Form 8-K - Alnylam Pharmaceuticals, INc.
Table of Contents

 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 12, 2005

Alnylam Pharmaceuticals, Inc.

 
(Exact Name of Registrant as Specified in Charter)
         
Delaware   000-50743   77-0602661
 
(State or Other Juris-
diction of Incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)
     
300 Third Street, Cambridge, MA   02142
 
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (617) 551-8200

Not applicable

 
(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 


TABLE OF CONTENTS

Item 1.01. Entry into a Material Definitive Agreement.
Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
Item 9.01. Financial Statements and Exhibits.
SIGNATURE
EXHIBIT INDEX
EX-10.1 - Form of Nonstatutory Stock Option Agreement
EX-10.2 - Form of Restricted Stock Agreement


Table of Contents

Item 1.01. Entry into a Material Definitive Agreement.

     On July 12, 2005, the Board of Directors (the “Board”) of Alnylam Pharmaceuticals, Inc. (“Alnylam”) elected James L. Vincent to the Board of Alnylam.

     In connection with the election of Mr. Vincent to the Board, on July 12, 2005, the Board of Alnylam granted to Mr. Vincent the following awards under the 2004 Stock Incentive Plan: (1) nonstatutory stock options to purchase 75,000 shares of common stock, $.01 par value per share (“Common Stock”), of Alnylam at an exercise price of $7.02 per share and (2) a restricted stock award, pursuant to which Mr. Vincent purchased 10,000 shares of Common Stock of Alnylam for a purchase price of $7.02 per share. The options vest as to one-third of the shares on each of the first, second and third anniversaries of the date of grant, subject to Mr. Vincent’s continued service as a member of the Board. The restricted stock vests in one week after Mr. Vincent’s election to the Board in the event that he continues to serve as a director at that time.

     The form of nonstatutory stock option agreement used in connection with these options is attached as Exhibit 10.1 hereto.

     The form of restricted stock agreement used in connection with this restricted stock award is attached as Exhibit 10.2 hereto.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

     (d) As described above, on July 12, 2005, the Board of Alnylam elected James L. Vincent to the Board of Alnylam. Mr. Vincent was elected to fill the vacancy on the Board and will serve as a Class II director with a term expiring at the annual meeting of stockholders of Alnylam held in 2006.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits

          See Exhibit Index attached hereto.

 


Table of Contents

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
  ALNYLAM PHARMACEUTICALS, INC.
 
 
Date: July 13, 2005  By:   /s/ John M. Maraganore, Ph.D.    
    John M. Maraganore, Ph.D.   
    President and Chief Executive Officer   

 


Table of Contents

         

EXHIBIT INDEX

         
Exhibit No.   Description
       
 
  10.1    
Form of Nonstatutory Stock Option Agreement
       
 
  10.2    
Form of Restricted Stock Agreement

 

<PAGE>
                                                                    Exhibit 10.1

                          ALNYLAM PHARMACEUTICALS, INC.

                       Nonstatutory Stock Option Agreement
                     Granted Under 2004 Stock Incentive Plan

1.    Grant of Option.

      This agreement evidences the grant by Alnylam Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), on          , 20[  ] (the "Grant Date") to
[ ], an [employee], [consultant], [director] of the Company (the "Participant"),
of an option to purchase, in whole or in part, on the terms provided herein and
in the Company's 2004 Stock Incentive Plan (the "Plan"), a total of [ ] shares
(the "Shares") of common stock, $.01 par value per share, of the Company
("Common Stock") at $[ ] per Share. Unless earlier terminated, this option shall
expire at 5:00 p.m., Eastern time, on [the date that is ten years from the Grant
Date] (the "Final Exercise Date").

      It is intended that the option evidenced by this agreement shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant", as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.

2.    Vesting Schedule.

      This option will become exercisable ("vest") as to [                    ].

      The right
 of exercise shall be cumulative so that to the extent the option
is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all Shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this option under Section 3 hereof or the Plan.

