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As filed with the Securities and Exchange Commission on April 16, 2007

Registration No. 333-141682

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 1
To
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

QUARK BIOTECH, INC.
(Exact name of registrant as specified in its charter)

California
(State or other jurisdiction of
incorporation or organization) 2834
(Primary Standard Industrial
Classification Code Number) 94-3192416
(I.R.S. Employer
Identification Number)

6501 Dumbarton Circle
Fremont, CA 94555
(510) 402-4020
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

Daniel Zurr, Ph.D.
Chief Executive Officer
6501 Dumbarton Circle
Fremont, CA 94555
(510) 402-4020
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Robert L. Jones, Esq.
Robert J. Brigham, Esq.
Cooley Godward Kronish LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
(650) 843-5000 Alan F. Denenberg, Esq.
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, CA 94025
(650) 752-2000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

        If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.    o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

        This Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-141682) of Quark Biotech, Inc. is being filed solely for the purpose of (a) amending "Part II-Item 16. Exhibits and Financial Statement Schedules" and "Part II-Exhibit Index" and (b) filing herewith Exhibits 4.3, 10.5, 10.11 through 10.16, and Exhibits 10.21 through 10.32, the omitted portions of which have been filed separately with the U.S. Securities and Exchange Commission in connection with the request for confidential treatment of such omitted portions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

        The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by us in connection with the sale of the common stock being registered. All amounts shown are estimates except for the SEC registration fee, the NASD filing fee and the NASDAQ Global Market filing fee.

		Amount to be Paid
SEC Registration Fee		$	2,648
NASD Filing Fee			9,125
NASDAQ Global Market Filing Fee			*
Blue Sky Qualification Fees And Expenses			*
Printing and Engraving Expenses			*
Legal Fees and Expenses			*
Accounting Fees and Expenses			*
Transfer Agent and Registrar Fees and Expenses			*
Miscellaneous Expenses			*
	Total	$

*

To be provided by amendment.

Item 14. Indemnification of Directors and Officers.

        We are incorporated under the laws of the State of Delaware. Section 145 of the Delaware General Corporation Law provides that a Delaware corporation may indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person was an officer, director, employee or agent of such corporation, or is or was serving at the request of such person as an officer, director, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporation may indemnify any persons who are, or are threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him or her against the expenses which such officer or director has actually and reasonably incurred. Our amended and restated certificate of incorporation

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and amended and restated bylaws, each of which will become effective upon the closing of this offering, provide for the indemnification of our directors and officers to the fullest extent permitted under the Delaware General Corporation Law.

        Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duties as a director, except for liability for any:

•

transaction from which the director derives an improper personal benefit;



•

act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;



•

unlawful payment of dividends or redemption of shares; or



•

breach of a director's duty of loyalty to the corporation or its stockholders.

        Our amended and restated certificate of incorporation and amended and restated bylaws include such a provision. Expenses incurred by any officer or director in defending any such action, suit or proceeding in advance of its final disposition shall be paid by us upon delivery to us of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified by us.

        Section 174 of the Delaware General Corporation Law provides, among other things, that a director, who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or redemption, may be held liable for such actions. A director who was either absent when the unlawful actions were approved, or dissented at the time, may avoid liability by causing his or her dissent to such actions to be entered in the books containing minutes of the meetings of the board of directors at the time such action occurred or immediately after such absent director receives notice of the unlawful acts.

        As permitted by the Delaware General Corporation Law, we have entered into indemnity agreements with each of our directors and executive officers, that require us to indemnify such persons against any and all expenses (including attorneys' fees), witness fees, damages, judgments, fines, settlements and other amounts incurred (including expenses of a derivative action) in connection with any action, suit or proceeding, whether actual or threatened, to which any such person may be made a party by reason of the fact that such person is or was a director, an officer or an employee of Quark or any of its affiliated enterprises, provided that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to our best interests and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder.

        At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

        We have an insurance policy covering our officers and directors with respect to certain liabilities, including liabilities arising under the Securities Act or otherwise.

        We plan to enter into an underwriting agreement which provides that the underwriters are obligated, under some circumstances, to indemnify our directors, officers and controlling persons against specified liabilities, including liabilities under the Securities Act.

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Item 15. Recent Sales of Unregistered Securities.

        The following list sets forth information regarding all unregistered securities sold by us since our inception through March 28, 2007.

        (1)   We have granted options under our 1994 Stock Option Plan, to purchase 1,130,000 shares of common stock to our employees, directors, and consultants, having exercise prices ranging from $0.0001 to $0.40 per share. Of these, options to purchase 975,000 shares of common stock have been exercised for aggregate consideration of $162,072.50, at exercise prices ranging from $0.0001 to $0.40 per share.

        (2)   We have granted options under our 1997 Stock Option Plan, to purchase 3,589,800 shares of common stock to our employees, directors, and consultants, having exercise prices ranging from $0.40 to $6.00 per share. Of these, options to purchase 77,540 shares of common stock have been exercised for aggregate consideration of $67,301.50, at exercise prices ranging from $0.40 to $6.00 per share.

        (3)   We have granted options under our 2003 Israeli Stock Plan, to purchase 489,250 shares of common stock to our Israeli employees, directors, and consultants, with an exercise price of $2.00 per share. Of these, options to purchase 5,000 shares of common stock have been exercised for aggregate consideration of $10,000.00.

        (4)   On January 14, 1994, we issued and sold 5,000,000 shares of our common stock to one of our founders and executive officers for $500.00.

        (5)   On January 14, 1994, we issued and sold 600,000 shares of our common stock to one of our founders and executive officers for $60.00.

        (6)   On January 14, 1994, we issued and sold 325,000 shares of our common stock to one of our founders and executive officers for $32.50.

        (7)   On January 14, 1994, we issued and sold 675,000 shares of our common stock to one of our founders and executive officers for $67.50.

        (8)   On January 14, 1994, we issued and sold 1,000 shares of our common stock to one of our executive officers for $0.10.

        (9)   On February 18, 1994, we issued and sold an aggregate of 645,000 shares of our Series A Preferred Stock to a total of 11 accredited investors for aggregate consideration of $806,250.00.

        (10) On March 14, 1994, we issued and sold an aggregate of 543,000 shares of our Series A Preferred Stock to a total of 14 accredited investors for aggregate consideration of $678,750.00.

        (11) On March 31, 1994, we issued and sold an aggregate of 132,000 shares of our Series A Preferred Stock to a total of 6 accredited investors for aggregate consideration of $165,000.00.

        (12) On May 3, 1994, we issued and sold 40,000 shares of our Series A Preferred Stock to a total of 1 accredited investor for aggregate consideration of $50,000.00.

        (13) On June 1, 1995, we issued and sold 4,000,000 shares of our Series B Preferred Stock to a total of 1 accredited investor for aggregate consideration of $5,000,000.00.

        (14) On August 30, 1995, we issued and sold an aggregate of 266,824 shares of our Series B Preferred Stock to a total of 8 accredited investors for aggregate consideration of $333,530.00.

        (15) On October 3, 1996, we issued and sold 1,375,000 shares of our Series C Preferred Stock to a total of 1 accredited investor for aggregate consideration of $5,500,000.00.

        (16) On December 31, 1996, we issued and sold an aggregate of 68,692 shares of our Series C Preferred Stock to a total of 7 accredited investors for aggregate consideration of $274,768.00.

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        (17) On May 30, 1997, we issued and sold 125,000 shares of our Series C Preferred Stock to a total of 1 accredited investor for aggregate consideration of $500,000.00.

        (18) On August 28, 1997, we issued and sold an aggregate of 5,000,000 shares of our Series D Preferred Stock and issued a warrant to purchase up to 4,125,000 shares of our Series D Preferred Stock to a total of 1 accredited investor for aggregate consideration of $20,000,000.00.

        (19) On September 9, 1997, we issued and sold an aggregate of 439,413 shares of our Series D Preferred Stock and issued warrants to purchase up to 410,940 shares of our Series D Preferred Stock to a total of 1 accredited investor for aggregate consideration of $1,757,652.00

        (20) On December 17,1999, we issued and sold 2,034,588 shares of our Series E Preferred Stock to a total of 1 accredited investor for aggregate consideration of $20,000,000.00.

        (21) On May 26, 2000, we issued and sold an aggregate of 16,232 shares of our Series E Preferred Stock to a total of 6 accredited investors for aggregate consideration of $159,569.56.

        (22) On March 27, 2001 we issued and sold an aggregate of 458,333 shares of our Series F Preferred Stock to a total of 2 accredited investors for aggregate consideration of $5,499,996.00.

        (23) On April 12, 2001 we issued and sold an aggregate of 335,434 shares of our Series F Preferred Stock to a total of 2 accredited investors for aggregate consideration of $4,025,208.00.

        (24) On December 27, 2005, we issued and sold an aggregate of 7,342,646 shares of our Series G Preferred Stock and issued warrants to purchase up to 1,468,528 shares of our common stock to a total of 4 accredited investors for aggregate consideration of $10,499,983.78.

        (25) On February 24, 2006, we issued and sold an aggregate of 1,923,086 shares of our Series G Preferred Stock and issued warrants to purchase up to 384,617 shares of our common stock to a total of 3 accredited investors for aggregate consideration of $2,750,012.98.

        (26) On May 1, 2006, we issued and sold an aggregate of 1,223,779 shares of our Series G Preferred Stock and issued warrants to purchase up to 244,755 shares of our common stock to a total of 3 accredited investors for aggregate consideration of $1,750,003.97.

        The offers, sales and issuances of the securities described in Item 15(1) through 15(3) were exempt from registration under the Securities Act under Rule 701 in that the transactions were under compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of such securities were our employees, directors or consultants and received the securities under our 2007 Equity Incentive Plan, 1997 Stock Plan, 2003 Israeli Stock Option Plan or 1994 Stock Option Plan. Appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions had adequate access, through employment or business relationships, to information about us.

        The offers, sales, and issuances of the securities described in Items 15(4) through 15(26) were exempt from registration under the Securities Act under Section 4(2) of the Securities Act and Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.

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Item 16. Exhibits and Financial Statement Schedules.

(a)

Exhibits.

Exhibit Number	Description of Document
1.1†	Form of Underwriting Agreement.
3.1*	Amended and Restated Articles of Incorporation of the Registrant, as currently in effect.
3.2†	Certificate of Amendment to Articles of Incorporation of the Registrant.
3.3†	Form of Certificate of Incorporation of the Registrant to be effective upon the completion of this offering.
3.4*	Amended and Restated Bylaws of the Registrant, as currently in effect.
3.5†	Form of Amended and Restated Bylaws of the Registrant to be effective upon the completion of this offering.
4.1	Reference is made to exhibits 3.1 through 3.5.
4.2†	Specimen Common Stock Certificate.
4.3	Third Amended and Restated Investor Rights Agreement, dated as of December 27, 2005, by and between the Registrant and the persons and entities named therein.
4.4†	Amendment No. 1 to Third Amended and Restated Investor Rights Agreement of the Registrant.
4.5*	Form of Series D Preferred Stock Purchase Warrant of Registrant.
5.1†	Opinion of Cooley Godward Kronish LLP.
10.1*#	Form of Indemnification Agreement between the Registrant and its officers and directors.
10.2*#	Employment Agreement, dated as of January 1, 2002, by and between the Registrant and Daniel Zurr.
10.3*#	Employment Agreement, dated as of January 1, 2002, by and between QBI Enterprises, Ltd. and Daniel Zurr.
10.4†#	Employment Agreement, dated as of September 14, 1997, by and between QBI Enterprises, Ltd. and Smadar Samira Shakked.
10.5#	Employment Agreement, dated as of November 13, 2006, by and between the Registrant and Smadar Samira Shakked.
10.6†#	Employment Agreement, dated as of October 1, 1995, by and between QBI Enterprises, Ltd. and Rami Skaliter.
10.7†#	Employment Agreement, dated as of February 1, 1998, by and between QBI Enterprises, Ltd. and Juliana Friedman.
10.8*#	Employment Agreement, dated as of March 7, 2007, by and between QBI Enterprises, Ltd. and Yaron Garmazi.
10.9†#	Employment Agreement, dated as of March 9, 2003, by and between Registrant and Shai Erlich.
10.10	Reserved.
10.11#	1997 Stock Plan.
10.12#	1997 Stock Option Plan for Israeli Employees.
10.13#	Form of Option Agreement and Form of Option Grant Notice under the 1997 Stock Plan.

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10.14#	Form of Option Agreement and Form of Option Grant Notice under the 1997 Stock Plan for Israeli Employees.
10.15#	2003 Stock Option Plan for Israeli Employees.
10.16#	Form of Option Agreement and Form of Option Grant Notice under the 2003 Israeli Stock Option Plan.
10.17*#	2007 Equity Incentive Plan.
10.18†#	Form of Stock Option Agreement and Form of Option Grant Notice under the 2007 Equity Incentive Plan.
10.19*	Lease Agreement, dated September 8, 2006, by and between the Registrant and John Arrillaga, Trustee and Richard T. Peery, Trustee.
10.20*	Lease Contract, dated December 15, 1995, by and between the Registrant and Kiryat Weizmann Science Park Ltd.
10.21‡	Exclusive License Agreement, dated September 3, 1999, by and between the Registrant and The Board of Trustees of The University of Illinois.
10.22‡	Collaboration Agreement, dated as of December 6, 2004, by and among the Registrant, QBI Enterprises, Ltd., and Atugen AG.
10.23‡	License Agreement, dated as of December 17, 2004, by and between Registrant and Sanwa Kagaku Kenkyusho Co., Ltd.
10.24‡	Option and License Agreement, dated as of April 19, 2005, by and among the Registrant, QBI Enterprises, Ltd., and Atugen AG.
10.25‡	Amendment to Collaboration Agreement, dated as of May 25, 2006, by and among the Registrant, QBI Enterprises, Ltd., and Atugen AG.
10.26‡	Deed of Amendment and Option, dated as of September 25, 2006, by and among the Registrant, Atugen AG, QBI Enterprises, Ltd., and Pfizer Inc.
10.27‡	License Agreement, dated as of September 25, 2006, by and between Registrant and Pfizer Inc.
10.28‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.29‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.30‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.31‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.32‡	First Amendment to the License Agreement between the Board of Trustees of The University of Illinois and the Registrant, dated March 23, 2007.
21.1*	List of Subsidiaries of the Registrant.
23.1*	Consent of Independent Registered Public Accounting Firm.
23.2†	Consent of Cooley Godward Kronish LLP (included in Exhibit 5.1).

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24.1* Power of Attorney.

*

Previously filed.

†

To be filed by amendment.

#

Indicates management contract or compensatory plan.

‡

Confidential treatment has been requested with respect to certain portions of this exhibit. The redacted portions have been filed separately with the SEC as required by Rule 406 of Regulation C.

(b)

Financial Statement Schedules.

        No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or the notes thereto.

Item 17. Undertakings.

        The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        The undersigned Registrant hereby undertakes that:

        (1)   For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

        (2)   For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

        That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the Registration Statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the Registration Statement or made in a document incorporated or deemed incorporated by referenced into the Registration Statement or prospectus that is part of the Registration Statement will, as to a purchaser with a time of

II-7

contract of sale prior to such first use, supersede or modify any statement that was made in the Registration Statement or prospectus that was part of the Registration Statement or made in any such document immediately prior to such date of first use.

        That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)

Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;



(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;



(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and



(iv)

Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

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SIGNATURES

        Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fremont, State of California, on the 16^th day of April, 2007.

QUARK BIOTECH, INC.
By:	/s/  DANIEL ZURR Daniel Zurr, Ph.D. President and Chief Executive Officer

        Pursuant to the requirements of the Securities Act, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/  DANIEL ZURRDANIEL ZURR, PH.D.	President, Chief Executive Officer and Director (Principal Executive Officer)	April 16, 2007
/s/  YARON GARMAZIYARON GARMAZI	Chief Financial Officer (Principal Financial and Accounting Officer)	April 16, 2007
*PHILIP B. SIMON	Chairman of the Board	April 16, 2007
*JOSEPH RUBINFELD, PH.D.	Vice-Chairman of the Board	April 16, 2007
*STEVEN B. FINK	Director	April 16, 2007
*TOMOMI OKAMOTO	Director	April 16, 2007

*By:
/s/  YARON GARMAZI Yaron Garmazi
Attorney-in-fact

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EXHIBIT INDEX

Exhibit Number	Description of Document
1.1†	Form of Underwriting Agreement.
3.1*	Amended and Restated Articles of Incorporation of the Registrant, as currently in effect.
3.2†	Certificate of Amendment to Articles of Incorporation of the Registrant.
3.3†	Form of Certificate of Incorporation of the Registrant to be effective upon the completion of this offering.
3.4*	Amended and Restated Bylaws of the Registrant, as currently in effect.
3.5†	Form of Amended and Restated Bylaws of the Registrant to be effective upon the completion of this offering.
4.1	Reference is made to exhibits 3.1 through 3.5.
4.2†	Specimen Common Stock Certificate.
4.3	Third Amended and Restated Investor Rights Agreement, dated as of December 27, 2005, by and between the Registrant and the persons and entities named therein.
4.4†	Amendment No. 1 to Third Amended and Restated Investor Rights Agreement of the Registrant.
4.5*	Form of Series D Preferred Stock Purchase Warrant of Registrant.
5.1†	Opinion of Cooley Godward Kronish LLP.
10.1*#	Form of Indemnification Agreement between the Registrant and its officers and directors.
10.2*#	Employment Agreement, dated as of January 1, 2002, by and between the Registrant and Daniel Zurr.
10.3*#	Employment Agreement, dated as of January 1, 2002, by and between QBI Enterprises, Ltd. and Daniel Zurr.
10.4†#	Employment Agreement, dated as of September 14, 1997, by and between QBI Enterprises, Ltd. and Smadar Samira Shakked.
10.5#	Employment Agreement, dated as of November 13, 2006, by and between the Registrant and Smadar Samira Shakked.
10.6†#	Employment Agreement, dated as of October 1, 1995, by and between QBI Enterprises, Ltd. and Rami Skaliter.
10.7†#	Employment Agreement, dated as of February 1, 1998, by and between QBI Enterprises, Ltd. and Juliana Friedman.
10.8*#	Employment Agreement, dated as of March 7, 2007, by and between QBI Enterprises, Ltd. and Yaron Garmazi.
10.9†#	Employment Agreement, dated as of March 9, 2003, by and between Registrant and Shai Erlich.
10.10	Reserved.
10.11#	1997 Stock Plan.
10.12#	1997 Stock Option Plan for Israeli Employees.
10.13#	Form of Option Agreement and Form of Option Grant Notice under the 1997 Stock Plan.
10.14#	Form of Option Agreement and Form of Option Grant Notice under the 1997 Stock Plan for Israeli Employees.
10.15#	2003 Stock Option Plan for Israeli Employees.

10.16#	Form of Option Agreement and Form of Option Grant Notice under the 2003 Israeli Stock Option Plan.
10.17*#	2007 Equity Incentive Plan.
10.18†#	Form of Stock Option Agreement and Form of Option Grant Notice under the 2007 Equity Incentive Plan.
10.19*	Lease Agreement, dated September 8, 2006, by and between the Registrant and John Arrillaga, Trustee and Richard T. Peery, Trustee.
10.20*	Lease Contract, dated December 15, 1995, by and between the Registrant and Kiryat Weizmann Science Park Ltd.
10.21‡	Exclusive License Agreement, dated September 3, 1999, by and between the Registrant and The Board of Trustees of The University of Illinois.
10.22‡	Collaboration Agreement, dated as of December 6, 2004, by and among the Registrant, QBI Enterprises, Ltd., and Atugen AG.
10.23‡	License Agreement, dated as of December 17, 2004, by and between Registrant and Sanwa Kagaku Kenkyusho Co., Ltd.
10.24‡	Option and License Agreement, dated as of April 19, 2005, by and among the Registrant, QBI Enterprises, Ltd., and Atugen AG.
10.25‡	Amendment to Collaboration Agreement, dated as of May 25, 2006, by and among the Registrant, QBI Enterprises, Ltd., and Atugen AG.
10.26‡	Deed of Amendment and Option, dated as of September 25, 2006, by and among the Registrant, Atugen AG, QBI Enterprises, Ltd., and Pfizer Inc.
10.27‡	License Agreement, dated as of September 25, 2006, by and between Registrant and Pfizer Inc.
10.28‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.29‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.30‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.31‡	License Agreement, dated as of September 26, 2006, by and between the Registrant and Alnylam Pharmaceuticals, Inc.
10.32‡	First Amendment to the License Agreement between the Board of Trustees of The University of Illinois and the Registrant, dated March 23, 2007.
21.1*	List of Subsidiaries of the Registrant.
23.1*	Consent of Independent Registered Public Accounting Firm.
23.2†	Consent of Cooley Godward Kronish LLP (included in Exhibit 5.1).
24.1*	Power of Attorney.

*

Previously filed.

†

To be filed by amendment.

#

Indicates management contract or compensatory plan.

‡

Confidential treatment has been requested with respect to certain portions of this exhibit. The redacted portions have been filed separately with the SEC as required by Rule 406 of Regulation C.

QuickLinks

EXPLANATORY NOTE
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
EXHIBIT INDEX

EX-4.3

Exhibit 4.3

QUARK BIOTECH, INC.

Third Amended and Restated Investor Rights Agreement

First Closing

December 27, 2005

Second Closing

February 24, 2006

Third Closing

May 1, 2006

TABLE OF CONTENTS

		PAGE
SECTION 1	CERTAIN DEFINITIONS	2
1.1	“Commission”	2
1.2	“Common Stock”	2
1.3	“Conversion Stock”	2
1.4	“Eligible Investors”	2
1.5	“Holder”	2
1.6	“Initiating Holders”	2
1.7	“Investors”	2
1.8	“Preferred Stock”	3
1.9	“Qualified Common Stock”	3
1.10	“Qualified Conversion Shares”	3
1.11	“Registrable Securities”	3
1.12	“Registration Expenses”	3
1.13	“Restricted Securities”	3
1.14	“Securities”	4
1.15	“Securities Act”	4
1.16	“Selling Expenses”	4
SECTION 2	REGISTRATION RIGHTS	4
2.1	Restrictions on Transferability	4
2.2	Restrictive Legend	4
2.3	Notice of Proposed Transfers	5
2.4	Requested Registration	6
2.5	Company Registration	8
2.6	Registration on Form S-3	9
2.7	Limitations on Subsequent Registration Rights	10
2.8	Expenses of Registration	10
2.9	Registration Procedures	10
2.10	Indemnification	11
2.11	Information by Holder	12
2.12	Rule 144 Reporting	12
2.13	Transfer of Registration Rights	13
2.14	Standoff Agreement	13
2.15	Termination of Registration Rights	13
SECTION 3	NEW ISSUANCE RIGHT OF FIRST REFUSAL	14
3.1	Right of First Refusal	14
3.2	Termination of Obligations	14
SECTION 4	RIGHT OF FIRST REFUSAL ON FOUNDER QUALIFIED COMMON STOCK SALES	15
4.1	Company Right	15
4.2	Notice of Company Acceptance	15

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		PAGE
4.3	Investor Right	15
4.4	Notice of Investor Acceptance	15
4.5	Permitted Sales of Refused Securities	16
4.6	Closing	16
4.7	Further Sale	16
SECTION 5	CO-SALE RIGHTS ON FOUNDER QUALIFIED COMMON STOCK SALES	17
5.1	Right to Participate	17
5.2	Qualified Participation	17
5.3	Continuing Rights	17
SECTION 6	ADDITIONAL PROVISIONS RELATING TO RIGHT OF FIRST REFUSAL AND CO-SALE RIGHTS ON CERTAIN FOUNDER SALES	17
6.1	Invalid Transfers	17
6.2	Permitted Transfers	18
6.3	Termination of Rights	18
6.4	Legends	18
SECTION 7	CERTAIN COVENANTS OF THE COMPANY AND THE INVESTORS	18
7.1	Certain Covenants Involving Investors Other Than the Series F Investors	18
7.2	Covenants Involving Only the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors and the Series G Investors	20
7.3	Termination of Covenants and Certain Rights of the Series A Investors, the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors and the Series G Investors	23
SECTION 8	MISCELLANEOUS	23
8.1	Governing Law	23
8.2	Entire Agreement; Amendment	23
8.3	Notices	24
8.4	Successors and Assigns	25
8.5	Delays or Omissions	25
8.6	Expenses	25
8.7	Attorneys’ Fees	25
8.8	Reverse Stock Split	26
8.9	Arbitration	26
8.10	Counterparts	26
8.11	Severability	26
8.12	Titles and Subtitles	27

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QUARK BIOTECH, INC.

THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT

THIS THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the “Agreement”) is made as of the 27a day of December, 2005 by and among Quark Biotech, Inc., a California corporation (the “Company”), the purchasers of shares of Series A Preferred Stock of the Company (the “Series A Investors”) pursuant to the Series A Preferred Stock Purchase Agreement dated as of February 18, 1994 (the “Series A Agreement”), the purchasers of Series B Preferred Stock of the Company (the “Series B Investors”) pursuant to the Series B Preferred Stock Purchase Agreement dated as of June 1, 1995 (the “Series B Agreement”), the purchasers of Series C Preferred Stock of the Company (the “Series C Investors”) pursuant to the Series C Preferred Stock Purchase Agreement dated as of October 3, 1996, as amended April 19, 1997 (the “Series C Agreement”), the purchaser of Series D Preferred Stock of the Company (the “Series D Investor”) pursuant to the Series D Preferred Stock Purchase Agreement dated as of August 28, 1997 (the “Series D Agreement”), the purchasers of Series E Preferred Stock of the Company (the “Series E Investors”) pursuant to the Series E Preferred Stock Purchase Agreement dated December 17, 1999 (the “Series E Agreement”), the purchasers of Series F Preferred Stock of the Company (the “Series F Investors”) pursuant to the Series F Preferred Stock Purchase Agreement dated March 26, 2001 (the “Series F Agreement”), the purchasers of Series G Preferred Stock of the Company (the “Series G Investors”) pursuant to the Series G Preferred Stock and Warrant Purchase Agreement dated December 27, 2005 (the “Series G Agreement”), the holders of Common Stock of the Company listed on Exhibit A (the “Common Holders”) and those persons listed on Exhibit B (collectively, the “Founders” and each individually a “Founder”).

RECITALS

A.The Company, the Series A Investors, the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors, the Series F Investors, the Common Holders, the Founders and Lawrence J. Ellison (“Ellison”) are parties to an Amended and Restated Investor Rights Agreement dated as of March 26, 2001 (the “Prior Investor Rights Agreement”).

C.The Series G Investors, in connection with the proposed purchase of up to 10,489,511 shares of the Company’s Series G Preferred Stock pursuant to the Series G Agreement (the “Shares” or “Series G Preferred”) and warrants to acquire up to 2,097,902 shares of Common Stock (the “Warrants”), desire to obtain certain rights pursuant to this Agreement.

C.In order to induce the Series G Investors to purchase the Shares, the holders of a majority of the Series A Preferred (including the Common Stock issued upon conversion thereof), the holders of a majority of the Series B Preferred (including the Common Stock issued upon conversion thereof), the holders of a majority of the Series C Preferred (including the Common Stock issued upon conversion thereof), the holders of a majority of the Series D Preferred (including the Common Stock issued upon conversion thereof), the holders of a majority of the Series E Preferred (including the Common Stock issued upon conversion

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thereof), the holders of a majority of the Series F Preferred (including the Common Stock issued upon conversion thereof), and the holders of a majority of the shares of Common Stock held by the Common Holders have agreed, pursuant to Section 10.2 of the Prior Investor Rights Agreement, to amend and restate in its entirety the Prior Investor Rights Agreement, and to incorporate the provisions constituting such agreement, as so amended and restated, in this Agreement in the manner set forth herein.

NOW, THEREFORE, the parties agree to amend and restate the Prior Investor Rights Agreement in its entirety as follows:

SECTION 1
CERTAIN DEFINITIONS

As used in this Agreement, the following terms shall have the following respective meanings:

1.1“Commission” shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

1.2“Common Stock” shall mean the Class A Common Stock Voting of the Company.

1.3“Conversion Stock” shall mean the Common Stock issued or issuable upon conversion of the Series A Preferred Stock issued pursuant to the Series A Agreement (the “Series A Preferred”), the Series B Preferred Stock issued pursuant to the Series B Agreement (the “Series B Preferred”), the Series C Preferred Stock issued pursuant to the Series C Agreement (the “Series C Preferred”), the Series D Preferred Stock issued pursuant to the Series D Agreement (the “Series D Preferred”), the Series E Preferred issued pursuant to the Series E Agreement (the “Series E Preferred”), the Series F Preferred issued pursuant to the Series F Agreement (the “Series F Preferred”), the Series G Preferred issued pursuant to the Series G Agreement, and the Common Stock issued or issuable upon exercise of the Warrants.

1.4“Eligible Investors” shall mean for purposes of Section 4, Section 5 and Section 6, the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors, the Series F Investors and the Series G Investors.

1.5“Holder” shall mean any Founder or Investor holding Registrable Securities and any person holding Registrable Securities to whom the rights under Section 2 hereof have been transferred in accordance with Section 2.13 of this Agreement.

1.6“Initiating Holders” shall mean any Investor or transferees of any Holder under Section 2.13 who in the aggregate are holders of greater than thirty-three percent (33%) of the Registrable Securities.

1.7“Investors” means, except as otherwise defined in Section 7.1, the Series A Investors, the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors, the Series F Investors and the Series G Investors, and “Investor” shall mean any one of them.

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1.8“Preferred Stock” means the Series A Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E Preferred, the Series F Preferred and the Series G Preferred.

1.9“Qualified Common Stock” means the Common Stock, excluding Conversion Stock.

1.10“Qualified Conversion Shares” means the Common Stock issued or issuable upon conversion of the Series B Preferred, the Series C Preferred, the Series D Preferred, the Series E Preferred, the Series F Preferred and the Series G Preferred, and the Common Stock issued or issuable upon exercise of the Warrants.

1.11“Registrable Securities” shall mean (i) the Conversion Stock; (ii) Qualified Common Stock held by any Founder; (iii) any Common Stock acquired (or issuable upon conversion of Preferred Stock acquired) pursuant to the exercise of the right of first refusal in Section 3.1 of this Agreement or pursuant to the exercise of the right of first refusal in Section 4.3 of this Agreement (including any shares issued by virtue of such shares upon any stock split, stock dividend, recapitalization (that does not change in any material respect the economic relationship of the then existing shareholders) or similar event (a “Recapitalization”)); and (iv) any Common Stock or other Securities issued or issuable in respect of the Qualified Common Stock or Conversion Stock issued or issuable upon any Recapitalization or any Common Stock otherwise issued or issuable with respect to the Preferred Stock, provided, however, that shares of Common Stock or other Securities shall no longer be treated as Registrable Securities after (A) they have been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, whether in a registered offering, pursuant to Rule 144 or otherwise, or (B) such Common Stock or other Securities are available for sale, in the opinion of counsel to the Company, in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale.

The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.

1.12“Registration Expenses” shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Sections 2.4, 2.5 and 2.6, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) and the reasonable fees and expenses of one counsel for all Holders in the event of the exercise of any demand registration provided for in Section 2.4.

1.13“Restricted Securities” shall mean Securities required to bear the legend set forth in Section 2.2.

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1.14“Securities” shall mean (i) the Company’s equity or debt securities, (ii) rights, options or warrants to subscribe for, purchase or otherwise acquire any equity or debt security of the Company and (iii) any agreement or commitment to issue any of the foregoing.

1.15“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

1.16“Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the Registrable Securities registered by the Holders and, except as set forth above, all reasonable fees and disbursements of counsel for any Holder.

SECTION 2
REGISTRATION RIGHTS

2.1Restrictions on Transferability. The Preferred Stock and the Conversion Stock shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 2, which conditions are intended to ensure compliance with the provisions of the Securities Act. Each Investor will cause any proposed purchaser, assignee, transferee, or pledgee of the Preferred Stock and the Conversion Stock held by an Investor to agree to take and hold such Securities subject to the provisions and upon the conditions specified in this Section 2.

2.2Restrictive Legend. Each certificate representing (i) the Series A Preferred, (ii) the Series B Preferred, (iii) the Series C Preferred, (iv) the Series D Preferred, (v) the Series E Preferred, (vi) the Series F Preferred, (vii) the Series G Preferred, (viii) the Conversion Stock and (ix) any other Securities issued in respect of the Preferred Stock or the Conversion Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of Section 2.3 below) be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AT ITS REQUEST AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

4

Certificates representing Securities issued by the Company under Regulation S of the Securities Act shall be stamped or otherwise imprinted with a legend substantially in the following form:

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE US. SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED, OR OTHERWISE DISPOSED OF, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES, ITS TERRITORIES, POSSESSIONS, OR AREAS SUBJECT TO ITS JURISDICTION, OR TO OR FOR THE ACCOUNT OR BENEFIT OF A “U.S. PERSON” AS THAT TERM IS DEFINED IN RULE 901 OF REGULATION S OF THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AT ANY TIME PRIOR TO ONE (1) YEAR AFTER [the date of issuance] EXCEPT (I) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (II) IN COMPLIANCE WITH RULE 144 OR (110 PURSUANT TO AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED.

Each Investor and Holder consents to the Company making a notation on its records and giving instructions to any transfer agent of the Preferred Stock or the Conversion Stock in order to implement the restrictions on transfer established in Section 2.1 and this Section 2.2.

2.3Notice of Proposed Transfers. The holder of each certificate representing Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 2.3. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities (other than (i) a transfer not involving a change in beneficial ownership or (ii) in transactions involving the distribution without consideration of Restricted Securities by any of the Investors to any of its partners or members, or retired partners or members, or to the estate of any of its partners or retired partners), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder’s intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, including whether or not the proposed transferee is an accredited investor as defined in Regulation D under the Securities Act, and, if requested by the Company, shall be accompanied, at such holder’s expense, by either (i) an unqualified written opinion of legal counsel who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company addressed to the Company, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act, or (ii) a “no action” letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company. It is agreed that the Company will not request an opinion of counsel for the holder for transactions made in reliance on Rule 144 under the Securities Act except in unusual circumstances, the existence of which shall be determined in good faith by the Board of Directors of the Company, and in any case the Company will not request an opinion of counsel

5

for the holder for transactions made in reliance on Rule 144(k) under the Securities Act. Each certificate evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 2.2 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such holder and the Company such legend is not required in order to establish compliance with any provision of the Securities Act.

2.4Requested Registration.

(a)Request for Registration. In case the Company shall receive from Initiating Holders a written request that the Company effect any registration, qualification or compliance with respect to Registrable Securities, the Company will:

(i)promptly give written notice of the proposed registration, qualification or compliance to all other Holders; and

(ii)as soon as practicable, use its diligent efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 2.4:

(A)In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

(B)Prior to six months after the effective date of the Company’s first registered public offering of its stock;

(C)During the period starting with the date sixty (60) days prior to the Company’s estimated date of filing of, and ending on the date six (6) months immediately following the effective date of, any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective;

(D)Unless the Registrable Securities sought to be registered by all Initiating Holders pursuant to this Section 2.4 comprises at least fifteen percent (15%) of all their outstanding Registrable Securities, except that such fifteen percent (1 5%) requirement shall not apply if the anticipated aggregate offering price, net of underwriting discounts and

6

commissions, of all Registered Securities sought to be registered by all Initiating Holders and other Holders pursuant to this Section 2.4, would exceed $3,000,000;

(E)After the Company has effected two such registrations pursuant to this Section 2.4(a), and such registrations have been declared or ordered effective and the Registrable Securities offered pursuant to such registrations have been sold; or

(F)If the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for a registration statement to be filed in the near future, then the Company’s obligation to use its best efforts to register, qualify or comply under this Section 2.4 shall be deferred for a period not to exceed 180 days from the date of receipt of written request from the Initiating Holders, provided, however, that the Company shall not exercise the right to defer registration granted pursuant to this paragraph (F) more than one time in any twelve-month period.

Subject to the foregoing clauses (A) through (F), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Initiating Holders, but in any event within one hundred twenty (1 20) days of such request or requests.

(b)Underwriting. In the event that a registration pursuant to Section 2.4 is for a registered public offering involving an underwriting, the Company shall so advise the Holders as part of the notice given pursuant to Section 2.4(a)(i). In such event, the right of any Holder to registration pursuant to Section 2.4 shall be conditioned upon such Holder’s participation in the underwriting arrangements required by this Section 2.4, and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent requested shall be limited to the extent provided herein.

The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by a majority in interest of the Initiating Holders, but subject to the Company’s reasonable approval. Notwithstanding any other provision of this Section 2.4, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise all Holders of Registrable Securities and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement. No Registrable Securities excluded from the underwriting by reason of the underwriter’s marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest one hundred (100) shares.

If any Holder of Registrable Securities disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. Any Registrable Securities excluded or withdrawn from

7

such underwriting, in the event that such underwriting represents the initial underwritten public offering of the Company’s Securities, shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to one hundred eighty (180) days after the effective date of the registration statement relating thereto, or such other shorter period of time as the underwriters may require. If by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company shall offer to all Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities calculated in the same manner used in this Section 2.4(b) in determining the allocation of shares to be sold when subject to an underwriter limitation.

2.5Company Registration.

(a)Notice of Registration. If at any time or from time to time the Company shall determine to register any of its Securities, either for its own account or the account of a security holder or holders, other than (i)(a) a firm commitment underwritten initial public offering pursuant to an effective registration statement under the Securities Act, covering the offer and sale of Common Stock for the account of the Company to the public if (x) the price per share (determined without regard to underwriter commissions and expenses) is not less than $1.43 (as adjusted for Recapitalizations), (y) the aggregate gross proceeds to the Company are not less than $20,000,000 (or ¥2,000,000,000 if the primary listing of shares is on a Japan exchange or over-the-counter market) before deduction of underwriting discount and commissions, and (z) the pre-offering market capitalization of the Company is at least $200,000,000 (or ¥20,000,000,000 if the primary listing of shares in on a Japan exchange or over-the-counter market), calculated as the number of outstanding shares, assuming the conversion of all convertible Securities and exercise of all options and warrants, multiplied by the mid-point of the range of sales prices published in the initial preliminary prospectus (a “Qualified IPO”), (ii) a registration relating solely to employee benefit plans, or (iii) a registration relating solely to a Commission Rule 145 transaction, the Company will:

(i)promptly give to each Holder written notice thereof; and

(ii)include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within twenty (20) days after receipt of such written notice from the Company, by any Holder.

(b)Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 2.5(a)(i). In such event the right of any Holder to registration pursuant to Section 2.5 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Securities through such underwriting shall (together with the Company and the other holders distributing their Securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 2.5, if the managing underwriter determines that marketing factors

8

require a limitation of the number of shares to be underwritten, the managing underwriter may limit (or exclude entirely) the shares held by holders of registration rights (other than Holders) and following exclusion of all such shares, Registrable Securities that may be included in such registration. The Company shall advise all Holders and other holders exercising their registration rights to distribute their Securities through such underwriting of any such limitation, and shall first limit (or exclude entirely) the shares held by holders of registration rights (other than the Holders), and following exclusion of all such shares, the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders exercising their registration rights in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders. If any Holder or holder disapproves of the terms of any such underwriting, it may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any Securities excluded or withdrawn from such underwriting, in the event that such underwriting represents the initial underwritten public offering of the Company’s securities, shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to one hundred eighty (180) days after the effective date of the registration statement relating thereto, or such other shorter period of time as the underwriters may require.

(c)Right to Terminate Registration. If the Company reasonably determines that a registration initiated by it under this Section 2.5 is not in the best interest of the Company, the Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.5 prior to the effectiveness of such registration whether or not any Holder has elected to include Securities in such registration.

2.6Registration on Form S-3.

(a)If any Holder whose Registrable Securities sought to be registered pursuant to this Section 2.6 comprises at least two percent (2%) of the Company’s outstanding Common Stock (assuming conversion of all convertible Securities and the exercise of all outstanding options and warrants) (a “Major Holder”), requests that the Company file a registration statement on Form S-3 (or any successor form to Form S-3) for a public offering of shares of the Registrable Securities the reasonably anticipated aggregate price to the public of which would exceed $1,000,000, and the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company shall: (i) promptly give written notice of the proposed registration to all other Holders of Registrable Securities and (ii) use its best efforts to cause, as soon as practicable, all Registrable Securities to be registered as may be so requested for the offering on such form and to cause such Registrable Securities to be qualified in such jurisdictions as the Major Holder or other Holders may reasonably request; provided, however, that the Company shall not be required to effect more than two (2) such registrations for each Major Holder pursuant to this Section 2.6 per twelve month period. The substantive provisions of Section 2.4(b) shall be applicable to each registration initiated under this Section 2.6.

(b)Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 2.6:  (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such

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jurisdiction and except as may be required by the Securities Act; or (ii) if the Company shall furnish to such Major Holder a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its shareholders for registration statements to be filed in the near future, then the Company’s obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed one hundred twenty (120) days from the receipt of the request to file such registration by such Major Holder, provided, however, that the Company shall not exercise the right to defer registration granted by this subparagraph (b)(ii) more than once in any twelve month period.

2.7Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not enter into any agreement granting any holder or prospective holder of any Securities of the Company registration rights with respect to such Securities unless such new registration rights, including standoff obligations, are subordinate to the registration rights granted Holders hereunder.

2.8Expenses of Registration.

(a)All Registration Expenses incurred in connection with all registrations pursuant to Sections 2.4 and 2.5, shall be borne by the Company. Unless otherwise stated, all Selling Expenses relating to Registrable Securities registered on behalf of the Holders and all other Registration Expenses shall be borne by the Holders of such Registrable Securities pro rata on the basis of the number of Registrable Securities so registered.

(b)All Registration Expenses and Selling Expenses incurred in connection with a registration pursuant to Section 2.6 shall be borne pro rata by the Holder whose Registrable Securities are included in the registration on Form S-3 according to the number of Registrable Securities included in such registration.

2.9Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to the Agreement, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense the Company will with all deliberate speed:

(a)Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for at least one hundred eighty (180) days or until the distribution described in the registration statement has been completed;

(b)Furnish to the Holders participating in such registration and to the underwriters of the Securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such Securities;

(c)Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration

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statements as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Securities covered by such registration statement;

(d)Use its best efforts to register and qualify the Securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; and

(e)In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

2.10Indemnification.

(a)The Company will indemnify each Holder, each of its officers and directors and partners, and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to the Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers and directors, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder, controlling person or underwriter and stated to be specifically for use therein.

(b)Each Holder will, if Registrable Securities held by such Holder are included in the Securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company’s Securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each other such Holder, each of its officers, directors and partners and each person controlling such

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Holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, partners, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein.

(c)Each party entitled to indemnification under this Section 2.10 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 2.10 unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. No Indemnifying Party shall be liable for indemnification hereunder with respect to any settlement or consent to judgment, in connection with any claim or litigation to which these indemnification provisions apply, that has been entered into without the prior consent of the Indemnifying Party (which consent will not be unreasonably withheld).

2.11Information by Holder. The Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holders, the Registrable Securities held by them and the distribution proposed by such Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 2.11.

2.12Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to:

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(a)Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

(b)File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements);

(c)So long as an Investor owns any Restricted Securities, furnish to the Investor forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its Securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as an Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing an Investor to sell any such Restricted Securities without registration.

2.13Transfer of Registration Rights. The rights to cause the Company to register Registrable Securities granted the Investors under Sections 2.4, 2.5 and 2.6 may be assigned (i) in connection with transactions involving the distribution without consideration of Registrable Securities by any of the Investors, to any of its partners or retired partners or the estate of any of its partners or members or retired partners or members, or (ii) to a transferee or assignee reasonably acceptable to the Company in connection with any transfer or assignment of Registrable Securities by an Investor, provided that (a) such transfer may otherwise be effected in accordance with applicable securities laws and Sections 2.2 and 2.3, and (b) such assignee or transferee acquires at least one hundred thousand (100,000) shares of Conversion Stock (adjusted for Recapitalizations after the date of this Agreement).

2.14Standoff Agreement. Each Holder agrees in connection with the Company’s initial public offering of the Company’s Securities that, upon request of the Company or the underwriters managing any underwritten offering of the Company’s Securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) from the effective date of such registration as may be requested by the underwriters; provided, that the officers and directors of the Company who own stock of the Company also agree to such restrictions with respect to all of their shares.

2.15Termination of Registration Rights. The registration rights granted pursuant to this Section 2 shall terminate as to each Holder at such time as a public market for the Company’s Common Stock exists and all Registrable Securities held by such Holder may, in the opinion of counsel to the Company (which opinion shall be concurred in by counsel for such Holder), be sold within a given three month period pursuant to Rule 144 or any other applicable exemption that allows for resale free of registration.

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SECTION 3
NEW ISSUANCE RIGHT OF FIRST REFUSAL

3.1Right of First Refusal.

(a)The Company hereby grants to each holder of Preferred Stock and each Common Holder a right of first refusal (the “New Issuance Right of First Refusal”) to purchase all (or any part) of such holder’s pro rata portion of any New Securities (as defined in this Section 3.1) that the Company may, from time to time, propose to sell and issue. Such pro rata portion, for purposes of this New Issuance Right of First Refusal, shall be the ratio of (X) such holder’s Common Stock, including Common Stock issued or issuable pursuant to conversion of such holder’s Preferred Stock to (Y) the sum of the total number of shares of Common Stock issued or issuable upon conversion of the Preferred Stock then outstanding and the Common Stock then held by the Common Holders. This New Issuance Right of First Refusal shall be subject to the following provisions:

(i)“New Securities” shall mean any Common Stock and Preferred Stock of the Company whether or not authorized on the date hereof, and rights, options, or warrants to purchase Common Stock or Preferred Stock and Securities of any type whatsoever that are, or may become, convertible into Common Stock or Preferred Stock; provided, however, that “New Securities” does not include the shares of Common Stock that would not constitute Additional Shares of Common Stock under the Company’s Articles of Incorporation, as amended from time to time.

(ii)In the event that the Company proposes to undertake an issuance of New Securities, it shall give each holder of Preferred Stock and each Common Holder written notice (the “Notice”) of its intention, describing the type of New Securities, the price, the general terms upon which the Company proposes to issue the same and the holder’s pro rata share of the New Securities. Each such holder shall have ten (10) calendar days after receipt of such Notice to agree to purchase up to its pro rata share of such New Securities at the price and upon the terms specified in the Notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased.

(iii)The Company shall have one hundred eighty (180) days following the ten (1 0) calendar day period specified above to sell, or enter into an agreement pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within such one hundred eighty (180) day period, the New Securities with respect to which the rights of the holders of Preferred Stock or Common Holders (as the case may be) were not exercised at a price and upon terms no more favorable to the purchasers thereof than specified in the Company’s Notice. In the event the Company has not sold the New Securities within such one hundred eighty (180) day period, the Company shall not thereafter issue or sell any New Securities, without first offering such New Securities to the holders of Preferred Stock and the Common Holders in the manner provided above.

3.2Termination of Obligations. The obligations of the Company and the rights of the Investors and Common Holders set forth in this Section 3 shall terminate and be of no further force or effect immediately prior to the earliest of (i) as to an Investor or Common Holder, such

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time as the Investor or Common Holder no longer owns any Securities, (ii) the closing of a Qualified PO, (iii) such time as the Company is subject to the reporting requirements of Sections 13 or 15(d) under the Exchange Act, or (iv) the occurrence of the merger or consolidation of the Company into, or the sale of all or substantially all of the Company’s assets to another corporation, unless the shareholders of the Company immediately prior to such merger, consolidation or sale shall own more than fifty percent (50%) of the capital stock of such other corporation immediately after such merger, consolidation or sale (“Change of Control”).

SECTION 4
RIGHT OF FIRST REFUSAL ON FOUNDER QUALIFIED COMMON STOCK SALES

4.1Company Right. At any time a Founder (a “Seller”) proposes to sell or otherwise dispose of for value to a third party (the “Proposed Transferee”) any Qualified Common Stock of the Company held by such Founder (the “Offered Securities”), the Seller shall first offer, in a writing delivered to the Company (the “Company Offer”), to sell the Offered Securities to the Company at the same price and on the same terms as proposed to be sold to the Proposed Transferee, which Company Offer shall remain open for a period of ten (1 0) calendar days after delivery thereof (unless terminated earlier by written notice from the Company declining to accept) (the “Company Offer Period”).

4.2Notice of Company Acceptance. Notice of the Company’s election to accept, in whole or in part, a Company Offer shall be made by a writing signed by an officer of the Company specifying the portion of the Offered Securities that the Company elects to purchase, delivered to the Seller prior to the expiration of the Company Offer Period (the “Company Acceptance Notice”).

4.3Investor Right. If the Company does not elect to purchase all of the Offered Securities, the Company shall give written notice to the Eligible Investors, and the Seller shall offer to sell to each Eligible Investor (i) that amount of the remaining Offered Securities multiplied by a fraction, the numerator of which is the aggregate number of shares of Qualified Common Stock and Qualified Conversion Shares held by or issuable to such Eligible Investor and the denominator of which is the total number of shares of Qualified Common Stock and Qualified Conversion Shares held by or issuable to all the Eligible Investors (the “Basic Amount”) and (ii) such additional portion of the remaining Offered Securities as any Eligible Investor indicates it will purchase should any of the Eligible Investors subscribe for less than their Basic Amounts (the “Undersubscription Amount”) and to which such Eligible Investor is entitled under Section 4.4 below, at the same price and on the same terms as those set forth in the Company Offer (the “Investor Offer”), which Investor Offer shall remain open for a period of fifteen (1 5) calendar days after delivery thereof (the “Investor Offer Period”).

4.4Notice of Investor Acceptance. Notice of an Eligible Investor’s election to accept the Investor Offer (the “Acceptance Notice”), in whole or in part, shall be evidenced by a writing signed by such Eligible Investor, setting forth the amount that the Eligible Investor elects to purchase (and, if such Eligible Investor elects to purchase more than its Basic Amount, the Undersubscription Amount that such Eligible Investor elects to purchase), and delivered to the Seller prior to the end of the Investor Offer Period. If the Basic Amounts subscribed for by the Eligible Investors are less than the total amount of Offered Securities the Eligible Investors are

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entitled to purchase pursuant to Section 4.3, then each Eligible Investor specifying an Undersubscription Amount in its Acceptance Notice shall be entitled to purchase the Undersubscription Amount specified; provided, however, that should the Undersubscription Amounts subscribed for exceed the difference between the total amount of Offered Securities the Eligible Investors are entitled to purchase and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Eligible Investor who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as is determined by multiplying such Available Undersubscription Amount by a fraction, the numerator of which is the aggregate number of shares of Qualified Common Stock and Qualified Conversion Shares held by or issuable to such Eligible Investor and the denominator of which is the aggregate number of shares of Qualified Common Stock and Qualified Conversion Shares held by or issuable to the Eligible Investors who have subscribed for an Undersubscription Amount; provided further, however, that if, as a result of the allocation of the Available Undersubscription Amount described above, any Eligible Investor shall be allocated a number of Offered Securities greater than the number of Offered Securities it has indicated it is willing to purchase, it shall not be required to purchase such Offered Securities; rather such additional Offered Securities shall be reallocated in accordance with the above formula among the other Eligible Investors who have subscribed for an Undersubscription Amount. All amounts determined by the formula set forth in this Section 4.4 shall be subject to rounding by the Board of Directors of the Company to the extent it reasonably deems necessary.

4.5Permitted Sales of Refused Securities. In the event that the amount of the Offered Securities the Company and the Eligible Investors elect to purchase does not equal the total amount of the Offered Securities, Seller shall have one hundred twenty (120) days from the expiration of the Investor Offer Period to sell, subject to Section 5 below, all or any part of the Offered Securities for which a Company Acceptance Notice or an Investor Acceptance Notice has not been given (the “Refused Securities”) to the Proposed Transferee at the same price and on the same terms as those set forth in the Company Offer.

4.6Closing. The Company and the Eligible Investors shall purchase the amount of Offered Securities specified in each Company Acceptance Notice or Acceptance Notice, as the case may be, upon the terms and conditions specified in the Company Offer, promptly following delivery of such Company Acceptance Notice or Acceptance Notice; provided, however, that the consummation of such purchase shall be subject to the preparation, execution and delivery of a purchase agreement reasonably satisfactory to the Company and the Eligible Investors, as the case may be, and their respective counsel. In addition, Seller shall promptly remit to each Eligible Investor that portion of the sale proceeds to which each Eligible Investor is entitled by reason of its participation in the sale to the Proposed Transferee pursuant to Section 5 below.

4.7Further Sale. Any Offered Securities not purchased by the Company, Eligible Investors or the Proposed Transferee in accordance with this Section 4 may not be sold or otherwise disposed of until they are again offered to the Company and the Eligible Investors in accordance with this Section 4.

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SECTION 5
CO-SALE RIGHTS ON FOUNDER QUALIFIED COMMON STOCK SALES

5.1Right to Participate. Each Eligible Investor shall have the right to participate in the sale to the Proposed Transferee upon the same terms and conditions as set forth in the Company Offer, subject to the terms and conditions set forth in this Section 5. An Eligible Investor shall exercise its right by delivering to the Seller, prior to the expiration of the Investor Offer Period, (i) written notice of its intention to participate, specifying the amount of shares such Eligible Investor desires to sell to the Proposed Transferee, and (ii) one or more certificates representing the number of shares which such Eligible Investor elects to sell hereunder, duly endorsed for transfer to the Proposed Transferee.

5.2Qualified Participation. Each Eligible Investor shall have the right to sell up to that number of shares equal to the product of (i) the amount of Offered Securities multiplied by (ii) a fraction, the numerator of which is the number of shares of Qualified Common Stock and Qualified Conversion Shares owned by such Eligible Investor, and the denominator of which is the total number of shares of Qualified Common Stock and Qualified Conversion Shares owned by the Seller and the Eligible Investors as a group. In the event that the Proposed Transferee together with the accepting Eligible Investors (if any) desire to purchase a number of shares of Common Stock different from the amount of the Offered Securities (the “New Amount”), the New Amount shall be substituted for the Offered Securities in the above equation for the purpose of determining each Eligible Investor’s participation rights. In the event of Eligible Investor participation, the amount of Offered Securities which Seller is entitled to sell on Seller’s own behalf pursuant to Section 4 hereof shall be reduced accordingly, and Seller shall include such Eligible Investor shares in the sale of the Offered Securities.

5.3Continuing Rights. The exercise or non-exercise of the right to participate hereunder with respect to a particular sale by a Seller shall not adversely affect an Eligible Investor’s right to participate in subsequent sales by the same or other Sellers pursuant to this Section 5.

SECTION 6
ADDITIONAL PROVISIONS RELATING TO RIGHT OF FIRST REFUSAL AND
CO-SALE RIGHTS ON CERTAIN FOUNDER SALES

6.1Invalid Transfers. Any sale, assignment or other transfer of Securities by a Seller contrary to the provisions of Section 4 and Section 5 hereof shall be null and void, and the transferee shall not be recognized by the Company as the holder or owner of the Securities sold, assigned, or transferred for any purpose (including, without limitation, voting or dividend rights), unless and until the Seller has satisfied the requirements of Section 4 and Section 5 with respect to such sale. The Seller shall provide the Company and the Eligible Investors with written evidence that such requirements have been met or waived prior to consummating any sale, assignment or other transfer of Securities, and no Securities shall be transferred on the books of the Company until such written evidence has been received by the Company and the Eligible Investors.

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6.2Permitted Transfers.

(a)Intra-Family and Other Transfers. Any Seller may transfer any Securities to the following (“Permitted Transferee”) without complying with Section 4 or Section 5 hereof: (i) to a member of such Seller’s immediate family, (ii) to a trust established by such Seller for the benefit of such Seller or such Seller’s immediate family by gift or inheritance or (iii) to any person or entity as a bona fide gift, provided, however, that no such transfer of Securities shall be effective unless and until the Permitted Transferee shall have executed such documentation, in form and substance satisfactory to the Company, evidencing the agreement by the Permitted Transferee to be bound by the provisions of this Agreement.

(b)Exempt Transactions. The participation rights set forth in Section 5 above shall not apply to any pledge of the Company’s Common Stock made by a Seller which creates a mere security interest, provided, however, that the pledgee shall execute such documentation, in form and substance satisfactory to the Company evidencing the agreement by the pledgee to be bound by the provisions of this Agreement.

6.3Termination of Rights. The obligations of the Founders and the rights of the Investors set forth in Section 4 and Section 5 shall terminate and be of no further force or effect immediately prior to the earliest of (i) as to an Eligible Investor, such time as the Eligible Investor no longer owns any Securities, (ii) the closing of a Qualified PO, (iii) such time as the Company becomes subject to the reporting obligations of Section 13 or 15(d) of the Exchange Act, or (iv) the occurrence of a Change of Control.

6.4Legends.

(a)Legend. Each certificate representing shares of the Common Stock of the Company now or hereafter owned by a Founder or sold or otherwise transferred to any Permitted Transferee shall be endorsed with the following legend:

“THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF AN AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT BY AND BETWEEN THE SHAREHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF PREFERRED STOCK. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.”

(b)Legend Removal. The legend referred to in Section 6.4(a) shall be removed upon termination, in accordance with the provisions of Section 6.3 above, of the rights set forth in Section 4 and Section 5.

SECTION 7
CERTAIN COVENANTS OF THE COMPANY AND THE INVESTORS

7.1Certain Covenants Involving Investors Other Than the Series F Investors. The following are covenants by and among the Company and the Investors. Solely for purposes of this Section 7.1, the term “Investor” or “Investors” shall refer only to the Series A Investors,

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the Series B Investors, the Series C Investors, the Series D Investor, Series E Investors and the Series G Investors.

(a)Financial Information.

(i)As soon as practicable after the end of each fiscal year, and in any event within one hundred and twenty (120) days thereafter, the Company will mail to each Investor a consolidated statement of financial position of the Company, as of the end of such fiscal year, and a consolidated statement of operations and a consolidated statement of cash flows, for the year then ended, prepared in accordance with generally accepted accounting principles, all in reasonable detail and audited by independent public accountants of national standing selected by the Company.

(ii)As long as an Investor holds not less than (A) 100,000 shares of Series A Preferred (including shares of Common Stock issued upon conversion of the Series A Preferred), (B) 250,000 shares of Series B Preferred (including shares of Common Stock issued upon conversion of the Series B Preferred), (C) 80,000 shares of Series C Preferred (including shares of Common Stock issued upon conversion of the Series C Preferred), (D) 80,000 shares of Series D Preferred (including shares of Common Stock issued upon conversion of the Series D Preferred), (E) 100,000 shares of Series E Preferred (including shares of Common Stock based upon conversion of the Series E Preferred) or (F) 1,000,000 shares of Series G Preferred (including shares of Common Stock based upon conversion of the Series G Preferred) (a “Major Series G Investor”), as adjusted for Recapitalizations (collectively, the “Major Investors”), the Company will deliver or provide to each such Major Investor (A) within sixty (60) days after the end of the first, second and third quarterly accounting periods in each fiscal year an unaudited consolidated statement of financial position, consolidated statement of operations and consolidated statement of cash flows of the Company, certified by the Company’s Chief Financial Officer, (B) an annual operating plan approved by the Board of Directors, within the earlier of (i) thirty (30) days prior to the beginning of the fiscal year, and (ii) ten (10) days following its adoption by the Board of Directors, and (C) upon written request by a Major Investor, within thirty (30) days after the end of each month, unaudited monthly financial statements.

(iii)The rights granted pursuant to Section 7.1 (a) may not be assigned or otherwise conveyed by an Investor except as provided in Section 7.2(a).

(b)Confidentiality. Each Investor agrees that any information obtained by the Investor pursuant to this Section 7 that may be proprietary to the Company or otherwise confidential will not be disclosed without the prior written consent of the Company. If the Investor requests in writing, the Company will identify in writing all information obtained by the Investor under this Section 7 that the Company considers confidential and that the Investor may not disclose without the Company’s prior written consent. Each Investor further acknowledges and understands that any information so obtained that may be considered “inside” non-public information will not be utilized by the Investor in connection with purchases or sales of the Company’s Securities except in compliance with applicable state and federal anti-fraud statutes. The provisions of this Section 7 shall not be in limitation of any rights that the Investor may have with respect to the books and records of the Company, or to inspect its properties or discuss its

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affairs, finances and accounts, under the laws of the jurisdictions in which it is incorporated. The term “Investor” as used in this Section 7.2(b) includes all officers, directors, affiliates, agents and other representatives of the Investor. Notwithstanding the above, “confidential information” shall not include (i) information known to the public generally, (ii) information known to the Investor from an independent source prior to the receipt of such information from the Company and (iii) information required to be disclosed by the Investor by court order or otherwise required by law, provided, however, that in the event of a required disclosure pursuant to this clause (iii), the Investor shall give the Company prompt written notice of any such requirement so that the Company may seek a protective order or other appropriate remedy.

(c)Inspection. The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Major Investor.

(d)Clinical Trial Reports. The Company will deliver or provide to each Series G Investor, upon the written request of any such Series G Investor, management reports regarding clinical trials, which shall include management’s review and analysis of data collected from such trials, as well as input from the Company’s medical and regulatory advisors, within thirty (30) days after completion of such trials. Such reports shall also include a certification from the Chief Executive Officer and Chief Technology Officer of the Company that the content of such reports is materially accurate and materially complete.

7.2Covenants Involving Only the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors and the Series G Investors. The following are covenants by and among only the Company and the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors and the Series G Investors. Solely for purposes of this Section 7.2, unless otherwise expressly indicated, the term “Investor” or “Investors” shall refer only to the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors and the Series G Investors.

(a)Assignment of Rights to Financial Information. The rights to Company financial information granted pursuant to Section 7.1(a) may not be assigned or otherwise conveyed by an Investor or by any subsequent transferee of any such rights without the prior written consent of the Company (which consent shall not be unreasonably withheld); provided, however, that, subject to Section 7.2(a), an Investor, after giving notice to the Company, may assign the rights granted pursuant to Section 7.1(a), to any transferee, other than a competitor of the Company, who acquires not less than (A) 250,000 shares of Series B Preferred, (B) 80,000 shares of Series C Preferred, (C) 80,000 shares of Series D Preferred, (D) 100,000 shares of Series E Preferred or (E) 1,000,000 shares of Series G Preferred (all as adjusted for Recapitalizations).

(b)Proprietary Information Agreement. The Company shall ensure that future employees of the Company execute the Company’s standard proprietary information agreement and that future consultants of the Company execute similar proprietary information agreements with substantially the same effect.

20

(c)Indemnification.

(i)To the extent permitted by law, the Company shall indemnify and hold harmless the Series D Investor and each Series E Investor, each person who controls Series D Investor and each Series E Investor within the meaning of the Exchange Act (including, without limitation, Ellison), and each of the respective members, managers, partners, officers, directors, employees, agents and affiliates of the foregoing (the “Investor Indemnitees”) from and against all actions, suits, claims, proceedings, costs, damages, judgments, amounts paid in settlement and expenses (including, without limitations, attorneys’ fees and disbursements) relating to or arising out of any claim, demand or cause of action asserted by any third party as a result of (i) the Series D Investor’s or any Series E Investor’s position as a shareholder of the Company, or (ii) any of the transactions contemplated by the Series D Agreement or the Series E Agreement, as the case may be; provided, however, that the indemnification provided hereby shall not extend to costs, damages, judgment, amounts paid in settlement and expenses to the extent directly and primary attributable to activities of an Investor Indemnitee which involve a wrongful act or omission (including a breach) of the Series D Investor or any Series E Investor, an Investor Indemnitee or any agent thereof whether in violation of the Series D Agreement or the Series E Agreement or otherwise (an “Indemnifiable Claim”).

(ii)The Company shall reimburse any Investor Indemnitees for all reasonable out-of-pocket expenses (including attorneys’ fees and disbursements) as they are incurred in connection with investigating, preparing to defend or defending any such Indemnifiable Claim (including any inquiry or investigation) whether or not an Investor Indemnitee is a party thereto. If an Investor Indemnitee makes a claim hereunder for payment or reimbursement of reasonable expenses, such expenses shall be paid or reimbursed promptly upon receipt of appropriate documentation relating thereto, subject to an undertaking by each Investor Indemnitee to repay to the Company all reimbursed amounts as to which such Investor Indemnitee is subsequently determined by a court of competent jurisdiction not to be entitled to indemnification hereunder, even if the Company reserves the right to dispute whether the Series D Agreement or the Series E Agreement, as the case may be, requires the payment or reimbursement of such expenses.

(iii)An Investor Indemnitee seeking indemnification hereunder shall give written notice to the Company of any claim with respect to which it seeks indemnification promptly after the discovery by such party of any matters giving rise to a claim for indemnification; provided that the failure of any Investor Indemnitee to give notice as provided herein shall not relieve the Company of its obligations under this Section 7.2(c) except to the extent the Company shall have been materially prejudiced by the failure of the Investor Indemnitee to make such notification. In case any such action, suit, claim or proceeding is brought against an Investor Indemnitee, the Company shall be entitled to participate in the defense thereof and, to the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to the Investor Indemnitee, and after notice from the Company to the Investor Indemnitee of its election so to assume the defense thereof, the Company shall not be liable to such Investor Indemnitee under this Section 7.2(c) for any legal or other expense subsequently incurred by such Investor Indemnitee in connection with the defense thereof; provided that (i) if the Company shall elect not to assume the defense of such claim or action or (ii) if the Investor Indemnitee reasonably determines that there may be a conflict between the

21

positions of the Company and of the Investor Indemnitee in defending such claim or action, then the Investor Indemnitee’s separate counsel shall be entitled to participate in and conduct the defense, and the Company shall be liable to any legal or other expenses incurred by the Investor Indemnitee in connection with the defense; provided that in no event shall the Company be required to pay the fees or expenses of more than one counsel other than its own. The Company shall not be liable for any settlement of any action, suit, claim or proceeding effected without its written consent; provided, however, that the Company shall not unreasonably withhold, delay or condition its consent. The Company further agrees that it shall not, without the Investor Indemnitee’s prior written consent, settle or compromise any claim or consent to entry of any judgment in respect thereof in any pending or threatened action, suit, claim or proceeding in respect of which indemnification may be sought hereunder (whether or not any Investor Indemnitee is an actual or potential party to such action, suit, claim or proceeding) unless such settlement or compromise includes an unconditional release of the Series D Investor or Series E Investors and each other Investor Indemnitee from all liability arising out of such action, suit, claim or proceeding.

(iv)If the indemnification provided for in this Section 7.2(c) is held by a court of competent jurisdiction to be unavailable to an Investor Indemnitee with respect to any loss, liability, claim, damage, or expense referred to therein, then the Company, in lieu of indemnifying such Investor Indemnitee hereunder, shall contribute to the amount paid or payable by such Investor Indemnitee as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the Investor Indemnitee on the other in connection with the actions or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Company and of the Investor Indemnitee shall be determined by reference to, among other things, whether the action, suit, claim proceeding, cost, damage, judgment, amount paid in settlement or expense at issue arose in part due to wrongful conduct of the Investor Indemnitee.

(v)The Company and each Series D/E Representative shall enter into the Company’s standard director indemnification agreement, pursuant to which the Company shall indemnify each Series DE Representative to the furthest extent permitted by law. The indemnification provided by such agreement shall supersede and replace the indemnification provided by Section 7.2(c)(i) with respect to claims relating to or arising out of Series D/E Representative’s position on the Board of Directors of the Company which claims are covered under such agreement and in respect of which claims indemnification is actually being provided under such agreement.

(vi)Prior to a Qualified PO, the Company shall maintain directors’ and officers’ insurance covering the Series D/E Representatives in an amount and on terms not less favorable than the most favorable terms of such insurance (if any) maintained by the Company for its other directors and officers. Following a Qualified PO, the Company shall use reasonable commercial efforts to maintain such directors’ and officers’ insurance covering the Series D/E Representatives, provided that such insurance is available for the Company’s Board of Directors at commercially reasonable rates.

22

(vii)The rights of Series D Investor and Series E Investors under this Section 7.2(c) shall be in addition to any liability that the Company might otherwise have to the Series D Investor, Series E Investors and the Series D/E Representatives under the Series D Agreement, Series E Agreement, the Restated Articles, at common law or otherwise.

(d)Legal Requirements. Each of the Company, the Series D Investor and the Series E Investors shall take all reasonable actions necessary or desirable to comply promptly with all legal requirements which may be imposed on them with respect to the consummation of the transactions contemplated by the Series D Agreement or Series E Agreement (including finishing all information required in connection with approvals of or filings with any governmental entity relating to the Hart-Scott-Rodino Antitrust Improvements Act of 1976) and shall promptly cooperate with and furnish information to any party hereto necessary in connection with any such requirements imposed upon any of them or their respective subsidiaries in connection with the consummation of the transactions contemplated by the Series D Agreement and Series E Agreement.

7.3Termination of Covenants and Certain Rights of the Series A Investors, the Series B Investors, the Series C Investors, the Series D Investor, the Series E Investors and the Series G Investors. All covenants of the Company set forth in Sections 7.1 and 7.2 shall terminate in all respects and be of no further force or effect immediately prior to the earliest of (i) the closing of a Qualified IPO (it being understood that solely for the purposes of this Section 7.3 with respect to termination of a covenant to which a Series A Investor is a party, any firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act shall constitute a “Qualified IPO”), (ii) such time as the Company becomes subject to the reporting obligations of Section 13 or 15(d) of the Exchange Act, or (iii) the occurrence of a Change of Control.

SECTION 8
MISCELLANEOUS

8.1Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of California.

8.2Entire Agreement; Amendment.

(a)This Agreement constitutes the full and entire understanding and agreement and supersedes any existing agreement between the parties with regard to the subject matter hereof, including without limitation the Prior Investor Rights Agreement. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company and Holders holding not less than sixty percent (60%) of the issued or issuable Conversion Stock (excluding any of such shares that have been sold to the public or pursuant to Rule 144) (a “Super Majority-in-Interest”); provided, however, that Holders purchasing Shares under the Series G Agreement after the Initial Closing (each as defined in the Series G Agreement) may become parties to this Agreement without any amendment to this Agreement pursuant to this section or any consent or approval of any party hereto; and provided, further, that if any amendment, waiver, discharge or termination operates in a manner that treats

23

any Holder different from other Holders, the consent of such Holder shall also be required for such amendment, waiver, discharge or termination. Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon each Holder and each future holder of all such securities of such Holder. Each Holder acknowledges that by the operation of this paragraph, and except as expressly provided herein, a Super Majority-in-Interest will have the right and power to diminish or eliminate all rights of such Holder under this Agreement.

(b)Sections 4, 5 and 6 may only be amended with the consent of all of (x) the Company and (z) a Super Majority-in-Interest; provided, however, if any such amendment would have an adverse effect on any or all Founders, the consent of holders of a majority of the Qualified Conversion Shares held by the Founders shall also be required.

(c)Section 7.1(a) through 7.1(c) may only be amended with the consent of all of (x) the Company and (y) a Super Majority-in-Interest, but excluding any Conversion Stock issued or issuable to the Series F Investors.

(d)Section 7.1(d) may only be amended with the consent of all of (x) the Company and (y) the holders of a majority-in-interest of the Conversion Stock issued or issuable to the Series G Investors.

(e)Section 7.2(a) and (b) may only be amended with the consent of all of (x) the Company and (y) a Super Majority-in-Interest, but excluding any Conversion Stock issued or issuable to the Series A Investors and the Series F Investors.

(f)Section 7.2(c) may only be amended with the consent of all of (x) the Company and (y) the holders of a majority-in-interest of the Conversion Stock issued or issuable to the Series D Investors and the Series E Investors.

(g)Sections 7.3 and 8.2 may be amended by the consent of the Company and those Investors whose approval would be required to amend any section of the Agreement to which such sections relate.

8.3Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, express courier or electronic mail, or otherwise delivered by hand, messenger or facsimile, addressed (a) if to an Investor, at the Investor’s address (including electronic mail address) or facsimile number set forth on the Schedule of Investors, or at such other address (including electronic mail address) or facsimile number as the Investor shall have furnished to the Company in writing, (b)if to the Company, the Founders or the Common Holders, at the address or facsimile number set forth on the signature page of this Agreement and addressed to the attention of the Chief Executive Officer, or at such other address or facsimile number as the Company shall have furnished to the Investors. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) when delivered if delivered personally, by messenger, by facsimile with receipt confirmed or by electronic mail with receipt confirmed or, if sent by registered or certified mail or express courier, at the earlier of its receipt or seventy-two (72) hours after the same has been deposited in a regularly maintained receptacle

24

for the deposit of registered or certified mail or express courier, addressed and mailed as aforesaid.

