Document:

Exhibit 10(o)

 

AMENDMENT
TO THE PACCAR INC SAVINGS INVESTMENT PLAN

 

(Amendment and Restatement Effective January 1, 2007)

 

Effective January 1,
2009, Sections 5.1 and 5.2 of the PACCAR Inc  Savings Investment Plan (the “SIP”)
shall be amended to read in its entirety as follows:

 

“5.1         Amount of Company Contributions

 

The Company may, in its sole discretion, make
one or more Company Contributions during each Plan Year with respect to Members’
Salary Deferrals (other than Age 50 Catch-Up Deferrals).  The Company’s rate of contribution and the
frequency and manner in which the Company makes its contributions shall be
decided by the Company in its sole discretion with respect to each Plan
Year.  The aggregate amount of Company
Contributions for each Plan Year shall be equal to the sum of the amounts
allocated for such Plan Year to Members pursuant to Section 5.2.  Company Contributions may be made in the form
of PACCAR Stock.  Company Contributions
shall be paid to the Trustee as soon as practicable following the end of the
period for which the contributions are being made, but shall in no event be
paid to the Trustee later than the due date for filing the Company’s federal
income tax return (including extensions) for the Plan Year.

 

5.2           Allocation of Company Contributions

 

Company Contributions, determined under Section 5.1,
shall be allocated to Members, subject to such eligibility conditions as the
Company may determine with respect to each Plan Year,  in an amount equal to the lesser of (1) a
percentage, to be determined each Plan Year in the Company’s sole discretion,
of the aggregate Salary Deferrals (other than Age 50 Catch-Up Deferrals) made
by each eligible Member during the Plan Year, not including Salary Deferrals
returned to the Member pursuant to Sections 4.5, 4.9 or 15.3, or (2) a
percentage, to be determined each Plan Year in the Company’s sole discretion,
of Compensation received during the portion of the Plan Year that the eligible
Member is an Eligible Employee and a Member (including a Restricted Member).  Company Contributions may be allocated in the
form of PACCAR Stock.”

 

Effective
January 1, 2009, Section 5.9 of the SIP shall be deleted in its entirety,
Sections 5.10 through 5.12 shall be renumbered accordingly, and all
cross-references shall be amended accordingly.

 

Effective January 1,
2009, the first paragraph of Section 5.10 (formerly Section 5.11) of the SIP
shall be amended to read in its entirety as follows:

 

“Each Member who has completed three or more
years of service (as defined below), may elect at any time to transfer any
whole percentage of the amount of the Member’s Company Contributions Account
then invested in one Investment Option (including the PACCAR Stock Fund) to
another Investment Option (including the PACCAR Stock 

 

 

Fund) in accordance with the Company’s written
procedures.  Any future Company
Contributions allocated to such Member may, in the Company’s sole discretion,
continue to be allocated to the Member’s Company Contributions Account in the
form of PACCAR Stock.”

 

Effective January 1,
2009, Section 7.2(b) of the SIP shall be amended to read in its entirety as
follows:

 

“(b)                           Contributions Credited

 

The Company shall credit to each Member’s
Company Contributions Account the amount of any Company Contributions allocated
as of such day or days within the Plan Year as the Company shall determine in
its sole discretion.  The Company shall
credit to each Member’s Salary Deferral Accounts the amount of Salary Deferrals
withheld, transfers from Company Contributions Accounts received and Rollover
Contributions received in such calendar month.”

 

Witness
the execution of
this Amendment to the PACCAR Inc Savings
Investment Plan (Amendment and
Restatement Effective January 1, 2007).

 

	
   

  	
  PACCAR
  Inc

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. C. Pigott

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman &
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
  March 12,
  2009

  

 

2Exhibit 10.1

 

	
   

  	
  CONFIDENTIAL TREATMENT
  REQUESTED

  	
  Execution

  
	
   

  	
  UNDER 17 C.F.R. §§
  200.80(b)4, AND 240.24b-2

  	
   

  

 

AMENDED AND RESTATED LICENSE AND
COLLABORATION AGREEMENT

 

This Amended and Restated License and
Collaboration Agreement (the  “Agreement”) is entered into as of
the 1st day of January, 2009 (the “Amendment Effective Date”)
by and among ALNYLAM PHARMACEUTICALS, INC., a
Delaware corporation, with its principal place of business at 300 Third Street,
Cambridge, Massachusetts 02142 (“Alnylam”), ISIS PHARMACEUTICALS, INC., a Delaware corporation, with its
principal place of business at 1896 Rutherford Road, Carlsbad, California 92008
(“Isis”, and each of Alnylam and Isis,
a “Licensor” and together, the “Licensors”), and REGULUS THERAPEUTICS INC. (formerly Regulus Therapeutics
LLC), a Delaware corporation, with its principal place of business at 1896
Rutherford Road, Carlsbad, California 92008 (“Regulus”).

 

RECITALS

 

WHEREAS,
Isis and Alnylam each granted a license to Regulus in accordance with that
certain License and Collaboration Agreement dated September 6, 2007 (the “Original License Agreement”);

 

WHEREAS,
as of the Amendment Effective Date, Alnylam, Isis and Regulus converted Regulus
from a Delaware limited liability company into a Delaware corporation; and

 

WHEREAS,
as a result of this corporate conversion, Isis, Alnylam, and Regulus now desire
to amend and restate the Original License Agreement, as provided herein.

 

AGREEMENT

 

NOW, THEREFORE,  in
consideration of the mutual covenants contained herein, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Isis, Alnylam and Regulus each agrees as follows:

 

1.              DEFINITIONS

 

Capitalized terms used herein and not defined
elsewhere herein have the meanings set forth in Exhibit 1.

 

2.             ASSIGNMENT; LICENSES

 

2.1           Assignments to Regulus.

 

(a)       Isis hereby grants, sells, conveys, transfers,
assigns, releases and delivers to Regulus all right, title and interest in and
to the Patent Rights and contracts listed on SCHEDULE 2.1(A) attached hereto, to have and hold the
same unto itself, its successors and assigns forever, and Regulus hereby
accepts such grant, sale, conveyance, etc.

 

 

(b)       Alnylam hereby grants, sells, conveys, transfers,
assigns, releases and delivers to Regulus all right, title and interest in and
to the Patent Rights and contracts listed on SCHEDULE 2.1(B) attached hereto, to have and hold the
same unto itself, its successors and assigns forever, and Regulus hereby
accepts such grant, sale, conveyance, etc.

 

(c)       Notwithstanding the foregoing, to the extent any
contract for which assignment is provided for herein is not assignable pursuant
to such contract without the written consent of another party or requires
novation, if assigned, this Agreement will not constitute an assignment or an
attempted assignment thereof if such assignment or attempted assignment would
constitute a breach thereof.  To the
extent a contract is not assigned pursuant to this provision, the applicable
Licensor will cooperate with the other Parties and will use its Commercially
Reasonable Efforts to provide Regulus the economic and other benefits intended
to be assigned to Regulus under the relevant contract.

 

2.2           Licenses Granted to Regulus.

 

(a)           Grants.  Subject to
the terms and conditions of this Agreement (including but not limited to Section 2.4),
each Licensor hereby grants to Regulus a worldwide, royalty-bearing,
sublicenseable (in accordance with Section 2.5) license in the Field,
under such Licensor’s Licensed IP,

 

(i)            to Develop miRNA Compounds and miRNA
Therapeutics,

 

(ii)           to Manufacture miRNA Compounds and miRNA
Therapeutics, and

 

(iii)          to
Commercialize miRNA Therapeutics.

 

Subject to Section 2.4, the rights granted under clauses (i), (ii) and
(iii) will be (y) exclusive with respect to miRNA Compounds which are
miRNA Antagonists and miRNA Therapeutics containing such miRNA Compounds, and (z) non-exclusive
with respect to miRNA Compounds which are Approved Precursor Antagonists and
miRNA Therapeutics containing such miRNA Compounds.

 

(b)           Request to License miRNA Mimics and Additional miRNA
Precursor Antagonists.  Regulus may request a
worldwide, royalty-bearing, sublicenseable (in accordance with Section 2.5),
non-exclusive license in the Field, under each Licensor’s Licensed IP, to
Develop, Manufacture and Commercialize a specific miRNA Mimic or a specific
miRNA Precursor Antagonist that is not then an Approved Precursor Antagonist,
and miRNA Therapeutics containing such miRNA Mimic or miRNA Precursor
Antagonist, by providing written notice to Licensors thereof on a miRNA
Mimic-by-miRNA Mimic or miRNA Precursor Antagonist-by-miRNA Precursor
Antagonist basis.  Such license is
subject to (i) review and affirmative approval by the Licensors, which
approval may be withheld by a Licensor in such Party’s sole discretion, and (ii) compliance
with relevant Third Party Rights ([***]). 
For the avoidance of doubt, Regulus will have no rights to such miRNA
Mimic or miRNA Precursor Antagonist hereunder unless and until the affirmative
approval of the relevant Licensor(s) and any required consents or
approvals from Third Parties have been obtained and Regulus agrees to comply
with all Third Party Rights, even to the extent inconsistent with the terms of
this 

 

2

 

Agreement, following which such miRNA Mimic or miRNA
Precursor Antagonist will be deemed to be an Approved Mimic or Approved
Precursor Antagonist, respectively.

 

(c)           Retained Rights.  The exclusive
license granted to Regulus by Alnylam pursuant to Section 2.2(a) is
subject to Alnylam’s retained right to (i) use and exploit its Licensed IP
solely to support its own internal Research in the Alnylam Field, and (ii) grant Permitted Licenses.  The exclusive license granted to Regulus by
Isis pursuant to Section 2.2(a) is subject to Isis’ retained right to
(i) use and exploit its Licensed IP solely to support its own internal
Research in the Isis Field, and (ii) grant
Permitted Licenses.  All rights in and to
each Licensor’s Licensed IP not expressly licensed pursuant to Sections 2.2(a) and
(b), and any other Patent Rights or Know-How of such Licensor, are hereby
retained by such Licensor.

 

2.3           Licenses Granted to Licensors Under Regulus IP. 
Subject to the terms and conditions of this Agreement and to Third Party
Rights:

 

(a)           Regulus hereby grants to Alnylam a worldwide,
exclusive, royalty-free, perpetual and irrevocable license, with the right to
grant sublicenses, under the Regulus IP solely to the extent necessary or
useful to research, discover, develop, make, have made, use, sell, offer to
sell and/or otherwise commercialize double-stranded oligonucleotides (other
than Approved Mimics) and any product containing double-stranded
oligonucleotides (other than Approved Mimics) (the “Alnylam
Field”).

 

(b)           Regulus hereby grants to Isis a worldwide, exclusive,
royalty-free, perpetual and irrevocable license, with the right to grant
sublicenses, under the Regulus IP solely to the extent necessary or useful to
research, discover, develop, make, have made, use, sell, offer to sell and/or
otherwise commercialize single-stranded oligonucleotides (other than miRNA
Antagonists, Approved Precursor Antagonists, or Approved Mimics) and any
product containing single-stranded oligonucleotides (other than miRNA Antagonists,
Approved Precursor Antagonists or Approved Mimics) (the “Isis
Field”).

 

2.4           Third Party Rights; Additional Rights.

 

(a)           Existing Out-License Agreements. 
The licenses granted under Section 2.2 and 2.3 are subject to and
limited by the licenses granted, and other obligations owed, by each Licensor
to a Third Party prior to the Effective Date under a Licensed Patent Right
Controlled by such Licensor, pursuant to agreements described on (i) PART 1
OF SCHEDULE 2.4(A) in the case of Licensed Patent Rights Controlled by Isis, and (ii) PART 2
OF SCHEDULE 2.4(A) in the case of Licensed Patent Rights Controlled by Alnylam, and (iii) in
an addendum transmittal instrument delivered by each Licensor within 30 days
after the Effective Date.  The schedules
and instruments provided under this Section 2.4(a) will be
collectively referred to as the “Out-License Summary”,
and the agreements described therein will be collectively referred to as the “Out-License Agreements”).

 

(b)           Existing In-Licenses from Third Parties.

 

(i)            Certain of the Licensed Patent Rights as of the
Effective Date that are licensed to Regulus under Section 2.2 are
in-licensed or were acquired by the applicable Licensor under agreements with
Third Party licensors or sellers that may contain restrictions on the scope of
the licenses or trigger payment or other material obligations or restrictions
(such 

 

3

 

license or purchase agreements in effect as of the
Effective Date being the “In-License Agreements”).  The licenses and other rights (including
sublicense and disclosure rights) granted to a Party pursuant to this Agreement
are subject to, and are limited to the extent of the terms of any (i) In-License
Agreements between Isis and any Third Party licensor, as specifically described
on PART 1 OF SCHEDULE 2.4(B) and (ii) any In-License Agreement between Alnylam
and any Third Party, as specifically described on PART 2
OF SCHEDULE 2.4(B).  The schedules
provided under this Section 2.4(b) will be collectively referred to
as “In-License Summary.”  Each Part of the In-License Summary summarizes all material restrictions on
the scope of the licenses, and all material payment obligations owed, under the
In-License Agreements (other than the Previous Agreements) which the applicable
Licensor reasonably believes apply to the licenses granted to Regulus hereunder
as of the Effective Date.  Except as
provided in Section 5.6(d), Regulus will assume all financial and other
obligations to the relevant Third Party, and be subject to all restrictions,
set forth on the In-License Summary and arising from the grant to Regulus of
the licenses pursuant to Section 2.2(a) as of the Effective Date.

 

(ii)           In addition to the financial obligations and scope
limitations set forth on the In-License Summary and the Out-License Summary,
and to the extent access to such terms have been made available to such
licensed Party in unredacted form (provided, however, that such
licensed Party has not failed to request such access in accordance with Section 2.4(e)),
a Party receiving a license or sublicense under Licensed IP hereunder will
comply, and will cause its Affiliates and Sublicensees to comply, with all
other terms of the In-License Agreements and Out-License Agreements, including
without limitation diligence requirements, applicable to the licenses granted
to such Party hereunder.

 

(c)           Optional In-Licenses. 
Notwithstanding anything to the contrary herein, the licenses to Isis’
Licensed IP hereunder initially shall not include licenses to Patent Rights or
Know-How licensed by Isis under the agreements listed and described on PART 1
OF SCHEDULE 2.4(C) and the licenses to Alnylam’s Licensed IP hereunder initially shall not
include licenses to Patent Rights or Know-How licensed by Alnylam under the
agreements listed and described on PART 2 OF SCHEDULE 2.4(C) (such agreements on Schedule 2.4(C) referred
to as the “Optional In-Licenses”).  Regulus is hereby granted the option of
expanding its licenses under Section 2.2 to include Patent Rights and
Know-How licensed to the relevant Licensor pursuant to [***] Optional
In-Licenses, with respect to [***] miRNA Compounds and related miRNA
Therapeutics, by notifying the Parties in writing of the relevant Optional
In-License, and each miRNA Compound with respect thereto, for which such option
is exercised.  Upon such exercise and
Regulus’ written agreement to assume all financial and other obligations and
restrictions imposed by the desired Optional In-License (including, to the
extent access to such terms have been made available to Regulus in unredacted
form (provided, however, that Regulus has not failed to request
such access in accordance with Section 2.4(e)), all other terms of such
Optional In-License applicable to the licenses granted to Regulus hereunder),
the Patent Rights and Know-How licensed to the relevant Licensor pursuant to
the specified Optional In-License shall be deemed included in such Licensor’s
Licensed IP solely with respect to the relevant miRNA Compounds and related
miRNA Therapeutics.

 

(d)           Additional Rights after Effective Date. 
If after the Effective Date, a Party (the “Controlling
Party”) invents or acquires rights or title to an invention
claimed by a Patent Right that would be included in the Licensed Patent Rights
or Regulus Patent Rights (the “Additional Rights”),
then, on the anniversary of the Effective Date following such invention or 

 

4

 

acquisition of such Additional Right, or as otherwise
reasonably requested by a Party, the Controlling Party must notify each other
Party (each, a “Non-Controlling Party”) of
such acquisition or invention.  If a
Non-Controlling Party wishes to include such Additional Rights under the
licenses granted pursuant to Sections 2.2, 2.3 or 5.6 (as the case may be),
such Non-Controlling Party will notify the Controlling Party of its desire to
do so, the Controlling Party will provide the Non-Controlling Party a summary
of all material restrictions on the scope of the licenses granted, and all material
payment obligations owed, under any Third Party Agreement applicable to such
Additional Rights and the Non-Controlling Party may, upon written notice to the
Controlling Party, obtain a license under such Additional Rights and will
assume all financial and other obligations to, and be subject to all
restrictions imposed by, the Controlling Party’s licensors or collaborators, if
any, arising from the grant to such Non-Controlling Party of such license
(including, to the extent access to such terms have been made available to such
Non-Controlling Party in unredacted form (provided, however, that
such Non-Controlling Party has not failed to request such access in accordance
with Section 2.4(e)), all other terms of such Third Party Agreements
applicable to the licenses granted to such Non-Controlling Party
hereunder).  Notwithstanding the
foregoing, any Additional Rights that do not carry financial or other
obligations or restrictions will be automatically included under the licenses
granted pursuant to Section 2.2, 2.3 or 5.6.  If the Controlling Party pays any upfront
payments or similar acquisition costs to access Additional Rights, the
Controlling Party and relevant Non-Controlling Party(ies) will negotiate in
good faith regarding sharing such acquisition costs and payments.  When acquiring or creating such Additional
Rights pursuant to any agreement entered into after the Effective Date, each
Party will endeavor in good faith to secure the right to sublicense such Additional
Rights to the other Parties.

 

(e)           Applicable Agreements. 
Each Party agrees to provide, upon the request of a Party, access to
each Third Party Agreement that is the subject of any provision of this Section 2.4;
provided, however, that the Parties agree and acknowledge that (i) the
Third Party Agreements so provided may, to the extent necessary to protect
confidential information of the relevant Third Party or financial information
of the relevant Party, be redacted, and (ii) if so redacted, the Party
assuming any obligations or accepting any limitations under a Third Party
Agreement pursuant to this Section 2.4, will only be liable to the extent
access to such terms have been made available to such licensed Party in
unredacted form.

 

2.5         Sublicenses.

 

(a)       Subject to Third Party Rights, Regulus
will have the right to grant to its Affiliates and Third Parties sublicenses
under the licenses granted in Sections 2.2(a) and (b).

 

(b)       Subject to Third Party Rights, the Opt-In
Party will have the right to grant to its Affiliates and Third Parties
sublicenses under the rights granted to such Licensor in Section 5.6(a).

 

(c)       Each such sublicense will be subject and
subordinate to, and consistent with, the terms and conditions of this
Agreement, and will provide that any such Affiliate and Sublicensee will not
further sublicense except on terms consistent with this Section 2.5.  Regulus or the Opt-In Party, as applicable,
will provide the other Parties with a copy of any sublicense granted pursuant
to this Section 2.5 within 30 days after the execution thereof.  Such copy may be redacted to exclude
confidential scientific information and other information 

 

5

 

required
by a Sublicensee to be kept confidential; provided that all relevant
financial terms and information will be retained.  Regulus or the Opt-In Party, as applicable,
will remain responsible for the performance of its Affiliates and Sublicensees,
and will ensure that all such Affiliates and Sublicensees comply with the
relevant provisions of this Agreement. 
In the event of a material default by any of its Affiliates or
Sublicensees under a sublicense agreement, Regulus or the Opt-In Party, as
applicable, will inform the other Parties and will take such action, after
consultation with such other Parties, which, in Regulus’ or the Opt-in Party’s
(as applicable) reasonable business judgment, will address such default.

 

3.             TECHNOLOGY TRANSFER

 

3.1           Technology Transfer to Regulus. 
At each meeting of the Collaboration Working Group the representatives
will discuss new Know-How and Patent Rights of Isis and Alnylam that are
included in such Licensor’s Licensed Patents and Licensed Know-How hereunder at
the level of detail necessary to enable Regulus to effectively practice such
Patent Rights and Know-How.

 

3.2           Technology Transfer from Regulus; Identification and
Improvements.  At each Collaboration Working Group meeting
Regulus will present a description of all Regulus IP developed by it or on its
behalf, or over which Regulus otherwise acquired Control, since the last
meeting.  The description will be at a
level of detail necessary to enable Isis, Alnylam or both, as appropriate, to
effectively practice such Regulus IP in accordance with their respective
licenses under Section 2.3.

 

4.             DILIGENCE

 

4.1         General Diligence. 
Except to the extent a Licensor receives a license from Regulus pursuant
to this Agreement to Develop, Manufacture and Commercialize miRNA Therapeutics,
Regulus will use Commercially Reasonable Efforts to Develop, and Commercialize
miRNA Compounds and miRNA Therapeutics in the Field.

 

4.2           Compliance with Laws.  Each Party
will, and will ensure that its Affiliates and Sublicensees will, comply with
all relevant Laws in exercising their rights and fulfilling their obligations
under this Agreement.

 

4.3           Reporting.  By January 31st of each year,
Regulus will prepare and furnish each Licensor with a written report
summarizing Regulus’ activities conducted during the prior calendar year to
Develop, Manufacture and Commercialize miRNA Therapeutics in the Field and
identifying the results obtained or benchmarks achieved since the last report
to the Licensors.

 

4.4           Designation of Research Programs and Development
Projects.  Regulus’ officers will be responsible for
reviewing the results of Research and Development activities under the
Operating Plan and designating (subject to the approval of the Managing Board)
from time to time Research Programs and Development Projects.  A “Research Program”
will begin upon the commencement of discovery or characterization activities
focused on one or more specific miRNA(s) after preliminary validation of
the biological function of such miRNA(s) has been identified (i.e.,
compound discovery, not target validation) and will include all activities with
respect to the Development, Manufacturing and Commercialization of miRNA
Compounds and 

 

6

 

miRNA Therapeutics directed to such miRNA(s). A
Research Program will become a “Development Project”
(and thereafter will no longer be a Research Program) when Regulus’ officers
recommend, and the Managing Board agrees, that a sufficient portfolio of data
exists to support the initiation of a [***] on a miRNA Compound drug candidate
targeting such miRNA(s).  Regulus will
maintain a written list of the then-current Research Programs and Development
Projects (each, a “Program/Project List”).

 

5.             RIGHT TO OPT-IN

 

5.1           Notice of Development Project Status. 
Concurrently with the conversion of a Research Program into a
Development Project, Regulus will notify each Licensor of such conversion and
whether or not Regulus will continue to pursue the Development and
Commercialization of such newly designated Development Project.

 

5.2           Continued Development by Regulus of Development
Projects.  If Regulus notifies Licensors pursuant to Section 5.1
that Regulus will continue to pursue the Development and Commercialization of
such Development Project, then, without limiting the generality of Section 4.1,
Regulus will use Commercially Reasonable Efforts to Develop and Commercialize
the relevant Development Compounds and Development Therapeutics in the
Field.  Regulus will also (a) pay to
each Licensor a royalty of [***]% of Net Sales of such Development Therapeutics
which are Royalty-Bearing Products, during the relevant Royalty Term (provided,
however, that, for the remainder of the relevant Royalty Term following
the end of the relevant Exclusivity Period, the royalty rate will be [***]%)
and (b) be responsible for all milestones, royalties and other payments
payable to Third Parties in respect of the Development, Manufacture and
Commercialization of such Development Therapeutics in the Field, by Regulus,
its Affiliates and Sublicensees, including any amounts payable by either
Licensor to Third Parties under the Third Party Rights.  The Parties will use reasonable efforts to
[***].  Regulus agrees that the royalty
described in clause (a) of this Section 5.2 is payable to each
Licensor, regardless of whether a particular Royalty-Bearing Product is covered
by such Licensor’s Licensed IP.  Each
Party agrees and acknowledges that such royalty structure (i) is freely
entered into by such Party, (ii) is a fair reflection of the value
received by Regulus from the licenses granted by the Licensors, and (iii) is
a reasonable allocation of the value received by Regulus from each Licensor,
due to the difficulty of determining the extent to which Licensor’s Licensed IP
covers or has enabled each Royalty-Bearing Product.

 

5.3           Opt-In Election.  If Regulus
notifies Licensors pursuant to Section 5.1 that it will not continue to
pursue the Development and Commercialization of such Development Project, each
Licensor will have the right, exercisable by providing written notice to
Regulus and the other Licensor within [***] days following receipt of such
notice (“Initial Opt-In Election Period”),
to elect to continue to pursue the Development and Commercialization of such
Development Project (“Opt-In Election”).

 

(a)           Opt-In by One Licensor.  If only one,
but not both, of the Licensors (the “Opt-In Party”)
makes an Opt-In Election with respect to such Development Project within the
Initial Opt-In Election Period, the High Terms set forth in Section 5.4
and the terms of Section 5.6 will apply following the end of such Initial
Opt-In Election Period and the Licensor who did not elect to opt-in will waive
its right to opt-in with respect to such Development Project.

 

7

 

(b)           No Opt-In; Second Opt-In Election. 
If, within the Initial Opt-In Election Period, neither Licensor makes an
Opt-In Election (or both Licensors fail to submit any response), then Regulus
will use diligent efforts to negotiate and finalize, within [***] months
following the end of the Initial Opt-In Election Period, a term sheet with a
Third Party pursuant to which such Third Party will Develop and Commercialize,
either by itself or with or on behalf of Regulus, such Development Project in
the Field.

 

(i)            If, despite diligent efforts, Regulus is unable to
finalize such term sheet with a Third Party with respect to the Development
Project within such [***] month period, or Regulus is able to finalize such
term sheet with a Third Party with respect to the Development Project within
such [***] month period, but Regulus is unable to execute a definitive
agreement substantially in conformance with such term sheet within [***] months
after finalizing such term sheet, Regulus will notify Licensors thereof and
each Licensor will again have the right, exercisable by providing written
notice to Regulus and the other Licensor, within [***] days following Regulus’
notice (“Second Opt-In Election Period”),
to elect to continue to pursue the Development and Commercialization of such
Development Project on the Low Terms set forth in Section 5.5.

 

(ii)           If only one, but not both, of the
Licensors, makes an Opt-In Election within the Second Opt-In Election Period
(the “Opt-In Party”), the Low Terms
set forth in Section 5.5 and the terms of Section 5.6 will apply
following the end of such Second Opt-In Election Period and the Licensor who
did not make an Opt-In Election, within such Second Opt-In Election Period,
will have waived its right to opt-in with respect to such Development Project.

 

(iii)          If,
within the Second Opt-In Election Period, neither Licensor makes an Opt-In
Election (or both Licensors fail to submit any response), then Regulus will
retain all rights to such Development Project.

 

(c)           Opt-In by Both Licensors. 
If, within the Initial Opt-In Election Period or Second Opt-In Election
Period, both Licensors submit an Opt-In Election with respect to such
Development Project, then the Parties will, to the extent mutually agreed, work
together to amend the Operating Plan to support Regulus in Developing and
Commercializing the Development Project, including, as applicable, creating a
funding and early development plan, and the designation of roles and
responsibilities of each Party in the execution of such Operating Plan.

 

5.4           Opt-In on High Terms.  In the event
that an Opt-In Election is made by only one of the Licensors during the Initial
Opt-In Election Period pursuant to Section 5.3(a), the following terms
will apply (“High Terms”):

 

8

 

(a)           Upfront Payment.  The Opt-In
Party will pay to Regulus, within 15 days following the end of the Initial
Opt-In Election Period, a one-time payment of [***] Dollars ($[***]).

 

(b)           Royalties.  During the
relevant Royalty Term, the Opt-In Party will pay to Regulus the following
royalties on Net Sales (aggregated from all relevant countries) of each
Royalty-Bearing Product in a calendar year:

 

	
  On the portion of Net Sales

  during the calendar year:

  	
   

  	
  Royalty Rate 

  on Net Sales During 

  Exclusivity Period

  	
   

  	
  Royalty Rate 

  on Net Sales After

  Exclusivity Period

  	
   

  
	
  Less than or
  equal to $[***]:

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  
	
  Greater than
  $[***]:

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  

 

The Opt-In Party’s
obligation to pay royalties under this Section 5.4(b) is imposed only
once with respect to the same unit of Royalty-Bearing Product.

 

(c)           Milestone Payments.  Subject to Section 5.6(f),
the Opt-In Party will pay to Regulus the following payments upon the
achievement of the events set forth below by a Royalty-Bearing Product for the
relevant Development Project:

 

	
  Milestone Event:

  	
   

  	
  Payment

  ([***]):

  	
   

  
	
  (i) Filing
  of IND for first Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (ii) Upon
  Completion of the first Phase IIa Clinical Trial

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (iii) Initiation
  (i.e., dosing of first patient) of the first Phase III Clinical Trial

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (iv) Filing
  of NDA in U.S. for first Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (v) Filing
  of NDA in the European Union for first Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (vi) Regulatory
  Approval in U.S. for the first Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (vii) Regulatory
  Approval in any Major Country in the European Union for the first
  Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  

 

The Opt-In Party
will notify the other Parties within 15 days following achievement or
occurrence of a milestone event.  Each
milestone payment under this Section 5.4(c) will be payable only once
with respect to the first Royalty-Bearing Product under the relevant 

 

9

 

Development
Project to achieve the milestone event. 
If an event in clause (ii), (iii), (iv) or (v) occurs before
an event in a preceding clause (i), (ii) or (iii), the milestone payment
described in such clause (i), (ii) or (iii) will be paid when the milestone
payment described in such clause (ii), (iii), (iv) or (v) is paid.

 

Milestone payments
will continue to be due for milestone events occurring after any grant by the
Opt-In Party or its Affiliates to a Third Party of a sublicense of the Regulus
IP or Licensed IP licensed to the Opt-In Party under Section 5.6(a) with
respect to the relevant Development Project.

 

(d)       Sublicense
Income.  Subject to Section 5.6(f),
the Opt-In Party will pay to Regulus a portion of the Sublicense Income
received by the Opt-In Party or its Affiliates, in accordance with the
following table:

 

	
  Sublicense agreement initially
  entered into

  during this timeframe:

  	
   

  	
  Percentage of 

  Sublicense Income

  	
   

  
	
  Prior to
  Completion of first Phase IIa Clinical Trial

  	
   

  	
  [***]

  	
  %

  
	
  After Completion
  of first Phase IIa Clinical Trial, but prior to completion of first Phase III
  Clinical Trial

  	
   

  	
  [***]

  	
  %

  
	
  After Completion
  of first Phase III Clinical Trial

  	
   

  	
  [***]

  	
  %

  

 

5.5           Opt-In on Low Terms.  In the event that an Opt-In Election is made
by only one, but not both, of the Licensors during the Second Opt-In Election
Period pursuant to Section 5.3(b)(ii), the following terms will apply (“Low Terms”):

 

(a)           Upfront Payment.  The Opt-In Party will pay to Regulus, within
15 days following the end of the Second Opt-In Election Period, a one-time
payment of [***] Dollars ($[***]).

 

(b)           Royalties.  During the relevant Royalty Term, the Opt-In
Party will pay to Regulus the following royalties on Net Sales (aggregated from
all relevant countries) of each Royalty-Bearing Product in a calendar year: 

 

	
  On the portion of Net Sales

  during the calendar year:

  	
   

  	
  Royalty Rate 

  on Net Sales During 

  Exclusivity Period

  	
   

  	
  Royalty Rate 

  on Net Sales After

  Exclusivity Period

  	
   

  
	
  Less than or
  equal to $[***]:

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  
	
  Greater than $[***]:

  	
   

  	
  [***]

  	
  %

  	
  [***]

  	
  %

  

 

The Opt-In Party’s
obligation to pay royalties under this Section 5.5(b) is imposed only
once with respect to the same unit of Royalty-Bearing Product.