3.    Exercise of Option.

      (a) Form of Exercise. Each election to exercise this option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement, and payment in full in the manner
provided in the Plan. The Participant may purchase less than the number of
shares covered hereby, provided that no partial exercise of this option may be
for any fractional share or for fewer than ten whole shares.

      (b) Continuous Relationship with the Company Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the
Participant, at the time he or she exercises this option, is, and has been at
all times since the Grant Date, an [employee or officer of], or consultant or
advisor to, the Company or any other entity the employees, officers, directors,
consultants, or advisors of which are eligible to receive option grants under
the Plan (an "Eligible Participant").


<PAGE>

      (c) Termination of Relationship with the Company. If the Participant
ceases to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this option shall terminate
three months after such cessation (but in no event after the Final Exercise
Date), provided that this option shall be exercisable only to the extent that
the Participant was entitled to exercise this option on the date of such
cessation. Notwithstanding the foregoing, if the Participant, prior to the Final
Exercise Date, violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
option shall terminate immediately upon such violation.

      (d) Exercise Period Upon Death or Disability. If the Participant dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this option shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant (or in the case of death by an authorized transferee), provided that
this option shall be exercisable only to the extent that this option was
exercisable by the Participant on the date of his or her death or disability,
and further provided that this option shall not be exercisable after the Final
Exercise Date.

      (e) Discharge for Cause. If the Participant, prior to the Final Exercise
Date, is discharged by the Company for "cause" (as defined below), the right to
exercise this option shall terminate immediately upon the effective date of such
discharge. "Cause" shall mean willful misconduct by the Participant or willful
failure by the Participant to perform his or her responsibilities to the Company
(including, without limitation, breach by the Participant of any provision of
any employment, consulting, advisory, nondisclosure, non-competition or other
similar agreement between the Participant and the Company), as determined by the
Company, which determination shall be conclusive. The Participant shall be
considered to have been discharged for "Cause" if the Company determines, within
30 days after the Participant's resignation, that discharge for cause was
warranted.

4.    Withholding.

      No Shares will be issued pursuant to the exercise of this option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.

5.    Transferability of Option.

      The Participant shall not sell, assign, transfer, pledge, hypothecate or
otherwise dispose of, by operation of law or otherwise, this option, or any
interest herein, except that the Participant may transfer this option, without
consideration, to or for the benefit of the Participant's spouse, children,
parents, uncles, aunts, siblings, grandchildren and any other relatives approved
by the Board of Directors (collectively, "Approved Relatives") or to a trust
established solely for the benefit of the Participant and/or Approved Relatives,
provided that such option shall remain subject to this agreement.


                                      -2-

<PAGE>

6.    Provisions of the Plan.

      This option is subject to the provisions of the Plan, a copy of which is
furnished to the Participant with this option.

      IN WITNESS WHEREOF, the Company has caused this option to be executed
under its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.

                                        ALNYLAM PHARMACEUTICALS, INC.


Dated: _________                        By:  _________________________________
                                             Name:  __________________________
                                             Title: __________________________


                                      -3-

<PAGE>


                            PARTICIPANT'S ACCEPTANCE

      The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 2004 Stock Incentive Plan.

                                        PARTICIPANT:

                                        ________________________________________

                                        Address: _______________________________
                                                 _______________________________


                                      -4-

<PAGE>
                                                                    Exhibit 10.2

                          ALNYLAM PHARMACEUTICALS, INC.

                           Restricted Stock Agreement
                     Granted Under 2004 Stock Incentive Plan

      AGREEMENT made this 12th day of July, 2005, between Alnylam
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and James L.
Vincent (the "Participant").

