exv10w4



 





			
	CONFIDENTIAL
	 	EXECUTION COPY






Exhibit 10.4




Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.




AMENDED AND RESTATED




COLLABORATION AGREEMENT




BY AND BETWEEN




ALNYLAM PHARMACEUTICALS, INC.




AND




MEDTRONIC, INC.




 









 








Table of Contents




	 	 	 	 	 
	 	 	Page	 
	Article I Definitions
	 	 	1	 
	Section 1.1 “Affiliate”
	 	 	1	 
	Section 1.2 “Alnylam Intellectual Property”
	 	 	2	 
	Section 1.3 “Alnylam Know-How”
	 	 	2	 
	Section 1.4 “Alnylam Patent Rights”
	 	 	2	 
	Section 1.5 “Alnylam siRNA”
	 	 	2	 
	Section 1.6 “Blocking Third Party Intellectual Property”
	 	 	2	 
	Section 1.7 “[**]”
	 	 	2	 
	Section 1.8 “Collaboration Program”
	 	 	3	 
	Section 1.9 “Collaboration Term”
	 	 	3	 
	Section 1.10 “Commercialization” or “Commercialize”
	 	 	3	 
	Section 1.11 “Commercializing Party”
	 	 	3	 
	Section 1.12 “Commercially Reasonable Efforts”
	 	 	3	 
	Section 1.13 “Confidential Information”
	 	 	3	 
	Section 1.14 “Control” or “Controlled”
	 	 	4	 
	Section 1.15 “Cover”, “Covering” or “Covered”
	 	 	4	 
	Section 1.16 “CPI”
	 	 	4	 
	Section 1.17 “Develop” or “Development”
	 	 	4	 
	Section 1.18 “Development Candidate”
	 	 	4	 
	Section 1.19 “Development Costs”
	 	 	4	 
	Section 1.20 “Device”
	 	 	5	 
	Section 1.21 “Device-Related”
	 	 	5	 
	Section 1.22 “Discover” or “Discovery”
	 	 	5	 
	Section 1.23 “[**]”
	 	 	5	 
	Section 1.24 “Effective Date”
	 	 	5	 
	Section 1.25 “Exclusivity Field”
	 	 	5	 
	Section 1.26 “Executive Officers”
	 	 	5	 
	Section 1.27 “FDA”
	 	 	5	 
	Section 1.28 “Field”
	 	 	5	 
	Section 1.29 “First Commercial Sale”
	 	 	5	 
	Section 1.30 “FTE Cost”
	 	 	5	 
	Section 1.31 “GAAP”
	 	 	6	 
	Section 1.32 “Gene Target”
	 	 	6	 
	Section 1.33 “IND”
	 	 	6	 
	Section 1.34 “Initial PDP Workplan”
	 	 	6	 
	Section 1.35 “Initial Product Development Program”
	 	 	6	 
	Section 1.36 “JCC Representative”
	 	 	6	 
	Section 1.37 “JRDC Representative”
	 	 	6	 
	Section 1.38 “[**] Agreement”
	 	 	6	 
	Section 1.39 “Know-How”
	 	 	6	 
	Section 1.40 “Launch Costs”
	 	 	6	 
	Section 1.41 “Licensed Product”
	 	 	7	 
	Section 1.42 “Listed or Approved Third Party Agreement”
	 	 	7	 






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	 	 	Page	 
	Section 1.43 “Major Market”
	 	 	7	 
	Section 1.44 “Manufacturing Cost”
	 	 	7	 
	Section 1.45 “Medtronic Device”
	 	 	7	 
	Section 1.46 “Medtronic Fiscal Quarter”
	 	 	8	 
	Section 1.47 “Medtronic Fiscal Year”
	 	 	8	 
	Section 1.48 “Medtronic Intellectual Property”
	 	 	8	 
	Section 1.49 “Medtronic Know-How”
	 	 	8	 
	Section 1.50 “Medtronic Patent Rights”
	 	 	8	 
	Section 1.51 “NDA”
	 	 	8	 
	Section 1.52 “Net Sales”
	 	 	8	 
	Section 1.53 “Neurodegenerative Disease”
	 	 	9	 
	Section 1.54 “Party”
	 	 	9	 
	Section 1.55 “Patent Rights”
	 	 	9	 
	Section 1.56 “Person”
	 	 	9	 
	Section 1.57 “Phase I Study”
	 	 	9	 
	Section 1.58 “Phase II(a) Study”
	 	 	9	 
	Section 1.59 “Phase II(b) Study”
	 	 	10	 
	Section 1.60 “Phase III Study”
	 	 	10	 
	Section 1.61 “[**] Opt Out”
	 	 	10	 
	Section 1.62 “[**] Opt Out”
	 	 	10	 
	Section 1.63 “[**] Opt Out”
	 	 	10	 
	Section 1.64 “[**] Opt Out”
	 	 	10	 
	Section 1.65 “Preliminary Success Criteria”
	 	 	10	 
	Section 1.66 “Primary Sequence or Chemical Modification Know-How”
	 	 	10	 
	Section 1.67 “Product”
	 	 	10	 
	Section 1.68 “Product Development Program”
	 	 	10	 
	Section 1.69 “Product Development Term”
	 	 	11	 
	Section 1.70 “Program Intellectual Property”
	 	 	11	 
	Section 1.71 “Program Know-How”
	 	 	11	 
	Section 1.72 “Program Patent Rights”
	 	 	11	 
	Section 1.73 “Regulatory Approval”
	 	 	11	 
	Section 1.74 “Regulatory Authority”
	 	 	11	 
	Section 1.75 “ROW Territory”
	 	 	11	 
	Section 1.76 “Royalty Term”
	 	 	11	 
	Section 1.77 “Section 2.5(d)(iii) [**] Agreement”
	 	 	12	 
	Section 1.78 “siRNA”
	 	 	12	 
	Section 1.79 “Target Indication”
	 	 	12	 
	Section 1.80 “Territory”
	 	 	12	 
	Section 1.81 “Third Party”
	 	 	12	 
	Section 1.82 “US Territory”
	 	 	12	 
	Section 1.83 “Valid Claim”
	 	 	12	 
	Section 1.84 “Workplan”
	 	 	12	 
	Section 1.85 Additional Definitions
	 	 	12	 
	 
	 	 	 	 
	Article II Collaboration Program; Commercialization
	 	 	14	 
	Section 2.1 General
	 	 	14	 
	Section 2.2 Governance; Decision-Making
	 	 	14	 






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	 	 	Page	 
	Section 2.3 Conduct of the Collaboration Program
	 	 	17	 
	Section 2.4 Right to Opt Out
	 	 	20	 
	Section 2.5 Exclusivity, Diligence and RoFN Obligations
	 	 	22	 
	Section 2.6 Supply of Alnylam siRNAs
	 	 	24	 
	Section 2.7 SAB Observer Right
	 	 	25	 
	 
	 	 	 	 
	Article III Grant of Rights
	 	 	25	 
	Section 3.1 Alnylam Grants
	 	 	25	 
	Section 3.2 Medtronic Grants
	 	 	27	 
	Section 3.3 Retained Rights
	 	 	29	 
	 
	 	 	 	 
	Article IV Financial Provisions
	 	 	29	 
	Section 4.1 Development Cost and Launch Cost Sharing
	 	 	29	 
	Section 4.2 Milestone Payments for Product Development Programs
	 	 	30	 
	Section 4.3 Royalty Payments
	 	 	31	 
	Section 4.4 Duration of Royalty Payments
	 	 	33	 
	Section 4.5 Royalties Payable Only Once
	 	 	33	 
	Section 4.6 Credits Against Future Royalties
	 	 	33	 
	 
	 	 	 	 
	Section 4.7 Quarterly Reconciliation of Development Costs and Net Sales; Royalty Reports and Accounting
	 	 	34	 
	Section 4.8 Currency Exchange
	 	 	35	 
	Section 4.9 Tax Withholding
	 	 	35	 
	Section 4.10 Late Payments
	 	 	35	 
	 
	 	 	 	 
	Article V Intellectual Property Ownership, Protection and Related Matters
	 	 	36	 
	Section 5.1 Ownership of Inventions
	 	 	36	 
	Section 5.2 Prosecution and Maintenance of Patent Rights
	 	 	37	 
	Section 5.3 Third Party Infringement
	 	 	38	 
	Section 5.4 Claimed Infringement; Claimed Invalidity
	 	 	40	 
	Section 5.5 Patent Term Extensions
	 	 	41	 
	Section 5.6 Patent Marking
	 	 	41	 
	Section 5.7 Maintain Licenses in Force
	 	 	41	 
	 
	 	 	 	 
	Article VI Confidentiality
	 	 	41	 
	Section 6.1 Confidential Information
	 	 	42	 
	Section 6.2 Disclosures to Employees, Consultants and Advisors
	 	 	42	 
	Section 6.3 Term
	 	 	42	 
	Section 6.4 Publicity
	 	 	42	 
	Section 6.5 Publications
	 	 	43	 
	 
	 	 	 	 
	Article VII Representations and Warranties
	 	 	43	 
	Section 7.1 Representations of Authority
	 	 	44	 
	Section 7.2 Consents
	 	 	44	 
	Section 7.3 No Conflict
	 	 	44	 
	Section 7.4 Enforceability
	 	 	44	 
	Section 7.5 Employee Obligations
	 	 	44	 
	Section 7.6 Intellectual Property
	 	 	44	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	Section 7.7 No Warranties
	 	 	45	 
	 
	 	 	 	 
	Article VIII Term and Termination
	 	 	45	 
	Section 8.1 Term
	 	 	45	 
	Section 8.2 Termination For Material Breach
	 	 	45	 
	Section 8.3 Termination Upon No-Go Decision
	 	 	46	 
	Section 8.4 Effect of Termination
	 	 	46	 
	Section 8.5 Survival
	 	 	49	 
	 
	 	 	 	 
	Article IX Miscellaneous Provisions
	 	 	50	 
	Section 9.1 Indemnification
	 	 	50	 
	Section 9.2 Governing Law and Waiver of Jury Trial
	 	 	51	 
	Section 9.3 Assignment
	 	 	52	 
	Section 9.4 Entire Agreement; Amendments
	 	 	52	 
	Section 9.5 Notices
	 	 	52	 
	Section 9.6 Force Majeure
	 	 	53	 
	Section 9.7 Independent Contractors
	 	 	53	 
	Section 9.8 No Strict Construction
	 	 	54	 
	Section 9.9 Headings
	 	 	54	 
	Section 9.10 No Implied Waivers; Rights Cumulative
	 	 	54	 
	Section 9.11 Severability
	 	 	54	 
	Section 9.12 Execution in Counterparts; Facsimile Signatures
	 	 	54	 
	Section 9.13 No Consequential or Punitive Damages
	 	 	54	 
	Section 9.14 Interpretation
	 	 	54	 






	 	 	 
	Schedules
	 	 
	Schedule 1.4

	 	Alnylam Patent Rights
	Schedule 1.42

	 	Listed or Approved Third Party Agreements
	Schedule 3.1(d)

	 	Existing Third Party Contractual Obligations of Alnylam
	Schedule 3.2(d)

	 	Existing Third Party Contractual Obligations of Medtronic
	Schedule 4.3(h)

	 	Payments Under Listed or Approved Third Party Agreements
	 
	 	 
	Exhibits
	 	 
	Exhibit A

	 	siRNA Supply Agreement Principal Terms
	Exhibit B

	 	Press Release
	Exhibit C

	 	Permitted Disclosures
	Exhibit D

	 	Device Supply Agreement Principal Terms








iv









 








AMENDED AND RESTATED COLLABORATION AGREEMENT




     This Amended and Restated Collaboration Agreement (this “Agreement”) is entered into
as of the 27th day of July, 2007 (the “Restatement 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 Medtronic, Inc., a corporation organized and existing under the laws of
the State of Minnesota and having its principal office at 710 Medtronic Parkway, Minneapolis,
Minnesota 55432 (“Medtronic”).



INTRODUCTION




     1. Alnylam is engaged in the business of discovering and developing siRNA-based therapeutics.



     2. Medtronic is engaged in the business of developing and marketing medical devices.



     3. On the Effective Date, Alnylam and Medtronic entered into a Collaboration Agreement (as
amended prior to the Restatement Date, the “Original Collaboration Agreement”), pursuant to
which Alnylam and Medtronic agreed to collaborate on the discovery, development, manufacture and
commercialization of siRNA-based therapeutics for the treatment of certain diseases using implanted
infusion devices for the direct delivery of siRNAs to the human nervous system.



     4. Alnylam and Medtronic now desire to amend and restate the Original Collaboration Agreement
to reflect their joint determination to commence and carry out the Initial Product Development
Program and to otherwise modify the terms of their collaboration on the discovery, development,
manufacture and commercialization of siRNA-based therapeutics as set forth herein.



     NOW, THEREFORE, in consideration of the respective representations, warranties, covenants and
agreements contained herein, and for other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Alnylam and Medtronic hereby amend and restate the Original
Collaboration Agreement in its entirety as follows:



Article I




Definitions




     When used in this Agreement, each of the following terms shall have the meanings set forth in
this Article I:



     Section 1.1 “Affiliate”. Affiliate of a specified Person shall mean any Person that
controls, is controlled by, or is under common control with such Person. For purposes of this
Section 1.1 and Section 9.3, “control” shall mean (a) in the case of corporate entities, direct or
indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote
for the election of directors, and (b) in the case of non-corporate entities, direct or indirect



 









 







ownership of at least fifty percent (50%) of the equity interest with the power to direct the
management and policies of such non-corporate entities.



     Section 1.2 “Alnylam Intellectual Property”. Alnylam Intellectual Property shall mean
Alnylam Know-How and Alnylam Patent Rights, collectively.



     Section 1.3 “Alnylam Know-How”. Alnylam Know-How shall mean any Know-How, other than
Know-How related to [**] and other than Program Know-How, that is (a) developed or acquired by
Alnylam prior to or during the Collaboration Term, (b) used to Discover, Develop, manufacture or
Commercialize Alnylam siRNAs, Medtronic Devices and/or Licensed Products, and (c) Controlled by
Alnylam and (i) used by Alnylam in the Collaboration Program and/or (ii) identified during a
Product Development Program as Know-How that will be used in the Commercialization of Licensed
Products to be Developed in such Product Development Program.



     Section 1.4 “Alnylam Patent Rights”. Alnylam Patent Rights shall mean any Patent
Rights Controlled by Alnylam and Covering Alnylam Know-How, including those Patent Rights set forth
on Schedule 1.4, but excluding Alnylam’s interest in Program Patent Rights. The Parties
acknowledge that Schedule 1.4 attached as of the Restatement Date is identical to
Schedule 1.5 of the Original Collaboration Agreement and has not been modified since the
Effective Date. Alnylam will provide Medtronic with an update to Schedule 1.4 within
thirty (30) days after the Restatement Date.



     Section 1.5 “Alnylam siRNA”. Alnylam siRNA shall mean any siRNA (a) the Discovery,
Development, manufacture, Commercialization or other use of which uses Alnylam Know-How or Program
Know-How or is Covered by Alnylam Patent Rights or Program Patent Rights and (b) that is made
available or approved by Alnylam’s JRDC Representatives for Development in the Collaboration
Program. Subject to Alnylam’s further development obligations pursuant to the siRNA Supply
Agreement, if Alnylam opts out of a Product Development Program pursuant to Section 2.4(a), the
Alnylam siRNAs with respect to the Licensed Product being developed in such Product Development
Program shall be the Alnylam siRNAs made available by Alnylam’s JRDC Representatives for use in the
Development of a Licensed Product in such Development Program prior to such opt-out.



     Section 1.6 “Blocking Third Party Intellectual Property”. Blocking Third Party
Intellectual Property shall mean, on a Licensed Product-by-Licensed Product and country-by-country
basis, Valid Claims that (a) were not Controlled by Medtronic or by Alnylam as of the Restatement
Date, (b) are not acquired or licensed by Medtronic or Alnylam, or any of their Affiliates, from a
Third Party after the Restatement Date pursuant to a Section 2.5(d)(iii) [**] Agreement, and (c)
Cover the manufacture or use of an siRNA or a Device contained in or used in such Licensed Product
in such country. For the avoidance of doubt, Valid Claims Controlled by Alnylam or Medtronic under
a [**] shall not constitute Blocking Third Party Intellectual Property.



     Section 1.7 “[**] shall mean achievement of [**] criteria, determined pursuant to Section
2.3(a), for a Product Development Program as constituting reasonable evidence of [**].



2









 





     Section 1.8 “Collaboration Program”. Collaboration Program shall mean the research
and development program performed by the Parties pursuant to the Original Collaboration Agreement
and to be performed by the Parties pursuant to this Agreement, to Develop Licensed Products.



     Section 1.9 “Collaboration Term”. Collaboration Term shall mean the period commencing
on the Effective Date and ending on the earliest of (a) the expiration or termination of all
Product Development Terms, (b) the date (if any) on which the Collaboration Term is terminated by
mutual written agreement of the Parties and (c) the date of termination of this Agreement in
accordance with the provisions hereof.



     Section 1.10 “Commercialization” or “Commercialize”. Commercialization or
Commercialize shall mean any activities directed to marketing, promoting, distributing, importing,
offering to sell, and/or selling a product, whether before or after Regulatory Approval for such
product has been obtained.



     Section 1.11 “Commercializing Party”. Commercializing Party shall mean, with respect
to each Licensed Product and each country in the Territory, Medtronic, unless and until Alnylam
becomes the Commercializing Party for such Licensed Product in such country due to (a) the exercise
by Medtronic of its opt-out right pursuant to Section 2.4(b) or (b) Alnylam’s termination of
Medtronic’s license rights relating to such Licensed Product in such country pursuant to Section
8.2.



     Section 1.12 “Commercially Reasonable Efforts”. Commercially Reasonable Efforts shall
mean the efforts, expertise and resources normally used by a Party to Discover, Develop,
manufacture and Commercialize a product or compound owned by it or to which it has rights, which is
of similar market potential at a similar stage in its development or product life, taking into
account issues of safety and efficacy, product profile, difficulty in developing the product or
compound, competitiveness of the marketplace for the product, the proprietary position of the
compound or product, the regulatory structure involved, the availability and level of reimbursement
for such treatment by Third Party payors or health insurance plans, the potential total
profitability of the applicable product(s) marketed or to be marketed and other relevant factors
affecting the cost, risk and timing of Development and the total potential reward to be obtained if
a product is Commercialized. The Parties agree that Commercially Reasonable Efforts shall not
require a Party to expend efforts, expertise and resources that such Party would not normally
expend to Discover, Develop, manufacture and Commercialize a product or compound owned by it or to
which it has rights, taking into account the foregoing factors.



     Section 1.13 “Confidential Information”. Confidential Information of a Party shall
mean all Know-How or other information that is of a confidential and proprietary nature to such
Party. Confidential Information includes Know-How or other information (whether or not patentable)
regarding a Party’s technology, products, business information or objectives and reports and audits
under Section 4.7, and all biological materials of a Party. Notwithstanding the foregoing,
Confidential Information shall not include Know-How or other information that:



          (a) was known or used by the receiving Party or its Affiliates prior to its date of disclosure
to the receiving Party as demonstrated by contemporaneous written records; or




3









 








          (b) either before or after the date of the disclosure to the receiving Party is lawfully
disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party
rightfully in possession of such Know-How or other information and not bound by confidentiality
obligations to the disclosing Party; or




          (c) either before or after the date of the disclosure to the receiving Party or its Affiliates
is or becomes published or otherwise is or becomes part of the public domain through no breach
hereof on the part of the receiving Party or its Affiliates; or




          (d) is independently developed by or for the receiving Party or its Affiliates without
reference to or reliance upon the Confidential Information of the disclosing Party as demonstrated
by contemporaneous written records.




     Section 1.14 “Control” or “Controlled”. Control or Controlled, with respect to any
(a) Know-How or other information or materials or (b) intellectual property right, shall mean the
possession (whether by license or ownership) by a Party of the ability to grant to the other Party
access and/or a license as provided herein without violating the terms of any agreement with any
Third Party existing as of the Effective Date or thereafter during the term of the Original
Collaboration Agreement or this Agreement.



     Section 1.15 “Cover”, “Covering” or “Covered”. Cover, Covering or
Covered, with respect to a product or technology, shall mean that, but for a license granted to a
Person under a Valid Claim included in the Patent Rights under which such license is granted, the
Discovery, Development, manufacture, Commercialization and/or other use of such product or practice
of such technology by such Person would infringe such Valid Claim.



     Section 1.16 “CPI”. CPI shall mean 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 1.17 “Develop” or “Development”. Develop or Development shall mean
preclinical and clinical siRNA and/or Device development activities, including test method
development and stability testing, Device design, siRNA-Device compatibility testing, toxicology,
animal efficacy studies, formulation, quality assurance/quality control development, statistical
analysis, clinical studies, regulatory affairs, product approval and registration.



     Section 1.18 “Development Candidate”. Development Candidate shall mean an Alnylam
siRNA that is designated as a Development Candidate by mutual agreement of the Parties.



     Section 1.19 “Development Costs”. Development Costs shall mean FTE Costs incurred and
costs and expenses paid to Third Parties (or payable to Third Parties and accrued in accordance
with GAAP) by either Party after the Restatement Date, in the performance of Development
responsibilities assigned to such Party under a Workplan in accordance with a budget under such
Workplan that has been approved by the JRDC.



4









 





     Section 1.20 “Device”. Device shall mean any implanted infusion device for delivery
of siRNAs to the human nervous system.



     Section 1.21 “Device-Related”. Device-Related, with respect to Know-How or Patent
Rights, shall mean relating specifically to the design or physical features of a Device, any [**] a
Device (excluding [**]), any hardware component of a Device, any software that controls a Device
and/or any associated medical devices or accessories, such as [**], and any use or implantation of
any of the foregoing, but not relating specifically to an siRNA ([**]) to be delivered by such
Device.



     Section 1.22 “Discover” or “Discovery”. Discover or Discovery shall mean any
activities conducted to discover and characterize siRNAs as potential therapeutics in the Field and
to support the designation of the same as Development Candidates in connection with any Product
Development Program.



     Section 1.23 “[**] shall mean an [**] produced [**].



     Section 1.24 “Effective Date”. Effective Date shall mean February 8, 2005.



     Section 1.25 “Exclusivity Field”. Exclusivity Field, with respect to a [**], shall
mean the treatment of Target Indications for which a Licensed Product is to be Commercialized,
using Devices for the direct delivery of siRNAs to the human nervous system [**]. Notwithstanding
the foregoing, (a) the Exclusivity Field shall not include [**] and (b) the term ‘direct delivery
to the human nervous system’ does not encompass [**].



     Section 1.26 “Executive Officers”. Executive Officers shall mean Medtronic’s Senior
Vice President of Medicine and Technology, Medtronic’s Vice President Corporate Technologies and
New Ventures, or the President of Medtronic’s Neurological division (or an officer or employee of
Medtronic then serving in a substantially equivalent capacity) and Alnylam’s Chief Operating
Officer (or the officer or employee of Alnylam then serving in a substantially equivalent
capacity).



     Section 1.27 “FDA”. FDA shall mean the United States Food and Drug Administration.



     Section 1.28 “Field”. Field shall mean the treatment of Neurodegenerative Diseases
using Devices for the direct delivery of siRNAs to the human nervous system [**], it being
understood that “direct delivery to the human nervous system” does not encompass [**]. For the
avoidance of doubt, the Parties agree that treatment of a Neurodegenerative Disease does not
include [**]. Notwithstanding the foregoing, the Field shall not include [**].



     Section 1.29 “First Commercial Sale”. First Commercial Sale, with respect to a
Licensed Product, shall mean the first commercial sale of such Licensed Product by the
Commercializing Party, its Affiliates, distributors and/or agents. Sales for test marketing or
clinical trial purposes shall not constitute a First Commercial Sale.



     Section 1.30 “FTE Cost”. FTE Cost shall mean the product obtained by multiplying (a)
the number of full-time-equivalent person-years (each consisting of a total of [**] hours) of



5









 







scientific, technical or managerial work by each Party’s personnel on or directly related to
any Product Development Program by (b) $[**], increased or decreased annually by the percentage
increase or decrease in the CPI as of December 31 of the then most recently ended calendar year
over the level of the CPI on December 31, 2006 (i.e., the first such increase or decrease would
occur on January 1, 2008).



     Section 1.31 “GAAP”. GAAP shall mean then current United States generally accepted
accounting principles, consistently applied.



     Section 1.32 “Gene Target”. Gene Target shall mean [**].



     Section 1.33 “IND”. IND shall mean an application submitted to a Regulatory Authority
to initiate human clinical trials, including (a) an Investigational New Drug application or any
successor application or procedure filed with the FDA, (b) except where otherwise specifically
provided in this Agreement, any foreign equivalent of a U.S. Investigational New Drug application,
and (c) all supplements and amendments that may be filed with respect to the foregoing.



     Section 1.34 “Initial PDP Workplan”. Initial PDP Workplan shall mean the Workplan for
the Initial Product Development Program agreed by the Parties as of the Restatement Date, as
amended by the JRDC from time to time.



     Section 1.35 “Initial Product Development Program”. Initial Product Development
Program shall mean the Discovery and Development activities to be performed by the Parties
hereunder with respect to Licensed Product(s) for the treatment of Huntington’s disease.



     Section 1.36 “JCC Representative”. JCC Representative shall mean a Party’s
representative designated by such Party to serve on the JCC pursuant to Section 2.2(b).



     Section 1.37 “JRDC Representative”. JRDC Representative shall mean a Party’s
representative designated by such Party to serve on the JRDC pursuant to Section 2.2(a).



     Section 1.38 “[**] Agreement”. [**] Agreement shall mean that certain [**] Research
Agreement, signed in [**], by and between Medtronic and [**].



     Section 1.39 “Know-How”. Know-How shall mean any tangible or intangible know-how,
expertise, discoveries, inventions, information, data or materials, including ideas, concepts,
formulas, methods, procedures, designs, technologies, compositions, plans, applications, technical
data, samples, chemical compounds and biological materials and all derivatives, modifications and
improvements thereof.



     Section 1.40 “Launch Costs”. Launch Costs shall mean, with respect to a Licensed
Product in the US Territory, the incremental portion of FTE Costs and costs and expenses paid to
Third Parties (or payable to Third Parties and accrued in accordance with GAAP) in connection with
pre-launch [**] market development, and the pre-launch [**] promotion, marketing, selling and
product support, of such Licensed Product (excluding cost of goods sold) in the US Territory, in
accordance with the budget for such Launch Costs that has been approved by the JCC, that represents
the amount of such FTE Costs and costs and expenses paid to Third Parties



6









 







that is in excess of levels of similar Commercialization expenses that are incurred in periods
[**] following First Commercial Sale. Launch Costs shall include the incremental portion described
above for the following expenses related to (or the portion thereof reasonably allocable to) the
promotion, marketing, selling and product support of such Licensed Product in the US Territory: (i)
Third Party marketing expenses (training materials etc.) as well as internal cost for preparation
of materials; (ii) medical education events; (iii) convention expenses; (iv) sales calls, (v)
market research costs, (vi) sales rep training, (vii) physician training and education, (viii)
referral or local marketing events, and (ix) senior product manager.



     Section 1.41 “Licensed Product”. Licensed Product shall mean a Product within the
Field that includes, as an active pharmaceutical ingredient, an Alnylam siRNA for delivery via a
Medtronic Device, together with such Medtronic Device, associated delivery hardware, and
disposables, in each case whether or not uniquely developed for exclusive delivery of Alnylam
siRNA(s).



     Section 1.42 “Listed or Approved Third Party Agreement”. Listed or Approved Third
Party Agreement shall mean any agreement listed on Schedule 1.42 or approved by the JRDC
following the Effective Date pursuant to which Alnylam and/or Medtronic acquire or license from a
Third Party Valid Claims that Cover an Alnylam siRNA or a Medtronic Device contained or used, alone
or in combination, in a Licensed Product. In addition, any agreement between Alnylam and [**]
under which Patent Rights are sublicensed to Medtronic pursuant to Section 3.1(e) shall be deemed
to be a Listed or Approved Third Party Agreement.



     Section 1.43 “Major Market”. Major Market shall mean any of the United States,
France, Germany, Italy, Spain, the United Kingdom or Japan.



     Section 1.44 “Manufacturing Cost”. Manufacturing Cost, with respect to the
manufacture and/or supply of Alnylam siRNAs or Medtronic Devices for incorporation into Licensed
Products, shall mean (a) if either Party or an Affiliate of either Party manufactures such Alnylam
siRNAs or Medtronic Devices, such Party’s and/or its Affiliates’ aggregate manufacturing costs,
which aggregate costs shall consist of (i) internal and out-of-pocket costs of raw materials, labor
and other variable costs directly incurred in the manufacture of such Alnylam siRNAs or Medtronic
Devices and (ii) reasonable and appropriate allocations (excluding [**]) pursuant to GAAP of
Alnylam siRNA or Medtronic Device manufacturing overhead costs, as applicable, or (b) [**] to a
Third Party, such Party’s aggregate internal and out-of-pocket costs of procuring such [**] from
the Third Party, testing such [**] and putting such [**].



