EXHIBIT 10.8
AGREEMENT
(THE "REQUIREMENT AMENDMENT")
between
GARCHING INNOVATION GMBH MUNICH, GERMANY
("GI")
and
ALNYLAM PHARMACEUTICALS, INC., CAMBRIDGE, USA (FORMERLY KNOWN AS ALNYLAM HOLDING
CO., INC.)
("Alnylam Pharma")
and
ALNYLAM US, INC., CAMBRIDGE, USA (FORMERLY KNOWN AS ALNYLAM PHARMACEUTICALS,
INC.)
("Alnylam US")
and
ALNYLAM EUROPE AG, KULMBACH, GERMANY (FORMERLY KNOWN AS RIBOPHARMA AG)
("Alnylam Germany")
(GI, Alnylam Pharma, Alnylam US and Alnylam Germany are hereinafter referred to
as the "Parties")
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PREAMBLE
WHEREAS, Alnylam US and GI are parties to the Alnylam Co-Exclusive License
Agreement dated as of December 20, 2002 (the "Alnylam License Agreement"),
pursuant to which Alnylam US received one of two proposed co-exclusive licenses
from GI to the patents described therein;
WHEREAS, Xxx Xxxxxx Gesellschaft zur Foerderung der Wissenschaften e.V. ("MPG"),
co-owner of the patents licensed under the Alnylam License Agreement (and only
MPG but none of the other co-owners of the licensed patents), established the
requirement to develop and commercialize the licensed patents also in Germany,
due to the fact that Xxx Xxxxxx, a main inventor of the licensed patents, made
his inventions at a Xxx Xxxxxx Institute in Germany in the course of a project
funded by the German government; MPG (and only MPG but none of the other
co-owners of the licensed patents) requested from GI to negotiate and implement
in the respective agreements a Comparability Requirement (as defined below) and
a Split of Indications Requirement (as defined below);
WHEREAS, the Alnylam License Agreement provides for the grant of a second
co-exclusive license to a European-based therapeutics company consisting of,
among other things, a German company that must have comparable operational
forces in terms of budget, employees, R&D and BD capacities as Alnylam US
("Europe RNAi") to be established by Alnylam US;
WHEREAS, Alnylam US and Alnylam Germany entered into a share exchange agreement
dated as of July 3, 2003 (the "Share Exchange Agreement") pursuant to which both
entities became wholly-owned subsidiaries of Alnylam Pharma;
WHEREAS, the equity ownership structure provided for under the Share Exchange
Agreement did not comply with certain of the requirements set forth in Appendix
C of the Alnylam License Agreement;
WHEREAS, under an Amendment to the Alnylam License Agreement dated as of July 2,
2003 (the "Garching Amendment"), GI agreed that Alnylam Germany qualifies as
Europe RNAi as described in the Alnylam License Agreement, provided that, among
other terms and conditions set forth in the Garching Amendment, for a period of
5 years after the effective date as defined in the Alnylam License Agreement (i)
Alnylam Pharma is required to use reasonable commercial efforts to build for
Alnylam Germany capabilities to develop, make, use, sell or import license
products comparable to Alnylam US and (ii) Alnylam Germany must have comparable
operational forces in Germany in terms of budget, employees, research and
development and business development capabilities as Alnylam US (conditions (i)
and (ii) above are hereinafter jointly referred to as the "Comparability
Requirement");
Requirement Amendment
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WHEREAS, GI and Alnylam Germany are parties to a Ribopharma Co-Exclusive License
Agreement dated as of July 30, 2003 (the "Ribopharma License Agreement")
pursuant to which GI granted a second co-exclusive license to Alnylam Germany
(formerly known as Ribopharma AG);
WHEREAS, under Section 2.3 of each the Alnylam License Agreement and the
Ribopharma License Agreement, Alnylam US, Alnylam Germany and GI have undertaken
to mutually agree on a reasonable and equal split of indications and
sub-indications according to the estimated market size and accessibility by RNAi
within the field between Alnylam US and Alnylam Germany (hereinafter referred to
as the "Split of Indications Requirement");
WHEREAS, Alnylam US and Alnylam Germany issued to GI a confidential report dated
as of January 10, 2005, pursuant to which Alnylam US and Alnylam Germany
asserted their compliance with the Comparability Requirement and the Split of
Indications Requirement;
WHEREAS, on January 20, 2005 GI issued to Alnylam US and Alnylam Germany a
deficiency notice regarding the Comparability Requirement, according to Section
C) 5.c) of the Garching Amendment (the "Deficiency Notice"), and an