8.4Successors and Assigns. Except as otherwise set forth in Section 2.13 and Section 7, this Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon, their respective successors, assigns and legal representatives; provided, however that, in addition to the requirements of Section 2.13, the right of first refusal and co-sale rights set forth in Section 4 and Section 5 hereof shall not be assignable by an Eligible Investor except to a transferee who acquires at least ten thousand (10,000) shares of Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred or Series G Preferred, as the case may be (or Qualified Conversion Shares issued upon conversion of the Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred, Series F Preferred or Series G Preferred, as the case may be) (as adjusted for Recapitalizations) and who agrees in writing to be bound by the applicable terms of this Agreement.

8.5Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any Holder, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such Holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Holder of any breach or default under this Agreement, or any waiver on the part of any Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing and as set forth in Section 8.2 above. All remedies, either under this Agreement or by law or otherwise afforded to any Holder, shall be cumulative and not alternative. Except as expressly provided herein, no delay or omission to exercise any right, power, or remedy occurring to the Company, upon any breach or default of the holder under this Agreement, shall impair any such right, power, or remedy of the Company, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of the Company of any breach of default under this Agreement, or any waiver on the part of the Company of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to the Company, shall be cumulative and not alternative.

8.6Expenses. The Company and each Investor shall bear its own expenses incurred on its behalf with respect to this Agreement and the transactions contemplated hereby (except as otherwise provided herein or in the Series G Agreement or in the Exhibits to the Series G Agreement executed contemporaneously herewith) and any amendments or waivers hereto.

8.7Attorneys’ Fees. In the event of any litigation in a court of competent jurisdiction or arbitration in accordance with Section 8.9 arising in connection with this

25

Agreement and the transactions contemplated hereby, the prevailing party in judgment shall be entitled to recover reasonable legal fees and costs in connection with such action.

8.8Reverse Stock Split. In the event the Company does a reverse stock split or share combination, such reverse stock split or share combination shall affect the share holding of all shareholders of the Company proportionately.

8.9Arbitration.

(a)At the option of (i) the Company or (ii) a Super Majority-in-Interest, any and all disputes or controversies whether of law or fact and of any nature whatsoever arising from or respecting this Agreement, shall be decided by arbitration by the American Arbitration Association (the “Association”) in accordance with the rules and regulations of the Association.

(b)The arbitrators shall be selected as follows: In the event the Company and a Super Majority-in-Interest agree on one arbitrator, the arbitration shall be conducted by such arbitrator. In the event the Company and a Super Majority-in-Interest do not so agree, the Company and a Super Majority-in-Interest shall each select one independent, qualified arbitrator and the two arbitrators so selected shall select the third arbitrator. The Company reserves the right to object to any individual arbitrator who shall be employed by or affiliated with a competing organization.

(c)Arbitration shall take place at San Francisco, California, or any other location mutually agreeable to the parties. At the request of either party, arbitration proceedings will be conducted in the utmost secrecy; in such case all documents, testimony and records shall be received, heard and maintained by the arbitrators in secrecy under seal, available for the inspection only of the Company or the Investors and their respective attorneys and their respective experts who shall agree in advance and in writing to receive all such information confidentially and to maintain such information in secrecy until such information shall become generally known. The provisions of California Code of Civil Procedure Section 1283.05 (permitting depositions to be taken and discovery to be obtained) are incorporated into and made applicable to any arbitration hereunder. The arbitrators, who shall act by majority vote, shall be able to decree any and all relief of an equitable nature, including but not limited to such relief as a temporary restraining order, a temporary and/or permanent injunction, and shall also be able to award damages, with or without an accounting and costs. The decree or judgment of an award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

(d)Reasonable notice of the time and place of arbitration shall be given to all persons, other than the parties, as shall be required by law, in which case such persons or those authorized representatives shall have the right to attend and/or participate in all the arbitration hearings in such manner as the law shall require.

8.10Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

8.11Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement

26

shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.

8.12Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement. The foregoing Agreement is executed as of the date first above written.

27

The foregoing Agreement is executed as of the date first above written.

“COMPANY”
QUARK BIOTECH, INC.
a California corporation
By:	/s/ Daniel Zurr
	Daniel Zurr, Ph.D.
	Chief Executive Officer
Address:		6536 Kaiser Drive
		Fremont, CA 94555
Fax:		(510) 402-4021

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“COMMON HOLDERS” AND
“FOUNDERS”

David M. Fineman and Ellen Gunn Fineman,
Trustees of the Fineman Revocable Trust dated
2/12/97

Claire F. Gunn, as Custodian for Chloe Rose
Fineman Under the California Uniform
Transfers to Minors Act

Claire F. Gunn, as Custodian for Emma Hart
Fineman Under the California Uniform
Transfers to Minors Act

John V. Roos

Bonnee Rubinfeld

Bonnee Rubinfeld and

Loretta Rubinfeld, JTWROS

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Common Holders and Founders cont’d.]

 /s/ J. Gregory Swendsen

J. Gregory Swendsen,

The J. Gregory Swendsen Revocable Living
Trust Dated February 1, 2001

 /s/ Susan H. Bell

Susan H. Bell,

The Susan H. Bell Revocable Trust U/A Dated
January 31, 2001

Daniel Zurr

Daniel Zurr,

Goddard and Ephrat Trust Company

fbo Mr. Daniel Zurr

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES A INVESTORS”

Donald T. Campbell, IRA FBO Donald T.
Campbell/DLJSC as Custodian/Rollover

Account

 /s/ David L. Austin

David L. Austin,

MLPF&S Cust. FPO David L. Austin

Account 813-81529

 /s/ Frances M. Austin

Frances M. Austin,

MLPF&S Cust. FPO Frances M. Austin RRA
Account 813-81530

Deborah R. Bernstein and

Harvey S. Hecht, as Community Property

Harvey S. Hecht

Robert Bruckman and

Mari Bruckman, as Community Property

Robert Bruckman,

Robert Bruckman, M.D., Inc. Money Purchase
Pension Plan

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES A INVESTORS”

Donald T. Campbell, IRA FBO Donald T.
Campbell/DLJSC as Custodian/Rollover

Account

David L. Austin,

Morgan Stanley Trust Company as Custodian
for David L. Austin IRA Acct. # IS-80329

Frances M. Austin,

Morgan Stanley Trust Company as Custodian
for Frances M. Austin IRA

 /s/ Joanne Radmore Ratkai, VP & GC

First Trust Corporation TTEE FBO

Harvey Hecht IRA M619043-0001

 /s/ Deborah R. Bernstein     /s/ Harvey S. Hecht

Deborah R. Bernstein and Harvey S. Hecht,
TTEE Deborah R. Bernstein and Harvey S.
Hecht Living Trust

Robert Bruckman and

Mari Bruckman, as Community Property

Robert Bruckman,

Robert Bruckman, M.D., Inc. Money Purchase
Pension Plan

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES A INVESTORS”

Donald T. Campbell, IRA FBO Donald T.
Campbell/DLJSC as Custodian/Rollover

Account

David L. Austin,

Morgan Stanley Trust Company as Custodian
for David L. Austin IRA Acct. # IS-80329

Frances M. Austin,

Morgan Stanley Trust Company as Custodian
for Frances M. Austin IRA

First Trust Corporation TTEE FBO

Harvey Hecht IRA M619043-0001

 /s/ Patricia Berns

Patricia Berns

Deborah R. Bernstein and Harvey S. Hecht,
TTEE Deborah R. Bernstein and Harvey S.
Hecht Living Trust

Robert Bruckman and

Mari Bruckman, as Community Property

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Series A Investors cont’d.]

Robert Bruckman,

Robert Bruckman, M.D., Inc. Profit Sharing
Plan

Robert Bruckman, TTEE

Murray A. Bruckman Trust

/s/ Jerome C. Dougherty

Jerome C. Dougherty,

Trustee for Jerome Dougherty

Attorney at Law Money Purchase Pension and
Profit Sharing Plan Trust

 /s/ Christian Pardee Erdman

Christian Pardee Erdman

Lois Pat Lee Gintjee,

Trustee of the Lois Pat Lee Gintjee

Living Trust, dated November 19, 1996

 /s/ David Fineman, TTEE

David Fineman, TTEE,

The Gunn-Fineman Inc. Profit Sharing and
Money Purchase Pension Trust

Joyce Hawkins, TTEE

Hawkins Family Trust dated March 18, 1991

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Series A Investors cont’d.]

Jeffrey A. Hawkins

Jonathan D. Hawkins

Roger W. Hedin, MD. and

Mary A. Hedin, as Community Property

Bonnie J. Lawless

Kathleen Lewis, M.D. and

Julien Homan, as Community Property

San Francisco Neonatology Medical Group
Profit Sharing Plan fbo Kathleen Lewis, M.D.

 /s/ Jack N. Rudel

W. Scott Newhall

Jack N. Rudel for W. Scott Newhall under
POA dated 8-3-00

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Series A Investors cont’d.]

Mark J. Peterson, TTEE,

Mark J. Peterson, Inc. Money Purchase
Pension Plan

 /s/ Polly Sue Ogden

Polly Sue Ogden, TTEE,

Polly Ogden Associates Keogh Profit Sharing
and Money Purchase Pension Plans

Donald H. Oppenheim

Peter Oppenheim, TTEE,

Oppenheim Family Trust u/t/a dated June 1974

Sylvia Oppenheim, TTEE,

Oppenheim Family Trust u/t/a dated June 1974

/s/ Joseph D. Sabella

Joseph D. Sabella, TTEE,

Restated Sabella Family Trust dated April 24,
1995

/s/ Iris Sabella

Iris Sabella, TTEE,

Restated Sabella Family Trust dated April 24,
1995

Jack Sender and

Merideth Sender, as Community Property

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Series A Investors cont’d.]

 /s/ Alfred D. Oppenheim

Alfred D. Oppenheim, TTEE,

Oppenheim/Slagle Family Trust u/t/a dated
August 12, 1991

 /s/ Terri A. Slagle

Terri A. Slagle, TTEE,

Oppenheim/Slagle Family Trust u/t/a dated
August 12, 1991

/s/ Terri A. Slagle

Terri A. Slagle,

San Francisco Neonatology Medical Group
Profit Sharing Plan fbo Terri A. Slagle

Steven Goldman,

San Francisco Neonatology Medical Group
Profit Sharing Plan fbo Steven Goldman, M.D.

Gerald L. Vercesi, TTEE,

Vercesi Family Trust dated December 15, 1994

Donna E. Vercesi, TTEE,

Vercesi Family Trust dated December 15, 1994

James L, Warren and

Cassandra H. Warren, as Community Property

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Series A Investors cont’d.]
/s/ Mark Wexman
Mark Wexman,
California Central Trust Bank, TTEE, fbo Mark Wexman, M.D.
/s/ Mark Wexman
Mark Wexman, M.D. and
/s/ Karen Wexman
Karen Wexman, M.D., as Community Property
WS Investment Company 94A
By:	/s/ Illegible
Title:
Howard B. Zack and
Diane C. Zack, as Community Property
John Ziegler

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES B PURCHASERS”
TAKO VENTURES, LLC
a California limited liability company
By	CEPHALOPOD CORPORATION, Member
By:	/s/ Philip B. Simon
Philip B. Simon
President
/s/ David L. Austin
David L. Austin,
MLPF&S Cust. FPO David L. Austin
Acct. 813-80329
Donald T. Campbell, IRA FBO Donald T. Campbell/DLJSC as Custodian/Rollover Account
/s/ Christian Pardee Erdman
Christian Pardee Erdman
Steven Goldman, M.D.
Peter and Sylvia Oppenheim, Trustees Oppenheim Family Trust u/t/a dated June 1974
Peter and Sylvia Oppenheim, Trustees Oppenheim Family Trust u/t/a dated June 1974

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES C INVESTORS”
TAKO VENTURES, LLC
a California limited liability company
By	CEPHALOPOD CORPORATION, Member
By:		/s/ Philip B. Simon
Philip B. Simon
President
Steven Goldman and
Diane Goldman, JTWROS
Jeffrey A. Hawkins
Peter Oppenheim and
Sylvia Oppenheim, TTEES of the Oppenheim Family Trust dated June 12, 1994
Diane C. Zack and
Howard B. Zack, as Community Property
Joseph Rubinfeld

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Series C Investors cont’d.]
John V. Roos
WS Investment Company 96B
By:	/s/ Illegible
Title:
SUPERGEN, INC.,
a California corporation
By:
	Joseph Rubinfeld, President
“SERIES D INVESTOR”
TAKO VENTURES, LLC
a California limited liability company
By	CEPHALOPOD CORPORATION, Member
By	/s/ Philip B. Simon
	Philip B. Simon
	President

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES E INVESTORS”
TAKO VENTURES, LLC
a California limited liability company
By	CEPHALOPOD CORPORATION, Member
By	/s/ Philip B. Simon
	Philip B. Simon
	President
/s/ Christian Pardee Erdman
Christian Pardee Erdman
Robert M. Lawless, TTEE,
The Trust of Robert M. and Bernadine T. Lawless
Gerald L. Vercesi, TTEE,
Vercesi Family Trust dated December 15, 1994
Donna E. Vercesi, TTEE,
Vercesi Family Trust dated December 15, 1994
James L. Warren and
Cassandra H. Warren, as Community Property
Delaware Charter Guarantee & Trust Co.,
fbo James L. Warren IRA

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

[Series E Investors cont’d.]

 /s/ Mark Wexman, MD

CNA TRUST, TTEE FBO Mark Wexman,
M.D.

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES F INVESTORS”
/s/	Akira Uehara
	Akira Uehara
	President
	Taisho Pharmaceutical Co., Ltd.

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES F INVESTORS”

Astellas Pharma Inc.

 /s/ Hirofumi Onosaka

Hirofumi Onosaka

Senior Corporate Officer

Senior Vice President, Corporate Strategy

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES F INVESTORS”
SANKYO CO., LTD.
By:	/s/ Hitoshi Suzuki
Name:		Hitoshi Suzuki
Title:		Director, Finance & Accounting Dept.

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
TRANS-SCIENCE GLOBAL BIO-TECHNOLOGY FUND
By:	SBI Asset Management Co., Ltd.
	Its Truster
By:	/s/ Kazuyuki Matsui
Name:		Kazuyuki Matsui
Title:		President

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
TS-US NO.1 INVESTMENT PARTNERSHIP
By:	Trans-Science, Inc.
	Its General Partner
By:	/s/ Kiyoshi Inoue
Name:		Kiyoshi Inoue
Title:		CEO & President

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”

By:	Asuka DBJ Investment LPS
	General Partner Asuka DBJ Partners Co., Ltd
Name:		/s/ Toru Mio
Title:		Representative Director

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
MUFG Venture Capital I, Limited Partnership
By:	The Mitsubishi UFJ Capital Company Limited, its General Partner
By:	/s/ Kazuhiko Tokita
Name: Kazuhiko Tokita
Title: President

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
ORIX FUND NO. 9
By: Orix Capital Corporation
/s/ Akira Hirose
By:	Akira Hirose, President
Its:	ORIX Capital Corporation,
	Executive Partner of ORIX Fund No. 9

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
Concordia Investment, L.P.
By:	/s/ Hirotoshi Komoda
Name:		Hirotoshi Komoda
Title:		CEO& President, Birdhill,
		Its General Partner

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
TRANS-SCIENCE NO.3 INVESTMENT LIMITED PARTNERSHIP
By:	Trans-Science, Inc.
	Its General Partner
By:	/s/ Kiyoshi Inoue
Name: Kiyoshi Inoue
Title: CEO & President

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
Tokio Marine & Nichido Fire Insurance Co., Ltd
New Financial Markets Dept.
By:	/s/ Takashi Yoshikawa
Name: Takashi Yoshikawa
Title: General Manager

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

“SERIES G INVESTORS”
Zenshin Capital Fund 1F Partnership
By:	/s/ Takeshi Mori
Name:		Its General Partner
		Zenshin Capital Partners, LLC
		Takeshi Mori
Title:		Managing Member

[QBI – Signature Page to Series G Third Amended and Restated Investors Rights Agreement]

EXHIBIT A

LIST OF COMMON HOLDERS

David M. Fineman and Ellen Gunn Fineman,

Claire F. Gunn, Custodian for Chloe Rose Fineman Under the California Uniform Transfers to Minors Act

Claire F. Gunn, Custodian for Emma Hart Fineman Under the California Uniform Transfers to Minors Act

John V. Roos

Bonnee Rubinfeld

Bonnee Rubinfeld and Loretta Rubinfeld, JTWROS

J. Gregory Swendsen

The J. Gregory Swendsen Revocable Living Trust Dated February 1, 2001

Susan Bell

The Susan H. Bell Revocable Trust U/A Dated January 31, 2001

Daniel Zurr

Goddard and Ephrat Trust Company

fbo Mr. Daniel Zurr

EXHIBIT B

LIST OF FOUNDERS

Founder’s Name	Address
Daniel Zurr Goddard and Ephrat Trust Company Ltd. f/b/o Mr. Daniel Zurr	QBI Enterprises Ltd. P.O. Box 895 Omer, 84965 Israel
Daniel Zurr	QBI Enterprises Ltd. P.O. Box 895 Omer, 84965 Israel
David M. and Ellen Gunn Fineman, Trustees of the Fineman Revocable Trust dated 2/12/97	Quark Biotech, Inc. 6536 Kaiser Dr. Fremont, CA 94555
The J. Gregory Swendsen Revocable Living Trust Dated February 1, 2001	Swendsen & Company 703 Market Street, Suite 906 San Francisco, CA 94103
The Susan H. Bell Revocable Trust U/A Dated January 31, 2001	POB 31295 Santa Fe, NM 87594
Bonnee Rubinfeld Bonnee Rubinfeld and Loretta Rubinfeld, JTWROS	5304 Blackhawk Drive Dandle, CA 94506
Claire F. Gunn, Custodian for Chloe Rose Fineman under the California Uniform Transfers to Minors Act	Quark Biotech, Inc. 6536 Kaiser Dr. Fremont, CA 94555
Claire F. Gunn, Custodian for Emma Hart Fineman under the California Uniform Transfers to Minor Act	Quark Biotech, Inc. 6536 Kaiser Dr. Fremont, CA 94555

EX-10.5

Exhibit 10.5

Biotech, Inc.

QUARK BIOTECH, INC.

AT WILL EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (THE “AGREEMENT”) is made as of November 13, 2006 by and between Quark Biotech, Inc., a California corporation (the “Company”), and Smadar Shakked (the Employee”),

1.Term. The Employee’s at-will employment shall be effective for a period of (7) seven months and shall commence on January 1, 2007 (the “Commencement Date”) and terminate on July 31, 2007 (the “Termination Date”), according to the terms and conditions set forth herein.

2.Title. The Employee will serve as the company’s Vice President, Finance and Acting CFO and will report to the CEO.

3.Duties. Employee will serve as the Company’s Vice President, Finance and Acting CFO and will primarily be responsible for financial activities or in such other capacity as the Company’s President or CEO may from time to time request.

4.During the term of this Agreement, Employee will devote all of his normal business time and attention to, and use his best efforts to advance, the business of the Company. Employee agrees not to engage actively in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior approval of the President or CEO. The Company and the Employee acknowledge and agree that any attempt by the Employee to engage in any other employment, occupation, or consulting activity other than for the Company, regardless of whether such activity is performed for remuneration, would materially affect the Employee’s ability to devote all of his attention and best efforts to advancing the business of the Company and that such activity would be in direct conflict with the essential business-related interests of the Company. Employee and the Company further acknowledge and agree that any attempt by the Employee to engage in any other employment, occupation, or consulting activity other than for the Company, regardless of whether such activity is performed for remuneration, would constitute a material and substantial disruption of the Company’s operations and, for this reason, Employee agrees that he shall not actively engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without the prior written approval of the President or CEO.

653Kaiser Drive, Fremont, California 94555 Tel: (510) 402-4020 Fax: (510) 402-4021 www.quarkbiotech.com

5.Compensation and Fringe Benefits. Employee shall be entitled to an initial salary of $16,666.67 which will be paid monthly in accordance with the Company’s normal payroll procedures. In addition, Employee will receive a monthly expense reimbursement in the amount of $666.67, a one-time sign on bonus of $17,333.34, and a relocation, from Israel to the US and back from the US to Israel, expense reimbursement in an amount up to, but not to exceed, $5,500.00. Employee will continue to utilize the 1 corporate cell phone now in Employee’s possession, to be fully paid for by the Company. Further, Employee will be entitled to take all Company holidays as paid time off and will accrue 10 business days vacation during the Term, with remuneration, which shall be coordinated with the vacation periods of other officers of the Company in a manner that will minimize disruption of the Company’s management efforts. As a full time employee, Employee will also be eligible to receive certain benefits including medical, dental, life/AD&D, short-term disability and long-term disability coverage. At present, the Company pays 80% of all medical and dental premiums and 100% of premiums for life, AD&D and short term and long-term disability coverage. The Company may modify job titles, salaries and benefits from time to time, as it deems necessary in its sole discretion.

6.Expenses. The Company will pay or reimburse Employee for reasonable travel, entertainment or other expenses incurred by the Employee in the furtherance of or in connection with the performance of Employee’s duties hereunder in accordance with the Company’s established policies. Applicant shall furnish the Company with evidence of the incurrence of such expenses within a reasonable period of time from the date that they were incurred.

7.Confidential Information and Arbitration Agreement; Rescission at Company’s Option. As a condition of Employee’s employment, Applicant will be required to sign and comply with a Confidential Information, Inventions Assignment, and Arbitration Agreement (“Arbitration Agreement”), attached as Appendix B, which is expressly incorporated by reference herein. Employee shall execute the Arbitration Agreement and agrees to be bound by the document. If the Employee fails to execute the documents or submit the fully executed document to the Company by the beginning of the first day of the Employee’s employment with the Company, such failure may be deemed by the Company as an offer by the Employee to rescind this Agreement in its entirety, which rescission shall immediately and automatically be accepted by, and permanently discharge, the Company from all performance obligations hereunder. The parties agree that pursuant to the Arbitration Agreement that is Exhibit “B” hereto, all disputes relating to or arising out of this Agreement, and/or Employee’s employment with and/or separation from the Company shall be resolved by binding arbitration and both parties expressly agree to waive any right to have their dispute resolved by a jury.

8.Termination Without Cause/Severance.

(a)Employee’s  employment with the Company constitutes at-will  employment. Therefore, either party may terminate the employment relationship, with or without

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cause, at any time during the Term hereof for any reason whatsoever by providing (60) sixty days advanced written notice. Unless otherwise agreed by the company the Employee will perform the remainder of the 60-day notice period, in Israel by resuming his previous position and salary in Israel.

(b)If the Company terminates Employee’s employment without Cause as that terms is defined in Paragraph 9 of this Agreement Employee shall be entitled to a severance payment in the amount of one (1) month base salary and benefits in exchange for a fully executed General Release.

9.Termination for Cause. The Company hereunder may terminate Employee’s employment at any time during the term of this Agreement for “Cause”. The term “Cause” is defined as any one or more of the following occurrences;

(a)Employee’s conviction by, or entry of a plea of guilty or nolo contender in, a court of competent and final jurisdiction for any crime which constitutes a felony in the jurisdiction involved, which conviction or plea materially injures the Company; or

(b)Employee’s commission of an act of fraud or misappropriation of funds or property, whether prior to or subsequent to the date hereof, upon the Company; or

(c)Gross negligence by Employee in the scope of Employee’s employment resulting in a material injury to the Company, violation by Employee of any duty of loyalty to the Company resulting in a material injury to the Company, or any other misconduct on the part of Employee resulting in a material injury to the Company; or

(d)Breach of the Arbitration Agreement; or

(e)Failure to remain legally entitled to work in the United States; or

(f)Commission of an intentional unlawful employment practice, such as sexual harassment.

If Employee’s employment hereunder shall be terminated by the Company for Cause pursuant to this Section 9, this Agreement shall terminate as of the date of notice of termination and Employee shall then not be considered an employee of the Company for any purpose, and his salary and all other benefits shall cease upon the termination of his employment; provided, however, that the Company will comply with Section 200 of the Labor Code with respect to the payment of the Employee’s salary upon the termination of the Employee’s employment and shall provide Employee with the required COBRA notification.

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9.Miscellaneous.

(a)Arbitration. All disputes or controversies whether of law or fact of any nature whatsoever rising from or respecting this Agreement shall be decided by arbitration pursuant to the Arbitration Agreement attached as Appendix B.

(b)Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to Employee, at 6536 Kaiser Drive Fremont, CA 94555 U.S.A., or at such other address as Employee shall have furnished to the Company in writing (including electronic mail address), or (b) if to the Company, at 6536 Kaiser Drive Fremont, CA 94555 U.S.A., attention Dr. Daniel Zurr, or to such other address as the Company shall have furnished to Employee in writing (including electronic mail address). Each such notice or communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally or sent by telegram, telefax (receipt confirmed), or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States Postal services.

(c)Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

(d)Entire Agreement. This Agreement, including all addenda and attachments hereto represents the entire agreement and understanding between the Company and Employee concerning Employee’s relationship with the Company

(e)No Oral Modification, Cancellation or Discharge. This Agreement may only be amended, cancelled or discharged in writing signed by Employee and the Company. Notwithstanding anything in this Agreement to the contrary, any consent, waiver, amendment, modification or other agreement delivered by electronic mail shall be effective.

(f)Governing Law. This Agreement shall be governed by the laws of the State of California.

(g)Acknowledgment. Employee acknowledges that he has had the opportunity to discuss this matter with and obtain advice from his private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

(h)Survivability. Notwithstanding any other provision of this Agreement, the obligations, covenants and duties of the Company and Employee under the Arbitration Agreement and the Employment Confidential Information Invention Assignment Agreement shall survive any termination of this Agreement.

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(i)Eligibility for employment. For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

QUARK BIOTECH, INC.		Type name
By:	/s/ Daniel Zurr	By:	/s/ Smadar Samira Shakked
Title:

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EX-10.11

Exhibit 10.11

QUARK BIOTECH, INC.

fka EXPRESSION SYSTEMS, INC.

1997 STOCK PLAN

(Amended as of July 20, 2000)

1.Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. Stock Purchase Rights may also be granted under the Plan.

2.Definitions. As used herein, the following definitions shall apply:

(a)“Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 4 hereof.

(b)“Applicable Laws” means the requirements relating to the administration of stock option plans under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country or jurisdiction where Options or Stock Purchase Rights are granted under the Plan.

(c)“Board” means the Board of Directors of the Company.

(d)“Code” means the Internal Revenue Code of 1986, as amended.

(e)“Committee” means a committee of Directors appointed by the Board in accordance with Section 4 hereof.

(f)“Common Stock” means the Common Stock of the Company.

(g)“Company” means Quark Biotech, Inc., fka Expression Systems, Inc., a California corporation.

(h)“Consultant” means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity.

(i)“Director” means a member of the Board of Directors of the Company.

(j)“Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(k)“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its

1

Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(l)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(m)“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i)If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii)If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or

(iii)In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(n)“Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(o)“Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

(p)“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(q)“Option” means a stock option granted pursuant to the Plan.

(r)“Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(s)“Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

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(t)“Optioned Stock” means the Common Stock subject to an Option or a Stock Purchase Right.

(u)“Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

(v)“Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(w)“Plan” means this 1997 Stock Plan.

(x)“Restricted Stock” means shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right under Section 11 below.

(y)“Section 16(b)” means Section 16(b) of the Securities Exchange Act of 1934, as amended.

(z)“Service Provider” means an Employee, Director or Consultant.

(aa)“Share” means a share of the Common Stock, as adjusted in accordance with Section 12 below.

(bb)“Stock Purchase Right” means a right to purchase Common Stock pursuant to Section 11 below.

(cc)“Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be subject to option and sold under the Plan and the Company’s 1994 Stock Option Plan (“1994 Plan”), is that number of shares equal to: (I) 5,000,000 Shares plus (ii) any Shares returned to the 1994 Plan as a result of termination of options under the 1994 Plan. The Shares may be authorized but unissued, or reacquired Common Stock.

If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.

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4.Administration of the Plan.

(a)Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(b)Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)to determine the Fair Market Value;

(ii)to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder;

(iii)to determine the number of Shares to be covered by each such award granted hereunder;

(iv)to approve forms of agreement for use under the Plan;

(v)to determine the terms and conditions, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)to determine whether and under what circumstances an Option may be settled in cash under subsection 9(e) instead of Common Stock;

(vii)to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;

(viii)to initiate an Option Exchange Program;

(ix)to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

(x)to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and

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(xi)to construe and interpret the terms of the Plan and awards granted pursuant to the Plan.

(c)Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

5.Eligibility.

(a)Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

(b)Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(c)Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee’s relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause.

6.Term of Plan. The Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 14 of the Plan.

7.Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement.

8.Option Exercise Price and Consideration.

(a)The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i)In the case of an Incentive Stock Option

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(A)granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

(ii)In the case of a Nonstatutory Stock Option

(A)granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(B)granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(iii)Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(b)The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant). Such consideration may consist of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than six months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

9.Exercise of Option.

(a)Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the case of Options granted to Officers, Directors and Consultants, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

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An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(b)Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least thirty (30) days) to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(c)Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee’s Disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(d)Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, at the time

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of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(e)Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

10.Non-Transferability of Options and Stock Purchase Rights. The Options and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

11.Stock Purchase Rights.

(a)Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, and the time within which such person must accept such offer. The terms of the offer shall comply in all respects with Section 260.140.42 of Title 10 of the California Code of Regulations. The offer shall be accepted by execution of a Restricted Stock purchase agreement in the form determined by the Administrator.

(b)Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock purchase agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or disability). The purchase price for Shares repurchased pursuant to the Restricted Stock purchase agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine. Except with respect to Shares purchased by Officers, Directors and Consultants, the repurchase option shall in no case lapse at a rate of less than 20% per year over five (5) years from the date of purchase.

(c)Other Provisions. The Restricted Stock purchase agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

(d)Rights as a Shareholder. Once the Stock Purchase Right is exercised, the purchaser shall have rights equivalent to those of a shareholder and shall be a shareholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 12 of the Plan.

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12.Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

(a)Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option or Stock Purchase Right, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options or Stock Purchase Rights have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option or Stock Purchase Right, as well as the price per share of Common Stock covered by each such outstanding Option or Stock Purchase Right, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option or Stock Purchase Right.

(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option or Stock Purchase Right will terminate immediately prior to the consummation of such proposed action.

(c)Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option and Stock Purchase Right shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option or Stock Purchase Right, the Optionee shall fully vest in and have the right to exercise the Option or Stock Purchase Right as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option or Stock Purchase Right shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option or Stock Purchase Right shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase

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Right immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

13.Time of Granting Options and Stock Purchase Rights. The date of grant of an Option or Stock Purchase Right shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or Stock Purchase Right, or such other date as is determined by the Administrator. Notice of the determination shall be given to each Employee to whom an Option or Stock Purchase Right is so granted within a reasonable time after the date of such grant.

14.Amendment and Termination of the Plan.

(a)Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b)Shareholder Approval. The Board shall obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c)Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

15.Conditions Upon Issuance of Shares.

(a)Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b)Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

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16.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

17.Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

18.Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

19.Information to Optionees and Purchasers. The Company shall provide to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Optionee or purchaser has one or more Options or Stock Purchase Rights outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

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EX-10.12

Exhibit 10.12

QUARK BIOTECH, INC.

1997 STOCK PLAN FOR ISRAELI EMPLOYEES

1.Scope of the Plan. This Plan is a sub-plan created under and pursuant to the Quark Biotech, Inc. 1997 Stock Plan (the “U.S. Plan”), which has been approved by the shareholders of Quark Biotech, Inc., and which provides that Israeli employees may benefit under this Plan. Options shall be granted under the Plan at the discretion of the Administrator and as reflected in terms of written option agreements, and are intended to qualify for preferred treatment under Israeli tax laws. Unless otherwise defined herein, the terms defined in the 1997 Plan shall have the same defined meanings in this Plan.

2.Purposes of the Plan. The purposes of this Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Directors of the Company’s subsidiary QBI Ltd. and to promote the success and business of QBI Ltd. and the Company. With respect to employees of QBI Ltd., Options granted under the Plan and the Shares issuable thereunder shall be held in escrow by a trustee to be approved by the Israeli Tax Authorities pursuant to Section 102 of the Israeli Income Tax Ordinance.

3.Definitions. As used herein, the following definitions shall apply:

(1)“Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 5 hereof.

(2)“Applicable Laws” means the requirements relating to the administration of stock option plans under Israeli law, the Ordinance, or U.S. State corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and/or the applicable laws of any other country or jurisdiction where Options are granted under the Plan.

(3)“Board” means the Board of Directors of the Company.

(4)“Code” means the Internal Revenue Code of 1986, as amended.

(5)“Committee” means a Committee of Directors appointed by the Board in accordance with Section 5 hereof.

(6)“Common Stock” means the Common Stock of the Company.

(7)“Company” means Quark Biotech, Inc., a California corporation and its Subsidiaries including QBI Enterprises Ltd.

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(8)“Director” means a member of the Board of Directors of the Company.

(9)“Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. An Employee shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(10)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(11)“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i)If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported, as quoted on such exchange or system for the last market trading day prior to the time of determination) as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii)If the Common Stock is quoted on the NASDAQ System (but not on the National Market System thereof) or regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or

(iii)In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(12)“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(13)“Option” means a stock option granted pursuant to the Plan. Options granted under the Plan shall be nonstatutory stock options and shall not qualify as incentive stock options under Sections 421 and 422 of the Code.

(14)“Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(15)“Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

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(16)“Optioned Stock” means the Common Stock subject to an Option.

(17)“Optionee” means the holder of an outstanding Option granted under the Plan.

(18)“Option Shares” means Shares issued upon exercise of Options.

(19)“Ordinance” means the Israeli Income Tax Ordinance (New Version), as amended.

(20)“Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(21)“Plan” means this 1997 Stock Plan for Israeli Employees.

(22)“QBI Ltd.” means QBI Enterprises Ltd., an Israeli company.

(23)“Rules” means the Income Tax Rules (Tax Reliefs on Issuance of Shares to Employees) 5749-1989 promulgated pursuant to Section 102, as amended.

(24)“Section 16(b)” means Section 16(b) of the Securities Exchange Act of 1934, as amended.

(25)“Section 102” means Section 102 of the Ordinance, as amended.

(26)“Share” means a share of the Common Stock of the Company, as adjusted in accordance with Section 13 below.

(27)“Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

(28)“Trustee” means a trustee to be approved by the Israeli Tax Authorities pursuant to Section 102 and the Rules.

4.Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares which may be subject to option and sold under the Plan is that number of shares equal to: (i) 1,370,000 Shares plus (ii) any Shares returned to the Company’s 1994 Stock Option Plan (the “1994 Plan”) as a result of termination of options under the 1994 Plan less the number of Shares issued under the U.S. Plan and any other subplans promulgated thereunder. The Shares may be authorized but unissued, or reacquired Common Stock.

If an Option should expire or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan

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upon exercise of an Option shall not be returned to the Plan and shall not become available for future distribution under the Plan.

5.Application of Section 102; The Trustee.

(1)It is the intention of QBI Ltd. and the Company that the provisions and tax benefits of Section 102 apply to the Options and Option Shares issued pursuant to the Plan to employees of QBI Ltd. The Options issued to employees of QBI Ltd. shall comply with the provisions of Section 102, the Rules and of the Escrow Agreement to be entered into between the Trustee and QBI (or the Company).

(2)In accordance with the provisions of Section 102, the Options and the Option Shares for employees of QBI Ltd. shall be issued to a Trustee and held by him for the benefit of the Optionees who are QBI Ltd. employees for a period of not less than two years from the date of issuance.

(3)After the two year holding period the Trustee shall not release or transfer such Options or the Options Shares before (i) withholding any applicable tax due pursuant to the Ordinance and the Rules; or (ii) receipt of an authorization from the Israeli Tax Authorities certifying that all such applicable taxes have been paid.

(4)The Options and Option Shares for employees of QBI Ltd. will be subject to the Terms and Conditions of Section 102 and the Rules.

6.Administration of the Plan.

(1)Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(2)Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)to determine the Fair Market Value;

(ii)to select the Employees to whom Options may from time to time be granted hereunder;

(iii)to determine the number of Shares to be covered by each such award granted hereunder;

(iv)to approve forms of agreement for use under the Plan;

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(v)to determine the terms and conditions, of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)to determine whether and under what circumstances an Option may be settled in cash under subsection 11(5) instead of Common Stock;

(vii)to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;

(viii)to initiate an Option Exchange Program;

(ix)to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

(x)to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable and subject to the Applicable Laws; and

(xi)to construe and interpret the terms of the Plan and awards granted pursuant to the Plan.

(3)Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

7.Eligibility.

(1)The persons eligible to participate in this Plan are Employees.

(2)Controlling Shareholders (as that term is defined in Section 5 of the Rules, Section 32(9) of the Ordinance) will not be eligible to participate in the Plan.

(3)Neither the Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionees’ relationship as an Employee of or with the Company, nor shall it interfere in any way with his or her right or the Company’s right to terminate such relationship at any time, with or without cause.

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8.Term of Plan. The Plan shall become effective upon its adoption by the Board and by the Board of Directors of QBI Ltd. It shall continue in effect for a term of ten (10) years unless sooner terminated under Section 15 of the Plan.

9.Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof.

10.Option Exercise Price and Consideration.

(1)The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:

(i)In the case of an Option

(1)granted to an Employee who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of the grant.

(2)granted to any other Employee, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

(2)The consideration to be paid for the Option Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator and may consist entirely of (1) cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares acquired upon exercise of an Option have been owned by the Optionee for more than six months on the date of surrender and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (5) delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Board shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

11.Exercise of Option.

(1)Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement.

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Except in the case of Options granted to Officers and Directors, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted. Unless the Administrator provides otherwise, vesting of Options granted to Officers and Directors hereunder shall be tolled during any unpaid leave of absence.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Trustee (if issued on exercise of Options held by the Trustee at the time of Exercise) or in the name of the Optionee or; if requested by the Optionee, in the name of the Optionee and his or her spouse (if issued on exercise of Options which were released and transferred with the provisions of Section 5(d) of the Plan. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Share are issued, except as provided in Section 13 of the Plan.

Exercise of an Option shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(2)Termination of Relationship as an Employee. Subject to the provision of Section 102, if an Optionee ceases to be an employee, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least thirty (30) days) to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares coved by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(3)Disability of Optionee. Subject to the provision of Section 102, if an Optionee ceases to be an Employee as a result of the Optionee’s disability, the Optionee may exercise the Option within such period of time as is specified in the Option Agreement (of at least six months) to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the

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absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. To the extent that Optionee is not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(4)Death of Optionee. Subject to the provision of Section 102, if an Optionee dies while an Employee, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, at the time of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If, after death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(5)Buyout Provisions. Subject to the provision of Section 102, the Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

12.Non-Transferability of Options. Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

13.Adjustments Upon Changes in Capitalization or Merger.

(1)Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option.

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(2)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(3)Merger or Asset Sale. In the event of a merger of the Company with or another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

14.Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option, or such other date as is determined by the Administrator. Notice of the determination shall be given to each Employee to whom an Option is so granted within a reasonable time after the date of such grant.

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15.Amendment and Termination of the Plan.

(1)Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(2)Shareholder Approval. The Board shall obtain Shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(3)Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

16.Conditions Upon Issuance of Shares.

(1)Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(2)Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

17.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

18.Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

19.Shareholder Approval. The Plan shall be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted. Such shareholder approval shall be obtained in the degree and manner required under Applicable Laws.

20.Information to Optionees and Purchasers. The Company shall provide to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Optionee or purchaser has one or more Options outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during

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the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

21.Taxes. The Optionee shall bear and timely pay any and all taxes levied in connection with the granting of the Options and the Option Shares. The Company, QBI Ltd. and/or the Trustee will have the right to withhold any such taxes which are not duly paid by the Optionee or which are to be withheld pursuant to any Applicable Law.

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EX-10.13

Exhibit 10.13

QUARK BIOTECH, INC.

1997 STOCK PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.

I.NOTICE OF STOCK OPTION GRANT

The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

Date of Grant	«                   »
Vesting Commencement Date	«     »
Exercise Price per Share	$«               »
Total Number of Shares Granted	«             »
Total Exercise Price	$«                    » USD
Type of Option:	o	Incentive Stock Option
	o	Nonstatutory Stock Option
Term/Expiration Date:	«                             »

Vesting Schedule:

This Option shall be exercisable, in whole or in part, according to the following vesting schedule:

«                             »

Termination Period:

This Option shall be exercisable for three months after Optionee ceases to be a Service Provider. Upon Optionee’s death or Disability, this Option may be exercised for one year after Optionee ceases to be a Service Provider. In no event may Optionee exercise this Option after the Term/Expiration Date as provided above.

II.AGREEMENT

1.Grant of Option. The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase the number of Shares set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 14(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”).

2.Exercise of Option.

(a)Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement.

(b)Method of Exercise. This Option shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the ˜Exercise Notice˜) which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with Applicable laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

3.Optionee’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, the Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.

4.Lock-Up Period. Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act. Such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

5.Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee:

(a)cash or check;

(b)consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(c)surrender of other Shares which, (i) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

6.Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law.

7.Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

8.Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option.

9.Tax Consequences. Set forth below is a brief summary as of the date of this Option of some of the federal tax consequences of exercise of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

(a)Exercise of ISO. If this Option qualifies as an ISO, there will be no regular federal income tax liability upon the exercise of the Option, although the excess, if any,

of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as an adjustment to the alternative minimum tax for federal tax purposes and may subject the Optionee to the alternative minimum tax in the year of exercise.

(b)Exercise of Nonstatutory Stock Option. There may be a regular federal income tax liability upon the exercise of a Nonstatutory Stock Option. The Optionee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Optionee is an Employee or a former Employee, the Company will be required to withhold from Optionee’s compensation or collect from Optionee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

(c)Disposition of Shares. In the case of an NSO, if Shares are held for at least one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an ISO, if Shares transferred pursuant to the Option are held for at least one year after exercise and of at least two years after the Date of Grant, any gain realized on disposition of the Shares will also be treated as long-term capital gain for federal income tax purposes. If Shares purchased under an ISO are disposed of within one year after exercise or two years after the Date of Grant, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (1) the Fair Market Value of the Shares on the date of exercise, or (2) the sale price of the Shares. Any additional gain will be taxed as capital gain, short-term or long-term depending on the period that the ISO Shares were held.

(d)Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two years after the Date of Grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee.

10.Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of the State of California.

11.No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE

FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

OPTIONEE:	QUARK BIOTECH, INC.
Signature	By Daniel Zurr
Print Name	Its President
Residence Address

EXHIBIT A

1997 STOCK PLAN

EXERCISE NOTICE

Quark Biotech, Inc.

1059 Serpentine Lane

Pleasanton, CA 94566

Attention:  President

1.Exercise of Option. Effective as of today,                   ,          , the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase                  shares of the Common Stock (the “Shares”) of Quark Biotech, Inc. (the “Company”) under and pursuant to the 1997 Stock Plan (the “Plan”) and the Stock Option Agreement dated                ,          (the “Option Agreement”).

2.Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement.

3.Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

4.Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 12 of the Plan.

5.Company’s Right of First Refusal. Before any Shares held by Optionee or any transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”).

(a)Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating:  (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).

(b)Exercise of Right of First Refusal. At any time within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below.

(c)Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

(d)Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

(e)Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice, that any such sale or other transfer is effected in accordance with any applicable securities laws and that the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

(f)Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

(g)Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Shares upon the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended.

6.Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

7.Restrictive Legends and Stop-Transfer Orders.

(a)Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

(b)Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c)Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

8.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

9.Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

10.Governing Law; Severability. This Agreement is governed by the internal substantive laws but not the choice of law rules, of the State of California.

11.Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This Agreement, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

Submitted by:	Accepted by:
OPTIONEE:	QUARK BIOTECH, INC.
Signature	By Daniel Zurr
Print Name	Its President
Address:
	Date Received

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:

COMPANY:QUARK BIOTECH, INC.

SECURITY:COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

(a)Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(b)Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company and any other legend required under applicable state securities laws.

(c)Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including:  (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

(d)Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

Signature of Optionee:
Date:	,

EX-10.14

 Exhibit 10.14

QUARK BIOTECH, INC.

1997 STOCK PLAN

NOTICE OF STOCK OPTION GRANT

FOR ISRAELI EMPLOYEES

Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.

Dear:                                                   , Trustee for the benefit of «    »

The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

Date of Grant	«            »
Vesting Commencement Date	«                            »
Exercise Price per Share	«        » USD
Total Number of Shares Granted	«                        »
Total Exercise Price	«                    » USD
Term/Expiration Date:	«                »

Vesting Schedule:

This Option shall be exercisable, in whole or in part, according to the following schedule:

Termination Period:

Subject to the provisions of Section 102, this Option shall be exercisable for three months after Optionee ceases to be an Employee. Upon Optionee’s death or Disability, this Option may be exercised for one year after Optionee ceases to be an Employee. In no event may Optionee exercise this Option after the Term/Expiration Date as provided above.

QUARK BIOTECH, INC.

STOCK OPTION AGREEMENT

1.Grant of Option. Quark Biotech, Inc., a California corporation (the “Company”), hereby grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase the number of Shares of Common Stock (the “Shares”) set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”) subject to the terms, definitions and provisions of the 1997 Stock Plan for Israeli Employees as amended and restated (the “Plan”) adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option. Subject to 15(3) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

2.Exercise of Option.

(1)Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement.

(2)Method of Exercise. This Option shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements may be required by the Company. Such Exercise Notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.

No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares.

3.Application of Section 102.

(1)It is the intention of QBI Ltd. and the Company that the provisions and tax benefits of Section 102 apply to this Option and any Optioned Stock issued pursuant to this Option. The Optionee shall comply with the provisions of Section 102, the Rules and of the Escrow Agreement to be entered into between the Trustee and QBI Ltd. (or the Company).

(2)In accordance with the provisions of Section 102, the Option and any Optioned Stock shall be issued to a Trustee and held by such Trustee for the benefit of Optionee for a period of not less than two years from the date of issuance.

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(3)After the two year holding period the Trustee shall not release or transfer the Option or any Optioned Stock before (i) withholding any applicable tax due pursuant to the Ordinance and the Rules; or (ii) receipt of an authorization from the Israeli Tax Authorities certifying that all such applicable taxes have been paid.

(4)The Option and Optioned Stock shall be subject to the terms and conditions of Section 102 and the Rules.

(5)No Optionee may claim an exemption from Israeli Tax pursuant to Section 97(a) of the Ordinance or pursuant to Part E’2 of the Ordinance in connection with a transfer by such Optionee of an Option or Optioned Stock prior to the end of the Holding Period (and defined in Section 1(1) of the Rules).

(6)Each Optionee shall be obligated to immediately notify the Company and the Trustee of his or her request, if any, to the Income Tax Authorities pursuant to Section 6(b) of the Rules in the event the Optioned Stock is registered on any stock exchange. Nothing herein shall obligate the Company to register the Shares or any of the Company’s stock on a stock exchange.

(7)In the event a stock split or stock dividend is declared on Shares, all post-split or post-dividend Shares held by the Trustee for the benefit of Optionee shall be subject to the provisions of this Section.

(8)Under Section 102 and the Rules, the tax relief thereunder shall not apply and the Optionee shall be required to promptly pay any applicable tax at such time as: (i) the Optionee’s employment is terminated during, the two year Holding Period (other than because of death or other reasons beyond the Optionees control which are acceptable to the Income Tax Authorities), (ii) the Company, QBI Ltd or the Optionee fail to comply with any of the conditions of Section 102, the Rules or other conditions prescribed by the Income Tax Authorities; or (iii) the Income Tax Authorities withdraw or cancel their approval for the plan in which event, the Trustee shall continue to hold the Optioned Stock or Option (to the extent the Options remains exercisable following termination of employment) for the remainder of the applicable Holding Period under Section 102.

(9)The Optionee acknowledges that the Option has been granted to him or her in lieu of wages.

4.Currency Control Act Restrictions. Any payment made by the Optionee to the Company or QBI Ltd. in connection with the exercise of this Option shall be made through an account in the Optionee’s name (the “Account”) with such commercial bank as is designated by the Company from time to time, and shall comply in all respects with the Currency Control Law, 1978 of Israel (the “CCL”). Any shares or other proceeds to be delivered to the Optionee by the Company upon exercise of this Option shall also be delivered to the Account. Similarly, all sales of Shares by the Optionee will be made out of the Account. OPTIONEE REPRESENTS THAT OPTIONEE HAS READ, UNDERSTANDS AND AGREES TO BE BOUND BY THE PROVISIONS OF THIS SECTION 4, AND UNDERSTANDS AND AGREES THAT THIS

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SECTION 4 MAY BE AMENDED FROM TIME TO TIME TO COMPLY WITH CHANGES IN THE CCL.

5.Optionee’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.

6.Lock-Up Period. Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act. Such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

7.Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof (in U.S. currency), at the election of the Optionee:

(1)cash (including wire transfer); or

(2)certified check; or

(3)consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(4)surrender of other shares of Common Stock of the Company which (A) in the case of Shares acquired pursuant to the exercise of an Option, have been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised.

8.Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Law.

9.Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

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10.Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option.

11.Tax Consequences. Any tax consequences arising in connection with the grant or exercise of the Optioned Stock shall be borne solely by the Optionee. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE ENTERING THIS AGREEMENT AND EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

12.Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely, to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of Israel.

13.No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE, AT THE WILL OF QBI LTD OR THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS AN EMPLOYEE AT ANY TIME, WITH OR WITHOUT CAUSE.

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Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof and of Section 102 and the Rules, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

OPTIONEE:	QUARK BIOTECH, INC.
	QBI LTD.
Signature	By:	Daniel Zurr
		President
Print Name
Residence Address:

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EXHIBIT A

1997 STOCK OPTION PLAN

EXERCISE NOTICE

FOR ISRAELI EMPLOYEES

Quark Biotech, Inc.

1059 Serpentine Lane

Pleasanton, CA 94566

Attention: President

1.Exercise of Option. Effective as of today,                 ,        the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase              shares of the Common Stock (the “Shares”) of Quark Biotech, Inc. (the “Company”) under and pursuant to the 1997 Stock Plan for Israeli Employees (the “Plan”, as amended and restated) and the Stock Option Agreement dated                ,               (the “Option Agreement”).

2.Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement.

3.Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

4.Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 14 of the Plan.

5.Company’s Right of First Refusal. Before any Shares held by Optionee or any transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”).

(1)Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).

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(2)Exercise of Right of First Refusal. At any time within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below.

(3)Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

(4)Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

(5)Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

(6)Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

(7)Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Shares 90 days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended.

6.Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee

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represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

7.Restrictive Legends and Stop-Transfer Orders.

(1)Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

(2)Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(3)Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

8.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth,

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this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

9.Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

10.Governing Law; Severability. This Agreement is governed by the internal substantive laws but not the choice of law rules, of Israel.

11.Entire Agreement. The Plan and Notice of Grant/Option Agreement are incorporated herein by reference. This Agreement, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

Submitted by:	Accepted by:
OPTIONEE	QUARK BIOTECH, INC.
Signature	By:	Daniel Zurr
		President
Address:

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EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:
COMPANY:	QUARK BIOTECH, INC.
SECURITY:	COMMON STOCK
AMOUNT:
DATE:

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

(1)Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(2)Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company, a legend prohibiting their transfer without the consent of the Commissioner of Corporations of the State of California and any other legend required under applicable state securities laws.

(3)Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer

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qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than two years after the later of the date the Securities were sold by the Company or the date they were sold by an affiliate of the Company, within the meaning of Rule 144, the Securities to be sold; and, in the case of an affiliate, or of a non-affiliate who has held the Securities less than three years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

(4)Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

Signature of Optionee:
Date:	,

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EX-10.15

Exhibit 10.15

QUARK BIOTECH, INC.

THE 2003 ISRAELI STOCK OPTION PLAN

(Adopted on May 16, 2003)

(*In compliance with Amendment No. 132 of the Israeli Tax Ordinance, 2002)

TABLE OF CONTENTS

		Page
1.	SCOPE OF THE PLAN	1
2.	PURPOSES OF THE PLAN	1
3.	DEFINITIONS	1
4.	SHARES SUBJECT TO THE PLAN	4
5.	ADMINISTRATION OF THE PLAN	4
6.	ELIGIBILITY	6
7.	DESIGNATION OF OPTIONS PURSUANT TO SECTION 102	6
8.	TRUSTEE	7
9.	TERM OF PLAN	7
10.	TERM OF OPTION	8
11.	OPTION EXERCISE PRICE AND CONSIDERATION	8
12.	VESTING OF OPTIONS	8
13.	TERM AND EXERCISE OF OPTION	9
14.	DIVIDENDS	10
15.	NON-TRANSFERABILITY OF OPTIONS	11
16.	ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER	11
17.	AMENDMENT AND TERMINATION OF THE PLAN	12
18.	CONDITIONS UPON ISSUANCE OF SHARES	12
19.	INABILITY TO OBTAIN AUTHORITY	13
20.	RESERVATION OF SHARES	13
21.	INFORMATION TO OPTIONEES AND PURCHASERS	13
22.	TAXES	13
23.	GOVERNMENT REGULATIONS	13
24.	CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES	13
25.	GOVERNING LAW & JURISDICTION	14
26.	NON-EXCLUSIVITY OF THE PLAN	14
27.	MULTIPLE AGREEMENTS	14

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This plan, as amended from time to time, shall be known as Quark Biotech Inc. 2003 Israeli Stock Option Plan (the “Plan”).

1.Scope of the Plan

This Plan is a sub-plan created under and pursuant to the Quark Biotech, Inc. 1997 Stock Plan (the “U.S. Plan”), which has been approved by the shareholders of Quark Biotech, Inc., and which provides that Israeli employees may benefit under this Plan. Options shall be granted under the Plan at the discretion of the Administrator and as reflected in terms of written Option Agreements. Unless otherwise defined herein, the terms defined in the U.S. Plan shall have the same defined meanings in this Plan.

2.Purposes of the Plan

The purposes of this Plan are to attract and retain in the employ of the Company and its Subsidiaries the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Directors, consultants, service providers and any other entity which the Administrator shall decide their services are considered valuable to the Company and its affiliates and to promote the success and business of the Company and its affiliates.

3.Definitions

As used herein, the following definitions shall apply:

(1)“Administrator” means the Board or any of its Committees as shall be administering the Plan in accordance with Section 5 hereof.

(2)“Applicable Laws” means the requirements relating to the administration of stock option plans under Israeli law, the Ordinance, or U.S. State corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and/or the applicable laws of any other country or jurisdiction where Options are granted under the Plan.

(3)“Approved 102 Option” means an Option granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Optionee.

(4)“Board” means the Board of Directors of the Company.

(5)“Capital Gain Option” or “CGO” as defined in Section 7.4 below.

(6)“Cause” means, (i) conviction of any felony involving moral turpitude or affecting the Company; (ii) any refusal to carry out a reasonable directive of the chief executive officer, the Board or the Optionee’s direct supervisor, which involves the business of the Company or any Parent or Subsidiary of the Company and was capable of being lawfully performed; (iii) embezzlement of funds of the Company or any Parent or Subsidiary of the Company, and (iv) any breach of the Optionee’s fiduciary duties or duties of care of the Company; including without limitation disclosure of confidential information of the Company.

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(7)“Code” means the Internal Revenue Code of 1986, as amended.

(8)“Committee” means a Committee of Directors appointed by the Board in accordance with Section 5 hereof.

(9)“Common Stock” means the Common Stock of the Company.

(10)“Company” means Quark Biotech, Inc., a California corporation.

(11)“Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the Ordinance.

(12)“Date of Grant” means, the date of grant of an Option, as determined by the Administrator and set forth in the Optionee’s Option Agreement.

(13)“Director” means a member of the Board of Directors of the Company.

(14)“Employee” means a person who is employed by the Company or any Parent or Subsidiary of the Company, including an individual who is serving as an officer holder (in compliance with Section 102), but excluding a Controlling Shareholder. An Employee shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company, its Parent, any Subsidiary, or any successor. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(15)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(16)“Exercise Price” means the purchase price for each Share subject to an Option.

(17)“Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i)If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation (“NASDAQ”) System, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported, as quoted on such exchange or system for the last market trading day prior to the time of determination) as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

Without derogating from the above, solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the Date of Grant the Company’s Common Stock is listed on any established stock exchange or a national market system or if the Company’s Common Stock will be registered for trading within ninety (90) days following the Date of Grant, the Fair Market Value of the Common Stock at the Date of Grant shall be determined in accordance with the average value of the Company’s Common Stock on the thirty

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(30) trading days preceding the Date of Grant or on the thirty (30) trading days following the date of registration for trading, as the case may be;

(ii)If the Common Stock is quoted on the NASDAQ System (but not on the National Market System thereof) or regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or

(iii)In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.

(18)“ITA” means the Israeli Tax Authorities.

(19)“Non-Employee” means a consultant, adviser, service provider, Controlling Shareholder or any other person who is providing services to the Company or to any Parent or Subsidiary of the Company but is not an Employee.

(20)“Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(21)“Ordinary Income Option” or “ORO” as defined in Section 7.5 below.

(22)“Option” means any option to purchase one or more Shares pursuant to the Plan.

(23)“102 Option” means any Option granted to Employees pursuant to Section 102 of the Ordinance.

(24)“3(i) Option” means an Option granted to a Non-Employee pursuant to Section 3(i) of the Ordinance.

(25)“Option Agreement” means a written or electronic agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan.

(26)“Option Exchange Program” means a program whereby outstanding Options are exchanged for Options with a lower exercise price.

(27)“Optioned Stock” means the Common Stock subject to an Option.

(28)“Optionee” means the holder of an outstanding Option granted under the Plan.

(29)“Ordinance” means the 1961 Israeli Income Tax Ordinance (New Version), as now in effect or as hereafter amended.

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(30)“Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(31)“Plan” means this 2003 Israeli Stock Option Plan.

(32)“Section 102” means Section 102 of the Ordinance, as now in effect or as hereafter amended.

(33)“Share” means a share of the Common Stock of the Company, as adjusted in accordance with Section 16 below.

(34)“Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

(35)“Trustee” means a trustee to be approved by the Israeli Tax Authorities pursuant to Section 102.

(36)“Unapproved 102 Option” means an Option granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.

(37)“Vesting Dates” means, as determined by the Administrator, the date as of which the Optionee shall be entitled to exercise the Options or part of the Options, as set forth in section 12 of the Plan.

4.Shares Subject to the Plan

Subject to the provisions of Section 16 of the Plan, the maximum aggregate number of Shares which may be subject to option and sold under the Plan is that number of shares equal to: (i) 3,870,000 Shares plus (ii) any Shares returned to the Company’s 1994 Stock Option Plan (the “1994 Plan”) as a result of termination of options under the 1994 Plan less the number of Shares issued under the U.S. Plan and any other sub-plans promulgated thereunder. The Shares may be authorized but unissued, or reacquired Common Stock.

If an Option should expire or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan upon exercise of an Option shall not be returned to the Plan and shall not become available for future distribution under the Plan.

5.Administration of the Plan

(1)Administrator. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.

(2)Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, and

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subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(i)to determine the Fair Market Value;

(ii)to select the Employees and Non-Employees to whom Options may from time to time be granted hereunder;

(iii)to determine the number of Shares to be covered by each Option granted hereunder;

(iv)to approve forms of agreement for use under the Plan;

(v)to determine the terms and conditions, of any Option granted hereunder. Such terms and conditions include, but are not limited to, the Exercise Price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi)to determine whether and under what circumstances an Option may be settled in cash under subsection 13(6) instead of Common Stock

(vii)to reduce the Exercise Price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;

(viii)to initiate an Option Exchange Program;

(ix)to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

(x)to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable and subject to the Applicable Laws; and

(xi)to construe and interpret the terms of the Plan and awards granted pursuant to the Plan.

(xii)to make an election as to the type of Approved 102 Option; and

(xiii)to designate the type of Options to be granted to Optionees.

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(3)Effect of Administrator’s Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Optionees.

6.Eligibility

(1)The persons eligible for participation in the Plan as Optionees shall include any Employees and/or Non-Employees of the Company or of any Parent or Subsidiary of the Company; provided, however, that (i) Employees may only be granted 102 Options; (ii) Non-Employees may only be granted 3(i) Options; and (iii) Controlling Shareholders may only be granted 3(i) Options.

(2)The grant of an Option hereunder shall neither entitle the Optionee to participate nor disqualify the Optionee from participating in, any other grant of Options pursuant to the Plan or any other option or share plan of the Company or any of any Parent or Subsidiary of the Company.

7.Designation Of Options Pursuant To Section 102

(1)The Administrator may designate Options granted to Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.

(2)The grant of Approved 102 Options shall be made under this Plan as described in Section 9 below, and shall be conditioned upon the approval of this Plan by the ITA.

(3)Approved 102 Options may either be classified as Capital Gain Options or Ordinary Income Options .

(4)Approved 102 Options elected and designated by the Administrator to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to herein as “CGOs”.

(5)Approved 102 Options elected and designated by the Administrator to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) shall be referred to herein as “OIOs”.

(6)The Company’s election of the type of Approved 102 Options as CGO or 0I0 granted to Employees (the “Election”), shall be appropriately filed with the ITA before the Date of Grant of an Approved 102 Option. Such Election shall become effective beginning the first Date of Grant of an Approved 102 Option under this Plan and shall remain in effect until the end of the year following the year during which the Company first granted Approved 102 Options. The Election shall obligate the Company to grant only the type of Approved 102 Option it has elected, and shall apply to all Optionees who were granted Approved 102 Options during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options simultaneously.

(7)All Approved 102 Options must be held in trust by a Trustee, as described in Section 8 below.

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(8)For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102 of the Ordinance and the regulations promulgated thereunder.

(9)With regards to Approved 102 Options, the provisions of the Plan and/or the Option Agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the Option Agreement. Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Option Agreement, shall be considered binding upon the Company and the Optionees.

8.Trustee

(1)Approved 102 Options which shall be granted under the Plan and/or any Shares allocated or issued upon exercise of such Approved 102 Options and/or other shares received subsequently following any realization of rights, including without limitation bonus shares, shall be allocated or issued to the Trustee and held for the benefit of the Optionees for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”). In the case the requirements for Approved 102 Options are not met, then the Approved 102 Options may be treated as Unapproved 102 Options, all in accordance with the provisions of Section 102 and regulations promulgated thereunder.

(2)Notwithstanding anything to the contrary, the Trustee shall not release any Shares allocated or issued upon exercise of Approved 102 Options prior to the full payment of the Optionee’s tax liabilities arising from Approved 102 Options which were granted to him and/or any Shares allocated or issued upon exercise of such Options.

(3)With respect to any Approved 102 Option, subject to the provisions of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, an Optionee shall not sell or release from trust any Share received upon the exercise of an Approved 102 Option and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Optionee.

(4)Upon receipt of an Approved 102 Option, the Optionee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with the Plan, or any Approved 102 Option or Share granted or issued to him thereunder.

9.Term of Plan

The Plan shall become effective upon its adoption by the Board. It shall continue in effect until the U.S. Plan terminates, unless sooner terminated under Section 17 of the Plan.

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10.Term of Option

The term of each Option shall be the term stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the Date of Grant thereof.

11.Option Exercise Price and Consideration

(1)The Exercise Price shall be determined by the Administrator, in its sole and absolute discretion, but shall be subject to the following:

(i)In the case of an Option

(1)granted to an Employee who, at the time of the grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of the grant.

(2)granted to any other Employee, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.

Each Option Agreement will contain the Exercise Price for each Optionee.

(2)The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator. Such consideration may consist of, without limitation, (1) cash, (2) check, (3) promissory note, (4) other Shares which (i) in the case of Shares acquired from the Company have been vested and owned by the Optionee for more than six months on the date of surrender and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Shares as to which said Option shall be exercised, (5) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan, or (6) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Board shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

(3)The Exercise Price shall be denominated in the currency of the primary economic environment of, either the Company or the Optionee (that is the functional currency of the Company or the currency in which the Optionee is paid) as determined by the Company.

12.Vesting of Options

(1)Subject to the provisions of the Plan, each Option shall vest on the Vesting Dates and for the number of Shares as shall be provided in the Option Agreement. However, no Option shall be exercisable after the expiration of the terms of the Option as set forth in the Option Agreement.

(2)An Option may be subject to such other terms and conditions on the time or times when it may be exercised, as the Administrator may deem appropriate. The vesting provisions of individual Options may vary.

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(3)Unless the Administrator provides otherwise, vesting of Options granted to Officers and Directors hereunder shall be suspended during any unpaid leave of absence.

13.Term and Exercise of Option

(1)Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Except in the case of Options granted to Officers and Directors, Options shall become exercisable at a rate of no less than 20% per year over five (5) years from the date the Options are granted.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment

authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Trustee (if issued on exercise of Options held by the Trustee at the time of Exercise) or in the name of the Optionee or; if requested by the Optionee, in the name of the Optionee and his or her spouse.

Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly upon exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Share are issued, except as provided in Section 16 of the Plan.

Exercise of an Option shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(2)Termination of Employment or Hired Services. If an Optionee ceases to be employed by or provide services to the Company or to any Parent or Subsidiary of the Company, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement (of at least thirty (30) days) to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for three (3) months following the Optionee’s termination. If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares coved by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

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(3)Disability of Optionee. If an Optionee ceases to be employed by or provide services to the Company or to any Parent or Subsidiary of the Company as a result of the Optionee’s disability, the Optionee may exercise the Option within such period of time as is specified in the Option Agreement (of at least six (6) months) to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s termination. To the extent that Optionee is not entitled to exercise the Option at the date of termination, or if Optionee does not exercise such Option to the extent so entitled within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(4)Death of Optionee. If an Optionee dies while he or she is employed by or providing services to the Company or to any Parent or Subsidiary of the Company, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement), by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option at the date of death. If, at the time of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If, after death, the Optionee’s estate or a person who acquired the right to exercise the Option by bequest or inheritance does not exercise the Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(5)For avoidance of any doubt, if termination of employment or service is for Cause, any outstanding unexercised Option (whether vested or non-vested), will immediately expire and terminate, and the Optionee shall not have any right in connection to such outstanding Options.

(6)Buyout Provisions. Subject to the provision of Section 102, the Administrator may at any time offer to buy out for a payment in cash or Shares, an Option previously granted, based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

14.Dividends

With respect to all Shares (but excluding, for avoidance of any doubt, any unexercised Options) allocated or issued upon the exercise of Options by the Optionee and held by the Optionee or by the Trustee, as the case may be, the Optionee shall be entitled to receive dividends in accordance with the quantity of such Shares, subject to the provisions of the Company’s Articles of Association (and all amendments thereto) and subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder.

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15.Non-Transferability of Options

Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee.

As long as Options and/or Shares are held by the Trustee on behalf of the Optionee, all rights of the Optionee over the Shares are personal, can not be transferred, assigned, pledged or mortgaged, other than by will or pursuant to the laws of descent and distribution.

16.Adjustments Upon Changes in Capitalization or Merger

(1)Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option.

(2)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until fifteen (15) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

(3)Merger or Asset Sale. In the event of a merger of the Company with or another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and

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exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.

17.Amendment and Termination of the Plan

(1)Amendment and Termination. The Board may at any time, but when applicable, after consulting with the Trustee, amend, alter, suspend or terminate the Plan.

(2)Shareholder Approval. The Board shall obtain Shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(3)Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.

18.Conditions Upon Issuance of Shares

(1)Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(2)Investment Representations. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

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19.Inability to Obtain Authority

The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

20.Reservation of Shares

The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

21.Information to Optionees and Purchasers

The Company shall provide to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such Optionee or purchaser has one or more Options outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information.

22.Taxes

The Optionee shall bear and timely pay any and all taxes levied in connection with the granting of the Options and the Shares, from the exercise of the Options, and from the sale of the Shares. The Company and/or any Parent or Subsidiary of the Company and/or the Trustee will have the right to withhold any such taxes which are not duly paid by the Optionee or which are to be withheld pursuant to any Applicable Law, rules, and regulations, including withholding taxes at source. Furthermore, the Optionee shall agree to indemnify the Company and/or any Parent or Subsidiary of the Company and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold any such tax from any payment made to the Optionee.

23.Government Regulations

The Plan, and the granting and exercise of Options hereunder, and the obligation of the Company to sell and deliver Shares under such Options, shall be subject to all Applicable Laws, whether of the State of Israel or of the United States or any other State having jurisdiction over the Company and the Optionee, including the registration of the Shares under the United States Securities Act of 1933, and the Ordinance and to such approvals by any governmental agencies or national securities exchanges as may be required. Nothing herein shall be deemed to require the Company to register the Shares under the securities laws of any jurisdiction.

24.Continuance of Employment or Hired Services

Neither the Plan nor the Option Agreement with the Optionee shall impose any obligation on the Company or any Parent or Subsidiary of the Company, to continue any Optionee in its

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employ or service, and nothing in the Plan or in any Option granted pursuant thereto shall confer upon any Optionee any right to continue in the employ or service of the Company or any Parent or Subsidiary of the Company or restrict the right of the Company or any Parent or Subsidiary of the Company to terminate such employment or service at any time.

25.Governing Law & Jurisdiction

The Plan shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to the Plan.

26.Non-Exclusivity of The Plan

The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. For the avoidance of doubt, prior grant of Options to Optionees of the Company under their employment agreements, and not in the framework of any previous option plan, shall not be deemed an approved incentive arrangement for the purpose of this Section.

27.Multiple Agreements

The terms of each Option may differ from other Options granted under the Plan at the same time, or at any other time. The Administrator may also grant more than one Option to a given Optionee during the term of the Plan, either in addition to, or in substitution for, one or more Options previously granted to that Optionee.

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EX-10.16

Exhibit 10.16

QUARK BIOTECH, INC.

2003 ISRAELI STOCK OPTION PLAN

NOTICE OF STOCK OPTION GRANT

FOR ISRAELI OPTIONEES

Unless otherwise defined herein, the terms defined in this Option Agreement shall have the same defined meanings in the Plan.

Dear:                                                   , Trustee for the benefit of «    »

The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

Date of Grant:	«                »
Vesting Commencement Date:	«                            »
Exercise Price per Share:	$«        » USD
Total Number of Shares Granted:	«                        »
Total Exercise Price:	$«                    » USD
Type of Option	Approved 102 Option:
	Capital Gain Option (CGO) ;or Ordinary Income Option (OIO)
	Unapproved 102 Option
	3(i) Option
Term/Expiration Date:	«                »

Vesting Schedule:

This Option shall be exercisable, in whole or in part, according to the following schedule:

«                    »

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Termination Period:

The Option shall be exercisable for three (3) months after Optionee ceases to be employed by or provide services to the Company or to any Parent or Subsidiary of the Company to the extent the Option is vested on the date of such termination. If Optionee ceases to be employed by or provide services to the Company or to any Parent or Subsidiary of the Company as the result of Optionee’s death or Disability, the Option may be exercised for one (1) year after the date of such termination to the extent the Option is vested on the date of such termination. In no event may the this Option be exercised after the Term/Expiration Date as provided above.

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QUARK BIOTECH, INC.

STOCK OPTION AGREEMENT (the “Option Agreement”)

1.Grant of Option. Quark Biotech, Inc., a California corporation (the “Company”), hereby grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase the number of Shares of Common Stock (the “Shares”) set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise Price”) subject to the terms, definitions and provisions of the 2003 Israeli Stock Option Plan (the “Plan”) adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in this Option Agreement shall have the same defined meanings in the Plan. In the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

2.Exercise of Option.

(1)Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement.

(2)Method of Exercise. This Option shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and such other representations and agreements may be required by the Company. Such Exercise Notice shall be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.

No Shares will be issued pursuant to the exercise of an Option unless such issuance and such exercise shall comply with Applicable Laws.

3.Application of Section 102.

(1)It is the intention of QBI Enterprises Ltd. (“QBI Ltd.”) and the Company that the provisions and tax benefits of Section 102 apply to this Option and any Optioned Stock issued pursuant to this Option. With respect to Approved 102 Options, the Optionee hereby acknowledges that he is familiar with the provisions of Section 102 and the regulations and rules promulgated thereunder, including without limitations the type of Option granted hereunder and the tax implications applicable to such grant. The Optionee shall comply with the provisions of Section 102 and the Escrow Agreement between the Trustee, the Company and QBI Ltd., attached as Exhibit C hereto.

(2)In accordance with the provisions of Section 102, Approved 102 Options and any Shares issued upon the exercise of Approved 102 Options shall be issued to a Trustee and held by such Trustee for the benefit of Optionee for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”).

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(3)With respect to any Approved 102 Option, subject to the provisions of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, an Optionee shall not sell or release from trust any Share received upon the exercise of an Approved 102 Option and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Optionee.

