURE BY ITS AFFILIATES, AND
ITS AND ITS AFFILIATES’ RESPECTIVE EMPLOYEES, CONSULTANTS, ADVISORS AND
PERMITTED SUBCONTRACTORS, SUBLICENSEES AND SUB-DISTRIBUTORS, AND, IN THE CASE OF
ALNYLAM, ALNYLAM’S ASIAN PARTNER, TO TREAT SUCH CONFIDENTIAL INFORMATION AS
REQUIRED UNDER SECTION 9.1 (AS IF SUCH AFFILIATES, EMPLOYEES, CONSULTANTS,
ADVISORS AND PERMITTED SUBCONTRACTORS, SUBLICENSEES AND SUB-DISTRIBUTORS WERE
PARTIES DIRECTLY BOUND TO THE REQUIREMENTS OF SECTION 9.1).  EACH PARTY MAY ALSO
DISCLOSE CONFIDENTIAL INFORMATION OF THE OTHER PARTY TO REGULATORY AUTHORITIES,
BUT SOLELY IN CONNECTION WITH THE  ACTIVITIES CONTEMPLATED BY THIS

 

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AGREEMENT, INCLUDING ACTIVITIES BY ALNYLAM OR ITS ASIAN PARTNER WITH RESPECT TO
THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCTS FOR ASIA.

 

SECTION 9.3  CERTAIN DISCLOSURES BY ALNYLAM OR CUBIST.  NOTWITHSTANDING ANYTHING
IN THIS AGREEMENT TO THE CONTRARY, BUT SUBJECT TO THE LAST PARAGRAPH OF
SECTION 9.1, ALNYLAM AND CUBIST AGREE THAT, EXCEPT AS CONTEMPLATED BY THE
DEVELOPMENT PLAN OR AS OTHERWISE DIRECTED BY THE JSC, NEITHER ALNYLAM OR ANY OF
ITS AFFILIATES NOR CUBIST OR ANY OF ITS AFFILIATES SHALL DISCLOSE THEIR OWN
CONFIDENTIAL INFORMATION THAT IS SPECIFIC TO LICENSED PRODUCT OTHER THAN TO ANY
OF THEIR RESPECTIVE RELATED PARTIES;, PROVIDED THAT EITHER PARTY OR ANY OF ITS
AFFILIATES MAY DISCLOSE ITS OWN CONFIDENTIAL INFORMATION THAT IS SPECIFIC TO
LICENSED PRODUCT (A) TO THE SAME EXTENT AS IT IS ALLOWED TO DISCLOSE THE OTHER
PARTY’S CONFIDENTIAL INFORMATION UNDER SECTION 9.2 OR (B) IN CONNECTION WITH
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT IN THE
TERRITORY OR ASIA.

 

SECTION 9.4  PUBLICITY.  UPON THE EXECUTION OF THIS AGREEMENT, THE PARTIES SHALL
ISSUE A JOINT PRESS RELEASE REGARDING THE SUBJECT MATTER OF THIS AGREEMENT IN
THE FORM ATTACHED AS EXHIBIT I.  AFTER SUCH INITIAL JOINT PRESS RELEASE, NEITHER
PARTY SHALL ISSUE A PRESS RELEASE OR MAKE A PUBLIC ANNOUNCEMENT RELATING TO
LICENSED PRODUCT OR THIS AGREEMENT WITHOUT THE PRIOR WRITTEN APPROVAL OF THE
OTHER PARTY, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED,
EXCEPT THAT (A) A PARTY MAY ISSUE SUCH PRESS RELEASE OR PUBLIC ANNOUNCEMENT IF
THE CONTENTS OF SUCH PRESS RELEASE OR PUBLIC ANNOUNCEMENT HAVE PREVIOUSLY BEEN
MADE PUBLIC OTHER THAN THROUGH A BREACH OF THIS AGREEMENT BY THE ISSUING PARTY
AND (B) A PARTY MAY ISSUE SUCH A PRESS RELEASE OR PUBLIC ANNOUNCEMENT IF
REQUIRED BY APPLICABLE LAW, INCLUDING BY THE RULES OR REGULATIONS OF THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR SIMILAR REGULATORY AGENCY IN A
COUNTRY OTHER THAN THE UNITED STATES OR OF ANY STOCK EXCHANGE OR NASDAQ, IN EACH
CASE UNDER CLAUSE (A) OR (B) AFTER FIRST NOTIFYING THE OTHER PARTY OF SUCH
PLANNED PRESS RELEASE OR PUBLIC ANNOUNCEMENT AT LEAST []* BUSINESS DAYS IN
ADVANCE OF ISSUING SUCH PRESS RELEASE OR MAKING SUCH PUBLIC ANNOUNCEMENT (OR,
WITH RESPECT TO PRESS RELEASES AND PUBLIC ANNOUNCEMENTS MADE PURSUANT TO THE
FOREGOING CLAUSE (B), WITH AS MUCH ADVANCE NOTICE AS POSSIBLE UNDER THE
CIRCUMSTANCES IF IT IS NOT POSSIBLE TO PROVIDE NOTICE AT LEAST []* BUSINESS DAYS
IN ADVANCE) FOR THE SOLE PURPOSE OF ALLOWING THE OTHER PARTY TO REVIEW THE
PROPOSED PRESS RELEASE OR PUBLIC ANNOUNCEMENT FOR THE INCLUSION OF CONFIDENTIAL
INFORMATION OR THE USE OF ITS NAME; PROVIDED THAT THE PARTY SUBJECT TO THE
REQUIREMENT SHALL INCLUDE IN SUCH PRESS RELEASE OR PUBLIC ANNOUNCEMENT MADE
PURSUANT TO THE FOREGOING CLAUSE (B) ONLY SUCH INFORMATION RELATING TO LICENSED
PRODUCT OR THIS AGREEMENT AS IS REQUIRED BY SUCH APPLICABLE LAW.

 

SECTION 9.5  PUBLICATIONS.  SUBJECT TO THE RESTRICTIONS PROVIDED BELOW, THE JSC
SHALL DETERMINE THE PUBLICATION STRATEGY FOR THE TERRITORY.  IN THE EVENT EITHER
PARTY IS PERMITTED BY THE JSC TO PUBLISH OR PRESENT THE RESULTS OF DEVELOPMENT
CARRIED OUT ON LICENSED PRODUCT, SUCH PUBLICATION OR PRESENTATION SHALL BE
SUBJECT TO THE PRIOR REVIEW BY THE OTHER PARTY FOR PATENTABILITY AND PROTECTION
OF SUCH OTHER PARTY’S CONFIDENTIAL INFORMATION.  EACH PARTY SHALL PROVIDE TO THE
OTHER PARTY THE OPPORTUNITY TO REVIEW ANY PROPOSED ABSTRACTS, MANUSCRIPTS OR
SUMMARIES OF PRESENTATIONS THAT COVER THE RESULTS OF DEVELOPMENT OF THE
PRODUCT.  EACH PARTY SHALL DESIGNATE A PERSON OR PERSONS WHO SHALL BE
RESPONSIBLE FOR REVIEWING SUCH PUBLICATIONS.  SUCH DESIGNATED

 

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PERSON SHALL RESPOND IN WRITING PROMPTLY AND IN NO EVENT LATER THAN []* DAYS
AFTER RECEIPT OF THE PROPOSED MATERIAL WITH EITHER APPROVAL OF THE PROPOSED
MATERIAL OR A SPECIFIC STATEMENT OF CONCERN, BASED UPON EITHER THE NEED TO SEEK
PATENT PROTECTION OR CONCERN REGARDING COMPETITIVE DISADVANTAGE ARISING FROM THE
PROPOSAL.  IN THE EVENT OF CONCERN, THE SUBMITTING PARTY AGREES NOT TO SUBMIT
SUCH PUBLICATION OR TO MAKE SUCH PRESENTATION THAT CONTAINS SUCH INFORMATION
UNTIL THE OTHER PARTY IS GIVEN A REASONABLE PERIOD OF TIME (NOT TO EXCEED []*
DAYS) TO SEEK PATENT PROTECTION FOR ANY MATERIAL IN SUCH PUBLICATION OR
PRESENTATION THAT IT BELIEVES IS PATENTABLE OR TO RESOLVE ANY OTHER ISSUES, AND
THE SUBMITTING PARTY SHALL REMOVE FROM SUCH PROPOSED PUBLICATION ANY
CONFIDENTIAL INFORMATION OF THE OTHER PARTY AS REQUESTED BY SUCH OTHER PARTY. 
WITH RESPECT TO ANY PROPOSED ABSTRACTS, MANUSCRIPTS OR SUMMARIES OF
PRESENTATIONS BY INVESTIGATORS OR OTHER THIRD PARTIES, INCLUDING RELATED PARTIES
SUCH MATERIALS SHALL BE SUBJECT TO REVIEW UNDER THIS SECTION 9.5 TO THE EXTENT
THAT ALNYLAM OR CUBIST, AS THE CASE MAY BE, HAS THE RIGHT TO DO SO.

 

SECTION 9.6  ASIAN PARTNER.  ALNYLAM SHALL USE DILIGENT EFFORTS TO AMEND ITS
AGREEMENT WITH ITS ASIAN PARTNER SUCH THAT ANY PRESS RELEASES AND PUBLICATIONS
RELATED TO LICENSED PRODUCT BY SUCH ASIAN PARTNER ARE SUBJECT TO THE REVIEW AND
APPROVAL PROCEDURES SET FORTH IN SECTIONS 9.4 AND 9.5.

 

SECTION 9.7  COORDINATION WITH ALNYLAM’S ASIAN PARTNER.  ALNYLAM AND CUBIST
SHALL USE DILIGENT EFFORTS TO MEET (IN-PERSON OR VIA VIDEO CONFERENCE OR
TELECONFERENCE) WITH REPRESENTATIVES OF ALNYLAM’S ASIAN PARTNER TO DISCUSS AND
COORDINATE THEIR RESPECTIVE ACTIVITIES WITH RESPECT TO LICENSED PRODUCTS,
INCLUDING:  (A) ADVERSE EVENT REPORTING, (B) PUBLICATIONS AND PRESS RELEASES,
(C) SHARING OF DATA AND CONFIDENTIAL INFORMATION, (D) MANUFACTURING AND
(E) REVIEW OF DEVELOPMENT ACTIVITIES.

 

ARTICLE X

 

REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS; INDEMNIFICATION

 

SECTION 10.1  EXCLUSIVITY COVENANT.  DURING THE TERM, NEITHER PARTY NOR ITS
AFFILIATES SHALL, OUTSIDE THIS AGREEMENT, DIRECTLY OR INDIRECTLY, CONDUCT
DEVELOPMENT OF, MANUFACTURE OR COMMERCIALIZE A DIRECTLY COMPETITIVE PRODUCT,
ANYWHERE IN THE TERRITORY OR GRANT RIGHTS TO AN THIRD PARTY TO DO ANY OF THE
FOREGOING.  IF EITHER PARTY OR ITS AFFILIATES WOULD VIOLATE THE PROVISIONS OF
THIS SECTION 10.1 AS A RESULT OF A MERGER, ACQUISITION OR COMBINATION WITH A
THIRD PARTY, (A) []* WITH THE UNDERSTANDING THAT THE FOREGOING RIGHT SHALL IN NO
WAY DIMINISH A PARTY’S OBLIGATIONS TO USE DILIGENT EFFORTS TO DEVELOP,
MANUFACTURE OR COMMERCIALIZE LICENSED PRODUCT UNDER THIS AGREEMENT.

 

SECTION 10.2  REPRESENTATIONS OF AUTHORITY.  ALNYLAM AND CUBIST EACH REPRESENTS
AND WARRANTS TO THE OTHER PARTY THAT, AS OF THE EFFECTIVE DATE, IT HAS FULL
RIGHT, POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO PERFORM ITS
RESPECTIVE OBLIGATIONS UNDER THIS AGREEMENT AND THAT IT HAS THE RIGHT TO GRANT
TO THE OTHER THE LICENSES AND SUBLICENSES GRANTED PURSUANT TO THIS AGREEMENT.

 

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SECTION 10.3  CONSENTS.  ALNYLAM AND CUBIST EACH REPRESENTS AND WARRANTS TO THE
OTHER PARTY THAT, EXCEPT FOR ANY REGULATORY APPROVALS, PRICING OR REIMBURSEMENT
APPROVALS, MANUFACTURING APPROVALS OR SIMILAR APPROVALS NECESSARY FOR THE
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF THE LICENSED PRODUCT, ALL
NECESSARY CONSENTS, APPROVALS AND AUTHORIZATIONS OF ALL GOVERNMENT AUTHORITIES
AND OTHER PERSONS REQUIRED TO BE OBTAINED BY IT AS OF THE EFFECTIVE DATE IN
CONNECTION WITH THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT HAVE
BEEN OBTAINED BY THE EFFECTIVE DATE.

 

SECTION 10.4  NO CONFLICT.  ALNYLAM AND CUBIST EACH REPRESENTS AND WARRANTS TO
THE OTHER PARTY THAT, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT, THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY SUCH PARTY, THE
PERFORMANCE OF SUCH PARTY’S OBLIGATIONS HEREUNDER AND THE LICENSES AND
SUBLICENSES TO BE GRANTED BY SUCH PARTY PURSUANT TO THIS AGREEMENT (A) DO NOT
CONFLICT WITH OR VIOLATE ANY REQUIREMENT OF APPLICABLE LAWS EXISTING AS OF THE
EFFECTIVE DATE AND APPLICABLE TO SUCH PARTY AND (B) DO NOT CONFLICT WITH,
VIOLATE, BREACH OR CONSTITUTE A DEFAULT UNDER ANY CONTRACTUAL OBLIGATIONS OF
SUCH PARTY OR ANY OF ITS AFFILIATES EXISTING AS OF THE EFFECTIVE DATE.  EACH
PARTY SHALL COMPLY WITH ALL LAWS APPLICABLE TO THE DEVELOPMENT, MANUFACTURE AND
COMMERCIALIZATION OF THE PRODUCT, INCLUDING APPLICABLE DRUG REGULATION LAWS,
CLINICAL INVESTIGATION LAWS AND HEALTH CARE LAWS.

 

SECTION 10.5  ENFORCEABILITY.  ALNYLAM AND CUBIST EACH REPRESENTS AND WARRANTS
TO THE OTHER PARTY THAT, AS OF THE EFFECTIVE DATE, THIS AGREEMENT IS A LEGAL AND
VALID OBLIGATION BINDING UPON IT AND IS ENFORCEABLE AGAINST IT IN ACCORDANCE
WITH ITS TERMS.

 

SECTION 10.6  SALES REPRESENTATIVES.

 

(A)                                  CUBIST REPRESENTS AND WARRANTS TO ALNYLAM
THAT IT WILL USE DILIGENT EFFORTS TO CAUSE ITS SALES REPRESENTATIVES IN THE
TERRITORY NOT TO MAKE STATEMENTS, CLAIMS OR UNDERTAKINGS TO ANY PERSON WITH WHOM
THEY DISCUSS OR PROMOTE LICENSED PRODUCT THAT ARE NOT CONSISTENT WITH, AND NOT
TO PROVIDE OR USE ANY LABELING, LITERATURE, OR OTHER MATERIALS OTHER THAN THOSE
CONSISTENT WITH, PROMOTIONAL MATERIALS PROVIDED TO THE JCT FOR REVIEW AND
COMMENT IN ADVANCE OF USE IN THE TERRITORY.  CUBIST SHALL NOT, AND SHALL USE
DILIGENT EFFORTS TO CAUSE ITS SALES REPRESENTATIVES NOT TO, MAKE ANY
REPRESENTATION, STATEMENT, WARRANTY OR GUARANTY WITH RESPECT TO LICENSED PRODUCT
THAT IS NOT CONSISTENT WITH THE APPLICABLE, CURRENT PACKAGE INSERT OF
PRESCRIBING INFORMATION OR OTHER DOCUMENTATION ACCOMPANYING OR DESCRIBING
LICENSED PRODUCT, INCLUDING CUBIST’S STANDARD LIMITED WARRANTY AND DISCLAIMERS,
IF ANY.

