Document:

EXHIBIT 10.1

 

EXECUTION COPY

 

 

CONFIDENTIAL TREATMENT

 

 

LICENSE AND
COLLABORATION AGREEMENT

 

BY AND BETWEEN

 

 

ALNYLAM PHARMACEUTICALS,
INC.

 

AND

 

CUBIST PHARMACEUTICALS,
INC.

 

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

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
   

  	
  Section 1.1

  	
  “Action”

  	
  1

  
	
   

  	
  Section 1.2

  	
  “Affiliate”

  	
  1

  
	
   

  	
  Section 1.3

  	
  “Alnylam Collaboration IP”

  	
  2

  
	
   

  	
  Section 1.4

  	
  “Alnylam In-License”

  	
  2

  
	
   

  	
  Section 1.5

  	
  “Alnylam Know-How”

  	
  2

  
	
   

  	
  Section 1.6

  	
  “Alnylam Patent Rights”

  	
  2

  
	
   

  	
  Section 1.7

  	
  “Alnylam Sequence Specific Patent Rights”

  	
  2

  
	
   

  	
  Section 1.8

  	
  “Alnylam Sequence Specific Know-How”

  	
  2

  
	
   

  	
  Section 1.9

  	
  “Alnylam Technology”

  	
  3

  
	
   

  	
  Section 1.10

  	
  “API Bulk Drug Substance”

  	
  3

  
	
   

  	
  Section 1.11

  	
  “Asia”

  	
  3

  
	
   

  	
  Section 1.12

  	
  “Asian Partner”

  	
  3

  
	
   

  	
  Section 1.13

  	
  “Business Day”

  	
  3

  
	
   

  	
  Section 1.14

  	
  “Calendar Quarter”

  	
  3

  
	
   

  	
  Section 1.15

  	
  “Calendar Year”

  	
  3

  
	
   

  	
  Section 1.16

  	
  “Clinical Investigation Laws”

  	
  3

  
	
   

  	
  Section 1.17

  	
  “Clinical Regulatory Filings”

  	
  3

  
	
   

  	
  Section 1.18

  	
  “Clinical Study”

  	
  4

  
	
   

  	
  Section 1.19

  	
  “CMC”

  	
  4

  
	
   

  	
  Section 1.20

  	
  “Collaboration”

  	
  4

  
	
   

  	
  Section 1.21

  	
  “Commercialization” or “Commercialize”

  	
  4

  
	
   

  	
  Section 1.22

  	
  “Commercialization Costs”

  	
  4

  
	
   

  	
  Section 1.23

  	
  “Confidential Information”

  	
  5

  
	
   

  	
  Section 1.24

  	
  “Control” or “Controlled”

  	
  5

  
	
   

  	
  Section 1.25

  	
  “Cost of Goods Sold”

  	
  5

  
	
   

  	
  Section 1.26

  	
  “Cover,” “Covering” or “Covered”

  	
  6

  
	
   

  	
  Section 1.27

  	
  “CPI”

  	
  6

  
	
   

  	
  Section 1.28

  	
  “Cubist Collaboration IP”

  	
  6

  
	
   

  	
  Section 1.29

  	
  “Cubist In-License”

  	
  6

  
	
   

  	
  Section 1.30

  	
  “Cubist Know-How”

  	
  6

  
	
   

  	
  Section 1.31

  	
  “Cubist Patent Rights”

  	
  6

  
	
   

  	
  Section 1.32

  	
  “Cubist Technology”

  	
  6

  
	
   

  	
  Section 1.33

  	
  “Development” or “Develop”

  	
  7

  
	
   

  	
  Section 1.34

  	
  “Development Costs”

  	
  7

  
	
   

  	
  Section 1.35

  	
  “Development Plan”

  	
  8

  
	
   

  	
  Section 1.36

  	
  “Diligent Efforts”

  	
  8

  
	
   

  	
  Section 1.37

  	
  “Directly Competitive Product”

  	
  8

  
	
   

  	
  Section 1.38

  	
  “Distribution Costs”

  	
  8

  
	
   

  	
  Section 1.39

  	
  “DMF”

  	
  8

  
	
   

  	
  Section 1.40

  	
  “Drug Regulation Laws”

  	
  8

  
	
   

  	
  Section 1.41

  	
  “EMEA”

  	
  9

  
					

 

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

 

i

 

TABLE
OF CONTENTS

 

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.42

  	
  “European Union” or “EU”

  	
  9

  
	
   

  	
  Section 1.43

  	
  “Executive Officers”

  	
  9

  
	
   

  	
  Section 1.44

  	
  “Existing Alnylam In-Licenses”

  	
  9

  
	
   

  	
  Section 1.45

  	
  “FDA”

  	
  9

  
	
   

  	
  Section 1.46

  	
  “Field”

  	
  9

  
	
   

  	
  Section 1.47

  	
  “Finished Product”

  	
  9

  
	
   

  	
  Section 1.48

  	
  “First Commercial Sale”

  	
  9

  
	
   

  	
  Section 1.49

  	
  “First Opt-Out Milestone”

  	
  9

  
	
   

  	
  Section 1.50

  	
  “FTE”

  	
  9

  
	
   

  	
  Section 1.51

  	
  “FTE Cost”

  	
  10

  
	
   

  	
  Section 1.52

  	
  “GAAP”

  	
  10

  
	
   

  	
  Section 1.53

  	
  “Generic Competition”

  	
  10

  
	
   

  	
  Section 1.54

  	
  “Generic Product”

  	
  10

  
	
   

  	
  Section 1.55

  	
  “Good Clinical Practice”

  	
  10

  
	
   

  	
  Section 1.56

  	
  “Good Laboratory Practice”

  	
  10

  
	
   

  	
  Section 1.57

  	
  “Governmental Authority”

  	
  10

  
	
   

  	
  Section 1.58

  	
  “Government Health Care Programs”

  	
  11

  
	
   

  	
  Section 1.59

  	
  “Government Order”

  	
  11

  
	
   

  	
  Section 1.60

  	
  “Health Care Laws”

  	
  11

  
	
   

  	
  Section 1.61

  	
  “ICH”

  	
  11

  
	
   

  	
  Section 1.62

  	
  “IND”

  	
  11

  
	
   

  	
  Section 1.63

  	
  “Investigator Sponsored Clinical Study”

  	
  11

  
	
   

  	
  Section 1.64

  	
  “Joint Collaboration IP”

  	
  11

  
	
   

  	
  Section 1.65

  	
  “Know-How”

  	
  12

  
	
   

  	
  Section 1.66

  	
  “Knowledge of Alnylam”

  	
  12

  
	
   

  	
  Section 1.67

  	
  “Kyowa Agreement”

  	
  12

  
	
   

  	
  Section 1.68

  	
  “Kyowa Hakko”

  	
  12

  
	
   

  	
  Section 1.69

  	
  “Law”

  	
  12

  
	
   

  	
  Section 1.70

  	
  “Legal Exclusivity Period”

  	
  12

  
	
   

  	
  Section 1.71

  	
  “Licensed Product”

  	
  12

  
	
   

  	
  Section 1.72

  	
  “Major EU Country”

  	
  12

  
	
   

  	
  Section 1.73

  	
  “Manufacturing” or “Manufacture”

  	
  12

  
	
   

  	
  Section 1.74

  	
  N.A. Pre-Tax Profit or Loss”

  	
  12

  
	
   

  	
  Section 1.75

  	
  “Necessary Third Party IP”

  	
  13

  
	
   

  	
  Section 1.76

  	
  “Net Sales”

  	
  13

  
	
   

  	
  Section 1.77

  	
  “New Drug Application” or “NDA”

  	
  15

  
	
   

  	
  Section 1.78

  	
  “North America” or “N.A.”

  	
  15

  
	
   

  	
  Section 1.79

  	
  “Parties”

  	
  15

  
	
   

  	
  Section 1.80

  	
  “Party”

  	
  15

  
	
   

  	
  Section 1.81

  	
  “Patent-Based Exclusivity Period”

  	
  15

  
	
   

  	
  Section 1.82

  	
  “Patent Rights”

  	
  15

  
	
   

  	
  Section 1.83

  	
  “Person”

  	
  15

  
					

 

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

 

ii

 

TABLE
OF CONTENTS

 

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.84

  	
  “Phase I Clinical Study”

  	
  15

  
	
   

  	
  Section 1.85

  	
  “Phase II Clinical Study”

  	
  15

  
	
   

  	
  Section 1.86

  	
  “Phase III Clinical Study”

  	
  16

  
	
   

  	
  Section 1.87

  	
  “Pivotal Clinical Study”

  	
  16

  
	
   

  	
  Section 1.88

  	
  “Post-Approval Study”

  	
  16

  
	
   

  	
  Section 1.89

  	
  “Private Health Care Plans”

  	
  16

  
	
   

  	
  Section 1.90

  	
  “Post Approval Medical and Regulatory Activities”

  	
  16

  
	
   

  	
  Section 1.91

  	
  “Product Liability Costs”

  	
  16

  
	
   

  	
  Section 1.92

  	
  “Profit-Share Territory”

  	
  16

  
	
   

  	
  Section 1.93

  	
  “Product Trademark”

  	
  16

  
	
   

  	
  Section 1.94

  	
  “Regulatory Approval”

  	
  16

  
	
   

  	
  Section 1.95

  	
  “Regulatory Authority”

  	
  17

  
	
   

  	
  Section 1.96

  	
  “Regulatory-Based Exclusivity Period”

  	
  17

  
	
   

  	
  Section 1.97

  	
  “Related Party”

  	
  17

  
	
   

  	
  Section 1.98

  	
  “RNAi Product”

  	
  17

  
	
   

  	
  Section 1.99

  	
  “Royalty Territory”

  	
  17

  
	
   

  	
  Section 1.100

  	
  “RSV”

  	
  17

  
	
   

  	
  Section 1.101

  	
  “RSV01 Product”

  	
  17

  
	
   

  	
  Section 1.102

  	
  “RSV02 Product”

  	
  17

  
	
   

  	
  Section 1.103

  	
  “Safety Data”

  	
  17

  
	
   

  	
  Section 1.104

  	
  “Sales Representative”

  	
  18

  
	
   

  	
  Section 1.105

  	
  “Second Opt-Out Milestone”

  	
  18

  
	
   

  	
  Section 1.106

  	
  “Sublicensee”

  	
  18

  
	
   

  	
  Section 1.107

  	
  “Sublicense Income”

  	
  18

  
	
   

  	
  Section 1.108

  	
  “Territory”

  	
  19

  
	
   

  	
  Section 1.109

  	
  “Third Party”

  	
  19

  
	
   

  	
  Section 1.110

  	
  “United States” or “U.S.”

  	
  19

  
	
   

  	
  Section 1.111

  	
  “Valid Claim”

  	
  19

  
	
   

  	
  Section 1.112

  	
  Additional Definitions

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II MANAGEMENT OF COLLABORATIVE ACTIVITIES

  	
  20

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 2.1

  	
  Joint Steering Committee

  	
  20

  
	
   

  	
  Section 2.2

  	
  Appointment of Subcommittees, Project Teams and
  Collaboration Managers

  	
  22

  
	
   

  	
  Section 2.3

  	
  Reports and Minutes

  	
  22

  
	
   

  	
  Section 2.4

  	
  Decision-Making

  	
  23

  
	
   

  	
  Section 2.5

  	
  Deadlocks

  	
  23

  
	
   

  	
  Section 2.6

  	
  Dissolution of JSC

  	
  24

  
	
   

  	
  Section 2.7

  	
  Collaboration Guidelines

  	
  24

  
					

 

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

 

iii

 

TABLE
OF CONTENTS

 

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE III LICENSE GRANTS

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 3.1

  	
  Alnylam Grants

  	
  25

  
	
   

  	
  Section 3.2

  	
  Cubist Grants

  	
  28

  
	
   

  	
  Section 3.3

  	
  Sublicensing Terms; Liability

  	
  29

  
	
   

  	
  Section 3.4

  	
  Joint Collaboration IP

  	
  29

  
	
   

  	
  Section 3.5

  	
  Section 365(n) of the Bankruptcy Code

  	
  29

  
	
   

  	
  Section 3.6

  	
  Retained Rights

  	
  30

  
	
   

  	
   

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

  	
  30

  
	
   

  	
   

  
	
   

  	
  Section 4.1

  	
  Overview

  	
  30

  
	
   

  	
  Section 4.2

  	
  Development Plan; Amendments; Development
  Responsibilities

  	
  30

  
	
   

  	
  Section 4.3

  	
  Development Efforts; Manner of Performance; Records and
  Reports

  	
  31

  
	
   

  	
  Section 4.4

  	
  Joint Development Costs

  	
  32

  
	
   

  	
  Section 4.5

  	
  Reimbursement of Development Costs

  	
  33

  
	
   

  	
  Section 4.6

  	
  Additional RSV Products

  	
  33

  
	
   

  	
  Section 4.7

  	
  Alnylam Opt-Out Option

  	
  33

  
	
   

  	
  Section 4.8

  	
  Technology Transfer and Exchange of Know-How

  	
  40

  
	
   

  	
   

  
	
  ARTICLE V COMMERCIALIZATION AND CERTAIN OTHER
  RESPONSIBILITIES

  	
  40

  
	
   

  	
   

  
	
   

  	
  Section 5.1

  	
  Diligent Efforts

  	
  40

  
	
   

  	
  Section 5.2

  	
  Joint Commercialization Team

  	
  40

  
	
   

  	
  Section 5.3

  	
  Commercialization Plan

  	
  41

  
	
   

  	
  Section 5.4

  	
  Regulatory Filings

  	
  43

  
	
   

  	
  Section 5.5

  	
  Advertising and Promotional Materials

  	
  43

  
	
   

  	
  Section 5.6

  	
  Sales and Distribution

  	
  43

  
	
   

  	
  Section 5.7

  	
  Reporting Obligations

  	
  44

  
	
   

  	
  Section 5.8

  	
  Other Responsibilities

  	
  44

  
	
   

  	
  Section 5.9

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

  	
  45

  
	
   

  	
  Section 5.10

  	
  Recalls, Market Withdrawals or Corrective Actions

  	
  46

  
	
   

  	
  Section 5.11

  	
  Medical Inquiries

  	
  46

  
	
   

  	
  Section 5.12

  	
  Export Monitoring

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI MANUFACTURE AND SUPPLY

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.1

  	
  Supply Obligations; Alnylam’s Existing Manufacturing
  Arrangements

  	
  46

  
					

 

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

 

iv

 

TABLE
OF CONTENTS

 

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
   

  	
  Section 6.2

  	
  Transition of Manufacturing Responsibilities to
  Cubist

  	
  48

  
	
   

  	
  Section 6.3

  	
  Supply Agreement

  	
  49

  
	
   

  	
  Section 6.4

  	
  Technology Transfer

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII FINANCIAL PROVISIONS

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.1

  	
  Upfront Fee

  	
  49

  
	
   

  	
  Section 7.2

  	
  Development Milestones

  	
  49

  
	
   

  	
  Section 7.3

  	
  Sales Milestones

  	
  50

  
	
   

  	
  Section 7.4

  	
  N.A. Pre-Tax Profit or Loss

  	
  51

  
	
   

  	
  Section 7.5

  	
  Licensed Product Royalties in the Royalty Territory

  	
  52

  
	
   

  	
  Section 7.6

  	
  Adjustments for Necessary Third Party IP Payments in
  the Royalty Territory

  	
  53

  
	
   

  	
  Section 7.7

  	
  Necessary Third Party IP in the
  Profit-Share Territory

  	
  54

  
	
   

  	
  Section 7.8

  	
  Royalty Adjustments for Generic Products

  	
  54

  
	
   

  	
  Section 7.9

  	
  Minimum Payments in the Royalty Territory

  	
  54

  
	
   

  	
  Section 7.10

  	
  Royalty Reports; Payments

  	
  55

  
	
   

  	
  Section 7.11

  	
  Payments from Alnylam to Cubist; Reports

  	
  55

  
	
   

  	
  Section 7.12

  	
  Audits

  	
  55

  
	
   

  	
  Section 7.13

  	
  Tax Matters

  	
  56

  
	
   

  	
  Section 7.14

  	
  United States Dollars

  	
  57

  
	
   

  	
  Section 7.15

  	
  Currency Exchange

  	
  57

  
	
   

  	
  Section 7.16

  	
  Blocked Payments

  	
  57

  
	
   

  	
  Section 7.17

  	
  Late Payments

  	
  57

  
	
   

  	
  Section 7.18

  	
  No Overlapping Royalties

  	
  57

  
	
   

  	
  Section 7.19

  	
  Reporting

  	
  57

  
	
   

  	
  Section 7.20

  	
  Resolution of Disputes

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII INTELLECTUAL PROPERTY OWNERSHIP,
  PROTECTION AND RELATED MATTERS

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.1

  	
  Inventorship

  	
  58

  
	
   

  	
  Section 8.2

  	
  Ownership

  	
  58

  
	
   

  	
  Section 8.3

  	
  Prosecution and Maintenance of Patent Rights

  	
  58

  
	
   

  	
  Section 8.4

  	
  Third Party Infringement

  	
  60

  
	
   

  	
  Section 8.5

  	
  Claimed Infringement; Third Party Challenges to
  Patent Rights

  	
  62

  
	
   

  	
  Section 8.6

  	
  Third Party Technology

  	
  63

  
	
   

  	
  Section 8.7

  	
  Patent Marking

  	
  64

  
	
   

  	
  Section 8.8

  	
  Trademarks

  	
  64

  
	
   

  	
   

  
	
  ARTICLE IX CONFIDENTIALITY AND PUBLICITY

  	
  65

  
	
   

  	
   

  
	
   

  	
  Section 9.1

  	
  Confidential Information

  	
  65

  
					

 

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

 

v

 

TABLE
OF CONTENTS

 

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
   

  	
  Section 9.2

  	
  Employee, Consultant and Advisor Obligations and
  Disclosure to Regulatory Authorities

  	
  66

  
	
   

  	
  Section 9.3

  	
  Certain Disclosures by Alnylam or Cubist

  	
  67

  
	
   

  	
  Section 9.4

  	
  Publicity

  	
  67

  
	
   

  	
  Section 9.5

  	
  Publications

  	
  67

  
	
   

  	
  Section 9.6

  	
  Asian Partner

  	
  68

  
	
   

  	
  Section 9.7

  	
  Coordination with Alnylam’s Asian Partner

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X REPRESENTATIONS AND WARRANTIES; CERTAIN
  COVENANTS; INDEMNIFICATION

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.1

  	
  Exclusivity Covenant

  	
  68

  
	
   

  	
  Section 10.2

  	
  Representations of Authority

  	
  68

  
	
   

  	
  Section 10.3

  	
  Consents

  	
  69

  
	
   

  	
  Section 10.4

  	
  No Conflict

  	
  69

  
	
   

  	
  Section 10.5

  	
  Enforceability

  	
  69

  
	
   

  	
  Section 10.6

  	
  Sales Representatives

  	
  69

  
	
   

  	
  Section 10.7

  	
  Additional Representations and Warranties of Alnylam

  	
  70

  
	
   

  	
  Section 10.8

  	
  Cubist Representation Regarding Cubist In-Licenses

  	
  72

  
	
   

  	
  Section 10.9

  	
  No Warranties

  	
  72

  
	
   

  	
  Section 10.10

  	
  No Debarment

  	
  72

  
	
   

  	
  Section 10.11

  	
  Indemnification

  	
  72

  
	
   

  	
  Section 10.12

  	
  Limitation of Liability

  	
  74

  
	
   

  	
  Section 10.13

  	
  Insurance

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI TERM AND TERMINATION

  	
  75

  
	
   

  	
   

  
	
   

  	
  Section 11.1

  	
  Term

  	
  75

  
	
   

  	
  Section 11.2

  	
  Termination Rights

  	
  75

  
	
   

  	
  Section 11.3

  	
  Effect of Termination

  	
  76

  
	
   

  	
  Section 11.4

  	
  Payments to Cubist

  	
  78

  
	
   

  	
  Section 11.5

  	
  Effect of Expiration or Termination; Survival

  	
  83

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII FINAL DECISION-MAKING; DISPUTE
  RESOLUTION

  	
  84

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 12.1

  	
  Disputes

  	
  84

  
	
   

  	
  Section 12.2

  	
  Arbitration

  	
  84

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII MISCELLANEOUS

  	
  85

  
	
   

  	
   

  
	
   

  	
  Section 13.1

  	
  Choice of Law

  	
  85

  
	
   

  	
  Section 13.2

  	
  Notices

  	
  85

  
	
   

  	
  Section 13.3

  	
  Severability

  	
  86

  
					

 

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

 

vi

 

TABLE
OF CONTENTS

 

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
   

  	
  Section 13.4

  	
  Captions

  	
  86

  
	
   

  	
  Section 13.5

  	
  Integration

  	
  86

  
	
   

  	
  Section 13.6

  	
  Independent Contractors; No Agency

  	
  86

  
	
   

  	
  Section 13.7

  	
  Submission to Jurisdiction

  	
  87

  
	
   

  	
  Section 13.8

  	
  Assignment; Successors

  	
  87

  
	
   

  	
  Section 13.9

  	
  No Consequential or Punitive Damages

  	
  88

  
	
   

  	
  Section 13.10

  	
  Performance by Affiliates

  	
  88

  
	
   

  	
  Section 13.11

  	
  Force Majeure

  	
  88

  
	
   

  	
  Section 13.12

  	
  Construction

  	
  88

  
	
   

  	
  Section 13.13

  	
  Execution in Counterparts; Facsimile Signatures

  	
  89

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EXHIBIT A

  	
  Alnylam Patent Rights

  	
   

  
	
   

  	
  EXHIBIT B

  	
  ALN-RSV01

  	
   

  
	
   

  	
  EXHIBIT C

  	
  Existing Alnylam In-Licenses

  	
   

  
	
   

  	
  EXHIBIT D

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

  	
   

  
	
   

  	
  EXHIBIT E

  	
  Development Plan

  	
   

  
	
   

  	
  EXHIBIT F

  	
  Material Agreements Related to Licensed Products in
  the Territory

  	
   

  
	
   

  	
  EXHIBIT G

  	
  Supply Agreement Term Sheet

  	
   

  
	
   

  	
  EXHIBIT H

  	
  Milestone Payments Under the Existing Alnylam
  In-Licenses

  	
   

  
	
   

  	
  EXHIBIT I

  	
  Press Release

  	
   

  
	
   

  	
  Schedule 10.7

  	
  Disclosure Schedule

  	
   

  
					

 

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

 

vii

 

LICENSE
AND COLLABORATION AGREEMENT

 

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

 

INTRODUCTION

 

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

 

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

 

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

 

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

 

ARTICLE I

 

DEFINITIONS

 

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

 

Section 1.1  “Action”.  Action means any threatened, pending or
completed claim, action, cause of action or suit (whether in contract or tort
or otherwise), litigation (whether at law or in equity, whether civil or
criminal), controversy, assessment, arbitration, investigation, hearing,
charge, complaint, demand, notice or proceeding of, to, from, by or before, or
threatened to be brought to, from, by or before, any Governmental Authority,
including interferences, oppositions and patent invalidity suits as described
in Section 8.5.

 

Section 1.2  “Affiliate”.  Affiliate means with respect to any Party,
any Person controlling, controlled by or under common control with such
Party.  For purposes of this Section 1.2,
“control” means (a) in the case of a Person that is a corporate entity,
direct or indirect ownership of fifty percent (50%) or more of the stock or
shares having the right to vote for the election of directors of such Person,
and (b) in the case of a Person that is an entity, but is 

 

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

 

 

not a corporate entity, the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

 

Section 1.3  “Alnylam Collaboration IP”.  Alnylam Collaboration IP means (a) any
improvement, discovery or Know-How, patentable or otherwise, first identified,
discovered or developed solely by employees of Alnylam or its Affiliates or
other persons not employed by Cubist or any of its Affiliates acting on behalf
of Alnylam or any of its Affiliates in the conduct of the Collaboration, and (b) any
Patent Rights that claim or cover such improvements, discoveries or Know-How
and are owned or otherwise Controlled by Alnylam or, subject to Section 13.8,
any of its Affiliates, at any time during the Term.  Alnylam Collaboration IP excludes Alnylam’s
interest in Joint Collaboration IP.

 

Section 1.4  “Alnylam In-License”.  Alnylam In-License
means (a) the Existing Alnylam In-Licenses, and (b) any other
agreement between Alnylam and a Third Party, executed during the Term, pursuant
to which Alnylam has rights and obligations with respect to, or which otherwise
Cover, a Licensed Product and where (i) the intellectual property that is
the subject of such agreement is included within Alnylam Technology, and (ii) such
Alnylam Technology is necessary or reasonably useful to Develop, Commercialize
or Manufacture Licensed Product in the Field.

 

Section 1.5  “Alnylam Know-How”.  Alnylam Know-How
means Know-How owned or otherwise Controlled by Alnylam or any of its
Affiliates as of the Effective Date or as to which Alnylam or, subject to Section 13.8,
any of its Affiliates, obtains Control during the Term that is necessary or
reasonably useful for Cubist and its Related Parties to perform their
obligations or exploit their rights under this Agreement with respect to
Licensed Product, including their rights to Develop, Manufacture, or
Commercialize Licensed Product (other than Alnylam’s rights in Joint
Collaboration IP and Alnylam Collaboration IP).

 

Section 1.6  “Alnylam Patent Rights”.  Alnylam Patent Rights
means those Patent Rights owned or otherwise Controlled by Alnylam or any of
its Affiliates as of the Effective Date or as to which Alnylam or, subject to Section 13.8,
any of its Affiliates, obtains Control during the Term that are necessary or
reasonably useful for Cubist and its Related Parties to perform their
obligations or exploit their rights under this Agreement with respect to
Licensed Product, including their rights to Develop, Manufacture, or
Commercialize Licensed Product (other than Alnylam’s rights in Joint
Collaboration IP and Alnylam Collaboration IP), including the Patent Rights set
forth in Exhibit A.

 

Section 1.7  “Alnylam Sequence Specific Patent Rights”.  Alnylam Sequence Specific Patent Rights means
claim(s) contained in Patent Rights comprising Alnylam Technology that are
specifically directed to particular sequences of Licensed Products in the
Territory.

 

Section 1.8  “Alnylam Sequence Specific Know-How”.  Alnylam Sequence Specific Know-How means
Know-How that is specific to RSV01 Product or to any other particular

 

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

 

2

 

sequence of Licensed Product, including
composition information and any preclinical and clinical test data related to
any of the foregoing.

 

Section 1.9  “Alnylam Technology”.  Alnylam Technology
means, collectively, Alnylam Know-How, Alnylam Patent Rights, Alnylam
Collaboration IP and Alnylam’s interest in Joint Collaboration IP, and any
Third Party Technology that is included in the definition of Alnylam Technology
after the Effective Date in accordance with Section 8.6.

 

Section 1.10  “API Bulk Drug Substance”.  API Bulk Drug Substance means Licensed
Product in bulk form manufactured for use as an active pharmaceutical ingredient.

 

Section 1.11  “Asia”.  Asia means Brunei, Cambodia, China (including
Hong Kong and Macao, but excluding Taiwan), Indonesia, Japan, Laos, Malaysia,
Myanmar, North Korea, Philippines, Singapore, South Korea, Taiwan, Thailand and
Vietnam.

 

Section 1.12  “Asian Partner”.  Asian Partner means Kyowa Hakko or any other
Third Party to whom Alnylam grants licenses under the Alnylam Technology to
Develop or Commercialize Licensed Products for use in the Field in Asia, but
shall not include a Third Party engaged by Alnylam or any of its Affiliates
merely to perform specific discreet tasks as contract services in connection
with Alnylam’s Development or Commercialization of Licensed Product.

 

Section 1.13  “Business Day”.  Business Day means a weekday on which banking
institutions in Boston, Massachusetts are open for business.  For purposes of clarity, a Business Day shall
not include any Saturday or Sunday or federal or Commonwealth of Massachusetts
holiday.

 

Section 1.14  “Calendar Quarter”.  Calendar Quarter means the respective periods
of three (3) consecutive calendar months ending on March 31, June 30,
September 30 and December 31; provided  that the first
Calendar Quarter of the Term shall begin on the Effective Date and end on March 31,
2009, and the last Calendar Quarter of the Term shall end on the last day of
the Term.

 

Section 1.15  “Calendar Year”.  Calendar Year means each successive period of
twelve (12) months commencing on January 1 and ending on December 31;
provided  that the first Calendar Year of the Term shall begin on
the Effective Date and end on December 31, 2009 and the last Calendar Year
of the Term shall end on the last day of the Term.

 

Section 1.16  “Clinical Investigation Laws”.  Clinical Investigation Laws means Laws relating to human clinical investigations,
including 21 C.F.R. Parts 50, 54, 56 and 312, and then-current Good Clinical
Practice, each as in effect and as amended from time to time.

 

Section 1.17  “Clinical Regulatory Filings”.  Clinical Regulatory Filings means data, filings
or materials relating to Licensed Product submitted to the applicable
Regulatory Authorities, including (a) data derived from Clinical Studies, (b) data
derived from non-clinical studies, and (c) data, filings or materials
relating to or contained in the CMC or a DMF.

 

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

 

3

 

Section 1.18  “Clinical Study”.  Clinical Study means a Phase I Clinical
Study, Phase II Clinical Study, Phase III Clinical Study or Pivotal Clinical
Study, as applicable, but excluding any Post-Approval Studies.

 

Section 1.19  “CMC”. 
CMC means the chemistry, manufacturing and controls section of an IND or
NDA in the United States, or the equivalent section of regulatory filings made
outside the United States.

 

Section 1.20  “Collaboration”.  Collaboration means the
collaboration of the Parties in the activities governed by this Agreement,
including such activities relating to the Development and Regulatory Approval
of Licensed Product.

 

Section 1.21  “Commercialization” or “Commercialize”.  Commercialization or Commercialize means (a) pre-launch,
launch or post launch activities directed to obtaining pricing and
reimbursement approvals, marketing, promoting, distributing, importing or
selling a product, and (b) solely for definitional purposes in
implementing the terms of this Agreement, all Post-Approval Medical and
Regulatory Activities.  Commercialization
includes strategic marketing, market research, sales force recruitment,
training and meetings, sales force detailing, sample drops, activities related
to managed care accounts and other similar accounts and government programs,
activities related to reimbursement, advertising, market and product support,
customer support, educational initiatives, product distribution, invoicing, and
sales activities.  Commercialization
shall not include any activities related to Manufacturing.

 

Section 1.22  “Commercialization Costs”.  Commercialization Costs means, with respect
to Licensed Product in the Field in the Profit-Share Territory, whether or not
occurring during Development or Commercialization (a) the costs and
expenses incurred by a Party or any of its Related Parties in the
Commercialization of Licensed Product, including the costs of advertising,
detailing, sales, marketing and promotion of Licensed Product and medical,
customer or regulatory support and a reasonable allocation (subject to the
oversight of the JCT) of []* for sales force management and support, (b) infrastructure
required to support and maintain patient/safety surveillance as required by
applicable Regulatory Authorities directly attributable to Licensed Product,
including the costs of maintaining the global safety database contemplated
under Section 5.9, (c) reasonable out-of-pocket []* costs and
expenses incurred by a Party or any of its Related Parties with respect to []*,
(d) reasonable out-of-pocket []* incurred by a Party or any of its Related
Parties regarding []* under Section 8.4 to the extent such enforcement
action is approved by the JSC and reasonable out-of-pocket costs and expenses
incurred by a Party or any of its Related Parties and included in
Commercialization Costs pursuant to Section []*, in each case with respect
to []*  in the Field in the Profit-Share
Territory, (e) the reasonable out-of-pocket costs and expenses of
maintaining Regulatory Approval for Licensed Product, (f) except for those
obligations to be paid fully by Alnylam under Section 7.7, []* to the
extent reasonably allocable to the Profit-Share Territory, (g) the costs
of product recalls, withdrawals, insurance, []* and returned product
destruction, and (h) the cost of []*. 
In calculated Commercialization Costs, the costs of internal personnel
engaged in Commercialization efforts shall be based on the FTE Cost applicable
to such efforts, unless another basis is otherwise agreed by the Parties in

 

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

 

4

 

writing. 
For sake of clarity, the FTE Cost of a sales representative does not
include []* based on sales of Licensed Product in the Profit-Share Territory,
which such []* shall be separately included as a Commercialization Costs budget
item.  For purposes of clarity, costs and
expenses included in the calculation of N.A. Pre-Tax Profit or Loss, and the
deductions specified in the definition of Net Sales or in Development Costs,
shall not be double-counted, and shall be determined from the books and records
of the applicable Party and its Affiliates maintained in accordance with GAAP,
consistently applied.