 

10

 

(c)           Milestone Payments.  Subject to Section 5.6(f), the Opt-In
Party will pay to Regulus the following payments upon the achievement of the
events set forth below by a Royalty-Bearing Product for the relevant
Development Project:

 

	
  Milestone Event:

  	
   

  	
  Payment for 

  Royalty-Bearing 

  Product 

  ([***]):

  	
   

  
	
  (i)  Filing
  of IND for first Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (ii)  Upon
  Completion of the first Phase IIa Clinical Trial

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (iii) Initiation
  (i.e., dosing of first patient) of the first Phase III Clinical Trial

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (iv) Filing
  of NDA in U.S. for first Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  (v) Regulatory
  Approval in U.S. for the first Royalty-Bearing Product

  	
   

  	
  $

  	
  [***]

  	
   

  

 

The Opt-In Party
will notify the other Parties within 15 days following achievement or
occurrence of a milestone event.  Each
milestone payment under this Section 5.4(c) will be payable only once
with respect to the first Royalty-Bearing Product under the relevant
Development Project to achieve the milestone event.  If an event in clause (ii), (iii), (iv) or
(v) occurs before an event in a preceding clause (i), (ii) or (iii),
the milestone payment described in such clause (i), (ii) or (iii) will
be paid when the milestone payment described in such clause (ii), (iii), (iv) or
(v) is paid.

 

Milestone payments
will continue to be due for milestone events occurring after any grant by the
Opt-In Party or its Affiliates to a Third Party of a sublicense of the Regulus
IP or Licensed IP licensed to the Opt-In Party under Section 5.6(a) with
respect to the relevant Development Project.

 

(d)           Sublicense Income.  Subject to Section 5.6(f), the Opt-In
Party will pay to Regulus a portion of the Sublicense Income received by the
Opt-In Party or its Affiliates, in accordance with the following table:

 

	
  Sublicense agreement initially
  entered into

  during this timeframe:

  	
   

  	
  Percentage of 

  Sublicense Income

  	
   

  
	
  Prior to
  Completion of first Phase IIa Clinical Trial

  	
   

  	
  [***]

  	
  %

  
	
  After Completion
  of first Phase IIa Clinical Trial, but prior to completion of first Phase III
  Clinical Trial

  	
   

  	
  [***]

  	
  %

  
	
  After Completion
  of first Phase III Clinical Trial

  	
   

  	
  [***]

  	
  %

  

 

11

 

5.6           Other Terms Applicable to Opt-In Party.

 

(a)           License Grant.

 

(i)                                     Regulus will, and hereby does, grant to
the Opt-In Party, subject to and limited by the Third Party Rights, a
worldwide, royalty-bearing, sublicenseable (in accordance with Section 2.5),
(x) license under all Regulus IP, and (y) sublicense under all
Licensed IP (within the scope of the license granted to Regulus under such
Licensed IP pursuant to Sections 2.2(a) and 2.2(b)), solely for purposes
of Developing, Manufacturing and Commercializing the relevant Development
Project’s Development Compounds and Development Therapeutics in the Field on
the terms set forth in this Section 5.6. 
Regulus shall comply with the provisions of Section 2.4 with
respect to the disclosure of information with respect to the relevant Third
Party Rights.

 

(ii)                                  Subject to Third Party Rights, the rights
granted under Section 5.6(a)(i) to the Opt-In Party will be
exclusive, to the fullest extent possible, under Regulus IP and under Licensed
IP.  For the sake of clarity, this means
that Regulus IP will be exclusively licensed by Regulus to the Opt-In Party
with respect to the relevant Development Project, and Regulus’ rights under the
Licensed IP will be exclusively sublicensed by Regulus to the Opt-In Party with
respect to the relevant Development Project, but any non-exclusive licenses
grant by the relevant Licensor to Regulus with respect to Licensed IP shall not
be deemed to have been expanded to exclusive licenses to Regulus.

 

(b)           Diligence.  The Opt-In Party will use Commercially
Reasonable Efforts to Develop, Manufacture and Commercialize the relevant
Development Compounds and Development Therapeutics, at such Opt-In Party’s own
expense, in the Field, either by itself or with or through its Affiliates or
Sublicensees.

 

(c)           Non-Compete.  The non-Opt-In Party with respect to a
Development Project will not, itself or through its Affiliates or with Third
Parties, Develop, Manufacture or Commercialize Development Compounds or
Development Therapeutics with respect to such Development Project during the
period (i) [***] of a Royalty-Bearing Product with respect to such
Development Project anywhere in the world as long as such Opt-In Party
reasonably believes that a Development Therapeutic would be a Royalty-Bearing
Product upon first commercial sale, and (ii) [***] of a Royalty-Bearing
Product with respect to such Development Project anywhere in the world, until
the expiration of [***] for such Development Project; provided, however
that each Party will be entitled to grant Permitted Licenses.

 

(d)           Third Party and Inter-Licensor
Payments.  In addition to the
royalties and milestones payable under Section 5.4 or 5.5 above, the
Opt-In Party will be responsible for all 

 

12

 

milestones, royalties and other payments payable to
Third Party Licensors and assumed under Section 2.4.  The Parties will use reasonable efforts to
[***].  In addition, the Opt-In Party
will be responsible for any other payments to the Third Parties in respect of
the Development, Manufacture and Commercialization of such Development
Compounds and Development Therapeutics in the Field.  In addition, the Licensors agree that any
amounts otherwise owed by one Licensor to another pursuant to a Previous
Agreement is hereby waived with respect to such Development Project.

 

(e)           No Longer a Development Project.  If one, but not both, Licensors make an Opt-In
Election with respect to a Development Project, such Development Project will
be permanently removed from the Program/Project List.

 

(f)            Credit for Prepaid Amounts.  The Parties agree that, with respect to any
Development Project, the relevant Opt-In Party should pay the greater of the
cumulative Guaranteed Payments and the cumulative Sublicense Income Payments as
of the end of each calendar quarter, and, because the timing of the Guaranteed
Payments and the Sublicense Income Payments with respect to any given
Development Project may not align, the Parties agree that the relevant Opt-In
Party will not, with respect to any calendar quarter, be required to pay more
than the amount necessary to bring the cumulative payments made by such Opt-In
Party with respect to such Development Project up to the greater of the
cumulative Guaranteed Payments and the cumulative Sublicense Income Payments
with respect to such calendar quarter. 
Therefore, with respect to any calendar quarter, the relevant Opt-In
Party shall pay the difference (if positive) between (i) the Cumulative
Amount Owed as of the end of such calendar quarter, minus (ii) the
Cumulative Amount Owed (if any) as of the end of the immediately prior calendar
quarter.  Several examples are provided
in Schedule 5.6(f).

 

(A)                              “Cumulative Amount Owed”
means, with respect to a Development Project and a calendar quarter, the
greater of (1) the cumulative Guaranteed Payments as of the end of such
calendar quarter, and (2) the cumulative Sublicense Income Payments as of
the end of such calendar quarter.

 

(B)                                “Guaranteed Payments”
means, with respect to a Development Project and a calendar quarter, (1) if
High Terms apply, the payments paid or payable pursuant to Sections 5.4(a) and
5.4(c) with respect to such calendar quarter, and (2) if Low Terms
apply, the payments paid or payable pursuant to Section 5.5(a) and
5.5(c) with respect to such calendar quarter.

 

5.7         Payment
of Royalties.  Following any
dissolution or winding-up of Regulus that results in no successor entity to
Regulus, any royalties, milestones and/or sublicense fees due to Regulus by a
Licensor in connection with an Opt-In Election under this Agreement, will be
reduced by [***] percent ([***]%) and this amount will instead be payable by
the Licensor required to pay such fee directly to the other Licensor (the “Receiving Licensor”); provided, however, if the Receiving Licensor has
pass-through obligations with respect to a royalty 

 

13

 

payment,
milestone or sublicense fee, the payment to the Receiving Licensor will not be
reduced to an amount less than the amount of the pass-through obligation.(1)

 

6.                                       [Intentionally Deleted]

 

7.                                       [Intentionally Deleted]

 

8.                                       PAYMENT TERMS; REPORTS; RECORD-KEEPING
AND AUDIT RIGHTS

 

8.1           Reports and Payments. The
Party paying any royalties, milestones or Sublicense Income Payments hereunder
(the “Paying Party”) to another
Party (each, a “Payee Party”) will deliver to
such Payee Party(ies), within 15 days after the end of each calendar quarter, a
report with a reasonably detailed written accounting of Net Sales of
Royalty-Bearing Products that are subject to royalty payments due to the Payee
Party(ies) for such calendar quarter, milestones payable and Sublicense Income
received or accrued during such period. 
Such quarterly reports will indicate gross sales on a country-by-country
and Royalty-Bearing Product-by-Royalty-Bearing Product basis, the deductions
from gross sales used in calculating Net Sales and the resulting calculation of
the royalties due to the Payee Party(ies). 
Royalties or other payments accrued for the period covered by each such
quarterly report will be due and payable 45 days after the end of each relevant
calendar quarter.  All amounts in this
Agreement are expressed in U.S. Dollars and all payments due to the Payee
Party(ies) hereunder will be paid in U.S. Dollars.  If any conversion of foreign currency to U.S.
Dollars is required in connection with any such payments, such conversion will
be made by using the conversion rate existing in the United States (as reported
in The Wall Street Journal) on the last
Business Day of the reporting period to which such payments relate, or such
other publication as the Parties agree.

 

8.2           Tax Withholding.  The Paying Party will use all reasonable and
legal efforts to reduce tax withholding with respect to payments to be made to
the Payee Party(ies).  Notwithstanding
such efforts, if the Paying Party concludes that tax withholdings are required
with respect to payments to the Payee Party(ies), the Paying Party will
withhold the required amount and pay it to the appropriate governmental
authority.  In any such case, the Paying
Party will promptly provide the Payee Party(ies) with original receipts or
other evidence reasonably sufficient to allow the Payee Party(ies) to document
such tax withholdings for purposes of claiming foreign tax credits and similar
benefits.

 

8.3           Late Payments.  Any payments that are not made on or before
the due date will bear interest at the lesser of (a) 1.5% per month or (b) the
maximum permissible rate under applicable law, for the period from the date on
which such payment was due through the date on which payment is actually made.

 

8.4           Financial Records.  Unless otherwise required by the Investor
Rights Agreement, the Paying Party will maintain, and will require its
Affiliates and Sublicensees to maintain, for 3 years after the relevant
reporting period all financial records relating to the transactions and
activities contemplated by this Agreement in sufficient detail to verify
compliance with the terms of this Agreement.

 

(1) This Section 5.7 was taken from Section 10.7
of the LLC Agreement.

 

14

 

8.5           Audit Right.  Once during each calendar year, each Payee
Party may retain an independent certified public accountant reasonably
acceptable to the Paying Party to audit the financial records described in Section 8.4,
upon reasonable notice to the Paying Party, during regular business hours and
under an obligation of confidentiality to the Paying Party.  Such Payee Party will bear all of the costs
of such audit, except as provided below. 
The results of such audit will be made available to all Parties; provided,
that, such results will be deemed the Confidential Information of the
Paying Party hereunder.  If the audit
demonstrates that the payments owed under this Agreement have been understated,
the Paying Party will pay the balance to the Payee Party, together with interest
in accordance with Section 8.3.  Further,
if the amount of the understatement is greater than 5% of the amount owed to
such Payee Party with respect to the audited period, then the Paying Party will
reimburse the Payee Party for the reasonable cost of the audit.  If the audit demonstrates that the payments
owed under this Agreement have been overstated, the Payee Party will refund to
the Paying Party the amount of such overpayment.  All payments owed by the Paying Party or
Payee Party under this Section 8.5 will be made within 30 days after the
results of the audit are delivered to the Parties unless the Paying Party is
disputing in good faith the results of the audit in which case the payment will
be made within 30 days after resolution of such dispute.

 

9.             INTELLECTUAL PROPERTY

 

9.1           Ownership.

 

(a)           As among the Parties, (i) all of
Alnylam’s Licensed IP will be owned solely by Alnylam, (ii) all of Isis’
Licensed IP will be owned solely by Isis, and (iii) subject to the Buy-Out
process, all Work Product, and the Intellectual Property therein, will be owned
by Regulus, and each Licensor hereby assigns, and will cause its Affiliates to
assign, to Regulus all Work Product and the Intellectual Property therein.

 

(b)           If Regulus enters into an agreement
(other than the Services Agreement) with one of its Affiliates, a Licensor, an
Affiliate of a Licensor or a Third Party pursuant to which Regulus IP could be
developed, Regulus will use Commercially Reasonable Efforts to require such
Person to assign to Regulus all right, title and interest to Regulus IP
developed by such Person, or otherwise ensure that Regulus Controls all such
Regulus IP.

 

9.2           Prosecution and Maintenance of
Patent Rights.

 

(a)           Regulus IP.  As among the Parties, Regulus will have the
sole right to file, prosecute and maintain Patent Rights covering any Regulus
IP, at Regulus’ own expense.

 

(b)       Licensor IP.

 

(i)                                     As among the Parties, each Licensor will
have the initial right to file, prosecute and maintain such Licensor’s Licensed
Patent Rights.  Such activities will be
at such Licensor’s expense.

 

(ii)                                  Subject to any Third Party Rights, in the
event that a Licensor declines to file, prosecute or maintain such Licensor’s
Licensed Patent Rights, elects to allow any such Patent Rights to lapse, or 

 

15

 

elects
to abandon any such Patent Rights before all appeals within the respective
patent office have been exhausted, then:

 

(A)                              Such Licensor will provide Regulus with
reasonable notice of its decision to decline to file, prosecute or maintain any
such Patent Rights or its election to allow any such Patent Rights to lapse, or
its election to abandon any such Patent Rights, so as to permit Regulus to
decide whether to file, prosecute or maintain the same, and to take any
necessary action.

 

(B)                                Regulus may assume control of the filing,
prosecution and/or maintenance of such Patent Rights in the name of such
Licensor, at Regulus’ expense.

 

(C)                                Such Licensor will, at Regulus’ expense
and reasonable request, assist and cooperate in the filing, prosecution and
maintenance of such Patent Rights.

 

(D)                               Regulus will provide such Licensor,
sufficiently in advance for such Licensor to comment, with copies of all patent
applications and other material submissions and correspondence with any patent
counsel or patent authorities pertaining to such Patent Rights.

 

(E)                                 Regulus will give due consideration to
the comments of such Licensor, but will have the final say in determining
whether or not to incorporate such comments.

 

(F)                                 Regulus and such Licensor will promptly
provide the other with copies of all material correspondence received from any
patent counsel or patent authorities pertaining to such Patent Rights.

 

9.3           Enforcement.

 

(a)           Competitive Infringement.  Subject to any Third Party Rights, the terms
of this Section 9.3(a) will apply with respect to any actual or
suspected infringement of a Licensor’s Licensed Patent Rights or Regulus Patent
Rights by a Third Party making, using or selling a therapeutic product that
contains or consists of (y) a miRNA Compound as an active ingredient [***]
or (z) if clause (y) does not apply, an oligonucleotide(s)  that
falls within the field of a Party’s exclusive license under Section 2.3 of
this Agreement.  In the case of (z) above,
the Party with the exclusive license in the field where the infringing product
most reasonably falls will be considered the relevant Commercializing Party for
purposes of this Section 9.3(a).

 

(i)                                     Each Party will promptly report in
writing to the other Parties any such infringement of which it becomes aware,
including, without limitation, receipt of any certification received under the
United States Drug Price Competition and Patent Term Restoration Act of 

 

16

 

1984
(Pub. Law 98-471), as amended (the “Hatch-Waxman Act”),
claiming that any of the Licensed Patent Rights or Regulus Patent Rights is
invalid, unenforceable or that no infringement will arise from the manufacture,
use or sale of such product (a “Paragraph IV Certification”).

 

(ii)                                  The relevant Commercializing Party will
have the initial right, at such Commercializing Party’s expense, to initiate a
legal action against such Third Party with respect to such infringement of the
Regulus Patent Rights and, if such Commercializing Party is a Licensor, such
Commercializing Party’s Licensed Patent Rights. 
At the Commercializing Party’s reasonable request and expense, the
relevant Licensor(s) (if Regulus is the Commercializing Party) or the
other Licensor (if a Licensor is the Commercializing Party) will use
Commercially Reasonable Efforts to initiate a legal action against such Third
Party with respect to an infringement described in clause (y) of this Section 9.3(a) of
such other Licensor(s)’ Licensed Patent Rights. 
Each other Party will join in any such action(s) as a party at the
Commercializing Party’s request and at the Commercializing Party’s expense in
the event that an adverse party asserts, the court rules or other Laws
then applicable provide, or the Commercializing Party determines in good faith,
that a court would lack jurisdiction based on such other Party’s absence as a
party in such suit.  Each other Party may
also at any time join in the Commercializing Party’s action and may be
represented by counsel of its choice, at such Party’s expense; but in any event
control of such action will remain with the Commercializing Party.  At the Commercializing Party’s or enforcing
Licensor’s reasonable request and expense, the other Parties will provide
reasonable assistance to the Commercializing Party or enforcing Licensor, as
the case may be, in connection with any such action.  Without the prior written consent of the
relevant other Party(ies), the Commercializing Party or enforcing Licensor, as
the case may be, will not enter into any settlement admitting the invalidity
of, impacting the scope or interpretation of or otherwise impairing such other
Party(ies)’ rights, as the case may be, in any such Patent Rights.

 

(iii)                               Any recoveries resulting from an action brought under Section 9.3(a)(ii) in
connection with an infringement described in clause (y) of Section 9.3(a) (whether
undertaken by the Commercializing Party or the enforcing Licensor) will be
applied as follows:

 

(A)                              First, to reimburse each Party for all
litigation costs in connection with such proceeding paid by such Party (on a
pro rata basis, based on each Party’s respective litigation costs, to the
extent the recovery was less than all such litigation costs); and

 

17

 

(B)                                The remainder of the recovery will be
retained by the Commercializing Party and [***].

 

Any recoveries
resulting from an action brought under Section 9.3(a)(ii) in
connection with an infringement described in clause (z) of Section 9.3(a) will
be retained by the Commercializing Party.

 

(iv)                              If the Commercializing Party does not,
within 6 months of written notice from another Party or otherwise becoming
aware of such infringement (or within 30 days of the Commercializing Party’s
receipt of a Paragraph IV Certification), commence and reasonably pursue a
legal action to prevent such infringement with respect to the Regulus Patent
Rights, Regulus will be entitled, at its expense, to commence the action in its
name.  Each Licensor will join in such
action as a party at Regulus’ request and expense in the event that an adverse
party asserts, the court rules or other Laws then applicable provide, or
Regulus determines in good faith, that a court would lack jurisdiction based on
such Licensor’s absence as a party in such suit, but control of such action
will remain with Regulus.  Any recoveries
resulting from such an action will be retained by Regulus.

 

(b)       Non-Competitive Infringement.

 

(i)                                     As among the Parties, except as provided
in Sections 9.3(a), Regulus will have the sole right to protect Regulus Patent
Rights from any actual or suspected infringement or misappropriation, at
Regulus’ own expense.  Any recoveries
resulting from such an action will be retained by Regulus [***].

 

(ii)                                  As among the Parties, except as provided
in Section 9.3(a), each Licensor will have the sole right to protect such
Licensor’s Licensed Patent Rights from any actual or suspected infringement or
misappropriation.  Such activities will
be at such Licensor’s expense.  Any
recoveries resulting from such an action will be retained by such Licensor.

 

9.4           Invalidity Claims.  Subject to any Third Party Rights, if a Third
Party at any time asserts a claim that a Licensor’s Licensed IP or the Regulus
IP is invalid or otherwise unenforceable (an “Invalidity
Claim”), whether as a defense in an infringement action brought
by a Party pursuant to Section 9.3 or in an action brought against a Party
under Section 9.5, the general concepts of Section 9.3 will apply to
such Invalidity Claim (i.e., each Party has the right to defend its own
intellectual property, except that the Commercializing Party will have the
initial right, to the extent provided in Section 9.3(a), to defend such
Invalidity Claim, and Regulus will have a step-in right, to the extent provided
in Section 9.3(a), to defend such Invalidity Claim).

 

18

 

9.5                                 Claimed Infringement.

 

(a)                                  Regulus will promptly notify the
Licensors of the receipt of any claim that the Development or Manufacture of
miRNA Compounds or miRNA Therapeutics or Commercialization of miRNA
Therapeutics infringes the Patent Rights or misappropriates Know-How of any
Third Party or the commencement of any action, suit or proceeding with respect
thereto, enclosing a copy of the claim and all papers served.

 

(b)                                 If a Party becomes aware that the
Development or Manufacture of miRNA Compounds or miRNA Therapeutics or the
Commercialization of miRNA Therapeutics in the Field, by a Commercializing
Party, its Affiliates or Sublicensees, infringes or misappropriates, or is
likely to or is alleged to infringe or misappropriate, the Patent Rights or Know-How
of any Third Party, such Party will promptly notify intellectual property
counsel to the other Parties, and such Commercializing Party will have the sole
right and responsibility to take any action it deems appropriate with respect
thereto; provided, however, that, to the extent that any
action would involve the enforcement of another Party’s Licensed IP or the
Regulus IP (if the Commercializing Party is a Licensor), or the defense of an
Invalidity Claim with respect to such other Party’s Licensed IP or the Regulus
IP, the general concepts of Section 9.3 will apply to the enforcement of
such other Party’s Licensed IP or the Regulus IP or the defense of such
Invalidity Claim (i.e., each Party has the right to enforce its own
intellectual property, except that the relevant Commercializing Party will have
the initial right, to the extent provided in Section 9.3(a), to enforce
such Licensed IP or Regulus IP or defend such Invalidity Claim, and Regulus
will have a step-in right, to the extent provided in Section 9.3(a), to
enforce such Patent Right or defend such Invalidity Claim).

 

9.6                           Additional Right. 
Notwithstanding any provision of Section 9, Isis will actively
participate in the planning and conduct of any enforcement of Regulus IP or
Isis IP and will take the lead of such enforcement to the extent that the scope
or validity of any Licensed Patent Right Controlled by Isis [***].

 

10.                                 CONFIDENTIAL INFORMATION

 

10.1                           Permitted Disclosures. 
Each Party may make Permitted Disclosures of another Party’s Confidential
Information.

 

10.2                           Scientific Publications. 
No Party will publish, present or otherwise disclose to the public the
results of any Research Program or Development Project (“Research
Results”), except as specifically approved by the Collaboration Working
Group or as provided in this Section 10.2 below or in Section 10.3.  The Collaboration Working Group will agree
upon the form and timing of any publication or presentation or other disclosure
(such as an abstract, manuscript or presentation) to the public of the Research
Results subject to the Collaboration Working Group’s approval.  For clarification, this Section 10.2 and
Section 10.3 will not apply with respect to the use and disclosure of
another Party’s Confidential Information as specifically provided for in the
Investor Rights Agreement or Section 10.1 of this Agreement or for
disclosure of any Party’s own information to comply with Law.

 

10.3                           Disclosures Regarding Royalty-Bearing
Products.  In addition, each Commercializing Party may,
without the Collaboration Working Group’s approval, make 

 

19

 

disclosures pertaining solely to its Royalty-Bearing
Products; provided, however,  that, (i) Regulus
will immediately notify (and provide as much advance notice as possible to) the
other Parties of any event materially related to its Royalty-Bearing Products
(including any regulatory approval) so that the Parties may analyze the need to
or desirability of publicly disclosing or reporting such event and (ii) any
press release or other similar public communication by any Party related to
efficacy or safety data and/or results of a Royalty-Bearing Product will be
submitted to the other Parties for review at least [***] Business Days (to the
extent permitted by Law) in advance of such proposed public disclosure, the
other Parties shall have the right to expeditiously review and recommend
changes to such communication and the Party whose communication has been
reviewed shall in good faith consider any changes that are timely recommended
by the reviewing Parties. 
Notwithstanding the foregoing, in each case such right of review and
recommendation shall only apply for the first time that specific information is
to be disclosed, and shall not apply to the subsequent disclosure of
information that (A) is substantially similar to a previously reviewed
disclosure and (B) in the context of the subsequent disclosure, does not
carry a substantially different qualitative message than that carried by the
previously reviewed disclosure.

 

11.                                 INDEMNIFICATION

 

11.1                           Indemnification by Regulus. 
Regulus agrees to defend each Licensor, the Affiliates of each Licensor,
and their respective agents, directors, officers and employees (the “Licensor Indemnitees”), at Regulus’
cost and expense, and will indemnify and hold harmless the Licensor Indemnitees
from and against any and all losses, costs, damages, fees or expenses (“Losses”) relating to or in
connection with a Third Party claim arising out of (a) any actual or
alleged death, personal bodily injury or damage to real or tangible personal
property claimed to result, directly or indirectly, from the manufacture,
storage, possession, use or consumption of, treatment with or sale, any miRNA
Compound or miRNA Therapeutic (other than as set forth in Section 11.2(a) or
in the Investor Rights Agreement), regardless of the form in which any such
claim is made or whether actual negligence is found,  (b) any actual or alleged infringement or unauthorized
use or misappropriation of any Patent Right or other intellectual property
right of a Third Party with respect to the activities of Regulus, its
Affiliates or Sublicensees under this Agreement or the Services Agreement, (c) breach
by Regulus of its representations, warranties or covenants made under this
Agreement or the Services Agreement, or (d) any negligent act or omission
or willful misconduct of Regulus, its Affiliates or Sublicensees or any of
their employees, contractors or agents, in performing its obligations or
exercising its rights under this Agreement or the Services Agreement; provided,
however, that, with respect to each Licensor and its related Licensor
Indemnitees, the foregoing indemnity will not apply to the extent that any such
Losses (i) are attributable to the gross negligence or willful misconduct
of such Licensor or its related Licensor Indemnitees, or (ii) are
otherwise subject to an obligation by such Licensor to indemnify the Superset
Indemnitees under Section 11.2(a)-(d).

 

11.2                           Indemnification by Licensor(s). 
Each Licensor agrees to defend Regulus and its Affiliates, and their
respective agents, directors, officers and employees (the “Regulus
Indemnitees”) and the other Licensor, and its related Licensor
Indemnitees (the Regulus Indemnitees, such other Licensor and its related
Licensor Indemnitees, collectively, the “Superset Indemnitees”),
at such Licensor’s cost and expense, and will indemnify and hold harmless the
Superset Indemnitees from and against any and all Losses, relating to or in
connection with a Third Party claim arising out of (a) any actual or
alleged death, personal 

 

20

 

bodily injury or damage to real or tangible personal
property claimed to result, directly or indirectly, from the manufacture,
storage, possession, use or consumption of, treatment with or sale, any miRNA
Compound or miRNA Therapeutic Developed, Manufactured and/or Commercialized by
such Licensor, its Affiliates or Sublicensees pursuant to Section 5,
regardless of the form in which any such claim is made or whether actual
negligence is found, (b) any actual or alleged infringement or
unauthorized use or misappropriation of any Patent Right or other intellectual
property right of a Third Party with respect to the activities of such
Licensor, its Affiliates or Sublicensees under this Agreement or the Services
Agreement, (c) any breach by such Licensor of its representations,
warranties or covenants under this Agreement or the Services Agreement given to
the other Party seeking indemnification hereunder, or (d) any negligent
act or omission or willful misconduct of such Licensor or its Affiliates, or
any of their employees, contractors or agents, in performing its obligations or
exercising its rights under this Agreement or the Services Agreement; provided,
however, that with respect to Regulus or the indemnified Licensor, and
the relevant Superset Indemnitees, the foregoing indemnity will not apply to
the extent that any such Losses (i) are attributable to the gross
negligence or willful misconduct of such Party or its Superset Indemnitees, or (ii) are
otherwise subject to an obligation by such Party to indemnify the Licensor
Indemnitees under Section 11.1(a)-(d).

 

11.3                           Notification of Claims; Conditions to
Indemnification Obligations.  A Party entitled
to indemnification under this Section 11 will (a) promptly notify the
indemnifying Party as soon as it becomes aware of a claim or action for which
indemnification may be sought pursuant hereto, (b) cooperate with the
indemnifying Party in the defense of such claim or suit, and (c) permit
the indemnifying Party to control the defense of such claim or suit, including
without limitation the right to select defense counsel; provided  that
if the Party entitled to indemnification fails to promptly notify the
indemnifying Party pursuant to the foregoing clause (a), the indemnifying Party
will only be relieved of its indemnification obligation to the extent
prejudiced by such failure. In no event, however, may the indemnifying Party
compromise or settle any claim or suit in a manner which admits fault or
negligence on the part of the indemnified Party, or which imposes obligations
on the indemnified Party, other than financial obligations that are covered by
the indemnifying Party’s indemnification obligation, without the prior written
consent of the indemnified Party. The indemnifying Party will have no liability
under this Section 11 with respect to claims or suits settled or
compromised without its prior written consent and the indemnified Party may
not, without the prior written consent of the indemnifying Party, compromise or
settle any claim or suit in a manner which admits fault or negligence on the
part of the indemnifying Party, or which imposes obligations on the indemnified
Party.

 

11.4                           Allocation.  In the event
a claim is based partially on an indemnified claim under this Agreement or the
Investor Rights Agreement and partially on a non-indemnified claim or based
partially on a claim indemnified by one Party under this Agreement or the
Investor Rights Agreement and partially on a claim indemnified by another
Party(ies) under this Agreement or the Investor Rights Agreement, any payments
in connection with such claims are to be apportioned between the Parties in
accordance with the degree of cause attributable to each Party.

 

21

 

12.                                 INSURANCE

 

12.1                           Without limiting a Party’s undertaking to
defend, indemnify, and hold the other Parties harmless as set forth in Section 11,
to the extent available on commercially reasonable terms each Party will obtain
and maintain a commercial general liability policy, including coverage for
commercial general liability claims and coverage for products liability claims,
taking into account the stage of development of the miRNA Compound or miRNA
Therapeutic to which such Party has rights under this Agreement, in amounts
reasonably sufficient to protect against liability under Section 11.  The foregoing coverage will continue during
the term of this Agreement and for a period of 3 years thereafter.  The Parties have the right to ascertain from
time to time that such coverage exists, such right to be exercised in a
reasonable manner.

 

13.                                 WARRANTIES

 

13.1                           Mutual Warranties. 
Each Party warrants that as of the Amendment Effective Date:  (a) it is a corporation duly organized
and in good standing under the laws of the jurisdiction of its incorporation or
organization, and it has full power and authority and the legal right to own
and operate its property and assets and to carry on its business as it is now
being conducted and as it is contemplated to be conducted under this Agreement
and the Services Agreement; (b) it has the full right, power and authority
to enter into this Agreement and the Services Agreement and to grant the rights
and licenses granted by it under this Agreement and the Services Agreement; (c) there
are no existing or, to its knowledge, threatened actions, suits or claims
pending with respect to the subject matter hereof or its right to enter into
and perform its obligations under this Agreement and the Services Agreement; (d) it
has taken all necessary action on its part to authorize the execution and
delivery of this Agreement and the Services Agreement and the performance of
its obligations under this Agreement and the Services Agreement; (e) this
Agreement and the Services Agreement have been duly executed and delivered on
behalf of it, and each constitutes a legal, valid, binding obligation,
enforceable against it in accordance with the terms hereof, subject to the
general principles of equity and to bankruptcy, insolvency, moratorium and
other similar laws affecting the enforcement of creditors’ rights generally; (f) all
necessary consents, approvals and authorizations of all regulatory and
governmental authorities and other persons required to be obtained by it in
connection with the execution and delivery of this Agreement and the Services
Agreement and the performance of its obligations under this Agreement and the
Services Agreement have been obtained; and (g) the execution and delivery
of this Agreement and the Services Agreement and the performance of its
obligations under this Agreement and the Services Agreement do not conflict
with, or constitute a default under, any of its existing contractual obligations.

 

13.2                           Additional Licensor Warranties.

 

(a)                                  Each Licensor warrants to Regulus that,
as of the Effective Date, except as set forth on Schedule 2.4(A) or
in accordance with Section 2.4:  (i) such
Licensor has the right to grant to Regulus the rights granted to Regulus under
such Licensor’s Licensed IP hereunder; and (ii) no written claim has been
made against such Licensor alleging that such Licensor’s Licensed Patent Rights
are invalid or unenforceable.