 

(B)                                 CUBIST REPRESENTS AND WARRANTS TO ALNYLAM
THAT IT SHALL USE DILIGENT EFFORTS TO CAUSE ITS SALES REPRESENTATIVES TO COMPLY
WITH THE APPLICABLE LAWS AND GUIDELINES AND RELATED TO THE PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER, INCLUDING THE FEDERAL FOOD, DRUG AND COSMETICS ACT, THE
PRESCRIPTION DRUG MARKETING ACT OF 1987, THE FEDERAL AND STATE ANTI-KICKBACK
STATUTES AND ALL APPLICABLE REGULATIONS THEREUNDER, AND AMA GUIDELINES ON GIFTS
TO PHYSICIANS FROM INDUSTRY AND PHRMA GUIDELINES, AND ALL RELEVANT EMEA
REGULATIONS, AUTHORIZATIONS AND LOCAL LAWS REGARDING ADVERTISEMENT, SALE AND
PROMOTION OF PHARMACEUTICAL PRODUCTS AS WELL AS ANY

 

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RELEVANT CODE OF PRACTICE, IN EACH CASE AS AMENDED FROM TIME TO TIME, AND TO
COMPLY WITH THE POLICIES IN CUBIST’S COMPLIANCE TRAINING MATERIALS FOR THE
TERRITORY.

 

SECTION 10.7  ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ALNYLAM.  ALNYLAM
REPRESENTS AND WARRANTS TO CUBIST THAT, EXCEPT AS SET FORTH ON SCHEDULE 10.7, AS
OF THE EFFECTIVE DATE:

 

(A)                                  EXHIBIT A SETS FORTH A COMPLETE AND
ACCURATE LIST OF (I) THE ALNYLAM PATENT RIGHTS OWNED BY ALNYLAM, AND (II) TO THE
KNOWLEDGE OF ALNYLAM AFTER DUE INQUIRY,  THE ALNYLAM PATENT RIGHTS IN-LICENSED
BY ALNYLAM, IN EACH CASE AS OF THE EFFECTIVE DATE.

 

(B)                                 ALNYLAM HAS NOT GRANTED, AND DURING THE TERM
WILL NOT GRANT, RIGHTS TO ANY THIRD PARTY UNDER THE ALNYLAM TECHNOLOGY THAT
CONFLICT WITH THE RIGHTS GRANTED TO CUBIST HEREUNDER AND SUCH ALNYLAM TECHNOLOGY
IS HELD FREE AND CLEAR OF ANY LIENS, SECURITY INTERESTS AND OTHER SIMILAR
ENCUMBRANCES.

 

(C)                                  ALNYLAM HAS NOT RECEIVED ANY WRITTEN NOTICE
OF (I) ANY CLAIM THAT ANY PATENT OR TRADE SECRET RIGHT OWNED OR CONTROLLED BY A
THIRD PARTY WOULD BE INFRINGED OR MISAPPROPRIATED BY THE MANUFACTURE, USE, SALE,
OFFER FOR SALE OR IMPORTATION OF LICENSED PRODUCTS IN THE FIELD IN THE
TERRITORY, OR (II) ANY THREATENED CLAIMS OR LITIGATION SEEKING TO INVALIDATE OR
OTHERWISE CHALLENGE THE ALNYLAM PATENT RIGHTS OWNED BY ALNYLAM OR ALNYLAM’S
RIGHTS THEREIN.

 

(D)                                 TO THE KNOWLEDGE OF ALNYLAM AFTER DUE
INQUIRY, NONE OF THE ALNYLAM PATENT RIGHTS OWNED BY ALNYLAM ARE SUBJECT TO ANY
PENDING RE-EXAMINATION, OPPOSITION, INTERFERENCE OR LITIGATION PROCEEDINGS.

 

(E)                                  ALNYLAM HAS PROVIDED CUBIST WITH ACCESS TO
(I) ALL DOCUMENTS REQUESTED BY CUBIST AND IN ALNYLAM’S POSSESSION OR CONTROL
RELATING TO THE ALNYLAM PATENT RIGHTS AND ALNYLAM KNOW-HOW AND (II) ALL OTHER
INFORMATION IN ALNYLAM’S POSSESSION OR CONTROL THAT, IN ALNYLAM’S REASONABLE
JUDGMENT, IS MATERIALLY ADVERSE TO CUBIST’S FREEDOM TO OPERATE UNDER THE ALNYLAM
PATENT RIGHTS OR TO USE ALNYLAM KNOW-HOW IN THE FIELD IN THE TERRITORY.

 

(F)                                    TO THE KNOWLEDGE OF ALNYLAM AFTER DUE
INQUIRY, THERE HAVE BEEN (I) NO MATERIAL INVENTORSHIP OR OWNERSHIP CHALLENGES
WITH RESPECT TO ANY OF THE ALNYLAM PATENT RIGHTS OR ALNYLAM KNOW-HOW AND (II) NO
INVENTORSHIP OR OWNERSHIP CHALLENGES OF ANY KIND WITH RESPECT TO THE ALNYLAM
SEQUENCE SPECIFIC PATENT RIGHTS.

 

(G)                                 EXHIBIT F SETS FORTH A TRUE AND COMPLETE
LIST OF ALL MATERIAL AGREEMENTS, INCLUDING LICENSE AGREEMENTS, CLINICAL TRIAL
AGREEMENTS AND MANUFACTURING OR SUPPLY AGREEMENTS, TO WHICH ALNYLAM IS A PARTY
AND WHICH RELATE TO LICENSED PRODUCT IN THE TERRITORY.  ALNYLAM IS NOT IN BREACH
UNDER ANY OF THE AGREEMENTS LISTED ON EXHIBIT F, NOR, TO THE KNOWLEDGE OF
ALNYLAM, IS ANY OTHER PARTY THERETO.  ALNYLAM HAS NOT RECEIVED ANY NOTICE OF
BREACH UNDER ANY OF THE AGREEMENTS LISTED IN EXHIBIT F.  ALNYLAM HAS PREVIOUSLY
PROVIDED CUBIST WITH ACCESS TO TRUE AND COMPLETE COPIES (OR, IN THE CASE OF
CLINICAL TRIAL AGREEMENTS, A REPRESENTATIVE FORM OF CLINICAL TRIAL AGREEMENT) OF
EACH OF THE AGREEMENTS LISTED ON EXHIBIT F.  THE ALNYLAM IN-LICENSE AGREEMENTS

 

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ARE IN FULL FORCE AND EFFECT AND ALNYLAM WILL MAINTAIN THE ALNYLAM IN-LICENSE
AGREEMENTS IN FULL FORCE AND EFFECT DURING THE TERM, WILL PERFORM ALL OF ITS
OBLIGATIONS THEREUNDER AND WILL NOT AMEND ANY SUCH AGREEMENT IN A MANNER THAT
WOULD ADVERSELY AFFECT THE RIGHTS AND OBLIGATIONS OF CUBIST UNDER THIS
AGREEMENT.  ALNYLAM WILL NOTIFY CUBIST PROMPTLY UPON RECEIVING ANY NOTICE OF
MATERIAL BREACH FROM A PARTY THEREUNDER.

 

(H)                                 TO THE KNOWLEDGE OF ALNYLAM, NO THIRD PARTY
IS INFRINGING ANY CLAIMS OF ANY ISSUED PATENTS ENCOMPASSED WITHIN THE ALNYLAM
PATENT RIGHTS BY OFFERING FOR SALE OR SELLING ANY DIRECTLY COMPETITIVE PRODUCT
IN THE TERRITORY.

 

(I)                                     THE ALNYLAM PATENT RIGHTS IN THE
TERRITORY THAT ARE PENDING PATENT APPLICATIONS AS OF THE EFFECTIVE DATE ARE
BEING DILIGENTLY PROSECUTED AT THE RESPECTIVE PATENT OFFICES, AND, TO THE
KNOWLEDGE OF ALNYLAM AFTER DUE INQUIRY, THE ALNYLAM PATENT RIGHTS IN THE
TERRITORY THAT ARE GRANTED HAVE BEEN MAINTAINED PROPERLY AND CORRECTLY AND ALL
APPLICABLE FEES HAVE BEEN PAID ON OR BEFORE THE DUE DATE FOR PAYMENT, IN EACH
CASE SUBJECT TO ALNYLAM’S REASONABLE BUSINESS JUDGMENT REGARDING THE MANAGEMENT
OF SUCH PATENT PORTFOLIO.

 

(J)                                     TO THE KNOWLEDGE OF ALNYLAM AFTER DUE
INQUIRY, THE DEVELOPMENT AND MANUFACTURE OF LICENSED PRODUCT IN THE TERRITORY TO
DATE HAS BEEN CONDUCTED BY ALNYLAM AND ITS AFFILIATES AND ITS SUBCONTRACTORS, IN
COMPLIANCE (IN ALL MATERIAL RESPECTS) WITH ALL APPLICABLE LAWS.  TO THE
KNOWLEDGE OF ALNYLAM AFTER DUE INQUIRY, NEITHER ALNYLAM NOR ANY OF ITS
AFFILIATES, NOR ANY OF THEIR RESPECTIVE OFFICERS, EMPLOYEES OR AGENTS, HAS MADE
AN UNTRUE STATEMENT OF A MATERIAL FACT OR FRAUDULENT STATEMENT TO ANY REGULATORY
AUTHORITY OR FAILED TO DISCLOSE A MATERIAL FACT REQUIRED TO BE DISCLOSED TO ANY
REGULATORY AUTHORITY.

 

(K)                                  EXCEPT AS WOULD NOT HAVE A MATERIAL ADVERSE
EFFECT ON THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCTS
OR CUBIST’S RIGHTS UNDER THIS AGREEMENT, ALL TESTING AND RESEARCH OF LICENSED
PRODUCTS (EXCLUDING THE MANUFACTURE OF MATERIALS USED IN CLINICAL TRIALS) BY
ALNYLAM AND ITS AFFILIATES HAVE BEEN CONDUCTED IN COMPLIANCE WITH GOOD CLINICAL
PRACTICES AND GOOD LABORATORY PRACTICES APPLICABLE AND REQUIRED AT THE TIME SUCH
ACTIVITY WAS PERFORMED AND ALL MATERIALS USED IN CLINICAL TRIALS OF LICENSED
PRODUCTS BY ALNYLAM AND ITS AFFILIATES HAVE BEEN MANUFACTURED IN COMPLIANCE WITH
GOOD MANUFACTURING PRACTICES APPLICABLE AT THE TIME SUCH ACTIVITY WAS PERFORMED.

 

(L)                                     TO THE KNOWLEDGE OF ALNYLAM AFTER DUE
INQUIRY, THERE IS NO MATERIAL MATTER CONCERNING THE SAFETY OR EFFICACY OF ANY
LICENSED PRODUCT AS TO WHICH ALNYLAM HAS NOT PROVIDED CUBIST WITH ACCESS TO ALL
MATERIAL INFORMATION.  ALNYLAM HAS DISCLOSED TO CUBIST OR MADE AVAILABLE TO
CUBIST FOR REVIEW ALL RELEVANT DATA AND DOCUMENTATION IN ITS CONTROL THAT IS
MATERIAL IN ORDER TO ASSESS THE SAFETY AND EFFICACY OF LICENSED PRODUCT.

 

(M)                               THERE ARE NO INQUIRIES, ACTIONS OR OTHER
PROCEEDINGS PENDING BEFORE OR, TO THE KNOWLEDGE OF ALNYLAM, THREATENED BY ANY
REGULATORY AUTHORITY WITH RESPECT TO LICENSED PRODUCT OR ANY FACILITY WHERE A
LICENSED PRODUCT IS MANUFACTURED, AND NEITHER ALNYLAM NOR ITS AFFILIATES HAVE
RECEIVED WRITTEN NOTICE THREATENING ANY SUCH INQUIRY, ACTION OR OTHER
PROCEEDING.

 

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(N)                                 EXCEPT FOR DISCLOSURES (I) TO THIRD PARTIES
FOR EVALUATION PURPOSES SUBJECT TO CONFIDENTIALITY OBLIGATIONS, (II) TO
ALNYLAM’S ASIAN PARTNER, (III) TO THIRD PARTY CONTRACTORS PROVIDING RESEARCH OR
DEVELOPMENT SERVICES TO ALNYLAM AND SUBJECT TO CONFIDENTIALITY OBLIGATIONS, OR
(IV) MADE IN ALNYLAM PATENT RIGHTS, ALNYLAM REPRESENTS THAT IT  HAS NOT LICENSED
OR DISCLOSED ALNYLAM SEQUENCE SPECIFIC KNOW-HOW TO ANY THIRD PARTY.

 

(O)                                 ALNYLAM HAS NOT GRANTED ANY RIGHT OR LICENSE
TO ISIS PHARMACEUTICALS, INC. TO DEVELOP OR COMMERCIALIZE LICENSED PRODUCTS.

 

SECTION 10.8  CUBIST REPRESENTATION REGARDING CUBIST IN-LICENSES.  CUBIST
REPRESENTS THAT THERE ARE NO CUBIST IN-LICENSES AS OF THE EFFECTIVE DATE.

 

SECTION 10.9  NO WARRANTIES.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN,
NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY, AND EACH PARTY HEREBY DISCLAIMS
ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO LICENSED PRODUCT.  EACH PARTY HEREBY DISCLAIMS
ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE AND
COMMERCIALIZATION OF THE LICENSED PRODUCT PURSUANT TO THIS AGREEMENT WILL BE
SUCCESSFUL OR THAT ANY PARTICULAR SALES LEVEL WITH RESPECT TO THE LICENSED
PRODUCT WILL BE ACHIEVED.

 

SECTION 10.10  NO DEBARMENT.  NEITHER PARTY NOR ANY OF ITS AFFILIATES HAS BEEN
DEBARRED OR IS SUBJECT TO DEBARMENT AND NEITHER PARTY NOR ANY OF ITS AFFILIATES
WILL USE IN ANY CAPACITY, IN CONNECTION WITH THE DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF THE PRODUCT, ANY PERSON WHO HAS BEEN DEBARRED PURSUANT TO
SECTION 306 OF THE UNITED STATES FEDERAL FOOD, DRUG, AND COSMETIC ACT, OR WHO IS
THE SUBJECT OF A CONVICTION DESCRIBED IN SUCH SECTION.  EACH PARTY AGREES TO
INFORM THE OTHER PARTY IN WRITING IMMEDIATELY UPON BECOMING AWARE THAT ANY
PERSON WHO IS PERFORMING SERVICES HEREUNDER IS DEBARRED OR IS THE SUBJECT OF A
CONVICTION DESCRIBED IN SECTION 306, OR IF ANY ACTION, SUIT, CLAIM,
INVESTIGATION OR LEGAL OR ADMINISTRATIVE PROCEEDING IS PENDING OR, TO THE BEST
OF SUCH PARTY’S KNOWLEDGE, IS THREATENED, RELATING TO THE DEBARMENT OR
CONVICTION OF SUCH PARTY OR ANY PERSON USED IN ANY CAPACITY BY SUCH PARTY OR ANY
OF ITS AFFILIATES IN CONNECTION WITH THE DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT.

 

SECTION 10.11  INDEMNIFICATION.

 

(A)                                  GENERAL INDEMNIFICATION BY CUBIST.  CUBIST
SHALL INDEMNIFY, HOLD HARMLESS, AND DEFEND ALNYLAM, ITS AFFILIATES, AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS (THE “ALNYLAM INDEMNITEES”)
FROM AND AGAINST ANY AND ALL THIRD PARTY CLAIMS, SUITS, LOSSES, LIABILITIES,
DAMAGES, COSTS, FEES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES)
(COLLECTIVELY, “LOSSES”) ARISING OUT OF OR RESULTING FROM, DIRECTLY OR
INDIRECTLY, (I) ANY BREACH OF, OR INACCURACY IN, ANY REPRESENTATION OR WARRANTY
MADE BY CUBIST IN THIS AGREEMENT, OR ANY BREACH OR VIOLATION OF ANY COVENANT OR
AGREEMENT OF CUBIST IN OR PURSUANT TO THIS AGREEMENT, OR

 

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(II) THE NEGLIGENCE OR WILLFUL MISCONDUCT BY OR OF CUBIST, ITS AFFILIATES AND
THEIR RESPECTIVE SUBLICENSEES, AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS IN THE PERFORMANCE OF CUBIST’S OBLIGATIONS UNDER THIS
AGREEMENT. CUBIST SHALL HAVE NO OBLIGATION TO INDEMNIFY THE ALNYLAM INDEMNITEES
TO THE EXTENT THAT THE LOSSES IN THE TERRITORY THAT ARISE OUT OF OR RESULT FROM,
DIRECTLY OR INDIRECTLY, ANY BREACH OF, OR INACCURACY IN, ANY REPRESENTATION OR
WARRANTY MADE BY ALNYLAM IN THIS AGREEMENT, ANY BREACH OR VIOLATION OF ANY
COVENANT OR AGREEMENT OF ALNYLAM IN OR PURSUANT TO THIS AGREEMENT, THE
NEGLIGENCE OR WILLFUL MISCONDUCT BY OR OF ANY OF THE ALNYLAM INDEMNITEES OR ANY
LOSS TO THE EXTENT ARISING FROM OR RELATED TO THE DEVELOPMENT, MANUFACTURE,
COMMERCIALIZATION, OR USE OF LICENSED PRODUCTS OUTSIDE THE FIELD OR FOR ASIA BY
ALNYLAM OR ANY OF ITS RELATED PARTIES.