      For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:

      1. Purchase of Shares.

      The Company shall issue and sell to the Participant, and the Participant
shall purchase from the Company, subject to the terms and conditions set forth
in this Agreement and in the Company's 2004 Stock Incentive Plan, as amended
(the "Plan"), 10,000 shares (the "Shares") of common stock, $.01 par value, of
the Company ("Common Stock"), at a purchase price of $7.02 per share. The
aggregate purchase price for the Shares shall be paid by the Participant by
check payable to the order of the Company or such other method as may be
acceptable to the Company. Upon receipt by the Company of payment for the
Shares, the Company shall issue to the Participant one or more certificates in
the name of the Participant for that number of Shares purchased by the
Participant. The Participant agrees that the Shares shall be subject to the
purchase option set forth
 in Section 2 of this Agreement and the restrictions on
transfer set forth in Section 4 of this Agreement.

      2. Purchase Option. In the event that the Participant ceases to be a
director of the Company for any reason or no reason on or prior to July 19,
2005, the Company shall have the right and option (the "Purchase Option") to
purchase from the Participant, for a sum of $7.02 per share (the "Option
Price"), some or all of the Unvested Shares (as defined below). "Unvested
Shares" means the total number of Shares multiplied by the Applicable Percentage
at the time the Purchase Option becomes exercisable by the Company. The
"Applicable Percentage" shall be (i) 100% on or prior to July 19, 2005 and (ii)
zero after July 19, 2005.

      3. Exercise of Purchase Option and Closing.

            (a) The Company may exercise the Purchase Option by delivering or
mailing to the Participant (or his estate), within 90 days after the termination
of the service of the Participant as a director of the Company, a written notice
of exercise of the Purchase Option. Such notice shall specify the number of
Shares to be purchased. If and to the extent the Purchase Option is not so
exercised by the giving of such a notice within such 90-day period, the Purchase
Option shall automatically expire and terminate effective upon the expiration of
such 90-day period.

            (b) Within 10 days after delivery to the Participant of the
Company's notice of the exercise of the Purchase Option pursuant to subsection
(a) above, the Participant (or his estate) shall, pursuant to the provisions of
the Joint Escrow Instructions referred to in Section 5 below, tender to the
Company at its principal offices the certificate or certificates representing
the Shares which the Company has elected to purchase in accordance with the
terms of this


<PAGE>

Agreement, duly endorsed in blank or with duly endorsed stock powers attached
thereto, all in form suitable for the transfer of such Shares to the Company.
Promptly following its receipt of such certificate or certificates, the Company
shall pay to the Participant the aggregate Option Price for such Shares
(provided that any delay in making such payment shall not invalidate the
Company's exercise of the Purchase Option with respect to such Shares).

            (c) After the time at which any Shares are required to be delivered
to the Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Participant on account of such Shares
or permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as permitted by
law, treat the Company as the owner of such Shares.

            (d) The Option Price may be payable, at the option of the Company,
in cancellation of all or a portion of any outstanding indebtedness of the
Participant to the Company or in cash (by check) or both.

            (e) The Company shall not purchase any fraction of a Share upon
exercise of the Purchase Option, and any fraction of a Share resulting from a
computation made pursuant to Section 2 of this Agreement shall be rounded to the
nearest whole Share (with any one-half Share being rounded upward).

            (f) The Company may assign its Purchase Option to one or more
persons or entities.

      4. Restrictions on Transfer. The Participant shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively "transfer") any Shares, or any interest therein, that
are subject to the Purchase Option, except that the Participant may transfer
such Shares (i) to or for the benefit of any spouse, children, parents, uncles,
aunts, siblings, grandchildren and any other relatives approved by the Board of
Directors (collectively, "Approved Relatives") or to a trust established solely
for the benefit of the Participant and/or Approved Relatives, provided that such
Shares shall remain subject to this Agreement (including without limitation the
restrictions on transfer set forth in this Section 4 and the Purchase Option)
and such permitted transferee shall, as a condition to such transfer, deliver to
the Company a written instrument confirming that such transferee shall be bound
by all of the terms and conditions of this Agreement or (ii) as part of the sale
of all or substantially all of the shares of capital stock of the Company
(including pursuant to a merger or consolidation), provided that, in accordance
with the Plan, the securities or other property received by the Participant in
connection with such transaction shall remain subject to this Agreement.