 

(b)                                 Each Licensor further warrants to each
other Party that such Licensor has prepared, or will prepare, as applicable,
its respective In-License Summary, Out-License 

 

22

 

Summary and descriptions of Optional In-Licenses, in
good faith and having used reasonable and diligent efforts to disclose, in
summary form, all material issues relating to the scope of the license granted
to Regulus and all material pass-through payment obligations.  The Parties agree and acknowledge that a
Licensor shall be deemed to be in breach of the warranty in this Section 13.2(b) if
such Licensor knowingly omitted from, or knowingly misrepresented in, its
In-License Summary, Out-License Summary or Optional In-License description any
material issues relating to the scope of the license granted to Regulus or any
material pass-through payment obligations. 
For the sake of clarity, the Parties agree and acknowledge, by way of
example and not limitation, that a Licensor shall not be deemed to be in breach
of the warranty in this Section 13.2(b) if its In-License Summary,
Out-License Summary or Optional In-License description is incorrect or
misleading in light of facts, issues or technology changes which occur or
become known after the date such In-License Summary, Out-License Summary or Optional
In-License description is provided to the other Licensor.

 

(c)                                  Each Licensor further warrants to each
other Party that such Licensor has set forth on Schedule 2.2(A), in good
faith and having used reasonable and diligent efforts to identify, all Patent
Rights Controlled by such Licensor on the Effective Date that (1) are
reasonably necessary or useful to the research, development and
commercialization of miRNA Compounds or miRNA Therapeutics as contemplated by
the current Operating Plan and (2) claim (a) miRNA Compounds or miRNA
Therapeutics in general, (b) specific miRNA Compounds or miRNA
Therapeutics, (c) chemistry or delivery of miRNA Compounds or miRNA
Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist
directly prevents the production of the specific miRNA, or (e) methods of
treating an Indication by modulating one or more miRNAs; except, in each
case for manufacturing technology (including but not limited to analytical
methods).  In the event a Licensor is in
breach of this warranty, the Parties will work in good faith to amend Schedule
2.2(A) such that the Patent Right that is the subject of the breach is
including as a Licensed Patent Right under this Agreement.

 

13.3                           Disclaimer.  EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS SECTION 13, NEITHER PARTY MAKES ANY
REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, QUALITY,
FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF PATENT
CLAIMS, WHETHER ISSUED OR PENDING.

 

14.                                 LIMITATION OF LIABILITY

 

14.1                           UNLESS RESULTING FROM A PARTY’S WILLFUL
MISCONDUCT OR FROM A PARTY’S WILLFUL BREACH OF SECTION 10, NO PARTY HERETO
WILL BE LIABLE TO ANY OTHER PARTY OR ITS AFFILIATES FOR SPECIAL, INCIDENTAL,
CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES ARISING
OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOSS OF
PROFITS, LOSS OF DATA, LOSS OF REVENUE, OR LOSS OF USE DAMAGES ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT WHETHER BASED UPON WARRANTY, CONTRACT,
TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF ANY NOTICE OF
SUCH DAMAGES.  NOTHING IN THIS SECTION 14
IS INTENDED TO LIMIT OR 

 

23

 

RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF
ANY PARTY UNDER THIS AGREEMENT.

 

15.                                 TERMINATION

 

15.1                           Term.  This
Agreement will become effective as of the Amendment Effective Date, and will
remain in effect until the earlier of (a) the termination of this
Agreement in accordance with Section 15.2, (b) the cessation of all
Development of potential Royalty-Bearing Products prior to the first commercial
sale of a Royalty-Bearing Product anywhere in the world, or (c) following
the first commercial sale of a Royalty-Bearing Product anywhere in the world,
the expiration of the Royalty Terms for Royalty-Bearing Products on a
country-by-country and a Royalty-Bearing Product-by-Royalty-Bearing Product
basis.

 

15.2                           Termination for Breach.

 

(a)                                  If Regulus breaches any material
provision of this Agreement (including any representation or warranty), and
fails to remedy such breach within sixty (60) days after written notice from
the Licensors, acting jointly, then the Licensors, acting jointly, shall have
the right, but not the obligation, to initiate the Buy-Out.  In such event, the Licensors will determine
which Licensor will be considered the “Initiating Founding
Investor” (as defined in the Investor Rights Agreement) for purposes
of the Buy-Out.

 

(b)                                 If an Opt-In Party breaches any material
provision of this Agreement with respect to the relevant Development Project,
and fails to remedy such breach within 60 days after written notice from
Regulus, then Regulus will have the right, but not the obligation, to terminate
such Opt-In Party’s rights and licenses with respect to such Development
Project and the breaching Opt-In Party will promptly return to the aggrieved
Party(ies) all related tangible Know-How and Confidential Information of such
aggrieved Party(ies).

 

(c)                                  Except as provided in Section 15.2(b),
if a Licensor breaches any material provision of this Agreement (including any
representation or warranty), and fails to remedy such breach within sixty (60)
days after written notice from any other Party, then (i) if such other
Party is a Licensor, such Licensor may initiate the Buy-Out, (ii) if such
other Party is Regulus, Regulus may not terminate this Agreement, and (iii) whether
such other Party is Regulus or a Licensor, such other Party has the right to
seek other legal or equitable remedies with respect to such breach.

 

(d)                                 Notwithstanding Section 15.2(b) or
15.2(c)(i), if a non-breaching Party gives the allegedly-breaching Party a
notice pursuant to this Section 15.2 of a material breach by such
alleged-breaching Party, and, as of the end of the cure period specified above,
two or more Parties are engaged in an arbitration pursuant to Section 16.7
in which such allegedly-breaching Party is in good faith disputing the
occurrence of the alleged material breach or the sufficiency of the cure with
respect thereto, then the non-breaching Parties may not (i) initiate the
Buy-Out in the case of Section 15.2(c)(i) or (ii) terminate the
applicable license in the case of Section 15.2(b), as a result of such
breach unless and until the arbitrator issues an award that such breach
occurred (if that issue was in dispute) and/or that the cure was insufficient
(if that issue was in dispute), following which the breaching Party shall have
60 days to cure such breach (or unless 

 

24

 

and until such allegedly-breaching Party is no longer
disputing such issues in good faith, if earlier).

 

15.3                           Effects of Termination.

 

(a)                                  Any of Regulus’ direct Sublicensees may,
by providing written notice to the Licensors within the 60 day period
immediately following termination of this Agreement with respect to Regulus, in
whole or in part, obtain from each Licensor a direct license from such
Licensor, on the same terms as the sublicense granted by Regulus to such
Sublicensee with respect to such Licensor’s Licensed IP, except to the extent
that any such terms are inconsistent with the rights granted by such Licensor
to Regulus under this Agreement, in which case any terms in this Agreement
which are more protective of such Licensor’s rights will instead apply.  If a Sublicensee provides such notice, the
Licensors will negotiate in good faith with such Sublicensee a written
agreement to reflect such terms; provided, that, (i) such Sublicensee
is, at the time of termination of this Agreement, in compliance with its
sublicense agreement with Regulus, and (ii) such Sublicensee cures any
payment default of Regulus hereunder, with respect to any royalties or
Sublicense Income Payments due to the Licensors with respect to the sublicense
granted by Regulus to such Sublicensee hereunder.

 

15.4                           Survival.  Upon
termination of this Agreement, the following sections of this Agreement will
survive: Sections 2.1, 2.3, 8, 9.1(a), 9.3, 10, 11, 12, 14, 15.2, 15.3, 15.4
and 16, and, to the extent related to Section 9.3, Sections 9.4, 9.5 and
9.6.  In addition, if this Agreement is
terminated pursuant to a Buy-Out, then, with respect to each Development
Project for which an Opt-In Party has obtained a license under Section 5.6
before the initiation of the Buy-Out, the following sections of this Agreement
will survive with respect to such Development Project:  Sections 5.4 or 5.5 (as applicable), and Section 5.6,
unless and until terminated pursuant to Section 15.2(b), subject to Section 15.2(d) (with
Regulus’ role in such termination sections being played by the other Founding
Investor following the dissolution of Regulus). 
Upon any expiration of this Agreement with respect to a Royalty-Bearing
Product under Section 15.1(c), the license granted under any Know-How that
is part of the Licensed IP and/or Regulus IP to a Party with respect to such
Royalty-Bearing Product will become a fully paid-up and perpetual license to
Manufacture, import, use, sell or otherwise Commercialize such Royalty-Bearing
Product.

 

16.                                 MISCELLANEOUS

 

16.1                           Assignment.  Neither this
Agreement nor any of the rights or obligations hereunder may be assigned by a
Party without the prior written consent of the other Parties, except (a) Regulus
shall assign both this Agreement and the Services Agreement to a Person that
acquires, by merger, sale of assets or otherwise, all or substantially
all of the business of Regulus to which the subject matter of this Agreement
relates, (b) each Licensor shall assign both this Agreement and the
Services Agreement along with the Transfer (as defined in the Investor Rights
Agreement) of such Licensor’s Shares  (as
defined in the Investor Rights Agreement) and registerable securities, if any,
and (c) each Party may assign or transfer its rights to receive
royalties, milestones and Sublicense Income Payments under this Agreement (but
no liabilities) to a Third Party in connection with [***].  Notwithstanding the foregoing, each Party
will have the right to assign this Agreement, in whole or in part, to an
Affiliate of such Party without
the prior written consent of the other Parties; provided  that
such assignee assumes in writing all 

 

25

 

obligations of the assigning Party hereunder.  Any assignment not in accordance with the
foregoing will be void.  This Agreement
will be binding upon, and will inure to the benefit of, all permitted successors
and assigns.  Each Party agrees that,
notwithstanding any provisions of this Agreement to the contrary, (y) in
the event that this Agreement is assigned by a Party in connection with the
sale or transfer of all or substantially all of the business of such Party to
which the subject matter of this Agreement relates, such assignment will not
provide the non-assigning Parties with rights or access to the Know-How or
Patent Rights of the acquirer of such assigning Party, and (z) in the
event of a Change of Control of a Party, the other Parties shall not acquire
rights or access to the Know-How or Patent Rights of the acquirer of such
acquired Party.

 

16.2                           Force Majeure. 
No Party will be held liable or responsible to any other Party nor be
deemed to have defaulted under or breached this Agreement for failure or
reasonable delay in fulfilling or performing any term of this Agreement (except
any obligation to pay upfront payments, milestones, royalties or Sublicense
Income Payments) when such failure or delay is caused by or results from causes
beyond the reasonable control of the affected Party, which may include, without
limitation, embargoes, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, acts of terrorism, strikes, lockouts or
other labor disturbances, or acts of God. 
The affected Party will notify the other Parties of such force majeure
circumstances as soon as reasonably practical and will make every reasonable
effort to mitigate the effects of such force majeure circumstances.

 

16.3                           Section 365(n) of
the Bankruptcy Code.  All rights
and licenses granted under or pursuant to any section of this Agreement are and
will otherwise be deemed to be for purposes of Section 365(n) of the
United States Bankruptcy Code (Title 11, U.S. Code), as amended (the “Bankruptcy
Code”), licenses of rights to “intellectual property” as defined in Section 101(35A)
of the Bankruptcy Code.  The Parties will
retain and may fully exercise all of their respective rights and elections
under the Bankruptcy Code.  The Parties agree that each Party, as
licensee of such rights under this Agreement, will retain and may fully
exercise all of its rights and elections under the Bankruptcy Code or any other
provisions of Applicable Law outside the United States that provide similar
protection for ‘intellectual property.’ 
The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against a Party under the U.S. Bankruptcy Code or
analogous provisions of applicable Law outside the United States, the Party
that is not subject to such proceeding will be entitled to a complete duplicate
of (or complete access to, as appropriate) such intellectual property and all
embodiments of such intellectual property, which, if not already in the non
subject Party’s possession, will be promptly delivered to it upon the non
subject Party’s written request thereof. 
Any agreements supplemental hereto will be deemed to be “agreements
supplementary to” this Agreement for purposes of Section 365(n) of
the Bankruptcy Code.

 

16.4                           Notices.  Any notice
required or provided for by the terms of this Agreement or the Services
Agreement shall be delivered in accordance with Section 13.9 of the
Investor Rights Agreement.

 

16.5                           Relationship of
the Parties.  It is
expressly agreed that the Parties will be independent contractors hereunder and
that the relationship among the Parties under this Agreement will not
constitute a partnership, joint venture or agency.  No Party will have the authority under this
Agreement to make any statements, representations or commitments of any 

 

26

 

kind, or to take any action,
which will be binding on any other Party, without the prior consent of such
other Party.  This Agreement will be understood to be a joint research
agreement to discover miRNA Compounds and associated uses and to develop
Royalty-Bearing Products in accordance with 35 U.S.C. § 103(c)(3).

 

16.6                           Governing Law. 
This Agreement will be governed and interpreted in accordance with the
substantive laws of the State of Delaware, excluding its conflicts of law
rules; provided  that matters of intellectual property law
concerning the existence, validity, ownership, infringement or enforcement of
intellectual property will be determined in accordance with the national
intellectual property laws relevant to the intellectual property in question.

 

16.7                           Dispute Resolution. 
Except (a) for matters of intellectual property law concerning the
existence, validity, ownership, infringement or enforcement of intellectual
property, which matters will not be subject to the terms of this Section 16.7,
and (b) as other dispute resolution procedures are expressly provided
herein, in the event of any dispute, controversy or claim arising out of or
relating to this Agreement, the Parties will try to settle such dispute,
controversy or claim amicably between themselves, including referring such
dispute, controversy or claim to the Executive Officers of the Parties.  If the Parties are unable to so settle such
dispute, controversy or claim within a period of 60 days from the date of such
referral, then upon notice by any Party to the other Parties, any such dispute,
controversy or claim arising out of or relating to any provision of this
Agreement, or the interpretation, enforceability, performance, breach,
termination or validity hereof, will be finally resolved under the Commercial
Arbitration Rules of the American Arbitration Association by a single
arbitrator appointed in accordance with such rules.  The Parties will be entitled to the same
discovery as permitted under the U.S. Federal Rules of Civil Procedure; provided
that the arbitrator will be entitled in its discretion to grant a
request from a Party for expanded or more limited discovery.  The place of arbitration will be New York,
New York.  The language of the
arbitration will be English.  At any
time, a Party may seek or obtain preliminary, interim or conservatory measures
from the arbitrators or from a court.

 

16.8                           Severability. 
In the event any one or more of the provisions contained in this
Agreement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein will not in any way be affected or impaired thereby, unless the absence
of the invalidated provision(s) adversely affect the substantive rights of
the Parties.  The Parties will in such an
instance use their best efforts to replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable provision(s) which,
insofar as practical, maintains the balance of the rights and obligations of
the Parties under this Agreement.

 

16.9                           Entire Agreement. 
This Agreement (including all schedules and exhibits hereto), the
Investor Rights Agreement and the Services Agreement constitute the entire
agreement among the Parties with respect to the subject matter herein and
supersedes all previous agreements (other than those listed in Schedule A
(the “Previous Agreements”)),
whether written or oral, with respect to such subject matter, including without limitation the Original License Agreement. For clarity,
the Parties acknowledge and agree that the Original License Agreement remains
in effect in accordance with its terms with respect to the period between September 6,
2007 and the Amendment Effective Date.  Unless
otherwise expressly indicated, references herein to sections, subsections,
paragraphs and the like are to such items within this 

 

27

 

Agreement.  The
Parties acknowledge that this Agreement is being executed and delivered
simultaneously with the execution and delivery by the Parties and/or their
Affiliates of the Investor Rights Agreement and the Services Agreement.  For purposes of clarity, nothing in this Agreement
(other than Section 5.6(d)) will be deemed to modify or amend any
provision of any of the Previous Agreements.

 

16.10                     Amendment and Waiver. 
This Agreement may not be amended, nor any rights hereunder waived,
except in a writing signed by the properly authorized representatives of each
Party.

 

16.11                     No Implied Waivers. 
The waiver by a Party of a breach or default of any provision of this
Agreement by any other Party will not be construed as a waiver of any
succeeding breach of the same or any other provision, nor will any delay or
omission on the part of a Party to exercise or avail itself of any right, power
or privilege that it has or may have hereunder operate as a waiver of any
right, power or privilege by such Party.

 

16.12                     Export Compliance. 
The Parties acknowledge that the exportation from the United States of
materials, products and related technical data (and the re-export from
elsewhere of United States origin items) may be subject to compliance with
United States export Laws, including, without limitation, the United States Bureau
of Export Administration’s Export Administration Regulations, the Federal Food,
Drug and Cosmetic Act and regulations of the FDA issued thereunder, and the
United States Department of State’s International Traffic and Arms Regulations
which restrict export, re-export, and release of materials, products and their
related technical data, and the direct products of such technical data.  The Parties agree to comply with all exports
Laws and to commit no act that, directly or indirectly, would violate any United
States Law, or any other international treaty or agreement, relating to the
export, re-export, or release of any materials, products or their related
technical data to which the United States adheres or with which the United
States complies.

 

16.13                     Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, and all of which together will constitute one
and the same instrument.

 

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28

 

IN WITNESS WHEREOF, the
Parties hereby execute this Agreement as of the date first written above.

 

 

	
   

  	
  ALNYLAM
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barry Greene

  
	
   

  	
   

  	
  Name: Barry Greene

  
	
   

  	
   

  	
  Title: President &
  COO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ISIS PHARMACEUTICALS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ B. Lynne Parshall

  
	
   

  	
   

  	
  Name: B. Lynne
  Parshall

  
	
   

  	
   

  	
  Title: COO & CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REGULUS THERAPEUTICS
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kleanthis G.
  Xanthopoulos

  
	
   

  	
   

  	
  Name: Kleanthis G.
  Xanthopoulos

  
	
   

  	
   

  	
  Title: President &
  CEO

  

 

 

Exhibit 1

 

Defined Terms

 

1.1                                 “Additional Rights”
will have the meaning set forth in Section 2.4(d).

 

1.2                                 “Affiliate”
of an entity means any other entity that, directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with such first entity.  For purposes of
this definition only, “control” (and, with correlative meanings, the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct the management or policies of an entity,
whether through the ownership of voting securities or by contract relating to
voting rights or corporate governance. 
For purposes of this Agreement (a) Regulus will not be deemed to be
an Affiliate of any Licensor and (b) a Licensor and its Affiliates will
not be considered an Affiliate of Regulus.

 

1.3                                 “Agreement”
will have the meaning set forth in the Preamble.

 

1.4                                 “Alnylam”
will have the meaning set forth in the Preamble.

 

1.5                                 “Alnylam Field”
will have the meaning set forth in Section 2.3(a).

 

1.6                                 “Amendment Effective Date”
has the meaning set forth in the Preamble.

 

1.7                                 “Approved Mimic”
will have the meaning set forth in Section 1.61.

 

1.8                                 “Approved Precursor
Antagonist” will have the meaning set forth in Section 1.61.

 

1.9                                 “Bankruptcy Code”
will have the meaning set forth in Section 16.3.

 

1.10                           “Business Day”
means a day on which the banks in New York, New York are open for business.

 

1.11                           “Buy-Out”
will have the meaning set forth in the Investor Rights Agreement.

 

1.12                           “Change of Control”
means, with respect to a Licensor, the earlier of (x) the public
announcement of or (y) the closing of: 
(a) a merger, reorganization or consolidation involving such
Licensor in which its shareholders immediately prior to such transaction would
hold less than 50% of the securities or other ownership or voting interests
representing the equity of the surviving entity immediately after such merger,
reorganization or consolidation, or (b) a sale to a Third Party of all or
substantially all of such Licensor’s assets or business relating to this
Agreement.

 

1.13                           “Collaboration Working
Group” means a group having equal representation from Isis,
Alnylam and Regulus which will meet on a regular basis to share information
about Know-How and Patent Rights relevant to the joint venture and to conduct
the business necessary under this Agreement. 
Each Party will designate two Collaboration Working Group members within
30 days of the Effective Date.

 

 

1.14                           “Combination Product”
will have the meaning set forth in Section 1.67.

 

1.15                           “Commercialization”
or “Commercialize” means any and all
activities directed to marketing, promoting, detailing, distributing,
importing, having imported, exporting, having exported, selling or offering to
sell a miRNA Therapeutic following receipt of Regulatory Approval for such
miRNA Therapeutic.

 

1.16                           “Commercializing Party”
means the Party Manufacturing, Developing or Commercializing a miRNA
Therapeutic under this Agreement pursuant to licenses granted under Sections
2.2 or 5.6.

 

1.17                           “Commercially Reasonable
Efforts” means, reasonable, diligent, good faith efforts to
accomplish an objective as such Party would normally use to accomplish a
similar objective, under similar circumstances exercising reasonable business
judgment.  With respect to the
Development, Manufacturing or Commercialization of a miRNA Therapeutic, such
efforts will be substantially equivalent to the efforts used by such Party with
respect to other products at similar stages in their development or product
life and of similar market potential, taking into account the profile of the
miRNA Therapeutic, the competitive landscape and other relevant factors
commonly considered in similar circumstances. 
For all Parties the level of effort will be at least that of a typical
medium sized biopharmaceutical company.

 

1.18                           “Completion”
means, with respect to any clinical trial, the locking of the database
pertaining to such clinical trial.

 

1.19                           “Confidential Information”
will have the meaning set forth in the Investor Rights Agreement.

 

1.20                           “Control” or
“Controlled” means the possession of
the right (whether by ownership, license or otherwise) to assign, or grant a
license, sublicense or other right as provided for herein without violating the
terms of any agreement or other arrangement with any Third Party; provided,
however, that neither Licensor will be deemed to Control Regulus IP and
no Party other than the relevant Licensor shall be deemed to Control such Licensor’s
Licensed IP.

 

1.21                           “Controlling Party”
will have the meaning set forth in Section 2.4(d).

 

1.22                           “Cover”, “Covered” or “Covering”
means, (a) with respect to a patent, that, in the absence of a license
granted to a Person under a Valid Claim included in such patent, the practice
by such Person of an invention claimed in such patent would infringe such Valid
Claim, or (b) with respect to a patent application, that, in the absence
of a license granted to a Person under a Valid Claim included in such patent
application, the practice by such Person of an invention claimed in such patent
application would infringe such Valid Claim if it were to issue as a patent.

 

1.23                           “Develop” or
“Development” means, with respect to
a miRNA Compound or miRNA Therapeutic, any discovery, characterization,
preclinical or clinical activity with respect to such miRNA Compound or miRNA
Therapeutic, including human clinical trials conducted after Regulatory
Approval of such miRNA Therapeutic to seek Regulatory Approval for additional
Indications for such miRNA Therapeutic.

 

2

 

1.24                           “Development Compound”
means, with respect to a Development Project, any miRNA Compound directed to
the miRNA(s) which is the focus of such Development Project.

 

1.25                           “Development Project”
will have the meaning set forth in Section 4.4.

 

1.26                           “Development Therapeutic”
means, with respect to a Development Project, any miRNA Therapeutic containing
an miRNA Compound(s) directed to the miRNA(s) which is the focus of
such Development Project.

 

1.27                           “Disclosing Party”
will have the meaning set forth in the Investor Rights Agreement.

 

1.28                           “Effective Date”
means September 6, 2007, the date on which the Parties entered into the
Original License Agreement.

 

1.29                           “Exclusivity Period”
means, with respect to a Royalty-Bearing Product in a country, that period of
time beginning with the first commercial sale of such Royalty-Bearing Product
in such country and ending on the later to expire of (a) the time during
which the applicable Regulatory Authority in such country is not permitted to
grant Regulatory Approval for a generic equivalent of such Royalty-Bearing
Product and (b):

 

·                  with respect to a Royalty-Bearing Product being
Commercialized by Regulus, the last Valid Claim of the Patent Rights licensed
to Regulus pursuant to this Agreement or the Regulus Patent Rights Covering (i) the
Manufacture of such Royalty-Bearing Product in such country or (ii) the
use, sale or other Commercialization of such Royalty-Bearing Product in such
country; or

 

·                  with respect to a Royalty-Bearing Product being
Commercialized by a Licensor, the last Valid Claim of the Patent Rights
licensed to such Licensor pursuant to this Agreement Covering (i) the
Manufacture of such Royalty-Bearing Product in such country or (ii) the
use, sale or other Commercialization of such Royalty-Bearing Product in such
country.

 

1.30                           “Executive Officer”
means, with respect to a Party, the Chief Executive Officer of such Party (or
the officer or employee of such Party then serving in a substantially
equivalent capacity) or his/her designee of substantially equivalent rank.

 

1.31                           “FDA” means
the United States Food and Drug Administration or any successor agency thereto.

 

1.32                           “Field”
means treatment and/or prophylaxis of any or all Indications.

 

1.33                           “GAAP” means
United States Generally Accepted Accounting Principles, consistently applied.

 

1.34                           “GLP” means
the then-current good laboratory practice standards promulgated or endorsed by
the FDA as defined in 21 C.F.R. Part 58, and comparable foreign regulatory
standards.

 

3

 

1.35                           “[***]”
means a [***].

 

1.36                           “Hatch-Waxman Act”
will have the meaning set forth in Section 9.3(a)(i)(A).

 

1.37                           “High Terms”
will have the meaning set forth in Section 5.4.

 

1.38                           “In-License Agreement”
will have the meaning set forth in Section 2.4(b).

 

1.39                           “In-License Summary”
will have the meaning set forth in Section 2.4(b).

 

1.40                           “IND” means
an Investigational New Drug Application or similar foreign application or submission
for approval to conduct human clinical investigations.

 

1.41                           “Indication”
means any disease or condition, or sign or symptom of a disease or condition,
or symptom associated with a disease or syndrome.

 

1.42                           “Initial Opt-In Election
Period” will have the meaning set forth in Section 5.3.

 

1.43                           “Intellectual Property”
will have the meaning set forth in the Investor Rights Agreement.

 

1.44                           “Invalidity Claim”
will have the meaning set forth in Section 9.4.

 

1.45                           “Investor Rights Agreement”
means the Founding Investor Rights Agreement of Regulus among the Parties,
dated as of the Amendment Effective Date, as the same may be amended from time
to time after the Amendment Effective Date.

 

1.46                           “Isis” will
have the meaning set forth in the Preamble.

 

1.47                           “Isis Field”
will have the meaning set forth in Section 2.3(b).

 

1.48                           “Know-How”
means any information, inventions, trade secrets or technology (excluding
Patent Rights), whether or not proprietary or patentable and whether stored or
transmitted in oral, documentary, electronic or other form.  Know-How includes ideas, concepts, formulas,
methods, procedures, designs, compositions, plans, documents, data,
discoveries, developments, techniques, protocols, specifications, works of
authorship, biological materials, and any information relating to research and
development plans, experiments, results, compounds, therapeutic leads,
candidates and products, clinical and preclinical data, clinical trial results,
and Manufacturing information and plans.

 

1.49                           “Law” means
any law, statute, rule, regulation, ordinance or other pronouncement having the
effect of law of any federal, national, multinational, state, provincial,
county, city or other political subdivision, domestic or foreign.

 

1.50                           “Licensed IP”
means, with respect to a Licensor, such Licensor’s Licensed Know-How and
Licensed Patent Rights.

 

1.51                           “Licensed Know-How”
means, with respect to a Licensor, all Know-How Controlled by such Licensor on
the Effective Date or during the term of this Agreement (except 

 

4

 

as otherwise expressly provided herein) that relates to (a) miRNA
Compounds or miRNA Therapeutics in general, (b) specific miRNA Compounds
or miRNA Therapeutics, (c) chemistry or delivery of miRNA Compounds or
miRNA Therapeutics, (d) mechanism(s) of action by which a miRNA
Antagonist directly prevents the production of a specific miRNA, or (e) methods
of treating an Indication by modulating one or more miRNAs; provided, however,
that in each case, (i) for any such Know-How that include financial or
other obligations to a Third Party, the provisions of Section 2.4 will
govern whether such Know-How will be included as Licensed Know-How and (ii) Licensed
Know How does not include manufacturing technology (including but not limited
to analytical methods).

 

1.52                           “Licensed Patent Rights”
means, with respect to a Licensor, (A) all Patent Rights Controlled by
such Licensor on the Effective Date and listed on SCHEDULE
2.2(A), and (B) all
Patent Rights Controlled by such Licensor during the term of this Agreement
(except as otherwise expressly provided herein) that claim (a) miRNA
Compounds or miRNA Therapeutics in general, (b) specific miRNA Compounds
or miRNA Therapeutics, (c) chemistry or delivery of miRNA Compounds or miRNA
Therapeutics, (d) mechanism(s) of action by which a  miRNA Antagonist  directly
prevents the production of the specific miRNA, or (e) methods of treating
an Indication by modulating one or more miRNAs; provided, however,
that in each case, (i) for any such Patent Rights that include financial
or other obligations to a Third Party, the provisions of Section 2.4 will
govern whether such Patent Right will be included as a Licensed Patent Right
and (ii) Licensed Patent Rights do not include manufacturing technology
(including but not limited to analytical methods).

 

1.53                           “Licensor”
will have the meaning set forth in the Preamble.

 

1.54                           “Licensor Indemnitees”
will have the meaning set forth in Section 11.1.

 

1.55                           “Losses”
will have the meaning set forth in Section 11.1.

 

1.56                           “Low Terms”
will have the meaning set forth in Section 5.5.

 

1.57                           “Major Country”
means France, Germany, Italy, Spain and the United Kingdom.

 

1.58                           “Manufacture”
or “Manufacturing” means any activity
involved in or relating to the manufacturing, quality control testing
(including in-process, release and stability testing), releasing or packaging,
for pre-clinical, clinical or commercial purposes, of a miRNA Compound or a
miRNA Therapeutic.

 

1.59                           “miRNA”
means a structurally defined functional RNA molecule usually between 21 and 25
nucleotides in length, which is derived from genetically-encoded non-coding RNA
which is predicted to be  processed into
a hairpin RNA structure that is a substrate for the double-stranded
RNA-specific ribonuclease Drosha and subsequently is predicted to serve as a
substrate for the enzyme Dicer, a member of the RNase III enzyme family;
including, without limitation, those miRNAs exemplified in miRBase
(http://microrna.sanger.ac.uk/).  To the
extent that [***] for purposes of this Agreement; provided, however,
that nothing contained herein shall require any Party hereto to [***].

 

5

 

1.60                           “miRNA Antagonist”
means a single-stranded oligonucleotide (or a single stranded analog thereof)
that is designed to interfere with or inhibit a particular miRNA.  For purposes of clarity, the definition of
“miRNA Antagonist” is not intended to include oligonucleotides that function
predominantly through the RNAi mechanism of action or the RNase H mechanism of
action.

 

1.61                           “miRNA Compound”
means a compound consisting of (a) a miRNA Antagonist, (b) to the
extent listed in Schedule 1.61 or otherwise agreed upon by Regulus and
the relevant Licensor(s) pursuant to Section 2.2(b), a miRNA Precursor
Antagonist (an “Approved Precursor Antagonist”),
or (c) to the extent agreed upon by Regulus and the relevant Licensor(s) pursuant
to Section 2.2(b), a miRNA Mimic (an “Approved Mimic”).

 

1.62                           “miRNA Mimic”
means a double-stranded or single-stranded oligonucleotide or analog thereof
with a substantially similar base composition as a particular miRNA and which
is designed to mimic the activity of such miRNA.

 

1.63                           “miRNA Precursor”
means a transcript that originates from a genomic DNA and that contains, but
not necessarily exclusively, a non-coding, structured RNA comprising one or
more mature miRNA sequences, including, without limitation, (a) polycistronic
transcripts comprising more than one miRNA sequence, (b) miRNA clusters
comprising more than one miRNA sequence, (c) pri-miRNAs, and/or (d) pre-miRNAs.

 

1.64                           “miRNA Precursor Antagonist”
means a single-stranded oligonucleotide (or a single stranded analog thereof)
that is designed to bind to a miRNA Precursor to prevent the production of one
or more miRNAs. For purposes of clarity, the definition of “miRNA Precursor
Antagonist” is not intended to include oligonucleotides that function
predominantly through the RNAi mechanism of action or the RNase H mechanism of
action.