(4)At the lapse of the Holding Period the Trustee shall not release or transfer the Option or any Shares issued upon exercise of an Option before (i) withholding any applicable tax due pursuant to the Ordinance and the regulations and rules promulgated thereunder; or (ii) receipt of an authorization from the Israeli Tax Authorities certifying that all such applicable taxes have been paid.

(5)The Option and Optioned Stock shall be subject to the terms and conditions of Section 102 and the regulations and rules promulgated thereunder.

(6)With respect to Unapproved 102 Option, if the Optionee ceases to be employed by the Company or any Parent or Subsidiary of the Company, the Optionee shall extend to the Company and/or to a Parent or Subsidiary of the Company a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

(7)In the event a stock split or stock dividend is declared on Shares, all post-split or post-dividend Shares held by the Trustee for the benefit of Optionee shall be subject to the provisions of this Section.

4.Currency Control Act Restrictions. Any payment made by the Optionee to the Company or QBI Ltd. in connection with the exercise of this Option shall be made through an account in the Optionee’s name (the “Account”) with such commercial bank as is designated by the Company from time to time, and shall comply in all respects with the Currency Control Law, 1978 of Israel (the “CCL”). Any shares or other proceeds to be delivered to the Optionee by the Company upon exercise of this Option shall also be delivered to the Account. Similarly, all sales of Shares by the Optionee will be made out of the Account. OPTIONEE REPRESENTS THAT OPTIONEE HAS READ, UNDERSTANDS AND AGREES TO BE BOUND BY THE PROVISIONS OF THIS SECTION 4, AND UNDERSTANDS AND AGREES THAT THIS SECTION 4 MAY BE AMENDED FROM TIME TO TIME TO COMPLY WITH CHANGES IN THE CCL.

5.Optionee’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended, at the time this Option is exercised, Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.

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6.Lock-Up Period. Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act Optionee shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act. Such restriction shall apply only to the first registration statement of the Company to become effective under the Securities Act that includes securities to be sold on behalf of the Company to the public in an underwritten public offering under the Securities Act. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period.

7.Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof (in U.S. currency), at the election of the Optionee:

(1)cash (including wire transfer); or

(2)certified check; or

(3)consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(4)surrender of other shares of Common Stock of the Company which (A) in the case of Shares acquired from the Company , have been vested and owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised.

8.Restrictions on Exercise. This Option may not be exercised until such time as the U.S. Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such Shares would constitute a violation of any Applicable Law.

9.Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by the Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

10.Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option.

11.Tax Consequences. Any tax consequences arising in connection with the grant or exercise of any Option, from the payment for Shares covered thereby, from the exercise of the

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Options, and from the sale of the Shares, hereunder, shall be borne solely by the Optionee. The Company and/or any Parent or Subsidiary of the Company and/or the Trustee shall withhold taxes according to the requirements under the Applicable Laws, including withholding taxes at source. Furthermore, the Optionee hereby agrees to indemnify the Company and/or any Parent or Subsidiary of the Company and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold any such tax from any payment made to the Optionee.

The Optionee will not be entitled to receive from the Company and/or the Trustee any Shares allocated or issued upon the exercise of Options prior to the full payments of the Optionee’s tax liabilities arising from Options which were granted to him and/or Shares issued upon the exercise of Options. For the avoidance of doubt, neither the Company nor the Trustee shall be required to release any share certificate to the Optionee until all payments required to be made by the Optionee have been fully satisfied.

The receipt of the Options and the acquisition of the Shares to be issued upon the exercise of the Options may result in tax consequences. OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE ENTERING THIS AGREEMENT AND EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

12.Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of Israel.

13.No Guarantee of Continued Employment or Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE OR A SERVICE PROVIDER, AT THE WILL OF QBI LTD OR THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR A SERVICE PROVIDER OF THE COMPANY FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS AN EMPLOYEE OR A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof and of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, and hereby accepts this Option subject to all of the

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terms and provisions thereof Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.

OPTIONEE:	QUARK BIOTECH, INC.
Signature	By:	Daniel Zurr
		President
Print Name
Residence Address:

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EXHIBIT A

2003 ISRAELI STOCK OPTION PLAN

EXERCISE NOTICE

FOR ISRAELI OPTIONEES

Quark Biotech, Inc.

6501 Dumbarton Circle

Fremont, CA 94555

Attention: President

1.Exercise of Option. Effective as of today,                        ,       , the undersigned (“Optionee”) hereby elects to exercise Optionee’s option to purchase              shares of the Common Stock (the “Shares”) of Quark Biotech, Inc. (the “Company”) under and pursuant to the 2003 Israeli Stock Option Plan (the “Plan”, as amended and restated) and the Stock Option Agreement dated                      ,         (the “Option Agreement”).

2.Delivery of Payment. Optionee herewith delivers to the Company the full exercise price of the Shares, as set forth in the Option Agreement, together with any and all withholding taxes due in connection with the exercise of the Option.

3.Representations of Optionee. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

4.Rights as Shareholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 16 of the Plan.

5.Company’s Right of First Refusal. Before any Shares held by Optionee or any transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”).

(1)Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).

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(2)Exercise of Right of First Refusal. At any time within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below.

(3)Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

(4)Payment. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within 30 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

(5)Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice and provided further that any such sale or other transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

(6)Exception for Certain Family Transfers. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during the Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s immediate family or a trust for the benefit of the Optionee’s immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section.

(7)Termination of Right of First Refusal. The Right of First Refusal shall terminate as to any Shares 90 days after the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended.

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6.Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

7.Restrictive Legends and Stop-Transfer Orders.

(1)Legends. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.

(2)Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

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(3)Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

8.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

9.Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

10.Governing Law; Severability. This Agreement is governed by the internal substantive laws but not the choice of law rules, of Israel.

11.Entire Agreement. The Plan and Notice of Grant/Option Agreement are incorporated herein by reference. This Agreement, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

Submitted by:	Accepted by:
OPTIONEE	QUARK BIOTECH, INC.
Signature	By:	Daniel Zurr
		President
Address:

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EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

OPTIONEE	:
COMPANY	:	QUARK BIOTECH, INC.
SECURITY	:	COMMON STOCK
AMOUNT	:
DATE	:

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

(1)Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

(2)Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee’s investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company, a legend prohibiting their transfer without the consent of the Commissioner of Corporations of the State of California and any other legend required under applicable state securities laws.

(3)Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer

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qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than two years after the later of the date the Securities were sold by the Company or the date they were sold by an affiliate of the Company, within the meaning of Rule 144, the Securities to be sold; and, in the case of an affiliate, or of a non-affiliate who has held the Securities less than three years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

(4)Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

Signature of Optionee:

Date:

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EX-10.21

EXHIBIT 10.21

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

EXCLUSIVE LICENSE AGREEMENT

“ISOLATION AND APPLICATION OF P53 INHIBITORS TO CONTROLLING TISSUE RESPONSE TO A VARIETY OF STRESSES AND FACILITATING ANTI-CANCER TREATMENT”
(UIC Tech ID #CS01)

TABLE OF CONTENTS

PREAMBLE
ARTICLES:
I	DEFINITIONS
II	GRANT
III	DUE DILIGENCE
IV	PAYMENTS
V	REPORTS AND RECORDS
VI	PATENT MAINTENANCE, ENFORCEMENT AND DEFENSE
VII	CONFIDENTIALITY
VIII	REPRESENTATIONS, WARRANTIES AND COVENANTS
IX	INDEMNIFICATION, PRODUCT LIABILITY
X	EXPORT CONTROLS
XI	NON-USE OF NAMES
XII	ASSIGNMENTS
XIII	TERMINATION
XIV	DISPUTE RESOLUTION
XV	PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
XVI	MISCELLANEOUS PROVISIONS

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This EXCLUSIVE LICENSE AGREEMENT is effective on the date last subscribed below (the “Effective Date”), and is by and between THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS, a body corporate and politic of the State of Illinois (“UNIVERSITY”) with offices in Chicago, Illinois 60612, and QUARK BIOTECH, INC., a California corporation with principal offices at 1059 Serpentine Lane, Pleasanton, California 94566, (“QBI”).

WITNESSETH

WHEREAS, in the course of research conducted under UNIVERSITY auspices, Dr. Andrei Gudkov and Elena Komarova in the Department of Molecular Genetics of UNIVERSITY (the “INVENTORS”), have produced an invention entitled [ * ] (the “INVENTION”) which is covered by the Patent Rights as defined in Article 1.5 below;

WHEREAS, pursuant to an assignment by Drs. Gudkov and Komarova to UNIVERSITY of all their right, title and interest in and to the INVENTION and any patents resulting therefrom, UNIVERSITY is the owner of the INVENTION and the corresponding Patent Rights, and has the right to grant licenses under said Patent Rights;

WHEREAS, UNIVERSITY desires to have the Patent Rights utilized in the public interest and QBI seeks to commercially develop the Patent Rights, and accordingly, the UNIVERSITY is willing to grant to QBI an exclusive license to its interest in the INVENTION and the Patent Rights on the terms and conditions set forth herein;

WHEREAS, LICENSEE seeks to commercially develop the Patent Rights through a thorough, vigorous and diligent program of exploiting the Patent Rights whereby public utilization shall result therefrom; and

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

ARTICLE I – DEFINITIONS

For the purpose of this Agreement, the following words and phrases shall have the following meanings:

1.1          “LICENSEE” shall mean QBI.

1.2          “Affiliate” shall mean any person, firm, corporation or other entity controlling, controlled by, or under common control with a party hereto. The term “control” wherever used throughout this Agreement shall mean ownership, directly or indirectly, of more than 50% of the equity capital. Other than LICENSEE, any corporation, company, partnership, joint venture, firm, individual or other entity which does not come within this definition shall be a “Non-Affiliate”.

1.3          “University Existing Technology” and “Sponsor Existing Technology” have the meaning given to them in the Research Agreement between UNIVERSITY and QBI effective September 1, 1999, attached hereto as Appendix A and incorporated herein by reference (“Research Agreement”).

1.4          “Confidential Information” means (i) any proprietary or confidential information or material in tangible form disclosed hereunder that is marked as “Confidential” at the time it is delivered to the receiving party, (ii) any proprietary or confidential information disclosed orally hereunder that is identified as confidential or proprietary when disclosed and such disclosure is confirmed in writing to the receiving party within 30 days by the disclosing party, and (iii) any information concerning the terms of this Agreement.

1.5          “Patent Rights” shall mean all of the following UNIVERSITY owned intellectual property:

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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(a)           the United States patent application entitled [ * ] and all foreign patent applications based on this U.S. application;

(b)           United States and foreign patents issued from this application, and divisionals and continuations of this application;

(c)           claims of U.S. and foreign continuation-in-part applications, and of the resulting patents which are directed to subject matter specifically described in the U.S. patent application Serial Number [ * ]; and

(d)           any reissues or re-examinations of patents described in (a), (b), or (c), above.

1.6          A “Licensed Product” shall mean any product or part thereof developed by or on behalf of LICENSEE which:

(a)           is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights which have not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction and which have not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise in any country in which such product is made, used or sold relative to said product or part; or

(b)           is manufactured by using a process which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights which have not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction and which have not been admitted to be invalid or unenforceable through reissue, disclaimer or otherwise in the country in which any such process is used or in which any such product is used or sold relative to said process.

1.7          A “Licensed Process” shall mean any process which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights in any country in which such process is practiced.

1.8          “Net Sales” shall mean the gross amount invoiced by LICENSEE or Affiliate for sales of Licensed Products or Licensed Processes to Non-Affiliate independent third parties, less the sum of the following:

(a)           promotional allowances, rebates, credits and cash, trade and quantity discounts, in amounts customary in the trade, actually taken;

(b)           excise taxes, sales, use, value added, and other consumption taxes and other compulsory payments to governmental authorities, actually paid;

(c)           outbound transportation charges and related insurance costs prepaid or allowed;

(d)           amounts allowed or credited due to returns and uncollectible amounts;

(e)           cost of any shipping packages and packing, if billed separately;

(f)            import and/or export duties and tariffs actually paid;

(g)           rebates; and

(h)           interest, service, finance, or sales or carrying charges paid by customers for extension of credit

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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No deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by LICENSEE or Affiliates and on its payroll, or for cost of collections. Licensed Products shall be considered “sold” when billed or invoiced.

1.9          “Sublicense” shall mean the right to make, use or sell Licensed Products or Licensed Processes, other than by outright sale to any Non-Affiliate (including any Non-Affiliated distributor).

ARTICLE 2

GRANT

2.1          UNIVERSITY hereby grants to LICENSEE an exclusive worldwide right and license in any field of use, including the right to sublicense, to make, have made, use, lease, offer to sell, export and otherwise exploit UNIVERSITY’s right, title and interest in the Licensed Products or Licensed Processes derived from the Patent Rights, on a royalty-bearing basis until the end of the last to expire patent of the Patent Rights on a country by country basis, subject to the rights reserved in Section 2.2 below.

2.2          Notwithstanding any other provisions of this Agreement, it is agreed that UNIVERSITY shall retain the right to use (subject to LICENSEE’s right to use) the technology being licensed under the Patent Rights, including any improvements, solely for its own non-commercial teaching and research activities; subject, however, to confidentiality obligations as set forth in Article VII.

2.3          LICENSEE hereby agrees that every Sublicense to which it shall be party and which shall relate to the rights, privileges and license granted hereunder shall contain a statement describing the date upon which LICENSEE’S exclusive rights, privileges and license hereunder shall terminate.

2.4          LICENSEE agrees that any Sublicenses granted will be in terms consistent and not in conflict with any of the material terms and conditions of this Agreement including, without limitation the provisions under Articles III, V, VII, VIII, IX, X, XI, XIII and XVI of this Agreement.

2.5          LICENSEE agrees to forward to UNIVERSITY a copy of any and all fully executed sublicense agreements within [ * ] of execution of same, and further agrees to forward to UNIVERSITY within [ * ] a copy of such reports received by LICENSEE from its sublicensees during the preceding [ * ] period under the Sublicenses as shall be pertinent to a royalty accounting under said Sublicense agreements.

2.6          Subject to the Research Agreement and other than the Existing Technology, the license granted hereunder shall not be construed to confer any rights upon LICENSEE by implication, estoppel or otherwise as to any technology not included in the Patent Rights and to which or in which LICENSEE does not otherwise have rights, title or an interest.

ARTICLE 3

DUE DILIGENCE

3.1          LICENSEE and its sublicensees shall use commercially reasonable efforts to bring Licensed Products or Licensed Processes to market [ * ] exploitation of the Patent Rights. Non-compliance with this Section 3.1 shall be grounds for termination.

3.2          In addition, LICENSEE and UNIVERSITY shall adhere to the following:

(a)           LICENSEE shall deliver to UNIVERSITY within [ * ] of Effective Date of this Agreement a business plan including [ * ], to the extent formed by LICENSEE. Similar reports shall be provided to UNIVERSITY within [ * ] to relay update and status information on LICENSEE’s progress on development of the Patent Rights, including projections of activity anticipated for the next reporting year.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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(b)           LICENSEE shall be responsible for diligently and promptly taking all reasonable steps to secure all required and/or necessary governmental approvals to sell, exploit, or market any and all Licensed Products. Subject to the terms and conditions of the Research Agreement, the Licensee shall meet the Milestones set forth below. Licensee can request extension of each Milestone deadline for a period of one (1) year upon payment of a fee of [ * ] for each extension requested (“Extended Deadline”).

(i)            If Licensee fails to [ * ], or within the Extended Deadline, than the licenses set forth in Section 2.1 for that particular Licensed Product shall terminate and be no longer valid, unless Licensee shall have earlier demonstrated to the satisfaction of the University that there is a valid cause for delaying the [ * ].

(ii)           If Licensee fails to [ * ], or within the Extended Deadline, than the licenses set forth in Section 2.1 for that particular Licensed Product shall terminate and be no longer valid, unless Licensee shall have earlier demonstrated to the satisfaction of the University that there is a valid cause for delaying the [ * ].

(c)           UNIVERSITY agrees to provide existing back-up data and documentation as may be required by regulatory agencies for purposes of supporting applications under government review.

(d)           LICENSEE shall advise UNIVERSITY, through [ * ] reports to be provided [ * ] pursuant to Section 5.2 below, of its program of development for and status of obtaining said approvals.

ARTICLE 4

PAYMENTS

4.1          For the rights, privileges and licenses granted hereunder, LICENSEE shall pay to the UNIVERSITY, in the manner hereinafter provided, until the end of the last to expire patent of the Patent Rights on a country by country basis or until this Agreement shall be terminated, as hereinafter provided, whichever occurs first:

(a)           a royalty in an amount equal to [ * ] of the aggregate Net Sales by LICENSEE or any Affiliate of the Licensed Products or Licensed Processes;

(b)           a [ * ] payments received by LICENSEE from sublicensees, based on Net Sales of Licensed Products or Licensed Processes by sublicensees, exclusive of [ * ] covered by Section 4.1(c) below; and

(c)           a [ * ]. No payments will be made under this Section 4.1(c) to the extent already covered under Section 4.1(b).

4.2          In the event a competitive product is sold in a country by an unlicensed thirdpart, and such third party’s activities demonstrably diminish LICENSEE’s capability to compete in the market, UNIVERSITY agrees to meet with LICENSEE to negotiate a reduction of royalties due for sales in that country, provided LICENSEE provides to the UNIVERSITY, prior to such meeting, [ * ].

4.3          Only one royalty shall be payable with respect to any unit of Licensed Product regardless of whether it is covered by more than one of the Patent Rights patent applications or Patent Rights patents licensed under this Agreement, or to be covered in more than one subsection of Section 4.1 hereof.

4.4          Royalty payments shall be paid quarterly within [ * ] of the close of each calendar quarter ending March 31, June 30, September 30 and December 31, in United States dollars in Chicago, Illinois,

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or at such other place as UNIVERSITY may reasonably designate consistent with the laws and regulations controlling in any foreign country, but not in any other currency. If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made by using the exchange rate prevailing at [ * ] on the last business day of the calendar quarterly reporting period to which such royalty payments relate.

4.5          Any taxes required to be paid or withheld on account of amounts payable to UNIVERSITY under this Agreement shall be deducted from the amounts due pursuant to Section 4.1 at the rates specified by applicable law or treaty. LICENSEE shall provide to UNIVERSITY, as soon as practical, receipts of payment of any such taxes from the appropriate taxing authority.

4.6          In the event that the LICENSEE’s, the Affiliates or its Sublicensees development, manufacture, use or sale of a Product would constitute an infringement of any patent right or intellectual property right of any third party, the Parties shall together use their reasonable endeavors to obtain an appropriate license from such third party. If such license requires LICENSEE to pay royalties to such third party, the royalty due and payable to the University under this Agreement for sale of the Product shall be reduced by [ * ] the amount which the Licensee is required to pay to said third party, provided that no royalty due to the University hereunder shall be reduced by more than [ * ].

ARTICLE 5

REPORTS AND RECORDS

5.1          LICENSEE shall keep full, true and accurate records pertaining to the sale or other disposition of the Licensed Products or Licensed Processes in sufficient detail as may be necessary to show the amounts payable to UNIVERSITY hereunder. Said records shall be kept at LICENSEE’s principal place of business. For the term of this Agreement, upon receipt of [ * ] prior written notice, UNIVERSITY shall have the right to cause an independent, certified public accountant to audit such records to confirm LICENSEE’s, affiliate’s and sublicensee’s Net Sales and royalty payments and all other payments or exchanges related to Patent Rights for the preceding year at UNIVERSITY’s expense. Such audits may be exercised during normal business hours once a year.

5.2          LICENSEE, within [ * ] after [ * ] of each year, shall deliver to UNIVERSITY true and accurate reports, giving such particulars of the business conducted by LICENSEE and its sublicensees during the preceding [ * ] period under this Agreement as shall be pertinent to a royalty accounting hereunder. These shall include at least the following, to be itemized per Licensed Product or Licensed Process:

(a)           number of Licensed Products commercially used, manufactured and sold, rented or leased;

(b)           total billings for Licensed Products and Licensed Processes commercially used, sold, rented or leased;

(c)           deductions applicable as provided in Paragraph 1.8.

(d)           total royalties due;

(e)           [ * ];

(f)            [ * ].

(g)           [ * ]; and

(h)           [ * ].

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5.3          If no royalties shall be due, LICENSEE shall so report.

ARTICLE 6

PATENT MAINTENANCE, ENFORCEMENT AND DEFENSE

6.1          Subject to this Article VI, UNIVERSITY shall control all decisions and activities related to the preparation, pursuit, filing, issuance, maintenance, enforcement and prosecution of the Patent Rights. UNIVERSITY shall diligently take all reasonable steps to obtain issuance of pending patent application(s) included in the Patent Rights in the name of The Board of Trustees of the University of Illinois. UNIVERSITY shall promptly provide LICENSEE with copies of all relevant documentation so that LICENSEE may be informed and appraised of the status of the Patent Rights at all times. The parties shall coordinate and communicate with each other during the term of this Agreement with respect to the filing and prosecution of patent applications and foreign counterparts thereto in respect of any invention in order to promote comprehensive cost-efficient patent coverage. UNIVERSITY agrees it will not abandon any patent application or issued patent if LICENSEE desires to continue prosecution or maintenance, provided LICENSEE is not in default of its payment obligations hereunder.

6.2          UNIVERSITY shall use its best efforts to amend any patent application to include claims reasonably requested by LICENSEE and required to protect the Licensed Products contemplated to be sold under this agreement.

6.3          LICENSEE shall be responsible for and pay all costs and expenses incurred by UNIVERSITY for the preparation, filing, prosecution, issuance, and maintenance of the Patent Rights pre-dating the Effective Date and post-dating the Effective Date for the term of this Agreement.

6.4          LICENSEE and UNIVERSITY shall promptly notify the other in writing of any alleged or threatened infringement of any Patent included in the Patent Rights or claiming the Invention. Both parties shall use their best efforts in cooperating with each other to terminate such infringement without litigation. LICENSEE shall have the first right to bring and control any action or proceeding with respect to such infringement at its own expense and by counsel of its own choice, and UNIVERSITY shall have the right, at its own expense, to be represented in any action involving any Patent Rights by counsel of its choice. If LICENSEE fails to bring an action or proceeding within (i) [ * ] following the notice of alleged infringement or (ii) [ * ] before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, UNIVERSITY shall have the right to bring and control any such action at its own expense and by counsel of its own choice, and LICENSEE shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. In the event a party brings an infringement action, the other party shall cooperate fully, including if required to bring such action, the furnishing of a power of attorney. Neither party shall have the right to settle any patent infringement litigation under this Section 6.4 in a manner that diminishes the rights or interests of the other party without the consent of such other party, which consent shall not be unreasonably withheld. All costs of any action to enforce the Patent Rights taken by LICENSEE shall be borne by LICENSEE and LICENSEE shall keep any recovery of damages derived therefrom, [ * ]. All costs of any action to enforce the Patent Rights taken by UNIVERSITY shall be borne be UNIVERSITY and UNIVERSITY shall share with LICENSEE any recovery of damages derived therefrom on a pro rata basis per costs incurred by UNIVERSITY and LICENSEE respectively in such policing activity.

6.5          LICENSEE, during the exclusive period of this Agreement, shall have the sole right in accordance with the terms and conditions herein to sublicense any alleged infringer for future use of the Patent Rights, with any royalty covered by Section 4.1 above to be paid to UNIVERSITY as required.

6.6          LICENSEE and UNIVERSITY shall promptly notify the other in writing of any allegation by a third party that the activity of either of the parties infringes or may infringe the intellectual property rights on such third party. LICENSEE shall defend the claim at its own expense and by counsel of its own choice including, without limitation, the right to settle, compromise or otherwise pursue such defense in

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any manner and on such terms as LICENSEE shall determine. UNIVERSITY agrees to provide assistance to LICENSEE as may be reasonably necessary or appropriate to pursue such actions. If LICENSEE fails to proceed with regard to such defense within (i) [ * ] following the notice of alleged infringement or [ * ] before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, or otherwise elects not to defend such a claim, UNIVERSITY shall have the right to defend the claim at its own expense and by counsel of its choice including, without limitation, the right to settle, compromise or otherwise pursue such defense in any manner and on such terms as UNIVERSITY shall determine. [ * ] of the royalty payments due from LICENSEE to UNIVERSITY hereunder shall be placed in escrow pending a resolution of the action. If it is determined by judgment or settlement that LICENSEE is required to make payments to said third party in order to continue to market, distribute or sell or otherwise use the Licensed Products, than any such payments owing to such third party shall be credited and offset against the escrowed royalty payments and LICENSEE may, at its option, terminate this Agreement pursuant to Section 13.2.

ARTICLE 7

CONFIDENTIALITY

7.1          During the term of this Agreement and for a period of [ * ] after termination thereof, each party will maintain all Confidential Information in trust and confidence and will not disclose any Confidential Information to any third party or use any Confidential Information for any purpose except as expressly authorized by this Agreement. Each party may use such Confidential Information only to the extent required to accomplish the purposes of this Agreement, including sublicensing. Each party will use the highest standard of care to protect Confidential Information and to ensure that its employees, agents, consultants and other representatives or, in the case of the UNIVERSITY, students, do not disclose or make any unauthorized use of the Confidential Information. Each party will promptly notify the other upon discovery of any unauthorized use or disclosure of the Confidential Information.

7.2          Confidential Information shall not include information that:

(a)           is now, or hereafter becomes, through no act or failure to act on the part of the receiving party, in the public domain or published;

(b)           is in possession of the receiving party at the time of receiving such information, as evidenced by its prior written records;

(c)           is hereafter furnished to the receiving party by a third party, as a matter of right and without restriction on disclosure; or

(d)           is required by law or a court order to be disclosed or is the subject of a written permission to disclose provided by the disclosing party.

7.3          Notwithstanding the above, a party may disclose Confidential Information of the other party:

(a)           to potential sublicensees to the extent such disclosure is reasonably necessary and provided sublicensee personnel are bound by obligations of confidentiality no less restrictive than those provided hereunder; or

(b)           if required by law or a court order to be disclosed or is the subject of a written permission to disclose provided by the disclosing party; to regulatory agencies in order to obtain registrations required; and to professional advisors, consultants and/or potential investors in connection with a private placement or public offering.

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ARTICLE 8

REPRESENTATIONS, WARRANTIES AND COVENANTS

8.1          Each party hereby represents and warrants that such party is duly organized and validly existing under the laws of the state of its incorporation and has full power and authority to enter into this Agreement and to carry out the provisions hereof.

8.2          Each party hereby represents and warrants that such party is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder and that this Agreement is a legal and valid obligation binding upon each party, enforceable in accordance with its terms. The execution, delivery and performance of this Agreement by such party does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any law or regulation of any court, governmental body or administrative or other agency having authority over it.

8.3          UNIVERSITY hereby represents that, to the best of its knowledge, no University patents or patent applications, other than the rights granted to LICENSEE hereunder to the Patent Rights, conflict with the representations and rights given to LICENSEE under this Agreement.

ARTICLE 9

INDEMNIFICATION, PRODUCT LIABILITY

9.1          LICENSEE shall at all times during the term of this Agreement and thereafter, indemnify, defend and hold UNIVERSITY, its trustees, officers, employees and affiliates, harmless against all claims, expenses, damages or liability (collectively, the “Losses”) including legal expenses and reasonable attorneys’ fees, resulting from the production, manufacture, sale, use, lease, consumption or advertisement of the Licensed Product(s) or arising from any obligation of LICENSEE hereunder, except to the extent that such Losses result from UNIVERSITY’s gross negligence or willful misconduct.

9.2          For the term of this Agreement, upon the commencement of production, sale, or transfer, whichever occurs first, of any Licensed Product, LICENSEE shall obtain and carry in full force and effect liability insurance which shall protect LICENSEE and UNIVERSITY in regard to events covered by Section 8.1 above, the nature and extent of which insurance coverage shall be commensurate with usual and customary industry practices, as determined by LICENSEE’s good faith assessment.

9.3          Except as otherwise expressly set forth in this Agreement, UNIVERSITY AND SPONSOR MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING.

ARTICLE 10

EXPORT CONTROLS

It is understood that UNIVERSITY is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended and the Export Administration Act of 1979), and that its obligations hereunder are contingent on compliance with applicable United States export laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without prior approval of such agency. UNIVERSITY neither represents that a license shall not be required nor that, if required, it shall be issued, but shall provide to

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LICENSEE reasonable assistance for determining the need for and the procuring of such license or other consent. LICENSEE agrees to comply with all applicable export and import control laws governing sales of Licensed Products and Licensed Processes.

ARTICLE 11

NON-USE OF NAMES

LICENSEE shall not use the names of the University of Illinois nor any of its employees, nor any adaptation thereof, in any advertising, promotional or sales literature without prior written consent obtained from UNIVERSITY in each case, except that LICENSEE may state that it is licensed by UNIVERSITY under one or more of the Patents comprising the Patent Rights and, if appropriate, that research related to the INVENTION or Patent Rights is ongoing at UNIVERSITY.

ARTICLE 12

ASSIGNMENT

12.1        This Agreement may not be assigned by LICENSEE other than to QBI Enterprises Ltd., an Israeli limited liability company and a subsidiary of LICENSEE, without prior written consent from UNIVERSITY.

12.2        Notwithstanding the foregoing prohibition, LICENSEE may, without UNIVERSITY’s consent, merge into, consolidate with, or transfer substantially all of its assets (“substantially” being respectively [ * ] or more thereof) as an entirety to any corporation, so long as the successor surviving corporation in any such merger, consolidation, transfer or reorganization assumes in writing the obligations of this Agreement. Such merger, consolidation, transfer or reorganization shall not in any way be a breach of this Article XII, nor be any default under this Agreement.

ARTICLE 13

TERMINATION

13.1        Either party may terminate this Agreement upon [ * ] written notice upon the occurrence of any of the following:

(a)           Upon or after the bankruptcy, insolvency, dissolution or winding-up of the other party (other than dissolution or winding-up for the purposes of reconstruction or amalgamation); or

(b)           Upon or after the breach of any material provision of this Agreement by the other party if the breaching party has not cured such breach within [ * ] following written notice of termination by the other party.

13.2        LICENSEE shall have the right to terminate this Agreement with or without cause at any time upon [ * ] advance written notice to UNIVERSITY subject to LICENSEE’s remittance of payments that may be due under this Agreement up to the effective date of termination. All rights granted to LICENSEE hereunder shall revert to UNIVERSITY upon the effective date of such termination.

13.3        Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such termination. LICENSEE shall return to UNIVERSITY all materials containing Licensed Product (exclusive of materials relating to Sponsor Existing Technology); provided, however, that LICENSEE shall have the right for one year thereafter to dispose of all Licensed Products then in its inventory, and shall pay royalties thereon, in accordance with the provisions of Article IV and shall submit the related reports as required by Article V, as though this Agreement had not terminated. Each party shall, promptly upon termination, return to the

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other party Confidential Information received from the other party and still subject to obligations of confidentiality hereunder, and neither party shall thereafter be entitled under this Agreement to use any such Confidential Information of the other party for any purpose.

ARTICLE 14

DISPUTE RESOLUTION

Other than any claim arising from LICENSEE’s failure to pay royalties due under this Agreement, any controversy or bonafide disputed claim arising under this Agreement between the parties, which dispute cannot be resolved by mutual agreement, shall, by the election of either party, be resolved by submitting to dispute resolution before a fact-finding body composed of one or more experts in the field, selected by mutual agreement within thirty days of written request by either party. Said dispute resolution shall be held in Chicago or at such other place as shall be mutually agreed upon in writing by the parties. The fact-finding body shall determine who shall bear the cost of said resolution. In the event that the parties cannot mutually agree within said thirty (30) days on the dispute resolution body, the parties will apply the procedural rules of a mutually agreeable forum.

ARTICLE 15

PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

Any payment, notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of receipt if sent to such party by telefax or overnight courier, or on the date three days after mailing if sent by certified mail, postage prepaid, addressed to it at its address below or as it shall designate by written notice given to the other party:

In the case of UNIVERSITY:

Intellectual Property Office

Office of the Vice Chancellor of Research

University of Illinois at Chicago

1737 West Polk Street, 312 AOB (M/C 672)

Chicago, Illinois 60612

ATTN: Director, Intellectual Property Office

In the case of LICENSEE:

Quark Biotech, Inc.

c/o QBI Enterprises, Ltd.

Weizmann Scientific Park

Building 3, 4^th Floor

P. O. Box 741

Nes Ziona, Israel 74106

ATTN: Daniel Zurr, President & CEO

FAX: 011-972-8-940-6476

ARTICLE 16

MISCELLANEOUS PROVISIONS

16.1        This Agreement shall be construed, governed, interpreted and applied in accordance with the laws of the State of Illinois, U.S.A., except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent was granted.

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16.2        The parties hereto acknowledge that this Agreement together with the Research Agreement set forth the entire Agreement and understanding of the parties hereto as to the subject matter hereof, and shall not be subject to any change or modification except by the execution of a written instrument subscribed to by the parties hereto.

16.3        The provisions of this Agreement are severable, and in the event that any provisions of this Agreement shall be determined to be invalid or unenforceable under any controlling body of the law, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof.

16.4        LICENSEE agrees to mark the Licensed Products sold in the United States with all applicable United States patent numbers. All Licensed Products shipped to or sold in other countries shall be marked in such a manner as to conform with the patent laws and practice of the country of manufacture or sale.

16.5        The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party.

16.6        This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be an original and all such counterparts shall together constitute but one and the same agreement.

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IN WITNESS WHEREOF, the parties have hereunto set their hands and seals and duly executed this Agreement the day and year set forth below.

THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS

By:	/s/ Craig S. Bazzani				Date:	9/1/99
			Craig S. Bazzani, Comptroller
Attest:		/s/ Michele M. Thompson		9/2/99	Date:	APPROVED:
			Michele M. Thompson, Secretary			/s/ Jill A. Tarzian Sorensen	9-1-99
						Jill A. Tarzian Sorensen            Date
						Director
						Intellectual Property Office
QUARK BIOTECH, INC.					Date:	9.3.99
By:			/s/ Daniel Zurr
			Dr. Daniel Zurr, President and CEO

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APPENDIX A

RESEARCH AGREEMENT

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RESEARCH AGREEMENT

This Research Agreement is entered into as of September 1, 1999 (“Effective Date”) by and between The Board of Trustees of The University of Illinois, a body corporate and politic of the State of Illinois, with principal offices at Urbana, Illinois, and offices in Chicago, Illinois 60612 (“University”), and Quark Biotech, Inc., a California corporation with principal offices at 1059 Serpentine Lane, Pleasanton, California 94566 (“Sponsor”).

WHEREAS, the University and Sponsor desire to undertake a collaborative research program (“Research Program”) based on application of Existing Technologies (as defined in Schedule I); and

WHEREAS, the Research Program is to be funded by Sponsor and carried out, in part, in the University’s laboratories pursuant to the terms and conditions set forth herein, and in part in the Sponsor’s laboratories.

NOW, THEREFORE, in consideration of the premises hereof and the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1.             STATEMENT OF WORK

a.             Objectives. The University and the Sponsor shall collaborate in the research according to this Agreement directed towards [ * ], based on p53 gene [ * ].

b.             Resource Commitment. The University shall, with the funds and/or equipment and/or technology made available by the Sponsor, furnish the necessary and appropriate personnel, materials, services, laboratories and other facilities and equipment for the conduct of its part of the work and initial Research Program (“Program”) described in Schedule II hereto and incorporated herein by reference. The Program may be amended or modified from time to time as the parties shall mutually agree. The University and Sponsor shall each permit the other party and any of its personnel to visit the laboratories or other facilities where the Research Program is being conducted at reasonable times and make all personnel who are engaged in the Research Program available to consult with the other party and any of its personnel during such visits or by telephone and/or by correspondence during the term of the Research Program.

c.             Conduct of Research. The Research Program shall be conducted in accordance with the Program and the Budget (as defined below) within the time periods contemplated therein as set forth in Schedule II(a) and (b) respectively. The Sponsor and the University agree to commence performance of the Research Program within [ * ] of the Effective Date hereof and each agrees to conduct the Research Program in a prudent and skillful manner in accordance [ * ] with the Program and Budget and all applicable federal, state and local laws, rules or regulations, and subject to the terms and conditions hereof. With respect to the Research Program set forth in Schedule II(a), Sponsor agrees that the University will [ * ] provided that, (i) Sponsor shall, [ * ]; (ii) the University shall [ * ]; and (iii) Sponsor [ * ].

2.             PRINCIPAL INVESTIGATOR. All research at the University in the subject matter of the Research Program shall be performed by Dr. Andrei Gudkov, as Principal Investigator, and the

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research team under his supervision, and subject to this Agreement. The University hereby assigns Dr. Andrei Gudkov as the Principal Investigator for directing the performance of the Research Program. The University shall notify Sponsor immediately if such Principal Investigator becomes unavailable and shall identify a successor, subject to Sponsor’s approval. If Sponsor does not approve the successor identified by the University or the University does not or cannot identify a successor, this Agreement may be terminated by Sponsor subject to Section 13 hereof.

3.             PERIOD OF PERFORMANCE.

a.             Term of Research Program. The period of performance of the Research Program set forth in Schedule II(a) will be three (3) years, commencing on September 1, 1999, and ending on August 31, 2002. The period of performance of the Research Program set forth in Schedule II(b) will be one (1) year, commencing on September 1, 1999, and ending on August 31, 2000. The term of the Research Program may be extended upon mutual written consent.

b.             Sponsor’s Right to Terminate Research Program. The Research Program may be terminated at any time prior to its expiration if Sponsor determines, at its sole discretion, that the Research Program is no longer viable or commercially feasible. In such case. Sponsor will notify University of that decision in writing, and the parties will work together to (i) [ * ].

4.             RESEARCH PROGRAM FUNDING.

a.             Budget. The Sponsor will pay the University up to the amounts set forth in the budget attached hereto as Schedule III and incorporated herein by reference (“Budget”), which Budget shall reflect the actual costs incurred in carrying out the performance of this Agreement plus the indirect costs assessed at the rate(s) agreed to by the parties. The University shall certify in writing, upon presentment of each Report (as defined below) that work as budgeted has been actually performed and that the University is in fact complying with all other provisions of this Agreement, and shall provide Sponsor with a written expense report for all amounts expended, pursuant to the Budget during the previous quarterly period. The aggregate annual cost under this Agreement shall not exceed the amount stated therefor in the Budget. The University is not obligated to expend any other funds on the Program nor is the Sponsor obligated to pay the University in excess of the stated amount set forth in the Budget, or to otherwise increase the Budget. The University, together with the Principal Investigator, shall be responsible for the correct and appropriate distribution and/or allocation of the funds in accordance with the Budget.

b.             Payments. The University shall be reimbursed within [ * ] after it submits its quarterly Report and expense report pursuant to Section 5(a) to Sponsor for costs incurred during the previous quarter with final payment to the University due upon Sponsor’s receipt of a final Report, marked as such, from the University no later than [ * ] after the expiration of the term of the Research Program. Payments shall be by check payable to the University of Illinois, and mailed to:

University of Illinois at Chicago

Office of Research Services

304 AOB, M/C 672

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1737 W. Polk Street

Chicago, Illinois 60612-7227

ATTN:  Paula Means, Director

c.             Equipment. Subject to Schedule II, [ * ] under this Agreement.

5.             FISCAL MANAGEMENT. The University shall maintain complete and accurate accounting records in accordance with accepted accounting practices for institutions of higher education. These records shall be available for inspection, review and audit at reasonable times during the term of this Agreement and for a period of [ * ] after the termination hereof by the Sponsor or any of its duly authorized representatives, at Sponsor’s expense.

6.             WORK PRODUCT. Subject to the provisions of Section 8 herebelow, each party shall own the work product, tangible and intangible, that it generates under this Agreement, and shall maintain records of its activities with respect to the Research Program in sufficient detail so as to properly reflect all work done and results achieved in the performance of the Research Program. Each party shall have reasonable access to all materials and data generated by or on behalf of the other party with respect to any and all work carried out under the Research Program, for each party’s internal, non-commercial use, not including work product licensed by Sponsor from University hereunder, subject to the confidentiality obligations in Section 9 hereof.

7.             REPORTS. The University and Sponsor, as collaborators in the Research Program, shall each provide to the other party a written report within [ * ] after the end of each calendar quarter, commencing after the end of the first full calendar quarter following the Effective Date of this Agreement, summarizing the progress and status of the Program set forth in Schedule II(a) (each, a “Report”). Within [ * ] following the end of the term of the Research Program set forth in Schedule II(a), the University and Sponsor will each furnish to the other party a final technical Report summarizing the work performed pursuant to the Program and the results thereof.

8.             INTELLECTUAL PROPERTY.

a.             Ownership of Technology. It is hereby acknowledged and agreed that each party has rights (including patent and other intellectual property rights) to certain technologies related to the Research Program (“University Existing Technology” as defined in Schedule I(a) hereto, and “Sponsor Existing Technology” as defined in Schedule I (b) hereto, collectively the “Existing Technologies”), and each party acknowledges that it does not have nor shall have any rights, title or interest to the other party’s Existing Technology. With the exception of the Existing Technologies, Sponsor and University agree that each shall notify the other of inventions, discoveries and intellectual property conceived, reduced to practice or otherwise developed under the Research Program (i) by the Principal Investigator and his personnel (“UIC Invention”); (ii) by Sponsor and its personnel at its laboratories in connection with the Research Program set forth in Schedule II(a) (“Sponsor Invention”); or (iii) jointly by personnel of the Sponsor and the Principal Investigator and his personnel under the Research Program (“Joint Inventions”), collectively referred to as “Inventions”.

b.             Notification of Inventions and Discoveries. Each party shall promptly notify the other in writing of any Invention within [ * ] of such discovery. Disclosure to and from

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University shall be made by filing of an Invention Disclosure statement with the University’s Intellectual Property Office. Copy of each such Invention Disclosure statement and the respective application filed with the patent office shall be sent promptly to Sponsor. All disclosures and notifications made pursuant to this clause 8(b) shall be deemed Confidential Information, as defined below, and subject to the provisions respecting confidentiality in Section 9 below.

c.             License. The University hereby grants the Sponsor (i) an exclusive worldwide license to the University’s right, title and interest in the UIC Invention set forth in the Exclusive License Agreement between the University and Sponsor dated as of the date hereof and attached hereto as Exhibit A (“License A”), and (ii) an exclusive option to obtain exclusive worldwide licenses to the University’s right, title and interest in any other UIC Invention or Joint Invention disclosed. Such option shall be for a [ * ] period, commencing with the date the notification of such Invention is received by Sponsor, and shall be exercised in writing by Sponsor, at which time the parties agree to execute license agreements (“License B”) in the same form and of the same terms and conditions as the Future Exclusive License Agreement attached hereto as Exhibit B.

d.             Patents. University shall control the preparation, filing, issuance, maintenance and prosecution of any U.S. or foreign patent application, including any division, continuation, continuation-in-part and substitution thereof, and any U.S. or foreign patent, including any reexamination, reissue, renewal, extension, confirmation, registration, revalidation and addition thereof with respect to any UIC Invention (the “UIC Patents”). Sponsor shall control the preparation, filing, issuance, maintenance and prosecution of any U.S. or foreign patent application, including any division, continuation, continuation-in-part and substitution thereof, and any U.S. or foreign patent, including any reexamination, reissue, renewal, extension, confirmation, registration, revalidation or addition thereof with respect to any Joint Invention (the “Joint Patents”). The party controlling patenting shall be free to decide in its sole discretion whether or not to file or continue prosecution or maintain any patent and shall engage counsel of its choice and at its expense to prepare, file, prosecute and maintain any such patents, in full consultation with the other party. The party controlling patenting shall communicate and coordinate with the other party its preparation, filing and prosecution of patent applications and shall provide the other party with copies of draft patent applications in sufficient time for the other party to comment thereon prior to filing, and shall give proper attention to any comments offered by the other party in preparing the final draft of the application for submission. The controlling party shall use its best efforts to amend any patent application to include claims reasonably requested by the other party and required to protect the UIC Inventions or Joint Inventions. The controlling party shall promptly provide the other party with copies of all relevant documentation and shall promptly share all patent filing and prosecution information, including notifying the other party of all filing and response deadlines so that the other party may be informed and appraised of the continuing prosecution, and the other party agrees to keep this documentation confidential. Should the controlling party elect not to prepare, file, prosecute or maintain a patent or discontinues its support of any of these activities, it shall promptly notify the other party but in no event later than [ * ] predating any response, filing or abandonment deadline, and the other party shall be free to decide, in its sole discretion and at its expense, whether or not to support or continue any such activities. The controlling party agrees to [ * ]

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promptly upon written request from the other party after it receives notice from the controlling party of its intention to abandon any patent rights in whole or in part, subject to any pre-existing rights of the federal government.

9.             CONFIDENTIALITY.

a.             Confidential information. During the course of the Research Program, the parties may each reveal to the other (i) any proprietary or confidential information or material in tangible form disclosed hereunder that is marked as “Confidential” at the time it is delivered to the receiving party, (ii) any proprietary or confidential information disclosed orally hereunder that is identified as confidential or proprietary when disclosed and such disclosure is confirmed in writing to the receiving party within 30 days by the disclosing party, and (iii) any information concerning the existence of this Agreement or its terms or the Research Program (including the Program, the Budget and any information or data generated pursuant thereto) (collectively, “Confidential Information”). Except as expressly provided herein, the parties agree that during the term of the Research Program and for a period of [ * ] thereafter, neither party shall use or disclose Confidential Information to any third party except for the purposes contemplated in this Agreement and the License. Notwithstanding the foregoing, the parties agree that Confidential Information useful or necessary for the conduct of the Program may be disclosed to the Principal Investigator and the authorized personnel working under his direct supervision and to Sponsor’s personnel in the course of conducting the Research Program, subject to such individuals being bound by confidentiality restrictions at least as restrictive as those herein.

b.             Protection of Confidential Information. Sponsor and University agree to protect all Confidential Information received from the other party from unauthorized use or disclosure with the highest degree of care and shall not copy or disseminate any Confidential Information or allow it to be copied or disseminated and shall return any Confidential Information given to it when requested to do so. Each party shall promptly notify the other upon discovery of any unauthorized use or disclosure of the other’s Confidential Information. The University shall cause the Principal Investigator and each individual working under his supervision with respect to the Research Program (including any graduate or other students and whether or not such individuals are employees of the University) to execute and deliver appropriate Non-Disclosure Agreements in the form attached hereto as Exhibit C. No individual shall be permitted to work on the Research Program unless he/she has executed such agreement.

c.             Exceptions. Confidential Information shall not include any information that (i) is now, or hereafter becomes, through no act or failure to act on the part of the receiving party, in the public domain or published; (ii) is in the possession of the receiving party prior to disclosure by the disclosing party, as evidenced by its written records; or (iii) is hereafter furnished to the receiving party by a third party, as a matter of right and without restriction on disclosure.

d.             Permitted Disclosures. Notwithstanding the above, a party may disclose Confidential Information of the other party:

(i)            to its personnel to the extent such disclosure is reasonably necessary to achieve the objectives of the Program and provided such personnel are bound by obligations of confidentiality no less restrictive than those provided hereunder;

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(ii)           to potential sublicensees to the extent such disclosure is reasonably necessary and provided sublicensee personnel are bound by obligations of confidentiality no less restrictive than those provided hereunder;

(iii)         if required by law or a court order to be disclosed or is the subject of a written permission to disclose provided by the disclosing party; to regulatory agencies in order to obtain registrations required; and to professional advisors, consultants and/or potential investors in connection with a private placement or public offering.

10.          PUBLICATION; PUBLICITY. University shall have the right to publish or otherwise present the results of the Research Program at symposia or academic meetings; provided that it first submit all proposed publications and presentations to the Sponsor [ * ] prior to submission of such proposed publication or presentation to a journal, editor or other third party. Sponsor shall have [ * ] after the receipt of the publication or presentation to review and comment upon it. Upon notice by Sponsor that Sponsor reasonably believes a patent application relating to an Invention should be filed prior to the publication or presentation or that exigent circumstances exist necessitating a delay in publication or presentation. Sponsor may request the University to delay and the University agrees to delay submission of the publication or presentation for up to an additional [ * ] from the date of Sponsor’s notification to the University or until a patent application or applications are filed, whichever come first. University shall give Sponsor appropriate recognition and credit for its contributions in all such publications and presentations at symposia or meetings including, without limitation, right of authorship and acknowledgement of QBI’s sponsorship. Any publicity, including press releases, press conferences or other disclosures, about the Research Program (including, without limitation, the establishment of any aspects of the Program, its progress or any results generated therefrom) shall be permitted only with the prior written approval of both the Sponsor and the University.

11.          RELATIONSHIP OF PARTIES. The University’s relationship to the Sponsor under this Agreement shall be that of independent contractor and not as an agent, joint venturer or partner of Sponsor, notwithstanding the joint ownership by University and Sponsor of certain Inventions hereunder.

12.          WARRANTIES AND INDEMNIFICATION. The University and Sponsor disclaim any guaranty that the Research Program shall be successful, in whole or in part. THE UNIVERSITY AND SPONSOR EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE RESEARCH PROGRAM, INCLUDING BUT NOT LIMITED TO, THE MARKETABILITY, USE OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE RESEARCH RESULTS DEVELOPED UNDER THE RESEARCH PROGRAM, OR THAT SUCH RESULTS DO NOT INFRINGE UPON ANY THIRD PARTY’S INTELLECTUAL PROPERTY RIGHTS. Sponsor agrees to indemnify and hold harmless the University and its employees and agents against any and all costs, damages and expenses, including reasonably attorneys’ fees, arising from any claim, damages and liabilities asserted by third parties arising from Sponsor’s use of the research results from the Research Program, except to the extent that the same is caused by any negligent or willful act or omission by or on behalf of the University. The University agrees to be responsible for any and all costs, damages and expenses, including reasonably attorneys’ fees, arising from any misrepresentation or breach by University of any of its covenants hereunder or

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the performance of any of its obligations under this Agreement, except to the extent that the same, is caused by any negligent or willful act or omission by or on behalf of the Sponsor. Notwithstanding anything to the contrary in the foregoing, neither party assumes any responsibility or liability for the nature, conduct or results of any research, testing or other work performed by the other party on such party’s premises.

13.          TERMINATION.

a.             Termination upon Default. Either party may terminate this Agreement upon      [ * ] written notice upon the occurrence of any of the following:

(i)            Upon or after the bankruptcy, insolvency, dissolution or winding-up of the other party (other than dissolution or winding-up for the purposes of reconstruction or amalgamation); or

(ii)           Upon or after the breach of any material provision of this Agreement by the other party if the breaching party has not cured such breach within the [ * ] following written notice of termination by the other party.

b.             Sponsor’s Right to Terminate. Sponsor shall have the right to terminate this Agreement (i) upon [ * ] written notice to the University if Sponsor does not approve of a successor Principal Investigator or no such successor is identified in accordance with Section 2; or (ii) upon [ * ] written notice to the University if Sponsor determines that the Research Program is no longer feasible in accordance with Section 3(b) and subject to the provisions of Section 3(b).

c.             Effect of Termination.

(i)            In the event of termination of this Agreement under the provisions of Section 13(b)(i) hereabove, University shall issue a final Report and, within [ * ] of receipt thereof, Sponsor shall pay to University the Pro rata portion of any direct or applicable indirect costs due to the University pursuant to the Budget which have been incurred up to and including the effective date of termination, or the University shall reimburse the Sponsor, on a pro rata basis, for any direct or applicable indirect costs that have been prepaid by Sponsor and which cover costs that have not been incurred by or at the time of termination. The termination of this Agreement under Section 13(b)(i) shall not relieve any party of any obligation or liability accrued hereunder prior to such termination nor affect or impair the rights of any party arising under this Agreement prior to and as of such termination including, without limitation, the right of Sponsor to obtain an exclusive license to Inventions and related patent and other intellectual property rights pursuant to the terms hereof. Any termination or cancellation of this Agreement or the Research Program under Section 13(b)(i) shall not terminate or cancel the License A or any License B executed, or options exercised for Inventions disclosed pursuant to Sections 8(b) and 8(c) above, prior to such termination. Without limiting the foregoing, Sections 7, 8, 9 and 12 shall survive termination of this Agreement as provided therein.

(ii)           In the event of termination of this Agreement under the provisions of Section 13(b)(ii) hereabove, University shall issue a final Report. The termination of this

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Agreement under Section 13(b)(ii) shall not relieve any party of any obligation or liability accrued hereunder prior to such termination nor affect or impair the rights of any party arising under this Agreement prior to and as of such termination including, without limitation, the right of Sponsor to obtain an exclusive license to Inventions and related patent and other intellectual property rights pursuant to the terms hereof. Any termination or cancellation of this Agreement or the Research Program hereunder shall not terminate or cancel the License A or any License B executed, or options exercised for Inventions disclosed pursuant to Sections 8(b) and 8(c) above, prior to such termination, with the exception that termination of the Research Program under the provisions of Section 3(b)(i) or 3(b)(iii) will result in termination or cancellation of all options exercised for Inventions disclosed pursuant to Sections 8(b) and 8(c) above for which license agreements have not been executed. Without limiting the foregoing, Sections 7, 8, 9 and 12 shall survive termination of this Agreement as provided therein.

14.          AMENDMENTS. This Agreement, together with the License and the Schedules and Exhibits attached hereto, embodies the entire understanding of the parties and shall supersede all previous communication, either verbal or written, between the parties relating to this Agreement. This Agreement may only be amended by the mutual written agreement of the parties hereto.

15.          ASSIGNMENT. This Agreement may not be assigned by either party without the prior written consent of the other; provided, however, that Sponsor may assign its rights, interest and obligations under this Agreement at any time and without the University’s consent, to QBI Enterprises, Ltd., an Israeli limited liability company and a subsidiary of Sponsor.

16.          GOVERNING LAW. This Agreement is to be governed by and construed in accordance with the laws of the State of Illinois.

17.          NOTICES. Any payment, notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of receipt if sent to such party by telefax or overnight courier, or on the date three days after mailing if sent by certified mail, postage prepaid, addressed to it at its address below or as it shall designate by written notice given to the other party:

In the case of UNIVERSITY:

University of Illinois at Chicago

Office of Research Services

304 AOB, M/C 672

1737 W. Polk Street

Chicago, Illinois 60612-7227

ATTN:  Paula Means, Interim Director

In the case of SPONSOR:

Quark Biotech, Inc.

c/o QBI Enterprises, Ltd.

Weizmann Scientific Park

Building 3, 4^th Floor

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P.O. Box 741

Nes Ziona, Israel 74106

Attn: Daniel Zurr, President & CEO

FAX: 011-972-8-940-6476

18.          DISPUTE RESOLUTION. Any controversy or bonafide dispute arising under this Agreement between the parties, which dispute cannot be resolved by mutual agreement, shall, by the election of either party, be resolved by submitting to dispute resolution before a fact-finding body composed of one or more experts in the field, selected by mutual agreement within thirty (30) days of written request by either party. Said dispute resolution shall be held in Chicago or at such other place as shall be mutually agreed upon in writing by the parties. The fact-finding body shall determine who shall bear the cost of said resolution. In the event that the parties cannot mutually agree within said thirty (30) days on the dispute resolution body, the parties will apply the procedural rules of a mutually agreeable forum.

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by affixing, their respective signatures below as of the day and year there noted.

THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS

	/s/ Craig S. Bazzani
Craig S. Bazzani, Comptroller			Date:
/s/ Michele M. Thompson		9/15/99
Michele M. Thompson, Secretary			Date:
APPROVED:
	/s/ Jill A. Tarzian Sorensen		9-1-99
Jill A. Tarzian Sorensen			Date
Director
Intellectual Property Office
QUARK BIOTECH, INC.
	/s/ Daniel Zurr		9/15/99
Dr. Daniel Zurr, President & CEO			Date:
AGREED AND ACKNOWLEDGED:
PRINCIPAL INVESTIGATOR
/s/ Andrei Gudkov			9-14-99
Dr. Andrei Gudkov			Date:

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SCHEDULE I:        DEFINITION OF EXISTING TECHNOLOGIES

(a)           UNIVERSITY EXISTING TECHNOLOGY

(b)           SPONSOR EXISTING TECHNOLOGY

SCHEDULE II:      RESEARCH PROGRAM

(a)           UNIVERSITY RESEARCH PROGRAM

(b)           QBI BIOCHIP TECHNOLOGY FACILITY PROGRAM

SCHEDULE III:     BUDGET FOR UNIVERSITY RESEARCH PROGRAM

EXHIBIT A:          EXCLUSIVE LICENSE AGREEMENT (“LICENSE A”)

EXHIBIT B:           FUTURE EXCLUSIVE LICENSE AGREEMENT (“LICENSE B”)

EXHIBIT C:           NON-DISCLOSURE AGREEMENT

Schedules & Exhibits

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SCHEDULE I(a)

UNIVERSITY EXISTING TECHNOLOGY

The United States patent application entitled [ * ]

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SCHEDULE I(b)

SPONSOR EXISTING TECHNOLOGY

“Sponsor Existing Technologies” shall mean QBI [ * ].

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SCHEDULE II(a)

UNIVERSITY RESEARCH PROGRAM

[ * ]

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SCHEDULE II(b)

[ * ]

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SCHEDULE III

BUDGET FOR UNIVERSITY RESEARCH PROGRAM

for the program of studies of Pifithrin-a
(September 1, 1999 – August 31, 2002)

Year 1
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
Year 2
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
Year 3
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]

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EXHIBIT A

EXCLUSIVE LICENSE AGREEMENT (“LICENSE A”)

{This License A is identical to the Exclusive License Agreement at the front of this Exhibit 10.21 to the Quark Biotech, Inc. Registration Statement on Form S-1 in executed form.}

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EXHIBIT B

FUTURE EXCLUSIVE LICENSE AGREEMENT (LICENSE B)

(UIC Tech ID #                )

[ * ]

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EXHIBIT C

NONDISCLOSURE AGREEMENT

[ * ]

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EX-10.22

Exhibit 10.22

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PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

COLLABORATION AGREEMENT

THIS AGREEMENT is made the sixth day of December, 2004

Between

atugen AG, a company incorporated under the laws of Germany, whose registered office is at Robert-Rössle-Str. 10, D13125 Berlin, Germany (hereinafter “Atugen”), of the first Part; and

Quark Biotech, Inc., a private limited company incorporated under the laws of California whose principal office is at 6540 Kaiser Drive, Fremont CA 94555, U.S.A. and QBI Enterprises Ltd., a private company incorporated under the laws of the State of Israel whose principal office is at Weizmann Science Park, P.O. box 4071, Nes Ziona 70400, ISRAEL, of the second Part (together hereinafter, “QBI”)

WHEREAS

A.Atugen has established proprietary technology and patent rights related to the development and manufacture of siRNA molecules potentially silencing any target in any species and has filed a patent application directed to biological aspects relating to the 801 gene in the field of cancer

B.QBI owns patent rights and know-how directed to the structure and function of the 801 gene and its role in diseases;

C.Atugen and QBI wish to engage in a collaborative research program with the aim of using Atugen’s technology to develop products directed to the 801 gene, for the treatment of cancer and other diseases in humans;

NOW, THEREFORE, it is agreed as follows:

1.             DEFINITIONS

“Affiliate” means any enterprise which controls, is controlled by, or is under common control with, such party as long as such control exists. For the purpose of the preceding sentence, the word “control” means the ownership of at least 50% of the outstanding voting stock of such enterprise or, a comparable equity interest in any other type of entity

“Atugen Background Technology” means any and all inventions, discoveries, methods and processes, improvements, know-how, technical information, data or other technology that is heretofore or hereafter discovered, conceived, made, developed

and/or reduced to practice by Atugen or its Affiliates, or owned in whole or in part by, or licensed (with a right to sublicense) to Atugen or its Affiliates and relates to: (i) the development and manufacture of siRNA molecules silencing gene targets in animals and humans, and (ii) the preparation of (liposome-based) formulations for the delivery of siRNA therapeutic products, as well as any and all intellectual property rights therein, including without limitation Patent Rights, copyright, trademark or trade secret rights. Atugen Background Technology related to patents and patent applications as of the date of this Agreement is identified in Schedule A1. The term Atugen Background Technology does not include the Atugen Program IP.

“Atugen Existing IP” means the Atugen Background Technology, and the Atugen Program IP.

“Atugen Products” – shall mean Products and Drug Products for the treatment of cancer in humans.

“Atugen Program IP” means certain stabilized, chemically modified siRNA molecule(s) silencing the human 801 gene and the mouse 801 gene that have been developed by Atugen prior to the date of this Agreement and certain lipids and liposome-based formulations, as identified in Schedule A2 hereto, and any and all intellectual property rights therein, including without limitation Patent Rights, copyright, trademark or trade secret rights.

“Clinical Development” means the trials conducted in human subjects to determine the safety, efficacy and pharmacokinetics of a compound as required by the US FDA. Clinical Development includes Phase I, Phase II, Phase III (and IV if required), and the New Drug Application (NDA) for Regulatory Approval by the FDA .

“First Commercial Sale” means the first sale to a third party in an arm’s length transaction for use or consumption in such country after required Regulatory Approval has been granted by the relevant regulatory authority in such country, provided that in a Major Market the First Commercial Sale shall not be deemed to have commenced until the annual Net Sales in that market exceeds [ * ].

“Formal Preclinical Development” means the aggregate of in vitro and in vivo studies required by the US FDA to determine the potential risk a compound poses to man and the environment, necessary and sufficient for an IND approval.

“Drug Product” means the Product formulated (such as e.g. using liposome-based Atugen Background Technology) for administration to man.

“IND” means an Investigational New Drug application filed with the FDA for a Drug Product in order to obtain approval for the commencement of clinical trials

“Know-How” means unpatented technical and other information, including information comprising or relating to concepts, discoveries, inventions, data, designs, formulae, ideas, methods, models, assays, research plans, procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development) processes (including manufacturing processes, specifications and techniques), laboratory records, chemical, pharmacological, toxicological, clinical,

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analytical and quality control data, trial data, case report forms, data analyses, reports or summaries and information contained in submissions to, and information from, ethical committees and regulatory authorities.

“Major Markets” shall mean any of: [ * ].

“Net Sales” shall mean the aggregate gross sales of any Product invoiced to third parties in an arm’s length transaction by QBI or Atugen or their Affiliates, less the following deductions (to the extent that such deductions are actually shown on the relevant invoices to third-party customers):

(a)any tax, duty or other governmental charge on the import or export, sale or use of any royalty-bearing Product (not including franchise tax or income tax);; and

(b)actual costs of transportation and insurance if invoiced to the customer; and

(c)and [ * ] deduction of [ * ] of the price invoiced for Products to cover all the usual sales expenses such as charges or allowances given or normal trade discounts allowed or commissions paid in lieu of trade discounts as well as credits or allowances given or made on account of return or rejection of any royalty-bearing Product;

“Patent Rights” shall mean any and all (a) patents, (b) pending patent applications, including, without limitation, all provisional applications, continuations, continuations-in-part, divisions, reissues, renewals, and all patents granted thereon, and (c) all patents-of-addition, reissue patents, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including, without limitation, supplementary protection certificates or the equivalent thereof.

“Products” means RNAi products that are (i) based on the Existing Atugen IP or discovered, developed or produced using the Existing Atugen IP, and (ii) are based on the QBI Existing IP and directed to the 801 gene.

“Proof of Concept” means those [ * ] that a Party deems [ * ].

“QBI Existing IP” means the present and future Patent Rights and Know-How owned by QBI and directed to the 801 polypeptide, to nucleic acid encoding the 801 polypeptide, antibody to the 801 polypeptide, antisense and siRNA to 801 gene and methods of treatment of diseases using these,including but not limited to rights to patents and patent applications listed in Schedule B.

“QBI Products” means Products and Drug Products for the treatment of human diseases other than cancer.

“Regulatory Approval” shall mean any and all MAA (Marketing Authorization Application) approvals or post-MAA approvals (including any applicable governmental price and reimbursement approvals), licenses, registrations, or authorizations of any federal, national, multinational, state, provincial or local regulatory agency, department,

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bureau or other governmental entity necessary for the development, manufacture, use, storage, import, transport, promotion, marketing and sale of a product in a country.

“Sublicense Royalties” shall mean net revenues from any royalties or similar payments that a Party or an Affiliate of a Party receives from a sublicensee on account of sales of Products by such sublicensee or its sublicensee

“Valid Patent Claim” shall mean: (i) a claim under an issued and unexpired patent which has not been revoked, held unenforceable or invalidated by a decision of a court or other governmental agency of competent jurisdiction, is unappealable or for which an appeal has not been filed within the time allowed for appeal and which has not been discharged, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise; or (ii) a claim in a pending patent application, which application: (a) is under active prosecution; or (b) for which formal examination has been requested; or (c) is a provisional application, the benefit of which can be claimed in a non-provisional application.

2.             SCOPE OF THE COLLABORATION

The Parties shall undertake the following activities in accordance with the terms of this Agreement, all of which shall together comprise the “Collaboration” for the purposes of this Agreement:

2.1           In the first stage of the Collaboration the Parties shall undertake a joint research program for the purpose of developing a Product or Products, which shall potentially have application in both Parties’ therapeutic area of interest. Such program shall include all research required for the development of such Products towards submission of an IND up to and including the Proof of Concept studies in animals, in accordance with the provisions of Section 3 herein (the “Joint Research Stage”);

2.2           In the second stage of the Collaboration, following the Joint Research Stage, each Party or its sublicensee shall independently undertake, at its own expense, such further pre-clinical and clinical drug development activities as are necessary to obtain Regulatory Approvals for the commercialization of Products in such Party’s therapeutic area of interest (the “Development Stage”). During the Development Stage of Collaboration the Parties shall determine which, if any, Formal Preclinical Development or Clinical Development studies are suitable to both Parties’ therapeutic category of interest and benefit both their Formal Preclinical Development or Clinical Development and shall cooperate with each other in the performance of such studies, in accordance with the provisions of Section 4.3 herein (the “Joint Development Program” ).

3.             THE JOINT RESEARCH STAGE

3.1.          Objectives of the Joint Research Stage The Parties shall undertake a joint research program with the overall objective of identifying and developing Product candidates related to 801 gene in each Party’s therapeutic area of interest up to and including Proof of Concept in vitro cell culture studies , in accordance with a detailed research plan which shall be agreed upon by the Parties as provided in Section 3.3.1

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(the “Joint Research Program”). For the avoidance of doubt, it is agreed that any studies in animals shall be made by either party on its own account unless the Parties otherwise agree upon. Once agreed upon, the Joint Research Program shall be attached as Schedule C to this Agreement and shall form an integral part thereof. The Joint Research Program may be up-dated and amended with the written consent of both Parties or the unanimous approval of the Steering Committee.

3.2.          Research Period. The Joint Research Program shall commence on the date upon which the Joint Research Plan is approved by the Parties in accordance with Section 3.3.1 below (the “Commencement Date”). The Joint Research Program shall continue for a period of [ * ] from the Commencement Date (the “Research Period”), and may be extended by the decision of the Steering Committee (as defined below) or by mutual written consent of the Parties.

3.3          Conduct of the Joint Research Program

3.3.1           The Joint Research Program. The Joint Research Program, comprising a detailed research plan and time-frame, shall be prepared and approved by the Parties by no later than [ * ] from the date first above written (the “Effective Date”). The Joint Research Program shall be divided into the tasks to be performed by each Party (each, a “Research Task”), and shall provide the following details with respect to each Research Task:

(a)The objectives of the Research Task

(b)The Party who shall be responsible for performing the Research Task (each, a “Performing Party”);

(c)The specific activities that must be performed to complete the Research Task and the work product that must be produced and delivered by the Performing Party (the “Research Task Deliverables”).

(d)The Party or Parties who will benefit from the results of the Research Task and bear the costs thereof as provided in Section 3.6.

(e)The timeframe for performance of the Research Task (a “Research Task Timeframe”); and

(f)The anticipated cost of the Research Task (the “Cost Estimate”).

3.3.2           Preparation of Research Task Costs Estimates The Party or Parties responsible for each Research Task shall be responsible for preparing the Cost Estimate, and shall submit it to the other Party for its approval.

3.4          Steering Committee

3.4.1        Membership and Functions.  The parties hereto agree to establish a Steering Committee (SC) which shall comprise four members, two representatives, designed by either party. the chairperson of the SC shall be designated semi-annually on an alternating basis between the parties. The initial

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chairperson shall be selected by [ * ]. The party not designating the chairperson shall designate one of its representative members as secretary to the SC for such period. Each party shall be free to change its representative members upon notice to the other party.

3.4.2 The Steering Committee shall manage the specific objectives and activities of the Joint Research Program and the Joint Development Program. Specifically, the Steering Committee shall be responsible for the following functions:

(a)Updating the Joint Research Program from time to time in accordance with the recommendations of the Parties. Such updates, once approved, shall be recorded and signed by both Parties and shall be incorporated herein as amendments to Schedule D. Such updates may involve the addition, alteration, or cancellation of entire Research Tasks or the alteration of specific details within each Research Task, such as the Research Task Deliverables, Research Task Timeframe, or Research Task Cost Estimate.

(b)Monitoring implementation of the Joint Research Program and Joint Development Program by the Parties, including the accomplishment of key objectives and the devotion of appropriate resources.

(c)Determining whether the Research Task Deliverables have been achieved at the end of each Research Task.

(d)Determining patenting strategy with respect to the Joint Program IP, including the timing of patent application filing and the choice of the prosecuting party for each invention within the Joint Program IP.

(e)Determining the policy on the publication of the results of the Joint Research Program and the Joint Development Program.

(f)Acting as the first forum in the resolution of disputes.

3.4.2        Meetings of the Steering Committee. Meetings of the S C shall be held at least once every [ * ] during the Joint Research Program and the Joint Development Program, at times and places as agreed upon at the prior meeting of the S C, and may be conducted in person or by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Either Party may also convene a special meeting of the S C at any time for the purpose of deciding any matter within the authority of the Steering Committee, by providing [ * ] written notice to the other Party. The chairperson shall be responsible for sending notices of the meetings to all members.

Two weeks prior to each SC meeting, a summary of progress of the development work of either party shall be provided by either party to the members of the SC.

3.4.3                Decisions of the Steering Committee. The Steering Committee shall make all decisions unanimously. Deadlock will be resolved by submission of the issue

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jointly to the CEO’s of QBI and Atugen, and if the parties are unable to reach a solution within [ * ] of such submission, the matter may be referred for resolution by either Party under Section 12. The Steering Committee will keep full records of all its decisions and minutes of its meetings will be circulated to each party and available for inspection by the parties on request.

Within [ * ] after each SC meeting, the secretary of the DMC shall prepare and distribute minutes of the meetings, which shall provide a description in reasonable detail of the discussions held at the meeting and list any actions, decisions or determinations approved by the SC.

The secretary shall be responsible for circulation of all draft and final minutes. The draft shall first be circulated to the chairperson, edited by the chairperson and then circulated in the final draft form to all members of the SC, sufficiently in advance of the next meeting to allow adequate review and comment prior to the meeting.

The minutes shall be approved or disapproved and revised as necessary, at the next meeting. Final minutes shall be distributed to the members of the SC.

3.4.4                Expenses of Steering Committee Members. For the avoidance of doubt, each party shall bear the travel accommodation and subsistence expenses of its staff involved in Steering Committee meetings.

3.5           Obligations of the Parties Pursuant to the Joint Research Program

3.5.1        Diligence Obligations of the Parties.  Each of the Parties agrees to diligently and timely perform its obligations pursuant to the Joint Research Program. Without limiting the generality of the foregoing, each Party undertakes to commit its resources and to exert the efforts necessary and reasonable and consistent with its normal business practices to execute and perform the Research Tasks assigned to such Party in the Joint Research Program, to maintain and utilize the scientific staff, laboratories, offices and other facilities consistent with such undertaking, and to reasonably cooperate with the other Party in the conduct of the Joint Research Program.

3.5.2        Supply of Products and Product Candidates by Atugen during the Joint Research Program.  During the Joint Research Program, Atugen shall be responsible for developing and manufacturing (or having manufactured) the siRNA molecules in quantities of up to [ * ] that are identified as potential Product candidates by the Parties (“Product Candidates”), and shall manufacture (or have manufactured) and supply quantities of up to [ * ] of such Product Candidates to the Parties, as needed by the Parties to perform their obligations pursuant to the Joint Research Program. The supply of Product Candidates by Atugen during the Research Stage shall be detailed as Research Tasks within the Joint Research Program, and the timing, quality and quantity of Product Candidates supplied by Atugen shall be defined as Research Deliverables for the purposes of this Agreement.