 

Section 1.23  “Confidential Information”.  Confidential Information means any and all
information and data, including information regarding or included within
Alnylam Technology and Cubist Technology and all other scientific,
pre-clinical, clinical, regulatory, manufacturing, marketing, financial or
commercial information or data, whether communicated in writing or orally or by
any other method, which is provided by one Party to the other Party in
connection with this Agreement.  Alnylam
Technology and Alnylam Collaboration IP are Confidential Information of
Alnylam. Cubist Technology and Cubist Collaboration IP are Confidential
Information of Cubist.  Joint
Collaboration IP is the Confidential Information of both Parties.

 

Section 1.24  “Control” or “Controlled”.  Control or Controlled means, with respect to
any intellectual property right or other intangible property, the possession
(whether by license or ownership, or by control over an Affiliate having
possession by license or ownership) by a Party of the ability to grant to the
other Party access or a license or sublicense as provided herein without
violating the terms of any agreement with any Third Party; provided  that
with respect to Third Party Technology obtained by a Party during the Term,
Control shall be deemed not to exist unless such Third Party Technology is
added to the Alnylam Technology or the Cubist Technology (as the case may be)
in accordance with Section 8.6.

 

Section 1.25  “Cost of Goods Sold”.  Cost of Goods Sold means, with respect to API
Bulk Drug Substance, Finished Product or placebo, as the case may be,
Manufactured under this Agreement, the reasonable internal and external costs
of a Party or any of its Related Parties incurred in Manufacturing such API
Bulk Drug Substance, Finished Product or placebo, including:  (a) to the extent that such API Bulk
Drug Substance, Finished Product or placebo is Manufactured by a Party or any
of its Related Parties, the Cost of Goods Sold of such API Bulk Drug Substance,
Finished Product or placebo, consisting of direct material and direct labor
costs, []*, all determined in accordance with the books and records of the
applicable Party or its Related Party(ies) maintained in accordance with United
States GAAP, consistently applied, and (b) to the extent that such API
Bulk Drug Substance, Finished Product or placebo is Manufactured by a Third
Party manufacturer, the actual fees paid by a Party or any of its Related
Parties to the Third Party for the Manufacture, supply, packaging and labeling
of such API Bulk Drug Substance, Finished Product or placebo []*, determined in
accordance with the books and records of the applicable Party or its Related
Party(ies) maintained in accordance with United States GAAP, consistently
applied.  Cost of Goods Sold shall not
include []*, except with respect to Licensed Product Manufactured by Cubist for
Alnylam to supply to its Asian Partner.

 

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

 

5

 

Section 1.26  “Cover,” “Covering” or “Covered”.  Cover, Covering or Covered means that, with
respect to Licensed Product, in
the absence of a license granted under a Valid Claim, the making, use, offering
for sale, sale, or importation of Licensed
Product would infringe such Valid Claim or,
with respect to a pending Valid Claim included in the Patent Rights under which
such license is granted, the making, use, offering for sale, sale, or
importation of Licensed Product
would infringe such Valid Claim if such patent application were to issue as a
patent.

 

Section 1.27  “CPI”. 
CPI means the Consumer Price Index — Urban Wage Earners and Clerical
Workers, U.S. City Average, All Items, 1982-84 = 100, published by the United
States Department of Labor, Bureau of Labor Statistics (or its successor
equivalent index) in the United States.

 

Section 1.28  “Cubist Collaboration IP”.  Cubist Collaboration IP means (a) any
improvement, discovery or Know-How, patentable or otherwise, first identified,
discovered or developed solely by employees of Cubist or its Affiliates or
other persons not employed by Alnylam or any of its Affiliates acting on behalf
of Cubist or any of its Affiliates, in the conduct of the Collaboration, and (b) any
Patent Rights which claim or cover such improvements, discoveries or Know-How
and are owned or otherwise Controlled by Cubist or, subject to Section 13.8,
any of its Affiliates, at any time during the Term.  Cubist Collaboration IP excludes Cubist’s
interest in Joint Collaboration IP.

 

Section 1.29  “Cubist In-License”.  Cubist In-License means any agreement between
Cubist and a Third Party executed during the Term pursuant to which Cubist has
rights and obligations with respect to, or which otherwise Cover, a Licensed
Product and where (a) the intellectual property that is the subject of
such agreement is included within Cubist Technology, and (b) such Cubist
Technology is necessary or reasonably useful to Develop, Commercialize or
Manufacture Licensed Product in the Field.

 

Section 1.30  “Cubist Know-How”.  Cubist Know-How means
Know-How Controlled by Cubist or, subject to Section 13.8, any of its
Affiliates, during the Term that is necessary or reasonably useful for Alnylam
and its Affiliates to perform their obligations or exploit their rights under
this Agreement (other than Cubist’s rights in Joint Collaboration IP and Cubist
Collaboration IP).

 

Section 1.31  “Cubist Patent Rights”.  Cubist Patent Rights
means those Patent Rights that (a) claim (i) Cubist Know-How, or (ii) the
Development, Manufacture or Commercialization of   Licensed Product, and that are necessary or
reasonably useful to Develop, Manufacture or Commercialize Licensed Product in
the Field, and (b) are Controlled by Cubist or, subject to Section 13.8,
any of its Affiliates, at any time during the Term.  Cubist Patent Rights shall not include Patent
Rights included in Cubist Collaboration IP or Cubist’s interest in Joint
Collaboration IP.

 

Section 1.32  “Cubist Technology”.  Cubist Technology means, collectively, Cubist
Know-How and Cubist Patent Rights, Cubist Collaboration IP and Cubist’s
interest in Joint

 

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

 

6

 

Collaboration IP, and any Third Party
Technology that is included in the definition of Cubist Technology after the
Effective Date in accordance with Section 8.6.

 

Section 1.33  “Development” or “Develop”.  Development or Develop means non-clinical and
clinical research and drug development activities, including research
activities directed at back-up compounds, toxicology, pharmacology and other
discovery efforts, test method development and stability testing, process
development, formulation development, delivery system development, quality
assurance and quality control development, statistical analysis, clinical
studies (including pre- and post-approval studies and investigator sponsored
clinical studies), regulatory affairs, and regulatory approval and clinical
study regulatory activities (excluding regulatory activities directed to
obtaining pricing and reimbursement approvals).

 

Section 1.34  “Development Costs”.  Development Costs means costs incurred by the
Parties or any of their Affiliates in Developing Licensed Product in the Field for the Profit-Share Territory, in
accordance with this Agreement and determined from the books and records of the
applicable Party and its Affiliates maintained in accordance with GAAP,
consistently applied, whether incurred before or after Regulatory Approval,
provided such activities and costs are consistent with the Development Plan and
related budget, including:

 

(a)           all out-of-pocket costs and expenses
incurred;

 

(b)           the costs of internal scientific,
medical or technical personnel engaged in such efforts, which costs shall be
determined based on the FTE Cost, unless another basis is otherwise agreed by
the Parties in writing;

 

(c)           the costs and expenses for
pre-clinical and clinical supplies needed for such efforts as set forth in the
Development Plan, consisting of (i) []* for clinical supplies of Licensed Product and placebo; (ii) cost
of comparator or combination drugs or devices; and (iii) costs and
expenses of disposal of clinical samples;

 

(d)           fees incurred in connection with
filings for or relating to Regulatory Approvals or pricing or reimbursement
approval in the Field in the Profit-Share Territory;

 

(e)           costs and
expenses incurred in connection with (i) []*; and (v) internal and
Third Party costs and expenses incurred in connection with (A) []*; and

 

(f)            any other costs incurred that are
explicitly included in the budgets included in the Development Plan.

 

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

 

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

 

7

 

Section 1.35  “Development Plan”.  Development Plan means the written workplan,
timetable and budget for the Parties’ Licensed Product Development efforts in
the Profit-Share Territory, agreed upon by the Parties as of the Effective
Date, as amended from time to time in accordance with this Agreement.  The initial Development Plan is attached as Exhibit E.

 

Section 1.36  “Diligent Efforts”.  Diligent Efforts means, with respect to each
Party’s obligations relating to Licensed
Product, the carrying out of such obligations in a diligent and
sustained manner using efforts substantially similar to the efforts a biopharmaceutical
company of comparable size and resources would typically devote to a product of
similar market potential, profit potential, similar stage in development or
commercialization, or strategic value resulting from its own research efforts,
based on conditions then prevailing, and taking into account other relevant
factors, including technical, medical, clinical efficacy, safety,
manufacturing, and delivery considerations, product labeling or anticipated
labeling, the patent and other proprietary position of the product, the
regulatory environment and competitive market conditions.  Diligent Efforts with respect to Alnylam’s
obligations, as specified in Sections 3.3, 4.3(b), 5.9, 6.1(b) and
9.6  related to the actions of its
Related Parties or the actions of any other Third Party with whom Alnylam has
entered into an agreement related to Licensed Product shall mean that (a) to
the extent such obligation is not currently included in its agreement with such
Related Party or other Third Party, Alnylam shall []*, (b) in entering
into any new agreement with a Related Party or such other Third Party, Alnylam
shall []*, and (c) in each case, Alnylam shall take reasonable action to
enforce such obligations.

 

Section 1.37  “Directly Competitive Product”.  Directly Competitive Product means any
therapeutic or prophylactic product that specifically targets RSV.  For avoidance of doubt, Directly Competitive
Product as to a Party shall not include a product with []*.

 

Section 1.38  “Distribution Costs”.  Distribution Costs means the costs, excluding
[]*, incurred by a Party or any of its Related Parties or for its account,
specifically identifiable to the distribution of a Licensed Product to a Third
Party in the Field intended for commercial sale in the Profit-Share Territory,
including (a) handling, transportation, customs clearance, containers,
freight, duties and insurance (including shipments from Third Party logistics
service providers to wholesalers, and excluding such costs, if any, treated as
a deduction in the definition of Net Sales), (b) customer services
including order entry, billing and adjustments, inquiry and credit and
collection, and (c) direct cost of facilities utilized for the storage and
distribution of Licensed Product,
determined from the books and records of the applicable Party and its
Affiliates maintained in accordance with GAAP, consistently applied.

 

Section 1.39  “DMF”. 
DMF means a Drug Master File filed with the FDA, or an equivalent filing
with any other Regulatory Authority.

 

Section 1.40  “Drug Regulation Laws”.  Drug Regulation Laws means Laws regulating drugs and pharmaceutical
products, including the United States Federal Food, Drug, and Cosmetic Act, 21
U.S.C. § 301 et seq., the Prescription Drug
Marketing Act of 1987, the Federal Controlled Substances Act, 21 U.S.C. § 801 et seq., and policies issued by the FDA, and similar

 

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

 

8

 

Laws of the EMEA or
other countries or jurisdictions in the Territory, each as in effect and as
amended from time to time.

 

Section 1.41  “EMEA”.  EMEA means the European Medicines Agency or
any successor agency thereto.

 

Section 1.42  “European Union” or “EU”.  European Union or EU means the countries of
the European Union, as it is constituted as of the Effective Date and as it may
be expanded from time to time, and Switzerland, Norway and Iceland.

 

Section 1.43  “Executive Officers”.  Executive Officers means the Chief Executive
Officer of Alnylam (or a senior executive officer of Alnylam designated by
Alnylam’s Chief Executive Officer) and the Chief Executive Officer of Cubist
(or a senior executive officer of Cubist designated by Cubist’s Chief Executive
Officer).

 

Section 1.44  “Existing Alnylam In-Licenses”.  Existing Alnylam In-Licenses means the Third
Party agreements set forth on Exhibit C.

 

Section 1.45  “FDA”. 
FDA means the United States Food and Drug Administration or any
successor agency thereto.

 

Section 1.46  “Field”.  Field means the treatment or prophylaxis of
diseases in humans.

 

Section 1.47  “Finished Product”.  Finished Product means the finished product
formulation of Licensed Product, containing API Bulk Drug Substance, filled
into unit packages for final labeling and packaging, and as finally labeled and
packaged in a form ready for administration.

 

Section 1.48  “First Commercial Sale”.  First Commercial Sale means, with respect to Licensed Product in a country, the
first commercial sale of Licensed
Product in such country.  Sales
for clinical study purposes or compassionate, named patient or similar use
shall not constitute a First Commercial Sale.

 

Section 1.49  “First Opt-Out Milestone”.  First Opt-Out Milestone means the earlier of:
(a) each of the following conditions having been met:  (i) []*, in each case with respect to
Licensed Product in the Field and with respect to the Profit-Share Territory;
or (b) []* with respect to Licensed Product in the Field and with respect
to the Profit-Share Territory.  For
purposes of clause (a)(iii) above, the JSC shall make the  determination whether to continue with plans
for []*.

 

Section 1.50  “FTE”. 
FTE means the number of full-time-equivalent person-years (each
consisting of a total of []* hours) of Development, Manufacturing or
Commercialization  work by each Party’s
personnel on or directly related to the applicable activity conducted
hereunder.

 

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

 

9

 

Section 1.51  “FTE Cost”.  FTE Cost means the amount obtained by
multiplying (a) the number of FTEs by (b) either
(i) $[]*  with respect to FTEs engaged in
Development activities or engaged in any scientific aspects of
Commercialization including drug safety analysis, or (ii) with respect to
FTEs engaged in other Commercialization activities, such rate as shall be
determined by the JCT in connection with preparation of the first
Commercialization Plan, which such amount shall be based on []*, consistent
with GAAP, in each case of clauses (i) or (ii) []* annually by []*,
in the case of the FTE Cost under clause (i), and over the []*, in the case of
the FTE Cost under clause (ii) (i.e., the first
such []* with respect to the FTE Cost for FTEs engaged in Development would
occur on []*).

 

Section 1.52  “GAAP”.  GAAP means United States generally accepted
accounting principles applied on a consistent basis, or any successor
accounting principles generally accepted for public companies in the United
States (such as International Financial Reporting Standards (“IFRS”)).  Unless otherwise defined or stated, financial
terms shall be calculated by the accrual method under GAAP.

 

Section 1.53  “Generic Competition”.  Generic Competition means, with respect to a
Licensed Product in any country in the Royalty Territory in a given Calendar
Quarter, that, during such Calendar Quarter, one or more Generic Products shall
be commercially available in such country and such Generic Products shall have
a []* (calculated on the basis of []*) of []* percent ([]* of Licensed Products
and Generic Products (based on []*, or if such data is not available, such
other reliable data source as reasonably determined by Cubist and agreed to by
Alnylam (such agreement not to be unreasonably withheld or delayed)); provided,
however, that, if []* data (or data from another data source selected in
accordance with the foregoing) is unavailable to determine the percentage []*
for a country in the Royalty Territory where a Generic Product is being sold,
the average Generic Competition of the countries in the EU for which such data
is available will be deemed to be the Generic Competition for such country in
which such data is not available.

 

Section 1.54  “Generic Product”.  Generic Product means any pharmaceutical product sold by a Third
Party not authorized by Cubist or its Related Parties that is (a) []*.

 

Section 1.55  “Good Clinical Practice”.  Good Clinical Practice means the current good
clinical practice applicable to the clinical Development of Licensed Product under applicable Law,
to the extent such standards are not less stringent than the U.S. current good
clinical practice, including the ICH guidelines.

 

Section 1.56  “Good Laboratory Practice”.  Good Laboratory Practice means the current
good laboratory practice applicable to the Development of Licensed Product under applicable Law,
to the extent such standards are not less stringent than the U.S. current good
laboratory practice, including 21 C.F.R. Part 58.

 

Section 1.57  “Governmental Authority”.  Governmental Authority means any United
States federal, state or local or any foreign government, or political
subdivision thereof, or any multinational organization or authority or any
authority, agency or commission entitled to

 

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

 

10

 

exercise any administrative, executive,
judicial, legislative, police, regulatory or taxing authority or power, any
court or tribunal (or any department, bureau or division thereof), or any
governmental arbitrator or arbitral body.

 

Section 1.58  “Government Health Care Programs”.  Government Health Care Programs means the
Medicare program (Title XVIII of the Social Security Act), the Medicaid program
(Title XIX of the Social Security Act), TRICARE, the Federal Employee Health
Benefits Program, and other foreign, federal, state and local governmental
health care plans and programs.

 

Section 1.59  “Government Order”.  Government Order means any order, writ,
judgment, injunction, decree, stipulation, ruling, determination or award
entered by or with any Governmental Authority.

 

Section 1.60  “Health Care Laws”.  Health Care Laws means Laws relating to Government Health Care
Programs, Private Health Care Plans, privacy and confidentiality of patient
health information and human biological materials, including:  federal and state Laws pertaining to the
federal Medicare and Medicaid programs (including the Medicaid rebate program);
federal Laws pertaining to the Federal Employees Health Benefit Program, the
TRICARE program and other Government Health Care Programs; federal and state
Laws applicable to health care fraud and abuse, kickbacks, physician
self-referral and false claims (including 42 U.S.C. § 1320a-7a, 42 U.S.C. §
1320a-7b, 42 U.S.C. § 1395nn and the federal Civil False Claims Act, 31 U.S.C.
§ 3729 et seq.); the Health Insurance
Portability and Accountability Act of 1996; and 45 C.F.R. Part 46, each as in effect and as amended from
time to time.

 

Section 1.61  “ICH”. 
ICH means the International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for Human Use.

 

Section 1.62  “IND”. 
IND means an Investigational New Drug Application filed with FDA or a
similar application filed with an applicable Regulatory Authority outside of
the United States such as a clinical trial application (CTA) or a clinical
trial exemption (CTX).

 

Section 1.63  “Investigator Sponsored Clinical Study”.
Investigator Sponsored Clinical Study means a human clinical study of Licensed Product that is sponsored and
conducted by a Third Party under an agreement with a Party pursuant to which
such Party provides clinical supplies of Licensed Product or funding for such clinical study.

 

Section 1.64  “Joint Collaboration IP”.  Joint Collaboration IP means, collectively, (a) any
improvement, discovery or Know-How, patentable or otherwise, first identified,
discovered or developed jointly by the Parties or their Affiliates or others
acting on behalf of Cubist and Alnylam or their Affiliates in the conduct of
the Collaboration, and (b) any Patent Rights which claim or cover such
improvements, discoveries or Know-How
during the Term.

 

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

 

11

 

Section 1.65  “Know-How”.  Know-How means all biological
materials and other tangible materials, inventions, practices, methods,
protocols, formulas, knowledge, know-how, trade secrets, processes, procedures,
assays, skills, experience, techniques and results of experimentation and
testing, including pharmacological, toxicological and pre-clinical and clinical
test data and analytical and quality control data, patentable or otherwise.

 

Section 1.66  “Knowledge of Alnylam”.  Knowledge of Alnylam means the []*.

 

Section 1.67  “Kyowa Agreement”.  Kyowa Agreement means the License and
Collaboration Agreement entered into by and between Alnylam and Kyowa Hakko as
of June 19, 2008, with respect to the Development and Commercialization of
Licensed Product in Asia.

 

Section 1.68  “Kyowa Hakko”.  Kyowa Hakko means Kyowa Hakko Kirin Co., Ltd.
(formerly known as Kyowa Hakko Kogyo Co., Ltd.), a corporation organized and
existing under the laws of Japan.

 

Section 1.69  “Law”. 
Law means any United States federal, state or local or foreign or
multinational law, statute, standard, ordinance, code, rule, regulation,
resolution or promulgation, or any Government Order, or any license, franchise,
permit or similar right granted under any of the foregoing, or any similar provision
having the force or effect of law.

 

Section 1.70  “Legal Exclusivity Period”.  Legal Exclusivity Period means, with respect
to a Licensed Product, the period beginning on the earlier of the commencement
of the (a) Patent-Based Exclusivity Period or (b) Regulatory-Based
Exclusivity Period, and expiring on the later of the expiration of the (i) Patent-Based
Exclusivity Period or (ii) Regulatory-Based Exclusivity Period.

 

Section 1.71  “Licensed Product”.  Licensed Products means any RNAi Product
directed to RSV.

 

Section 1.72  “Major EU Country”.  Major EU Country means any of the United
Kingdom, France, Germany, Italy or Spain.

 

Section 1.73  “Manufacturing” or “Manufacture”.  Manufacturing or Manufacture means, as
applicable, all activities associated with the production, manufacture, supply,
processing, filling, finishing, testing, packaging, labeling, shipping, and
storage of Licensed Product or placebo (including API Bulk Drug Substance and
Finished Product), including process and formulation development, process
validation, stability testing, manufacturing scale-up, pre-clinical, clinical
and commercial manufacture and analytical development, product
characterization, quality assurance and quality control development, testing
and release.

 

Section 1.74  “N.A. Pre-Tax Profit or Loss”.  N.A. Pre-Tax Profit or Loss means Net Sales
of Licensed Product in North America by Cubist and its Affiliates (but not
Sublicensees) plus Sublicense Income minus (a) Cost of Goods Sold, (b) Distribution
Costs and (c)

 

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

 

12

 

Commercialization Costs, in each case
determined from the books and records of the applicable Party or its Related
Parties, maintained in accordance GAAP, consistently applied.

 

Section 1.75  “Necessary Third Party IP”.  Necessary Third Party IP means, on a
country-by-country basis, Know-How or Patent Rights that are owned or
controlled by a Third Party and Cover or are otherwise necessary or reasonably
useful for the Development, Manufacture or Commercialization of Licensed
Product in the Field in such country, and are the subject of an Alnylam
In-License or a Cubist In-License.

 

Section 1.76  “Net Sales”.  Net Sales shall mean the gross amount
invoiced by Cubist, and its Affiliates with respect to the Profit-Share
Territory and shall mean the gross amount invoiced by Cubist and its Related
Parties with respect to the Royalty Territory, in each case on sales or other
dispositions (excluding sales or dispositions for use in clinical
trials, other scientific testing, or as samples, or as part of compassionate
use, patient assistance, named patient or test marketing program or any similar
program or study, or other similar cases, in each case for which Cubist or its
Related Parties receive no revenue) of Licensed Product to Third
Parties, less the following deductions:

 

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

 

(b)           Tariffs, duties, excises, sales
taxes, value-added or other taxes or governmental charges imposed upon and paid
directly with respect to the delivery, sale or use of Licensed Product
(excluding national, state or local taxes based on income);

 

(c)           Amounts repaid or credited by reason
of rejections, defects, recalls or returns or because of reasonable and
customary chargebacks, refunds, rebates (including rebates to managed care
organizations, group purchasing organizations, pharmacy benefit management
companies, health maintenance organizations, healthcare institutions, other
buying groups or providers of healthcare or social and welfare systems, or in
connection with patient assistance or similar programs) or retroactive price
reductions (including any discounts granted later than at the time of
invoicing), government mandated rebates and similar types of rebates (e.g.,
Pharmaceutical Price Regulation Scheme and Medicaid, or wholesalers,
distributors and other trade customers), or cash sales incentives, or
deductions for items of a nature or substance similar to that of the foregoing
deductions in this clause (c) that may become customary;

 

(d)           []*;

 

(e)           []*;

 

(f)            Postage charges, shipping materials,
freight, insurance and other transportation charges incurred in shipping such
Licensed Product to Third Parties, included and separately stated in the
applicable invoice; and

 

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

 

13

 

(g)           Any item substantially similar in
character or substance to any of the foregoing and not separately invoiced to
the customer, to the extent consistent with then prevailing industry standards.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

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

 

Section 1.77  “New Drug Application” or “NDA”.  New Drug Application or NDA means (a) an
application submitted to FDA pursuant to 21 U.S.C. § 505(b), which
contains complete details of the manufacture and testing of a new drug, for
purposes of obtaining Regulatory Approval for such new drug in the United
States, for a particular indication, and also includes any Biologics License
Application, or (b) a similar application, such as a Marketing Approval
Authorization (“MAA”) filed with the EMEA or other Regulatory Authority.

 

Section 1.78  “North America” or “N.A.”.  North America or N.A. means the United
States, Canada and Mexico.

 

Section 1.79  “Parties”.  Parties means Alnylam and Cubist.

 

Section 1.80  “Party”.  Party means either Alnylam or Cubist.

 

Section 1.81  “Patent-Based Exclusivity Period”.  Patent-Based Exclusivity Period means, with
respect to a country in the Royalty Territory, that period of time during which
at least one Valid Claim within the Alnylam Patent Rights Covers Licensed
Product in such country.

 

Section 1.82  “Patent Rights”.  Patent Rights means patents and patent
applications and all substitutions, divisions, continuations,
continuations-in-part, reissues, reexaminations, supplemental protection
certificates and extensions and the like thereof, and all counterparts thereof
in any country.

 

Section 1.83  “Person”.  Person means any natural person, corporation,
firm, business trust, joint venture, association, organization, company,
partnership or other business entity, or any government, or any agency or
political subdivisions thereof.

 

Section 1.84  “Phase I Clinical Study”.  Phase I Clinical Study means a clinical study
of Licensed Product in human volunteers or patients with the endpoint of
determining initial tolerance, toxicity, safety or pharmacokinetic information,
which shall be deemed commenced when the third volunteer or patient in such
study has received his or her initial dose of Licensed Product.

 

Section 1.85  “Phase II Clinical Study”.  Phase II Clinical Study means a preliminary
efficacy and safety or dose ranging human clinical study of Licensed Product in
the target patient population, which shall be deemed commenced when the third
patient in such study has received his or her initial dose of Licensed Product.

 

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

 

 

15

 

Section 1.86  “Phase III Clinical Study”.  Phase III Clinical Study means a human
clinical study to confirm with statistical significance the efficacy and safety
of Licensed Product performed to obtain Regulatory Approval for Licensed
Product in any country, which shall be deemed commenced when the third patient
in such study has received his or her initial dose of Licensed Product.

 

Section 1.87  “Pivotal Clinical Study”.  Pivotal Clinical Study means a human clinical
study, including any Phase III Clinical Study, the results of which, if the
pre-defined endpoints are met, are intended to be the data from a pivotal study
necessary to support Regulatory Approval for Licensed Product in any country.

 

Section 1.88  “Post-Approval Study”.  Post Approval Study means a clinical study of
Licensed Product that is initiated in a country in the Territory after receipt
of Regulatory Approval for such Licensed Product in such country.

 

Section 1.89  “Private Health Care Plans”.  Private Health Care Plans means
non-governmental Third Party health care payors and plans, including insurance
companies, health maintenance organizations and other managed care
organizations, Blue Cross and Blue Shield plans and self-funded employers.

 

Section 1.90  “Post Approval Medical and Regulatory
Activities”.  Post Approval Medical
and Regulatory Activities means all medical and regulatory activities directed
at support of Licensed Product after Regulatory Approval, including medical
education, use of medical science liaisons, post approval regulatory
activities, Post Approval Studies, and patient safety/pharmacovigilance
surveillance.

 

Section 1.91  “Product Liability Costs”.  Product Liability Costs means costs
associated with Third Party product liability claims or Actions resulting from
the Development, Manufacture or Commercialization of Licensed Product under
this Agreement in the Field in the Profit-Share Territory and product liability
insurance premiums for policies covering the Development, Manufacture or
Commercialization of Licensed Product in the Field in the Profit-Share
Territory (other than Losses entitled to indemnification under Section 10.11(c)(i) or
(ii)).

 

Section 1.92  “Profit-Share Territory”.  Profit-Share Territory means, subject to Section 4.7,
North America.

 

Section 1.93  “Product Trademark”.  Product Trademark means the trademark(s) and
service mark(s) for use in connection with the distribution, marketing,
promotion and sale of Licensed Product, or accompanying logos, trade dress or
indicia of origin.  Product Trademarks
specifically excludes the corporate names and logos of the Parties and their
Affiliates.

 

Section 1.94   “Regulatory Approval”.  Regulatory Approval means the approval of the
applicable Regulatory Authority necessary for the marketing and sale of
Licensed Product for a particular indication in a country, excluding separate
pricing or reimbursement approvals that may be required, and including the
expansion or modification of the label for such indication.

 

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

 

16

 

Section 1.95  “Regulatory Authority”.  Regulatory Authority means any federal,
national, multinational, state, provincial or local regulatory agency,
department, bureau or other governmental entity with authority over the
manufacturing, marketing, sale or use of a pharmaceutical product in a country,
including the FDA in the United States and the EMEA in the EU.

 

Section 1.96  “Regulatory-Based Exclusivity Period”.  Regulatory-Based Exclusivity Period means,
with respect to a Licensed Product in a country in the Royalty Territory, that
period of time during which Cubist or any of its Related Parties has been
granted the exclusive legal right by a Regulatory Authority (or is otherwise
entitled to the exclusive legal right by operation of applicable Law) in such
country to market and sell the active ingredient contained in such Licensed
Product in such country.

 

Section 1.97  “Related Party”.  Related Party means (a) with respect to
Cubist, any of Cubist’s Affiliates or Sublicensees, and, (b) with respect
to Alnylam, any of Alnylam’s Affiliates or Sublicensees and Alnylam’s Asian
Partner.

 

Section 1.98  “RNAi Product”.  RNAi Product means a double-stranded
oligonucleotide molecule designed to act primarily through an RNA interference
mechanism that is not a microRNA, microRNA antagonist or microRNA mimic and
which consists of either (a) two separate oligomers of native or
chemically modified RNA that are hybridizable to one another along a
substantial portion of their lengths, or (b) a single oligomer of native
or chemically modified RNA that is hybridizable to itself by self-complementary
base-pairing along a substantial portion of its length to form a hairpin, in
either case that inactivates, including inactivation resulting from cleavage, a
target mRNA, which encodes a protein product, via a double-stranded RNase, such
as those involved in the RNA interference mechanism.

 

Section 1.99  “Royalty Territory”.  Royalty Territory means, subject to Section 4.7,
the entire Territory other than North America.

 

Section 1.100  “RSV”. RSV means all strains of the
respiratory syncytial virus.

 

Section 1.101  “RSV01 Product”.  RSV01 Product means any product containing
Alnylam’s proprietary composition known as ALN-RSV01.  ALN-RSV01 is described on Exhibit B.

 

Section 1.102  “RSV02 Product”.  RSV02 Product means any product containing
Alnylam’s proprietary composition designated by the JSC as ALN-RSV02.

 

Section 1.103  “Safety Data”.  Safety Data means adverse event information
and other information (if any) required by one (1) or more Regulatory
Authorities to be collected or to be reported to such Regulatory Authorities
under applicable Laws.

 

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

 

17

 

Section 1.104  “Sales Representative”.  Sales Representative means an individual, who
engages in or manages sales calls and other promotional efforts with respect to
Licensed Product and who is employed by a Party or an Affiliate of a Party.

 

Section 1.105  “Second Opt-Out Milestone”.  Second Opt-Out Milestone means the earlier to
occur of: (a) []*.  For the
avoidance of doubt, if there is a deadlock at the JSC with respect to the
determination in clause (b), then []*.