 

1.65                           “miRNA Therapeutic”
means a therapeutic product having one or more miRNA Compounds as an active
ingredient (s).

 

1.66                           “NDA” means
a New Drug Application or similar application or submission for approval to
market and sell a new pharmaceutical product filed with or submitted to a
Regulatory Authority.

 

1.67                           “Net Sales”
means, with respect to a Royalty-Bearing Product, the gross invoice price of
all units of such Royalty-Bearing Products sold by the relevant Commercializing
Party, its Affiliates and/or their direct Sublicensees to any Third Party, less
the following items:  (a) trade
discounts, credits or allowances, (b) credits or allowances additionally
granted upon returns, rejections or recalls, (c) freight, shipping and
insurance charges, (d) taxes, duties or other governmental tariffs (other
than income taxes), (e) government-mandated rebates, and (f) a reasonable
reserve for bad debts.  “Net Sales” under
the following circumstances will mean the fair market value of such
Royalty-Bearing Product:  (i) Royalty-Bearing
Products which are used by such Commercializing Party, its Affiliates or direct
Sublicensees for any commercial purpose without charge or provision of invoice,
(ii) Royalty-Bearing Products which are sold or disposed of in whole or in
part for non cash consideration, or (iii) Royalty-Bearing Products which
are provided to a Third Party by such Commercializing Party, its Affiliates or
direct Sublicensees 

 

6

 

without charge or provision of invoice and used by such Third Party
except in the cases of Royalty-Bearing Products used to conduct clinical
trials, reasonable amounts of Royalty-Bearing Products used as marketing
samples and Royalty-Bearing Product provided without charge for compassionate
or similar uses.

 

Net Sales will not include any transfer between or
among a Party and any of its Affiliates or direct Sublicensees for resale.

 

In the event a Royalty-Bearing 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, will be determined
by multiplying the Net Sales (as determined without reference to this
paragraph) of the Combination Product, by the fraction, A/A+B, where A is the
average sale price of the Royalty-Bearing Product when sold separately in
finished form and B is the average sale price of the other therapeutically
active pharmaceutical compound(s) included in the Combination Product when
sold separately in finished form, each during the applicable royalty period or,
if sales of all compounds did not occur in such period, then in the most recent
royalty reporting period in which sales of all occurred.  In the event that such average sale price
cannot be determined for both the Royalty-Bearing Product and all other
therapeutically active pharmaceutical compounds included in the Combination
Product, Net Sales for the purposes of determining royalty payments will be
calculated as above, but the average sales price in the above equation will be
replaced by a good faith estimate of the fair market value of the compound(s) for
which no such price exists.  As used
above, the term “Combination Product” means
any pharmaceutical product which consists of a Royalty-Bearing Product and
other therapeutically active pharmaceutical compound(s).

 

1.68                           “Non-Controlling Party”
will have the meaning set forth in Section 2.4(d).

 

1.69                           “[***]”
means [***].

 

1.70                           “[***]”
means the [***].

 

1.71                           “Operating Plan”
has the meaning ascribed to it in the Investor Rights Agreement.

 

1.72                           “Opt-In Election”
will have the meaning set forth in Section 5.3.

 

1.73                           “Opt-In Party”
will have the meaning set forth in Section 5.3(a) and 5.3(c).

 

1.74                           “Opt-In Product”
means any miRNA Therapeutic that is Developed, Manufactured or Commercialized pursuant
to a Development Project for which one and only one Licensor has exercised an
Opt-In Election and which the relevant Opt-In Party subsequently licensed.

 

1.75                           “Optional In-License”
will have the meaning set forth in Section 2.4(c).

 

1.76                           “Out-License Agreement”
will have the meaning set forth in Section 2.4(a).

 

1.77                           “Out-License Summary”
will have the meaning set forth in Section 2.4(a).

 

7

 

1.78                           “Paragraph IV Certification”
will have the meaning set forth in Section 9.3(a)(i)(A).

 

1.79                           “Party”
means Alnylam, Isis and/or Regulus; “Parties”
means Alnylam, Isis and Regulus, or any combination thereof.

 

1.80                           “Patent Rights”
means (a) patent applications (including provisional applications and for
certificates of invention); (b) any patents issuing from such patent
applications (including certificates of invention); (c) all patents and
patent applications based on, corresponding to, or claiming the priority date(s) of
any of the foregoing; and (d) any substitutions, extensions (including
supplemental protection certificates), registrations, confirmations, reissues,
divisionals, continuations, continuations-in-part, re-examinations, renewals
and foreign counterparts thereof.

 

1.81                           “Payee Party”
will have the meaning set forth in Section 8.1.

 

1.82                           “Paying Party”
will have the meaning set forth in Section 8.1.

 

1.83                           “Permitted Disclosures”  The following are Permitted Disclosures:

 

(a)          To the extent that a Recipient has been
granted the right to sublicense under the terms of this Agreement, such Party
will have the right to provide a Disclosing Party’s Confidential Information to
the employees, consultants and advisors of such Recipient’s Affiliate and Third
Party sublicensees and potential sublicensees who have a need to know the
Confidential Information for purposes of exercising such sublicense and are
bound by an obligation to maintain in confidence the Confidential Information
of the Disclosing Party; provided, that such Persons are bound to
maintain the confidentiality of such information to the same extent as if they
were parties hereto.

 

(b)         Each Recipient will have the right to
provide a Disclosing Party’s Confidential Information:

 

(i)                                     to governmental or other regulatory
agencies in order to seek or obtain patents, to seek or obtain approval to
conduct clinical trials, or to gain Regulatory Approval, as contemplated by
this Agreement; provided  that such disclosure may be made only to
the extent reasonably necessary to seek or obtain such patents or approvals;
and

 

(ii)           as necessary, if embodied in products, to
develop and commercialize such products as contemplated by this Agreement.

 

1.84                           “Permitted License”
means a license granted by a Licensor to a Third Party to enable such Third
Party to broadly manufacture or formulate oligonucleotides, where such Third
Party is primarily engaged in [***]; provided, however, that any
such license will not grant rights to research, manufacture or formulate miRNA
Compounds or miRNA Therapeutics for which the other Licensor has obtained or
later obtains a license pursuant to Section 5 or pursuant to the Buy-Out
process in the Investor Rights Agreement.

 

8

 

1.85                           “Person”
means 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.

 

1.86                           “Phase IIa Clinical Trial”
means, with respect to a Royalty-Bearing Product, any human clinical trial
conducted in patients with a particular Indication for the purpose of studying
the pharmacokinetic or pharmacodynamic properties and preliminary assessment of
safety and efficacy of such Royalty-Bearing Product over a measured dose response,
as described in 21 C.F.R. §312.21(b) or its foreign counterpart.

 

1.87                           “Phase III Clinical Trial”
means, with respect to a Royalty-Bearing Product, a controlled pivotal clinical
study of such Royalty-Bearing Product that is prospectively designed to
demonstrate statistically whether such Royalty-Bearing Product is safe and
effective to treat a particular Indication in a manner sufficient to obtain
Regulatory Approval to market such Royalty-Bearing Product, as described in 21
CFR 312.21(c) or its foreign counterpart.

 

1.88                           “Previous Agreements”
will have the meaning set forth in Section 16.9.

 

1.89                           “Program/Project List”
will have the meaning set forth in Section 4.4.

 

1.90                           “Recipient”
will have the meaning set forth in the Investor Rights Agreement.

 

1.91                           “Regulatory Approval”
means the act of a Regulatory Authority necessary for the marketing and sale
(including, if required for marketing and sales, pricing) of such product in a
country or regulatory jurisdiction, including, without limitation, the approval
of an NDA by the FDA.

 

1.92                           “Regulatory Authority”
means any applicable government regulatory authority involved in granting
approvals for the marketing and/or pricing of a product in a country or
regulatory jurisdiction including, without limitation, the FDA.

 

1.93                           “Regulus”
will have the meaning set forth in the Preamble.

 

1.94                           “Regulus Indemnitees”
will have the meaning set forth in Section 11.2.

 

1.95                           “Regulus IP”
means all Regulus Know-How and Regulus Patent Rights.

 

1.96                           “Regulus Know-How”
means all Know-How conceived and/or developed by or on behalf of Regulus
(including by employees of a Licensor or its Affiliates in performance of the
Services Agreement), or over which Regulus otherwise acquires Control,
including but not limited to any Know-How assigned to Regulus by a Licensor
under Section 9.1, but specifically excluding Licensed IP.

 

1.97                           “Regulus Patent Rights”
means any Patent Right claiming an invention conceived and/or developed by or
on behalf of Regulus (including by employees of a Licensor or its Affiliates in
performance of the Services Agreement), or over which Regulus otherwise
acquires Control, including but not limited to any Patent Right assigned to
Regulus by a Licensor under Sections 2.1 or 9.1, but specifically excluding Licensed
IP.

 

9

 

1.98                           “Research”
means pre-clinical research including gene function, gene expression and target
validation research, which may include small pilot toxicology studies but
excludes the pharmacokinetic and toxicology studies required to meet the
regulations for filing an IND, clinical development and commercialization.

 

1.99                           “Research Program”
will have the meaning set forth in Section 4.4.

 

1.100                     “Royalty-Bearing Product”
means

 

(a)          a miRNA Therapeutic being Developed, Manufactured or
Commercialized by Regulus that, on a country-by-country basis, is, or Regulus
reasonably believes will be, at the time of first commercial sale of such miRNA
Therapeutic, Covered in such country by a Valid Claim of a Patent Right or
covered by Know-How of (i) a Licensed Patent Right licensed to it
hereunder, or (ii) any Regulus IP (except any Regulus IP solely
in-licensed or acquired by Regulus from a Third Party); or

 

(b)         an Opt-In Product that, on a country-by-country basis,
is, or the relevant Opt-In Party reasonably believes will be, at the time of
first commercial sale of such Opt-In Product, Covered in such country by a
Valid Claim of a Patent Right or covered by Know-How, which Patent Right or
Know-How is licensed to the applicable Opt-In Party hereunder.

 

1.101                     “Royalty Term”
means, with respect to each Royalty-Bearing Product in a country, the period
commencing upon first commercial sale of such Royalty-Bearing Product in such
country and ending upon the later of (a) the expiration of the Exclusivity
Period, or (b) 10 years following first commercial sale of such
Royalty-Bearing Product.

 

1.102                     “Second Opt-In Election
Period” will have the meaning set forth in Section 5.3(c)(i).

 

1.103                     “Services Agreement”
means that certain Amended and Restated Services Agreement by and between
Regulus, Alnylam and Isis dated the Amendment Effective Date, as the same may
be amended from time to time after the Amendment Effective Date.

 

1.104                     “Sublicense Income”
means all amounts received by the Opt-In Party or its Affiliates with respect
to any sublicense granted to a Third Party by the Opt-In Party or its
Affiliates of the Regulus IP or Licensed IP licensed to the Opt-In Party under Section 5.6(a),
including, without limitation, upfront payments and milestones, but excluding:

 

(a)                                  amounts received by the Opt-In Party or
its Affiliates as payments for actual direct costs for performing future
Development, Manufacturing or Commercialization activities undertaken by the
Opt-In Party or its Affiliates for, or in collaboration with, such Sublicensee
or its Affiliates with respect to the relevant Opt-In Products;

 

(b)                                 amounts received by the Opt-In Party
and/or its Affiliates from such Sublicensee  or its
Affiliates as the purchase price for the Opt-In Party’s or any of its
Affiliates’ 

 

10

 

debt or equity securities, except that amounts which exceed the fair market value of
such debt or equity securities will be considered Sublicense Income;

 

(c)                                  royalties paid by such Sublicensee or its
Affiliates with respect to Net Sales of Royalty-Bearing Products; and

 

(d)                                 amounts paid by such Sublicensee or its
Affiliates to the Opt-In Party or its Affiliates to purchase Royalty-Bearing
Products; except that any amount
greater than the actual cost of goods (with no profit added) of such
Royalty-Bearing Products, determined in accordance with GAAP, will be
considered Sublicense Income.

 

1.105                     “Sublicense Income Payments”
means, with respect to a Development Project and a calendar quarter, the
Sublicense Income received by the relevant Opt-In Party or its Affiliates in
such calendar quarter with respect to such Development Project, multiplied by
the relevant percentage determined pursuant to Section 5.4(d) or
5.5(d), as applicable.

 

1.106                     “Sublicensee”
means a Third Party to whom a Party, or its Affiliates or Sublicensees, has
granted a sublicense in accordance with the terms of this Agreement.

 

1.107                     “Superset Indemnitees”
will have the meaning set forth in Section 11.2.

 

1.108                     “Third Party”
means any Person other than the Parties or any of their Affiliates.

 

1.109                     “Third Party Agreement”
means either (i) an out-license agreement described in the Out-License
Summary, (ii) an In-License Agreement described on the In-License Summary,
(iii) an Optional In-License or (iv) an agreement pursuant to which a
Controlling Party obtained Control over an Additional Right.

 

1.110                     “Third Party Rights”
means, with respect to a Party, any rights of, and any limitations, restrictions
or obligations imposed by, Third Parties pursuant to Third Party Agreements.

 

1.111                     “Valid Claim”
means a claim (a) of any issued, unexpired patent that has not been
revoked or held unenforceable or invalid by a decision of a court or
governmental agency of competent jurisdiction from which no appeal can be
taken, or with respect to which an appeal is not taken within the time allowed
for appeal, and that has not been disclaimed or admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise; or (b) of any
patent application that has not been cancelled, withdrawn or abandoned, or been
pending for more than [***] years.

 

1.112                     “Work Product”
means any data, documentation, inventions and other Know-How arising from or
made in the performance of the Services (as defined in the Services Agreement)
by a Licensor.

 

11

 

SCHEDULE A

 

Previous
Agreements

 

Strategic Collaboration &
License Agreement between Isis Pharmaceuticals, Inc. and Alnylam
Pharmaceuticals, Inc., dated March 11, 2004, as supplemented or
amended by letter agreements dated March 9, 2004 (as amended by letter
agreement dated October 28, 2005), March 11, 2004, and June 10,
2005

 

License Agreement between
Max Plank Innovation GmbH (formerly Garching Innovation GmbH), Isis
Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc., dated October 18,
2004

 

Co-Exclusive License
Agreement among The Board of Trustees of the Leland Stanford Junior University,
Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc., dated August 31,
2005

 

 

Schedule 1.61

 

Initial miRNA
Precursor Antagonists

 

[***]

 

Schedule 2.1(A)

Patents and
License Agreements Assigned to Regulus by Isis

 

Isis
Patent Applications to be Assigned to Regulus

 

	
  IsisDocket

  Number

  	
   

  	
  Country

  	
   

  	
  Serial Number

  	
   

  	
  Filing

  Date

  	
   

  	
  Priority

  Date

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  

 

 

Isis
License Agreements to be Assigned to Regulus

 

[***]

 

2

 

Schedule 2.1(B)

Patents and
License Agreements Assigned to Regulus by Alnylam

 

Alnylam
Patent Applications to be Assigned to Regulus

 

	
  CaseNumber

  	
   

  	
  InvTitle

  	
   

  	
  Country

  	
   

  	
  CaseType

  	
   

  	
  AppNumber

  	
   

  	
  FilDate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  

 

Alnylam
License Agreements to be Assigned to Regulus

 

License Agreement between The Rockefeller University
and Alnylam Pharmaceuticals, Inc. effective August 15, 2005

 

[summary
is attached as Exhibit 2]

 

Schedule 2.2(A)

Patents and Patent
Applications Licensed to Regulus by Isis on the Effective Date

 

	
  Isis Docket

  Number

  	
   

  	
  Country

  	
   

  	
  Serial

  Number

  	
   

  	
  Filing Date

  	
   

  	
  Priority

  Date

  	
   

  	
  Title

  	
   

  	
  Patent

  Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  

 

3

 

Patents and Patent Applications Licensed to Regulus by Alnylam on the
Effective Date

 

	
  CaseNumber

  	
   

  	
  InvTitle

  	
   

  	
  Co.

  	
   

  	
  AppNumber

  	
   

  	
  FilDate

  	
   

  	
  PubNumber

  	
   

  	
  PubDate

  	
   

  	
  PatNumber

  	
   

  	
  IssDate

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  

 

4

 

Schedule 2.4(A)

Part 1

Isis’ Existing Out-License Agreements

 

This
Appendix 2.4(A) contains a list and summary of certain agreements in
effect as of the Effective Date between Isis and certain Third Parties that
may, as applicable, place certain encumbrances or limitations on the licenses
or sublicenses granted to Regulus and the representations and warranties, where
specified in the Agreement.  Copies of
the listed agreements will be provided at Regulus’ request for a complete
disclosure of the encumbrances and limitations in each agreement.

 

As
set forth in the Agreement, the information and disclosures contained in this
Appendix are intended only to qualify and limit the licenses granted by Isis to
Regulus, the exclusivity covenants, and the representations and warranties
given by Isis under the Agreement and do not expand in any way the scope or
effect of any such licenses, representations or warranties.

 

Nothing
herein constitutes an admission of any liability or obligation of Isis nor an
admission against any interest of Isis. 
The inclusion of this Appendix or the information contained in this
Appendix does not 

 

5

 

indicate
that Isis has determined that this Appendix or the information contained in
this Appendix when considered individually or in the aggregate, is necessarily
material to Isis.

 

Regulus
acknowledges that certain information contained in this Appendix may constitute
material Confidential Information relating to Isis which may not be used for any
other purpose other than that contemplated by the Agreement.

 

Capitalized
terms used herein below, but not otherwise defined herein below, have the
meanings given to such terms in the applicable agreement listed below, unless
it is clear from the context that the term has the meaning set forth in the
Agreement.

 

[***]

 

6

 

Schedule 2.4(A)

Part 2

Alnylam’s Existing
Out-License Agreements

 

License and Collaboration Agreement between Tekmira
Pharmaceuticals Corporation (formerly INEX Pharmaceuticals Corporation) and
Alnylam, dated January 8, 2007

 

License and
Collaboration Agreement dated July 8, 2007, by and among Alnylam
Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd and Hoffmann-La Roche
Inc., effective on August 9, 2007

 

Research
Collaboration and License Agreement between Novartis Institutes for BioMedical
Research, Inc. and Alnylam Pharmaceuticals, Inc., effective
October 12, 2005, as amended by the Addendum Re: Influenza Program
effective as of December 13, 2005, Amendment No. 1 to such Addendum
effective as of March 14, 2006, and Amendment No. 2 to such Addendum
effective as of May 5, 2006

 

[summaries
are attached as Exhibit 2]

 

7

 

Schedule 2.4(B)

Part 1

Isis’ Existing
In-License Agreements

 

This
Appendix 2.4(B) contains a list and summary of certain agreements in
effect as of the Effective Date between Isis and certain Third Parties that
may, as applicable, place certain encumbrances or limitations on the licenses
or sublicenses granted to Regulus and the representations and warranties, where
specified in the Agreement.  Copies of
the listed agreements will be provided at Regulus’ request for a complete
disclosure of the encumbrances and limitations in each agreement.

 

As
set forth in the Agreement, the information and disclosures contained in this
Appendix are intended only to qualify and limit the licenses granted by Isis to
Regulus, the exclusivity covenants, and the representations and warranties
given by Isis under the Agreement and do not expand in any way the scope or
effect of any such licenses, representations or warranties.

 

Nothing
herein constitutes an admission of any liability or obligation of Isis nor an
admission against any interest of Isis. 
The inclusion of this Appendix or the information contained in this
Appendix does not indicate that Isis has determined that this Appendix or the
information contained in this Appendix when considered individually or in the
aggregate, is necessarily material to Isis.

 

Regulus
acknowledges that certain information contained in this Appendix may constitute
material Confidential Information relating to Isis which may not be used for
any other purpose other than that contemplated by the Agreement.

 

Capitalized
terms used herein below, but not otherwise defined herein below, have the
meanings given to such terms in the applicable agreement listed below, unless
it is clear from the context that the term has the meaning set forth in the Agreement.

 

[***]

 

 

Schedule 2.4(B)

Part 2

Alnylam’s Existing
In-License Agreements

 

License Agreement between The Rockefeller University
and Alnylam Pharmaceuticals, Inc. effective May 8, 2006 (the “Tuschl
Agreement”)

 

Co-Exclusive License Agreement among The Board of
Trustees of the Leland Stanford Junior University, Alnylam Pharmaceuticals, Inc.
and Isis Pharmaceuticals, Inc. effective August 31, 2005

 

License Agreement among Garching Innovation GmbH,
Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc.
effective October 18, 2004

 

[summaries
are attached as Exhibit 2]

 

2

 

Schedule 2.4(C)

Part 1

Isis’ Optional
In-Licenses

 

This
Appendix 2.4(C) contains a list and summary of certain agreements in effect
as of the Effective Date between Isis and certain Third Parties that may, as
applicable, place certain encumbrances or limitations on the licenses or
sublicenses granted to Regulus and the representations and warranties, where
specified in the Agreement.  Copies of
the listed agreements will be provided at Regulus’ request for a complete
disclosure of the encumbrances and limitations in each agreement.

 

As
set forth in the Agreement, the information and disclosures contained in this
Appendix are intended only to qualify and limit the licenses granted by Isis to
Regulus, the exclusivity covenants, and the representations and warranties
given by Isis under the Agreement and do not expand in any way the scope or
effect of any such licenses, representations or warranties.

 

Nothing
herein constitutes an admission of any liability or obligation of Isis nor an
admission against any interest of Isis. 
The inclusion of this Appendix or the information contained in this
Appendix does not indicate that Isis has determined that this Appendix or the
information contained in this Appendix when considered individually or in the
aggregate, is necessarily material to Isis.

 

Regulus
acknowledges that certain information contained in this Appendix may constitute
material Confidential Information relating to Isis which may not be used for
any other purpose other than that contemplated by the Agreement.

 

Capitalized
terms used herein below, but not otherwise defined herein below, have the
meanings given to such terms in the applicable agreement listed below, unless
it is clear from the context that the term has the meaning set forth in the
Agreement.

 

[***]

 

 

Schedule 2.4(C)

Part 2

Alnylam’s Optional
In-Licenses

 

[***]Amended and
Restated Exclusive Patent License Agreement between Massachusetts Institute of
Technology (“MIT”) and Alnylam, dated May 9, 2007

 

License and Collaboration Agreement between Tekmira
Pharmaceuticals Corporation (formerly INEX Pharmaceuticals Corporation) (“Tekmira”)
and Alnylam, dated January 8, 2007

 

The Sublicense
Agreement between Tekmira and Alnylam, dated January 8, 2007

 

[summaries
are attached as Exhibit 2]

[***]

 

2

Schedule 5.6(f)

 

Examples regarding
Payments Due

 

 

Example
1:  [***]

Party opts-in at [***]

Party responsible for High Terms

Party sublicenses product mid Phase IIb at
terms below

 

	
  Milestones

  	
   

  	
  “Guaranteed 

  Payments”

  Due Under

  High Terms

  	
   

  	
  Paid Before 

  Sublicense

  	
   

  	
  Cumulative
  “Guaranteed
  Payments”
  Payable

  	
   

  	
  Sublicense

  Milestones

  	
   

  	
  “Sublicense

  Income”

  	
   

  	
  “Sublicense 

  Income 

  Payments”

  Due ([***]%)

  	
   

  	
  Cumulative

  “Sublicense
  Income
  Payments”
  Due

  	
   

  	
  “Cumulative 

  Amount
  Owed”

  	
   

  	
  Payments

  Payable By

  Opt-in Party

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Upfont

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  IND filing

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Completion of
  Phase IIa

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Phase III start

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

 

Example 2:  [***]

Party
opts-in at [***]

Party
responsible for Low Terms

Party
sublicenses product after IND at terms below

 

	
  Milestones

  	
   

  	
  “Guaranteed

  Payments”

  Due Under

  Low Terms

  	
   

  	
  Paid Before

  Sublicense

  	
   

  	
  Cumulative

  “Guaranteed

  Payments”

  Payable

  	
   

  	
  Sublicense

  Milestones

  	
   

  	
  “Sublicense

  Income”

  	
   

  	
  “Sublicense

  Income

  Payments”

  Due ([***]%)

  	
   

  	
  Cumulative 

  “Sublicense

  Income

  Payments”

  Due

  	
   

  	
  “Cumulative

  Amount

  Owed”

  	
   

  	
  Payments

  Payable By

  Opt-in Party

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Upfont

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  IND filing

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Upfront
  sublicense

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Completion of
  Phase IIa

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Phase III start

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  P3 end

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Japan approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

2

 

Example 3:  [***]

Party
opts-in at [***]

Party
responsible for High Terms

Party
sublicenses product mid Phase III at terms below

 

	
  Milestones

  	
   

  	
  “Guaranteed

  Payments”

  Due Under 

  High Terms

  	
   

  	
  Paid Before

  Sublicense

  	
   

  	
  Cumulative

  “Guaranteed

  Payments”

  Payable

  	
   

  	
  Sublicense

  Milestones

  	
   

  	
  “Sublicense

  Income”

  	
   

  	
  “Sublicense 

  Income

  Payments”

  Due ([***]%)

  	
   

  	
  Cumulative

  “Sublicense

  Income

  Payments”

  Due

  	
   

  	
  “Cumulative

  Amount 

  Owed”

  	
   

  	
  Payments

  Payable By

  Opt-in Party

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Upfont

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  IND filing

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Completion of
  Phase IIa

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Phase III start

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

3

 

Exhibit 2

 

Alnylam
Agreement Summaries

 

[attached]

 

 

Exhibit 2

 

Alnylam Summaries

 

Attachments to
Schedules 2.1(B), 2.4(A) Part 2, 2.4(B) Part 2 and 2.4(C) Part 2

 

Copies of the following agreements, some in redacted form, have been,
or shall be, made available to Licensee as of the Effective Date:

 

Schedule 2.1(B):  Patents and License Agreements Assigned to
Regulus by Alnylam

 

·              License
Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc.
effective August 15, 2005

 

Schedule 2.4(A) Part 2:  Alnylam’s Existing Out-License Agreements

 

·              License
and Collaboration Agreement between Tekmira Pharmaceuticals Corporation
(formerly INEX Pharmaceuticals Corporation) and Alnylam Pharmaceuticals, Inc.,
dated January 8, 2007.

 

·              License
and Collaboration Agreement dated July 8, 2007, by and among Alnylam
Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd and Hoffmann-La Roche
Inc., effective on August 9, 2007

 

·              Research
Collaboration and License Agreement between Novartis Institutes for BioMedical
Research, Inc. and Alnylam Pharmaceuticals, Inc., effective October 12,
2005, as amended by the Addendum Re: Influenza Program effective as of December 13,
2005, Amendment No. 1 to such Addendum effective as of March 14,
2006, and Amendment No. 2 to such Addendum effective as of May 5,
2006

 

Schedule 2.4(B) Part 2:  Alnylam’s Existing In-License Agreements

 

·              License
Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc.
effective May 8, 2006

 

·              Co-Exclusive
License Agreement among The Board of Trustees of the Leland Stanford Junior
University, Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc.
effective August 31, 2005

 

·              License
Agreement among Garching Innovation GmbH, Alnylam Pharmaceuticals, Inc.
and Isis Pharmaceuticals, Inc. effective October 18, 2004

 

Schedule 2.4(C) Part 2:  Alnylam’s Optional In-Licenses

 

·              Amended
and Restated Exclusive Patent License Agreement between Alnylam Pharmaceuticals, Inc.
and Massachusetts Institute of Technology, dated May 9, 2007.

 

1

 

·              The
Sublicense Agreement between Tekmira Pharmaceuticals Corporation (formerly INEX
Pharmaceuticals Corporation) and Alnylam Pharmaceuticals, Inc., dated January 8,
2007.

 

This In-License Summary, Out-License Summary and summary
of assigned contracts and Optional In-Licenses highlights certain obligations
of, or restrictions on, Alnylam and/or its assignees or sublicensees of
Licensed IP under In-License Agreements, Out-License Agreements, assigned
contracts and Optional In-Licenses, including without limitation In-License
Agreement payment obligations, which are applicable to Regulus under the
Agreement, in each case subject to the terms and conditions of such In-License
Agreements.  The summaries set forth in
these summaries are not intended to be comprehensive or inclusive of all
obligations or restrictions which may be applicable to assignees of such
assigned contracts or sublicensees of Licensed IP under such In-License
Agreements, Out-License Agreements or Optional In-Licenses.

 

Unless otherwise expressly stated, capitalized terms not otherwise
defined in these summaries shall have the meanings ascribed to them in the
applicable In-License Agreement, Out-License Agreement, assigned contract or
Optional In-License and references to sections, articles, schedules or exhibits
made in these summaries shall be to sections, articles, schedules or exhibits,
as the case may be, in or to such applicable In-License Agreement, Out-License
Agreement, assigned contract or Optional In-License.

 

2

 

ROCKEFELLER
(Stoffel)

 

License Agreement between The Rockefeller
University and Alnylam Pharmaceuticals, Inc. effective August 15,
2005 (“Stoffel Agreement”)

 

Brief Summary of Technology Covered by License:

 

·              Alnylam
and The Rockefeller University jointly own intellectual property relating to
chemically modified oligonucleotides as therapeutic agents for reduction or
elimination of microRNA expression. 
These oligonucleotides or “antagomirs” target a miRNA by complimentary
base pairing to a miRNA or pre-miRNA nucleotide sequence.  Antagomirs may be chemically modified to
resist nucleolytic degradation, or to enhance delivery into cells (e.g. by
conjugation to cholesterol).

 

Scope of License (Section 1.1)

 

·              Alnylam’s
worldwide, exclusive, sublicensable license is limited to a license to make,
have made, use, have used, import, have imported, sell, offer for sale and have
sold Licensed Products for all uses.

 

·              Rockefeller
reserves the right to use, and to permit other non-commercial entities to
use  the Rockefeller Patent Rights for
educational and non-commercial research purposes.

 

·              Rockefeller
Patent Rights were developed with funding from the U.S. National Institutes of
Health.  The United States government
retains rights in such intellectual property, including, but not limited to,
requirements that products, which result from such intellectual property and
are sold in the United States, must be substantially manufactured in the United
States.

 

Certain Sublicense Terms
(Section 1.5)

 

·                  Alnylam will
prohibit the sublicensee from further sublicensing and require the sublicensee
to comply with the terms and conditions of the Stoffel Agreement.

 

·                  Within thirty (30) days after Alnylam
enters into a sublicense agreement, Alnylam will deliver to Rockefeller a copy
of the sublicense agreement which may be redacted with respect to content that
is not relevant to Alnylam’s obligations under the Stoffel Agreement.

 

·                  Alnylam is primarily liable to
Rockefeller for any act or omission of a sublicensee that would be a breach of
the Stoffel Agreement if performed or omitted by Alnylam, and Alnylam will be
deemed to be in breach of the Stoffel Agreement as a result of such act or
omission.

 

3

 

Diligence (Section 2)

 

·                  By end of the
year 2007, Alnylam (or sublicensees) will select the method of delivery.

 

·                  By the end of
the year 2008, Alnylam (or sublicensees) will optimize the lead compound.

 

·                  By the end of
the year 2010, Alnylam (or sublicensees) will conclude preclinical development

 

Payment Obligations (Sections 3 and 4)

 

·              The
following milestones are payable:

 

	
  ·         First
  issuance in the U.S. of a patent under the Rockefeller Patent Rights covering
  a Licensed Product

  	
   

  	
  · $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·         First
  dosing of a subject in a Phase II clinical trial for the first Licensed
  Product

  	
   

  	
  · $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·         Approval
  by the U.S. FDA of a New Drug Application for the first Licensed Product

  	
   

  	
  · $

  	
  [***]

  	
   

  

 

·              A
[***]% royalty is payable to Rockefeller on Net Sales of Licensed Products by
Alnylam, its Affiliates and its sublicensees (no offsets).