     Section 1.45 “Medtronic Device”. Medtronic Device shall mean, with respect to a
particular Product Development Program, any Device that is made available or approved by
Medtronic’s JRDC Representatives for use in the Development of a Licensed Product in such Product
Development Program. Subject to Medtronic’s further development obligations pursuant to the Device
Supply Agreement, if Medtronic opts out of a Product Development Program pursuant to Section
2.4(b), the Medtronic Device with respect to the Licensed Product being developed in such Product
Development Program shall be the Medtronic Device made available by Medtronic’s JRDC
Representatives for use in the Development of a Licensed Product in such Development Program prior
to such opt-out.



7









 





     Section 1.46 “Medtronic Fiscal Quarter”. Medtronic Fiscal Quarter shall mean
Medtronic’s fiscal quarters used for financial reporting purposes which, as of the Effective Date
are the 13-week periods ending on the last Friday in July, October, January and April.



     Section 1.47 “Medtronic Fiscal Year”. Medtronic Fiscal Year shall mean Medtronic’s
fiscal year used for financial reporting purposes, which, as of the Effective Date, is a period
consisting of four consecutive Medtronic Fiscal Quarters, and ending on the last Friday in April of
the applicable year.



     Section 1.48 “Medtronic Intellectual Property”. Medtronic Intellectual Property shall
mean Medtronic Know-How and Medtronic Patent Rights, collectively.



     Section 1.49 “Medtronic Know-How”. Medtronic Know-How shall mean any Know-How, other
than Know-How related to [**] and other than Program Know-How, that is (a) developed or acquired by
Medtronic prior to or during the Collaboration Term, (b) used to Discover, Develop, manufacture or
Commercialize Alnylam siRNAs, Medtronic Devices and/or Licensed Products, and (c) Controlled by
Medtronic and (i) used by Medtronic in the Collaboration Program and/or (ii) identified during a
Product Development Program as Know-How that will be used in the Commercialization of Licensed
Products to be Developed in such Product Development Program.



     Section 1.50 “Medtronic Patent Rights”. Medtronic Patent Rights shall mean any Patent
Rights Controlled by Medtronic and Covering Medtronic Know-How, excluding Medtronic’s interest in
Program Patent Rights.



     Section 1.51 “NDA”. NDA shall mean an application submitted to a Regulatory Authority
for marketing approval of a product, including (a) a New Drug Application, Product License
Application or Biologics License Application filed with FDA or any successor applications or
procedures, (b) a foreign equivalent of a U.S. New Drug Application, Product License Application or
Biologics License Application or any successor applications or procedures, and (c) all supplements
and amendments that may be filed with respect to the foregoing.



     Section 1.52 “Net Sales”. Net Sales, with respect to a particular Licensed Product in
a particular period, shall mean the gross amount invoiced by the Commercializing Party, its
Affiliates and/or its sublicensees on sales or other dispositions (excluding sales or dispositions
for use in clinical trials or other scientific testing, in either case for which Commercializing
Party receives no revenue) of the Licensed Product to unrelated Third Parties during such period,
less the following deductions:



          (a) Trade, cash and quantity discounts actually allowed and taken directly with respect to
such sales or other dispositions;




          (b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and paid directly with
respect to the delivery, sale or use of the Licensed Product and included and separately stated in
the applicable invoice (excluding national, state or local taxes based on income);




8









 








          (c) Amounts repaid or credited by reason of rejections, defects, recalls or returns or because
of reasonable and customary chargebacks, refunds, rebates or retroactive price reductions;




          (d) Amounts previously included in Net Sales of Licensed Products that are written-off by the
Commercializing Party as uncollectible in accordance with the Commercializing Party standard
practices for writing off uncollectible amounts consistently applied; provided that
if any such written-off amounts are subsequently collected, such collected amounts shall be
included in Net Sales in the period in which they are subsequently collected; and




          (e) Freight, insurance and other transportation charges incurred in shipping a Licensed
Product to Third Parties, included and separately stated in the applicable invoice.



Such amounts shall, subject to the provisions of Sections 4.7 and 4.8, be determined from the books
and records of the Commercializing Party, its Affiliates and/or its sublicensees, maintained in
accordance with GAAP, consistently applied.




     Section 1.53 “Neurodegenerative Disease”. Neurodegenerative Disease shall mean a
disease of the brain and/or spinal cord in humans that is characterized by the chronic and
progressive death of neurons which leads to the loss of normal neural function. Such diseases
include, but are not limited to, Parkinson’s disease, Huntington’s disease, Alzheimer’s disease,
and amyotrophic lateral sclerosis. For the avoidance of doubt, Neurodegenerative Disease shall not
include [**].



     Section 1.54 “Party”. Party shall mean Alnylam or Medtronic; “Parties” shall mean
Alnylam and Medtronic. As used in this Agreement, references to “Third Parties” do not include a
Party or its Affiliates.



     Section 1.55 “Patent Rights”. Patent Rights shall mean United States and foreign
patents, patent applications and/or provisional patent applications, utility models and utility
model applications, design patents or registered industrial designs and design applications or
applications for registration of industrial designs, and all substitutions, divisionals,
continuations, continuation-in-part applications, continued prosecution applications, reissues,
reexaminations and extensions thereof.



     Section 1.56 “Person”. Person shall mean any corporation, limited or general
partnership, limited liability company, joint venture, trust, unincorporated association,
governmental body, authority, bureau or agency, any other entity or body, or an individual.



     Section 1.57 “Phase I Study”. Phase I Study shall mean a study of an siRNA or Product
in human volunteers or patients the purpose of which is preliminary determination of safety and
tolerability of a dosing regime and for which there are no primary endpoints (as recognized by FDA
or other Regulatory Authorities) in the protocol relating to efficacy.



     Section 1.58 “Phase II(a) Study”. Phase II(a) Study shall mean a preliminary efficacy
and safety study of an siRNA or Product in the target patient population designed to demonstrate
Clinical Proof of Concept.



9









 





     Section 1.59 “Phase II(b) Study”. Phase II(b) Study shall mean a study of an siRNA or
Product to evaluate further any preliminary efficacy observed for, and the safety of, the siRNA or
Product in the target patient population and/or to provide data that may be useful in the design of
subsequent studies of the siRNA or Product such as Phase III Studies or Pivotal Studies.



     Section 1.60 “Phase III Study”. Phase III Study shall mean a controlled study to
confirm with statistical significance the efficacy and safety of an siRNA or Product performed to
obtain marketing and/or manufacturing approval for the product in any country.



     Section 1.61 “[**] Opt Out”. [**] Opt Out shall mean, with respect to a Product
Development Program, that a Party exercised its option to opt out of such Product Development
Program pursuant to Section 2.4 any time after a [**] for the Initial Product Development Program
or after the Restatement Date for any Additional Product Development Program but prior to the [**]
with respect to any Alnylam siRNA included in such Product Development Program.



     Section 1.62 “[**] Opt Out”. [**] Opt Out shall mean, with respect to a Product
Development Program, that a Party exercised its option to opt out of such Product Development
Program pursuant to Section 2.4 any time after the [**] but prior to the achievement of [**] with
respect to any Alnylam siRNA included in such Product Development Program.



     Section 1.63 “[**] Opt Out”. [**] Opt Out shall mean, with respect to a Product
Development Program, that a Party exercised its option to opt out of such Product Development
Program pursuant to Section 2.4 any time after the achievement of [**] but prior to the end of the
Product Development Term.



     Section 1.64 “[**] Opt Out”. [**] Opt Out shall mean, with respect to a Product
Development Program, that a Party exercised its option to opt out of such Product Development
Program pursuant to Section 2.4 at any time after the [**] but prior to the [**] with respect to
any Alnylam siRNA included in such Product Development Program.



     Section 1.65 “Preliminary Success Criteria”. Preliminary Success Criteria shall mean
the suppression, distribution and therapeutic criteria with respect to an Alnylam siRNA under the
Initial Product Development Program as shall be agreed by the Parties or as shall be [**] pursuant
to Section 2.3(a).



     Section 1.66 “Primary Sequence or Chemical Modification Know-How”. Primary Sequence
or Chemical Modifications Know-How shall mean information about the primary sequence of any siRNA
or chemical modifications incorporated into any siRNA.



     Section 1.67 “Product”. Product shall mean a human therapeutic product that includes
siRNA(s) as active pharmaceutical ingredient(s) delivered or approved for delivery via a Device,
together with any Device, associated delivery hardware, and disposables whether or not uniquely
developed for exclusive delivery of such siRNA(s).



     Section 1.68 “Product Development Program”. Product Development Program shall mean
the Initial Product Development Program and/or any Additional Product Development Program(s).



10









 





     Section 1.69 “Product Development Term”. Product Development Term, with respect to
each Product Development Program, shall mean the period commencing on (a) with respect to the
Initial Product Development Program, the Restatement Date, and (b) with respect to any Additional
Product Development Program, the date on which the Parties mutually agree to commence such
Additional Product Development Program in accordance with Section 2.3(e), and, subject to [**],
ending on the earliest date on which a First Commercial Sale of Licensed Product(s) for the
treatment of each of the Target Indication(s) designated for such Product Development Program has
occurred.



     Section 1.70 “Program Intellectual Property”. Program Intellectual Property shall
mean Program Know-How and Program Patent Rights, collectively.



     Section 1.71 “Program Know-How”. Program Know-How shall mean any Know-How or interest
therein, other than Know-How related to [**], that is developed or acquired, either solely by a
Party and/or its Affiliate(s) or jointly by both Parties and/or their Affiliate(s), in the conduct
of the Collaboration Program. For the avoidance of doubt, any Know-How, including any Know-How
that is Covered by Patent Rights Controlled by Medtronic, that is sublicensed by Medtronic to
Alnylam (or, in the case of Know-How assigned to Medtronic under the [**] Agreement, that is
licensed by Medtronic to Alnylam) under the letter agreement dated [**] between the Parties
concerning the [**] Agreement shall be deemed Program Know-How hereunder.



     Section 1.72 “Program Patent Rights”. Program Patent Rights shall mean any Patent
Rights or interest therein Controlled by either Party or Controlled jointly by the Parties that
Cover Program Know-How.



     Section 1.73 “Regulatory Approval”. Regulatory Approval shall mean the approval of
the applicable Regulatory Authority necessary for the marketing and sale of a Licensed Product for
a particular indication in a country, excluding separate pricing and/or reimbursement approvals
that may be required.



     Section 1.74 “Regulatory Authority”. Regulatory Authority shall mean a federal,
national, multinational, state, provincial or local regulatory agency, department, bureau or other
governmental entity with authority over the testing, manufacture, use, storage, import, promotion,
marketing or sale of a Product in a country or territory.



     Section 1.75 “ROW Territory”. ROW Territory shall mean all countries in the world
other than the US Territory.



     Section 1.76 “Royalty Term”. Royalty Term, with respect to each Licensed Product in
each country of the Territory, shall mean the period of time commencing with the First Commercial
Sale of such Licensed Product in such country and ending on the later of (a) the latest date on
which the use, offer for sale, sale or importation of such Licensed Product in such country or the
manufacture of such Licensed Product in the country of manufacture is Covered by a Valid Claim of
Alnylam Patent Rights, Medtronic Patent Rights or Program Patent Rights, or (b) a specified number
of years after First Commercial Sale of such Licensed Product in such



11









 







country, which number shall be fifteen (15) years with respect to any Licensed Product
resulting from the Initial Product Development Program.



     Section 1.77 “Section 2.5(d)(iii) [**] Agreement”. Section 2.5(d)(iii) [**]
Agreement shall mean an agreement entered into by a [**] with a Third Party, as described in
Section 2.5(d)(iii), that was not approved by the JRDC.



     Section 1.78 “siRNA”. siRNA shall mean a composition designed to act primarily
through an RNAi mechanism which consists of either (a) two separate oligomers of native or
chemically modified RNA that are hybridized to one another along a substantial portion of their
lengths, or (b) a single oligomer of native or chemically modified RNA that is hybridized to itself
by self-complementary base-pairing along a substantial portion of its length to form a hairpin.



     Section 1.79 “Target Indication”. Target Indication shall mean, with respect to an
Alnylam siRNA Developed in the Initial Product Development Program, Huntington’s disease, and, with
respect to an Alnylam siRNA Developed in any Additional Product Development Program, each human
disease or condition that is designated by the Parties as a Target Indication with respect to such
Alnylam siRNA in accordance with Section 2.3(e).



     Section 1.80 “Territory”. Territory shall mean, subject to Section 8.2(b), the US
Territory and/or the ROW Territory.



     Section 1.81 “Third Party”. Third Party shall mean any Person other than Alnylam or
Medtronic and their respective Affiliates.



     Section 1.82 “US Territory”. US Territory shall mean the United States of America,
including its territories, possessions and Puerto Rico.



     Section 1.83 “Valid Claim”. Valid Claim shall mean (a) a claim 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) a claim of any published patent application filed by a Party in good faith that has not been
cancelled, withdrawn or abandoned, nor been pending for more than [**] years from the filing date
of the earliest patent application from which such patent application claims priority.



     Section 1.84 “Workplan”. Workplan shall mean the Initial PDP Workplan or any other
work plan describing the activities to be undertaken during the applicable Product Development
Program, as adopted, updated or amended pursuant to Section 2.3.



     Section 1.85 Additional Definitions. Each of the
following definitions is set forth in the section of this
Agreement indicated below:



12









 





	 	 	 	 
	Definition	 	Section
	“Additional Product Development Program”
	 	 	2.3(e)
	“Agreement”
	 	 	Preamble
	“Alnylam”
	 	 	Preamble
	“Alnylam Discontinuation Notice”
	 	 	2.4(a)
	“Alnylam Indemnified Parties”
	 	 	9.1(a)
	“[**] Agreement”
	 	 	Schedule 1.42
	“[**] Licensors”
	 	 	3.2(e)
	“Breaching Party”
	 	 	8.2(a) or 8.2(c)
	“[**]”
	 	 	2.5(d)
	“[**]”
	 	 	9.3
	“[**]”
	 	 	3.1(e)
	“Device Inventions”
	 	 	5.1(b)
	“Device Supply Agreement”
	 	 	8.4(a)(vii)
	“Electing Party”
	 	 	5.2(c)
	“Enjoined Period”
	 	 	4.6
	“Exclusive Negotiation Period”
	 	 	2.5(c)(ii)
	“GI”
	 	 	Schedule 1.42
	“GI Agreements”
	 	 	Schedule 1.42
	“Go Decision”
	 	 	2.3(c)(i)
	“Indemnified Party”
	 	 	9.1(d)
	“Indemnifying Party”
	 	 	9.1(d)
	“Initial Commitment”
	 	 	4.1(a)
	“Invalidity Claim”
	 	 	5.4(c)
	“Isis Agreement”
	 	 	Schedule 1.42
	“JCC”
	 	 	2.1
	“Jointly Developed Inventions”
	 	 	5.1(c)
	“JRDC”
	 	 	2.2(a)
	“[**]”
	 	 	2.3(d)
	“Losses”
	 	 	9.1(a)
	“[**]”
	 	 	2.5(a)
	“Medtronic”
	 	 	Preamble
	“Medtronic Discontinuation Notice”
	 	 	2.4(b)
	“Medtronic Indemnified Parties”
	 	 	9.1(b)
	“[**] Agreement”
	 	 	Schedule 1.42
	“[**] Agreement”
	 	 	Schedule 1.42
	“No-Go Decision”
	 	 	2.3(c)(i)
	“Non-Breaching Party”
	 	 	8.2(a) or 8.2(c)
	“Non-Electing Party”
	 	 	5.2(c)
	“Non-Performing Party”
	 	 	2.3(f)
	“Original Collaboration Agreement”
	 	 	Introduction
	“Performing Party”
	 	 	2.3(f)
	“[**]”
	 	 	Schedule 1.42
	“Program Data”
	 	 	5.1(e)
	“Quarterly Reports”
	 	 	4.6(a)
	“[**]”
	 	 	2.5(d)
	“Reimbursable Launch Costs”
	 	 	4.3(f)






13









 






	 	 	 	 
	Definition	 	Section
	“Restatement Date”
	 	 	Preamble
	“Right of Access”
	 	 	5.1(e)
	“RoFN Notice”
	 	 	2.5(c)(i)
	“RoFN Offer”
	 	 	2.5(c)(iii)
	“RoFN Opportunity”
	 	 	2.5(c)
	“RoFN Response Notice”
	 	 	2.5(c)(i)
	“RoFN Response Period”
	 	 	2.5(c)(i)
	“RoFN Term”
	 	 	2.5(c)
	“SEC”
	 	 	6.1
	“Severed Clause”
	 	 	9.11
	“siRNA Supply Agreement”
	 	 	2.6(b)
	“Sole Inventions”
	 	 	5.1(c)
	“Stanford Agreement”
	 	 	Schedule 1.42
	“Third Party Infringement Claim”
	 	 	5.4(a)
	“[**]”
	 	 	2.5(a)






Article II




Collaboration Program; Commercialization




     Section 2.1 General. Prior to the Restatement Date, the Parties conducted the
Technology Development Program (as defined in the Original Collaboration Agreement). Pursuant to
the terms of this Agreement, the Parties have agreed to terminate the Technology Development
Program and to transition their collaboration on the Discovery, Development, manufacture and
Commercialization of Licensed Products to the Initial Product Development Program commencing on the
Restatement Date. The objective of the Collaboration Program shall continue to be the Discovery
and Development of Licensed Products. Both Parties will continue to be engaged in the conduct of
the Collaboration Program, and shall be responsible for various Collaboration Program activities as
set forth in this Agreement. In connection with this amendment and restatement of the Original
Collaboration Agreement, the Parties have also agreed to establish a Joint Commercialization
Committee (the “JCC”) to oversee the Commercialization of Licensed Products



     Section 2.2 Governance; Decision-Making.



          (a) JRDC. The Joint Research and Development Committee (the “JRDC”) shall be
comprised of four (4) JRDC Representatives designated by Alnylam and four (4) JRDC Representatives
designated by Medtronic, one of which JRDC Representatives from each Party shall be designated as
the co-chair of the JRDC and each of which JRDC Representatives shall be of the seniority and
experience appropriate for service on the JRDC in light of the functions, responsibilities and
authority of the JRDC. The JRDC shall continue to oversee the worldwide research and development
activities of the Parties under the Collaboration Program, including regulatory matters, as set
forth below. Each Party shall make its designation of its post-Restatement Date JRDC
Representatives not later than thirty (30) days after the Restatement
Date. Subject to Sections 2.2(c) and 2.4 below, the JRDC shall meet at least quarterly until
the




14









 







end of the Collaboration Term, to (i) review the efforts of the Parties in the conduct of the
Collaboration Program and monitor the progress of the Product Development Program(s) on a regular
basis, (ii) review and, subject to Sections 2.2(e) and 2.3(a), approve proposed updates and
amendments to the Workplan for each Product Development Program, and (iii) otherwise oversee and
direct the Collaboration Program activities undertaken pursuant to this Agreement. The JRDC shall
be dissolved and its activities and authority terminated upon the earliest of (A) the end of the
Collaboration Term, (B) Alnylam’s election to discontinue participation in the JRDC pursuant to
Section 2.2(c), and (C) the exercise by either Party of its right to opt out of all Product
Development Programs pursuant to Section 2.4.




          (b) JCC. Upon filing of an NDA in the United States for a Licensed Product hereunder,
the Parties shall establish the JCC, comprised of three (3) JCC Representatives designated by
Alnylam and three (3) JCC Representatives designated by Medtronic, each of which JCC
Representatives shall be of the seniority and experience appropriate for service on the JCC in
light of the functions, responsibilities and authority of the JCC. The JCC shall be responsible
for overseeing Commercialization activities of the Parties with respect to Licensed Product in the
United States. Subject to Sections 2.2(c) and 2.4 below, the JCC shall meet at least quarterly
until the end of the last-to-expire Royalty Term for a Licensed Product in the United States.




          (c) Alnylam Right to Discontinue Participation. At any time after filing of an NDA in
the United States for a Licensed Product hereunder, Alnylam shall have the right to discontinue its
participation in the JRDC and/or the JCC, and such discontinuation by Alnylam shall not constitute
a breach of any of Alnylam’s obligations hereunder. For the avoidance of doubt, Alnylam may
exercise its right to discontinue its participation in the JRDC and/or the JCC pursuant to this
Section 2.2(c) without opting out of any Product Development Program pursuant to Section 2.4(a).




          (d) Meetings; Representatives. The location of such meetings of the JRDC and JCC
shall alternate between Minneapolis, MN and Cambridge, MA, unless otherwise agreed by the JRDC or
JCC, as the case may be. The JRDC and JCC may also meet by means of a telephone or video
conference call, and may take action by vote at a meeting or telephone or video conference call, or
pursuant to a written vote; provided that the JRDC and the JCC shall hold at least one meeting per
year in person in Minneapolis and one meeting per year in person in Cambridge. Each Party may
change any one or more of its JRDC Representatives or JCC Representatives, as the case may be, at
any time upon written notice to the other Party. Each Party shall use Commercially Reasonable
Efforts to cause its JRDC Representatives and JCC Representatives to attend the meetings of the
JRDC and JCC, respectively. If any of a Party’s JRDC Representatives or JCC Representatives, as
the case may be, is unable to attend a meeting, such Party may designate an alternate to attend
such meeting in place of the absent JRDC Representative or JCC Representative. In addition, each
Party may, at its discretion, invite non-voting employees, and, with the consent of the other
Party, consultants or scientific advisors (provided they are engaged as such under obligations of
confidentiality) to attend the meetings of the JRDC or JCC.



          (e) Decision-Making Authority. All decisions of the JRDC and JCC, as the case may be,
shall be made by majority vote, with each Party’s JRDC


15









 








Representatives or JCC Representatives
collectively having one vote, and the goal of all decision making shall be to achieve consensus.
Upon fifteen (15) days prior written notice, either Party may convene a special meeting of the JRDC
or JCC, as the case may be, for the purpose of resolving any failure to reach agreement on a matter
within the scope of the authority and responsibility of the JRDC or JCC, as the case may be. If
the JRDC or JCC, as the case may be, is unable to reach agreement on any matter so referred to it
for resolution by one or more of the Parties within thirty (30) days after the matter is so
referred to it, such matter shall be referred to the Executive Officers for resolution. If the
matter is not resolved by the Executive Officers within thirty (30) days after referral to the
Executive Officers, then:




               (i) if such matter relates primarily to Collaboration Program activities with respect to any
Alnylam siRNA, Alnylam shall have the right to decide the matter; provided that
Alnylam has not discontinued its participation in the JRDC pursuant to Section 2.2(c) or opted out
of the Product Development Program pursuant to Section 2.4; provided further
that, if Alnylam has discontinued its participation in the JRDC pursuant to Section 2.2(c)
or opted out of the Product Development Program pursuant to Section 2.4, Medtronic shall have the
right to decide the matter;



               (ii) notwithstanding clause (i) above, if such matter relates primarily to the Development of
Medtronic Devices for use in Licensed Products, Medtronic shall have the right to decide the
matter; provided that Medtronic has not opted out of the Product Development
Program pursuant to Section 2.4; provided further that, if Medtronic has
opted out of the Product Development Program pursuant to Section 2.4, Alnylam shall have the right
to decide the matter;



               (iii) if such matter relates primarily to Commercialization matters, the Commercializing Party
shall have the right to decide the matter; provided that the budget for Launch
Costs for any Licensed Product shall be subject to the approval of both Parties, such approval not
to be unreasonably withheld, delayed or conditioned; and



               (iv) if such matter is not described in paragraphs (i), (ii) or (iii) above, then neither
Party shall have the unilateral right to decide the matter.


Notwithstanding anything in this Section 2.2(e), neither Party shall have a unilateral right to
resolve any dispute involving the breach or alleged breach of this Agreement, to amend or modify
this Agreement or the Parties’ respective rights and obligations hereunder or, except as expressly
provided in this Section 2.2(e), any Workplan or the Parties’ respective rights and obligations
thereunder.



Furthermore, notwithstanding anything in this Section 2.2(e), neither Party shall have a unilateral
right to amend or modify any Workplan if such amendment or modification would require the use of
additional Know-How or a license under additional Patent Rights that is Controlled by the other
Party and subject to financial obligations to any Third Party (other than financial obligations
under a Section 2.5(d)(iii) [**] Agreement) unless in connection with such amendment or
modification the applicable Third Party agreement (other than a Section
2.5(d)(iii) [**] Agreement) is approved by the JRDC as a Listed or Approved Third Party Agreement.




16









 








     Section 2.3 Conduct of the Collaboration Program.



          (a) Workplans. The Parties shall undertake each Product Development Program in
accordance with a Workplan for such Product Development Program. The Initial PDP Workplan has been
agreed by the Parties as of the Restatement Date, except that (i) the Preliminary Success Criteria
shall be agreed by the Parties within ninety (90) days after the Restatement Date or, if the
Parties are unable to agree within such 90-day period, each Party shall notify the other Party, in
writing, of [**] Preliminary Success Criteria, and (ii) the [**] criteria for the Initial Product
Development Program, including the design and protocols for conducting studies suitable to
demonstrate [**], shall be agreed to by the Parties within [**]; provided that if
the Parties are unable to agree upon the [**] criteria within such [**] period, then either Party
may refer the matter for resolution pursuant to the procedures set forth in the second and third
sentences of Section 2.2(e). The first dosing of a participant in the first such Phase II(a) Study
or Phase II(b) Study shall not be undertaken by or on behalf of either Party until after the [**]
criteria have been determined and documented for such Product Development Program. Notwithstanding
anything to the contrary in a Workplan, Medtronic shall not have any liability for any failure to
develop any improvement to or next generation of a Medtronic Device. The Workplan, the license
royalty rates and the minimum duration of the Royalty Term for each Additional Product Development
Program shall be agreed by the Parties in connection with the Parties’ agreement to initiate such
Additional Product Development Program. Each Workplan shall address, in reasonable detail, the
roles and responsibilities of each Party with respect to the Discovery and Development of Licensed
Product(s) covered by such Product Development Program, including each Party’s roles and
responsibilities with respect to (x) clinical study activities, such as filing INDs with Regulatory
Authorities, the selection of centers, negotiation and execution of clinical agreements, training,
monitoring, data collection, notice of adverse events and other regulatory requirements, and (y)
other activities as necessary to effect the Discovery and Development of Licensed Products under
such Collaboration Program. Such Workplan shall further (A) set forth the Target Indication(s) for
the corresponding Product Development Program, (B) include budgets for the Parties’ Discovery and
Development activities pursuant to such Product Development Program, and (C) except as provided
above with respect to the Initial Workplan, set forth the clinical results which, if achieved,
would demonstrate [**] for such Product Development Program and the design and protocols for
conducting studies suitable to demonstrate whether such results are achieved. The Parties
acknowledge that in the course of the Collaboration Program, the Parties (but not the JRDC) may
modify the designation of the Development Candidate and Target Indication(s), the clinical results
which, if achieved, would demonstrate [**], and the design and protocols for conducting studies
designed to produce such clinical results, by amending the relevant Workplan to reflect such
modification(s). Subject to the foregoing, each Workplan shall be updated annually by the JRDC.
Each Party, through its JRDC Representatives may, at any time or from time to time, also submit
proposed additions, updates or amendments to the Workplan to the JRDC for its review and approval.
Any such additions, updates or amendments shall not become effective until approved in writing by
the JRDC. The JRDC shall review and consider any such proposed Workplans, additions, updates or
amendments on an expeditious basis, and all such Workplans, additions, updates and amendments
approved as set forth above
 shall thereafter govern the
Parties’ Discovery and Development activities pursuant to the applicable Product Development
Program.




17









 








          (b) General Responsibilities of Each Party. Subject to Section 2.4,




               (i) Medtronic shall be responsible for all Collaboration Program activities relating to the
Development, manufacture and Commercialization of Licensed Product(s) solely for sale in the ROW
Territory.



               (ii) Each Party shall use Commercially Reasonable Efforts to (A) undertake the
responsibilities assigned to such Party in any applicable Workplan, (B) perform its obligations
hereunder in a scientifically sound and workmanlike manner; (C) as appropriate, make available to
the other Party those resources set forth in any applicable Workplan; and (D) carry out all work
done in the course of the Collaboration Program in material compliance with all applicable federal,
state or local laws, regulations and guidelines governing the conduct of such work. Either Party
may perform its Collaboration Program responsibilities hereunder through its Affiliates or through
the use of Third Party contractors such as contract research organizations, contract employees,
consultants and the like who merely conduct activities on behalf of such Party, are subject to such
Party’s supervision and control, and will not have any rights (other than non-exclusive research
rights) in any intellectual property created in conjunction with such activities; provided
that such Party shall remain primarily liable for its obligations under this Agreement.