 

(B)                                 GENERAL INDEMNIFICATION BY ALNYLAM.  ALNYLAM
SHALL INDEMNIFY, HOLD HARMLESS, AND DEFEND CUBIST, ITS AFFILIATES AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS (THE “CUBIST INDEMNITEES”)
FROM AND AGAINST ANY AND ALL LOSSES ARISING OUT OF OR RESULTING FROM, DIRECTLY
OR INDIRECTLY, (I) ANY BREACH OF, OR INACCURACY IN, ANY REPRESENTATION OR
WARRANTY MADE BY ALNYLAM IN THIS AGREEMENT, OR ANY BREACH OR VIOLATION OF ANY
COVENANT OR AGREEMENT OF ALNYLAM IN OR PURSUANT TO THIS AGREEMENT, (II) THE
NEGLIGENCE OR WILLFUL MISCONDUCT BY OR OF ALNYLAM, ITS AFFILIATES AND THEIR
RESPECTIVE SUBLICENSEES, AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS IN THE PERFORMANCE OF ALNYLAM’S OBLIGATIONS UNDER THIS AGREEMENT OR
(III) THE DEVELOPMENT, MANUFACTURE, COMMERCIALIZATION, OR USE OF LICENSED
PRODUCTS OUTSIDE THE FIELD OR FOR ASIA BY ALNYLAM OR ANY OF ITS RELATED
PARTIES.  ALNYLAM SHALL HAVE NO OBLIGATION TO INDEMNIFY THE CUBIST INDEMNITEES
TO THE EXTENT THAT THE LOSSES ARISE OUT OF OR RESULT FROM, DIRECTLY OR
INDIRECTLY, ANY BREACH OF, OR INACCURACY IN, ANY REPRESENTATION OR WARRANTY MADE
BY CUBIST IN THIS AGREEMENT, OR ANY BREACH OR VIOLATION OF ANY COVENANT OR
AGREEMENT OF CUBIST IN OR PURSUANT TO THIS AGREEMENT, OR THE NEGLIGENCE OR
WILLFUL MISCONDUCT BY OR OF ANY OF THE CUBIST INDEMNITEES.

 

(C)                                  PRODUCT LIABILITY.

 

(I)                                     CUBIST SHALL INDEMNIFY AND HOLD HARMLESS
THE ALNYLAM INDEMNITEES FROM, AGAINST AND IN RESPECT OF ANY AND ALL LOSSES
ARISING OUT OF THIRD PARTY PRODUCT LIABILITY CLAIMS INCURRED OR SUFFERED BY THE
ALNYLAM INDEMNITEES, OR ANY OF THEM, DIRECTLY OR INDIRECTLY RELATING TO LICENSED
PRODUCT USED OR SOLD IN THE TERRITORY UNDER THIS AGREEMENT AND RESULTING FROM OR
ARISING OUT OF THE NEGLIGENCE, WILLFUL MISCONDUCT, OR BREACH OF THIS AGREEMENT
OF OR BY CUBIST OR ANY OF THE OTHER CUBIST INDEMNITEES, EXCEPT TO THE EXTENT
CAUSED BY THE NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF THIS AGREEMENT OF OR
BY ALNYLAM OR ANY OF THE OTHER ALNYLAM INDEMNITEES.

 

(II)                                  ALNYLAM SHALL INDEMNIFY AND HOLD HARMLESS
THE CUBIST INDEMNITEES FROM, AGAINST AND IN RESPECT OF ANY AND ALL LOSSES
ARISING OUT OF THIRD PARTY PRODUCT LIABILITY CLAIMS INCURRED OR SUFFERED BY THE
CUBIST INDEMNITEES, OR ANY OF THEM, DIRECTLY OR INDIRECTLY RELATING TO LICENSED
PRODUCT AND RESULTING FROM OR ARISING OUT OF THE NEGLIGENCE, WILLFUL MISCONDUCT,
BREACH OF THIS AGREEMENT OF OR BY ALNYLAM OR ANY OF THE OTHER ALNYLAM
INDEMNITEES, OR THE DEVELOPMENT, MANUFACTURE, COMMERCIALIZATION, OR USE OF
LICENSED PRODUCTS

 

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OUTSIDE THE FIELD OR FOR ASIA BY ALNYLAM OR ANY OF ITS RELATED PARTIES, EXCEPT
TO THE EXTENT CAUSED BY THE NEGLIGENCE, WILLFUL MISCONDUCT OR BREACH OF THIS
AGREEMENT OF OR BY CUBIST OR ANY OF THE OTHER CUBIST INDEMNITEES AND RELATED TO
THE TERRITORY.

 

(III)                               ANY LOSSES ARISING OUT OF THIRD PARTY
PRODUCT LIABILITY CLAIMS (OTHER THAN SUCH CLAIMS ENTITLED TO INDEMNIFICATION
UNDER SECTION 10.10(C)(I) OR 10.10(C)(II)) SHALL BE (A) []*.

 

(D)                                 INDEMNIFICATION PROCEDURE.  IN THE EVENT OF
ANY SUCH CLAIM AGAINST ANY CUBIST INDEMNITEE OR ALNYLAM INDEMNITEE
(INDIVIDUALLY, AN “INDEMNITEE”), THE INDEMNIFIED PARTY SHALL PROMPTLY NOTIFY THE
OTHER PARTY IN WRITING OF THE CLAIM AND THE INDEMNIFYING PARTY SHALL MANAGE AND
CONTROL, AT ITS SOLE EXPENSE, THE DEFENSE OF THE CLAIM AND ITS SETTLEMENT.  THE
INDEMNITEE SHALL COOPERATE WITH THE INDEMNIFYING PARTY AND MAY, AT ITS OPTION
AND EXPENSE, BE REPRESENTED IN ANY SUCH ACTION OR PROCEEDING.  THE INDEMNIFYING
PARTY SHALL NOT BE LIABLE FOR ANY SETTLEMENTS, LITIGATION COSTS OR EXPENSES
INCURRED BY ANY INDEMNITEE WITHOUT THE INDEMNIFYING PARTY’S WRITTEN
AUTHORIZATION.  NOTWITHSTANDING THE FOREGOING, IF THE INDEMNIFYING PARTY
BELIEVES THAT ANY OF THE EXCEPTIONS TO ITS OBLIGATION OF INDEMNIFICATION OF THE
INDEMNITEES SET FORTH IN SECTION 10.11(A), 10.11(B) OR 10.11(C) MAY APPLY, THE
INDEMNIFYING PARTY SHALL PROMPTLY NOTIFY THE INDEMNITEES, WHICH SHALL THEN HAVE
THE RIGHT TO BE REPRESENTED IN ANY SUCH ACTION OR PROCEEDING BY SEPARATE COUNSEL
AT THEIR EXPENSE; PROVIDED THAT THE INDEMNIFYING PARTY SHALL BE RESPONSIBLE FOR
PAYMENT OF SUCH EXPENSES IF THE INDEMNITEES ARE ULTIMATELY DETERMINED TO BE
ENTITLED TO INDEMNIFICATION FROM THE INDEMNIFYING PARTY.

 

SECTION 10.12  LIMITATION OF LIABILITY.  NEITHER PARTY HERETO WILL BE LIABLE FOR
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS
ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY
NOTICE OF SUCH DAMAGES, EXCEPT AS A RESULT OF A PARTY’S WILLFUL MISCONDUCT OR A
MATERIAL BREACH OF THE CONFIDENTIALITY AND NON-USE OBLIGATIONS IN ARTICLE IX. 
NOTHING IN THIS SECTION 10.12 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.

 

SECTION 10.13  INSURANCE.  EACH PARTY SHALL MAINTAIN INSURANCE DURING THE TERM
AND FOR A PERIOD OF AT LEAST []* YEARS AFTER THE LAST COMMERCIAL SALE OF A
LICENSED PRODUCT IN THE FIELD IN THE TERRITORY UNDER THIS AGREEMENT, WITH A
REPUTABLE, SOLVENT INSURER IN AN AMOUNT APPROPRIATE FOR ITS BUSINESS AND
PRODUCTS OF THE TYPE THAT ARE THE SUBJECT OF THIS AGREEMENT, AND FOR ITS
OBLIGATIONS UNDER THIS AGREEMENT.  SPECIFICALLY, EACH PARTY SHALL MAINTAIN
PRODUCT AND CLINICAL TRIAL LIABILITY INSURANCE OF AT LEAST $[]* PER OCCURRENCE
ON A WORLDWIDE BASIS.  EACH PARTY WILL FURTHER ENSURE COMPLIANCE WITH ALL
FOREIGN LOCAL CLINICAL TRIAL LIABILITY INSURANCE REQUIREMENTS THAT MAY APPLY
WITH RESPECT TO LICENSED PRODUCT.  UPON REQUEST, EACH PARTY SHALL PROVIDE THE
OTHER PARTY WITH EVIDENCE OF THE EXISTENCE AND MAINTENANCE OF SUCH INSURANCE
COVERAGE.

 

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ARTICLE XI

 

TERM AND TERMINATION

 

SECTION 11.1  TERM.  UNLESS TERMINATED EARLIER IN ACCORDANCE WITH THIS
ARTICLE XI, THIS AGREEMENT SHALL REMAIN IN FORCE FOR THE PERIOD COMMENCING ON
THE EFFECTIVE DATE AND EXPIRING, ON A LICENSED PRODUCT-BY-LICENSED PRODUCT AND
COUNTRY-BY-COUNTRY BASIS EITHER (A) WITH RESPECT TO ANY COUNTRY IN THE ROYALTY
TERRITORY, UPON EXPIRATION OF THE APPLICABLE ROYALTY TERM, OR (B) WITH RESPECT
TO THE PROFIT-SHARE TERRITORY UNTIL THIS AGREEMENT IS TERMINATED IN ACCORDANCE
WITH  SECTION 11.2(A), (THE “TERM”).  UPON EXPIRATION OF THE TERM, THE LICENSES
GRANTED TO CUBIST UNDER ARTICLE III IN THE ROYALTY TERRITORY SHALL CONVERT TO
PERPETUAL, EXCLUSIVE FULLY PAID-UP, NON-ROYALTY-BEARING LICENSES.

 

SECTION 11.2  TERMINATION RIGHTS.

 

(A)                                  TERMINATION FOR CONVENIENCE.  CUBIST SHALL
HAVE THE RIGHT TO TERMINATE THIS AGREEMENT AT ANY TIME AFTER THE EFFECTIVE DATE
(I) ON THREE (3) MONTHS PRIOR WRITTEN NOTICE TO ALNYLAM IF SUCH NOTICE IS GIVEN
PRIOR TO THE ACCEPTANCE FOR FILING OF THE FIRST APPLICATION FOR REGULATORY
APPROVAL OF A LICENSED PRODUCT IN A COUNTRY OR REGULATORY JURISDICTION IN THE
TERRITORY, OR (II) ON NINE (9) MONTHS PRIOR WRITTEN NOTICE IF SUCH NOTICE IS
GIVEN AFTER THE ACCEPTANCE FOR FILING OF THE FIRST APPLICATION FOR REGULATORY
APPROVAL OF A LICENSED PRODUCT IN A COUNTRY OR REGULATORY JURISDICTION IN THE
TERRITORY.

 

(B)                                 TERMINATION FOR CAUSE.  THIS AGREEMENT MAY
BE TERMINATED AT ANY TIME DURING THE TERM UPON WRITTEN NOTICE BY EITHER PARTY IF
THE OTHER PARTY IS IN MATERIAL BREACH OF A MATERIAL OBLIGATION HEREUNDER AND HAS
NOT CURED SUCH BREACH WITHIN []* IN THE CASE OF A PAYMENT BREACH OR []* IN THE
CASE OF ALL OTHER MATERIAL BREACHES OF MATERIAL OBLIGATIONS, AFTER WRITTEN
NOTICE OF THE BREACH.

 

(C)                                  CHALLENGES OF PATENT RIGHTS.  IF A PARTY OR
ANY OF ITS RELATED PARTIES (THE “CHALLENGING PARTY”) (I) COMMENCES OR
PARTICIPATES IN ANY ACTION OR PROCEEDING (INCLUDING ANY PATENT OPPOSITION OR
RE-EXAMINATION PROCEEDING), OR OTHERWISE ASSERTS ANY CLAIM, CHALLENGING OR
DENYING THE VALIDITY OR ENFORCEABILITY OF ANY OF THE PATENT RIGHTS OF THE OTHER
PARTY (I.E.,  THE PATENT RIGHTS INCLUDED IN THE ALNYLAM TECHNOLOGY OR THE PATENT
RIGHTS INCLUDED IN THE CUBIST TECHNOLOGY, AS THE CASE MAY BE), OR ANY CLAIM
THEREOF, OR (II) ACTIVELY ASSISTS ANY OTHER PERSON BRINGING OR PROSECUTING ANY
ACTION OR PROCEEDING (INCLUDING ANY PATENT OPPOSITION OR RE-EXAMINATION
PROCEEDING) CHALLENGING OR DENYING THE VALIDITY OR ENFORCEABILITY OF ANY OF SUCH
OTHER PARTY’S PATENT RIGHTS OR ANY CLAIM THEREOF, THEN THE OTHER PARTY (THE
“NON-CHALLENGING PARTY”) WILL HAVE THE RIGHT, IN ITS SOLE DISCRETION, TO GIVE
NOTICE TO THE CHALLENGING PARTY THAT THE LICENSES GRANTED TO THE CHALLENGING
PARTY WITH RESPECT TO ALL OR ANY PORTION OF THE NON-CHALLENGING PARTY’S PATENT
RIGHTS INCLUDED IN THE ALNYLAM TECHNOLOGY OR THE CUBIST TECHNOLOGY (AS THE CASE
MAY BE) WILL TERMINATE []* AFTER SUCH NOTICE (OR SUCH LONGER PERIOD AS THE
NON-CHALLENGING PARTY MAY DESIGNATE IN SUCH NOTICE), AND, UNLESS THE CHALLENGING
PARTY WITHDRAWS OR CAUSES TO BE WITHDRAWN ALL SUCH CHALLENGE(S) WITHIN SUCH []*
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DESIGNATED BY THE NON-CHALLENGING PARTY), SUCH LICENSE RIGHTS WILL SO
TERMINATE.  THE FOREGOING PROVISIONS OF THIS SECTION 11.2(C) NOTWITHSTANDING, IF
(X) ALNYLAM IS THE NON-CHALLENGING PARTY, (Y) ALNYLAM DOES NOT ELECT TO
TERMINATE THIS AGREEMENT PURSUANT TO THIS SECTION 11.2(C), AND (Z) THE PATENT
CHALLENGE IS UNSUCCESSFUL, THEN (1) []*.  NOTWITHSTANDING ANYTHING IN THIS
SECTION 11.2(C) TO THE CONTRARY, A CHALLENGE BY CUBIST AS TO WHETHER A PATENT
APPLICATION WAS FILED BY ALNYLAM IN GOOD FAITH FOR PURPOSES OF THE DEFINITION OF
VALID CLAIM SHALL NOT BE CONSIDERED A CHALLENGE FOR WHICH ALNYLAM CAN EXERCISE
ITS RIGHTS UNDER THIS SECTION 11.2(C).

 

SECTION 11.3  EFFECT OF TERMINATION.