insufficiency notice regarding the Split of Indications Requirement according to
Section 2.3 of the Alnylam License Agreement and Section 2.3 of the Ribopharma
License Agreement (the "Insufficiency Notice"); and
WHEREAS, without prejudice to, and/or acknowledging any default under, any of
the contractual obligations described above, the Parties engaged into further
discussions intended to reach amicable agreement with respect to the matters
cited below and to settle any controversy arising out of the Comparability
Requirement and the Split of Indications Requirement;
NOW THEREFORE, the Parties agree with respect to the foregoing as follows:
1. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that with respect
to the scope, content, reporting, failure, cure and termination procedure,
and any other terms and conditions (including without limitation Sections
A) 1., A) 3. d), and C) 5. a) through c) of the Garching Amendment) in
connection with the Comparability Requirement set forth in the Alnylam
License Agreement, the Garching Amendment and the Ribopharma License
Agreement as well as the requirements set out in Sec. 10.2 of the Share
Exchange Agreement (collectively, the "Comparability Requirement Terms and
Conditions"), the Comparability Requirement Terms and Conditions shall be
amended as follows (the amended Comparability Requirement Terms and
Conditions set forth in (i) through (vi) below collectively the "Amended
Comparability Requirement Terms and Conditions"):
Requirement Amendment
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(i) For a period until December 20, 2007 (the "Period"), Alnylam Pharma
(or any successor or assignee of Alnylam Pharma) is obliged to maintain
Alnylam Germany as an operating company in Germany with at least a number
of employees collectively equal to 25 full-time equivalent employees
("FTEs") (such number may include the management of Alnylam Germany and
incoming employees who have signed their employment contracts with Alnylam
Germany but have not yet commenced their employment) having their legal
and habitual residence in Germany and working at least 75% of their
working time in Germany, and
(ii) Alnylam Pharma (or any successor or assignee of Alnylam Pharma) shall
ensure for the Period that 10 of the 25 FTEs as defined under (i) above
are scientists with at least a doctoral-level degree, and a further 4 of
these 25 FTEs are diploma scientists ("Academic Quota"), unless the
Parties have agreed on a different Academic Quota, it being understood
that Alnylam Pharma may propose - at any time - adjustments to the
Academic Quota subject to GI's approval, which approval shall not be
unreasonably withheld by GI, provided that Alnylam Pharma has given
sufficient reasons for its proposed adjustments.
(iii) Alnylam Pharma (or any successor or assignee of Alnylam Pharma)
shall provide GI, within 30 days after the end of each calendar quarter,
with calendar quarterly reports (the "Reports") showing in sufficient
detail how Alnylam Pharma has fulfilled during the immediately preceding
calendar quarter and intends to fulfil in the calendar quarter in which
the respective Report is submitted, its obligations set forth in (i) and
(ii) above; the first Report shall be delivered to GI for the first
calendar quarter 2005, and
(iv) In the event GI informs Alnylam Pharma in writing, within 30 (thirty)
days after receipt of the respective Report, that Alnylam Pharma failed to
comply with one or more of its obligations set forth in (i) and (ii) above
(the "Failure Notice"), and Alnylam Pharma fails to cure that breach
within 90 days after receiving the Failure Notice or, if such breach is
the result of one or more employees leaving their employment with Alnylam
Germany, within 180 days after the final date of employment of such
employee, whichever period is longer ("Grace Period"), GI shall have the
extraordinary right, but subject to the procedure set forth in clause 1(v)
below, to terminate the Ribopharma License Agreement in writing with 30
days prior notice to Alnylam Pharma. In the event of such termination,
Sections 11.7, 11.8 and 12.3 of the Ribopharma License Agreement shall not
apply, and such termination of the Ribopharma License Agreement shall be
GI's sole remedy under any or all of this Requirement Amendment, the
Ribopharma License Agreement, the Alnylam License Agreement and the
Garching Amendment for failure by Alnylam Pharma (or any successor or
Assignee of Alnylam Pharma) to comply with the obligations set forth in
1(i) and 1(ii) above.