          (c) Initial Commitment; Go/No-Go Decision.




               (i) The initial phase of the Initial Product Development Program shall consist of certain
activities designated in the Initial PDP Workplan directed toward the achievement of the mutually
agreed Preliminary Success Criteria or, if the Parties are unable to agree upon the Preliminary
Success Criteria, the achievement of [**]. Such initial phase activities consist primarily of [**]
studies, and the Parties’ funding obligations with respect to such activities are set forth in
Section 4.1(a). Upon completion of such initial phase activities, the Parties will continue the
Initial Product Development Program if (A) both Parties agree that the mutually agreed Preliminary
Success Criteria or, if the Parties are unable to agree upon the Preliminary Success Criteria, [**]
Preliminary Success Criteria have been achieved, (B) both Parties otherwise agree to continue, or
(C) the Parties are unable to agree as to whether the mutually agreed Preliminary Success Criteria
or, if the Parties are unable to agree upon the Preliminary Success Criteria, [**] Preliminary
Success Criteria have been achieved, and a [**] determines that the mutually agreed Preliminary
Success Criteria or, if the Parties are unable to agree upon the Preliminary Success Criteria, [**]
Preliminary Success Criteria have been achieved pursuant to Section 2.3(d)(i) (a “Go
Decision”). Alternatively, subject to Section 2.3(c)(iii), the Initial Product Development
Program will not continue beyond the Initial Commitment if either (x) the mutually agreed
Preliminary Success Criteria or, if the Parties are unable to agree upon the Preliminary Success
Criteria, [**] Preliminary Success Criteria have not been achieved or (y) the Parties are unable to
agree as to whether the Preliminary Success Criteria have been achieved and a [**] determines that
the mutually agreed Preliminary Success Criteria or, if the Parties are unable to agree upon the
Preliminary Success Criteria, [**]
Preliminary Success Criteria have not been achieved pursuant to Section 2.3(d)(i) (a
“No-Go Decision”).



18









 





               (ii) If a Go Decision results from the initial phase of the Initial Product Development
Program, the Parties shall proceed to the next phase of Development under the Initial PDP Workplan.



               (iii) If a No-Go Decision results from the initial phase of the Initial Product Development
Program, the Parties shall not proceed to the next phase of Development under the Initial PDP
Workplan and, unless otherwise agreed by the Parties, either Party may terminate this Agreement in
accordance with Section 8.3.



          (d) Certain Matters Subject to Third Party Determination.




               (i) The Parties shall submit to a panel of three [**] the following matters: (A) if the
Parties are unable to agree, whether the [**], (B) whether the [**] or (C) if the Parties are
unable to agree, whether [**] in any Product Development Program. One member of any such [**]
shall be nominated by Alnylam, one member shall be nominated by Medtronic and the third shall be
selected by the two members nominated by the Parties. If the Parties pursue more than one Product
Development Program, the Parties may elect to [**] for different Product Development Programs in
order to [**] of the respective Product Development Programs. The determination of such [**] as to
such dispute shall be binding on both Parties. Each Party shall be responsible for [**] member
nominated by it and the Parties shall share equally in [**]. The Parties may also elect by mutual
agreement to use a [**] for guidance on other issues that may arise in the course of the
Collaboration Program.



               (ii) If the Parties have not entered into an siRNA Supply Agreement within the timeframe set
forth in Section 2.6(b) or a Device Supply Agreement within the timeframe set forth in Section
8.4(a)(vii), the Parties shall [**] (in the case of the siRNA Supply Agreement) or [**] (in the
case of the Device Supply Agreement) for the purpose of promptly finalizing negotiations of the
applicable agreement. Each Party shall [**]. Such [**] shall [**] the provisions set forth in
Exhibit A or Exhibit D, as applicable and, to the extent not addressed in
Exhibit A or Exhibit D, as applicable, [**]. The Parties shall enter into the form
of agreement [**] within one (1) week of [**].



          (e) Additional Product Development Programs. At any time during the Collaboration
Term, either pursuant to Section 2.5(c) or otherwise, the Parties may mutually agree (i) to discuss
and, if the Parties agree, initiate additional program(s) (each, an “Additional Product
Development Program”) to Discover and Develop additional Alnylam siRNA(s), Development
Candidate(s) and Licensed Product(s) in the Field, (ii) to adopt additional Workplan(s) for any
such Additional Product Development Program(s), and (iii) on the Target Indication(s) for Alnylam
siRNA(s) or Development Candidate(s) within each such Additional Product Development Program. In
connection with each JRDC meeting, each Party shall provide to the other Party any material data
and information Controlled by such Party (A) relating to any proposed Additional Product
Development Program or (B) during the RoFN Term, obtained by such Party from any [**] in the Field
pursuant to Section 2.5(d) for which the providing Party is the [**], other than such data and
information relating to RoFN Opportunities
for which Alnylam has the right to enter into definitive agreements with Third Parties
pursuant to Section 2.5(c)(iv). For the avoidance of doubt, additional Development relating to
delivery of the same siRNA to the same location to treat a different indication shall not
constitute a Product



19









 






Development Program separate from an existing Product
Development Program in
which such siRNA is Developed for delivery to such location; provided that any such
additional Development shall be subject to approval of any associated modifications to the
applicable Workplan, as set forth in Sections 2.2(a) and 2.2(e).




          (f) Non-Exclusive Remedy for Failure to Perform Workplan Responsibilities. If either
Party (the “Performing Party”) reasonably determines that the other Party (the
“Non-Performing Party”) has materially failed to fulfill such Non-Performing Party’s
responsibilities under the Workplan for a Product Development Program, then, without limiting any
remedies that may be available under this Agreement to the Performing Party for such material
failure by the Non-Performing Party, the Performing Party may elect the following non-exclusive
remedy for such material failure: (i) the Performing Party may provide the Non-Performing Party
with written notice of the Non-Performing Party’s material failure, which notice shall set forth
with reasonable specificity the steps that the Performing Party believes the Non-Performing Party
must take to cure such material failure; (ii) during the sixty (60) day period following the
foregoing written notice from the Performing Party, the Non-Performing Party shall have the right
to cure its material failure, if any, and to respond in writing to the Performing Party regarding
the steps taken by the Non-Performing Party to effect such cure and/or disputing the Performing
Party’s assertions of material failure; (iii) if after such sixty (60) day period, the Performing
Party reasonably determines that the Non-Performing Party has still materially failed to perform
the Non-Performing Party’s responsibilities under the Workplan, as previously set forth in the
Performing Party’s notice to the Non-Performing Party, the Performing Party may elect, either
itself or through a Third Party, to (x) perform the specific Workplan activities that the
Non-Performing Party materially failed to perform, (y) modify the applicable Workplan budget to
include and allocate the costs of such performance by or on behalf of the Performing Party (i.e.,
require the Non-Performing Party to share in such costs in accordance with Section 4.1(a) or
Section 4.1(b), as applicable) and (z) exclude the Non-Performing Party’s costs relating to its
material failure to perform from the applicable Workplan budget (i.e., not permit the
Non-Performing Party to include such costs in the costs that the Performing Party is required to
share in accordance with Section 4.1(a) or Section 4.1(b), as applicable). Any dispute under this
Section 2.3(f) as to whether a material failure has occurred or whether any such failure has been
cured shall be subject to resolution in the same manner as that to which any other alleged breach
of this Agreement is subject; provided that the Performing Party may elect to
pursue the remedy set forth in clause (x) above before any such dispute has been resolved, in which
case the costs of such performance by or on behalf of the Performing Party shall be borne by the
Parties as finally determined through dispute resolution (i.e., the Performing Party may go “at
risk” to perform such activities and, if such dispute is resolved in the Performing Party’s favor,
the costs of such performance shall be shared by the Non-Performing Party as set forth in clause
(y) above).




     Section 2.4 Right to Opt Out.



          (a) Discontinuation of Participation in Product Development Program by Alnylam.
Notwithstanding anything to the contrary in this Agreement, Alnylam may at any time during any
Product Development Term, or, in the case of the Initial Development Program, only
at any time after a Go Decision and prior to the end of the Product Development Term for the
Initial Product Development Program, in its sole discretion, by ninety (90) days’ prior written
notice to Medtronic (an “Alnylam Discontinuation Notice”), discontinue its participation in
any



20









 






Product Development Program, and no such discontinuation shall constitute a breach of Alnylam’s
obligations hereunder. If Alnylam discontinues its participation in a Product Development Program,
then (i) the Parties shall perform a final reconciliation of applicable Development Costs for the
US Territory pursuant to Section 4.7(a) through the effective date of such discontinued
participation, and thereafter, Alnylam shall have no further obligation to share in the Development
Costs for such Product Development Program pursuant to Section 4.1(b); (ii) the JRDC and JCC shall
cease to have oversight over such Product Development Program and the Licensed Products Developed
thereunder; (iii) subject to Alnylam’s obligations pursuant to the siRNA Supply Agreement, Alnylam
shall have no further Workplan responsibilities in connection with such Product Development
Program; (iv) Medtronic may elect to continue Developing Licensed Product(s) Developed in such
Product Development Program unilaterally; (v) if Medtronic elects to continue Developing Licensed
Product(s) Developed in such Product Development Program unilaterally, Alnylam shall, if requested
by Medtronic, enter into an arrangement under which Alnylam will, directly or through a Third
Party, supply Alnylam siRNAs to Medtronic for use in Licensed Products Developed under such Product
Development Program as set forth in Section 8.4(c)(vi); (vi) Alnylam’s license rights set forth in
Section 3.2(b) with respect to the Commercialization of Licensed Products Developed in such Product
Development Program shall terminate and (vii) from and after such discontinuation by Alnylam, the
royalties payable by Medtronic to Alnylam on Net Sales of Licensed Products Developed in such
Product Development Program shall be reduced as set forth in Section 4.3(b).




          (b) Discontinuation of Participation in Product Development Program by Medtronic.
Notwithstanding anything to the contrary in this Agreement, Medtronic may at any time during any
Product Development Term, or, in the case of the Initial Development Program, only at any time
after a Go Decision and prior to the end of the Product Development Term for the Initial Product
Development Program, in its sole discretion, by ninety (90) days’ prior written notice to Alnylam
(a “Medtronic Discontinuation Notice”), discontinue its participation in any Product
Development Program, and no such discontinuation shall constitute a breach of Medtronic’s
obligations hereunder. If Medtronic discontinues its participation in a Product Development
Program, then (i) the Parties shall perform a final reconciliation of applicable Development Costs
for the US Territory pursuant to Section 4.6(a) through the effective date of such discontinued
participation, and thereafter, Medtronic shall have no further obligation to share in the
Development Costs for such Product Development Program pursuant to Section 4.1(b); (ii) the JRDC
and JCC shall cease to have oversight over such Product Development Program and the Licensed
Products Developed thereunder; (iii) subject to Medtronic’s obligations pursuant to the Device
Supply Agreement, Medtronic shall have no further Workplan or Commercialization responsibilities in
connection with such Product Development Program; (iv) Alnylam may elect to continue Developing
Licensed Product(s) Developed in such Product Development Program unilaterally; (v) if Alnylam
elects to continue Developing Licensed Product(s) Developed in such Product Development Program
unilaterally, Medtronic shall, if requested by Alnylam, enter into a Device Supply Agreement as set
forth in Section 8.4(a)(vii); (vi) Medtronic’s license rights set forth in Section 3.1(b) with
respect to the Commercialization of Licensed Products Developed in such Product Development Program
shall terminate and, if Alnylam elects to continue Developing the applicable Licensed Product(s),
Alnylam shall thereafter be the Commercializing Party for such Licensed Products in both the US Territory
and the ROW Territory; and (vii) from and after such discontinuation by Medtronic, Alnylam shall



21









 





pay royalties to Medtronic on Net Sales of Licensed Products Developed in such Product Development
Program as set forth in Section 4.3(b).



          (c) If a Party elects to discontinue its participation in a Product Development Program
pursuant to Section 2.4(a) or Section 2.4(b), and thereafter the other Party determines not to
continue unilaterally Developing any Licensed Product Developed in such Product Development
Program, then the Parties shall discuss whether and on what terms they may desire to jointly seek a
licensee for such Licensed Product. In such circumstances, if the Parties elect not to jointly
seek a licensee for such Licensed Product, then such Product Development Program shall terminate
and the consequences set forth in Section 8.4(d) shall apply with respect to such Product
Development Program.




     Section 2.5 Exclusivity, Diligence and RoFN Obligations.



          (a) Exclusivity in Exclusivity Field. During the Product Development Term for any
Product Development Program, neither Party shall, directly or indirectly, by itself or jointly with
or through any of its Affiliates or any Third Parties (but excluding minority investments in Third
Parties where such Party’s engagement is limited to holding such minority investments and typical
rights associated therewith), engage in the [**] for such Product Development Program, other than
pursuant to this Agreement. In addition, commencing with [**] and continuing for the [**], neither
Party shall, directly or indirectly, by itself or jointly with or through any of its Affiliates or
any Third Parties (but excluding minority investments in Third Parties where such Party’s
engagement is limited to holding such minority investments), engage in the [**] in such Licensed
Product, other than pursuant to this Agreement. Notwithstanding the foregoing, (i) Alnylam shall
be [**] and (ii) Alnylam shall [**].




          (b) Diligence Obligations. With respect to each Product Development Program, the
Commercializing Party shall use its Commercially Reasonable Efforts to obtain Regulatory Approvals
for and Commercialize at least one Licensed Product in each Major Market for each Target
Indication. The non-Commercializing Party acknowledges that a failure by the Commercializing Party
to obtain a Regulatory Approval for or to Commercialize a Licensed Product in a Major Market for a
Target Indication may be consistent with the exercise of Commercially Reasonable Efforts under
appropriate circumstances. The non-Commercializing Party’s sole and exclusive remedy and the
Commercializing Party’s sole and exclusive liability for any failure to use its Commercially
Reasonable Efforts to obtain Regulatory Approvals for and/or to Commercialize at least one Licensed
Product in one or more particular Major Markets, as well as for any failure to use Commercially
Reasonable Efforts to continue to Commercialize a Licensed Product in any Major Market, shall be
the termination of the Commercializing Party’s license rights for such Major Market pursuant to
Section 8.2(b) or, if such failure relates to all Major Markets and to all Target Indications, the
termination of this Agreement pursuant to Section 8.2(c). For the avoidance of doubt, the
Commercializing Party’s obligation hereunder will not survive the expiration or termination of this
Agreement.




          (c) RoFN. During the period commencing on the Restatement Date and ending on the
earlier of (i) [**], (ii) [**], or (iii) [**] (the “RoFN Term”), in the event that
(A) Alnylam desires to [**] and (B) Alnylam desires to [**] (other than [**]) for (x) the collaborative
[**] of


22









 






such Product and/or (y) a [**] of such Product (such [**], and such [**], each, a “RoFN
Opportunity”):




          (i) Alnylam shall give to Medtronic notice of [**] to do so (the “RoFN Notice”) prior
to [**]; provided, however, that this Section 2.5(c) shall not prevent Alnylam from
[**]. Not later than [**] days after the date of the RoFN Notice (the “RoFN Response
Period”), Medtronic shall, by written notice to Alnylam (the “RoFN Response Notice”),
advise Alnylam whether Medtronic has a bona fide interest in discussing a collaboration with
Alnylam with respect to such RoFN Opportunity.




          (ii) If either (A) Medtronic fails to timely give a RoFN Response Notice with respect to a
RoFN Notice, or (B) the RoFN Response Notice does not state that Medtronic has a bona fide interest
in discussing a collaboration with or license from (as applicable) Alnylam with respect to the RoFN
Opportunity described in the RoFN Notice, then all of Medtronic’s rights under this Section 2.5(c)
with respect to such RoFN Opportunity shall terminate as of the date of the RoFN Response Notice or
the expiration of the RoFN Response Period (whichever is earlier), and Alnylam shall thereafter be
free to pursue such RoFN Opportunity with no participation by Medtronic for [**] after which if
Alnylam has not reached an agreement with respect to such RoFN Opportunity [**]. If the RoFN
Response Notice timely given by Medtronic to Alnylam states that Medtronic has a bona fide interest
in discussing a collaboration with or license from (as applicable) Alnylam with respect to the RoFN
Opportunity described in the RoFN Notice, the Parties shall undertake, on an exclusive basis and
for a [**] (unless a shorter period is mutually agreed by the Parties) (the “Exclusive
Negotiation Period”), good faith discussions and negotiations of definitive agreements setting
forth all applicable terms and conditions of the collaboration or license between them with respect
to the RoFN Opportunity.




          (iii) Prior to the end of the Exclusive Negotiation Period, Medtronic shall furnish to Alnylam
a written offer (the “RoFN Offer”) which shall (A) clearly specify that such written offer,
and no other, constitutes the RoFN Offer hereunder with respect to the relevant RoFN Opportunity,
and (B) set forth all material terms and conditions on which Medtronic is prepared to [**] with
respect to such RoFN Opportunity. If Medtronic fails to timely furnish to Alnylam a RoFN Offer
with respect to a RoFN Opportunity, Medtronic’s rights and Alnylam’s obligations under this Section
2.5(c) shall terminate with respect to such RoFN Opportunity for a [**] after which if Alnylam has
not reached an agreement with respect to such RoFN Opportunity the provisions of this Section
2.5(c) shall once again apply to such RoFN Opportunity.




          (iv) If, as of the end of the Exclusive Negotiation Period, the Parties have not entered into
a legally binding definitive agreement with respect to the RoFN Opportunity described in the RoFN
Notice, Alnylam shall have the right to undertake detailed discussions and negotiations with
respect to such RoFN Opportunity with one or more Third Parties and to enter into definitive
agreements for the same on terms more favorable to Alnylam, taken as a whole, than the terms set
forth in the RoFN Offer; provided, however, that if no such definitive agreement is
entered into prior to [**], then the provisions of this Section 2.5(c) shall
once again apply to such RoFN Opportunity. Alnylam shall not be obligated to reveal to
Medtronic the identity of any Third Party involved in any such transaction.




23









 








          (d) Certain [**]. If during the Collaboration Term either Party (the “[**]”) intends
to [**], and such proposed [**], and such [**] either (x) would not include [**] or (y) would
require the [**] (an “[**]”), then:




               (i) The [**] shall provide written notice to the JRDC of such intention to [**] and during the
[**] days following such notification provide such reasonable and available information about such
proposed [**] to the JRDC as the other Party’s JRDC Representatives may request;



               (ii) The JRDC shall consider the advisability of such proposed [**] based on its potential to
[**] without unduly burdening [**], and if the JRDC determines that such proposed [**] is
advisable, the JRDC shall approve such [**] and the agreement between the [**] and [**]; and



               (iii) If the JRDC does not approve such [**], the [**] may, after such [**] day period,
following the notification, elect to enter into such [**] at its own expense and the agreement
between the [**] and [**].


Notwithstanding the foregoing, if during the [**] days following the [**]’s notice to the JRDC of
such intention to engage such [**], the other Party provides written notice to the [**] that (A)
the other Party desires to promptly negotiate a Workplan for, and enter into, an Additional Product
Development Program that would have [**] would fall and (B) the other Party desires that the [**]
not engage the [**] in such proposed [**], then the [**] shall delay entering into such proposed
[**] for a period of [**] days in order to provide the Parties with an opportunity to negotiate a
Workplan for and initiate such proposed Additional Product Development Program. If the Parties do
not initiate such proposed Additional Product Development Program within such [**] day period, then
the [**] shall be free to enter into the proposed [**]. If the Parties do initiate such proposed
Additional Product Development Program within such [**] day period, the proposed [**] shall be
subject to Section 2.5(a) above, if such [**] would [**] for such Additional Product Development
Program.




     Section 2.6 Supply of Alnylam siRNAs.



          (a) Preclinical and Clinical Supply. Subject to Section 2.4, during each Product
Development Program Term, unless otherwise agreed by the Parties, Alnylam shall initially have
responsibility for procuring and providing Alnylam siRNAs for use by the Parties in the conduct of
Workplan activities relating to such Product Development Program, and the Manufacturing Cost of
such supply shall constitute a Development Cost that will be shared by the Parties pursuant to
Section 4.1. 




          (b) Commercial Supply. If Medtronic continues as the Commercializing Party with
respect to Licensed Products Developed in a Product Development Program, after successful
completion of the Phase I Study for such Product Development Program, the Parties shall negotiate
and enter into a separate manufacturing and supply agreement that shall include the terms set forth
in Exhibit A attached hereto (the “siRNA Supply Agreement”) under which
Alnylam shall, directly or through a Third Party, provide the commercial supply of Alnylam
siRNA(s) for such Licensed Products, at Alnylam’s Manufacturing Cost plus [**] percent



24









 






([**]%) (as
reflected in a standard cost as described below), in stable bulk material form and meeting mutually
agreed manufacturing specifications to be set forth in the siRNA Supply Agreement, to Medtronic or
its designee. If the Parties have not entered into an siRNA Supply Agreement within sixty (60)
days after commencing negotiations, either Party may submit such impasse for resolution pursuant to
Section 2.3(d)(ii). [**].




     Section 2.7 SAB Observer Right. During the Collaboration Term, Alnylam shall continue
to permit a Medtronic representative reasonably acceptable to Alnylam to attend all meetings of
Alnylam’s Scientific Advisory Board as an observer. Alnylam consents to [**] as Medtronic’s
initial representative for such purpose.



Article III




Grant of Rights




     Section 3.1 Alnylam Grants.



          (a) Product Development Program Licenses.




               (i) Subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Alnylam’s right to perform its obligations hereunder, Alnylam hereby grants to Medtronic and its
Affiliates a non-exclusive, non-royalty-bearing right and license in the Territory during the
applicable Product Development Term, without the right to grant sublicenses (except in accordance
with Section 3.1(c)), under Alnylam’s rights in Alnylam Intellectual Property, to perform
Medtronic’s obligations hereunder and to use Alnylam siRNAs in the course of the Product
Development Program(s) to (A) Discover and Develop Licensed Products in the Field and (B) subject
to Section 3.1(f), to make or have made Licensed Products in the Field.



               (ii) Subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Alnylam’s right to perform its obligations hereunder, Alnylam hereby grants to Medtronic and its
Affiliates a non-exclusive, non-royalty-bearing right and license in the Territory during the
applicable Product Development Term, with the right to grant sublicenses, under Alnylam’s rights in
Program Intellectual Property, to perform Medtronic’s obligations hereunder and to use Alnylam
siRNAs in the course of the Product Development Program(s) to (A) Discover and Develop Licensed
Products in the Field and (B) subject to Section 3.1(f), to make or have made Licensed Products in
the Field.



               (iii) For the avoidance of doubt, the foregoing licenses in this Section 3.1(a) to Discover
any Licensed Product are subject to Alnylam’s first having made available or approved the siRNA
contained in such Licensed Product.



          (b) Commercialization Licenses.




               (i) Subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Alnylam’s right to perform its obligations hereunder, Alnylam hereby grants
to Medtronic and its Affiliates (subject to Section 8.1(a)) a royalty-bearing right and
license in the Territory, with the right (subject to Section 3.1(c)) to grant sublicenses, under
Alnylam’s



25









 







rights in Alnylam Intellectual Property, (A) on an exclusive basis, to Commercialize
Licensed Products Developed in the course of the Collaboration Program for which Medtronic is the
Commercializing Party and (B) on a non-exclusive basis and subject to Section 3.1(f), to make or
have made Licensed Products Developed in the course of the Collaboration Program for which
Medtronic is the Commercializing Party.



               (ii) Subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Alnylam’s right to perform its obligations hereunder, Alnylam hereby grants to Medtronic and its
Affiliates (subject to Section 8.1(a)) a royalty-bearing right and license in the Territory, with
the right to grant sublicenses, under Alnylam’s
rights in Program Intellectual Property, (A) on an
exclusive basis, to Commercialize Licensed Products Developed in the course of the Collaboration
Program for which Medtronic is the Commercializing Party and (B) on a non-exclusive basis and
subject to Section 3.1(f), to make or have made Licensed Products Developed in the course of the
Collaboration Program for which Medtronic is the Commercializing Party.



          (c) Medtronic Sublicense Rights. Subject to Section 3.1(d), if Medtronic determines
in good faith that, solely for the purpose of facilitating a Product Development Program or the
Commercialization of a Licensed Product, it would be advantageous to grant to a Third Party, for
such purpose, a sublicense of the rights licensed to Medtronic under Section 3.1(a)(i) or Section
3.1(b)(i), then Medtronic may grant such sublicense; provided that:




               (i) Medtronic’s sublicensees shall have no right to grant further sublicenses without
Alnylam’s written consent, which consent shall not be unreasonably withheld;



               (ii) Medtronic shall be primarily liable for any failure by its sublicensees to comply with,
and Medtronic guarantees to Alnylam the compliance by each of its sublicensees with, all relevant
restrictions, limitations and obligations in this Agreement; and



               (iii) such sublicense is granted pursuant to a written sublicense agreement and Medtronic
provides Alnylam with a copy of such sublicense agreement within thirty (30) days after the
execution of such sublicense agreement.



          (d) Existing Third Party Contractual Obligations. With respect to Alnylam
Intellectual Property that is subject to contractual obligations between Alnylam and Third Parties,
Medtronic’s rights and licenses under Section 3.1 of this Agreement are subject to the restrictions
and other terms described in Schedule 3.1(d). During the Collaboration Program and the
Royalty Term (and, with respect to any continuing obligations under such Third Party contracts,
such as record-keeping and audit obligations, thereafter for so long as such obligations continue),
Medtronic hereby agrees to comply, and to cause its Affiliates and sublicensees to comply, with
such restrictions and other terms.




          (e) License Exclusions. Notwithstanding anything to the contrary herein, the licenses
to Alnylam Patent Rights hereunder initially shall not include a license to [**] under any
agreement between Alnylam and [**] in effect as of the Effective Date; provided
that if any such licensed Patent Rights [**], Medtronic shall have the option of expanding
its licenses hereunder



26









 






to include such issued patents by notifying Alnylam of such election (in
which case [**]) and agreeing to [**] under such sublicense during the Royalty Term attributable to
such Licensed Product. In addition, if after the Effective Date Alnylam exercises any option under
its sponsored research agreement with [**] or its materials exchange agreement with [**] to obtain
a license to Patent Rights useful in the Field and controlled by [**], as applicable, and such
license includes the right to grant a sublicense to Medtronic, then such Patent Rights licensed
from [**], as applicable, shall constitute Alnylam Patent Rights hereunder from and after the date
Medtronic requests a sublicense thereto from Alnylam. Medtronic shall [**] by Alnylam to [**]
attributable to Medtronic’s sublicense for so long as such sublicense continues. If Medtronic
exercises its right under this Section 3.1(e) to obtain sublicense(s) under Patent Rights licensed
by Alnylam from [**], Schedule 3.1(d) shall thereupon be amended as necessary to describe
applicable restrictions and other terms imposed by such contractual obligations for purposes of
Section 3.1(d).




          (f) Medtronic Covenant [**]. Medtronic covenants [**] unless and until there has been
a [**], and thereafter only (i) as permitted pursuant to Article VIII; (ii) if Alnylam files for
bankruptcy protection or has an involuntary bankruptcy action filed against it, which involuntary
bankruptcy action is not dismissed within sixty (60) days after being filed, prior to [**] or (iii)
pursuant to the terms of an siRNA Supply Agreement, if such agreement is entered into by the
Parties.




          (g) Medtronic Obligation with Respect to Affiliates. Medtronic shall be primarily
liable for any failure by its Affiliates to comply with, and Medtronic guarantees to Alnylam the
compliance by each of its Affiliates with, all relevant restrictions, limitations and obligations
in this Agreement.




     Section 3.2 Medtronic Grants.



          (a) Product Development Program Licenses.




               (i) Subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Medtronic’s right to perform its obligations hereunder, Medtronic hereby grants to Alnylam and its
Affiliates a non-exclusive, non-royalty-bearing right and license in the Territory during the
applicable Product Development Term, without the right to grant sublicenses (except in accordance
with Section 3.2(c)), under Medtronic’s rights in Medtronic Intellectual Property, to perform
Alnylam’s obligations hereunder and to use Medtronic Devices in the course of the Product
Development Program(s) to (A) Discover and Develop Licensed Products in the Field and (B) subject
to Section 3.2(e), to make or have made Licensed Products in the Field.