 

·              If
Alnylam grants a sublicense under the Stoffel Agreement and receives payment in
connection with such grant in the form of upfront fees, maintenance fees and
milestone payments (net of any sums due to Rockefeller under this Agreement for
the same milestone event), Alnylam will pay Rockefeller [***]% of such
payments, excluding payments for costs incurred by Alnylam, Payments to Alnylam
in the form of royalties paid by a sublicensee, equity investments in Alnylam
by a sublicensee, loan proceeds paid to Alnylam by a sublicensee in an arms
length transaction, full recourse debt financing and research and development
funding paid to Alnylam in a bona fide transaction are also excluded from the
sublicense income calculation.

 

·              Payments
are due to Rockefeller within 60 days after the end of the quarter in which the
royalties or fees accrue.

 

Books and Records (Sections 4.3 and 4.4)

 

·              Sub-licensees
are required to keep complete and accurate books and records to verify Net
Sales, and all of the royalties, fees, and other payments payable under the

 

4

 

Stoffel Agreement.  The records
for each quarter will be maintained for at least three (3) years after
submission of the applicable report required under the Stoffel Agreement.

 

·              Upon
reasonable prior written notice to Alnylam, sublicensees will provide an
independent, reputable CPA appointed by Rockefeller and reasonably acceptable
to Alnylam with access to all of the books and records required by the Stoffel
Agreement to conduct a review or audit of Net Sales, and all of the royalties,
fees, and other payments payable under the Stoffel Agreement.  If the audit determines that Alnylam has
underpaid any royalty payment by 5% or more, Alnylam will also promptly pay the
costs of the review or audit.

 

Non-Use of Name (Section 5.4)

 

·              Sublicensees
may not use the name, logo, seal, trademark, or service mark (including any
adaptation of them) of Rockefeller or any Rockefeller school, organization,
employee, student or representative, without the prior written consent of
Rockefeller, except for purposes of compliance with securities regulations.

 

Termination (Section 6.2)

 

·              Alnylam
may terminate for convenience

 

·              Sublicenses
will survive for 90 days following termination and Rockefeller agrees to enter
into license agreement(s) directly with sublicensees upon the same terms
as the terms of the Stoffel Agreement

 

·              Alnylam
must promptly inventory all finished product and works-in-product of Licensed
Products of its sublicensees.  Inventory
may be sold off unless Rockefeller terminates for a breach by Alnylam or its
sublicensees or Alnylam’s bankruptcy.

 

Prosecution and Enforcement (Section 7)

 

·              Alnylam
will prepare the Rockefeller Patent Rights, but Rockefeller will prosecute and
maintain the Rockefeller Patent Rights with Alnylam’s input.  Alnylam has a right to manage the prosecution
and enforcement.  Alnylam will reimburse
Rockefeller’s prosecution and maintenance costs.

 

·              Alnylam
must inform Rockefeller promptly, but no later than 30 days, after learning of
infringement of the Rockefeller Patent Rights. 
Alnylam and Rockefeller will consult each other concerning response to
infringement.  Alnylam may enforce the
Rockefeller Patent Rights; recoveries, after the parties’ expenses are
reimbursed, are treated as Net Sales subject to royalties.  Rockefeller has step-in enforcement rights.

 

Definitions

 

“Licensed Products” means products that are made, made for,
used, used for, imported, imported for, sold, sold for or offered for sale by
Alnylam or its Affiliates or

 

5

 

sublicensees and that either (i) in the absence of this Agreement,
would infringe at least one Valid Claim of the Rockefeller Patent Rights, or (ii) use
a process or machine covered by a Valid Claim of Rockefeller Patent Rights.

 

“Net Sales”
means with respect to each Licensed Product the gross amount invoiced by
Alnylam or its Affiliates or sublicensees on sales or other dispositions of
such product to third parties less Qualifying Costs directly attributable to a
sale and actually taken and/or identified on the invoice and borne by Company,
or its Affiliates or sublicensees.  “Qualifying
Costs” means:  (a) customary
discounts in the trade for quantity purchased, prompt payment or wholesalers
and distributors; (b) credits, allowances or refunds for claims or returns
or retroactive price reductions (including government healthcare programs and
similar types of rebates) that do not exceed the original invoice amount; (c) prepaid
outbound transportation expenses and transportation insurance premiums; and (d) sales,
transfer, excise and use taxes and other fees imposed by a governmental
agency.  Sales for clinical study
purposes or compassionate, named patient or similar use shall not constitute
Net Sales

 

“Rockefeller Patent Rights” means Rockefeller’s interests in a
specified patent application ([***]) and related patent family relating to
reduction or elimination of miRNA expression.

 

6

 

TEKMIRA

 

License and Collaboration Agreement between
Tekmira Pharmaceuticals Corporation (formerly INEX Pharmaceuticals Corporation)
(“Tekmira”) and Alnylam, dated January 8, 2007 (“Effective Date”)
(“Tekmira Agreement”)

 

Brief Summary of Technology Covered by License:

 

·                  Tekmira (f.k.a.
Inex Pharmaceuticals Corp.) granted Alnylam a license relating to liposomal
delivery of siRNA and miRNA products. 
Alnylam granted Tekmira (i) an option to obtain exclusive,
royalty-bearing, worldwide  licenses
under its fundamental siRNA intellectual property for 3 genetic targets and (ii) an
exclusive, royalty bearing license to certain intellectual property relating to
immunostimulatory RNA oligonucleotide compositions (“IOC Technology”).  Alnylam retained certain rights to
participate with Tekmira in commercialization of IOC Technology.  In addition, Alnylam provided funding for a
2-year formulation development collaboration with Tekmira, a multi-year loan
for capital expenditure purposes, and Tekmira will provide exclusive manufacturing
services for Alnylam’s development programs up until completion of Phase 2
clinical studies.

 

Limitations on Scope of License (Sections 6.1 and 6.4)

 

·              The
license granted to Alnylam is limited to an exclusive, royalty-bearing,
worldwide license under Inex Technology, Inex Collaboration IP and Tekmira’s
interest in Joint Collaboration IP to Develop, Manufacture and Commercialize
Alnylam Royalty Products in the Alnylam Field, subject to (a) Tekmira’s
non-exclusive license under Alnylam’s rights in Inex Technology and
Collaboration IP for purposes of performing Tekmira’s obligations under the
Collaboration with respect to Alnylam Royalty Products, and the Manufacturing
Activities, and (b) Tekmira’s exclusive, worldwide license under Alnylam’s
rights in Inex Technology and Collaboration IP to Develop, Manufacture and
Commercialize Inex Development Products (as defined below) in the Alnylam
Field.

 

·              Any
license granted by Alnylam to a Third Party under Alnylam RNAi Technology and
Alnylam Collaboration IP would be subject to a non-exclusive, worldwide license
granted to Tekmira for purposes of performing Tekmira’s obligations under the
Collaboration with respect to Alnylam Royalty Products, and the Manufacturing
Activities.

 

·              Any
license granted by Alnylam to a Third Party under Alnylam Core Patent Rights,
Alnylam Lipidoid Patent Rights, Alnylam Collaboration IP and Alnylam’s interest
in Joint Collaboration IP would be subject to an exclusive, worldwide license
granted to Tekmira to Develop, Manufacture and Commercialize RNAi Products
directed to up to three (3) Targets (each such Target, an “Inex
Development Target,” and such RNAi Products, the “Inex Development
Products”) which Tekmira may select (as described below) in the Alnylam
Field.  During the Selection Term,
Tekmira has the right to nominate a Target, subject to (a) Alnylam’s
contractual obligation to a Third Party that would be breached by the inclusion
of such Target as an Inex Development Target under

 

7

 

the Tekmira Agreement, and (b) Alnylam’s determination after good
faith review of its ongoing or planned scientific and/or business activities
that such Target is a Target of interest to Alnylam.  If neither of these criteria apply, the
Target is deemed to have been successfully nominated as an “Inex Development
Target” and Alnylam is obligated to use Commercially Reasonable Efforts
consistent with the terms of the Novartis Agreement to obtain Novartis’ consent
to such selection.  If an Inex
Development Target is not available for license, then Tekmira may nominate an
additional Target, until an aggregate of 3 Inex Development Targets have been
identified and approved for selection. 
If all 3 Inex Development Targets have not been approved for selection
by the expiration of the Selection Term, the Selection Term will be extended
until the earlier of (i) the date on which an aggregate of 3 such Inex
Development Targets have been identified and approved for selection, and (ii) January 8,
2014.

 

·              Any
license granted by Alnylam to a Third Party under Alnylam IOC Technology, Alnylam
Collaboration IP and Alnylam’s interest in Joint Collaboration IP would be
subject to an exclusive license granted to Develop, Manufacture and
Commercialize IOC Products in the Inex IOC Field in and for the United States.

 

Restrictions on Sublicensing by Alnylam (Sections 6.2 and 6.4)

 

·              Alnylam
may grant sublicenses to Third Parties to Develop, Manufacture and
Commercialize Alnylam Royalty Products; provided, that (i) with
respect to any sublicense of Alnylam’s rights under Section 6.1.1(a) (i.e.,
the exclusive license under Inex Technology to develop and commercialize
Alnylam Royalty Products in the Alnylam Field) of the Tekmira Agreement in
respect of any Alnylam Royalty Product for which Tekmira has not initiated
Manufacturing of batches of finished dosage form for GLP toxicology studies,
Alnylam is required to use Commercially Reasonable Efforts to facilitate a
business discussion between Tekmira and Alnylam’s Sublicensee (other than
Tekmira or its Affiliates) with respect to the provision of manufacturing
services by Tekmira to such Sublicensee; and (ii) with respect to any
sublicense of Alnylam’s rights under Section 6.1.1(a) of the Tekmira
Agreement in respect of any Alnylam Royalty Product for which Tekmira has
initiated Manufacturing of batches of finished dosage form for GLP toxicology
studies, Alnylam’s Sublicensee (other than Tekmira or its Affiliates) will be
required to obtain its requirements of the bulk finished dosage form of such
Alnylam Royalty Product from Tekmira on the terms set forth in Article 5
of the Tekmira Agreement.  However,
Tekmira agrees to negotiate in good faith with Alnylam and/or Alnylam’s
Sublicensee either an alternate or modified supply arrangement or the release
of such Sublicensee from such exclusive supply obligation in return for
reasonable compensation to Tekmira.

 

·              Each
license and/or sublicense granted by Alnylam under the Tekmira Agreement to
develop, manufacture and commercialize Alnylam Royalty Products must be subject
and subordinate to the terms and conditions of the Tekmira Agreement and must
contain terms and conditions consistent with those in the Tekmira Agreement,
including, without limitation, the requirements of Section 6.4 of the
Tekmira Agreement (see below). 
Commercializing Sublicensees are also required to: (i) submit
applicable sales or other reports consistent with those required under the
Tekmira Agreement; (ii) comply with an

 

8

 

audit requirement similar to the requirement set forth in Section 7.6
of the Tekmira Agreement; and (iii) comply with the confidentiality and
non-use provisions of Article 8 of the Tekmira Agreement with respect to
both Parties’ Confidential Information. 
If Alnylam becomes aware of a material breach of any sublicense by a
Third Party Sublicensee, Alnylam is required to promptly notify Tekmira of the
particulars of same and take all Commercially Reasonable Efforts to enforce the
terms of such sublicense.

 

·              Section 6.4
of the Tekmira Agreement states that all licenses and other rights granted to
Alnylam with respect to Inex Technology under Article 6 of the Tekmira
Agreement are subject to (i) the rights granted to Tekmira, and to Tekmira’s
ability to grant rights to Alnylam under the Inex In-Licenses, and (ii) the
provisions of the UBC Sublicense Documents governing or relating to the rights
sublicensed to Alnylam.

 

Diligence and Annual Reports (Section 6.7)

 

·              Alnylam
is required to use Commercially Reasonable Efforts to Develop and Commercialize
an Alnylam Royalty Product.

 

·              Alnylam
is required to deliver to Tekmira an annual report, due no later than December 31
of each Contract Year during the Agreement Term, which summarizes the major
activities undertaken by Alnylam during the preceding 12 months to Develop and
Commercialize its Royalty Products in the applicable field.  The report will include an outline of the
status of any such Royalty Products in clinical trials and the existence of any
sublicenses with respect to such Royalty Products which have not been previously
disclosed.

 

Financial Obligations (Sections 7.2-7.4 and 6.1.3)

 

Milestone Payments:

 

·              (a) Alnylam
will make milestone payments to Tekmira as set forth below on a
Target-by-Target basis, no later than 30 calendar days after the earliest date
on which the corresponding milestone event has been achieved with respect to
the first Alnylam Royalty Product directed to a Target (other than a Biodefense
Target) to achieve such milestone event:

 

	
  Milestone Event

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initiation of first Phase I Study

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Initiation of first Phase II Study

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Acceptance by a Regulatory Authority in a
  Major Market of the first NDA for filing

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First NDA Regulatory Approval in a Major
  Market

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Aggregate worldwide cumulative Net Sales
  equals or exceeds $[***]

  	
   

  	
  $

  	
  [***]

  	
   

  

 

9

 

·              (b) If,
however, the Target is a Biodefense Target, in lieu of the milestone payments
set forth above, the following milestone payments will be payable, on a
Target-by-Target basis, no later than 30 calendar days after the later of (i) the
earliest date on which the corresponding milestone event has been achieved with
respect to the first Alnylam Royalty Product directed to a Biodefense Target to
achieve such milestone event and (ii) receipt by Alnylam of all funding
from a Funding Authority that Alnylam is eligible to receive for the
achievement of such milestone event:

 

	
  Milestone Event

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Approval of the first IND filed by Alnylam

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Positive safety data from the first Phase I
  Study to be completed

  	
   

  	
  $

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  First Commercial Sale

  	
   

  	
  $

  	
  [***]

  	
   

  

 

·              Notwithstanding
the foregoing: (i) if the first Alnylam Royalty Product directed to a
Target to achieve a milestone event as set forth in clause (a) or (b) above
is comprised of a formulation Covered by or employing any Third Party Liposome
Patent Rights, then only [***]% of the corresponding milestone payment will be
payable to Tekmira; and (ii) notwithstanding that a Target is a Biodefense
Target, if Alnylam or its Related Parties Commercialize or sell an Alnylam
Royalty Product directed to such Target other than to a Funding Authority, the
milestone payment amounts set forth in clause (a) will then apply in lieu
of the amounts set forth in clause (b).

 

·              Each
milestone payment by Alnylam to Tekmira hereunder will be payable only once for
each Target, regardless of the number of times the milestone is achieved with
respect to one or more Alnylam Royalty Products directed to such Target.

 

·              On
and after [***], Alnylam will be entitled to reduce each milestone payment
payable by Alnylam under the Tekmira Agreement (after application of
appropriate deductions by [***]% of such milestone payment, until such time as
the aggregate amount of all such reductions hereunder equals $[***].  For clarity, Alnylam may offset (i) its
obligation to pay the resulting milestone payment against (ii) certain
obligations of Tekmira owed to Alnylam pursuant to the Loan Agreement, as
provided in the Loan Agreement.

 

Royalty Payments:

 

·              Royalties
are payable to Tekmira on Net Sales of Alnylam Royalty Products worldwide as
follows:

 

10

 

	
  Aggregate Calendar Year Net
  Sales of the

  Alnylam Royalty Product

  	
   

  	
  Royalty

  (as a percentage of Net Sales)

  	
   

  
	
  on the first
  $[***] - $[***]

  	
   

  	
  [***]

  	
  %

  
	
  On the
  subsequent $[***] - $[***]

  	
   

  	
  [***]

  	
  %

  
	
  Greater than
  $[***]

  	
   

  	
  [***]

  	
  %

  

 

·              Notwithstanding
the foregoing, if an Alnylam Royalty Product is comprised of a formulation
Covered by or employing any Third Party Liposome Patent Rights then royalties
on Net Sales of Alnylam Royalty Products will be calculated as follows:

 

	
  Aggregate Calendar Year Net
  Sales of the

  Alnylam Royalty Product

  	
   

  	
  Royalty

  (as a percentage of Net Sales)

  	
   

  
	
  on the first
  $[***] - $[***]

  	
   

  	
  [***]

  	
  %

  
	
  On the
  subsequent $[***] - $[***]

  	
   

  	
  [***]

  	
  %

  
	
  Greater than
  $[***]

  	
   

  	
  [***]

  	
  %

  

 

·              If
the Development, Manufacture or Commercialization of an Alnylam Royalty Product
in accordance with the Tekmira Agreement infringes Necessary Third Party IP,
the applicable royalties in each country payable to Tekmira will be reduced by
[***]% of the amount paid by Alnylam of any royalties under all licenses of
such Necessary Third Party IP that are reasonably allocable to the Development,
Manufacture and Commercialization of the Alnylam Royalty Product in or for such
country in the Alnylam Field; provided, however, that, on a
country-by-country basis, in no event will the royalties payable to Tekmira
with respect to Net Sales in a country for any Calendar Quarter be reduced
below the greater of: (i) [***]% of the royalties otherwise payable to
Tekmira for such Calendar Quarter, and (ii) the amount of any royalties
payable under the In-licenses of Alnylam that are reasonably allocable to the
Commercialization or Manufacture of the Alnylam Royalty Product in or for such
country in the Field (where the royalties are calculated by adding one
percentage point to the applicable royalty rate(s) in the applicable
In-License(s)).

 

·              If
Alnylam is required to make any payments to UBC in respect of the Inex
Technology or Inex Collaboration IP licensed to Alnylam pursuant to the UBC
Sublicense Agreement, then Alnylam will be entitled to offset any amounts
payable by Alnylam to Tekmira under the Tekmira Agreement by the amount of
Alnylam’s payments to UBC until such amounts have been credited in full.

 

Royalty Reports; Payment and Audit Rights (Sections 7.3.4 and 7.6)

 

·              Commencing
upon the First Commercial Sale of an Alnylam Royalty Product, Alnylam is
required to provide to Tekmira a quarterly written report showing the quantity
of Alnylam Royalty Products sold in each country (as measured in saleable units
of product), the gross sales of such Alnylam Royalty Product in each country, total
deductions for such Alnylam Royalty Product for each country included in the
calculation of Net Sales, the Net Sales in each country of such Alnylam Royalty
Product subject to royalty payments and the royalties payable with respect to
such Alnylam Royalty 

 

11

 

Product.  Quarterly reports are
due no later than the 25th day following the close of each Calendar
Quarter.  Royalties shown to have accrued
by each royalty report are due and payable on the date such royalty report is
due.

 

·              Complete
and accurate records must be kept in sufficient detail to enable the royalties
and other payments payable under the Tekmira Agreement to be determined.

 

·              Upon
the written request of Tekmira and not more than once in each Calendar Year, a
Sublicensee must permit an independent certified public accounting firm of
nationally recognized standing selected by Tekmira and reasonably acceptable to
such Sublicensee to have access during normal business hours to such of the
records of Sublicensee as may be reasonably necessary to verify the accuracy of
the royalty and other financial reports required to be delivered under the
Tekmira Agreement for any Calendar Year ending not more than [***] months prior
to the date of such request, for the sole purpose of verifying the basis and
accuracy of payments made under Article 7 of the Tekmira Agreement.

 

Prosecution and Enforcement (Sections 10.2,
10.3 and 10.4)

 

·              Alnylam
is solely responsible, at Alnylam’s discretion, for filing, prosecuting,
conducting ex parte and inter partes proceedings (including the
defense of any interference or opposition proceedings) and maintaining all
Patent Rights comprising Alnylam RNAi Technology, Alnylam IOC Technology or
Alnylam Collaboration IP, in Alnylam’s name.

 

·              Tekmira,
at Tekmira’s discretion, for filing, prosecuting, conducting ex parte and inter partes proceedings, (including the defense of any
interference or opposition proceedings), and maintaining all Patent Rights
comprising Inex Technology or Inex IOC Technology, in Tekmira’s name, or Inex
Collaboration IP, in UBC’s name.

 

·              Subject
to Tekmira’s continuing right to the prior review of, comment on, revision to
and approval of material documents, which will not be unreasonably delayed or
withheld, Alnylam is solely responsible, at Alnylam’s discretion, for filing,
conducting ex parte and inter partes prosecution, and maintaining
(including the defense of any interference or opposition proceedings) all
Patent Rights comprising Joint Collaboration IP, in the names of both Tekmira
and Alnylam.

 

·              If
Alnylam elects not to seek or continue to seek or maintain patent protection on
any Alnylam IOC Technology or Alnylam Collaboration IP which is subject to
Tekmira’s licensed rights under the Tekmira Agreement, or Joint Collaboration
IP, then Tekmira will have step-in rights. 
If Alnylam declines to file, prosecute and/or maintain Valid Claims at
Tekmira’s request in Joint Collaboration IP, then Tekmira will have step-in
rights.

 

·              If
Tekmira elects not to seek or continue to seek or maintain patent protection on
any Inex Technology or Inex Collaboration IP, which is subject to Alnylam’s
licensed rights under the Tekmira Agreement, then subject to the provisions of
the UBC 

 

12

 

Sublicense Documents, Alnylam will have rights (but not the
obligation), at its expense, to prosecute and maintain in any country patent
protection on such Inex Technology in the name of Tekmira or Inex Collaboration
IP in the name of UBC.

 

·              Each
Party agrees: (a) to make its employees, agents and consultants reasonably
available to the other Party (or to the other Party’s authorized attorneys,
agents or representatives), to the extent reasonably necessary to enable such
Party to undertake patent prosecution; (b) to provide the other Party with
copies of all material correspondence pertaining to prosecution with the patent
offices; (c) to cooperate, if necessary and appropriate, with the other
Party in gaining patent term extensions wherever applicable to Patent Rights;
and (d) to endeavor in good faith to coordinate its efforts with the other
Party to minimize or avoid interference with the prosecution and maintenance of
the other Party’s patent applications.

 

·              The
patent filing, prosecution and maintenance expenses incurred after the
Effective Date with respect to Patent Rights comprised of Alnylam Core Patent
Rights, Alnylam IOC Technology, Alnylam Lipidoid Patent Rights, Inex
Technology, Inex IOC Technology and Collaboration IP will be borne by each
Party having the right to file, prosecute and maintain such Patent Rights under
the Tekmira Agreement.

 

·              Subject
to the provisions of any Inex In-License and the provisions of the UBC
Sublicense Documents, in respect of the Alnylam Royalty Products in the Alnylam
Field, Alnylam will have the sole and exclusive right to initiate an
infringement or other appropriate suit anywhere in the world against any Third
Party who at any time has infringed, or is suspected of infringing, any Patent
Rights, or of using without proper authorization, any Know-How, comprising any
Inex Technology or Collaboration IP that is licensed to Alnylam under the
Tekmira Agreement.

 

·              Alnylam
will have the sole and exclusive right to initiate an infringement or other
appropriate suit anywhere in the world against any Third Party who at any time
has infringed, or is suspected of infringing, any Patent Rights, or of using
without proper authorization any Know-How, comprising Alnylam RNAi Technology,
Alnylam IOC Technology or Alnylam Collaboration IP; provided, that if Alnylam
fails to initiate a suit or take other appropriate action with respect to
Alnylam IOC Technology in the United States with respect to an IOC Product that
it has the initial right to initiate or take pursuant thereto within 90 days
after becoming aware of the basis for such suit or action, then Tekmira may, in
its discretion, provide Alnylam with written notice of Tekmira’s intent to
initiate a suit or take other appropriate action with respect to such IOC
Product.  If Alnylam fails to initiate a
suit or take such other appropriate action within 30 days after receipt of such
notice from Tekmira, then Tekmira will have the right to initiate a suit or
take other appropriate action that it believes is reasonably required to
protect its licensed interests under the Alnylam IOC Technology and Alnylam
Collaboration IP with respect to such IOC Product.

 

·              Alnylam
may defend any Infringement Claim brought against either Party or its
Affiliates or Sublicensees arising out of the Development, Manufacture or
Commercialization of any Alnylam Royalty Product in the Alnylam Field.  Tekmira may 

 

13

 

defend any Infringement Claim brought against either Party or its
Affiliates or Sublicensees arising out of the Development, Manufacture or
Commercialization of any Inex Royalty Product and in (a) the Alnylam
Field, in the case of Inex Development Products or (b) the Inex IOC Field,
in the case of Inex IOC Products.

 

·              As
the responsible party, Alnylam must keep Tekmira informed, and from time to
time consult with Tekmira regarding the status of any such claims and provide
Tekmira with copies of all documents filed in, and all written communications
relating to, any suit brought in connection with such claims.  Tekmira also has the right to participate and
to be presented in any such claim or related suit.  If Alnylam fails to exercise its right to
assume such defense within 30 days following written notice of such Infringement
Claim, Tekmira has the sole and exclusive right to control the defense of such
Infringement Claim.

 

Termination for Patent Challenge (Section 11.5)

 

·              If
any Sublicensee asserts in any court or other governmental agency of competent
jurisdiction that an Inex Patent Right or a Patent Right Controlled by Tekmira
by virtue of the Inex-UBC License Agreement and sublicensed to Alnylam pursuant
to the UBC Sublicense (in either case, an “Inex Patent”) is invalid,
unenforceable, or that no issued Valid Claim embodied in such Inex Patent
excludes a Third Party from making, having made, using, selling, offering for
sale, importing or having imported an Alnylam Royalty Product in such
jurisdiction, then Tekmira may, upon written notice to Alnylam, terminate all
licenses granted to Alnylam for such Alnylam Royalty Product(s) covered by
such Inex Patent that is under challenge in the applicable jurisdiction;
provided, however, that Tekmira will not terminate such license if within 30
days of Alnylam’s receipt of Tekmira’s notification under the Tekmira Agreement
(a) it is confirmed by written notice to Tekmira that Sublicensee no
longer intends to challenge the validity or enforceability of such Inex Patent;
or (b) documentation is provided to Tekmira to confirm Sublicensee’s
withdrawal of its filing, submission, or other process commenced in any court
or other governmental agency of competent jurisdiction to challenge the
validity or enforceability of any such Inex Patent.

 

Definitions

 

“Alnylam Collaboration IP” means, generally (a) any
improvement, invention, or Know-How first discovered or developed by employees
of Alnylam or its Affiliates or other persons not employed by Tekmira acting on
behalf of Alnylam, in the performance of the Collaboration, the Manufacturing
Activities, and/or Alnylam’s obligations under the Original Agreements, and (b) any
Patent Rights which claim, cover or relate to such Know-How.  Alnylam Collaboration IP excludes Alnylam’s
interest in Joint Collaboration IP.

 

“Alnylam Core Patent Rights” means those Patent Rights set forth
in Schedule 1.3 of the Tekmira Agreement, including various Tuschl I and Tuschl
II patents and patent applications, as such Schedule is supplemented from time
to time pursuant to Section 6.5.1 of the Tekmira Agreement.

 

14

 

“Alnylam Field” means the treatment, prophylaxis and diagnosis
of diseases in humans using an RNAi Product or miRNA Product.

 

“Alnylam IOC Technology” mean, generally (a) Know-How
Controlled by Alnylam as of the Effective Date that is useful or necessary to
Develop, Commercialize and/or Manufacture an IOC Product in the Inex IOC Field
(excluding any Alnylam Collaboration IP and Alnylam’s interest in Joint
Collaboration IP), and (b) those Patent Rights set forth in Schedule 1.5
of the Tekmira Agreement, including USSN [***].

 

“Alnylam Lipidoid Patent Rights” means those Patent Rights
Controlled by Alnylam under a license from the Massachusetts Institute of
Technology pursuant to the MIT License Agreement and that are set forth in
Schedule 1.6 of the Tekmira Agreement, including USSN [***].

 

“Alnylam RNAi Know-How” means, generally, Know-How Controlled by
Alnylam that Alnylam determines in its reasonable judgment to be useful or
necessary to Develop, Commercialize and/or Manufacture an Alnylam Royalty
Product in the Alnylam Field (excluding any Alnylam Collaboration IP and
Alnylam’s interest in Joint Collaboration IP).

 

“Alnylam RNAi Patent Rights” means, generally, Patent Rights
Controlled by Alnylam that claim (a) Alnylam RNAi Know-How, or (b) the
identification, characterization, optimization, construction, expression,
formulation, use or production of an Alnylam Royalty Product, as the case may
be, and which Alnylam determines in its reasonable judgment to be useful or
necessary to Develop, Commercialize and/or Manufacture an Alnylam Royalty
Product in the Alnylam Field (including, without limitation, the Alnylam Core
Patent Rights and the Alnylam Lipidoid Patent Rights, but specifically
excluding Alnylam IOC Technology and any Patent Rights included in Alnylam
Collaboration IP or Alnylam’s interest in Joint Collaboration IP).

 

“Alnylam RNAi Technology” means, collectively, Alnylam RNAi
Know-How and  Alnylam RNAi Patent Rights.

 

“Alnylam Royalty Product” means any RNAi Product or a miRNA
Product that, but for the licenses granted hereunder, would be Covered by one
or more Valid Claims of the Inex Patent Rights.

 

“Biodefense Target” means (a) a Target within the genome of
one or more Category A, B and C pathogens, as defined by the National Institute
of Allergy and Infectious Diseases, including without limitation, pathogens
listed on Schedule 1.12 of the Tekmira Agreement, but specifically excluding
influenza virus, or (b) an endogenous cellular Target against which
Alnylam Develops and/or Commercializes an Alnylam Royalty Product for
commercial supply to one or more Funding Authorities.

 

“Collaboration IP” means, collectively, Alnylam Collaboration
IP, Inex Collaboration IP and Joint Collaboration IP.

 

15

 

“Existing Inex In-Licenses” means the Third Party agreements
listed on Schedule 1.30 to the Tekmira Agreement.

 

“IOC” or “Immunostimulatory Oligonucleotide Composition”
means a single-stranded or double-stranded ribonucleic acid (“RNA”)
composition, or derivative thereof, that has activity solely through an
immunostimulatory mechanism and has no RNAi activity against a human gene
transcript or viral genomic sequence.

 

“IOC Product” means a product containing, comprised of
or based on IOCs or IOC derivatives.

 

“Inex Collaboration IP” means, generally (a) any
improvement, invention or Know-How first discovered or developed by employees
of Tekmira or its Affiliates or other persons not employed by Alnylam acting on
behalf of Tekmira, in the performance of the Collaboration, the Manufacturing
Activities, and/or Tekmira’s obligations under the Original Agreements, and (b) any
Patent Rights which claim, cover or relate to such Know-How.  Inex Collaboration IP excludes Tekmira’s
interest in Joint Collaboration IP.

 

“Inex In-License” means an agreement between Tekmira or its
Affiliates, and a Third Party, pursuant to which Tekmira or any of its
Affiliates Control(s) Inex Technology relating to the Alnylam Field under
a license or sublicense from such Third Party, including without limitation,
the Existing Inex In-Licenses.

 

“Inex IOC Field” means the treatment, prophylaxis and diagnosis
of diseases in humans using an IOC Product.

 

“Inex IOC Technology” means, generally (a) Know-How
Controlled by Tekmira or its Affiliates with respect to IOC Products and/or
IOCs, and (b) Patent Rights Controlled by Tekmira and its Affiliates that
claim such Know-How or the identification, characterization, optimization,
construction, expression, formulation, delivery, use or production of an IOC
Product and/or IOC, and are useful or necessary to Develop, Commercialize
and/or Manufacture IOC Products in the Field.

 

“Inex Know-How” means, generally, Know-How Controlled by Tekmira
or its Affiliates with respect to an RNAi Product or miRNA Product (excluding
any Inex Collaboration IP, Tekmira’s interest in Joint Collaboration IP and any
such Know-How sublicensed to Alnylam pursuant to the UBC Sublicense).

 

“Inex Patent Rights” means, generally, Patent Rights Controlled
by Tekmira or its Affiliates that claim (a) Inex Know-How or (b) the
identification, characterization, optimization, construction, expression,
formulation, delivery, use or production of an RNAi Product or miRNA Product,
and are useful or necessary to Develop, Commercialize and/or Manufacture RNAi
Products or miRNA Products in the Alnylam Field (excluding any Patent Rights
included in Inex Collaboration IP, Tekmira’s interest in Joint Collaboration IP
and any such Patent Rights licensed to Alnylam pursuant to the UBC Sublicense).