 

Section 1.106  “Sublicensee”.  Sublicensee, as to a Licensed Product, means
any Third Party to whom a Party or any of its Affiliates grants a sublicense (a) in
the case of Cubist or its Affiliates, under any Alnylam Technology to Develop,
Manufacture or Commercialize any Licensed Product in the Field in the
Territory, and (b) in the case of Alnylam or its Affiliates, under any
Cubist Technology licensed to Alnylam pursuant to Section 3.2 or Section 11.3;
provided  that the term “Sublicensee” does not include []*.

 

Section 1.107  “Sublicense Income”.  Sublicense Income means (a) with respect
to Cubist, any payment Cubist or any of its Affiliates receives from a licensee
or Sublicensee for the grant to such licensee or Sublicensee of a sublicense to
the rights to Alnylam Technology licensed to Cubist under this Agreement or a
license to the Cubist Technology with respect to Licensed Product in the Field
in the Profit-Share Territory, or, in the event Alnylam exercises the Opt-Out
Option, any payment Cubist or any of its Affiliates receives from a licensee or
Sublicensee for the grant to such licensee or Sublicensee of a sublicense to
the rights to Alnylam Technology licensed to Cubist under this Agreement or a
license to the Cubist Technology with respect to Licensed Product in North
America, (b) with respect to Alnylam, any payment Alnylam or any of its
Affiliates receives from a licensee or Sublicensee for the grant to such
licensee or Sublicensee of a sublicense to the rights to Cubist Technology
licensed to Alnylam or a license to Alnylam Technology under this Agreement
with respect to Licensed Product in the Field in the Profit-Share Territory, in
each case to the extent permitted by the JSC under this Agreement, and (c) with
respect to Alnylam, in the event Cubist terminates this Agreement after the
Second Opt-Out Milestone, any payment Alnylam or any of its Affiliates receives
from a licensee or Sublicensee for the grant to such licensee or Sublicensee of
a sublicense to the rights to Cubist Technology or a license under Alnylam
Technology with respect to Licensed Product in the Field in North America, in
each case including []*.  As used in this
Section 1.107, “licensee” does not include []*.

 

                The
foregoing provisions of this Section 1.107 notwithstanding, Sublicense
Income shall not include:

 

(a)           []*;

 

(b)           []*;

 

(c)           []*;

 

(d)           []*; and

 

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

 

18

 

(e)           []*.

 

Section 1.108  “Territory”.  Territory means the entire world, except for
Asia.

 

Section 1.109  “Third Party”.  Third Party means any Person other than a
Party or any of its Affiliates.

 

Section 1.110  “United States” or “U.S.”.  United States or U.S. means the United States
of America and its territories and possessions.

 

Section 1.111  “Valid Claim”.  Valid Claim means a claim (a) of any issued,
unexpired patent that has not been revoked or held unenforceable or invalid by
a decision of a court or governmental agency of competent jurisdiction from
which no appeal can be taken, or with respect to which an appeal is not taken
within the time allowed for appeal, and that has not been disclaimed or
admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise or (b) of any patent application that has been filed with a good
faith belief that claims are reasonably likely to issue that Cover Licensed
Product and which such application has not been cancelled, withdrawn or
abandoned or been pending for more than []* as measured from the earliest
claimed priority date of such patent application.

 

Section 1.112  Additional
Definitions.  Each of the following definitions is set
forth in the Section of this Agreement indicated below:

 

	
  Definition

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  1974
  Convention

  	
   

  	
  13.1(c)

  
	
  AAA

  	
   

  	
  12.1

  
	
  Additional
  RSV Product

  	
   

  	
  4.6

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Alnylam

  	
   

  	
  Preamble

  
	
  Alnylam
  Indemnitees

  	
   

  	
  10.11(a)

  
	
  Alnylam
  Trademarks

  	
   

  	
  8.8(b)

  
	
  Asian
  Partner Payments

  	
   

  	
  7.11

  
	
  Bankruptcy
  Code

  	
   

  	
  3.5

  
	
  Challenging
  Party

  	
   

  	
  11.2(c)

  
	
  Collaboration
  Manager

  	
   

  	
  2.2

  
	
  Combination
  Product

  	
   

  	
  1.76

  
	
  Commercialization
  Plan

  	
   

  	
  5.3(a)

  
	
  Competitive
  Infringement

  	
   

  	
  8.4(a)

  
	
  Confidential
  Information

  	
   

  	
  9.1

  
	
  Cubist

  	
   

  	
  Preamble

  
	
  Cubist
  Indemnitees

  	
   

  	
  10.11(b)

  
	
  Cubist
  Trademarks

  	
   

  	
  8.8(b)

  
	
  Dispute

  	
   

  	
  12.1

  
	
  Effective
  Date

  	
   

  	
  Preamble

  

 

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

 

19

 

	
  Definition

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Excluded
  Claim

  	
   

  	
  12.1

  
	
  IFRS

  	
   

  	
  1.52

  
	
  Indemnitee

  	
   

  	
  10.11(d)

  
	
  JCT

  	
   

  	
  5.2

  
	
  JSC

  	
   

  	
  2.1(a)

  
	
  JSC
  Chairperson

  	
   

  	
  2.1(b)

  
	
  Losses

  	
   

  	
  10.11(a)

  
	
  M&A
  Event

  	
   

  	
  13.8

  
	
  MAA

  	
   

  	
  1.77

  
	
  Negotiation
  Period

  	
   

  	
  3.1(g)

  
	
  Non-Challenging
  Party

  	
   

  	
  11.2(c)

  
	
  Option
  Period

  	
   

  	
  3.1(g)

  
	
  Opt-Out
  Option

  	
   

  	
  4.7(a)

  
	
  Patent
  Expenses

  	
   

  	
  8.3(e)

  
	
  Promotional
  Materials

  	
   

  	
  5.5

  
	
  ROFN
  Notice

  	
   

  	
  3.1(g)

  
	
  ROFN
  Right

  	
   

  	
  3.1(g)

  
	
  Royalty
  Term

  	
   

  	
  7.5(d)

  
	
  Safety
  Information Exchange Agreement

  	
   

  	
  5.9

  
	
  Severed
  Clause

  	
   

  	
  13.3

  
	
  Supply
  Agreement

  	
   

  	
  6.3

  
	
  Supply
  Agreement Term Sheet

  	
   

  	
  6.3

  
	
  Tax
  or Taxes

  	
   

  	
  7.13(e)

  
	
  Term

  	
   

  	
  11.1

  
	
  Third
  Party Technology

  	
   

  	
  8.6

  

 

ARTICLE
II

 

MANAGEMENT OF COLLABORATIVE ACTIVITIES

 

Section 2.1  Joint Steering Committee.  The Parties hereby establish a joint
committee to facilitate the Collaboration in the Profit-Share Territory as
follows:

 

(a)           Composition of the Joint Steering
Committee.  The Collaboration in the
Profit-Share Territory shall be conducted under the direction of a joint
steering committee (the “JSC”) comprised of three (3) named
representatives of Cubist and three (3) named representatives of Alnylam
or such other number of representatives as the Parties may from time to time
mutually agree.  Each Party shall appoint
its respective representatives to the JSC from time to time, and may substitute
one or more of its representatives, in its sole discretion, effective upon
notice to the other Party of such change. 
Each Party shall have at least one JSC representative who is a senior
employee (vice president level or above), and all JSC representatives shall
have appropriate expertise and ongoing familiarity with the Collaboration.

 

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

 

 

20

 

Additional representatives
or consultants may from time to time, by mutual consent of the Parties, be
invited to attend JSC meetings, provided such representatives’ and consultants
are subject to written obligations that are no less stringent than the
confidentiality obligations and restrictions on use set forth in Article IX.  All proceedings for the JSC shall take place
in English.  Each Party shall bear its
own expenses relating to attendance at such meetings by its representatives.

 

(b)           JSC Chairperson.  The chairperson of the JSC (the “JSC
Chairperson”) shall rotate every twelve (12) months between Alnylam and
Cubist.  The initial JSC Chairperson
shall be a representative of Alnylam.  The JSC Chairperson’s responsibilities shall
include (i) scheduling meetings at least []* per Calendar Quarter, but
more frequently if the JSC determines it necessary; (ii) setting agendas
for meetings with solicited input from other members; and (iii) confirming
and delivering minutes to the JSC for review and final approval.

 

(c)           Meetings.  The
first JSC meeting shall be held within []* after the Effective Date, and the JSC shall
meet in accordance with a schedule established by mutual agreement of the
Parties, but no less frequently than []* each Calendar Quarter, with the location
for such meetings alternating between Alnylam and Cubist facilities in
Massachusetts (or such other locations as are determined by the JSC).  Alternatively, the JSC may meet by means of
teleconference, videoconference or other similar communications equipment, but
at least []* meetings per Calendar Year shall be conducted in person.

 

(d)           JSC Responsibilities.  The JSC shall have the following
responsibilities with respect to the Collaboration:

 

(i)            providing updates regarding the Development of Licensed
Product in the Territory;

 

(ii)           monitoring, planning and coordinating the Development of
Licensed Product in the Profit-Share Territory and the Parties’ respective
commitments relating to shared Development Costs;

 

(iii)          reviewing and approving (A) each annual update to the
Development Plan, and (B) any modifications to the Development Plan within
[]* after each submission thereof to the JSC (or sooner as circumstances
warrant);

 

(iv)          regularly assessing the progress of the Parties in their
conduct of the Development Plan against the timelines and budgets contained
therein, reviewing relevant data, and considering issues of priority;

 

(v)           overseeing Manufacturing activities related to the
Development of Licensed Product for the Territory;

 

(vi)          reviewing information and data relating to the Development
of Licensed Products by Alnylam and its Related Parties for Asia;

 

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

 

21

 

(vii)         coordinating with the JCT regarding Commercialization
matters related to the Profit-Share Territory, as necessary or appropriate;

 

(viii)        []*.

 

(ix)           performing such other activities as the Parties agree in
writing shall be the responsibility of the JSC; and

 

(x)            attempting to resolve any and all disputes relating to
the conduct of the Collaboration in the Profit-Share Territory by consensus.

 

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

 

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

 

Section 2.2  Appointment of Subcommittees, Project
Teams and Collaboration Managers. 
The JSC shall be empowered to create such subcommittees of itself and
project teams as it may deem appropriate or necessary. Each such subcommittee
and project team shall report to the JSC, which shall have authority to approve
or reject recommendations or actions proposed thereby subject to the terms of
this Agreement.  Each Party shall also
designate a collaboration manager (each a “Collaboration Manager”), who
shall be responsible for the day-to-day coordination of the Collaboration and
will serve to facilitate communication between the Parties with respect to both
the Profit-Share Territory and the Royalty Territory.  Each Party may change its designated
Collaboration Manager from time to time upon written notice to the other Party.

 

Section 2.3  Reports and Minutes.  Each Party shall prepare and deliver to the
JSC, by no later than each []* (for the period ending December 31 of the
prior Calendar Year), written reports summarizing such Party’s Development
activities for Licensed Product in the Field for the Territory performed to
date (or updating such report for activities performed since the last such
report submitted hereunder, as applicable). 
Such reports may be provided in any reasonable

 

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

 

22

 

written form determined by the reporting
Party, including in a presentation slide format that reasonably summarizes such
activities.  Alnylam shall also, at the
same time it submits a written report under this Section 2.3 regarding
activities in the Territory, also provide a written report to the JSC
summarizing the status, progress and results of activities performed by Alnylam
and its Asian Partner with respect to Development, Manufacture or
Commercialization of Licensed Product for Asia. 
In addition, Cubist shall provide Alnylam with prompt written notice of
the achievement by Cubist of any milestone event set forth in Section 7.2.  Each Party will provide the members of the
JSC with copies, which may be in electronic format, of all materials it intends
to present at a JSC meeting.  The JSC may
also request at any time specific data or information related to Collaboration
activities or any other data to which the JSC is entitled under this Agreement
or that a written report be prepared in advance of any meeting summarizing
certain material data and information arising out of the conduct of the
Collaboration any other data to which the JSC is entitled under this Agreement
and the Party or appropriate committee to whom such request is made shall
promptly provide to the other Party or the JSC such report, data or information.  A secretary shall be appointed for each
meeting and shall prepare minutes of the meeting, it being understood that the
secretary and the JSC Chairperson shall not be representatives of the same
Party (that is, if the JSC Chairperson is a representative of Cubist, the
secretary shall be a representative of Alnylam, and vice versa).

 

Section 2.4  Decision-Making.  Decisions within the purview of the JSC shall
be made by the JSC by consensus, with the representatives of each Party
collectively having one vote on behalf of such Party.  For each meeting of the JSC, at least two (2) representatives
of each Party shall constitute a quorum. 
Action on any matter may be taken at a meeting, by teleconference,
videoconference or by written agreement.

 

Section 2.5  Deadlocks.  The JSC shall attempt to resolve any and all
disputes relating to the Collaboration by consensus.  If the JSC is unable to reach a consensus
with respect to a dispute, then the dispute shall be submitted to escalating
levels of Alnylam and Cubist senior management for review.  If such dispute cannot be resolved despite
escalation, then the Chief Executive Officers of Alnylam and Cubist shall
attempt to resolve such dispute.  If the
Chief Executive Officers cannot reach an agreement regarding such dispute
within []* days after submission to them for resolution, then if the dispute is
one over which the JSC has authority pursuant to Section 2.1(d) or if
the dispute relates to the Royalty Territory, then Cubist shall have the final
decision-making authority subject to Sections 2.5(a) and (b).  Notwithstanding anything in this Agreement to
the contrary, any decision within the purview of the JSC for which Cubist has
exercised its final decision-making authority shall be considered a decision or
approval of the JSC.

 

(a)           Notwithstanding anything in this
Agreement to the contrary, Cubist (i) has no final decision-making
authority over the Development or Commercialization of Licensed Product for
Asia or outside the Field, or the Manufacture of Licensed Product by Alnylam or
its Related Parties for such purposes, (ii) may not conduct, sponsor, fund
or otherwise support a Clinical Study or Post-Approval Study of Licensed
Product that would []* the Development or Commercialization of Licensed Product
in the Field in Asia without Alnylam’s prior written

 

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

 

23

 

consent; (iii) may not
effect a transfer of responsibility for the Manufacture of API Bulk Drug
Substance or Finished Product from Alnylam to Cubist, it being understood that
any such decisions shall be made by the Parties in accordance with Article VI;
(iv) may not exercise its final decision-making authority to resolve any
disputes between the Parties regarding the []*; (v) may not exercise its
final decision-making authority to []*; (vi) may not exercise its final
decision-making authority with respect to decisions about whether []*, (vii) may
not exercise its final decision-making authority to resolve any dispute
regarding []*; and (viii) may not exercise its final decision-making
authority to (A) require Alnylam to use other than Diligent Efforts to
perform its obligations under the Collaboration, (B) require Alnylam to
perform any activities for which it is not responsible under this Agreement, to
amend the Development Plan or Commercialization Plan to impose additional
obligations on Alnylam without Alnylam’s consent, including for purposes of
clarity, to approve any change in the budgets for the Development Plan or the
Commercialization Plan pursuant to Section 4.5 or Section 5.3(b), it
being understood that Cubist shall have final decision-making authority
regarding implementation of the activities set forth in the Development Plan
and the Commercialization Plan, including pricing of Licensed Product in the
Territory; (C) resolve any dispute as to what level of effort constitutes
Diligent Efforts, (D) require Alnylam to take any action that would, or
fail to take any action where the failure to take such action would, violate
any applicable Law, rule or regulation or any agreement with any Third
Party (provided, that, in entering into any such agreement,
Alnylam is not in breach of its obligation under this Agreement) or infringe
the intellectual property rights of Third Parties, or (E) expand or narrow
the responsibilities of the JSC or JCT; and

 

(b)           with respect to all disputes between
the Parties under this Agreement that are not subject to Cubist’s final decision-making
authority, the dispute resolution provisions of Article XII shall apply.

 

Section 2.6  Dissolution of JSC.  The JSC shall be dissolved upon the earlier
to occur of (a) []*; provided  that, after the []* of the
Effective Date, Alnylam shall have the right, but shall not be obligated, to
participate on the JSC.  In the event the
JSC is dissolved or Alnylam elects not participate under the preceding
sentence, (i) decisions within the purview of the JSC shall be made by
Cubist subject to the limits on Cubist’s decision-making authority set forth in
Section 2.5 (a) and subject to Section 2.5(b), and (ii) information
sharing shall continue as set forth in Section 4.8

 

Section 2.7  Collaboration Guidelines.

 

(a)           In conducting activities under this
Agreement, neither Party shall prejudice the value of Licensed Product by
reason of such Party’s activities outside of the Collaboration.  Except as specifically provided in Article III
or Section 10.1, the foregoing shall not require either Party to limit the
development, manufacture or commercialization of products other than Licensed
Product.  Without limiting the provisions
of this Section 2.7(a), Alnylam agrees that it will not conduct, sponsor,
fund or otherwise support without Cubist’s prior written consent, and will use
Diligent Efforts to prevent any Related Party from, conducting, sponsoring,

 

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

 

24

 

funding or otherwise
supporting, a clinical study of any Licensed Product for Asia that would []*
the Development or Commercialization of Licensed Products in the
Territory.  In all matters relating to
this Agreement, the Parties shall seek to comply with good pharmaceutical and
environmental practices.

 

(b)           Subject to the terms of this
Agreement, the activities and resources of each Party shall be managed by such
Party, acting independently and in its individual capacity.

 

ARTICLE
III

 

LICENSE GRANTS

 

Section 3.1  Alnylam Grants.

 

(a)           Development License.  Subject to the terms of this Agreement,
Alnylam hereby grants to Cubist (i) a co-exclusive (with Alnylam, to the
extent of Alnylam’s rights and obligations under this Agreement) right and
license, with the right to grant sublicenses, under the Alnylam Technology, to
Develop Licensed Products in the Field for the Profit-Share Territory, and (ii) an
exclusive right and license, with the right to grant sublicenses, under the
Alnylam Technology, to Develop Licensed Products in the Field for the Royalty
Territory.  Such licenses shall be (A) royalty-bearing
for the Royalty Term of Licensed Product in each country of the Royalty
Territory, and (B) subject to the Parties’ rights and obligations with
respect to N.A. Pre-Tax Profit or Loss in the Profit-Share Territory for the
Term in accordance with Section 7.4. 
Upon expiration of the Royalty Term in the case of a country in the
Royalty Territory, the license granted under clause (ii) shall convert to
an exclusive, perpetual, fully paid-up, non-royalty-bearing licenses to Develop
Licensed Products in the Field in the applicable country(ies).  Notwithstanding anything in this Agreement to
the contrary, Alnylam shall not be entitled to multiple royalty or other
payments by reason of the split of the license granted to Cubist under this Article III
into a Development, Commercialization and a Manufacturing license.

 

(b)           Commercialization License.  Subject to the terms of this Agreement,
Alnylam hereby grants to Cubist an exclusive right and license, with the right
to grant sublicenses, under the Alnylam Technology to Commercialize Licensed
Products in the Field in the Territory. 
Such license shall be (i) royalty-bearing for the Royalty Term of
Licensed Product in each country of the Royalty Territory, and (ii) subject
to the Parties’ rights and obligations with respect to N.A. Pre-Tax Profit or
Loss in the Profit-Share Territory for the Term.  Upon expiration of the Royalty Term in the
case of a country in the Royalty Territory, the license granted under clause (i) shall
convert to an exclusive, perpetual, fully paid-up, non-royalty-bearing license
to Commercialize Licensed Products in the Field in such country(ies).

 

(c)           Manufacturing License.  Subject to the terms of this Agreement, including
Alnylam’s rights as set forth in Article VI, Alnylam hereby grants to
Cubist a co-exclusive (with Alnylam, to the extent of Alnylam’s rights and
obligations under Article VI) right and license, with the right to grant
sublicenses, to the extent consistent with Article VI, under the Alnylam

 

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

 

25

 

Technology, to Manufacture
or have Manufactured Licensed Products for Development and Commercialization in
the Field for the Territory.

 

(d)           Limitation on Exclusivity.  For purposes of
clarity, notwithstanding anything to the contrary in Section 3.1(a), 3.1(b) or
10.1, Alnylam has previously and retains the right after the Effective Date to
grant non-exclusive licenses to Third Parties to Develop, Manufacture and
Commercialize RNAi Products for the Territory under Alnylam
Technology other than under the Alnylam Sequence Specific Patent Rights or
Alnylam Sequence Specific Know-How; provided, that, neither
Alnylam nor any of its Affiliates (i) will license or will disclose  Licensed Product-specific data, sequence
information or other Licensed Product-specific Know-How to any Third Party
other than to a Related Party for purposes of enabling Alnylam to fulfill its
obligations under this Agreement or with respect to the Development and
Commercialization of Licensed Products in Asia, (ii) has or will
allow any Third Party to rely on Licensed Product-specific regulatory filings
or pre-clinical or clinical work, or, except as specified in a Development Plan
for purposes of the Collaboration, collaborate with any Third Party other than
a Related Party regarding Licensed Products in any manner, including in
any manner that conflicts with Section 3.1(a), 3.1(b) or 10.1,
or (iii) will, after the Effective Date, grant a right or license to any
Third Party under any Patent Rights or Know-How that would allow such Third
Party to Develop, Manufacture and Commercialize Licensed Products other than
pursuant to options or other rights existing on the Effective Date under the
agreements listed in Exhibit D.

 

(e)           Affiliates; Sublicenses.

 

(i)            Cubist shall have the right to grant sublicenses under
the licenses granted to it pursuant to Sections 3.1(a), (b) and (c), and
the right to grant licenses of its rights under any Joint Collaboration IP, to
an entity that is its Affiliate for so long as such entity remains an Affiliate
of Cubist and complies in all material respects with the obligations of Cubist
under this Agreement.  Cubist hereby
guarantees the full payment and performance of its Affiliates under this
Agreement.

 

(ii)           Subject to Sections 3.1(f), 3.3 and 10.1, and for the
Profit-Share Territory []*, Cubist has the right to grant sublicenses of its
rights and the licenses granted to it under this Agreement (and the right to
grant sublicenses under Alnylam’s interest in any Joint Collaboration IP) to
Third Parties to Develop and Commercialize Licensed  Product in the Field in the Territory (A) []*.

 

(iii)          Subject to Sections 3.1(f) and 3.3 and Article VI,
Cubist shall have the right to grant sublicenses of its rights and the license
granted under Section 3.1(c) (and the right to grant sublicenses
under Alnylam’s interest in any Joint Collaboration IP) to Third Parties to
Manufacture the RSV01  Product, the RSV02
Product, any Additional RSV Product, or a Licensed Product sublicensed under Section 3.1(e)(ii) for
Development and Commercialization in the Field for the Territory.

 

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

 

26

 

(f)            Alnylam In-Licenses.  All licenses and other rights granted to
Cubist hereunder are subject to the rights and obligations of Alnylam under the
Alnylam In-Licenses and the Kyowa Agreement. 
Cubist shall comply with all terms and conditions of the Alnylam
In-Licenses and the Kyowa Agreement in the Territory applicable to a
Sublicensee of Alnylam, and shall perform and take such actions in the
Territory as may be required of a Sublicensee (and, with respect to the Kyowa
Agreement and the []*, as may be required of Alnylam, with respect to
Development, Manufacture and Commercialization of Licensed Product for the
Territory) to allow Alnylam to comply with its obligations thereunder,
including obligations relating to sublicensing, patent matters,
confidentiality, reporting, audit rights, indemnification and diligence; provided
that in no event shall Cubist be responsible for any payment obligations
or other financial obligations of any kind of Alnylam under such agreements
except as otherwise specifically set forth in Sections 4.7, 7.6, 7.7, 7.9
and  8.6. 
In order to facilitate Cubist’s compliance with this Section 3.1(f),
Alnylam will provide Cubist with reasonable notice in advance of any action or
information required of Cubist in respect of the Alnylam In-Licenses, including
a description regarding Alnylam’s interpretation of such requirements, and
Cubist will, to the extent required under this Section 3.1(f), perform
such actions and provide such information in accordance with such requirements
as reasonably interpreted by Alnylam.

 

(g)           Right of First Negotiation for
Asia.  Alnylam hereby grants to
Cubist a right of first negotiation to add Asia to the Royalty Territory
hereunder (the “ROFN Right”) if, during the Term, (i) the Kyowa
Agreement terminates and (ii) Alnylam determines to seek an Asian Partner
other than Kyowa Hakko for Licensed Products in the Field in Asia.  Prior to initiating formal business
discussions with one or more Third Parties other than Kyowa Hakko regarding
such opportunity, Alnylam shall notify Cubist of Alnylam’s determination to
seek an Asian Partner other than Kyowa Hakko (the “ROFN Notice”), and
Cubist shall have []* after receipt of the ROFN Notice (the “Option Period”)
to notify Alnylam in writing that either (A) Cubist is exercising its ROFN
Right and is interested in adding Asia to the Royalty Territory hereunder, or (B) Cubist
is not interested in adding Asia to the Royalty Territory hereunder and
therefore waives its ROFN Right.  Failure
by Cubist to provide written notice of its exercise of the ROFN Right within
the Option Period shall constitute a waiver by Cubist of its ROFN Right.  If Cubist provides written notice to Alnylam
exercising its ROFN Right within the Option Period, the Parties shall negotiate
exclusively in good faith for a period of up to []* from the date the ROFN
Notice was received by Cubist (or such longer period as the Parties may
mutually agree) (the “Negotiation Period”) regarding mutually agreeable
terms and conditions, including mutually agreeable financial terms and
conditions, on which this Agreement would be amended to add Asia to the Royalty
Territory hereunder.  If, despite such
good faith negotiations, the Parties do not execute such an amendment within
the Negotiation Period, or if Cubist waives its ROFN Right, then Alnylam shall
thereafter be free to negotiate and execute agreement(s) with one or more
Third Parties with respect to such opportunity; provided  that for
a period of []*  after the earlier of Cubist’s
waiver of its ROFN Right or the expiration of the Negotiation Period, Alnylam
shall not enter into an agreement regarding such opportunity on terms that, in
the aggregate, are materially more favorable to the Third Party than those last
offered by Alnylam to Cubist.

 

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

 

27

 

Section 3.2  Cubist Grants.

 

(a)           Manufacturing License.  Subject to the terms and conditions of this
Agreement, Cubist hereby grants to Alnylam a non-exclusive, fully paid-up,
non-royalty-bearing worldwide right and license, with the right to grant
sublicenses, subject to Section 3.2(c), under the Cubist Technology, to
Manufacture or have Manufactured Licensed Products, but solely to the extent
necessary (i) during the Term, to enable Alnylam to fulfill its
obligations under this Agreement with respect to the Collaboration, and (ii) during
and after the Term, for the Development and Commercialization of Licensed
Products for Asia but only to the extent that such []*.

 

(b)           Cubist Technology License.  Subject to the terms and conditions of this
Agreement, Cubist hereby grants to Alnylam a non-exclusive, fully paid-up, non-royalty-bearing license, with the
right to grant sublicenses, subject to Section 3.2(c), under any Cubist Technology but
solely to the extent necessary (i) during
the Term, to enable Alnylam to fulfill its obligations under this
Agreement with respect to the Collaboration, and (ii) during and after the Term, to Develop and Commercialize
Licensed Products for Asia but only to the extent that such []*.

 

(c)           Affiliates; Sublicenses.

 

(i)            Alnylam shall have the right to grant sublicenses under
the licenses granted to it pursuant to Sections 3.2(a) and (b), and,
subject to the licenses granted to Cubist under Sections 3.1(a), (b) and
(c), the right to grant licenses of its rights under any Joint Collaboration
IP, to an entity that is an Affiliate for so long as such entity remains an
Affiliate of Alnylam and complies in all material respects with the obligations
of Alnylam under this Agreement.  Alnylam
hereby guarantees the full payment and performance of its Affiliates under this
Agreement.

 

(ii)           Subject to Article VI, Alnylam shall have the right
to grant sublicenses to Third Parties under the licenses granted to it pursuant
to Sections 3.2(a)(i).

 

(iii)          Alnylam shall have the right to grant sublicenses to Third
Parties under the licenses granted to it under Section 3.2(b)(i); provided
that []*.

 

(iv)          Alnylam shall have the right to grant sublicenses to Third
Parties under the licenses granted to it pursuant to Sections 3.2(a)(ii) and
3.2(b)(ii).

 

(d)           Payments Owed by Cubist.  Alnylam shall promptly reimburse Cubist for
any amounts that Cubist or any of its Affiliates shall owe to any Third
Party by reason of the license granted by Cubist to Alnylam under this Section 3.2
or under Section 11.3(a) and any sublicense granted by Alnylam or any
of its Affiliates with respect to Development, Manufacture or Commercialization
of Licensed Product under any such license, if such Third Party Technology was
included in the definition of Cubist Technology in accordance with Section 8.6.

 

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

 

28

 

Section 3.3  Sublicensing Terms; Liability.

 

(a)           Each sublicense granted by a Party
pursuant to this Article III shall be subject and subordinate to the terms
and conditions of this Agreement and shall contain terms and conditions
consistent with those in this Agreement. 
Each Party shall promptly provide the other Party with a copy of the fully
executed sublicense agreement covering any sublicense granted hereunder, and
such sublicense agreement shall contain the following provisions:  (i) a requirement that such Sublicensee
submit applicable sales or other reports to the Party granting the sublicense
to the extent necessary or relevant to the reports required to be made or
records required to be maintained under this Agreement; (ii) the audit
requirement set forth in Section 7.12; (iii) a requirement that such
Sublicensee comply with the confidentiality and non-use provisions of Article IX
with respect to both Parties’ Confidential Information; and (iv) any other
provisions applicable to a Sublicensee required under any Alnylam In-License or
Cubist In-License, as the case may be, of which the other Party is notified in
writing.  If a granting Party becomes
aware of a material breach of any sublicense by a Sublicensee of the rights
granted to such Party under this Article III, the granting Party shall
promptly notify the other Party of the particulars of the same and use Diligent
Efforts to enforce the terms of such sublicense.

 

(b)           Each Party shall at all times be
responsible for the performance of its Sublicensees under this Agreement.

 

Section 3.4  Joint Collaboration IP.  Subject to (i) the rights granted to
each Party under this Agreement, including the exclusive licenses granted to
Cubist under Section 3.1, (ii) the obligations of the Parties’ set
forth in Section 10.1 and (iii) the payment obligations set forth in Article VII,
each Party shall have the right to use, sell, keep, license, sublicense or
assign its interest in Joint Collaboration IP and otherwise undertake all
activities a sole owner might undertake with respect to such Joint
Collaboration IP without the consent of and without accounting to the other
Party.

 

Section 3.5  Section 365(n) of
the Bankruptcy Code.  All rights and
licenses granted under or pursuant to any Section of this Agreement,
including Sections 3.1 and 3.2 hereof, are rights to “intellectual
property” (as defined in Section 101(35A) of Title 11 of the United States
Code, as amended (such Title 11, the “Bankruptcy Code”)).  Each Party hereby acknowledges that (a) copies
of research data, (b) laboratory samples, (c) product samples and
inventory, (d) formulas, (e) laboratory notes and notebooks, (f) data
and results related to clinical trials, (g) regulatory filings and
approvals, (h) rights of reference in respect of regulatory filings and
approvals, (i) pre-clinical research data and results, and (j) marketing,
advertising and promotional materials, constitute “embodiments” of intellectual
property pursuant to Section 365(n) of the Bankruptcy Code.  Each Party agrees not to interfere with the
other Party’s exercise of rights and licenses to intellectual property licensed
hereunder and embodiments thereof in accordance with this Agreement and agrees
to use reasonable efforts to assist the other Party to obtain such intellectual
property and embodiments thereof in the possession or control of Third Parties
as reasonably necessary for the other Party to exercise such rights and
licenses in accordance with this Agreement.

 

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

 

29

 

Section 3.6  Retained Rights.  Any rights of a Party not expressly granted
under this Agreement shall be retained by such Party.