3.5.3        Transparency of Research. The Parties shall communicate frequently by way of written communication such as reports, letters, e-mails, by phone conversations, meetings and visits to each other’s site in order to keep each other informed at all times of the work performed by each Party under the Joint Research Program. Each Party shall provide the other party and the Steering Committee with quarterly

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written summary reports at the end of each three-month period specifying the activities undertaken by that party pursuant to the Joint Research Program and the results in such details to allow a qualified judgement. Specifically the Parties undertake to inform the Steering Committee of any and all results of all Research Tasks performed under this Agreement, including studies (if any) performed for them by third parties, including the Proof of Concept in vivo studies. Further, each Party shall provide all necessary data, results, documentation and information in its possession that was generated in the course of the Joint Research Program and in the event that the parties jointly participated in a Joint Development Program pursuant to Section 4, the Joint Development Program, to support regulatory applications such as for example IND or NDA/BLA. Each Party shall have the right to send members of its staff to visit the sites at which work on the Joint Research Program is being conducted by the other Party, or its Affiliates, in order to review and discuss the progress and results of the Joint Research Program and/or Joint Development Program, provided such visits are at reasonable times and are for a period to be agreed between the parties, and provided reasonable prior notice is given. The Party sending such visitors shall be responsible for meeting the travel, subsistence and accommodation expenses of its staff.

3.6          Funding of the Joint Research Program.

3.6.1        Funding of Research Tasks for the Benefit of Both Parties.  Where a Research Task has been identified in the Joint Research Program as being for the joint benefit of the Parties, each Party shall [ * ] such Research Task, up to the amount set forth in the applicable Cost Estimate according to the then current Joint Research Program (Schedule C).

3.6.2        Funding of Research Tasks for the Benefit of One Party.  Where a Research Task has been identified in the Joint Research Program as being for the sole benefit of one Party, such Party shall [ * ] such Research Task, up to the amount set forth in the applicable Cost Estimate according to the then current Joint Research Program (Schedule C).

3.6.3        Payments. Upon Successful Completion of each Research Task, the Performing Party shall issue an invoice to the other Party for its share (if any, in accordance with Sections 3.6.1 and 3.6.2 above) of the actual costs incurred by the Performing Party, up to the amount set forth in the relevant Cost Estimate, and the other Party shall pay the amount invoiced within thirty days of receipt thereof. A Party performing several Research Tasks may issue a consolidated invoice for all such Research Tasks upon Successful Completion of the last thereof. For the purposes of this Section the term “Successful Completion” shall mean achievement of the relevant Research Task Deliverables as determined by the Steering Committee.

3.6.4        Failure to Perform Notwithstanding anything to the contrary in this Section 3.6, a Party shall not be required to pay its share of the costs for a Research Task if the Performing Party failed to deliver the Research Task Deliverables as set forth in the then current Joint Research Program within the Research Timeframe, provided that (i) such failure is not due to a good scientific reason or other reasons beyond the control of the Party, and (ii) such failure or delay has not been cured and continued for a period in excess of [ * ] (a “Failure to Perform”). In the event of a Failure to Perform, the non-Performing Party shall have the right, at its sole discretion,

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to (i) assume performance of the Research Task from the Performing Party, and the Performing Party shall be required to transfer to the other Party, at its request, any and all Know How and Material in the possession of the Performing Party that is useful or necessary for the performance of the Research Task, and shall grant the other Party a license to use the same to the extent necessary to perform the Research Task, or (ii) to terminate this Agreement in accordance with Section 11.3.

4.             DEVELOPMENT STAGE

4.1          Preparation of Third Party Manufacturer for the Joint Development Stage

3.7.1        The Parties agree that [ * ] shall be approached first as the potential major third party manufacturer for the purpose of manufacturing Products and Drug Products meeting the cGMP standards required by the U.S FDA and supplying Products in suitable quantities for use in each Party’s individual development program and (if applicable) in the Joint Development Program. As QBI will be the first Party requiring such cGMP quality of Products, QBI will negotiate and enter into a Manufacturing and Supply Agreements securing, however, that Atugen is fully embedded into the flow of information by receiving copies of reports, changes of the program and project, quantities produced and delivered and that Atugen shall have the right and option to be supplied byQBI’s selected manufacturers. on Atugen’s expense  Atugen shall prepare and provide to such common third-party manufacturers and to QBI an up-to-date dossier, which atugen has developed with its partner and which has proven to be suitable for a production of specific 801-siRNA molecules at such partners’ manufacturing facilities. It is understood and agreed that the manufacturers will have to adapt such Manufacturing Process File (the “Manufacturing Process File “) to its own conditions. The Manufacturing Process File intends to describe the Product manufacturing process in sufficient detail (and in any event, at least that level of detail indicated in Schedule D) to (i) enable the preparation of a Drug Master File (DMF) for submission in the IND application and (ii) to enable the selected third party manufacturer (or manufacturers) to practice the Product manufacturing process. For the removal of doubt it is clarified that Atugen’s obligations to prepare, deliver, and update the Manufacturing Process File pursuant to this Section 4.1 shall remain in effect even if Atugen does not participate in the Joint Development Program or its participation in the Collaboration is terminated pursuant to Section 11; however, if Atugen terminates this Agreement in its entirety pursuant to Section 11.2 (ii), Atugen has no longer such obligation pursuant to this Section 4.1. For the removal of doubt Atugen has no further obligation to prepare and provide additional information other than given in the Manufacturing Process File, even if this information may not be sufficient for the preparation of a DMF.

4.2.          Completion of Joint Research Program. The Joint Research Program shall be deemed completed upon decision of the Parties to proceed to Development Stage and perform the Joint Development Program. In the event that the Parties do not make such decision at the same time, the Development Stage shall commence when one Party notifies the other in writing that it has commenced Formal Preclinical Development of a Product following completion of Proof of Concept studies (i.e. in vitro cell

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culture studies) in such Party’s therapeutic area of interest (the “Development Commencement Date”). The first Party to commence Formal Preclinical Studies shall promptly notify the other Party thereof and shall be referred to hereinafter as the “Initiating Party”, and the other Party shall be referred to hereinafter as the “Non-Initiating Party”. For the removal of doubt, it is clarified that a Party has the right to initiate Formal Preclinical Development of the Product even if the other Party has not yet completed the Proof of Concept studies for the Product in his therapeutic category of interest. It is agreed, however, that the Initiating Party shall keep the other party informed of the progress of its Formal Preclinical Development by sending [ * ] summary reports with the essential data and results to enable the other party to a qualified decision.

4.3           Initiation of the Joint Development Program. For a period of [ * ] after the Development Commencement Date, the Non-Initiating Party shall have the right, but not the obligation, to join with the Initiating Party in the performance of a Joint Development Program, by providing the Initiating Party with a notice of participation (a “Participation Notice”). The Non-Initiating Party may participate in the Joint Development Program even if it has not yet completed its Proof of Concept studies in its therapeutic area of interest. Upon delivery of a Notice of Participation by the Non-Initiating Party, the Parties shall prepare and implement the Joint Development Program in accordance with the provisions of Section 4.5 below.

(a)In the event that the Non-Initiating Party joins the Development Program during the period of [ * ] after the Development Commencement Date, the Non-Initiating Party shall reimburse to the Initiating party [ * ] of all costs incurred by the Initiating Party during the period between the Development Commencement Date and the Participation Notice.

(b)In the event that the Non-Initiating Party joins the Development Program during the period between [ * ] after the Development Commencement Date, the Non-Initiating Party shall reimburse to the Initiating party [ * ] of all costs incurred by the Initiating Party during the period between the Development Commencement Date and the Participation Notice.

It is clarified that the Non-Initiating Party shall not be obliged to join the Initiating Party in performing a Joint Development Program even if it has completed its Proof of Concept studies in its therapeutic area of interest or at any time. In the event that the Non-Initiating Party does not notify the Initiating Party of its decision to join in for the performance of the Joint Development Program within [ * ] from the Development Commencement Date, no Joint Development Program shall be performed. For the removal of doubt, the non-performance of the Joint Development Program shall not, except in the circumstances set forth in Section 4.4 below, affect any of the other rights and obligations of the Parties pursuant to this Agreement

Notwithstanding anything to the contrary in this Section 4.3, in the event that a Party has sublicensed the development of Products in its therapeutic area of interest to a sublicensee in accordance with Section 6.3, such sublicensee shall not be obliged to enter into a Joint Development Program with the other Party in accordance with this Section 4.3.

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4.4. Preparation of the Joint Development Program. Upon receipt of a Participation Notice from the Non-Initiating Party in accordance with Section 4.3, the Parties shall prepare and the Steering Committee shall meet to determine the Joint Development Program. The Joint Development Program shall include specifically those studies of the Formal Preclinical Development or Clinical Development studies required by each Party for their specific independent development program, and that are suitable to both Parties’ therapeutic category of interest and benefit both their Formal Preclinical Development and Clinical Development. The Joint Development Program shall detail the studies, timetable, Cost Estimates and payment terms and schedules and shall be incorporated into this agreement as a new Schedule F. Other than as provided in the Joint Development Program each Party shall be responsible for [ * ].

4.5.          Implementation of the Joint Development Program. Unless otherwise agreed, the Initiating Party shall be responsible for implementing the Joint Development Program and shall report to the Steering Committee and to the Non-Initiating Party. It is clarified that the Steering Committee shall be operative during the Joint Development stage in accordance with Section 3.4 above and the Parties shall cooperate with each other as provided in Section 3.5.3.

4.6           Funding of the Joint Development Program. Each Party shall each bear [ * ] by QBI or Atugen in the performance of the Joint Development Program. The payment schedule shall be agreed upon by the Parties and detailed in Schedule F to this Agreement. In the event that either Party withdraws from the Joint Development Program in accordance with Section 4.7 below, such Party shall [ * ].

4.7.          Termination of Participation in the Joint Development Program. Either Party may terminate its participation in the Joint Development Program by providing the other Party with [ * ] written notice. In such case the followings shall apply:

(a)The rights and licenses granted by one Party to the Other Party pursuant to this Agreement shall remain in full force and effect, subject to the obligations of the Parties pursuant to this Agreement.

(b)Each Party shall transfer to the other Party, and shall cause all of its sublicenses or Affiliates to transfer to the other Party, by no later than [ * ] from the date of termination of participation under this Section 4.7 all Know-How and Materials relating to (a) the Joint Program IP, and (b), the information, data, Know How developed under this Agreement, to the extent necessary or useful for the development, manufacture, marketing and sale of Products and Drug Products in the other Party’s therapeutic area of interest.

(c)Atugen shall update the Product Manufacturing Process file and shall forward it to QBI in sufficient detail to enable preparation of a DMF or the IND and further to enable QBI to manufacture or have manufactured the Product and the Drug Product during the Development Stage and for commercial purposes. Atugen’s obligations under 3.7.1 shall survive such termination of participation in the Joint Development Program.

4.8   Diligent Performance of the Development and Commercialization Obligations of the Parties.

4.8.1. Diligent Performance of Development. Each Party, by itself or through

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its Affiliates or sub licensees, undertakes to employ commercially reasonable efforts, including funding consistent with such efforts, to develop Products in accordance with such Party’s own individual development plan and (if applicable) the Joint Development Program and to achieve the Development Milestones set forth in Section 11.4. Specifically, each Party, by itself or through Affiliates or sublicensees, undertakes to employ its best efforts, including funding consistent with such efforts, to carry out all efficacy, pharmaceutical, safety, toxicological and clinical tests, trials and studies and all other activities necessary in order to obtain Regulatory Approval for the production, use and sale of Products in such Party’s therapeutic area of interest. In the event that a Party (or its Affiliates of sublicensees) does not achieve the Development Milestones set, the other Party may terminate the licenses granted to the Non-Achieving Party as set forth in Section 11.4.

4.8.2. Progress Reports. During the period commencing on the Development Commencement Date and ending upon the receipt of the Regulatory Approval for a Product each Party (or Affiliate or sublicensee) shall make periodic progress reports to the other Party with a frequency of not less than each [ * ] (the “Progress Reports”) whether or not the Joint Development Program has been initiated.

4.8.3. Commercial Manufacture of Product. Following completion of the Development Stage, each Party shall be entitled, at such Party’s sole discretion, to (i) continue obtaining supplies of the Products and Drug Products for all of such Party’s commercial needs from the third party-manufacturer appointed by the Parties in accordance with Section 3.7.1 or (ii) to appoint and qualify a different or additional manufacturer to supply such Party with commercial quantities of Products and Drug Products, and the provisions of Section 3.7.1 shall apply, mutatis mutandis, to such additional or different manufacturer.

4.8.4        Diligence in Commercialization. During the period commencing with the receipt of Regulatory Approval by a Party or sub licensee for Products in a given country, such Party shall, and shall ensure that its Affiliates and sub licensees shall, use its or their best efforts, including funding consistent with such efforts, to promote, market and sell such Products in such country.

5.             INTELLECTUAL PROPERTY

5.1           Ownership

5.1.1        Existing IP. Each Party shall remain the sole owner of its Existing IP, and shall have no right in or to the Existing IP of the other Party, except in accordance with the licenses set forth herein.

5.1.2        Improvements to Atugen Background Tech nology  Atugen shall own any improvements that relate directly to the Atugen Background Technology and are of a general technology nature, rather than directed to specific target genes or products, which are made, invented, discovered, or reduced to practice by either Party in the course of the Collaboration.

5.1.3        Joint Program IP  The Parties shall jointly own all inventions, discoveries, know-how, trade secrets, methods, information, data, or Materials that are first

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made, invented, discovered or reduced to practice by either Party in the conduct of the Joint Research Program, or the Joint Development Program (hereinafter, “Joint Program IP”). The Joint Program IP shall include patent applications directed to specific anti-801 siRNAs.

5.2           Assignment and Perfection of Interest. Each Party agrees to cooperate with the other Party and to take all reasonable action and to execute, or have its employees, agents or consulta nts execute, all documents necessary to effectuate any assignment necessary to achieve joint ownership of the Joint Program IP. All patent applications and issued patents covering Joint Program IP shall be jointly owned and shall be prosecuted in accordance with Section 7.

6.             LICENSES

6.1.          Grant By QBI

6.1.1. Research License. Subject to the terms of this Agreement, QBI hereby grants to Atugen a non-exclusive, world-wide, royalty free license, without the right to sublicense, under the QBI Existing IP and the Joint Program IP, to perform the Joint Research Program and the Joint Development Program.

6.1.2        Development and Commercialization License Subject to the terms of this Agreement, QBI hereby grants to Atugen an exclusive, royalty bearing, world-wide license with the right to sublicense as set forth in Section 6.3, under the QBI Existing IP and the Joint Program IP, to develop, manuf acture and/or have manufactured and commercialize import, market, sell and otherwise commercialize Atugen Products.

6.2           Grant By Atugen

6.2.1        Research License. Subject to the terms of this Agreement, Atugen hereby grants to QBI a non-exclusive, world-wide, royalty free license, without the right to sublicense, under the Atugen Existing IP and the Joint Program IP, to perform the Joint Research Program and the Joint Deve lopment Program.

6.2.2.       Development and Commercialization License Subject to the terms of this Agreement, Atugen hereby grants to QBI an exclusive, royalty bearing, world-wide license, with the right to sublicense as set forth in Section 6.3 under the Atugen Existing IP and the Joint Program IP, to develop, use, manufacture and/or have manufactured, import, market, sell and otherwise commercialize QBI Products.

6.3           Sublicenses

6.3.1. Sublicense Grant. Each Party shall be entitled to grant sublicenses to third parties under the development and commercialization license granted to such Party pursuant to Section 6.2.1.6 or 6.2.2.6 above, on terms and conditions in compliance with and not inconsistent with the terms of this Agreement (a “Sublicense”). Such Sublicenses shall be made for consideration and in arm’s length transactions.

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6.3.2. Sublicense Agreements. Sublicenses shall only be granted pursuant to written agreements, which shall be in compliance and not inconsistent with and shall be subject and subordinate to the terms and conditions of this Agreement. Any act or omission by a sub licensee, which would have constituted a breach of this Agreement had it been an act or omission by the Party granting such Sublicense, shall constitute a breach of this Agreement

7.             PATENT PROSECUTION AND MAINTENANCE

7.1           Upon decision of the Steering Committee to file a Patent Application for the Joint Program IP (such Patent Applications, and all Patent Rights issued with respect thereto, the “Joint Patents”), such Patent Application shall be filed, prosecuted and maintained by the Party nominated by the Steering Committee for the specific Patent Application (the “Filing Party”) in the joint names of Atugen and QBI. The Filing Party shall consult with the other Party about the contents of each Joint Patent Application prior to its filing, and shall obtain the other Party’s approval thereto, such approval not to be unreasonably withheld. Unless otherwise determined by the Steering Committee each Joint Patent shall be filed in [ * ] and in such additional countries, as the parties will agree. The costs of filing and maintaining the Joint Patents shall be borne equally by the Parties. Each Party shall promptly provide to the Filing Party all information, data or other assistance including, without limitation, the execution of any documents or instruments, necessary to enable such party to file, prosecute and defend the Patents and Patent Applications.

7.2           If either Party gives written notice to the other Party that it does not wish to fund a Joint Patent (i) for a specific claim relating to the Joint Program IP, or (ii) in a particular country, or fails to respond within [ * ] to a written request by the other party that it state its intention with respect to such Joint Program IP, or if a Party fails to reimburse the Filing Party for its half of the patent prosecution and/or maintenance expenses relating to such Joint Patent within thirty days of Filing Party’s invoice for the same, the other Party shall have the right to file, in its own name and at its own expense, such Patent Application, or application for such specific claim or in such country. In such event, the Filing Party shall have the exclusive right to develop Products derived from or covered by the claims in such patent application.

7.3           Infringement of IP by Third Parties

7.3.1        If either Party by itself or through an Affiliate or sublicensee becomes aware that a third party is infringing any rights in the Joint Program IP, or if either Party becomes aware of any allegation by a third party that the activity of either of the Parties hereunder infringes or may infringe a patent of such third party, that party will promptly provide the other with written notice thereof. The Filing Party (or its sublicensee) shall have the initial right to bring a claim for infringement or to defend such claim at the parties’ joint expense, except that it shall keep the other Party reasonably informed of its progress on the claim.

7.3.2   In the event that the Filing Party or its sublicensee fails to institute a suit for infringement or fails to defend such claim (as the case may be) or take other reasonable action in response to such action pursuant to subsection 7.3.1 within [ * ] after notice of such infringement, the other Party or its sublicensee will have the right,

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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but not the obligation, to institute such suit or defend the claim as the case may be or take other appropriate action in its own name to enforce the applicable patent or infringed right or defend the claim. Regardless of which party brings the action, the non-enforcing party agrees to provide the enforcing party with all assistance reasonably requested by the enforcing party, and at the expense of the enforcing party, including without limitation, joining as a party to such action where legally required for the conduct or prosecution of such action. Any damages or other monetary recovery, whether by settlement or otherwise, shall [ * ], and if done jointly, shall [ * ]. Neither party shall have the right to settle any patent infringement litigation under this Section in a manner that diminishes the rights or interests of the other party without the consent of such other party, which consent shall not be unreasonably withheld.

7.3.3. Cooperation. Each party agrees to cooperate fully with the other party in the preparation, filing, prosecution, maintenance, enforcement and defense of the Joint Patents. Such cooperation shall include, without limitation: (i) executing all papers and instruments, or requiring its employees or agents to execute such papers and instruments, so as to vest the ownership of the Joint Patents jointly in the Parties, and to enable the party having the right hereunder to do so to apply for, prosecute, maintain, enforce and defend its rights to the Joint Patents; (ii) providing the other party with notice of any matters coming to such party’s attention that may affect the preparation, filing, prosecution, maintenance, enforcement or defense of such rights in the Joint Patents; and (iii) undertaking no actions that are potentially deleterious to the preparation, filing, prosecution, maintenance, enforcement or defense of such rights on the Joint Patents.

8.             ROYALTIES

8.1  Royalties on Sales of Products by the Parties  Each Party (the “Royalty Paying Party” shall pay to the other Party (the “Royalty Receiving Party”) royalties on world-wide Net Sales of Products by the Royalty Paying Party, its Affiliates, or its sub-licensees, as follows:

8.1.1        For Products that are developed and/or marketed directly by the Royalty Paying Party or its Affiliates, the Royalty Receiving Party shall be entitled to receive a royalty equal to [ * ] of the annual Net Sales of such Products.

8.1.2        For Products that are developed and/or sold by sub licensees of the Royalty Paying Party, the Royalty Receiving Party shall be entitled to receive a royalty equal to [ * ] of the Sublicense Royalties.

8.2           Royalty Reductions

8.2.1  Notwithstanding the foregoing, in the event that (i) a Product of either Royalty Paying Party [ * ], and (ii) [ * ], the royalties payable pursuant to Section 8.1.1 and Section 8.1.2 above shall be [ * ] as of the beginning of [ * ], provided, however that such reduction shall only affect the royalty payable for sales effected [ * ].

8.2.2        Offset of Third Party License Fees. The Royalty Paying Party may offset [ * ] of any royalties or license fees it must pay to third parties pursuant to any licenses

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necessary to commercialize such Party’s Products (the “Royalty Offset”) against the royalties payable by the commercializing Party to the other Party; provided, however, that the necessity of obtaining such licenses arose or became known following the date of this Agreement.

8.2.3        No royalty reduction as set forth in Sections 8.2.1 and 8.2.2 or resulting from combination of Sections 8.2.1 and 8.2.2 shall have the effect to reduce the royalties payable by the commercializing Party to the other Party to less than [ * ] of the amounts that would have otherwise been due under the percentages set forth in Section 8.1, if the Product is covered by a Valid Patent Claim in the Joint Patents

8.3           Sublicensing Receipts. Where a Party receives payments, other than sublicensee Royalties from a sub licensee, in consideration for the grant of the sublicense, or the grant of an option to obtain a Sublicense, including without limitation license fees, down-payments, milestone payments, and license maintenance fees, but excluding payments specifically committed to cover costs actually incurred by such Party or their Affiliates in the development of the Products (herein, “Sublicense Fees”) such Party shall pay to the other Party an amount equal to [ * ] of such Sublicense Fees, within [ * ] of the date on which such Sublicense Fees are paid by the sub licensee.

8.4           Royalty Term The royalties specified in Sections 8.1 1 and 8.1.2 shall be payable on a country-by-country basis commencing with the First Commercial Sale of each Product and shall continue until the later of: (i) the expiration of ten (10) years from the first commercial sale of each such Product in that country (provided that in the case of a country within the European Union such ten (10) year period shall run from the date of First Commercial Sale of such Product anywhere in the European Union), and (ii) until the last to expire of any Valid Patent Claims claiming such Product which are included in the Joint Patents.

8.5           Royalty Calculation  Royalties shall be computed at the end of each calendar quarter, which, for the purpose of this Agreement, shall end on the last day of the month of March, June, September and December. If this Agreement is terminated for any reason during a quarter then, for the purpose of this clause only, the date of termination shall be the end of that current quarter. Royalties shall be paid for each quarter within [ * ] of the end of the quarter. All sums due under this Agreement are exclusive of any value added tax, which shall be payable in addition, against the rendering by the other party of any appropriate value added tax invoice.

8.6           Records  Each Party will maintain, and will cause its sublicensees to maintain, complete and accurate books and records which enable the royalties and other amounts payable hereunder to be verified. Upon reasonable prior notice to the commercializing Party, an auditor paid for and selected by the other Party shall have access, during normal business hours, to the books and records of the commercializing Party and its sublicensees to conduct a review or audit thereof. The auditor shall agree not to use or disclose any information contained in the commercializing Party’s or its sublicensees’ books or records, except for the purpose of fulfilling its duties as set forth in this provision. If the auditor determines that the commercializing Party or any sublicensee has underpaid royalties and other amounts payable by [ * ] or more, the Commercializing Party shall pay promptly, in addition to any such underpayment, the costs and expenses of such auditor in connection with its review or audit, provided

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that no Party shall be liable to reimburse the other Party for any underpayment that occurred more than [ * ] prior to such audit.

8.7           Currency Conversion Royalties shall be calculated and paid in Euro. For the purpose of computing the Net Sales revenue made in a currency other than Euro, the royalty-paying Party shall convert such currency from local currency to Euro in accordance with [ * ].

8.8           Taxes In the event that either Party (the “Paying Party”) is required to withhold any tax to the tax or revenue authorities in any country regarding any payment to the other Party (the “Recipient Party”) due to the laws of such country, such amount shall be deducted from the payment to be made to the Recipient Party, and the Paying Party shall promptly notify the Recipient Party of such withholding and, within a reasonable time after making such deduction, furnish the Recipient Party with copies of any tax certificate or other documentation evidencing such withholding. Each Party agrees to cooperate with the other Party in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect.

9.             WARRANTIES AND LIMITATION OF LIABILITY

9.1           Organization and Consents. Each of the Party’s hereby 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, this Agreement has been duly executed by such Party and constitutes a legal, valid and binding obligation of such Party, enforceable in accordance with its terms, and all necessary consents, approvals and authorizations of all government authorities and other persons required to be obtained by such Party in connection with the execution, delivery and performance of this Agreement have been and shall be obtained.

9.2           No Conflict. Each Party represents to the other Party that notwithstanding anything to the contrary in this Agreement, the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (a) do not conflict with or violate such Party’s corporate charter and bylaws or any requirement of applicable laws of regulations and (b) do not and shall not conflict with, violate or breach or constitute a default or require any consent under, any contractual obligation of such Party.

9.3           Intellectual Property. Each Party warrants that it independently developed, and is the owner or licensee (with the right to sublicense) or otherwise has rightful possession of, such Party’s Existing IP, including patents and patent applications. Each Party further warrants that as of the Effective Date such Party is not aware of any actual or threatened proceedings in which it is claimed or is implied that the use of such Party’s Existing IP infringes the rights of a third party, [ * ] and to the best of each Party’s knowledge, use of such Party’s Existing IP as set forth in this Agreement will not infringe the rights of any third party.

9.4           Disclaimer.

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS, WAIVES, RELEASES, AND RENOUNCES ANY

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WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE PARTIES EXPRESSLY DO NOT WARRANT (I) THE SUCCESS OF ANY STUDY OR TEST COMMENCED PURSUANT TO THE JOINT RESEARCH PROGRAM OR THE DEVELOPMENT PROGRAM (II) THE SAFETY OR USEFULNESS FOR ANY PURPOSE OF THE EXISTING IP PROVIDED BY EACH PARTY.

9.5           Limitation of Liability.

NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OF THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.

10.          INDEMNITY

10.1         Indemnification by QBI. QBI agrees to indemnify, defend, and hold harmless Atugen, its Affiliates and its sublicensees and their respective directors, officers, employees and agents (the “Atugen Indemnified Parties”) from and against any losses, costs, damages, fees or expenses arising out of any third party claim relating to (i) any breach by QBI of any of its representations, warranties or obligations pursuant to this Agreement, (ii) the gross negligence or willful misconduct of QBI, or (iii) injuries resulting from the development, manufacture, use, sale or other disposition of any QBI Product in any country. In the event of any such claim against the Atugen Indemnified Parties by any third party, Atugen shall promptly notify QBI in writing of the claim and QBI shall manage and control, at its sole expense, the defense of the claim and its settlement. The Atugen Indemnified Parties shall cooperate with QBI and may, at their option and expense, be represented in any such action or proceeding. QBI shall not be liable for any litigation costs or expenses incurred by the Atugen Indemnified Parties without QBI’s prior written authorization. In addition, QBI shall not be responsible for the indemnification or defense of any Atugen Indemnified Party arising from any negligent or intentional acts by any Atugen Indemnified Party or the breach by Atugen of any obligation or warranty under this Agreement, or any claims compromised or settled without Atugen’s prior written consent.

10.2         Indemnification by Atugen. Atugen agrees to indemnify, defend, and hold harmless QBI, its Affiliates and its sublicensees, and their respective directors, officers, employees and agents (the “QBI Indemnified Parties”) from and against any losses, costs, damages, fees or expenses arising out of any third party claim relating to (i) any breach by Atugen of any of its representations, warranties or obligations pursuant to this Agreement, (ii) the gross negligence or willful misconduct of Atugen, or (iii) injuries resulting from the development, manufacture, use, sale or other disposition of any Atugen Product in any country. In the event of any such claim against the

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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QBI Indemnified Parties by any third party, QBI shall promptly notify Atugen in writing of the claim and Atugen shall manage and control, at its sole expense, the defense of the claim and its settlement. The QBI Indemnified Parties shall cooperate with Atugen and may, at their option and expense, be represented in any such action or proceeding. Atugen shall not be liable for any litigation costs or expenses incurred by the QBI Indemnified Parties without QBI’s prior written authorization. In addition, Atugen shall not be responsible for the indemnification or defense of any QBI Indemnified Party arising from any negligent or intentional acts by any QBI Indemnified Party or the breach by QBI of any obligation or warranty under this Agreement, or any claims compromised or settled without QBI’s prior written consent.

11.          TERM AND TERMINATION

11.1         Term  This Agreement shall be effective as of the date first above written and shall continue in full force and effect until the expiration of the Royalty term as set forth in Section 8.3, unless sooner terminated under this Section 11 (“Term” of the Agreement).

11.2.1      Termination for Breach. Either Party (the “Terminating Party”) shall be entitled, at such Party’s sole and absolute discretion to (i) terminate the licenses granted to the other Party (the “Non-Terminating Party”) pursuant to this Agreement, or (ii) terminate this Agreement in its entirety, in the event that the other Party commits a material breach of any of the terms of the Agreement and fails to remedy such breach within [ * ] of written notice given by the non-breaching party.

11.2.2      Effect of Termination for Breach: In the event that the Terminating Party elects to terminate only the licenses granted to the other Party pursuant to Subsection 11.2(i) above, the licenses granted to the Terminating Party hereunder shall remain in full force and effect, subject to payment of the royalty obligations set forth herein. In the event of termination for breach as set forth in this Article 11.2, the Non-Terminating Party shall transfer to the Terminating Party, and shall cause all of its sub licensees or Affiliates to transfer to the Terminating Party, by no later than [ * ] from the date of termination of participation under this Section 4.7. all Know-How and Materials relating to (a) the Joint Program IP, and (b) the information, data, Know How developed under this Agreement, to the extent necessary or useful for the development, manufacture, marketing and sale of Products and Drug Products in the other Party’s therapeutic area of interest.

11.3         Termination due to Failure to Perform in the Joint Research Stage

Without derogating from the generality of Section 11.2, either Party shall be entitled to terminate the Joint Research Program and to (i) terminate the licenses granted to the other Party or (ii) terminate the Agreement in the event of Failure to Perform of the other Party as provided in Section 3.6.4.

11.4.        Termination due to non-achievement of Development Milestones. Either Party (or its Affiliate or sub licensee) may (but is not obliged to) terminate the licenses granted to the other Party (the “Terminating Party”) in the event that the other party (the “Non-Achieving Party”) does not achieve its Development Milestones set forth [ * ], i.e. cancer indications for Atugen and a non-cancer indications for QBI, as set

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forth in the following table (the “Development Milestones”) within the timeframe set therefore:

Development Milestone	Atugen or sublicensee	Quark or sublicensee
[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]

In the event of any termination according to this Section 11.4 the licenses granted by the Non-Achieving Party to the Terminating Party shall remain in full force and effect, subject to payment of royalties as provided in this Agreement.

Notwithstanding the foregoing, if the Non-Achieving Party is QBI and the reason for QBI’s failure to achieve the Development Milestones is due only to a failure of the siRNA molecules generated under this Agreement including Products or Drug Products to inhibit the 801 gene in a manner that is suitable for drug development, then the licenses granted to Atugen shall become non-exclusive.

11.5         Termination by Either Party Either Party shall be entitled to terminate this Agreement should the other Party hereto become insolvent, or if proceedings in voluntary or involuntary bankruptcy or pursuant to any other insolvency law shall be instituted by, on behalf of or against the other party, or if a trustee or receiver of the party’s property shall be appointed.

12.          DISPUTE RESOLUTION

Any disputes between the Parties which relates to an alleged breach of this Agreement, or is otherwise connected with this Agreement or any term or condition hereof, and cannot be resolved amicably by the Parties, shall be finally resolved by binding arbitration, except disputes regarding the validity, scope or enforceability of patents or trademarks, which shall be submitted to a court of competent jurisdiction. The arbitration shall be held in The Hague, Netherlands according to the rules of the International Chamber of Commerce (“ICC”) and the laws of the Netherlands. The arbitration will be conducted by a panel of three (3) arbitrators with significant experience in the pharmaceutical industry appointed in accordance with applicable ICC rules. Any arbitration herewith shall be conducted in the English language to the maximum extent possible. Judgment on the award so rendered shall be final and may be entered in any court having jurisdiction thereof.

13.          PUBLIC ANNOUNCEMENTS; PUBLICATIONS

Promptly following execution of this Agreement by the Parties, either Party may issue an initial press release in such form as the Party may hereafter agree upon. Neither Party shall issue any further news release or other public announcement relating to this Agreement, including any of its terms, or to the performance of either party hereunder, without the prior written approval of the other Party, such approval not to be

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unreasonably withheld. Once the text or substance of any announcement has been so approved, it may be repeated without further approval.

14.          SCIENTIFIC PUBLICATIONS

Each Party will submit to the other for review and approval, such approval not to be unreasonably withheld, all proposed academic, scientific and medical publications and public presentations relating to research and development of Products or otherwise involving the Joint Program IP or their share therein, for review in connection with protection of such Intellectual Property rights, including without limitation, the preservation of exclusive Patent rights and/or to determine whether any confidential information set out therein should be modified or deleted. Written copies of such proposed publications and presentations shall be submitted to a party no later than [ * ] before submission for publication or presentation and the other party shall provide its comments with respect to such publications and presentations with [ * ] of its receipt of such written copy. Notwithstanding the foregoing, no such publication or presentation shall be made until such publication or presentation has been approved by each party’s patent counsel. Each party will comply with standard academic practice regarding authorship or scientific publication and recognition of contribution of other parties in any such publication.

15.          CONFIDENTIALITY

15.1         Each Party undertakes to keep and treat as confidential and not disclose to any third party, any information relating to the business or trade secrets of the other, nor make use of such information for any purpose whatsoever, except to those employees of the party who need to know for the purposes of this Agreement, provided that the foregoing obligation shall not extend to information which:

(a)           is or will have been known to the receiving party prior to the disclosure by the other party as evidenced by written record or other proof; or

(b)           is or will have been public knowledge through no fault of the receiving party; or

(c)           has been received from a third party who did not acquire it directly or indirectly from the disclosing party.

16.          NOTICES

All notices required to be given hereunder shall be given in writing to the recipient at the address stated below, or to such other address as the recipient may from time to time specify in writing by sending the same by pre-paid registered postage or facsimile and shall if sent by registered post be deemed to be five days after posting, and if sent by facsimile, shall be deemed to have been received at the time of delivery as indicated on the facsimile activity report.

If to Atugen, addressed to:

Thomas Christély, COO and CFO

Telephone: +49 30 9489 2800, Facsimile: +49 30 9489 2801

email: christely@atugen.com

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With a copy to:

Dr. Klaus Giese, CSO and VP Research

Telephone: +49 30 9489 2800, Facsimile: +49 30 9489 2801

email: giese@atugen.com

If to QBI, addressed to:

Dr. Daniel Zurr, President and CEO

Telephone: +972 8 9305111, Facsimile: +972-8-9406476

email: zurr@qbi.co.il

With a copy to:

Dr. Rami Skaliter, EVP Research and Development

Telephone: +972 8 9305111, Facsimile: +972-8-9406476

email: skaliter@qbi.co.il

17.          MISCELLANEOUS

17.1         Amendment of Agreement

Neither any alteration, modification or addition to this Agreement, nor any waiver of any of the terms hereof shall be valid unless made in writing and signed by the duly authorized representatives from both parties.

17.2         Force Majeure

Neither Party shall be deemed to be in breach of this Agreement or otherwise liable to the other Party for any delay in performance or any non-performance of any obligations under this Agreement (and the time for performance shall be extended accordingly) if and to the extent that the delay or non-performance is due to circumstances beyond its reasonable control including without limitation flood, fire, earthquake, riots or industrial disputes not involving employees of such party (“Force Majeure”).

A party suffering an event of Force Majeure shall promptly notify the other of the nature and extent of the circumstances giving rise to Force Majeure. If the relevant Force Majeure prevails for a continuous or aggregate period in excess of two months after the date on which the Force Majeure begins, the Party not suffering the event of Force Majeure is entitled to give notice to the other party terminating the Agreement forthwith. Neither party shall have any liability to the other in respect of termination of this Agreement due to Force Majeure, but rights and liabilities which have accrued prior to termination shall subsist and the parties shall meet to agree on the process for their continuing use.

17.3         Severability. If any part of this Agreement is declared invalid by any legal authority having jurisdiction over either Party, then such declaration shall not affect the remainder of the Agreement, which shall continue in full force and effect. The Parties shall revise the invalidated part in a manner that will render such provision valid and closely approximate the Parties’ original intent.

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17.4         Waiver. Except as specifically provided for herein, the waiver from time to time by either of the Parties of any of their rights or their failure to exercise any remedy shall not operate or be construed as a continuing waiver of same or of any other of such Party’s rights or remedies provided in this Agreement.

17.5         Independent Contractors.  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement shall be construed as authorization for either Atugen or QBI to act as agent for the other. Members of the Steering Committee shall remain, employees of Atugen or QBI, as the case may be.

17.6         Consents Not Unreasonably Withheld. Whenever provision is made in this Agreement for either Party to secure the consent or approval of the other, that consent or approval shall not unreasonably be withheld, and whenever in this Agreement provision is made for one Party to object to or disapprove a matter, such objection or disapproval shall not unreasonably be exercised.

17.7         Further Action. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

17.8         Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their permitted successors and assigns; provided, however, that neither Party shall assign any of its rights and obligations hereunder except (i) as incident to the merger, consolidation, reorganization or acquisition of stock or assets affecting substantially all of the assets or actual voting control of the assigning Party or (ii) to an Affiliate; provided, however, that in no event shall either Party’s obligations under the Joint Research Program be assigned to an Affiliate without the prior written consent of the other Party. Atugen acknowledges and agrees that the Research Program may be performed in whole or in party on behalf of QBI by QBI Enterprises Ltd...

17.9         Headings. The section and paragraph headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said sections or paragraphs.

17.10       Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

In witness whereof, the Parties have signed this Agreement effective as of the date first above written,

QBI			Atugen
Quark Biotech Inc./QBI Enterprises Ltd.
By		/s/ Daniel Zurr	By	/s/ P. Buckel, /s/ T. Christely
Name		Daniel Zurr	Name		P. Buckel, T. Christely
Title		CEO	Title		CEO, COO/CFO
Date	December 6, 2004		Date		November 30, 2004

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Schedule A1

•[ * ]

Schedule A2

•[ * ]

Schedule B

•[ * ]

Schedule C

General description of the Joint Research and the specific Research Tasks. For each Research Task specify:

1.Objectives of the Research Task

2.Performing Party, responsible for performing the Research Task

3.The specific activities that must be performed to complete the Research Task and the Research Task Deliverables

4.The Party or Parties who will benefit from the results of the Research Task and bear the costs thereof as provided in Section 3.6.

5.The Research Task Timeframe

6.The Cost Estimate of the Research Task.

Schedule D

In relation to the Manufacturing Process File – specify the level of detail required (that enables the preparation of a Drug Master File (DMF) for submission in the IND application)

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PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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EX-10.23

Exhibit 10.23

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”) is made as of December 17, 2004 by and between QUARK BIOTECH, INC., a California corporation having its principal place of business at 6536 Kaiser Drive, Fremont CA 94555, U.S.A. (hereinafter referred to as “Quark”) and SANWA KAGAKU KENKYUSHO CO., LTD., a corporation organized and existing under the laws of Japan and having its principal place of business at 35 Higashisotobori-cho, Higashi-ku, Nagoya 461-8631, Japan (hereinafter referred to as “SKK”).

SKK and Quark are sometimes referred to herein individually as a party and collectively as the parties.

WHEREAS, Quark, together with its Affiliates (as hereinafter defined), has developed and owns or has the exclusive right to use the Quark Know-How and the Patent Rights relating to the antidyslipidemic compound known as BT16 (as hereinafter defined); and

WHEREAS, SKK, together with its Affiliates (as hereinafter defined) possesses extensive capabilities in the development and commercialization of pharmaceutical products in Japan and in certain countries in Asia; and

WHEREAS, SKK desires to obtain and Quark is willing to grant to SKK, an exclusive license in the Territory under the Patent Rights and the Quark Know-How (as such terms are hereinafter defined), on the terms and conditions set forth herein.

Now, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, SKK and Quark hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, the following initially capitalized terms, whether used in the singular or plural, shall have the respective meanings set forth below:

1.1          “Affiliate” shall mean, with respect to either party to this Agreement, any individual or entity directly or indirectly controlled by or under common control with, such party. For purposes of this Agreement, the direct or indirect ownership of fifty percent (50%) or more of the outstanding voting securities of an entity, or the right to receive fifty percent (50%) or more of the profits or earnings of an entity shall be deemed to constitute “control.” For the avoidance of doubt, [ * ].

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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1.2          “BTI6” shall mean [*].

1.3          [*].

1.4          “Calendar Quarter” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31 and such shorter period of time from the later of each of the foregoing dates through the date this Agreement is terminated or expires.

1.5          “Calendar Year” shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31, for so long as this Agreement is in effect.

1.6          “Development Time Table” shall mean that development time table that sets forth the schedule and major milestones for SKK to develop Licensed Products in the Territory as further described in and as may be amended pursuant to Section 2.3.1.

1.7          “Effective Date” shall mean the next business day following the delivery of full and duly executed counterparts of this Agreement.

1.8          “First Commercial Sale” shall mean, with respect to any Licensed Product, the first sale of such Licensed Product by SKK, or any Affiliate or SKK Sublicensee, to any third party, in an arms length transaction for use or consumption in a country in the Territory, provided that the “First Commercial Sale” shall not be deemed to have commenced in any country until the annual Net Sales in that country exceeds [ * ]

1.9          “Improvement” shall mean any [ * ] for Licensed Products or Licensed Compounds, in each case which is [ * ].

1.10        “Licensed Compound” shall mean BT16.

1.11        “Licensed Product(s)” shall mean any form or dosage of pharmaceutical composition or preparation in final form for sale by prescription, over-the-counter or any other method, which contains as an active ingredient the Licensed Compound.

1.12        “NDA” shall mean a New Drug Application or its equivalent, filed with any regulatory authority in any country in the Territory seeking approval to market and sell a Licensed Product in such country in the Territory.

1.13        “Net Sales” shall mean the gross invoice prices for all sales of Licensed Product on a country by country basis by SKK, its Affiliates or SKK Sublicensees to an unaffiliated third party, less deductions from such gross amounts for: (i) customary trade, quantity and cash discounts actually taken, (ii) credits, rebates, allowances and adjustments actually granted for rejections, recall or returns, (iii) duties, sales, use, consumption, value-added, excise and similar taxes or duties, (iv) transportation, insurance and other shipping expenses and (v) actual allowances for bad debt or uncollectible amounts, provided that the total amount deducted for items (i) to (v) above shall not exceed [ * ] of the gross invoiced value.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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1.14        “Patent Rights” shall mean all patent applications (including all provisional patent applications) and patents in each country of the Territory and all PCT patent applications and patents relating in any way to the Licensed Compound or Licensed Products (including, without limitation, the formulation, ingredients, preparation, packaging, means of delivery, manufacture, use or sale thereof) as listed in Schedule 1.14 hereto and all Quark Improvement Patents and applications therefore for which SKK has exercised its option, as set forth in Section 4.1) and all substitutions, divisions, continuations, continued prosecution application, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, divisions of or supplementary protection certificates for any of the foregoing or any like filing therefore, and all international or foreign equivalents or counterparts of any of the foregoing.

1.15        “PCT” shall mean the Patent Cooperation Treaty done at Washington on June 19, 1970, amended on September 28, 1979, modified on February 3, 1984 and October 3, 2001 and as in force on April 1, 2002.

1.16        “Phase I Clinical Study” shall mean the clinical investigation of an investigational new drug into humans which is designed to determine the metabolism and pharmacologic actions of the drug in humans, the side effects associated with increasing doses, and if possible, early evidence of effectiveness, as approved by applicable regulatory authorities and conducted in accordance with applicable law.

1.17        “Phase II Clinical Study” shall mean the clinical investigation of an investigational new drug in humans and includes controlled clinical studies conducted to evaluate the effectiveness of the drug for a particular indication or indications in patients with the disease or condition under study and to determine the short-term side effects and risks associated with the drug, as approved by applicable regulatory authorities and conducted in accordance with applicable law.

1.18        “Phase III Clinical Study” shall mean the controlled and uncontrolled clinical studies in humans, typically involving several hundred to several thousand subjects, which are intended to gather additional information about effectiveness and safety that is needed by applicable regulatory authorities to evaluate the overall benefit-risk relationship of the drug and provide an adequate basis for physician labeling, as approved by applicable regulatory authorities and conducted in accordance with applicable law.

1.19        “Quark Improvement Patent” shall mean any patent containing claims that cover an Improvement developed by or for Quark or for which Quark has the right to grant licenses to SKK as set forth herein.

1.20        “Quark Know-How” shall mean any of Quark’s, Quark Additional Licensees’ or Quark’s Affiliates’ information and materials relating to the research, development, registration, manufacture, marketing, use or sale of Licensed Compound and/or Licensed Product which prior to or during the Term of this Agreement are developed by or at the request of Quark, [ * ] or in Quark’s, [ * ] possession or control through license or otherwise (provided that Quark is permitted to make disclosure thereof to SKK without violating the terms of any third party agreement), and which are not generally known. Quark Know-How shall include, without

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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limitation, discoveries, practices, methods, knowledge, Quark Improvements, processes, formulas, data, ideas, skill, experience, inventions, know-how, technology, trade secrets, manufacturing procedures, purification and isolation techniques, instructions, test data and other intellectual property, patentable or otherwise, relating to Licensed Compound and/or Licensed Product, including without limitation, test procedures and other new technologies derived therefrom. Quark Know-How shall also include, without limitation: (i) all biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, clinical, safety, manufacturing and quality control data and information related thereto; and (ii) compositions of matter, assays and biological materials specifically relating to development, manufacture, use or sale of any Licensed Compound and/or Licensed Product.

1.21        “Quark Additional Licensees” shall mean any party not an Affiliate of Quark, which party is authorized directly or indirectly by Quark or its Affiliates through express or implied license or consent to discover, develop, make, have made, import, export, use, distribute, market, promote, offer for sale and sell Licensed Product(s) outside the Territory.

1.22        “Regulatory Approval” shall mean any approval, license, registration or authorization of any governmental entity necessary for the development, manufacture, use, storage, distribution, marketing, import, export or sale of Licensed Product(s) and/or the Licensed Compound.

1.23        “SKK Sublicensee” shall mean any party not an Affiliate of SKK, which party is authorized directly or indirectly by SKK or its Affiliates through express or implied license or consent to discover, develop, make, have made, import, export, use, distribute, market, promote, offer for sale and sell Licensed Product(s) in the Territory under Section 2.1.2.

1.24        “Territory” shall mean Japan, South Korea, the People’s Republic of China (including Hong Kong SAR) and Taiwan.

1.25        “Valid Claim” shall mean any claim of an issued and unexpired patent in a country in the Territory included within the Patent Rights, which has not been (i) revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal; or (ii) [ * ].

ARTICLE 2

LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND

COMMERCIALIZATION

2.1          Exclusive License Grant.

2.1.1       License. Quark hereby grants to SKK, an exclusive license in the Territory to use Quark Know-how and the Licensed Compound to develop, make, have made, import, export, use, distribute, market, promote, offer for sale and sell Licensed Product(s). Quark also hereby grants to SKK, an exclusive license in the Territory under the Patent Rights to develop, make, have made, import, export, use, distribute, market, promote, offer for sale and sell the Licensed Compound (solely for use as an active ingredient in Licensed Product(s)) and

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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Licensed Product(s). Quark shall not, and shall ensure that its Affiliates and Quark Additional Licensees do not, directly or indirectly develop, make, have made, import, export, use, distribute, market, promote, offer for sale or sell Licensed Compounds or Licensed Products in the Territory. Quark retains the right to use Quark Know-How and Patent Rights outside the Territory subject to the other provisions of this Agreement. For the avoidance of doubt, none of the foregoing restrictions on the rights licensed to SKK shall prevent SKK from contracting with third parties to make, have made, import, export, distribute, market promote offer for sale and sell the Licensed Compound if such third parties do not utilize the Quark Know-How.

2.1.2       Right to Sublicense. SKK shall be entitled to grant sublicenses to third parties in the Territory under the license granted pursuant to Section 2.1.1 above “Sublicense”), subject to the following conditions:

(a)           Sublicense Agreements. Sublicenses shall only be granted pursuant to written agreements, which shall be in compliance with and subject to the terms and conditions of this Agreement. SKK will provide Quark with notice of the signing of such agreement that will indicate the name of the SKK Sublicensee, the territory and the duration of the agreement.

(b)           If the license set forth in Section 2.1.1 above terminates, any Sublicense that has been granted by SKK shall terminate to the extent that the license is terminated; provided, however, that, for each SKK Sublicensee, upon termination of the Sublicense with such SKK Sublicensee, if the SKK Sublicensee is not then in breach of its sublicense agreement with SKK such that SKK would have the right to terminate such sublicense, Quark shall be obligated, at the request of such SKK Sublicensee, to enter into a new license agreement with such SKK Sublicensee which shall be in compliance with and consistent with the terms and conditions of this Agreement, as required under Section 2.1.2(a)), provided that such terms shall be amended, if necessary, to the extent required to ensure that such sublicense agreement does not impose any obligations or liabilities on Quark which are not included in this Agreement.

(c)           Any act or omission by an SKK Sublicensee which would constitute a breach of this Agreement had it been an act or omission of SKK shall constitute a breach of this Agreement by SKK.

2.2          Quark’s Obligations.

2.2.1       Disclosure of Information. Promptly after the Effective Date, Quark shall, at its own cost use good faith commercially reasonable efforts to, disclose to SKK in writing, or via mutually acceptable electronic media, copies or reproductions of all Quark Know-How not previously disclosed to SKK if any in order to enable SKK to exploit its rights granted under Section 2.1. In addition, during the term of this Agreement Quark shall [ * ] in accordance with the terms of this Agreement. Quark’s [ * ] shall be subject to [ * ]. At the request of SKK, Quark shall use commercially reasonable efforts to comply with SKK’s requests, including, but not limited to, SKK’s request to supply SKK with specific information, data, or certificates of authors relating to or for the GLP studies that Quark has or will provide to SKK pursuant hereto.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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2.2.2       Quark Current Intentions Regarding Development. Notwithstanding anything to the contrary in this Agreement, it is acknowledged and agreed by the parties that Quark [ * ].

2.2.3       Development of Licensed Products Outside the Territory. Quark shall [ * ]. For the avoidance of doubt, Quark shall be [ * ].

2.2.4       Registration of INN. Quark shall use commercially reasonable efforts to register an INN (International Nonproprietary Name) with the World Health Organization for the Licensed Compound before SKK initiates the Phase II Clinical Study for a Licensed Product in the Territory.

2.2.5       Reports. Within [ * ] after the end of each Calendar Year, Quark shall provide SKK with a written report of the status of the research and development, clinical development activities and progress of any Regulatory Approval, as applicable, in connection with the development of Licensed Products outside the Territory. Each report shall describe [ * ]. Quark’s obligation to report on the progress of the research and development activities [ * ]. Notwithstanding the provisions of Section 2.2.2 above, if Quark or any of Quark’s Affiliates [ * ].

2.2.6       [ * ].

2.2.7       GLP Statements. Quark shall use its reasonable commercial efforts to obtain and supply SKK with GLP Statements, as defined by the OECD Guidelines, for the following GLP studies for the Licensed Compound within [ * ] from the Effective Date:

(i)	[ * ];
(ii)	[ * ];
(iii)	[ * ];
(iv)	[ * ]; and
(v)	[ * ].

If Quark is unable to supply SKK with the GLP Statement for any of the above GLP studies, SKK shall use commercially reasonable efforts to carry out or have carried out such studies for which Quark was unable to supply SKK with the GLP Statement in time to try to ensure that completion of such studies will not cause a delay in the development plan for the Licensed Product(s) in the Territory. [ * ]. SKK shall provide a copy Quark with a copy of the report for each study within [ * ] after the study report is completed. Such study report shall constitute SKK Data for purposes of this Agreement, provided however, that Quark may use such reports subject to and in accordance with the provisions of this Agreement.

2.3          SKK’s Development Obligations.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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2.3.1       SKK Diligence. Promptly following the Effective Date, Quark and SKK will discuss in good faith and attempt to reach agreement on the Development Time Table within a period of [ * ], that when agreed to by the parties shall be initialed by the parties and attached as hereto as Schedule 2.3.1 to this Agreement.

SKK shall, at SKK’s expense, use its commercially reasonable efforts (directly or through SKK’s Affiliates or SKK Sublicensees) to develop, obtain Regulatory Approval for, and commercialize the Licensed Product(s) in the Territory in accordance with the Development Time Table. If SKK is delayed by more than [ * ] in achieving the milestones set forth in the Development Time Table, SKK shall promptly thereafter provide written notice thereof to Quark. Thereafter, the parties shall meet to discuss in good faith the reasons and causes for such delay and discuss any adjustments that may need to be made to the Development Time Table. If the parties agree to amend the Development Time Table, the parties shall signify their agreement by initialing a revised Development Time Table which will then replace the then existing Development Time Table. The parties acknowledge and agree that all business decisions including, without limitation, decisions relating to SKK’s research, development, registration, manufacture, sale, commercialization, design, price, distribution, marketing and promotion of Licensed Products in the Territory, covered under this Agreement, shall be within the sole discretion of SKK.

2.3.2       Research and Development Activities. Subject to its diligence obligations set forth in Section 2.3.1, SKK shall be responsible, at its cost and expense, and in its sole judgment, for all research and development activities which are necessary to obtain Regulatory Approval for a Licensed Product in the Territory and any post-approval studies required as a condition of obtaining any Regulatory Approval for a Licensed Product in the Territory. In addition, SKK shall be responsible for any other studies (or portions of studies) necessary or desirable, in its sole judgment, for maintaining any Regulatory Approval in the Territory, as well as any pre-marketing studies prior to such Regulatory Approval and post-marketing studies conducted following such Regulatory Approval.

2.3.3       Licensed Product Registrations. Subject to its diligence obligations set forth in Section 2.3.1, SKK shall be responsible, at its cost and expense, and in its sole judgment, for determining the appropriate regulatory strategy, for obtaining and maintaining all Regulatory Approvals in the Territory and for obtaining and maintaining any pricing and reimbursement approvals required for the sale of Licensed Product in the Territory.

2.4          Additional Obligations. For the avoidance of doubt, nothing in this Agreement shall be construed as the grant of a right or license to SKK to research, develop, manufacture, distribute, sell, or have sold Licensed Products outside of the Territory, provided however, that SKK shall have the right to procure Licensed Compound from sources outside the Territory.

2.5          Data and Improvements. SKK shall own all data arising out of studies and research performed by SKK with respect to the Licensed Compound or Licensed Products (“SKK Data”). [ * ]. Without limiting the generality of the foregoing, Quark agrees to use its good faith commercially reasonable efforts to [ * ]. Quark shall provide to SKK the results from any research or studies that (notwithstanding the provisions of Section 2.2.2) Quark [ * ]. SKK

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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shall consider requests by Quark to share SKK’s test results or other results of its development efforts for the Licensed Products. Notwithstanding any other provision of this Agreement, [ * ].

2.6          Reports. Within [ * ] after the end of each Calendar Year, SKK shall provide Quark with a report of the status of the research and development, clinical development activities and progress of any Regulatory Approval, as applicable, in connection with the development of Licensed Products in the Territory. Each report shall describe SKK’s (and, if applicable, SKK’s Affiliates and SKK Sublicensees’) progress in such development activities during the prior Calendar Year and planned programs for the current year. At Quark’s request during the term of this Agreement, the parties shall meet at SKK’s facilities in Japan to discuss such development and commercialization plans; provided, however, that such meetings shall not occur more frequently than semi-annually, unless SKK agrees otherwise. [ * ].

ARTICLE 3

PAYMENTS; ROYALTIES AND RECORDS

3.1          License Fee. In partial consideration for the licenses granted to SKK hereunder, SKK shall pay to Quark a license fee (“License Fee”) of [ * ], which payment shall be due within [ * ] following the Effective Date.

3.2          Clinical Development Milestone Payments. In further consideration for the licenses granted to SKK hereunder, SKK shall pay to Quark clinical development milestone payments as set forth below (“Milestone Payments”).

3.2.1       [ * ] upon the earlier of (i) [ * ] or (ii) [ * ];

3.2.2       [ * ] upon [ * ].

3.2.3       [ * ] upon [ * ].

3.2.4       [ * ] upon [ * ].

3.2.5       [ * ] upon [ * ].

For the avoidance of doubt, SKK shall have no obligation to pay Quark the foregoing Milestone Payments more than one time.

3.3          Royalties. In further consideration for the licenses granted to SKK hereunder, subject to the terms and conditions of this Agreement, SKK shall pay to Quark royalties equal to [ * ] of the Net Sales of Licensed Products in each country of the Territory. Notwithstanding the foregoing, if SKK reasonably determines that [ * ], from the first day of the month following the month in which SKK [ * ]. The royalties shall be payable quarterly for a period commencing in the Calendar Quarter in which the First Commercial Sales occur and shall continue on a country-by-country basis for the longer, in each country, of a period of ten (10) years or the expiry of the last to expire in such country of a Valid Claim. No royalties shall be due upon the sale or other transfer among SKK, its Affiliates or SKK Sublicensees, but in such cases the royalty shall be

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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due and calculated upon SKK’s or its Affiliates’ or SKK Sublicensees’ Net Sales to the first independent third party.

3.4          Payments of Royalty; Payment Exchange Rate and Currency Conversions.

3.4.1       Royalties Paid Quarterly. Within [ * ] following the end of each Calendar Quarter, following the First Commercial Sale of a Licensed Product, SKK shall furnish to Quark a written report for the Calendar Quarter showing the Net Sales of Licensed Product(s) sold by SKK, its Affiliates and SKK Sublicensees in the Territory during such Calendar Quarter and the royalties payable under this Agreement for such Calendar Quarter. Within [ * ] after the submission of such written report, SKK shall pay to Quark, for the account of SKK or the applicable Affiliate or SKK Sublicensee, as the case may be, a sum equal to the aggregate royalty due for such Calendar Quarter.

3.4.2       Method of Payment. Payments to be made by SKK to Quark under this Agreement shall be paid by bank wire transfer in immediately available funds to such bank account as is designated in writing by Quark from time to time. Royalty payments shall be made in United States dollars. The rate of exchange to be used in any conversion from the currency in the country where the applicable Net Sales are made to United States dollars shall be [ * ]. Such [ * ] may only be changed by the mutual written agreement of the parties.

3.4.3       Maintenance of Record; Audits. During the term of this Agreement and for a period of [ * ] after the Calendar Year in which sales of Licensed Products took place, SKK shall keep and shall cause its Affiliates and any SKK Sublicensees to keep complete and accurate records pertaining to the sale or other disposition of the Licensed Products commercialized by it, in sufficient detail to permit Quark to confirm the accuracy of all payments due hereunder. Quark shall have the right to cause an independent, certified public accountant to whom SKK has no reasonable objection, to audit such records to confirm SKK’s Net Sales and royalty payments; provided, however, that such auditor shall enter into a confidentiality agreement acceptable to SKK and not disclose SKK’s confidential information to Quark, except to the extent such disclosure is necessary to verify the amount of royalties due under this Agreement. Quark may exercise such audit right for a Calendar Year [ * ] in a given Calendar Year and only within [ * ] after the royalty period to which such records relate, upon notice to SKK and during normal business hours. Quark shall bear the full cost of such audit unless such audit discloses a variance of more than [ * ] from the amount of the Net Sales or royalties previously paid. In such case, SKK shall bear the full cost of such audit. The independent, certified public accountant conducting such audit shall only report the results of its audit and shall not disclose to Quark the facts relied upon in making such computation. The terms of this Section 3.4.3 shall survive any termination or expiration of this Agreement for a period of three (3) years.

3.4.4       Record Keeping by SKK Sublicensee. SKK shall include in each Sublicense granted by it pursuant to this Agreement a provision requiring the SKK Sublicensee to make reports to SKK, to keep and maintain records of sales made pursuant to such Sublicense and to grant access to such records by Quark’s independent accountant to the same extent required of SKK under this Agreement.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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3.4.5       Income Tax Withholding. If at any time, SKK is required to withhold, under Japanese law, income taxes or other taxes imposed upon payments set forth in this Agreement, Quark shall bear such taxes and SKK shall make such withholding payments as required and subtract such withholding payments from the payments due to Quark. The parties shall discuss any other withholding taxes imposed on payments made hereunder in order to find a reasonable solution for minimizing and allocating the burden of any withholding taxes.

ARTICLE 4

PATENTS

4.1          Filing, Prosecution and Maintenance of Patents by Quark. Quark shall diligently file, prosecute and maintain in the Territory, or cause to be diligently filed, prosecuted and maintained in the Territory, all Patent Rights, including, without limitation, all Quark Improvement Patent(s) at Quark’s expense. Furthermore, if Quark applies for a Quark Improvement Patent outside the Territory, Quark shall apply for the same Quark Improvement Patent in the Territory. Quark shall keep SKK regularly and fully advised of the status of all pending patent applications. Without limiting the generality of the foregoing, Quark shall promptly disclose to SKK in writing, or via mutually acceptable electronic media, on an ongoing basis, information regarding all Patent Rights in the Territory, including all applications for Quark Improvement Patents (including the details of the claims set forth in such applications), the status of all such applications, including comments and office actions received from relevant patent offices, the dates such patents issue and such other information as may reasonably be requested by SKK. Upon the reasonable written request of SKK, Quark shall provide copies of any substantive papers related to the filing, prosecution and maintenance of such patent filings. SKK shall treat all information, papers, and other materials provided by Quark pursuant to this Section 4.1 in accordance with the confidentiality provisions of this Agreement. SKK shall have a period of [ * ] from the date SKK receives written notice from Quark of the filing of an application for a Quark Improvement Patent in the Territory that describes the invention covered by such application (including the claims set forth in such application) to exercise its rights to include such application and the Quark Improvement Patent(s) that may issue on such application in the license granted by Quark to SKK pursuant to Section 2.1. SKK shall exercise its option by sending written notice to Quark.

4.2          Option of SKK to Prosecute and Maintain Patents. Quark shall give written notice to SKK of any desire to cease prosecution and/or maintenance of a particular Quark Improvement Patent or application therefore and, in such case, shall permit SKK, at its sole discretion, to continue prosecution or maintenance at its own expense. If SKK elects to continue prosecution or maintenance, Quark shall execute such documents and perform such acts, at SKK’s expense, as may be reasonably necessary to [ * ] to allow SKK to continue such prosecution or maintenance. Any patents or patent applications [ * ] shall, after such assignment, not be considered Quark Improvement Patents.

4.3          SKK’s Right to Terminate License of Specific Patents. At any time during the term of this Agreement SKK shall have the right to terminate its license of any patents or patent applications included in the Patent Rights licensed to SKK under Section 2.1 (including, without limitation, any of the Quark Improvement Patent for which SKK has exercised its option under

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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Section 4.1). If SKK exercises such rights, Quark acknowledges and agrees that the effect under Section 3.3 may be to shorten the period of time during which SKK is obligated to pay royalties to Quark. Except as set forth in the preceding sentence, SKK’s exercise of its rights in this Section 4.3, will not affect SKK’s obligations set forth in this Agreement.

4.4          Enforcement.

4.4.1       Notice and Discontinuance of Infringement. In the event that either SKK or Quark becomes aware of any infringement involving Licensed Products within the Territory of any issued patent within the Patent Rights (including any Quark Improvement Patents for which SKK has exercised its option set forth in Section 4.1), it will notify the other party in writing to that effect. Quark shall have the first right, but not the obligation, to bring suit against the third party infringer at its own expense. SKK will reasonably cooperate with Quark in any such suit or action and shall have the right to consult with Quark and be represented by its own counsel at its own expense. Any recovery or damages derived from any suit under this Section shall be used first to reimburse each of Quark and SKK for its documented out-of-pocket legal expenses relating to the suit, second [ * ].

4.4.2       Continuance of Infringement. If Quark has neither obtained a discontinuance of such infringement nor brought suit against such infringer within 6 months of any notice under Section 4.4.1, SKK shall have the right, but not the obligation, to bring suit against such infringer under the Patent Rights and join Quark as a party plaintiff, provided that SKK shall bear all the expenses of such suit. Quark shall cooperate with SKK in any such suit for infringement of a Patent Right brought by SKK against a third party, and shall have the right to consult with SKK and to participate in and be represented by independent counsel in such litigation at its own expense. SKK shall incur no liability to Quark as a consequence of such litigation or any unfavorable decision resulting therefrom, including any decision holding any of the Quark Improvement Patents invalid or unenforceable. In the event that SKK recovers any sums in such litigation by way of damages or in settlement thereof, SKK shall retain all such sums.

4.4.3       Third Party Infringement Suit. In the event that a third party initiates legal action alleging that SKK’s, its Affiliates’ or SKK Sublicensees’ making, having made, importing, exporting, using, distributing, marketing, promoting, offering for sale or selling Licensed Compound and/or Licensed Product infringes or will infringe such third party’s intellectual property rights, then SKK may elect to defend such suit at its sole expense and discretion. Upon SKK’s request and in connection with SKK’s defense of any such third party infringement suit. Quark shall reasonably cooperate with SKK for such defense provided, that SKK shall promptly reimburse Quark for reasonable out-of-pocket costs and expenses incurred by Quark in providing such cooperation. In addition to any other remedies that SKK may have pursuant to other provisions of this Agreement or by reason of law or equity, SKK shall be entitled to [*].

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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ARTICLE 5

CONFIDENTIALITY AND PUBLICATION

5.1          Confidentiality.

5.1.1       Nondisclosure Obligation. Each of Quark and SKK shall use only accordance with this Agreement and shall not disclose to any third party any Proprietary Information received by it from the other party, without the prior written consent of the other party. For the purposes of this Article V, “Proprietary Information” shall mean Quark Know-How and all other scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing, verbally or electronically, which is provided by one party to the other party in connection with this Agreement. When Propriety Information is disclosed in a manner other than in writing, it shall be reduced to written form, marked “Confidential” and transmitted to the receiving party within twenty (20) business days of disclosure to the receiving party. Notwithstanding the foregoing, “Proprietary information” shall include all reports that SKK provides to Quark pursuant to this Agreement, including without limitation the status reports referred to in Section 2.6 and the royalty reports furnished in accordance with Section 3.4.1 as well as all information SKK may furnish in connection with an audit, regardless of whether such information is marked as “Confidential.”

The foregoing obligations shall survive the expiration or termination of this Agreement for a period of [ * ]. These obligations shall not apply when and to the extent Proprietary Information: (i) is known by the receiving party at the time of its receipt, and not through a prior disclosure by the disclosing party, as documented by written records; (ii) is at the time of disclosure or thereafter becomes published or otherwise part of the public domain without breach of this Agreement by the receiving party; (iii) is subsequently disclosed to the receiving party by a third party that has the right to make such disclosure; (iv) is developed by the receiving party independently of Proprietary Information or other information received from the disclosing party and such independent development can be documented by the receiving party; (v) is disclosed to any institutional review board of any entity conducting clinical trials or any governmental or other regulatory agencies in order to obtain patents or to gain approval to conduct clinical trials or to market Licensed Compound and/or Licensed Product, but such disclosure may be made only to the extent reasonably necessary to obtain such patents or authorizations; or (vi) is required by law, regulation, rule, act or order of any governmental authority or agency to be disclosed by a party, provided that notice is promptly delivered to the other party in order to provide an opportunity to seek a protective order or other similar order with respect to such Proprietary Information and thereafter the disclosing party discloses to the requesting entity only the minimum Proprietary Information required to be disclosed in order to comply with the request, whether or not a protective order or other similar order is obtained by the other party.

5.1.2       Disclosure to Agents. Notwithstanding the provisions of Section 5.1.1 and subject to the other terms of this Agreement, SKK shall have the right to disclose Quark Proprietary Information to SKK Sublicensees, agents, consultants, Affiliates or other third parties (collectively “Agents”) in accordance with this Section 5.1.2. Such disclosure shall be limited only to those Agents directly involved in the research, development, manufacturing, marketing or promotion of Licensed Compound or Licensed Products (or for such Agents to determine their interest in performing such activities) in accordance with this Agreement. Any such Agents must agree in writing to be bound by confidentiality and non-use obligations which contain terms that are similar in all material respects to those contained in this Agreement.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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5.1.3       Return of Proprietary Information. Upon termination of this Agreement the receiving party shall return all documents, and copies thereof, (including those in the possession of SKK’s Agents pursuant to Section 5.1.2) containing the disclosing party’s Proprietary Information at any time upon request of the disclosing party. However, the receiving party may retain one (1) copy of such documents in a secure location solely for the purpose of determining its obligations hereunder, to comply with any applicable regulatory requirements, or to defend against any product liability or other claims.

5.2          Publicity. Quark and SKK shall jointly issue a press release, the content of which shall be mutually agreed, concerning this Agreement promptly after the Effective Date. Each party may subsequently issue press releases related to this Agreement but only if substantially approved before release by the other party. Quark may use the substance of the joint press release, SKK’s public announcements, and any other materials approved by SKK in writing, in Quark’s investor relations and public relations activities. Nothing in the foregoing, however, shall prohibit a party from making disclosures to the extent deemed necessary under applicable federal or state securities laws or any rule or regulation of any nationally recognized securities exchange, provided such disclosure is accurate and complete. In such event, however, the disclosing party shall use good faith efforts to consult with the other party prior to such disclosure and shall request confidential treatment to the extent available.

5.3          Publication. SKK and Quark each acknowledge the potential benefit in publishing results of certain studies to obtain recognition within the scientific community and to advance the state of scientific knowledge. Each party also recognizes the mutual interest in obtaining valid patent protection and in protecting business interests and trade secret information. No publication of Quark Know-How or Quark Proprietary information may be made without the prior written consent of Quark [ * ]. No publication of SKK Data may be made without prior written consent of SKK. The parties agree that SKK, its Affiliates, employees or consultants shall be free to make any publication which does not disclose Quark Know-How. In the event that any proposed publication (as defined below) discloses Quark Know-How, the following procedure shall apply: Either party, its Affiliates, employees or consultants wishing to make a publication shall deliver to the other party (and in the case SKK desires to make a proposed publication, [ * ] a copy of the proposed written publication or an outline of an oral disclosure at least [ * ] prior to submission for publication or presentation. For purposes of this Agreement, the term “publication” shall include, without limitation, abstracts and manuscripts for publication, slides and texts of oral or other public presentations, and texts of any transmission through any electronic media, e.g. any computer access system such as the Internet, including the World Wide Web. The reviewing party shall have the right to (i) propose modifications to the publication for patent reasons, trade secret reasons or business reasons, (ii) request delay of the publication or presentation in order to protect patentable information or (iii) reasonably object to such publication for patent, trade secret or business reasons. If the reviewing party requests a delay, the publishing party shall delay submission or presentation for a period not less than [ * ] from the filing date of the first patent application covering the information contained in the proposed publication or presentation.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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ARTICLE 6

REPRESENTATIONS AND WARRANTIES

6.1          Representations and Warranties of Each Party. Each of Quark and SKK hereby represents, warrants and covenants to the other party hereto as follows:

6.1.1       it is a corporation or entity duly organized and validly existing under the laws of the state or other jurisdiction of incorporation or formation;

6.1.2       this Agreement has been duly authorized, executed and delivered and constitutes such party’s legal, valid and binding obligation enforceable against it in accordance with its terms subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to the availability of particular remedies under general equity principles; and

6.1.3       it shall comply with all applicable material laws and regulations relating to its activities under this Agreement.