               (ii) Subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Medtronic’s right to perform its obligations hereunder, Medtronic hereby grants to Alnylam and its
Affiliates a non-exclusive, non-royalty-bearing right and license in the Territory during the
applicable Product Development Term, with the right to grant sublicenses, under Medtronic’s rights
in Program Intellectual Property, to perform Alnylam’s obligations
hereunder and to use Medtronic Devices in the course of the Product Development Program(s) to



27









 







(A) Discover and Develop Licensed Products in the Field and (B) subject to Section 3.2(e), to make
or have made Licensed Products in the Field.



               (iii) For the avoidance of doubt, the foregoing licenses in this Section 3.2(a) to Discover
any Licensed Product are subject to Medtronic’s first having made available or approved the
Medtronic Device for use in such Licensed Product.



          (b) Commercialization Licenses.




               (i) In the event Alnylam becomes the Commercializing Party for any Licensed Product in any
country, and subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Medtronic’s right to perform its obligations hereunder, Medtronic shall, and hereby does, grant to
Alnylam and its Affiliates (subject to Section 8.1(a)) a royalty-bearing right and license in the
Territory, with the right (subject to Section 3.2(c)) to grant sublicenses, under Medtronic’s
rights in Medtronic Intellectual Property, (A) on an exclusive basis, to Commercialize Licensed
Products Developed in the course of the Collaboration Program for which Alnylam is the
Commercializing Party and (B) on a non-exclusive basis and subject to Section 3.2(e), to make or
have made Licensed Products Developed in the course of the Collaboration Program for which Alnylam
is the Commercializing Party.



               (ii) In the event Alnylam becomes the Commercializing Party for any Licensed Product in any
country, and subject to the terms and conditions of this Agreement (including Section 2.5(a)) and
Medtronic’s right to perform its obligations hereunder, Medtronic shall, and hereby does, grant to
Alnylam and its Affiliates (subject to Section 8.1(a)) a royalty-bearing right and license in the
Territory, with the right to grant sublicenses, under Medtronic’s rights in Program Intellectual
Property, to (A) on an exclusive basis, Commercialize Licensed Products Developed in the course of
the Collaboration Program for which Alnylam is the Commercializing Party and (B) on a non-exclusive
basis and subject to Section 3.2(e), make or have made Licensed Products Developed in the course of
the Collaboration Program for which Alnylam is the Commercializing Party.



          (c) Alnylam Sublicense Rights. Subject to Section 3.2(d), if Alnylam determines in
good faith that, solely for the purpose of facilitating a Product Development Program or the
Commercialization of a Licensed Product, it would be advantageous to grant to a Third Party, for
such purpose, a sublicense of the rights licensed to Alnylam under Section 3.2(a)(i) or Section
3.2(b)(i), then Alnylam may grant such sublicense; provided that:




               (i) Alnylam’s sublicensees shall have no right to grant further sublicenses without
Medtronic’s written consent, which consent shall not be unreasonably withheld;



               (ii) Alnylam shall be primarily liable for any failure by its sublicensees to comply with, and
Alnylam guarantees to Medtronic the compliance by each of its sublicensees with, all relevant
restrictions, limitations and obligations in this Agreement; and



               (iii) such sublicense is granted pursuant to a written sublicense agreement and Alnylam
provides Medtronic with a copy of such sublicense agreement within thirty (30) days after the
execution of such sublicense agreement.



28









 





          (d) Existing Third Party Contractual Obligations. With respect to Medtronic
Intellectual Property that is subject to contractual obligations between Medtronic and Third
Parties, Alnylam’s rights and licenses under Section 3.2 of this Agreement are subject to the
restrictions and other terms described in Schedule 3.2(d). During the Collaboration
Program and, if and to the extent Alnylam is the Commercializing Party, during the Royalty Term
(and, with respect to any continuing obligations under such Third Party contracts, such as
record-keeping and audit obligations, thereafter for so long as such obligations continue), Alnylam
hereby agrees to comply, and to cause its Affiliates and sublicensees to comply, with such
restrictions and other terms.




          (e) License Exclusions. Notwithstanding anything to the contrary herein, the licenses
to Medtronic Patent Rights hereunder initially shall not include a license to Patent Rights
licensed by Medtronic from [**] (collectively, the “[**] Licensors”) under any agreement
between Medtronic and the [**] Licensors in effect as of the Restatement Date; provided
that if any such licensed Patent Rights Cover a Licensed Product and Alnylam requires a
sublicense be granted by Medtronic under such licensed Patent Rights in order to exercise its
rights with respect to Licensed Products hereunder or under a Device Supply Agreement, Medtronic
shall grant such sublicense, either directly to Alnylam and/or to any Third Party contract
manufacturer of Devices mutually agreed in connection with a Device Supply Agreement, as requested
by Alnylam.




          (f) Alnylam Covenant [**]. Alnylam covenants [**] unless and until there has been a
[**], and thereafter only (i) as permitted pursuant to Article VIII; (ii) if Medtronic files for
bankruptcy protection or has an involuntary bankruptcy action filed against it, which involuntary
bankruptcy action is not dismissed within sixty (60) days after being filed, prior to [**] or (iii)
pursuant to the terms of a Device Supply Agreement, if such agreement is entered into by the
Parties.




     Section 3.3 Retained Rights. Subject to Sections 2.5, 3.1 and 3.2 of this Agreement,
each Party retains and shall have the right to practice and license its rights in the Program
Intellectual Property without obtaining the other Party’s consent and without any duty to account
to the other Party.



Article IV




Financial Provisions




     Section 4.1 Development Cost and Launch Cost Sharing.



          (a) Initial Commitment Amount. The Parties shall each initially commit to
contributing fifty percent (50%) of an aggregate funding amount that shall not exceed $[**] without
approval by the JRDC, in accordance with the Initial PDP Workplan and the Initial Commitment Budget
(as defined in the Initial PDP Workplan), to fund the Initial Commitment
Activities (as defined in the Initial PDP Workplan), which Initial Commitment Activities shall
consist primarily of certain [**] studies (the “Initial Commitment”).




29









 








          (b) US Development Costs. Medtronic and Alnylam shall each be responsible for fifty
percent (50%) of all Development Costs incurred during each Product Development Program to support
regulatory filing for Licensed Product(s) in the US Territory or satisfy conditions of receiving
Regulatory Approval in the US Territory; provided that if either Party has
exercised its right to opt out of such Product Development Program pursuant to Section 2.4, the
continuing Party shall be responsible for all Development Costs incurred during such Product
Development Program following the effective date of such opt-out.




          (c) ROW Development Costs and Device Costs. Medtronic shall be solely responsible for
100% of all Development Costs incurred during each Product Development Program (i) solely to
support regulatory filing for Licensed Product(s) in the ROW Territory, or solely to satisfy
conditions of receiving Regulatory Approval in the ROW Territory, or (ii) in the Development of
Medtronic Devices for use in Licensed Products in the ROW Territory; provided that
if Medtronic has exercised its right to opt out of such Product Development Program pursuant to
Section 2.4(b) and Alnylam has elected to become the Commercializing Party, Alnylam shall be
responsible for all Development Costs incurred during such Product Development Program following
the effective date of such opt-out.




          (d) Launch Costs. The Commercializing Party shall be solely responsible for Launch
Costs, subject to partial reimbursement as set forth in Section 4.3(f).




     Section 4.2 Milestone Payments for Product Development Programs. The Commercializing
Party shall make the following milestone payments to the other Party upon the first occurrence of
the following milestones for the first Licensed Product to reach such milestone in each Product
Development Program for which such Party is the Commercializing Party:



	 	 	 
	 	 	Milestone Payment
	Milestones	 	Upon Occurrence of Milestone
	Upon filing of an NDA with a Regulatory
Authority in a Major Market other than the
United States

	 	$[**]
	Upon receipt of Regulatory Approval in a
Major Market other than the United States

	 	$[**]





If for any reason a milestone event corresponding to a milestone payment under this Section 4.2
does not occur prior to the occurrence of the next milestone event listed in the table above in
this Section 4.2 for such Product Development Program, then such prior non-occurring milestone
event shall be deemed to occur concurrently with the occurrence of the next milestone event. Each
milestone payment shall be made within thirty (30) days after the achievement of the applicable
milestone.




30









 








     Section 4.3 Royalty Payments.



          (a) Royalty. During the Royalty Term applicable to each Licensed Product, and subject
to adjustment as set forth in Sections 4.3(b), 4.3(c), 4.3(d), and 4.3(e) and offsetting credits as
set forth in Sections 4.3(f), 5.2(a) and 5.4(c), the Commercializing Party shall pay to the other
Party royalties on a Licensed Product-by-Licensed Product basis, with the amount of such royalties
calculated as a percentage of Net Sales in a Medtronic Fiscal Year for such Licensed Product. Such
royalties for the Licensed Product(s) resulting from the Initial Product Development Program are as
follows:




               (i) With respect to Net Sales of each Licensed Product in the US Territory, as follows:



	 	 	 	 	 
	 	 	Percentage of
	Annual Net Sales in US Territory	 	Incremental Amount
	Up to and including $[**]
	 	 	[**]	%
	 
	 	 	 	 
	Above $[**] up to and including $[**]
	 	 	[**]	%
	 
	 	 	 	 
	Above $[**] up to and including $[**]
	 	 	[**]	%
	 
	 	 	 	 
	Above $[**] up to and including $[**]
	 	 	[**]	%
	 
	 	 	 	 
	Above $[**]
	 	 	[**]	%






               (ii) With respect to Net Sales of each Licensed Product in the ROW Territory, as follows:



	 	 	 
	 	 	Percentage of
	Annual Net Sales in ROW Territory	 	Incremental Amount
	Up to and including $[**]

	 	[**]%
	 
	 	 
	Above $[**] up to and including $[**]

	 	[**]%
	 
	 	 
	Above $[**] up to and including $[**]

	 	[**]%
	 
	 	 
	Above $[**] up to and including $[**]

	 	[**]%
	 
	 	 
	Above $[**]

	 	[**]%





For example, if Net Sales for a Licensed Product throughout the ROW Territory totaled $[**] in a
Medtronic fiscal year, the total royalties (before applying any adjustments or credits) for such
Net Sales would be $[**], calculated as follows: [**].




          (b) Opt-Out Adjustment. The royalty payment due to the non-Commercializing Party
following any exercise by the non-Commercializing Party of its right pursuant to Section 2.4 to opt
out of a Product Development Program shall be reduced to a percentage of the royalty


31









 







payment determined pursuant to Section 4.3(a) (i.e., treating the Commercializing Party as the
royalty-paying Party and the other Party as the royalty-receiving Party) for each Licensed Product
included in such Product Development Program, determined as set forth below based on the point
during such Product Development Program that the non-Commercializing Party provided notice that it
was exercising its right to opt out of such Product Development Program:




	 	 	 	 	 
	Timing of Opt Out Notice	 	Percentage
	[**] Opt Out
	 	 	[**]	%
	 
	 	 	 	 
	[**] Opt Out
	 	 	[**]	%
	 
	 	 	 	 
	[**] Opt Out
	 	 	[**]	%
	 
	 	 	 	 
	[**] Opt Out
	 	 	[**]	%






          (c) Reduction for Lack of Patent Coverage. Subject to Section 4.3(g), the royalty set
forth in Sections 4.3(a) and 4.3(b) payable by the Commercializing Party to the other Party with
respect to Net Sales of a Licensed Product in the Territory shall be reduced by [**] percent
([**]%) during any portion of the Royalty Term for such Licensed Product in which the use, offer
for sale, sale and importation of such Licensed Product in the country of sale, and the manufacture
of such Licensed Product in the country of manufacture, are not Covered by a Valid Claim of Alnylam
Patent Rights or Program Patent Rights (if Medtronic is the Commercializing Party) or Medtronic
Patent Rights or Program Patent Rights (if Alnylam is the Commercializing Party).




          (d) Reductions to Royalties for Third Party Royalties. During the Royalty Term and
subject to Section 4.3(g), the royalty set forth in Sections 4.3(a)(i) and 4.3(c) payable by the
Commercializing Party to the other Party with respect to Net Sales of a Licensed Product in the US
Territory shall be reduced by [**] percent ([**]%) of the amounts attributable to such Licensed
Product in the US Territory paid by such Commercializing Party to the other Party pursuant to
Section 4.3(h) and to Third Parties in respect of licenses under [**] and Listed or Approved Third
Party Agreements necessary for the Discovery, Development, manufacturing or Commercialization of
such Licensed Product in the US Territory. In the event that the non-Commercializing Party has
exercised its right to opt out of the Product Development Program under which the Licensed Product
was Developed, any royalty reduction pursuant to this Section 4.3(d) shall be prorated in
accordance with the applicable percentage listed in the table set forth in Section 4.3(b) above for
the point during such Product Development Program at which the non-Commercializing Party provided
notice that it was exercising its right to opt out of such Product Development Program. For
example, if the royalty reduction calculated in accordance with the first sentence of this Section
4.3(d) is $[**] and the timing of the non-Commercializing Party’s opt-out of the relevant Product
Development Program made such opt-out a [**] Opt Out, then the royalty reduction pursuant to this
Section 4.3(d) would be $[**].




          (e) Reductions to Royalties for Section 2.5(d)(iii) [**] Agreements. During
the Royalty Term, the royalty set forth in Sections 4.3(a) and 4.3(b) with respect to Net Sales of
a Licensed Product shall be reduced by [**] percent ([**]%) of any royalties paid by the
Commercializing Party to Third Parties in respect of licenses under Section 2.5(d)(iii) [**]



32









 






Agreements necessary for the Discovery, Development, manufacturing or Commercialization of
such Licensed Product for which the non-Commercializing Party is the [**].




          (f) Credit for Launch Costs. Subject to Section 4.3(g), Medtronic may credit up to
[**] percent ([**]%) of Launch Costs relating to a Licensed Product (“Reimbursable Launch
Costs”) against any royalty payment otherwise payable to Alnylam under this Section 4.3 with
respect to Net Sales of such Licensed Product in the US Territory, provided that
Alnylam has not exercised its right pursuant to Section 2.4(a) to opt out, and has not been deemed
to have opted out pursuant to Section 8.4(c)(iii), of the Product Development Program in which such
Licensed Product was Developed.




          (g) Aggregate Reduction Limitation. The royalty reductions provided for in Sections
4.3(c) and 4.3(d), combined with the credit for Reimbursable Launch Costs set forth in Section
4.3(f), and the offsetting credits set forth in Sections 5.2(a) and 5.4(c), shall not in the
aggregate exceed [**] percent ([**]%) of the royalty otherwise payable to the non-Commercializing
Party under Section 4.3(a). The Commercializing Party may [**] in the manner specified in Sections
4.3(c), 4.3(d), 4.3(f), 5.2(a) and 5.4(c), with such portion [**] in this Section 4.3(g).




          (h) Listed or Approved Third Party Agreements. In addition to any royalty set forth
in Sections 4.3(a) and 4.3(b), during the Royalty Term, the Commercializing Party for a Licensed
Product shall reimburse the other Party for the amounts payable by such other Party to Third
Parties pursuant to Listed or Approved Third Party Agreements, including such amounts set forth in
Schedule 4.3(h) with respect to Listed or Approved Third Party Agreements in effect as of
the Restatement Date, in respect of the Discovery, Development, manufacturing and/or
Commercialization of such Licensed Product and/or in respect of the licenses and sublicenses
granted by the other Party to the Commercializing Party in this Agreement with respect to such
Licensed Product in the Territory. The Parties shall cooperate to coordinate such reimbursements
by the Commercializing party in a manner that ensures all amounts payable by the other Party
pursuant to Listed or Approved Third Party Agreements are paid in a timely manner and otherwise in
compliance with such Listed or Approved Third Party Agreements (i.e., in a manner that does not
require the other Party to pay such amounts to any Third Party prior to receiving such amounts from
the Commercializing Party).




     Section 4.4 Duration of Royalty Payments. The royalties payable under Section 4.3(a)
shall be paid on each Licensed Product until the expiration of the Royalty Term on a Licensed
Product-by-Licensed Product and country-by-country basis.



     Section 4.5 Royalties Payable Only Once. The Commercializing Party’s obligation to
pay royalties under Section 4.3(a) is imposed only once with respect to the same unit of Licensed
Product, including by reason of such Licensed Product being Covered by more than one Valid Claim of
Alnylam Patent Rights or Program Patent Rights.



     Section 4.6 Credits Against Future Royalties. If the validity of a Valid Claim of an
issued patent is the subject of administrative action or legal action by a non-governmental Third
Party in a country and as a result of such action is later revoked or held unenforceable or invalid
by a decision of a court or governmental agency of competent jurisdiction or and as a result of



33









 







such action is disclaimed or admitted to be invalid or unenforceable through reissue,
disclaimer or otherwise in such country, and such Valid Claim was the sole basis for the payment of
royalties by the Commercializing Party for a Licensed Product(s) pursuant to Section 4.3 for the
country in question, then the Commercializing Party shall be entitled to credit the amount of
royalties paid to the other Party under Section 4.3 for such Licensed Product(s), from the date the
Valid Claim became the subject of such action to the date of the final unappealable decision (but
excluding any period during which such Third Party is enjoined from engaging in activities that
would infringe such Valid Claim or during which approval of such Third Party’s NDA (or abbreviated
new drug application) is stayed by the applicable Regulatory Authority following the institution by
such Third Party of such action through a paragraph IV certification under 21 CFR Part 314
asserting that such Valid Claim is invalid, unenforceable or that no infringement will arise from
the manufacture, use or sale of such Third Party’s product, or through an equivalent law or
regulation (an “Enjoined Period”)), against any future royalties or payments to be made to
the other Party with respect to the Commercialization of the Licensed Product in question
(excluding reimbursement amounts pursuant to Sections 3.1(e) and 4.3(h)).



     Section 4.7 Quarterly Reconciliation of Development Costs and Net Sales; Royalty Reports
and Accounting.



          (a) Within forty-five (45) days after the end of each Medtronic Fiscal Quarter during the
Collaboration Term, each Party shall provide the other Party with a statement of the Development
Costs, if any, actually incurred by such Party during such Medtronic Fiscal Quarter, as well as the
details of any adjustments to be made to the amounts submitted by such Party for any previous
Medtronic Fiscal Quarter (such reports, “Quarterly Reports”). The Quarterly Reports shall
be in a form to be mutually agreed by the Parties within ninety (90) days after the Restatement
Date. The net amount payable by a Party, if any, under such Quarterly Reports shall be calculated
in a manner to allocate responsibility for Development Costs between the Parties as set forth in
Section 4.1 above, and shall be paid by the Party owing such net amount to the other Party within
fifteen (15) days after such reports are delivered. For example, with respect to Development Costs
for the US Territory, if neither Party has exercised its right to opt out of a Product Development
Program pursuant to Section 2.4, then the Party that incurred a lower amount of such Development
Costs for such Medtronic Fiscal Quarter shall pay the other Party fifty percent (50%) of the
difference between the amounts of such Development Costs incurred respectively by the Parties
during such Medtronic Fiscal Quarter.




          (b) Following the First Commercial Sale of any Licensed Product in the Territory, the
Commercializing Party shall deliver to the other Party, within forty-five (45) days after the end
of each Medtronic Fiscal Quarter, reasonably detailed written accountings of Net Sales of Licensed
Products that are subject to royalty payments due to the other Party for such Medtronic Fiscal
Quarter. Such accountings shall be Confidential Information of the Commercializing Party unless
otherwise excluded by Sections 1.13(a) through 1.13(d). Such accountings shall indicate gross
sales and Net Sales on a country-by-country and Licensed Product-by-Licensed Product basis and the
calculation of royalties from such gross sales and Net Sales, including an accounting of deductions
taken from gross sales to arrive at Net Sales and the amounts of and documentation supporting any
reduction pursuant to Sections 4.3(c), 4.3(d), and 4.3(e), any offsetting credit pursuant to
Sections 4.3(f), 5.2(a) and 5.4(c), and any [**] Fiscal Quarter pursuant to Section 4.3(g). When
the Commercializing Party delivers such accounting to the



34









 






non-Commercializing Party for a Medtronic Fiscal Quarter, the Commercializing Party shall also
deliver all royalty payments due under Section 4.3 to the non-Commercializing Party for such
Medtronic Fiscal Quarter.




          (c) Each Party shall keep, and shall require its Affiliates and sublicensees to keep, complete
and accurate records of the latest three (3) years relating to gross sales, Net Sales, Development
Costs, Reimbursable Launch Costs and all information relevant under Sections 4.3, 4.7, 4.8 and 4.9.
For the sole purpose of verifying amounts payable to the auditing Party hereunder, the auditing
Party shall have the right annually, at the auditing Party’s expense, to retain an independent
certified public accountant selected by the auditing Party and reasonably acceptable to the audited
Party, to review such records in the location(s) where such records are maintained by the audited
Party, its Affiliates and sublicensees upon reasonable notice and during regular business hours.
Such representatives shall execute a suitable confidentiality agreement reasonably acceptable to
the audited Party prior to conducting such audit. Such representatives shall disclose to each
Party only their conclusions regarding the accuracy of payments of royalties and expenses hereunder
and of records related thereto. The right to audit any royalty report, Quarterly Report or payment
shall extend for three (3) years from the end of the calendar year in which such royalty report or
Quarterly Report was delivered or such payment was made. Each royalty report and Quarterly Report
shall be subject only to one such audit. The audited Party shall promptly pay the auditing Party
the amount of any underpayment revealed by such audit together with interest calculated in the
manner provided in Section 4.9. If the underpayment is equal to or greater than ten percent (10%)
of the amount that was otherwise due, the auditing Party shall be entitled to have the audited
Party reimburse the auditing Party’s reasonable out-of-pocket costs of such review. The auditing
Party shall promptly return to the audited Party any overpayment revealed by such audit.




     Section 4.8 Currency Exchange. With respect to sales of Licensed Products invoiced in
U.S. Dollars, the sales and royalties payable shall be expressed in U.S. Dollars. With respect to
sales of Licensed Products invoiced in a currency other than U.S. Dollars, the sales and royalties
payable shall be expressed in their U.S. Dollar equivalent calculated using the Commercializing
Party’s standard currency translation methodology for the conversion of foreign sales currencies
into U.S. Dollars, which methodology shall be in accordance with GAAP and shall be the methodology
generally used by the Commercializing Party for currency conversions in such Party’s audited
financial statements. All payments shall be made in U.S. Dollars.



     Section 4.9 Tax Withholding. Each Party shall use all reasonable and legal efforts to
reduce tax withholding on payments made to the other Party. Notwithstanding such efforts, if the
paying Party concludes that tax withholdings under the laws of any country are required with
respect to payments to the other Party, the paying Party shall withhold the required amount and pay
it to the appropriate governmental authority. In such case, the paying Party shall promptly
provide the other Party with copies of receipts or other evidence reasonably required and
sufficient to allow the other Party to document such tax withholdings adequately for purposes of
claiming foreign tax credits and similar benefits.



     Section 4.10 Late Payments. The paying Party shall pay interest to the other Party on
the aggregate amount of any payments that are not paid on or before the date such payments are



35









 







due under this Agreement at a rate per annum equal to the lesser of the then current “prime
rate” in effect at Wells Fargo Bank, N.A. 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.



Article V




Intellectual Property Ownership, Protection and Related Matters




     Section 5.1 Ownership of Inventions.



          (a) Non-Program Know-How. Any Know-How developed by Medtronic or Alnylam prior to or
outside the Collaboration Program shall remain the sole property of such Party.




          (b) Device Inventions. Medtronic shall exclusively own all Device-Related Know-How
made or created by either Party, their employees, agents and consultants, or jointly by any of the
foregoing, in the course of the Collaboration Program (“Device Inventions”).




          (c) Joint Inventions and Sole Inventions. All Know-How other than Device Inventions
made or created jointly by employees, agents and consultants of Medtronic, on the one hand, and
employees, agents and consultants of Alnylam, on the other hand, in the course of the Collaboration
Program (“Jointly Developed Inventions”) shall be owned jointly on the basis of each Party
having an undivided interest in the whole. All Know-How other than Device Inventions made or
created solely by employees, agents and consultants of a Party in the course of the Collaboration
Program (“Sole Inventions”) shall be owned exclusively by such Party.




          (d) Inventorship. The determination of inventorship shall be made in accordance with
United States patent laws. In the event of a dispute regarding inventorship, if the Parties are
unable to resolve the dispute, the Parties shall jointly engage mutually acceptable independent
patent counsel not regularly employed by either Party to resolve such dispute. The decision of
such independent patent counsel shall be binding on the Parties with respect to the issue of
inventorship.




          (e) Data Ownership; Right of Reference and Other Use. All preclinical and clinical
data generated with respect to the Licensed Products in the course of the Collaboration Program
shall be owned by the Party generating such data (“Program Data”) and each Party shall have
access to all Program Data generated by the other Party in the course of the Collaboration Program.
Each Party shall have a right of reference with respect to, and the right to use, all Program
Data; provided that, (i) Alnylam shall not attempt to use such Program Data as the
primary basis for obtaining a Regulatory Approval for a Product, other than a Licensed Product for
which Alnylam is the Commercializing Party, that includes a Device substantially similar to any
Medtronic Device used to generate such Program Data and (ii) Medtronic shall not use such Program
Data as the primary basis for obtaining a Regulatory Approval for a Product, other than a Licensed
Product for which Medtronic is the Commercializing Party, containing an siRNA [**] substantially
similar to any Alnylam siRNA used to generate such data. Subject to the proviso in the immediately
preceding sentence, each Party shall be entitled to access, reference, disclose to investors,
lenders, acquirers, licensees, contractors and prospective investors, lenders, acquirers,



36









 






licensees and contractors, and otherwise use all Program Data without the other Party’s
consent and without any duty to account to the other Party for such access, reference, disclosure
and other use. During the Product Development Term for any Development Candidate or as provided in
Section 8.4, the Parties agree that upon the non-sponsoring Party’s written request, the Party that
is sponsoring any IND, NDA or similar application filed with any Regulatory Authority will provide
copies to the other Party of all data and other materials submitted with respect to such
application and all correspondence from the Regulatory Authority (“Right of Access”).




          (f) Further Actions and Assignments. Each Party shall take all further actions and
execute all assignments requested by the other Party and reasonably necessary or desirable to vest
in the other Party the ownership rights set forth in this Section 5.1.




     Section 5.2 Prosecution and Maintenance of Patent Rights.



          (a) Sole Inventions Owned by Alnylam. Alnylam shall have the exclusive right and
option to file and prosecute any patent applications and maintain any patents Covering Sole
Inventions owned by Alnylam; provided that in the event that Alnylam declines the
option to file and prosecute any such patent applications or maintain any such patents that Cover
Licensed Products, it shall give Medtronic reasonable notice to this effect, sufficiently in
advance to permit Medtronic to undertake such filing, prosecution and maintenance without a loss of
rights, and thereafter Medtronic may, upon written notice to Alnylam, file and prosecute such
patent applications and maintain such patents in Alnylam’s name, all at Medtronic’s expense
(subject to the immediately following sentence), and all such Sole Inventions shall remain owned
exclusively by Alnylam. If Medtronic incurs filing, prosecution and/or maintenance expenses with
respect to Sole Inventions owned by Alnylam and Covering a Licensed Product in accordance with the
immediately preceding sentence, Medtronic shall be entitled to deduct the reasonable and documented
amount of such expenses from any royalties that Medtronic pays to Alnylam with respect to such
Licensed Product pursuant to Section 4.3.




          (b) Device Inventions and Sole Inventions Owned by Medtronic. Medtronic shall have
the exclusive right and option to file and prosecute any patent applications and to maintain any
patents Covering Device Inventions and Sole Inventions owned by Medtronic.




          (c) Jointly Developed Inventions. The JRDC shall determine which Party shall have the
right and option to file and prosecute any patent applications and to maintain any patents Covering
Jointly Developed Inventions at the shared expense of both Parties; provided that
in the event that either Party declines an option to file and prosecute any such patent
applications or maintain any such patents that pertain solely to Licensed Products or declines to
share in such filing, prosecution and maintenance expenses (“Non-Electing Party”), it shall
give the other Party (“Electing Party”) reasonable notice to this effect, sufficiently in
advance to permit the Electing Party to undertake such filing, prosecution and maintenance without
a loss of rights, and thereafter the Electing Party may, upon written notice to the Non-Electing
Party, file and prosecute such patent applications and maintain such patents in its own name and at
its sole expense, and the Non-Electing Party shall assign all of its rights therein to the Electing
Party for no additional consideration.




37









 








          (d) Costs and Expenses. Except as otherwise provided in Section 5.2(c), each Party
shall bear its own costs and expenses in filing, prosecuting and maintaining Patent Rights Covering
Device Inventions, Sole Inventions and Jointly Developed Inventions. Furthermore, Alnylam shall
bear its own costs and expenses in filing, prosecuting and maintaining other Patent Rights within
Alnylam Patent Rights and Medtronic shall bear its own costs and expenses in filing, prosecuting
and maintaining other Patent Rights within Medtronic Patent Rights.