      5. Escrow.

      The Participant shall, upon request of the Company at any time prior to
lapse of the Purchase Option, execute Joint Escrow Instructions in the form
attached to this Agreement as Exhibit A. The Joint Escrow Instructions shall be
delivered to the Secretary of the Company, as escrow agent thereunder. The
Participant shall deliver to such escrow agent upon request of the Company at
any time prior to lapse of the Purchase Option, a stock assignment duly endorsed
in blank, in the form attached to this Agreement as Exhibit B, and hereby
instructs the Company to


                                      -2-

<PAGE>

deliver to such escrow agent, on behalf of the Participant, the certificate(s)
evidencing the Shares issued hereunder. Such materials shall be held by such
escrow agent pursuant to the terms of such Joint Escrow Instructions.

      6. Restrictive Legends.

      All certificates representing Shares shall have affixed thereto legends in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:

            "The shares of stock represented by this certificate are subject to
            restrictions on transfer and an option to purchase set forth in a
            certain Restricted Stock Agreement between the corporation and the
            registered owner of these shares (or his predecessor in interest),
            and such Agreement is available for inspection without charge at the
            office of the Secretary of the corporation."

      7. Provisions of the Plan.

            (a) This Agreement is subject to the provisions of the Plan, a copy
of which is furnished to the Participant with this Agreement.

            (b) As provided in the Plan, upon the occurrence of a Reorganization
Event (as defined in the Plan), the repurchase and other rights of the Company
hereunder shall inure to the benefit of the Company's successor and shall apply
to the cash, securities or other property which the Shares were converted into
or exchanged for pursuant to such Reorganization Event in the same manner and to
the same extent as they applied to the Shares under this Agreement. If, in
connection with a Reorganization Event, a portion of the cash, securities and/or
other property received upon the conversion or exchange of the Shares is to be
placed into escrow to secure indemnification or similar obligations, the mix
between the vested and unvested portion of such cash, securities and/or other
property that is placed into escrow shall be the same as the mix between the
vested and unvested portion of such cash, securities and/or other property that
is not subject to escrow.

      8. Withholding Taxes; Section 83(b) Election.

            (a) The Participant acknowledges and agrees that the Company has the
right to deduct from payments of any kind otherwise due to the Participant any
federal, state or local taxes of any kind required by law to be withheld with
respect to the purchase of the Shares by the Participant or the lapse of the
Purchase Option.

            (b) The Participant has reviewed with the Participant's own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Participant
is relying solely on such advisors and not on any statements or representations
of the Company or any of its agents. The Participant understands that the
Participant (and not the Company) shall be responsible for the Participant's own
tax liability that may arise as a result of this investment or the transactions
contemplated by this Agreement. The Participant understands that it may be
beneficial in many circumstances to


                                      -3-

<PAGE>

elect to be taxed at the time the Shares are purchased rather than when and as
the Company's Purchase Option expires by filing an election under Section 83(b)
of the Internal Revenue Code of 1986 with the I.R.S. within 30 days from the
date of purchase.

            THE PARTICIPANT ACKNOWLEDGES THAT IT IS SOLELY THE PARTICIPANT'S
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO
MAKE THIS FILING ON THE PARTICIPANT'S BEHALF.

      9. Miscellaneous.

            (a) No Rights to Serve as a Director. The Participant acknowledges
and agrees that the vesting of the Shares pursuant to Section 2 hereof is earned
only by continuing service as a director of the Company (not through the act of
purchasing shares hereunder). The Participant further acknowledges and agrees
that the transactions contemplated hereunder and the vesting schedule set forth
herein do not constitute an express or implied promise of continued service as a
director for the vesting period, for any period, or at all.

            (b) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by law.

            (c) Waiver. Any provision for the benefit of the Company contained
in this Agreement may be waived, either generally or in any particular instance,
by the Board of Directors of the Company.

            (d) Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 4 of this
Agreement.