 

ARTICLE
IV

 

DEVELOPMENT OF LICENSED PRODUCTS; 

ADDITIONAL RSV PRODUCTS; OPT-OUT RIGHTS

 

Section 4.1  Overview.  The Parties will collaborate in the further
Development of Licensed Product; provided, however, that the
Parties will Develop Licensed Product in the Field in the Profit-Share
Territory in accordance with the allocations of Development responsibilities
set forth in the Development Plan as amended from time-to-time in accordance
with Section 4.2, and, subject to the obligation to update the JSC, Cubist
will be solely responsible for, and with respect to the Major EU Countries
shall use Diligent Efforts with respect to, the Development of Licensed Product
in the Field in the Royalty Territory.

 

Section 4.2  Development Plan; Amendments; Development
Responsibilities.

 

(a)           The Development of Licensed Product
in the Profit-Share Territory shall be governed by the Development Plan, and
the Parties shall use Diligent Efforts to conduct all their Development
activities relating to Licensed Product in accordance with the Development
Plan.  As of the Effective Date, the
Development Plan includes an initial overall plan for the Development of
Licensed Product in the United States. 
The Development Plan as of the Effective Date also includes the initial
funding budgeted for each stage of Development in the United States.

 

(b)           The JSC shall review the Development
Plan not less frequently than annually and shall develop detailed and specific
Development Plan updates, which shall update or include annual Development
budgets for the Profit-Share Territory for each Calendar Year until the
completion of Licensed Product Development activities in the Profit-Share
Territory.  No later than []* of each
Calendar Year, the JSC shall prepare a preliminary draft of the update to the
Development Plan and budget for the following Calendar Year.  The JSC shall review and agree (subject to
the final Board approval of each Party) on a final version of each annual
updated Development Plan and budget no later than each []* for the immediately
following Calendar Year.  The Parties may
also develop and submit to the JSC from time to time other proposed substantive
amendments to the Development Plan.  The
JSC shall review such proposed amendments and may approve such proposed
amendments or any other proposed amendments that the JSC may consider from time
to time in its discretion and, upon such approval by the JSC, the Development
Plan shall be amended accordingly. 
Amendments and updates to the Development Plan, including any budgets
for the Profit-Share Territory contained in the Development Plan, shall not be
effective without the approval of the JSC. 
In connection with each annual update to the Development Plan, the JSC
shall review the FTE Cost, and shall recommend to the Parties whether any
amendment should be made to the prospective FTE Cost to reflect updated
benchmarking information or adjustments to account for FTE skill sets that

 

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

 

30

 

were not included in the
original FTE Cost calculation.  No change
to the FTE Cost shall be effective without the written agreement of both
Parties.

 

(c)           The Parties anticipate that
responsibilities for Development activities for the Profit-Share Territory will
initially be allocated between the Parties substantially as set forth in Exhibit E.

 

(d)           Notwithstanding anything in this
Agreement to the contrary, Cubist shall not have an obligation to seek JSC
approval of development plans and budgets in the Royalty Territory, but will
keep the JSC apprised of such plans.

 

Section 4.3  Development Efforts; Manner of
Performance; Records and Reports.

 

(a)           Each of Alnylam and Cubist shall use
Diligent Efforts to execute and to perform, or cause to be performed, the
activities assigned to it relating to the Development Plan and to cooperate
with the other in carrying out the Development Plan, in each case in good
scientific manner and in compliance with applicable Law, Good Clinical Practice
and Good Laboratory Practice. 
Notwithstanding anything in this Agreement to the contrary, neither
Party will engage or use a Third Party to perform any of the Development
activities allocated to it under the Development Plan or provide any Licensed
Product to any Third Party in the Profit-Share Territory unless such action,
and the form of agreement with such Third Party, have been approved in advance
by the JSC.

 

(b)           Each Party will maintain scientific records,
in sufficient detail and in good scientific manner appropriate for patent and
regulatory purposes, which will fully and properly reflect all work done and results
achieved in the performance of the Development activities with respect to
Licensed Product by such Party and its permitted contractors and permitted
Sublicensees.  Each Party will have the
right, during normal business hours and upon reasonable notice, to inspect and
copy (or request the other Party to copy) all records of the other Party
maintained in connection with the work done and results achieved in the
performance of such Development activities, but solely to the extent such
records relate to Licensed Product or to the extent access to such records is
necessary for a Party to exercise its rights under this Agreement.  All such records, and the information
disclosed therein, as well as all disclosures made pursuant to Sections 4.3(c) and
4.8, will be maintained in confidence by the recipient in accordance with Article IX
and will only be used for purposes of the Collaboration; provided  that
Alnylam shall be permitted to disclose any such information obtained from
Cubist to its Asian Partner for the purpose of
assisting such Asian Partner to Develop, Manufacture and Commercialize Licensed
Products for Asia, subject to the requirement that, to the extent permissible
under Alnylam’s agreements with its Asian Partner, the Asian Partner has an
obligation to disclose to Alnylam, and to permit Alnylam to disclose to Cubist,
and permit Cubist to use for the purposes set forth in this Agreement,
information and records of all work done and results achieved by such Asian
Partner in the performance of Development, Manufacture or Commercialization of
Licensed Products for Asia, including the information specified in this Section 4.3(b) and
the information specified in Section 4.3(c) and Section 4.8.  Alnylam shall use Diligent Efforts to require
its

 

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

 

31

 

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

 

(c)           In addition to the
other disclosure obligations set forth in this Section 4.3, at times and
in a manner to be reasonably agreed by the Parties, each Party shall disclose
to the other Party a written summary, in a form mutually agreed by the Parties,
of clinical data with respect to Licensed Products generated by or under
authority of such Party or any Related Party since the last such disclosure.  Upon the request of either Party, the other
Party shall provide prompt and complete access to, and the right to use for
purposes of the activities for which such requesting Party is licensed
hereunder, any Clinical Regulatory Filings and Safety Data generated by such
Party or its Related Parties; provided  that in any such case the
requesting Party provides notice to the other Party reasonably in advance and
reimburses the other Party for any reasonably incurred copying costs of
providing such access.  Each Party must
provide access to its Related Party’s Clinical Regulatory Filings and Safety
Data on the same basis as if the Related Parties were such Party.  If requested by either Party or the JSC, the
Parties shall discuss any issues relating to such Clinical Regulatory Filings
or Safety Data provided by a Party to the other Party.  In addition to the foregoing, if required by
a Regulatory Authority(ies) or if it is reasonably necessary for a Party or its
Related Party(ies) to have access to the underlying raw data, case report forms
or other original documents (including laboratory notebooks) generated by or on
behalf of the other Party or its Related Party(ies), then such other Party
shall provide, or cause to be provided, access to the originals, of such items.

 

Section 4.4  Joint
Development Costs.

 

(a)           The Parties shall
share Development Costs as follows:  (i) all
Development Costs solely for the Profit-Share Territory shall be shared equally
by the Parties, and (ii) all Development Costs incurred with respect to
Development of Licensed Product for the Profit-Share Territory but generating
data or other Know-How that also has applicability in the Royalty Territory
shall be continue to be shared equally by the Parties except that any incremental
costs associated specifically with any Development activities not required for
the Profit-Share Territory shall be []*. 
The Parties shall discuss and attempt to mutually determine in good
faith how specific Development Costs are allocated in accordance with the
foregoing sentence.  Except as otherwise
set forth in this Section 4.4(a), Cubist shall be responsible for its
costs associated with Development of Licensed Product for the Royalty
Territory.

 

(b)           Development Costs
shall initially be borne by the Party incurring the cost or expense, subject to
reimbursement as provided in Section 4.5. 
Each Party shall calculate and maintain records of Development Costs
incurred by it in accordance with procedures to be established by the JSC.  Alnylam and Cubist shall report []* to each
other on their Development Costs, with such reports to be submitted within []*
after the []* of each Calendar Year. 
Notwithstanding the foregoing, within []* after the end of the []*,
Alnylam and Cubist shall each provide to the other an estimate of such Party’s
Development Costs for such []*. The Parties shall seek to resolve any questions
related to such accounting statements within []* after receipt.

 

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

 

32

 

Section 4.5  Reimbursement
of Development Costs.

 

(a)                                The
Party that incurs more than its share of the total actual Development Costs for
Licensed Product, as allocated under Section 4.4(a), shall be paid by the
other Party an amount of cash sufficient to reconcile to its agreed percentage
of actual Development Costs in each Calendar Quarter; provided  that,
except as set forth in Section 4.5(b) total actual Development Costs
for a Party for a Calendar Year shall not exceed []* percent ([]*%) of the
budgeted Development Costs for such Party for such Calendar Year, as shown in
the then current version of the Development Plan, except to the extent the JSC
approves the increase over []* percent ([]*%) of the budgeted Development Costs
for such Party before the additional costs are incurred.  Subject to Section 4.5(b), if actual
Development Costs for a Calendar Year to date incurred by either Party exceed
budgeted Development Costs for such Party for such Calendar Year by more than
[]* percent ([]*%) and the JSC did not approve some or all of such increase
before the costs were incurred, the Development Costs deemed to have been
incurred by such Party for purposes of determining the balancing payment under
the first sentence of this Section 4.5(a) shall be limited to []*
percent ([]*%) of such Party’s budgeted Development Costs plus any portion of
the increase over such amount that was approved in advance by the JSC or
approved under Section 4.5(b). 
Decisions of the JSC with respect to Development Cost overruns shall be
made in accordance with Section 2.5. 
Reconciling payments under this Section 4.5 for any Calendar
Quarter shall be made within []* after the end of such Calendar Quarter.

 

(b)                               Notwithstanding
anything in Section 4.5(a) to the contrary, the Parties agree to
approve a Party’s actual Development Costs in excess of []* percent ([]*%) of
such Party’s budgeted Development Costs to the extent the overrun is
attributable []*, provided that a contingency for such issue is not already
included in the budget for Development Costs for such Calendar Year.

 

Section 4.6  Additional RSV Products.  If, at any time
during the Term, the JSC determines to commence Development of a Licensed
Product other than the RSV01 Product or the RSV02 Product (an “Additional
RSV Product”), then the Additional RSV Product shall be included in the
Collaboration and the Parties will promptly update the Development Plan
accordingly.

 

Section 4.7  Alnylam Opt-Out Option.

 

(a)           Exercise of Option.  At any time after the First Opt-Out
Milestone, Alnylam, by written notice to Cubist, shall have the right, in its
sole discretion, to opt-out of further Development of all Licensed Products by
providing written notice to Cubist citing this Section 4.7 (the “Opt-Out
Option”), which Opt-Out Option shall, subject to Section 4.7(b), take
effect []* after the date of such written notice.  Upon the effective date of Alnylam’s exercise
of its Opt-Out Option, the following consequences shall occur:

 

(i)            The
Royalty Territory shall thereafter be expanded to comprise the entire
Territory;

 

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

 

33

 

(ii)           The Profit-Share Territory shall
cease to exist;

 

(iii)          The Parties shall cease to share in
N.A. Pre-Tax Profit or Loss;

 

(iv)          Except as set forth in 4.7(a)(v) and
4.7(a)(xii) and subject to Section 4.7(b), Alnylam shall cease to share in
Development Costs pursuant to Sections 4.4 and 4.5;

 

(v)           For a period of []* following the
effective date of Alnylam’s Opt-Out Option, Alnylam shall continue to be
responsible for fifty percent (50%) of Development Costs incurred by Cubist
under the then current Development Plan; provided  that the
cumulative Development Costs paid by Alnylam for Licensed Product under this Section 4.7(a)(v) after
Alnylam has exercised the Opt-Out Option shall not exceed:  (A) []* Dollars ($[]*) if Alnylam
exercised the Opt-Out Option after the First Opt-Out Milestone and prior to the
Second Opt-Out Milestone and (B) []* Dollars ($[]*) if Alnylam exercised
the Opt-Out Option after the Second Opt-Out Milestone.

 

(vi)          Without limiting Cubist’s obligations
under Section 7.2, and subject to Sections 4.7(a)(ix) 4.7(a)(xii),
Cubist shall make the non-refundable, non-creditable milestone payments set
forth below to Alnylam not later than []* after the earliest date on which the
corresponding milestone event set forth below has been achieved:

 

	
  Milestone Event

  	
   

  	
  Payment if

  Alnylam’s

  Exercise of the

  Opt-Out Option

  Takes Effect After

  the First Opt-Out

  Milestone and

  Prior to the

  Second Opt-Out

  Milestone

  	
   

  	
  Payment if

  Alnylam’s

  Exercise of the

  Opt-Out Option

  Takes Effect After

  the Second Opt-

  Out

  Milestone

  	
   

  	
  Section

  4.7(a)(xii)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  

 

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

 

34

 

	
  Milestone Event

  	
   

  	
  Payment if

  Alnylam’s

  Exercise of the

  Opt-Out Option

  Takes Effect After

  the First Opt-Out

  Milestone and

  Prior to the

  Second Opt-Out

  Milestone

  	
   

  	
  Payment if

  Alnylam’s

  Exercise of the

  Opt-Out Option

  Takes Effect After

  the Second Opt-

  Out

  Milestone

  	
   

  	
  Section

  4.7(a)(xii)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  

 

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

 

(vii)         Without limiting Cubist’s obligations
under Section 7.3 (which shall continue to apply to Net Sales of Licensed
Product in the Royalty Territory but only as the Royalty Territory was defined
immediately prior to Alnylam’s exercise of the Opt-Out Option), and subject to
Sections 4.7(a)(ix) and 4.7(a)(xii), in addition to all other amounts
payable under this Agreement, Cubist shall make the non-refundable,
non-creditable milestone payments set forth below to Alnylam upon the
achievement of the milestone events set forth below, such payment to be made as
set forth below:

 

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

 

35

 

	
  Milestone Event

  	
   

  	
  Payment if

  Alnylam’s Exercise

  of the Opt-Out

  Option Takes

  Effect After the

  First Opt-Out

  Milestone and

  Prior to the Second

  Opt-Out Milestone

  	
   

  	
  Payment if

  Alnylam’s

  Exercise of the

  Opt-Out Option

  Takes Effect After

  the Second Opt-

  Out

  Milestone

  	
   

  	
  Section

  4.7(a)(xii)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  

 

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

 

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

 

(viii)        Without limiting Cubist’s obligations
under Section 7.5 (which shall continue to apply to Net Sales of Licensed
Product in the Royalty Territory as the Royalty Territory was defined
immediately prior to Alnylam’s exercise of the Opt-Out Option), and subject to
Sections 4.7(a)(ix), 4.7(a)(xii), 7.5(c), 7.5(d), 7.6 and 7.8 through 7.20
(inclusive) (which, for such purpose, shall be modified as necessary to apply
to the royalty obligations described in this Section 4.7(a)(viii)), Cubist
shall pay to Alnylam royalties on the aggregate Net Sales of all Licensed
Products in North America by Cubist or its Related Parties as follows:

 

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

 

36

 

	
  Aggregate Calendar Year Net

  Sales of Licensed Products in

  North America

  	
   

  	
  Royalty Rate (as

  a Percentage of

  Net Sales) if

  Alnylam’s

  Exercise of the

  Opt-Out Option

  Takes Effect

  After the First

  Opt-Out

  Milestone and

  Prior to the

  Second Opt-Out

  Milestone

  	
   

  	
  Royalty Rate (as

  a Percentage of

  Net Sales) if

  Alnylam’s

  Exercise

  of the Opt-Out

  Option Takes

  Effect

  After the Second

  Opt-Out

  Milestone

  	
   

  	
  Section 4.7(a)(xii)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $[]* - $[]*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Greater than $[]*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  

 

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

 

(ix)           The foregoing provisions of this Section 4.7(a) notwithstanding,
if  Alnylam has exercised its Opt-Out
Option and Cubist or any of its Affiliates, prior to or after  Alnylam’s exercise of its Opt-Out Option,  granted or grants one or more Third Party
licensees or Sublicensees a sublicense under the Alnylam Technology or a
license under the Cubist Technology to Develop or Commercialize any Licensed
Product in the Field in a country or

 

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

 

37

 

countries in North America, then Cubist shall
have no payment obligations under Sections 4.7(a)(vi), 4.7(a)(vii) or
4.7(a)(viii) with respect to development or sales milestones achieved, or
Net Sales of Licensed Products, by such Cubist licensee  or Sublicensee in such country(ies) in North
America, and, in lieu of such payments and subject to Section 7.9(c),
Cubist shall instead pay Alnylam a portion of Sublicense Income received from
such Third Party licensee or Sublicensee with respect to such country(ies) in
North America in accordance with the following:

 

	
  Opt-Out Point

  	
   

  	
  Percentage of Sublicense Income

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  []%*

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  After the Second Opt-Out Milestone

  	
   

  	
  []%*

  	
   

  

 

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

 

(x)                               The
JSC and JCT shall be dissolved, and, except as set forth in Article VI,
all decisions regarding Development, Commercialization and Manufacture of
Licensed Product shall become subject to Cubist’s final decision-making
authority, except that:  (A) Cubist
may not conduct, sponsor, fund or otherwise support a Clinical Study or
Post-Approval Study of Licensed Product that would []* the Development or
Commercialization of Licensed Product in the Field in Asia, without Alnylam’s
prior written consent, (B) Cubist may not resolve any dispute as to what
constitutes Diligent Efforts or as to whether the First Opt-Out Milestone or
the Second Opt-Out Milestone has been achieved, and (C) Cubist may not
unilaterally amend this Agreement.

 

(xi)                            This
Agreement shall otherwise remain in effect.

 

(xii)                         Notwithstanding
the foregoing provisions of this Section 4.7(a), if (1) Alnylam
exercises the Opt-Out Option after the Second Opt-Out Milestone and (2) []*,
then:

 

A.                                   Cubist
shall promptly provide Alnylam with a copy of such []* and with a summary of
all relevant information relating to such []*;

 

B.                                     Additionally,
Cubist shall provide Alnylam with such additional information regarding such
[]* and planned []* as Alnylam may reasonably request;

 

C.                                     Within
[]* after receipt of the information and documents provided by Cubist pursuant to
clause (A); provided however in no event shall such time period expire earlier
than []* after delivery of any

 

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

 

38

 

information requested by Alnylam pursuant to
clause (B), Alnylam shall make one of the following two elections and notify
Cubist of such election:  (I) elect
to accept the milestones and royalties set forth in the column entitled “Section 4.7(a)(xii)
Option I” in Sections 4.7(a)(vi), 4.7(a)(vii) and 4.7(a)(viii), in lieu of
the otherwise applicable opt-out economics set forth above in Sections
4.7(a)(vi), 4.7(a)(vii) and 4.7(a)(viii) (provided that such reduced
economics shall remain subject to the applicable provisions of Section 7.9
referenced in Section 4.7(a)(viii)) or (II) agree to fund []* percent
([]*%) of the []*, in which case there shall be no reduction to the applicable
opt-out economics set forth above in Sections 4.7(a)(vi), 4.7(a)(vii) and 4.7(a)(viii);

 

D.                                    If
Alnylam makes the election set forth in clause (C)(I) above and Cubist
subsequently achieves a []* provided to Alnylam by Cubist pursuant to clause (A) above,
Cubist shall notify Alnylam of such occurrence promptly after receipt of such
[]* and Alnylam shall thereafter have an option, exercisable by providing
Cubist with notice of such exercise within []* after Alnylam’s receipt of
Cubist’s notification, to pay Cubist []* percent ([]*%) of the amount of the
additional []* actually incurred by Cubist in []* and, if Alnylam exercises
such option and thereafter makes such payment within []* after Alnylam’s
receipt of Cubist’s notification, the reduction to Alnylam’s opt-out economics
set forth in clause (C)(I) above shall not apply; and

 

E.                                      If
Alnylam makes the election set forth in clause (C)(II) above, then the JSC
shall be reconstituted and, []*, all Development and Manufacture for the
purposes of Development of Licensed Product for the Profit-Share Territory
shall []*.  For purposes of clarity, (i) at
the time []*, the JSC will be dissolved again and Alnylam will, from that point
forward, receive milestones and royalties based upon the exercise of its
Opt-Out Option after the Second Opt-Out Milestone and (ii) at no time
shall Alnylam resume sharing in N.A. Pre-Tax Profit or Loss.

 

(b)                                 Cubist
Termination.  Notwithstanding
anything in this Section 4.7 to the contrary, Alnylam’s exercise of its
Opt-Out Option shall not take effect if, prior to the effective date of such
Opt-Out Option under this Section 4.7, Cubist provides written notice to
Alnylam of Cubist’s decision to terminate this Agreement under Section 11.2(a).

 

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

 

39

 

Section 4.8  Technology Transfer and Exchange of
Know-How.

 

(a)           Exchange of
Know-How.  Promptly following the
Effective Date, Alnylam will make available to Cubist, at no cost or expense to
Cubist, such Alnylam Know-How as is requested by Cubist in connection with
Cubist’s Development efforts, including all data from any and all clinical
trials and preclinical studies and non-clinical development work for Licensed
Products that are in existence as of the Effective Date.  During the Term, Alnylam shall promptly
update Cubist as to all Alnylam Know-How that has not previously been provided
under this Agreement, and shall provide to Cubist any such additional Alnylam
Know-How promptly upon Cubist’s request.

 

(b)           Updates if JSC
Ceases to Exist.  In the event during
the Term the JSC ceases to exist, then no later than []* of each Calendar Year
thereafter (for the period ending December 31 of the prior Calendar Year),
(i) Cubist shall prepare and deliver to Alnylam a written report
summarizing the status, progress and results of activities performed by Cubist
and its Related Parties with respect to the Development, Manufacture or
Commercialization of Licensed Product in the Field for the Territory performed
since the last such report submitted under this Agreement, and (ii) Alnylam
shall submit to Cubist a written report summarizing the status, progress and
results of activities performed by Alnylam and its Related Parties with respect
to Development, Manufacture or Commercialization of Licensed Product for Asia
since the last report submitted under this Agreement.  Such reports may be provided in any
reasonable written form determined by the Party making such report, including
in a presentation slide format that reasonably summarizes such activities.

 

ARTICLE V

 

COMMERCIALIZATION AND CERTAIN OTHER
RESPONSIBILITIES

 

Section 5.1  Diligent Efforts.  Cubist shall have the sole right to
Commercialize Licensed Product in the Field in the Territory.  The costs of Commercialization in the Royalty
Territory shall be borne one hundred percent (100%) by Cubist.  The costs of Commercialization in the
Profit-Share Territory shall be shared equally by the Parties through the
sharing of N.A. Pre-Tax Profit or Loss under Section 7.4 even if there are
no Net Sales. Cubist shall use Diligent Efforts to Commercialize Licensed
Products in those countries in the Territory in which Cubist has obtained
Regulatory Approval and where Commercialization is commercially reasonable,
including by providing appropriate incentives consistent with its normal
business practices to Sales Representatives involved in the Commercialization
of Licensed Products in the Territory.

 

Section 5.2  Joint Commercialization Team.  Commencing with the earlier of (i) []*
and (ii) the date []* prior to the anticipated launch of the first
Licensed Product in the Territory, and provided Alnylam has not exercised its
Opt-Out Option, the Parties will establish a joint commercialization team (“JCT”)
to coordinate the Commercialization of Licensed Product in the Field in the
Profit-Share Territory.  The provisions
of Sections 2.1(a), 2.1(b) and 2.1(c) relating to the operation of
the JSC shall also apply to the JCT; provided, however, that
Alnylam shall have the right, but not the obligation, to participate in the
JCT.  The responsibilities of the JCT
include:

 

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

 

40

 

(a)           providing updates
regarding the Commercialization of Licensed Product in the Profit-Share
Territory;

 

(b)           reviewing,
commenting on and approving the Commercialization Plan and all updates to the
Commercialization Plan;

 

(c)           coordinating with
the JSC regarding Development matters as necessary or appropriate to
Commercialization of Licensed Product in the Profit-Share Territory;

 

(d)           overseeing
Manufacturing activities related to the Commercialization of Licensed Product
in the Territory;

 

(e)           receiving updates
from Cubist on the status of Commercialization activities in the Royalty
Territory;

 

(f)            performing such
other activities as the Parties agree in writing shall be the responsibility of
the JCT; and

 

(g)           attempting to
resolve any and all disputes relating to the Commercialization of Licensed
Product in the Territory by consensus.

 

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

 

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

 

Section 5.3  Commercialization
Plan.

 

(a)           Commencing no later
than []* prior to the anticipated launch of the first Licensed Product, Cubist
shall prepare and deliver to the JCT, by no later than  []* of each Calendar Year, a written plan and
budget that describes in detail the Commercialization activities (including
pre-launch and launch activities, if applicable) to be undertaken with respect
to Licensed Product in the Profit-Share Territory in the next Calendar Year and
the dates by which such activities are targeted to be accomplished (each, a “Commercialization
Plan”).  The Commercialization Plan
(including the budget) shall contain sufficient detail with respect to
Commercialization tactics and other matters to enable the JCT to conduct a meaningful
review of the Commercialization Plan, and the JCT shall approve the first
Commercialization Plan for the Profit-Share Territory no later than []* prior
to launch of the first Licensed Product in the Profit-Share Territory.  Thereafter, the JCT shall review the
Commercialization Plan not less frequently than annually and shall develop
Commercialization Plan updates, which shall include updated budgets for the
Profit-Share Territory, for each Calendar Year. 
Cubist may also develop and

 

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

 

41

 

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

 

(b)           The amount by which
the Commercialization Costs actually incurred by a Party in any Calendar Year
exceeds such Party’s allocated share, under Section 7.4(a), of the total
Commercialization Costs for such period, as shown on the applicable
Commercialization Plan, shall be taken into account in the calculation of the
balancing payment to be made under Section 7.4(b) so as to reconcile
each Party to its agreed percentage of actual Commercialization Costs in
accordance with Section 7.4(b); provided  that, except as set
forth in Section 5.3(c), the total actual Commercialization Costs for a
Party for a Calendar Year shall not exceed []* percent ([]*%) of the budgeted
Commercialization Costs for such Party for such Calendar Year, as shown in the
then current version of the Commercialization Plan, except to the extent the
JCT approves the increase over []* percent ([]*%) of the budgeted
Commercialization Costs for such Party before the additional costs are
incurred.  Except as set forth in Section 5.3(c),
if actual Commercialization Costs for the Calendar Year to date incurred by
either Party exceed budgeted Commercialization Costs for such Party for such
Calendar Year by more than []* percent ([]*%) and the JCT did not approve some
or all of such increase before the costs were incurred, the Commercialization
Costs deemed to have been incurred by such Party for purposes of determining
the balancing payments pursuant to Section 7.4(b) shall be limited to
[]* percent ([]*%) of such Party’s budgeted Commercialization Costs plus any
portion of the increase over such amount that was approved in advance by the
JCT or that is approved or permitted under Section 5.3(c).  Decisions of the JCT with respect to
Commercialization Cost overruns shall be made in accordance with Section 2.5.  Alnylam and Cubist shall report []* to each
other on their Commercialization Costs, with such reports to be submitted
within []* after the []*. 
Notwithstanding the foregoing, within []* after the end of the []*,
Alnylam and Cubist shall each provide to the other an estimate of such Party’s
Commercialization Costs for such []*. The Parties shall seek to resolve any
questions related to such accounting statements within []* after receipt.

 

(c)           Notwithstanding anything in Section 5.3(b) to
the contrary, []*, reasonable out-of-pocket costs of []* incurred by a Party or
any of its Related Parties under Section []* is approved by the JSC and
reasonable out-of-pocket costs  incurred
by a Party or any of its Related Parties under Section []*, in each case
with respect to Actions  in the Field
in the Profit-Share Territory shall be included as Commercialization Costs
regardless of whether such costs are included in the Commercialization Plan,
provided that the Parties shall use good faith efforts to include estimates of
such costs in the Commercialization Plan. 
In addition, the limitations in Section 5.3(b) with respect to
Commercialization Costs in excess of []* percent ([]*%) of budget shall not
apply to []*, including []*, which such amounts shall be included in
Commercialization

 

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

 

42

 

Costs in the amounts actually incurred in
accordance with Cubist’s then-current []*, as communicated by Cubist to Alnylam
for the applicable Calendar Year.  The
Parties further agree that the JCT shall approve a Party’s Commercialization
Costs in excess of []* percent ([]*%) of such Party’s budgeted
Commercialization Costs to the extent the overrun is attributable to []*,
provided that a contingency for such issue is not already included in the
budget for Commercialization Costs for such Calendar Year.

 

Section 5.4  Regulatory Filings.  Except as may be otherwise specified by the
JSC or set forth in Exhibit E or as otherwise required for Alnylam
to perform its obligations under this Agreement, Cubist (or its Related
Parties) shall be the holder of all INDs and Regulatory Approvals (including
IND and NDA submissions) for Licensed Product in the Territory, and Cubist
shall have the right to (a) oversee, monitor and coordinate all regulatory
actions, communications and filings with, and submissions to, each Regulatory
Authority, (b) be responsible for interfacing, corresponding and meeting
with each Regulatory Authority and (c) be responsible for maintaining all
regulatory filings.  Alnylam or its Asian
Partner shall have the right to cross-reference all INDs, Regulatory Approvals
and all other regulatory filings filed by Alnylam or Cubist or their respective
Related Parties in the Territory with respect to the Development, Manufacture
or Commercialization of Licensed Products for Asia.

 

Section 5.5  Advertising and Promotional Materials.  As between the Parties, Cubist will be
responsible for the creation, preparation, production, reproduction and filing
with the applicable Regulatory Authorities, of relevant written sales,
promotion and advertising materials relating to Licensed Product (“Promotional
Materials”) for use in the Territory. 
All such Promotional Materials will be compliant with all applicable
Laws, and in the Profit Share Territory shall be consistent with the
Commercialization Plan.  Subject to any
limitations imposed by applicable Law, all such Promotional Materials and all
documentary information and oral presentations (where practicable) regarding
the marketing and promotion of Licensed Product in the Field in the Territory
shall (a) acknowledge the Parties’ license arrangement and collaboration
on Licensed Product, and (b) in the Profit-Share Territory, shall display
the Cubist and Alnylam names and logos with equal prominence.   Copies of all
Promotional Materials used in the Territory will be archived by Cubist in
accordance with applicable Law.  Upon
Alnylam’s reasonable request, copies of the core Promotional Materials used by
Cubist in the Profit-Share Territory shall be translated into English (where
applicable) and provided to Alnylam, and the costs of such translations shall
be Commercialization Costs.  Upon Alnylam’s
reasonable request and cost, copies of the
core Promotional Materials used by Cubist in the Royalty Territory shall
be translated into English (where applicable) and provided to Alnylam. Upon
Cubist’s reasonable request and cost, copies of the core Promotional Materials
for Licensed Product used by Alnylam or any of its Related Parties in the Field
for Asia shall be translated into English (where applicable) and provided to
Cubist.

 

Section 5.6  Sales and Distribution.  Cubist shall be responsible for booking sales
and shall warehouse and distribute Licensed Product in the Territory.  If Alnylam receives any orders for Licensed
Product in the Field for the Territory, it shall refer such orders to Cubist.

 

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

 

43

 

Section 5.7  Reporting Obligations.