6.2          Quark’s Representations. In addition to its representations, warranties and covenants set forth in Section 6.1 above, Quark hereby represents and warrants to SKK as follows:

6.2.1       Quark has the full right, power and authority to enter into and perform all of its obligations under the terms of this Agreement, including without limitation, the right, power and authority to grant the licenses set forth in this Agreement;

6.2.2       Quark owns or has an exclusive license to the Patent Rights and the Quark Know-How in the Territory, which to the best of its knowledge is free and clear of any claims of third parties, including, without limitation, any liens and encumbrances and Quark has not granted any right, license or interest in, to or under the Quark Know-How to any third party which restricts or is inconsistent with the rights and licenses granted to SKK pursuant to this Agreement;

6.2.3       As of the date hereof, the patents and patent applications listed in Schedule 1.14 are all the Patent Rights that Quark owns or has a license to use in the Territory relating to the Licensed Compound and Licensed Products;

6.2.4       Quark has used commercially reasonable efforts to maintain and prosecute the Patent Rights in the ordinary course of business and to maintain the secrecy of all Quark Know-How;

6.2.5       Quark has not received any notice or claim that use of the Patent Rights or Quark Know-How or the development, manufacture, use or sale of the Licensed Compound or Licensed Products infringes any third party intellectual property rights in the Territory and the use of the Patent Rights, Quark Know-How and the development, manufacture, use and sale of the Licensed Compound and Licensed Products by SKK and its Affiliates and/or the SKK Sublicensees, as contemplated in this Agreement, shall not infringe any intellectual property rights of any third party;

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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6.2.6       To the best of Quark’s knowledge, all documentation and other information, including, but not limited to the documentation and information included in the Quark Know-How, was or will be, at the time it was or will be conveyed or provided to SKK, accurate and complete in light of the purposes for which it was intended to be used; and

6.2.7       To the best of its knowledge no third party is infringing the Patent Rights or has misappropriated any of the Quark Know-How.

6.3          Continuing Representations. The representations and warranties of each party contained in Sections 6.1 and 6.2 shall survive the execution of this Agreement.

6.4          No Inconsistent Agreements. Except as set forth in Schedule 6.4, neither party has in effect, and after the Effective Date neither party shall enter into, any oral or written agreement or arrangement that would be inconsistent with its obligations under this Agreement.

ARTICLE 7

INDEMNIFICATION AND LIMITATION ON LIABILITY

7.1          Indemnification by SKK. SKK shall indemnify, defend and hold harmless Quark and its Affiliates, and each of its and their respective employees, officers, directors and agents (each, a “Quark Indemnified Party”) from and against any and all third party claims, demands, lawsuits, proceedings, settlement amounts, liability, loss, damage, cost, and expense (including reasonable attorneys’ fees), subject to the limitations in Section 7.5 (collectively, a “Liability”) which may be asserted against the Quark Indemnified Party or which the Quark Indemnified Party may incur, suffer or be required to pay resulting from or arising out of (i) the discovery, development, manufacture, promotion, distribution, use, testing, marketing, sale or other disposition of Licensed Compound and/or Licensed Product(s) by SKK, its Affiliates or SKK Sublicensees in the Territory, including, without limitation, any personal injury, death, or other injuries suffered by users of Licensed Compound or Licensed Product, or (ii) the breach by SKK of any covenant, representation or warranty contained in this Agreement. Notwithstanding the foregoing, SKK shall have no obligation under this Agreement to indemnify, defend or hold harmless any Quark Indemnified Party with respect to any Liability which results from willful misconduct or negligent acts or omissions of Quark, its Affiliates, Quark Sublicensee or any of their respective employees, officers, directors or agents, or breach of this Agreement by Quark.

7.2          Indemnification by Quark. Quark shall indemnify, defend and hold harmless SKK and its Affiliates and SKK Sublicensees, and each of its and their respective employees, officers, directors and agents (each, a “SKK Indemnified Party”) from and against any Liability which the SKK Indemnified Party may incur, suffer or be required to pay resulting from or arising out of (i) the discovery, development, manufacture, promotion, distribution, use, testing, marketing, sale or other disposition of Licensed Compound and/or Licensed Product(s) by Quark, its Affiliates or Quark Additional Licensees outside the Territory, including, without limitation, any personal injury, death, or other injuries suffered by users of Licensed Compound or Licensed Product, (ii) any claim or legal action described in Section 4.4.3 in which a third party alleges that any exercise of SKK’s rights pursuant to this Agreement (x) infringes such third party’s intellectual property rights to the Licensed Compound or (y) infringes such third

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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party’s patents having the same or similar claims as those contained or embodied in any of the Patent Rights, or (iii) the breach by Quark of any covenant, representation or warranty contained in this Agreement. Notwithstanding the foregoing, Quark shall have no obligation under this Agreement to indemnify, defend or hold harmless any SKK Indemnified Party with respect to any Liability which results from willful misconduct or negligent acts or omissions of SKK, its Affiliates, SKK Sublicensee or any of their respective employees, officers, directors or agents.

7.3          Conditions to Indemnification. Each party agrees to promptly give the other party notice of any claim for which indemnification might be sought. Failure of an indemnified party to provide notice of a claim to the indemnifying party shall affect the indemnified party’s right to indemnification only to the extent that such failure has a material adverse effect on the indemnifying party’s ability to defend or the nature or the amount of the Liability. Subject to the provisions of Article IV, the indemnifying party shall have the right to assume the defense of any suit or claim related to the Liability if it has assumed responsibility for the suit or claim in writing; however, if in the reasonable judgment of the indemnified party, such suit or claim involves an issue or matter which could have a materially adverse effect on the business operations or assets of the indemnified party, the indemnified party may waive its rights to indemnity under this Agreement and control the defense or settlement thereof, but in no event shall any such waiver be construed as a waiver of any indemnification rights such party may have at law or in equity. If the indemnifying party defends the suit or claim, the indemnified party may participate in (but not control) the defense thereof at its sole cost and expense.

7.4          Settlements. Subject to the provisions of Article IV, neither party may settle a claim or action related to a Liability without the consent of the other party, if such settlement would impose any monetary obligation on the ether party or require the other party to submit to an injunction or otherwise limit the other party’s rights under this Agreement; provided that such consent shall not unreasonably be withheld or delayed. Any payment made by a party to settle any such claim or action shall be at its own cost and expense.

7.5          Limitation of Liability. With respect to any claim by one party against the other arising out of the performance or failure of performance of the other party under this Agreement, the parties expressly agree that the liability of such party to the other party for such breach shall be limited under this Agreement or otherwise at law or equity to direct damages only and in no event shall a party be liable for, punitive, exemplary or consequential damages suffered or incurred by the other party. Without limiting the foregoing, each party’s maximum liability to the other party pursuant to the foregoing shall be limited to the aggregate amounts actually paid by SKK to Quark pursuant to this Agreement, expect in cases of fraud, in which case no such limitation shall apply.

7.6          Insurance. Each party acknowledges and agrees that during the Term of this Agreement it shall maintain adequate insurance and/or a self-insurance program for contractual liability insurance to cover such party’s obligations under this Agreement. In addition, each party shall maintain adequate products liability insurance to cover its obligations under this Agreement. Each party shall provide the other party with evidence of such insurance and/or self-insurance program, upon request.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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ARTICLE 8

TERM AND TERMINATION

8.1          Term and Expiration. This Agreement shall be effective as of the Effective Date and unless terminated earlier by mutual written agreement of the parties or pursuant to Sections 8.2 below, the term of this Agreement shall continue until the termination of SKK’s obligation to pay Quark royalties pursuant to Section 3.3. Upon expiration of this Agreement, SKK’s licenses pursuant to Section 2.1 shall become fully paid-up, perpetual, non-exclusive licenses.

8.2          Termination.

8.2.1       Termination for Cause. This Agreement may be terminated by written notice by the terminating party at any time during the term of this Agreement:

(i)            by either party with [ * ] prior written notice, if the other party is in material breach of its material obligations hereunder (but specifically excluding in the case of SKK, any breach by SKK of SKK’s diligence obligations set forth in Section 2.3.1) and has not cured such breach within [ * ] after notice requesting cure of the breach with reasonable detail of the particulars of the alleged breach or initiated actions reasonably expected to cure the cited failure within [ * ] of receiving notice and thereafter diligently pursued such actions to cure the failure [ * ]; or

(ii)           by either party, upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other party, or in the event a receiver or custodian is appointed for such party’s business, or if a substantial portion of such party’s business is subject to attachment or similar process; provided, however, that in the case of any involuntary bankruptcy proceeding such right to terminate shall only become effective if the proceeding is not dismissed within sixty (60) days after the filing thereof.

8.2.2       Termination for Breach of Diligence, Obligations. If after SKK has provided written notice in accordance with Section 2.3.1 of a delay of [ * ] in meeting a milestone set forth in the Development Time Table, then SKK and Quark shall each cause a scientific representative from each of the parties to study the reasons for such delay and attempt to determine for a period not to exceed [ * ] on whether a justifiable reason exists for such delay. If the scientific representatives are unable to agree on whether a justifiable reason exists for any such delay during such [ * ] period, then Quark may refer the matter for resolution in accordance with the dispute resolution provisions of Section 9.3. If ultimately the matter is the subject of arbitration and the arbitral award specifies that no justifiable reason exists for such delay or if the scientific representatives mutually determine in writing that no justifiable reason exists for such delay, then SKK shall promptly upon receipt of any such arbitral award or written determination, remedy the delay. If SKK fails to remedy such delay, or initiated actions reasonably expected to remedy such delay, within [ * ] after receipt of such written decision, then Quark may immediately terminate this Agreement by providing written notice of termination to SKK.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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8.2.3       Termination by SKK. SKK may terminate this Agreement at any time by providing Quark with sixty (60) days prior written notice, provided that SKK has paid Quark the License Fee set forth in Section 3.1 and the milestone payment set forth in Section 3.2.1.

8.3          Effect of Termination. Expiration or termination of the Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination, and the provisions of Article V and VII shall survive the expiration of the Agreement. Furthermore, if SKK terminates this Agreement pursuant to (a) Section 8.2.1 (i) for material breach of any obligation of Quark under Section 2.1.1 or any provision of Section 6.2, or (b) Section 8.2.1(ii), in addition to any other remedies available to SKK pursuant to the other provisions of this Agreement or by reason of law or equity, the licenses granted to SKK pursuant to Section 2.1 shall immediately and automatically become fully paid-up, perpetual, irrevocable licenses and SKK shall have no further obligation to make any payment to Quark pursuant to this Agreement. Except as set forth in the preceding sentence, any expiration or early 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 termination, including the obligation to pay royalties for Licensed Product(s) or Licensed Compound sold prior to such termination.

ARTICLE 9

MISCELLANEOUS

9.1          Assignment. Neither this Agreement nor any or all of the rights and obligations of a party hereunder shall be assigned, delegated, sold, transferred, sublicensed (except as otherwise provided herein) or otherwise disposed of, by operation of law or otherwise, to any third party (other than an Affiliate of an assigning party under the condition that the assignor remain responsible to the other party under this Agreement), without the prior written consent of the other party, and any attempted assignment, delegation, sale, transfer, sublicense or other disposition, by operation of law or otherwise, of this Agreement or of any rights or obligations hereunder contrary to this Section 9.1 shall be a material breach of this Agreement by the attempting party, and shall be void and without force or effect; provided, however, either party may, without such consent, assign the Agreement and its rights and obligations hereunder to an Affiliate or in connection with the transfer or sale of all or substantially all of its assets related to the division or the subject business, or in the event of its merger or consolidation or change in control or similar transaction. This Agreement shall be binding upon, and inure to the benefit of, each party, its Affiliates, and its permitted successors and assigns. Each party shall be responsible for the compliance by its Affiliates with the terms and conditions of this Agreement.

9.2          Governing Law. This Agreement shall be governed, interpreted and construed in accordance with the laws of the State of California, without giving effect to conflict of law principles.

9.3          Dispute Resolution. Subject to the terms of this Agreement, in the event of any dispute, controversy or claim arising out of or relating to this Agreement, the parties shall try to settle it amicably between themselves including first referring such dispute, controversy or claim by notice to the other, to their respective chief executive officers for attempted resolution by good faith negotiations within thirty (30) days after such notice. In the event the chief executive

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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officers are not able to resolve such dispute controversy or claim, either party may at any time after the thirty (30)-day period invoke the arbitration provisions of this Section 9.3.

All arbitration proceedings shall be conducted in San Francisco, California, under the procedural rules of the International Chamber of Commerce. The party requesting arbitration shall serve upon the other party a demand for arbitration stating the substance of the controversy, dispute or claim, and the contention of the party requesting arbitration. Within sixty (60) days after the demand, the parties shall each select one arbitrator, which arbitrators shall together select a third arbitrator. The three arbitrators are to act as neutral arbitrators and shall have no past, present or anticipated future affiliation with the parties, which would unduly influence the independence of an arbitrator. The decision of the arbitrators shall be in writing setting forth the basis therefore.

The arbitrators shall have the authority to award compensatory damages, interest, tort damages (but not punitive or similar damages nor consequential or incidental damages) and specific performance and other equitable relief. The parties shall abide by the award rendered in such arbitration proceeding, and such award may be enforced and executed upon in any court having jurisdiction over the party against whom enforcement of such award is sought. During such arbitration proceedings, each party shall pay its arbitrators’ fees, administration charges and related expenses of arbitration. The losing party shall thereafter reimburse the prevailing party for all such costs incurred in connection with such arbitration.

9.4          Waiver. Any delay or failure in enforcing a party’s rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of such party’s rights to the future enforcement of its rights under this Agreement, nor operate to bar the exercise or enforcement thereof at any time or times thereafter, excepting only as to an express written and signed waiver as to a particular matter for a particular period of time.

9.5          Independent Relationship. Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the parties hereto or any of their agents or employees, or any other legal arrangement that would impose liability upon one party for the act or failure to act of the other party. Neither party shall have any power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other party, or to bind the other party in any respect whatsoever.

9.6          Entire Agreement; Amendment. This Agreement, including the Appendices and Schedules hereto and all the covenants, promises, agreements, warranties, representations, conditions and understandings contained herein sets forth the complete, final and exclusive agreement between the parties and supersedes and terminates all prior and contemporaneous agreements and understandings between the parties, whether oral or in writing. There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the parties other than as are set forth herein. No subsequent alteration, amendment, change, waiver or addition to this Agreement shall be binding upon the parties unless reduced to writing and signed by an authorized officer of each party. Either party in deciding to execute this Agreement has relied on no understanding, agreement, representation or promise, not explicitly set forth herein.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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9.7          Notices. Except as otherwise set forth in this Agreement, any notice required or permitted to be given or sent under this Agreement shall be hand delivered or sent by express delivery service or certified or registered mail, postage prepaid, or by facsimile or e-mail transmission (with written confirmation copy by registered first-class mail) to the parties at the addresses, facsimile and e-mail numbers indicated below.

If to Quark, to:

Quark Biotech, Inc.

6526 Kaiser Drive

Fremont, CA 94555

USA

Attn: Daniel Zurr, Ph.D., CEO

Telephone +1-510-402-4020

Facsimile : +1-510-402-4021

If to SKK to:

Sanwa Kagaku Kenkyusho Co., Ltd.

35 Higashisotobori-cho, Higashi-ku

Nagoya, Japan 461-8631

Attn: Mr. Masuo Kato,

General Manager, Business Development Dept.

Telephone:+81-52-951-8130

Facsimile; +81-52-950-1860

With copies to:

Squire, Sanders and Dempsey L.L.P.
1-1-39 Hiroo, Shibuya-ku
Tokyo, Japan 150-0012
Attn: Stephen E, Chelberg, Esq.
Telephone: +81-3-5774-1800
Facsimile: +81-3-5774-1818
E-Mail: schelberg@ssd.com

Any such notice shall be deemed to have been received on the date actually received. Either party may change its address or its facsimile number by giving the other party written notice, delivered in accordance with this Section.

9.8          Force Majeure. Failure of any party to perform its obligations under this Agreement (except the obligation to make payments when properly due) shall not subject such party to any liability or place them in breach of any term or condition of this Agreement to the other party if such failure is due to any cause beyond the reasonable control of such non-performing party (“force majeure”). Causes of non-performance constituting force majeure shall include, without limitation, acts of God, fire, explosion, flood, earthquake, drought, war, riot, act of terror, sabotage, embargo, strikes or other labor trouble, failure in whole or in part of suppliers to deliver on schedule materials, equipment or machinery, interruption of or delay in

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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transportation, a national health emergency, spread of communicable disease or compliance with any order or regulation of any government entity acting with color of right. The party affected shall promptly notify the other party of the condition constituting force majeure as defined herein and shall exert reasonable efforts to eliminate, cure and overcome any such causes and to resume performance of its obligations with all possible speed. If a condition constituting force majeure as defined herein exists for more than ninety (90) consecutive days, the parties shall meet to negotiate a mutually satisfactory resolution to the problem, if practicable

9.9          Severability. If any provision of this Agreement is declared illegal, invalid or unenforceable by a court having competent jurisdiction, it is mutually agreed that this Agreement shall endure except for the part declared invalid or unenforceable by order of such court, provided, however, that in the event that the terms and conditions of this Agreement are materially altered, the parties will, in good faith, renegotiate the terms and conditions of this Agreement to reasonably substitute such invalid or unenforceable provisions in light of the intent of this Agreement.

9.10        Counterparts. This Agreement shall become binding when any one or more counterparts hereof, individually or taken together, shall bear the signatures of each of the parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be an original as against either party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument.

9.11        Further Actions. Each party agrees to execute, acknowledge and deliver such further instruments and to do all other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement including, without limitation, any filings with any antitrust agency which may be required.

IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized representatives of the parties as of the date set forth below.

QUARK BIOTECH, INC.
By:	/s/ Daniel Zurr
Name:	Daniel Zurr, Ph.D.
Title:	CEO

SANWA KAGAKU KENKYUSHO CO., LTD.
By:	/s/ Kazuo Yamamoto
Name:		Kazuo Yamamoto
Title:		President

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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SCHEDULE 1.14

EXISTING QUARK PATENTS AND PATENT APPLICATIONS

1.             [ * ].

2.             [ * ].

3.             [ * ].

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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EX-10.24

EXHIBIT 10.24

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

Option and Licence Agreement

between

Atugen AG, a company incorporated under the laws of Germany, whose registered office is at Robert-Rössle-Str. 10, D13125 Berlin, Germany of the first Part;

(hereinafter referred to as “Atugen”),

and

Quark Biotech, Inc., a private limited company incorporated under the laws of California whose principal office is at 6540 Kaiser Drive, Fremont CA 94555, U.S.A. and QBI Enterprises Ltd., a private company incorporated under the laws of the State of Israel whose principal office is at Weizmann Science Park, P.O. box 4071, Nes Ziona  70400, ISRAEL, of the second Part (together hereinafter referred to as “QBI”)

of

xx March 2005

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WHEREAS

A.Atugen has established proprietary technology and patent rights related to the development and manufacture of siRNA molecules (atuRNAi™) potentially silencing any gene in any species and has prepared or will prepare liposome-based formulations (atuFect) as inhibitors for specific molecular drug targets (atuRNAi) and has filed patent applications for these technologies (Atugen IP) as listed in Annex 1 to this Agreement; and

B.QBI owns patent rights and know-how directed to the structure and function of five genes and its role in diseases (QBI Targets) as listed in the Annex 2 to this Agreement; and

C.QBI wishes to obtain a licence under Atugen IP in the event that the evaluation of the specific atuRNAi against QBI Targets shows positive results and that QBI wishes to implement a drug development project based on the specific atuRNAi inhibiting a QBI Target; and

D.Atugen is prepared to develop and supply QBI with five atuRNAis inhibiting specific QBI Targets, to provide to QBI certain appertaining research and development services as hereinafter defined and to grant QBI options for non-exclusive licences under Atugen IP;

NOW, THEREFORE, it is agreed as follows:

1.             Definitions

As used herein, capitalised terms shall have the respective meaning set forth below:

1.1“Affiliate” means any enterprise which controls, is controlled by, or is under common control with, such party as long as such control exists. For the purpose of the preceding sentence, the word “control” means the ownership of at least 50% of the outstanding voting stock of such enterprise or, a comparable equity interest in any other type of entity.

1.2“Atugen IP” means the Atugen patents and patent applications as of the date of this Agreement as identified in Annex 1. For the purposes of this Agreement “Atugen Patent” shall be considered to be an issued patent if issued to Atugen in the US or the European Union (European Patent) and having valid claims which claims would otherwise be infringed by the QBI Product.

1.3“atuRNAi(s)” shall mean the siRNAs developed by or for Atugen and supplied to QBI under this Agreement as potential inhibitors of certain molecular drug targets for therapeutic intervention.

1.4“Clinical Development” means the trials conducted in human subjects to determine the safety, efficacy and pharmacokinetics of a compound as required by the US FDA. Clinical Development includes Phase I, Phase II, Phase III (and IV if

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required), and the New Drug Application (NDA) for Regulatory Approval by the FDA .

1.5“Evaluation” means those in vivo animal studies testing the efficacy and safety of a Product candidate in a disease model that a Party developing such Product deems necessary and sufficient to proceed to Formal Preclinical Development stage of the Product towards filing of an IND.

1.6“First Commercial Sale” means the first sale to a third party in an arm’s length transaction for use or consumption in such country after required Regulatory Approval has been granted by the relevant regulatory authority in such country.

1.7“Formal Preclinical Development” means the aggregate of in vitro and in vivo studies required by the US FDA to determine the potential risk a compound poses to man and the environment, necessary and sufficient for an IND approval.

1.8“IMPD” means an Investigational Medical Product Development filed with the EMEA in Europe.

1.9“IND” means an Investigational New Drug application filed with the FDA in the USA for a Product in order to obtain approval for the commencement of clinical trials.

1.10“Major Country” shall mean any of: [ * ].

1.11“Net Sales” shall mean the aggregate gross sales of any Product invoiced to third parties in an arm’s length transaction by QBI or their Affiliates, less the following deductions (to the extent that such deductions are actually shown on the relevant invoices to third-party customers):

(a)any tax, duty or other governmental charge on the import or export, sale or use of any royalty-bearing Product (not including franchise tax or income tax); and

(b)actual costs of transportation and insurance if invoiced to the customer; and

(c)[ * ] deduction of [ * ] of the price invoiced for Products to cover all the usual sales expenses such as charges or allowances given or normal trade discounts allowed or commissions paid in lieu of trade discounts as well as credits or allowances given or made on account of return or rejection of any royalty-bearing Product;

1.12“Patent Rights” shall mean any and all (a) patents, (b) pending patent applications, including, without limitation, all provisional applications, continuations, continuations-in-part, divisions, reissues, renewals, and all patents granted thereon, and (c) all patents-of-addition, reissue patents, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including, without limitation, supplementary protection certificates or the equivalent thereof.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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1.13“Products” means RNAi products that are (i) based on the Atugen IP or discovered, developed or produced using the Atugen IP, and (ii) are based on the QBI IP and directed to QBI Target.

1.14“QBI IP” means the present and future Patent Rights and Know-How owned by QBI and directed to the [ * ] to the QBI Target genes and methods of treatment of diseases using these, including but not limited to rights to patents and patent applications listed in Annex 2.

1.15“QBI Products” means Products and Drug Products for the treatment of human diseases covered by QBI IP.

1.16“QBI Targets” shall mean the genes covered by QBI IP listed in Annex 2 to this Agreement.

1.17“Regulatory Approval” shall mean any and all NDA (New Drug Approval), MAA (Marketing Authorization Application) approvals or post-MAA approvals (including any applicable governmental price and reimbursement approvals), licenses, registrations, or authorizations of any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity necessary for the development, manufacture, use, storage, import, transport, promotion, marketing and sale of a product in a country.

1.18“Sublicense Revenues” shall mean all revenues from any royalties or similar payments that QBI or an Affiliate of QBI receives from a sub-licensee on account of sales of Products by such sub-licensee or its sub-licensee, including, but not limited to, down-payments, milestone payments and royalties.

1.19“Territory” shall mean any of the (i) USA, (ii) a Major Country) and (iii) Japan.

1.20“Valid Patent Claim” shall mean: (i) a claim under an issued and unexpired patent which has not been revoked, held unenforceable or invalidated by a decision of a court or other governmental agency of competent jurisdiction, is unappealable or for which an appeal has not been filed within the time allowed for appeal and which has not been discharged, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise; or (ii) a claim in a pending patent application, which application: (a) is under active prosecution; or (b) for which formal examination has been requested; or (c) is a provisional application, the benefit of which can be claimed in a non-provisional application.

2.        Evaluation Stage

2.1In the initial stage of the Agreement Atugen agrees to provide QBI certain services and to supply specific atuRNAis and liposomal transfection reagents for five (5) defined QBI Targets for Evaluation.

2.2Four of these QBI Targets have been defined in Annex 2 to this Agreement. QBI shall have the right to select the fifth QBI Target to be included in this Agreement

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and such target shall be added to Annex 2 unless it would violate Atugen’s existing contractual obligations to third parties existing at the time of notification by QBI of its target selection, in which event BI shall be entitled to select another target that does not conflict with such contractual obligations of Atugen.

2.3Furthermore, Atugen understands that QBI might wish to obtain licences under Atugen IP for additional genes in which QBI has an intellectual property position and agrees, when requested by QBI, to consider such request and negotiate in good faith the inclusion of such additional genes as QBI Targets at terms and conditions to be discussed, provided [ * ].

2.4Any atuRNAi supplied by Atugen to QBI during the Evaluation stage will be used by QBI solely for conducting research and evaluation studies including in vivo studies in animals for the purpose of obtaining proof of concept under the QBI IP. QBI is specifically not authorized to and is forbidden from: (i) reselling, transferring or distributing the material either as a stand- alone product or as a component of another product, (ii) using the material for diagnostic or therapeutic purposes. With respect to research use, QBI will be permitted to transfer material to a bona fide third party performing contracted research and consulting services for QBI, or an alternative supplier in accordance with the provisions of Sections 2.8 and 2.9 below, provided that the third party performing such services is bound by limited use obligations consistent with this Agreement.

2.5QBI agrees to use [ * ] to enter into an appropriate R&D Program for evaluation of the atuRNAis supplied by Atugen, and to report and to make available to Atugen all the findings, results and data obtained in the evaluation and R&D Program.

2.6Any improvements to Atugen technology, as defined by Atugen IP, resulting from the QBI R&D Programs shall be owned by Atugen with the right to apply for patents in its name and at its own expense and such results, data and improvements shall be a partial compensation for the rights granted by Atugen to QBI under this Agreement.

QBI shall own all other results, data and intellectual property obtained by QBI in the QBI R&D Programs. QBI shall have the right to use such results for any purpose in its discretion and shall have the right to file patents for such results in its name and at its own expense.

2.7In consideration of the right to evaluate the atuRNAis inhibiting the QBI Targets and the right to obtain options for licences under Atugen IP as hereinafter specified, QBI agrees to pay to Atugen upon the non-refundable sum of [ * ] one half of which shall be creditable against the option fee for the first QBI Target selected by QBI according to section 3 below.

Within [ * ] from receipt by Atugen of such payment, Atugen shall deliver to QBI the atuRNAis that have been ordered and synthesized to date.

2.8For the quantities of atuRNAi required for the Evaluation and further development the Parties agree upon preliminary target prices as follows:

•Initial quantity of [ * ] atuRNAi [ * ]

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•Quantity of [ * ] atuRNAi [ * ]

•Quantity of [ * ] atuRNAi [ * ]

•Quantity of [ * ] atuRNAi [ * ]

The prices for liposomal transfection reagents shall be determined separately.

Atugen agrees to use [ * ] to supply the atuRNAi for quantities of [ * ] at the target prices and to inform QBI after synthesis of the initial quantity of [ * ] whether these price levels may be kept. In the event that the cost of synthesis of specific atuRNAi sequences of quantities of [ * ] should be higher, QBI shall have the right to (i) select a different siRNA for the same target which might be synthesized at a lower cost, or (ii) source the same RNAi from an alternative supplier, provided that such alternative supplier is able to synthesize the siRNA [ * ] required by QBI.

2.9Atugen agrees to use its commercially reasonable efforts to supply or have supplied any specific QBI order for quantities of [ * ] of atuRNAi in accordance with the specifications and quality requirements of QBI and within [ * ] of the receipt by Atugen of QBI’s order therefor and any specific order for quantities of [ * ] of atuRNAi within [ * ] on receipt by Atugen of QBI’s order therefor. Atugen will inform QBI as soon as possible of any potential delay of delivery, and QBI shall be entitled to source the atuRNAi from an alternative supplier provided that such alternative supplier is able to [ * ] required by QBI.

2.10Atugen agrees to render to QBI upon QBI’s request certain development services such as the optimisation of cell lines and the screening of siRNA molecules.

2.11QBI agrees to compensate Atugen for such services with fees as follows:

•For the [ * ] a monthly FTE rate of [ * ]

•For the [ * ] a fee of [ * ]

•For the [ * ] a fee of [ * ]

Fees for other services mutually agreed upon shall be determined in good faith by the Parties.

3.             Option

3.1Grant

Atugen hereby grants QBI the right to request from Atugen for each of the QBI Targets an option on a non-exclusive and worldwide licence for Atugen IP with the right to sub-license at terms consistent with this Agreement to evaluate, develop and commercialise therapeutic atuRNAis inhibiting the specific QBI Target agreed upon (the “QBI Option”) at the terms and conditions hereinafter specified.

3.2It is understood by the Parties that a QBI Option will be separately granted by Atugen for each QBI Target under the conditions specified below but does not include the QBI Target RTP 801 covered by a separate agreement between the Parties.

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3.3Option Period

QBI shall be entitled to obtain the option for each QBI Targetupon achieving proof of concept [ * ] for the specific QBI Target to QBI’s satisfaction, however, not later than (i) [ * ] from the date of the [ * ] delivery of a quantity of more than [ * ] of atuRNAi required by QBI to allow the achievement of proof of concept [ * ] (the “POC Quantity”), or (ii) [ * ] from the date of the delivery by Atugen of the [ * ] quantity of the respective atuRNAi ordered by QBI (“First Delivery”)  in the event that QBI does not order the POC Quantity within [ * ].

3.4The request for any such option shall be made by QBI in writing (the “QBI Option Notice”).

3.5Each QBI Option is granted to QBI for the period starting from achieving proof of concept [ * ] or the date specified in section 3.3 above until thirty days after obtaining an IND or any similar approval by the health authorities (IMPD) allowing clinical phase I trials required by the EMEA or FDA as prerequisite of a drug approval for a product developed by QBI hereunder inhibiting a QBI Target (a “QBI Product”), or until twenty-four (24) months after delivery by QBI to Atugen of the relevant QBI Option Notice, whichever is earlier (the “Option Period”), and shall automatically expire thereafter unless QBI has exercised the option by delivery to Atugen of written notice thereof.

3.6Diligence

During the option period QBI shall diligently pursue the development of the specific atuRNAi under the QBI Option and agrees to submit quarterly reports and a final report on the results.

3.7           Option Fees

For each single QBI Option requested by QBI and granted by Atugen for the option period, QBI agrees to pay Atugen a non-refundable option fee as follows:

3.7.1[ * ] if at the time the QBI Option is granted [ * ], a sum which shall be increased to

3.7.2[ * ] if (i) [ * ] at the time the relevant QBI Option is granted or (ii) if [ * ] but prior to [ * ] with respect to the relevant QBI Target. The difference due according to 3.7.2 (ii) shall be [ * ] from receipt by QBI of Atugen’s notice of [ * ]..

The option fee shall be payable within [ * ] from delivery of the respective QBI Option Notice.

3.8           Exercise of the QBI Options

3.8.1QBI can exercise each of the QBI Options granted hereunder at any time during the Option Period. The exercise of the QBI Option is contingent upon payment of the exercise fee of:

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3.8.2[ * ] if at the time the relevant QBI Option is exercised [ * ], a sum which shall be increased to

3.8.3[ * ] if (i) [ * ] at the time the relevant QBI Option is exercised or (ii) if [ * ] but prior to [ * ] with respect to the relevant QBI Target. The difference due according to 3.8.3.(ii) shall be [ * ] from receipt by QBI of Atugen’s notice of [ * ].

3.9           Development Plan / Milestones

QBI agrees to submit to Atugen QBI’s development plan describing QBI’s best estimate of the time schedule for reaching the following milestones: [ * ].

4.             License

Upon exercise of each specific option in accordance with section 3.8 above Atugen shall grant a non-exclusive license under Atugen IP in accordance with the terms and conditions specified below:

4.1           Grant

Atugen agrees to grant to QBI a non-exclusive and worldwide license with the right to sub-license at terms and conditions consistent with this Agreement under the Atugen IP and the know-how relating to the atuRNAi(s) to research, develop, have developed, manufacture, have manufactured, market and sell QBI Products.

4.2           Diligence

QBI undertakes to diligently pursue the development work in accordance with the QBI Plan.

4.3Milestone Payments

4.3.1As long as [ * ], QBI agrees to make the milestone payments set forth below for the first indication of a QBI Product to reach such milestone with respect to each QBI Target :

4.3.1.1[ * ]

4.3.1.2[ * ]

4.3.1.3[ * ]

4.3.2If [ * ] by the time any milestone payments defined in 4.3.1.1 through 4.3.1.3 are due, the amounts specified as milestone payments on such date shall be [ * ].

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4.3.3For the removal of doubt, it is clarified that these milestone payments are payable once only for each QBI Product, and only for the first indication of a QBI Product developed for each QBI Target that achieves the relevant milestone.

Milestone payments 4.3.1.2 and 4.3.1.3 are payable for [ * ], to a maximum amount payable per milestone of [ * ] if the Atugen IP has issued.

4.4   Royalties

4.4.1Should any QBI Product covered by this license be marketed by QBI or by any of its Affiliates and as long as [ * ], QBI agrees to pay to Atugen on Net Sales of any QBI Product covered by this license, royalties as follows:

•[ * ] for the first [ * ] of annual Net Sales;

•[ * ] for the next [ * ] of annual Net Sales; and

•[ * ] for all annual Net Sales above [ * ]

4.4.2As soon as [ * ] the royalty rates specified shall [ * ] with respect to sales in that part of the Territory [ * ].

4.4.3[ * ]

4.5Sub-Licence Revenues

In the event of sub-licensing of a specific QBI Product by QBI in the Territory or country within a Territory, QBI agrees to pay to Atugen in lieu of all payments to be made hereunder after such sub-licence in respect to such QBI Product and Territory or country within a Territory, a share of all Sub-Licence Revenues received by QBI from such sub-licence. This share of the Sub-Licence Revenues shall depend on the status of the development of the respective QBI Product at the time of the grant of the sub-licence as follows:

4.5.1[ * ] of the Sub-License Revenues if the sub-licensing to a third party happens prior to [ * ];

4.5.2[ * ] of the Sub-License Revenues, if the sub-licensing to a third party happens after [ * ].

4.6                  Supplies of Materials

In order to guarantee a continuous supply of GMP quality atuRNAis used by QBI in development of QBI Products, Atugen shall provide manufacturing information to a third party GMP producer selected by QBI to supply all of QBI’s or its sub-licensee’s requirements of the specific atuRNAi.

In the event the Atugen Patent is finally rejected in any Territory and such rejection is not appealed or appealable by Atugen, QBI shall have the right to forthwith terminate the license agreement in such Territory.

5.Atugen Options

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5.1In consideration of the rights granted under the Licence Agreement QBI agrees to grant to Atugen [ * ] licence [ * ] to any improvement of the atuRNAi and liposome formulation technology, in accordance with section 2.6 above.

5.2Atugen shall have, furthermore, the option to enter into an agreement with QBI related to the joint development for oncology applications of atuRNAi inhibiting the QBI Targets being subject matter of this Agreement with worldwide licences and with the right to sub-license. QBI agrees that such negotiations shall be held in good faith along the lines of the terms and principles outlined in the 801-Agreement between the parties hereto e.g. time periods and percentages [ * ] of the development of the respective QBI project at the time of the request for negotiations. For the avoidance of doubt it is clarified that therapeutic products related to the treatment of side effects of radiology, chemotherapy or other forms of treatment of cancer, are not oncology applications and are not subject to such option.

6.             Liability / Disclaimer

All materials and information are provided on an “as is” basis, and the parties expressly disclaim all implied warranties, including without limitation any warranty of non-infringement, any obligation to defend any action or suit brought by any third party, and any warranty with respect to quality of the results, and fitness of the results for any particular purpose.

Neither party shall be liable for any damages caused by simple negligence of any of its officers; employees or subcontractors except for negligence in the performance of essential obligations of this agreement.

Each party expressly disclaims any warranty that the results will not be subject to prior rights, including patents, of any other entity including that party itself or entities related thereto, nor that another party, including the party itself or an entity related thereto, is not researching the same genomic, expressed and/or protein sequence data or has not reached the same results, whether through analyses performed by the party, through use of the party’s databases and software or otherwise.

7.Miscellaneous Provisions

7.1          Assignment

Neither Party shall be entitled to assign its rights hereunder without the express written consent of the other Party hereto, except that both QBI and Atugen may otherwise assign their respective rights and transfer their respective duties hereunder to any assignee of all or substantially all of their respective businesses (or that portion thereof to which this Agreement relates) or in the event of their respective merger or consolidation or similar transaction. No assignment and transfer shall be valid or effective unless and until the assignee/transferee shall

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agree in writing to be bound by the provisions of this Agreement in which case the Agreement will inure to the benefit of such successors and assigns.

7.2           Further Actions

Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

7.3Use of Name

Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name or trademark of the other Party for any purpose in connection with the performance of this Agreement.

7.4Public Announcements

Except as required by law (including, without limitation, disclosure requirements of the U.S. Securities and Exchange Commission, Nasdaq or any other stock exchange, neither Party shall make any public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld. It shall not be unreasonable for a Party to withhold consent with respect to any public announcement containing any of such Party’s confidential information. In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party with a copy of the proposed text prior to such announcement sufficiently in advance of the scheduled release of such announcement to afford such other PARTY a reasonable opportunity to review and comment upon the proposed text.

7.5           Waiver

A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either PARTY.

7.6           Severability

When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement and the parties shall negotiate, in good faith, a new provision which will, as closely as possible, carry out the intentions of the parties provided for in the invalidated provision. In the event that any invalidated or prohibited provision materially affects the rights and

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obligations of a Party and the Parties fail to agree to a new provision, the Party thus affected shall have the right to terminate this Agreement by written notice to the other Party.

7.7           Amendment

No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

7.8           Entire Agreement

This Agreement, together with the Annexes hereto, sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby.

7.9           Parties in Interest

All the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns.

7.10         Descriptive Headings

The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

8.             Law and Venue

8.1This Agreement shall be construed in accordance with the Laws of Switzerland.

8.2The parties agree to submit any dispute, controversy or claim arising out of or relating to this Agreement to arbitration to be held in the English language in accordance with the rules of conciliation and arbitration of the International Chamber of Commerce to the exclusion of all other jurisdiction. Arbitration shall be held in Zurich, Switzerland, in the English language.

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QBI				Atugen AG
Quark Biotech Inc./
QBI Enterprises Ltd.
By	/s/ Daniel Zurr			By	/s/ T. Christely , /s/ P. Buckel
Name			Daniel Zurr	Name		T. Christely , P. Buckel
Title		CEO		Title				COO/CFO, CEO
Date		April 18, 2005		Date			April 19, 2005

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Annex 1

1.[ * ]

2.[ * ]

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EX-10.25

Exhibit 10.25

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

AMENDMENT TO COLLABORATION AGREEMENT

This Amendment to the Collaboration Agreement (“Amendment”) is made as of May 25, 2006 (“Effective Date”) by and between Quark Biotech, Inc., a private limited company incorporated under the laws of California with a principal office at 6540 Kaiser Drive, Fremont, California 94555 (hereinafter “Quark”) and QBI Enterprises Ltd., a private company incorporated under the laws of the State of Israel with a principal office at Weizmann Science Park, P.O. Box 4071, Nes Ziona 70400, Israel (together hereinafter “QBI”), and Atugen AG, a company incorporated under the laws of Germany with a registered office at Robert-Rössle-Strasse 10, D-13125 Berlin, Germany (“Atugen”).

RECITALS

WHEREAS, QBI and Atugen are parties to a Collaboration Agreement dated December 6, 2004 (“Agreement”);

WHEREAS, Quark and Atugen have filed patent applications for inventions arising from their collaboration pursuant to the Agreement both before and after December 6, 2004;

WHEREAS, QBI and Atugen desire that all such patent applications be jointly owned, consistent with and subject to the terms of the Agreement;

NOW, THEREFORE, the parties wish to amend the Agreement as set forth herein.

AGREEMENT

In consideration of the mutual promises, covenants and conditions recited herein and for good and valuable consideration, the parties agree as follows:

1.Capitalized Terms. Capitalized terms not defined herein have the meaning given to them in the Agreement.

2.Quark Assignment to Atugen. Quark, while retaining for itself an equal, undivided right, title and interest, has assigned to Atugen an equal, undivided right, title and interest in and to all Patent Rights to the patent applications listed at the end of this Paragraph 2

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(“QBI Patents”). A copy of the assignment document is attached hereto as Exhibit A. Quark at its sole cost will promptly take steps to record or otherwise make of record Atugen’s undivided right, title and interest in the QBI Patents. Quark agrees that it will, at its sole expense, execute all documents reasonably necessary to effectuate the foregoing assignment.

Country	Application	Filing Date
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]

3.Atugen Assignment to Quark. Atugen, while retaining unto itself an equal, undivided right, title and interest, has assigned to Quark (with Quark acknowledging that such patent rights will be abandoned by Atugen under paragraph 6 hereunder) an equal, undivided right, title and interest in an to all Patent Rights to the patent applications listed at the end of this Paragraph 3 (“Atugen Patents”). A copy of the assignment is attached hereto as Exhibit B. Quark at its sole cost will at an appropriate time take steps to record or otherwise make of record Quark’s undivided right, title and interest in such Atugen Patents. Atugen agrees that it will, at Quark’s sole expense, execute all additional documents reasonably necessary to effectuate the foregoing assignment.

4.

Country	Application	Filing Date
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]

5.Atugen Grant to QBI. In order to effectuate the intent of the parties that the licenses from Atugen to QBI under the Agreement include the QBI Patents and Atugen Patents (with QBI acknowledging that the Atugen Patents will be abandoned by Atugen under paragraph 6 hereunder), Sections 6.2.1 and 6.2.2 of

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the Agreement are amended to insert “and the QBI Patents and the Atugen Patents” after “Joint Program IP”.

6.QBI Grant to Atugen. In order to effectuate the intent of the parties that the licenses from QBI to Atugen under the Agreement include the QBI Patents and Atugen Patents (with Atugen acknowledging that the Atugen Patents will be abandoned by Atugen under paragraph 6 hereunder), Sections 6.1.1 and 6.1.2 of the Agreement are amended to insert “and the QBI Patents and the Atugen Patents” after “Joint Program IP”.

7.Abandonment of Atugen Patents. Atugen will affirmatively abandon, and take all reasonable steps necessary to prevent all the Atugen Patents from being published by any patent office throughout the world.

8.Prosecution of QBI Patents. QBI will be responsible [ * ] for prosecuting and maintaining the QBI Patents, and QBI will handle all post grant proceedings in relation to the QBI Patents (such as reissues, reexaminations and interferences, if any) (collectively, “the Patent Activities”). QBI will keep Atugen informed concerning the Patent Activities by, among other things, supplying Atugen with copies of all substantive documents related to the Patent Activities, and will consult with Atugen in relation thereto. QBI shall furnish such documents and consult with Atugen in sufficient time (at least two weeks) before any action by QBI is due, to allow Atugen to provide comments on the Patent Activity under consideration, which comments QBI shall consider in good faith. QBI will not [ * ]. Should QBI decide that it does not desire to continue the Patent Activities in relation to a QBI Patent in any country, or in relation to any pending claim, then QBI shall promptly inform Atugen and Atugen, at its sole option and cost, will have right to continue the Patent Activities in relation to any such QBI Patent or claim. In the event that Atugen takes over control of the Patent Activities under the preceding provisions, [ * ]

9.Pursuit of Specific Patent Claims. QBI, in consultation with Atugen, will pursue claims in the QBI Patents to (a) [ * ] and (b)    [ * ].

10.Inventorship. The determination of any disputes regarding inventorship of the QBI Patents will first be brought to QBI’s U.S. patent counsel, [ * ] and Atugen’s U.S. patent counsel, [ * ], or such other counsel as each party may designate for itself for such determination. If such counsel cannot reach a mutual inventorship determination, inventorship will be determined by a third party

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U.S. patent attorney, mutually agreed to by the parties and having no conflict of interest regarding either of the parties, unless the respective party agrees to waive such conflict, with the cost of such third party determination to be paid for by QBI.

11.[ * ].

12.Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed and original and all of which together shall constitute one instrument.

13.Effect of Amendment. This Amendment is effective as of the Effective Date above. Except for the explicit amendments herein, the terms of the Agreement shall not be modified by this Amendment.

13.   Disclaimer of Liability. The parties, Atugen on the one hand, and QBI on the other, hereby irrevocably waive any and all claims, demands, or causes of action whatsoever in law or in equity that each may have against the other in relation to the preparation, filing and prosecution to date of the Atugen and QBI Patents.

IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered by their authorized representatives as of the Effective Date.

Atugen AG	QBI         Quark Biotech, Inc./QBI Enterprises Ltd.
/s/ T. Christely, /s/ K. Giese	/s/ Daniel Zurr
(signatures)	(signature)
T. Christély  /  Dr. K. Giese	Dr. Daniel Zurr
CEO  /  CSO, VP Research	CEO
Date: May 22, 2006	Date: May 25, 2006

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Assignment #1

WHEREAS, QUARK BIOTECH, Inc., a corporation having principal place of business at 6540 Kaiser Drive, Fremont, California, 94555, USA, (“Quark”), is the owner of record of all right, title and interest in and to the patent applications listed in Appendix 1 hereto (the “Patent Rights”); and

WHEREAS, atugen AG., a corporation having a principal place of business at Robert Rössle-Str. 10, D-13125 Berlin, Germany, (“Atugen”), is entitled to own an equal, undivided right and interest in and to the Patent Rights as a tenant in common, subject to the exclusive rights in certain fields granted to Quark and its affiliate, QBI Enterprises, Ltd., pursuant to a December 6, 2004 Agreement.

NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Quark, while retaining unto itself an equal, undivided right and interest in and to the Patent Rights, hereby assigns and transfers as a tenant in common to Atugen and its successors and assigns, an equal, undivided right and interest in and to the Patent Rights, as well as all other patent rights that may be based thereon or claim priority thereof, including all renewals, divisions, substitutes, reissues, continuations, reissues or extensions thereof, and every priority right that is or may be predicated upon or arise from the Patent Rights, to the full end of the terms, including any extensions, thereof.

Quark hereby authorizes and requests that any and all appropriate governmental authorities issue all documents evidencing joint ownership of an equal, undivided interest, as tenants in common, in and to the Patent Rights by each of Quark and Atugen, and their lawful successor and assigns.

Atugen represents and warrants that it has not, and will not, exercise or convey any right assigned to it herein in any manner which is inconsistent with the December 6, 2004 Agreement.

Quark (Assignor)		Atugen (Assignee) hereby accepts this Assignment
By:	/s/ R. Skaliter	By:	/s/ T. Christely, /s/ K. Giese
	Rami Skaliter		T. Christely K. Giese
Title:	Executive Vice President	Title:		CEO        CSO
Date:	January 19, 2006	Date:		January   , 2006

EXHIBIT A

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Appendix 1

To ASSIGNMENT #1

Country	Application No.	Filing Date
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]

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Assignment #2

WHEREAS, atugen AG., a corporation having a principal place of business at Robert Rössle-Str. 10, D-13125, Berlin, Germany, (“Atugen”), is the owner of record of all right, title and interest in and to the patent applications listed in Appendix 1 hereto (the “Patent Rights”); and

WHEREAS, QUARK BIOTECH, Inc., a corporation having principal place of business at 6540 Kaiser Drive, Fremont, California, 94555, USA, (“Quark”), is entitled to own an equal, undivided right and interest in and to the Patent Rights as a tenant in common, subject to the exclusive rights in the field of oncology granted to Atugen pursuant to a December 6, 2004 Agreement.

NOW, THEREFORE, in consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Atugen, while retaining unto itself an equal, undivided right and interest in and to the Patent Rights, hereby assigns and transfers as a tenant in common to Quark and its successors and assigns, an equal, undivided right and interest in and to the Patent Rights, as well as all other patent rights that may be based thereon or claim priority thereof, including all renewals, divisions, substitutes, reissues, continuations, reissues or extensions thereof, and every priority right that is or may be predicated upon or arise from the Patent Rights, to the full end of the terms, including any extensions, thereof.

Atugen hereby authorizes and requests that any and all appropriate governmental authorities issue all documents evidencing joint ownership of an equal, undivided interest, as tenants in common, in and to the Patent Rights by each of Atugen and Quark, and their lawful successor and assigns.

Quark represents and warrants that it has not, and will not, exercise or convey any right assigned to it herein in any manner which is inconsistent with the December 6, 2004 Agreement.

Atugen (Assignor)			Quark (Assignee) hereby accepts this Assignment
By:	/s/ T. Christely, /s/ K. Giese		By:	/s/ R. Skaliter
	T. Christely K. Giese			Rami Skaliter
Title:		CEO        CSO	Title:		Executive Vice President
Date:		January     , 2006	Date:		January 19, 2006

EXHIBIT B

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Appendix 1

To ASSIGNMENT #2

Country	Application No.	Filing Date
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]

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EX-10.26

EXHIBIT 10.26

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DEED

AMENDMENT AND OPTION

This Deed of Amendment and Option (this “Amendment and Option”) is dated as of September 25, 2006 among ATUGEN AG, (“Atugen”), a corporation incorporated under the laws of Germany, Robert-Rössle-Str. 10, D13125 Berlin Germany, QUARK BIOTECH, INC. (“QBI”), a corporation incorporated under the laws of California, 6536 Kaiser Drive, Freemont CA 94555, USA, QBI ENTERPRISES LTD (“QEL”), a corporation organized under the laws of Israel, Weizman Science Park, P.O. Box 4071, Nes Ziona 70400, Israel (QBI and QEL collectively, “Quark”), and PFIZER INC. (“Pfizer”), a corporation incorporated under the laws of Delaware, 235 East 42^nd Street, New York, NY 10017, USA.

WHEREAS, Atugen owns certain patents and/or patent applications as well as related know-how, technology and scientific and technical information relating to siRNA molecules directed to silencing the RTP801 gene which have been licensed by Atugen to Quark pursuant to the Atugen License (as hereinafter defined);

WHEREAS, Pfizer and Quark will be entering into the Quark License (as hereinafter defined) relating to siRNA molecules directed to silencing the RTP801 gene under which Quark grants to Pfizer, inter alia, exclusive sublicenses under patents and related know-how, and scientific and technical information licensed by Atugen to Quark pursuant to the Atugen License;

WHEREAS, in connection with the Quark License, Pfizer has requested certain clarifications regarding the Atugen License; and

WHEREAS, in order to assure to Pfizer the full enjoyment of all rights to be granted to Pfizer under the Quark License, Pfizer desires to obtain an option to acquire under certain circumstances from Atugen certain licenses from Atugen relating to siRNA molecules directed to silencing the RTP801 gene.

NOW, THEREFORE, in consideration of the mutual covenants and agreements provided herein, the parties have executed this Amendment and Option:

I.      Definitions. For purposes of this Amendment and Option the following definitions shall be applicable:

A.Save as otherwise provided herein, all terms defined in the License Agreement (as hereinafter defined) when used herein shall have their defined meanings as specified in the License Agreement.

B.“Atugen License” means the Collaboration Agreement, dated December 6, 2004, among Atugen, QBI and QEL, as amended by the Amendment dated May 25, 2006.

C.“Quark License” means the license agreement between QBI and Pfizer in the form set forth in Exhibit A, or such amended form upon which QBI and Pfizer may agree from time to time, subject to Section III C below, attached hereto and made a part hereof.

D.“License Agreement” means the license agreement between Atugen and Pfizer in the form set forth in Exhibit B, attached hereto and made a part hereof, as amended from time to time in accordance with its terms.

II.    Grant of Option.   Atugen hereby grants to Pfizer, and Pfizer hereby accepts, an option to acquire an exclusive license to the Atugen Existing IP and the Joint Program IP subject to the terms and conditions of the License Agreement. The terms of said license are those contained in the License Agreement which shall become effective as provided herein. The option granted hereunder shall be exercisable by Pfizer in the event the Atugen License is terminated or under any circumstances under which Quark shall no longer, pursuant to the Atugen License, have license rights to the Atugen Existing IP or the Joint Program IP. Upon the occurrence of such termination of the Atugen License or such loss of such license rights, Atugen shall promptly notify Pfizer, and, within thirty (30) days of receipt of such notice, Pfizer shall have the right, at its sole discretion, to exercise the option granted hereunder. The option shall be exercised by Pfizer by sending a notice to Atugen, stating Pfizer’s desire to exercise the option provided herein; thereafter Atugen and Pfizer shall promptly sign and deliver in duplicate the License Agreement, to be dated the date of such execution, whereupon the License Agreement shall become effective as of the date on which Quark shall have no longer any license rights to the Atugen Existing IP or the Joint Program IP.

III.   Amendment of Atugen License and Approval and Terms of Quark License.

A.Notwithstanding to the contrary any provisions of the Atugen License, (i) Quark shall be deemed to be in full compliance with the provisions of the Atugen License by entering into and performing the Quark License in accordance with its terms, and (ii) Pfizer shall have no obligations or liability to Atugen or to Quark pursuant to the Atugen License.

B.Atugen hereby consents and agrees to the execution, delivery and performance by Quark and Pfizer of the Quark License. To the extent that any of the provisions of the Quark License are inconsistent or conflict with the terms of the Atugen License, the terms of the Quark License shall take precedence, and Atugen and Quark waive any such conflict. To the extent that any of the provisions of the Quark License are inconsistent or conflict with the terms of this Amendment and Option, the terms of this Amendment and Option shall take precedence, and QBI and Pfizer waive any such conflict.

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C.Pfizer and Quark agree not to amend or modify Sections 1.14 (Extended Royalty Term), 1.24 (Initial Royalty Term), 1.31 (Net Sales), 1.49 (Royalty Term), 5.1 to 5.13, 6.1 to 6.6 and 7.9 of the Quark License, and Quark agrees not to waive any right or interest it has under any such provision of the Quark License, in each case in any manner which would materially restrict, limit, impede or prejudice the benefits which Atugen is entitled under the Atugen Licence (as amended by this Amendment and Option) or the License Agreement in connection with the Quark License. Pfizer and Quark further agree to procure that no assign or successor in title at any time to their respective rights under the Quark Licence makes any such amendment or modification or, in the case of Quark, waiver. For clarity, the parties hereto agree that amendment, modification or waiver of any section of the Quark License that is not listed above in this Section III(C) would not materially restrict, limit, impede or prejudice the benefits which Atugen is entitled under the Atugen Licence (as amended by this Amendment and Option) or the License Agreement in connection with the Quark License.

D.Atugen and Quark agree not to amend or modify the Atugen License which would restrict, limit, impede or prejudice in a material manner the exercise by Pfizer of its rights under the Quark License, this Amendment and Option or the License Agreement.

E.Atugen and Quark hereby amend and clarify, with Pfizer’s consent, the Atugen License, as follows:

1.     All licenses granted by Quark to Atugen under Section 6.1 of the Atugen License are hereby terminated and all obligations of Atugen pursuant to the Atugen License, whose lawful performance depends on Atugen having the continued benefit of any such license are also hereby terminated.

2.     All intellectual property rights of Quark arising under the Atugen License have been and remain vested solely in QBI rather than QEL, which has been performing research and development services on behalf of QBI.

3.     References in Sections 4.8.1 and 4.8.4 of the Atugen License to “best efforts” are hereby amended to be “commercially reasonable efforts.”

4.     (a)       Section 8.1.2 of the Atugen License is hereby deleted and replaced by the following wording:

“For Products that are developed and/or sold by sub-licensees, Atugen shall be entitled to receive a royalty of [ * ] of the Sublicense Royalties. For purposes of this Section, and in the case where Pfizer Inc. is the sublicensee, the Sublicense Royalties shall be the payments due from Pfizer Inc. to Quark under Sections 5.7 and/or 5.8, subject to Sections 5.9 to 5.12 inclusive and under Section 7.9, of the sublicence from Quark to Pfizer Inc.”

(b)In Section 8.2.2 of the Atugen License, the words “…necessary to commercialize such Party’s Products (the “Royalty Offset”) against the royalties payable by the

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commercializing Party to the other Party…” shall be deleted and replaced with the words “…necessary to commercialize such Party’s Products (the “Royalty Offset”) against the royalties payable by the Royalty Paying Party under Sections 8.1.1 or 8.1.2…”.

(c)In Section 8.2.3 of the Atugen License, the percentage figure of [ * ] shall be replaced by the percentage figure of [ * ].

(d)In Section 8.3 of the Atugen License, the percentage and percentage figure of [ * ] shall be replaced by the percentage and percentage figure of [ * ] in respect of the first milestone payment to be made by Pfizer to QBI pursuant to Section 5.1 of the Quark License and by the percentage and percentage figure of [ * ] in respect of all other milestone payments to be made by Pfizer to QBI pursuant to Sections 5.1 to 5.5 inclusive of the Quark License. For clarity, no payments shall be due to Atugen arising out of payments made under Sections 4.8 to 4.12 inclusive of the Quark License.

(e)The “Products” definition in Section 1 of the Atugen License is hereby deleted and replaced by the following:

“‘Products’ means RNAi products that are (i) based on the Atugen Existing IP or discovered, developed or produced using the Atugen Existing IP, (ii) based on the Quark Existing IP and (iii) directed to the 801 gene.”

5.     The second sentence of Section 12 of the Atugen License is hereby amended to read in full as follows:  “The arbitration shall be conducted in London, England, according to the rules of the London Court of International Arbitration (“LCIA”) and the laws of England.”

6.     Atugen consents to Quark’s delegation to Pfizer, in accordance with the Quark License, of responsibility and control over the prosecution and enforcement of the Joint Patents (as defined in the Atugen License) which are currently being prosecuted by Quark. Atugen shall not have the right or obligation to enforce Atugen Existing IP or the Joint Patents relating to the QBI Products; provided, however, that Quark shall pay to Atugen [ * ] of any damages, settlements, accounts of profits or other financial compensation received by Quark pursuant to Section 7.9 of the Quark License.

7.     So long as the Quark License remains in effect, Quark shall be deemed to have satisfied the Development Milestones of Section 11.4 of the Atugen License (as defined in the Atugen License). If the Quark License terminates for any reason, then:

(a)   The sole remaining Development Milestone under the Atugen License applicable to Quark shall be to [ * ] within [ * ] from termination of the Quark License (and all other Development Milestones shall be cancelled); and

(b)   If Quark thereafter grants a sublicense under the Atugen License, there shall be no Development Milestones, but Quark and the new sublicensee(s) shall remain

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obligated to use commercially reasonable efforts to develop a QBI Product (as defined in the Atugen License).

IV.   Atugen Warranties. Atugen hereby warrants to Pfizer that:

A.Other than the Atugen License, Atugen has not entered into any agreement with any other person or firm granting any rights or licenses to the Atugen Existing IP or the Joint Program IP to conduct activities within the scope of the licenses granted to Pfizer in Sections 3.1 and 3.2 of the License Agreement.

B.Atugen has the corporate power and authority to execute and deliver this Amendment and Option and to perform its obligations hereunder, and the execution, delivery and performance of this Amendment and Option by Atugen has been duly and validly authorized and approved by proper corporate action on the part of Atugen.

C.The Atugen License is in full force and effect. To Atugen’s knowledge, all payments to date required to be made under the Atugen License by Quark have been made.

D.Schedules A1, A2 and A3 to the License Agreement contains a complete listing of all of the patents and patent applications owned or controlled by Atugen or any of its Affiliates relating to siRNA molecules directed to silencing of the RTP801 gene which have been licensed to Quark under the Atugen License.

V.    Pfizer Warranties. Pfizer hereby warrants to Atugen that:

A.Pfizer has the corporate power and authority to execute and deliver this Amendment and Option and to perform its obligations hereunder, and the execution, delivery and performance of this Amendment and Option by Pfizer has been duly and validly authorized and approved by proper corporate action on the part of Pfizer.

B.Other than the Quark License, Pfizer has not entered into any agreement with Quark in relation to the Atugen Existing IP or the Joint Program IP.

VI.   Pfizer and Quark Warranty. Pfizer and Quark hereby jointly and severally warrant to Atugen that no agreements, other than the Quark License in the form set forth in Exhibit A, exist between them, and that such form is a complete and accurate copy of the agreement to be entered into between them.

VII.  Term and Termination. Sections I, VII and VIII of this Amendment and Option shall be effective as of the date first set forth above. The remaining Sections of this Amendment and Option shall be effective as of the later of the date first set forth above and the date which the Quark Licence comes into full force and effect. This Amendment and Option shall terminate if for any reason the Quark License has not (a) been executed within [ * ] following the date first set forth above and become effective by [ * ], or (b) the Quark License has been terminated. Except in the event of such termination, this Amendment and Option shall remain in effect. In addition, upon [ * ] notice to Quark and Atugen, Pfizer shall have the right, at its sole discretion,

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to terminate all of its rights and obligations under this Amendment and Option, without prejudice to any rights or obligations which have accrued hereunder prior to the effective date of such termination. The provisions of Section III(E)(7)(a) above shall survive the termination of this Amendment and Option.

VIII.    Miscellaneous.

A.Force Majeure. No party shall be liable for failure of or delay in performing obligations set forth in this Amendment and Option, and no party shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes reasonably beyond the control of such party.

B.Assignment. This Amendment and Option shall not be assignable by any party without the prior consent of the other, except that any party may assign this Amendment and Option, in whole or in part, (i) to any affiliate of such party, provided, that in all cases the assigning party shall remain responsible for all obligations hereunder if its affiliate shall fail to perform hereunder, (ii) to any successor to substantially all of such party’s business or assets, (iii) to a third party in circumstances where such party is required to, or reasonably believes based on advice of counsel, that it will be required to, divest any of the Licensed Products (as defined in the Quark License) in order to comply with applicable laws or the order of any governmental authority as a result of a merger or acquisition, or (iv) by Atugen, QBI or QEL to a permitted assignee of the Atugen License.

C.Governing Law. This Amendment and Option shall be governed by the laws of England in all respects of validity, construction and performance thereof. The parties submit to the non-exclusive jurisdiction of the English courts.

D.Notices. Any notice, consent, approval reports, requests and communication hereunder this Amendment and Option shall be in writing sent by registered airmail or by facsimile (confirmed by such registered mail) and addressed as follows:

If to Pfizer:	If to Atugen:
Pfizer Inc.	Atugen AG
235 East 42nd Street	Robert-Rössle-Str. 10
New York, N.Y. 10017	D13125 Berlin Germany
Attention: General Counsel	Attention: Thomas Christély
Fax: 212-808-8924	Fax: +49 30 9489 2801
If to Quark:
Quark Biotech Inc.	QBI Enterprises Limited
6536 Kaiser Drive	Weizman Science Park
Freemont, CA 94555	P.O. Box 4071
Attention: Daniel Zurr, Ph.D.	Nes Ziona 70400, Israel

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Fax: (510) 402-4021	Attention: Daniel Zurr, Ph.D.
	Fax: 972-8.940.6476

All notices shall be deemed to be effective five days after posting if sent by registered post, and upon delivery as indicated on the facsimile activity report if sent by facsimile. In case any party changes its address at which notice is to be received, written notice of such change shall be given without delay to the other party.

E.Entire Agreements, Amendments. This Amendment and Option (together with the Schedule and Exhibits hereto and all other agreements referred to herein or in said Exhibits) sets forth the entire agreement and understanding among the parties hereto as to the subject matter hereof and supercedes all agreements or understandings, verbal or written, made among Atugen, QBI, QEL and Pfizer before the date hereof with respect to the subject matter hereof. None of the terms or this Amendment and Option shall be amended, supplemented or modified except in writing signed by the parties hereto.

F.Severability. If and solely to the extent that any provision of this Amendment and Option shall be invalid or unenforceable, or shall render this Amendment and Option to be unenforceable or invalid, such offending provision shall be of no effect and shall not effect the validity of the remainder of this Amendment and Option or any of its provisions; provided, however, the parties shall use their respective reasonable efforts to renegotiate the offending provisions to best accomplish the original intentions of the parties.

G.Waivers. Any term or condition of this Amendment and Option may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party or parties waiving such term or condition. The waiver by any party of any term or condition of this Amendment and Option or the failure on the part of any party, on one or more instances, to enforce any of the provisions of this Amendment and Option or to exercise any right or privilege, shall not be deemed or construed to be a waiver of such term or condition for any similar instance in the future or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Amendment and Option shall be cumulative and none of them shall be a limitation of any other remedy, right, undertaking, obligation or agreement.

H.Binding Effect. This Amendment and Option shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

I.Counterparts. This Amendment and Option may be executed in any two or more counterparts, each of which, when executed, shall be deemed to be an original and all of which together shall constitute one and the same document.

J.Headings. Headings in this Amendment and Option are included herein for ease of reference only and shall have no legal effect. References to Sections, Schedules and Exhibits are to Sections, Schedules and Exhibits of this Amendment and Option unless otherwise specified.

K.Publicity. No party hereto shall make any public announcements regarding the terms of this

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Amendment and Option or events or performance hereunder except as may be required by a party to comply with any legal requirements or as the parties may agree in writing. The parties hereby agree that a public announcement in the form of that set out in Exhibit C may be released by Atugen following execution and delivery of this Amendment and Option by the parties and the execution and delivery of the Quark License by Quark and Pfizer.

L.Third Party Rights. The Contracts (Rights of Third Parties) Act 1999 shall not apply to this agreement and no rights or benefits expressly or impliedly conferred by it shall be enforceable under that Act against the parties to it by any other person.

M.Waivers. Quark and Atugen each confirms that the other is in compliance in all respects with its obligations under the Atugen License and waives, in full and final satisfaction, any claims and entitlements whatsoever that it may have in respect of any breach by the other of any such obligation.

{Remainder of page intentionally left blank}

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IN WITNESS WHEREOF, the parties hereto have caused this Deed of Amendment and Option to be executed as of the date first written above by their duly authorized officers.

Executed as a Deed by	Executed as a Deed by
ATUGEN AG acting by its	PFIZER INC. acting by its
authorized signatory	authorized signatory

By:	/s/ T. Christely, /s/ K. Giese	By:	/s/ Lisa Ricciardi
Name: T. Christely, K. Giese		Name: Lisa Ricciardi
Title: CEO, CSO		Title: SVP Licensing & Development

Executed as a Deed by	Executed as a Deed by
QUARK BIOTECH, INC.	QBI ENTERPRISES, LTD.
acting by its authorized signatory	acting by its authorized signatory

By:	/s/ Daniel Zurr	By:	/s/ Daniel Zurr
Name: Daniel Zurr		Name: Daniel Zurr
Title: CEO		Title: CEO

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{EXHIBIT 10.27}

{This Exhibit 10.27 has been filed separately as an exhibit to the Quark Biotech, Inc. Registration Statement on Form S-1 in executed form.}

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EXHIBIT B

DEED

LICENSE AGREEMENT

[ * ]

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EX-10.27

EXHIBIT 10.27

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LICENSE AGREEMENT

BY AND BETWEEN

QUARK BIOTECH INC.

AND

PFIZER INC.

TABLE OF CONTENTS

Section 1.	DEFINITIONS.	1
Section 2.	HSR.	1
Section 3.	LICENSES; EXCLUSIVITY.	12
3.1	Exclusive Licenses	12
3.2	Non-Exclusive Research Licenses	13
3.3	Sublicenses.	13
3.4	Negative Covenant; No Implied License.	13
3.5	Exclusivity.	13
Section 4.	DEVELOPMENT, REGULATORY APPROVALS AND MARKETING.	13
4.1	Committees; Development Plans	13
4.2	Updates to Development Plans.	16
4.3	Development [ * ]	16
4.4	Development Activities	16
4.5	Diligence	16
4.6	Regulatory Affairs	16
4.7	Manufacture and Supply	17
4.8	Costs	17
4.9	Commercialization.	17
4.10	[ * ] of Licensed Products for Non-Ophthalmic Indications	18
4.11	Transition Plan for Ophthalmic Uses	18
4.12	Transition Plan for Non-Ophthalmic Uses	18

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Section 5.	FEES AND ROYALTIES.
5.1	Milestone Payments for First Ophthalmic Use
5.2	Milestone Payments for the Second Ophthalmic Use
5.3	Milestone Payments for Non-Ophthalmic Uses
5.4	Sales Milestone Payments for Ophthalmic Uses
5.5	Sales Milestone Payments for Non-Ophthalmic Uses
5.6	Milestone Payment Not Creditable.
5.7	Royalty Payments for Ophthalmic Uses
5.8	Royalty Payments for Non-Ophthalmic Uses
5.9	Reduction in Royalty Payments
5.10	Duration of Royalty Payments
5.11	Third Party Royalties.
5.12	Royalty Floor
5.13	Notices of Termination.
Section 6.	ACCOUNTING AND PROCEDURES FOR PAYMENT.
6.1	Inter-Company Sales
6.2	Calculation of Net Sales
6.3	Royalty Payments; Sales Milestone Payments
6.4	Method of Payments
6.5	Inspection of Records
6.6	Tax Matters
Section 7.	PATENTS AND INFRINGEMENT.
7.1	Third Party License Agreements.
7.2	Title to Inventions
7.3	Prosecution of Quark Patent Rights (Sole Inventions)
7.4	Prosecution of Joint Patents

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7.5	Patents Covering Biomolecules and Licensed Products
7.6	Notices and Encumbrances
7.7	Patent Term Extensions
7.8	Interpretation of Patent Judgments
7.9	Infringement of Quark Patent Rights by a Third Party
7.10	Paragraph IV Notices
7.11	Other Actions by a Third Party
7.12	Compensation to Inventors
Section 8.	CONFIDENTIALITY; PUBLICATION.
8.1	Confidentiality
8.2	Publications and Presentations
8.3	Publicity
8.4	Filing, Registration or Notification of the Agreement
Section 9.	REPRESENTATIONS AND WARRANTIES.
9.1	Quark Representations and Warranties
9.2	Pfizer Representations and Warranties
9.3	Disclaimer of Warranty
Section 10.	COVENANTS.
10.1	Quark Covenants
10.2	Pfizer Covenants
Section 11.	CHANGE OF CONTROL
Section 12.	TERM.
Section 13.	TERMINATION.
13.1	Termination Rights
13.2	Accrued Obligations
13.3	Effect of Termination

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13.4	Bankruptcy
Section 14.	INDEMNIFICATION.
14.1	General Indemnification
14.2	Product Liability Indemnification
14.3	Losses
14.4	Defense Procedures; Procedures for Third Party Claims
14.5	Disclaimer of Liability for Consequential Damages
Section 15.	GOVERNING LAW AND JURISDICTION.
15.1	Governing Law
15.2	Jurisdiction
Section 16.	MISCELLANEOUS.
16.1	Force Majeure
16.2	Severability
16.3	Waivers; Remedies
16.4	Entire Agreements; Amendments
16.5	Survival
16.6	Assignment
16.7	Independent Contractor
16.8	Notices
16.9	Third Party Beneficiaries
16.10	Joint and Several Obligations
16.11	Binding Effect
16.12	Counterparts
16.13	Headings

iv

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LICENSE AGREEMENT

This License Agreement (this “Agreement”), dated as of September 25, 2006, is by and between Quark Biotech Inc., a California corporation with offices located at 6536 Kaiser Avenue, Fremont, California 94555, U.S.A. (“Quark”) and Pfizer Inc., a Delaware corporation with offices located at 235 East 42^nd Street, New York, New York, 10017, U.S.A. (“Pfizer”).

WHEREAS, Quark owns or controls certain patents, patent applications, technology, know-how and scientific and technical information relating to Biomolecules and Licensed Products (as defined below); and

WHEREAS, Pfizer has extensive experience and expertise in the development and commercialization of pharmaceutical products, and desires to acquire an exclusive license in the Territory (as defined below) to such patents, patent applications, technology, know-how and scientific and technical information;

WHEREAS, Quark desires to grant such license to Pfizer;

NOW, THEREFORE, in consideration of the mutual covenants and agreements provided herein, Quark and Pfizer hereby agree as follows:

Section 1.              DEFINITIONS.

For purposes of this Agreement, the following definitions shall be applicable:

1.1           “Additional Use” means any use for a Licensed Product other than the first use for such Licensed Product.

1.2           “Affiliate” means any entity directly or indirectly controlled by, controlling, or under common control with, a party to this Agreement, but only for so long as such control shall continue. For purposes of this definition of “Affiliate” only, “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) means possession, direct or indirect, of  (a) the power to direct or cause direction of the management and policies of an entity (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (b) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests.

1.3           “Applicable Biomolecule” means a Biomolecule as to which Pfizer or its Affiliate at any time during the Term [ * ].

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1.4           “Applicable Licensed Product” means a Licensed Product as to which Pfizer or its Affiliate at any time during the Term [ * ].

1.5           “Atugen License” means the Collaboration Agreement, dated December 6, 2004, among Atugen AG, Quark and QBI Enterprises Ltd., as amended by (i) the Memorandum of Understanding, dated January 19, 2006, (ii) the Amendment to Collaboration Agreement dated May 25, 2006 and (iii) the Amendment and Option, dated the date of this Agreement.