 

16

 

“Inex Royalty Product” means any (a) Inex Development Product
that, but for the licenses granted hereunder, would be Covered by one or more
Valid Claims under the Alnylam Core Patent Rights or the Alnylam Lipidoid
Patent Rights, or (b) IOC Product that but for the licenses granted
hereunder, would be Covered by one or more Valid Claims under the Alnylam IOC
Technology.

 

“Inex Technology” means, collectively, Inex Know-How and Inex
Patent Rights.

 

“Inex-UBC License Agreement” means that certain license
agreement between Tekmira and the University of British Columbia (“UBC”)
dated effective July 1, 1998, as amended by Amendment Agreement between
Tekmira and UBC dated effective July 11, 2006, and Second Amendment
Agreement dated effective the Effective Date.

 

“Joint Collaboration IP” means, generally (a) any improvement,
discovery or Know-How first discovered or developed jointly by the Parties or
their Affiliates or others acting on behalf of Tekmira and Alnylam in the
performance of the Collaboration, the Manufacturing Activities and/or the
obligations of the Parties under the Original Agreements, and (b) any
Patent Rights which claim, cover or relate to such Know-How.

 

“Manufacturing Activities” means those activities performed by a
party relating to the manufacture and supply of Alnylam Royalty Products.

 

“miRNA Product” means a product containing, comprised of or
based on native or chemically modified RNA oligomers designed to either
modulate an miRNA and/or provide the function of an miRNA.

 

“Necessary Third Party IP” means, on a country-by-country basis,
Know-How or Patent Rights in such country owned or controlled by a Third Party
that cover a Royalty Product.

 

“Pre-Existing Alliance Agreements” are listed on Schedule 1.79
to the Tekmira Agreement.

 

“RNAi Product” means a product containing, comprised of or based
on siRNAs or siRNA derivatives or other moieties effective in gene function
modulation and designed to modulate the function of particular genes or gene
products by causing degradation of a Target mRNA to which such siRNAs or siRNA
derivatives are complementary (“RNAi Interference Mechanism”), and that
is not an miRNA Product.

 

“Royalty Product” means, either (a) an Alnylam Royalty
Product, or (b) an Inex Royalty Product.

 

“Selection Term” means the period commencing on the Effective
Date and continuing for five (5) Contract Years thereafter, unless such
period is extended pursuant to Section 2.2 of the Tekmira Agreement.

 

“Small Interfering RNA” or “siRNA” means a
double-stranded ribonucleic acid (RNA) composition designed to act primarily
through an RNA Interference Mechanism that 

 

17

 

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.

 

“Target” means: (a) a polypeptide or entity comprising a
combination of at least one polypeptide and other macromolecules, that is a
site or potential site of therapeutic intervention by a therapeutic agent; or a
nucleic acid which is required for expression of such polypeptide; (b) variants
of a polypeptide, cellular entity or nucleic acid described in clause (a); (c) a
defined non-peptide entity, including a microorganism, virus, bacterium or
single cell parasite; provided that the entire genome of a virus will be
regarded as a single Target; or (d) a naturally occurring interfering RNA
or miRNA or precursor thereof.

 

“Third Party Liposome Patent Rights” means, with respect to an
Alnylam Royalty Product, (a) the Alnylam Lipidoid Patent Rights and/or (b) other
technology comprising a lipid component or liposomal formulation useful or
necessary for the Development, Manufacture or Commercialization of such Alnylam
Royalty Product and Controlled by Alnylam under a license from a Third Party,
and in each case with respect to which Intellectual Property Rights Alnylam has
granted to Tekmira a non-exclusive, royalty- and milestone fee-bearing (on a
pass-through basis) license to Develop, Manufacture and Commercialize Inex
Royalty Products in the Alnylam Field in the case of Inex Development Product,
and in the Inex IOC Field in the case of IOC Products.

 

“UBC Sublicense Documents” means the collective reference to (a) the
Sublicense Agreement dated as of the Effective Date between the Parties (the “UBC
Sublicense”), (b) the Consent and Agreement dated as of the Effective
Date among the Parties and UBC, and (c) the Assignment dated the Effective
Date between Tekmira and UBC.

 

18

 

ROCHE

 

License and Collaboration Agreement dated July 8,
2007, by and among Alnylam Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd
(“Roche Basel”) and Hoffmann-La Roche Inc. (together with Roche Basel, “Roche”)
(“Roche Agreement”), effective on August 9, 2007 (“Effective
Date”)

 

Brief Description of Technology Covered by License

 

·              Alnylam
granted Roche and its Affiliates a non-exclusive, worldwide license under
Alnylam’s rights to Architecture and Chemistry IP and Delivery IP as it existed
at the effective time of the Agreement, to develop and commercialize RNAi
Products for treatment/prophylaxis of indications in at least the fields of
cancer, certain liver diseases, metabolic disease and pulmonary disease.  Roche has the option to enter additional
therapeutic fields and, prior to granting exclusive licenses in the other
Fields, Alnylam must give Roche a right of first negotiation.

 

Limitations on Scope of License

 

Any license granted by Alnylam to a Third Party under Architecture and
Chemistry IP or Delivery IP would be subject to the following limitations:

 

·              License Grant to Roche.  Roche and its Affiliates have a
non-exclusive, worldwide license to develop and commercialize RNAi Products for
the treatment/prophylaxis of indications in at least the primary fields of
cancer, certain liver diseases, metabolic disease and pulmonary disease) and
any additional fields (which are listed in a schedule to the Roche Agreement)
to which Roche acquires non-exclusive rights (collectively, “Field”).

 

·              Designated Targets.  If Roche selects a Target which is not a
Blocked Target and such Target is cleared through the Novartis ROFO mechanism,
Roche has non-exclusive rights within the scope of its basic license grant to
develop and commercialize RNAi Products directed to such “Designated Target” in
the Field.

 

·              Alnylam/Roche Discovery Collaboration.  Roche and Alnylam have agreed to collaborate
on a specified number of targets during the term of the agreement.

 

·              ROFN. 
If Alnylam intends to grant to any Third Party an exclusive license to
any particular additional field which has not yet been acquired by Roche,
Alnylam must first offer Roche the right to extend its non-exclusive licenses
into such additional field upon payment of a specified field option fee.

 

·              Extension into Additional Fields.  Roche may extend its development and
commercialization activities directed to a Target into any additional field,
provided that Roche notify Alnylam of such extension and pay certain milestone
payments.

 

19

 

Prosecution and Enforcement

 

·              Alnylam
is obligated to take reasonable measures to protect and, to the extent Alnylam
has such a right, to enforce the IP being licensed to Roche under the Roche
Agreement.

 

·              Alnylam
is also obligated to assume control of the defense of any aspects of any third
party infringement claim that involves the validity, scope and/or
enforceability of such licensed IP. 
Roche has the right to control the defense of any other third party
infringement claim or aspect thereof related to the licensed IP.  Alnylam must keep Roche advised of status and
consider Roche’s recommendations.

 

Definitions

 

·              “Architecture
and Chemistry Intellectual Property” refers, generally, to Know-How and
Patent Rights listed on Schedule C to the Roche Agreement, in each case
Controlled by Alnylam as of the Effective Date, and covering (a) the
general structure, architecture, or design of double-stranded oligonucleotide
molecules which engage RNAi mechanisms in a cell; (b) chemical
modifications of double-stranded oligonucleotides (including any modification to
the base, sugar or internucleoside linkage, nucleotide mimetics, and any end
modifications) which do not abolish the RNAi activity of the double-stranded
oligonucleotides in (a); (c) manufacturing techniques for the
double-stranded oligonucleotide molecules or chemical modifications of (a) and
(b); or (d) all uses or applications of double-stranded oligonucleotide
molecules or chemical modifications in (a) or (b); but  excluding
(i) IP to the extent specifically related to Blocked Targets, and (ii) Delivery
IP.  Includes future Patent Rights that
claim priority to or common priority with any of the aforementioned Patent
Rights.

 

·              “Blocked
Target” means any Target that is subject to a contractual obligation of a
Pre-Existing Alliance Agreement that would be breached by the inclusion of such
Target as a Designated Target under this Agreement

 

·              “Delivery
Intellectual Property” refers, generally, to Know-How and Patent Rights
listed on Schedule C to the Roche Agreement, in each case Controlled by
Alnylam as of the Effective Date, and covering (a) delivery technologies
necessary or useful for delivery of double-stranded oligonucleotide molecules;
or (b) manufacturing techniques for such delivery technologies of (a); but
excluding Patent Rights which relate specifically to Blocked
Targets.  Includes future Patent Rights
that claim priority to or common priority with any of the aforementioned Patent
Rights.

 

·              “RNAi
Compound” means any compound that, in vitro or otherwise, functions through
the mechanism of RNAi and consists of or encodes double-stranded
oligonucleotides, and which double-stranded oligonucelotides optionally may be
chemically modified to contain modified nucleotide bases or non-RNA
nucleotides, and optionally may be administered in conjunction with a delivery
vehicle or vector.

 

·              “RNAi
Product” means any product that contains one or more RNAi Compounds as an
active ingredient.

 

20

 

·              “Target”
means (a) a polypeptide or entity comprising a combination of at least one
polypeptide and other macromolecules, that is a site or potential site of
therapeutic intervention by a therapeutic agent; or a nucleic acid which is
required for expression of such polypeptide; (b) variants of a polypeptide
(including any splice variant thereof), cellular entity or nucleic acid
described in clause (a); or (c) a defined non-peptide entity, including a
microorganism, virus, bacterium or single cell parasite; provided  that
the entire genome of a virus shall be regarded as a single Target.

 

21

 

NOVARTIS

 

Research Collaboration and License Agreement
between Novartis Institutes for BioMedical Research, Inc. and Alnylam
Pharmaceuticals, Inc., effective October 12, 2005, as amended by the
Addendum Re: Influenza Program effective as of December 13, 2005,
Amendment No. 1 to such Addendum effective as of March 14, 2006, and
Amendment No. 2 to such Addendum effective as of May 5, 2006 (“Novartis
Agreement”)

 

Brief Description of Technology Covered by License

 

·                  Alnylam granted
Novartis a right to exclusively develop a certain number of Targets using
intellectual property controlled by Alnylam during the term of the
Agreement.  Some of the Targets would be
developed through collaborative work between Novartis and Alnylam.  In addition, Novartis has the right to
convert their license from an exclusive license with respect to certain Targets
to a broad, non-exclusive license.

 

Scope of Rights

 

·              Novartis
may select a specified number of Targets (“Selected Targets”).  Alnylam and Novartis entered into a Research
Collaboration to identify and optimize RNAi Compounds directed against Selected
Targets and develop improved RNAi technology to enable and enhance the utility
of such RNAi Compounds. (Section 2)

 

·              Alnylam
granted Novartis and its Affiliates worldwide licenses under Alnylam
Intellectual Property to (i) perform Novartis’s obligations under the
Research Collaboration, (ii) Discover RNAi Compounds, (iii) Discover
RNAi Compounds directed at the Selected Targets, and (iv) Discover,
Develop, Commercialize or Manufacture Discovered RNAi Compounds and
Collaboration Products.  The rights under
clauses (i) and (ii) are non-exclusive and non-sublicenseable, under
clause (iii) are exclusive and non-sublicenseable, and under clause (iv) are
exclusive and sublicenseable.  (Sections
3.1(a) and (b))

 

·              For
a period of time, Novartis has an option, exercisable upon notice and payment
of a fee, to obtain for itself and its Affiliates a non-exclusive,
non-sublicenseable (except to third party contractors), worldwide, perpetual
license under Broad RNAi Intellectual Property for any human, veterinary or
agricultural applications (the “Adoption License”).  Alnylam may not grant any exclusive rights or
licenses under any Broad RNAi Intellectual Property except with respect to an
opportunity Novartis does not acquire under the ROFO or in accordance with
agreements existing before the effective date of the Novartis Agreement.  (Section 3.1(c) and (e))

 

·              Exclusivity:  Alnylam and its Affiliates may not, either
alone or directly or indirectly in conjunction with a Third Party, conduct
Discovery of any RNAi Compound or RNAi Products directed to a Selected Target,
or Discovery, Development, Commercialization or Manufacture of Discovered RNAi
Compounds, Collaboration 

 

22

 

Products, or RNAi Compounds or RNAi Products directed to Selected
Targets.  Alnylam and its Affiliates may
not grant to any Third Party any rights under Alnylam Intellectual Property to
engage in any of the foregoing activities. 
(Section 2.6(a))

 

·              ROFO:  If Alnylam or any of its Affiliates seek,
directly or indirectly in conjunction with a Third Party (with limited
exceptions), or to license a Third Party (with limited exceptions) the right,
to Discover, Develop, Commercialize or Manufacture any RNAi Compounds or RNAi
Products directed at a Target(s), Alnylam must first provide written notice to
Novartis.  Novartis has a period of time
to accept or reject the opportunity.  If
Novartis rejects an opportunity for a program for which no IND has been filed
in the US or Major Market Countries, or Novartis and Alnylam are unable to come
to terms on a post-IND program, Alnylam may, within a specified period of time,
enter an agreement with a Third Party, which can be no more favorable overall
to such Third Party than those offered to Novartis under Section 2.6(c)(i).  (Sections 2.6(b) and (c))

 

·              In-Licensing
IP:  To the extent applicable,
Alnylam must comply with Sections 2.6(b) and (c) when acquiring or
licensing rights from Third Parties.  In
the course of acquiring or licensing additional Broad RNAi Intellectual
Property or any other Alnylam Intellectual Property covering a Collaboration
Product, Alnylam must use its best efforts to ensure that such rights include
the right to sublicense to Novartis such Broad RNAi Intellectual Property or
other Alnylam Intellectual Property. 
(Sections 2.6(d), 3.1(f))

 

·              Technology
Transfer:  Alnylam will periodically
deliver to Novartis all Alnylam Intellectual Property specifically relating to
the Discovered RNAi Compounds, relating to the Research Collaboration, or
otherwise necessary or useful to the Discovery, Development, Commercialization
or Manufacture of Discovered RNAi Compounds or Collaboration Products.  Once Novartis acquires the Adoption License,
Alnylam will periodically deliver to Novartis all Broad RNAi Intellectual
Property.  The deliveries will include un-redacted
copies of agreements that directly or indirectly grant or restrict rights in
Alnylam Intellectual Property, which may be redacted to comply with
confidentiality obligations and to exclude terms that do not relate to
Novartis’s rights or obligations; provided, that Alnylam will use commercially
reasonable efforts to ensure that Novartis is granted access to un-redacted
copies of such agreements.

 

·              Alnylam
may not assign, license or otherwise grant any rights or dispose of any Broad
RNAi Intellectual Property or other Alnylam Intellectual Property covering a
Collaboration Product without making such disposition expressly subject to
Novartis’s rights.  (Section 3.1(g))

 

IP Ownership, Prosecution and Enforcement (Section 6)

 

·              Novartis
owns all IP jointly created by the parties in the Research Collaboration.  Novartis grants Alnylam a worldwide,
non-exclusive, sublicenseable (solely to Controlled Contractors) license under
such jointly-created IP that is Broad RNAi Intellectual Property, to engage in
any and all research activities directed to human, veterinary or agricultural
applications.

 

23

 

·              Novartis
has a step-in right to prosecute Alnylam Patent Rights that pertain to a
Discovered RNAi Compound or a Licensed Product.

 

·              Alnylam
will promptly report in writing to Novartis any known or suspected infringement
or misappropriation of Alnylam Intellectual Property and will provide Novartis
with all available evidence supporting such infringement or misappropriation.

 

·              Alnylam
has the right to protect the Alnylam Intellectual Property, and Alnylam will
consult with Novartis regarding the status of any such action and will provide
Novartis with copies of all material documents relating to such action.  Notwithstanding the foregoing, Novartis has
the sole and exclusive right to initiate a suit under Alnylam Intellectual
Property to protect a Discovered RNAi Compound, a Licensed Product or IP
created solely by Novartis or jointly by Novartis and Alnylam in the Research
Collaboration; Alnylam must provide reasonable assistance at Novartis’
request.  Recoveries will be shared in a
specified manner.

 

·              Novartis
and Alnylam will cooperate in responding to a claim challenging the validity of
any Alnylam Patent Right covering a Discovered RNAi Compound or a Licensed
Product.

 

Definitions

 

“Adopted Product” means a product containing RNAi Compound(s) that
are Discovered, Developed, Commercialized or Manufactured pursuant to the
Adoption License.

 

“Alnylam Intellectual Property” means Know-How and Patent Rights
now or in the future owned or licensed by Alnylam or its Affiliates, including
Broad RNAi Intellectual Property.

 

“Broad RNAi Intellectual Property” means all Know-How and Patent
Rights now or in the future owned or licensed by Alnylam or its Affiliates that
relate to RNAi technology, products or processes, including (a) the
general structure, architecture, or design of nucleic acid based molecules
which engage RNAi mechanisms in a cell; (b) chemical modifications of
nucleic acids (including any modification to the base, sugar or internucleoside
linkage, nucleotide mimetics, and any end modifications) which do not abolish
the RNAi activity of the nucleic acid molecules in (a); (c) manufacturing
techniques for the nucleic acid based molecules or chemical modifications of (a) and
(b); and (d) all uses or applications of nucleic acid based molecules or
chemical modifications in (a) or (b); but excluding Patents which relates
solely to (i) a specific Target or small group of Targets; or (ii) delivery
technologies which may be broadly employed for delivery of nucleic acid based
molecules.

 

“Collaboration Product” means any product that contains one or
more Discovered RNAi Compound(s) as active ingredient(s).

 

24

 

“Discovered RNAi Compound” means an RNAi Compound directed to a
Selected Target that is Discovered during the course of a program under the
Novartis Agreement, together with all derivatives of such RNAi Compound, where
“derivative” means a compound that may contain modified nucleotides or
may have been modified by chemical or molecular genetic means but which still,
at least in vitro, functions through an RNAi mechanism against the same Target.

 

“Licensed Products” means the Collaboration Products and the
Adopted Products.

 

“RNAi Compound” means any compound that in vitro or otherwise
functions through the mechanism of RNAi and consists of or encodes
double-stranded RNA, and which double-stranded RNA is optionally chemically
modified to contain modified nucleotide bases or non-RNA nucleotides, and
optionally may be administered in conjunction with a delivery vehicle or
vector.

 

“RNAi Product” means any product that contains one or more RNAi
Compounds as an active ingredient.

 

“Target” means: (a) a polypeptide or entity comprising a
combination of at least one polypeptide and other macromolecules, that is a site
or potential site of therapeutic intervention by a therapeutic agent; or a
nucleic acid which is required for expression of such polypeptide; (b) variants
of a polypeptide, cellular entity or nucleic acid described in clause (a); (c) a
defined non-peptide entity, including a microorganism, virus, bacterium or
single cell parasite; provided that the entire genome of a virus shall be
regarded as a single Target; or (d) a naturally occurring interfering RNA
or microRNA or precursor thereof.

 

25

 

ROCKEFELLER
(Tuschl)

 

License Agreement between The Rockefeller
University and Alnylam Pharmaceuticals, Inc. effective May 8, 2006 (“Tuschl
Agreement”)

 

Brief Summary of Technology Covered by License:

 

The Rockefeller University granted Alnylam a license to intellectual
property developed by Dr. Thomas Tuschl relating to sequence-specific
inhibition of microRNAs (RU 681) (also known as “Tuschl IV”).

 

Scope of License (Section 1.1)

 

·              Alnylam’s
non-exclusive, world-wide, sublicensable license is limited to a license to
research, develop, make, have made, use, have used, import, have imported,
sell, offer for sale and have sold Licensed Products for human and animal
therapeutics.

 

·              Rockefeller
Patent Rights were developed with funding from the U.S. National Institutes of
Health.  The United States government
retains rights in such intellectual property, including, but not limited to,
requirements that products, which result from such intellectual property and
are sold in the United States, must be substantially manufactured in the United
States.

 

Certain Sublicense Terms (Section 1.5)

 

·                  Alnylam will
only have the right to grant sublicenses if such sublicense (a) is granted
in conjunction with a license or sublicense of Alnylam’s rights under
proprietary intellectual property that is in addition to the Rockefeller Patent
Rights, and (b) is granted in connection with a bona fide collaboration
with one or more third parties established by written agreement that is for
purposes of research and/or development of products under a jointly prepared
research plan.

 

·                  Alnylam will
prohibit the sublicensee from further sublicensing and require the sublicensee
to comply with the terms and conditions of the Tuschl Agreement (other than
Alnylam’s payment and reporting obligations).

 

·                  Within thirty (30) days after Alnylam
enters into a sublicense agreement, Alnylam will deliver to Rockefeller a copy
of the sublicense agreement which may be redacted except with respect to terms,
including financial terms that re not relevant to Alnylam’s obligations under
the Tuschl Agreement.

 

·              Upon
an Alnylam bankruptcy event, payments due to Alnylam from its Affiliates or
sublicensees under the sublicense agreement in the form of milestone payments
and royalties on Licensed Products will, upon notice from Rockefeller to such
Affiliate or sublicensee, become payable directly to Rockefeller for the
account of Alnylam.  Upon receipt of such
funds, Rockefeller will remit to Alnylam the amount by which such payments
exceed the amounts owed by Alnylam to Rockefeller.

 

26

 

·                  Alnylam is primarily liable to
Rockefeller for any act or omission of a sublicensee that would be a breach of
the Stoffel Agreement if performed or omitted by Alnylam, and Alnylam will be
deemed to be in breach of the Stoffel Agreement as a result of such act or
omission.

 

Diligence (Section 2)

 

·                  Alnylam must
provide Rockefeller within 30 days of the third and each subsequent anniversary
of the Effective Date with written progress reports discussing the development,
evaluation, testing and commercialization of all Licensed Products.

 

Payment Obligations (Sections 3 and 4)

 

·              The
following milestones are payable for each Licensed Product against an
individual Gene Target:

 

	
  Receipt of IND approval.

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Dosing of first patient in Phase II
  Clinical Trials.

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Dosing of first patient in Phase III
  Clinical Trials.

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Receipt of NDA approval.

  	
   

  	
  $

  	
  [***]

  	
   

  

 

·              A
[***]% royalty is payable to Rockefeller on Net Sales of Licensed Products by
Alnylam, its Affiliates and its sublicensees (no offsets).

 

·              If
Rockefeller grants a license under the Rockefeller Patent Rights to any third
party, which will permit such third party to manufacture or sell for any use
within the scope of the license at a lower royalty rate than that provided in
the Tuschl Agreement, Rockefeller will promptly notify Alnylam of such license,
including all material terms and conditions of such license, and offer to
Alnylam the lower royalty rates and all of the material terms and conditions of
such license. If Alnylam accepts such terms in writing, the royalty rate and
all material terms and conditions of such notice shall thereafter apply to
Alnylam and the parties will promptly execute an amendment to the Tuschl
Agreement reflecting such terms and conditions.

 

·              Alnylam
must pay Rockefeller a one-time fee of $[***] within 30 days after granting a
sublicense to a permitted sublicensee.

 

·              Payments
are due to Rockefeller within 60 days after the end of the quarter in which the
royalties or fees accrue.

 

Books and Records (Sections 4.3 and 4.4)

 

·              Sub-licensees
are required to keep complete and accurate books and records to verify Sales,
Net Sales, and all of the royalties, fees, and other payments payable under

 

27

 

the Tuschl Agreement. The records for each quarter will be maintained
for at least 3 years after submission of the applicable report required under
the Tuschl Agreement.

 

·              Upon
reasonable prior written notice to Alnylam, sublicensees will provide an independent,
reputable CPA appointed by Rockefeller and reasonably acceptable to Alnylam
with access to all of the books and records required by the Tuschl Agreement to
conduct a review or audit of Sales, Net Sales, and all of the royalties, fees,
and other payments payable under the Tuschl Agreement. If the audit determines
that Alnylam has underpaid any royalty payment by 5% or more, Alnylam will also
promptly pay the costs of the review or audit.

 

Non-Use of Name (Section 5.4)

 

·              Sublicensees
may not use the name, logo, seal, trademark, or service mark (including any
adaptation of them) of Rockefeller or any Rockefeller school, organization,
employee, student or representative, without the prior written consent of
Rockefeller.

 

Termination (Section 6.2)

 

·              Alnylam
may terminate for convenience

 

·              Alnylam
must promptly inventory all finished product and works-in-product of Licensed
Products of its sublicensees. Inventory may be sold off unless Rockefeller
terminates for a breach by Alnylam or its sublicensees or Alnylam’s bankruptcy.

 

Prosecution and Enforcement (Section 7)

 

·              Rockefeller
controls the preparation, prosecution and maintenance of the Rockefeller Patent
Rights and the selection of patent counsel, with input from Alnylam. Alnylam
will be copied on, and allowed to comment upon, all substantive issues in the
patent prosecution.

 

·              Alnylam
shall pay a pro rata share, not to exceed [***]%, for all reasonable out of
pocket attorney charges and official fees incident to the preparation,
prosecution, and maintenance of such patent applications and patents, not
exceeding $[***]/year. If Rockefeller chooses not to prosecute or maintain the
patent rights, Alnylam may do so and receive a credit against its royalty
obligations in an amount equal to its expenses.

 

·              Alnylam
must inform Rockefeller promptly after learning of infringement of the
Rockefeller Patent Rights. Alnylam and Rockefeller will consult each other
concerning response to infringement. Rockefeller may enforce any infringement
of the Rockefeller Patent Rights at Rockefeller’s expense and retain the
recoveries. If Rockefeller requests Alnylam to join such enforcement litigation
and Alnylam elects to do so, the recoveries will be shared between Company and
Rockefeller in proportion with their respective shares of the aggregate
litigation expenditures. Alnylam has step-in enforcement rights. Alnylam must
not settle or compromise any such litigation in a manner that imposes any

 

28

 

obligations or restrictions on Rockefeller or grants any rights to the
Rockefeller Patent Rights without Rockefeller’s prior written permission. Step-in
recoveries, after Alnylam’s expenses are reimbursed, are treated as Net Sales
subject to royalties.

 

Definitions

 

“Gene Target” means a genomic microRNA locus, any portion
thereof, any RNA transcribed from within or overlapping such locus or portion,
and all transcript and allelic variants thereof.

 

“Licensed Products” means products that are researched, developed,
made, made for, used, used for, imported, imported for, sold, sold for or
offered for sale by Alnylam or its Affiliates or sublicensees and that either (i) in
the absence of this Agreement, would infringe at least one Valid Claim of the
Rockefeller Patent Rights, or (ii) use a process or machine covered by a
Valid Claim of Rockefeller Patent Rights.

 

“Net Sales”
means with respect to each Licensed Product the gross amount invoiced by
Alnylam or its Affiliates or sublicensees on sales or other dispositions of
such product to third parties less Qualifying Costs directly attributable to a
sale and actually taken and/or identified on the invoice and borne by Company,
or its Affiliates or sublicensees. “Qualifying Costs” means: (a) customary
discounts in the trade for quantity purchased, prompt payment or wholesalers
and distributors; (b) credits, allowances or refunds for claims or returns
or retroactive price reductions (including government healthcare programs and
similar types of rebates) that do not exceed the original invoice amount; (c) prepaid
outbound transportation expenses and transportation insurance premiums; and (d) sales,
transfer, excise and use taxes and other fees imposed by a governmental agency.
Sales for clinical study purposes or compassionate, named patient or similar
use shall not constitute Net Sales

 

“Rockefeller Patent Rights” means a patent application entitled
“Anti Micro-RNA Oligonucleotide Molecules” and related patent family, relating
to sequence-specific inhibition of microRNAs (RU 681).

 

29

 

STANFORD
(Sarnow/miR-122)

 

Co-Exclusive
License Agreement among The Board of Trustees of the Leland Stanford Junior
University, Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc.
effective August 31, 2005 (each of Alnylam and Isis, a “Licensee”)
(“Sarnow/miR-122”)

 

Brief Summary of Technology Covered by License:

 

·              Co-exclusive
license to use of mir-122 to reduce HCV replication (Stanford Docket S04-097);
research done in Sarnow lab supported by NIAID.

 

Scope of License (Section 3):

 

·              Stanford
grants to each of the Licensees a co-exclusive, worldwide right and license
under the Licensed Patents in the Exclusive Licensed Field of Use to develop,
make, have made, use, have used, import, offer to sell, and sell Licensed
Products in the Licensed Territory.

 

·              Stanford
grants to each of Licensees a non-exclusive, worldwide right and license under
the Licensed Patent in the Non-Exclusive Licensed Field of Use to develop,
make, have made, use, have used, import, offer to sell and sell Licensed
Products in the Licensed Territory.

 

·              Stanford
retains the right, on behalf of itself and all other non-profit academic
research institutions, to practice the Licensed Patents for any non-profit
purpose, including sponsored research and collaborations. Licensee agrees that,
notwithstanding any other provision of this Agreement, it has no right to
enforce the Licensed Patents against any such institution. Stanford and any
such other institution have the right to publish any information included in
the Licensed Patents. If Stanford alters its requirements for license
agreements with respect to the subjects addressed in this Section, or enters
into a license agreement with terms more favorable to a licensee than those set
forth in this Section, Stanford agrees to negotiate in good faith with the
Licensees to amend the terms of this Section based upon the reasonable
written request of either Licensee.

 

·              The
Bayh-Dole Act, including U.S. manufacturing obligations, applies.

 

Sublicensing Rights (Section 4):

 

·              Each
Licensee may grant sublicenses in connection with (Section 4.1):

 

·              a
bona fide collaboration with one or more third parties established by written
agreement (i) for purposes of research and/or development of products
under a jointly prepared research plan; and (ii) which includes a license
or sublicense of such Licensee’s rights under related intellectual property
covering proprietary know-how or patent rights in addition to a sublicense to
the Licensed Patents; and/or

 

30

 

·              provision
of services to such Licensee, including without limitation contract
manufacturing, and other services relating to development and commercialization
of Licensed Products.

 

·              If
both of Licensees or their sublicensees are unable or unwilling to serve or
develop a potential market or market territory for which there is a company
willing to be a sublicensee, Stanford may request the Licensees to negotiate in
good faith a sublicense under the Licensed Patents.

 

·              Any
sublicense:

 

·              will
prohibit any grant of a further sublicense by a sublicensee;

 

·              will
expressly include the provisions of Articles 8 (Royalty Reports, Payments, and
Accounting), 9 (Exclusions and Negations of Warranties) and 10 (Indemnity) for
the benefit of Stanford;

 

·              will
require the assumption of all obligations, including the payment of royalties
specified in the sublicense, to Stanford or its designee, if this Agreement is
terminated; and

 

·              is
subject to this Agreement.

 

·              Each
Licensee will submit to Stanford a copy of each sublicense after it becomes
effective, which copy may be redacted except as to matters directly pertinent
to such Licensee’s obligations under this Agreement.

 

·              If
either Licensee grants a sublicense pursuant to Section 4.1(A), and
receives an upfront payment in connection therewith, the following amounts, if
applicable, will be due to Stanford from such Licensee within 60 days of the
full execution of the agreement establishing such collaboration:

 

·              (A)          if such agreement includes an upfront
payment equal to or less than $[***], a payment will be due to Stanford in the
amount of $[***];

 

·              (B)           if such agreement includes an upfront
payment greater than $[***] and equal to or less than $[***], a payment will be
due to Stanford in the amount of $[***];

 

·              (C)           if such agreement includes an upfront
payment greater than $[***], a payment will be due to Stanford in the amount of
$[***].

 

·              If
Licensees jointly enter into a bona fide collaboration with a third party, the
relevant upfront payment shall be due only once for such collaboration. Any
amounts representing the reimbursement of costs previously incurred by a
Licensee, including fully burdened personnel costs and patent expenses, will
not be included in determining the amount of any up front payment.

 

31

 

·              If
Licensee pays all royalties due Stanford from a sublicensee’s Net Sales,
Licensee may grant that sublicensee a royalty-free or non-cash sublicense or
cross-license.