 

(a)           Within Territory.  Cubist shall prepare and deliver to the JCT
(or, if the JCT does not exist, shall deliver to Alnylam), by no later than
each []* (for the period ending December 31 of the prior Calendar Year),
written reports summarizing Cubist’s Commercialization activities for Licensed
Product in the Field in the Territory performed to date (or updating such
report for activities performed since the last such report submitted hereunder,
as applicable).  In addition, Cubist
shall provide Alnylam with written notice of (i) all filings and
submissions for Regulatory Approval regarding Licensed Product in the Territory
in a timely manner; (ii) all Regulatory Approvals obtained or denied, the
filing of any IND for Licensed Product, the First Commercial Sale of Licensed
Product in each country in the Territory and the achievement by Cubist of any
milestone event set forth in Section 7.2 or 7.3, within []* after Cubist
learns such event has occurred; provided, however, that in all
circumstances, Cubist shall inform Alnylam of such event prior to public
disclosure of such event by Cubist. Moreover, to the extent consistent with the
provisions of Section 3.1(f) and subject to Section 7.4, Cubist
shall prepare and deliver to Alnylam any additional reports required under the
Alnylam In-Licenses, in each case sufficiently in advance to enable Alnylam to
comply with its obligations under the Alnylam In-Licenses.  Cubist shall also provide to the JCT such
other information as Alnylam may reasonably request related to
Commercialization of Licensed Product in the Territory and shall keep the JCT
reasonably informed of Cubist’s Commercialization activities with respect to
Licensed Product in the Field in the Territory.

 

(b)           Asia.  Alnylam shall prepare and deliver to the JCT
(or, if the JCT does not exist, shall deliver to Cubist), by no later than each
[]* (for the period ending December 31 of the prior Calendar Year),
written reports summarizing the Commercialization activities of Alnylam and its
Related Parties with respect to Licensed Product in the Field for Asia
performed to date (or updating such report for activities performed since the
last such report submitted hereunder, as applicable).  In addition, Alnylam shall provide Cubist
with written notice within []* after Alnylam becomes aware (but in any event
prior to public disclosure by Alnylam) of (i) all filings and submissions
for Regulatory Approvals regarding Licensed Product in Asia; and (ii) all
Regulatory Approvals obtained or denied, the filing of any IND for Licensed
Product or the First Commercial Sale of Licensed Product, in each case in each
country in Asia.  Alnylam shall also
provide such other information to Cubist as Cubist may reasonably request and
shall keep Cubist reasonably informed of Commercialization activities of
Alnylam and its Asian Partner with respect to Licensed Product in the Field in
Asia.

 

Section 5.8  Other Responsibilities.  Without intending to limit in any way Cubist’s
overall responsibility for Commercialization of Licensed Products in the
Territory, the Parties agree that Cubist shall be solely responsible for (a) handling
all returns of Licensed Product, in the Territory, it being understood that if
Licensed Product is returned to Alnylam, it shall promptly be shipped to a
facility designated by Cubist; and (b) handling all aspects of Licensed
Product order processing, invoicing and collection, distribution, inventory and
receivables in the Territory; provided  that in the Profit-Share
Territory, the costs of such activities shall be included as Commercialization
Costs or Distribution Costs, as the case may be, in the calculation and

 

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

 

44

 

reconciliation of N.A. Pre-Tax Profit or Loss
in accordance with Section 7.4.  All
returns will be required to be made in accordance with Cubist’s standard return
procedures which require a return authorization to be issued by Cubist or its
designee.

 

Section 5.9  Adverse Event and Licensed Product
Complaint Reporting Procedures; Notice of Information Affecting Marketability
of Licensed Product.  Each Party will
maintain a record of any and all complaints it receives with respect to
Licensed Products, and will use Diligent Efforts to ensure that its Related
Parties maintain such records.  Each
Party will notify the other Party in reasonable detail of any complaint it
receives with respect to Licensed Product within sufficient time to allow the
other Party and its Related Parties to comply with any and all regulatory and
other requirements imposed upon them in any jurisdiction in which Licensed
Product is being marketed or tested in Clinical Studies or Post-Approval
Studies.  Cubist will maintain a global
safety database for Licensed Product. 
The reasonable costs of implementing and maintaining the global safety database
shall be included as Commercialization Costs in the calculation and reconciliation
of N.A. Pre-Tax Profit or Loss in accordance with Section 7.4 even though
the global safety database will also be used with respect to the Royalty
Territory.  In the event Alnylam elects
to exercise its Opt-Out Option under Section 4.7, notwithstanding anything
to the contrary contained in Section 4.7 or otherwise in this Agreement,
Alnylam shall continue to pay []* of the reasonable costs of maintaining the
global safety database, and shall reimburse Cubist for such costs on a monthly
basis within []* after receipt of an invoice from Cubist.  Alnylam and the Asian Partner will have
access to all data in the global adverse event database, subject to reasonable
procedures to be mutually agreed upon by the Parties and such Asian Partner and
set forth in the Safety Information Exchange Agreement, as defined below.  Cubist will provide Alnylam and the Asian
Partner with all adverse event information and safety data relating to Licensed
Product in its Control through access to the global adverse event
database.  Alnylam will use Diligent
Efforts to require that its Asian Partner will report to Alnylam or directly to
Cubist the details around any adverse events and serious adverse events
relating to Licensed Product in its Control within the time periods for such
reporting as specified in the Safety Information Exchange Agreement.  Cubist shall be responsible for submitting
adverse event reports with respect to Licensed Products to the applicable
Regulatory Authorities in the Territory. 
Cubist’s reasonable costs associated with submitting adverse event
reports in the Royalty Territory shall be borne by Cubist.  Cubist’s reasonable costs associated with
submitting adverse event reports in the Profit-Share Territory shall be
included as Commercialization Costs in the calculation and reconciliation of
N.A. Pre-Tax Profit or Loss in accordance with Section 7.4.  In addition, each Party shall promptly notify
the other Party if such Party becomes aware of any information or circumstance
that is likely to have a material adverse effect on the Development,
Manufacture or Commercialization of Licensed Products in the Territory.  Within []* after the Effective Date, the
Parties will develop and agree in writing upon a safety information exchange
agreement (the “Safety Information Exchange Agreement”) that will
include safety data exchange procedures governing the coordination of
collection, investigation, reporting, and exchange of information concerning
any adverse experiences, and any product quality and product complaints
involving adverse experiences, related to Licensed Product, sufficient to
enable each Party to comply with its legal and regulatory obligations and
consistent with the terms of this Agreement. 
At Cubist’s request, Alnylam shall use Diligent

 

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

 

45

 

Efforts to require that its Asian Partner
become a Party to the Safety Information Exchange Agreement.

 

Section 5.10  Recalls, Market Withdrawals or Corrective
Actions.  If any Regulatory Authority
issues or requests a recall or takes a similar action in connection with
Licensed Product in the Territory, or if either Party determines that an event,
incident or circumstance has occurred that may result in the need for a recall
or market withdrawal in the Territory, the Party notified of such recall or
similar action, or the Party that desires such recall, withdrawal or similar
action, shall, within []*, advise the other Party thereof by telephone or
facsimile.  Cubist, in consultation with
Alnylam, shall decide whether to conduct a recall or product withdrawal in the
Territory (except in the case of a government mandated recall, when Cubist may
act without such advance notice, but shall notify Alnylam as soon as possible)
and the manner in which any such recall or withdrawal shall be conducted.  Alnylam will make available to Cubist, upon
request, all of Alnylam’s pertinent records that Cubist may reasonably request
to assist Cubist in effecting any recall.

 

Section 5.11  Medical Inquiries.  Cubist shall handle all medical questions or
inquiries from members of the medical profession in the Territory regarding
Licensed Product in the Field. Cubist’s reasonable costs associated with
handling medical questions or inquiries from members of the medical profession
in the Profit-Share Territory shall be included as Commercialization Costs in
the calculation and reconciliation of N.A. Pre-Tax Profit or Loss in accordance
with Section 7.4.

 

Section 5.12  Export Monitoring.  Cubist and its Related Parties will use
Diligent Efforts to monitor and prevent exports of Licensed Product from the
Territory to countries in Asia, using methods commonly used in the industry for
such purpose, and shall promptly inform Alnylam of any such exports of Licensed
Product from the Territory to countries in Asia, and the actions taken to
prevent such exports.  Cubist agrees to take any actions
reasonably requested in writing by Alnylam that are consistent with applicable
Law to prevent exports of Licensed Product from the Territory to countries in
Asia.  Alnylam shall use Diligent Efforts
to effect provisions with its Asian Partner that require the Asian Partner to
use efforts consistent with those required of Cubist under this Section 5.12
to inform Cubist of, and to prevent, exports of Licensed Products from
countries in Asia into countries in the Territory.

 

ARTICLE VI

 

MANUFACTURE AND SUPPLY

 

Section 6.1  Supply Obligations; Alnylam’s Existing
Manufacturing Arrangements.

 

(a)           Subject to Section 6.2,
from and after the Effective Date, Alnylam will use Diligent Efforts, either
itself or through Third Parties, to Manufacture, in accordance with applicable
cGMP (as defined in the Supply Agreement Term Sheet), and supply to Cubist API
Bulk Drug Substance and Finished Product (as applicable) in quantities that are
reasonably sufficient for the conduct of Development and Commercialization by
Cubist with respect to the

 

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

 

46

 

Profit-Share  Territory under the Development Plan and
Commercialization Plan, respectively, and for Development and Commercialization
in the Royalty Territory. Cubist shall pay Alnylam an amount equal to Alnylam’s
Cost of Goods Sold for API Bulk Drug Substance and Finished Product (as
applicable) supplied by Alnylam to Cubist pursuant to this Section 6.1
with respect to the Development and Commercialization in the Royalty Territory,
payable within []* after receipt of an invoice therefor in accordance with the
Supply Agreement.  Alnylam’s Cost of
Goods Sold for API Bulk Drug Substance and Finished Product (as applicable)
supplied by Alnylam to Cubist pursuant to this Section 6.1 for Development
in the Profit-Share Territory shall be included as Development Costs. Alnylam’s
Cost of Goods Sold for API Bulk Drug Substance and Finished Product (as
applicable) supplied by Alnylam to Cubist pursuant to this Section 6.1 for
Commercialization in the Profit-Share Territory shall be shared by the
Parties  through the calculation of N.A.
Pre-Tax Profit or Loss.

 

(b)           Prior to the
Effective Date, Alnylam entered into the master services agreements identified
on Exhibit F with respect to the supply of API Bulk Drug Substance
and Finished Product for clinical trials, and such agreements are hereby deemed
approved by Cubist. Subject to Sections 6.2 and 6.3, Alnylam shall be
responsible for the day-to-day management of such suppliers on behalf of the
Parties, under the direction of the JSC; provided  that in no
event shall Alnylam amend any of the agreements identified on Exhibit F
with respect to any Licensed Product without Cubist’s prior written approval of
the form of the amendment, which approval shall not be unreasonably withheld or
delayed.  After the Effective Date,
Alnylam, in consultation with Cubist, shall use Diligent Efforts to enter into
such additional agreements (if any, as determined by the Parties) with suppliers
of API Bulk Drug Substance or Finished Product (as applicable) to supply the
Parties with API Bulk Drug Substance or Finished Product in quantities that are
reasonably sufficient for the conduct of Development and Commercialization
activities for the Territory pursuant to this Agreement.  The selection of such Third Party suppliers
and the terms of the agreements with such Third Party suppliers with respect to
Licensed Products shall be subject to prior approval by both Parties, which
approval shall not be unreasonably withheld or delayed.  The terms of any such agreements shall
include the right of both Parties to audit any such Third Party suppliers of
API Bulk Drug Substance or Finished Product being supplied for the
Territory.  In the case of the agreements
identified on Exhibit F, to the extent permitted by such agreements
and upon the reasonable request of Cubist, Alnylam shall audit such existing
Third Party suppliers with respect to activities related to Licensed Products
and, to the extent permitted by such agreements, shall permit Cubist
representatives to participate as part of the audit team.  The results of any such audit shall be
reported to Alnylam as provided in such agreements and Alnylam shall report
such results to Cubist to the extent permitted by such agreements.  Notwithstanding anything in this Agreement to
the contrary, Alnylam shall use Diligent Efforts to amend the agreements listed
on Exhibit F to the extent necessary to permit Cubist
representatives to participate in audits of such Third Parties with respect to
Licensed Product and to have access to audit results.

 

(c)           The JSC shall not
take any action or direct Alnylam to take any action that would result in the
breach of any agreement set forth on Exhibit F, or of any subsequent
agreement between Alnylam and an API Bulk Drug Substance or Finished Product
supplier,

 

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

 

47

 

including any minimum purchase
obligation or non-cancelable order obligation contained in any such agreement.

 

Section 6.2  Transition of Manufacturing
Responsibilities to Cubist.

 

(a)           The Parties
contemplate that, at a suitable time after the Effective Date, the Parties may agree
to transfer responsibility for Manufacturing API Bulk Drug Substance and
Finished Product for the Territory (as applicable) to Cubist or a designated
Third Party manufacturer.  The Supply
Agreement Term Sheet also contains provisions under which Cubist may assume
responsibility for the Manufacture of 
Licensed Product.

 

(b)           If, and at such time
as a transition of Manufacturing to Cubist is to occur under Section 6.2(a),
Cubist will either (i) enter into agreement(s) with API Bulk Drug
Substance supplier(s) or Finished Product suppliers or (ii) supply
API Bulk Drug Substance or Finished Product (after completion of transfer of
responsibilities), in either case to replace the agreement(s) referenced
in Section 6.1 or to provide a second source of supply for API Bulk Drug
Substance or Finished Product, the terms of any such agreements or arrangements
involving Cubist shall be subject to both Parties’ prior written approval,
which approval shall not be unreasonably withheld or delayed.  After such transition, Cubist’s Cost of Goods
Sold for API Bulk Drug Substance and Finished Product (as applicable) supplied
by Cubist for Development in the Profit-Share Territory shall be included as
Development Costs, and Cubist’s Cost of Goods Sold for API Bulk Drug Substance
and Finished Product (as applicable) supplied by Cubist for Commercialization
in the Profit-Share Territory shall be shared by the Parties through the
calculation of N.A. Pre-Tax Profit or Loss.

 

(c)           From and after such
time, if any, as responsibility for Manufacturing API Bulk Drug Substance or
Finished Product is transitioned to Cubist, Cubist shall use Diligent Efforts
to Manufacture or have Manufactured and supply sufficient quantities of the API
Bulk Drug Substance or Finished Product (as applicable) to enable Cubist to
respond on a timely basis to customer demand for Licensed Products in the Field
in the Territory.

 

(d)           Cubist acknowledges
that Alnylam has certain supply obligations to Kyowa Hakko under the Kyowa
Agreement, and that, if any such obligations to Kyowa Hakko or to another Asian
Partner remain at the time of any transition of responsibility for supply to
Cubist pursuant to Section 6.2(a), the Parties shall use Diligent Efforts
to structure such transition in a manner that enables Alnylam to satisfy such
supply obligations to Kyowa Hakko (or another Asian Partner, as applicable)
after such transition in a reasonable manner, provided in no event shall Cubist
have any obligation to supply Alnylam with any Licensed Product other than the Licensed
Product Cubist is Manufacturing for itself.

 

(e)           Alnylam shall pay
Cubist an amount equal to []* for any API Bulk Drug Substance and Finished
Product (as applicable) supplied by Cubist to Alnylam (or its designee)
pursuant to Section 6.2(d) []* to which Alnylam is entitled under its
agreement with its Asian Partner, which such amount shall be paid within []*
after receipt of an invoice therefor. 
Sale by

 

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

 

48

 

Cubist of API Bulk Drug
Substance or Finished Product to Alnylam under this Agreement shall not be
included in the calculation of Net Sales.

 

Section 6.3  Supply
Agreement.  The terms of Exhibit G
hereof (the “Supply Agreement Term Sheet”) shall govern the Manufacture
and supply of Licensed Product hereunder until such time as the Parties enter
into a supply agreement (the “Supply Agreement”), after which time, the
terms of the Supply Agreement shall govern. 
The Parties will use their commercially reasonable efforts to enter
into, within []* after the Effective Date, a Supply Agreement among Alnylam,
Cubist and Kyowa Hakko, consistent with the terms set forth in Exhibit G,
and containing such other terms as shall be consistent with this Agreement, the
Kyowa Agreement and industry standards for a contract manufacturing agreement
in the context of a collaborative effort. 
For purposes of clarity, if Cubist assumes responsibility for the
Manufacture and supply of License Product pursuant hereto or pursuant to the
Supply Agreement Term Sheet or the Supply Agreement, it is the intention of the
Parties that Cubist will have the same rights and obligations as the
manufacturer and supplier that Alnylam held prior to such time under the Supply
Agreement Term Sheet or the Supply Agreement, as the case may be.

 

Section 6.4  Technology
Transfer.  Promptly after a decision
of the Parties  or election by Cubist
under Section 6.2 to transfer Manufacture of the API Bulk Drug Substance
or Finished Product (as applicable) to Cubist or to a Third Party API Bulk Drug
Substance supplier or Finished Product supplier with whom Cubist enters into an
agreement, as permitted under Section 6.2, Alnylam will transfer to Cubist
or to such Third Party supplier all documents and Manufacturing information and
other Know-How necessary or reasonably useful to enable Cubist to Manufacture
or have Manufactured the API Bulk Drug Substance and Finished Product (as
applicable).  Alnylam’s costs and expenses
incurred in connection with any such transfer of technology under this Section 6.4
shall []*, to the extent consistent with this Agreement.

 

ARTICLE VII

 

FINANCIAL PROVISIONS

 

Section 7.1  Upfront Fee.  Within five (5) Business Days after the
Effective Date, Cubist shall pay Alnylam a non-refundable, non-creditable
initial payment of Twenty Million Dollars ($20,000,000).

 

Section 7.2  Development Milestones.  Cubist shall make the non-refundable,
non-creditable milestone payments set forth below to Alnylam not later than []*
after the earliest date on which the corresponding milestone event set forth
below has been achieved:

 

	
  Milestone Event

  	
   

  	
  Payment*

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  

 

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

 

49

 

	
  Milestone Event

  	
   

  	
  Payment*

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  

 

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

 

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

 

Section 7.3  Sales Milestones.  In addition to all other amounts payable
under this Agreement, Cubist shall make non-refundable, non-creditable
milestone payments set forth below to Alnylam 
upon the achievement of the milestone events set forth below, such
payment to be made as set forth below:

 

	
  Milestone Event

  	
   

  	
  Payment*

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  

 

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

 

50

 

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

 

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

 

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

 

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

 

Section 7.4  N.A. Pre-Tax Profit or Loss.

 

(a)                                  Allocation
of N.A. Pre-Tax Profit or Loss. 
Subject to Section 5.3(b), the Parties shall share in N.A. Pre-Tax
Profit or Loss for the Profit-Share Territory as follows:  fifty percent (50%) to Alnylam and fifty
percent (50%) to Cubist.  N.A. Pre-Tax
Profit or Loss shall be calculated in accordance with Section 7.4(b).  It is understood that costs and expenses
included in components of N.A. Pre-Tax Profit or Loss shall not be double
counted and shall not also be included in Development Costs.

 

(b)                                 Quarterly
Reconciliation of N.A. Pre-Tax Profit or Loss.

 

(i)            Within []* after the end of each
Calendar Quarter after the Effective Date, Cubist shall submit to Alnylam a
written report setting forth (A) all Net Sales of Licensed Products in the
Profit-Share Territory made by Cubist or its Related Parties during such
Calendar Quarter, together with an accounting of the deductions from gross
invoice price to Net Sales in accordance with Section 1.76, (B) all
Sublicense Income received during such Calendar Quarter, and (C) the Cost
of Goods Sold, Commercialization Costs and Distribution Costs incurred by
Cubist with respect to Licensed Products in the Field in the Profit-Share
Territory.

 

(ii)           Within []* after the end of each
Calendar Quarter after the Effective Date, Alnylam shall submit to Cubist a
written report setting forth the Cost of Goods Sold, Commercialization Costs
and Distribution Costs incurred by Alnylam with respect to Licensed Products in
the Field in the Profit-Share Territory.

 

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

 

51

 

(iii)                               In
submitting the reports contemplated by Sections 7.4(b)(i) and 7.4(b)(ii),
subject to Section 5.3(c), the Parties shall submit costs and expenses for
inclusion in the reconciliation of N.A. Pre-Tax Profit or Loss only to the
extent such costs and expenses were made or incurred by such Party for
activities described in the then current Commercialization Plan, or (B) as
otherwise approved by the JSC or JCT.

 

(iv)                              Within
[]* after the receipt of Alnylam’s report pursuant to Section 7.4(b)(ii),
Cubist shall submit to Alnylam a written report setting forth in reasonable
detail the calculation of N.A. Pre-Tax Profit or Loss and the calculation of
the net amount owed by Cubist to Alnylam, or by Alnylam to Cubist, in order to
ensure the sharing of N.A. Pre-Tax Profit or Loss set forth in Section 7.4(a).  The net amount payable shall be paid by
Cubist or by Alnylam (as the case may be) within []* after the end of the
applicable Calendar Quarter.

 

Section 7.5  Licensed Product Royalties in the Royalty
Territory.

 

(a)                                  Royalty
Rates.  Subject to
Sections 7.5(b), 7.5(c), 7.5(d), 7.6, 7.7, 7.8 and 7.9, Cubist shall pay
to Alnylam royalties on the aggregate Net Sales in the Royalty Territory of
each Licensed Product by Cubist or its Related Parties, determined on a Licensed
Product-by-Licensed Product basis, as follows:

 

	
  Calendar Year Net Sales

  of Licensed Product

  	
   

  	
  Royalty Rate for

  RSV01 Products

  (as a percentage

  of such Net Sales)

  	
   

  	
  Royalty Rate for

  Licensed Products

  other than RSV01

  Products (as a

  percentage of

  such Net Sales)

  	
   

  
	
  $[]* - $[]*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  
	
  Greater than $[]*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  

 

(b)                                 Applicability
of Royalty Rates to Net Sales in the Royalty Territory.  Royalties on aggregate Net Sales of Licensed
Product in the Royalty Territory in a Calendar Year shall be paid at the rate
applicable to the portion of Net Sales within each of the Net Sales levels
above during such Calendar Year.  For
example, subject to Sections 7.5(c), 7.5(d), 7.6, 

 

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

 

52

 

7.7, 7.8 and 7.9, if, during a
Calendar Year, Net Sales of an RSV01 Product were equal to $[]*, the royalty
payable by Cubist would be calculated by []*.

 

(c)                                  Royalties
in North America After Exercise of the Opt-Out Option.  In the event Alnylam exercises its Opt-Out
Option under Section 4.7, (i) the Royalty Territory shall be expanded
to include North America, and (ii) Net Sales of Licensed Products for
purposes of calculating the royalty tiers shall be determined separately for
North America and the rest of the Territory in accordance with Section 4.7(a),
provided that the royalty rates applicable to North America shall be those set
forth in Section 4.7(a).

 

(d)                                 Royalty
Term and Adjustments.  The
obligations of Cubist to make royalty payments at the full rates recited in Section 7.5(a) shall
commence on the Effective Date and shall expire on a Licensed
Product-by-Licensed Product and country-by-country basis on the later of:  (i) the expiration of the Legal
Exclusivity Period or (ii) the tenth (10th) anniversary of the date of the
First Commercial Sale of such Licensed Product in such country by Cubist or its
Related Parties (the “Royalty Term”). 
The foregoing provisions of this Section 7.5(d) notwithstanding,
the royalties payable with respect to Net Sales of a Licensed Product sold in
any country in the Royalty Territory shall be reduced to []* percent ([]*%) of
the amounts otherwise payable pursuant to Section 7.5(a) (as further
adjusted by the other provisions of this Article VII), during any portion
of the Royalty Term when there is not an applicable Legal Exclusivity Period in
effect with respect to such Licensed Product in such country.

 

Section 7.6  Adjustments for Necessary Third Party IP
Payments in the Royalty Territory.

 

(a)                                  With
respect to Licensed Products in the Royalty Territory, (i) subject to Section 7.9,
Alnylam shall bear []* percent
([]*%) of any royalties, upfront fees, milestones
or other payments owed under the Existing Alnylam In-Licenses with respect to
the Development, Manufacture or Commercialization of a Licensed Product in the
Field in the Royalty Territory; (ii) subject to Sections 7.6(b) and
7.9, Cubist shall bear []* percent ([]*%) of any royalties upfront fees,
milestones or other payments under the Alnylam In-Licenses, other than the
Existing Alnylam In-Licenses, to the extent reasonably allocable to Necessary
Third Party IP for the Development, Manufacture or Commercialization of a
Licensed Product in the Field in the Royalty Territory; and (iii) subject
to Sections 7.6(b) and 7.9, Cubist shall bear []* percent ([]*%) of any
royalties upfront fees, milestones or other payments under the Cubist
In-Licenses, to the extent reasonably allocable to Necessary Third Party IP for
the Development, Manufacture or Commercialization of a Licensed Product in the
Field in the Royalty Territory.  Any such amounts shall be paid by Cubist or paid by
Alnylam and reimbursed by Cubist; provided  that if such amounts
are paid by Alnylam, Alnylam shall invoice Cubist for the amounts identified on
a Calendar Quarter basis, and Cubist shall pay such invoices within []* after
receipt of Alnylam’s invoice.

 

(b)                                 Subject
to Section 7.9, []* percent ([]*%) of all royalties, upfront fees,
milestones or other payments under the Alnylam In-Licenses and the Cubist
In-Licenses actually 

 

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

 

53

 

paid by Cubist pursuant to Section 7.6(a)(ii) or
7.6(a)(iii) shall be fully creditable against royalties payable by Cubist
to Alnylam pursuant to Section 7.5(a) or Section 4.7.  []*.

 

Section 7.7  Necessary Third Party IP in the Profit-Share Territory.  With
respect to  Licensed Product in the
Profit-Share Territory, (a) []* percent ([]*%) of any royalties, upfront fees, milestones or
other payments under the Alnylam In-Licenses (other than Existing Alnylam
In-Licenses), (b) []* percent ([]*%) of royalties payable under Existing
Alnylam In-Licenses up to []* percent ([]*%) of Net Sales, (c) []* percent
([]*%) of the allocated milestones under Existing Alnylam In-Licenses that are
identified on Exhibit H, and (d) ([]*%) of any royalties, upfront fees, milestones or
other payments under the Cubist
In-Licenses, in each case under clauses (a), (b), (c) and (d), to the
extent reasonably allocable to Necessary Third Party IP for the
Development, Manufacture or Commercialization
of Licensed Products in the Field for the Profit-Share Territory, shall
be included in Commercialization Costs or Development Costs, as applicable;
provided that it is understood that []* percent ([]*%) of the allocated
milestones identified on Exhibit H shall be included in
Commercialization Costs or Development Costs, as the case may be, with respect
to Licensed Products for the Profit-Share Territory.  Alnylam shall bear []* percent ([]*%) of any
royalties, up-front fees, milestones or other payments owed under the Existing
Alnylam In-Licenses with respect to Development, Manufacture or
Commercialization of Licensed Product in the Field in the Profit-Share
Territory to the extent not covered under the preceding sentence.

 

Section 7.8  Royalty Adjustments for Generic Products.  If, during a given Calendar Quarter, there is
Generic Competition in a particular country of the Royalty Territory with
respect to a Licensed Product, then subject to Section 7.9, the royalties
payable on the Net Sales of such Licensed Product in such country during such
Calendar Quarter shall be reduced to (a) []* percent ([]*%) of the amounts
otherwise payable pursuant to Section 7.5(a), as adjusted by the other
provisions of this Article VII, with respect to such Licensed Product in
such country for such Calendar Quarter, and (b) []* percent ([]*%) of the
amounts otherwise payable pursuant to Section 7.5(a), as adjusted by the
other provisions of this Article VII, with respect to such Licensed
Product in such country for such Calendar Quarter where the market share in
such country for the Generic Product (determined in accordance with Section 1.54)
is greater than []* percent ([]*%).

 

Section 7.9  Minimum Payments in the Royalty Territory.

 

(a)                                  Unless
the reductions in Section 7.8(b) apply, notwithstanding anything to
the contrary in Section 7.5, 7.6 or 7.8, with respect to any Licensed
Product in any country in the Royalty Territory in any Calendar Quarter, if the
royalty payments (after all adjustments and reductions) to be made to Alnylam
by Cubist would otherwise be less than the royalty amounts payable by Alnylam
(and not reimbursed by Cubist) to Third Parties under the Alnylam In-Licenses
with respect to such Net Sales of Licensed Product in the Royalty Territory
plus []*  percent ([]*%) of the Net Sales
of such Licensed Product in the Royalty Territory in such Calendar Quarter,
then Alnylam shall invoice Cubist for
such shortfall amounts on a Calendar Quarter basis, and Cubist shall pay such
invoices within []* after receipt of Alnylam’s invoice.

 

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

 

54

 

(b)                                 If
the reductions in Section 7.8(b) apply, notwithstanding anything to
the contrary in Section 7.5, 7.6 or 7.8, with respect to any Licensed
Product in any country in the Royalty Territory in any Calendar Quarter, if the
royalty payments (after all adjustments and reductions) to be made to Alnylam
by Cubist would otherwise be less than the amounts payable by Alnylam to Third
Parties under the Alnylam In-Licenses plus []* percent ([]*%) of the Net Sales
of such Licensed Product in such Calendar Quarter in the Royalty Territory,
then Alnylam shall invoice Cubist for
such shortfall amounts on a Calendar Quarter basis, and Cubist shall pay such
invoices within []* after receipt of Alnylam’s invoice.

 

(c)                                  If the provisions of Section 4.7(a)(ix) apply,
notwithstanding anything to the contrary in Section 4.7(a)(ix) or
this Article VII, if the portion of Sublicense Income attributable to the
Net Sales of Licensed Products by such Cubist Sublicensee in such country(ies)
in North America in any Calendar Quarter would otherwise be less than the
royalty amounts payable by Alnylam to Third Parties under the Alnylam
In-Licenses with respect to such Net Sales of Licensed Product in such
country(ies) in North America in such Calendar Quarter plus []* percent ([]*%)
of such Net Sales, then Alnylam shall invoice Cubist for such shortfall amounts
on a Calendar Quarter basis, and Cubist shall pay such invoices within []*
after receipt of Alnylam’s invoice.

 

Section 7.10  Royalty Reports; Payments.  Within []* after the end of each Calendar
Quarter for which royalties are payable by Cubist to Alnylam with respect to
Net Sales of Licensed Products in the Royalty Territory pursuant to Section 7.5,
Cubist shall submit to Alnylam a report, on a country-by-country basis,
providing in reasonable detail an accounting of all Net Sales (including an
accounting of all unit sales of Licensed Product and calculation of the
deductions from gross invoice price to Net Sales in accordance with Section 1.76)
made during such Calendar Quarter and the calculation of the applicable
royalties under Section 7.5(a). 
Cubist shall pay to Alnylam all amounts payable by it under Section 7.5
as indicated in the report at the time Cubist submits the report.

 

Section 7.11  Payments from Alnylam to Cubist; Reports.  Alnylam will pay Cubist []* percent ([]*%) of
any Asian Partner Payments received by Alnylam from its Asian Partner after the
Effective Date, in accordance with this Section 7.11.  No
sooner than []* and no later than []* after the end of each Calendar Quarter in
which Alnylam receives Asian Partner Payments, Alnylam shall submit to Cubist a
report, providing in reasonable detail an accounting of all Asian Partner
Payments received by Alnylam during such Calendar Quarter and the calculation
of the applicable payment under this Section 7.11.  Alnylam shall pay to Cubist all amounts
payable by it under this Section 7.11 as indicated in the report at the
time Alnylam submits the report.  As used in this Section 7.11,
“Asian Partner Payments” means any of the following received by Alnylam
from its Asian Partner:  (a) []*.  For avoidance of doubt, this Section 7.11
survives any termination of this Agreement as long as such termination occurs
after NDA submission in the United States.