1.6           “Biomolecule” means any [ * ]. Biomolecule shall include the [ * ] molecules set forth on Exhibit A hereto.

1.7           “BLA or NDA” means a Biologics License Application (as defined in 21 C.F.R. 600 et. seq.) or a New Drug Application (as defined in 21 C.F.R. 314.5 et. seq.), in each case filed with the FDA with respect to a pharmaceutical product or an analogous application or filing with any analogous Government Authority outside of the United States (including any supra-national agency such as in the European Union) necessary for approval of a pharmaceutical product in such jurisdiction.

1.8           “Change of Control” means an event where:

(a)           any person or group (other than a Biotech Company [ * ]) becomes the beneficial owner, directly or indirectly, of at least fifty percent (50%) or more of the outstanding Voting Stock or voting power over Voting Stock of (i) Quark or (ii) any Parent Company (other than, for purposes of this clause (a), [ * ]; or

(b)           if Quark has registered as an issuer under the Securities Exchange Act of 1934, as amended (the “1934 Act”) or has become a public company under a comparable law of a country other than the United States, and a majority of the seats (other than vacant seats) on the board of directors or other governing body of Quark (the “Board”) is occupied by any person or group who were neither (i) members of the Board on the date that Quark first registered under the 1934 Act or otherwise became publicly held or (ii) members thereafter appointed, nominated or recommended by the Board; or

(c)           Quark enters into an agreement with any person or entity (other than a Biotech Company) providing for a merger, consolidation, reorganization or other similar transaction (or series of related transactions) of Quark with another person or other entity (other than any Biotech Company) as a result of which, immediately following such transaction (or series of related transactions) at least a majority of the outstanding Voting Stock or voting power over Voting Stock of the surviving or newly-created entity in such transaction (or series of related transactions) is beneficially owned by shareholders who were not shareholders of Quark at any time during the two (2) years immediately prior to such transaction (or series of related transactions); or

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(d)           (x) any pharmaceutical, biotechnology or biopharmaceutical company that had at least [ * ] in aggregate annual pharmaceutical net sales (based on data provided by IMS International, or, if such data is not available, such other reliable data source as reasonably determined by Pfizer and agreed to by Quark, with such agreement not to be unreasonably withheld, conditioned or delayed), for (i) its most recently-completed fiscal year (but, if such fiscal year consists of fewer than 12 months, the sales for such partial fiscal year shall be annualized) or (ii) its current fiscal year if there is no immediately preceding fiscal year (in which case the sales for such ongoing fiscal year shall be annualized), or (y) any one or more persons or entities that are direct or indirect parent holding companies or subsidiaries of the pharmaceutical, biotechnology or biopharmaceutical company described in clause (x) above, or (z) any Affiliate of the pharmaceutical, biotechnology or biopharmaceutical company described in clause (x) above (collectively, any of the persons or entities described in clauses (x), (y) or (z), a “Large Pharmaceutical Company”) acquires beneficial ownership of [ * ] or more of the outstanding Voting Stock or voting power over Voting Stock of any Parent Company; or

(e)           any Parent Company sells or otherwise transfers to a Third Party all or substantially all of its right, title and interest in the Quark Patent Rights and the Quark Technology (subject to licenses back consistent with the licenses to Pfizer set forth herein).

For purposes of this definition of “Change of Control” only: (a) references to any Parent Company shall be deemed to include all successors in any merger, consolidation, reorganization or similar transaction (or series of related transactions) preceding any transaction (or series of related transactions) described above; (b) “beneficial ownership” (and other correlative terms) shall mean beneficial ownership as defined in Rule 13d-3 under the 1934 Act and “group” shall have the meaning defined in Section 13(d)(3) of the 1934 Act; it being understood and agreed that “beneficial ownership” shall also include any securities which any person or any of such person’s Affiliates or parent holding company or any of its Affiliates (X) has the right to acquire directly or indirectly (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise, and/or (Y) owns or controls, whether directly or indirectly, through any subsidiary or other Affiliate; (c) “Biotech Company” means any biotechnology, biopharmaceutical or biotechnology tool company (in no event to include any Large Pharmaceutical Company) that in the case of any biotechnology or biopharmaceutical company, is primarily engaged in the research and development of novel pharmaceutical therapeutics for use in humans or in the case of a biotechnology tool company, is primarily directed at human disease; (d) “Voting Stock” means securities of any class or series of a corporation or other person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote generally in matters put before the shareholders or members of such corporation or person; (e) “control” (including, with correlative meanings, “controlled by”, “controlling” and “under common control with”) of an entity means possession, direct or indirect, of  (I) the power to direct or cause direction of the management and policies of such entity (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), or (II) at least 50% of the voting securities (whether directly or pursuant to any option, warrant or other similar arrangement) or other comparable equity interests of such entity;  (f) “parent holding company” means, with respect to any referenced person, any corporation or other person which, directly or indirectly, beneficially owns at least fifty percent (50%) or more

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of the outstanding Voting Stock or voting power over Voting Stock of such referenced person or otherwise controls, whether directly or indirectly, such referenced person; and (g) “Parent Company” means any one or more persons or entities which are direct or indirect parent holding companies of Quark or Affiliates controlling Quark.

1.9           “Combination Product” means any pharmaceutical product containing a Biomolecule and one or more other active pharmaceutical ingredients.

1.10         “Commence” or “Commencement” when used to describe a clinical study, means the first dosing of the first patient for such clinical study.

1.11         “Commercially Reasonable Efforts” means those efforts and resources that Pfizer would use were it developing or commercializing its own pharmaceutical products that are of similar market potential as the Licensed Products, taking into account product labeling or anticipated labeling, present and future market potential, past performance of Licensed Products and Pfizer’s own pharmaceutical products that are of similar market potential, [ * ], medical and clinical considerations, present and future regulatory environment and competitive market conditions, all as measured by the facts and circumstances at the time such efforts are due.

1.12         “Control” or “Controlled” means, with respect to any intellectual property right, that the party owns or has a license to such intellectual property right and has the ability to grant the other party access, a license, or a sublicense (as applicable) to such intellectual property right as provided herein, without violating the terms of any agreement or other arrangement with any Third Party existing at the time such party would be first required hereunder to grant the other party such access, license or sublicense.

1.13         “Effective Date” means the later of (i) the date upon which the applicable waiting period under the HSR Act shall have expired or been terminated with respect to this Agreement, (ii) the date on which any investigations opened by means of a second request or otherwise shall have been terminated, without action by a Governmental Authority to prevent the parties from implementing the transactions contemplated by this Agreement with respect to the United States and (iii) [ * ].

1.14         “Extended Royalty Term” shall mean, on a country-by-country and Licensed Product-by-Licensed Product basis, the period of time from the expiration of the Initial Royalty Term until [ * ]. For clarity, if at the expiration of the Initial Royalty Term there shall be [ * ], there would be no Extended Royalty Term for such country.

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

1.16         “FDCA” means the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder.

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1.17         “[ * ]” means, with respect to a country in the Territory, a fraction (expressed as a percentage), the numerator of which shall be the [ * ], and the denominator of which shall be [ * ], based on [ * ], or, if such [ * ]; provided, however, that, in the event [ * ], the [ * ].

1.18         “Generic Product” means any pharmaceutical product sold by a Third Party, not authorized by Pfizer, its Affiliate or any Sublicensee, that contains a Biomolecule as its active pharmaceutical ingredient which has [ * ] contained within a Licensed Product and is approved in reliance on the prior approval of a Licensed Product as determined by the applicable Regulatory Authority.

1.19         “Governmental Authority” means any court, agency, department, authority or other instrumentality of any foreign, federal, state, county, city or other political subdivision.

1.20         “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

1.21         “IND” means an Investigational New Drug Application submitted under the FDCA or an analogous application or filing with any analogous agency or Government Authority outside of the United States (including any supra-national agency such as in the European Union) under any analogous foreign Law.

1.22         “Indemnified Party” shall have the meaning assigned to it in Section 14.4.

1.23         “Indemnifying Party” shall have the meaning assigned to it in Section 14.4.

1.24         “Initial Royalty Term” shall mean, on a country-by-country and Licensed Product-by-Licensed Product basis, the period commencing on the date of the first commercial sale of a Licensed Product in such country, and ending on the later of (i) the date on which the manufacture, use, sale, offer for sale or importation of such Licensed Product in such country ceases to be covered by a Valid Claim in such country, or (ii) the date that is ten (10) years following the date of the first commercial sale of a Licensed Product in such country.

1.25         “Launch” means on a country-by-country and Licensed Product-by-Licensed Product basis, the first date on which Pfizer, its Affiliate or a Sublicensee has achieved aggregate Net Sales of such Licensed Product in such country of at least [ * ], after receipt by Pfizer of the first Regulatory Approval (and, in any country in which Price Approval is necessary or relevant for a majority of the population to obtain access to pharmaceutical products, Price Approval) for such Licensed Product in such country.

1.26         “Law” or “Laws” means all laws, statutes, rules, regulations, orders, judgments and/or ordinances of any Governmental Authority.

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1.27         “Licensed Product” means any Product (i) the manufacture, use, sale, offer for sale or importation of which in the absence of the licenses granted to Pfizer under this Agreement, would infringe any of the Quark Patent Rights, or (ii) the manufacture or use of which utilizes any Quark Technology.

1.28         “Losses” shall have the meaning assigned to it in Section 14.3.

1.29         “Major EU Countries” means [ * ].

1.30         [ * ].

1.31         “Net Sales” means with respect to a Licensed Product, the gross amount invoiced by Pfizer, its Affiliates, and the Sublicensees of such Licensed Product to Third Parties, less any of the following related to such sales of Licensed Product:  actual bad debts, sales returns and allowances actually paid, granted or accrued, including trade, quantity and cash discounts and any other adjustments, including granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargebacks, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions, adjustments arising from consumer discount programs or similar programs, or arising in connection with any Pfizer Discount or Savings Program (as defined below), customs or excise duties, sales tax, consumption tax, value added tax, and other similar taxes (except income taxes) measured by the production, sale, or delivery of goods in each case only if included as a specific line item on an invoice to such Third Party or duties relating to sales and any payments in respect of sales to the United States government, any State government or any foreign government, or to any Governmental Authority, or with respect to any government subsidized program or managed care organization, and charges for freight and insurance related to the return of Licensed Products and not otherwise paid by the customer. For purposes of this definition of “Net Sales” only, “Pfizer Discount or Savings Program” means any discount, rebate or reimbursement program applicable to a Licensed Product under which Pfizer or its Affiliates provides to low income, uninsured or other patients the opportunity to purchase Pfizer pharmaceutical products at discounted prices.

If Pfizer or any of its Affiliates, or any Sublicensee sells any Licensed Product together with any other product at a single price or rate or at a discount for collectively buying such products, then Net Sales with respect to such Licensed Product shall equal the number of units of the Licensed Product sold together with the non-Licensed Products multiplied by the average Net Sales price at which Pfizer or such Affiliate, or such Sublicensee sold the Licensed Product individually to similar customers for similarly sized orders.

Net Sales shall be determined from books and records maintained in accordance with generally accepted accounting principles in the United States, consistently applied throughout the organization and across all products of the entity whose sales of Licensed Product are giving rise to Net Sales.

In the case of Net Sales of a Combination Product:

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(i)            [ * ];

(ii)           for all other Combination Products [ * ], the allocation of Net Sales of the Combination Product to the Licensed Product shall be as follows:

(a)           if Pfizer, its Affiliates, or any Sublicensee separately sells in such country during such year when it sells such Combination Product both (1) one or more Licensed Products as a single chemical entity and (2) other products containing active pharmaceutical ingredient as a single chemical entity, which is also contained in such Combination Product, then the Net Sales attributable to such Combination Product during such year shall be calculated by [ * ];

(b)           if Pfizer, its Affiliates, or any Sublicensee separately sells, in such country during such year when it sells such Combination Product, one or more Licensed Products as a single chemical entity but does not separately sell, in such country, other products containing the other active pharmaceutical ingredient that is also contained in such Combination Product, then the Net Sales attributable to such Combination Product during such year shall be calculated by    [ * ];

(c)           if Pfizer, its Affiliates or Sublicensees do not separately sell, in such country during such year when it sells such Combination Products, each Licensed Product contained in the Combination Product, then the Net Sales attributable to such Combination Product during such year shall be [ * ].

1.32         “Non-Ophthalmic Use” means any use of a Licensed Product for the treatment or prevention of any disease or condition, excluding in any case any Ophthalmic Use. For example, each of [ * ] would be a different Non-Ophthalmic Use, but both [ * ] would be deemed within the [ * ] Non-Ophthalmic Use.

1.33         “Ophthalmic Use” means any use of a Licensed Product for the treatment or prevention of any disease or condition relating to the eye. For example, each of [ * ] would be a different Ophthalmic Use.

1.34         “Pfizer Confidential Information” means all information that is disclosed (whether orally, electronically or in writing) by Pfizer to Quark or its Affiliates and (a) in the case of oral information, is outlined in a summary prepared by Pfizer and delivered to Quark promptly after disclosure and (b) in the case of written or electronic information is designated “Confidential” in writing by Pfizer at the time of disclosure to Quark, to the extent that such information is not (i) as of the date of disclosure known to Quark, other than by virtue of a prior confidential disclosure to Quark by Pfizer; or (ii) disclosed in published literature, or otherwise generally known to the public through no fault or omission of Quark; or (iii) obtained from a Third Party free from any obligation of confidentiality to Pfizer; or (iv) independently developed by Quark without access to the Pfizer Confidential Information; or (v) in the reasonable opinion of legal counsel, required to be disclosed under applicable Law; provided that, in the case of (v), Quark provides Pfizer sufficient prior notice (to the extent practicable) of such disclosure and agrees to cooperate, at the request and sole expense of Pfizer, with Pfizer’s efforts to preserve the confidentiality of such information.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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1.35         “Pfizer Patent Rights” means all patents and patent applications (including, subject to the third sentence of Section 7.5, all provisionals, divisionals, continuations, renewals, continuations-in-part, re-examinations, patents of addition, supplementary protection certificates, extensions, restorations of patent terms, letters of patent, registration or confirmation patents and reissues granted by a Governmental Authority) to the extent (i) owned, Controlled by or licensed to Pfizer or its Affiliates during the Term, and (ii) used by Pfizer or its Affiliates in the research, development or manufacture of Biomolecule or Licensed Products. Pfizer Patent Rights shall include patents and patent applications described in this Section 1.35 which are jointly owned by Pfizer and Quark or their respective Affiliates (or their respective assignees).

1.36         “Pfizer Quarter” means each of the four (4) thirteen (13) week periods (i) with respect to the United States, commencing on January 1 of any year, and (ii) with respect to any country in the Territory other than the United States, commencing on December 1 of any year.

1.37         “Pfizer Technology” means all scientific and technical information and data, including know-how, trade secrets and technology related thereto now or hereafter during the Term owned, Controlled by or licensed to Pfizer or any of its Affiliates that are used by Pfizer or its Affiliates in the research, development and manufacture of Biomolecule or Licensed Products. Pfizer Technology shall not include any Pfizer Patent Rights.

1.38         “Pfizer Year” means (i) in the United States, each of the twelve (12) month periods commencing on January 1 of any year and ending on December 31 and (ii) in any country in the Territory other than the United States, each of the twelve (12) month periods commencing on December 1 of any year and ending on November 30 of the following year.

1.39         “Phase I” means any human clinical trial, the principal purpose of which is preliminary determination of safety in healthy individuals or patients as described under 21 C.F.R. §312.21(a) with respect to the United States, or, with respect to a jurisdiction other than the United States, a similar clinical study.

1.40         “Phase II” means any human clinical trial conducted for purposes of preliminary determination of efficacy and/or preliminary establishment of appropriate dosage ranges for efficacy and safety in patients, as described under 21 C.F.R. §312.21(b) with respect to the United States, or, with respect to a jurisdiction other than the United States, a similar clinical study.

1.41         “Phase III” means any human clinical trial intended to be a pivotal trial for obtaining approval of a BLA or NDA, or to otherwise establish safety and efficacy in patients with the disease or condition being studied for purposes of filing a BLA or NDA, with the FDA or other applicable Regulatory Authority, as described under 21 C.F.R. §312.21(c) with respect to the United States, or, with respect to a jurisdiction other than the United States, a similar clinical study.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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1.42         “Price Approval” means, in countries where Governmental Authorities authorize for reimbursement, or approve or determine pricing for pharmaceutical products for reimbursement or otherwise, receipt of such reimbursement authorization or pricing approval or determination.

1.43         “Product” means any product, including any pharmaceutical product or diagnostic product, which contains any Biomolecule, either alone or in combination with any other active pharmaceutical ingredient, in all formulations and strengths for all uses.

1.44         “Quark Confidential Information” means all information about any element of Quark Technology, as well as any other information regarding the business and operations of Quark, that is disclosed (whether orally, electronically or in writing) by Quark to Pfizer or its Affiliates and (a) in the case of oral information, is outlined in a summary prepared by Quark and delivered to Pfizer promptly after disclosure and (b) in the case of written or electronic information is designated “Confidential” in writing by Quark at the time of disclosure to Pfizer, to the extent that such information is not (i) as of the date of disclosure to Pfizer, known to Pfizer, other than by virtue of a prior confidential disclosure to Pfizer by Quark; or (ii) disclosed in published literature, or otherwise generally known to the public through no fault or omission of Pfizer; or (iii) obtained from a Third Party free from any obligation of confidentiality to Quark; or (iv) independently developed by Pfizer without access to the Quark Confidential Information; or (v) in the reasonable opinion of legal counsel, required to be disclosed under applicable Law; provided that, in the case of (v), Pfizer provides Quark sufficient prior notice (to the extent practicable) of such disclosure and agrees to cooperate, at the request and sole expense of Quark, with Quark’s efforts to preserve the confidentiality of such information.

1.45         “Quark Patent Rights” means (i) all patents and patent applications listed on Exhibit B attached hereto and any patents which may issue from, or claim priority to or through, the applications listed on Exhibit B (which identifies separately the patents and patent applications (x) owned by Quark and (y) licensed to and Controlled by Quark), (ii) all other patents and patent applications in the Territory, now or hereafter during the Term Controlled by Quark or any of its respective Affiliates that relate to Biomolecule or any Licensed Product, and (iii) subject to the third sentence of Section 7.5, all provisionals, divisionals, continuations, renewals, continuations-in-part, re-examinations, patents of addition, supplementary protection certificates, extensions, restorations of patent terms, letters of patent, registration or confirmation patents and reissues with respect to any patents described in the foregoing clauses (i) or (ii) hereof granted by a Governmental Authority. Quark Patent Rights shall include any patents and patent applications described in this Section 1.45 which are jointly owned by Quark and Pfizer or their respective Affiliates (or their respective assignees).

1.46         “Quark Technology” means all scientific and technical information and data (whether or not patentable), including know-how, trade secrets and technology related thereto now or hereafter during the Term Controlled by Quark or any of its respective Affiliates that

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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relate to Biomolecule or any Licensed Product, including: (i) medical, clinical, toxicological or other scientific data, and (ii) processes and analytical methodology useful in the research, development and manufacture of Biomolecule or any Licensed Product. Quark Technology shall not include any Quark Patent Rights.

1.47         “Regulatory Approval” means any and all approvals, excluding any INDs, but including supplements and amendments, licenses, registrations or authorizations (other than Price Approvals) of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other Governmental Authority, that are necessary for the manufacture, distribution, use, marketing or sale of a pharmaceutical product in a regulatory jurisdiction.

1.48         “Regulatory Authority” shall mean, in respect of a particular country or jurisdiction, the Governmental Authority having the responsibility for granting Regulatory Approvals in such country or jurisdiction.

1.49         “Royalty Term” shall mean, in respect of each country in the Territory, the period commencing on the first day of the Initial Royalty Term in such country and ending on the last day of the Extended Royalty Term in respect of such country or, if there is no Extended Royalty Term in such country, the last day of the Initial Royalty Term in such country.

1.50         “[ * ]” means [ * ] in the applicable country.

1.51         “Standby License” means the license agreement between Atugen AG and Pfizer relating to certain Quark Patent Rights owned by Atugen AG.

1.52         “Sublicensee” means a Third Party, which has been granted sublicense rights pursuant to this Agreement, which rights include at least the rights to make and sell the Licensed Product. Third Parties that have the right to formulate or package the Licensed Product shall be considered to have the right to “make” the Product for purposes of this Section 1.52, excluding however, Third Parties that have the right only to re-package Licensed Product for resale. Third Parties that are permitted only to distribute and resell Licensed Product, or that manufacture or package Licensed Product for supply to Pfizer or its Affiliates are not “Sublicensees.”

1.53         “Term” shall have the meaning assigned to it in Section 12.1.

1.54         “Territory” means the entire world.

1.55         “Third Party” shall mean any natural person, corporation, partnership, trust, limited liability company, or any other entity or organization other than Pfizer, Quark and its respective Affiliates.

1.56         “Third Party Claim” shall have the meaning assigned to it in Section 14.4.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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1.57         “Valid Claim” means any claim of (i) an issued and unexpired patent included within patents under the Quark Patent Rights which has not been rejected, revoked or held unenforceable or invalid by a final, nonappealable decision of a Governmental Authority of competent jurisdiction or unappealed within the time allowable for appeal, and which has not been disclaimed, or admitted by Quark to be invalid or unenforceable, or (ii) a pending patent application within the Quark Patent Rights that has not been cancelled, withdrawn, abandoned or pending for more than [ * ] years after the earliest filing date to which such pending application claims priority.

1.58         Construction. Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (i) “include”, “includes” and “including” are not limiting; (ii) definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (iii) references to an agreement or instrument mean such agreement or instrument as from time to time amended, modified or supplemented; (iv) references to any entity or person are also to its permitted successors and assigns; (v) references to an “Article”, “Section”, “Exhibit” or “Schedule” refer to an Article or Section of, or any Exhibit or Schedule to, this Agreement unless otherwise indicated; (vi) the word “will” shall be construed to have the same meaning and effect as the word “shall”; and (vii) the word “any” shall mean “any and all” unless otherwise indicated by context.

1.59         Other Defined Terms. The following terms shall have the meanings ascribed to them in the provisions of this Agreement indicated opposite such term below:

1934 Act	1.8(b	)
Abandoned Patents	7.3(b	)
[ * ]	4.7
[ * ] Agreement	4.7
Biotech Company	1.8
Committee	4.1(a	)
Courts	15.2
Development Plan	4.1(h	)
DoJ	2.1
First Licensed Product Development Plan	4.1(h	)
First Ophthalmic Use Milestone	5.1
First Ophthalmic Use Milestone Payments	5.1
FTC	2.1
Infringement Claim	7.9(a	)
Initial JDC	4.1(a	)
JDC Chairman	4.1(a	)
JDC Vice Chairman	4.1(b	)
Joint Inventions	7.2(a	)
Joint Patents	7.4
JRC	4.1(a	)
JRC Chairman	4.1(a	)
JRC Vice Chairman	4.1(b	)
Large Pharmaceutical Company	1.8(d	)

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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Litigation Conditions	14.4(a	)
long acting formulation	5.1
Most Recent Milestone	5.1
Non-Ophthalmic Pre-clinical Studies	4.12
Non-Ophthalmic Use Milestone	5.3
Non-Ophthalmic Use Milestone Payments	5.3
Non-Ophthalmic Use Sales Milestone Payment	5.5
Notice of Non-Ophthalmic Use	4.10
Ophthalmic Use Sales Milestone Payment	5.4
Paragraph IV Claim	7.10
Parent Company	1.8
Pfizer Withholding Tax Action	6.6(b	)
Quark Patent Filing Schedule	7.3(a	)
Representatives	14.1
Second Ophthalmic Use	5.2
Second Ophthalmic Use Milestone	5.2
Second Ophthalmic Use Milestone Payments	5.2
separate patent filings	7.5
Shortfall Audit	6.5
Sole Inventions	7.2(a	)
Supply Notice	4.7(b	)
[ * ]	1.8(a	)
Third Party Patent Licenses	5.11(b	)
Transition Plan	4.11
VAT	.6.6(a	)
Voting Stock	1.8

Section 2.              HSR.

2.1           HSR. Promptly following signing of this Agreement, Pfizer (or its Affiliate) and Quark (or its Affiliate) shall take (i) all actions necessary to make the filing required under the HSR Act and (ii) reply at the earliest practicable date to any requests for information received from the United State Federal Trade Commission (“FTC”) or Antitrust Division of the United States Department of Justice (“DoJ”) pursuant to the HSR Act. The parties shall, to the extent reasonably practicable, consult with one another prior to making any filings, responses to inquiries or other contacts with the FTC or DoJ concerning the transactions contemplated hereby.

Section 3.              LICENSES; EXCLUSIVITY.

3.1           Exclusive Licenses. Subject to the terms of this Agreement, Quark hereby grants to Pfizer, and Pfizer hereby accepts, an exclusive license (even as to Quark and its Affiliates, except for performance of the responsibilities assigned to them under this Agreement), including the right to sublicense as provided in Section 3.3, under the Quark Patent Rights and Quark Technology to develop, make, have made, use, sell, offer for sale and import Biomolecules and Licensed Products in the Territory.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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3.2           Non-Exclusive Research Licenses. Without limiting any of the licenses granted in Section 3.1, Quark hereby grants to Pfizer, and Pfizer hereby accepts, a non-exclusive, irrevocable, royalty-free, perpetual license in the Territory, to use solely for research done by Pfizer or its Affiliates or by Third Party contractors for Pfizer or its Affiliates the Quark Technology (excluding any Quark Technology that is now or hereafter during the Term covered by claims in issued patents or published patent applications) disclosed to Pfizer during the Term. For clarity, Pfizer shall not have any right to use or permit the use of the Quark Technology for or in connection with the sale or manufacture for sale of any products or processes. Pfizer hereby grants to Quark, and Quark hereby accepts, a non-exclusive, irrevocable, royalty-free, perpetual license in the Territory to use solely for research done by Quark or its Affiliates or by Third Party contractors for Quark or its Affiliates the Pfizer Technology (excluding any Pfizer Technology that is now or hereafter during the Term covered by claims in issued patents or published patent applications) disclosed to Quark during the Term. For clarity, Quark shall not have any rights to use or permit the use of the Pfizer Technology for or in connection with the sale or manufacture for sale of any products or processes.

3.3           Sublicenses. Pfizer may grant sublicenses under the licenses set forth in Section 3.1, in whole or in part, (i) to any of its Affiliates and (ii) to any Third Party; provided, however, Pfizer shall not grant any sublicense to any Sublicensee with respect to the Licensed Products in the United States, the Major EU Countries and Japan without the prior approval of Quark, which approval shall not be unreasonably withheld, conditioned or delayed. All sublicenses granted hereunder shall be consistent with, and subordinate to, the terms and conditions of this Agreement, and Pfizer shall be responsible for ensuring the compliance of its Sublicensees and shall remain responsible to Quark for all its obligations under this Agreement. In the event of a material default by any Sublicensee with respect to the sale of Licensed Products in the United States, the Major EU Countries or Japan, Pfizer will inform Quark and take such action, after consultation with Quark, that in Pfizer’s reasonable business judgment is required to address such default.

3.4           Negative Covenant; No Implied License. Each party covenants that it will not and shall ensure that its Affiliates and Sublicensees will not, practice technology licensed to it under this Agreement outside the scope of the licenses granted herein. Except as specifically provided herein, no party grants to the other parties any license, express or implied, to any technology, know-how, inventions, improvements, trade secrets or materials that it possesses.

3.5           Exclusivity. During the Term, neither Quark nor Pfizer shall, and neither of them shall permit any of its Affiliates to, commercialize any Biomolecule or any Product, except pursuant to this Agreement.

Section 4.              DEVELOPMENT, REGULATORY APPROVALS AND MARKETING.

4.1           Committees; Development Plans.

(a)           Committee. Within [ * ] days following the Effective Date, the parties will establish (i) a joint development committee for the purpose of overseeing the development of Licensed Products for Ophthalmic Uses (the “Initial JDC”) and (ii) a joint research committee [ * ] (the “JRC”). If the JRC [ * ]. Pfizer may, [ * ], and the JDC and the JRC may be referred to as the “Committee” or “Committees”).

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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(b)           Membership; Subcommittees. Each Committee shall consist of an equal number of representatives from Pfizer and Quark, with each party entitled to one vote for decision-making purposes. Each JDC and the JRC shall have a representative designated by (i)  [ * ] who shall serve as the chairman of such JDC and JRC (the “JDC Chairman” and the “JRC Chairman,” as the case may be) and (ii) [ * ] who shall serve as the vice chairman of such JDC and JRC (the “JDC Vice Chairman” and the “JRC Vice Chairman,” as the case may be). The respective individual representatives of either party to each Committee may be removed and replaced from time to time at the discretion of the party he or she represents by sending notice of such action to the other party. A representative from either party may serve as his or her party’s representative on one or more JDCs as well as on the JRC pursuant to the appointment by such party. An alternate representative designated by a party may serve temporarily in the absence of a permanent representative for each Committee for such party. Each Committee may establish one or more subcommittees to oversee and implement specific development activities related to the Licensed Product for which such Committee is responsible. Each Committee shall establish the membership and operating procedures of any subcommittees formed by such Committee.

(c)           JDC Responsibilities. The role of each JDC shall be to oversee the development of each Licensed Product for the indications within the scope of such JDC, including to:

(i)            Review and approve the applicable Development Plan prepared by Pfizer for the Licensed Product for which it is responsible;

(ii)           Review and approve material amendments to the applicable Development Plan;

(iii)          Review and approve the overall strategy for clinical studies;

(iv)          Monitor the progress of all clinical trials and other studies for the Licensed Product for which it is responsible, including reviewing activities against the applicable Development Plan; and

(v)           To the extent practicable, review material activities relating to Regulatory Approval of the Licensed Product in question, including review pre-meeting briefing documents, executive summaries and meeting minutes in connection with meetings with Regulatory Authorities in the United States and the Major EU Countries; and

(vi)          Perform such other functions as appropriate to further the purposes of this Agreement.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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Upon receipt of the Regulatory Approval of a Licensed Product for all of the indications within the scope of a JDC in the United States and the Major EU Countries, such JDC and its subcommittees shall terminate.

(d)           JRC Responsibilities. The role of the JRC shall be to oversee the pre-clinical development of the Licensed Products. [ * ], and any material amendments to such strategies, plans and protocols; provided, however, Quark shall have the right to complete the Non-Ophthalmic Pre-clinical Studies. Quark shall update the JRC from time to time regarding the progress of its Non-Ophthalmic Pre-Clinical Studies, and shall provide the JRC with the data and other results of such studies as soon as practicable after such studies are completed. The JRC shall review the data and results of such studies with the goal of identifying Non-Ophthalmic Uses that are appropriate for further development and (if successful) commercialization as Licensed Products. The JRC shall decide whether to pursue further development, including clinical studies, of the Licensed Product for each Non-Ophthalmic Use. Upon final decision following review of all data for all Non-Ophthalmic Pre-clinical Studies, the JRC and its subcommittees shall terminate.

(e)           Decision-making. All matters subject to approval of or determination by each Committee shall be decided by unanimous agreement. Subject to Section 4.1(f), in the event that any Committee is unable to reach agreement on any matter, such matter shall be considered in good faith, including taking into consideration any comments or suggestions provided by [ * ] representatives on such Committee, and decided by [ * ], as the case may be.

(f)            [ * ]. Notwithstanding Section 4.1(e), [ * ] shall have a [ * ] (i) [ * ] or (ii) [ * ]  In the case of [ * ]. In the case of [ * ]. In advance of such meeting, [ * ] shall submit to [ * ], and [ * ] shall respond with [ * ]. Thereafter (and in any event within [ * ] of [ * ], the [ * ] shall meet with the [ * ] to review the [ * ]. The [ * ] following [ * ].

(g)           Meetings. Each Committee shall meet at such times as the applicable JDC Chairman or the JRC Chairman may reasonably request (it being expected that a JDC shall meet at least once per calendar quarter during any period when there are active development activities pertaining to such JDC). Each Committee shall hold meetings at such times and places as shall be determined by such Committee (it being expected that any in-person meetings will alternate between the appropriate offices of each party). The applicable JDC Chairman and the JRC Chairman shall endeavor to circulate an agenda for each meeting within a reasonable time prior to such meeting, and will include all matters requested to be included on such agenda by the JDC Vice Chairman or the JRC Vice Chairman. The applicable JDC Chairman and the JRC Chairman will cause complete and accurate minutes of all material discussions occurring at each meeting and all matters decided upon at such meeting to be prepared. A copy of the draft minutes of each meeting will be provided to each member of the applicable Committee by the applicable JDC Chairman and the JRC Chairman, as the case may be. Such minutes shall not be finalized until the JDC Chairman and the JDC Vice Chairman, in the caser of JDC meeting minutes, and the JRC Chairman and the JRC Vice Chairman, in the case of JRC meeting minutes, review and confirm the accuracy of such minutes, provided that any minutes will be deemed approved unless the responsible person objects to the accuracy of such minutes within

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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[ * ] of receipt. Any Committee meeting may also be held by telephone or videoconference, if agreed in advance by the applicable members of that Committee. Each party may invite such other personnel of such party to attend any meeting of any Committee as an observer as such party deems appropriate. The parties shall each be responsible for its own costs and expenses to attend the Committee meetings.

(h)           Development Plans. Each JDC shall prepare a development plan for the development of the Licensed Product it oversees (the “Development Plan”) and each party shall perform its respective development activities for each Licensed Product subject to and in accordance with the terms and conditions set forth in this Agreement and the Development Plan established for such Licensed Product by the applicable JDC. No later than [ * ] after the Effective Date, the Initial JDC shall formally adopt (i) a clinical development plan for the first Licensed Product for the treatment of [ * ], and (ii) a preliminary clinical development plan for the first Licensed Product for other Ophthalmic Use(s) (collectively, the “First Licensed Product Development Plan”). In the event the JRC determines to proceed with the development of a Licensed Product for any Additional Use, whether for Ophthalmic Use or Non-Ophthalmic Use, the applicable JDC shall adopt a Development Plan for the development of such Licensed Product for such Additional Use within [ * ] after the formation of such JDC. The components of each Development Plan for a Licensed Product shall be [ * ].

4.2           Updates to Development Plans. As needed from time to time, Pfizer may update the Development Plan to take into account completion, commencement or cessation of development activities not contemplated by the then-current Development Plan, and submit such proposed plan to the applicable JDC. Such JDC will endeavor to meet and finalize the updated plan(s) within [ * ] of receipt of such proposal. Once approved by the applicable JDC, such updated Development Plan shall replace the prior Development Plan.

4.3           Development [ * ]. Quark and its Affiliates shall have the right, at its sole discretion, to [ * ] for each Licensed Product in accordance with the [ * ]. Pfizer shall [ * ] consistent with the [ * ] for each Licensed Product. For each Licensed Product, the applicable JDC shall designate at least one [ * ]; provided, however, if Pfizer reasonably determines that the indication being studied is not [ * ], Quark’s right to [ * ] shall not apply to any Licensed Product for such indication. For clarity, the parties agree that there is [ * ].

4.4           Development Activities. Pfizer shall be responsible for overseeing all research and development of the Biomolecules and Licensed Products. During the development of each Licensed Products, Pfizer shall invite at least one (1) representative of Quark to [ * ], in each case in connection with the development of such Licensed Product.

4.5           Diligence. Pfizer will use Commercially Reasonable Efforts to develop, seek Regulatory Approval for, manufacture and commercialize Licensed Products.

4.6           Regulatory Affairs. Pfizer shall own and be responsible for preparing and submitting all regulatory filings and seeking and maintaining all Regulatory Approvals for all Licensed Products. In the event Quark shall have filed an IND with respect to a Licensed Product prior to the Effective Date, upon Pfizer’s request Quark shall promptly transfer such IND to Pfizer or its designated Affiliate.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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4.7           Manufacture and Supply.

(a)Pfizer shall be responsible for the manufacture of all preclinical and clinical materials for each Licensed Product and for the commercial supply of each Licensed Product. Quark shall use reasonable efforts to promptly assign to Pfizer or its designated Affiliate the development and supply agreement, dated [ * ] (the “[ * ] Agreement”), between Quark and [ * ]. If the [ * ], Pfizer shall use [ * ] until the earlier of (i) [ * ] or (ii) [ * ]. Nothing herein shall restrict Quark from engaging [ * ] to manufacture any materials other than Biomolecules or Licensed Products.

(b)           If during the Term Pfizer determines that it desires to produce one or both strands of any Biomolecule for the commercial supply of any Licensed Product at a second site, whether such second site would be operated by Pfizer or by a Third Party, Pfizer shall give written notice of such determination to Quark (a “Supply Notice”). If within [ * ] following receipt of the Supply Notice, Quark notifies Pfizer that Quark desires to be considered as a supplier of such stand(s) of any Biomolecule set forth in the Supply Notice, then Pfizer shall negotiate exclusively with Quark and in good faith for a period of not less than [ * ] to determine whether Quark can satisfy the requirements of Pfizer. Such [ * ] period shall commence with the first substantive meeting between the parties to discuss the manufacturing requirements of Pfizer. In the course of its negotiations, Pfizer shall not impose on Quark supply conditions of quality, price, capacity or risk allocation that it would not require of Third Party suppliers or impose upon itself. It is the intent of this paragraph for Pfizer to select Quark as the supplier that provides a second site for the manufacture of such strand(s) of any Biomolecule selected by Pfizer if Quark desires to fill such role, is capable of doing so on competitive terms and Quark’s manufacturing capabilities in terms of quality, reliability and otherwise is reasonably satisfactory to Pfizer. For purposes of this paragraph only, “site” shall mean a geographical location of manufacturing facilities ([ * ]), and “second site” shall mean any manufacturing site that is not the initial site for the manufacture of Biomolecules for the commercial supply of Licensed Products. The initial site shall include both [ * ]’s site (which may be used solely to manufacture the registration batches and the launch supply of Biomolecule for the country or the group of countries for which the first Regulatory Approval is obtained) and Pfizer’s initial site, including the expansion of a facility within such site.

4.8           Costs. Pfizer shall be responsible for all costs associated with the research, development, manufacture and commercialization of Licensed Products that are incurred after the Effective Date. Pfizer shall reimburse Quark for costs incurred to research and develop Biomolecule and Licensed Products [ * ] in an amount not to exceed [ * ], which amount shall be due and payable within [ * ] after the Effective Date. Pfizer shall also reimburse Quark for those costs set forth in Schedule 4.8 hereto, which shall be due and payable within [ * ] after the Effective Date.

4.9           Commercialization. Subject to Section 4.10,Pfizer shall be responsible for all commercialization activities relating to the Licensed Products, including selection and ownership of all trademarks for all Licensed Products and pricing and other terms of sale for all Licensed Products. Subject to the terms attached as Schedule 4.9 hereto, Quark shall be the exclusive distributor of the Licensed Products for Ophthalmic Uses and Non-Ophthalmic Uses in Israel.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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4.10         [ * ] of Licensed Products for Non-Ophthalmic Indications. Pfizer shall give Quark notice within [ * ] following the filing of each BLA or NDA for a Licensed Product for a Non-Ophthalmic Use in the United States or the Major EU Countries (“Notice of Non-Ophthalmic Use”). Pfizer shall include with such Notice of Non-Ophthalmic Use a summary of its proposed marketing plan for such use. Within [ * ] of Quark’s receipt of such Notice of Non-Ophthalmic Use, the parties shall meet to discuss [ * ]. For clarity, Pfizer shall have no obligation to grant [ * ].

4.11         Transition Plan for Ophthalmic Uses. In order to ensure the smooth transition of ongoing development activities for the Ophthalmic Uses of the Licensed Products, the parties hereby agree to the provisions of the transition plan which is attached hereto as Exhibit C (the “Transition Plan”). If there is an inconsistency or disagreement between the Transition Plan and this Agreement, the terms of this Agreement shall prevail. Pfizer shall pay to Quark an amount equal to [ * ] within [ * ] after the Effective Date as partial reimbursement of Quark’s research and development costs and expenses incurred in connection with the research and development of the Licensed Product for wet age-related macular degeneration.

4.12         Transition Plan for Non-Ophthalmic Uses. In order to ensure the smooth transition of ongoing development activities for the Non-Ophthalmic Uses of the Licensed Products, Quark shall initially retain the right to [ * ] as set forth in Schedule 4.12 (the “Non-Ophthalmic Pre-clinical Studies”); provided, however, [ * ]. Pfizer shall pay to Quark an amount equal to [ * ] within [ * ] after the Effective Date in order to help fund the Non-Ophthalmic Pre-clinical Studies. In addition, Quark shall [ * ], and Pfizer shall [ * ]. Quark shall provide Pfizer a copy of [ * ].

Section 5.              FEES AND ROYALTIES.

5.1           Milestone Payments for First Ophthalmic Use. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement applicable to such payments, Pfizer shall pay to Quark the following amounts (the “First Ophthalmic Use Milestone Payments”) after the occurrence of the relevant milestone (the “First Ophthalmic Use Milestone”) for the first Licensed Product developed for the first Ophthalmic Use. Pfizer shall make the first First Ophthalmic Use Milestone Payment within [ * ] after the Effective Date and each of the other of such milestone payments within [ * ] after each of the other First Ophthalmic Use Milestones. For clarity, each First Ophthalmic Use Milestone shall be due and payable to Quark whether such milestone is achieved by Pfizer, its Affiliates, or any Sublicensee.

First Ophthalmic Use Milestone	First Ophthalmic Use Milestone Payment
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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Each First Ophthalmic Use Milestone Payment shall be paid once, regardless of the number of the Licensed Products achieving such milestones.

In the event Pfizer develops a Licensed Product for Ophthalmic Use with [ * ], the First Ophthalmic Use Milestone Payments shall be [ * ]. For purposes of this paragraph only, [ * ].

If any First Ophthalmic Use Milestone (the “Most Recent Milestone”) is achieved without triggering any of the earlier First Ophthalmic Use Milestones, then Pfizer shall pay to Quark any missed First Ophthalmic Use Milestone Payment at the same time as the Most Recent Milestone payment is due, except that the Launch of the first Licensed Product in any one country of the Territory shall not be deemed to trigger any milestone payment related to the Launch of the first Licensed Product in any other country of the Territory.

For clarity, each milestone payment owed to Quark under this Section 5.1 which refers to the first Ophthalmic Use shall be paid to Quark for the first Licensed Product to achieve such milestone for an Ophthalmic Use.

5.2           Milestone Payments for the Second Ophthalmic Use. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement applicable to such payments, Pfizer shall pay to Quark the following amounts (the “Second Ophthalmic Use Milestone Payments”) after the occurrence of the relevant milestone (the “Second Ophthalmic Use Milestone”) for the first Licensed Product developed for an Ophthalmic Use other than the first Ophthalmic Use (the “Second Ophthalmic Use”). Pfizer shall make the Second Ophthalmic Use Milestone Payment within [ * ] after each of the Second Ophthalmic Use Milestones.

Second Ophthalmic Use Milestone	Second Ophthalmic Use Milestone Payment
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]

Each Second Ophthalmic Use Milestone Payment shall be paid once, regardless of the number of Licensed Products or the number of additional Ophthalmic Uses for any Licensed Product achieving such milestones.

For clarity, if a Licensed Product achieves any of the Second Ophthalmic Use Milestones before all of the First Ophthalmic Use Milestones are triggered, then Pfizer shall pay to Quark such Second Ophthalmic Use Milestone Payment without regard to which Licensed Product(s) are involved in either Ophthalmic Use.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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5.3           Milestone Payments for Non-Ophthalmic Uses. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement applicable to such payments, Pfizer shall pay to Quark the following amounts (the “Non-Ophthalmic Use Milestone Payments”) after the occurrence of the relevant milestone (the “Non-Ophthalmic use Milestone”) for the first Licensed Product developed for each Non-Ophthalmic Use, subject to modification as provided in the final three sentences of this Section 5.3. Pfizer shall make the Non-Ophthalmic Use Milestone Payment within [ * ] after each Non-Ophthalmic Use Milestones.

Non-Ophthalmic Use Milestone		Non-Ophthalmic Use Milestone Payment
	[ * ]	[ * ]
	[ * ]	[ * ]
	[ * ]	[ * ]
	[ * ]	[ * ]
	[ * ]	[ * ]

Each Non-Ophthalmic Use Milestone Payment shall be paid once for each applicable Non-Ophthalmic Use, regardless of the number of Licensed Products for the applicable Non-Ophthalmic Use.

If any of the foregoing milestones is achieved before the counterpart First Ophthalmic Use Milestone occurs, the Non-Ophthalmic Use Milestone Payment for such event shall be [ * ] so long as the Non-Ophthalmic Use in question is [ * ] which, based solely on the [ * ]. If the Non-Ophthalmic Use in question is [ * ], then this paragraph shall not apply. By way of example, [ * ]. Quark acknowledges that Pfizer may [ * ].

5.4           Sales Milestone Payments for Ophthalmic Uses. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement applicable to such payments, Pfizer shall pay to Quark the following one-time payments (each, an “Ophthalmic Use Sales Milestone Payment”) when aggregate Net Sales of all Licensed Products for Ophthalmic Uses in any [ * ] consecutive Pfizer Quarters in the Territory first reach the respective thresholds indicated below:

Worldwide Annual Net Sales	Sales Milestone Payment
Net Sales in any [ * ] consecutive Pfizer Quarters reach [ * ]	[ * ]
Net Sales in any [ * ] consecutive Pfizer Quarters reach [ * ]	[ * ]
Net Sales in any [ * ] consecutive Pfizer Quarters reach [ * ]	[ * ]

Each Ophthalmic Use Sales Milestone Payment shall be paid once, regardless of the number of Licensed Products sold or the number of Ophthalmic Uses commercialized.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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5.5           Sales Milestone Payments for Non-Ophthalmic Uses. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement applicable to such payments, Pfizer shall pay to Quark the following one-time payments (each, a “Non-Ophthalmic Use Sales Milestone Payment”) when aggregate Net Sales of all Licensed Products for Non-Ophthalmic Uses in any [ * ] consecutive Pfizer Quarters in the Territory first reach the respective thresholds indicated below:

Worldwide Annual Net Sales	Sales Milestone Payment
Net Sales in any [ * ] consecutive Pfizer Quarters reach [ * ]	[ * ]
Net Sales in any [ * ] consecutive Pfizer Quarters reach [ * ]	[ * ]
Net Sales in any [ * ] consecutive Pfizer Quarters reach [ * ]	[ * ]
Net Sales in any [ * ] consecutive Pfizer Quarters reach [ * ]	[ * ]

Each Non-Ophthalmic Use Sales Milestone Payment shall be paid once, regardless of the number of Licensed Products sold or the number of Non-Ophthalmic Uses commercialized.

5.6           Milestone Payment Not Creditable. Milestone payments made under Sections 5.1 through 5.5 shall be non-creditable and non-refundable.

5.7           Royalty Payments for Ophthalmic Uses. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement applicable to such payments, Pfizer shall pay to Quark, with respect to sales of the Licensed Products for Ophthalmic Uses, an amount equal to:

(a)           [ * ] of Net Sales for the portion of Net Sales of such Licensed Products in a calendar year in the Territory less than or equal to [ * ]; plus

(b)           [ * ] of Net Sales for the portion of Net Sales of such Licensed Products in a calendar year in the Territory greater than [ * ] and less than or equal to [ * ]; plus

(c)           [ * ] of Net Sales for the portion of Net Sales of such Licensed Products in a calendar year in the Territory in excess of [ * ].

5.8           Royalty Payments for Non-Ophthalmic Uses. In consideration of the rights granted hereunder, and subject to the terms and conditions of this Agreement applicable to such payments, Pfizer shall pay to Quark, with respect to sales of the Licensed Products for Non-Ophthalmic Uses, an amount equal to:

(a)           [ * ] of Net Sales for the portion of Net Sales of such Licensed Products in a calendar year in the Territory less than or equal to [ * ]; plus

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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(b)           [ * ] of Net Sales for the portion of Net Sales of such Licensed Products in a calendar year in the Territory greater than [ * ] and less than or equal to [ * ]; plus

(c)           [ * ] of Net Sales for the portion of Net Sales of such Licensed Products in a calendar year in the Territory in excess of [ * ].

If Quark commences [ * ], the royalties set forth in this Section 5.8 shall be [ * ].

5.9           Reduction in Royalty Payments. For Net Sales of a Licensed Product in the United States, any payments owed with respect to such Licensed Product pursuant to Sections 5.7 and 5.8 above during the Initial Royalty Term shall be reduced by [ * ] for the remainder of the Term if at any time the following events occur or are in existence: (x) [ * ], or (y) [ * ]. For Net Sales of a Licensed Product in a country in the Territory other than the United States, any payments owed with respect to such Licensed Product pursuant to Sections 5.7 and 5.8 above during the Initial Royalty Term shall be reduced by [ * ] for the remainder of the Term if at any time [ * ].

5.10         Duration of Royalty Payments. Payments under Sections 5.7 and 5.8 above shall continue until the expiration of the Initial Royalty Term in such country for the Licensed Product concerned. After the Initial Royalty Term, Pfizer shall make payments to Quark [ * ] above until the expiration of the Extended Royalty Term in such country for the Licensed Product concerned; provided, however, Pfizer’s obligations to make any payments with respect to sales of Licensed Products in the Territory under Sections 5.7 and 5.8 above after the Initial Royalty Term shall expire when [ * ]. Upon expiration of the Royalty Term for a particular Licensed Product, Pfizer shall have a royalty-free, perpetual, irrevocable, worldwide, non-exclusive license, with the right to sublicense, under the Quark Technology to make, have made, use, sell, offer for sale and import such Biomolecule and such Licensed Product in the countries where the Royalty Term has expired.

5.11         Third Party Royalties.

(a)           [ * ] all payments and other obligations to Third Parties existing as of the date hereof relating to Quark Patent Rights and Quark Technology, including the Atugen License. In the event the Standby License shall become effective, Pfizer shall have the right to [ * ].

(b)           If Pfizer (i) reasonably determines that, in order to avoid infringement of any patent not licensed hereunder, it is necessary for Pfizer to obtain a license from a Third Party, or at Pfizer’s direction, for Quark to obtain a license from a Third Party (with a sublicense or an assignment of such license to Pfizer) in order to develop, make, use, sell, offer for sale or import a Biomolecule or a Licensed Product in a country in the Territory and to pay a royalty or other payment under such license (including in connection with settlement of a patent infringement claim), or (ii) shall be subject to a final court or other binding order or ruling requiring the payment of a royalty or other payment to a Third Party patent holder in respect of any Biomolecule or Licensed Product in a country in the Territory (“Third Party Patent Licenses”), [ * ] of any consideration paid under Third Party Patent Licenses by Pfizer, its Affiliates or Sublicensees shall be fully creditable against royalties and other payments payable to Quark

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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hereunder; provided, however, in no event shall such credit cause the royalties paid to Quark for any particular Pfizer Quarter to be reduced to less than [ * ] of the amount that would otherwise be payable to Quark for such Pfizer Quarter pursuant to Sections 5.7 and 5.8; provided, further, that [ * ]. This Section 5.11(b) shall not apply to any Net Sales in the United States for any period of time during which [ * ]. In the event Quark obtains a license from a Third Party at Pfizer’s direction pursuant to clause (i) above, Pfizer shall reimburse Quark, within [ * ] following receipt of an invoice from Quark, for [ * ] of the royalties and other payments made by Quark under such agreement, or (in the case of royalties) such greater percentage as may be necessary to give effect to the provisos of the first sentence of this Section 5.11(b) (royalty floor provisions) or to the second sentence of this Section 5.11(b) (referring to clause (x) of Section 5.9). [ * ]. In the event Quark obtains a license from a Third Party at Pfizer’s direction pursuant to clause (i) above, (X) Quark shall not amend the terms of such license agreement without Pfizer’s approval and (Y) Pfizer shall provide Quark with the information sufficient to enable it to calculate and pay royalties under its Third Party Patent Licenses, if any, and shall otherwise reasonably cooperate to enable compliance with such agreements.

5.12         Royalty Floor. During the Initial Royalty Term, in no event shall the royalty reduction provisions of Sections 5.9 and 5.11(b) work together in a manner that causes the payments owed under Sections 5.7 and 5.8 with respect to Net Sales of a Licensed Product in any particular Pfizer Quarter to be equal to an amount less than [ * ] of the amount that would be due under Sections 5.7 and 5.8 without the application of any royalty reduction. During the Extended Royalty Term, the royalty rate shall not be reduced below the rate provided for in Section 5.10, except by means of application of Section 5.11(b), and in that case the net royalty payable to Quark shall not be reduced to less than [ * ] of the rate provided for in Section 5.10. In either case, [ * ]. For clarity, any reduction in payments to Quark pursuant to Section 5.11(a) shall not affect this Section 5.12.

5.13         Notices of Termination. In the event that Pfizer has given Quark any notice of termination of this Agreement under Section 13 below, [ * ] payments under Sections 5.1, 5.2 and 5.3 above shall become due during such notice period.

Section 6.              ACCOUNTING AND PROCEDURES FOR PAYMENT.

6.1           Inter-Company Sales. Sales between or among Pfizer, its Affiliates and Sublicensees shall not be subject to royalties under Section 5; royalties shall only be calculated upon Net Sales to a Third Party that is not a Sublicensee. Pfizer shall be responsible for accounting for and paying milestone payments and royalties on Net Sales by its Affiliates and Sublicensees.

6.2           Calculation of Net Sales. All royalty payments shall be computed and paid in United States dollars. For the purposes of determining the amount of any sales milestone payments under Sections 5.4 and 5.5 or royalties due for the relevant Pfizer Quarter, the amount of Net Sales in any foreign currency shall be converted into United States dollars in a manner consistent with Pfizer’s normal practices used to prepare its audited financial reports; provided that such practices use a widely accepted source of published exchange rates.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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6.3           Royalty Payments; Sales Milestone Payments.

(a)           Pfizer shall make royalty payments to Quark with respect to each Pfizer Quarter within [ * ] after the end of each Pfizer Quarter, and each payment shall be accompanied by a report identifying for each Licensed Product, the Net Sales for such Licensed Product for each country, and the computation of the amount payable to Quark. In addition, within [ * ] after the end of each Pfizer Year, Pfizer shall deliver to Quark a report, in the form attached hereto as Schedule 6.3, for each of the United States, Major EU Countries and Japan.

(b)           Pfizer shall make any Ophthalmic Use Sales Milestone Payment and any Non-Ophthalmic Use Sales Milestone Payment payable with respect to any [ * ] consecutive Pfizer Quarters within [ * ] after the end of the [ * ] Pfizer Quarter, and such payment shall be accompanied by a report identifying for each Licensed Product, the Net Sales for such Licensed Product for each country.

(c)           All reports provided under this Section 6.3 shall be kept confidential by Quark and not disclosed to any other party, other than Quark’s accountants which shall be obligated to keep such information confidential, and such information and reports shall only be used for purposes of this Agreement.

6.4           Method of Payments. All payments hereunder shall be made by electronic transfer in immediately available funds via either a bank wire transfer, an ACH (automated clearing house) mechanism, or any other means of electronic funds transfer, at Pfizer’s election, to the bank account set forth in Schedule 6.4, or to such other bank account as Quark shall designate in a notice at least fifteen (15) days before the payment is due. All payments under this Agreement which is not paid on the date due until [ * ] past such date shall bear interest from the date due until paid at a rate equal to the [ * ]. All payments under this Agreement which is not paid on the [ * ] past the date due shall bear interest from the date due until paid at a rate equal to the [ * ]

6.5           Inspection of Records. Pfizer shall, and shall cause its Affiliates and Sublicensees to, keep accurate books and records setting forth gross sales of each Licensed Product, Net Sales of each Licensed Product, and amounts payable hereunder to Quark for each such Licensed Product. Pfizer shall permit Quark, by independent qualified public accountants employed by Quark and reasonably acceptable to Pfizer, to examine such books and records at any reasonable time, upon reasonable notice, but not later than [ * ] following the rendering of any such reports or making of any payments to Quark hereunder. The foregoing right of examination may be exercised only [ * ] during any [ * ] period. In the event any audit shows a shortfall of more than [ * ] in any sales report submitted pursuant to Section 6.3 (the “Shortfall Audit”), Quark shall have the right to examine such books and records [ * ] during any [ * ] period; provided, however, if Quark’s examinations do not show a shortfall of more than [ * ] in any sales report submitted pursuant to Section 6.3 for a period of [ * ] following the Shortfall Audit, then the foregoing right of examination may be exercised only [ * ] during any [ * ] period. Such accountants may be required by Pfizer to enter into a reasonably acceptable confidentiality agreement, and in no event shall such accountants disclose to Quark any information, other than the accuracy of reports and payments made or due hereunder. The opinion of said independent accountants regarding such reports and payments shall be binding on the parties, other than in the case of manifest error. Quark shall bear the cost of any such examination and review; provided that if

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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the examination shows an underpayment of royalties of more than [ * ] of the amount due for the applicable period, then Pfizer shall promptly reimburse Quark for all costs incurred in connection with such examination. Pfizer shall promptly pay to Quark the amount of any underpayment of royalties revealed by such examination, together with interest calculated pursuant to Section 6.4. Any overpayment of royalties by Pfizer revealed by an examination shall be fully creditable against future royalty payments.

6.6           Tax Matters.

(a)           VAT. The parties agree to cooperate with one another and use reasonable efforts to avoid or reduce obligations to pay any value added tax or similar payment (“VAT”) in respect of any royalties, milestone payments and other payments made by Pfizer to Quark under this Agreement.  In the event that any VAT is owing in any jurisdiction in respect of any such payment, then Pfizer shall pay such VAT, then (i) if such VAT is owing as a result of any action by Pfizer, including any assignment or sublicense, or any failure on the part of Pfizer or its Affiliates to comply with applicable Laws or filing or record retention requirements, that has the effect of modifying the tax treatment of the parties hereto, or to the extent such VAT may be recovered by Pfizer or credited to Pfizer, then the payment in respect of which such VAT is owing shall be made without deduction for or on account of such VAT to ensure that Quark receives a sum equal to the sum which it would have received had not such VAT been due or (ii) otherwise, such payment shall be made after deduction of such VAT.  Any increase in payments to Quark under this Section 6.6(a) shall reflect only the incremental increase in VAT directly resulting from clause (i) above. In the event that any VAT is owing in any jurisdiction in respect of any such payment, Quark will provide to Pfizer invoices showing the correct amount of VAT in respect of such payments hereunder.

(b)           The parties agree to cooperate with one another and use reasonable efforts to avoid or reduce tax withholding or similar obligations on the part of Pfizer in respect of any royalties, milestone payments and other payments made by Pfizer to Quark under this Agreement.  If Pfizer is required to make a payment to Quark subject to a deduction of tax or withholding tax, (i) if such withholding or deduction obligation arises as a result of any action by Pfizer, including any assignment or sublicense, or any failure on the part of Pfizer to comply with applicable Laws or filing or record retention requirements, that has the effect of modifying the tax treatment of the parties hereto (a “Pfizer Withholding Tax Action”), then the sum payable by Pfizer (in respect of which such deduction or withholding is required to be made) shall be increased to the extent necessary to ensure that Quark receives a sum equal to the sum which it would have received had no such Pfizer Withholding Tax Action occurred, (ii) otherwise, the sum payable by Pfizer (in respect of which such deduction or withholding is required to be made) shall be made to Quark after deduction of the amount required to be so deducted or withheld, which deducted or withheld amount shall be remitted in accordance with applicable Law.  Any increase in the payments to Quark under this Section 6.6(b) shall reflect only the incremental increase in withholding tax directly resulting from Pfizer’s Withholding Tax Action.

(c)           Tax Cooperation.  To the extent Pfizer is required to deduct and withhold taxes on any payments to Quark, Pfizer shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to Quark an official tax

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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certificate or other evidence of such withholding sufficient to enable Quark to claim such payments of taxes.  Quark shall provide to Pfizer any tax forms that may be reasonably necessary in order for Pfizer to not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty.  Quark shall use reasonable efforts to provide any such tax forms to Pfizer at least thirty (30) days prior to the due date for any payments for which Quark desires that Pfizer apply a reduced withholding rate.  Each party shall provide the other with reasonable assistance to enable the recovery, as permitted by Law, of withholding taxes, VAT, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the party bearing such withholding tax or VAT.

Section 7.              PATENTS AND INFRINGEMENT.

7.1           Third Party License Agreements. The Parties acknowledge that to the extent Quark Patent Rights are held by Quark under license from Third Parties, Quark will allow Pfizer to exercise the rights set forth in this Section 7 which are granted to Pfizer to the extent the same rights have been granted to Quark under such Third Party license agreement(s).

7.2           Title to Inventions.

(a)           Each party shall own and retain the entire right, title and interest in and to all inventions made solely by such party’s and/or any of its Affiliates’ employee(s) or agent(s) and all intellectual property rights in such inventions (“Sole Inventions”). During the Term, each party shall own an undivided one-half interest in and to any inventions that are made jointly by each of the parties’ and/or their Affiliates’ employees or agents, and in all intellectual property rights in such jointly-made inventions (“Joint Inventions”). Inventorship of inventions (including whether such inventorship is sole or joint) will be determined by the applicable Laws of the United States. If there is a dispute between the parties as to which party shall own any particular invention, the parties shall engage a qualified independent Third Party patent attorney jointly selected by the parties as an expert to resolve such dispute.

(b)           Subject to the licenses of Section 3.1, each party shall retain the unrestricted right to use Joint Inventions and to grant licenses thereto, without the consent of or a duty of accounting to the other party.

7.3           Prosecution of Quark Patent Rights (Sole Inventions).

(a)           With respect to Quark Patent Rights that are owned solely by Quark, Quark and Pfizer shall cooperate in connection with the continued prosecution and maintenance by Quark of such Quark Patent Rights; provided, however, that if there are any Quark Patent Rights that [ * ]. The out-of-pocket costs and expenses incurred to obtain, prosecute and maintain Quark Patent Rights that are solely owned by Quark shall be:  (a) [ * ], and (b) [ * ]. Quark shall notify Pfizer at least [ * ] prior to the deadline for entering into national phase with respect to any PCT application included in Quark Patent Rights. No later than [ * ] prior to entry into national phase, Pfizer shall provide Quark with a list of countries not identified on the Quark Patent Filing Schedule and the patent applications for each such country that Pfizer would like Quark to file. Quark shall file international patent applications, or designate for national filing and file, in all such countries the patent applications requested by Pfizer. Pfizer shall have access

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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to all documentation, filings and communications to or from the respective patent offices, at reasonable times and upon reasonable notice. Quark shall keep Pfizer informed of the status of all pending patent applications that pertain to any Biomolecule or any Licensed Product. Quark, its agents and attorneys shall give due consideration to all suggestions and comments of Pfizer regarding any aspect of such patent prosecutions.

(b)           Quark shall not abandon any Quark Patent Rights without at least [ * ] prior notice to Pfizer. If Quark decides to abandon any Quark Patent Rights (the “Abandoned Patents”), Pfizer shall have the option to [ * ] such patents and patent applications, [ * ] and to continue the prosecution and maintenance of such patents and patent applications [ * ]. Quark Patent Rights shall not include any Abandoned Patents, and if Pfizer elects to continue the prosecution and maintenance of the Abandoned Patents, Quark shall [ * ]. In such event, [ * ].

7.4           Prosecution of Joint Patents. The JDC shall determine which party shall be responsible for obtaining, prosecuting and/or maintaining patents and patent applications, in appropriate countries in the Territory, covering Joint Inventions owned by Quark and Pfizer (“Joint Patents”). The out-of-pocket costs and expenses incurred to obtain, prosecute and maintain Joint Patents shall be:  (a) [ * ], and (b) [ * ]. Either party may decline to bear its share of the costs and expenses to file, prosecute and/or maintain any particular Joint Patent in one or more countries. In that case, the other party may undertake the responsibility for filing, prosecuting and/or maintaining such Joint Patent at its own expense, and if it does so, the declining party shall assign to the other party all its right, title and interest to any such Joint Patent(s), and upon such assignment such Joint Patent(s) shall become solely Pfizer Patent Rights or Quark Patent Rights, as the case may be.

7.5           Patents Covering Biomolecules and Licensed Products. Whenever permitted by applicable Laws, the patent applications that cover Biomolecules or Licensed Products shall be split from patent applications that cover other molecules or products in all countries in the Territory where such patent applications have been filed. The parties shall attempt to cover Biomolecules and Licensed Products in patent applications with claims that are as broad as possible, taking into account the desire not to cover, generally or specifically, other molecules or products to the extent such other molecules or products can be covered by separate patent applications. Divisionals or other patent applications that have been filed to cover molecules or products other than Biomolecules and Licensed Products (“separate patent filings”) shall be excluded from the definition of Pfizer Patent Rights or Quark Patent Rights, as the case may be, even though they may claim priority dates based on, or otherwise derive from, patent filings that included or related to Biomolecules and Licensed Products, and each Party shall have the right to prosecute and enforce such separate patent filings in its own name, in its sole discretion, for its sole benefit and at its sole expense. Quark shall keep Pfizer informed of the status regarding the split of patent applications contemplated in this Section, including providing access to all related documentation, filings and communications. Quark, its agents and attorneys shall give due consideration to all suggestions and comments of Pfizer regarding any aspect of such patent prosecutions. If any separate patent filings are Joint Patents, they shall be subject to Section 7.4.

7.6           Notices and Encumbrances. Quark agrees that it will execute and file those notices and other filings as Pfizer shall request be made, from time to time with the United States Patent and Trademark Office (or any successor agency) or any analogous patent office in the Territory with respect to the rights granted under this Agreement.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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7.7           Patent Term Extensions.

(a)           Subject to Section 7.7(b), Pfizer shall have the exclusive right and obligation to seek patent term extensions or supplemental patent protection, including supplementary protection certificates, in any country in the Territory in relation to the Quark Patent Rights in Quark’s name, but at Pfizer’s expense. Quark and Pfizer shall cooperate in connection with all such activities, and Pfizer, its agents and attorneys will give due consideration to all timely suggestions and comments of Quark regarding any such activities; provided, all final decisions shall be made by Pfizer.

(b)           At least [ * ] after the first Regulatory Approval or patent grant, whichever is the later applicable reference point for patent term extensions, Pfizer shall notify Quark of its intention to seek a patent term extension or supplemental patent protection with respect to any patent within Quark Patent Rights. If the patents within Quark Patent Rights do not cover any then-marketed products other than Licensed Product, the decision of Pfizer shall be final. However, if any patent within Quark Patent Rights also covers then-marketed products other than Licensed Products, Pfizer does not intend to seek extended protection for such patent, and Quark desires to seek a patent term extension or supplemental protection with respect to such patent, then Quark may, upon notice to Pfizer, assume responsibility for seeking a patent term extension or supplemental patent protection. If the original Pfizer notice under this Section 7.7(b) indicated an intention to pursue a patent term extension or supplemental patent protection, Pfizer shall thereafter pursue such extended protection diligently and in good faith.

7.8           Interpretation of Patent Judgments. If any claim relating to a patent under the Quark Patent Rights becomes the subject of a judgment, decree or decision of a court, tribunal, or other authority of competent jurisdiction in any country, which judgment, decree, or decision is or becomes final (there being no further right of review) and adjudicates the validity, enforceability, scope, or infringement of the same, the construction of such claim in such judgment, decree or decision shall be followed thereafter in such country in determining whether a product is a Licensed Product hereunder, not only as to such claim but also as to all other claims in such country to which such construction reasonably applies. If at any time there are two or more conflicting final judgments, decrees, or decisions with respect to the same claim, the decision of the higher tribunal shall thereafter control, but if the tribunal be of equal rank, then the final judgment, decree, or decision more favorable to such claim shall control unless and until the majority of such tribunals of equal rank adopt or follow a less favorable final judgment, decree, or decision, in which event the latter shall control.

7.9           Infringement of Quark Patent Rights by a Third Party.

(a)           Each of the parties will promptly notify the other in the event of any actual, potential or suspected infringement of a patent under the Quark Patent Rights by any Third Party (an “Infringement Claim”). Pfizer shall have the right, but not the obligation, to institute litigation in connection with an Infringement Claim, and any such litigation shall be at Pfizer’s

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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expense; provided that Quark shall be entitled to receive [ * ] of any damages, settlements, accounts of profits, or other financial compensation recovered by Pfizer from a Third Party based upon any such Infringement Claim after deducting Pfizer’s out-of-pocket expenses (including counsel fees and expenses) incurred in pursuing such Infringement Claim. Any suit by Pfizer shall be either in the name of Quark or its Affiliate, the name of Pfizer or its Affiliate, or jointly by Pfizer, Quark or their respective Affiliates, as may be required by the Law of the forum, provided, however, that if such suit is filed in the name of Quark or an Affiliate (either solely or jointly), [ * ]. For this purpose, Quark shall execute such legal papers and cooperate in the prosecution of such suit as may be reasonably requested by Pfizer.

(b)           If Pfizer elects not to assume control over enforcing any Infringement Claim, Quark may, but shall not be required to, assume sole control over enforcing such Infringement Claim using counsel of its choice.  Any suit by Quark shall be either in the name of Quark or its Affiliate, the name of Pfizer or its Affiliate, or jointly by Pfizer, Quark or their respective Affiliates, as may be required by the Law of the forum, provided, however, that if such suit is filed in the name of Pfizer or an Affiliate (either solely or jointly), [ * ].  For this purpose, Pfizer shall execute such legal papers and cooperate in the prosecution of such suit as may be reasonably requested by Quark. In the event Quark assumes control over enforcing any Infringement Claim, Pfizer shall be entitled to receive [ * ] of any damages, settlements, accounts of profits, or other financial compensation recovered from a Third Party based upon any such Infringement Claim after deducting Quark’s out-of-pocket expenses (including counsel fees and expenses) incurred in pursuing such Infringement Claim, and Quark may retain the balance.

7.10         Paragraph IV Notices. If any party receives a notice under 21 U.S.C. §355(b)(2)(A)(iv) or 355(j)(2)(A)(vii)(IV), or any notice under any future analogous provisions of United States Law relating to regulation or approval of biological products, concerning a Quark Patent Right, as it relates to a Licensed Product (a “Paragraph IV Claim”), then it shall provide a copy of such notice to the other parties within [ * ] after its receipt thereof. Pfizer shall have the right, but not the obligation, to initiate patent infringement litigation for such Paragraph IV Claim, at its own expense. If Pfizer elects not to assume control over enforcing any Paragraph IV Claim, Pfizer shall notify Quark as soon as practicable but in any event not later than [ * ] before the first action required to enforce or preserve such Paragraph IV Claim so that Quark may, but shall not be required to, assume sole control over enforcing such Paragraph IV Claim using counsel of its own choice. The parties shall cooperate in the prosecution of any Paragraph IV Claim, and share any compensation recovered as a result of such prosecution, as set forth in Section 7.9 above.

7.11         Other Actions by a Third Party. Each of the parties shall promptly notify the other in the event of any legal or administrative action by any Third Party against a Joint Patent or Quark Patent Right of which it becomes aware, including any nullity, revocation, reexamination or compulsory license proceeding. Pfizer shall have the first right, but not the obligation, to defend against any such action involving a Quark Patent Right or a Joint Patent, in its own name, and the costs of any such defense shall be at Pfizer’s expense. Quark, upon request of Pfizer, agrees to join in any such action and to cooperate reasonably with Pfizer. If Pfizer fails to defend against any such action involving such Quark Patent Right or Joint Patent, then Quark shall have the right, but not the obligation, to defend such action, in its own name, and any such defense shall be at Quark’s expense. Pfizer, upon request of Quark, shall cooperate reasonably with Quark in any such action.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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7.12         Compensation to Inventors. As between Quark and Pfizer only, Quark shall be responsible for any compensation and any other payments due to the inventors of any Quark Patent Rights, including any Quark Patent Rights licensed to Quark by a Third Party, and Pfizer shall be responsible for any compensation and any other payments due to the inventors of any Pfizer Patent Rights, including any Pfizer Patent Rights licensed to Pfizer by a Third Party. In the case of Joint Patents, each Party shall be responsible for any compensation and any other payments due to its respective inventors.

Section 8.              CONFIDENTIALITY; PUBLICATION.

8.1           Confidentiality.

(a)           Quark agrees that, during the Term and for [ * ] thereafter, it will keep confidential, and will cause its Affiliates to keep confidential, all Quark Confidential Information and Pfizer Confidential Information that is disclosed pursuant to this Agreement. Quark agrees to take such action, and to cause its Affiliates to take such action, to preserve the confidentiality of Quark Confidential Information and Pfizer Confidential Information, respectively, as it would customarily take to preserve the confidentiality of its own similar types of confidential information. Quark represents that all of its employees and any of its consultants, scientific collaborators, or sub-contractors who shall have access to Pfizer Confidential Information or Quark Confidential Information are, or will be, bound by an agreement to maintain such information in confidence. Quark shall, and shall cause its Affiliates, (i) to use Pfizer Confidential Information only as expressly permitted in this Agreement and (ii) not disclose Quark Confidential Information or Pfizer Confidential Information to any Third Parties under any circumstance without the prior consent of Pfizer, except as expressly permitted in this Agreement.