          (e) Cooperation. Each Party agrees to cooperate with the other with respect to the
filing, prosecution and maintenance of Program Patent Rights pursuant to this Section 5.2,
including the execution of all such documents and instruments and the performance of such acts as
may be reasonably necessary in order to permit the other Party to undertake any filing, prosecution
or maintenance of Patent Rights that such Party has elected not to pursue, as provided for in
Sections 5.2(a), (b) and (c).




     Section 5.3 Third Party Infringement.



          (a) Notice. Each Party shall promptly report in writing to the other Party during the
term of this Agreement any (i) known or suspected infringement of Medtronic Patent Rights, Alnylam
Patent Rights or Program Patent Rights or (ii) known or suspected unauthorized use or
misappropriation of Medtronic Know-How, Alnylam Know-How or Program Know-How, related to the
unauthorized manufacture, use, offer for sale, sale or importation of a Product in the Field, of
which such Party becomes aware, and shall provide the other Party with all available evidence
supporting such infringement, suspected infringement, unauthorized use or misappropriation or
suspected unauthorized use or misappropriation.




          (b) Infringement Actions.




               (i) Alnylam shall have the sole and exclusive right to initiate a suit or take other
appropriate action that it believes is reasonably required to protect the Alnylam Intellectual
Property and the Program Intellectual Property Covering Sole Inventions made by Alnylam prior to
the Restatement Date. To the extent that any such suit or action pertains to Licensed Products,
Alnylam shall give Medtronic advance notice of its intent to file any such suit or take any such
action and the reasons therefor, and shall provide Medtronic with an opportunity to make
suggestions and comments regarding such suit or action. Thereafter, Alnylam shall keep Medtronic
promptly informed, and shall from time to time consult with Medtronic regarding the status of any
such suit or action and shall provide Medtronic with copies of all material documents (e.g.,
complaints, answers, counterclaims, material motions, orders of the court, memoranda of law and
legal briefs, interrogatory responses, depositions, material pre-trial filings, expert reports,
affidavits filed in court, transcripts of hearings and trial testimony, trial exhibits and notices
of appeal) filed in, or otherwise relating to, such suit or action. For the avoidance of doubt,
Medtronic shall have no right to enforce any Alnylam Intellectual Property or any Program
Intellectual Property Covering Sole Inventions made by Alnylam prior to the Restatement Date.



               (ii) Medtronic shall have the sole and exclusive right to initiate a suit or take other
appropriate action that it believes is reasonably required to protect the Medtronic Intellectual
Property and the Program Intellectual Property Covering Sole Inventions made by



38









 







Medtronic prior to the Restatement Date. To the extent that any such suit or action pertains
to Licensed Products, Medtronic shall give Alnylam advance notice of its intent to file any such
suit or take any such action and the reasons therefor, and shall provide Alnylam with an
opportunity to make suggestions and comments regarding such suit or action. Thereafter, Medtronic
shall keep Alnylam promptly informed, and shall from time to time consult with Alnylam regarding
the status of any such suit or action and shall provide Alnylam with copies of all material
documents (e.g., complaints, answers, counterclaims, material motions, orders of the court,
memoranda of law and legal briefs, interrogatory responses, depositions, material pre-trial
filings, expert reports, affidavits filed in court, transcripts of hearings and trial testimony,
trial exhibits and notices of appeal) filed in, or otherwise relating to, such suit or action. For
the avoidance of doubt, Alnylam shall have no right to enforce any Medtronic Intellectual Property
or any Program Intellectual Property Covering Sole Inventions made by Medtronic prior to the
Restatement Date.



               (iii) Subject to Section 5.3(b)(i) and Section 5.3(b)(ii), the Commercializing Party shall
have the initial right to initiate a suit or take other appropriate action that it believes is
reasonably required to protect Program Intellectual Property. To the extent that any such suit or
action pertains to Licensed Products, the Commercializing Party shall give the other Party advance
notice of its intent to file any such suit or take any such action and the reasons therefor, and
shall provide the other Party with an opportunity to make suggestions and comments regarding such
suit or action. Thereafter, the Commercializing Party shall keep the other Party promptly
informed, and shall from time to time consult with the other Party regarding the status of any such
suit or action and shall provide the other Party with copies of all material documents (e.g.,
complaints, answers, counterclaims, material motions, orders of the court, memoranda of law and
legal briefs, interrogatory responses, depositions, material pre-trial filings, expert reports,
affidavits filed in court, transcripts of hearings and trial testimony, trial exhibits and notices
of appeal) filed in, or otherwise relating to, such suit or action.



          (c) Step-in Rights. If the Commercializing Party fails to initiate a suit or take
such other appropriate action under Section 5.3(b)(iii) above within [**] days after becoming aware
of alleged infringement, unauthorized use or misappropriation, then, to the extent that such
alleged infringement, unauthorized use or misappropriation results in a product that competes with
a Licensed Product, the other Party may, in its discretion, provide the Commercializing Party with
written notice of its intent to initiate a suit or take other appropriate action. If the other
Party provides such notice and the Commercializing Party fails to initiate a suit or take such
other appropriate action within [**] days after receipt of such notice from the other Party, then
the non-Commercializing Party shall have the right to initiate a suit or take other appropriate
action that it believes is reasonably required to protect the Program Intellectual Property. The
non-Commercializing Party shall give the Commercializing Party advance notice of its intent to file
any such suit or take any such action and the reasons therefor, and shall provide the
Commercializing Party with an opportunity to make suggestions and comments regarding such suit or
action. Thereafter, the non-Commercializing Party shall keep the Commercializing Party promptly
informed, and shall from time to time consult with the Commercializing Party regarding the status
of any such suit or action and shall provide the Commercializing Party with copies of all material
documents (e.g., complaints, answers, counterclaims, material motions, orders of the court,
memoranda of law and legal briefs, interrogatory responses, depositions, material pre-trial
filings, expert reports, affidavits filed in



39









 






court, transcripts of hearings and trial testimony, trial exhibits and notices of appeal)
filed in, or otherwise relating to, such suit or action. Notwithstanding the foregoing provisions
of this Section 5.3(c), the rights of the non-Commercializing Party to initiate suit or take other
action pursuant to this Section 5.3(c) shall be subject to all limitations and restrictions on such
rights imposed by agreements between the Commercializing Party and Third Parties.




          (d) Conduct of Action; Costs. The Party initiating suit shall have the sole and
exclusive right to select counsel for any suit initiated by it under this Section 5.3. If required
under applicable law in order for such Party to initiate and/or maintain such suit, the other Party
shall join as a party to the suit. If requested by the Party initiating suit, the other Party
shall provide reasonable assistance to the Party initiating suit in connection therewith at no
charge to such Party except for reimbursement of reasonable out-of-pocket expenses incurred in
rendering such assistance. The Party initiating suit shall assume and pay all of its own
out-of-pocket costs incurred in connection with any litigation or proceedings described in this
Section 5.3, including the fees and expenses of the counsel selected by it. The other Party shall
have the right to participate and be represented in any such suit by its own counsel at its own
expense.




          (e) Recoveries. To the extent that any such suit or action pertains to Licensed
Products, any recovery obtained as a result of any proceeding described in this Section 5.3 or from
any counterclaim or similar claim asserted in a proceeding described in Section 5.4, by settlement
or otherwise, shall be applied in the following order of priority:




               (i) first, the Party initiating the suit or action shall be reimbursed for all costs in
connection with such proceeding paid by such Party;



               (ii) second, the other Party shall be reimbursed for all costs in connection with such
proceeding paid by the other Party; and



               (iii) third, any remainder shall be paid seventy-five percent (75%) to the Party initiating
the suit or action, and the balance to the other Party.



     Section 5.4 Claimed Infringement; Claimed Invalidity.



          (a) Notice. In the event that a Third Party at any time provides written notice of a
claim to, or brings an action, suit or proceeding against a Party, or any of its Affiliates or
sublicensees, claiming infringement of such Third Party’s Patent Rights or unauthorized use or
misappropriation of such Third Party’s Know-How, based upon an assertion or claim arising out of
the research, development, manufacture, use or sale of Licensed Products by such Party (a
“Third Party Infringement Claim”), such Party shall promptly notify the other Party of the
claim or the commencement of such action, suit or proceeding, enclosing a copy of the claim and/or
all papers served.




          (b) Defense of Third Party Infringement Claims. The Parties’ respective obligations
with respect to Third Party Infringement Claims are set forth in Section 9.1.




          (c) Patent Invalidity Claim. If a Third Party at any time asserts a claim that any
Alnylam Patent Right, Medtronic Patent Rights or Program Patent Right Covering a Licensed Product
is invalid or otherwise unenforceable (an “Invalidity Claim”), whether as a defense in an



40









 






infringement action brought by Alnylam or Medtronic pursuant to Section 5.3, in a declaratory
judgment action or in a Third Party Infringement Claim brought against Alnylam or Medtronic, the
Parties shall cooperate with each other in preparing and formulating a response to such Invalidity
Claim. Neither Party shall settle or compromise any Invalidity Claim involving Patent Rights
Controlled by the other Party without the consent of the other Party. If the Commercializing Party
for a Licensed Product incurs expenses to respond to Invalidity Claims involving Alnylam Patent
Rights (if Medtronic is the Commercializing Party) or Medtronic Patent Rights (if Alnylam is the
Commercializing Party) pertaining to such Licensed Product, the Commercializing Party shall be
entitled to deduct the reasonable and documented amount of such expenses from the royalties that it
pays to the non-Commercializing Party with respect to such Licensed Product pursuant to Section
4.3.




     Section 5.5 Patent Term Extensions. The Parties shall, as necessary and appropriate,
use reasonable efforts to agree upon a joint strategy for obtaining, and cooperate with each other
in obtaining, patent term extensions for Medtronic Patent Rights, Alnylam Patent Rights or Program
Patent Rights Covering Licensed Products.



     Section 5.6 Patent Marking. The Commercializing Party shall comply with all
applicable statutes that require patent marking in any country in which Licensed Products are sold
by such Party, its Affiliates and/or sublicensees with respect to Program Patent Rights and Patent
Rights Controlled by the other Party with respect to which the other Party has provided the
Commercializing Party the appropriate language to be used sufficiently in advance of the sale of
the Licensed Product to allow the Commercializing Party to mark such Licensed Product.



     Section 5.7 Maintain Licenses in Force. The non-Commercializing Party shall promptly
notify the Commercializing Party if any Third Party with which the non-Commercializing Party has
entered into a license agreement material to any Development Candidate, Medtronic Device or
Licensed Product alleges any breach, default, or event that, with the passage of time or giving of
notice, could become a default by the non-Commercializing Party of any such license agreement. The
Commercializing Party shall be entitled, but not obligated, to cure any alleged breach or default
by the non-Commercializing Party of a payment obligation or other obligation, if possible, under
any such license agreement and set-off the cost of such cure against amounts otherwise owed to the
non-Commercializing Party hereunder. The non-Commercializing Party agrees that, prior to
modifying, waiving, amending or letting lapse any provision of any such license agreement in a
manner material to any Development Candidate or Licensed Product, it shall notify the
Commercializing Party of such prospective modification, waiver, amendment or lapse and provide the
Commercializing Party with a reasonable opportunity to provide the non-Commercializing Party with
input regarding such prospective modification, waiver, amendment or lapse. The non-Commercializing
Party shall use reasonable efforts, consistent with the exercise of reasonable business judgment,
not to modify, waive, amend or let lapse any such license agreement, and not to take any action or
omit to take any action with respect to any such license agreement, an effect of which would be to
adversely affect the Commercializing Party’s rights or obligations hereunder in any material
respect.



Article VI




Confidentiality





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     Section 6.1 Confidential Information. With respect to any Confidential Information of
a Party disclosed by it or its Affiliates to the other Party during the term of the Original
Collaboration Agreement or this Agreement, such receiving Party agrees: (a) not to use any
Confidential Information consisting of Device-Related Know-How or Primary Sequence or Chemical
Modification Know-How in connection with activities other than those contemplated by this
Agreement, (b) that any Confidential Information consisting of Device-Related Know-How or Primary
Sequence or Chemical Modification Know-How shall not be used in conjunction with any Third Party
who is not a consultant of, or an advisor to, the receiving Party or its Affiliates without the
prior written consent of the disclosing Party, (c) that such Confidential Information shall be
maintained in confidence by the receiving Party and its Affiliates, and (d) that such Confidential
Information shall not be disclosed by the receiving Party or its Affiliates to any Third Party who
is not a consultant of, or an advisor to, the receiving Party or its Affiliates without the prior
written consent of the disclosing Party. Notwithstanding the foregoing provisions of this Section
6.1, either Party may disclose Confidential Information of the other Party or the terms of this
Agreement if such Party reasonably determines, based on advice from its counsel, that it is
required to make such disclosure by applicable law, regulation or legal process, including by the
rules or regulations of the United States Securities and Exchange Commission (the “SEC”) or
similar regulatory agency in a country other than the United States or of any stock exchange, in
which event such Party shall provide prior notice of such intended disclosure to such other Party
sufficiently in advance to enable the other Party to seek confidential treatment or other
protection for the Confidential Information subject to such requirement unless the disclosing Party
is prevented by law or regulation from providing such advance notice, shall disclose only such
Confidential Information of such other Party as such disclosing Party reasonably determines is
required to be disclosed, and shall seek confidential treatment of any terms of this Agreement that
such other Party considers particularly sensitive, including the royalty rate terms of this
Agreement, from the SEC, similar regulatory agencies in countries other than the United States, or
any stock exchange.



     Section 6.2 Disclosures to Employees, Consultants and Advisors. Each Party agrees
that it and its Affiliates shall provide Confidential Information received from the other Party
only to the receiving Party’s respective employees, consultants and advisors, and to the employees,
consultants and advisors of the receiving Party’s Affiliates, who have a need to know such
Confidential Information to assist the receiving Party in fulfilling its obligations under this
Agreement, provided that each Party shall remain responsible for any failure by its
and its Affiliates’ respective employees, consultants and advisors to treat such information and
materials as required under Section 6.1.



     Section 6.3 Term. All obligations imposed under this Article VI shall expire upon the
later of (a) the expiration of the last-to-expire Royalty Term or (b) [**] years after the
expiration or termination of this Agreement.



     Section 6.4 Publicity. Upon execution of this Agreement, the Parties shall jointly
issue a press release announcing the execution of this Agreement in form and substance
substantially as attached hereto as Exhibit B. During the term of this Agreement, the
content of any press release or public announcement relating to this Agreement and/or Licensed
Products shall be mutually agreed by the Parties, which agreement shall not be unreasonably
withheld, delayed or conditioned, except that a Party may, without the other Party’s consent, (a)
issue such



42









 







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 or its Affiliates, (b) issue such press release or public announcement if the
contents of such press release or public announcement are limited substantially to any of the
matters set forth on Exhibit C, or (c) issue such press release or public announcement if
such Party reasonably determines, based on advice from its counsel, that it is required to issue
such a press release or public announcement by applicable law, regulation or legal process,
including by the rules or regulations of the SEC or similar regulatory agency in a country other
than the United States or of any stock exchange, in which event such Party shall provide at least
two (2) business days’ prior notice of such intended press release or public announcement to the
other Party unless the disclosing Party is prevented by law, regulation or legal process for
providing such advance notice and shall include in such press release or public announcement only
such information relating to this Agreement and/or the Licensed Product as it reasonably determines
is required by such applicable law, regulation or legal process. The Party subject to the
requirement to issue such press release or public announcement shall, if reasonably practicable
under the circumstances, consider in good faith all comments provided by the other Party prior to
such press release or public announcement.



     Section 6.5 Publications. The Parties acknowledge that scientific lead time is a key
element of the value of the Collaboration Program and further agree to use Commercially Reasonable
Efforts to control public scientific disclosures of the results of the Collaboration Program to
prevent any potential adverse effect of any premature public disclosure of such results. The
Parties shall establish a procedure for publication review and each Party shall first submit to the
other Party an early draft of all such publications, whether they are to be presented orally or in
written form, at least thirty (30) days prior to submission for publication. Each Party shall
review such proposed publication in order to avoid the unauthorized disclosure of a Party’s
Confidential Information and to preserve the patentability of inventions arising from the
Collaboration Program. If, as soon as reasonably possible, but no longer than thirty (30) days
following receipt of an advance copy of a Party’s proposed publication, the other Party informs
such Party that its proposed publication contains Confidential Information of the other Party, then
such Party shall delete such Confidential Information from its proposed publication. In addition,
if at any time during such thirty (30) day period, the other Party informs such Party that its
proposed publication discloses inventions made by either Party in the course of the Collaboration
Program that have not yet been protected through the filing of a patent application, or the public
disclosure of such proposed publication could be expected to have a material adverse effect on any
Patent Rights or Know-How of such other Party, then such Party shall either (a) delay such proposed
publication, for up to sixty (60) days from the date the other Party informed such Party of its
objection to the proposed publication, to permit the timely preparation and first filing of patent
application(s) on the information involved or (b) remove the identified disclosures prior to
publication. The Parties agree that all publications of results of the Collaboration Program by
Alnylam or Medtronic shall acknowledge the contribution of the other Party and Third Party
collaborators, as applicable, to such results.



Article VII




Representations and Warranties




43









 





     Section 7.1 Representations of Authority. Alnylam and Medtronic each represents and
warrants to the other Party that it has full corporate right, power and authority to enter into
this Agreement and to perform its respective obligations under this Agreement.



     Section 7.2 Consents. Alnylam and Medtronic each represents and warrants to the other
Party that all necessary consents, approvals and authorizations of all government authorities and
other Persons required to be obtained by it as of the Restatement Date in connection with the
execution, delivery and performance of this Agreement have been or shall be obtained by the
Restatement Date.



     Section 7.3 No Conflict. Alnylam and Medtronic each represents and warrants to the
other Party that, notwithstanding anything to the contrary in this Agreement, the execution and
delivery of this Agreement, the performance of such Party’s obligations in the conduct of the
Collaboration Program and the licenses and sublicenses to be granted pursuant to this Agreement (a)
do not and will not conflict with or violate any requirement of applicable laws or regulations
existing as of the Restatement Date and (b) do not and will 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 Restatement Date.



     Section 7.4 Enforceability. Alnylam and Medtronic each represents and warrants to the
other Party that this Agreement is a legal and valid obligation binding upon it and is enforceable
in accordance with its terms.



     Section 7.5 Employee Obligations. Alnylam and Medtronic each represents and warrants
that all of its employees, officers, consultants and advisors who have been, are or will be
involved in the Collaboration Program have executed or will have executed agreements or have
existing obligations under law requiring assignment to such Party of all intellectual property made
during the course of and as the result of their association with such Party, and obligating the
individual to maintain as confidential such Party’s Confidential Information, to the extent
required to support such Party’s obligations under this Agreement. Alnylam and Medtronic each
represents and warrants that, to its knowledge, none of its employees who have been, are or will be
involved in the Collaboration Program are, as a result of the nature of such Collaboration Program
to be conducted by the Parties, in violation of any covenant in any contract with a Third Party
relating to non-disclosure of proprietary information, non-competition or non-solicitation.



     Section 7.6 Intellectual Property. Each Party represents and warrants to the other
Party as follows:



          (a) To such Party’s knowledge, the performance by either Party of its obligations under any
Workplan will not result in the infringement of any intellectual property rights or the use of
misappropriated trade secrets of any Third Party.




          (b) Such Party has the right to grant the rights and licenses granted to the other Party by
such Party under this Agreement.




          (c) To such Party’s knowledge, no Third Party with which such Party has entered into any
license agreement under which Patent Rights or Know-How material to this Agreement



44









 






are licensed from such Third Party intends to cancel or terminate such license agreement and
no Third Party has the right to cancel or terminate such license agreement.




     Section 7.7 No Warranties. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN OR IN THE
siRNA SUPPLY AGREEMENT OR IN THE DEVICE SUPPLY AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS AND
EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATIONS OR
WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.



Article VIII




Term and Termination




     Section 8.1 Term. This Agreement shall become effective as of the Restatement Date,
shall expire on a Licensed Product-by-Licensed Product and country-by-country basis upon the
expiration of the Royalty Term for such Licensed Product in such country, and shall expire in its
entirety upon the later of (i) the expiration of the Collaboration Term or (ii) the expiration of
the last-to-expire Royalty Term, unless earlier terminated as set forth in this Article VIII.



          (a) Effect of Royalty Term Expiration. Upon the expiration of the Royalty Term
applicable to any Licensed Product in any country, (i) in the event that Medtronic is the
Commercializing Party for such Licensed Product, Medtronic’s licenses under Section 3.1(b) with
respect to such Licensed Product shall convert to non-exclusive, fully paid-up, non-royalty-bearing
licenses and (ii) in the event that Alnylam is the Commercializing Party for such Licensed Product,
Alnylam’s licenses under Section 3.2(b) with respect to such Licensed Product shall convert to
non-exclusive, fully paid-up, non-royalty-bearing licenses.




     Section 8.2 Termination For Material Breach.



          (a) Upon any material breach of obligations under a Workplan by a Party (the “Breaching
Party”) related solely to such Workplan, the other Party (the “Non-Breaching Party”)
may terminate the Product Development Program for which the Workplan was prepared, by providing
sixty (60) days’ written notice to the Breaching Party specifying the material breach. In the case
of payment defaults, the Breaching Party may cure by paying all non-contested amounts during the
notice period and submitting issues regarding the remaining disputed amounts to dispute resolution
without termination of the Agreement. The termination shall become effective at the end of the
notice period unless the Breaching Party cures such breach during such notice period.
Notwithstanding the foregoing, if such material breach, by its nature, is not curable, the
Non-Breaching Party may terminate immediately. If upon the termination of a Product Development
Program, no Product Development Program remains in progress and no Licensed Product is then being
Commercialized under this Agreement, this Agreement shall terminate when such Product Development
Program terminates.




          (b) Upon any material breach of Section 2.5(b) of this Agreement by a Commercializing Party
with respect to one or more, but less than all, Major Markets for a given Target Indication, (i) if
Medtronic is the Commercializing Party, Alnylam may, as its sole and



45









 






exclusive remedy for such material breach, terminate the license rights to Alnylam Patent
Rights under Sections 3.1(a), 3.1(b) and 3.1(c) and (ii) if Alnylam is the Commercializing Party,
Medtronic may, as its sole and exclusive remedy for such material breach, terminate the license
rights to Medtronic Patent Rights under Sections 3.2(a), 3.2(b) and 3.2(c), in either case with
respect to such Major Markets for such Target Indication, by providing sixty (60) days’ written
notice to the Commercializing Party specifying the material breach. The termination shall become
effective at the end of the notice period unless the Commercializing Party cures such breach during
such notice period. Notwithstanding the foregoing, if such material breach, by its nature, is not
curable, the non-Commercializing Party may terminate immediately. Upon termination of the
Commercializing Party’s license rights with respect to a Major Market for a Target Indication under
this Section 8.2(b), such Party shall have no further obligations under Section 2.5(b) with respect
to such Major Market for such Target Indication or liability due to its failure to Commercialize or
to use Commercially Reasonable Efforts to Commercialize.




          (c) Upon any material breach of this Agreement by a Party (the “Breaching Party”)
other than a material breach described in Section 8.2(a) or 8.2(b), the other Party (the
“Non-Breaching Party”) may terminate this Agreement by providing sixty (60) days’ written
notice to the Breaching Party, specifying the material breach, provided that, with
respect to any such termination based on a material breach of Section 2.5(b), such termination and
the consequences set forth in Section 8.4 shall be the Non-Breaching Party’s sole and exclusive
remedy for such breach. In the case of payment defaults, the Breaching Party may cure by paying
all non-contested amounts during the notice period and submitting issues regarding the remaining
disputed amounts to dispute resolution without termination of the Agreement. The termination shall
become effective at the end of the notice period unless the Breaching Party cures such breach
during such notice period. Notwithstanding the foregoing, if such material breach, by its nature,
is not curable, the Non-Breaching Party may terminate immediately.




     Section 8.3 Termination Upon No-Go Decision. In the event of a No-Go Decision
pursuant to Section 2.3(c), either Party may terminate this Agreement upon written notice to the
other Party, which termination shall become effective thirty (30) days following receipt by the
other Party of such notice.



     Section 8.4 Effect of Termination.



          (a) In the event of termination of this Agreement or a Product Development Program by Alnylam
for Medtronic’s uncured (or uncurable) material breach pursuant to Section 8.2(a) or 8.2(c), or in
the event that Alnylam elects to assume unilateral Development and Commercialization of Licensed
Products following Medtronic’s decision to opt out of a Product Development Program pursuant to
Section 2.4(b), then, with respect to the entire Agreement if the entire Agreement is being
terminated, or with respect only to the applicable Product Development Program being terminated:




               (i) Medtronic shall, with respect to all Alnylam siRNAs that have achieved [**] as of the
effective date of such termination or opt-out, promptly transfer to Alnylam all INDs, NDAs and
similar applications filed with Regulatory Authorities for which Medtronic is then the sponsor in
relation to Licensed Products containing or using such Alnylam siRNAs; provided
that, with respect to any INDs, NDAs, PMAs or similar applications filed with



46









 







Regulatory Authorities for which Medtronic is then the sponsor that relate to the use of
Medtronic Devices to deliver drugs or compositions other than or in addition to Alnylam siRNAs,
Medtronic shall not be obligated to transfer such applications to Alnylam and instead Medtronic
must, at Medtronic’s choice, either (A) obtain and maintain applications filed with Regulatory
Authorities to Commercialize such Medtronic Device or (B) grant Alnylam a Right of Access and a
right of reference for the purposes of obtaining Regulatory Approval of the Licensed Products
Developed in such Product Development Program; provided further that, if
Medtronic does not transfer any IND, NDA, PMA or similar application pursuant to the immediately
preceding proviso, and as a consequence Alnylam would experience a delay in the continued
Development or Commercialization of any applicable Licensed Product, Medtronic shall take all
reasonable and legally permissible steps to enable Alnylam to continue to operate under such IND,
NDA, PMA or similar application retained by Medtronic, without delay, for such reasonable period of
time as may be necessary to enable Alnylam to obtain, and provided that Alnylam diligently pursues,
approval of any IND, NDA, PMA or similar application that may be necessary for Alnylam to continue
Development or Commercialization;



               (ii) Medtronic shall, with respect to all Alnylam siRNAs that have not yet achieved [**],
grant Alnylam a Right of Access and a right of reference for any purpose to all INDs and other
filings with Regulatory Authorities for which Medtronic is then the sponsor in relation to Licensed
Products containing or using such Alnylam siRNAs;



               (iii) Medtronic shall promptly, upon request by Alnylam, provide to Alnylam copies of any
scientific and regulatory data in Medtronic’s possession (excluding data already in Alnylam’s
possession) with respect to such Alnylam siRNAs and to Licensed Products containing or using such
Alnylam siRNAs that are reasonably necessary for Alnylam to undertake subsequent Development,
manufacture and Commercialization of such Licensed Products;



               (iv) in the case of Alnylam electing to continue a Product Development Program following
termination of such Product Development Program or Medtronic’s decision to opt out of such Product
Development Program, Alnylam shall be deemed the Commercializing Party with respect to all Licensed
Products Developed under such Product Development Program;



               (v) in the case of termination of the Agreement by Alnylam pursuant to Section 8.2(a) or
8.2(c), Alnylam shall be deemed the Commercializing Party with respect to all relevant Licensed
Products and Medtronic shall be deemed to have opted out of all relevant Product Development
Programs at the stage in each such Product Development Program during which the breach occurred;



               (vi) all licenses granted to Alnylam under this Agreement shall survive termination, subject
to (A) the payment of milestones in accordance with Section 4.2, (B) payment of royalties pursuant
to Section 4.3, and (C) the payment of all reimbursement amounts pursuant to Section 4.3(h); and



               (vii) after a Go Decision, if requested by Alnylam, Medtronic shall provide, on an exclusive
basis for use in Licensed Products, an adequate supply of Medtronic



47









 







Devices to meet Alnylam’s requirements for Devices, including all associated delivery hardware
and disposables for use in Licensed Product(s) hereunder for which Alnylam is the Commercializing
Party, pursuant to the terms of a separate manufacturing and supply agreement to be negotiated and
entered into by the Parties, which shall include the terms set forth in Exhibit D attached
hereto (the “Device Supply Agreement”), under which Medtronic shall, directly or through a
Third Party, provide to Alnylam or its designee the commercial supply of Medtronic Device(s) for
such Licensed Products, at Medtronic’s Manufacturing Cost plus [**] percent ([**]%) (as reflected
in a standard cost as described below), meeting mutually agreed manufacturing specifications to be
set forth in the Device Supply Agreement. If the Parties have not entered into a Device Supply
Agreement within sixty (60) days of the effective date of termination or of Medtronic’s opt-out, as
applicable, either Party may submit such impasse for resolution pursuant to Section 2.3(d)(ii). If
Alnylam exercises the option to obtain Medtronic Devices under this Section 8.4(c), Alnylam and its
designees shall not procure Devices from any Person other than Medtronic or its Third Party
designee for use in the manufacture or sale of Licensed Product(s).