 

(A)                                  TERMINATION BY ALNYLAM.  WITHOUT LIMITING
ANY OTHER LEGAL OR EQUITABLE REMEDIES THAT ALNYLAM MAY HAVE, IF ALNYLAM
TERMINATES THIS AGREEMENT IN ACCORDANCE WITH SECTION 11.2(B) OR 11.2(C), THEN
(I) CUBIST’S OBLIGATIONS UNDER SECTION []* SHALL SURVIVE FOR A PERIOD OF []*
AFTER THE EFFECTIVE DATE OF TERMINATION, (II) CUBIST SHALL, FOR A PERIOD OF []*
FOLLOWING THE DATE OF NOTICE OF TERMINATION, CONTINUE TO PAY []* PERCENT ([]*%)
OF []* AND PROVIDED THAT THE []* BY CUBIST UNDER THIS CLAUSE SHALL NOT EXCEED
(A) []* DOLLARS ($[]*) IF ALNYLAM TERMINATED THIS AGREEMENT AFTER THE FIRST
OPT-OUT MILESTONE AND PRIOR TO THE SECOND OPT-OUT MILESTONE AND (B) []* DOLLARS
($[]*) IF ALNYLAM TERMINATED THIS AGREEMENT AFTER THE SECOND OPT-OUT MILESTONE;
(III) THE LICENSES GRANTED TO ALNYLAM IN SECTION 3.2 SHALL SURVIVE AND ANY
RESTRICTIONS ON SUBLICENSING SHALL NO LONGER APPLY, (IV) CUBIST SHALL AS
PROMPTLY AS PRACTICABLE TRANSFER TO ALNYLAM OR ALNYLAM’S DESIGNEE (A) POSSESSION
AND OWNERSHIP OF ALL GOVERNMENTAL OR REGULATORY CORRESPONDENCE, CONVERSATION
LOGS, FILINGS AND APPROVALS (INCLUDING ALL REGULATORY APPROVALS AND PRICING AND
REIMBURSEMENT APPROVALS) RELATING TO THE DEVELOPMENT, MANUFACTURE OR
COMMERCIALIZATION OF LICENSED PRODUCT AND ALL CUBIST TRADEMARKS THEN BEING USED
IN CONNECTION WITH LICENSED PRODUCT, OTHER THAN CUBIST’S CORPORATE TRADEMARKS
(B) COPIES OF ALL DATA, REPORTS, RECORDS AND MATERIALS, COMMERCIALIZATION PLANS,
MARKETING PLANS, PROMOTIONAL MATERIALS, AND OTHER SALES AND MARKETING RELATED
INFORMATION IN CUBIST’S POSSESSION OR CONTROL TO THE EXTENT THAT SUCH DATA,
REPORTS, RECORDS, MATERIALS OR OTHER INFORMATION RELATE TO THE DEVELOPMENT,
MANUFACTURE OR COMMERCIALIZATION OF LICENSED PRODUCT, INCLUDING ALL NON-CLINICAL
AND CLINICAL DATA RELATING TO LICENSED PRODUCT, AND CUSTOMER LISTS AND CUSTOMER
CONTACT INFORMATION AND ALL SAFETY DATA AND OTHER ADVERSE EVENT DATA IN CUBIST’S
POSSESSION OR CONTROL; PROVIDED THAT (I) CUBIST SHALL NOT BE REQUIRED BY THIS
PROVISION TO PROVIDE ANY CONFIDENTIAL INFORMATION TO ALNYLAM AND (II) CUBIST
SHALL USE DILIGENT EFFORTS TO OBTAIN FOR ALNYLAM THE RIGHT TO ACCESS ALL SUCH
DATA, REPORTS, RECORDS, MATERIALS, AND OTHER SALES AND MARKETING RELATED
INFORMATION, AND (C) ALL RECORDS AND MATERIALS IN CUBIST’S POSSESSION OR CONTROL
CONTAINING CONFIDENTIAL INFORMATION OF ALNYLAM, (V) IF REQUESTED BY ALNYLAM,
APPOINT ALNYLAM AS CUBIST’S OR CUBIST’S RELATED PARTIES’ AGENT FOR ALL LICENSED
PRODUCT-RELATED MATTERS INVOLVING REGULATORY AUTHORITIES IN THE TERRITORY UNTIL
ALL REGULATORY APPROVALS AND OTHER REGULATORY FILINGS HAVE BEEN TRANSFERRED TO
ALNYLAM OR ITS DESIGNEE, (VI) IF THE EFFECTIVE DATE OF TERMINATION IS AFTER
FIRST COMMERCIAL SALE IN ANY COUNTRY IN THE TERRITORY, THEN, IF REQUESTED BY
ALNYLAM, CUBIST SHALL APPOINT ALNYLAM AS ITS EXCLUSIVE DISTRIBUTOR OF LICENSED
PRODUCT IN THE TERRITORY AND GRANT ALNYLAM THE RIGHT TO APPOINT
SUB-DISTRIBUTORS, UNTIL SUCH TIME AS ALL REGULATORY APPROVALS IN THE TERRITORY
HAVE BEEN TRANSFERRED TO ALNYLAM OR ITS DESIGNEE, (VII) IF CUBIST OR ITS RELATED
PARTIES ARE MANUFACTURING FINISHED PRODUCT, []*, PROVIDED SUCH PERIOD OF TIME
SHALL NOT EXCEED []*, UNLESS OTHERWISE AGREED BY CUBIST, (VIII) IF

 

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ALNYLAM SO REQUESTS, CUBIST SHALL TRANSFER TO ALNYLAM ANY THIRD PARTY AGREEMENTS
RELATING TO THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF LICENSED
PRODUCT TO WHICH CUBIST IS A PARTY, SUBJECT TO ANY REQUIRED CONSENTS OF SUCH
THIRD PARTY, WHICH CUBIST SHALL USE DILIGENT EFFORTS TO OBTAIN PROMPTLY, AND
(IX) []*.  CUBIST SHALL EXECUTE ALL DOCUMENTS AND TAKE ALL SUCH FURTHER ACTIONS,
INCLUDING, WHERE APPLICABLE, THE PROMPT ASSIGNMENT OF REGULATORY APPROVALS AND
THIRD PARTY AGREEMENTS, AS MAY BE REASONABLY REQUESTED BY ALNYLAM IN ORDER TO
GIVE EFFECT TO THE FOREGOING CLAUSES (I) THROUGH (IX) AS SOON AS PRACTICABLE AND
IN ORDER TO ENABLE ALNYLAM TO CONTINUE TO DEVELOP, MANUFACTURE AND COMMERCIALIZE
LICENSED PRODUCTS IN THE FIELD IN THE TERRITORY IN THE SAME MANNER AS WAS BEING
CONDUCTED BY CUBIST PRIOR TO ANY SUCH TERMINATION.

 

(B)                                 TERMINATION BY CUBIST FOR CONVENIENCE.  IF
CUBIST TERMINATES THIS AGREEMENT IN ACCORDANCE WITH SECTION 11.2(A), THEN THE
PROVISIONS OF SECTION 11.3(A)(I)-(IX) SHALL APPLY, EXCEPT THAT THE PERIOD DURING
WHICH CUBIST SHALL BE REQUIRED TO CONTINUE TO PAY []* UNDER
SECTION 11.3(A)(II) SHALL BE []* (FOLLOWING THE THREE MONTH NOTICE PERIOD)
RATHER THAN THE []* SPECIFIED IN SECTION 11.3(A)(II).  IN ADDITION, DURING THE
APPLICABLE TERMINATION NOTICE PERIOD PURSUANT TO SECTION 11.2(A), CUBIST SHALL
CONTINUE TO PERFORM []* ALL DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION
ACTIVITIES WITH RESPECT TO LICENSED PRODUCTS IN ACCORDANCE WITH THE PLANS FOR
SUCH ACTIVITIES REVIEWED AND APPROVED BY THE JSC AND JCT PRIOR TO CUBIST’S
DETERMINATION TO TERMINATE; PROVIDED THAT ALNYLAM MAY, IN ITS DISCRETION, ELECT
TO SHORTEN SUCH TERMINATION NOTICE PERIOD IN ORDER TO FACILITATE A MORE RAPID
REVERSION OF ALL LICENSED PRODUCT RIGHTS BACK TO ALNYLAM BY PROVIDING CUBIST
REASONABLE WRITTEN NOTICE OF SUCH ELECTION, IN WHICH CASE CUBIST SHALL USE
DILIGENT EFFORTS TO FACILITATE SUCH MORE RAPID REVERSION.  CUBIST SHALL EXECUTE
ALL DOCUMENTS AND TAKE ALL SUCH FURTHER ACTIONS AS MAY BE REASONABLY REQUESTED
BY ALNYLAM IN ORDER TO GIVE EFFECT TO THE FOREGOING PROVISIONS OF THIS
SECTION 11.3(B).

 

(C)                                  TERMINATION BY CUBIST FOR CAUSE OR FOR
PATENT CHALLENGE BY ALNYLAM.  WITHOUT LIMITING ANY OTHER LEGAL OR EQUITABLE
REMEDIES THAT CUBIST MAY HAVE, IF CUBIST TERMINATES THIS AGREEMENT IN ACCORDANCE
WITH SECTION 11.2(B) OR 11.2(C), THEN THE PROVISIONS OF
SECTION 11.3(A)(III)-(VIII) SHALL APPLY; PROVIDED THAT IF CUBIST HAS THE RIGHT
TO TERMINATE THIS AGREEMENT IN ACCORDANCE WITH SECTION 11.2(B) OR 11.2(C), THEN
IN LIEU OF EXERCISING SUCH TERMINATION RIGHT, CUBIST MAY ELECT NOT TO TERMINATE
THIS AGREEMENT AND TO CONVERT THE PARTIES’ PROFIT-SHARING ARRANGEMENT WITH
RESPECT TO LICENSED PRODUCT IN THE PROFIT-SHARE TERRITORY TO A ROYALTY
ARRANGEMENT, IN WHICH CASE THE CONSEQUENCES OF SUCH CONVERSION SHALL BE THE SAME
AS THOSE SET FORTH IN SECTION 4.7 (I.E., AS IF ALNYLAM HAD OPTED OUT OF THE
PROFIT-SHARING ARRANGEMENT) AS OF THE TIME OF SUCH CONVERSION, EXCEPT THAT, IF
SUCH TERMINATION OCCURS BEFORE THE FIRST OPT-OUT MILESTONE, IN LIEU OF ANY AND
ALL OF THE PAYMENTS OTHERWISE DUE TO ALNYLAM UNDER SUCH SECTION AND UNDER
ARTICLE VII OF THIS AGREEMENT, CUBIST SHALL PAY TO ALNYLAM (I) ROYALTIES ON NET
SALES OF LICENSED PRODUCT BY CUBIST AND ITS RELATED PARTIES EQUAL TO (A) IN
NORTH AMERICA,  []* PERCENT ([]*%) OF THE ROYALTY AMOUNTS PAYABLE UNDER
SECTION 4.7(A)(VIII) APPLICABLE AFTER AN EXERCISE BY ALNYLAM OF THE OPT-OUT
OPTION AFTER THE FIRST OPT-OUT MILESTONE BUT PRIOR TO THE SECOND OPT-OUT
MILESTONE, SUBJECT TO THE ADJUSTMENT PROVISIONS SET FORTH IN SUCH SECTION AND
SUBJECT TO SECTION 4.7(A)(IX), AND (B) IN THE TERRITORY OUTSIDE OF NORTH
AMERICA, []* PERCENT ([]*%) OF THE ROYALTY AMOUNTS PAYABLE UNDER SECTION 7.5(A),
SUBJECT TO THE ADJUSTMENT PROVISIONS SET FORTH IN SECTIONS 7.5(D), 7.6, 7.8,
7.9(B) (WITH RESPECT TO SECTION 7.9(B), AS IF THE REDUCTIONS IN SECTION 

 

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7.8(B) APPLY, WHETHER OR NOT THE CONDITIONS SET FORTH IN SECTION 7.8(B) FOR SUCH
REDUCTIONS HAVE BEEN SATISFIED) AND 7.10 THROUGH 7.20 (INCLUSIVE) (WHICH, FOR
SUCH PURPOSE, SHALL BE MODIFIED AS NECESSARY TO APPLY TO THE ROYALTY OBLIGATIONS
DESCRIBED IN THIS SECTION 11.3(C)(I)(B) AND (II) MILESTONE PAYMENTS ON
MILESTONES ACHIEVED BY CUBIST AND ITS RELATED PARTIES WITH RESPECT TO LICENSED
PRODUCT EQUAL TO (A) IN NORTH AMERICA, []* PERCENT ([]*%) OF THE MILESTONE
PAYMENT AMOUNTS PAYABLE UNDER SECTIONS 4.7(A)(VI) AND 4.7(A)(VII) APPLICABLE
AFTER AN EXERCISE BY ALNYLAM OF THE OPT-OUT OPTION AFTER THE FIRST OPT-OUT
MILESTONE BUT PRIOR TO THE SECOND OPT-OUT MILESTONE, SUBJECT TO
SECTION 4.7(A)(IX), AND (B) IN THE TERRITORY OUTSIDE OF NORTH AMERICA, []*
PERCENT ([]*%) OF THE MILESTONE PAYMENT AMOUNTS PAYABLE UNDER SECTIONS 7.2 AND
7.3.  IF CUBIST TERMINATES THIS AGREEMENT PURSUANT TO SECTION 11.2(A) OR 
11.2(B), CUBIST MAY OFFSET ANY UNPAID AMOUNTS OWED TO ALNYLAM PURSUANT TO
SECTION 4.7 OR ARTICLE VII BY THE AMOUNT OF CUBIST’S DAMAGES DETERMINED BY ANY
COURT HAVING JURISDICTION OVER SUCH MATTER TO HAVE RESULTED FROM ALNYLAM’S
BREACH OF THIS AGREEMENT.

 

SECTION 11.4  PAYMENTS TO CUBIST.  IN THE EVENT CUBIST TERMINATES THIS AGREEMENT
UNDER SECTION 11.2, AND SUCH TERMINATION OCCURS AFTER THE FIRST OPT-OUT
MILESTONE, ALNYLAM SHALL THEREAFTER MAKE THE FOLLOWING PAYMENTS TO CUBIST:

 

(A)                                  SUBJECT TO SECTIONS 11.4(F) AND 11.4(G),
ALNYLAM SHALL MAKE THE NON-REFUNDABLE, NON-CREDITABLE MILESTONE PAYMENTS SET
FORTH BELOW TO CUBIST NOT LATER THAN []* AFTER THE EARLIEST DATE ON WHICH THE
CORRESPONDING MILESTONE EVENT SET FORTH BELOW HAS BEEN ACHIEVED:

 

Milestone Event

 

Payment if Cubist’s
Termination Takes
Effect After the
First Opt-Out
Milestone but Prior
to the Second Opt-
Out Milestone

 

Payment if Cubist’s
Termination Takes
Effect After the
Second Opt-Out
Milestone

 

Section
11.4(g)
Option I

 

 

 

 

 

 

 

 

 

(A)Acceptance for filing of an application for Regulatory Approval for a
Licensed Product for any indication in the United States

 

$[]*

 

$[]*

 

$[]*

 

 

 

 

 

 

 

 

 

(B) First Commercial Sale of a Licensed Product in any indication in the United
States

 

$[]*

 

$[]*

 

$[]*

 

 

 

 

 

 

 

 

 

(C) Acceptance for filing of an application for Regulatory Approval for a
Licensed Product for any indication other than the indication with respect to
which the milestone event described in paragraph (A) above was achieved in the
United States

 

$[]*

 

$[]*

 

$[]*

 

 

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Milestone Event

 

Payment if Cubist’s
Termination Takes
Effect After the
First Opt-Out
Milestone but Prior
to the Second Opt-
Out Milestone

 

Payment if Cubist’s
Termination Takes
Effect After the
Second Opt-Out
Milestone

 

Section
11.4(g)
Option I

 

 

 

 

 

 

 

 

 

(D) Regulatory Approval of a Licensed Product for any indication other than the
indication with respect to which the milestone event described in paragraph
(A) above was achieved in the United States

 

$[]*

 

$[]*

 

$[]*

 

 

The milestone payments set forth in this Section 11.4(a) shall be paid only
once, upon the first achievement of the applicable milestone event by the first
Licensed Product to achieve such milestone event.