(b)           Notwithstanding Section 8.1(a), (i) Quark shall be permitted to use Quark Confidential Information for any purpose other than those purposes exclusively licensed to Pfizer pursuant to Section 3.1, and (ii) except as provided in the final sentence of this Section 8.1(b), may disclose Quark Confidential Information to actual and prospective contractors, licensees, advisors, investigators or investors, as well as potential acquirors, that have signed confidentiality agreements containing, or are otherwise bound by, confidentiality obligations as restrictive as those contained herein, or as necessary or desirable to obtain patents, enforce its rights, or to communicate with Governmental Authorities. Quark shall not disclose Quark Confidential Information which is related solely to Biomolecules or Licensed Products except as necessary or reasonable to carry out the purposes of this Agreement or to obtain patents, enforce its rights, or to communicate with Governmental Agencies.

(c)           Pfizer agrees that, during the Term and for [ * ] thereafter, it will keep confidential, and will cause its Affiliates to keep confidential, all Quark Confidential Information that is disclosed pursuant to this Agreement. Pfizer agrees to take such action, and to cause its Affiliates to take such action, to preserve the confidentiality of Quark Confidential Information

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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as it would customarily take to preserve the confidentiality of its own similar types of confidential information. Pfizer represents that all of its employees and any of its consultants or sub-contractors who shall have access to Quark Confidential Information are, or will be, bound by an agreement to maintain such information in confidence. Pfizer shall, and shall cause its Affiliates, (i) to use Quark Confidential Information only as expressly permitted in this Agreement and (ii) not disclose Quark Confidential Information to any Third Parties under any circumstance without the prior consent of Quark, except as expressly permitted in this Agreement.

(d)           For clarity, Pfizer may disclose Quark Confidential Information (i) to Governmental Authorities (a) to the extent desirable to obtain or maintain INDs or Regulatory Approvals for any Biomolecule or Licensed Product within the Territory and (b) in order to respond to inquiries, requests or investigations by Governmental Authorities; (ii) to outside consultants, scientific advisory boards, managed care organizations, non-clinical and clinical investigators, and to the extent desirable to patent, trademark, develop, register or market any Biomolecule or Licensed Product; provided that Pfizer shall obtain the same confidentiality obligations from such Third Parties as it obtains with respect to its own similar types of confidential information; and (iii) to the extent necessary in order to enforce its rights under this Agreement. Notwithstanding anything to the contrary in this Section 8.1, Quark may disclose Pfizer Confidential Information to Governmental Authorities in order to respond to inquiries, requests or investigations.

(e)           Subject to Sections 3.2, 5.10 and 13.3 which grant Pfizer and/or Quark continuing rights of use of Quark Confidential Information and Pfizer Confidential Information, as the case may be, after the termination of this Agreement pursuant to Section 13, Pfizer and Quark each agree, upon the other’s request, to return or destroy all Quark Confidential Information or Pfizer Confidential Information, as the case may be, disclosed to it pursuant to this Agreement, including all copies and extracts of documents, as promptly as practicable following its receipt of such request, except that one (1) copy may be kept for the purpose of complying with continuing obligations under this Agreement.

8.2           Publications and Presentations. Quark shall not, and (subject to existing commitments set forth in Schedule 8.2) shall cause its Affiliates and its Affiliates’ employees, consultants, contractors, licensees and agents not to, publish or publicly present any results of any preclinical or clinical studies with respect to any Biomolecule or Licensed Product without Pfizer’s prior consent [ * ], except as may be required by applicable Law or legal proceedings. Pfizer recognizes that Quark has an interest in the publication of preclinical studies (particularly the results of proof of concept and efficacy experiments) related to Biomolecules conducted by itself and its collaborators, and agrees that the [ * ]. Subject to the foregoing, Quark shall provide to Pfizer the opportunity to review any proposed abstracts, manuscripts or summaries of presentations that cover any Biomolecule or Licensed Product at least [ * ] prior to Quark’s submission of such proposed abstract, manuscript or summary for publication or presentation. Pfizer shall designate a person who shall be responsible for reviewing and approving such publications or presentations. Such designated person shall respond promptly and in no event later than [ * ] after receipt of the proposed material. With respect to any proposed abstracts, manuscripts or summaries for publication or presentation by investigators or other Third Parties,

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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such materials shall be subject to review under the principles of this Section 8.2 to the extent reasonably practicable. Nothing in this Section 8 shall be construed to limit the right of Pfizer’s or Quark’s clinical investigators to publish the results of their own studies.

8.3           Publicity. The public announcement of the execution of this Agreement is set forth in Schedule 8.3 attached hereto and may be promptly disseminated following the execution of this Agreement by any party. Except as set forth in Sections 8.1(b), 8.1(d) and 8.2, no party may make a public statement or disclosure (written or oral), including in analyst meetings, concerning the terms of this Agreement, except where such statement: (a) is required by applicable Law or legal proceedings, or (b) in the case of any public statement or disclosure pursuant to clause (a) above, the party required to make such statement or disclosure shall (i) use reasonable efforts to include in such statement or disclosure only the information that, after consultation with counsel, such party believes is required by applicable Law to be disclosed and (ii) provide the other party with a copy of such statement sufficiently in advance of dissemination so that the other party will have the opportunity to comment upon the statement, and shall give due consideration to any comments of the other party in the final statement.

8.4           Filing, Registration or Notification of the Agreement. If a party determines that it is required by applicable Law to publicly file, register or notify this Agreement with a Governmental Authority, including public filings pursuant to securities laws, it shall provide the proposed redacted form of the Agreement to the other party with a reasonable amount of time for the other party to review such draft and agree upon such redacted form of the Agreement. The party making such filing, registration or notification shall request, and use commercially reasonable efforts to obtain, confidential treatment of all terms redacted from this Agreement for a term of at least five (5) years. Each party shall be responsible for its own legal and other external costs in connection with any such filing, registration or notification.

Section 9.              REPRESENTATIONS AND WARRANTIES.

9.1           Quark Representations and Warranties. As of the date hereof and as of the Effective Date, Quark hereby represents and warrants to Pfizer as follows:

(a)           Exhibit B contains a complete and correct list of all patents and patent applications in the Territory owned, Controlled by or licensed to Quark (and pursuant to Section 1.45, indicating which (x) are owned and (y) which are licensed) relating to the research, development, manufacture, use, sale, offer for sale or importation of Biomolecules or Licensed Products. To Quark’s knowledge, the research, development, manufacture, use, sale, offer for sale or importation by Pfizer of the Biomolecules, including in finished dosage form, does not and will not infringe any claim in any issued patent of any Third Party, or, if and when issued, claims within published patent applications of any Third Party, except as heretofore disclosed to Pfizer. Quark has furnished to Pfizer all material information in its possession relating to (i) infringement, if any, of Quark Patent Rights or (ii) claims within patents or published patent applications of Third Parties covering the composition of matter or use of Biomolecules. To the knowledge of Quark, no claim or litigation has been brought or is threatened by any person or entity alleging that (i) any of the Quark Patent Rights in the Territory is invalid or unenforceable, or (ii) practice of any of the Quark Technology in the Territory infringes or otherwise conflicts or interferes with any intellectual property or proprietary right of any Third Party (including by way

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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of example through the institution or written threat of institution of interference, nullity, revocation or similar invalidity proceedings before the United States Patent and Trademark Office or any equivalent foreign entity). Quark has complied with applicable Laws, including any disclosure requirements, in connection with the filing, prosecution and maintenance of Quark Patent Rights in the Territory.

(b)           Except as listed on Exhibit B for patents and patent applications subject to the licenses granted to Quark pursuant to the Atugen License, Quark is the sole legal and beneficial owner of the Quark Patent Rights, free of any lien, encumbrance, charge, security interest, mortgage or other similar restriction. No Third Party has any right, interest or claims in or to, and neither Quark nor its Affiliate has not entered into any agreement granting any right, interest, license or claim in or to, the Quark Patent Rights or Quark Technology insofar as such rights pertain to Biomolecules or Licensed Products. All assignments to Quark of inventorship rights relating to the Quark Patent Rights owned by Quark are valid and enforceable.

(c)           Except for the Atugen License, there are no agreements to which Quark is a party pursuant to which Quark has a license, an option to obtain a license, or holds an immunity from suit, with respect to patents which are pending, applied for, granted or registered and reasonably could be asserted by any Third Party to be infringed by the research, development, manufacture, use, sale, offer for sale or importation of the Biomolecules. The Atugen License (i) constitutes a valid and legally binding obligation of each of the parties thereto, enforceable in accordance with its terms and is in full force and effect, (ii) will continue to be in full force and effect on identical terms immediately following the execution and performance of this Agreement, except as modified by the Amendment and Option of even date herewith by and among Atugen AG, Pfizer and Quark, and (iii) represents the complete agreement and understanding between Quark and Atugen AG relating to the patent rights that are the subject of the Atugen License. Quark has performed all of its obligations under the Atugen License and Quark is not (with or without the lapse of time or the giving of notice, or both) in breach or default under the Atugen License, and, to the knowledge of Quark, Atugen AG is not (with or without the lapse of time or the giving of notice, or both) in breach or default thereunder. Quark has not received and is not aware of any notice or claim against it with respect to any breach or default under the Atugen License. Complete and correct copies of the Atugen License (including all amendments, supplements and waivers thereto) have heretofore been delivered to Pfizer.

(d)           Quark has heretofore disclosed to Pfizer all material scientific and technical information known to it or its Affiliates with respect to the Biomolecules and the Licensed Products.

(e)           All agreements between Quark and Third Parties regarding the supply and manufacture of the Biomolecules (including intermediate molecules) and the Licensed Products (including all amendments, supplements and waivers thereto) have heretofore been delivered to Pfizer.

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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(f)            Quark has heretofore disclosed to Pfizer all material correspondence and contact information between Quark and the FDA and any other Governmental Authorities regarding the Biomolecules or the Licensed Products.

(g)           Quark has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement by Quark have been duly and validly authorized and approved by proper corporate actions on the part of Quark, and Quark has taken all other action required by applicable Law, its certificate of incorporation, by-laws or other organizational documents or any agreement to which it is a party or to which it may be subject required to authorize such execution, delivery and performance (other than compliance with all applicable requirements of the HSR Act and other Laws implicated by the performance by Quark and its Affiliates of their obligations hereunder at the time of such performance). Assuming due authorization, execution and delivery on the part of Pfizer, this Agreement constitutes a legal, valid and binding obligation of Quark, enforceable against Quark in accordance with its terms.

(h)           The execution and delivery of this Agreement by Quark and the performance by Quark contemplated hereunder does not and will not violate any applicable Laws or any order of any Governmental Authority (assuming compliance with all applicable requirements of the HSR Act and other Laws implicated by the performance by Quark and its Affiliates of their obligations hereunder at the time of such performance), and will not conflict with or constitute a material default under any contractual obligation of Quark or its Affiliates.

(i)            Neither the execution and delivery of this Agreement nor the performance hereof by Quark requires Quark or any of its Affiliates to obtain any permits, authorizations or consents from any Governmental Authority (assuming compliance with all applicable requirements of the HSR Act and other Laws implicated by the performance by Quark and its Affiliates of their obligations hereunder at the time of such performance) or from any other person, firm or corporation and such execution, delivery and performance will not result in the breach of or give rise to any termination of, rescission, renegotiation or acceleration under or trigger any other rights under  any agreement or contract to which Quark or any of its Affiliates may be a party.

(j)            There is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in Law or in equity, pending or relating to or, to the knowledge of Quark, threatened against Quark or any of its Affiliates, in each case in connection with the Quark Patent Rights, the Quark Technology, the Biomolecules or Licensed Products or relating to the transactions contemplated by this Agreement.

9.2           Pfizer Representations and Warranties. As of the date hereof and as of the Effective Date, Pfizer hereby represents and warrants to Quark as follows:

(a)           Pfizer has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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performance of this Agreement by Pfizer have been duly and validly authorized and approved by proper corporate action on the part of Pfizer, and Pfizer has taken all other actions required by applicable Law, its certificate of incorporation or by-laws or any agreement to which it is a party or to which it may be subject required to authorize such execution, delivery and performance (other than compliance with all applicable requirements of the HSR Act and other Laws implicated by the performance by Pfizer and its Affiliates of their obligations hereunder at the time of such performance). Assuming due authorization, execution and delivery on the part of Quark, this Agreement constitutes a legal, valid and binding obligation of Pfizer, enforceable against Pfizer in accordance with its terms.

(b)           The execution and delivery of this Agreement and the performance by Pfizer contemplated hereunder does not and will not violate any applicable Laws or any order of any Governmental Authority (assuming compliance with all applicable requirements of the HSR Act and other Laws implicated by the performance by Pfizer and its Affiliates of their obligations hereunder at the time of such performance) and will not conflict with or constitute a material default under any contractual obligation of Pfizer or its Affiliates.

(c)           Neither the execution and delivery of this Agreement nor the performance hereof by Pfizer requires Pfizer or any of its Affiliates to obtain any permits, authorizations or consents from any Governmental Authority (subject to obtaining all necessary Regulatory Approvals with respect to the manufacture, use or sale of Biomolecules and Licensed Products and assuming compliance with all applicable requirements of the HSR Act and other Laws implicated by the performance by Pfizer and its Affiliates of their obligations hereunder at the time of such performance) or from any other person, firm or corporation and such execution, delivery and performance will not result in the breach of or give rise to any termination of, rescission, renegotiation or acceleration under or trigger any other rights under any agreement or contract to which Pfizer or any of its Affiliates may be a party.

(d)           There is no action, claim, demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal, regulatory or otherwise, in Law or in equity, pending or relating to or, to the knowledge of Pfizer, threatened against Pfizer or any of its Affiliates in each case in connection with the Pfizer Patent Rights, the Pfizer Technology, the Biomolecules or Licensed Products or relating to the transactions contemplated by this Agreement.

9.3           Disclaimer of Warranty. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NO PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO BIOMOLECULES, LICENSED PRODUCTS, QUARK PATENT RIGHTS, QUARK TECHNOLOGY, PFIZER PATENT RIGHTS OR PFIZER TECHNOLOGY. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 9, PARTIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE.

Section 10.            COVENANTS.

10.1         Quark Covenants. Quark hereby covenants and agrees with Pfizer that:

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

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(a)           Quark shall maintain in effect the Atugen License and shall not take any actions (or omit to take any actions) that would result in a breach of the Atugen License or any termination thereof prior to the applicable stated term of the Atugen License. Quark agrees that it shall not amend, modify or supplement the Atugen License or waive any terms or conditions thereunder that would have an adverse effect on Pfizer’s rights hereunder, without the prior consent of Pfizer. In addition, except as permitted by Section 16.6, Quark shall not sell, assign, convey, pledge, hypothecate or otherwise transfer the Atugen License or Quark’s rights or obligations thereunder, or otherwise make any commitment in a manner that conflicts with Pfizer’s rights hereunder without the prior consent of Pfizer. Quark shall immediately notify Pfizer upon receipt by Quark of any notice from Atugen AG of any actual or alleged default or breach or of its intent to terminate the Atugen License, exercise of its rights or remedies thereunder, or otherwise take any action that may adversely affect Pfizer’s rights under this Agreement.

(b)           Subject to Section 16.6, during the Term, Quark shall not sell or assign to any person (i) any Quark Patent Rights that are registered in the name of or owned or Controlled by Quark, or (ii) any Quark Technology which is material to the activities of Quark or Pfizer under this Agreement; provided, however, Quark and any Affiliate of Quark may sell or assign Quark Patent Rights and/or Quark Technology to any wholly-owned direct or indirect subsidiary of Quark that (x) is and continues to be at all times incorporated and domiciled (including with respect to principal headquarters) in any state of the United States and (y) prior to any such sale or assignment to such person described in clause (x), has acknowledged and confirmed in writing to Pfizer, all in a manner reasonably acceptable to Pfizer, that, effective as of such sale or assignment, such transferee shall be bound by this Agreement as if it were a party to it and to the identical extent applicable to the transferor with respect to Quark Patent Rights and/or Quark Technology. In addition, except as permitted by Section 16.6, during the Term, Quark shall not incur or permit to exist (and shall cause each Affiliate not to incur or permit to exist) any indebtedness for which any Quark Patent Rights and/or Quark Technology (A) constitutes collateral for such indebtedness, or (B) is subject to any lien, encumbrance, charge, security interest, mortgage, liability, or other restriction with respect to such indebtedness. Nothing in this Section 10.1 shall restrict Quark from granting licenses to Third Parties under the Quark Patent Rights or Quark Technology outside the scope of the exclusive licenses to Pfizer contained in this Agreement.

(c)           Quark shall conduct, and shall use reasonable efforts to cause its contractors and consultants to conduct, all its activities contemplated under this Agreement in accordance with (i) all applicable Laws of the country in which such activities are conducted, and (ii) known or published standards of the applicable Governmental Authority of such country.

10.2         Pfizer Covenants. Pfizer hereby covenants and agrees with Quark that Pfizer shall conduct, and shall use reasonable efforts to cause its contractors and consultants to conduct, all its activities contemplated under this Agreement in accordance with (i) all applicable Laws of the country in which such activities are conducted, and (ii) known or published standards of the applicable Governmental Authority of such country. Pfizer further covenants and agrees that it will conduct its activities pursuant to this Agreement in a manner that complies with the terms and conditions of the Atugen Agreement applicable to Sublicensees thereunder, and shall not take (or fail to take) any action that would cause Quark to be in breach of such agreement.

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Section 11.            CHANGE OF CONTROL.

11.1         In the event Quark becomes aware of any Change of Control, Quark shall notify Pfizer promptly, but in no event later than [ * ], following any transaction that constitutes a Change of Control and Pfizer shall have the right upon [ * ] notice following any Change of Control to elect that any one or more of the following shall be deleted, in whole or in part, from this Agreement:  [ * ]. In the event that Pfizer makes any election as provided in this Section 11 to delete any Section (in whole or in part), neither party shall have any further obligations with respect to such deleted Sections or parts thereof. For clarity, Pfizer shall be entitled, in its sole discretion, to make the elections provided for in this Section 11 upon each occurrence of Change of Control.

Section 12.            TERM.

12.1         Unless terminated earlier pursuant to Section 13, the term of this Agreement (the “Term”) shall be the period commencing on the Effective Date of this Agreement and ending (i) with respect to a particular country in the Territory, upon the expiration of the Royalty Term applicable to such country and (ii) with respect to this Agreement, the expiration of the last Royalty Term to expire.

12.2         Prior to the Effective Date, Quark and Pfizer shall not have any rights or obligations hereunder. Notwithstanding anything to the contrary in Section 12, effective as of the date of this Agreement, each of Pfizer and Quark covenant and agree that (a) [ * ], and (b) Quark or its Affiliates will not negotiate, engage in or otherwise enter into any transaction involving (i) the sale or grant of any rights or licenses to the Quark Patent Rights or the Quark Technology that will conflict with the rights and licenses granted to Pfizer hereunder or (ii) any joint venture, co-promotion or similar relationship involving the Quark Patent Rights or the Quark Technology that will conflict with the rights and licenses granted to Pfizer hereunder. The obligations set forth in this Section 12.2 shall terminate [ * ] after the date of this Agreement if the Effective Date has not occurred on or before such date.

Section 13.            TERMINATION.

13.1         Termination Rights. This Agreement may be terminated as follows:

(a)           If either Pfizer or Quark materially breaches or materially defaults in the performance or observance of any of the provisions of this Agreement, such breach or default has a material adverse effect on the benefits reasonably anticipated by the non-breaching party, and such breach or default is not cured within [ * ] after the giving of notice by the other party specifying such breach or default, then the other party shall have the right to terminate this Agreement forthwith, such termination to be effective upon the expiration of such [ * ] notice period. For the purpose of this Section 13.1(a), a material breach or material default in the performance of any of the provisions of this Agreement shall include a material inaccuracy in any warranty or representation contained herein.

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(b)           At any time upon [ * ] notice to Quark, Pfizer shall have the right, at Pfizer’s sole discretion, to terminate this Agreement, such termination to be effective upon expiration of such [ * ] notice period. During such [ * ] period, Pfizer and Quark shall endeavor in all reasonable respects to effect a smooth transition to Quark (to the extent requested by Quark) of the activities being conducted by Pfizer under this Agreement.

13.2         Accrued Obligations. Expiration or termination of this Agreement for any reason (i) shall be without prejudice to Quark’s right to receive all payments accrued under this Agreement prior to the effective date of such termination and to any other remedies which a party may otherwise have and (ii) shall not release a party hereto from any indebtedness, liability or other obligation incurred hereunder by such party prior to the effective date of termination or expiration.

13.3         Effect of Termination. Upon any termination of this Agreement pursuant to Section 13.1, all licenses and rights granted herein to Pfizer shall terminate, [ * ]. In addition, unless Pfizer terminates this Agreement under Section 13.1(a), Pfizer shall, promptly after such termination:

(a)           Regulatory Matters. Transfer to Quark ownership of all regulatory filings and Regulatory Approvals relating to the Biomolecules or the Licensed Products, including related correspondence with Regulatory Authorities, and provide copies thereof;

(b)           Pre-clinical and Clinical Matters. Transfer to Quark all pre-clinical and clinical data in Pfizer’s possession or control relating to Biomolecules or Licensed Products;

(c)           Manufacturing Matters. At Quark’s option, to be exercised no later than [ * ] after the effective date of termination,

(i)            use reasonable efforts to [ * ],

(ii)           not object if Quark desires to contract directly with any Third Party supplier of Biomolecules or Licensed Products whose agreements are not assigned pursuant to paragraph (i) above for the supply of such Biomolecules and Licensed Products,

(iii)          cooperate with Quark in reasonable respects to transfer manufacturing documents and materials which are used by Pfizer in the manufacture of Applicable Biomolecules or Applicable Licensed Products to the extent such manufacturing documents and materials are not obtained by Quark pursuant to the assignment of agreements pursuant to paragraph (i) above,

(iv)          for a period of up to [ * ] following the effective date of termination, cooperate with Quark, at Quark’s request, in reasonable respects to transfer manufacturing know how which are used by Pfizer in the manufacture of Applicable Biomolecules or Applicable Licensed Products, provided Quark shall

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reimburse Pfizer for Pfizer’s reasonable internal and out-of-pocket expenses incurred to provide such requested assistance, to the extent such manufacturing know how is not obtained by Quark pursuant to the assignment of agreements pursuant to paragraph (i) above, and

(v)           sell Pfizer’s then existing inventory of Biomolecules and Licensed Products to Quark, at [ * ], but only if the following conditions have been met:  (A) such Biomolecules and Licensed Products meets the applicable release specifications; and (B) Pfizer does not believe the continued use of such Biomolecules and Licensed Products reasonably causes safety concerns;

(d)           License Grant. At Quark’s option, to be exercised no later than [ * ] after the effective date of termination,

(i)            Subject to Section 13.3(d)(iii) below, grant an exclusive, fully paid-up, irrevocable, perpetual license, with the right to sublicense and enforce, under the Pfizer Technology solely to develop, make, have made, use, sell, offer for sale and import the Applicable Biomolecule and the Applicable Licensed Products in the Territory; provided, that, [ * ], and [ * ]; provided, further, Quark shall execute such documentation reasonably satisfactory to Pfizer to effectuate such agreement;

(ii)           Subject to Section 13.3(d)(iii) below, grant an exclusive, royalty-bearing license, with the right to sublicense and enforce, under the Pfizer Patent Rights solely to develop, make, have made, use, sell, offer for sale and import the Applicable Biomolecule and the Applicable Licensed Product in the Territory. In consideration of such license, Quark shall pay to Pfizer [ * ], and (B) the duration of such [ * ]; provided, that, with respect to [ * ], and [ * ];

(iii)          If any device was used by Pfizer in conjunction with the Applicable Biomolecule or the Applicable Licensed Product, then the licenses granted to Quark under this Section 13.3(d) shall [ * ]; and

(e)           Assignment of Trademark. Assign to Quark all of Pfizer’s right, title and interest in any trademarks used solely in connection with Licensed Products;

provided that (x) the parties agree that any good faith failure by Pfizer to provide immaterial data, information, reports, records, correspondence or other materials to Quark shall not be a breach of Pfizer’s obligations under this Section 13.3, and (y) in no event shall Pfizer be required to retain any obligations or liabilities under agreements assigned to Quark pursuant to this Section 13.3 except for those arising prior to the date of assignment of such agreements.

If Pfizer terminates this Agreement pursuant to Section 13.1(a), Pfizer shall, promptly after such termination, perform the activities set forth in Sections 13.3(a), (b) and (c) above.

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13.4         Bankruptcy. Pfizer may, in addition to any other remedies available to it by law or in equity, exercise the rights set forth below by notice to Quark, in the event Quark shall have become insolvent or bankrupt, or shall have made a general assignment for the benefit of its creditors, or there shall have been appointed a trustee or receiver of Quark or for all or a substantial part of its property, or any case or proceeding shall have been commenced or other action taken by or against Quark in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect, and any such event shall have continued for sixty (60) days undismissed, unbonded and undischarged. All rights and licenses granted under or pursuant to this Agreement by Quark are, and shall otherwise be deemed to be, for purposes of Article 365(n) of the U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined under Article 101 of the U.S. Bankruptcy Code. The parties agree that Pfizer, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code. The parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against Quark under the U.S. Bankruptcy Code, Pfizer shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and, if not already in its possession, Quark shall promptly deliver to Pfizer all such intellectual property and all embodiments of such intellectual property (a) upon any such commencement of a bankruptcy proceeding upon its request therefore, unless Quark elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of Quark upon request therefore by Pfizer, provided, however, that delivery of such intellectual property and related embodiments to Pfizer shall not convey any additional rights to Pfizer or relieve it of payment obligations or other obligations under this Agreement except to the extent  permitted by bankruptcy laws in the event Quark rejects this Agreement.

Section 14.            INDEMNIFICATION.

14.1         General Indemnification. Pfizer and Quark will indemnify, defend and hold each other and each other’s Affiliates, directors, officers and employees (collectively, “Representatives”) harmless from any and all Losses (as defined below) arising out of or resulting from a claim by a Third Party against either party based on any action or omission of the Indemnifying Party’s agents, employees or officers related to its obligations under this Agreement; provided, however, that except as provided in Section 14.2 the foregoing shall not apply if the claim is found to be based upon the negligence, recklessness or willful misconduct of the Indemnified Party.

14.2         Product Liability Indemnification. Pfizer will indemnify, defend and hold Quark and its Affiliates, directors, officers and employees harmless from any and all Losses arising out of or resulting from a claim by a Third Party for death or bodily injury arising in connection with the development, testing, manufacture, or commercialization of Biomolecules or Licensed Products.

14.3         Losses. For purposes of this Agreement, “Losses” shall mean any and all actions, costs, losses, claims, liabilities, fines, interest, awards, judgments, penalties, demands, damages (including special, indirect, incidental, punitive and consequential damages) and expenses (including court costs, costs of investigation and reasonable fees and disbursements of counsel, consultants and expert witnesses) incurred by a party hereto.

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14.4         Defense Procedures; Procedures for Third Party Claims. In the event that any Third Party asserts a claim with respect to any matter for which a party (the “Indemnified Party”) is entitled to indemnification hereunder (a “Third Party Claim”), then the Indemnified Party shall promptly notify the party obligated to indemnify the Indemnified Party (the “Indemnifying Party”) thereof; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then only to the extent that) the Indemnifying Party is prejudiced thereby.

(a)           Subject to Section 14.4(c), the Indemnifying Party shall have the right, exercisable by notice to the Indemnified Party within ten (10) days of receipt of notice from the Indemnified Party of the commencement of or assertion of any Third Party Claim, to assume direction and control of the defense, litigation, settlement, appeal or other disposition of the Third Party Claim (including the right to settle the claim solely for monetary consideration) with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnified Party; provided that (i) the Indemnifying Party has sufficient financial resources, in the reasonable judgment of the Indemnified Party, to satisfy the amount of any adverse monetary judgment that may reasonably result from such claim, (ii) the Third Party Claim does not seek equitable or other non-monetary relief from the Indemnified Party and (iii) the Indemnifying Party expressly agrees in writing that as between the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall be solely obligated to satisfy and discharge the Third Party Claim in full (the conditions set forth in clauses (i), (ii) and (iii) above are collectively referred to as the “Litigation Conditions”).

(b)           Within ten (10) days after the Indemnifying Party has given notice to the Indemnified Party of its intended exercise of its right to defend a Third Party Claim, the Indemnified Party shall give notice to the Indemnifying Party of any objection thereto based upon the Litigation Conditions. If the Indemnified Party reasonably so objects, the Indemnified Party shall continue to defend the Third Party Claim, at the expense of the Indemnifying Party, until such time as such objection is withdrawn. If no such notice is given, or if any such objection is withdrawn, the Indemnifying Party shall be entitled, at its sole cost and expense, to assume direction and control of such defense, with counsel selected by the Indemnifying Party and reasonably acceptable to the Indemnified Party. During such time as the Indemnifying Party is controlling the defense of such Third Party Claim, the Indemnified Party shall cooperate, and shall cause its Affiliates and agents to cooperate upon request of the Indemnifying Party, in the defense or prosecution of the Third Party Claim, including by furnishing such records, information and testimony and attending such conferences, discovery proceedings, hearings, trials or appeals as may reasonably be requested by the Indemnifying Party. In the event that the Indemnifying Party does not satisfy the Litigation Conditions or does not notify the Indemnified Party of the Indemnifying Party’s intent to defend any Third Party Claim within ten (10) days after notice thereof, the Indemnified Party may (without further notice to the Indemnifying Party) undertake the defense thereof with counsel of its choice and at the Indemnifying Party’s reasonable expense (including reasonable, out-of-pocket attorneys’ fees and costs and expenses of enforcement or defense). The Indemnifying Party or the Indemnified Party, as the case may be, shall have the right to join in (including the right to conduct discovery, interview and

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examine witnesses and participate in all settlement conferences), at its own expense, but not control, the defense of any Third Party Claim that the other party is defending as provided in this Agreement.

(c)           The Indemnifying Party shall not, without the prior consent of the Indemnified Party, enter into any compromise or settlement which commits the Indemnified Party to take, or to forbear to take, any action. The Indemnified Party shall have the sole and exclusive right to settle any Third Party Claim, on such terms and conditions as it deems reasonably appropriate, to the extent such Third Party Claim involves equitable or other non-monetary relief from the Indemnified Party, but shall not have the right to settle such Third Party Claim to the extent such Third Party Claim involves monetary damages, or equitable or non-monetary relief from the Indemnifying Party, without the prior consent of the Indemnifying Party. The Indemnified Party shall not make any admission of liability in respect of the Third Party Claim without the prior consent of the Indemnifying Party and shall use reasonable endeavors to mitigate its loss arising from the Third Party Claim. Notwithstanding anything to the contrary herein, in no event may an Indemnified Party settle or compromise any Third Party Claim for which it intends to seek indemnification from the Indemnifying Party hereunder without the prior consent of the Indemnifying Party, or the indemnification provided under Section 14.1 as to such Third Party Claim shall be null and void.

14.5         Disclaimer of Liability for Consequential Damages. IN NO EVENT SHALL ANY PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE UNDER THIS AGREEMENT FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE,  SUFFERED BY PFIZER, QUARK OR ANY OF THEIR RESPECTIVE REPRESENTATIVES, UNDER THIS AGREEMENT, EXCEPT (A) TO THE EXTENT OF ANY SUCH DAMAGES PAID TO A THIRD PARTY AS PART OF A THIRD PARTY CLAIM, AND (B) FOR PURPOSES OF INDEMNIFICATION PURSUANT TO SECTION 14, IN THE EVENT OF AN INTENTIONAL AND WILLFUL BREACH IN BAD FAITH OF ANY REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT BY QUARK OR PFIZER OR THEIR RESPECTIVE AFFILIATES (AS THE CASE MAY BE) OF THIS AGREEMENT.

Section 15.            GOVERNING LAW AND JURISDICTION.

15.1         Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without regard to conflicts of law rules.

15.2         Jurisdiction. With the exception of those matters referred for resolution by independent accountants under Section 6.5, in the event of any controversy, claim or counterclaim arising out of or relating to this Agreement, the parties shall first attempt to resolve such controversy or claim through good faith negotiations for a period of not less than thirty (30) days following notification of such controversy or claim to the other party. If such controversy or claim cannot be resolved by means of such negotiations during such period, then such  controversy or claim shall be resolved by the United States District Court for the Southern District of New York or a local court sitting in New York, New York (collectively, the “Courts”).

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Each party (a) irrevocably submits to the non-exclusive jurisdiction in the Courts for purposes of any action, suit or other proceeding relating to or arising out of this Agreement and (b) agrees not to raise any objection at any time to the laying or maintaining of the venue of any such action, suit or proceeding in any of the Courts, irrevocably waives any claim that such action, suit or other proceeding has been brought in an inconvenient forum and further irrevocably waives the right to object, with respect to such action, suit or other proceeding, that such Court does not have any jurisdiction over such party. Each of QBI and QBI Enterprises hereby irrevocably designates, appoints and empowers Cooley Godward LLP, Five Palo Alto Square, 3000 El Camino Real, Palo Alto, CA 94306, Attention:  Robert L. Jones, Esq., Facsimile No. (650) 849-7400, as its true and lawful agent and attorney-in-fact in its name, place and stead to receive and accept on its behalf service of process in any action, suit or proceeding in the Courts with respect to any matters as to which it has submitted to jurisdiction as set forth in the immediately preceding sentence.

Section 16.            MISCELLANEOUS.

16.1         Force Majeure. No party hereto shall be liable to any other party for any losses or damages attributable to a default in or breach of this Agreement which is the result of war (whether declared or undeclared), acts of God, revolution, acts of terror, fire, earthquake, flood, pestilence, riot, accident(s), labor trouble, or shortage of or inability to obtain material, equipment or transport or any other cause beyond the reasonable control of such party (in no event to include the obligation to pay money, unless such force majeure specifically precludes the payment process); provided that if such a cause occurs, then the party affected will promptly notify the other parties of the nature and likely result and duration (if known) of such cause and use commercially reasonable efforts to reduce the effect.

16.2         Severability. If and solely to the extent that any provision of this Agreement shall be deemed invalid or unenforceable by a Governmental Authority, such offending provision shall be of no effect and shall not affect the validity of the remainder of this Agreement or any of its provisions; provided, however, the parties shall use their respective reasonable efforts to renegotiate the offending provisions to best accomplish the original intentions of the parties.

16.3         Waivers; Remedies. Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party or parties waiving such term or condition. Neither the waiver by any party of any term or condition of this Agreement nor the failure on the part of any party, in one or more instances, to enforce any of the provisions of this Agreement or to exercise any right or privilege, shall be deemed or construed to be a waiver of such term or condition for any similar instance in the future or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be a limitation of any other remedy, right, undertaking, obligation or agreement.

16.4         Entire Agreements; Amendments. This Agreement, together with the Amendment and Option, dated the date hereof, among Quark, QBI Enterprises Ltd, Atugen AG and Pfizer, sets forth the entire agreement and understanding among the parties as to the subject matter hereof and supersedes all agreements or understandings, verbal or written, made between

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Quark and Pfizer before the date hereof with respect to the subject matter hereof, including the Confidentiality Agreement between the parties, dated December 6, 2005. None of the terms of this Agreement shall be amended, supplemented or modified except in writing signed by the parties.

16.5         Survival. The provisions of Sections 3.2 (Research License), 6.5 (Inspection of Records), 8.1 (Confidentiality), 13.3 (Effect of Termination), 14 (Indemnification) and, 15 (Governing Law and Jurisdiction), as well as any other Sections or defined terms referred to in such Sections or necessary to give them effect shall survive termination or expiration of this Agreement and remain in force until discharged in full. Furthermore, any other provisions required to interpret and enforce the parties’ rights and obligations or to wind up their outstanding obligations under this Agreement shall survive to the extent required.

16.6         Assignment. Neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by any party without the consent of the other parties; provided, however, any party may, without such consent, assign this Agreement, in whole or in part: (i) to any of its respective Affiliates; provided that such party shall remain jointly and severally liable with such Affiliate in respect of all obligations so assigned and such Affiliate has acknowledged and confirmed in writing that effective as of such assignment or other transfer, such Affiliate shall be bound by this Agreement as if it were a party to it as and to the identical extent applicable to the transferor; (ii) any successor in interest by way of merger, acquisition or sale of all or substantially all of its assets provided that such successor agrees in writing to be bound by the terms of this Agreement as if it were the assigning party; (iii) any sale or other transfer by Quark to a Third Party of all (and not less than all) of its right, title and interest in the Quark Patent Rights and the Quark Technology (subject to licenses back consistent with the licenses to Pfizer set forth herein), provided (x) such Third Party is and continues to be at all times incorporated and domiciled (including with respect to principal headquarters) in any state of the United States and (y) prior to such sale or transfer, has acknowledged and confirmed in writing to Pfizer, all in a manner reasonably acceptable to Pfizer, that, effective as of such sale or transfer, such Third Party shall be bound by this Agreement as if it were a party to it and to the identical extent applicable to Quark with respect to Quark Patent Rights and/or Quark Technology, or (iv) to a Third Party in circumstances where a party or its Affiliates is required to, or reasonably believes based on advice of counsel, that it will be required to, divest any of the Licensed Products in order to comply with applicable Law or the order of any Governmental Authority as a result of a merger or acquisition. [ * ]. Any purported assignment in violation of this Section 16.6 shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement.

16.7         Independent Contractor. The relationship between Quark and Pfizer is that of independent contractors. Quark and Pfizer are not joint venturers, partners, principal and agent, employer and employee, and have no other relationship other than independent contracting parties.

16.8         Notices. Each communication and document made or delivered by one party to another under this Agreement shall be made in the English language. All notices, consents, approvals, requests or other communications required hereunder given by one party to the other

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hereunder shall be in writing and made by registered or certified air mail, facsimile, express overnight courier or delivered personally to the following addresses of the respective parties:

If to Quark:	Quark Biotech, Inc.
	6536 Kaiser Drive
	Freemont, CA 94555
	Attention:   Daniel Zurr, Ph.D.
	Facsimile:   (510) 402-4021
with a copy to:	Cooley Godward LLP
	Five Palo Alto Square
	3000 El Camino Real
	Palo Alto, CA 94306
	Attention:   Robert L. Jones, Esq.
	Facsimile:   (650) 849-7400
If to Pfizer:	Pfizer Inc.
	235 East 42nd Street
	New York, New York 10017-5755
	U.S.A.
	Attention: President, Pfizer Human Health
	Facsimile:      1-212-808-8652
with a copy to:	Attention: Executive Vice President and General Counsel
	Facsimile:      1-212-808-8924

Notices hereunder shall be deemed to be effective (a) upon receipt if personally delivered, (b) on the tenth (10^th) day following the date of mailing if sent by registered or certified air mail; (c) on the second (2^nd) day following the date of transmission or delivery to the overnight courier if sent by overnight courier; and (d) on the next day after the date sent by facsimile (with receipt confirmation). A party may change its address listed above by sending notice to the other party in accordance with this Section 16.8.

16.9         Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any Third Party, including, any creditor of either party. No such Third Party shall obtain any right under any provision of this Agreement or shall by reasons of any such provision make any claim in respect of any debt, liability or obligation (or otherwise) against either party.

16.10       Joint and Several Obligations. All obligations of QBI and QBI Enterprises under this Agreement shall be joint and several.

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16.11       Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.

16.12       Counterparts. This Agreement may be executed in any two or more counterparts, each of which, when executed, shall be deemed to be an original and all of which together shall constitute one and the same document.

16.13       Headings. Headings in this Agreement are included herein for ease of reference only and shall have no legal effect.

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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed by their duly authorized officers on the date first written above.

QUARK BIOTECH, INC.			PFIZER INC.
By:	/s/ Daniel Zurr		By:	/s/ Lisa Ricciardi
Name:		Daniel Zurr	Name:		Lisa Ricciardi
Title:		President and Chief Executive Officer	Title:		Senior Vice President,
					Licensing & Development
					Pfizer, Inc.

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EXHIBIT A

BIOMOLECULES

[ * ]

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EXHIBIT B

QUARK PATENT RIGHTS

(i) owned by Quark

PUBLICATION/PATENT NO.	APPLICATION NO.	FILING DATE	PROSECUTING PARTY
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]

(ii) licensed to Quark

PUBLICATION NO.	APPLICATION NOS.	FILING DATE	PROSECUTING PARTY
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]

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PUBLICATION NO.	APPLICATION NOS.	FILING DATE	PROSECUTING PARTY
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]
[ * ]	[ * ]	[ * ]	[ * ]

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EXHIBIT C

TRANSITION PLAN

1.Transition Services

1.1Document, Information, and Material Transfer

1.1.1Request. Quark will use reasonable efforts to provide the following to Pfizer no later than [ * ] after the Effective Date (unless otherwise specified herein or agreed to by the parties): [ * ]

1.2Regulatory Applications

1.2.1United States INDs. Within [ * ] after written notification from Pfizer that [ * ]

1.2.2Non-U.S. INDs. With respect to all non-US INDs for [ * ], within [ * ] after written notification from Pfizer, [ * ]

1.2.3Maintenance by Quark. For the period beginning on the Effective Date and ending on the earlier of (i) [ * ]

1.2.4Word Documents. Within [ * ] after the Effective Date, Quark will deliver [ * ].

1.2.5Interaction with Regulatory Authorities. After the Effective Date, [ * ]

1.3Safety Reporting

1.3.1Unless otherwise directed [ * ]

1.3.2The parties will designate representatives from Pfizer and Quark [ * ]

1.4Conduct of Ongoing Clinical Trials

1.4.1Until Quark receives written notification from Pfizer [ * ]

1.5Quality Assurance

1.5.1Completion of Audit Reports. Quark shall use reasonable efforts to complete all preclinical, clinical, and manufacturing quality assurance audit reports for any audits completed or ongoing as of the Effective Date relating to [ * ]

1.6Pharmaceutical Sciences/Manufacturing

1.6.1Stability Program Management. Quark will transfer [ * ]

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1.6.2Document Transfer and Management. Quark will transfer [ * ]

1.7Third Party Contracts

1.7.1No later than [ * ] after the Effective Date, Quark will provide Pfizer with [ * ]

1.7.2Pfizer agrees to [ * ]

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ATTACHMENT 1

[ * ]

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ATTACHMENT II

THIRD PARTY CONTRACTS

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SCHEDULE 4.8

REIMBURSEMENT OF CERTAIN EXPENSES

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

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SCHEDULE 4.9

CERTAIN TERMS OF ISRAEL DISTRIBUTION

I.Quark shall have the exclusive right to market, promote, distribute and sell the Licensed Product, at its expense.

II.Pfizer shall obtain and maintain the Regulatory Approval for the Licensed Product, at its expense. If permitted by applicable Laws, Pfizer shall obtain the Price Approval for the Licensed Products, at its expense. If Pfizer is not permitted by applicable Laws to obtain Price Approval for the Licensed Products, then Quark shall obtain the Price Approval for the Licensed Products. Pfizer shall manufacture and supply the Licensed Product to Quark on terms to be agreed.

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SCHEDULE 4.12

Non-Ophthalmic Indications for siRNAs Inhibiting RTP801
Workplan 2006 — 2007

[ * ]

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SCHEDULE 6.3

FORM OF ANNUAL SALES REPORT FOR US

[ * ]

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FORM OF ANNUAL SALES REPORT FOR MAJOR EU COUNTRIES AND JAPAN

Annual Report-Major Countries — Non-US

[ * ]

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SCHEDULE 6.4

QUARK’S BANK ACCOUNT INFORMATION

[ * ]

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SCHEDULE 7.3

QUARK PATENT FILING SCHEDULE

[ * ]

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SCHEDULE 8.2

THIRD PARTY AGREEMENTS WITH EXISTING COMMITMENTS TO PERMIT PUBLICATION

[ * ]

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SCHEDULE 8.3

PRESS RELEASE

For immediate release:	Contacts:	Pfizer:
September 26, 2006		Paul Fitzhenry
		(212) 733-4637
		Quark Biotech:
		Juliana Friedman
		(972-8-9305-111)
		Ogilvy PR:
		Cynthia Isaac
		(212) 880-5206

PFIZER EXPANDS RESEARCH COMMITMENT TO OPHTHALMOLOGY THROUGH LICENSING AGREEMENT WITH QUARK BIOTECH

Novel gene target RTP-801 offers a new approach for a potential treatment of age-related macular degeneration

NEW YORK, NY, FREMONT, CA and NESS-ZIONA, ISRAEL September 26 - Pfizer Inc and Quark Biotech, Inc., announced today that they have entered into an agreement under which Pfizer acquires an exclusive worldwide license to Quark’s novel human gene RTP-801 and to molecules that modify its expression or function. RTP-801 is involved in the development of pathologic blood vessels which accelerate the progression of age-related macular degeneration (AMD).

Financial terms of the agreement were not announced. The agreement is subject to clearance by the U.S. Federal Trade Commission.

AMD is the leading cause of blindness in the developed world affecting about 15 million Americans over the age of 50. The target for RTP-801 is neovascular or wet AMD. Wet AMD is the most devastating form of the disease and occurs due to the formation of an abnormal vascular network beneath the retina of the eye. These blood vessels are excessively leaky and lead to an accumulation of fluid and blood beneath and within the retina resulting in a loss of visual acuity.

“Despite advances in research and the availability of new treatment options, there remains a need for new approaches to improve the lives of patients with AMD,” said Martin Mackay, Ph.D., Pfizer senior vice president Worldwide Research and Technology. “We are excited about the

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potential of RTP-801i to preserve vision in patients with wet AMD who have an increased risk of progressive eye damage and vision loss.”

“We are pleased that Pfizer has chosen our novel target RTP801 and biomolecules for its drug development program” said Daniel Zurr, CEO of Quark. “This agreement provides further recognition for Quark’s creative approach to discover conceptually new drugs to treat devastating diseases. We are dedicated to help society with innovative medicines by moving from novel gene targets to unique compounds and eventually commercial products.”

Based on pre-clinical models, it is believed that AMD can be treated by blocking the expression of the RTP-801 gene through RNA interference or RNAi. RNAi is a naturally occurring mechanism within cells for selectively silencing and regulating specific genes. The ability to silence genes through RNAi could provide a new way to treat a wide range of human diseases - including AMD - that are caused by the inappropriate activity of specific genes.

Pfizer Inc: Working for a healthier world™
Founded in 1849, Pfizer is the world’s largest research-based pharmaceutical company taking new approaches to better health. We discover and develop innovative medicines to treat and help prevent disease for both people and animals. Through consistent, high-quality manufacturing and distribution operations, our medicines reach patients in 180 nations. We also partner with healthcare providers, governments and local communities around the world to expand access to our medicines and to provide better quality healthcare and health system support. At Pfizer, our colleagues work every day to help people stay happier and healthier longer and to reduce the human and economic burden of disease worldwide.

About Quark Biotech, Inc.

Quark Biotech, Inc. is a privately held development-stage, biopharmaceutical company headquartered in Fremont, CA. Through an innovative combination of gene silencing and DNA microarray technology, Quark has pioneered and patented its BiFARTM platform for high-throughput functional profiling, allowing significant advances in the identification of target genes and proteins. This technology allows the company to develop conceptually novel drugs that could provide previously unavailable benefits to patients. Quark development efforts are focused on treatment of fibrotic and ischemic diseases of the eye, kidney and lungs, in indications with clear unmet medical needs.

Quark corporate product development teams are based in Fremont, CA and research facilities in Ness-Ziona, Israel

# # # # #

PFIZER DISCLOSURE NOTICE: The information contained in this document is as of September 26, 2006. Pfizer assumes no obligation to update any forward-looking statements contained in this document as a result of new information or future events or developments.

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This release contains forward-looking information about a research and development program and the potential efficacy of product candidates that might result from the program that involve substantial risks and uncertainties. Such risks and uncertainties include, among other things, the uncertainty inherent in research and development activities, decisions by regulatory authorities regarding whether and when to approve any drug applications that may result from the program as well as their decisions regarding labeling and other matters that could affect the commercial potential of product candidates that may result from the program; and competitive developments.

A further list and description of risks and uncertainties can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and in its reports on Form 10-Q and Form 8-K.

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EX-10.28

EXHIBIT 10.28

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LICENSE AGREEMENT

This License Agreement (this “Agreement”) is entered into by and between ALNYLAM PHARMACEUTICALS, INC., a corporation organized under the laws of the State of Delaware having a principal office at 300 Third Street, Cambridge MA 02142 U.S.A. (“ALNYLAM”), and Quark Biotech, Inc. a corporation organized under the laws of the State of California having offices located at 6536 Kaiser Avenue, Fremont CA 94555 U.S.A. (“QUARK”).

INTRODUCTION

ALNYLAM owns or has rights to certain intellectual property covering technology useful for the discovery, development, manufacture, characterization, or use of therapeutic products that function through RNA interference (“RNAi”).

QUARK desires to research and potentially develop and commercialize products that function through RNAi directed at inhibition of expression of the target identified as RTP801, and QUARK seeks a non-exclusive license under certain intellectual property of ALNYLAM to research, develop and commercialize such products.

ALNYLAM is willing to grant the non-exclusive license to research, develop and commercialize products as described above to QUARK under the terms and conditions of this Agreement, and a related agreement of even date concerning other intellectual property.

In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, ALNYLAM and QUARK agree as follows:

TABLE OF CONTENTS

		PAGE
ARTICLE 1 — DEFINITIONS		1
1.1	Act	1
1.2	Affiliate	1
1.3	ALNYLAM	1
1.4	ALNYLAM Patent Rights	1
1.5	Approval	1
1.6	Commercialize or Commercialization	1
1.7	Commercially Reasonable Efforts	1
1.8	Confidential Information	2
1.9	Develop, Developing or Development	2
1.10	Effective Date	2
1.11	FDA	2
1.12	Field	2
1.13	First Commercial Sale	2
1.14	GAAP	2
1.15	Group I Patent Rights	2
1.16	Group II Patent Rights	2
1.17	IND or Investigational New Drug Application	2
1.18	Licensed RNAi Product	2
1.19	Major Market	3
1.20	Net Sales	3
1.21	Party	4
1.22	Phase I Clinical Trial	4
1.23	Phase II Clinical Trial	4
1.24	Phase III Clinical Trial	5
1.25	QUARK	5
1.26	Research or Researching	5
1.27	RNAi Product	5
1.28	Royalty Quarter	5
1.29	siRNA	5
1.30	Sublicensee	5
1.31	Target	5
1.32	Term	5
1.33	Territory	6
1.34	Valid Claim	6
ARTICLE 2 — LICENSE GRANT		6
2.1	Licenses of ALNYLAM Patent Rights	6
2.2	Retained Rights of ALNYLAM	6
2.3	Commercially Reasonable Efforts	6
2.4	Regulatory Filings	7

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ARTICLE 3 — FEES AND ROYALTIES		7
3.1	Upfront Fee	7
3.2	Maintenance Fee	7
3.3	Milestone Payments	7
3.4	Royalties	8
3.6	Reduction in Royalty Payments	10
ARTICLE 4 — INTELLECTUAL PROPERTY		10
4.1	Prosecution and Maintenance of Patent Rights	10
4.2	Infringement of ALNYLAM Rights	10
4.3	Claimed Infringement of Third Party Rights	11
4.4	Other Infringement Resolutions	11
4.5	Interpretation of Patent Judgments	11
ARTICLE 5 — CONFIDENTIAL INFORMATION		12
5.1	Non-Use and Non-Disclosure of Confidential Information	12
5.2	Limitation on Disclosures	12
ARTICLE 6 — REPORTS, TAXES AND PAYMENTS		13
6.1	Reports	13
6.2	Tax Withholding	13
6.3	Payments	13
6.4	Audits	13
ARTICLE 7 — INDEMNIFICATION AND INSURANCE		14
7.1	QUARK Indemnification	14
7.2	Insurance	15
ARTICLE 8 — EXPORT		15
8.1	General	15
8.2	Delays	15
8.3	Assistance	15
ARTICLE 9 — TERM AND TERMINATION		16
9.1	Term	16
9.2	Expiration	16
9.3	Material Breach	16
9.4	Termination by QUARK	16
9.5	Consequences of Termination; Survival	16
9.6	License upon Termination	16
ARTICLE 10 — MISCELLANEOUS		17
10.1	Representations by QUARK and ALNYLAM	17
10.2	Dispute Resolution	18

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10.3	Publicity	19
10.4	Force Majeure	20
10.5	Consequential Damages	20
10.6	Assignment	20
10.7	Notices	21
10.8	Independent Contractors	22
10.9	Governing Law; Jurisdiction	22
10.10	Severability	22
10.11	No Implied Waivers	22
10.12	Entire Agreement	22
10.13	Counterparts	22
EXHIBIT A	ALNYLAM PATENT RIGHTS	1
EXHIBIT B	IN-LICENSES COVERING ALNYLAM PATENT RIGHTS	1
APPENDIX I	TARGET	1

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ARTICLE I — DEFINITIONS

General.  When used in this Agreement, each of the following terms, whether used in the singular or plural, will have the meanings set forth in this Article I.

1.1Act means the United States Food, Drug and Cosmetic Act of 1938, 21 U.S.C.  §§ 301, 42 U.S.C., as such may be amended from time to time, and its implementing regulations.

1.2Affiliate means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a Party.  For purposes of the foregoing sentence, “control” will mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities, and (c) in any country where local law does not permit foreign entities to own stock or shares or have equity interest of fifty percent (50%) or more in such entities, the direct or indirect ownership or control of the maximum percentage of such stock or shares or equity interest as is permitted under local law.

1.3ALNYLAM means Alnylam Pharmaceuticals, Inc., a Delaware corporation, its Affiliates (including its subsidiaries, Alnylam U.S., Inc. and Alnylam Europe AG), and their respective successors and assigns.

1.4ALNYLAM Patent Rights means the patents and patent applications listed on Exhibit A and all patent applications hereafter filed that derive from the patents and patent applications listed on Exhibit A, including all continuations, continuations-in-part, divisions, applications for certificate of invention, provisionals, or any substitute applications, any patents issued with respect to any such patent applications; and all reissues, substitutions, confirmations, re-registrations, re-examinations, invalidations, supplementary protection certificates, certificates of invention and patents of addition of any such patents; and all foreign equivalents of any of the foregoing.

1.5Approval means, with respect to each Licensed RNAi Product Developed and Commercialized, the receipt of sufficient authorization from the appropriate regulatory authority on a country-by-country basis to market such Licensed RNAi Product in a country, including (where necessary in a particular country prior to marketing a Licensed RNAi Product) all separate pricing and/or reimbursement approvals that may be required for marketing.

1.6Commercialize or Commercialization means any and all activities directed to manufacturing (including, without limitation, by means of contract manufacturers), marketing, promoting, distributing, importing, exporting and selling an RNAi Product, in each case for commercial purposes, and activities directed to obtaining pricing and reimbursement approvals, as applicable.

1.7Commercially Reasonable Efforts means the level of efforts and resources that would be

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employed by a biotechnology company with equivalent resources to QUARK in connection with Researching, Developing, and Commercializing its own products of similar market potential at a similar stage of its product life, taking into account the apparent attributes of the molecule, the competitiveness of the relevant marketplace, the proprietary positions of third parties, regulatory structures, including the likelihood of obtaining an Approval, and the anticipated profitability of such product.

1.8Confidential Information means all proprietary or confidential information and materials, patentable or otherwise, of a Party which are disclosed by or on behalf of such Party to the other Party hereunder, including, without limitation, chemical substances, formulations, techniques, methodology, equipment, data, reports, know how, sources of supply, patent positioning, business plans, and also including without limitation proprietary and confidential information of third parties in possession of such Party under an obligation of confidentiality, whether or not related to making, using or selling Licensed RNAi Products.

1.9Develop, Developing or Development means with respect to an RNAi Product, preclinical and clinical drug development activities, including: test method development and stability testing, toxicology, formulations, quality assurance/quality control development, statistical analysis and report writing; clinical studies and regulatory affairs; Approval and registration.

1.10Effective Date means September 26, 2006.

1.11FDA means the United States Food and Drug Administration or any successor agency thereto.

1.12Field  means the use of therapeutic RNAi Products against the Target for the treatment in humans of [ * ]

1.13First Commercial Sale means, with respect to each Licensed RNAi Product, the first commercial sale in a country as part of a nationwide introduction after receipt by Quark or any of its Affiliates or Sublicensees of Approval in such country, excluding de minimis named patient and compassionate use sales.

1.14GAAP means United States generally accepted accounting principles applied on a consistent basis.  Unless otherwise defined or stated, financial references shall be calculated by the accrual method under GAAP.

1.15Group I Patent Rights means the ALNYLAM Patent Rights identified on Exhibit A as Group I Patent Rights.

1.16Group II Patent Rights means the ALNYLAM Patent Rights identified on Exhibit A as Group II Patent Rights.

1.17IND or Investigational New Drug Application means a United States investigational new drug application or its equivalent or any corresponding foreign application.

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1.18Licensed RNAi Product means an RNAi Product, the identification, characterization, validation, synthesis, development, use, formulation, manufacture, production or sale of which would infringe a Valid Claim but for the grant of the licenses set forth in this Agreement.

1.19Major Market means, individually and collectively, [ * ].

1.20Net Sales means, with respect to Licensed RNAi Products, the gross amount invoiced by QUARK or its Affiliates or Sublicensees on sales or other dispositions of such Licensed RNAi Products to third parties which are not Affiliates in those countries where at least a Valid Claim covering such Licensed RNAi Product then exists, less actual bad debts, sales returns and allowances actually paid, granted or accrued, including trade, quantity and cash discounts and any other adjustments, including granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargebacks, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions, adjustments arising from consumer discount programs or similar programs, or arising in connection with any Discount or Savings Program (as defined below), customs or excise duties, sales tax, consumption tax, value added tax, and other similar taxes (except income taxes) measured by the production, sale, or delivery of goods in each case only if included as a specific line item on an invoice to such third party or duties relating to sales and any payments in respect of sales to the United States government, any State government or any foreign government, or to any governmental authority, or with respect to any government subsidized program or managed care organization, and charges for freight and insurance related to the return of Licensed RNAi Products and not otherwise paid by the customer.  For purposes of this definition of “Net Sales” only, “Discount or Savings Program” means any discount, rebate or reimbursement program applicable to a Licensed RNAi Product under which QUARK or its Affiliates or Sublicensees provides to low income, uninsured or other patients the opportunity to purchase pharmaceutical products at discounted prices.

In the event that a Licensed RNAi Product is sold in any country in the form of a combination product containing one or more therapeutically active ingredients in addition to such Licensed RNAi Product in any year, Net Sales of such combination product will be adjusted by multiplying actual Net Sales of such combination product in such country by the fraction A/(A+B), where A is the average Net Sales prices per daily dose during such year of the Licensed RNAi Product in such country, if sold separately in such country, and B is the average Net Sales prices per daily dose of any product containing the other therapeutically active ingredients in the combination product in such country, if sold separately in such country.  If, in a specific country, the product containing the other therapeutically active ingredients in the combination product are not sold separately in such country, Net Sales will be calculated by multiplying actual Net Sales of such combination product by the fraction A/C, where A is the average Net Sales prices per daily dose of the Licensed RNAi Product in such country and C is the average Net Sales prices per daily dose of the combination product in such country.  If, in a specific country, the Licensed RNAi Product is not sold separately in such country, Net Sales will be calculated by multiplying actual Net Sales of such combination product by the fraction

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(C-B)/C, where B is the average Net Sales prices per daily dose of the product containing the other therapeutically active ingredients in the combination product in such country and C is the average Net Sales prices per daily dose of the combination product in such country.  If, in a specific country, both the Licensed RNAi Product and the product containing the other therapeutically active ingredients in the combination product are not sold separately in such country, the Net Sales price for the Licensed RNAi Product and the product containing the other therapeutically active ingredients in the combination product will be negotiated by the Parties in good faith based upon the costs, overhead and profit as are then incurred for the Licensed RNAi Product and all similar substances then being made and marketed by the selling Party and having an ascertainable market price.

In the event QUARK or any of its Affiliates or Sublicensees receive non-monetary consideration in exchange for the sale or other disposition of Licensed RNAi Products to Third Parties which are not Affiliates, Net Sales for such sale or other disposition shall include the fair market value of the non-cash consideration received as a result of such sale or other disposition.  If such sale or other disposition occurred in a country where QUARK or such Affiliate or Sublicensee sold the same Licensed RNAi Product in commercial quantities solely for monetary consideration, the fair market value of the non-cash consideration received for such Licensed RNAi Product shall be determined on the basis of the value received in such solely monetary transactions.  If QUARK or its Affiliate or Sublicensee did not have sales or other dispositions of Licensed RNAi Product in such country solely for monetary consideration, then the fair market value of such products shall be determined on the basis of all relevant facts and circumstances.

In the event that QUARK or any of its Affiliates or Sublicensees price and sell Licensed RNAi Products in conjunction with other products of QUARK or its Affiliates or Sublicensees at a single price or rate or at a discount for collectively buying such products, then Net Sales with respect to such Licensed RNAi Product shall equal the number of units of the Licensed RNAi Product sold together with the non-Licensed RNAi Products multiplied by the average Net Sales price at which QUARK or any of its Affiliates or Sublicensees sold the Licensed RNAi Product individually to similar customers for similarly sized orders.

Net Sales shall be determined from books and records maintained in accordance with generally accepted accounting principles in the United States, consistently applied throughout the organization and across all products of the entity whose sales of Licensed RNAi Product are giving rise to Net Sales.

1.21Party means either ALNYLAM or QUARK; Parties means both ALNYLAM and QUARK.

1.22Phase I Clinical Trial means a study of a Licensed RNAi Product in humans the purpose of which includes the determination of safety and/or pharmacokinetic and pharmacodynamic profile in healthy individuals or patients.

1.23Phase II Clinical Trial means a study of a Licensed RNAi Product in patients of dose range and efficacy of a Licensed RNAi Product, which is intended to generate sufficient

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data to commence a Phase III Clinical Trial.

1.24Phase III Clinical Trial means a controlled study of a Licensed RNAi Product in patients of the efficacy and safety of a Licensed RNAi Product which is prospectively designed to demonstrate statistically whether such Licensed RNAi Product is effective and safe for use in a particular indication in a manner sufficient to obtain Approval to market such Licensed RNAi Product.

1.25QUARK means Quark Biotech, Inc., a California corporation, and its successors and assigns.

1.26Research or Researching means identifying, evaluating, validating and optimizing RNAi Products.

1.27RNAi Product means a therapeutic product containing, comprised or based on siRNAs or siRNA derivatives or other moieties effective in gene function modulation and designed to modulate the function of the Target through RNA interference.

1.28Royalty Quarter means each of the four (4) thirteen (13) week periods (i) with respect to the United States, commencing on January 1 of any year, and (ii) with respect to any country in the Territory other than the United States, commencing on December 1 of any year.

1.29siRNA means a double-stranded ribonucleic acid (RNA)  composition designed to act primarily through an RNA interference mechanism that consists of either (a) two separate oligomers of native or chemically modified RNA that are hybridized to one another along a substantial portion of their lengths, or (b) a single oligomer of native or chemically modified RNA that is hybridized to itself by self-complementary base-pairing along a substantial portion of its length to form a hairpin.

1.30Sublicensee means a third party which is not an Affiliate of QUARK and to whom QUARK has granted a sublicense of all or a portion of the rights granted hereunder.  Without limiting the generality of the foregoing, a Sublicensee will be deemed to include any third party (a) who is granted a sublicense hereunder by QUARK pursuant to the terms of the outcome or settlement of any infringement or threatened infringement action and (b) who enters into any form of agreement with QUARK under which such third party will distribute a Licensed RNAi Product in any country in the Territory and who has twenty-five percent (25%) or more of the market share for such Licensed RNAi Product in such country.

1.31Target means RTP801 as more specifically described in Appendix I, and its encoded gene products, including any fragment or common genetic variants thereof that result from or prevent mutation in, or a single nucleotide polymorphism with respect to such gene.

1.32Term means the period of time that begins upon the Effective Date and ends upon the expiration or abandonment of all issued patents and filed applications within the ALNYLAM Patent Rights.

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1.33Territory means worldwide.  For clarity, at any time the Territory will not include any country to which the exportation or re-exportation of materials, products and related technical data covered by this Agreement is restricted under U.S. export laws, which restriction has not been removed or waived.

1.34Valid Claim means any claim [ * ].

ARTICLE II — LICENSE GRANT

2.1Licenses of ALNYLAM Patent Rights.

(a)ALNYLAM grants to QUARK: a non-exclusive royalty-bearing right and license under the ALNYLAM Patent Rights, subject to the terms and conditions of the in-license(s) identified on Exhibit B governing ALNYLAM’s rights, for the sole and exclusive purposes of Researching, Developing and Commercializing Licensed RNAi Products for the Target in the Field in the Territory.  The license granted in this Section 2.1(a) will be for the Term and such license will include the right to grant sublicenses within the Field, subject to Section 2.1(b) of this Agreement and other terms and conditions of this Agreement and the in-license(s) identified on Exhibit B governing ALNYLAM’s rights under the ALNYLAM Patent Rights.

(b)In the event that QUARK sublicenses the rights granted under Section 2.1(a) above, QUARK will notify ALNYLAM within [ * ] after such sublicense becomes effective and provide a copy of the fully executed sublicense agreement to ALNYLAM within the same time frame (with such reasonable redactions as QUARK may make, provided that such redactions do not include provisions necessary to demonstrate compliance with the requirements of this Agreement), which shall be treated as Confidential Information of QUARK, provided that ALNYLAM may disclose such sublicense agreement(s) to third parties under confidence if and to the extent required in order to comply with ALNYLAM’s contractual obligations.

2.2Retained Rights of ALNYLAM.  Any rights of ALNYLAM not expressly granted to QUARK under this Agreement will be retained by ALNYLAM.  For clarity, this license does not include a license under ALNYLAM trade secrets, and no communication of significant technical information of either Party is expected to occur pursuant to this Agreement.

2.3Commercially Reasonable Efforts.  QUARK shall use Commercially Reasonable Efforts to carry out Research, Development, and Commercialization of Licensed RNAi Products [ * ] Development and Commercialization during the Term.  The activities of QUARK’s Affiliates, Sublicensees, subcontractors, collaborators, transferees, and successors shall be attributed to QUARK for purposes of determining QUARK’s satisfactions of the foregoing diligence obligations.  QUARK will [ * ] in written progress reports to be provided [ * ].  Such reports will include a summary of all significant Development and Commercialization events in respect of Licensed RNAi Products, including without limitation, the status of clinical trials underway (but not the results of such trials) and the

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achievement of any of the milestone events set forth in Article III of this Agreement; [ * ].

2.4Regulatory Filings.  QUARK, its Affiliates or Sublicensees will prepare, file, and prosecute all appropriate governmental applications and/or filings to obtain Approval of Licensed RNAi Products in the Field.  QUARK, its Affiliates or Sublicensees will own and maintain all such applications and/or filings and Approvals of the Licensed RNAi Products in the Field.

ARTICLE III — FEES AND ROYALTIES

3.1Upfront Fee.  Within [ * ] of the Effective Date of this Agreement, QUARK will pay to ALNYLAM an upfront, non-refundable fee of [ * ] as consideration for the license granted in Section 2.1(a).

3.2Maintenance Fee.  Until the First Commercial Sale of a Licensed RNAi Product, QUARK will pay to ALNYLAM an annual maintenance fee in the amount of [ * ] for the license granted under this Agreement.  Such annual maintenance fee shall be due within  [ * ] after the anniversary of the Effective Date of this Agreement.

3.3Milestone Payments.  With respect to Licensed RNAi Products and the achievement by QUARK, its Affiliates or Sublicensees of the milestones in the table below for Licensed RNAi Products, QUARK will provide notice to ALNYLAM of the occurrence of a milestone event within [ * ] of such event, and make the indicated milestone payment to ALNYLAM within [ * ] after the occurrence of the relevant event.  Milestone payments will be due only once for the first RNAi Product against the Target being developed by QUARK, or an Affiliate or Sublicensee of QUARK, to achieve the relevant milestone event that is a Licensed RNAi Product or would be a Licensed RNAi Product if all of the claims included in the patent applications under ALNYLAM Patent Rights in existence in Major Market countries as of the date such milestone event is achieved were to issue in their then-current form.  For clarity, only one payment shall be due hereunder with respect to each of the following milestone events against the Target, regardless of the number of such RNAi Products that achieve such milestone.

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Milestone Event	Payment
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]

In the event one or more milestone events set out above are skipped for any reason, the payment for such skipped milestone events(s) will be due at the same time as the payment for the next achieved milestone event.

3.4Royalties.

(a)Royalties on Net Sales will be due and payable by QUARK to ALNYLAM on a Licensed RNAi Product-by-Licensed RNAi Product basis and on a country-by-country basis in the Territory until the expiration of the last Valid Claim covering such Licensed RNAi Product in such country.  Beginning with the first Royalty Quarter in which a First Commercial Sale in a country occurs, and during subsequent Royalty Quarters, running royalties are payable on Net Sales in the Territory in accordance with the applicable running royalty rates set out in subsections (b) and (c) of this Section 3.4.  If at the time of the First Commercial Sale or at any time thereafter all Valid Claims covering a Licensed RNAi Product expire in a particular country, then such RNAi Product shall be royalty-free in such country; [ * ].

(b)Subject to subsections (a) and (c) of this Section 3.4, the following royalties will be due to ALNYLAM (all references are to U.S. dollars):

Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]

(c)In the event a Licensed RNAi Product is covered by the license granted under that

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agreement between the Parties of even date with this Agreement which provides for the grant of rights to QUARK under patent rights in-licensed by ALNYLAM from Cancer Research Technology Limited, subject to subsection (a) of this Section 3.4, the applicable running royalty rates set out below will apply (all references are to U.S. dollars):

Royalty Rate for Net Sales  of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]

3.5Reduction in Royalty Payments.  In the event QUARK or any Affiliate or Sublicensee has Net Sales of Licensed RNAi Product in a country during the Term at a time when there are also sales of Generic Product in such country in the same calendar year, the Parties shall meet and confer for the purpose of determining an equitable reduction in the royalties payable by QUARK in respect of such Net Sales, taking into consideration factors such as the reduced margins realized by QUARK or its Affiliate or Sublicensee and also any Third Party obligations of ALNYLAM.  As used herein, the term “Generic Product” means any pharmaceutical product sold by a third party, not authorized by QUARK or any Affiliate or Sublicensee, that contains the same active pharmaceutical ingredient as a Licensed RNAi Product and is approved in reliance on the prior approval of a Licensed RNAi Product as determined by the applicable regulatory authority.

ARTICLE IV — INTELLECTUAL PROPERTY

4.1Prosecution and Maintenance of Patent Rights.  ALNYLAM will have the right and responsibility to file, prosecute and maintain patent protection in the Territory for all ALNYLAM Patent Rights.  [ * ].

4.2Infringement of ALNYLAM Rights.

(a)Each Party will promptly report in writing to the other Party during the Term any known or suspected infringement by a third party of any of the ALNYLAM Patent Rights of which such Party becomes aware, as such infringement relates to Research, Development or Commercialization of Licensed RNAi Products in the Field directed to the Target (a “Licensed Rights Infringement”) and will provide the other Party with all available evidence supporting such Licensed Rights Infringement.

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(b)ALNYLAM will have the sole and exclusive right to initiate an infringement or other appropriate suit in the Territory against any third party who at any time has infringed, or is suspected of infringing, any of the ALNYLAM Patent Rights.

(c)ALNYLAM will have the sole and exclusive right to select counsel for any suit referred to in subsection (b) above initiated by it and will pay all expenses of the suit, including without limitation attorneys’ fees and court costs.

4.3Claimed Infringement of Third Party Rights.

(a)In the event that a third party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliates or Sublicensees, claiming infringement of its patent rights based upon an assertion or claim arising out of the development, use, manufacture, distribution, importation or sale of Licensed RNAi Products (“Third Party Claim”), such Party will promptly notify the other Party of the claim or the commencement of such action, suit or proceeding, enclosing a copy of the claim and all papers served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

(b)Each Party shall have sole and exclusive responsibility for the defense of its own interests in actions in which they are named in connection with any Third Party Claim brought against either Party or any of their respective Affiliates or Sublicensees.  All litigation costs and expenses incurred by either Party in connection with the defense of such Third Party Claim will be borne by such Party.  Each Party will keep the other Party promptly informed, and may from time to time consult with the other Party regarding the status of any such Third Party Claims.