            (e) Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or five days after
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party hereto at the address shown
beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 9(e).

            (f) Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.

            (g) Entire Agreement. This Agreement and the Plan constitute the
entire agreement between the parties, and supersedes all prior agreements and
understandings, relating to the subject matter of this Agreement.


                                      -4-

<PAGE>

            (h) Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Participant.

            (i) Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the internal laws of the State of Delaware
without regard to any applicable conflicts of laws.

            (j) Participant's Acknowledgments. The Participant acknowledges that
he or she: (i) has read this Agreement; (ii) has been represented in the
preparation, negotiation, and execution of this Agreement by legal counsel of
the Participant's own choice or has voluntarily declined to seek such counsel;
(iii) understands the terms and consequences of this Agreement; (iv) is fully
aware of the legal and binding effect of this Agreement; and (v) understands
that the law firm of Wilmer Cutler Pickering Hale and Dorr LLP, is acting as
counsel to the Company in connection with the transactions contemplated by the
Agreement, and is not acting as counsel for the Participant.

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

                                        ALNYLAM PHARMACEUTICALS, INC.

                                        By:_____________________________________

                                           Title:_______________________________

                                        Address:      300 Third Street
                                                      Cambridge, MA 02142

                                        ________________________________________
                                        James L. Vincent

                                        Address: _______________________________

                                                 _______________________________


                                      -5-

<PAGE>


                                    Exhibit A

                          ALNYLAM PHARMACEUTICALS, INC.

                            Joint Escrow Instructions

                                  July 12, 2005


Secretary
Alnylam Pharmaceuticals, Inc.
300 Third Street
Cambridge, MA 02142

Dear Sir:

      As Escrow Agent for Alnylam Pharmaceuticals, Inc., a Delaware corporation,
and its successors in interest under the Restricted Stock Agreement (the
"Agreement") of even date herewith, to which a copy of these Joint Escrow
Instructions is attached (the "Company"), and the undersigned person ("Holder"),
you are hereby authorized and directed to hold the documents delivered to you
pursuant to the terms of the Agreement in accordance with the following
instructions:

      1. Appointment. Holder irrevocably authorizes the Company to deposit with
you any certificates evidencing Shares (as defined in the Agreement) to be held
by you hereunder and any additions and substitutions to said Shares. For
purposes of these Joint Escrow Instructions, "Shares" shall be deemed to include
any additional or substitute property. Holder does hereby irrevocably constitute
and appoint you as his attorney-in-fact and agent for the term of this escrow to
execute with respect to such Shares all documents necessary or appropriate to
make such Shares negotiable and to complete any transaction herein contemplated.
Subject to the provisions of this Section 1 and the terms of the Agreement,
Holder shall exercise all rights and privileges of a stockholder of the Company
while the Shares are held by you.

      2. Closing of Purchase.

            (a) Upon any purchase by the Company of the Shares pursuant to the
Agreement, the Company shall give to Holder and you a written notice specifying
the purchase price for the Shares, as determined pursuant to the Agreement, and
the time for a closing hereunder (the "Closing") at the principal office of the
Company. Holder and the Company hereby irrevocably authorize and direct you to
close the transaction contemplated by such notice in accordance with the terms
of said notice.

            (b) At the Closing, you are directed (i) to date the stock
assignment form or forms necessary for the transfer of the Shares, (ii) to fill
in on such form or forms the number of Shares being transferred, and (iii) to
deliver same, together with the certificate or certificates


                                      -6-

<PAGE>

evidencing the Shares to be transferred, to the Company against the simultaneous
delivery to you of the purchase price for the Shares being purchased pursuant to
the Agreement.

      3. Withdrawal. The Holder shall have the right to withdraw from this
escrow any Shares as to which the Purchase Option (as defined in the Agreement)
has terminated or expired.

      4. Duties of Escrow Agent.

            (a) Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.