          (b) In the event of termination of Medtronic’s license rights with respect to one or more
Licensed Product(s) in one or more (but less than all) Major Markets by Alnylam for Medtronic’s
uncured (or uncurable) material breach pursuant to Section 8.2(b), then Alnylam shall be deemed the
Commercializing Party for such Licensed Product(s) in such Major Market(s). In addition, Medtronic
shall perform the obligations set forth in Sections 8.4(a)(i), 8.4(a)(ii), 8.4(a)(iii), 8.4(a)(vi)
and 8.4(a)(vii) above (limited in each case to such Licensed Product(s) in such Major Market(s)).




          (c) In the event of termination of this Agreement or a Product Development Program by
Medtronic for Alnylam’s uncured (or uncurable) material breach pursuant to Section 8.2(a) or
8.2(c), or in the event that Medtronic elects to assume unilateral Development and
Commercialization of Licensed Products following Alnylam’s decision to opt out of a Product
Development Program pursuant to Section 2.4(a), then, with respect to the entire Agreement if the
entire Agreement is being terminated, or with respect only to the applicable Product Development
Program being terminated:




               (i) Alnylam shall, with respect to all Alnylam siRNAs that have achieved [**] as of the
effective date of such termination or opt-out, promptly transfer to Medtronic all INDs, NDAs and
similar applications filed with Regulatory Authorities for which Alnylam is then the sponsor in
relation to Licensed Products containing or using such Alnylam siRNAs;



               (ii) Alnylam shall, with respect to all Alnylam siRNAs that have not yet achieved [**], grant
Medtronic a Right of Access and a right of reference for any purpose to all INDs and other filings
with Regulatory Authorities for which Alnylam is then the sponsor in relation to Licensed Products
containing or using such Alnylam siRNAs;



               (iii) in the case of termination of the Agreement by Medtronic pursuant to Section 8.2(a) or
8.2(c), Alnylam shall be deemed to have opted out of all relevant Product Development Programs at
the stage in each such Product Development Program during which the breach occurred;



48









 





               (iv) all licenses granted to Medtronic under this Agreement shall survive termination, subject
to (A) the payment of milestones in accordance with Section 4.2, (B) the payment of all
reimbursement amounts pursuant to Sections 3.1(e) and 4.3(h), and (C) payment of royalties pursuant
to Section 4.3;



               (v) Alnylam shall promptly, upon request by Medtronic, provide to Medtronic copies of any
scientific and regulatory data in Alnylam’s possession (excluding data already in Medtronic’s
possession) with respect to such Alnylam siRNAs and to Licensed Products containing or using such
Alnylam siRNAs that are reasonably necessary for Medtronic to undertake subsequent Development,
manufacture and Commercialization of such Licensed Products; and



               (vi) after a Go Decision, if requested by Medtronic, Alnylam shall provide, on an exclusive
basis, an adequate supply of Alnylam siRNAs to meet Medtronic’s requirements for Alnylam siRNAs for
use in Licensed Product(s) hereunder for which Medtronic is the Commercializing Party either
pursuant to the terms of any siRNA Supply Agreement in effect on the effective date of termination
or opt-out, or, if no siRNA Supply Agreement is then in effect, pursuant to the terms set forth in
Section 2.6(b).



          (d) In the event of termination of this Agreement pursuant to Section 8.3 or a termination of
a Product Development Program pursuant to Section 2.4(c), then




               (i) each Party’s rights, obligations and licenses under this Agreement or with respect to such
Product Development Program, as applicable, shall terminate; and



               (ii) each Party will within thirty (30) days return to the other all tangible Confidential
Information, or all tangible Confidential Information relating to such Product Development Program,
as applicable, of the other Party (except one copy which may be retained by legal counsel solely
for evidentiary purposes in the event of a dispute).



          (e) Notwithstanding any other provision of this Agreement, upon termination of any of the
licenses granted to Medtronic or Alnylam hereunder for any reason (including termination of this
Agreement), each Party hereby grants the other Party a perpetual, irrevocable, royalty-free,
non-exclusive license to its Know-How related to Products, excluding any Patent Rights, and
Device-Related Know-How and any Primary Sequence or Chemical Modification Know-How, with the right
to grant sublicenses, in such country or countries where such licenses terminated. Nothing in this
section shall be interpreted to require either Party to deliver or to provide its Know-How to the
other Party.




     Section 8.5 Survival. In the event of any expiration or termination of this
Agreement, (a) all financial obligations under Article II, IV or V accrued as of the effective date
of such expiration or termination shall survive, and (b) the obligations set forth in Article VI
and in Section 9.1, and all other terms, provisions, representations, rights and obligations
contained in this Agreement that by their terms survive expiration or termination of this
Agreement, shall survive. In the event of any expiration (but not termination prior to the
expiration of the term set forth in Section 8.1) of this Agreement, the licenses described in
Section 8.1(a) shall survive indefinitely.



49









 





Article IX




Miscellaneous Provisions




     Section 9.1 Indemnification.



          (a) Medtronic. Medtronic shall indemnify and hold harmless Alnylam and its Affiliates
and their respective directors, officers, employees and agents (the “Alnylam Indemnified
Parties”) from and against all losses, costs, damages, fees or expenses (“Losses”)
arising out of (i) any breach by Medtronic of any of its representations, warranties or obligations
pursuant to this Agreement, (ii) any Third Party claim of personal injury or other product
liability resulting from Licensed Products for which Medtronic was the Commercializing Party,
provided that Medtronic shall have no obligation to indemnify or hold harmless
Alnylam from personal injury or other product liability resulting from manufacturing defects (e.g.,
failures to manufacture in accordance with cGMP or agreed manufacturing specifications) in Alnylam
siRNAs supplied by Alnylam or its subcontractors; or (iii) any Third Party Infringement Claim based
on the use, offer for sale, sale or importation of any Licensed Product in any country outside of
the US Territory, or the manufacture in any country of any Licensed Product (other than relating to
the manufacture by Alnylam or its subcontractor of Alnylam siRNAs) sold in any country outside the
US Territory, for which Medtronic is the Commercializing Party. Notwithstanding the foregoing,
Medtronic shall not be responsible for the indemnification of any Alnylam Indemnified Party to the
extent arising from any grossly negligent or willfully wrongful acts by any Alnylam Indemnified
Party.




          (b) Alnylam. Alnylam shall indemnify and hold harmless Medtronic and its Affiliates
and their respective directors, officers, employees and agents (the “Medtronic Indemnified
Parties”) harmless from and against all Losses arising out of (i) any breach by Alnylam of any
of its representations, warranties or obligations pursuant to this Agreement, (ii) any Third Party
claim of personal injury or other product liability resulting from Licensed Products for which
Alnylam was the Commercializing Party, provided that Alnylam shall have no
obligation to indemnify or hold harmless Medtronic from personal injury or other product liability
resulting from manufacturing defects (e.g., failures to manufacture in accordance with cGMP or
agreed manufacturing specifications) in Medtronic Devices supplied by Medtronic or its
subcontractors, or (iii) any Third Party Infringement Claim based on the use, offer for sale, sale
or importation of any Licensed Product in any country outside of the US Territory, or the
manufacture in any country of any Licensed Product (other than relating to the manufacture by
Medtronic or its subcontractor of Medtronic Devices) sold in any country outside the US Territory,
for which Alnylam is the Commercializing Party. Notwithstanding the foregoing, Alnylam shall not
be responsible for the indemnification of any Medtronic Indemnified Party to the extent arising
from any grossly negligent or willfully wrongful acts by any Medtronic Indemnified Party.




          (c) Cross-Indemnification of Third Party Infringement Claims for the US Territory.
Medtronic shall indemnify and hold harmless the Alnylam Indemnified Parties, and Alnylam shall
indemnify and hold harmless the Medtronic Indemnified Parties, from and against [**] percent
([**]%) of all Losses arising out of any Third Party Infringement Claim based on the use, offer for
sale, sale or importation of any Licensed Product in the US Territory, or the



50









 






manufacture in any country of any Licensed Product sold in the US Territory; provided
that, in the event that the non-Commercializing Party has exercised its right pursuant to
Section 2.4 to discontinue its participation in the Product Development Program under which such
Licensed Product was Developed, the non-Commercializing Party’s obligation pursuant to this Section
9.1(c) relating to alleged infringing activities occurring after such opt-out shall be [**] for the
point during such Product Development Program at which the non-Commercializing Party provided
notice that it was exercising its right to opt out of such Product Development Program. For
example, if the non-Commercializing Party’s indemnification amount determined in accordance with
the first sentence of this Section 9.1(c) is $[**] for Losses arising from infringement following
the non-Commercializing Party’s opt-out of the relevant Product Development Program, and the timing
of the non-Commercializing Party’s opt-out made such opt-out a [**] Opt Out, then the
indemnification amount pursuant to this Section 9.1(c) would be $[**].




          (d) Third Party Claims. A person entitled to indemnification under this Section 9.1
(an “Indemnified Party”) shall give prompt written notification to the person from whom
indemnification is sought (the “Indemnifying Party”) of the commencement of any action,
suit or proceeding relating to a Third Party claim for which indemnification may be sought or, if
earlier, upon the assertion of any such claim by a Third Party (it being understood and agreed,
however, that the failure by an Indemnified Party to give notice of a Third Party claim as provided
in this subsection shall not relieve the Indemnifying Party of its indemnification obligation under
this Agreement except and only to the extent that such Indemnifying Party is actually prejudiced as
a result of such failure to give notice). Within 30 days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the
defense of such action, suit, proceeding or claim with counsel reasonably satisfactory to the
Indemnified Party. If the Indemnifying Party does not assume control of such defense, the
Indemnified Party shall control such defense. The Party not controlling such defense may
participate therein at its own expense; provided that if the Indemnifying Party
assumes control of such defense and the Indemnified Party reasonably concludes, based on advice
from counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests with
respect to such action, suit, proceeding or claim, the Indemnifying Party shall be responsible for
the reasonable fees and expenses of counsel to the Indemnified Party solely in connection
therewith; provided further, however, that in no event shall the
Indemnifying Party be responsible for the fees and expenses of more than one counsel in any one
jurisdiction for all Indemnified Parties. The Party controlling such defense shall keep the other
Party advised of the status of such action, suit, proceeding or claim and the defense thereof and
shall consider recommendations made by the other Party with respect thereto. The Indemnified Party
shall not agree to any settlement of such action, suit, proceeding or claim without the prior
written consent of the Indemnifying Party, which shall not be unreasonably withheld. The
Indemnifying Party shall not agree to any settlement of such action, suit, proceeding or claim or
consent to any judgment in respect thereof that does not include a complete and unconditional
release of the Indemnified Party from all liability with respect thereto or that imposes any
liability or obligation on the Indemnified Party without the prior written consent of the
Indemnified Party.




     Section 9.2 Governing Law and Waiver of Jury Trial. This Agreement shall be construed
and the respective rights of the Parties determined according to the substantive laws of the State
of Delaware notwithstanding the provisions governing conflict of laws under such



51









 







Delaware law to the contrary. The Parties hereby (a) consent to service of process by mailing
or delivering such service to the Party at its respective notice address set forth in Section 9.5;
and (b) waive any right to a trial by jury in any action or proceeding to enforce or defend any
rights under this Agreement or under any amendment, instrument, document or agreement delivered in
connection herewith or hereafter and agree that any such action or proceeding shall be tried before
a court and not before a jury.



     Section 9.3 Assignment. Neither Alnylam nor Medtronic may assign this Agreement in
whole or in part without the consent of the other Party, except if such assignment is to an
Affiliate of the assigning Party or occurs in connection with the sale or transfer of all or
substantially all of the business or assets of the assigning Party to which the subject matter of
this Agreement pertains. In the event that, in connection with the sale or transfer of all or
substantially all of Alnylam’s business or assets to which the subject matter of this Agreement
pertains, Alnylam becomes controlled by, comes to control or comes under common control with, or
assigns this Agreement to, any [**], without Medtronic’s consent as permitted by the immediately
preceding sentence (any such event, a “[**]”), then, subject to any other consequences that the
Parties may otherwise mutually agree: (a) Alnylam shall promptly notify Medtronic of such [**], (b)
if, upon the occurrence of such [**], Medtronic is the Commercializing Party for Licensed
Product(s) Developed in any Product Development Program, Medtronic shall have the right to
terminate the JRDC and/or JCC, as applicable, with respect to each such Product Development Program
upon written notice to Alnylam within [**] days after Alnylam’s notification to Medtronic of such
[**] pursuant to the foregoing clause (a), and (c) with respect to any [**] that occurs during the
Product Development Term for a Product Development Program, Medtronic shall have the right, upon
written notice to Alnylam within [**] days after Alnylam’s notification to Medtronic of such [**]
pursuant to the foregoing clause (a), (i) [**]. After a [**], in no event shall Medtronic (A) [**]
this Agreement or (B) [**].



     Section 9.4 Entire Agreement; Amendments. This Agreement (including all attachments
hereto) constitutes the entire agreement between the Parties with respect to the subject matter
hereof, amends and restates the Original Collaboration Agreement in its entirety, and supersedes
all other previous arrangements with respect to the subject matter hereof, whether written or oral,
except for the letter agreement dated as of [**] between the Parties concerning the [**] Agreement,
which shall survive in accordance with its terms. Any amendment or modification to this Agreement
shall be made in writing signed by both Parties.



     Section 9.5 Notices.



Notices to Alnylam shall be addressed to:



Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, MA 02142

Telefacsimile: (617) 551-8101

Attention: COO



with a copy to:




52









 







Wilmer Cutler Pickering Hale and Dorr LLP

60 State Street

Boston, MA 02109

Telefacsimile: (617) 526-5000

Attention: Steven D. Singer, Esq.



Notices to Medtronic shall be addressed to:



Medtronic, Inc.

710 Medtronic Parkway

Minneapolis, MN 55432-5604



with separate copies thereof addressed to



Attention: General Counsel

Mail Stop LC400

Telefacsimile: (763) 572-5459



and



Attention:

Vice President and Chief Development Officer

Mail Stop LC390

Telefacsimile: (763) 505-2542



Either Party may change its address by giving notice to the other Party in the manner herein
provided. Any notice required or provided for by the terms of this Agreement shall be in writing
and shall be (a) sent by registered or certified mail, return receipt requested, postage prepaid,
(b) sent via a reputable overnight courier service, or (c) sent by facsimile transmission with an
original to be followed the same day via a reputable overnight courier service, in each case
properly addressed in accordance with the paragraph above. The effective date of notice shall be
the actual date of receipt by the Party receiving the same.




     Section 9.6 Force Majeure. No failure or omission by the Parties in the performance
of any obligation of this Agreement shall be deemed a breach of this Agreement or create any
liability if the same shall arise from any cause or causes beyond the control of the Parties,
including, but not limited to, the following: acts of God; acts or omissions of any government; any
rules, regulations or orders issued by any governmental authority or by any officer, department,
agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion;
insurrection; riot; and invasion and provided that such failure or omission resulting from one of
the above causes is cured as soon as is practicable after the occurrence of one or more of the
above-mentioned causes.



     Section 9.7 Independent Contractors. It is understood and agreed that the
relationship between the Parties hereunder is that of independent contractors and that nothing in
this



53









 







Agreement shall be construed as authorization for either Alnylam or Medtronic to act as agent
for the other.



     Section 9.8 No Strict Construction. This Agreement has been prepared jointly and
shall not be strictly construed against any Party.



     Section 9.9 Headings. The captions or headings of the sections or other subdivisions
hereof are inserted only as a matter of convenience or for reference and shall have no effect on
the meaning of the provisions hereof.



     Section 9.10 No Implied Waivers; Rights Cumulative. No failure on the part of Alnylam
or Medtronic to exercise, and no delay in exercising, any right, power, remedy or privilege under
this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice
or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of
any breach of this Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or further exercise
thereof or the exercise of any other right, power, remedy or privilege.



     Section 9.11 Severability. If, under applicable law or regulation, 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”), 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. In the event such a valid and enforceable
provision cannot be agreed upon, the invalidity of one or more Severed Clauses shall not affect the
validity of this Agreement as a whole, unless the Severed Clauses are of such essential importance
to this Agreement that it is to be reasonably assumed that the Parties would not have entered into
this Agreement without the Severed Clauses.



     Section 9.12 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 shall be deemed to be original signatures.



     Section 9.13 No Consequential or Punitive Damages. NEITHER PARTY HERETO WILL BE
LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, MULTIPLE OR PUNITIVE DAMAGES,
OR FOR LOST PROFITS, ARISING OUT OF THIS AGREEMENT OR RELATING TO ANY BREACH OF THIS AGREEMENT,
REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 9.13 IS INTENDED TO LIMIT OR
RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY WITH RESPECT TO THIRD PARTY
CLAIMS.



     Section 9.14 Interpretation. 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.”



54









 







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 from time to time
enacted, repealed or amended, (C) any reference herein to 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 or
Schedules shall be construed to refer to Articles, Sections, Exhibits and Schedules of this
Agreement; and (g) all references to the “knowledge” of a Party shall refer to the actual knowledge
of any of such Party’s officer or director level employees or members of its Board of Directors, or
the knowledge which any such person would reasonably be expected to have assuming reasonable
inquiry in light of such person’s position with such Party.



[Remainder of page intentionally left blank]




55









 








     IN WITNESS WHEREOF, the Parties have executed this Amended and Restated Collaboration
Agreement as of the Restatement Date.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	ALNYLAM PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John Maraganore	 	 
	 

	 	 	 	 	 	 
	 	 	Name: John Maraganore	 	 
	 	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	MEDTRONIC, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert S. White	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Robert S. White	 	 
	 	 	Title: Vice President, Corporate Dept.	 	 






56









 





SCHEDULE 1.4




ALNYLAM PATENT RIGHTS





	1.4.1	 	Patents and Patent Applications Owned by Alnylam or Licensed from Third Parties Other than
Isis Pharmaceuticals, Inc.




Alnylam Patent Rights include all claims of the patents and patent applications listed in Table
1.4.1, including any claims of specific Alnylam siRNAs as inhibitors of Gene Targets, but excluding
claims of inhibitors of genes that are not Gene Targets. The patents and patent applications listed
in Table 1.4.1 are either owned by Alnylam or licensed from Third Parties other than Isis
Pharmaceuticals, Inc. (“Isis”). Alnylam Patent Rights licensed from such other Third Parties are
subject to sublicensing restrictions and other conditions imposed by such Third Parties as set
forth in Schedule 3.1(d).





	1.4.2	 	Patents and Patent Applications Licensed from Isis




Alnylam Patent Rights also include rights to a broad portfolio of patents and patent applications
licensed to Alnylam by Isis Pharmaceuticals, Inc. (the “Isis Patents”) pursuant to the Isis
Agreement. The Isis Patents are described in Schedules 1-27 and 1-28 of the Isis Agreement, which
are appended to, and incorporated by reference into, this Schedule 1.4. Table 1.4.2 lists those
Isis Patents classified in the Isis Agreement as “Isis Current Motif and Mechanism Patents” and
listed in Schedule 1-28 of the Isis Agreement. Table 1.4.3 lists those Isis Patents classified in
the Isis Agreement as “Isis Current Chemistry Patents” and listed in Schedule 1-27 of the Isis
Agreement.



For certain of the Isis Patents, the rights licensed to Alnylam by Isis are:





	 	(a)	 	Subject to rights retained by Third Parties that share joint inventorship with Isis, as
set forth in Exhibit 5.3(c) of the Isis Agreement, appended to and incorporated by
reference into Schedule 3.1(d), or
	 
	 	(b)	 	Subject to restrictions imposed by contractual obligations between Isis and Third
Parties, as set forth in Exhibit 5.3(d) of the Isis Agreement, also appended to and
incorporated by reference into Schedule 3.1(d).




For all of the Isis Patents, the licenses granted by Isis to Alnylam exclude the right to use Isis
Patents for certain named targets to which Isis retained exclusive rights.




1









 








Table 1.4.1




Patents and Patent Applications Owned by Alnylam

or Licensed by Alnylam from Third Parties Other than Isis Pharmaceuticals, Inc.




	 	 	 	 	 	 	 	 	 	 	 
	 	 	Filing	 	 	 	 	 	 	 	 
	Case No.	 	Date	 	Country	 	Serial No.	 	Status	 	Title
	[**]

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]





Confidential Materials omitted and filed separately with the Securities and Exchange Commission.
Asterisks denote omissions.



A total of 6 pages have been redacted.




2









 





Table 1.4.2, Isis Current Motif and Mechanism Patents: Schedule 1-28 from Isis Agreement




Schedule 1-28 Isis Current Motif and Mechanism Patents




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Isis Docket	 	 	 	 	 	Patent	 	Grant	 	 	 	 	 	 	 	 
	Number	 	Country	 	Status	 	Number	 	Date	 	Title	 	3rd Party	 	 	3rd Party	 
	[**]
	 	[**]	 	[**]	 	 	 	 	 	[**]	 	 	 	 	 	 	 	 





Confidential Materials omitted and filed separately with the Securities and Exchange
Commission. Asterisks denote omissions. [**]



A total of 10 pages have been omitted pursuant to a request for confidential treatment.





			
	 	 	 
	CONFIDENTIAL
	 	Page 1
















 








Table 1.4.3, Isis Current Chemistry Patents: Schedule 1-27 from Isis Agreement




Schedule 1-27 Isis Current Chemistry Patents




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Isis Docket	 	Country	 	 	 	Patent	 	Grant	 	 	 	 	 	 	 	3rd	 
	Number	 	Name	 	Status	 	Number	 	Date	 	Title	 	3rd Party	 	 	Party	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Confidential Materials omitted and filed separately with the Securities and Exchange Commission.



Asterisks denote omissions. [**]



A total of 47 pages have been omitted pursuant to a request for confidential treatment.




CONFIDENTIAL




			
	 	 	 
	 
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SCHEDULE 1.42




LISTED OR APPROVED THIRD PARTY AGREEMENTS




MEDTRONIC THIRD PARTY AGREEMENTS



Listed Medtronic Third Party Agreements shall include the following agreements:



1. DEVELOPMENT AND MANUFACTURING AGREEMENT by and among [**] and Medtronic, Inc. dated [**] (the
“[**]  Agreement”).



2. [**] Patent License Agreement-Nonexclusive between [**] and Medtronic, Inc. dated [**] (the
“[**]  Agreement”).



3. EXCLUSIVE LICENSE AGREEMENT by and among [**] and Medtronic, Inc. dated [**] (the “[**] 
Agreement”).




ALNYLAM THIRD PARTY AGREEMENTS



Listed Alnylam Third Party Agreements shall include the following agreements:



1. CO-EXCLUSIVE LICENSE AGREEMENTS between (a) Garching Innovation GmbH (“GI”) and Alnylam U.S.,
Inc. (formerly Alnylam Pharmaceuticals, Inc.), dated December 19, 2002, and amended on May 7, 2003,
July 2, 2003, July 14, 2003, July 21, 2003 and January 8, 2004; and (b) GI and Ribopharma AG, dated
July 30, 2003 (collectively, the “GI Agreements”).



2. AGREEMENT between THE BOARD OF TRUSTEES OF THE LELAND Stanford JUNIOR UNIVERSITY and Alnylam
Pharmaceuticals, Inc., dated September 17, 2003 (the “Stanford Agreement”).



3. STRATEGIC COLLABORATION AND LICENSE AGREEMENT between Isis Pharmaceuticals, Inc. and Alnylam
Pharmaceuticals, Inc., dated March 11, 2004 (the “Isis Agreement”).














 






SCHEDULE 3.1(d)


EXISTING THIRD PARTY CONTRACTUAL OBLIGATIONS OF ALNYLAM



This schedule provides excerpts of provisions from the Listed Alnylam Third Party Agreements that
impose restrictions and other terms on sublicensees of the rights licensed to Alnylam under such
agreements:





	 	1.	 	The GI Agreements
	 
	 	2.	 	The Stanford Agreement
	 
	 	3.	 	The Isis Agreement




The excerpts relating to the Isis Agreement include the full text of two Exhibits from the Isis
Agreement that relate to limitations on the rights granted to Alnylam under such Isis Agreement.




 









 








1. The GI Agreements



Certain restrictions on, and other terms relating to, the rights licensed from GI are described in
the following clauses excerpted from the Co-Exclusive License executed between Alnylam and GI on
December 20, 2002, which clauses appear in substantially the same form in the Co-Exclusive License
executed between Ribopharma and GI on July 30, 2003:





“ARTICLE 2 — GRANT OF RIGHTS




1.7 “SUBLICENSEE”




shall mean any third party who sells or intends to commercialize LICENSED PRODUCTS under a
sublicense from COMPANY to develop, make, use and sell LICENSED PRODUCTS. SUBLICENSEE shall
not include a distributor which purchases LICENSED PRODUCTS (whether in packaged form or
bulk form) from COMPANY and resells such LICENSED PRODUCTS to third parties in a manner
consistent with normal trade practices in the pharmaceutical industry.




1.8 “NET SALES”




shall mean the gross amount invoiced by COMPANY and its SUBLICENSEES to third parties for
LICENSED PRODUCTS, less the following: (i) to the extent separately stated on the document
of sale, any taxes or duties imposed on the manufacture, use, sale or import of LICENSED
PRODUCTS which are paid by COMPANY, (ii) outbound transportation costs and costs of
insurance in transit, (iii) customary trade, cash or quantity discounts or rebates, to the
extent actually allowed and taken, and (iv) amounts repaid or credited by reason of
rejection or return.




No deductions shall be made for commissions paid to individuals or entities, or for cost of
collections. NET SALES shall occur on the date of invoice for a LICENSED PRODUCT.




Non-cash consideration shall not be accepted by COMPANY or any SUBLICENSEE for LICENSED
PRODUCTS without the prior written consent of GI.




In the event that a LICENSED PRODUCT is sold in combination with one or more active
ingredients (excluding, without limitation, any formulation, stabilisation and delivery
technology) which are not LICENSED PRODUCTS, which active ingredients are also independently
marketed during the royalty period in question in the FIELD (or the non-exclusive field
licensed in the second paragraph of Section 2.1, as the case may be) in the country in
question, then NET SALES, for purposes of determining royalty payments on the combination
product, shall be calculated by multiplying the NET SALES of the combination product by the
fraction A/A+B, where A is the average gross selling price of the LICENSED PRODUCT sold
separately in similar quantities in the country in question during the royalty period in
question, and B is the average gross selling price of the other active ingredient(s) sold
separately in similar quantities in the country in question during the royalty period in
question. In the event that a LICENSED PRODUCT is sold in combination with other active
ingredient(s), and the LICENSED PRODUCT or one or more other active ingredients are not sold
separately, GI and



 









 







COMPANY shall negotiate in good faith other means of calculating NET SALES with respect to
such combination product, in order to fairly reflect the value of the LICENSED PRODUCT
relative to the other active ingredient(s) in such combination product.




2.4 Sublicenses




Immediately after the signature of each sublicense granted under this Agreement, COMPANY
shall provide GI with a copy of the signed sublicense agreement...




ARTICLE 4 — COMPANY DILIGENCE OBLIGATIONS AND REPORTS




4.1 Activity Requirements




COMPANY shall use commercially reasonable efforts, and shall oblige its SUBLICENSEES to use
commercially reasonable efforts, to develop and to introduce into the commercial market
LICENSED PRODUCTS at the earliest practical date.




4.2 Development Reports




COMPANY shall furnish, and shall oblige its SUBLICENSEES to furnish to COMPANY for
inclusion in its reports to GI, to GI in writing, within 30 (thirty) days after the end of
each calendar quarter with COMPANY’s standard R&D report...on the progress of its efforts
during the immediately preceding calendar quarter to develop and commercialize LICENSED
PRODUCTS for each indication and sub-indication within the FIELD. The report shall also
contain a discussion of intended R&D efforts for the calendar quarter in which the report is
submitted.




4.4 Liability for SUBLICENSEES


If SUBLICENSEES of COMPANY develop, manufacture, use and/or sell LICENSED PRODUCTS under the
PATENT RIGHTS, COMPANY warrants and is liable towards GI that the SUBLICENSEES perform their
sublicense agreement in accordance with this Agreement, and COMPANY shall be responsible and
liable for royalty payments and reports of the SUBLICENSEES.




4.5 Effect of Failure




In the event that GI determines that COMPANY or any of its SUBLICENSEES has failed to
fulfill any of its obligations under this Section 4, then GI may treat such failure as a
material breach in accordance with Section 11.7.




ARTICLE 5 — SHARES, ROYALTIES AND PAYMENT TERMS




5.2 Running Royalties




Non-cash consideration shall not be accepted by COMPANY or any SUBLICENSEE for LICENSED
PRODUCTS without the prior written consent of GI.