 

(B)                                 SUBJECT TO SECTIONS 11.4(F) AND 11.4(G),
ALNYLAM SHALL MAKE THE NON-REFUNDABLE, NON-CREDITABLE MILESTONE PAYMENTS SET
FORTH BELOW TO CUBIST UPON THE ACHIEVEMENT OF THE MILESTONE EVENTS SET FORTH
BELOW, SUCH PAYMENT TO BE MADE AS SET FORTH BELOW:

 

Milestone Event

 

Payment if Cubist’s
Termination Takes
Effect After the
First Opt-Out
Milestone but Prior
to the Second Opt-
Out Milestone

 

Payment if Cubist’s
Termination Takes
Effect After the
Second Opt-Out
Milestone

 

Section 11.4(g)
Option I

 

 

 

 

 

 

 

 

 

Aggregate Calendar Year Net Sales of Licensed Products in North America greater
than $[]*

 

$[]*

 

$[]*

 

$[]*

 

 

 

 

 

 

 

 

 

Aggregate Calendar Year Net Sales of Licensed Products in North America greater
than $[]*

 

$[]*

 

$[]*

 

$[]*

 

 

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Milestone Event

 

Payment if Cubist’s
Termination Takes
Effect After the
First Opt-Out
Milestone but Prior
to the Second Opt-
Out Milestone

 

Payment if Cubist’s
Termination Takes
Effect After the
Second Opt-Out
Milestone

 

Section 11.4(g)
Option I

 

 

 

 

 

 

 

 

 

Aggregate Calendar Year Net Sales of Licensed Products in North America greater
than $[]*

 

$[]*

 

$[]*

 

$[]*

 

 

Subject to Section 11.4(c), the milestone payments set forth in this
Section 11.4(b) shall be paid only once, upon the first achievement of the
applicable milestone event.  For purposes of determining whether a milestone
event set forth in this Section 11.4(b) has occurred (and without creating an
obligation to pay the milestone more than once as set forth in the preceding
sentence), Calendar Year Net Sales shall be aggregated for all Licensed Products
sold in North America during the relevant Calendar Year.

 

If more than one of the milestone events set forth in this Section 11.4(b) first
occurs based on sales of Licensed Product in North America in the same Calendar
Year, all of such milestone payments shall be paid for such Calendar Year.  If a
milestone payment set forth above is earned based on Net Sales over a period
that is shorter in duration than a full Calendar Year, such payment shall become
due and payable []* after the Calendar Quarter in which the milestone event is
achieved.

 

(C)                                  ALNYLAM SHALL PAY ADDITIONAL MILESTONES
UPON EACH OF THE EVENTS LISTED IN PARAGRAPHS (A) AND (B) HAVING BEEN MET IN THE
TERRITORY OUTSIDE NORTH AMERICA; PROVIDED THAT THE PAYMENT AMOUNTS SET FORTH
ABOVE SHALL BE REDUCED TO []* PERCENT ([]*%) OF THE AMOUNTS SPECIFIED ABOVE.

 

(D)                                 ALNYLAM SHALL, SUBJECT TO SECTIONS 7.5(D),
7.6(B), 7.8, SECTIONS 7.10 THROUGH 7.20 (INCLUSIVE) (WHICH FOR SUCH PURPOSE,
SHALL BE MODIFIED AS NECESSARY TO APPLY TO THE ROYALTY OBLIGATIONS DESCRIBED IN
THIS SECTION 11.4 AND TO REFLECT THE FACT THAT ALNYLAM IS THE ROYALTY-PAYING
PARTY AND CUBIST IS THE ROYALTY-RECEIVING PARTY), SECTION 11.4(F) AND
SECTION 11.4(G), PAY TO CUBIST ROYALTIES ON THE AGGREGATE NET SALES (WITH SUCH
DEFINITION MODIFIED ACCORDINGLY FOR THIS PURPOSE) OF LICENSED PRODUCTS IN THE
TERRITORY BY ALNYLAM AND ITS SUBLICENSEES, AS FOLLOWS:

 

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Aggregate Calendar Year Net
Sales 
of Licensed Products

 

Royalty Rate (as
a Percentage of
Such Aggregate
Net Sales) if
Cubist’s
Termination
Takes Effect
After the First
Opt-Out
Milestone But
Prior to the
Second Opt-Out
Milestone

 

Royalty Rate (as
a Percentage of
Such Aggregate
Net Sales) if
Cubist’s
Termination
Takes Effect
After the Second
Opt-Out
Milestone

 

Section 11.4(g)
Option I

 

$[]* - $[]*

 

[]%*

 

[]%*

 

[]%*

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

[]%*

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

[]%*

 

Greater than $[]* and less than or equal to $[]*

 

[]%*

 

[]%*

 

[]%*

 

Greater than $[]*

 

[]%*

 

[]%*

 

[]%*

 

 

(E)                                  IN ADDITION TO THE REDUCTIONS AND OFFSETS
OTHERWISE PROVIDED FOR UNDER THIS SECTION 11.4, (I) []* PERCENT ([]*%) OF THE
ALLOCATED MILESTONE AMOUNTS UNDER THE EXISTING ALNYLAM IN-LICENSES THAT ARE
IDENTIFIED ON EXHIBIT H, AND (II) []* PERCENT ([]*%) OF ALL ROYALTIES ON THE NET
SALES IN NORTH AMERICA OF LICENSED PRODUCTS PAID BY ALNYLAM UNDER THE EXISTING
ALNYLAM IN-LICENSES UP TO A MAXIMUM OF []* PERCENT ([]*%) OF SUCH NET SALES
SHALL BE CREDITABLE BY ALNYLAM AGAINST ALL AMOUNTS PAYABLE BY ALNYLAM TO CUBIST
PURSUANT TO THIS SECTION 11.4 (I.E. ALNYLAM’S MAXIMUM []* PERCENT ([]*%)
CREDITABLE SHARE WOULD BE []* PERCENT ([]*%) OF SUCH NET SALES).

 

(F)                                    THE FOREGOING PROVISIONS OF THIS
SECTION 11.4 NOTWITHSTANDING, IF ALNYLAM GRANTED OR GRANTS A SUBLICENSE UNDER
THE CUBIST TECHNOLOGY OR A LICENSE UNDER THE ALNYLAM TECHNOLOGY TO DEVELOP OR
COMMERCIALIZE LICENSED PRODUCT IN THE FIELD IN A COUNTRY OR COUNTRIES IN NORTH
AMERICA, THEN ALNYLAM SHALL HAVE NO PAYMENT OBLIGATIONS UNDER SECTIONS 11.4(A),
(B), (C) OR (D) WITH RESPECT TO DEVELOPMENT OR SALES MILESTONES ACHIEVED, OR NET
SALES OF LICENSED PRODUCTS SOLD, BY SUCH ALNYLAM SUBLICENSEE OR LICENSEE IN SUCH
COUNTRY IN NORTH AMERICA, AND,

 

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in lieu of such payments, Alnylam shall instead pay Cubist a portion of
Sublicense Income received from such Third Party Sublicensee or licensee with
respect to such country(ies) in North America in accordance with the following;
provided that in no event shall the amount paid to Cubist be less than the
amounts owed by Cubist or any of its Affiliates under any Cubist In-License with
respect to such Licensed Product in such country(ies):

 

Effective Date of Cubist’s Termination

 

Percentage of Sublicense Income

 

 

 

 

 

After the First Opt-Out Milestone and prior to the Third Opt-Out Milestone

 

[]%*

 

 

 

 

 

After the Second Opt-Out Milestone

 

[]%*

 

 

FOR PURPOSES OF CLARITY, (A) IF THIS AGREEMENT IS TERMINATED BY CUBIST PURSUANT
TO SECTION 11.2 AND SUCH TERMINATION OCCURS PRIOR TO THE FIRST OPT-OUT
MILESTONE, ALNYLAM SHALL HAVE NO PAYMENT OBLIGATIONS TO CUBIST PURSUANT TO THIS
SECTION 11.4, AND (B) IF THIS AGREEMENT IS TERMINATED BY CUBIST PURSUANT TO
SECTION 11.2 AND SUCH TERMINATION OCCURS AFTER THE FIRST OPT-OUT MILESTONE,
ALNYLAM’S PAYMENT OBLIGATIONS UNDER SECTIONS 11.4(A), 11.4(B), 11.4(C) AND
11.4(D), IN EACH CASE SUBJECT TO SECTION 11.4(E), SHALL APPLY WITH RESPECT TO
DEVELOPMENT AND SALES MILESTONES ACHIEVED, AND THE NET SALES OF LICENSED
PRODUCTS SOLD, BY ALNYLAM AND ITS AFFILIATES IN SUCH COUNTRY(IES) IN NORTH
AMERICA.

 

(G)                               NOTWITHSTANDING THE FOREGOING PROVISIONS OF
THIS SECTION 11.4, IF CUBIST (I)  TERMINATES THIS AGREEMENT PURSUANT TO
SECTION 11.2 AFTER THE SECOND OPT-OUT MILESTONE AND (II) []*, THEN:

 

A.                                   ALNYLAM SHALL PROMPTLY PROVIDE CUBIST WITH
A COPY OF SUCH []* AND WITH A SUMMARY OF ALL RELEVANT INFORMATION RELATING TO
SUCH []* FOR SUCH LICENSED PRODUCT FOR A PEDIATRIC CLINICAL INDICATION;

 

B.                                     ADDITIONALLY, ALNYLAM SHALL PROVIDE
CUBIST WITH SUCH ADDITIONAL INFORMATION REGARDING SUCH []* AND PLANNED []* AS
ALNYLAM MAY REASONABLY REQUEST;

 

C.                                     WITHIN []* AFTER RECEIPT OF THE
INFORMATION AND DOCUMENTS PROVIDED BY ALNYLAM PURSUANT TO CLAUSE (A); PROVIDED
HOWEVER IN NO EVENT SHALL SUCH TIME PERIOD EXPIRE EARLIER THAN []* AFTER
DELIVERY OF ANY INFORMATION REQUESTED BY CUBIST PURSUANT TO CLAUSE (B), CUBIST
SHALL MAKE ONE OF THE FOLLOWING TWO ELECTIONS AND NOTIFY ALNYLAM OF SUCH
ELECTION:  (I) ELECT TO ACCEPT THE MILESTONES AND ROYALTIES SET FORTH IN THE
COLUMN ENTITLED “SECTION 11.4(G) OPTION I” IN SECTIONS 11.4(A), 11.4(B) AND
11.4(D), IN LIEU OF THE OTHERWISE APPLICABLE POST-TERMINATION ECONOMICS SET
FORTH ABOVE IN SECTIONS 11.4(A), 11.4(B) AND 11.4(D) OR (II) AGREE TO FUND []*
PERCENT ([]*%) OF THE

 

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[]* FOR SUCH SUBSEQUENT ADDITIONAL []*, IN WHICH CASE THERE SHALL BE NO
REDUCTION TO THE APPLICABLE POST-TERMINATION ECONOMICS SET FORTH ABOVE IN
SECTIONS 11.4(A), 11.4(B) AND 11.4(D);

 

D.                                    IF CUBIST MAKES THE ELECTION SET FORTH IN
CLAUSE (C)(I) ABOVE AND ALNYLAM SUBSEQUENTLY ACHIEVES A []* PROVIDED TO CUBIST
BY ALNYLAM PURSUANT TO CLAUSE (A) ABOVE, ALNYLAM SHALL NOTIFY CUBIST OF SUCH
OCCURRENCE PROMPTLY AFTER RECEIPT OF SUCH []* AND CUBIST SHALL THEREAFTER HAVE
AN OPTION, EXERCISABLE BY PROVIDING ALNYLAM WITH NOTICE OF SUCH EXERCISE WITHIN
[]* AFTER CUBIST’S RECEIPT OF ALNYLAM’S NOTIFICATION, TO PAY ALNYLAM []* PERCENT
([]*%) OF THE AMOUNT OF THE ADDITIONAL []* ACTUALLY INCURRED BY ALNYLAM IN []*
AND, IF CUBIST EXERCISES SUCH OPTION AND THEREAFTER MAKES SUCH PAYMENT WITHIN
[]* AFTER CUBIST’S RECEIPT OF ALNYLAM’S NOTIFICATION, THE REDUCTION TO CUBIST’S
POST-TERMINATION ECONOMICS SET FORTH IN CLAUSE (C)(I) ABOVE SHALL NOT APPLY; AND

 

E.                                      IF CUBIST MAKES THE ELECTION SET FORTH
IN CLAUSE (C)(II) ABOVE, THEN THE JSC SHALL BE RECONSTITUTED AND, []*, ALL
DEVELOPMENT AND MANUFACTURE FOR THE PURPOSES OF DEVELOPMENT OF LICENSED PRODUCT
FOR THE PROFIT-SHARE TERRITORY SHALL AGAIN BE SUBJECT TO THE PROVISIONS OF THIS
AGREEMENT AS IF CUBIST HAD NOT TERMINATED THE AGREEMENT PURSUANT TO
SECTION 11.2. FOR PURPOSES OF CLARITY, (I) []*, THE JSC WILL BE DISSOLVED AGAIN
AND CUBIST WILL, FROM THAT POINT FORWARD, RECEIVE MILESTONES AND ROYALTIES BASED
UPON THE TERMINATION OF THIS AGREEMENT PURSUANT TO SECTION 11.2 AFTER THE SECOND
OPT-OUT MILESTONE AND (II) AT NO TIME SHALL CUBIST RESUME SHARING IN N.A.
PRE-TAX PROFIT OR LOSS.

 

SECTION 11.5  EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL.  EXPIRATION OR
TERMINATION OF THIS AGREEMENT SHALL NOT RELIEVE THE PARTIES OF ANY OBLIGATION
ACCRUING PRIOR TO SUCH EXPIRATION OR TERMINATION.  ANY EXPIRATION OR TERMINATION
OF THIS AGREEMENT SHALL BE WITHOUT PREJUDICE TO THE RIGHTS OF EITHER PARTY
AGAINST THE OTHER ACCRUED OR ACCRUING UNDER THIS AGREEMENT PRIOR TO EXPIRATION
OR TERMINATION, INCLUDING PAYMENT OBLIGATIONS ARISING PRIOR TO SUCH EXPIRATION
OR TERMINATION.  THE PROVISIONS OF SECTIONS 3.2(A)(II), 3.2(B)(II), 3.2(C)(IV),
3.2(D), 3.3, 3.4, 3.5, 4.3(B), 4.3(C), 9.1, 9.2, 9.3, 10.11, 10.12, 10.13, 11.3
AND 11.4, THIS SECTION 11.5 AND ARTICLES XII AND XIII SHALL SURVIVE ANY
EXPIRATION OR TERMINATION OF THIS AGREEMENT AND ALL OTHER PROVISIONS CONTAINED
IN THIS AGREEMENT THAT BY THEIR EXPLICIT TERMS SURVIVE EXPIRATION OR TERMINATION
OF THIS AGREEMENT, SHALL SURVIVE.  EXCEPT AS SET FORTH IN THIS ARTICLE XI, UPON
TERMINATION OR EXPIRATION OF THIS AGREEMENT ALL OTHER RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT TERMINATE.

 

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ARTICLE XII

 

FINAL DECISION-MAKING; DISPUTE RESOLUTION

 

SECTION 12.1  DISPUTES.  EXCEPT AS OTHERWISE PROVIDED IN SECTION 2.5, THE
PARTIES SHALL NEGOTIATE IN GOOD FAITH AND USE REASONABLE EFFORTS TO SETTLE ANY
DISPUTE, CONTROVERSY OR CLAIM ARISING FROM, OR RELATED TO, THIS AGREEMENT OR TO
THE BREACH, TERMINATION OR VALIDITY HEREOF (COLLECTIVELY, “DISPUTE”).  IN
PARTICULAR, THE CHIEF EXECUTIVE OFFICER OF ALNYLAM AND THE EXECUTIVE OFFICER OF
CUBIST SHALL ATTEMPT TO RESOLVE ALL DISPUTES.  IF THE CHIEF EXECUTIVE OFFICERS
CANNOT REACH AN AGREEMENT REGARDING A DISPUTE, AND A PARTY WISHES TO PURSUE THE
MATTER, EACH SUCH DISPUTE THAT IS NOT AN EXCLUDED CLAIM SHALL BE FINALLY
RESOLVED BY BINDING ARBITRATION UNDER THE THEN-CURRENT COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION (“AAA”) BY ONE OR MORE ARBITRATORS
APPOINTED IN ACCORDANCE WITH SECTION 12.2, AND JUDGMENT ON THE ARBITRATION AWARD
MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF OR OF THE RELEVANT PARTY
OR ITS ASSETS.  AS USED IN THIS SECTION 12.1, THE TERM “EXCLUDED CLAIM” MEANS A
DISPUTE THAT CONCERNS (A) []*.