            (b) You shall be obligated only for the performance of such duties
as are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by you
to be genuine and to have been signed or presented by the proper party or
parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact of Holder while acting in good
faith and in the exercise of your own good judgment, and any act done or omitted
by you pursuant to the advice of your own attorneys shall be conclusive evidence
of such good faith.

            (c) You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or entity,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. If
you are uncertain of any actions to be taken or instructions to be followed, you
may refuse to act in the absence of an order, judgment or decrees of a court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person or
entity, by reason of such compliance, notwithstanding any such order, judgment
or decree being subsequently reversed, modified, annulled, set aside, vacated or
found to have been entered without jurisdiction.

            (d) You shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.

            (e) You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.

            (f) Your rights and responsibilities as Escrow Agent hereunder shall
terminate if (i) you cease to be Secretary of the Company or (ii) you resign by
written notice to each party. In the event of a termination under clause (i),
your successor as Secretary shall become Escrow Agent hereunder; in the event of
a termination under clause (ii), the Company shall appoint a successor Escrow
Agent hereunder.

            (g) If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.


                                      -7-

<PAGE>

            (h) It is understood and agreed that if you believe a dispute has
arisen with respect to the delivery and/or ownership or right of possession of
the securities held by you hereunder, you are authorized and directed to retain
in your possession without liability to anyone all or any part of said
securities until such dispute shall have been settled either by mutual written
agreement of the parties concerned or by a final order, decree or judgment of a
court of competent jurisdiction after the time for appeal has expired and no
appeal has been perfected, but you shall be under no duty whatsoever to
institute or defend any such proceedings.

            (i) These Joint Escrow Instructions set forth your sole duties with
respect to any and all matters pertinent hereto and no implied duties or
obligations shall be read into these Joint Escrow Instructions against you.

            (j) The Company shall indemnify you and hold you harmless against
any and all damages, losses, liabilities, costs, and expenses, including
attorneys' fees and disbursements, (including without limitation the fees of
counsel retained pursuant to Section 4(e) above, for anything done or omitted to
be done by you as Escrow Agent in connection with this Agreement or the
performance of your duties hereunder, except such as shall result from your
gross negligence or willful misconduct.

      5. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.

            COMPANY:        Notices to the Company shall be sent to the address
                            set forth in the salutation hereto, Attn: President

            HOLDER:         Notices to Holder shall be sent to the address set
                            forth below Holder's signature below.

            ESCROW AGENT:   Notices to the Escrow Agent shall be sent to the
                            address set forth in the salutation hereto.

            6. Miscellaneous.

                  (a) By signing these Joint Escrow Instructions, you become a
party hereto only for the purpose of said Joint Escrow Instructions, and you do
not become a party to the Agreement.

                  (b) This instrument shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.


                                      -8-

<PAGE>


                                        Very truly yours,

                                        Alnylam Pharmaceuticals, Inc.

                                        By:_____________________________________
                                        Title:__________________________________

                                        HOLDER:

                                        ________________________________________
                                                     (Signature)

                                        ________________________________________
                                                     Print Name

                                        Address: _______________________________

                                                 _______________________________

                                        Date Signed:____________________________
ESCROW AGENT:


_______________________________
Secretary


                                      -9-

<PAGE>


                                    Exhibit B

                  (STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)


      FOR VALUE RECEIVED, I hereby sell, assign and transfer unto
__________________ (_________) shares of Common Stock, $0.01 par value per
share, of Alnylam Pharmaceuticals, Inc. (the "Corporation") standing in my name
on the books of the Corporation represented by Certificate(s) Number __________
herewith, and do hereby irrevocably constitute and appoint
______________________ attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.

                                        Dated: _________________________________

IN PRESENCE OF                          ________________________________________

                                        ________________________________________


      NOTICE: The signature(s) to this assignment must correspond with the name
as written upon the face of the certificate, in every particular, without
alteration, enlargement, or any change whatever and must be guaranteed by a
commercial bank, trust company or member firm of the Boston, New York or Midwest
Stock Exchange.


                                      -10-