 

Diligence:

 

·              Each
Licensee will use commercially reasonable efforts to (a) develop, manufacture,
and sell Licensed Products and develop markets for Licensed Products; and (b) meet
the milestones shown in its respective Appendix (see below). If a Licensee does
not meet a milestone in its Appendix by its corresponding date, it will have 30
days to submit to Stanford a specific written plan designed to meet its
obligations under this Section as promptly as possible using commercially
reasonable efforts. Each plan shall be subject to Stanford’s written approval,
which will not be unreasonably withheld. Such Licensee will have 3 months to
demonstrate to Stanford’s reasonable satisfaction its compliance with such
plan.

 

·              (Appendices)
Each Licensee will be solely responsible for meeting the following diligence
milestones in its development programs:

 

·              By
the end of the year 2006, such Licensee will commence optimization of miRNA
inhibitors.

 

·              By
the end of the year 2007, such Licensee will select the method of delivery for
such miRNA inhibitors.

 

·              By
the end of the year 2008, such Licensee (i) optimize a lead miRNA
inhibitor and (ii) propose additional clinical milestones to Stanford.

 

·              By
the end of the year 2010, such Licensee will complete preclinical development

 

·              If
Alnylam and Isis are jointly developing a given Licensed Product, both will be
deemed in compliance with their respective diligence obligations if either of
Alnylam and Isis is fulfilling such obligations.

 

·              By
March 1 of each year, each Licensee will submit a written annual report to
Stanford covering the preceding calendar year.

 

Payment Obligations (Section 7):

 

·              The
following annual maintenance fees are due under this Agreement:

 

·              (A)          $[***] on the first 4 anniversaries of
the Effective Date;

 

·              (B)           $[***] on the 5th through 8th anniversaries of the Effective
Date; and

 

·              (C)           $[***] on the 9th anniversary of the
Effective Date and each anniversary thereafter.

 

32

 

Unless
instructed otherwise by Licensees, Stanford will send invoices for one half of
the above amounts to each Licensee.

 

·              (Section 7.3)The following
milestones are payable for each Licensee for the first Licensed Product in the
Exclusive Field of Use:

 

	
  IND acceptance in U.S. or first dosing of a subject outside the U.S.

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Dosing of first subject in first Phase III Clinical Trial

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  NDA approval in U.S. or a foreign equivalent

  	
   

  	
  $

  	
  [***]

  	
   

  

 

·

 

·

 

·              Milestones payable with
respect to the first Licensed Product of each Licensee in the Non-Exclusive
Field of Use are [***]%) of those above..

 

·              Milestones payable with
respect to the second Licensed Product (i.e. a new molecular entity) of each
Licensee in the Non-Exclusive Field of Use are [***]%) of those in the first
chart above.

 

·              For clarity, if Alnylam
achieves any of the above milestone events, it does not relieve Isis of the
obligation to pay similar milestones when Isis, or its sublicensee achieves the
same milestone events; provided, however, that if Alnylam and Isis are jointly
developing a given Licensed Product, payments are due only once in respect of
the achievement of a milestone event for such Licensed Product.

 

·              (Section 7.4)  Each Licensee will pay Stanford earned
royalties on Net Sales of [***]% of Net Sales of such Licensee’s Licensed
Product.  If a Licensee becomes obligated
to pay royalties to any third parties in connection with the sale of a Licensed
Product, the royalties due to Stanford from such Licensee under this Section for
such Licensed Product will be reduced in connection with amounts paid to such
third parties as follows:  for every
[***]% of Net Sales which is paid to such third parties (in the aggregate) in a
given calendar year, the royalty rate due to Stanford will be reduced by
[***]%.  In no event, however, will the
royalty payable to Stanford by such Licensee be reduced below a floor of
[***]%.  If the Licensees are jointly
developing and/or commercializing a Licensed Product, the royalty set forth
above shall be due only once with respect to such Licensed Product.

 

·              Royalty payments due to
Stanford under Section 7.4 above in a particular year will be reduced by
the license maintenance fee paid by such Licensee and applicable to such year.

 

Non-Use
of Names (Section 12.2):

 

·              The Licensees will not
identify Stanford in any promotional statement, or otherwise use the name of
any Stanford faculty member, employee, or student, or any 

 

33

 

trademark,
service mark, trade name, or symbol of Stanford or its affiliated hospitals and
clinics, including the Stanford name, unless Stanford has given its prior
written consent or as required by law, rule or regulation.  Permission may be withheld at Stanford’s sole
discretion.

 

Prosecution
and Enforcement (Section 13):

 

·              Subject to Stanford’s
approval, Isis will coordinate and be responsible for preparing, filing,
prosecuting and maintaining the Licensed Patents in Stanford’s name.  The parties shall work together to develop a
prosecution strategy and decide in which countries the Licensed Patents will be
filed.

 

·              Isis will

 

·              (i) keep Stanford and
Alnylam informed as to the filing, prosecution, maintenance and abandonment, as
applicable, of the Licensed Patents;

 

·              (ii) furnish Stanford
and Alnylam copies of documents relevant to any such filing, prosecution
maintenance and abandonment, as applicable;

 

·              (iii) allow Stanford
and Alnylam reasonable opportunity to timely comment on documents to be filed
with any patent office which would affect the Licensed Patents;

 

·              (iv) give good faith
consideration to the comments and advice of Stanford and Alnylam; provided
however that Stanford will have the opportunity to provide Isis with final
approval on how to proceed in any response or taking any such action; and

 

·              (v) provide copies of
any official written communications relating to the Licensed Patents to
Stanford and Alnylam within 10 days of Isis receiving such communication and
Stanford and Alnylam will provide any applicable comments to Isis no later than
5 days prior to the first deadline (without extensions) to file a response or
take any action relating to such communication.

 

·              Isis may use counsel of its
choice, which must be acceptable to Stanford and Alnylam, for the filing,
prosecution and maintenance of the Licensed Patents and the Licensees shall be
billed directly by such counsel.

 

·              A Licensee or the Licensees
will reimburse Stanford the following costs:

 

·              all Stanford’s reasonable
and actual out-of-pocket patenting expenses incurred after the Effective Date
related to the Licensed Patents.

 

·              If one and only one Licensee
decides to abandon ongoing prosecution and/or maintenance of any of the
Licensed Patents, on a country-by-country and Licensed Patent-by-Licensed
Patent basis, the continuing Licensee will pay 100% of the ongoing expenses for
such Licensed Patent.  Stanford shall have
the right to continue payment for such Licensed Patent in its own discretion
and at its own expense if both Licensees 

 

34

 

decide
to abandon ongoing prosecution and/or maintenance of the Licensed Patents.   If Stanford decides to maintain such
Licensed Patent, the license with respect to such Licensed Patent in such
country under this Agreement shall terminate with respect to the ceasing
Licensee(s).  Cessation of payment by one
Licensee as to a Licensed Patent will not affect the rights of the other
Licensee with respect to such Licensed Patent. 
If Isis is the Licensee wishing to cease payment of a Licensed Patent,
the responsibility for the prosecution of such Licensed Patent will transfer to
Stanford.

 

·              Each Licensee may assign its
rights and obligations under Sections 13.1 and 13.2 to a sublicensee, subject
to prior notification to and approval from Stanford.

 

·              Stanford has the first right
to institute action against a third party infringer which will be executed (if
at all) within 90 days after Stanford first becomes aware of the infringing
activity, and may name one or both Licensees as a party for standing
purposes.  Each Licensee may elect to
jointly prosecute the action (with Stanford) by providing written notice within
30 days after the date of the notice from Stanford.  If both Licensees elect not to jointly
prosecute, Stanford may pursue the suit, at its sole cost (including costs of
litigation) and in such event will be entitled to retain the entire amount of
any recovery or settlement that is in excess of the parties’ costs; if one or
both Licensees elect to jointly prosecute, Stanford and the jointly prosecuting
Licensees will proceed in accordance with the Joint Suit provisions.  If a Licensee elects not to join a suit, that
Licensee will discuss in good faith with Stanford the assignment of rights,
causes of action, and damages necessary for Stanford to prosecute the alleged
infringement.

 

·              Joint Suit.  If Stanford and either or both Licensees are
jointly prosecuting an action against a third party infringer, they will share
the out-of-pocket costs and any recovery or settlement equally; and agree how
they will exercise control over the action.

 

·              (Sections 13.6 and
13.7)  If Stanford elects not to
participate in a suit, either or both Licensee(s) may institute and
prosecute a suit so long as it conforms with the requirements of this
Section.  The Licensee(s) will reach
agreement on the institution and prosecution of such suit and the sharing of
such costs among themselves and will diligently pursue the suit and the
Licensee(s) instituting the suit will bear the entire cost (including
necessary expenses incurred by Stanford) of the litigation.  The Licensee(s) will keep Stanford
reasonably apprised of all developments in the suit, and will seek Stanford’s
input and approval on any substantive submissions or positions taken in the
litigation regarding the scope, validity and enforceability of the Licensed
Patents.  The Licensee(s) will not
prosecute, settle or otherwise compromise any such suit in a manner that
adversely affects Stanford’s interests without Stanford’s prior written
consent.  If either or both Licensees sue
under Section 13.6, then any recovery in excess of any unrecovered
litigation costs and fees will be shared with Stanford as follows:

 

·              Any recovery for past sales
by the infringer of products, which, if sold by a Licensee, would be Licensed
Products will be deemed Net Sales for purposes of this Agreement, and such
Licensees will pay Stanford royalties;

 

35

 

·              Licensee and Stanford will
negotiate in good faith appropriate compensation to Stanford for any non-cash
settlement, non-cash cross-license or payment for the right to make future
sales.

 

Term
and Termination (Section 14, 18.1):

 

·              Any termination shall only
terminate this Agreement between Stanford and the affected Licensee, and it
shall remain in full force and effect between Stanford and the non-affected
Licensee.

 

·              Each Licensee may terminate
its rights and obligations under this Agreement by giving Stanford at least 30
days written notice.

 

·              A breach by one Licensee of
its obligations to Stanford under this Agreement may not be used as a basis for
termination of this Agreement by the non-breaching Licensee, nor may a breach
of any obligation arising between the Licensees under this Agreement be used as
a basis for termination by one Licensee.

 

Assignment
(Section 15):

 

·              Each Licensee may assign
this Agreement as part of a sale, regardless of whether such a sale occurs
through an asset sale, stock sale, merger or other combination, or any other
transfer of such Licensee’s entire business, or that part of the Licensee’s
business to which this Agreement relates.

 

Definitions:

 

                “Exclusive Licensed Field
of Use” means the research, development, commercialization and monitoring
of therapeutics for the treatment and prevention of Hepatitis C and directly
related conditions and diseases (including without limitation chronic
hepatitis, cirrhosis and primary liver cancer). 
The Exclusive Field of Use specifically excludes:

 

(A) diagnostics;  and

 

(B) commercialization
of reagents.

 

“Licensed
Patents” means Stanford’s U.S. Provisional Patent Application, Serial
Number [***], and the related patent family. 
“Licensed Patent” excludes any continuation-in-part (CIP) patent
application or patent unless the subject matter of such CIP patent application
is specifically described or claimed in another Licensed Patent and is filed
within three (3) years of the Effective Date.  Licensed Patents exclude any claims relating
to new matter that is invented by Stanford after the Effective Date.

 

36

 

“Licensed
Product” means a product in either the Exclusive Licensed Field of Use or
the Non-Exclusive Licensed Field of Use the making, using, importing or selling
of which, absent this license, infringes a Valid Claim of a Licensed Patent.

 

“Non-Exclusive
Licensed Field of Use” means the research, development, commercialization
and monitoring of therapeutics for the treatment and prevention of all
conditions or diseases other than Hepatitis C and directly related conditions
or diseases.

 

37

 

GARCHING
(Co-Exclusive)

 

License Agreement among Garching Innovation GmbH (“GI”),
Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc.
effective October 18, 2004

 

Brief
Summary of Technology Covered by License:

 

·      The Max Planck Society granted co-exclusive rights
Alnylam and Isis to patent applications (known as “Tuschl III”) based on the
microRNA work of Dr. Thomas Tuschl. These microRNAs have the potential to
be new drug targets or therapeutic products and are the subjects of the
licensed patent applications.

 

Scope of License (Section 2.1):

 

·              GI hereby grants to each
Alnylam and ISIS and their Affiliates a royalty-bearing co-exclusive worldwide
license, with the right to grant sublicenses, under the Patent Rights to
develop, make, have made, use, sell and import Licensed Products in the Field.

 

·              MPG retains the right to
practice under the Patent Rights for non-commercial scientific research,
teaching, education, non-commercial collaboration (including industry-sponsored
scientific collaborations) and publication purposes.

 

·              Alnylam and ISIS acknowledge
that the German government retains a royalty-free, non-exclusive,
non-transferable license to practice any government-funded invention claimed in
any Patent Rights for government purposes.

 

Sublicensing
(Section 2.2):

 

·              Alnylam and ISIS may each
grant sublicenses to the rights granted to them under Section 2.1 to Third
Parties, however only (i) as Naked Sublicenses, (ii) in connection
with a Drug Discovery Collaboration or Development Collaboration, or (iii) to
a Sales Partner.

 

·              Each Naked Sublicense shall
be subject to the prior written approval of GI, which shall not unreasonably be
withheld.  Alnylam or ISIS, as
applicable, shall inform GI in writing at least 30 days prior to the intended
signature of any such sublicense agreement in sufficient detail (in particular
regarding financial terms and other relevant information) to permit GI to
decide whether or not to approve.  Any
requested approval is deemed to be granted if GI does not refuse the approval
in writing within 30 days after receiving the necessary information; in
particular, GI may withhold its approval if GI deems the received information
not sufficient.

 

·              Each sublicense granted
under this Agreement shall be subject and subordinate to, and consistent with,
the terms and conditions of this Agreement. Alnylam or ISIS, as applicable,
shall be liable that any subsequent sublicenses granted by the Sublicensees are
subject and subordinate to, and consistent with, the terms and conditions of
this Agreement.  In the event of a
material default by any sublicensee under an Isis or 

 

38

 

Alnylam
sublicense, the applicable party will inform GI and take commercially
reasonable efforts to cause the sublicensee to cure the default or will
terminate the sublicense. (Section 4.6)

 

·              Within 30 days after the
signature of each sublicense granted under this Agreement, Alnylam or ISIS, as
applicable, shall provide GI with a reasonably redacted copy of the signed
sublicense agreement.

 

Diligence
(Section 4):

 

·              Alnylam and ISIS shall each
use commercially reasonable efforts, and shall oblige their Affiliates and
Sublicensees to use commercially reasonable efforts, to develop and
commercialize their respective Licensed Products.

 

·              Semi-annual progress
reports.  ALNYLAM and ISIS shall each
furnish, and require their Affiliates to furnish to ALNYLAM and ISIS, to GI in
writing, semi-annually, within 60 days after the end of each calendar half
year, with a report, stating in reasonable detail the activities and the
progress of their efforts (including the efforts of their Sublicensees) during
the immediately preceding half year to develop and commercialize their
respective Licensed Products, on a product-by-product and country-by-country
basis.  The report shall also contain a
discussion of intended development and commercialisation efforts for the
calendar half year in which the report is submitted.

 

Financial
Obligations (Section 5):

 

·              Alnylam and ISIS shall each
pay to GI the following milestone payments for each of their respective
Licensed Products (including Licensed Products of their Affiliates and
Sublicensees) within 30 days:

 

	
  Milestone Event

  	
   

  	
  Milestone Payment

  	
   

  
	
  First Initiation of Phase I Clinical Study

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  First Initiation of Phase II Clinical Study

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  First Initiation of Phase III Clinical Study

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Regulatory Approval in USA, Japan or Europe

  	
   

  	
  $

  	
  [***]

  	
   

  

 

Each
of the above milestone payment is due from the Party that is engaged in the
development and commercialization of such Licensed Product.

 

For
each Licensed Product, milestone payments will only be due the first time such
Licensed Product achieves such milestone. 
A Licensed Product will be considered the same Licensed Product as long
as it has not been modified in such a way (unless as the result of stabilizing,
formulation or delivery technology) that would require the filing of a
different IND for such Licensed Product.

 

·              Royalties (Section 5.3):

 

39

 

·              Alnylam and ISIS shall each
pay to GI for each of their respective Licensed Products (including Licensed
Products of their Affiliates and Sublicensees) covered by Valid Claims the
following running royalties on the incremental portion of annual Net Sales:

 

	
  ·

  	
  Less than or equal to
  $[***] US Dollars

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Between $[***] US Dollars
  and $[***] US Dollars

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Between $[***] US Dollars
  and $[***] US Dollars

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Greater
  than $[***] US Dollars

  	
   

  	
  [***]

  	
  %

  

 

·              Alnylam and ISIS shall each
pay to GI for each of their respective Licensed Products (including Licensed
Products of their Affiliates and Sublicensees) covered by Pending Claims [***]%
of running royalties above

 

·              If Alnylam or ISIS, or any
of their Affiliates or Sublicensees, licenses any patents or patent
applications Controlled by a Third Party in order to make, use, or sell a
Licensed Product (explicitly excluding, without limitation, any Third Party
patents and patent applications covering any formulation, stabilization, or
delivery technology, or any target for a Licensed Product) the running
royalties set forth in Sec. 5.3 will be reduced, on a country-by-country and
product-by-product basis, from the date running royalties have to be actually
paid to such Third Party, by [***]% of any running royalty owed to a Third
Party for the manufacture, use or sale of a Licensed Product, provided however
that the running royalties due to GI will not be reduced to less than [***]%.

 

·              The running royalties stated
in Section 5.3 shall in no event be reduced by the application of this Section 5.4
to less than a minimum royalty rate of (i) [***]% for Licensed Products
covered by Valid Claims, and (ii) [***]% for Licensed Products covered by
Pending Claims.

 

·              In no event shall the total
cumulative running royalty burden of Alnylam or Isis for a Licensed Product
arising out of this Agreement and any Existing GI Licenses, calculated on a
product-by-product and country-by-country basis, exceed [***]% for such a
Licensed Product.

 

·              Sublicense Revenues (Section 5.5):

 

·              Subject to Section 5.5(d),
in the event that Alnylam or ISIS grant a Naked Sublicense to a Third
Party pursuant to Section 2.2 (a), Alnylam or ISIS, as applicable, shall
pay to GI [***]% of their respective Sublicense Consideration received, due
within 30 days after receipt.

 

·              Subject to Section 5.5(d),
in the event that Alnylam or ISIS grant a sublicense to a Third Party pursuant
to Section 2.2 (a) in connection with a Drug Discovery Collaboration
or Development Collaboration, Alnylam or ISIS, as applicable, shall pay to 

 

40

 

GI
the following percentages of their respective Sublicense Consideration
received, due within 30 days after receipt:

 

	
   

  	
   

  	
   

  	
  Percentage
  due to GI

  	
   

  
	
  ·

  	
  Sublicense granted

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  Up to, but not including,
  filing of an IND:

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  After filing of an IND

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  After
  initiation of Phase II Clinical Study

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  After
  initiation of Phase III Clinical Study

  	
   

  	
  [***]

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·

  	
  After
  filing of a NDA

  	
   

  	
  [***]

  	
  %

  

 

·              If Alnylam or ISIS receives
any non-cash Sublicense Consideration, Alnylam or ISIS, as applicable, shall
pay GI, at GI’s election, either (i) a cash payment equal to the fair
market value of the Sublicense Consideration, or (ii) the in-kind portion,
if practicable, of the Sublicense Consideration.

 

·              (Section 5.5(d)) If
Alnylam or ISIS grant a sublicense that includes, in addition to the Patent
Rights, patents or patent applications Controlled by Alnylam or ISIS, the
percentage of the Sublicense Consideration due to GI shall be based on the
value reasonably attributable to the Patent Rights relative to the value of the
patents or patent applications Controlled by Alnylam or ISIS included in such
sublicense (such relative value of the Patent Rights hereinafter the “Patent
Rights Value”).

 

·              Together with the copy of
any sublicense agreement to be provided to GI according to Sec. 2.2, Alnylam or
ISIS, as applicable, shall suggest to GI the Patent Rights Value based on a
good faith fair market value determination, together with any information
reasonably necessary or useful for GI to evaluate such suggestion.

 

·              If a “fair market value” has
to be determined, the Party obliged to suggest such fair market value shall
provide the other Party in due time with a good faith determination of the fair
market value, together with any information necessary or useful to support such
determination. The other Party shall have the right to provide the suggesting
Party in due time with a counter-determination of the fair market value, which
shall include any information necessary or useful to support such
counter-determination.

 

Prosecution and Enforcement (Section 6):

 

·              GI shall, in its sole
discretion, apply for, seek issuance of, maintain, or abandon the Patent Rights
during the Term.

 

·              Alnylam, ISIS and GI shall
cooperate, if necessary and appropriate, with each other in gaining patent term
extension wherever applicable to the Patent Rights, and shall use reasonable
efforts to agree upon a joint strategy relating to patent term extensions.

 

41

 

·              Alnylam and ISIS shall
together pay to GI [***]%, and each of Alnylam and ISIS shall pay [***]% of
such [***]% share, of all fees and costs, including attorneys fees, relating to
the filing, prosecution, maintenance and extension of the Patent Rights, which
incur during the Term.

 

·              If Alnylam or ISIS wish to
cease payment for any of the Patent Rights, GI shall have the right to continue
payment for such Patent Rights in its own discretion and at its own expense;
such Patent Rights shall no longer be covered by this Agreement with respect to
the ceasing party from the date Alnylam or ISIS informs GI of its cessation of
payments.

 

·              Enforcement (Section 6.3):

 

·              Alnylam and ISIS shall each
promptly inform GI in writing if they become aware of any suspected or actual
infringement of the Patent Rights by any Third Party, and of any available
evidence thereof.

 

·              Subject to the right of each
Alnylam and ISIS to join in the prosecution of infringements set forth below,
GI shall have the right, but not the obligation, to prosecute (whether judicial
or extrajudicial) in its own discretion and at its own expense, all
infringements of the Patent Rights.  The
total costs of any such sole infringement action shall be borne by GI, and GI
shall keep any recovery or damages (whether by way of settlement or otherwise)
derived therefrom.  In any such
infringement suits, Alnylam and ISIS shall each, at GI’s expense, cooperate
with GI in all respects.

 

·              Alnylam and ISIS shall each
have the right at their sole discretion to join GI’s prosecution of any
infringements of the Patent Rights.  GI
and the joining Party(ies) will agree in good faith on the sharing of the total
cost of any such joint infringement action and the sharing of any recovery or
damages derived therefrom.

 

·              If GI decides not to
prosecute infringements of the Patent Rights, neither solely nor jointly with
Alnylam or ISIS, GI shall offer to Alnylam and ISIS to prosecute (whether
jointly by Alnylam and ISIS or solely by one of them) any such infringement in
their own discretion and at their own expense. GI shall, at the expense of the prosecuting
Party(ies), cooperate.  The total cost of
any such sole infringement action shall be borne by the prosecuting Party(ies),
and the prosecuting Party(ies) shall keep any recovery or damages derived
therefrom.

 

·              If a Party prosecuting
infringements intends to settle the infringement (such as granting a license or
entering a settlement agreement), any such arrangement needs the prior written
approval of the other Parties, which shall not unreasonably be withheld. Any
sublicense granted by Alnylam or ISIS to a Third Party infringer shall be
regarded and treated as a Naked Sublicense under this Agreement.

 

42

 

Term and Termination (Section 9):

 

·              Alnylam and ISIS shall each
have the right to terminate this Agreement, for any reason, upon at least 3
months prior written notice to GI. 
Termination of this Agreement by either Isis or Alnylam shall not be
deemed to be termination by the other.

 

·              If at least 50% of issued
and outstanding shares of Alnylam or ISIS are assigned or transferred to a
Third Party, Alnylam or ISIS, as applicable, shall provide GI, upon GI’s
request, with written reports in reasonable detail on the actual and intended
future activities of Alnylam or ISIS, as applicable, to develop and commercialize
Licensed Products.  If the reports are
not provided to GI in due time and/or in sufficient detail, after 60 days
written notice from GI, such failure will be a material breach, and GI shall
have the right to terminate this Agreement with respect to such breaching party
in accordance with the procedures set forth in Section 9.6. Alnylam or
ISIS, as applicable, shall inform GI promptly of the implementation of any such
assignment or transfer.

 

·              GI shall have the right to
terminate this Agreement upon 30 days prior written notice to Alnylam or ISIS,
if Alnylam or ISIS, as applicable, or any of their Affiliates, attack, or have
attacked or support an attack through a Third Party, the validity of any of the
Patent Rights.

 

·              If any license granted to
Alnylam or ISIS under this Agreement is terminated, any sublicense under such
license granted prior to termination of said license shall remain in full force
and effect, provided that (i) the Sublicensee is not then in breach of its
sublicense agreement, and (ii) the Sublicensee agrees, in writing within
30 days after the effective date of termination, 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 Alnylam
or ISIS in place.

 

Non-Use of Names (Section 4.5):

 

·              Neither Alnylam nor ISIS,
nor their Affiliates or Sublicensees, may use the name of “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
aforementioned, in any promotional material or other public announcement or
disclosure without the prior written consent of GI or in the case of an
individual, the consent of that individual.

 

Assignment (Section 10.4):

 

·              Neither this Agreement no
any rights or obligations may be assigned or otherwise transferred by Alnylam
or ISIS to a Third Party without the prior written consent of GI.
Notwithstanding the foregoing, Alnylam and ISIS each may assign this Agreement
to a Third Party in connection with the merger, consolidation, or sale of all
or substantially all of their assets or that portion of their business to which
this Agreement relates; provided, however, that this Agreement shall
immediately terminate if the proposed Third Party assignee fails to agree in
writing to be bound by the terms and conditions of this 

 

43

 

Agreement
on or before the effective date of assignment. 
After the effective date of assignment, the Third Party assignee shall
provide GI, upon GI’s request, with written reports in reasonable detail on the
actual and intended future activities of the Third Party assignee to develop
and commercialize Licensed Products.  If
the Third Party assignee does not maintain a program to develop and
commercialize Licensed Products that is substantially similar or greater in
scope to the program of Alnylam or ISIS after the effective date of assignment,
then GI has the right to limit the scope of the co-exclusive license granted
under this Agreement to such Licensed Products actually covered by the program
of the Third Party assignee.

 

Definitions:

 

“Development
Collaboration” means a collaboration by Alnylam and/or ISIS with a Third
Party whose purpose is the (i) further development and/or
commercialization of a Licensed Product discovered by Isis or Alnylam either on
their own or as part of a Drug Discovery Collaboration or (ii) further
joint development and/or joint commercialization of Licensed Products, in each
case, beginning after the initiation of IND-Enabling Tox Studies for such
Licensed Products. Collaborations that do not include or involve the licensed
Patent Rights shall not constitute Development Collaborations.

 

“Drug
Discovery Collaboration” means a collaboration by Alnylam and/or ISIS with
a Third Party whose purpose is the joint discovery, joint development and/or
joint optimization of Licensed Products up to, but not including, IND-Enabling
Tox Studies for such Licensed Products.

 

“Existing
GI Licenses” means any license agreement between Alnylam and GI in force
and effect prior to the Effective Date of this Agreement and relating to patents
or patent applications of MPG that also cover the manufacture, use and sale of
Licensed Products.

 

“Field”
means use of Licensed Products

 

(i)            for each Party’s internal
and collaborative research use, and

 

(ii)           for all therapeutic and
prophylactic uses in human diseases,

 

specifically
excluding any commercial provision of Licensed Products as research reagents
for research purposes, and any diagnostic use.

 

“Licensed
Products” means any product, or part thereof, the manufacture, use or sale
of which, absent the license granted hereunder, would infringe one or more
Pending Claims or one or more Valid Claims of the Patent Rights.

 

“Naked
Sublicenses” means any sublicense to the Patent Rights granted by Alnylam
and/or ISIS to a Third Party that is not a license in connection with a Drug
Discovery Collaboration, Development Collaboration or Sales Partner agreement.
Licenses that do not include or involve rights to the Patents Rights shall not
constitute Naked Sublicenses.

 

44

 

“Patent
Rights” means the patents and applications listed on Exhibit A and the
related patent family.

 

“Sales
Partner” means any legal entity that is granted a sublicense to the Patent
Rights by Alnylam, ISIS, their Affiliates or Sublicensees solely to market,
promote, distribute or sell, or otherwise dispose of, Licensed Products in
finished form.

 

“Sublicense
Consideration” means any consideration, whether in cash (e.g. initial or
upfront payments, technology access fees, annual fixed payments) or in kind
(e.g. devices, services, use rights, equity), received by Alnylam or ISIS and
their Affiliates from Sublicensees as consideration for the sublicense granted.
Sublicense Consideration specifically excludes (i) any milestone payments
relating to the achievement of certain clinical events, (ii) any running
royalties on sales of products, (iii) payments specifically committed to
reimburse Alnylam or ISIS for the fully-burdened cost of research and
development, (iv) payments made by the Sublicensee in consideration of
equity (shares, options, warrants or any other kind of securities) of Alnylam
or ISIS at fair market value, and (iv) equity (shares, options, warrants
or any other kind of securities) of the Sublicensee purchased by Alnylam or
ISIS at fair market value.

 

45

 

MIT

 

Amended and Restated Exclusive Patent License Agreement
between Massachusetts Institute of Technology (“MIT”) and Alnylam, dated
May 9, 2007 (“MIT Agreement”)

 

Brief Summary of Technology Covered by License:

 

·      M.I.T. granted Alnylam exclusive rights to develop
and commercialize for human RNAi therapeutics certain technology relating to
novel lipid compositions that are potential components of cationic liposomal
formulations for cellular delivery of oligonucleotides.  The technology was developed in the
laboratory of Professor Robert Langer.

 

Limitations
on Scope of License (Sections 2.1, 2.3 and 2.5)

 

·              The license granted to
Alnylam is limited to a exclusive (for the Exclusive Period), worldwide license
under the Patent Rights to develop, make, have made, use and import Library
Products and Licensed Processes to develop, make, have made, use, sell, offer
to sell, lease, and import Licensed Products in the Field and to develop and
perform Licensed Processes in the Field.

 

·              Alnylam does not have the
right to sell or offer for sale the Library Products separately from a sale or
offer for sale of a Licensed Product.

 

·              MIT retains the right to
practice under the Patent Rights for research, teaching, and educational
purposes.  The U.S. federal government
retains a royalty-free, non-exclusive, non-transferable license to practice any
government-funded invention claimed in any Patent Rights as set forth in 35 USC
201-211, and the regulations promulgated thereunder, including the requirement
that Library Products, whether or not part of Licensed Products, used or sold
in the U.S. must be manufactured substantially in the U.S.

 

·              The Patent Rights may not be
asserted against non-for-profit research institutions that practice the Patent
Rights for research funded by (i) the institutions themselves, (ii) not-for
profit foundations, or (iii) any federal, state or municipal
government.  Alnylam may assert the
Patent Rights against not-for-profit research institutions only if the
infringement activity of the not-for-profit research institution was performed
in the fulfillment of research sponsored by a for-profit entity and the
assertion of infringement must be limited to those specific activities.

 

Restrictions
on Sublicensing by Alnylam (Sections 2.1 and 2.3)

 

·              Alnylam may grant
sublicenses under commercially reasonable terms and conditions only during the
Exclusive Period.  Any sublicenses by
Alnylam may extend past the expiration date of the Exclusive Period, but any
exclusivity of such sublicense will expire upon the expiration of the Exclusive
Period.

 

46

 

·              The sublicense must incorporate
terms and conditions sufficient to enable Alnylam and its Affiliates to comply
with the MIT Agreement.  Such sublicenses
will also include provisions to provide that if Sublicensee brings a Patent
Challenge against MIT (except as required under a court order or subpoena),
Alnylam may terminate the sublicense.

 

·              Upon termination of the MIT
Agreement, any Sublicensee not then in default will have the right to seek a
license from MIT, and MIT agrees to negotiate such licenses in good faith under
reasonable terms and conditions.