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(v) Within 30 days after the end of the Grace Period, Alnylam Pharma may
provide written notice to GI in sufficient detail to demonstrate that the
Amended Comparability Requirement Terms and Conditions were fulfilled
within the Grace Period, or, despite diligent efforts to fulfill them,
were not fulfilled within the Grace Period for reasons outside the
reasonable control of Alnylam Pharma, e.g. because it has not been
possible within such Grace Period to recruit an appropriate individual for
a vacant position. In the event that, after giving reasonable
consideration to such written notice from Alnylam, GI does not agree that
Alnylam Pharma has fulfilled, or used diligent efforts to fulfill, the
Amended Comparability Requirement Terms and Conditions within the Grace
Period, GI shall have the right to seek termination of the Ribopharma
License Agreement by initiating arbitration in accordance with Section
12.3 of the Ribopharma License Agreement, with the following
modifications:
(a) the only matter on which the arbitrators will be asked to rule
is whether Alnylam Pharma has met, or has used diligent
efforts to meet, the Amended Comparability Requirement Terms
and Conditions;
(b) if the arbitrators rule that Alnylam Pharma has met, or has
used diligent efforts to meet, the Amended Comparability
Requirement Terms and Conditions, GI shall not have the right
to terminate the Ribopharma License Agreement and shall bear
all costs of the arbitration; and
(c) if the arbitrators rule that Alnylam Pharma has not met, or
has not used diligent efforts to meet, the Amended
Comparability Requirement Terms and Conditions, GI shall have
the right to terminate the Ribopharma License Agreement
immediately, and Alnylam Pharma shall bear all costs of the
arbitration.
(vi) GI shall herewith waive and Alnylam Pharma, Alnylam US and Alnylam
Germany shall herewith accept such waiver of any and all rights including
but not limited to any right of GI to terminate the Alnylam License
Agreement and/or the Ribopharma License Agreement based on an asserted
default under the Comparability Requirement Terms and Conditions.
2. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that with respect
to the Split of Indications Requirement set forth in the Alnylam License
Agreement and the Ribopharma License Agreement (i) Alnylam US and Alnylam
Germany shall be fully and irrevocably released from the Split of
Indications Requirement and all and any pending, threatened or asserted
claims arising out of any asserted default under the Split of Indications
Requirement, and (ii) GI shall herewith waive and Alnylam Pharma, Alnylam
US and Alnylam Germany shall herewith accept such waiver of any and all
rights including but not limited to any
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right of GI to terminate the Alnylam License Agreement and/or the
Ribopharma License Agreement based on an asserted default under the Split
of Indications Requirement.
3. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that in each of
the Alnylam License Agreement and the Ribopharma License Agreement,
Section 4.2 shall be amended to read as follows:
"COMPANY shall furnish, and shall oblige its AFFILIATES and
SUBLICENSEES to furnish to COMPANY for inclusion in its reports to
GI, to GI in writing, within 30 (thirty) days after the end of each
calendar year, with COMPANY's standard R&D report, on the progress
of its efforts during the immediately preceding calendar year to
develop and commercialize LICENSED PRODUCTS for each indication and
sub-indication within the FIELD. The report shall also contain a
discussion of intended R&D efforts for the calendar year in which
the report is submitted."
4. Alnylam Pharma, Alnylam US, Alnylam Germany and GI agree that in each of
the Alnylam License Agreement and the Ribopharma License Agreement, the
final paragraph of Section 4.3 shall be amended to read as follows:
"If GI decides that COMPANY did not fulfill the requirements of (a)
or (b), and/or that COMPANY's terms and conditions for the requested
sublicense have been unreasonable (in either case, a "Sublicensing
Deficiency"), GI may provide COMPANY with notice in writing
("Sublicensing Deficiency Notice") of such decision. Within thirty
(30) days of receiving such Sublicensing Deficiency Notice, COMPANY
shall provide GI within a written reply proposing a plan to correct
such Sublicensing Deficiency, and/or explaining COMPANY's reasonable
belief that no such Sublicensing Deficiency exists. If COMPANY does
not provide a written reply to GI within thirty (30) days after
receiving such Sublicensing Deficiency Notice, or if after giving
such reply due consideration, including discussing such reply with
COMPANY, GI reasonably concludes that such Sublicensing Deficiency
does exist and/or that COMPANY's proposed corrective plan is
inadequate, GI may initiate the arbitration procedure according to
Section 12.3. If the award of the arbitration tribunal states a
non-fulfillment of the requirements of (a) or (b), COMPANY shall
immediately start negotiations with the third party; if the award of
the arbitration tribunal states unreasonable terms and conditions,
COMPANY shall immediately re-negotiate reasonable terms and
conditions with the third party. In any such awards of the
arbitration tribunal, the costs for the arbitration procedure shall
be borne solely by COMPANY."