 

Section 7.12  Audits.  Each Party shall keep complete and accurate
records of the items underlying Development Costs, Commercialization Costs,
Distribution Costs, Net Sales, Cost of 

 

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

 

55

 

Goods Sold, Necessary IP Rights, royalties,
milestones, other license fees and other payments and the elements required to
calculate N.A. Pre-Tax Profit or Loss relating to the reports and payments
required by Sections 4.4, 4.5, 4.7, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9,
7.10 and 7.11.  Each Party will have the
right []* at its own expense to have an independent, certified public
accountant, selected by such Party and reasonably acceptable to the other
Party, review any such records of the other Party in the location(s) where
such records are maintained by the other Party upon reasonable notice and
during regular business hours and under obligations of confidence, for the sole
purpose of verifying the basis and accuracy of payments made under Sections
4.4, 4.5, 4.7, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 and 7.11 within the
prior []* period.  If the review of such
records reveals that the other Party has failed to accurately report
information pursuant to Sections 4.4, 4.5, 4.7, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7,
7.8, 7.9, 7.10 and 7.11, then the other Party shall promptly pay to the
auditing Party any resulting amounts due under such Sections, together with
interest calculated in the manner provided in Section 7.17.  If any such discrepancies are greater than
five percent (5%) of the amounts actually due for any Calendar Quarter under
Sections 4.4, 4.5, 4.7, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10  and 7.11, the other Party shall pay all of
the costs of such review.

 

Section 7.13  Tax Matters.

 

(a)                                  Cubist
will make all payments to Alnylam under this Agreement without deduction or
withholding except to the extent that any such deduction or withholding is
required by applicable Law to be made on account of Taxes (as that term is
defined in Section 7.13(e) below).

 

(b)                                 Any
Tax required to be withheld under applicable Law on amounts payable under this
Agreement will promptly be paid by Cubist on behalf of Alnylam to the
appropriate Governmental Authority, and Cubist will furnish Alnylam with proof
of payment of such Tax.  Any such Tax
required to be withheld will be an expense of and borne by Alnylam.  Cubist will give notice of its intention to
begin withholding any such Tax in advance and cooperate to use reasonable and
legal efforts to reduce such Tax on payments made to Alnylam hereunder.

 

(c)                                  Cubist
and Alnylam will cooperate with respect to all documentation required by any
relevant Government Authority or reasonably requested by Cubist to secure a
reduction in the rate of applicable withholding Taxes.

 

(d)                                 If
Cubist had a duty to withhold Taxes in connection with any payment it made to
Alnylam under this Agreement but Cubist failed to withhold, and such Taxes were
assessed against and paid by Cubist, then Alnylam will indemnify and hold
harmless Cubist from and against such Taxes (including interest).  If Cubist makes a claim under this Section 7.13(d),
it will comply with the obligations imposed by Section 7.13(b) as if
Cubist had withheld Taxes from a payment to Alnylam.

 

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

 

56

 

(e)                                  Solely
for purposes of this Section 7.13, “Tax” or “Taxes” means
any present or future taxes, levies, imposts, duties, charges, assessments or
fees of any nature (including interest, penalties and additions thereto) that
are imposed by a Government Authority.

 

Section 7.14  United States Dollars.  All dollar ($) amounts specified in this
Agreement are United States dollar amounts.

 

Section 7.15  Currency Exchange.  All payments to be made by Cubist to Alnylam
shall be made in U.S. dollars, to an Alnylam bank account able to receive U.S.
dollars.  In the case of sales outside
the United States, royalty payments by Cubist to Alnylam shall be converted to
U.S. dollars in accordance with the following: 
the rate of currency conversion shall be calculated using a simple
average of mid-month and month-end spot rates as published by The Wall Street
Journal, Eastern Edition.  This method of
conversion is and shall be consistent with Cubist’s then current methods.  Cubist shall give Alnylam prompt written
notice of any changes to Cubist’s customary and usual procedures for currency
conversion, which shall only apply after such notice has been delivered and provided
that such changes continue to maintain a set methodology for currency
conversion.

 

Section 7.16  Blocked Payments.  If, by reason of applicable Law in any
country, it becomes impossible or illegal for Cubist or its Related Party(ies)
to transfer, or have transferred on its behalf, royalties or other payments to
Alnylam, Cubist shall promptly notify Alnylam of the conditions preventing such
transfer and such royalties or other payments shall be deposited in local
currency in the relevant country to the credit of Alnylam in a recognized
banking institution designated by Alnylam or, if none is designated by Alnylam
within a period of []*, in a recognized banking institution selected by Cubist
or its Related Party(ies), as the case may be, and identified in a notice given
to Alnylam.

 

Section 7.17  Late Payments.  The paying Party shall pay interest to the
receiving Party on the aggregate amount of any payments that are not paid on or
before the date such payments are due under this Agreement at a rate per annum
equal to the lesser of one percent (1%) per month or the highest rate permitted
by applicable Law, calculated on the number of days such payments are paid
after the date such payments are due.

 

Section 7.18  No Overlapping Royalties.  Notwithstanding any other provision of this
Agreement, in no event shall any royalty payment provided for under any Section of
this Agreement be paid with respect to any sale of a specific Licensed Product
to the extent a royalty has been paid pursuant to any other Section of
this Agreement with respect to such sale of the same specific Licensed Product;
provided  that the higher royalty amount is paid, and provided
further that the foregoing shall not apply to the payment of sales
milestones under Sections 4.7, 7.3 and 11.4.

 

Section 7.19  Reporting.  The Parties will use the Calendar Year to
establish monthly, quarterly and annual time periods for all of their financial
budgeting and actual reporting requirements, including N.A. Pre-Tax Profit or
Loss reporting.

 

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

 

57

 

Section 7.20  Resolution of Disputes.  If there is a dispute,
claim or controversy relating to any financial obligation by one Party
to the other Party pursuant to this Agreement, such Party shall provide such
other Party with written notice setting forth in reasonable detail the nature
and factual basis for such good-faith dispute and each Party agrees that it
shall seek to resolve such dispute within []* after the date such written
notice is received.  If no such
resolution is reached by the Parties, the dispute shall be resolved through the
procedures set forth in Article XII. 
Notwithstanding any other provision of this Agreement to the contrary,
the obligation to pay any reasonably disputed amount shall not be deemed to
have been triggered until such dispute is resolved hereunder; provided  that
all amounts that are not in dispute shall be paid in accordance with this
Agreement.

 

ARTICLE VIII

 

INTELLECTUAL
PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS

 

Section 8.1  Inventorship.  Inventorship for patentable inventions
conceived or reduced to practice during the course of the performance of
activities pursuant to this Agreement shall be determined in accordance with
United States patent laws for determining inventorship.

 

Section 8.2  Ownership.  Subject to the licenses and rights granted to
Cubist under this Agreement, Alnylam shall own the entire right, title and
interest in and to all inventions and discoveries (and Patent Rights claiming
patentable inventions therein) first made or discovered solely by employees or
consultants of Alnylam or acquired solely by Alnylam in the course of
conducting the Collaboration.  Subject to
the licenses and rights granted to Alnylam under this Agreement, Cubist shall
own the entire right, title and interest in and to all inventions and
discoveries (and Patent Rights claiming patentable inventions therein) first
made or discovered solely by employees or consultants of Cubist or acquired
solely by Cubist in the course of conducting the Collaboration.  The Parties shall jointly own any inventions
and discoveries (and Patent Rights claiming patentable inventions therein)
first made or discovered jointly in the course of conducting the Collaboration.

 

Section 8.3  Prosecution and Maintenance of Patent
Rights.

 

(a)                                  Cubist
Technology.  Cubist shall have the
sole right to, at Cubist’s discretion, file, conduct prosecution, and maintain
(including the defense of any interference or opposition proceedings), all
Patent Rights comprising Cubist Technology (other than Joint Collaboration IP),
in Cubist’s name.

 

(b)                                 Alnylam
Technology.  Alnylam shall have the
sole right to, at Alnylam’s discretion, file, conduct prosecution, and maintain
(including the defense of any interference or opposition proceedings), all
Patent Rights comprising Alnylam Technology (other than Joint Collaboration
IP), in Alnylam’s name.  Alnylam shall
provide to Cubist copies of all prosecution filings related to Alnylam Sequence
Specific Patent Rights sent to or received from patent offices in the
Territory, unless otherwise directed by Cubist, and, with respect to patent
applications containing Alnylam Sequence Specific Patent Rights having
information not previously filed that 

 

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

 

58

 

is intended to be submitted to
patent offices in the Territory, shall use reasonable efforts to provide Cubist
with a draft of each such filing reasonably in advance of submission and shall
consider in good faith any comments regarding such draft application that
Cubist may timely provide.  In addition,
Alnylam shall provide to Cubist such other information related to prosecution
of the Alnylam Patent Rights as Cubist may from time to time reasonably request
to allow Cubist to track prosecution and maintenance of Alnylam Patent
Rights.  In the event Alnylam decides not
to file a patent application on Alnylam Know-How that would contain Alnylam
Sequence Specific Patent Rights, or decides to abandon prosecution of any
Alnylam Sequence Specific Patent Rights or decides to not otherwise maintain or
extend any Alnylam Sequence Specific Patent Rights, Alnylam shall give Cubist
written notice sufficiently in advance of any loss of rights to allow Cubist to
file, prosecute, maintain or extend, as the case may be, such Alnylam Sequence
Specific Patent Rights, in Alnylam’s name.

 

(c)                                  Joint
Collaboration IP.

 

(i)                                     Alnylam
shall have the first right to, at Alnylam’s discretion, file, conduct
prosecution, and maintain (including the defense of any interference or
opposition proceedings), all Patent Rights included in Joint Collaboration IP,
in the names of both Alnylam and Cubist. 
Cubist shall use Diligent Efforts to make available to Alnylam or its
authorized attorneys, agents or representatives, such of its employees as
Alnylam in its reasonable judgment deems necessary in order to assist it in
obtaining patent protection for such Joint Collaboration IP.  Each Party shall sign, or use Diligent
Efforts to have signed, all legal documents necessary to file and prosecute
patent applications or to obtain or maintain patents in respect of such Joint
Collaboration IP, at its own cost.

 

(ii)                                  If
Alnylam elects not to seek or continue to seek or maintain patent protection on
any Joint Collaboration IP in the Territory, Cubist shall have the right to, at
Cubist’s discretion, to seek, prosecute and maintain in any country in the
Territory patent protection on such Joint Collaboration IP in the names of both
Alnylam and Cubist.  Alnylam shall use
Diligent Efforts to make available to Cubist its authorized attorneys, agents
or representatives, such of Alnylam’s employees as are reasonably necessary to
assist Cubist in obtaining and maintaining the patent protection described
under this Section 8.3(c)(ii). 
Alnylam shall sign or use Diligent Efforts to have signed all legal
documents necessary to file and prosecute such patent applications or to obtain
or maintain such patents.

 

(iii)                               With
respect to Patent Rights included in the Joint Collaboration IP, the Party
filing, prosecuting and maintaining such Patent Rights shall provide the other
Party, within []* after submitting or receiving such filings or correspondence,
with copies of all filings and correspondence submitted to and received from
patent offices in the Territory and, with respect to substantive filings and
correspondence to be submitted to patent offices in the Territory, shall use
reasonable efforts to provide the other Party with drafts of such filings and
correspondence reasonably in advance of submission and shall consider in good
faith any comments regarding such filings and correspondence that the other
Party may timely provide.

 

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

 

59

 

(d)                                 Patent
Term Extensions.  The Parties shall
cooperate, if necessary and appropriate, with each other in gaining patent term
extensions (including those extensions available under U.S. Drug Price Competition
and Patent Term Restoration Act of 1984, the Supplementary Certificate of
Protection of Member States of the EU and other similar measures in any other
country) wherever applicable to Patent Rights Controlled by either Party that
Cover Licensed Product in the Territory. 
The Parties shall, if necessary and appropriate, use reasonable efforts
to agree upon a joint strategy relating to patent term extensions, but, in the
absence of mutual agreement with respect to any extension issue, the patent or the
claims of the patent shall be selected on the basis of the scope,
enforceability and remaining term of the patent in the relevant country or
region.  All filings for such extensions
shall be made by the Party Controlling such patent or, in the case of Patent
Rights included in the Joint Collaboration IP, by the Party responsible for
filing, prosecuting and maintaining such Patent Rights in accordance with this Section 8.3.

 

(e)                                  Patent
Expenses.  The patent filing,
prosecution and maintenance expenses incurred after the Effective Date with
respect to Patent Rights comprised of Alnylam Technology and Cubist Technology
(“Patent Expenses”) shall be borne by the Party responsible for filing,
prosecuting and maintaining such Patent Rights under this Section 8.3; provided
that []*.

 

Section 8.4  Third Party Infringement.

 

(a)                                  Notices.  Each Party shall promptly report in writing
to the other Party any (i) known or suspected infringement of any Alnylam
Technology or Cubist Technology being used in the Collaboration, including any
Joint Collaboration IP or (ii) unauthorized use or misappropriation of any
Confidential Information or Know-How of a Party by a Third Party of which it
becomes aware, in each case only to the extent relevant to the Development,
Manufacture or Commercialization of Licensed Product and involving a competing
product (“Competitive Infringement”) in the Territory, and shall provide
the other Party with all available evidence supporting such infringement, or
unauthorized use or misappropriation.

 

(b)                                 Rights
to Enforce.

 

(i)                                     Cubist’s
First Right.  Subject to the
provisions of any Third Party agreement under which Cubist’s rights in Cubist
Technology are granted, Cubist shall have the sole and exclusive right to
initiate an infringement or other appropriate suit anywhere in the world
against any Third Party who at any time has infringed, or is suspected of
infringing, any Patent Rights, or of using without proper authorization any
Know-How, comprising Cubist Patent Rights, Cubist Know-How, or Cubist
Collaboration IP.

 

(ii)                                  Alnylam’s
First Right.  Subject to the
provisions of any Third Party agreement under which Alnylam’s rights in Alnylam
Technology are granted and subject to Section 8.4(b)(iii) below,
Alnylam shall have the sole and exclusive right to initiate an infringement or
other appropriate suit anywhere in the world against any Third Party who at any
time has infringed, or is suspected of infringing, any Patent Rights, or of
using without proper 

 

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

 

60

 

authorization any Know-How, comprising
Alnylam Patent Rights, Alnylam Know-How, Alnylam Collaboration IP or Joint
Collaboration IP.

 

(iii)                               Requests
to Initiate Enforcement Action. 
Alnylam will consider in good faith any request from Cubist to initiate
an infringement or other appropriate suit against any Third Party with respect
to a Competitive Infringement in the Territory of Alnylam Patent Rights, Alnylam
Know-How, Alnylam Collaboration IP or Joint Collaboration IP; provided, however,
that Alnylam shall not be required to initiate any such suit.  If, however, Alnylam elects not to initiate
such suit with respect to Alnylam Sequence Specific Patent Rights or Alnylam
Sequence Specific Know-How, or otherwise does not commence suit with respect to
Alnylam Sequence Specific Patent Rights within []* after Cubist’s request made
under the preceding sentence, Cubist shall have the right to initiate such suit
with respect to the Alnylam Sequence Specific Patent Rights and to join Alnylam
as a party.

 

(c)                                  Procedures;
Expenses and Recoveries.  The Party
having the right to initiate any infringement suit under Section 8.4(b) above
shall have the sole and exclusive right to select counsel for any such suit and
shall pay all expenses of the suit, including attorneys’ fees and court costs
and reimbursement of the other Party’s reasonable out-of-pocket expense in
rendering assistance requested by the initiating Party; provided  that
with respect to any such suit, the Parties may mutually agree to jointly bear
such costs and expenses, in which case the allocation of recoveries described
below may be adjusted as mutually agreed by the Parties.  If required under applicable Law in order for
the initiating Party to initiate or maintain such suit, or if either Party is
unable to initiate or prosecute such suit solely in its own name or it is
otherwise advisable to obtain an effective legal remedy, in each case, the
other Party shall join as a party to the suit and will execute and cause its
Affiliates to execute all documents necessary for the initiating Party to
initiate litigation to prosecute and maintain such action.  In addition, at the initiating Party’s
request, the other Party shall provide reasonable assistance to the initiating
Party in connection with an infringement suit at no charge to the initiating
Party except for reimbursement by the initiating Party of reasonable
out-of-pocket expenses incurred in rendering such assistance.  The non-initiating Party shall have the right
to participate and be represented in any such suit by its own counsel at its
own expense.  If the Parties obtain from
a Third Party, in connection with such suit, any damages, license fees,
royalties or other compensation (including any amount received in settlement of
such litigation) in respect of a Competitive Infringement in the Royalty
Territory, such amounts shall be allocated, subject to any adjustment to such
allocation agreed by the Parties in connection with an agreement to jointly
bear the costs and expenses of the infringement action as described above, as
follows:

 

(i)                                     first,
to reimburse each Party for all expenses of the suit incurred by such Party,
including attorneys’ fees and disbursements, court costs and other litigation
expenses;

 

(ii)                                  second,
[]* percent ([]*%) of the balance to be paid to the Party initiating the suit;
and

 

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

 

61

 

(iii)                               third, the
remainder to be paid to the other Party.

 

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

 

Section 8.5  Claimed Infringement; Third Party
Challenges to Patent Rights.  If a
Party (a) becomes aware of any claim that the Development, Manufacture or
Commercialization of Licensed Product in the Territory infringes the Patent
Rights of any Third Party or (b) receives any notices regarding or becomes
party to any Action in which a Third Party challenges or denies the validity or
enforceability of any Patent Rights licensed to the other Party hereunder, or
any claim thereof (i) Controlled by such Party in the Profit-Share
Territory, (ii) Covering Licensed Product, (iii) specific to Licensed
Product in the Field and (iv) not broadly applicable to RNAi Products,
such Party shall promptly notify the other Party.  With respect to any matter described in the
foregoing clause (a), in any such instance, the Parties shall cooperate and
shall mutually agree upon an appropriate course of action, which may include
settlement of such claim.  Each Party
shall have an equal right to participate in any settlement discussions that are
held with such Third Parties.  If there
is a dispute between the Parties as to whether or not Third Party Patent Rights
at issue in such matter described in the foregoing clause (a) Cover
Licensed Product, the Parties agree to select an independent patent counsel to
decide whether or not the subject Third Party Patent Rights Cover Licensed
Product.  The Parties agree that if such
patent counsel determines that such Third Party Patent Rights Cover Licensed
Product, they will accept such determination for purposes of Sections 7.6 and
7.7.  If the decision is that such Third
Party Patent Rights do not Cover Licensed Product, either Party may still
obtain a license, but shall be solely responsible for any payment obligations
to the Third Party.  With respect to any
matter described in the foregoing clause (b), the Parties shall cooperate and
shall mutually agree upon an appropriate course of action, and the Party
responsible for filing, prosecuting and maintaining such Patent Rights pursuant
to Section 8.3 shall have responsibility for defending the patentability,
validity and/or enforceability of such Patent Rights in such Action.  The reasonable out-of-pocket costs incurred by
the defending Party or any of its Related Parties with respect to such Action
described in the foregoing clause (b) []*. 
For the avoidance of doubt, the costs incurred by a defending Party or
any of its Related Parties with respect to an Action of the kind described in
the foregoing clause (b), but with respect to Patent Rights outside the
Profit-Share Territory, []*; provided  that, if such matter arises
in the context of an Action brought by a Party pursuant to Section 8.4,
the costs of such Action shall be borne as provided in Section 8.4.  Each Party shall also provide to the other
Party copies of any other notices it receives or has received from Third
Parties regarding any patent nullity actions, any declaratory judgment actions
and any alleged infringement or misappropriation of Third Party intellectual
property relating to the Development, Manufacture or Commercialization of
Licensed Product in the Territory.  Such
notices shall be provided promptly, but in no event after more than []* after
receipt thereof.

 

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

 

62

 

Section 8.6  Third Party Technology.

 

(a)                                  If after the
Effective Date, (i) Alnylam or any of its Affiliates acquires from a Third
Party Know-How or Patent Rights that would fall within the definition of
Alnylam Technology but for the proviso of Section 1.24 and that is subject
to payment obligations to such Third Party, or (ii) Cubist or any of its Affiliates
acquires from a Third Party Know-How or Patent Rights within the definition of
Cubist Technology but for the proviso of Section 1.24 and that is subject
to payment obligations to such Third Party (collectively, “Third Party
Technology”) then the Party acquiring the Third Party Technology shall
promptly so notify the other Party and provide to such other Party a copy of
the agreement and a written description of the payment obligations that would
be allocated to []* in the Royalty Territory, or []*, or paid by Alnylam under Section 3.2(d) with
respect to the Development, Manufacture or Commercialization of Licensed
Product for Asia (as the case may be), in each case which allocation shall be
determined []*.

 

(b)                                 Cubist may
elect to include Third Party Technology acquired by Alnylam or any of its
Affiliates in the rights and licenses granted to Cubist under Section 3.1
with respect to the Development, Manufacture or Commercialization of Licensed
Products in the Royalty Territory by providing written notice to Alnylam of
such election prior to Commercialization of such Licensed Product in the
Royalty Territory, and, in such event, such Third Party Technology shall be
deemed included within the definition of Alnylam Patent Rights, Alnylam
Know-How and Alnylam Technology, as applicable, and the agreement with the
Third Party under which such Third Party Technology was acquired shall be
included in the definition of Alnylam In-License, in each case solely with
respect to the Royalty Territory. Notwithstanding anything in this Agreement to
the contrary, neither Alnylam nor any of its Affiliates shall enter into any
agreement with any Third Party or take any other action that would prevent such
Third Party Technology acquired by Alnylam or any of its Affiliates from
becoming Alnylam Technology upon Cubist’s election in accordance with this Section 8.6(b) or
the election of the JSC or JCT under Section 8.6(c).

 

(c)                                  The JSC or JCT
may elect to include Third Party Technology acquired by Alnylam or any of its
Affiliates within the rights and licenses granted to Cubist pursuant to Section 3.1,
or by Cubist or any of its Affiliates within the rights and licenses granted to
Alnylam pursuant to Section 3.2, in each case with respect to Development,
Manufacture or Commercialization of Licensed Products in the Profit-Share
Territory by providing written notice to Alnylam or Cubist (as the case may be)
of such election prior to the Commercialization of such Licensed Product in the
Profit-Share Territory, and, in such event, such Third Party Technology shall
be deemed included in the definition of Alnylam Patent Rights, Alnylam Know-How
and Alnylam Technology, or Cubist Patent Rights, Cubist Know-How and Cubist
Technology, as the case may be, and the agreement with the Third Party under
which such Third Party Technology was acquired shall be included in the
definition of Alnylam In-License or Cubist In-License (as applicable), in each
case solely with respect to the Profit-Share Territory.

 

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

 

63

 

(d)                                 Alnylam may
elect to include Third Party Technology acquired by Cubist or any of its
Affiliates in the rights and licenses granted to Alnylam pursuant to Section 3.2
with respect to (i) the Development, Manufacture or Commercialization of
Licensed Products for Asia, (ii) the fulfillment of its obligations under
this Agreement with respect to the Collaboration, and (iii) the
Manufacture of Licensed Products for the Royalty Territory by providing written
notice to Cubist of such election prior to the Commercialization of such
Licensed Product in Asia, and, in such event, such Third Party Technology shall
be deemed included within the definition of Cubist Patent Rights, Cubist
Know-How and Cubist Technology, as the case may be, and the agreement with the
Third Party under which such Third Party Technology was acquired shall be
included in the definition of Cubist In-License.  Neither Cubist nor any of its Affiliates
shall enter into any agreement with any Third Party or take any other action
that would prevent Third Party Technology acquired by Cubist or any of its
Affiliates from becoming Cubist Technology, upon Alnylam’s election in
accordance with this Section 8.6(d) or the election of the JSC or JCT
under Section 8.6(c).

 

Section 8.7  Patent Marking.  Each Party agrees to comply with the patent
marking statutes in each country in which Licensed Product is sold by such
Party or its Related Parties.

 

Section 8.8  Trademarks.

 

(a)                                  Each Party and
its Affiliates shall retain all right, title and interest in and to its and
their respective corporate names and logos.

 

(b)                                 Cubist will
develop and propose, and the JCT shall review and comment on, one or more
Product Trademark(s) for use by Cubist and its Related Parties throughout
the Territory.  Such Product Trademark(s) considered
by the JCT may, with Alnylam’s consent, not to be unreasonably withheld or
delayed, include the Product Trademark(s) developed or used by Alnylam
with respect to Licensed Product in Asia (the “Alnylam Trademarks”).  Any Product Trademark(s) (other than the
Alnylam Trademarks) that are used by Cubist to promote and sell Licensed
Product in the Territory are hereinafter referred to as the “Cubist
Trademarks”.  Alnylam (or its Related
Parties, as appropriate) shall own all rights to Alnylam Trademarks, and all
goodwill associated therewith, throughout the world.  Cubist (or its Related Parties, as
appropriate) shall own all rights to Cubist Trademarks and all goodwill
associated therewith, throughout the world. 
Alnylam shall also own rights to any Internet domain names incorporating
the applicable Alnylam Trademarks or any variation or part of such Alnylam
Trademarks used as its URL address or any part of such address; and Cubist
shall also own rights to any Internet domain names incorporating the applicable
Cubist Trademarks or any variation or part of such Cubist Trademarks used as
its URL address or any part of such address.

 

(c)                                  If Alnylam
Trademarks are used to promote and sell Licensed Product in the Territory, then
the following provisions shall apply: 
Alnylam shall grant Cubist an exclusive license to use such Alnylam
Trademarks to Commercialize Licensed Product in the Territory.  Cubist agrees that the quality of Licensed
Product and the Manufacture and Commercialization thereof shall be consistent
with the quality standards applied by Alnylam thereto.  In addition, 

 

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

 

64

 

Cubist shall comply strictly
with Alnylam’s trademark style and usage standards that Alnylam communicates to
Cubist from time to time with respect to the Alnylam Trademarks.  Cubist shall, at []* expense in the Royalty
Territory and subject to []* for the Profit-Share Territory, at the request of
Alnylam from time to time, submit to Alnylam for approval a reasonable number
of production samples of Licensed Product and related packaging materials.  If Alnylam reasonably objects to the quality
of Licensed Product or the usage of the Alnylam Trademarks in connection with
any sample, it shall give written notice of such objection to Cubist within []*
after receipt by Alnylam of the sample, specifying the way in which such usage
of the Alnylam Trademarks fails to meet the style, usage or quality standards
for Licensed Product set forth in the second and third sentences of this Section 8.8(c),
and Cubist shall []* cease sale and distribution of Licensed Product.  If Cubist wishes to continue to distribute
and sell Licensed Product, it must remedy the failure and submit further
samples to Alnylam for approval.

 

(d)                                 If Alnylam
Trademarks are used to promote and sell Licensed Product in the Territory, then
Alnylam will use Diligent Efforts to establish, maintain and enforce such
Alnylam Trademarks in the applicable countries in the Territory.  Cubist shall be responsible for []* percent
([]*%) of the costs of such efforts in the Royalty Territory and Cubist shall
reimburse Alnylam for []* such costs incurred by Alnylam within []* after
receiving any invoice from Alnylam for such costs.  []* in the costs of such efforts in the
Profit-Share Territory and Cubist shall reimburse Alnylam for []* percent
([]*%) of such costs incurred by Alnylam within []* after receiving any invoice
from Alnylam for such share of such costs. 
Cubist will use Diligent Efforts to establish, maintain and enforce the
Cubist Trademarks in the Territory, at its expense, subject to the applicable
cost sharing provisions for the Profit-Share Territory.

 

(e)                                  If either Party
becomes aware of any infringement of any Product Trademark by a Third Party,
such Party shall promptly notify the other Party and the Parties shall consult
with each other and jointly determine the best way to prevent such
infringement, including by the institution of legal proceedings against such
Third Party.

 

ARTICLE
IX

 

CONFIDENTIALITY AND PUBLICITY

 

Section 9.1  Confidential Information.  During the Term and for a period of []* after
any termination or expiration hereof, each Party agrees to keep in confidence
and not to disclose to any Third Party, or use for any purpose, except pursuant
to, and in order to carry out, the terms and objectives of this Agreement, any
Confidential Information of the other Party. 
The terms of this Agreement shall be considered Confidential Information
of both Parties hereunder.  The restrictions
on the disclosure and use of Confidential Information set forth in the first
sentence of this Section 9.1 shall not apply to any Confidential
Information that:

 

(a)                                  was known by
the receiving Party prior to disclosure by the disclosing Party hereunder (as
evidenced by the receiving Party’s written records or other competent evidence);

 

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

 

65

 

(b)                                 is or becomes
part of the public domain through no fault of the receiving Party;

 

(c)                                  is disclosed to
the receiving Party by a Third Party having a legal right to make such
disclosure without violating any confidentiality or non-use obligation that
such Third Party has to the disclosing Party and provided such Third Party is
not disclosing such information on behalf of the disclosing Party; or

 

(d)                                 is
independently developed by personnel of the receiving Party who did not have
access to the Confidential Information (as evidenced by the receiving Party’s
written records or other competent evidence).

 

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

 

Section 9.2  Employee, Consultant and Advisor
Obligations and Disclosure to Regulatory Authorities.  Each Party agrees that it and its Affiliates
shall provide or permit access to Confidential Information received from the
other Party and such Party’s Affiliates and representatives only to the
receiving Party’s employees, consultants, advisors and permitted
subcontractors, Sublicensees, Alnylam’s Asian Partner and sub-distributors, and
to the employees, consultants, advisors and permitted subcontractors,
Sublicensees and sub-distributors of the receiving Party’s Affiliates, who in
such Party’s reasonable judgment have a need to know such Confidential
Information to assist the receiving Party with the activities contemplated by
this Agreement and who are subject to obligations of confidentiality and
non-use with respect to such Confidential Information similar to the
obligations of confidentiality and non-use of the receiving Party pursuant to Section 9.1;
provided  that Alnylam and Cubist shall each remain responsible
for any failure by its Affiliates, and its and its Affiliates’ respective employees,
consultants, advisors and permitted subcontractors, Sublicensees and
sub-distributors, and, in the case of Alnylam, Alnylam’s Asian Partner, to
treat such Confidential Information as required under Section 9.1 (as if
such Affiliates, employees, consultants, advisors and permitted subcontractors,
Sublicensees and sub-distributors were Parties directly bound to the
requirements of Section 9.1).  Each
Party may also disclose Confidential Information of the other Party to
Regulatory Authorities, but solely in connection with the  activities contemplated by this 

 

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

 

66

 

Agreement, including activities by Alnylam or
its Asian Partner with respect to the Development, Manufacture or
Commercialization of Licensed Products for Asia.

 

Section 9.3  Certain Disclosures by Alnylam or Cubist.  Notwithstanding anything in this Agreement to
the contrary, but subject to the last paragraph of Section 9.1, Alnylam
and Cubist agree that, except as contemplated by the Development Plan or as
otherwise directed by the JSC, neither Alnylam or any of its Affiliates nor
Cubist or any of its Affiliates shall disclose their own Confidential Information
that is specific to Licensed Product other than to any of their respective
Related Parties;, provided that either Party or any of its Affiliates
may disclose its own Confidential Information that is specific to Licensed
Product (a) to the same extent as it is allowed to disclose the other
Party’s Confidential Information under Section 9.2 or (b) in
connection with Development, Manufacture or Commercialization of Licensed
Product in the Territory or Asia.

 

Section 9.4  Publicity.  Upon the execution of this Agreement, the
Parties shall issue a joint press release regarding the subject matter of this
Agreement in the form attached as Exhibit I.  After such initial joint press release,
neither Party shall issue a press release or make a public announcement
relating to Licensed Product or this Agreement without the prior written
approval of the other Party, which approval shall not be unreasonably withheld
or delayed, except that (a) a Party may issue such press release or public
announcement if the contents of such press release or public announcement have
previously been made public other than through a breach of this Agreement by
the issuing Party and (b) a Party may issue such a press release or public
announcement if required by applicable Law, including by the rules or
regulations of the United States Securities and Exchange Commission or similar
regulatory agency in a country other than the United States or of any stock
exchange or Nasdaq, in each case under clause (a) or (b) after first
notifying the other Party of such planned press release or public announcement
at least []* Business Days in advance of issuing such press release or making
such public announcement (or, with respect to press releases and public
announcements made pursuant to the foregoing clause (b), with as much advance
notice as possible under the circumstances if it is not possible to provide
notice at least []* Business Days in advance) for the sole purpose of allowing
the other Party to review the proposed press release or public announcement for
the inclusion of Confidential Information or the use of its name; provided
that the Party subject to the requirement shall include in such press
release or public announcement made pursuant to the foregoing clause (b) only
such information relating to Licensed Product or this Agreement as is required
by such applicable Law.