 

SECTION 12.2  ARBITRATION.

 

(A)           THE ARBITRATION PROVIDED FOR IN SECTION 12.1 SHALL BE CONDUCTED BY
A PANEL OF THREE (3) PERSONS EXPERIENCED IN THE PHARMACEUTICAL BUSINESS WHO ARE
INDEPENDENT OF BOTH PARTIES AND NEUTRAL WITH RESPECT TO THE DISPUTE PRESENTED
FOR ARBITRATION.  WITHIN THIRTY (30) DAYS AFTER INITIATION OF ARBITRATION, EACH
PARTY SHALL SELECT ONE PERSON TO ACT AS ARBITRATOR AND THE TWO PARTY-SELECTED
ARBITRATORS SHALL SELECT A THIRD ARBITRATOR WITHIN THIRTY (30) DAYS AFTER THEIR
APPOINTMENT.  IF THE ARBITRATORS SELECTED BY THE PARTIES ARE UNABLE OR FAIL TO
AGREE UPON THE THIRD ARBITRATOR, THE THIRD ARBITRATOR SHALL BE APPOINTED BY THE
AAA.  THE PLACE OF ARBITRATION SHALL BE BOSTON, MASSACHUSETTS, AND ALL
PROCEEDINGS AND COMMUNICATIONS SHALL BE IN ENGLISH.

 

(B)           EITHER PARTY MAY APPLY TO THE ARBITRATORS FOR INTERIM INJUNCTIVE
RELIEF UNTIL THE ARBITRATION AWARD IS RENDERED OR THE CONTROVERSY IS OTHERWISE
RESOLVED.  EITHER PARTY ALSO MAY, WITHOUT WAIVING ANY REMEDY UNDER THIS
AGREEMENT, SEEK FROM ANY COURT HAVING JURISDICTION ANY INJUNCTIVE OR PROVISIONAL
RELIEF NECESSARY TO PROTECT THE RIGHTS OR PROPERTY OF THAT PARTY PENDING THE
ARBITRATION AWARD.  THE ARBITRATORS SHALL HAVE NO AUTHORITY TO AWARD PUNITIVE OR
ANY OTHER TYPE OF DAMAGES NOT MEASURED BY A PARTY’S COMPENSATORY DAMAGES.  EACH
PARTY SHALL BEAR ITS OWN COSTS AND EXPENSES AND ATTORNEYS’ FEES, AND THE PARTY
THAT DOES NOT PREVAIL IN THE ARBITRATION PROCEEDING SHALL PAY THE ARBITRATORS’
AND ANY ADMINISTRATIVE FEES OF ARBITRATION. EXCEPT TO THE EXTENT NECESSARY TO
CONFIRM AN AWARD OR AS MAY BE REQUIRED BY LAW, NEITHER A PARTY NOR AN ARBITRATOR
MAY DISCLOSE THE EXISTENCE, CONTENT, OR RESULTS OF AN ARBITRATION WITHOUT THE
PRIOR WRITTEN CONSENT OF BOTH PARTIES.  IN NO EVENT SHALL AN ARBITRATION BE
INITIATED AFTER THE DATE ON WHICH  COMMENCEMENT OF A LEGAL OR EQUITABLE
PROCEEDING BASED ON THE DISPUTE, CONTROVERSY OR CLAIM WOULD BE BARRED BY THE
APPLICABLE MASSACHUSETTS STATUTE OF LIMITATIONS.  ANY DISPUTE CONCERNING THE
APPLICATION OF THE STATUTE OF LIMITATIONS SHALL BE RESOLVED BY THE ARBITRATORS.

 

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(C)           THE PARTIES AGREE THAT, IN THE EVENT OF A DISPUTE OVER THE NATURE
OR QUALITY OF PERFORMANCE UNDER THIS AGREEMENT, NEITHER PARTY MAY TERMINATE THIS
AGREEMENT UNTIL FINAL RESOLUTION OF THE DISPUTE THROUGH ARBITRATION OR OTHER
JUDICIAL DETERMINATION, AND THIS AGREEMENT SHALL BE TERMINATED ONLY IF
ARBITRATORS DETERMINE THAT THE TERMINATION OF THIS AGREEMENT IS AN APPROPRIATE
REMEDY.  THE PARTIES FURTHER AGREE THAT ANY PAYMENTS MADE PURSUANT TO THIS
AGREEMENT PENDING RESOLUTION OF THE DISPUTE SHALL BE REFUNDED PROMPTLY IF AN
ARBITRATOR OR COURT DETERMINES THAT SUCH PAYMENTS ARE NOT DUE.

 

(D)           THE PARTIES HEREBY AGREE THAT ANY DISPUTED PERFORMANCE OR
SUSPENDED PERFORMANCES PENDING THE RESOLUTION OF THE ARBITRATION THAT THE
ARBITRATORS DETERMINE TO BE REQUIRED TO BE PERFORMED BY A PARTY MUST BE
COMPLETED WITHIN A REASONABLE TIME PERIOD FOLLOWING THE FINAL DECISION OF THE
ARBITRATORS.

 

(E)           THE PARTIES HEREBY AGREE THAT ANY MONETARY PAYMENT TO BE MADE BY A
PARTY PURSUANT TO A DECISION OF THE ARBITRATORS SHALL BE MADE IN UNITED STATES
DOLLARS, FREE OF ANY TAX OR OTHER DEDUCTION. THE PARTIES FURTHER AGREE THAT THE
DECISION OF THE ARBITRATORS SHALL BE THE SOLE, EXCLUSIVE AND BINDING REMEDY
BETWEEN THEM REGARDING THE MATTERS PRESENTED TO THE ARBITRATORS.

 

ARTICLE XIII

 

MISCELLANEOUS

 

SECTION 13.1  CHOICE OF LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER, AND ANY COURT ACTION IN ACCORDANCE WITH SECTION 13.7 SHALL
APPLY, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS EXCLUDING:  (A) ITS
CONFLICTS OF LAWS PRINCIPLES; (B) THE UNITED NATIONS CONVENTIONS ON CONTRACTS
FOR THE INTERNATIONAL SALE OF GOODS; (C) THE 1974 CONVENTION ON THE LIMITATION
PERIOD IN THE INTERNATIONAL SALE OF GOODS (THE “1974 CONVENTION”); AND (D) THE
PROTOCOL AMENDING THE 1974 CONVENTION, DONE AT VIENNA APRIL 11, 1980.

 

SECTION 13.2  NOTICES.  ANY NOTICE OR REPORT REQUIRED OR PERMITTED TO BE GIVEN
OR MADE UNDER THIS AGREEMENT BY ONE OF THE PARTIES TO THE OTHER SHALL BE IN
WRITING AND SHALL BE DEEMED TO HAVE BEEN DELIVERED UPON PERSONAL DELIVERY OR
(A) IN THE CASE OF NOTICES PROVIDED BETWEEN PARTIES IN THE CONTINENTAL UNITED
STATES, FOUR DAYS AFTER DEPOSIT IN THE MAIL OR THE BUSINESS DAY NEXT FOLLOWING
DEPOSIT WITH A REPUTABLE OVERNIGHT COURIER AND (B) IN THE CASE OF NOTICES
PROVIDED BY TELECOPY (WHICH NOTICE SHALL BE FOLLOWED IMMEDIATELY BY AN
ADDITIONAL NOTICE PURSUANT TO CLAUSE (A) ABOVE IF THE NOTICE IS OF A DEFAULT
HEREUNDER), UPON COMPLETION OF TRANSMISSIONS TO THE ADDRESSEE’S TELECOPIER, AS
FOLLOWS (OR AT SUCH OTHER ADDRESSES OR FACSIMILE NUMBERS AS MAY HAVE BEEN
FURNISHED IN WRITING BY ONE OF THE PARTIES TO THE OTHER AS PROVIDED IN THIS
SECTION 13.2):

 

If to Alnylam:

 

Alnylam Pharmaceuticals, Inc.
300 Third Street
Cambridge, Massachusetts 02142
U.S.A.
Attention: Chief Executive Officer
Facsimile No.: (617) 551-8101

 

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With a copy to:

 

Alnylam Pharmaceuticals, Inc.
300 Third Street
Cambridge, Massachusetts 02142
U.S.A.
Attention: Vice President - Legal
Facsimile No.: (617) 575-7315

 

 

 

If to Cubist:

 

Cubist Pharmaceuticals, Inc.
65 Hayden Avenue
Lexington, Massachusetts 02421
U.S.A.
Attention: President, Chief Executive Officer
Facsimile No.: (781) 861-1412

 

 

 

With a copy to:

 

Cubist Pharmaceuticals, Inc.
65 Hayden Avenue
Lexington, Massachusetts 02421
U.S.A.
Attention: General Counsel
Facsimile No.: (781) 860-1407

 

SECTION 13.3  SEVERABILITY.  IF, UNDER APPLICABLE LAW, ANY PROVISION OF THIS
AGREEMENT IS INVALID OR UNENFORCEABLE, OR OTHERWISE DIRECTLY OR INDIRECTLY
AFFECTS THE VALIDITY OF ANY OTHER MATERIAL PROVISION(S) OF THIS AGREEMENT (SUCH
INVALID OR UNENFORCEABLE PROVISION, A “SEVERED CLAUSE”), THIS AGREEMENT SHALL
ENDURE EXCEPT FOR THE SEVERED CLAUSE.  THE PARTIES SHALL CONSULT ONE ANOTHER AND
USE REASONABLE EFFORTS TO AGREE UPON A VALID AND ENFORCEABLE PROVISION THAT IS A
REASONABLE SUBSTITUTE FOR THE SEVERED CLAUSE IN VIEW OF THE INTENT OF THIS
AGREEMENT.

 

SECTION 13.4  CAPTIONS.  ALL CAPTIONS HEREIN ARE FOR CONVENIENCE ONLY AND SHALL
NOT BE INTERPRETED AS HAVING ANY SUBSTANTIVE MEANING.

 

SECTION 13.5  INTEGRATION.  THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT
AND SUPERSEDES ALL PREVIOUS AGREEMENTS, WHETHER WRITTEN OR ORAL. 
NOTWITHSTANDING THE AUTHORITY GRANTED TO THE JSC UNDER THIS AGREEMENT, THIS
AGREEMENT MAY BE AMENDED ONLY IN WRITING SIGNED BY PROPERLY AUTHORIZED
REPRESENTATIVES OF EACH OF ALNYLAM AND CUBIST.  IF A CONFLICT ARISES BETWEEN THE
DEVELOPMENT PLAN, THE GLOBAL STRATEGIC COMMERCIALIZATION PLAN AND THE
COMMERCIALIZATION PLANS AND BUDGETS, ON THE ONE HAND, AND THIS AGREEMENT, ON THE
OTHER HAND, THE TERMS OF THIS AGREEMENT SHALL GOVERN.

 

SECTION 13.6  INDEPENDENT CONTRACTORS; NO AGENCY.  NEITHER PARTY SHALL HAVE ANY
RESPONSIBILITY FOR THE HIRING, FIRING OR COMPENSATION OF THE OTHER PARTY’S
EMPLOYEES OR FOR ANY EMPLOYEE BENEFITS.  NO EMPLOYEE OR REPRESENTATIVE OF A
PARTY SHALL HAVE ANY AUTHORITY TO BIND OR

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

86

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OBLIGATE THE OTHER PARTY TO THIS AGREEMENT FOR ANY SUM OR IN ANY MANNER
WHATSOEVER, OR TO CREATE OR IMPOSE ANY CONTRACTUAL OR OTHER LIABILITY ON THE
OTHER PARTY WITHOUT SAID PARTY’S WRITTEN APPROVAL.  FOR ALL PURPOSES, AND
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, CUBIST’S
LEGAL RELATIONSHIP UNDER THIS AGREEMENT TO ALNYLAM SHALL BE THAT OF INDEPENDENT
CONTRACTOR.

 

SECTION 13.7  SUBMISSION TO JURISDICTION.  EACH PARTY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN BOSTON, MASSACHUSETTS,
WITH RESPECT TO ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT IN WHICH A PARTY BRINGS AN ACTION IN AID OF ARBITRATION OR AN ACTION
ON A CLAIM THAT IS NOT SUBJECT TO ARBITRATION BY THE TERMS OF SECTION 12.1 OF
THIS AGREEMENT.  EACH PARTY FURTHER AGREES THAT THE JURISDICTION OF SUCH COURTS
SHALL BE EXCLUSIVE AND THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED ONLY IN SUCH COURTS, AND AGREES NOT TO BRING ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER
COURT, EXCEPT THAT AN ACTION OR PROCEEDING SEEKING INJUNCTIVE RELIEF OR BROUGHT
TO ENFORCE AN ARBITRATION DECISION ISSUED PURSUANT TO SECTION 12.2 MAY BE
BROUGHT IN ANY COURT OF COMPETENT JURISDICTION.  EACH PARTY WAIVES ANY DEFENSE
OF LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR INCONVENIENT FORUM TO THE
MAINTENANCE OF ANY ACTION OR PROCEEDING IN A STATE OR FEDERAL COURT SITTING IN
BOSTON, MASSACHUSETTS AND WAIVES ANY BOND, SURETY OR OTHER SECURITY THAT MIGHT
BE REQUIRED OF THE OTHER PARTY WITH RESPECT THERETO.  EACH PARTY MAY MAKE
SERVICE ON THE OTHER PARTY BY SENDING OR DELIVERING A COPY OF THE PROCESS TO THE
PARTY TO BE SERVED AT THE ADDRESS AND IN THE MANNER PROVIDED FOR THE GIVING OF
NOTICES IN SECTION 13.2.  NOTHING IN THIS SECTION 13.7, HOWEVER, SHALL AFFECT
THE RIGHT OF ANY PARTY TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.

 

SECTION 13.8  ASSIGNMENT; SUCCESSORS.  NEITHER ALNYLAM NOR CUBIST MAY ASSIGN
THIS AGREEMENT IN WHOLE OR IN PART, NOR ANY RIGHTS HEREUNDER, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE OTHER PARTY; PROVIDED THAT (A) EITHER PARTY MAY ASSIGN
THIS AGREEMENT IN WHOLE OR IN PART TO AN AFFILIATE ON THE CONDITION THAT THE
ASSIGNING PARTY SHALL REMAIN LIABLE HEREUNDER FOR THE PROMPT PAYMENT AND
PERFORMANCE OF ALL OBLIGATIONS OF THE ASSIGNEE, WHICH RIGHT TO ASSIGN SHALL
INCLUDE THE RIGHT TO ASSIGN RIGHTS TO RECEIVE ANY PAYMENTS REQUIRED UNDER THIS
AGREEMENT CONSISTENT WITH LICENSE GRANTS, SUBLICENSES AND OTHER RIGHTS
REFERENCED IN SECTIONS 3.1, 3.2 AND 3.4 UPON REASONABLE WRITTEN NOTICE TO THE
OTHER PARTY OF SUCH ASSIGNMENT, AND (B) THIS AGREEMENT MAY BE ASSIGNED BY A
PARTY IF SUCH PARTY MERGES WITH, OR ALL OR SUBSTANTIALLY ALL OF SUCH PARTY’S
BUSINESS OR ASSETS TO WHICH THIS AGREEMENT RELATES ARE ACQUIRED BY ANOTHER
PERSON (WHETHER BY MERGER, SALE OF ASSETS, SALE OF STOCK OR OTHERWISE) (AN “M&A
EVENT”), TO SUCH PARTY’S MERGER PARTNER OR ACQUIRER.   EACH PARTY AGREES THAT,
NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, IF AN
M&A EVENT OCCURS WITH RESPECT TO A PARTY, SUCH M&A EVENT []*.  IN THE EVENT THE
INTELLECTUAL PROPERTY OR TECHNOLOGY OF SUCH MERGER PARTNER OR ACQUIRER OF SUCH
PARTY, OR OF ANY THIRD PARTY THAT BECOMES AN AFFILIATE OF SUCH PARTY BY VIRTUE
OF SUCH M&A EVENT IS THE SUBJECT OF AN ALNYLAM IN-LICENSE OR CUBIST IN-LICENSE
AS OF THE DATE OF THE M&A EVENT, THE TERMS OF SECTION 8.6 SHALL CONTINUE TO
APPLY WITH RESPECT TO SUCH INTELLECTUAL PROPERTY AND TECHNOLOGY.  ANY ASSIGNMENT
MADE OTHER THAN IN ACCORDANCE WITH THE IMMEDIATELY PRECEDING SENTENCE SHALL BE
WHOLLY VOID AND INVALID, AND THE ASSIGNEE IN ANY SUCH ASSIGNMENT SHALL ACQUIRE
NO RIGHTS WHATSOEVER, AND THE NON-ASSIGNING PARTY SHALL NOT RECOGNIZE, NOR SHALL
IT BE REQUIRED TO RECOGNIZE,

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

87

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SUCH ASSIGNMENT.  THIS SECTION 13.8 LIMITS BOTH THE RIGHT AND THE POWER TO
ASSIGN THIS AGREEMENT OR RIGHTS UNDER THIS AGREEMENT.  THIS AGREEMENT SHALL BE
BINDING UPON, AND SHALL INURE TO THE BENEFIT OF, ALL PERMITTED SUCCESSORS AND
ASSIGNS.