5.3 Royalty Stacking




(a) Third Party Licenses 




In the event COMPANY or a SUBLICENSEE takes, for objective commercial and/or legal reasons,
a license from any third party under any patent applications or patents that



 









 







dominate the PATENT RIGHTS or is dominated by the PATENT RIGHTS in order to develop, make,
use, sell or import any LICENSED PRODUCT (explicitly excluding, without limitation, any
third party patents and patent applications for formulation, stabilization and delivery),
then COMPANY is allowed to deduct [**]% ([**] percent) of any additional running royalties
to be paid to such third party up to [**]% ([**] percent) of the running royalties stated in
Section 5.2, from the date COMPANY has to pay running royalties to such third party.
However, the running royalties stated in Section 5.2 shall not be reduced to less than a
minimum of [**]% ([**] percent) of NET SALES in any case.




For avoidance of doubt, if COMPANY or a SUBLICENSEE takes a license to a third party target,
COMPANY is in no event allowed to deduct any license fees for such target from running
royalties due to GI under this Agreement.




(b) PATENT RIGHTS Coverage




In the event that (i) COMPANY or its SUBLICENSEES sell a LICENSED PRODUCT in a country where
no PATENT RIGHTS are issued and no patent applications that are part of the PATENT RIGHTS
are pending that have not been pending for less than [**] years after filing national patent
applications in the country in question, and (ii) such LICENSED PRODUCT is manufactured in a
country where PATENT RIGHTS are issued or patent applications that are part of the PATENT
RIGHTS are pending that have not been pending for more than [**] years after filing national
patent applications in the country in question, the royalties stated in Section 5.2 will be
reduced by [**]% ([**] percent) for such LICENSED PRODUCT, until the expiration or
abandonment of all issued patents and filed patent applications within the PATENT RIGHTS in
the country in which the LICENSED PRODUCT is manufactured.




5.4 Reports




Within 30 (thirty) days of the end of each calendar half year, COMPANY shall deliver a
detailed report to GI for the immediately preceding calendar half year showing at least (i)
the number of LICENSED PRODUCTS sold by COMPANY and its SUBLICENSEES in each country, (ii)
the gross price charged by COMPANY and its SUBLICENSEES for each LICENSED PRODUCTS in each
country, (iii) the calculation of NET SALES, and (iv) the resulting running royalties due to
GI according to those figures. If no running royalties are due to GI, the report shall so
state.




5.6 Bookkeeping and Auditing




COMPANY is obliged to keep, and shall oblige its SUBLICENSEES to keep, complete and accurate
books on any reports and payments due to GI under this Agreement, which books shall contain
sufficient information to permit GI to confirm the accuracy of any reports and payments made
to GI. GI, or GI’s appointed agents, is authorized to check the books of COMPANY, and, upon
GI’s request, COMPANY, or agents appointed by GI for COMPANY, shall check the books of its
SUBLICENSEES for GI, once a year. The charges for such a check shall be borne by GI. In
the event that such check reveals an underpayment in excess of 5% (five percent), COMPANY
shall bear the full cost of



 









 







such check and shall remit any amounts due to GI within thirty days of receiving notice
thereof from GI.




The right of auditing by GI under this Section shall expire five years after each report or
payment has been made. Sublicenses granted by COMPANY shall provide that COMPANY shall have
the right to check the books of its SUBLICENSEES according to this Section 5.6.




5.7 No Refund




All payments made by COMPANY or its SUBLICENSEES under this Agreement are nonrefundable and
noncreditable against each other.




ARTICLE 7 — INDEMNIFICATION AND INSURANCE




7.1 Indemnification




COMPANY shall indemnify, defend, and hold harmless the OWNERS and their trustees, officers,
faculty, students, employees, and agents and their respective successors, heirs and assigns
(the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable
attorneys fees and expenses) incurred by or imposed upon any of the Indemnitees in
connection with any claims, suits, actions, demands or judgments arising out of any theory
of liability (including without limitation actions in the form of tort, warranty, or strict
liability and regardless of whether such action has any factual basis) concerning (i) any
use of the PATENT RIGHTS by COMPANY or its SUBLICENSEES, or (ii) any product, process, or
service that is developed, made, used, sold, or performed pursuant to any right or license
granted under this Agreement.




ARTICLE 8 — CONFIDENTIALITY




8.1 Obligation for Company




COMPANY may disclose such information to its actual and prospective SUBLICENSEES,
investors, lenders, other financing sources, acquirors and third parties being acquired by
COMPANY, provided however, that COMPANY has entered into serious discussions with such
entities, and such entities have requested such information, and such entities are obliged
to confidentiality to the same extent as COMPANY.



ARTICLE 10 — General Compliance with Laws




10.2 Non-Use of OWNERS Names



Neither COMPANY nor its SUBLICENSEES shall use the name of “Massachusetts Institute of
Technology,” “University of Massachusetts”, “Whitehead Institute”, “Max Planck Institute”,
“Max Planck Society”, “Garching Innovation” or any variation, adaptation, or abbreviation
thereof, or of any of its trustees, officers, faculty, students, employees, or agents, or
any trademark owned by any of the OWNERS, in any promotional material or other public
announcement or disclosure without the prior written consent of the OWNERS or in the case of
an individual, the consent of that individual. The foregoing notwithstanding, without the
consent of the OWNERS,



 









 







COMPANY may state generally that it is co-exclusively licensed by the OWNERS under the
PATENT RIGHTS.




ARTICLE 11 — EFFECTIVENESS AND TERMINATION




11.5 Attack on PATENT RIGHTS




GI shall have the right to terminate this Agreement immediately upon written notice to
COMPANY, if COMPANY attacks, or has attacked or supports an attack through a third party,
the validity of any of the PATENT RIGHTS. To the extent legally enforcable, sublicenses
granted by COMPANY shall provide that in the event the SUBLICENSEE attacks, or has attacked
or supports an attack through a third party, the validity of any of the PATENT RIGHTS,
COMPANY shall have the right to terminate the sublicense agreement immediately; upon request
of GI, COMPANY shall have the obligation to terminate such sublicense agreement.




11.8 Effect of Termination




In no event shall termination of this Agreement release COMPANY or its SUBLICENSEES from
the obligation to pay any amounts that became due on or before the effective date of
termination.




In the event that any license granted to COMPANY under this Agreement is terminated, any
sublicense under such license granted prior to termination of said license shall remain in
full fore and effect, provided that:




(a) the SUBLICENSEE is not then in breach of its sublicense agreement, and




(b) the SUBLICENSEE agrees to be bound to GI as licensor under the terms and conditions of
the sublicense agreement, provided that GI shall have no other obligation than to leave the
sublicense granted by COMPANY in place.”



 









 





2. The Stanford Agreement



Certain restrictions on, and other terms relating to, the rights licensed from Stanford are
described in the following clauses excerpted from the Stanford Agreement. Articles 7, 8 and 9 of
the Stanford Agreement are included in full in these excerpts because clause 13.4 of such agreement
states that “Any sublicense will expressly include the provisions of Articles 7, 8, and 9 for the
benefit of Stanford.”





“2 DEFINITIONS




2.3 “Net Sales” means the gross commercialization revenue derived by Alnylam and any
sublicensee from Licensed Product, less the following items but only as they actually
pertain to the disposition of Licensed Product by Alnylam and any sublicensee, are included
in gross revenue, and are separately billed:




	 	(A)	 	import, export, excise and sales taxes, and custom duties;
	 
	 	(B)	 	costs of insurance, packing, and transportation from the place of manufacture
to the customer’s premises or point of installation;
	 
	 	(C)	 	costs of installation at the place of use; and
	 
	 	(D)	 	credit for returns, allowances, or trades; and
	 
	 	(E)	 	customary trade, quantity or cash discounts actually allowed or taken.
	 
	 	(F)	 	Where Licensed Products are not sold separately, but are sold in combination
with or as parts of other therapeutic products, hereinafter such combinations referred
to as a “Combination Product” and the Licensed Product and each such other product
being referred to as a “Component Product”, the Net Sales price to be used for the
purpose of calculating royalties payable in respect of Combination Products must be
determined by multiplying the Net Sales price of the Combination Product by the
percentage value of the Licensed Product comprising a Component Product contained in
the Combination Product, such percentage value being determined by dividing the current
market value of the Licensed Product comprising a Component Product by a sum of the
separate current market values of each of the Component Products which are contained in
the Combination Product. The current market value of each of the Component Products
must be for a quantity comparable to that contained in the Combination Product and of
the same class, purity and potency. When no current market value is available for a
Component Product, a reasonable hypothetical market value for such Component Product
based upon the allocation of the same proportions of costs, reasonable overhead and
profits (all of which must be determined on the basis of generally accepted accounting
principles) as are or should be allocated to similar Component Products and having an
ascertainable market value.




 









 












7 ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING




7.1 Quarterly Earned Royalty Payment and Report. Beginning with the first sale of a
Licensed Product, Alnylam will make written reports (even if there are no sales) and earned
royalty payments to Stanford within thirty days after the end of each calendar quarter.
This report will be in the form of the report of Appendix B and will state the number,
description, and aggregate Net Sales of Licensed Product during the completed calendar
quarter, and resulting calculation pursuant to Section 6.3 of earned royalty payment due
Stanford for the completed calendar quarter. With each report, Alnylam will include payment
due Stanford of royalties for the completed calendar quarter.




7.2 Termination Report. Alnylam will make a written report to Stanford within ninety days
after the license expires under Section 3.2. Alnylam will continue to make reports after
the license has expired, until all Licensed Product produced under the license have been
sold or destroyed. Concurrent with the submittal of each post-termination report, Alnylam
will pay Stanford all applicable royalties.




7.3 Accounting. Alnylam will keep and maintain records for a period of three years showing
the manufacture, sale, use, and other disposition of products sold or otherwise disposed of
under the license. Records will include general-ledger records showing cash receipts and
expenses, and records that include production records, customers, serial numbers, and
related information in sufficient detail to enable Alnylam to determine the royalties
payable under this Agreement.




7.4 Audit by Stanford. Alnylam will permit an independent certified public accountant
selected by Stanford and acceptable to Alnylam to examine Alnylam’s books and records from
time to time (but no more than one time a year) to the extent necessary to verify reports
provided for in Sections 7.1 and 7.2. Stanford will pay for the cost of such audit, unless
the results of the audit reveal an underreporting of royalties due Stanford of five percent
or more, in which case, Alnylam will pay the audit costs.




8 NEGATION OF WARRANTIES




8.1 To the best of Stanford’s OTL knowledge, Stanford is the sole owner of Licensed Patent
and has the right to enter into this Agreement and to grant the rights and licenses set
forth herein.




8.2 Negation of Warranties. Nothing in this Agreement is construed as:




	 	(A)	 	Stanford’s warranty or representation as to the validity or
scope of any Licensed Patent;
	 
	 	(B)	 	A warranty or representation that anything made, used, sold, or
otherwise disposed of under any license granted in this Agreement is or will be
free from infringement of patents, copyrights, and other rights of third
parties;




 









 






	 	(C)	 	An obligation to bring suit against third parties for
infringement, except as described in Article 12;
	 
	 	(D)	 	Granting by implication, estoppel, or otherwise any licenses or
rights under patents or other rights of Stanford or other persons other than
Licensed Patent, regardless of whether the patents or other rights are dominant
or subordinate to any Licensed Patent; or
	 
	 	(E)	 	An obligation to furnish any technology or technological
information.






8.3 No warranties. Except as expressly set forth in this Agreement, Stanford makes no
representations and extends no warranties of any kind, either express or implied. There are
no express or implied warranties of merchantability or fitness for a particular purpose, or
that Licensed Product will not infringe any patent, copyright, trademark, or other rights,
or any other express or implied warranties.




8.4 Specific Exclusion. Nothing in this Agreement grants Alnylam any express or implied
license or right under or to U.S. Patent 4,656,134 entitled “Amplification of Eucaryotic
Genes” or any patent application corresponding thereto.




9 INDEMNITY




9.1 Indemnification. Alnylam will indemnify, hold harmless, and defend Stanford and
Stanford Hospitals and Clinics, and their respective trustees, officers, employees,
students, and agents against all claims for death, illness, personal injury, property
damage, and improper business practices arising out of the manufacture, use, sale, or other
disposition of Invention, Licensed Patent, Licensed Product, by Alnylam or any sublicensee,
or their customers except to the extent such claims are due to the gross negligence or
willful misconduct of Stanford. Stanford agreed to promptly notify Alnylam in writing of
any such claim and Alnylam shall manage and control, at its own expense, the defense of such
claim and its settlement. Alnylam agrees not to settle any such claim against Stanford
without Stanford’s written consent where such settlement would include any admission of
liability on the part of Stanford, where the settlement would impose any restriction on the
conduct by Stanford of any of its activities, or where the settlement would not include an
unconditional release of Stanford from all liability for claims that are the subject matter
of such claim.




9.2 No Liability. Subject to Section 9.1, neither party will be liable to each other for any
loss profit, expectation, punitive or other indirect, special, consequential, or other
damages whatsoever, in connection with any claim arising out of or related to this Agreement
whether grounded in tort (including negligence), strict liability, contract, or otherwise.




9.3 Workers’ Compensation. Alnylam will at all times comply, through insurance or
self-insurance, with all statutory workers’ compensation and employers’ liability



 









 







requirements covering all employees with respect to activities performed under this
Agreement.




9.4 Insurance. Alnylam will maintain, during the term of this Agreement, Comprehensive
General Liability Insurance, including Product Liability Insurance prior to
commercialization, with a reputable and financially secure insurance carrier to cover the
activities of Alnylam and its sublicensees. Upon initiation of human clinical trials of
Licensed Product, such insurance will provide minimum limits of liability of Five Million
Dollars and will include Stanford and Stanford Hospitals and Clinics, and their respective
trustees, directors, officers, employees, students, and agents as additional insureds.
Insurance will be written to cover claims incurred, discovered, manifested, or made during
or after the expiration of this Agreement and must be placed with carriers with ratings of
at least A- as rated by A.M. Best. Alnylam will furnish a Certificate of Insurance
evidencing primary coverage and additional insured requirements and requiring thirty (30)
days prior written notice of cancellation or material change to Stanford. Alnylam will
advise Stanford, in writing, that it maintains excess liability coverage (following form)
over primary insurance for at least the minimum limits set forth above. All insurance of
Alnylam will be primary coverage; insurance of Stanford and Stanford Hospitals and Clinics
will be excess and noncontributory.




	13.3	 	Sublicense Requirements. Any sublicense granted by Alnylam under this Agreement will be
subject and subordinate to terms and conditions of this Agreement, except:






	 	(A)	 	Sublicense terms and conditions will reflect that any sublicensee will not
further sublicense, with the exception that sublicensee may further sublicense rights
under Licensed Patents only as needed or implied in the course of distribution or
performance of service as required for the sale to an end user of Licensed Products;






	13.4	 	Sublicenses Revert to Stanford. Any sublicense will expressly include the provisions of
Articles 7, 8, and 9 for the benefit of Stanford. If a sublicensee desires that its sublicense
survive the termination of this agreement, Stanford agrees that the sublicense will revert to
Stanford subject to the transfer of all obligations, including the payment of royalties
specified in the sublicense, to Stanford or its designee, if this Agreement is terminated.”




 









 











3. The Isis Agreement




     Certain restrictions on, and other terms relating to, the rights licensed from Isis are described
in the following clauses excerpted from the Isis Agreement. Reference is made in clauses 5.3(c) and
5.3(d) of the Isis Agreement, reproduced below, to Exhibits 5.3(c) and 5.3(d), respectively,
attached to the Addendum Transmittal to the Isis Agreement. The aforesaid Exhibits 5.3(c) and
5.3(d) are reproduced in their entirety at the end of this Schedule 3.1(e).



     “5.3 Limitations on Licenses



          (a) The licenses granted under Section 5.1 above are not intended to grant any rights to
Alnylam to practice the Isis Excluded Technology...




          (b) Notwithstanding the licenses granted to Alnylam under Section 5.1, Isis retains its rights
in the Isis Patent Rights and in the Joint Patents (i) exclusively for the Isis Exclusive Targets
and (ii) exclusively for the Isis Encumbered Targets...




          (c) Licenses to Isis Patent Rights that are joint patents with Third Parties (i.e., invented
by one or more Isis inventors and one or more non-Isis inventors) are licensed subject to the
retained rights of any non-Isis inventors and their assignees and licensees. Any such retained
rights of non-Isis inventors and their assignees and licensees existing as of the Effective Date
are set forth in Exhibit 5.3(c) attached to the Addendum Transmittal.




          (d) Licenses to Isis Patent Rights that are subject to contractual obligations between Isis
and Third Parties in effect as of the Effective Date are licensed subject to the restrictions and
other terms described in Exhibit 5.3(d) attached to the Addendum Transmittal. Alnylam hereby
agrees to comply, and to cause its sublicensees to comply, with such restrictions and other terms.




     6.4 Target Pool



          (b) Initial Designations; Conversion of Target Slots. Initially, subject to Section
6.4(e), Isis can designate up to [**] Reserved Targets as Isis Exclusive Targets (the “Isis
Exclusive Targets”, and each Target Slot occupied by an Isis Exclusive Target, an “Exclusive Target
Slot”) and up to [**] Reserved Targets as Isis Co-Exclusive Targets (the “Isis Co-Exclusive
Targets”, and each Target Slot occupied by an Isis Co-Exclusive Target, a “Co-Exclusive Target
Slot”). On January 1 of each year starting with January 1, [**], one of the [**] initial
Co-Exclusive Target Slots will convert into an Exclusive Target Slot such that the initial [**]
Target Slots will all be Exclusive Target Slots by January 1, [**]. Subject to section 6.4(f), the
Isis Co-Exclusive Target in a Co-Exclusive Target Slot that converts to an Exclusive Target Slot
will become an Isis Exclusive Target.




 









 






ARTICLE 7




LICENSE FEES AND ROYALTIES PAYABLE TO ISIS



     7.2 Royalties. Subject to the terms and conditions of, and during the term of, this
Agreement, Alnylam will pay to Isis royalties on sales of Alnylam Products by Alnylam, its
Affiliates or sublicensees (except Naked Sublicensees) equal to [**]% of Net Sales. Alnylam may
reduce the royalty due under this section by [**]% of any additional royalties that Alnylam owes to
Third Parties on such Alnylam Product that arise from Alnylam acquiring access to new technologies
after the Effective Date; provided, however that (a) the royalty due under this section can never
be less than a floor of [**]% and (b) additional royalties arising as the result of the addition,
pursuant to Section 11.8, of Isis Future Chemistry Patents or Isis Future Motif and Mechanism
Patents to the Isis Patent Rights licensed to Alnylam cannot be used to reduce the royalty.



     7.3 Development Milestones.



     (a) Alnylam, its Affiliates or sublicensees (except Naked Sublicensees) will pay to Isis the
following milestone payments for each Alnylam Product within [**] days after the first achievement
of each of the following events:



	 	 	 
	Milestone Event	 	Milestone Payment
	Initiation of Phase I Trial
	 	US$[**]
	Initiation of Phase III Trial
	 	US$[**]
	Filing NDA
	 	US$[**]
	Marketing Approval
	 	US$[**]





Each milestone payment under this Section 7.3(a) will only be due on the first Alnylam Product that
modulates a particular Gene Target to trigger such milestone payment, whether such milestone is
achieved by Alnylam or an Affiliate or sublicensee of Alnylam.




ARTICLE 9




OTHER PAYMENT TERMS




     9.1 Payments. All payments by a Party under this Agreement will be made in United
States dollars by bank wire transfer in next day available funds to such bank account in the United
States designated in writing by Alnylam or Isis, from time to time. Royalties payable under
Sections 7.2 and 8.2 shall be payable on a quarterly basis within 45 days after the end of each
calendar quarter. The Party with such royalty obligation (the “Royalty-Paying Party”) shall
provide the other Party with a report setting forth (i) gross sales of Alnylam Products or Isis
Products, as applicable, by the Royalty-Paying Party, its Affiliates and sublicensees, (ii) all
deductions from such gross sales taken in calculating Net Sales, (iii) Net Sales of Alnylam
Products or Isis Products, as applicable, by the Royalty-Paying Party, its Affiliates and
sublicensees, (iv) royalties payable based on such Net Sales and (v) all other information relevant
to the calculation of such royalties, on a product-by-product and country-by-country basis, for
each calendar quarter within [**] days after the end of such calendar quarter.



     9.2 Late Payments; Collections. In the event that any payment, including royalty,
milestone, Sublicense Revenue or Technology Access Fee payments, due hereunder is not made



 









 







when due, the payment will bear interest from the date due at the lesser of (i) 1.5% per
month, compounded monthly, or (ii) the highest rate permitted by law; provided, however, that in no
event will such rate exceed the maximum legal annual interest rate. If a Party disputes in writing
the amount of an invoice presented by the other Party within [**] days of receipt of such invoice,
interest will only be due on the correct amount as later determined or agreed. The payment of such
interest will not limit a Party from exercising any other rights it may have as a consequence of
the lateness of any payment. In addition, each Party agrees to pay all external costs of
collection, including reasonable attorneys’ fees, incurred by the other Party in enforcing the
payment obligations after a due date has passed under this Agreement.



     9.3 Audit Rights.



     (a) Upon the written request of Isis or Alnylam, as the case may be, and not more than once in
each calendar year, Isis or Alnylam will permit the other Party’s independent certified public
accountant to have access upon reasonable advance notice and during normal business hours to its
records as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for
the current year and the preceding 2 years prior to the date of such request. The accounting firm
will disclose to the auditing Party only whether the royalty reports are correct or incorrect, the
specific details concerning any discrepancies, and the corrected amount of Net Sales and royalty
payments. No other information will be provided to the auditing Party. Once a Party has audited a
particular calendar year under this section, the Party will be precluded from subsequently auditing
such calendar year. In any sublicense granted by a Party under this Agreement, such Party will
endeavor to secure a similar audit right and if reasonably requested by the other Party will
enforce such audit right.



     (b) If such accounting firm concludes that additional royalties were owed during such period,
the delinquent Party will pay the additional royalties within 90 days of the date such Party
receives the accounting firm’s written report. The fees charged by such accounting firm will be
paid by the auditing Party unless the additional royalties, milestones or other payments owed by
the audited Party exceed 5% of the royalties, milestones or other payments paid for the time period
subject to the audit, in which case the audited Party will pay the reasonable fees and expenses
charged by the accounting firm.



ARTICLE 13




INDEMNIFICATION




     13.1 Indemnification by Alnylam. Alnylam will indemnify, defend and hold Isis and its
agents, employees, officers and directors (the “Isis Indemnitees”) harmless from and against any
and all liability, damage, loss, cost or expense (including reasonable attorneys’ fees) arising out
of Third Party claims or suits related to (a) Alnylam’s performance of its obligations under this
Agreement; (b) breach by Alnylam of its representations and warranties set forth in Article 15; or
(c) the discovery, development, manufacture, use, importation or commercialization (including
marketing and sale) of Alnylam Products.



 









 





ARTICLE 14




TERM AND TERMINATION OF AGREEMENT




     14.4 Accrued Rights and Surviving Obligations.



          (b) The rights of any sublicensee under any permitted sublicense granted in accordance with
Section 5.2 or 6.3 will survive the termination of this Agreement.




EXHIBIT 1.1




DEFINITIONS





	10.	 	“Alnylam Product” means a Double Stranded RNA Product or MicroRNA Product discovered or
developed by Alnylam, its Affiliates or sublicensees, the manufacture, sale or use of which is
covered by a Valid Claim within the Isis Patent Rights.
	 
	29.	 	“Isis Encumbered Target” means a Gene Target (a) to which Isis has a contractual obligation
to a Third Party existing as of the Effective Date that precludes Isis from granting a license
under Section 5 with respect to such Gene Target and (b) that is identified and described on a
[**] (as defined in the letter agreement dated March 9, 2004 between Alnylam and Isis). When
and if such restrictions lapse a Gene Target will cease to be an Isis Encumbered Target.
	 
	30.	 	“Isis Excluded Technology” means (a) RNase H mechanisms, RNase H motifs and RNase H
oligonucleotides when utilized in an RNase H mechanism, assays and methods thereof; (b)
modulators of specific genes, gene families or proteins; (c) manufacturing technologies; (d)
analytical technologies, kits and assays, including without limitation methods, systems and
compositions of matter for amplifying, quantifying, detecting, characterizing or identifying
nucleic acids or nonoligomeric ligands thereto; (e) formulation and delivery technologies; and
(f) the specific technology listed on Schedule 1-30 attached to the Addendum Transmittal.
	 
	31.	 	“Isis Exclusive Target” has the meaning set forth in Section 6.4(b).
	 
	51.	 	“Net Sales” will mean the gross invoice price of Products sold by Alnylam or Isis (as
applicable), their respective Affiliates and sublicensees (but with respect to Alnylam does
not include Naked Sublicensees) to a Third Party less the following items: (i) trade
discounts, credits or allowances, (ii) credits or allowances additionally granted upon
returns, rejections or recalls, (iii) freight, shipping and insurance charges, (iv) taxes,
duties or other governmental tariffs (other than income taxes) and (v) government-mandated
rebates and (vi) a reasonable reserve for bad debts. Except in the cases of Products used to
conduct clinical trials, reasonable amounts of Products used as marketing samples and Product
provided without charge for compassionate or similar uses, a Party, its Affiliates or
sublicensees will be treated as having sold Products for an




 









 






	 	 	amount equal to the fair market value of Products if: (a) Products are used by such Party,
its Affiliates or sublicensees without charge or provision of invoice, or (b) Products are
provided to a Third Party by such Party, its Affiliates or sublicensees without charge or
provision of invoice and used by such third party.
	 
	 	 	In the event the Product is sold as part of a Combination Product (as defined below), the
Net Sales from the Combination Product, for the purposes of determining royalty payments,
shall be determined by multiplying the Net Sales (as determined without reference to this
paragraph) of the Combination Product, during the applicable royalty reporting period, by
the fraction, A/A+B, where A is the average sale price of the Product when sold separately
in finished form and B is the average sale price of the other product(s) included in the
Combination Product when sold separately in finished form, in each case during the
applicable royalty reporting period or, if sales of both the Product and the other
product(s) did not occur in such period, then in the most recent royalty reporting period in
which sales of both occurred. In the event that such average sale price cannot be
determined for both the Product and all other products(s) included in the Combination
Product, Net Sales for the purposes of determining royalty payments shall be calculated by
multiplying the Net Sales of the Combination Product by the fraction of C/C+D where C is the
fair market value of the Product and D is the fair market value of all other product(s)
included in the Combination Product. As used above, the term “Combination Product” means
any pharmaceutical product which consists of a Product and other therapeutically active
pharmaceutical compound or any delivery technology that embodies substantial intellectual
property rights Controlled by the selling Party (e.g., a common syringe would not constitute
a delivery technology that embodies substantial intellectual property rights Controlled by
the selling Party, but an implantable delivery device such as a stent would constitute such
a delivery technology).
	 
	62.	 	“Valid Claim” means (i) an issued claim of an unexpired Patent that has not been withdrawn,
canceled or disclaimed, or held invalid or unenforceable by a court of competent jurisdiction
in an unappealed or unappealable decision, or (ii) a claim of a patent application which has
been pending for less than [**] years from the earliest priority date for such application.”




 









 











Exhibit 5.3(c) from Isis Agreement




Isis Third-Party Joint Patents Rights




     The following schedule is provided by Isis Pharmaceuticals, Inc. to Alnylam Pharmaceuticals,
Inc., in connection with the Strategic Collaboration and License Agreement between Alnylam and Isis
(the “Agreement”). Capitalized terms used but not otherwise defined herein have the meanings given
to such terms in the Agreement.



     This schedule and the information and disclosures contained in this schedule are intended only
to qualify and limit the licenses granted by Isis to Alnylam in the Agreement and do not expand in
any way the scope or effect of any such licenses.



     Isis has cases with joint inventorship with the four following entities:




	 	1)	 	[**] Isis holds the following joint patents:
	 
	 	 	 	[**]
	 
	 	2)	 	[**] Isis holds one joint patent relating to [**], which is co-assigned with [**].
There are no contractual restrictions on Isis’ right to license their rights to this
patent.
	 
	 	3)	 	[**]: Isis holds ten patents relating to a conserved [**], which are joint with [**].
Isis holds the sole assignment to these patents.
	 
	 	4)	 	[**]: Isis holds two patents relating to [**], which are joint with inventors from the
[**]. Isis holds the sole assignment to these patents.




 









 











Exhibit 5.3(d) from Isis Agreement




Isis Encumbered Patent Rights




     The following schedule of encumbered Patents is provided by Isis Pharmaceuticals, Inc. to
Alnylam Pharmaceuticals, Inc., in connection with the Strategic Collaboration and License Agreement
between Alnylam and Isis (the “Agreement”). Capitalized terms used but not otherwise defined
herein have the meanings given to such terms in the Agreement.