 

Section 9.5  Publications.  Subject to the restrictions provided below,
the JSC shall determine the publication strategy for the Territory.  In the event either Party is permitted by the
JSC to publish or present the results of Development carried out on Licensed
Product, such publication or presentation shall be subject to the prior review
by the other Party for patentability and protection of such other Party’s
Confidential Information.  Each Party
shall provide to the other Party the opportunity to review any proposed
abstracts, manuscripts or summaries of presentations that cover the results of
Development of the Product.  Each Party
shall designate a person or persons who shall be responsible for reviewing such
publications.  Such designated 

 

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

 

67

 

person shall respond in writing promptly and
in no event later than []* days after receipt of the proposed material with
either approval of the proposed material or a specific statement of concern,
based upon either the need to seek patent protection or concern regarding
competitive disadvantage arising from the proposal.  In the event of concern, the submitting Party
agrees not to submit such publication or to make such presentation that
contains such information until the other Party is given a reasonable period of
time (not to exceed []* days) to seek patent protection for any material in
such publication or presentation that it believes is patentable or to resolve
any other issues, and the submitting Party shall remove from such proposed
publication any Confidential Information of the other Party as requested by
such other Party.  With respect to any
proposed abstracts, manuscripts or summaries of presentations by investigators
or other Third Parties, including Related Parties such materials shall be
subject to review under this Section 9.5 to the extent that Alnylam or
Cubist, as the case may be, has the right to do so.

 

Section 9.6  Asian Partner.  Alnylam shall use Diligent Efforts to amend
its agreement with its Asian Partner such that any press releases and
publications related to Licensed Product by such Asian Partner are subject to
the review and approval procedures set forth in Sections 9.4 and 9.5.

 

Section 9.7  Coordination with Alnylam’s Asian Partner.  Alnylam and Cubist shall use Diligent Efforts
to meet (in-person or via video conference or teleconference) with
representatives of Alnylam’s Asian Partner to discuss and coordinate their
respective activities with respect to Licensed Products, including:  (a) adverse event reporting, (b) publications
and press releases, (c) sharing of data and Confidential Information, (d) Manufacturing
and (e) review of Development activities.

 

ARTICLE X

 

REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS; INDEMNIFICATION

 

Section 10.1  Exclusivity Covenant.  During the Term, neither Party nor its
Affiliates shall, outside this Agreement, directly or indirectly, conduct
Development of, Manufacture or Commercialize a Directly Competitive Product,
anywhere in the Territory or grant rights to an Third Party to do any of the
foregoing.  If either Party or its
Affiliates would violate the provisions of this Section 10.1 as a result
of a merger, acquisition or combination with a Third Party, (a) []* with
the understanding that the foregoing right shall in no way diminish a Party’s
obligations to use Diligent Efforts to Develop, Manufacture or Commercialize
Licensed Product under this Agreement.

 

Section 10.2  Representations of Authority.  Alnylam and Cubist each represents and
warrants to the other Party that, as of the Effective Date, it has full right,
power and authority to enter into this Agreement and to perform its respective
obligations under this Agreement and that it has the right to grant to the
other the licenses and sublicenses granted pursuant to this Agreement.

 

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

 

68

 

Section 10.3  Consents.  Alnylam and Cubist each represents and
warrants to the other Party that, except for any Regulatory Approvals, pricing
or reimbursement approvals, manufacturing approvals or similar approvals
necessary for the Development, Manufacture or Commercialization of the Licensed
Product, all necessary consents, approvals and authorizations of all Government
Authorities and other Persons required to be obtained by it as of the Effective
Date in connection with the execution, delivery and performance of this
Agreement have been obtained by the Effective Date.

 

Section 10.4  No Conflict.  Alnylam and Cubist each represents and warrants
to the other Party that, notwithstanding anything to the contrary in this
Agreement, the execution and delivery of this Agreement by such Party, the
performance of such Party’s obligations hereunder and the licenses and
sublicenses to be granted by such Party pursuant to this Agreement (a) do
not conflict with or violate any requirement of applicable Laws existing as of
the Effective Date and applicable to such Party and (b) do not conflict
with, violate, breach or constitute a default under any contractual obligations
of such Party or any of its Affiliates existing as of the Effective Date.  Each Party shall comply with all Laws
applicable to the Development, Manufacture and Commercialization of the
Product, including applicable Drug Regulation Laws, Clinical Investigation Laws
and Health Care Laws.

 

Section 10.5  Enforceability.  Alnylam and Cubist each represents and
warrants to the other Party that, as of the Effective Date, this Agreement is a
legal and valid obligation binding upon it and is enforceable against it in
accordance with its terms.

 

Section 10.6  Sales Representatives.

 

(a)                                  Cubist
represents and warrants to Alnylam that it will use Diligent Efforts to cause
its Sales Representatives in the Territory not to make statements, claims or undertakings
to any Person with whom they discuss or promote Licensed Product that are not
consistent with, and not to provide or use any labeling, literature, or other
materials other than those consistent with, Promotional Materials provided to
the JCT for review and comment in advance of use in the Territory.  Cubist shall not, and shall use Diligent
Efforts to cause its Sales Representatives not to, make any representation,
statement, warranty or guaranty with respect to Licensed Product that is not
consistent with the applicable, current package insert of prescribing
information or other documentation accompanying or describing Licensed Product,
including Cubist’s standard limited warranty and disclaimers, if any.

 

(b)                                 Cubist
represents and warrants to Alnylam that it shall use Diligent Efforts to cause
its Sales Representatives to comply with the applicable Laws and guidelines and
related to the performance of its obligations hereunder, including the Federal
Food, Drug and Cosmetics Act, the Prescription Drug Marketing Act of 1987, the
Federal and State Anti-Kickback Statutes and all applicable regulations
thereunder, and AMA Guidelines on Gifts to Physicians from Industry and PhRMA
Guidelines, and all relevant EMEA regulations, authorizations and local laws
regarding advertisement, sale and promotion of pharmaceutical products as well
as any 

 

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

 

69

 

relevant code of practice,
in each case as amended from time to time, and to comply with the policies in
Cubist’s compliance training materials for the Territory.

 

Section 10.7  Additional Representations and Warranties
of Alnylam.  Alnylam represents and
warrants to Cubist that, except as set forth on Schedule 10.7, as of the
Effective Date:

 

(a)                                  Exhibit A sets forth a
complete and accurate list of (i) the Alnylam Patent Rights owned by
Alnylam, and (ii) to the Knowledge of Alnylam after due inquiry,  the Alnylam Patent Rights in-licensed by
Alnylam, in each case as of the Effective Date.

 

(b)                                 Alnylam has not
granted, and during the Term will not grant, rights to any Third Party under
the Alnylam Technology that conflict with the rights granted to Cubist
hereunder and such Alnylam Technology is held free and clear of any liens,
security interests and other similar encumbrances.

 

(c)                                  Alnylam has not
received any written notice of (i) any claim that any patent or trade
secret right owned or controlled by a Third Party would be infringed or
misappropriated by the manufacture, use, sale, offer for sale or importation of
Licensed Products in the Field in the Territory, or (ii) any threatened
claims or litigation seeking to invalidate or otherwise challenge the Alnylam
Patent Rights owned by Alnylam or Alnylam’s rights therein.

 

(d)                                 To the
Knowledge of Alnylam after due inquiry, none of the Alnylam Patent Rights owned
by Alnylam are subject to any pending re-examination, opposition, interference
or litigation proceedings.

 

(e)                                  Alnylam has
provided Cubist with access to (i) all documents requested by Cubist and
in Alnylam’s possession or control relating to the Alnylam Patent Rights and
Alnylam Know-How and (ii) all other information in Alnylam’s possession or
control that, in Alnylam’s reasonable judgment, is materially adverse to Cubist’s
freedom to operate under the Alnylam Patent Rights or to use Alnylam Know-How
in the Field in the Territory.

 

(f)                                    To the
Knowledge of Alnylam after due inquiry, there have been (i) no material
inventorship or ownership challenges with respect to any of the Alnylam Patent
Rights or Alnylam Know-How and (ii) no inventorship or ownership
challenges of any kind with respect to the Alnylam Sequence Specific Patent
Rights.

 

(g)                                 Exhibit F sets forth a
true and complete list of all material agreements, including license
agreements, clinical trial agreements and manufacturing or supply agreements,
to which Alnylam is a party and which relate to Licensed Product in the
Territory.  Alnylam is not in breach
under any of the agreements listed on Exhibit F, nor, to the
Knowledge of Alnylam, is any other party thereto.  Alnylam has not received any notice of breach
under any of the agreements listed in Exhibit F.  Alnylam has previously provided Cubist with
access to true and complete copies (or, in the case of clinical trial
agreements, a representative form of clinical trial agreement) of each of the
agreements listed on Exhibit F. 
The Alnylam In-License Agreements 

 

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

 

70

 

are in full force and effect
and Alnylam will maintain the Alnylam In-License Agreements in full force and
effect during the Term, will perform all of its obligations thereunder and will
not amend any such agreement in a manner that would adversely affect the rights
and obligations of Cubist under this Agreement. 
Alnylam will notify Cubist promptly upon receiving any notice of
material breach from a party thereunder.

 

(h)                                 To the
Knowledge of Alnylam, no Third Party is infringing any claims of any issued
patents encompassed within the Alnylam Patent Rights by offering for sale or
selling any Directly Competitive Product in the Territory.

 

(i)                                     The Alnylam
Patent Rights in the Territory that are pending patent applications as of the
Effective Date are being diligently prosecuted at the respective patent
offices, and, to the Knowledge of Alnylam after due inquiry, the Alnylam Patent
Rights in the Territory that are granted have been maintained properly and
correctly and all applicable fees have been paid on or before the due date for
payment, in each case subject to Alnylam’s reasonable business judgment
regarding the management of such patent portfolio.

 

(j)                                     To the Knowledge
of Alnylam after due inquiry, the Development and Manufacture of Licensed
Product in the Territory to date has been conducted by Alnylam and its
Affiliates and its subcontractors, in compliance (in all material respects)
with all applicable Laws.  To the
Knowledge of Alnylam after due inquiry, neither Alnylam nor any of its
Affiliates, nor any of their respective officers, employees or agents, has made
an untrue statement of a material fact or fraudulent statement to any
Regulatory Authority or failed to disclose a material fact required to be
disclosed to any Regulatory Authority.

 

(k)                                  Except as would
not have a material adverse effect on the Development, Manufacture or
Commercialization of Licensed Products or Cubist’s rights under this Agreement,
all testing and research of Licensed Products (excluding the manufacture of
materials used in clinical trials) by Alnylam and its Affiliates have been
conducted in compliance with Good Clinical Practices and Good Laboratory
Practices applicable and required at the time such activity was performed and
all materials used in clinical trials of Licensed Products by Alnylam and its
Affiliates have been Manufactured in compliance with Good Manufacturing
Practices applicable at the time such activity was performed.

 

(l)                                     To the
Knowledge of Alnylam after due inquiry, there is no material matter concerning
the safety or efficacy of any Licensed Product as to which Alnylam has not
provided Cubist with access to all material information.  Alnylam has disclosed to Cubist or made
available to Cubist for review all relevant data and documentation in its
control that is material in order to assess the safety and efficacy of Licensed
Product.

 

(m)                               There are no
inquiries, actions or other proceedings pending before or, to the Knowledge of
Alnylam, threatened by any Regulatory Authority with respect to Licensed
Product or any facility where a Licensed Product is Manufactured, and neither
Alnylam nor its Affiliates have received written notice threatening any such
inquiry, action or other proceeding.

 

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

 

71

 

(n)                                 Except for
disclosures (i) to Third Parties for evaluation purposes subject to
confidentiality obligations, (ii) to Alnylam’s Asian Partner, (iii) to
Third Party contractors providing research or development services to Alnylam
and subject to confidentiality obligations, or (iv) made in Alnylam Patent
Rights, Alnylam represents that it  has
not licensed or disclosed Alnylam Sequence Specific Know-How to any Third
Party.

 

(o)                                 Alnylam has not
granted any right or license to Isis Pharmaceuticals, Inc. to Develop or
Commercialize Licensed Products.

 

Section 10.8  Cubist Representation Regarding Cubist
In-Licenses.  Cubist represents that
there are no Cubist In-Licenses as of the Effective Date.

 

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

 

Section 10.10  No Debarment.  Neither Party nor any of its Affiliates has
been debarred or is subject to debarment and neither Party nor any of its
Affiliates will use in any capacity, in connection with the Development,
Manufacture or Commercialization of the Product, any Person who has been
debarred pursuant to Section 306 of the United States Federal Food, Drug,
and Cosmetic Act, or who is the subject of a conviction described in such section.  Each Party agrees to inform the other Party
in writing immediately upon becoming aware that any Person who is performing
services hereunder is debarred or is the subject of a conviction described in Section 306,
or if any action, suit, claim, investigation or legal or administrative
proceeding is pending or, to the best of such Party’s knowledge, is threatened,
relating to the debarment or conviction of such Party or any Person used in any
capacity by such Party or any of its Affiliates in connection with the
Development, Manufacture or Commercialization of Licensed Product.

 

Section 10.11  Indemnification.

 

(a)                                  General
Indemnification by Cubist. 
Cubist shall indemnify, hold harmless, and defend Alnylam, its
Affiliates, and their respective directors, officers, employees and agents (the
“Alnylam Indemnitees”) from and against any and all Third Party claims,
suits, losses, liabilities, damages, costs, fees and expenses (including
reasonable attorneys’ fees) (collectively, “Losses”) arising out of or resulting
from, directly or indirectly, (i) any breach of, or inaccuracy in, any
representation or warranty made by Cubist in this Agreement, or any breach or
violation of any covenant or agreement of Cubist in or pursuant to this
Agreement, or 

 

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

 

72

 

(ii) the negligence or
willful misconduct by or of Cubist, its Affiliates and their respective
Sublicensees, and their respective directors, officers, employees and agents in
the performance of Cubist’s obligations under this Agreement. Cubist shall have
no obligation to indemnify the Alnylam Indemnitees to the extent that the
Losses in the Territory that arise out of or result from, directly or
indirectly, any breach of, or inaccuracy in, any representation or warranty
made by Alnylam in this Agreement, any breach or violation of any covenant or
agreement of Alnylam in or pursuant to this Agreement, the negligence or willful
misconduct by or of any of the Alnylam Indemnitees or any Loss to the extent
arising from or related to the Development, Manufacture, Commercialization, or
use of Licensed Products outside the Field or for Asia by Alnylam or any of its
Related Parties.

 

(b)                                 General
Indemnification by Alnylam.  Alnylam shall indemnify, hold harmless, and
defend Cubist, its Affiliates and their respective directors, officers,
employees and agents (the “Cubist Indemnitees”) from and against any and
all Losses arising out of or resulting from, directly or indirectly, (i) any
breach of, or inaccuracy in, any representation or warranty made by Alnylam in
this Agreement, or any breach or violation of any covenant or agreement of
Alnylam in or pursuant to this Agreement, (ii) the negligence or willful
misconduct by or of Alnylam, its Affiliates and their respective Sublicensees,
and their respective directors, officers, employees and agents in the
performance of Alnylam’s obligations under this Agreement or (iii) the
Development, Manufacture, Commercialization, or use of Licensed Products
outside the Field or for Asia by Alnylam or any of its Related Parties.  Alnylam shall have no obligation to indemnify
the Cubist Indemnitees to the extent that the Losses arise out of or result
from, directly or indirectly, any breach of, or inaccuracy in, any
representation or warranty made by Cubist in this Agreement, or any breach or
violation of any covenant or agreement of Cubist in or pursuant to this
Agreement, or the negligence or willful misconduct by or of any of the Cubist
Indemnitees.

 

(c)                                  Product
Liability.

 

(i)                                     Cubist shall
indemnify and hold harmless the Alnylam Indemnitees from, against and in
respect of any and all Losses arising out of Third Party product liability
claims incurred or suffered by the Alnylam Indemnitees, or any of them,
directly or indirectly relating to Licensed Product used or sold in the
Territory under this Agreement and resulting from or arising out of the
negligence, willful misconduct, or breach of this Agreement of or by Cubist or
any of the other Cubist Indemnitees, except to the extent caused by the
negligence, willful misconduct or breach of this Agreement of or by Alnylam or
any of the other Alnylam Indemnitees.

 

(ii)                                  Alnylam shall
indemnify and hold harmless the Cubist Indemnitees from, against and in respect
of any and all Losses arising out of Third Party product liability claims
incurred or suffered by the Cubist Indemnitees, or any of them, directly or
indirectly relating to Licensed Product and resulting from or arising out of
the negligence, willful misconduct, breach of this Agreement of or by Alnylam
or any of the other Alnylam Indemnitees, or the Development, Manufacture,
Commercialization, or use of Licensed Products 

 

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

 

73

 

outside the Field or for Asia by Alnylam or
any of its Related Parties, except to the extent caused by the negligence,
willful misconduct or breach of this Agreement of or by Cubist or any of the
other Cubist Indemnitees and related to the Territory.

 

(iii)                               Any Losses
arising out of Third Party product liability claims (other than such claims
entitled to indemnification under Section 10.10(c)(i) or
10.10(c)(ii)) shall be (A) []*.

 

(d)                                 Indemnification
Procedure.  In the event of any such claim
against any Cubist Indemnitee or Alnylam Indemnitee (individually, an “Indemnitee”),
the indemnified Party shall promptly notify the other Party in writing of the
claim and the indemnifying Party shall manage and control, at its sole expense,
the defense of the claim and its settlement. 
The Indemnitee shall cooperate with the indemnifying Party and may, at
its option and expense, be represented in any such action or proceeding.  The indemnifying Party shall not be liable
for any settlements, litigation costs or expenses incurred by any Indemnitee
without the indemnifying Party’s written authorization.  Notwithstanding the foregoing, if the
indemnifying Party believes that any of the exceptions to its obligation of
indemnification of the Indemnitees set forth in Section 10.11(a), 10.11(b) or
10.11(c) may apply, the indemnifying Party shall promptly notify the
Indemnitees, which shall then have the right to be represented in any such
action or proceeding by separate counsel at their expense; provided  that
the indemnifying Party shall be responsible for payment of such expenses if the
Indemnitees are ultimately determined to be entitled to indemnification from
the indemnifying Party.

 

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

 

Section 10.13  Insurance.  Each Party shall maintain insurance during
the Term and for a period of at least []* years after the last commercial sale
of a Licensed Product in the Field in the Territory under this Agreement, with
a reputable, solvent insurer in an amount appropriate for its business and
products of the type that are the subject of this Agreement, and for its
obligations under this Agreement. 
Specifically, each Party shall maintain product and clinical trial liability insurance of at least $[]* per
occurrence on a worldwide basis.  Each Party will further ensure
compliance with all foreign local clinical trial liability insurance
requirements that may apply with respect to Licensed Product.  Upon request, each Party shall provide
the other Party with evidence of the existence and maintenance of such
insurance coverage.

 

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

 

74

 

ARTICLE
XI

 

TERM AND TERMINATION

 

Section 11.1  Term. 
Unless terminated earlier in accordance with this Article XI, this
Agreement shall remain in force for the period commencing on the Effective Date
and expiring, on a Licensed Product-by-Licensed Product and country-by-country
basis either (a) with respect to any country in the Royalty Territory,
upon expiration of the applicable Royalty Term, or (b) with respect to the
Profit-Share Territory until this Agreement is terminated in accordance
with  Section 11.2(a), (the “Term”).  Upon expiration of the Term, the licenses
granted to Cubist under Article III in the Royalty Territory shall convert
to perpetual, exclusive fully paid-up, non-royalty-bearing licenses.

 

Section 11.2  Termination Rights.

 

(a)                                  Termination for
Convenience.  Cubist
shall have the right to terminate this Agreement at any time after the
Effective Date (i) on three (3) months prior written notice to
Alnylam if such notice is given prior to the acceptance for filing of the first
application for Regulatory Approval of a Licensed Product in a country or
regulatory jurisdiction in the Territory, or (ii) on nine (9) months
prior written notice if such notice is given after the acceptance for filing of
the first application for Regulatory Approval of a Licensed Product in a
country or regulatory jurisdiction in the Territory.

 

(b)                                 Termination for
Cause.  This Agreement may be
terminated at any time during the Term upon written notice by either Party if
the other Party is in material breach of a material obligation hereunder and
has not cured such breach within []* in the case of a payment breach or []* in
the case of all other material breaches of material obligations, after written
notice of the breach.

 

(c)                                  Challenges of
Patent Rights.  If a Party
or any of its Related Parties (the “Challenging Party”) (i) commences
or participates in any action or proceeding (including any patent opposition or
re-examination proceeding), or otherwise asserts any claim, challenging or
denying the validity or enforceability of any of the Patent Rights of the other
Party (i.e.,  the Patent Rights included
in the Alnylam Technology or the Patent Rights included in the Cubist
Technology, as the case may be), or any claim thereof, or (ii) actively
assists any other Person bringing or prosecuting any action or proceeding
(including any patent opposition or re-examination proceeding) challenging or
denying the validity or enforceability of any of such other Party’s Patent
Rights or any claim thereof, then the other Party (the “Non-Challenging
Party”) will have the right, in its sole discretion, to give notice to the
Challenging Party that the licenses granted to the Challenging Party with
respect to all or any portion of the Non-Challenging Party’s Patent Rights
included in the Alnylam Technology or the Cubist Technology (as the case may
be) will terminate []* after such notice (or such longer period as the
Non-Challenging Party may designate in such notice), and, unless the
Challenging Party withdraws or causes to be withdrawn all such challenge(s) within
such []* period (or such longer period as is 

 

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

 

75

 

designated by the
Non-Challenging Party), such license rights will so terminate.  The foregoing provisions of this Section 11.2(c) notwithstanding,
if (x) Alnylam is the Non-Challenging Party, (y) Alnylam does not
elect to terminate this Agreement pursuant to this Section 11.2(c), and (z) the
patent challenge is unsuccessful, then (1) []*.  Notwithstanding anything in this Section 11.2(c) to
the contrary, a challenge by Cubist as to whether a patent application was
filed by Alnylam in good faith for purposes of the definition of Valid Claim
shall not be considered a challenge for which Alnylam can exercise its rights
under this Section 11.2(c).

 

Section 11.3  Effect of Termination.

 

(a)                                  Termination by
Alnylam.  Without limiting any other
legal or equitable remedies that Alnylam may have, if Alnylam terminates this
Agreement in accordance with Section 11.2(b) or 11.2(c), then (i) Cubist’s
obligations under Section []* shall survive for a period of []* after the
effective date of termination, (ii) Cubist shall, for a period of []*
following the date of notice of termination, continue to pay []* percent ([]*%)
of []* and provided  that the []* by Cubist under this clause
shall not exceed (A) []* Dollars ($[]*) if Alnylam terminated this
Agreement after the First Opt-Out Milestone and prior to the Second Opt-Out
Milestone and (B) []* Dollars ($[]*) if Alnylam terminated this Agreement
after the Second Opt-Out Milestone; (iii) the licenses granted to Alnylam
in Section 3.2 shall survive and any restrictions on sublicensing shall no
longer apply, (iv) Cubist shall as promptly as practicable transfer to
Alnylam or Alnylam’s designee (A) possession and ownership of all
governmental or regulatory correspondence, conversation logs, filings and
approvals (including all Regulatory Approvals and pricing and reimbursement
approvals) relating to the Development, Manufacture or Commercialization of
Licensed Product and all Cubist Trademarks then being used in connection with
Licensed Product, other than Cubist’s corporate trademarks (B) copies of
all data, reports, records and materials, Commercialization Plans, marketing
plans, Promotional Materials, and other sales and marketing related information
in Cubist’s possession or Control to the extent that such data, reports,
records, materials or other information relate to the Development, Manufacture
or Commercialization of Licensed Product, including all non-clinical and
clinical data relating to Licensed Product, and customer lists and customer
contact information and all Safety Data and other adverse event data in Cubist’s
possession or Control; provided  that (I) Cubist shall not be
required by this provision to provide any confidential information to Alnylam
and (II) Cubist shall use Diligent Efforts to obtain for Alnylam the right
to access all such data, reports, records, materials, and other sales and
marketing related information, and (C) all records and materials in Cubist’s
possession or Control containing Confidential Information of Alnylam, (v) if
requested by Alnylam, appoint Alnylam as Cubist’s or Cubist’s Related Parties’
agent for all Licensed Product-related matters involving Regulatory Authorities
in the Territory until all Regulatory Approvals and other regulatory filings
have been transferred to Alnylam or its designee, (vi) if the effective
date of termination is after First Commercial Sale in any country in the
Territory, then, if requested by Alnylam, Cubist shall appoint Alnylam as its
exclusive distributor of Licensed Product in the Territory and grant Alnylam
the right to appoint sub-distributors, until such time as all Regulatory
Approvals in the Territory have been transferred to Alnylam or its designee, (vii) if
Cubist or its Related Parties are Manufacturing Finished Product, []*, provided
such period of time shall not exceed []*, unless otherwise agreed by Cubist, (viii) if

 

*Confidential Treatment Requested. 
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Alnylam so requests, Cubist
shall transfer to Alnylam any Third Party agreements relating to the
Development, Manufacture or Commercialization of Licensed Product to which
Cubist is a party, subject to any required consents of such Third Party, which
Cubist shall use Diligent Efforts to obtain promptly, and (ix) []*.  Cubist shall execute all documents and take
all such further actions, including, where applicable, the prompt assignment of
Regulatory Approvals and Third Party agreements, as may be reasonably requested
by Alnylam in order to give effect to the foregoing clauses (i) through (ix) as
soon as practicable and in order to enable Alnylam to continue to Develop,
Manufacture and Commercialize Licensed Products in the Field in the Territory
in the same manner as was being conducted by Cubist prior to any such
termination.

 

(b)                                 Termination by
Cubist for Convenience.  If
Cubist terminates this Agreement in accordance with Section 11.2(a), then
the provisions of Section 11.3(a)(i)-(ix) shall apply, except that
the period during which Cubist shall be required to continue to pay []* under Section 11.3(a)(ii) shall
be []* (following the three month notice period) rather than the []* specified
in Section 11.3(a)(ii).  In
addition, during the applicable termination notice period pursuant to Section 11.2(a),
Cubist shall continue to perform []* all Development, Manufacture and
Commercialization activities with respect to Licensed Products in accordance
with the plans for such activities reviewed and approved by the JSC and JCT
prior to Cubist’s determination to terminate; provided  that
Alnylam may, in its discretion, elect to shorten such termination notice period
in order to facilitate a more rapid reversion of all Licensed Product rights
back to Alnylam by providing Cubist reasonable written notice of such election,
in which case Cubist shall use Diligent Efforts to facilitate such more rapid
reversion.  Cubist shall execute all
documents and take all such further actions as may be reasonably requested by Alnylam
in order to give effect to the foregoing provisions of this Section 11.3(b).

 

(c)                                  Termination by
Cubist for Cause or for Patent Challenge by Alnylam.  Without limiting any other legal or equitable
remedies that Cubist may have, if Cubist terminates this Agreement in
accordance with Section 11.2(b) or 11.2(c), then the provisions of Section 11.3(a)(iii)-(viii) shall
apply; provided  that if Cubist has the right to terminate this
Agreement in accordance with Section 11.2(b) or 11.2(c), then in lieu
of exercising such termination right, Cubist may elect not to terminate this
Agreement and to convert the Parties’ profit-sharing arrangement with respect
to Licensed Product in the Profit-Share Territory to a royalty arrangement, in
which case the consequences of such conversion shall be the same as those set
forth in Section 4.7 (i.e., as if Alnylam had opted out of the
profit-sharing arrangement) as of the time of such conversion, except that, if
such termination occurs before the First Opt-Out Milestone, in lieu of any and
all of the payments otherwise due to Alnylam under such Section and under Article VII
of this Agreement, Cubist shall pay to Alnylam (i) royalties on Net Sales
of Licensed Product by Cubist and its Related Parties equal to (A) in
North America,  []* percent ([]*%) of the
royalty amounts payable under Section 4.7(a)(viii) applicable after
an exercise by Alnylam of the Opt-Out Option after the First Opt-Out Milestone
but prior to the Second Opt-Out Milestone, subject to the adjustment provisions
set forth in such Section and subject to Section 4.7(a)(ix), and (B) in
the Territory outside of North America, []* percent ([]*%) of the royalty
amounts payable under Section 7.5(a), subject to the adjustment provisions
set forth in Sections 7.5(d), 7.6, 7.8, 7.9(b) (with respect to Section 7.9(b),
as if the reductions in Section 

 

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

 

77

 

7.8(b) apply, whether
or not the conditions set forth in Section 7.8(b) for such reductions
have been satisfied) and 7.10 through 7.20 (inclusive) (which, for such
purpose, shall be modified as necessary to apply to the royalty obligations
described in this Section 11.3(c)(i)(B) and (ii) milestone
payments on milestones achieved by Cubist and its Related Parties with respect
to Licensed Product equal to (A) in North America, []* percent ([]*%) of
the milestone payment amounts payable under Sections 4.7(a)(vi) and 4.7(a)(vii) applicable
after an exercise by Alnylam of the Opt-Out Option after the First Opt-Out
Milestone but prior to the Second Opt-Out Milestone, subject to Section 4.7(a)(ix),
and (B) in the Territory outside of North America, []* percent ([]*%) of
the milestone payment amounts payable under Sections 7.2 and 7.3.  If Cubist terminates this Agreement pursuant
to Section 11.2(a) or  11.2(b),
Cubist may offset any unpaid amounts owed to Alnylam pursuant to Section 4.7
or Article VII by the amount of Cubist’s damages determined by any court
having jurisdiction over such matter to have resulted from Alnylam’s breach of
this Agreement.

 

Section 11.4  Payments to Cubist.  In the event Cubist terminates this Agreement
under Section 11.2, and such termination occurs after the First Opt-Out
Milestone, Alnylam shall thereafter make the following payments to Cubist:

 

(a)                                  Subject to
Sections 11.4(f) and 11.4(g), Alnylam shall make the non-refundable,
non-creditable milestone payments set forth below to Cubist not later than []*
after the earliest date on which the corresponding milestone event set forth
below has been achieved:

 

	
  Milestone Event

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  First Opt-Out

  Milestone but Prior

  to the Second Opt-

  Out Milestone

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  Second Opt-Out

  Milestone

  	
   

  	
  Section

  11.4(g)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  

 

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

 

78

 

	
  Milestone Event

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  First Opt-Out

  Milestone but Prior

  to the Second Opt-

  Out Milestone

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  Second Opt-Out

  Milestone

  	
   

  	
  Section

  11.4(g)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  

 

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

 

(b)                                 Subject to
Sections 11.4(f) and 11.4(g), Alnylam shall make the non-refundable,
non-creditable milestone payments set forth below to Cubist upon the
achievement of the milestone events set forth below, such payment to be made as
set forth below:

 

	
  Milestone Event

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  First Opt-Out

  Milestone but Prior

  to the Second Opt-

  Out Milestone

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  Second Opt-Out

  Milestone

  	
   

  	
  Section 11.4(g)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  

 

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

 

79

 

	
  Milestone Event

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  First Opt-Out

  Milestone but Prior

  to the Second Opt-

  Out Milestone

  	
   

  	
  Payment if Cubist’s

  Termination Takes

  Effect After the

  Second Opt-Out

  Milestone

  	
   

  	
  Section 11.4(g)

  Option I

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  	
  $[]*

  	
   

  

 

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

 

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

 

(c)                                  Alnylam shall
pay additional milestones upon each of the events listed in paragraphs (a) and
(b) having been met in the Territory outside North America; provided
that the payment amounts set forth above shall be reduced to []* percent
([]*%) of the amounts specified above.