 

·              Alnylam may permit third parties (i) to
use Library Products and Licensed Processes for the purpose of research with
academic or nonprofit institutions and contract research, including for the
conduct of clinical trials of a Licensed Product, and (ii) to sell
Licensed Products under an agency, consignment or equivalent arrangement,
wherein such rights are not sublicense rights.

 

·              Alnylam will promptly furnish MIT
with a fully signed photocopy of any sublicense agreement, which copy may be
redacted except with respect to terms directly relevant to Alnylam’s
obligations under the MIT Agreement.

 

Diligence
and Reporting (Sections 3.1 and 3.2)

 

·              Sublicensees are required to use
diligent efforts to develop Library Products and Licensed Products and to
introduce Licensed Products into the commercial market; thereafter Sublicensees
are required to make Licensed Products reasonably available to the public.  Specifically, the following obligations must
be fulfilled:

 

·              Written reports are due within
[***] days after the end of each calendar year on the progress of efforts
during the immediately preceding calendar year to develop and commercialize
Licensed Products.  Such reports will
include the number of [***], a description of [***], and the [***]that have
been tested.  The report will also
contain a discussion of intended efforts and sales projections for the year in
which the report is submitted.

 

·              Funding for research at MIT
pursuant to the Budget set forth in Attachment C of the Research Agreement.

 

·              By [***], Library Products will be
evaluated for use in [***].

 

·              Prior to [***], at least [***]
will be advanced to [***] studies in support of [***] for [***] studies.

 

·              Filing of [***] for Licensed
Product [***]by [***].

 

·              Commencement of [***] trial for a
Licensed Product within [***] years of IND filing for such Licensed Product.

 

47

 

·              First Commercial Sale of a
Licensed Product within [***] for each such Licensed Product.

 

·              If any Sublicensee is determined
to have failed to fulfill any obligation under Sections 3.1(a) and 3.1(c) -
(g) above, MIT may treat such failure as a material breach, subject to any
changes to such diligence requirements as may be mutually-agreed by the parties
below.

 

·              If Alnylam anticipates a failure
to meet an obligation set forth in Section 3.1(c), (d), (e), (f) or (g) above
will occur, Alnylam will promptly advise MIT, and representatives of each party
will meet to review the reasons for anticipated failure.  Alnylam and MIT will enter into a written
amendment to the MIT Agreement with respect to any mutually agreed upon change(s) to
the relevant obligation.  If, after good
faith discussion, Alnylam and MIT are unable to agree upon an amendment to the
obligation, Alnylam, at its discretion, may elect to extend the due date to
meet the obligation for such diligence obligation by one year by providing
written notice to MIT along with payment in the amount of $[***].  Alnylam may extend the due date of each
diligence obligation set forth in Section 3.1(c), (d), (e), (f) or (g) of
the MIT Agreement only once during the term.

 

Financial
Obligations (Section 4.1)

 

License Maintenance Fees:

 

·              Alnylam will pay MIT the following
license maintenance fees on the dates set forth below:

 

	
  Each January 1st for 2008 and 2009

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Each January 1st for 2010 and 2011

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Each January 1st for 2012 and 2013

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Each January 1st for 2014 and 2015

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Each January 1st of every year thereafter

  	
   

  	
  $

  	
  [***]

  	
   

  

 

·              The annual license maintenance fee
is nonrefundable, but may be credited to running royalties subsequently due on
Net Sales earned during the same calendar year, if any.  License maintenance fees paid in excess of running
royalties due in such calendar year will not be creditable to amounts due for
future years.

 

Royalty Payments:

 

·              Running royalties of [***]% of Net
Sales of Licensed Products and Licensed Processes are due within [***] days of
the end of each calendar quarter.

 

·              If Alnylam or an Affiliate is
legally required to pay royalties to one or more third parties in order to
obtain a license or similar right necessary to practice the Patent Rights,
Alnylam will be entitled to credit up to [***]% of the amounts payable to such
third

 

48

 

parties
against the royalties due to MIT for the same reporting period; provided,
however, that (i) in no event will the running royalties due to MIT, when
aggregated with any other offsets and credits allowed under the MIT Agreement,
be less than [***]% of Net Sales in any reporting period, and (ii) royalties
due to third parties with respect to [***] patents (see Appendix B to
MIT Agreement) will not qualify for purposes of the foregoing offset against
royalties.

 

Milestone Payments:

 

·              Alnylam will pay MIT the amounts
set forth below upon achievement by Alnylam or any of its Affiliates or
Sublicensees of certain milestone events as set forth below.  Payments will be due in respect of the
achievement of such milestone events for each first Licensed Product containing
an miRNA Therapeutic(s) and/or an siRNA Therapeutic(s) towards a
specific Target or a specific combination of Targets; provided, however, that
if in the course of development a given Licensed Product is discontinued and
replaced with a different Licensed Product for the same therapeutic indication
containing an miRNA Therapeutic(s) and/or an siRNA Therapeutic(s) towards
at least one Target that was also a Target of the discontinued Licensed
Product, milestone payments already paid for the discontinued Licensed Product
will not be due for achievement of the same milestone event(s) by the
substituted Licensed Product.

 

	
  Milestone Event

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Filing of an Investigational New Drug Application (or equivalent)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Dosing of first patient in a Phase 2 clinical trial (or equivalent)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Dosing of first patient in a Phase 3 clinical trial (or equivalent)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  First Commercial Sale

  	
   

  	
  $

  	
  [***]

  	
   

  

 

·              In the event of an assignment as
described in Article 10 of the MIT Agreement, the milestone payments set
forth above that have not yet come due, will instead be replaced with the
milestone events and payments set forth below.

 

	
  Milestone Event

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Filing of Investigational New Drug Application (or equivalent)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Dosing of first patient in a Phase 2 clinical trial (or equivalent)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  Dosing of first patient in a Phase 3 clinical trial (or equivalent)

  	
   

  	
  $

  	
  [***]

  	
   

  
	
  First Commercial Sale

  	
   

  	
  $

  	
  [***]

  	
   

  

 

49

 

·              The milestone events set forth in
the two tables above are intended to be successive.  In addition and notwithstanding the
foregoing, if any milestone is reached without achieving a preceding milestone,
then the amount which would have been payable on achievement of the preceding
milestone will be payable upon achievement of the next successive
milestone.  Alnylam will notify MIT
within ten (10) days of the achievement of any of the above milestones by
Alnylam or any of its Affiliates or Sublicensees.

 

Sublicense Income:

 

·              If Alnylam or an Affiliate grants
a sublicense of its rights under Section 2.1 of the MIT Agreement, Alnylam
will pay MIT, as applicable:

 

·              [***]% of all Sublicense Income
received by Alnylam or Affiliates from Sublicensees which are also receiving
rights to substantial technology and/or patent rights owned or controlled by
Alnylam or Affiliates related to the development of Licensed Products, whether
such Sublicense Income is received under the same agreement as the sublicense
to Alnylam’s rights under Section 2.1 of the MIT Agreement and/or in a
separate agreement.  (To the extent that
the only other patents and/or technology rights received by Sublicensees are
sublicense rights under the patent rights listed in Appendix B, then any
sharing of Sublicense Income will fall under clause (b) below); and

 

·              [***]% of all Sublicense Income
received by Alnylam or Affiliates from Sublicensees if such Sublicensees are
receiving a sublicense to Alnylam’s rights under Section 2.1 of the MIT
Agreement alone or with a sublicense to the patent rights listed in Appendix
B, without substantial additional technology and/or other patent rights
from Alnylam or Affiliates, whether or not in the same agreement, as part of
the same business arrangement related to Licensed Products.

 

·              Such amount will be payable for
each reporting period and will be due to MIT within [***] days of the end of
each reporting period.

 

Reports
(Sections 5.1 and 5.2)

 

·              Prior to First Commercial Sale of
a Licensed Product or first commercial performance of a Licensed Process,
Alnylam is required to deliver annual reports within [***] days of the end of
each calendar year, containing information concerning the immediately preceding
year, as further described in Section 5.2 of the MIT Agreement (see
below).  The date of First Commercial
Sale of a Licensed Product or commercial performance of a Licensed Process must
be reported to MIT within [***] days of its occurrence.

 

·              After First Commercial Sale of a
Licensed Product or commercial performance of a Licensed Process, reports are
required to be delivered to MIT within [***] days of the end of each reporting
period containing information concerning the immediately preceding reporting
period, as further described in Section 5.2 of the MIT Agreement (see
below).

 

50

 

·              Section 5.2 states that
reports must include at least the following information for the immediately
preceding reporting period:

 

·              the number of Licensed Products
sold, leased, or distributed to independent third parties in each country and,
if applicable, the number of [***] used in the provision of services in each
country;

 

·              a description of Licensed
Processes performed in each country as may be pertinent to a royalty accounting
under the MIT Agreement;

 

·              gross price charged in each
country and, if applicable, the gross price charged for each Licensed Product
used to provide services in each country; and the gross price charged for each
Licensed Process performed in each country;

 

·              calculation of Net Sales in each
country, including a listing of applicable deductions;

 

·              total royalty payable on Net Sales
in U.S. dollars, together with the exchange rate used for conversion;

 

·              the amount of Sublicense Income
received by Alnylam and its Affiliates and the amount due to MIT from such
sublicense income, including an itemized breakdown of the sources of income
comprising the Sublicense Income;

 

·              [***] categorized by rights
relating to [***];

 

·              the dates on which milestone
events are achieved and the milestone payments due; and

 

·              [***] in accordance with the
requirements of Article [***] of the MIT Agreement.

 

If
no amounts are due to MIT for any reporting period, the report will so state.

 

Recordkeeping
and Audit Rights (Section 5.4)

 

·              Sublicensees are required to
maintain complete and accurate records reasonably relating to (i) the
rights and obligations under the MIT Agreement, and (ii) any amounts
payable to MIT in relation to the MIT Agreement, which records will contain
sufficient information to permit MIT to confirm the accuracy of any reports and
payments delivered to MIT and compliance in other respects with the MIT
Agreement.  Such records will be retained
for at least [***] years following the end of the calendar year to which they
pertain, during which time a certified public accountant selected by MIT (who
will be required to enter into a confidentiality obligation with Sublicensee)
may inspect such records upon advance notice and during normal business hours
solely for the purpose of verifying any reports and payments or compliance in
other respects with the MIT Agreement.

 

51

 

Prosecution
and Enforcement (Sections 6.1, 7.1-7.3 and 7.7)

 

·              MIT will prepare, file, prosecute,
and maintain all of the Patent Rights. 
Alnylam will cooperate with MIT in such filing, prosecution and
maintenance.

 

·              So long as Alnylam remains the
exclusive licensee of the Patent Rights in the Field, Alnylam, to the extent
permitted by law, will have the right, under its own control and at its own
expense, to prosecute any third party infringement of the Patent Rights in the
Field, subject to Sections 2.5(c) (Non-assert), 7.4 (Offsets) and 7.5
(Recovery) of the MIT Agreement.  Prior
to commencing any such action, Alnylam will consult with MIT and will consider
the views of MIT regarding the advisability of the proposed action and its
effect on the public interest.

 

·              If Alnylam is unsuccessful in
persuading the alleged infringer to desist or fails to have initiated an
infringement action within a reasonable time after Alnylam first becomes aware
of the basis for such action, MIT will have the right, at its sole discretion,
to prosecute such infringement under its sole control and at its sole expense,
and to keep any recovery.

 

·              If a Patent Challenge is brought
against Alnylam by a third party, MIT, at its option, will have the right
within 20 days after commencement of such action to take over the sole defense
of the action.  If MIT does not exercise
this right, Alnylam may take over the sole defense of such action.

 

·              So long as Alnylam remains the
exclusive licensee of the Patent Rights in the Field, Alnylam will have the
sole right to sublicense any alleged infringer in the Field for future use of
the Patent Rights in accordance with Alnylam’s rights under and the terms and
conditions of this Agreement.  Any
upfront fees as part of such sublicense will be shared equally between Alnylam
and MIT; other revenues to Alnylam pursuant to such sublicense will be treated
as set forth in Article 4 of the MIT Agreement.

 

Consequences
of a Patent Challenge by Sublicensee (Sections 12.5 and 4.3)

 

·              If a Sublicensee brings a Patent
Challenge against MIT (except as required under a court order or subpoena), MIT
may send a written demand to Alnylam to terminate the sublicense.  If Alnylam fails to so terminate such
sublicense within 30 days of MIT’s demand, MIT may immediately terminate the
MIT Agreement and/or the license granted thereunder.

 

·              Notwithstanding the foregoing, if
MIT decides not to terminate the MIT Agreement and the Patent Challenge is
successful, Alnylam will have no right to recoup any royalties paid during the
period of challenge.  If the Patent
Challenge is unsuccessful, Alnylam will reimburse MIT for all of its costs and
expenses it incurred as a result of such Patent Challenge, including without
limitation attorneys fees, court costs, litigation related disbursements, and
third party and expert witness fees (collectively, “Litigation Costs”).  Reimbursement for Litigation Costs will be
made within thirty (30) days of receipt of one or more invoices from MIT for
such Litigation Costs.

 

52

 

Certain
Termination Rights (Sections 12.1, 12.2 and 12.4)

 

·              Alnylam has the right to terminate
the MIT Agreement for any reason upon at least 6 months’ prior written notice
to MIT and payment of all amounts due to MIT through the effective date of
termination.

 

·              If Alnylam ceases to carry on its
business related to the MIT Agreement, MIT will have the right to terminate the
MIT Agreement immediately upon written notice to Alnylam.

 

·              MIT, at its sole discretion, may
terminate the Exclusive Period upon ten (10) days written notice to
Alnylam if any of the following events occurs:  (a) Alnylam is in
uncured material default under the Research Agreement, including uncured
failure to make any payments due thereunder; or (b) the Research Agreement
is terminated for any reason other than for (i) material breach by MIT, (ii) the
inability of Dr. Robert Langer to continue to serve as Principal
Investigator, and the inability of the parties to agree upon a replacement
Principal Investigator, an interim Principal Investigator, or an alternate
arrangement for the performance of the Research after Dr. Langer is no
longer able to serve as Principal Investigator (capitalized terms used in the
foregoing clause have the meanings ascribed to them in the Research Agreement);
or (iii) circumstances beyond MIT’s reasonable control that preclude the
continuation of the Research, as provided for under the Research Agreement.

 

Definitions

 

“Development
Candidate” means a pre-clinical Licensed Product which possesses desirable
properties of a therapeutic agent for the treatment of a clinical condition
based on in vitro and animal
proof-of-concept studies.

 

“Exclusive
Period” means the term of the MIT Agreement.

 

“Field”
means therapeutic use in humans.

 

“Immunomodulatory
Nucleic Acid” means a nucleic acid molecule that (i) stimulates or
blocks immune system functions, and (ii) the nucleotide sequence of which
does not specifically target and modulate gene expression.  Immunomodulatory Nucleic Acid specifically
excludes siRNA, miRNA and nucleic acids that function through an RNA
interference mechanism.

 

“Library
Component” means a Library Product which is a set of reaction products
formed by an addition reaction between two individual monomers, which set will
include all reaction products and combinations within such set, including all
isomers; and any compounds identical to any of the foregoing, including
individual reaction products within such set, regardless of the means by which
said compounds are prepared, manufactured or synthesized.

 

“Library
Product” means any product that, in whole or in part: (i) absent the
license granted hereunder, would infringe one or more Valid Claims of the
Patent Rights; or

 

53

 

(ii) is
manufactured by using a Licensed Process or that, when used, practices a
Licensed Process.

 

“Licensed
Process” means any process that, in whole or in part: (i) absent the
license granted hereunder, would infringe one or more Valid Claims of the
Patent Rights; or (ii) when practiced, uses a Library Product.

 

“Licensed
Product” means any product that contains both (i) an RNAi Product and (ii) a
Library Product.  Licensed Product
specifically excludes any products containing or incorporating any other
therapeutically or pharmaceutically active agents, including without limitation
proteins or peptides, antibodies, Small Molecules, non-siRNA and non-miRNA
nucleic acids, and Immunomodulatory Nucleic Acids.

 

“miRNA”
(“microRNA”) means a class of endogenous, non-coding, sequence specific
ribonucleic acid (RNA) between 21 to 25 nucleotides in length that modulates
gene expression.  miRNA specifically
excludes messenger RNA, and any other RNA that encodes a polypeptide, and
Immunomodulatory Nucleic Acids.

 

“miRNA
Therapeutic” means a therapeutic containing, composed of or based on
oligomers of native or chemically modified RNA designed to either modulate an
miRNA and/or provide the function of an miRNA.

 

“ND98
Library Component” means the Library Component which is described in Appendix
C of the MIT Agreement.

 

“Patent
Rights” means the patent applications listed on Appendix A to the
MIT Agreement entitled “Amine-Containing Lipids and Uses Thereof” and “A
Combination Library of Lipidoids: 
Efficient Systemic siRNA Delivery”, and resulting patents and patent
applications.

 

“Research
Agreement” means the sponsored research agreement between MIT and Alnylam
effective on May 8, 2007.

 

“Research
Support Payment” means payments to Alnylam or an Affiliate from a
Sublicensee for the purposes of funding the costs of bona fide research and development of Licensed Products
and/or Library Products under a jointly prepared research plan and only to the
extent such payments were spent on such research and development of Licensed
Products and/or Library Products, and only to fund or pay for direct and
indirect costs and fully loaded personnel costs, all as calculated under
GAAP.  For the avoidance of doubt, Research
Support Payments will mean payments that are expressly intended only to fund or
pay for (i) equipment, supplies, products or services, and (ii) the
use of employees and/or full time consultants, incurred or to be incurred on
behalf of such Sublicensee to achieve a research or development goal for
Licensed Products and/or Library Products.

 

“RNAi
Product” means a product containing one or more siRNA Therapeutics and/or
miRNA Therapeutics towards one or more Targets. 
For the avoidance of doubt, RNAi Product specifically includes siRNA
Therapeutics and miRNA Therapeutics in

 

54

 

association
with other molecules which are not therapeutically or pharmaceutically active,
but which function to improve delivery to cells, including, without limitation,
siRNA and miRNA Therapeutics which are covalently linked to, or otherwise
associated with, lipids, carbohydrates, peptides, proteins, aptamers and Small
Molecules.

 

“siRNA”
(“small interfering RNA”) means a double-stranded ribonucleic acid (RNA)
molecule designed to act through an RNA interference mechanism that 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.  siRNA specifically excludes messenger RNA,
and any other RNA that encodes a polypeptide, and Immunomodulatory Nucleic
Acids.

 

“siRNA
Therapeutic” means a therapeutic containing, composed of or based on siRNA
and designed to modulate the function of particular genes or gene products by
causing degradation of a messenger RNA to which such siRNA is complementary,
and that is not an miRNA Therapeutic.

 

“Small
Molecule” means a non-polymeric bioactive molecule that is not a peptide,
protein, DNA, RNA or a complex carbohydrate.

 

“Sublicense
Income” means any payments that Alnylam or an Affiliate receives from a Sublicensee
in consideration of the sublicense of the rights granted Alnylam and Affiliates
under Section 2.1 of the MIT Agreement, including without limitation
equity, license fees, milestone payments (net of any sums due to MIT under this
Agreement for the same milestone event), license maintenance fees, and other
payments, but specifically excluding:

 

·                  royalties on Net Sales;

 

·                  minimum royalty upfront
payments only to the extent such payments equal actual royalties due to
Alnylam;

 

·                  fair market value of equity
investments in Alnylam or an Affiliate by a Sublicensee;

 

·                  reimbursement of out of
pocket patent expenses for the Patent Rights;

 

·                  Research Support Payments;

 

·                  loan proceeds paid to
Alnylam by a Sublicensee in an arms length, full recourse debt financing; and

 

·                  any amounts received under
an indemnification obligation.

 

55

 

For clarity, the amounts received by Alnylam or its affiliates related
to the development of Licensed Products will be considered Sublicense Income.

 

“Target”
means (a) a single gene, as defined in the NCBI Entrez Gene database or
any successor database thereto, or a product of such gene, that is a site or
potential site of therapeutic intervention by an siRNA Therapeutic and/or an
miRNA Therapeutic; (b) naturally occurring variants of a gene or gene
product described in clause (a); or (c) a naturally occurring interfering
RNA or miRNA or precursors thereof; provided that for the purposes of this
definition a viral genome will be regarded as a single gene, and that the DNA
sequence encoding a specific miRNA precursor will also be regarded as a single
gene.

 

56

 

TEKMIRA/UBC

 

The Sublicense Agreement between Tekmira and Alnylam, dated January 8,
2007 (“UBC Sublicense Agreement”)

 

Brief
Summary of Technology Covered by License:  See Tekmira-Alnylam Agreement above.

 

Limitations
on Scope of License (Sections 3.1 and 3.3)

 

·              The sublicense granted to Alnylam
is limited to an exclusive, worldwide license under the rights granted to
Tekmira in the University License Agreement (see below) with respect to
Technology to research, develop, manufacture, have made, distribute, import,
use, sell and have sold Products in and for the Alnylam Field.  In addition, any sublicense granted by
Tekmira to Alnylam would be subject to Tekmira’s sublicense to Esperion
Technologies, Inc. of certain technology relating to liposome compositions
and methods for the treatment of atherosclerosis.

 

·              Under the University License
Agreement, Tekmira obtained from the University an exclusive, worldwide license
to use and sublicense the Technology and to make, have made, distribute, import
and use goods, the manufacture, use or sale of which would, but for the license
granted herein, infringe a Valid Claim of any Patent, including a license to
use and sublicense the Technology for (a) the delivery of and use with
nucleic acid constructs, and (b) the treatment, prophylaxis and diagnosis
of diseases in humans using an RNAi Product or miRNA Product, and to research,
develop, make, have made, distribute, import, use, sell and have sold RNAi
Products and miRNA Products.

 

·              University retains the right to
use the Technology without charge in any manner whatsoever for non-commercial
research, scholarly publication, educational or other non-commercial use.

 

Restrictions
on Sublicensing by Alnylam (Sections 3.2 and 4.2)

 

·              Any further sublicense granted by
Alnylam to a third party would be subject to the grant of the following
licenses by Alnylam to Tekmira under Alnylam’s rights in the Technology: (a) to
perform Tekmira’s obligations under the Collaboration with respect to Products,
and the Manufacturing Activities, on a non-exclusive basis, and (b) to
develop, manufacture and commercialize Inex Royalty Products for the treatment,
prophylaxis and diagnosis of diseases in humans, on an exclusive basis.

 

·              Alnylam may grant sublicenses to
third parties with respect to the Technology only upon written notice to
Tekmira and the University, and provided  that the Sublicensee
agrees (i) to perform the terms of the UBC Sublicense Agreement as if such
Sublicensee were Alnylam under the UBC Sublicense Agreement; (ii) to
represent that Sublicensee is not, as of the effective date of the relevant
sublicense agreement, engaged in a dispute with the University; and (iii) to
be subject to a written sublicense agreement that contains terms consistent
with “the terms of this Agreement” described in Section

 

57

 

4.2(c) of
the UBC Sublicense Agreement (see below) and that provides that the University
is a third party beneficiary of, and has the right to enforce directly against
the sublicensee, the terms in such sublicense agreement that are consistent
with the terms listed in Section 4.2(c)(ii) of the UBC Sublicense
Agreement.

 

·              Section 4.2(c)(ii) of
the UBC Sublicense Agreement states that the “terms of this Agreement” means (i) the
terms set forth in the UBC Sublicense Agreement; (ii) terms in such
sublicense agreement consistent with Sections 1.3 (Alnylam Consent to Certain
Disclosures to the University), 1.7 (Rights of the University), 2.1 (Limited
Warranties), 2.2 (Disclaimer of Product Liability), 2.3 (Indemnification of the
University), 2.4 (Monetary Cap Respecting UBC License), 2.5 (Disclaimer of
Consequential Losses by the University), 2.6 (Litigation), 2.7 (UBC Trademark),
2.8 (Confidentiality of Terms) and 2.13 (Alnylam Warranties) of the Consent
Agreement among Alnylam, Tekmira and the University of even date with the UBC
Sublicense Agreement (“Consent Agreement”); and (iii) other
customary and reasonable terms, including but not limited to terms relating to
breach and termination, that are consistent with Alnylam’s obligations to
Tekmira under the UBC Sublicense Agreement and the Tekmira Agreement.

 

·              Any sublicense granted by Alnylam
under the UBC Sublicense Agreement will survive termination of the licenses or
other rights granted to Alnylam under the UBC Sublicense Agreement, and be
assumed by Tekmira, as long as (i) the sublicensee is not then in breach
of its sublicense agreement, (ii) the sublicensee agrees in writing to be
bound to Tekmira as a sublicensor and to the University under the terms and
conditions of the UBC Sublicense Agreement, and (iii) the sublicensee
agrees in writing that in no event will Tekmira assume any obligations or
liabilities, or be under any obligation or requirement of performance, under
any such sublicense extending beyond Tekmira’s obligations and liabilities
under the UBC Sublicense Agreement.

 

·              Alnylam is required to furnish
Tekmira with a copy of each sublicense granted within 30 days after
execution.  Any such copy may contain
reasonable redactions as Alnylam may make, provided  that such
redactions do not include provisions necessary to demonstrate compliance with
the requirements of the UBC Sublicense Agreement.  If University requests of Tekmira that a less
redacted version of any sublicense be provided to University, Alnylam agrees to
discuss in good faith with Tekmira and the University the University’s
concerns.

 

Financial Obligations (Section 5.0)

 

·              The consideration for the rights
granted to Alnylam to the Technology under the UBC Sublicense Agreement, and
the consideration for the rights granted by Tekmira to Alnylam to other
technologies under the Tekmira Agreement, is the payment by Alnylam of milestones
and royalties in accordance with Article 7 of the Tekmira Agreement.

 

Prosecution
and Enforcement (Section 7.7)

 

·              Tekmira will have the right, with
reasonable input from Alnylam, to identify any process, use or products arising
out of the Technology that may be patentable and will

 

58

 

take all reasonable steps to apply for a patent
in the name of the University, provided that Tekmira pays all costs of applying
for, registering, and maintaining the patent in those jurisdictions in which
Tekmira determines that a Patent is required.

 

·              On the issuance of a patent for
the Technology, Tekmira will have the right to become, and will become the
licensee of the same, all pursuant to the terms contained in the University
License Agreement, and Alnylam will have the right to become, and will become
the sublicensee of such rights pursuant to the terms contained in the UBC
Sublicense Agreement.

 

·              Should Tekmira:

 

·              discontinue pursuing one or more
patent applications, patent protection or patent maintenance in relation to the
Patent(s) or any continuation, continuation in-part, division, reissue,
re-examination or extension thereof; or

 

·              not pursue patent protection in
relation to the Patent(s) in any specific jurisdiction; or

 

·              discontinue or not pursue patent
protection in relation to any further process, use or products arising out of
the Technology in any jurisdiction;|

 

·              then Tekmira will provide Alnylam with notice of its decision to
discontinue or not to pursue such patent protection concurrently with the
notice provided to the University by Tekmira pursuant to Section 6.6 of
the University License Agreement.

 

·              In the event of an alleged
infringement by a third party of the Technology or any right with respect to
the Technology, or any complaint by Alnylam alleging any infringement by a
third party with respect to the Technology or any right with respect to the
Technology, in each case that is licensed to Alnylam under the UBC Sublicense
Agreement, Alnylam will, subject to Tekmira having first obtained the
University’s consent as required by Article 7 of the University License
Agreement, have the right to prosecute such litigation at Alnylam’s expense.

 

·              In the event of any litigation,
Alnylam will keep Tekmira fully informed of the actions and positions taken or
proposed to be taken by Alnylam (on behalf of itself or a sublicensee) and
actions and positions taken by all other parties to such litigation.

 

·              In the event of an alleged
infringement of the Technology or any third party use of the Technology which
is Confidential Information, Alnylam and Tekmira agree that they will
reasonably cooperate to enjoin such third party’s use of the Technology.

 

·              If any complaint alleging
infringement or violation of any patent or other proprietary rights is made
against Alnylam (or a sublicensee of Alnylam) with respect to the manufacture,
use or sale of Product, then:

 

59

 

·              Alnylam will promptly notify
Tekmira upon receipt of any such complaint and will keep Tekmira fully informed
of the actions and positions taken by the complainant and taken or proposed to
be taken by Tekmira (on behalf of itself or a sublicensee);

 

·              Alnylam (or any sublicenseee, as
the case may be) will pay all costs and expenses incurred by Alnylam (or any
sublicensee of Alnylam) in investigating, resisting, litigating and settling
such a complaint, including the payment of any award or damages and/or costs to
any third party; and

 

·              if as a result of such suit it is
decided that a Product infringes any valid claim on a patent owned by another,
Tekmira will consider fair distribution of Royalty Income.

 

Diligence
and Reporting (Section 10.2)

 

·              Alnylam is required to use its
reasonable commercial efforts to promote, market and sell the Products and
utilize the Technology and to meet or cause to be met the market demand for the
Products and the utilization of the Technology.

 

·              Alnylam is required to deliver to
Tekmira an annual report, due on December 31 of each year, which
summarizes the major activities Alnylam has undertaken in the course of the
preceding 12 months to develop and commercialize and/or market the
Technology.  The report must include an
outline of the status of any Products in clinical trials and the existence of
any sublicenses of the Technology.

 

Certain Termination Rights (Section 16.1)

 

·              If Alnylam’s rights to Inex
Technology are terminated under the Tekmira Agreement, the UBC Sublicense
Agreement and the license granted to Alnylam thereunder also terminates.

 

Definitions

 

Capitalized
terms not otherwise defined below have the meanings given to them under the
Tekmira Agreement.

 

“1999 CRA” means the Collaborative
Research Agreement between Tekmira and the University dated effective January 1,
1999 and successor agreements to such Know-How.

 

“2007 CRA” means the Collaborative
Research Agreement between Tekmira and the University dated effective January 1,
2007 and successor agreements to such Know-How.

 

“Alnylam Field”  means the use of Products for the
treatment, prophylaxis and diagnosis of diseases in humans.

 

“Improvements” means, generally (i) any
and all patents and any and all patent applications that claim priority to
Patents; and (ii) any and all inventions arising therefrom.  Notwithstanding anything to the contrary in
the University License Agreement, ownership of all Improvements (A) that
fall within clause (i) above will be

 

60

 

assigned to the University; and (B) that
fall within clause (ii) above will follow inventorship as determined by
U.S. patent law, except that the University will own all Improvements made by
its employees, whether alone or jointly with Tekmira, under the 1999 CRA or
2007 CRA.

 

“miRNA Product” means a product
containing, comprised of or based on native or chemically modified RNA
oligomers designed to either modulate a micro RNA transcript and/or provide the
function of a micro RNA transcript.

 

“Patent(s)” means, generally, the
patents and patent applications, including certain “Wheeler Patents,” listed on
Schedule A to the UBC Sublicense Agreement, and any claims of CIPs and of
resulting patents which are to the UBC Sublicense Agreement, and any reissues
of such patents.

 

“Product(s)” means any RNAi Product or
miRNA Product that, the manufacture, use or sale of which would, but for the
license granted herein, infringe a Valid Claim of one or more of the Patent(s).

 

“RNAi Product” means a product
containing, comprised of or based on small interfering RNAs or small
interfering RNA derivatives or other moieties effective in gene function
modulation and designed to modulate the function of particular genes or gene
products by causing degradation of a target mRNA to which such small
interfering RNAs or small interfering RNA derivatives are complementary, and
that is not an miRNA Product.

 

“Technology” means the Patent(s) and
any and all knowledge, know-how and/or technique or techniques invented,
developed and/or acquired, being invented, developed and/or acquired by the
University solely or jointly with Tekmira relating to the Patent(s), including,
without limitation, all research, data, specifications, instructions, manuals,
papers or other materials of any nature whatsoever, whether written or otherwise,
relating to same.

 

“University License Agreement” means the
License Agreement dated effective July 1, 1998, as amended, pursuant to
which Tekmira is the exclusive licensee of certain Patents owned by the
University of British Columbia (the “University”).

 

61

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