 

SECTION 13.9  NO CONSEQUENTIAL OR PUNITIVE DAMAGES.  NEITHER PARTY HERETO WILL
BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, PUNITIVE
OR MULTIPLE DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS
HEREUNDER, OR FOR ANY LOSS OR INJURY TO A PARTY’S PROFITS OR GOODWILL ARISING
FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF
SUCH DAMAGES.  NOTHING IN THIS SECTION 13.9 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY WITH RESPECT TO THIRD
PARTY CLAIMS.

 

SECTION 13.10  PERFORMANCE BY AFFILIATES.  TO THE EXTENT THAT THIS AGREEMENT
IMPOSES OBLIGATIONS ON AFFILIATES OF A PARTY, SUCH PARTY AGREES TO CAUSE ITS
AFFILIATES TO PERFORM SUCH OBLIGATIONS.  EITHER PARTY MAY USE ONE OR MORE OF ITS
AFFILIATES TO PERFORM ITS OBLIGATIONS AND DUTIES HEREUNDER; PROVIDED THAT THE
PARTIES SHALL REMAIN LIABLE HEREUNDER FOR THE PROMPT PAYMENT AND PERFORMANCE OF
ALL THEIR RESPECTIVE OBLIGATIONS HEREUNDER.

 

SECTION 13.11  FORCE MAJEURE.  NEITHER PARTY SHALL BE HELD LIABLE TO THE OTHER
PARTY NOR BE DEEMED TO HAVE DEFAULTED UNDER OR BREACHED THIS AGREEMENT FOR
FAILURE OR DELAY IN PERFORMING ANY OBLIGATION UNDER THIS AGREEMENT TO THE EXTENT
THAT SUCH FAILURE OR DELAY IS CAUSED BY OR RESULTS FROM CAUSES BEYOND THE
REASONABLE CONTROL OF THE AFFECTED PARTY, POTENTIALLY INCLUDING EMBARGOES, WAR,
ACTS OF WAR (WHETHER WAR BE DECLARED OR NOT), INSURRECTIONS, RIOTS, CIVIL
COMMOTIONS, STRIKES, LOCKOUTS OR OTHER LABOR DISTURBANCES, FIRE, FLOODS, LOCUSTS
OR OTHER ACTS OF GOD, OR ACTS, OMISSIONS OR DELAYS IN ACTING BY ANY GOVERNMENTAL
AUTHORITY OR THE OTHER PARTY.  THE AFFECTED PARTY SHALL NOTIFY THE OTHER PARTY
OF SUCH FORCE MAJEURE CIRCUMSTANCES AS SOON AS REASONABLY PRACTICAL, AND SHALL
PROMPTLY UNDERTAKE ALL REASONABLE EFFORTS NECESSARY TO CURE SUCH FORCE MAJEURE
CIRCUMSTANCES.

 

SECTION 13.12  CONSTRUCTION.  EACH PARTY ACKNOWLEDGES THAT IT HAS BEEN ADVISED
BY COUNSEL DURING THE COURSE OF NEGOTIATION OF THIS AGREEMENT, AND, THEREFORE,
THAT THIS AGREEMENT SHALL BE INTERPRETED WITHOUT REGARD TO ANY PRESUMPTION OR
RULE REQUIRING CONSTRUCTION AGAINST THE PARTY CAUSING THIS AGREEMENT TO BE
DRAFTED.  WHENEVER THE CONTEXT MAY REQUIRE, ANY PRONOUN SHALL INCLUDE THE
CORRESPONDING MASCULINE, FEMININE AND NEUTER FORMS.  THE WORDS “INCLUDE,”
“INCLUDES” AND “INCLUDING” SHALL BE DEEMED TO BE FOLLOWED BY THE PHRASE “WITHOUT
LIMITATION.”  THE WORD “WILL” SHALL BE CONSTRUED TO HAVE THE SAME MEANING AND
EFFECT AS THE WORD “SHALL.”  UNLESS THE CONTEXT REQUIRES OTHERWISE, (A) ANY
DEFINITION OF OR REFERENCE TO ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT HEREIN
SHALL BE CONSTRUED AS REFERRING TO SUCH AGREEMENT, INSTRUMENT OR OTHER DOCUMENT
AS FROM TIME TO TIME AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED (SUBJECT TO ANY
RESTRICTIONS ON SUCH AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS SET FORTH HEREIN
OR THEREIN), (B) ANY REFERENCE TO ANY LAWS HEREIN SHALL BE CONSTRUED AS
REFERRING TO SUCH LAWS AS THEY FROM TIME TO TIME MAY BE ENACTED, REPEALED OR
AMENDED, (C) ANY REFERENCE HEREIN TO

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

88

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ANY PERSON SHALL BE CONSTRUED TO INCLUDE THE PERSON’S SUCCESSORS AND ASSIGNS,
(D) THE WORDS “HEREIN,” “HEREOF’ AND “HEREUNDER,” AND WORDS OF SIMILAR IMPORT,
SHALL BE CONSTRUED TO REFER TO THIS AGREEMENT IN ITS ENTIRETY AND NOT TO ANY
PARTICULAR PROVISION HEREOF, (E) ANY REFERENCE HEREIN TO THE WORDS “MUTUALLY
AGREE” OR “MUTUAL WRITTEN AGREEMENT” SHALL NOT IMPOSE ANY OBLIGATION ON EITHER
PARTY TO AGREE TO ANY TERMS RELATING THERETO OR TO ENGAGE IN DISCUSSIONS
RELATING TO SUCH TERMS EXCEPT AS SUCH PARTY MAY DETERMINE IN SUCH PARTY’S SOLE
DISCRETION; (F) ALL REFERENCES HEREIN TO ARTICLES, SECTIONS,  EXHIBITS AND
SCHEDULES SHALL BE CONSTRUED TO REFER TO ARTICLES, SECTIONS, EXHIBITS AND
SCHEDULES OF THIS AGREEMENT; AND (G) THE WORD “OR” IS USED IN THE INCLUSIVE
SENSE (AND/OR).

 

SECTION 13.13  EXECUTION IN COUNTERPARTS; FACSIMILE SIGNATURES.  THIS AGREEMENT
MAY BE EXECUTED IN COUNTERPARTS, EACH OF WHICH COUNTERPARTS, WHEN SO EXECUTED
AND DELIVERED, SHALL BE DEEMED TO BE AN ORIGINAL, AND ALL OF WHICH COUNTERPARTS,
TAKEN TOGETHER, SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT EVEN IF BOTH
PARTIES HAVE NOT EXECUTED THE SAME COUNTERPART.  SIGNATURES PROVIDED BY
FACSIMILE TRANSMISSION OR BY ELECTRONIC PDF TRANSMISSION SHALL BE DEEMED TO BE
ORIGINAL SIGNATURES.

 

[Remainder of page intentionally left blank]

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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IN WITNESS WHEREOF, Alnylam and Cubist have caused this Agreement to be duly
executed by their authorized representatives under seal, in duplicate on the
dates written herein below.

 

 

ALNYLAM PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ John M. Maraganore

 

Title:

Chief Executive Officer

 

Date:

January 9, 2009

 

 

 

 

 

 

 

CCUBIST PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Michael W. Bonney

 

Title:

President, Chief Executive Officer

 

Date:

January 8, 2009

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

90

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EXHIBIT A

 

Alnylam Patent Rights

 

RSV

 

Docket

 

Title

 

Country

 

App No

 

Filing date

 

Pub. No

 

Pub date

 

Status

 

[]*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

A-1

--------------------------------------------------------------------------------

 

EXHIBIT B

 

ALN-RSV01

 

[]*

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

B-1

--------------------------------------------------------------------------------

 

EXHIBIT C

 

Existing Alnylam In-Licenses

 

As of the Effective Date, Existing Alnylam In-Licenses includes the following
Third Party agreements:

 

[]*

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

C-1

--------------------------------------------------------------------------------

 

EXHIBIT D

 

Existing Alnylam Out-Licenses That Include Rights or Options to Licensed
Products

 

[]*

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

D-1

--------------------------------------------------------------------------------

 

EXHIBIT E

 

Development Plan Overview

 

[]*

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

E-1

--------------------------------------------------------------------------------

 

EXHIBIT F

 

Material Agreements Related to Licensed Products in the Territory

 

[]*

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

F-1

--------------------------------------------------------------------------------

 

EXHIBIT G

 

Supply Agreement Term Sheet

 

1.               Alnylam and Cubist shall use their commercially reasonable
efforts to enter into a supply agreement (the “Supply Agreement”) among Alnylam,
Cubist and Kyowa Hakko, which Supply Agreement will be consistent with the terms
of this supply agreement term sheet (the “Supply Agreement Term Sheet”).  From
the Effective Date until the effective date of the Supply Agreement, the terms
of the Agreement and this Supply Agreement Term Sheet shall govern the
Manufacture and supply of Licensed Product under the Agreement; provided,
however, that in the event of conflict between this Supply Agreement Term Sheet
and the Agreement, the terms of the Agreement shall apply.

 

2.               The Parties shall be responsible for establishing the
specifications (the “Specifications”) and approving the master batch record,
including the necessary documentation, certificates of analysis and test
results, for the API Bulk Drug Substance and Finished Product to be supplied
under the Supply Agreement.

 

3.               Until Regulatory Approval of a Licensed Product in the
Territory, Alnylam shall supply API Bulk Drug Substance and Finished Product to
Cubist for use in the Profit-Share Territory consistent with the Development
Plan and for use in the Royalty Territory.  The costs for such API Bulk Drug
Substance and Finished Product shall be determined in accordance with the
Agreement.  Cubist shall use the API Bulk Drug Substance and Finished Product
supplied by Alnylam solely for purposes contemplated under this Agreement and
shall not transfer any such API Bulk Drug Substance or Finished Product to any
Third Party for any other purpose.

 

4.               Unless agreed otherwise in writing by the Parties, []* before
the commencement of each Calendar Quarter, Cubist will give to Alnylam a
forecast of the estimated quarterly requirements of API Bulk Drug Substance and
Finished Product for the Royalty Territory for the []* period commencing with
such Calendar Quarter (the “Royalty Territory Forecast”).  Such Royalty
Territory Forecast will include quantity and unit requirements for API Bulk Drug
Substance and Finished Product on a country-by-country basis.  With respect to
the Royalty Territory, []* percent ([]*%) of the forecasted requirements of API
Bulk Drug Substance and Finished Product during the []* Calendar Quarters of
such Royalty Territory Forecast, and []* percent ([]*%) of the forecasted
requirements of API Bulk Drug Substance and Finished Product during the []*
Calendar Quarters of such Royalty Territory Forecast, shall be considered
binding on Cubist, and Alnylam shall supply such forecasted amounts.  The
forecasted requirements of API Bulk Drug Substance and Finished Product during
the []* Calendar Quarters of such Royalty Territory Forecast will be
non-binding. Cubist will provide Alnylam with binding

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

G-1

--------------------------------------------------------------------------------

 

purchase orders for API Bulk Drug Substance and Finished Product at least []* in
advance of the delivery date for such API Bulk Drug Substance or Finished
Product, as the case may be. In the event that Cubist requests any changes to
forecast, Alnylam shall (i) use its commercially reasonable efforts to
accommodate such requests and (ii) use its commercially reasonable efforts to
minimize any costs incurred as a result of such changes.

 

5.               Unless agreed otherwise in writing by the Parties, []* before
the commencement of each Calendar Quarter, the JSC or the JCT, as the case may
be, will give to Alnylam a forecast of the estimated quarterly requirements of
API Bulk Drug Substance and Finished Product for the Profit-Share Territory for
the []* period commencing with such Calendar Quarter (the “Profit-Share
Forecast” and together with the Royalty Territory Forecast, the “Forecast”). 
Such Profit-Share Forecast will include quantity and unit requirements for API
Bulk Drug Substance and Finished Product on a country-by-country basis.  With
respect to the Profit-Share Territory, the JSC or the JCT, as the case may be,
shall approve any changes in the amounts of Licensed Product to be Manufactured
for the Profit-Share Forecast; provided, however, that Alnylam shall use its
commercially reasonable efforts to minimize any costs incurred as a result of
such changes, and for purposes of clarity, any such minimized costs shall be
considered Development Costs or Commercialization Costs, as the case may be, for
purposes of the Agreement.

 

6.               In the event of an actual or anticipated shortage of supply of
API Bulk Drug Substance or Finished Product, Alnylam shall promptly notify
Cubist and, unless otherwise agreed by the Parties, available supply shall be
allocated between the Royalty Territory, the Profit-Share Territory and Asia on
a pro-rata basis based on good faith forecasts of requirements.  In addition,
Alnylam will use commercially reasonable efforts to resolve all failure to
supply issues as promptly as possible in consultation with Cubist and Kyowa
Hakko.

 

7.               If and to the extent that a Failure to Supply (as hereinafter
defined) occurs, Cubist shall have the right to assume control of the
Manufacture of Licensed Product; provided, however, that (a) the Parties,
working through the JSC or JCT, as appropriate, will conduct an orderly transfer
of the technology necessary to so Manufacture Licensed Product and (b) the
Parties shall use Diligent Efforts to structure such transition in a manner that
enables Alnylam to satisfy its supply obligations to Kyowa Hakko.  For purposes
of this Supply Agreement Term Sheet, a “Failure to Supply” will be deemed to
have occurred only after Alnylam has failed to deliver []* percent ([]*%) of the
aggregate requirements for Licensed Product for a given Calendar Quarter in the
Royalty Territory and the Profit-Share

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

G-2

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Territory, respectively, as described in the Forecast, in two out of any four
consecutive Calendar Quarters.  Similarly, if Cubist suffers a Failure to
Supply, Alnylam shall have the right to reassume control of the Manufacture of
Licensed Product.

 

8.               Alnylam agrees that all API Bulk Drug Substance and Finished
Product supplied to Cubist will, at the time of delivery to Cubist, have been
Manufactured in accordance with the Specifications and the master batch record,
and except for batches not intended for human use, with current Good
Manufacturing Practices and equivalent Laws outside the United States (“cGMP”). 
Alnylam will be solely responsible for all costs and expenses caused by failed
batches, including batches which fail to meet the requirements of the previous
sentence, as a result of the negligence or intentional misconduct of any Alnylam
employee.

 

9.               In addition to more detailed terms regarding the matters
specified above in this Supply Agreement Term Sheet, the Supply Agreement shall
contain other customary supply agreement provisions, including indemnification
provisions appropriate for a Supply Agreement.  Furthermore, Alnylam and Cubist
will enter into a Technical and Quality Agreement with respect to the Licensed
Product governing, among other things, quality assurance requirements,
documentation and procedures, audit and inspection rights and similar matters.