     This schedule and the information and disclosures contained in this schedule are intended only
to qualify and limit the licenses granted by Isis to Alnylam in the Agreement and do not expand in
any way the scope or effect of any such licenses.



[**]


The Patents identified by Isis docket numbers [**] cover the incorporation of certain
[**]-proprietary [**] constructs.



The licenses from Isis to Alnylam with respect to these Patents are limited to the Isis Field. In
addition, [**] has a research license to practice these Patents in the Isis Field.



“Isis Field” means the use of [the [**] proprietary building blocks] solely for the purposes of
developing [**] products for [**] indications other than the [**].



Reference is made to the discussion regarding Merck nucleosides on the Excluded Technology
schedule.



[**]


[**] has retained exclusive rights in the Patents identified by a [**] in the Third Party column to
make, have made, use, import, export or sell compounds and other subject matter claimed within the
scope of the patents which are [**].



In addition, [**] has a non-exclusive, non-sublicensable, non-assignable license under such Patents
to make and use [**] for internal research purposes, but not for any commercial purpose.



[**] means [**] may also have a mechanism of action or biological activity
other than one conferred through [**] provided that (i) the compound originally was
designed [**] and (ii) the final compound or any compounds used to derive the final
compound were not identified using [**] in any fashion. An [**] and may be
composed of [**] may have [**] partially or completely [**] may be made such that
[**] to form [**].



[**] means any [**] which was developed by [**] on or prior to [**], and which (i) enhances the
[**], (ii) selectively delivers [**] to the intended [**], (iii) provides sustained release of a
[**], or (iv) otherwise favorably alters the [**].



[**] has retained rights (originally granted from [**]) in the Patents identified by a [**] in the
Third Party column to (i) conduct research and development within the [**] and (ii) make, have
made, use, offer for sale, sell, supply and import within the [**] used in connection therewith.




 









 







[**] may grant sublicenses only (a) to affiliates, for any use within the [**], and (b) to
non-affiliates only to the extent necessary to enable such sublicensee to make, have made, use,
offer for sale, sell, supply and import a [**] or a research or development collaborator of [**]
during the term of such collaboration and for which [**] (alone or in conjunction with a
commercialization partner for such compound) has commenced or is prepared to commence human
clinical trials.



[**] means research with respect to, and the development and use of, [**].



[**] means any material which (i) [**], and (ii) is a molecule [**], and (iii) is not [**], and
(iv) is [**].



[**] means any [**], and which (i) enhances [**], (ii) selectively [**], or (iv) otherwise
favorably [**].



[**]


Alnylam cannot grant Naked Sublicenses with respect to the Patents identified by a [**] in the
Third Party column or the Patents listed on Annex 3. In addition,[**] has the first right to
defend and enforce such Patents if it is facing the greatest competitive threat from infringement.



Alnylam must notify Isis if it grants a sublicense of any kind to a Third Party with respect to
such Patents.



The [**] has the first right to defend and maintain the Patents with a docket number containing
[**]



Isis also has access to certain other Hybridon technology to the extent it is useful for [**].
However, in addition to the restrictions described above, this technology carries certain other use
restrictions depending on how the technology is characterized under the in-license agreement. We
do not believe that such technology will be useful to Alnylam, but have provided a description of
the technology and its related encumbrances on Annex 3 attached hereto.



[**]


The Patents identified by a [**] in the Third Party column can only be sublicensed in combination
with a product that (i) uses such Patents and (ii) employs as a material element other Isis Patent
Rights.



[**]


[**] each have a license to use some or all of the Patents identified by a [**] in the Third Party
column for their own internal [**].



[**]


With respect to the Patents identified by an [**] in the Third Party column, [**] has a
nonexclusive license to make, have made, use, import, offer to sell, sell and have sold [**] and
other related research products to the [**].





 









 







[**] means [**]; provided however that specifically excluded from this definition shall be those
[**]



[**]


[**] has a non-exclusive license to the Patents identified by a [**] in the Third Party column to
(i) make, use, distribute and sell Licensed Products to purchasers who have signed a form license
agreement and (ii) have [**] made solely by [**] for use by [**] in the manufacture of Licensed
Products.



“Licensed Product” means [**] that incorporate any [**].



[**] means any of the following [**]:



•   [**]




Annex 3



If the Patents marked with either a [**] restriction are (i) included in any interference
proceedings with the [**], (ii) [**] prevails in the interference proceeding and (iii) the
interference count(s) for such Patents broadly cover [**], the licenses under such Patents are
limited to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have
imported [**]; provided that the license will only extend to the issued claims corresponding to the
interference count and shall not extend to any other claim of such Patents.



The licenses under the Patents marked with an [**] are limited (i) to discover, develop, make, have
made, use, sell, have sold, offer to sell, import and have imported [**], (ii) to [**], and (iii)
to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have
imported [**].



The licenses under the Patents marked with a [**] restriction are limited to discover, develop,
make, have made, use, sell, have sold, offer to sell, import and have imported [**], provided that
neither such [**], or are used with, [**].



The licenses under the Patents marked with an [**] restriction are limited to to discover, develop,
make, have made, use, sell, have sold, offer to sell, import and have imported [**] and practice
[**], provided that such [**] and [**] use, or are used with, the technology covered by the claims
of such Patents solely for the [**].



The licenses under the Patents marked with an [**] restriction are limited to discover, develop,
make, have made, use, sell, have sold, offer to sell, import and have imported [**] and practice
[**], which [**] and [**] primarily act [**], but which may [**].



The licenses under the Patents marked with a [**] restriction are limited to discover, develop,
make, have made, use, sell, have sold, offer to sell, import and have imported [**] and practice
[**]; provided, however, that such licenses will not extend to [**] or [**] related to [**] or
[**].




 









 







For purposes of this description:



[**]



Confidential Materials omitted and filed separately with the Securities and Exchange Commission.
Asterisks denote omissions. [**]



A total of 6 pages have been omitted pursuant to a request for confidential treatment.




 









 








SCHEDULE 3.2(d)




EXISTING THIRD PARTY CONTRACTUAL OBLIGATIONS OF MEDTRONIC



1. [**] Agreement



2. [**] Agreement



3. [**] Agreement



Each of the above as provided by Medtronic to Alnylam prior to the Restatement Date.




 









 








Schedule 4.3(h)

Payments Under Listed or Approved Third Party Agreements




Alnylam Third Party Agreements



1. Royalties on Net Sales




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	After	 	 
	 	 	 	 	 	 	 	 	 	 	permitted	 	 
	 	 	Type of Patent	 	 	 	Royalty	 	On Sales	 	stacking	 	 
	Licensor	 	Rights	 	Inventors	 	Rate	 	(in $ millions)	 	offset	 	Comments
	Garching Innovation
	 	[**]
	 	Sharp/Tuschl et al.
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Stanford University
	 	[**] RNAi in vivo
	 	McCaffrey et al.
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Isis Pharmaceuticals
	 	[**]
	 	Crooke et al.
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Cancer Research Technology
a
	 	dsRNA-mediated RNAi in mammalian cells
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]






 









 






2. Milestone and Other Payments




	 	 	 	 	 	 	 	 	 	 	 
	Licensor	 	Type of IP	 	Inventors	 	Payment	 	Triggering Event	 	Comments
	Stanford University
	 	[**]
	 	McCaffrey et al.
	 	[**]
	 	[**]
	 	[**]
	Isis Pharmaceuticals
	 	[**]
	 	Crooke et al.
	 	[**]
	 	[**]
	 	[**]
	Cancer Research 

Technologya
	 	dsRNA-mediated
RNAi in
mammalian cells
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 
	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 
	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 
	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 
	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 
	 	 	 	 	 	[**]
	 	[**]	 	 






 




[**]




Medtronic Third Party Agreements



In accordance with the terms of the agreements listed on Schedule 3.2(d), which agreements shall
constitute Listed or Approved Third Party Agreements.





 









 








EXHIBIT A




PRINCIPAL TERMS OF siRNA SUPPLY AGREEMENT



Capitalized but undefined terms have the meaning given to such term in the Amended and Restated
Collaboration Agreement (the “Collaboration Agreement”).





	1.	 	Supply, related licenses and specifications. Alnylam, directly or indirectly, would
supply to Medtronic Medtronic’s requirements for the Alnylam siRNA component of Licensed
Products for the Target Indication that was Developed in a Product Development Program, in
stable bulk material form. Medtronic would grant to Alnylam any necessary licenses to make
and supply to Medtronic the Alnylam siRNA. The siRNA would meet the specifications (including
but not limited to shelf life requirements, formulation, manufacturing, packaging, storage and
transportation) agreed upon during such Product Development Program or otherwise developed
under this agreement as set out below.
	 
	2.	 	Forecast. Medtronic would provide rolling [**] forecasts to Alnylam on a monthly
basis. The first [**] of such forecast would be binding and, the remaining [**] would be
binding with changes of plus or minus [**]% of the forecasted quantities permitted.
	 
	3.	 	Pricing and payments. Pricing for the Alnylam siRNA would be established on a
per-unit Manufacturing Cost basis for such products, plus a margin of [**]%. Estimated prices
would be set annually for the following Medtronic Fiscal Year. After each such year, Alnylam
would deliver to Medtronic a report of the Alnylam siRNA Manufacturing Costs for such year,
plus [**]%. Medtronic would receive a credit for amounts overpaid for Alnylam siRNA during
the previous year or pay Alnylam the amount that it underpaid for Alnylam siRNA by
appropriately adjusting the per-unit cost otherwise determined for the subsequent year in
order to compensate for any such amount subject to final true-up upon termination or
expiration.
	 
	4.	 	Warranty and remedies. Alnylam would warrant to Medtronic that the Alnylam siRNA
would meet the Alnylam siRNA specifications (including but not limited to shelf life
requirements, formulation, manufacturing, packaging, storage and transportation) agreed upon
with Medtronic or as provided in this agreement. No other warranty with respect to the
product, express or implied, would be made.
	 
	5.	 	Commercialization risks and insurance. Except as provided in the agreement or the
Collaboration Agreement, Medtronic would bear all Commercialization and product liability risk
associated with the Licensed Products. Medtronic would secure and maintain product liability
insurance, or otherwise self-insure, in a manner sufficient to cover all reasonably
foreseeable risks associated therewith. Medtronic would be responsible for all costs related
to field actions, including recalls, unless and to the extent the Alnylam siRNA does not
comply with its warranty; provided, however, that Alnylam would cooperate in any such recall
or field action.
	 
	6.	 	Indemnification. The provisions of Section 9.1 of the Collaboration Agreement would
remain in effect. In addition, Alnylam would indemnify Medtronic against product




A-1









 






	 	 	liability and field actions, including recalls, to the extent arising from or necessitated
by manufacturing defects in Alnylam siRNA supplied by Alnylam.
	 
	7.	 	Quality, record keeping, regulatory obligations and audit rights. Alnylam, as the
Alnylam siRNA manufacturer, and Medtronic, as the Licensed Product Commercializing Party,
would comply with their respective quality, record keeping and other regulatory obligations.
The parties would cooperate with each other in meeting their respective obligations, including
without limitation adverse event and other post-approval reporting obligations for which they
are responsible. Medtronic would have final decision making authority with respect to any
Alnylam siRNA field action, including without limitation product recalls. Upon the request of
the other Party, each Party would provide to the other reasonable evidence of such Party’s
compliance with applicable regulatory obligations and required or agreed-upon quality
standards (which will include Medtronic’s and Alnylam’s own quality standards, GMPs and ISO
standards). In addition, Medtronic would have the right to conduct annual and emergency
audits of Alnylam’s or its subcontractor’s manufacturing facilities to ensure compliance with
the aforementioned standards. If requested by a Party, the Parties may enter into a separate
quality, technical and safety information exchange agreement containing the respective
quality, technical, safety and record keeping obligations of the Parties.
	 
	8.	 	Term, expiration and certain terminations. The agreement would continue until the
termination of the Royalty Term of the Licensed Product. Either Party could terminate the
agreement, after delivery of reasonable notice to cure and the other party’s failure to cure,
for material breach of the agreement by the other Party.
	 
	 	 	Medtronic could terminate the agreement with delivery of a written notice of at least six
months if Medtronic chooses to end the Commercialization of all Licensed Products. In any
such case, subject to a maximum purchase commitment to be negotiated and reflected in the
definitive supply agreement, Medtronic would pay for or purchase from Alnylam [**] provided
that Alnylam would use commercially
reasonable efforts to minimize such expenses, beginning on the date of receipt of the
notice).
	 
	 	 	Alnylam could terminate the agreement with two year written notice to Medtronic if Alnylam
decides to exit from the siRNAs research, development and commercialization business. In
such case, Medtronic would have the right to exercise a failure to supply license pursuant
to section 9.
	 
	9.	 	Failure to supply license. If (i) Alnylam (either directly or via a subcontractor)
is in material breach of the agreement and fails to cure such breach within three months of
receipt of written notice specifying such breach, (ii) Alnylam decides to exit from the siRNAs
research, development and commercialization business, (iii) Alnylam is otherwise unable to
deliver Alnylam siRNA for at least six months due to circumstances beyond its control,
including a third party supplier failure to supply Alnylam siRNA




A-2









 






	 	 	components or ingredients, or (iv) Alnylam files for bankruptcy or has an involuntary
bankruptcy that is not dismissed within 60 days after being filed, then Medtronic would be
entitled to exercise a non-exclusive license, with the right to sublicense, to Medtronic or
a Medtronic sublicensee to manufacture the Alnylam siRNA. At Medtronic’s expense, Alnylam
would provide all reasonably necessary support to enable Medtronic or its sublicensee to
manufacture the Alnylam siRNA. This failure to supply license would be Medtronic’s sole and
exclusive remedy under the circumstances described in sections 9(ii), 9(iii) and 9(iv)
above.
	 
	10.	 	Further Alnylam siRNA development rights and obligations. If this agreement comes
into effect due to an Alnylam opt-out or otherwise at a time when the parties have not agreed
upon Alnylam siRNA specifications under the Product Development Program, Medtronic may require
Alnylam to [**]. Medtronic would [**]. If, at the end of such period, the parties have not
agreed upon the specifications for the Alnylam siRNA, this agreement would terminate without
further obligation to Alnylam. Any intellectual property created by Alnylam hereunder during
this period would be treated as Program Intellectual Property under the Collaboration
Agreement.
	 
	11.	 	Kitting and packaging. At Medtronic’s request, the parties would negotiate for the
provision by Alnylam of kitting and packaging services for the Alnylam siRNA, alone or in
combination with other components of the Licensed Products, on terms and prices to be
negotiated in good faith by the parties. Neither party would have an obligation to request or
provide such services, however.
	 
	12.	 	Other terms and conditions. The agreement would contain provisions substantially
comparable to Section 9.2 through 9.14 of the Collaboration Agreement and other standard terms
and conditions found in supply agreements of this nature, including for example standard
representations and confidentiality provisions.




A-3









 











EXHIBIT B




PRESS RELEASE






	 	 	 	 
	Contacts:
	 	 
	Cynthia Clayton (Investors)

Alnylam Pharmaceuticals, Inc.

617-551-8207

	 	Marybeth Thorsgaard

Medtronic Public Relations

763-505-2644
	 
	 	 
	Kathryn Morris (Media)

KMorrisPR

845-635-9828

	 	Jeff Warren

Medtronic Investor Relations

763-505-2696






Alnylam and Medtronic Advance Collaboration on Drug-Device Combinations with
RNAi Therapeutics for CNS Diseases




- Collaboration Focuses on RNAi Therapeutic Program for Huntington’s Disease -




MINNEAPOLIS and CAMBRIDGE, Mass., — July 30, 2007 — Medtronic, Inc., (NYSE: MDT) and Alnylam
Pharmaceuticals, Inc. (Nasdaq: ALNY), a leading RNAi therapeutics company, announced today that the
companies are advancing their collaboration initiated in February, 2005, following positive
pre-clinical data generated under the initial joint technology development phase of the program.



Under the terms of the agreement, Alnylam and Medtronic will focus on developing a drug-device
combination for the treatment of Huntington’s disease. The product is expected to consist of an
RNAi therapeutic targeting the Huntington’s disease gene that will be delivered by Medtronic’s
implantable infusion pump. In addition, the companies may jointly decide to collaborate on the
development of similar drug-device combinations using Alnylam’s RNAi therapeutics platform and
Medtronic’s implantable infusion pump for the treatment of other neurodegenerative diseases, such
as Parkinson’s disease.



The agreement has also been revised as a 50/50 relationship in the United States. Medtronic will
commercialize the therapy consisting of the identified RNAi compound and advanced delivery devices.
In the United States, Alnylam has the opportunity to invest in clinical development of this
therapy through product launch. In Europe, Medtronic is solely responsible for development and
commercialization.



“We have been very pleased with the progress made to date by the scientific teams at Alnylam and
Medtronic. Pre-clinical data from our Huntington’s disease program provide a strong rationale to
advance an RNAi therapeutic program forward for this important disease where there are simply no
effective therapies for patients today,” said John Maraganore, President and Chief Executive
Officer of Alnylam.



“We have proven expertise in delivering targeted therapies throughout the body, while Alnylam
brings leadership in the evolving science of RNAi technology,” said Stephen Oesterle, M.D.,
Medtronic senior vice president, medicine and technology. “Together, we are well positioned to



B-1









 



explore drug-device combinations with a goal of discovering better ways to treat serious
neurodegenerative diseases.”




Alnylam has reported on data in its Huntington’s disease program in a number of scientific
meetings. Most recently, at the Keystone Symposium “RNAi for Target Validation and as a
Therapeutic” in January, 2007, Alnylam collaborators presented in vivo data demonstrating that an
siRNA targeting the huntingtin gene inhibited the progression of Huntington’s disease in a mouse
model. These results showed both a reduction of neuronal pathology and an improvement in abnormal
behavior, where pathological protein aggregates were decreased by about 70 percent and two types of
abnormal behavior – clasping and footslips – were ameliorated by approximately 50 percent and 70
percent, respectively. In addition, levels of the huntingtin messenger RNA, which encodes the
protein that mediates Huntington’s disease, were reduced by about 70 percent.



About RNA Interference (RNAi)

RNAi 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. It
represents one of the most promising and rapidly advancing frontiers in biology and drug discovery
today and 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 Medtronic

Medtronic, Inc., headquartered in Minneapolis, is the world’s leading medical technology company,
providing lifelong solutions for people with chronic disease. Its website is www.medtronic.com.



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. In addition, the
company is developing RNAi therapeutics for the treatment of influenza, hypercholesterolemia, and
liver cancers, amongst other diseases. 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 Merck, Medtronic, Novartis, Biogen Idec, and Roche. The company, founded in
2002, maintains global headquarters in Cambridge, Massachusetts. For more information, visit
www.alnylam.com.



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Medtronic Forward-Looking Statements

Any forward-looking statements are subject to risks and uncertainties such as those described in
Medtronic’s Annual Report on Form 10-K for the year ended April 27, 2007. Actual results may
differ materially from anticipated results.



Alnylam Forward-Looking Statements

Various statements in this release concerning our future expectations, plans, and prospects,
including without limitation statements with respect to development of a novel drug-device
combination for the treatment of Huntington’s disease and future payments to Alnylam under the
collaboration with Medtronic, 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 risks related to: our approach to discover and develop novel drugs,
which is unproven and may never lead to marketable products; our ability to fund and the results of
further pre-clinical and clinical trials; obtaining, maintaining and protecting intellectual
property utilized by our products; our ability to enforce our patents against infringers and to
defend our patent portfolio against challenges from third parties; our ability to obtain additional
funding to support our business activities; our dependence on third parties for development,
manufacture, marketing, sales, and distribution of products; the successful development of our
product candidates, all of which are in early stages of development; obtaining regulatory approval
for products; competition from others using technology similar to ours and others developing
products for similar uses; our dependence on collaborators; and our short operating history; as
well as those risks more fully discussed in the “Risk Factors” section of our most recent report on
Form 10-Q on file with the Securities and Exchange Commission. In addition, any forward-looking
statements represent our views only as of today and should not be relied upon as representing our
views as of any subsequent date. We do not assume any obligation to update any forward-looking
statements.




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EXHIBIT C




PERMITTED DISCLOSURES





	 	•	 	Filings for regulatory approval in any Major Market
	 
	 	•	 	Regulatory approvals in any Major Market
	 
	 	•	 	Completion of clinical studies and top line results thereof
	 
	 	•	 	Completion of patient enrollments for clinical studies
	 
	 	•	 	Milestone achievements and/or payments
	 
	 	•	 	Presence and participation at scientific or financial forums
	 
	 	•	 	Announcement of data at scientific or financial forums
	 
	 	•	 	FDA advisory committee meetings





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EXHIBIT D




PRINCIPAL TERMS OF DEVICE SUPPLY AGREEMENT



Capitalized but undefined terms have the meaning given to such term in the Amended and Restated
Collaboration Agreement (the “Collaboration Agreement”).





	1.	 	Supply, related licenses and specifications. Medtronic, directly or indirectly,
would supply to Alnylam Alnylam’s requirements for the Medtronic Devices component of Licensed
Products for the Target Indication that were Developed in a Product Development Program.
Alnylam would grant to Medtronic any necessary licenses to make and supply to Alnylam the
Medtronic Devices. The Medtronic Devices would meet the specifications agreed upon during
such Product Development Program, or otherwise developed under this agreement as set out
below. Medtronic may change the specifications of the Medtronic Device only for safety
reasons or if such changes would not negatively affect the delivery of the Alnylam siRNA
component of the Licensed Product for the Target Indication.
	 
	2.	 	Forecast. Alnylam would provide rolling [**] forecasts to Medtronic on a monthly
basis. The first [**] of such forecast would be binding, and the remaining [**] would be
binding with changes of plus or minus [**]% of the forecasted quantities permitted.
	 
	3.	 	Pricing and payments. Pricing for the Medtronic Devices would be established on a
per-unit Manufacturing Cost-basis for such products, plus a margin of [**]%. Estimated prices
would be set annually for the following Medtronic Fiscal Year. After each such year,
Medtronic would deliver to Alnylam a report of the Medtronic Device Manufacturing Costs for
such year, plus [**]%. Alnylam would receive a credit for amounts overpaid for Medtronic
Devices during the previous year or pay Medtronic the amount that it underpaid for Medtronic
Devices by appropriately adjusting the per-unit cost otherwise determined for the subsequent
year in order to compensate for any such amount subject to final true-up upon termination or
expiration.
	 
	4.	 	Warranty and remedies. The Medtronic Devices would carry with it Medtronic’s
standard product warranty. In addition, Medtronic would warrant to Alnylam that the Medtronic
Devices would meet the Medtronic Device specifications agreed upon with Alnylam or as provided
in this agreement. No other warranty with respect to the product, express or implied, would
be made.
	 
	5.	 	Commercialization risks and insurance. Except as provided in the agreement or the
Collaboration Agreement, Alnylam would bear all Commercialization and product liability risk
associated with the Licensed Products. Alnylam would secure and maintain product liability
insurance sufficient to cover all reasonably foreseeable risks associated therewith. Alnylam
would be responsible for all costs related to field actions, including recalls, unless and to
the extent the Medtronic Devices do not comply with their warranty; provided, however, that
Medtronic would cooperate in any such recall or field action.




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	6.	 	Indemnification. The provisions of Section 9.1 of the Collaboration Agreement would
remain in effect. In addition, Medtronic would indemnify Alnylam against product liability
and field actions, including recalls, to the extent arising from or necessitated by
manufacturing defects in Medtronic Devices supplied by Medtronic.
	 
	7.	 	Quality, record keeping and regulatory obligations. Medtronic, as the Medtronic
Device manufacturer, and Alnylam, as the Licensed Product Commercializing Party, would comply
with their respective quality, record keeping and other regulatory obligations. The parties
would cooperate with each other in meeting their respective obligations, including without
limitation adverse event and other post-approval reporting obligations for which they are
responsible. Medtronic would have final decision making authority with respect to any
Medtronic Device field action, including without limitation product recalls. Upon the request
of the other Party, each Party would provide to the other reasonable evidence of such Party’s
compliance with applicable regulatory obligations and required or agreed-upon quality
standards (which will include Medtronic’s own quality standards, GMPs and ISO standards). In
addition, if requested by a Party, the Parties may enter into a separate quality, technical
and safety information exchange agreement containing the respective quality, technical, safety
and record keeping obligations of the Parties.
	 
	8.	 	Term, expiration and certain terminations. The agreement would continue until the
termination of the Royalty Term of the Licensed Product. Either Party could terminate the
agreement, after delivery of reasonable notice to cure and the other party’s failure to cure,
for material breach of the agreement by the other Party.
	 
	 	 	Alnylam could terminate the agreement with delivery of a written notice of at least six
months if Alnylam chooses to end the Commercialization of all Licensed Products. In any
such case, subject to a maximum purchase commitment to be negotiated and reflected in the
definitive supply agreement, Alnylam would pay for or purchase from Medtronic [**] provided
that Medtronic would use commercially reasonable efforts to minimize such expenses,
beginning on the date of receipt of the notice).
	 
	 	 	On a country-by-country basis, Medtronic could terminate the agreement if it withdraws the
Medtronic Devices from the market for legitimate safety reasons (after consulting with
Alnylam on any such matter), if Medtronic is otherwise requested by the FDA or similar
foreign regulatory bodies to withdraw the Medtronic Devices, or, with two years written
notice to Alnylam, if Medtronic decides to exit the neurological implantable drug pump
business. In any such case, Alnylam would have the right to exercise a failure to supply
license pursuant to section 9.
	 
	9.	 	Failure to supply license. If (i) Medtronic (either directly or via a subcontractor)
is in material breach of the agreement and fails to cure such breach within three months of
receipt of written notice specifying such breach, (ii) Medtronic withdraws the Medtronic
Devices from the market for any safety reason, is otherwise requested by the FDA or similar
foreign regulatory bodies to withdraw the Medtronic Devices, or decides to exit the
neurological implantable drug pump business, (iii) Medtronic (either directly or via a




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	 	 	subcontractor) is otherwise unable to deliver Medtronic Devices for at least six months due
to circumstances beyond its control, including a third party supplier failure to supply
Medtronic key parts of the Medtronic Devices, or (iv) Medtronic files for bankruptcy or has
an involuntary bankruptcy that is not dismissed within 60 days after being filed, then
Alnylam would be entitled to exercise a non-exclusive license granted by Medtronic in the
supply agreement to have Medtronic Devices manufactured by a mutually agreed-upon third
party sublicensee, such agreement not to be unreasonably withheld, delayed or conditioned,
that would agree to maintain all proprietary Medtronic Device manufacturing intellectual
property and information in strict confidence and not to use any such intellectual property
and information for any other purpose. For the avoidance of doubt, Section 9.3 of the
Collaboration Agreement shall not limit Medtronic’s obligations under the immediately
preceding sentence. At Alnylam’s expense, Medtronic would provide all reasonably necessary
support to the sublicensee to enable such sublicensee to manufacture the Medtronic Device.
This failure to supply license would be Alnylam’s sole and exclusive remedy under the
circumstances described in sections 9(ii), 9(iii) and 9(iv) above.
	 
	10.	 	Further Medtronic Device development rights and obligations. If this agreement comes
into effect due to a Medtronic opt-out or otherwise at a time when the parties have not agreed
upon Medtronic Device specifications under the Product Development Program, Alnylam may
require Medtronic to [**] Development Program pursuant to the Workplan. Alnylam would [**].
If, at the end of such period, the parties have not agreed upon the specifications for a
Medtronic Device, this agreement would terminate without further obligation to Medtronic. Any
intellectual property created by Medtronic hereunder during this period would be treated as
Program Intellectual Property under the Collaboration Agreement.
	 
	 	 	In addition, on a country-by-country basis, Medtronic may in its discretion and after
appropriate notice to Alnylam, replace any Medtronic Device with a new generation device(s)
if such replacement product(s) perform at the same or improved levels, for the intended use
in the Target Indication, as the original Medtronic Device and have received all necessary
Regulatory Approvals. If Medtronic replaces the Medtronic Device with a new generation
product(s) after the Product Development Term, such replacement would neither increase nor
decrease the Royalty Term of the Licensed Product.
	 
	11.	 	Kitting and packaging. At Alnylam’s request, the parties would negotiate for the
provision by Medtronic of kitting and packaging services for the Medtronic Devices, alone or
in combination with other components of the Licensed Products, on terms and prices to be
negotiated in good faith by the parties. Neither party would have an obligation to request or
provide such services, however.
	 
	12.	 	Other terms and conditions. The agreement would contain provisions substantially
comparable to Section 9.2 through 9.14 of the Collaboration Agreement, and other standard
terms and conditions found in supply agreements of this nature, including for example standard
representations and confidentiality provisions.






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