 

(d)                                 Alnylam shall,
subject to Sections 7.5(d), 7.6(b), 7.8, Sections 7.10 through 7.20 (inclusive)
(which for such purpose, shall be modified as necessary to apply to the royalty
obligations described in this Section 11.4 and to reflect the fact that
Alnylam is the royalty-paying Party and Cubist is the royalty-receiving Party),
Section 11.4(f) and Section 11.4(g), pay to Cubist royalties on
the aggregate Net Sales (with such definition modified accordingly for this
purpose) of Licensed Products in the Territory by Alnylam and its Sublicensees,
as follows:

 

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

 

80

 

	
  Aggregate Calendar Year Net

  Sales 

  of Licensed Products

  	
   

  	
  Royalty Rate (as

  a Percentage of

  Such Aggregate

  Net Sales) if

  Cubist’s

  Termination

  Takes Effect

  After the First

  Opt-Out

  Milestone But

  Prior to the

  Second Opt-Out

  Milestone

  	
   

  	
  Royalty Rate (as

  a Percentage of

  Such Aggregate

  Net Sales) if

  Cubist’s

  Termination

  Takes Effect

  After the Second

  Opt-Out

  Milestone

  	
   

  	
  Section 11.4(g)

  Option I

  	
   

  
	
  $[]* - $[]*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

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

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  
	
  Greater than $[]*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  	
  []%*

  	
   

  

 

(e)                                  In addition to
the reductions and offsets otherwise provided for under this Section 11.4,
(i) []* percent ([]*%) of the allocated milestone amounts under the
Existing Alnylam In-Licenses that are identified on Exhibit H, and (ii) []*
percent ([]*%) of all royalties on the Net Sales in North America of Licensed
Products paid by Alnylam under the Existing Alnylam In-Licenses up to a maximum
of []* percent ([]*%) of such Net Sales shall be creditable by Alnylam against
all amounts payable by Alnylam to Cubist pursuant to this Section 11.4
(i.e. Alnylam’s maximum []* percent ([]*%) creditable share would be []*
percent ([]*%) of such Net Sales).

 

(f)                                    The foregoing
provisions of this Section 11.4 notwithstanding, if Alnylam granted or
grants a sublicense under the Cubist Technology or a license under the Alnylam
Technology to Develop or Commercialize Licensed Product in the Field in a
country or countries in North America, then Alnylam shall have no payment
obligations under Sections 11.4(a), (b), (c) or (d) with respect to
development or sales milestones achieved, or Net Sales of Licensed Products
sold, by such Alnylam Sublicensee or licensee in such country in North America,
and,

 

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

 

81

 

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

 

	
  Effective Date of Cubist’s Termination

  	
   

  	
  Percentage of Sublicense Income

  	
   

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  []%*

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  After the Second Opt-Out Milestone

  	
   

  	
  []%*

  	
   

  

 

For purposes of clarity, (A) if
this Agreement is terminated by Cubist pursuant to Section 11.2 and such
termination occurs prior to the First Opt-Out Milestone, Alnylam shall have no
payment obligations to Cubist pursuant to this Section 11.4, and (B) if
this Agreement is terminated by Cubist pursuant to Section 11.2 and such
termination occurs after the First Opt-Out Milestone, Alnylam’s payment
obligations under Sections 11.4(a), 11.4(b), 11.4(c) and 11.4(d), in each
case subject to Section 11.4(e), shall apply with respect to development
and sales milestones achieved, and the Net Sales of Licensed Products sold, by
Alnylam and its Affiliates in such country(ies) in North America.

 

(g)                               Notwithstanding
the foregoing provisions of this Section 11.4, if Cubist (i) 
terminates this Agreement pursuant to Section 11.2 after the Second
Opt-Out Milestone and (ii) []*, then:

 

A.                                   Alnylam
shall promptly provide Cubist with a copy of such []* and with a summary of all
relevant information relating to such []* for such Licensed Product for a
pediatric clinical indication;

 

B.                                     Additionally,
Alnylam shall provide Cubist with such additional information regarding such
[]* and planned []* as Alnylam may reasonably request;

 

C.                                     Within
[]* after receipt of the information and documents provided by Alnylam pursuant
to clause (A); provided  however in no event shall such time
period expire earlier than []* after delivery of any information requested by
Cubist pursuant to clause (B), Cubist shall make one of the following two
elections and notify Alnylam of such election: 
(I) elect to accept the milestones and royalties set forth in the
column entitled “Section 11.4(g) Option I” in Sections 11.4(a), 11.4(b) and
11.4(d), in lieu of the otherwise applicable post-termination economics set
forth above in Sections 11.4(a), 11.4(b) and 11.4(d) or (II) agree
to fund []* percent ([]*%) of the

 

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

 

82

 

[]* for such subsequent additional []*, in
which case there shall be no reduction to the applicable post-termination
economics set forth above in Sections 11.4(a), 11.4(b) and 11.4(d);

 

D.                                    If
Cubist makes the election set forth in clause (C)(I) above and Alnylam
subsequently achieves a []* provided to Cubist by Alnylam pursuant to clause (A) above,
Alnylam shall notify Cubist of such occurrence promptly after receipt of such
[]* and Cubist shall thereafter have an option, exercisable by providing
Alnylam with notice of such exercise within []* after Cubist’s receipt of
Alnylam’s notification, to pay Alnylam []* percent ([]*%) of the amount of the
additional []* actually incurred by Alnylam in []* and, if Cubist exercises
such option and thereafter makes such payment within []* after Cubist’s receipt
of Alnylam’s notification, the reduction to Cubist’s post-termination economics
set forth in clause (C)(I) above shall not apply; and

 

E.                                      If
Cubist makes the election set forth in clause (C)(II) above, then the JSC
shall be reconstituted and, []*, all Development and Manufacture for the
purposes of Development of Licensed Product for the Profit-Share Territory
shall again be subject to the provisions of this Agreement as if Cubist had not
terminated the Agreement pursuant to Section 11.2. For purposes of
clarity, (i) []*, the JSC will be dissolved again and Cubist will, from
that point forward, receive milestones and royalties based upon the termination
of this Agreement pursuant to Section 11.2 after the Second Opt-Out
Milestone and (ii) at no time shall Cubist resume sharing in N.A. Pre-Tax
Profit or Loss.

 

Section 11.5  Effect of Expiration or Termination;
Survival.  Expiration or termination
of this Agreement shall not relieve the Parties of any obligation accruing
prior to such expiration or termination. 
Any expiration or termination of this Agreement shall be without prejudice
to the rights of either Party against the other accrued or accruing under this
Agreement prior to expiration or termination, including payment obligations
arising prior to such expiration or termination.  The provisions of Sections 3.2(a)(ii), 3.2(b)(ii),
3.2(c)(iv), 3.2(d), 3.3, 3.4, 3.5, 4.3(b), 4.3(c), 9.1, 9.2, 9.3, 10.11, 10.12,
10.13, 11.3 and 11.4, this Section 11.5 and Articles XII and XIII shall
survive any expiration or termination of this Agreement and all other
provisions contained in this Agreement that by their explicit terms survive
expiration or termination of this Agreement, shall survive.  Except as set forth in this Article XI,
upon termination or expiration of this Agreement all other rights and
obligations of the Parties under this Agreement terminate.

 

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

 

83

 

ARTICLE XII

 

FINAL DECISION-MAKING; DISPUTE RESOLUTION

 

Section 12.1  Disputes.  Except as otherwise provided in Section 2.5,
the Parties shall negotiate in good faith and use reasonable efforts to settle
any dispute, controversy or claim arising from, or related to, this Agreement
or to the breach, termination or validity hereof (collectively, “Dispute”).  In particular, the Chief Executive Officer of
Alnylam and the Executive Officer of Cubist shall attempt to resolve all
Disputes.  If the Chief Executive
Officers cannot reach an agreement regarding a Dispute, and a Party wishes to
pursue the matter, each such Dispute that is not an Excluded Claim shall be
finally resolved by binding arbitration under the then-current Commercial
Arbitration Rules of the American Arbitration Association (“AAA”)
by one or more arbitrators appointed in accordance with Section 12.2, and
judgment on the arbitration award may be entered in any court having
jurisdiction thereof or of the relevant Party or its assets.  As used in this Section 12.1, the term “Excluded
Claim” means a dispute that concerns (a) []*.

 

Section 12.2  Arbitration.

 

(a)           The arbitration provided for in Section 12.1
shall be conducted by a panel of three (3) persons experienced in the
pharmaceutical business who are independent of both Parties and neutral with
respect to the Dispute presented for arbitration.  Within thirty (30) days after initiation of
arbitration, each Party shall select one person to act as arbitrator and the
two Party-selected arbitrators shall select a third arbitrator within thirty (30)
days after their appointment.  If the
arbitrators selected by the Parties are unable or fail to agree upon the third
arbitrator, the third arbitrator shall be appointed by the AAA.  The place of arbitration shall be Boston,
Massachusetts, and all proceedings and communications shall be in English.

 

(b)           Either Party may
apply to the arbitrators for interim injunctive relief until the arbitration
award is rendered or the controversy is otherwise resolved.  Either Party also may, without waiving any
remedy under this Agreement, seek from any court having jurisdiction any
injunctive or provisional relief necessary to protect the rights or property of
that Party pending the arbitration award. 
The arbitrators shall have no authority to award punitive or any other
type of damages not measured by a Party’s compensatory damages.  Each Party shall bear its own costs and
expenses and attorneys’ fees, and the Party that does not prevail in the
arbitration proceeding shall pay the arbitrators’ and any administrative fees
of arbitration. Except to the extent necessary to confirm an award or as may be
required by law, neither a Party nor an arbitrator may disclose the existence,
content, or results of an arbitration without the prior written consent of both
Parties.  In no event shall an
arbitration be initiated after the date on which  commencement of a legal or equitable
proceeding based on the dispute, controversy or claim would be barred by the
applicable Massachusetts statute of limitations.  Any dispute concerning the application of the
statute of limitations shall be resolved by the arbitrators.

 

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

 

84

 

(c)           The Parties agree
that, in the event of a Dispute over the nature or quality of performance under
this Agreement, neither Party may terminate this Agreement until final
resolution of the Dispute through arbitration or other judicial determination, and this Agreement shall be terminated only
if arbitrators determine that the termination of this Agreement is an
appropriate remedy.  The Parties
further agree that any payments made pursuant to this Agreement pending
resolution of the Dispute shall be refunded promptly if an arbitrator or court
determines that such payments are not due.

 

(d)           The Parties hereby
agree that any disputed performance or suspended performances pending the
resolution of the arbitration that the arbitrators determine to be required to
be performed by a Party must be completed within a reasonable time period
following the final decision of the arbitrators.

 

(e)           The Parties hereby
agree that any monetary payment to be made by a Party pursuant to a decision of
the arbitrators shall be made in United States dollars, free of any tax or
other deduction. The Parties further agree that the decision of the arbitrators
shall be the sole, exclusive and binding remedy between them regarding the
matters presented to the arbitrators.

 

ARTICLE XIII

 

MISCELLANEOUS

 

Section 13.1  Choice of Law.  This Agreement shall be governed by and
interpreted under, and any court action in accordance with Section 13.7
shall apply, the laws of the Commonwealth of Massachusetts excluding:  (a) its conflicts of laws principles; (b) the
United Nations Conventions on Contracts for the International Sale of Goods; (c) the
1974 Convention on the Limitation Period in the International Sale of Goods
(the “1974 Convention”); and (d) the Protocol amending the 1974
Convention, done at Vienna April 11, 1980.

 

Section 13.2  Notices.  Any notice or report required or permitted
to be given or made under this Agreement by one of the Parties to the other
shall be in writing and shall be deemed to have been delivered upon personal
delivery or (a) in the case of notices provided between Parties in the
continental United States, four days after deposit in the mail or the Business
Day next following deposit with a reputable overnight courier and (b) in
the case of notices provided by telecopy (which notice shall be followed
immediately by an additional notice pursuant to clause (a) above if the
notice is of a default hereunder), upon completion of transmissions to the
addressee’s telecopier, as follows (or at such other addresses or facsimile
numbers as may have been furnished in writing by one of the Parties to the
other as provided in this Section 13.2):

 

	
  If to Alnylam:

  	
   

  	
  Alnylam Pharmaceuticals, Inc.

  300 Third Street

  Cambridge, Massachusetts 02142

  U.S.A.

  Attention: Chief Executive Officer

  Facsimile No.: (617) 551-8101

  

 

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

 

85

 

	
  With a copy
  to:

  	
   

  	
  Alnylam
  Pharmaceuticals, Inc.

  300 Third Street

  Cambridge, Massachusetts 02142

  U.S.A.

  Attention: Vice President - Legal

  Facsimile No.: (617) 575-7315

  
	
   

  	
   

  	
   

  
	
  If to Cubist:

  	
   

  	
  Cubist Pharmaceuticals, Inc.

  65 Hayden Avenue

  Lexington, Massachusetts 02421
 U.S.A.

  Attention: President, Chief Executive Officer

  Facsimile No.: (781) 861-1412

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Cubist Pharmaceuticals, Inc.

  65 Hayden Avenue

  Lexington, Massachusetts 02421
 U.S.A.

  Attention: General Counsel

  Facsimile No.: (781) 860-1407

  

 

Section 13.3  Severability.  If, under applicable Law, any provision of
this Agreement is invalid or unenforceable, or otherwise directly or indirectly
affects the validity of any other material provision(s) of this Agreement
(such invalid or unenforceable provision, a “Severed Clause”), this
Agreement shall endure except for the Severed Clause.  The Parties shall consult one another and use
reasonable efforts to agree upon a valid and enforceable provision that is a
reasonable substitute for the Severed Clause in view of the intent of this
Agreement.

 

Section 13.4  Captions.  All captions herein are for convenience only
and shall not be interpreted as having any substantive meaning.

 

Section 13.5  Integration.  This Agreement constitutes the entire
agreement between the Parties hereto with respect to the subject matter of this
Agreement and supersedes all previous agreements, whether written or oral.  Notwithstanding the authority granted to the
JSC under this Agreement, this Agreement may be amended only in writing signed
by properly authorized representatives of each of Alnylam and Cubist.  If a conflict arises between the Development
Plan, the Global Strategic Commercialization Plan and the Commercialization
plans and budgets, on the one hand, and this Agreement, on the other hand, the
terms of this Agreement shall govern.

 

Section 13.6  Independent Contractors; No Agency.  Neither Party shall have any responsibility
for the hiring, firing or compensation of the other Party’s employees or for
any employee benefits.  No employee or
representative of a Party shall have any authority to bind or

 

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

 

86

 

obligate the other Party to
this Agreement for any sum or in any manner whatsoever, or to create or impose
any contractual or other liability on the other Party without said Party’s
written approval.  For all purposes, and
notwithstanding any other provision of this Agreement to the contrary, Cubist’s
legal relationship under this Agreement to Alnylam shall be that of independent
contractor.

 

Section 13.7  Submission to Jurisdiction.  Each Party submits to the exclusive
jurisdiction of the state and federal courts sitting in Boston, Massachusetts,
with respect to actions or proceedings arising out of or relating to this
Agreement in which a Party brings an action in aid of arbitration or an action
on a claim that is not subject to arbitration by the terms of Section 12.1
of this Agreement.  Each Party further
agrees that the jurisdiction of such courts shall be exclusive and that all
claims in respect of such action or proceeding may be heard and determined only
in such courts, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court, except that an action or
proceeding seeking injunctive relief or brought to enforce an arbitration
decision issued pursuant to Section 12.2 may be brought in any court of
competent jurisdiction.  Each Party
waives any defense of lack of personal jurisdiction, improper venue or
inconvenient forum to the maintenance of any action or proceeding in a state or
federal court sitting in Boston, Massachusetts and waives any bond, surety or
other security that might be required of the other Party with respect
thereto.  Each Party may make service on
the other Party by sending or delivering a copy of the process to the Party to
be served at the address and in the manner provided for the giving of notices
in Section 13.2.  Nothing in this Section 13.7,
however, shall affect the right of any Party to serve legal process in any
other manner permitted by law.

 

Section 13.8  Assignment; Successors.  Neither Alnylam nor Cubist may assign this
Agreement in whole or in part, nor any rights hereunder, without the prior
written consent of the other Party; provided  that (a) either
Party may assign this Agreement in whole or in part to an Affiliate on the
condition that the assigning Party shall remain liable hereunder for the prompt
payment and performance of all obligations of the assignee, which right to
assign shall include the right to assign rights to receive any payments
required under this Agreement consistent with license grants, sublicenses and
other rights referenced in Sections 3.1, 3.2 and 3.4 upon reasonable written
notice to the other Party of such assignment, and (b) this Agreement may
be assigned by a Party if such Party merges with, or all or substantially all
of such Party’s business or assets to which this Agreement relates are acquired
by another Person (whether by merger, sale of assets, sale of stock or
otherwise) (an “M&A Event”), to such Party’s merger partner or
acquirer.   Each Party agrees that,
notwithstanding any other provisions of this Agreement to the contrary, if an
M&A Event occurs with respect to a Party, such M&A Event []*.  In the event the intellectual property or
technology of such merger partner or acquirer of such Party, or of any Third
Party that becomes an Affiliate of such Party by virtue of such M&A Event
is the subject of an Alnylam In-license or Cubist In-license as of the date of
the M&A Event, the terms of Section 8.6 shall continue to apply with
respect to such intellectual property and technology.  Any assignment made other than in accordance
with the immediately preceding sentence shall be wholly void and invalid, and
the assignee in any such assignment shall acquire no rights whatsoever, and the
non-assigning Party shall not recognize, nor shall it be required to recognize,

 

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

 

87

 

such assignment.  This Section 13.8 limits both the right
and the power to assign this Agreement or rights under this Agreement.  This Agreement shall be binding upon, and
shall inure to the benefit of, all permitted successors and assigns.

 

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

 

Section 13.10  Performance by Affiliates.  To the extent that this Agreement imposes
obligations on Affiliates of a Party, such Party agrees to cause its Affiliates
to perform such obligations.  Either
Party may use one or more of its Affiliates to perform its obligations and
duties hereunder; provided  that the Parties shall remain liable
hereunder for the prompt payment and performance of all their respective
obligations hereunder.

 

Section 13.11  Force Majeure.  Neither Party shall be held liable to the
other Party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in performing any obligation under this Agreement to the
extent that such failure or delay is caused by or results from causes beyond
the reasonable control of the affected Party, potentially including embargoes,
war, acts of war (whether war be declared or not), insurrections, riots, civil
commotions, strikes, lockouts or other labor disturbances, fire, floods, locusts
or other acts of God, or acts, omissions or delays in acting by any
Governmental Authority or the other Party. 
The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical,
and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances.

 

Section 13.12  Construction.  Each Party acknowledges that it has been
advised by counsel during the course of negotiation of this Agreement, and,
therefore, that this Agreement shall be interpreted without regard to any
presumption or rule requiring construction against the Party causing this
Agreement to be drafted.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation.”  The word “will” shall be
construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein or therein), (b) any reference to any Laws herein shall
be construed as referring to such Laws as they from time to time may be
enacted, repealed or amended, (c) any reference herein to

 

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

 

88

 

any Person shall be construed to include the
Person’s successors and assigns, (d) the words “herein,” “hereof’ and “hereunder,”
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (e) any reference
herein to the words “mutually agree” or “mutual written agreement” shall not
impose any obligation on either Party to agree to any terms relating thereto or
to engage in discussions relating to such terms except as such Party may
determine in such Party’s sole discretion; (f) all references herein to
Articles, Sections,  Exhibits and Schedules
shall be construed to refer to Articles, Sections, Exhibits and Schedules of
this Agreement; and (g) the word “or” is used in the inclusive sense
(and/or).

 

Section 13.13  Execution in Counterparts; Facsimile
Signatures.  This Agreement may be
executed in counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, and all of which counterparts,
taken together, shall constitute one and the same instrument even if both
Parties have not executed the same counterpart. 
Signatures provided by facsimile transmission or by electronic PDF
transmission shall be deemed to be original signatures.

 

[Remainder of page intentionally left blank]

 

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

 

89

 

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

 

	
   

  	
  ALNYLAM PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Maraganore 

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
  Date:

  	
  January 9, 2009

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CCUBIST PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael W. Bonney 

  
	
   

  	
  Title:

  	
  President, Chief Executive Officer 

  
	
   

  	
  Date:

  	
  January 8, 2009

  

 

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

 

90

 

EXHIBIT A

 

Alnylam
Patent Rights

 

RSV

 

	
  Docket

  	
   

  	
  Title

  	
   

  	
  Country

  	
   

  	
  App No

  	
   

  	
  Filing date

  	
   

  	
  Pub. No

  	
   

  	
  Pub date

  	
   

  	
  Status

  	
   

  
	
  []*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

A-1

 

EXHIBIT B

 

ALN-RSV01

 

[]*

 

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

 

B-1

 

EXHIBIT C

 

Existing Alnylam In-Licenses

 

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

 

[]*

 

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

 

C-1

 

EXHIBIT D

 

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

 

[]*

 

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

 

D-1

 

EXHIBIT E

 

Development Plan Overview

 

[]*

 

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

 

E-1

 

EXHIBIT F

 

Material Agreements
Related to Licensed Products in the Territory

 

[]*

 

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

 

F-1

 

EXHIBIT G

 

Supply Agreement Term Sheet

 

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

 

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

 

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

 

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

 

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

 

G-1

 

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

 

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

 

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

 

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

 

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

 

G-2

 

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

 

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

 

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

 

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

 

G-3

 

EXHIBIT H

 

Milestone
Payments Under the Existing Alnylam In-Licenses

 

	
  Existing Alnylam In

  license

  	
   

  	
  Milestone

  	
   

  	
  Alnylam

  Payment

  Obligation

  	
   

  	
  Allocable Share of

  Milestone to be

  split in Profit-Share

  Territory

  	
   

  
	
  []*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

H-1

 

EXHIBIT I

 

Press Release

 

	
  

  	
   

  	
  

  

 

	
  Contacts:

  	
   

  	
   

  
	
  Cubist Pharmaceuticals, Inc.

  	
   

  	
  Alnylam Pharmaceuticals, Inc.

  
	
  Eileen
  C. McIntyre

  	
   

  	
  Cynthia
  Clayton (Investors)

  
	
  781-860-8533

  	
   

  	
  617-551-8207

  
	
  eileen.mcintyre@cubist.com

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tara
  Murphy

  	
   

  	
  Adriana
  Jenkins (Media)

  
	
  Weber
  Shandwick

  	
   

  	
  Yates
  Public Relations

  
	
  617-520-7045

  	
   

  	
  617-744-1713

  
	
  TMurphy@WeberShandwick.com

  	
   

  	
   

  

 

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

 

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

 

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

 

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

 

I-1

 

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

 

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

 

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

 

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

 

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

 

I-2

 

About Respiratory Syncytial
Virus (RSV)

 

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

 

About RNA Interference (RNAi)

 

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

 

About Cubist Pharmaceuticals

 

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

 

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

 

I-3

 

About Alnylam Pharmaceuticals

 

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

 

This press release contains
forward-looking statements, including statements regarding ALN-RSV01 and the
ALN-RSV program as a potential treatment for RSV.  There are many factors that could cause
actual results to differ materially from those in these forward-looking
statements.  These factors include the
following: (i) Cubist and Alnylam’s ability to develop, manufacture and
achieve commercial success for ALN-RSV01 or other RNAi therapeutics that are
the subject of this collaboration; (ii) whether the FDA accepts proposed
clinical trial protocols that may be achieved in a timely manner for ALN-RSV01
or other RNAi therapeutics that are the subject of this collaboration; (iii) Cubist’s
ability to conduct successful clinical trials in a timely manner; (iv) the
demonstrated clinical efficacy and safety of ALN-RSV01 or other RNAi
therapeutics that are the subject of this collaboration as they relate to
standards for regulatory approval and in comparison to competitive products; (v) ALN-RSV01
and other RNAi therapeutics that are the subject of this collaboration could
take a significantly longer time to gain regulatory approval and market
acceptance than Cubist or Alnylam expects or may never gain such approval or
acceptance in RSV; (vi) others may develop RSV technologies or products
superior to, and/or which reach the market 

 

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

 

I-4

 

before ALN-RSV01 or other RNAi
therapeutics that are the subject of this collaboration; (vii) technical
difficulties or excessive costs relating to the manufacture of ALN-RSV01 or
other RNAi therapeutics that are the subject of this collaboration; (viii) a
smaller market for ALN-RSV01 or other RNAi therapeutics that are the subject of
this collaboration in RSV than Cubist or Alnylam currently anticipates; (ix) Cubist’s
and Alnylam’s ability to adequately develop and maintain adequate protection
for the intellectual property related to ALN-RSV01 or other RNAi therapeutics
that are the subject of this collaboration; and (x) a variety of other
risks common to our industry that may be encountered with respect to the development,
manufacture or commercialization of ALN-RSV, including ongoing regulatory
review, public and investment community perception of the industry, legislative
or regulatory changes, and Cubist’s ability to attract and retain talented
employees.  Drug development involves a
very high degree of risk.  Success of a
product candidate in early stage clinical trials or pre-clinical trials does
not mean that subsequent trials will also be successful or that the candidate will
be successfully commercialized.  Additional
factors that could cause actual results to differ materially from those
projected or suggested in any forward-looking statements are contained in
Cubist’s most recent 10-K and 10-Q filings with the Securities and Exchange
Commission, including those factors discussed under the caption “Risk Factors”
in such filings.  These statements speak
only as of the date of this release, and Cubist undertakes no obligation to
update or revise these statements, except as may be required by law.

 

Alnylam Forward-Looking Statement

 

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

 

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

 

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

 

I-5

 

Schedule 10.7

 

Disclosure Schedule

 

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

 

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

 

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

 

10.7-1

 

10.7
(b)

 

[]*

 

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

 

10.7-2

 

10.7(c)

 

[]*

 

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

 

10.7-3

 

10.7
(d)

 

OPPOSITIONS & APPEALS

 

	
  Patent #

  	
   

  	
  # of

  Opponents

  	
   

  	
  Opponents/Appellants

  	
   

  	
  Status

  	
   

  
	
  []*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

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

 

10.7-4

 

10.7(g)

 

·                  []*

 

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

 

10.7-5Exhibit 10.2

 

Cubist Pharmaceuticals, Inc.

Director Compensation, Benefits, Programs

(Effective as of the date of the 2009 Annual Meeting of Stockholders)

 

Director Compensation

 

	
  Element

  	
   

  	
  Compensation

  
	
   

  	
   

  	
   

  
	
  Retainer

  	
   

  	
  Non-Executive
  Chairman of the Board - $34,000

  Lead Director - $28,000

  Other Non-Employee Directors - $22,000

  Paid on an annual basis in June in either cash or stock; cash/stock
  election to be made at March board meeting; pro rated based on number of
  months served during the 12 months beginning on the date of the prior
  calendar year’s Annual Meeting of Stockholders

  
	
   

  	
   

  	
   

  
	
  Initial
  Option Grant

  	
   

  	
  Non-Executive
  Chairman of the Board: Stock options with a Black-Scholes value of $250,000

  Lead Director: Stock options with a Black-Scholes value of $200,000

  Other
  Non-Employee Directors: Stock options with a Black-Scholes value of $150,000

  Grant Date/vesting: Vests quarterly on a pro rata basis over 3 years from the
  grant date

  
	
   

  	
   

  	
   

  
	
  Annual Option Grant

  	
   

  	
  Non-Executive Chairman of
  the Board: Stock options with a Black-Scholes value of $250,000

  Lead Director: Stock options with a Black-Scholes value of $200,000

  Other Non-Employee
  Directors: Stock options with a Black-Scholes value of $150,000

  Grant Date/vesting: Options will be granted (and valued) on the date of each
  Annual Meeting of Stockholders; vests 100% on the earlier of the first
  anniversary of the grant date or the date of the next calendar year’s Annual
  Meeting of Stockholders

  
	
   

  	
   

  	
   

  
	
  Meeting Fee - Board
  Meetings

  	
   

  	
  $4,000 per meeting
  attended (in person) (except for Non-Executive Chairman of the Board and Lead
  Director, see below)

  $1,000 per meeting attended (by phone)

  
	
   

  	
   

  	
   

  
	
  Meeting Fee - Committee
  Meetings (non-Chair members)

  	
   

  	
  Audit Committee: $2,000
  per meeting attended (in person or by phone)

  Other Committees: $1,500 per meeting attended (in person of by phone)

  
	
   

  	
   

  	
   

  
	
  Meeting Fee - Committee
  Chairmen

  	
   

  	
  Audit Committee: $4,000
  per meeting led (in person or by phone)

  Other Committees: $3,500 per meeting led (in person of by phone)

  
	
   

  	
   

  	
   

  
	
  Meeting Fee —
  Non-Executive Chairman of the Board

  	
   

  	
  $5,000 per Board Meeting led

  
	
   

  	
   

  	
   

  
	
  Meeting Fee - Lead
  Director

  	
   

  	
  $5,000 per Board Meeting
  led

  
	
   

  	
   

  	
   

  
	
  Meeting Fee —
  Non-Committee Members Attending Committee Meetings

  	
   

  	
  Paid the same per meeting
  fee as a non-Chair member of the Committee

  

 

 

Director Benefits

 

	
  Expense
  Reimbursement

  	
   

  	
  Cubist
  shall reimburse the cost of all reasonable travel related expenses and meals
  incurred in connection with attending Board or Committee Meetings. Directors
  should travel one class below first class. Exceptions will be handled on a
  case-by-case basis and should be submitted to the Chairman (or, if there is
  no Chairman, the Lead Director)

  
	
   

  	
   

  	
   

  
	
  D &
  O Insurance

  	
   

  	
  Cubist
  provides Director & Officer Insurance for all Board Members.

  
	
   

  	
   

  	
   

  
	
  NACD
  Membership

  	
   

  	
  Cubist
  provides a membership to the National Association of Corporate Directors for
  all Board Members

  
	
   

  	
   

  	
   

  
	
  Director
  Education Programs

  	
   

  	
  Cubist
  supports director education and will reimburse directors for reasonable
  expenses incurred in connection with participation in director education
  programs. Directors are expected to report all such participation to the
  Secretary of the Corporation. Cubist also provides in-house direction
  education and has a Director Orientation Program.

  

 

Administration

 

1.               Cubist delivers a
check at each regularly scheduled in-person Board Meeting that includes
compensation for all Board and Committee meetings attended since the last
regularly scheduled in-person Board Meeting. 
Included with the check is an Attendance Report and Stock Option Report.  Directors are compensated for Board or
Committee meetings designated by the Chairman of the Board, Lead Director, or
Committee Chairman, as the case may be, for which minutes are prepared.

 

2.               Board retainer is
payable on an annual basis as of the date of the Annual Meeting of Stockholders
in either cash or stock, in recognition of the previous 12 months of service
beginning on the date of the previous calendar year’s Annual Meeting of
Stockholders. Stock or cash election will be made in March. The retainer shall
be pro-rated based on the number of months served as a Director in the previous
12 months.

 

3.               Receipts must be
submitted to Cubist’s CEO within 60 days of each travel engagement.

 

4.               A summary of Cubist Director &
Officers Insurance Policy is included in the Director’s Handbook.

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