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

G-3

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EXHIBIT H

 

Milestone Payments Under the Existing Alnylam In-Licenses

 

Existing Alnylam In
license

 

Milestone

 

Alnylam
Payment
Obligation

 

Allocable Share of
Milestone to be
split in Profit-Share
Territory

 

[]*

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

H-1

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EXHIBIT I

 

Press Release

 

[g110701kg23i001.jpg]

 

[g110701kg23i002.jpg]

 

Contacts:

 

 

Cubist Pharmaceuticals, Inc.

 

Alnylam Pharmaceuticals, Inc.

Eileen C. McIntyre

 

Cynthia Clayton (Investors)

781-860-8533

 

617-551-8207

eileen.mcintyre@cubist.com

 

 

 

 

 

Tara Murphy

 

Adriana Jenkins (Media)

Weber Shandwick

 

Yates Public Relations

617-520-7045

 

617-744-1713

TMurphy@WeberShandwick.com

 

 

 

Alnylam and Cubist Form Strategic Collaboration to Develop and Commercialize
RNAi Therapeutics Targeting Respiratory Syncytial Virus (RSV) Infection

 

Lexington, Mass. and Cambridge, Mass., January 9, 2009 — Cubist
Pharmaceuticals, Inc., (Nasdaq: CBST), a leading acute care biopharmaceutical
company, and Alnylam Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi
therapeutics company, announced today that they have formed a strategic
collaboration to develop and commercialize Alnylam’s ALN-RSV program.  The
RSV-specific RNAi therapeutic program includes ALN-RSV01, which is currently in
Phase II clinical development for the treatment of respiratory syncytial virus
(RSV) infection in adult lung transplant patients, as well as several other
potent and specific second-generation RNAi-based RSV inhibitors in pre-clinical
studies.

 

The collaboration is structured as a 50/50 co-development and profit share
arrangement in North America, and a milestone- and royalty-bearing license
arrangement in the rest of the world outside of Asia, where ALN-RSV is partnered
with Kyowa Hakko Kirin Co.,

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

I-1

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Ltd.  Alnylam will receive an upfront payment of $20 million.  In addition,
Alnylam is eligible to receive development and sales milestone payments from
Cubist that could total $82.5 million, for a total in upfront and potential
milestone payments of $102.5 million, as well as double digit royalties on net
sales outside of North America and Asia.  After achieving certain development
milestones, Alnylam could convert the North American co-development and profit
share to a royalty-bearing license with development and sales milestones. 
Cubist will have sole rights for commercialization of the ALN-RSV program
worldwide outside of Asia, subject to the cost and profit sharing in North
America.

 

“Cubist is pleased to be working with Alnylam and to be involved in the
development and potential commercialization of a therapy for this significant
infectious disease,” said Michael W. Bonney, President and Chief Executive
Officer of Cubist.  “We expect that this collaboration will leverage the
development expertise and commercial success we have achieved in the area of
infectious disease.  There is significant need for novel therapeutics to
effectively treat patients with RSV infection, a leading cause of pediatric
hospitalization and a prevalent infection in certain adult populations.  We are
convinced that developing a treatment for RSV infection is an important
therapeutic and commercial opportunity, and, like Alnylam, are committed to
addressing this need.”

 

“We are excited to have formed this new alliance with Cubist — a like-minded
organization that shares our commitment to bringing a novel RNAi therapeutic to
patients infected with RSV.  We have tremendous respect for the Cubist team, and
have been impressed with the development and ongoing commercial success they
have had with their lead anti-infective program, CUBICIN® (daptomycin for
injection),” said John Maraganore, Ph.D., Chief Executive Officer of Alnylam. 
“Partnering this program brings additional critical mass to the advancement of
ALN-RSV01 and/or second-generation RSV-specific RNAi therapeutics in our broader
program which we aim to advance through ongoing pre-clinical studies toward
potential clinical studies as early as 2010. The partnership also provides
Alnylam with yet additional financial flexibility to invest beyond RSV in the
multiple product opportunities represented by our growing pipeline of novel RNAi
therapeutics.”

 

In 2008, Alnylam conducted the GEMINI study in which ALN-RSV01 was evaluated in
a double-blind, randomized, placebo-controlled Phase II clinical trial.  Data
from this study showed that intranasally administered ALN-RSV01 demonstrated
statistically significant anti-viral efficacy with an approximately 40% relative
reduction in RSV infection rate and a 95% increase in the number of
infection-free subjects, as compared with placebo.  The RNAi therapeutic is
currently being studied in a double-blind, randomized, placebo-controlled Phase
II clinical trial to assess the safety and tolerability of aerosolized ALN-RSV01
in adult lung transplant patients naturally infected with RSV.  As a secondary
objective, this trial will evaluate the anti-viral activity of ALN-RSV01 in
patients with a naturally acquired RSV lower respiratory tract infection.  Based
on these and other data, Cubist and Alnylam will aim to maximize the value of
the entire RSV program for advancement in pediatric and adult RSV-infected
patients.

 

--------------------------------------------------------------------------------

*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

I-2

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About Respiratory Syncytial Virus (RSV)

 

RSV is a highly contagious virus that causes infections in both the upper and
lower respiratory tract.  RSV infects nearly every child at least once by the
age of two years and is a major cause of hospitalization due to respiratory
infection in children and people with compromised immune systems, and others. 
RSV infection typically results in cold-like symptoms but can lead to more
serious respiratory illnesses such as croup, pneumonia, bronchiolitis, and in
extreme cases, death.  RSV infection in the pediatric and adult populations
account for more than 300,000 hospitalizations per year in the U.S.  In
addition, RSV infection in infants has been linked to the development of
childhood asthma.  As a result, there is a significant need for novel
therapeutics to treat patients who become infected with RSV.

 

About RNA Interference (RNAi)

 

RNAi (RNA interference) is a revolution in biology, representing a breakthrough
in understanding how genes are turned on and off in cells, and a completely new
approach to drug discovery and development.  Its discovery has been heralded as
“a major scientific breakthrough that happens once every decade or so,” and
represents one of the most promising and rapidly advancing frontiers in biology
and drug discovery today which was awarded the 2006 Nobel Prize for Physiology
or Medicine.  RNAi is a natural process of gene silencing that occurs in
organisms ranging from plants to mammals.  By harnessing the natural biological
process of RNAi occurring in our cells, the creation of a major new class of
medicines, known as RNAi therapeutics, is on the horizon.  RNAi therapeutics
target the cause of diseases by potently silencing specific messenger RNAs
(mRNAs), thereby preventing disease-causing proteins from being made.  RNAi
therapeutics have the potential to treat disease and help patients in a
fundamentally new way.

 

ABOUT CUBIST PHARMACEUTICALS

 

Cubist Pharmaceuticals, Inc. is a biopharmaceutical company focused on the
research, development, and commercialization of pharmaceutical products that
address unmet medical needs in the acute care environment.  In the U.S., Cubist
markets CUBICIN® (daptomycin for injection), the first antibiotic in a new class
of anti-infectives called lipopeptides.  Cubist has an agreement with
AstraZeneca to handle U.S. hospital sales for their established broad spectrum
antibiotic, MERREM® I.V. (meropenem for injection).  In addition to the
collaboration with Alnylam on RSV announced today, the Cubist product pipeline
includes ecallantide, a recombinant human protein in Phase 2 clinical trials for
the prevention of blood loss during cardiothoracic surgery; and two programs
with recently submitted INDs that address unmet medical needs to treat
Gram-negative infections and CDAD (Clostridium difficile-associated diarrhea). 
Cubist is headquartered in Lexington, MA.  Additional information can be found
at Cubist’s web site at www.cubist.com

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

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ABOUT ALNYLAM PHARMACEUTICALS

 

Alnylam is a biopharmaceutical company developing novel therapeutics based on
RNA interference, or RNAi.  The company is applying its therapeutic expertise in
RNAi to address significant medical needs, many of which cannot effectively be
addressed with small molecules or antibodies, the current major classes of
drugs.  Alnylam is leading the translation of RNAi as a new class of innovative
medicines with peer-reviewed research efforts published in the world’s top
scientific journals including Nature, Nature Medicine, and Cell.  The company is
leveraging these capabilities to build a broad pipeline of RNAi therapeutics;
its most advanced program is in Phase II human clinical trials for the treatment
of respiratory syncytial virus (RSV) infection and is partnered with Cubist and
Kyowa Hakko.  In addition, the company is developing RNAi therapeutics for the
treatment of a wide range of disease areas, including liver cancers,
hypercholesterolemia, Huntington’s disease, and TTR amyloidosis.  The company’s
leadership position in fundamental patents, technology, and know-how relating to
RNAi has enabled it to form major alliances with leading companies including
Medtronic, Novartis, Biogen Idec, Roche, Takeda, Kyowa Hakko, and Cubist.  To
reflect its outlook for key scientific, clinical, and business initiatives,
Alnylam established “RNAi 2010” in January 2008 which includes the company’s
plan to significantly expand the scope of delivery solutions for RNAi
therapeutics, have four or more programs in clinical development, and to form
four or more new major business collaborations, all by the end of 2010.  Alnylam
is a joint owner of Regulus Therapeutics LLC, a joint venture focused on the
discovery, development, and commercialization of microRNA therapeutics.  Founded
in 2002, Alnylam maintains headquarters in Cambridge, Massachusetts.  For more
information, please visit http://www.alnylam.com.Cubist Forward-Looking
Statement

 

THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS
REGARDING ALN-RSV01 AND THE ALN-RSV PROGRAM AS A POTENTIAL TREATMENT FOR RSV. 
THERE ARE MANY FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE IN THESE FORWARD-LOOKING STATEMENTS.  THESE FACTORS INCLUDE THE FOLLOWING:
(I) CUBIST AND ALNYLAM’S ABILITY TO DEVELOP, MANUFACTURE AND ACHIEVE COMMERCIAL
SUCCESS FOR ALN-RSV01 OR OTHER RNAI THERAPEUTICS THAT ARE THE SUBJECT OF THIS
COLLABORATION; (II) WHETHER THE FDA ACCEPTS PROPOSED CLINICAL TRIAL PROTOCOLS
THAT MAY BE ACHIEVED IN A TIMELY MANNER FOR ALN-RSV01 OR OTHER RNAI THERAPEUTICS
THAT ARE THE SUBJECT OF THIS COLLABORATION; (III) CUBIST’S ABILITY TO CONDUCT
SUCCESSFUL CLINICAL TRIALS IN A TIMELY MANNER; (IV) THE DEMONSTRATED CLINICAL
EFFICACY AND SAFETY OF ALN-RSV01 OR OTHER RNAI THERAPEUTICS THAT ARE THE SUBJECT
OF THIS COLLABORATION AS THEY RELATE TO STANDARDS FOR REGULATORY APPROVAL AND IN
COMPARISON TO COMPETITIVE PRODUCTS; (V) ALN-RSV01 AND OTHER RNAI THERAPEUTICS
THAT ARE THE SUBJECT OF THIS COLLABORATION COULD TAKE A SIGNIFICANTLY LONGER
TIME TO GAIN REGULATORY APPROVAL AND MARKET ACCEPTANCE THAN CUBIST OR ALNYLAM
EXPECTS OR MAY NEVER GAIN SUCH APPROVAL OR ACCEPTANCE IN RSV; (VI) OTHERS MAY
DEVELOP RSV TECHNOLOGIES OR PRODUCTS SUPERIOR TO, AND/OR WHICH REACH THE MARKET

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

I-4

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BEFORE ALN-RSV01 OR OTHER RNAI THERAPEUTICS THAT ARE THE SUBJECT OF THIS
COLLABORATION; (VII) TECHNICAL DIFFICULTIES OR EXCESSIVE COSTS RELATING TO THE
MANUFACTURE OF ALN-RSV01 OR OTHER RNAI THERAPEUTICS THAT ARE THE SUBJECT OF THIS
COLLABORATION; (VIII) A SMALLER MARKET FOR ALN-RSV01 OR OTHER RNAI THERAPEUTICS
THAT ARE THE SUBJECT OF THIS COLLABORATION IN RSV THAN CUBIST OR ALNYLAM
CURRENTLY ANTICIPATES; (IX) CUBIST’S AND ALNYLAM’S ABILITY TO ADEQUATELY DEVELOP
AND MAINTAIN ADEQUATE PROTECTION FOR THE INTELLECTUAL PROPERTY RELATED TO
ALN-RSV01 OR OTHER RNAI THERAPEUTICS THAT ARE THE SUBJECT OF THIS COLLABORATION;
AND (X) A VARIETY OF OTHER RISKS COMMON TO OUR INDUSTRY THAT MAY BE ENCOUNTERED
WITH RESPECT TO THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ALN-RSV,
INCLUDING ONGOING REGULATORY REVIEW, PUBLIC AND INVESTMENT COMMUNITY PERCEPTION
OF THE INDUSTRY, LEGISLATIVE OR REGULATORY CHANGES, AND CUBIST’S ABILITY TO
ATTRACT AND RETAIN TALENTED EMPLOYEES.  DRUG DEVELOPMENT INVOLVES A VERY HIGH
DEGREE OF RISK.  SUCCESS OF A PRODUCT CANDIDATE IN EARLY STAGE CLINICAL TRIALS
OR PRE-CLINICAL TRIALS DOES NOT MEAN THAT SUBSEQUENT TRIALS WILL ALSO BE
SUCCESSFUL OR THAT THE CANDIDATE WILL BE SUCCESSFULLY COMMERCIALIZED. 
ADDITIONAL FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE PROJECTED OR SUGGESTED IN ANY FORWARD-LOOKING STATEMENTS ARE CONTAINED IN
CUBIST’S MOST RECENT 10-K AND 10-Q FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING THOSE FACTORS DISCUSSED UNDER THE CAPTION “RISK FACTORS”
IN SUCH FILINGS.  THESE STATEMENTS SPEAK ONLY AS OF THE DATE OF THIS RELEASE,
AND CUBIST UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE THESE STATEMENTS, EXCEPT
AS MAY BE REQUIRED BY LAW.

 

ALNYLAM FORWARD-LOOKING STATEMENT

 

Various statements in this release concerning Alnylam’s future expectations,
plans and prospects, constitute forward-looking statements for the purposes of
the safe harbor provisions under The Private Securities Litigation Reform Act of
1995.  Actual results may differ materially from those indicated by these
forward-looking statements as a result of various important factors, including
statements concerning the timing and scope of clinical trials and studies for
ALN-RSV therapeutics, the potential to achieve certain results which could
trigger milestone payments and royalties to Alnylam, and the potential market
for novel RSV therapeutics, as well as those risks more fully discussed in the
“Risk Factors” section of its most recent quarterly report on Form 10-Q on file
with the Securities and Exchange Commission.  In addition, any forward-looking
statements represent Alnylam’s views only as of today and should not be relied
upon as representing its views as of any subsequent date.  Alnylam does not
assume any obligation to update any forward-looking statements.

 

Cubist and CUBICIN are registered trademarks of Cubist Pharmaceuticals, Inc. 
AstraZeneca and MERREM are registered trademarks of the AstraZeneca group of
companies.

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

I-5

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Schedule 10.7

 

Disclosure Schedule

 

This Disclosure Schedule is provided in connection with Section 10.7 of that
certain Collaboration and License Agreement (the “Agreement”), dated January 9,
2009 between Alnylam Pharmaceuticals, Inc. (“Alnylam”) and Cubist
Pharmaceuticals, Inc. (“Cubist”).  Capitalized terms used herein and not
otherwise defined shall have the meanings given such terms in the Agreement,
unless the context indicates otherwise.

 

The section numbers below correspond to the section numbers of the
representations and warranties in the Agreement.  An item of disclosure in any
section or subsection of this Disclosure Schedule shall qualify other sections
and subsections of the Agreement to the extent it is reasonably clear from a
reading of the disclosure that such disclosure is applicable to such other
sections and subsections. Inclusion of an item in this Disclosure Schedule does
not necessarily indicate that an item is material or called for by a
representation in the Agreement.

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

10.7-1

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10.7 (b)

 

[]*

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

10.7-2

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10.7(c)

 

[]*

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

10.7-3

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10.7 (d)

 

OPPOSITIONS & APPEALS

 

Patent #

 

# of
Opponents

 

Opponents/Appellants

 

Status

 

[]*

 

 

 

 

 

 

 

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

10.7-4

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10.7(g)

 

·                  []*

 

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*Confidential Treatment Requested.  Omitted portions filed separately with the
Commission.

 

10.7-5

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