Requirement Amendment
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5. In consideration for the agreements of GI set out in paragraphs 1 through
4 above, Alnylam Pharma shall issue and transfer, within 30 days after the
Amendment Execution Date, a total of 270,000 (two hundred seventy
thousand) fully-paid shares of Alnylam Pharma Common Stock, such shares to
be free of any restrictions on transfer other than any restrictions
required under applicable U.S. securities laws (the "Compensation
Shares"). The Compensation Shares shall be distributed in accordance with
written instructions (the "Distribution Instructions") to be provided by
GI to Alnylam Pharma within 5 days after the Amendment Execution Date,
instructing Alnylam Pharma to issue and transfer such Compensation Shares
either
(i) in total to MPG, in which case it shall be GI's sole and exclusive
responsibility to split the Compensation Shares and to cause MPG to assign
and transfer any part of the Compensation Shares to any of the
Massachusetts Institute of Technology ("MIT") and/or the Xxxxxxxxx
Institute ("WI") (MIT, WI and MPG collectively the "Approving Owners" as
defined in the Ribopharma License Agreement). In such case, however,
Alnylam Pharma shall diligently assist and support MPG in connection with
any further assignment and transfer of any portion of the Compensation
Shares; in particular, Alnylam Pharma shall, and, as necessary or useful,
shall instruct its respective consultants or agents (e.g., EquiServe
Trust) to, execute any documents or take any other action required under
applicable U.S. securities law in order to implement any further
assignment and transfer of any portion of the Compensation Shares in the
most expeditious manner;
or
(ii) in portions to the Approving Owners in accordance with a share
distribution scheme set forth by GI in the Distribution Instructions.
The Distribution Instructions shall also include written confirmation from
each Approving Owner that it approves this Requirement Amendment.
MPG (or any of its successors or assignees) and the Approving Owners shall
be and remain the owner of the Compensation Shares, including without
limitation in the event that this Requirement Amendment or any of the
Alnylam License Agreement, the Garching Amendment or the Ribopharma
License Agreement is terminated.
6. GI shall represent and warrant that it has the right and authority to
enter into this Requirement Amendment and that such Requirement Agreement,
in particular the Amended Comparability Requirement Terms and Conditions
and the release from the Split of Indications Requirements as agreed in
this Requirement Amendment, does not conflict with any rights and claims
of third parties, in particular of the
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Approving Owners. GI shall defend, indemnify and hold harmless Alnylam
Pharma, Alnylam US and Alnylam Germany, as well as its directors and
officers against any claims of third parties, in particular the Approving
Owners, irrespective on what basis, against Alnylam Pharma, Alnylam US
and/or Alnylam Germany because of this Requirement Amendment or any of the
Amended Comparability Requirement Terms and Conditions or the release from
the Split of Indications Requirement as agreed in this Requirement
Amendment.
7. This Requirement Amendment shall come into effect on June 15, 2005 (the
"Amendment Execution Date") and shall remain in effect for the term of the
Alnylam License Agreement and the Ribopharma License Agreement. Until the
Amendment Execution Date, GI herewith agreed to suspend the Deficiency
Notice and the Insufficiency Notice.
8. This Requirement Amendment shall be governed by and construed in
accordance with the laws of Federal Republic of Germany. Any controversy
arising out of or in connection with this Requirement Amendment shall be
subject to arbitration under the procedural Rules of the International
Chamber of Commerce. The arbitration tribunal shall be appointed as
follows: GI, on the one hand, and collectively Alnylam Pharma, Alnylam US
and Alnylam Germany, on the other hand, shall each select, within 30
(thirty) days after receipt of notice that arbitration is initiated, an
independent and experienced third party as arbitrator. Such two selected
arbitrators shall mutually select an independent and experienced third
party as third arbitrator. The venue for such arbitration procedure shall
be Munich, Germany, the language shall be English. The award of the
arbitration shall be final and binding for the parties. Notwithstanding
the foregoing, each party may apply for interlocutory relief in court.
9. This Requirement Amendment may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together
constitute one and the same instrument.
In witness thereof the parties have caused this agreement to be executed by
their duly authorized representatives.
Garching Innovation GmbH
By: /s/ Xx. Xxxxxxxx Xxxxxx
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Name: Xx. Xxxxxxxx Xxxxxx
Title: Geschaftsfuhrer/Managing Director
Date: June 14, 2005
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Alnylam Pharmaceuticals, Inc.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Chief Operating Officer
Date: June 7, 2005
Alnylam US, Inc.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Sr. Vice President Business Development
Date: June 7, 2005
Alnylam Europe AG
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Managing Director
Date: June 13, 2005
Alnylam Europe AG
By: /s/ Andreas Bossko
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Name: Andreas Bossko
Title: Vice President, Finance
Date: June 13, 2005
Requirement Amendment
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