(c)Neither Party will settle any Third Party Claim in a manner that is in derogation of the rights of the other Party without obtaining the prior written consent of such other Party.

(d)THE PROVISIONS OF THIS SECTION 4.3 STATE THE ENTIRE RESPONSIBILITY OF THE PARTIES, AND THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES, IN THE CASE OF ANY THIRD PARTY CLAIMS OR VIOLATION OF ANY THIRD PARTY’S RIGHTS.

4.4Other Infringement Resolutions.   In the event of a dispute or potential dispute which has not ripened into a demand, claim or suit of the types described in Sections 4.2 and 4.3 of this Agreement, the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute will apply.

4.5Interpretation of Patent Judgments. If any claim relating to a patent under the

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ALNYLAM Patent Rights becomes the subject of a judgment, decree or decision of a court, tribunal, or other authority of competent jurisdiction in any country, which judgment, decree, or decision is or becomes final (there being no further right of review) and adjudicates the validity, enforceability, scope, or infringement of the same, the construction of such claim in such judgment, decree or decision shall be followed thereafter in such country in determining whether a product is a Licensed RNAi Product hereunder, not only as to such claim but also as to all other claims in such country to which such construction reasonably applies.  If at any time there are two or more conflicting final judgments, decrees, or decisions with respect to the same claim, the decision of the higher tribunal shall thereafter control, but if the tribunal be of equal rank, then the final judgment, decree, or decision more favorable to such claim shall control unless and until the majority of such tribunals of equal rank adopt or follow a less favorable final judgment, decree, or decision, in which event the latter shall control.

ARTICLE V — CONFIDENTIAL INFORMATION

5.1Non-Use and Non-Disclosure of Confidential Information.  Each Party agrees that all Confidential Information of a Party that is disclosed by a Party to the other Party (a) will not be used by the receiving Party except in connection with the activities contemplated by this Agreement or in order to further the purposes of this Agreement (b) will be maintained in confidence by the receiving Party and (c) will not be disclosed by the receiving Party to any third party who is not a consultant or advisor under an obligation of confidentiality to, the receiving Party or an Affiliate or Sublicensee of the receiving Party, without the prior written consent of the disclosing Party.  Notwithstanding the foregoing, the receiving Party will be entitled to use and disclose Confidential Information of the disclosing Party which (i) was known by the receiving Party or its Affiliates prior to its date of disclosure by the disclosing Party to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (ii) either before or after the date of the disclosure such Confidential Information is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party, (iii) either before or after the date of the disclosure by the disclosing Party to the receiving Party such Confidential Information becomes published or otherwise part of the public domain through no fault or omission on the part of the receiving Party or its Affiliates, (iv) is independently developed by or for the receiving Party or its Affiliates without reference to or in reliance upon the Confidential Information as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (v) is reasonably necessary to conduct clinical trials or to obtain regulatory approval of Licensed RNAi Products or for the prosecution and maintenance of Patent Rights, (vi) is reasonably required in order for a Party to obtain financing or conduct discussions with Development or Commercialization partners so long as such third party recipients are bound by an obligation of confidentiality or (vii) is required to be disclosed by the receiving Party to comply with applicable laws or regulations or legal process, including without limitation 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, provided that the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes

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reasonable and lawful actions to avoid or minimize the extent of such disclosure.

5.2Limitation on Disclosures.  Each Party agrees that it will provide Confidential Information received from the other Party solely to its employees, consultants and advisors, and the employees, consultants and advisors of its Affiliates or Sublicensees as applicable, who have a legitimate business need to know and an obligation to maintain in confidence the Confidential Information of the disclosing Party.  The disclosing Party is liable for any breach of the non-disclosure obligation of its consultants, advisors, Affiliates and Sublicensees as applicable.

ARTICLE VI — REPORTS, TAXES AND PAYMENTS

6.1Reports.  As to each Royalty Quarter commencing with the Royalty Quarter during which the First Commercial Sale occurs, [ * ] after the end of such Royalty Quarter (if QUARK has not entered into an agreement with a Sublicensee) and within [ * ] after the receipt by QUARK from a Sublicensee of such Sublicensee’s report, as required by such Sublicensee’s sublicense for each Royalty Quarter (if QUARK has entered into an agreement with a Sublicensee), QUARK will deliver to ALNYLAM a written report showing, on a country-by-country basis, the Net Sales of Licensed RNAi Products calculated under GAAP and its royalty obligation for such quarter with respect to such Net Sales under this Agreement together with wire transfer of an amount equal to such royalty obligation.  All Net Sales will be segmented in each such report according to sales by QUARK and each Affiliate and Sublicensee, as well as on a product-by-product basis, including the rates of exchange used to convert Net Sales to United States Dollars from the currency in which such sales were made.  For the purposes of this Agreement, the rates of exchange to be used for converting Net Sales to United States Dollars will be [ * ].

6.2Tax Withholding.  QUARK will use all reasonable and legal efforts to reduce tax withholding with respect to payments to be made to ALNYLAM.  Notwithstanding such efforts, if QUARK concludes that tax withholdings under the laws of any country are required with respect to payments to ALNYLAM, QUARK will make the full amount of the required payment to ALNYLAM after any tax withholding.  In any such case, QUARK shall provide ALNYLAM with a written explanation of such withholding and original receipts or other evidence reasonably desirable and sufficient to allow ALNYLAM to document such tax withholdings for purposes of claiming foreign tax credits and similar benefits.  For purposes of clarity, any payment due to ALNYLAM in respect of fees set out in Article III of this Agreement will be paid in the full amount specified after any tax withholding, with the amount of any tax withholding associated with such payments to be paid by QUARK to the appropriate government authority.

6.3Payments.  Unless otherwise agreed by the Parties, all payments required to be made under this Agreement will be made in United States Dollars via wire transfer to an account designated in advance by the receiving Party.

6.4Audits.

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(a)At any given point in time, QUARK will have on file and will require its Affiliates and Sublicensees to have on file complete and accurate records for the last [ * ] of all Net Sales of Licensed RNAi Products (including associated data).  ALNYLAM will have the right, [ * ] during each [ * ] period, to retain at its own expense an independent qualified certified public accountant reasonably acceptable to QUARK to review such records upon reasonable notice, during regular business hours.  If the audit demonstrates that the payments owed under this Agreement have been understated, QUARK will pay the balance to ALNYLAM together with interest on such amounts from the date on which such payment obligation accrued at a rate equal to [ * ].  If the underpayment is greater than [ * ] of the amount owed, then QUARK will reimburse ALNYLAM for its reasonable out-of-pocket costs of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, ALNYLAM will credit the balance against the next payment due from QUARK (without interest).

(b)QUARK shall require that the terms of any sublicense under its rights in this Agreement are fully in compliance with the terms and conditions of the in-licenses governing ALNYLAM’s rights under the ALNYLAM Patent Rights identified on Exhibit B, including without limitation, all obligations with respect to maintenance of records and audit rights.  ALNYLAM will provide QUARK in a timely manner with a true and complete copy (subject to redaction of financial and other information not material to ALNYLAM’s ability to sublicense rights licensed thereunder to QUARK under this Agreement) of all such in-licenses.

ARTICLE VII — INDEMNIFICATION AND INSURANCE

7.1QUARK Indemnification.  QUARK agrees to indemnify and hold harmless ALNYLAM and its Affiliates, and their respective agents, directors, officers and employees and their respective successors and assigns (the “ALNYLAM Indemnitees”) from and against any and all losses, costs, damages, fees or expenses (“Losses”) incurred by an ALNYLAM Indemnitee arising out of or in connection with any claim, suit, demand, investigation or proceeding brought by a third party (“Claim”) based on (a) the development, use, manufacture, distribution or sale of any Licensed RNAi Product by QUARK or any of its Affiliates or Sublicensees, including, but not limited to, any claims made against ALNYLAM by third parties alleging infringement, injury, damage, death or other consequence occurring to any person claimed to result, directly or indirectly, from the possession, use or consumption of, or treatment with, any Licensed RNAi Product, whether claimed by reason of breach of warranty, negligence, product defect or otherwise, and regardless of the form or forum in which any such claim is made, (b) any breach of any representation, warranty or covenant of QUARK in this Agreement, and (c) actions taken or omitted to be taken by QUARK or its Affiliates, subcontractors or Sublicensees, or the employees, agents or representatives of any of them in performing QUARK’s obligations under this Agreement.

The above indemnification shall not apply to the extent that any Losses are due to a material breach of any of ALNYLAM’s representations, warranties, covenants and/or obligations under this Agreement.

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7.2Insurance.  With respect to its activities under this agreement, QUARK will secure and maintain in full force and effect throughout the term of this Agreement (and for at least    [ * ] thereafter for claims made coverage), the following types and amounts of insurance coverage with carriers having a minimum AM Best rating of A, with per claim deductibles that do not exceed twenty thousand U.S. dollars ($20,000):

Comprehensive General Liability and Personal Injury, including coverage for contractual liability assumed by QUARK and coverage for QUARK independent contractor(s), with limits of at least [ * ] per occurrence and a general aggregate limit of [ * ].

Umbrella Liability, exclusive of the coverage provided by the policies listed above, with a limit of at least [ * ].

Products/Clinical/Professional Liability, exclusive of the coverage provided by the Comprehensive General Liability policy, with an aggregate limit of at least     [ * ] with ALNYLAM to be named as an additional insured party with respect to each Licensed RNAi Product under such coverage.

Notwithstanding the above, the obligations under this Section 7.2 shall not apply to (i) QUARK after such time that QUARK achieves aggregate annual revenues for all pharmaceutical and diagnostic products in excess of [ * ], or (ii) any Affiliate or Sublicensee that has aggregate annual revenues for all pharmaceutical and diagnostic products in excess of one billion U.S. dollars [ * ]; provided, however, that QUARK shall provide written notice to ALNYLAM at such time as it determines this Section is in effect.

ARTICLE VIII — EXPORT

8.1General.  The Parties acknowledge that the exportation from the United States of materials, products and related technical data (and the re-export from elsewhere of United States origin items) may be subject to compliance with United States export laws, including without limitation the United States Bureau of Export Administration’s Export Administration Regulations, the Act and regulations of the FDA issued thereunder, and the United States Department of State’s International Traffic and Arms Regulations which restrict export, re-export, and release of materials, products and their related technical data, and the direct products of such technical data.  The Parties agree to comply with all applicable exports laws and to commit no act that, directly or indirectly, would violate any United States law, regulation, or treaty, or any other international treaty or agreement, relating to the export, re-export, or release of any materials, products or their related technical data to which the United States adheres or with which the United States complies.

8.2Delays.  The Parties acknowledge that they cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party.

8.3Assistance.  The Parties agree to provide assistance to one another in connection with each Party’s efforts to fulfill its obligations under this Article VIII.

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ARTICLE IX — TERM AND TERMINATION

9.1Term.  This Agreement will remain in effect until it expires as set forth in Section 9.2 unless terminated in accordance with this Article IX.

9.2Expiration.  Unless terminated earlier, this Agreement will expire at the end of the Term.

9.3Material Breach.

(a)ALNYLAM will have the right to terminate this Agreement, upon written notice to QUARK, in the event QUARK materially breaches its obligations under this Agreement and does not remedy such breach within [ * ] after receipt of written notice from ALNYLAM specifically identifying the breach and stating that ALNYLAM intends to terminate the Agreement if QUARK fails to remedy the breach within the [ * ] time period.

(b)In the event that ALNYLAM materially breaches its obligations under this Agreement, and does not remedy such breach within [ * ] after receipt of written notice from QUARK specifically identifying the breach, [ * ].

9.4Termination by QUARK.  QUARK will have the right to terminate this Agreement for any reason upon [ * ] prior written notice to ALNYLAM.

9.5Consequences of Termination; Survival.  Subject to Section 9.6, in the event this Agreement is terminated under Section 9.4 above, or by ALNYLAM under Section 9.3(a) above, all licenses and rights granted by ALNYLAM to QUARK under this Agreement will terminate; provided, however, that to the extent such licenses and rights are required in respect of clinical trials that are ongoing and cannot reasonably be terminated promptly due to health or safety reasons or the requirements of applicable law, such licenses and rights will continue in effect until such clinical trials are properly terminated.  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 without limitation the obligation to pay royalties for Licensed RNAi Product sold prior to such expiration or termination.  The provisions of Article V shall survive the expiration or termination of this Agreement and shall continue in effect as applicable for [ * ] from the date of initial disclosure.  In addition, the provisions of Article VII and Article X (other than 10.1), and Sections 9.5 and 9.6 shall survive any expiration or termination of this Agreement.

9.6License upon Termination.  Upon any termination of this Agreement pursuant to Sections 9.3, ALNYLAM shall enter into an agreement containing substantially the same provisions as this Agreement with any Sublicensees of QUARK existing at the time of such termination, covering the RNAi Products that had been licensed to such Sublicensee by QUARK, provided that at the time of any termination of this Agreement, such Sublicensees are in full compliance with the terms and conditions of the sublicense

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agreement.  ALNYLAM acknowledges that such Sublicensees of QUARK that are then in full compliance with the terms and conditions of their respective sublicense agreement are third party beneficiaries of this Agreement, including this Section 9.6.

ARTICLE X — MISCELLANEOUS

10.1Representations by QUARK and ALNYLAM.

(a)Subject to Section 10.1 (e) below, each Party hereby represents and warrants to the other Party as of the Effective Date:

(i)Such Party is a corporation duly organized under the laws of the state of its incorporation, and has all necessary power and authority to conduct its business in the manner in which it is currently being conducted, to own and use its assets in the manner in which its assets are currently owned and used, and to enter into and perform its obligations under this Agreement.

(ii)The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Party and its Board of Directors and no consent, approval, order or authorization of, or registration, declaration or filing with any third party or governmental authority is necessary for the execution, delivery or performance of this Agreement.

(iii)This Agreement constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to (A) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (B) rules of law governing specific performance, injunctive relief and other equitable remedies.

(b)QUARK represents and warrants to ALNYLAM that as of the Effective Date:

(i)Neither QUARK nor any of its Affiliates has been found in breach of any laws or regulations governing the production of medicinal products in the United States or any other jurisdiction within the Territory.

(ii)Neither QUARK nor any of its Affiliates has been debarred (nor is QUARK or any of its Affiliates using in any capacity in connection with its activities under this Agreement any person who has been debarred) by the FDA from working for or providing services to any pharmaceutical or biotechnology company under Section 306 of the United States Food, Drug and Cosmetic Act.

(iii)QUARK has never approved or commenced any proceeding, or made any election contemplating, the winding up or cessation of QUARK’s business or affairs or the assignment of QUARK’s material assets for the benefit of creditors.  To QUARK’s knowledge, no such proceeding is pending or

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threatened.

(c)QUARK acknowledges and agrees that ALNYLAM has not made any representation or warranty that it has or can provide all the rights that are necessary or useful to Research, Develop or Commercialize (as applicable) a Licensed RNAi Product.

(d)ALNYLAM represents and warrants to QUARK that as of the Effective Date of this Agreement it has the right to grant QUARK, its Affiliates and Sublicensees the licenses granted hereunder and has not granted any conflicting rights to any other person or entity.  ALNYLAM has delivered to QUARK a true and complete copy (except for the redaction of financial and other information not relevant to QUARK’s understanding of its rights and obligations under this Agreement) of each in-license identified on Exhibit B of this Agreement.  ALNYLAM shall maintain such in-licenses in effect and shall not amend any such in-license in a manner that is detrimental to the rights of QUARK under this Agreement without the prior written consent of QUARK.

10.2Dispute Resolution; Arbitration Procedures.

(a)In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof, the Parties will try to settle such dispute, controversy or claim amicably between themselves, including referring such dispute, controversy or claim to the Chief Operating Officer of ALNYLAM or his designee, and the Chief Executive Officer of QUARK, or any other officer designated by such Chief Executive Officer.  In the event that after [ * ] the designated officers of both Parties fail to resolve the matter, either Party may submit such dispute, controversy or claim that is not an “Excluded Claim” for resolution by binding arbitration under the Rules of Arbitration of the International Chamber of Commerce.  Judgment on the arbitration award may be entered in any court of competent jurisdiction.  The arbitration will be conducted in New York, New York and the language of all communications and proceedings relating to the arbitration will be English.

(b)The arbitration shall be conducted by a panel of three persons experienced in the pharmaceutical business.  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 of their appointment.  If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the Parties shall select two replacement arbitrators to replace the arbitrators originally selected, which replacement arbitrators shall select a third arbitrator within thirty (30) days of their appointment.  The Parties agree (a) to meet with the arbitrator(s) within thirty (30) days of selection and (b) to agree at that meeting or before upon procedures for discovery and as to the conduct of the hearing which will result in the hearing being concluded within no more than six (6) months after selection of the arbitrator(s) and in the award being rendered within thirty (30) days of any post-hearing briefing, which briefing will

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be completed by both sides within thirty (30) days after the conclusion of the hearings, or within sixty (60) days of the conclusion of the hearings if there is no post-hearing briefing.   In the event the Parties cannot agree upon procedures for discovery as set forth in (a) above, the arbitrator(s) shall provide that discovery be limited so that the schedule may be met without difficulty and so that neither side obtains more than a total of twenty-five (25) hours of deposition testimony from all witnesses, including both fact and expert witnesses, or serves more than ten (10) individual requests for documents or ten (10) individual requests for admission or interrogatories.  In no event will the arbitrator(s), absent agreement of the Parties, allow more than three (3) days per side for the hearing or more than a total of six (6) days for the hearing.  Multiple hearing days will be scheduled consecutively to the greatest extent possible.

(c)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 an equal share of the arbitrators’ fees and any administrative fees of arbitration.

(d)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 when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations.

(e)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.  The Parties further agree that any payments made pursuant to this Agreement pending resolution of the dispute shall be refunded if an arbitrator or court determines that such payments are not due.

(f)As used in this Section 10.2, the term “Excluded Claim” shall mean a dispute, controversy or claim that concerns (a) the validity or infringement of a patent, trademark or copyright; or (b) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory.  Excluded Claims shall be resolved in a court of competent jurisdiction.

10.3Publicity.  No disclosure of the existence of, or the terms of, this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the

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other Party, except as may be required by law or as set forth in this Section 10.3. The Parties acknowledge and agree that, upon and following the Effective Date, one or both of the Parties intends to issue a press release announcing the execution of this Agreement.  Notwithstanding the foregoing, the Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases prior to the issuance thereof.  Either Party may issue such press releases or otherwise make such public statements or disclosures (such as in annual reports to stockholders or filings with the Securities and Exchange Commission) as it determines, based on advice of counsel, are reasonably necessary to comply with applicable laws and regulations.  In addition, following any initial press release(s) announcing this Agreement or other public disclosure approved by both Parties, either Party shall be free to disclose, without the other Party’s prior written consent, the existence of this Agreement, the identity of the other Party and those terms of the Agreement which have already been publicly disclosed in accordance herewith.

10.4Force Majeure.  No failure or omission by the Parties in the performance of any obligation of this Agreement will be deemed a breach of this Agreement or create any liability if the same will arise from any cause or causes beyond the control of the Parties, including, but not limited to, the following: acts of God; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; flood; storm; earthquake; accident; war; rebellion; insurrection; riot; and invasion.  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.

10.5Consequential Damages.  NEITHER PARTY (INCLUDING ITS AFFILIATES AND SUBLICENSEES) SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFIT OR LOST REVENUE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 10.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OF A PARTY OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE V.

10.6Assignment.

(a)This Agreement and any of its rights and obligations may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent may not be unreasonably withheld, delayed or conditioned; provided, however, that either Party may assign this Agreement, without the consent of the other Party, in connection with such Party’s merger, consolidation or transfer or sale of all or substantially all of the assets of such Party; provided further that the successor, surviving entity, purchaser of assets, or transferee, as applicable, expressly assumes in writing such Party’s obligations under this Agreement.  Any purported assignment in contravention of this Section 10.6 shall,

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at the option of the non-assigning Party, be null and void and of no effect.

(b)This Agreement will be binding upon and inure to the benefit of the Parties and their permitted successors and assigns.

10.7Notices.

Notices to ALNYLAM will be addressed to:

Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, Massachusetts  02142

U.S.A.

Attention: Chief Operating Officer

Facsimile No.: (617) 551-8101

With copy to:

Faber Daeufer & Rosenberg PC

950 Winter Street, Suite 4500

Waltham, Massachusetts  02451

Attention: James R. McGarrah, Esq.

Facsimile No.: (781) 795-4747

Notices to QUARK will be addressed to:

Quark Biotech Inc.

6536 Kaiser Avenue

Fremont, CA 94555

Attention: Chief Executive Officer

Facsimile No.:  (510) 402-4021

With copy to:

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attention: Robert L. Jones, Esq.

Facsimile No.: (650) 849-7400

Any Party may change its address by giving notice to the other Party in the manner provided in this Section 10.7.  Any notice required or provided for by the terms of this Agreement will be in writing and will be (a) sent by certified mail, return receipt requested, postage prepaid, (b) sent via a reputable international express courier service, or (c) sent by facsimile transmission, with a copy by regular mail.  The effective date of the notice will be the actual date of receipt by the receiving Party.

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10.8Independent Contractors.  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement will be construed as authorization for either Party to act as the agent for the other Party.

10.9Governing Law; Jurisdiction.  This Agreement will be governed and interpreted in accordance with the substantive laws of the State of New York, notwithstanding the provisions governing conflict of laws under such law of the State of New York to the contrary, provided that matters of intellectual property law will be determined in accordance with the national intellectual property laws relevant to the intellectual property in question.  Each Party agrees to submit to the jurisdiction of the state and federal courts located in the State of New York and waives any defense of inconvenient forum to the maintenance of any action or proceeding in such courts.

10.10Severability.  In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of the relevant jurisdiction, the validity of the remaining provisions will not be affected and the rights and obligations of the Parties will be construed and enforced as if the Agreement did not contain the particular provisions held to be unenforceable, provided that the Parties will negotiate in good faith a modification of this Agreement with a view to revising this Agreement in a manner which reflects, as closely as is reasonably practicable, the commercial terms of this Agreement as originally signed.

10.11No Implied Waivers.  The waiver by either Party of a breach or default of any provision of this Agreement by the other Party will not be construed as a waiver of any succeeding breach of the same or any other provision, nor will any delay or omission on the part of either Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

10.12Entire Agreement.  This Agreement, along with that certain Confidential Disclosure Agreement by and between the Parties dated as of June 1, 2004, as amended, and the related License Agreement by and between the Parties of even date herewith related to the Target and covering sublicense of patent rights owned by Cancer Research Technology Limited, constitute the entire agreement between the Parties with respect to its subject matter and supersedes all previous written or oral representations, agreements and understandings between the Parties.  This Agreement may be amended only by a writing signed by both Parties.

10.13Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

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IN WITNESS WHEREOF, the Parties hereto have set their hand as of the Effective Date.

ALNYLAM PHARMACEUTICALS, INC.
By:	/s/ Barry Greene
	Name:
	Title:
QUARK BIOTECH INC.
By:	/s/ Daniel Zurr
	Name: Daniel Zurr, Ph.D.
	Title: President and CEO

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EXHIBIT A

ALNYLAM Patent Rights

Group I

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

Group II

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

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EXHIBIT B

IN-LICENSES COVERING ALNYLAM PATENT RIGHTS

[ * ]

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APPENDIX I

TARGET

RTP 801

[ * ]

`

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EX-10.29

EXHIBIT 10.29

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LICENSE AGREEMENT

This License Agreement (this “Agreement”) is entered into by and between ALNYLAM PHARMACEUTICALS, INC., a corporation organized under the laws of the State of Delaware having a principal office at 300 Third Street, Cambridge MA 02142 U.S.A. (“ALNYLAM”), and Quark Biotech, Inc. a corporation organized under the laws of the State of California having offices located at 6536 Kaiser Avenue, Fremont CA 94555 U.S.A. (“QUARK”).

INTRODUCTION

ALNYLAM owns or has rights to certain intellectual property covering technology useful for the discovery, development, manufacture, characterization, or use of therapeutic products that function through RNA interference (“RNAi”).

QUARK desires to research and potentially develop and commercialize products that function through RNAi directed at inhibition of expression of the target identified as RTP801, and QUARK seeks a non-exclusive license under certain intellectual property of ALNYLAM to research, develop and commercialize such products.

ALNYLAM is licensed under certain intellectual property pursuant to an agreement with Cancer Research Technology Limited effective July 18, 2003 (“CRT Agreement”) and is permitted to grant sublicenses thereunder.

ALNYLAM is willing to grant a non-exclusive license under its rights under the CRT Agreement to research, develop and commercialize products as described above to QUARK under the terms and conditions of this Agreement, and a related agreement of even date concerning other intellectual property.

In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, ALNYLAM and QUARK agree as follows:

TABLE OF CONTENTS

		PAGE
ARTICLE I — DEFINITIONS		1
1.1	Act	1
1.2	Affiliate	1
1.3	ALNYLAM	1
1.4	ALNYLAM Patent Rights-CRT	1
1.5	Approval	1
1.6	Commercialize or Commercialization	1
1.7	Commercially Reasonable Efforts	1
1.8	Confidential Information	2
1.9	CRT	2
1.10	Develop, Developing or Development	2
1.11	Effective Date	2
1.12	FDA	2
1.13	Field	2
1.14	First Commercial Sale	2
1.15	GAAP	2
1.16	Group I Patent Rights	2
1.17	Group II Patent Rights	2
1.18	IND or Investigational New Drug Application	2
1.19	Issued Valid Claim	2
1.20	Licensed Product	3
1.21	Major Market	3
1.22	Net Sales	3
1.23	Party	3
1.24	Phase I Clinical Trial	3
1.25	Phase II Clinical Trial	3
1.26	Phase III Clinical Trial	3

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1.27	QUARK	3
1.29	Research or Researching	3
1.30	RNAi Product	3
1.31	Royalty Licensed Product	3
1.32	Royalty Quarter	3
1.33	Sublicensee	3
1.34	Target	4
1.35	Term	4
1.36	Territory	4
1.37	Third Party	4
1.38	Valid Claim	4
ARTICLE II — LICENSE GRANT		4
2.1	Licenses of ALNYLAM Patent Rights-CRT	4
2.2	Retained Rights of ALNYLAM	5
2.3	Commercially Reasonable Efforts.	5
2.4	Regulatory Filings	6
ARTICLE III — FEES AND ROYALTIES		6
3.1	Upfront Fee	6
3.2	Maintenance Fee	6
3.3	Milestone Payments	6
3.4	Royalties	7
ARTICLE IV — INTELLECTUAL PROPERTY		7
4.1	Prosecution and Maintenance of Patent Rights	7
4.2	Infringement of ALNYLAM Rights-CRT	8
4.3	Claimed Infringement of Third Party Rights	8
4.4	Other Infringement Resolutions	9
4.5	Interpretation of Patent Judgments	9

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ARTICLE V — CONFIDENTIAL INFORMATION		9
5.1	Non-Use and Non-Disclosure of Confidential Information	9
5.2	Limitation on Disclosures	10
ARTICLE VI — REPORTS, TAXES AND PAYMENTS		10
6.1	Reports	10
6.2	Tax Withholding	10
6.3	Payments	11
6.4	Audits	11
ARTICLE VII	— INDEMNIFICATION AND INSURANCE	12
7.1	QUARK Indemnification	12
7.2	Insurance	12
ARTICLE VIII — EXPORT		13
8.1	General	13
8.2	Delays	13
8.3	Assistance	13
ARTICLE IX — TERM AND TERMINATION		13
9.1	Term	13
9.2	Expiration	13
9.3	Material Breach	13
9.4	Termination by QUARK	14
9.5	Consequences of Termination; Survival	14
9.6	License upon Termination	14
9.7	Termination of CRT Agreement	14
ARTICLE X — MISCELLANEOUS		15
10.1	Representations by QUARK and ALNYLAM	15
10.2	Dispute Resolution; Arbitration Procedures	16
10.3	Publicity	17

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10.4	Force Majeure	18
10.5	Consequential Damages	18
10.6	Assignment	18
10.7	Notices	19
10.8	Independent Contractors	19
10.9	Governing Law; Jurisdiction	20
10.10	Severability	20
10.11	No Implied Waivers	20
10.12	Entire Agreement	20
10.13	Counterparts	20
EXHIBIT A ALNYLAM Patent Rights-CRT		22
APPENDIX I	TARGET	23

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ARTICLE I — DEFINITIONS

General.  When used in this Agreement, each of the following terms, whether used in the singular or plural, will have the meanings set forth in this Article I.  Capitalized terms not defined herein may be defined in the CRT Agreement, as specifically referenced in the context of the sentence applying such capitalized term(s).

1.1Act means the United States Food, Drug and Cosmetic Act of 1938, 21 U.S.C.  §§ 301, 42 U.S.C., as such may be amended from time to time, and its implementing regulations.

1.2Affiliate means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a Party.  For purposes of the foregoing sentence, “control” will mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities, and (c) in any country where local law does not permit foreign entities to own stock or shares or have equity interest of fifty percent (50%) or more in such entities, the direct or indirect ownership or control of the maximum percentage of such stock or shares or equity interest as is permitted under local law.

1.3ALNYLAM means Alnylam Pharmaceuticals, Inc., a Delaware corporation, its Affiliates (including its subsidiaries, Alnylam U.S., Inc. and Alnylam Europe AG), and their respective successors and assigns.

1.4ALNYLAM Patent Rights-CRT means the CRT Patent Rights as defined in the CRT Agreement, which include the Patent Rights listed in Exhibit A attached to this Agreement.

1.5Approval means, with respect to each Licensed Product Developed and Commercialized, the receipt of sufficient authorization from the appropriate regulatory authority on a country-by-country basis to market such Licensed Product in a country, including (where necessary in a particular country prior to marketing a Licensed Product) all separate pricing and/or reimbursement approvals that may be required for marketing.

1.6Commercialize or Commercialization means any and all activities directed to manufacturing (including, without limitation, by means of contract manufacturers), marketing, promoting, distributing, importing, exporting and selling an RNAi Product, in each case for commercial purposes, and activities directed to obtaining pricing and reimbursement approvals, as applicable.

1.7Commercially Reasonable Efforts means the level of efforts and resources that would be employed by a biotechnology company with equivalent resources to QUARK in connection with Researching, Developing, and Commercializing its own products of similar market potential at a similar stage of its product life, taking into account the apparent attributes of the molecule, the competitiveness of the relevant marketplace, the

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proprietary positions of third parties, regulatory structures, including the likelihood of obtaining an Approval, and the anticipated profitability of such product.

1.8Confidential Information means all proprietary or confidential information and materials, patentable or otherwise, of a Party which are disclosed by or on behalf of such Party to the other Party hereunder, including, without limitation, chemical substances, formulations, techniques, methodology, equipment, data, reports, know how, sources of supply, patent positioning, business plans, and also including without limitation proprietary and confidential information of third parties in possession of such Party under an obligation of confidentiality, whether or not related to making, using or selling Licensed Products.

1.9CRT means Cancer Research Technology Limited, a company registered in England (registered number 1626049) whose registered office is at Sardinia House, Sardinia Street 61, London WC2A 3NL.

1.10Develop, Developing or Development means with respect to an RNAi Product, preclinical and clinical drug development activities, including: test method development and stability testing, toxicology, formulations, quality assurance/quality control development, statistical analysis and report writing; clinical studies and regulatory affairs; Approval and registration.

1.11Effective Date means September 26, 2006.

1.12FDA means the United States Food and Drug Administration or any successor agency thereto.

1.13Field means the use of therapeutic RNAi Products against the Target for the treatment in humans of [ * ].

1.14First Commercial Sale means, with respect to each Licensed Product, the first commercial sale in a country as part of a nationwide introduction after receipt by Quark or any of its Affiliates or Sublicensees of Approval in such country, excluding de minimis named patient and compassionate use sales.

1.15GAAP means United States generally accepted accounting principles applied on a consistent basis.  Unless otherwise defined or stated, financial references shall be calculated by the accrual method under GAAP.

1.16Group I Patent Rights means the ALNYLAM patent rights identified on Exhibit A of the QUARK License Agreement.

1.17Group II Patent Rights means the ALNYLAM patent rights identified on Exhibit A of the QUARK License Agreement.

1.18IND or Investigational New Drug Application means a United States investigational new drug application or its equivalent or any corresponding foreign application.

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1.19Issued Valid Claim means “Issued Valid Claim” as defined in the CRT Agreement.

1.20Licensed Product means “Licensed Product”, as defined in the CRT Agreement.

1.21Major Market means, individually and collectively, [ * ].

1.22Net Sales means “Net Sales” as defined in the CRT Agreement.

1.23Party means either ALNYLAM or QUARK; Parties means both ALNYLAM and QUARK.

1.24Phase I Clinical Trial means a study of a Licensed Product in humans the purpose of which includes the determination of safety and/or pharmacokinetic and pharmacodynamic profile in healthy individuals or patients.

1.25Phase II Clinical Trial means a study of a Licensed Product in patients of dose range and efficacy of a Licensed Product, which is intended to generate sufficient data to commence a Phase III Clinical Trial.

1.26Phase III Clinical Trial means a controlled study of a Licensed Product in patients of the efficacy and safety of a Licensed Product which is prospectively designed to demonstrate statistically whether such Licensed Product is effective and safe for use in a particular indication in a manner sufficient to obtain Approval to market such Licensed Product.

1.27QUARK means Quark Biotech, Inc., a California corporation, and its successors and assigns.

1.28QUARK License Agreement means the License Agreement entered into by and between QUARK and ALNYLAM dated September 25, 2006 with respect to the Target.

1.29Research or Researching means identifying, evaluating, validating and optimizing RNAi Products.

1.30RNAi Product means a therapeutic product containing, comprised or based on small interfering RNAs or small interfering RNA derivatives or other moieties effective in gene function modulation and designed to modulate the function of the Target through RNA interference.

1.31Royalty Licensed Product means “Royalty Licensed Product”, as defined in the CRT Agreement, against the Target.

1.32Royalty Quarter means each of the four (4) thirteen (13) week periods (i) with respect to the United States, commencing on January 1 of any year, and (ii) with respect to any country in the Territory other than the United States, commencing on December 1 of any year.

1.33Sublicensee means a third party which is not an Affiliate of QUARK and to whom QUARK has granted a sublicense of all or a portion of the rights granted hereunder. 

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Without limiting the generality of the foregoing, a Sublicensee will be deemed to include any third party (a) who is granted a sublicense hereunder by QUARK pursuant to the terms of the outcome or settlement of any infringement or threatened infringement action and (b) who enters into any form of agreement with QUARK under which such third party will distribute a Licensed Product in any country in the Territory and who has twenty-five percent (25%) or more of the market share for such Licensed Product in such country.

1.34Target means RTP801 as more specifically described in Appendix I, and its encoded gene products, including any fragment or common genetic variants thereof that result from or prevent mutation in, or a single nucleotide polymorphism with respect to such gene.

1.35Term means the period of time that begins upon the Effective Date and ends upon the later of (a) the expiration of the last to expire of the ALNYLAM Patent Rights-CRT with a Valid Claim in the Territory, or (b) the expiration of the obligation to pay royalties in this Agreement.

1.36Territory means worldwide.  For clarity, at any time the Territory will not include any country to which the exportation or re-exportation of materials, products and related technical data covered by this Agreement is restricted under U.S. export laws, which restriction has not been removed or waived.

1.37Third Party means any entity or person other than the Parties or an Affiliate of a Party.

1.38Valid Claim means “Valid Claim” as defined in the CRT Agreement.

ARTICLE II — LICENSE GRANT

2.1Licenses of ALNYLAM Patent Rights-CRT.

(a)ALNYLAM grants to QUARK:  a non-exclusive royalty-bearing right and license under the ALNYLAM  Patent Rights-CRT, subject to and under the terms and conditions of the CRT Agreement, for the sole and exclusive purposes of Researching, Developing, having Developed, using, keeping, making, having made, importing, having imported, selling, having sold, Commercializing, and otherwise disposing or offering to dispose of Licensed Products for the Target in the Field in the Territory.  The license granted in this Section 2.1(a) will be for the Term and such license will include the right to grant sublicenses, subject to Section 2.1(c) and other terms and conditions of this Agreement and the CRT Agreement, including without limitation Clauses 2.4 and 15 of the CRT Agreement.  [ * ].

(b)QUARK acknowledges and agrees that, pursuant to Clause 2.3 of the CRT Agreement, [ * ].

(c)In the event that QUARK sublicenses the rights granted under Section 2.1(a) above, QUARK will notify ALNYLAM within [ * ] after such sublicense becomes effective and provide a copy of the fully executed sublicense agreement

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to ALNYLAM within the same time frame (with such reasonable redactions as QUARK may make, provided that such redactions do not include provisions necessary to demonstrate compliance with the requirements of this Agreement or the CRT Agreement), which shall be treated as Confidential Information of QUARK, provided that ALNYLAM may disclose such sublicense agreement(s) to Third Parties under confidence if and to the extent required in order to comply with ALNYLAM’s contractual obligations.

2.2Retained Rights of ALNYLAM.  Any rights of ALNYLAM not expressly granted to QUARK under this Agreement will be retained by ALNYLAM. For clarity, this license does not include a license under CRT trade secrets, and no communication of significant technical information of either party is expected to occur pursuant to this Agreement.

2.3Commercially Reasonable Efforts.  QUARK shall use Commercially Reasonable Efforts to carry out Research, Development, and Commercialization of Licensed Products [ * ] Development and Commercialization during the Term.  The activities of QUARK’s Affiliates, Sublicensees, subcontractors, collaborators, transferees, and successors shall be attributed to QUARK for purposes of determining QUARK’s satisfactions of the foregoing diligence obligations.  QUARK will [ * ] in written progress reports to be provided [ * ].  Such reports will include a summary of all significant Development and Commercialization events in respect of Licensed Products, including without limitation, the status of clinical trials underway (but not the results of such trials) and the achievement of any of the milestone events set forth in Article III of this Agreement; [ * ].

2.4Regulatory Filings.  QUARK, its Affiliates or Sublicensees will prepare, file, and prosecute all appropriate governmental applications and/or filings to obtain Approval of Licensed Products in the Field.  QUARK, its Affiliates or Sublicensees will own and maintain all such applications and/or filings and Approvals of the Licensed Products in the Field.

ARTICLE III — FEES AND ROYALTIES

3.1Upfront Fee.  Within [ * ] of the Effective Date of this Agreement, QUARK will pay to ALNYLAM an upfront, non-refundable fee of [ * ] as consideration for the license granted in Section 2.1(a).

3.2Maintenance Fee.  Until the First Commercial Sale of a Licensed Product, QUARK will pay to ALNYLAM an annual maintenance fee in the amount of [ * ] for the license granted under this Agreement.  Such annual maintenance fee shall be due within [ * ] after the anniversary of the Effective Date of this Agreement.

3.3Milestone Payments.  With respect to Licensed Products and the achievement by QUARK, its Affiliates or Sublicensees of the milestones in the table below for Licensed Products, QUARK will provide notice to ALNYLAM of the occurrence of a milestone event within [ * ] of such event, and make the indicated milestone payment to ALNYLAM within [ * ] after the occurrence of the relevant event.  Milestone payments will be due only once for the first Licensed Product against the Target to achieve the relevant milestone event.  For clarity, only one payment shall be due hereunder with respect to each of the following milestone events against the Target, regardless of the number of such Licensed Products that achieve such milestone.

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Milestone Event	Payment
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]

In the event one or more milestone events set out above are skipped for any reason, the payment for such skipped milestone events(s) will be due at the same time as the payment for the next achieved milestone event.

3.4Royalties.

(a)With respect to each Royalty Licensed Product, running royalties on Net Sales will be due and payable by QUARK to ALNYLAM on a country-by-country basis in the Territory until the expiration of the last ALNYLAM Patent Rights-CRT with an Issued Valid Claim covering such Royalty Licensed Product in such country.  Beginning with the first Royalty Quarter in which a First Commercial Sale in a country occurs, and during subsequent Royalty Quarters, running royalties are payable on Net Sales in the Territory occurring in a calendar year in accordance with the applicable running royalty rates set out in subsections (b) and (c) of this Section 3.4.  If at the time of the First Commercial Sale or at any time thereafter all Issued Valid Claims covering a Royalty Licensed Product expire in a particular country, then such Royalty Product shall be royalty-free in such country; [ * ].

(b)For Net Sales in the Territory in the Field, subject to subsection (c) of this Section 3.4, the following royalties will be due to ALNYLAM (all references are to U.S. dollars):

Royalty Rate for Net Sales of Royalty Licensed Products [ * ]	[ * ]
Royalty Rate for Net Sales of Royalty Licensed Products [ * ]	[ * ]

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Royalty Rate for Net Sales of Royalty Licensed Products [ * ] [ * ]

(c)In the event a Royalty Licensed Product is covered by the license granted under the Quark License Agreement (either the Group I Patent Rights or Group II Patents Rights as defined therein, or both), the applicable running royalty rates set out below will apply (all references are to U.S. dollars):

Royalty Rate for Net Sales of Royalty Licensed Product [ * ]

ARTICLE IV — INTELLECTUAL PROPERTY

4.1Prosecution and Maintenance of Patent Rights.  ALNYLAM will have the right and responsibility to file, prosecute and maintain patent protection in the Territory for all ALNYLAM Patent Rights-CRT.  [ * ].

4.2Infringement of ALNYLAM Rights-CRT.

(a)Each Party will promptly report in writing to the other Party during the Term any known or suspected infringement by a third party of any of the ALNYLAM Patent Rights-CRT of which such Party becomes aware, as such infringement relates to Research, Development or Commercialization of Licensed Products in the Field directed to the Target (a “Licensed Rights Infringement”) and will provide the other Party with all available evidence supporting such Licensed Rights Infringement.

(b)ALNYLAM will have the sole and exclusive right to initiate an infringement or other appropriate suit in the Territory against any third party who at any time has infringed, or is suspected of infringing, any of the ALNYLAM Patent Rights-CRT.

(c)ALNYLAM will have the sole and exclusive right to select counsel for any suit referred to in subsection (b) above initiated by it and will pay all expenses of the suit, including without limitation attorneys’ fees and court costs.

4.3Claimed Infringement of Third Party Rights.

(a)In the event that a third party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliates or Sublicensees, claiming infringement of its Patent Rights based upon an assertion or claim arising out of the development, use, manufacture, distribution, importation or sale of Licensed Products (“Third Party Claim”), such Party will promptly notify the other Party of the claim or the commencement of such action, suit or proceeding, enclosing a copy of the claim and all papers served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other

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Party and to offer reasonable assistance to the other Party at no cost to the other Party.

(b)Each Party shall have sole and exclusive responsibility for the defense of its own interests in actions in which they are named in connection with any Third Party Claim brought against either Party or any of their respective Affiliates or Sublicensees.  All litigation costs and expenses incurred by either Party in connection with the defense of such Third Party Claim will be borne by such Party.  Each Party will keep the other Party promptly informed, and may from time to time consult with the other Party regarding the status of any such Third Party Claims.

(c)Neither Party will settle any Third Party Claim in a manner that is in derogation of the rights of the other Party without obtaining the prior written consent of such other Party.

(d)THE PROVISIONS OF THIS SECTION 4.3 STATE THE ENTIRE RESPONSIBILITY OF THE PARTIES, AND THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES, IN THE CASE OF ANY THIRD PARTY CLAIMS OR VIOLATION OF ANY THIRD PARTY’S RIGHTS.

4.4Other Infringement Resolutions.  In the event of a dispute or potential dispute which has not ripened into a demand, claim or suit of the types described in Sections 4.2 and 4.3 of this Agreement, the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute will apply.

4.5Interpretation of Patent Judgments.  If any claim relating to a patent under the ALNYLAM Patent Rights-CRT becomes the subject of a judgment, decree or decision of a court, tribunal, or other authority of competent jurisdiction in any country, which judgment, decree, or decision is or becomes final (there being no further right of review) and adjudicates the validity, enforceability, scope, or infringement of the same, the construction of such claim in such judgment, decree or decision shall be followed thereafter in such country in determining whether a product is a Licensed Product hereunder, not only as to such claim but also as to all other claims in such country to which such construction reasonably applies.  If at any time there are two or more conflicting final judgments, decrees, or decisions with respect to the same claim, the decision of the higher tribunal shall thereafter control, but if the tribunal be of equal rank, then the final judgment, decree, or decision more favorable to such claim shall control unless and until the majority of such tribunals of equal rank adopt or follow a less favorable final judgment, decree, or decision, in which event the latter shall control.

ARTICLE V — CONFIDENTIAL INFORMATION

5.1Non-Use and Non-Disclosure of Confidential Information.  Each Party agrees that all Confidential Information of a Party that is disclosed by a Party to the other Party (a) will not be used by the receiving Party except in connection with the activities contemplated

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by this Agreement or in order to further the purposes of this Agreement (b) will be maintained in confidence by the receiving Party and (c) will not be disclosed by the receiving Party to any third party who is not a consultant or advisor under an obligation of confidentiality to, the receiving Party or an Affiliate or Sublicensee of the receiving Party, without the prior written consent of the disclosing Party.  Notwithstanding the foregoing, the receiving Party will be entitled to use and disclose Confidential Information of the disclosing Party which (i) was known by the receiving Party or its Affiliates prior to its date of disclosure by the disclosing Party to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (ii) either before or after the date of the disclosure such Confidential Information is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party, (iii) either before or after the date of the disclosure by the disclosing Party to the receiving Party such Confidential Information becomes published or otherwise part of the public domain through no fault or omission on the part of the receiving Party or its Affiliates, (iv) is independently developed by or for the receiving Party or its Affiliates without reference to or in reliance upon the Confidential Information as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (v) is reasonably necessary to conduct clinical trials or to obtain regulatory approval of Licensed Products or for the prosecution and maintenance of Patent Rights, (vi) is reasonably required in order for a Party to obtain financing or conduct discussions with Development or Commercialization partners so long as such third party recipients are bound by an obligation of confidentiality or (vii) is required to be disclosed by the receiving Party to comply with applicable laws or regulations or legal process, including without limitation 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, provided that the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid or minimize the extent of such disclosure.

5.2Limitation on Disclosures.  Each Party agrees that it will provide Confidential Information received from the other Party solely to its employees, consultants and advisors, and the employees, consultants and advisors of its Affiliates or Sublicensees as applicable, who have a legitimate business need to know and an obligation to maintain in confidence the Confidential Information of the disclosing Party.  The disclosing Party is liable for any breach of the non-disclosure obligation of its consultants, advisors, Affiliates and Sublicensees as applicable.

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ARTICLE VI — REPORTS, TAXES AND PAYMENTS

6.1Reports.  As to each Royalty Quarter commencing with the Royalty Quarter during which the First Commercial Sale occurs, within [ * ] after the end of such Royalty Quarter (if QUARK has not entered into an agreement with a Sublicensee) and within [ * ] after the receipt by QUARK from a Sublicensee of such Sublicensee’s report, as required by such Sublicensee’s sublicense for each Royalty Quarter (if QUARK has entered into an agreement with a Sublicensee), QUARK will deliver to ALNYLAM a written report showing, on a country-by-country basis, the Net Sales of Royalty Licensed Products calculated under GAAP and its royalty obligation for such quarter with respect to such Net Sales under this Agreement together with wire transfer of an amount equal to such royalty obligation.  All Net Sales will be segmented in each such report according to sales by QUARK and each Affiliate and Sublicensee, as well as on a product-by-product basis, including the rates of exchange used to convert Net Sales to United States Dollars from the currency in which such sales were made.  For the purposes of this Agreement, the rates of exchange to be used for converting Net Sales to United States Dollars will be [ * ].

6.2Tax Withholding.  QUARK will use all reasonable and legal efforts to reduce tax withholding with respect to payments to be made to ALNYLAM.  Notwithstanding such efforts, if QUARK concludes that tax withholdings under the laws of any country are required with respect to payments to ALNYLAM, QUARK will make the full amount of the required payment to ALNYLAM after any tax withholding.  In any such case, QUARK shall provide ALNYLAM with a written explanation of such withholding and original receipts or other evidence reasonably desirable and sufficient to allow ALNYLAM to document such tax withholdings for purposes of claiming foreign tax credits and similar benefits.  For purposes of clarity, any payment due to ALNYLAM in respect of fees set out in Article III of this Agreement will be paid in the full amount specified after any tax withholding, with the amount of any tax withholding associated with such payments to be paid by QUARK to the appropriate government authority.

6.3Payments.  Unless otherwise agreed by the Parties, all payments required to be made under this Agreement will be made in United States Dollars via wire transfer to an account designated in advance by the receiving Party.

6.4Audits.

(a)At any given point in time, QUARK will have on file and will require its Affiliates and Sublicensees to have on file complete and accurate records containing all data necessary for the calculation of the amounts payable by it to ALNYLAM pursuant to this Agreement.  Such records and books of account shall be kept for [ * ] years following the end of the calendar year to which they relate.  ALNYLAM will have the right, [ * ] during each [ * ] period, to retain at its own expense an independent qualified certified public accountant reasonably acceptable to QUARK to review such records upon reasonable notice during regular business hours, subject to the confidentiality terms set forth in this Agreement.  If the audit demonstrates that the payments owed under this

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Agreement have been understated, QUARK will pay the balance to ALNYLAM together with interest on such amounts from the date on which such payment obligation accrued at a rate equal to [ * ].  If the underpayment is greater than [ * ] of the amount owed, then QUARK will reimburse ALNYLAM for its reasonable out-of-pocket costs of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, ALNYLAM will credit the balance against the next payment due from QUARK (without interest).

(b)QUARK shall require that the terms of any sublicense under its rights in this Agreement are fully in compliance with the terms and conditions of the CRT Agreement governing ALNYLAM’s rights under the ALNYLAM Patent Rights-CRT, including without limitation, all obligations with respect to maintenance of records and audit rights.  ALNYLAM will provide QUARK in a timely manner with a true and complete copy (subject to redaction of financial and other information not material to ALNYLAM’s ability to sublicense rights licensed thereunder to QUARK under this Agreement) of all such in-licenses.

(c)QUARK shall use reasonable efforts to allow CRT the same access to QUARK’s books and records as it has to ALNYLAM’s books and records under the CRT Agreement.

ARTICLE VII — INDEMNIFICATION AND INSURANCE

7.1QUARK Indemnification.  QUARK agrees to indemnify and hold harmless ALNYLAM and its Affiliates, and their respective agents, directors, officers and employees and their respective successors and assigns (the “ALNYLAM Indemnitees”) from and against any and all losses, costs, damages, fees or expenses (“Losses”) incurred by an ALNYLAM Indemnitee arising out of or in connection with any claim, suit, demand, investigation or proceeding brought by a third party (“Claim”) based on (a) the development, use, manufacture, distribution or sale of any Licensed Product by QUARK or any of its Affiliates or Sublicensees, including, but not limited to, any claims made against ALNYLAM by third parties alleging infringement, injury, damage, death or other consequence occurring to any person claimed to result, directly or indirectly, from the possession, use or consumption of, or treatment with, any Licensed Product, whether claimed by reason of breach of warranty, negligence, product defect or otherwise, and regardless of the form or forum in which any such claim is made, (b) any breach of any representation, warranty or covenant of QUARK in this Agreement, and (c) actions taken or omitted to be taken by QUARK or its Affiliates, subcontractors or Sublicensees, or the employees, agents or representatives of any of them in performing QUARK’s obligations under this Agreement.

The above indemnification shall not apply to the extent that any Losses are due to a material breach of any of ALNYLAM’s representations, warranties, covenants and/or obligations under this Agreement.

7.2Insurance.  With respect to its activities under this agreement, QUARK will secure and maintain in full force and effect throughout the term of this Agreement (and for at least    

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[ * ] thereafter for claims made coverage), the following types and amounts of insurance coverage with carriers having a minimum AM Best rating of A, with per claim deductibles that do not exceed twenty thousand U.S. dollars ($20,000):

Comprehensive General Liability and Personal Injury, including coverage for contractual liability assumed by QUARK and coverage for QUARK independent contractor(s), with limits of at least [ * ] per occurrence and a general aggregate limit of [ * ].

Umbrella Liability, exclusive of the coverage provided by the policies listed above, with a limit of at least [ * ].

Products/Clinical/Professional Liability, exclusive of the coverage provided by the Comprehensive General Liability policy, with an aggregate limit of at least [ * ] with ALNYLAM to be named as an additional insured party with respect to each Licensed Product under such coverage.

Notwithstanding the above, the obligations under this Section 7.2 shall not apply to (i) QUARK after such time that QUARK achieves aggregate annual revenues for all pharmaceutical and diagnostic products in excess of [ * ] or (ii) any Affiliate or Sublicensee that has aggregate annual revenues for all pharmaceutical and diagnostic products in excess of [ * ] provided, however, that QUARK shall provide written notice to ALNYLAM at such time as it determines this Section is in effect.

ARTICLE VIII — EXPORT

8.1General.  The Parties acknowledge that the exportation from the United States of materials, products and related technical data (and the re-export from elsewhere of United States origin items) may be subject to compliance with United States export laws, including without limitation the United States Bureau of Export Administration’s Export Administration Regulations, the Act and regulations of the FDA issued thereunder, and the United States Department of State’s International Traffic and Arms Regulations which restrict export, re-export, and release of materials, products and their related technical data, and the direct products of such technical data.  The Parties agree to comply with all applicable exports laws and to commit no act that, directly or indirectly, would violate any United States law, regulation, or treaty, or any other international treaty or agreement, relating to the export, re-export, or release of any materials, products or their related technical data to which the United States adheres or with which the United States complies.

8.2Delays.  The Parties acknowledge that they cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party.

8.3Assistance.  The Parties agree to provide assistance to one another in connection with each Party’s efforts to fulfill its obligations under this Article VIII.

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ARTICLE IX — TERM AND TERMINATION

9.1Term.  This Agreement will remain in effect until it expires as set forth in Section 9.2 unless terminated in accordance with this Article IX.

9.2Expiration.  Unless terminated earlier, this Agreement will expire at the end of the Term.

9.3Material Breach.

(a)ALNYLAM will have the right to terminate this Agreement, upon written notice to QUARK, in the event QUARK materially breaches its obligations under this Agreement and does not remedy such breach within [ * ] after receipt of written notice from ALNYLAM specifically identifying the breach and stating that ALNYLAM intends to terminate the Agreement if QUARK fails to remedy the breach within the [ * ] time period.

(b)In the event that ALNYLAM materially breaches its obligations under this Agreement, and does not remedy such breach within [ * ] after receipt of written notice from QUARK specifically identifying the breach, [ * ].

9.4Termination by QUARK.  QUARK will have the right to terminate this Agreement for any or no reason upon [ * ] prior written notice to ALNYLAM.

9.5Consequences of Termination; Survival.  In the event this Agreement is terminated under Section 9.4 above, or by ALNYLAM under Section 9.3(a) above, all licenses and rights granted by ALNYLAM to QUARK under this Agreement will terminate; provided, however, that to the extent such licenses and rights are required in respect of clinical trials that are on-going and cannot reasonably be terminated promptly due to health or safety reasons or the requirements of applicable law, such licenses and rights will continue in effect until such clinical trials are properly terminated.  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 without limitation the obligation to pay royalties for Royalty Licensed Products sold prior to such expiration or termination.  The provisions of Article V shall survive the expiration or termination of this Agreement shall continue in effect as applicable for [ * ] from the date of initial disclosure.  In addition, the provisions of Article VII and Article X (other than Section 10.1), and Sections 9.5 and 9.6 shall survive any expiration or termination of this Agreement.

9.6License upon Termination.  Upon any termination of this Agreement pursuant to Sections 10.3, ALNYLAM shall enter into an agreement containing substantially the same provisions as this Agreement with any Sublicensees of QUARK existing at the time of such termination, covering the RNAi Products that had been licensed to such Sublicensee by QUARK, provided that at the time of any termination of this Agreement, such Sublicensees are in full compliance with the terms and conditions of the sublicense agreement.  ALNYLAM acknowledges that such Sublicensees of QUARK that are then

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in full compliance with the terms and conditions of their respective sublicense agreement are third party beneficiaries of this Agreement, including this Section 9.6.

9.7Termination of CRT Agreement.  ALNYLAM shall promptly notify QUARK in the event of a termination of the CRT Agreement.  Provided that QUARK is not then in material breach of this Agreement, ALNYLAM shall facilitate communications between QUARK and CRT so that QUARK may enter into a direct licensing arrangement with CRT on terms substantially similar to those contained herein.  ALNYLAM hereby confirms the intent of Section 2.4(b) of the CRT Agreement to cause the direct grant of a license by CRT to QUARK in the event of termination of the CRT Agreement, subject to the conditions of such Section 2.4(b).

ARTICLE X — MISCELLANEOUS

10.1Representations by QUARK and ALNYLAM.

(a)Subject to Section 10.1(e) below, each Party hereby represents and warrants to the other Party as of the Effective Date:

(i)Such Party is a corporation duly organized under the laws of the state of its incorporation, and has all necessary power and authority to conduct its business in the manner in which it is currently being conducted, to own and use its assets in the manner in which its assets are currently owned and used, and to enter into and perform its obligations under this Agreement.

(ii)The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Party and its Board of Directors and no consent, approval, order or authorization of, or registration, declaration or filing with any third party or governmental authority is necessary for the execution, delivery or performance of this Agreement.

(iii)This Agreement constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to (A) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (B) rules of law governing specific performance, injunctive relief and other equitable remedies.

(b)QUARK represents and warrants to ALNYLAM that as of the Effective Date:

(i)Neither QUARK nor any of its Affiliates has been found in breach of any laws or regulations governing the production of medicinal products in the United States or any other jurisdiction within the Territory.

(ii)Neither QUARK nor any of its Affiliates has been debarred (nor is QUARK or any of its Affiliates using in any capacity in connection with its activities under this Agreement any person who has been debarred) by the FDA from working for or providing services to any pharmaceutical or

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biotechnology company under Section 306 of the United States Food, Drug and Cosmetic Act.

(iii)QUARK has never approved or commenced any proceeding, or made any election contemplating, the winding up or cessation of QUARK’s business or affairs or the assignment of QUARK’s material assets for the benefit of creditors.  To QUARK’s knowledge, no such proceeding is pending or threatened.

(c)QUARK acknowledges and agrees that ALNYLAM has not made any representation or warranty that it has or can provide all the rights that are necessary or useful to Research, Develop or Commercialize (as applicable) a Licensed Product.

(d)ALNYLAM represents and warrants to QUARK that as of the Effective Date of this Agreement it has the right to grant QUARK, its Affiliates and Sublicensees the licenses granted hereunder and has not granted any conflicting rights to any other person or entity.  ALNYLAM has delivered to QUARK a true and complete copy (except for the redaction of financial and other information not relevant to QUARK’s understanding of its rights and obligations under this Agreement) of the CRT Agreement.  ALNYLAM shall maintain such CRT Agreement in effect and shall not amend any such in-license in a manner that is detrimental to the rights of QUARK under this Agreement without the prior written consent of QUARK.

10.2Dispute Resolution; Arbitration Procedures.

(a)In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof, the Parties will try to settle such dispute, controversy or claim amicably between themselves, including referring such dispute, controversy or claim to the Chief Operating Officer of ALNYLAM or his designee, and the Chief Executive Officer of QUARK, or any other officer designated by such Chief Executive Officer.  In the event that after [ * ] the designated officers of both Parties fail to resolve the matter, either Party may submit such dispute, controversy or claim that is not an “Excluded Claim” for resolution by binding arbitration under the Rules of Arbitration of the International Chamber of Commerce.  Judgment on the arbitration award may be entered in any court of competent jurisdiction.  The arbitration will be conducted in New York, New York and the language of all communications and proceedings relating to the arbitration will be English.

(b)The arbitration shall be conducted by a panel of three persons experienced in the pharmaceutical business.  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 of their appointment.  If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the Parties shall select two replacement arbitrators to

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replace the arbitrators originally selected, which replacement arbitrators shall select a third arbitrator within thirty (30) days of their appointment.  The Parties agree (a) to meet with the arbitrator(s) within thirty (30) days of selection and (b) to agree at that meeting or before upon procedures for discovery and as to the conduct of the hearing which will result in the hearing being concluded within no more than six (6) months after selection of the arbitrator(s) and in the award being rendered within thirty (30) days of any post-hearing briefing, which briefing will be completed by both sides within thirty (30) days after the conclusion of the hearings, or within sixty (60) days of the conclusion of the hearings if there is no post-hearing briefing.   In the event the Parties cannot agree upon procedures for discovery as set forth in (a) above, the arbitrator(s) shall provide that discovery be limited so that the schedule may be met without difficulty and so that neither side obtains more than a total of twenty-five (25) hours of deposition testimony from all witnesses, including both fact and expert witnesses, or serves more than ten (10) individual requests for documents or ten (10) individual requests for admission or interrogatories.  In no event will the arbitrator(s), absent agreement of the Parties, allow more than three (3) days per side for the hearing or more than a total of six (6) days for the hearing.  Multiple hearing days will be scheduled consecutively to the greatest extent possible.

(c)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 an equal share of the arbitrators’ fees and any administrative fees of arbitration.

(d)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 when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations.

(e)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.  The Parties further agree that any payments made pursuant to this Agreement pending resolution of the dispute shall be refunded if an arbitrator or court determines that such payments are not due.

(f)As used in this Section 10.2, the term “Excluded Claim” shall mean a dispute, controversy or claim that concerns (a) the validity or infringement of a patent, trademark or copyright; or (b) any antitrust, anti-monopoly or competition law or

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regulation, whether or not statutory.  Excluded Claims shall be resolved in a court of competent jurisdiction.

10.3Publicity.  No disclosure of the existence of, or the terms of, this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by law or as set forth in this Section 10.3. The Parties acknowledge and agree that, upon and following the Effective Date, one or both of the Parties intends to issue a press release announcing the execution of this Agreement.  Notwithstanding the foregoing, the Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases prior to the issuance thereof.  Either Party may issue such press releases or otherwise make such public statements or disclosures (such as in annual reports to stockholders or filings with the Securities and Exchange Commission) as it determines, based on advice of counsel, are reasonably necessary to comply with applicable laws and regulations.  In addition, following any initial press release(s) announcing this Agreement or other public disclosure approved by both Parties, either Party shall be free to disclose, without the other Party’s prior written consent, the existence of this Agreement, the identity of the other Party and those terms of the Agreement which have already been publicly disclosed in accordance herewith.

10.4Force Majeure.  No failure or omission by the Parties in the performance of any obligation of this Agreement will be deemed a breach of this Agreement or create any liability if the same will arise from any cause or causes beyond the control of the Parties, including, but not limited to, the following: acts of God; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; flood; storm; earthquake; accident; war; rebellion; insurrection; riot; and invasion.  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.

10.5Consequential Damages.  NEITHER PARTY (INCLUDING ITS AFFILIATES AND SUBLICENSEES) SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFIT OR LOST REVENUE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 10.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OF A PARTY OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE V.

10.6Assignment.

(a)This Agreement and any of its rights and obligations may not be assigned or otherwise transferred by either Party without the prior written consent of the other

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Party, which consent may not be unreasonably withheld, delayed or conditioned; provided, however, that either Party may assign this Agreement, without the consent of the other Party, in connection with such Party’s merger, consolidation or transfer or sale of all or substantially all of the assets of such Party; provided further that the successor, surviving entity, purchaser of assets, or transferee, as applicable, expressly assumes in writing such Party’s obligations under this Agreement.  Any purported assignment in contravention of this Section 10.6 shall, at the option of the non-assigning Party, be null and void and of no effect.

(b)This Agreement will be binding upon and inure to the benefit of the Parties and their permitted successors and assigns.

10.7Notices.

Notices to ALNYLAM will be addressed to:

Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, Massachusetts  02142

U.S.A.

Attention: Chief Operating Officer

Facsimile No.: (617) 551-8101

With copy to:

Faber Daeufer & Rosenberg PC

950 Winter Street, Suite 4500

Waltham, Massachusetts  02451

Attention: James R. McGarrah, Esq.

Facsimile No.: (781) 795-4747

Notices to QUARK will be addressed to:

Quark Biotech Inc.

6536 Kaiser Avenue

Fremont, CA 94555

Attention: Chief Executive Officer

Facsimile No.:  (510) 402-4021

With copy to:

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attention: Robert L. Jones, Esq.

Facsimile No.: (650) 849-7400

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Any Party may change its address by giving notice to the other Party in the manner provided in this Section 10.7.  Any notice required or provided for by the terms of this Agreement will be in writing and will be (a) sent by certified mail, return receipt requested, postage prepaid, (b) sent via a reputable international express courier service, or (c) sent by facsimile transmission, with a copy by regular mail.  The effective date of the notice will be the actual date of receipt by the receiving Party.

10.8Independent Contractors.  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement will be construed as authorization for either Party to act as the agent for the other Party.

10.9Governing Law; Jurisdiction.  This Agreement will be governed and interpreted in accordance with the substantive laws of the State of New York, notwithstanding the provisions governing conflict of laws under such law of the State of New York to the contrary, provided that matters of intellectual property law will be determined in accordance with the national intellectual property laws relevant to the intellectual property in question.  Each Party agrees to submit to the jurisdiction of the state and federal courts located in the State of New York and waives any defense of inconvenient forum to the maintenance of any action or proceeding in such courts.

10.10Severability.  In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of the relevant jurisdiction, the validity of the remaining provisions will not be affected and the rights and obligations of the Parties will be construed and enforced as if the Agreement did not contain the particular provisions held to be unenforceable, provided that the Parties will negotiate in good faith a modification of this Agreement with a view to revising this Agreement in a manner which reflects, as closely as is reasonably practicable, the commercial terms of this Agreement as originally signed.

10.11No Implied Waivers.  The waiver by either Party of a breach or default of any provision of this Agreement by the other Party will not be construed as a waiver of any succeeding breach of the same or any other provision, nor will any delay or omission on the part of either Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

10.12Entire Agreement.  This Agreement, along with that certain Confidential Disclosure Agreement by and between the Parties dated as of June 1, 2004, as amended, and the related QUARK License Agreement by and between the Parties of even date herewith, constitute the entire agreement between the Parties with respect to its subject matter and supersedes all previous written or oral representations, agreements and understandings between the Parties.  This Agreement may be amended only by a writing signed by both Parties.

10.13Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

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Remainder of Page

Intentionally Left Blank

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IN WITNESS WHEREOF, the Parties hereto have set their hand as of the Effective Date.

ALNYLAM PHARMACEUTICALS, INC.
By:	/s/ Barry Greene
	Name:
	Title:
QUARK BIOTECH INC.
By:	/s/ Daniel Zurr
	Name: Daniel Zurr, Ph.D.
	Title: President and CEO

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EXHIBIT A

ALNYLAM Patent Rights-CRT

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

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APPENDIX I

TARGET

RTP801

[ * ]

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EX-10.30

EXHIBIT 10.30

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LICENSE AGREEMENT

This License Agreement (this “Agreement”) is entered into by and between ALNYLAM PHARMACEUTICALS, INC., a corporation organized under the laws of the State of Delaware having a principal office at 300 Third Street, Cambridge MA 02142 U.S.A. (“ALNYLAM”), and Quark Biotech, Inc. a corporation organized under the laws of the State of California having offices located at 6536 Kaiser Avenue, Fremont CA 94555 U.S.A. (“QUARK”).

INTRODUCTION

ALNYLAM owns or has rights to certain intellectual property covering technology useful for the discovery, development, manufacture, characterization, or use of therapeutic products that function through RNA interference (“RNAi”).

QUARK desires to research and potentially develop and commercialize products that function through RNAi directed at inhibition of expression of the target identified as p53, and QUARK seeks a non-exclusive license under certain intellectual property of ALNYLAM to research, develop and commercialize such products.

ALNYLAM is willing to grant the non-exclusive license to research, develop and commercialize products as described above to QUARK under the terms and conditions of this Agreement, and a related agreement of even date concerning other intellectual property.

In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, ALNYLAM and QUARK agree as follows:

TABLE OF CONTENTS

		PAGE
ARTICLE 1 — DEFINITIONS		1
1.1	Act	1
1.2	Affiliate	1
1.3	ALNYLAM	1
1.4	ALNYLAM Patent Rights	1
1.5	Approval	1
1.6	Commercialize or Commercialization	1
1.7	Commercially Reasonable Efforts	1
1.8	Confidential Information	2
1.9	Develop, Developing or Development	2
1.10	Effective Date	2
1.11	FDA	2
1.12	Field	2
1.13	First Commercial Sale	2
1.14	GAAP	2
1.15	Group I Patent Rights	2
1.16	Group II Patent Rights	2
1.17	IND or Investigational New Drug Application	2
1.18	Licensed RNAi Product	2
1.19	Major Market	3
1.20	Net Sales	3
1.21	Party	4
1.22	Phase I Clinical Trial	4
1.23	Phase II Clinical Trial	4
1.24	Phase III Clinical Trial	5
1.25	QUARK	5
1.26	Research or Researching	5
1.27	RNAi Product	5
1.28	Royalty Quarter	5
1.29	siRNA	5
1.30	Sublicensee	5
1.31	Target	5
1.32	Term	5
1.33	Territory	6
1.34	Valid Claim	6
ARTICLE 2 — LICENSE GRANT		6
2.1	Licenses of ALNYLAM Patent Rights	6
2.2	Retained Rights of ALNYLAM	7
2.3	Commercially Reasonable Efforts	7
2.4	Regulatory Filings	7

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ARTICLE 3 — FEES AND ROYALTIES		7
3.1	Upfront Fee	7
3.2	Maintenance Fee	7
3.3	Milestone Payments	7
3.4	Royalties	8
3.6	Reduction in Royalty Payments	10
ARTICLE 4 — INTELLECTUAL PROPERTY		10
4.1	Prosecution and Maintenance of Patent Rights	10
4.2	Infringement of ALNYLAM Rights	10
4.3	Claimed Infringement of Third Party Rights	11
4.4	Other Infringement Resolutions	11
4.5	Interpretation of Patent Judgments	12
4.6	Other Actions by a Third Party	12
ARTICLE 5 — CONFIDENTIAL INFORMATION		12
5.1	Non-Use and Non-Disclosure of Confidential Information	12
5.2	Limitation on Disclosures	13
ARTICLE 6 — REPORTS, TAXES AND PAYMENTS		13
6.1	Reports	13
6.2	Tax Withholding	13
6.3	Payments	14
6.4	Audits	14
ARTICLE 7 — INDEMNIFICATION AND INSURANCE		14
7.1	QUARK Indemnification	14
7.2	Insurance	15
ARTICLE 8 — EXPORT		15
8.1	General	15
8.2	Delays	16
8.3	Assistance	16
ARTICLE 9 — TERM AND TERMINATION		16
9.1	Term	16
9.2	Expiration	16
9.3	Material Breach	16
9.4	Termination by QUARK	16
9.5	Consequences of Termination; Survival	16
9.6	License upon Termination	17

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ARTICLE 10 — MISCELLANEOUS		17
10.1	Representations by QUARK and ALNYLAM	17
10.2	Dispute Resolution	18
10.3	Publicity	20
10.4	Force Majeure	20
10.5	Consequential Damages	20
10.6	Assignment	20
10.7	Notices	21
10.8	Independent Contractors	22
10.9	Governing Law; Jurisdiction	22
10.10	Severability	22
10.11	No Implied Waivers	22
10.12	Entire Agreement	22
10.13	Counterparts	22
EXHIBIT A	ALNYLAM PATENT RIGHTS	1
EXHIBIT B	IN-LICENSES COVERING ALNYLAM PATENT RIGHTS	1
APPENDIX I	TARGET	1
APPENDIX II	[ * ]	1

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ARTICLE I — DEFINITIONS

General.  When used in this Agreement, each of the following terms, whether used in the singular or plural, will have the meanings set forth in this Article I.

1.1Act means the United States Food, Drug and Cosmetic Act of 1938, 21 U.S.C.  §§ 301, 42 U.S.C., as such may be amended from time to time, and its implementing regulations.

1.2Affiliate means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a Party.  For purposes of the foregoing sentence, “control” will mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities, and (c) in any country where local law does not permit foreign entities to own stock or shares or have equity interest of fifty percent (50%) or more in such entities, the direct or indirect ownership or control of the maximum percentage of such stock or shares or equity interest as is permitted under local law.

1.3ALNYLAM means Alnylam Pharmaceuticals, Inc., a Delaware corporation, its Affiliates (including its subsidiaries, Alnylam U.S., Inc. and Alnylam Europe AG), and their respective successors and assigns.

1.4ALNYLAM Patent Rights means the patents and patent applications listed on Exhibit A and all patent applications hereafter filed that derive from the patents and patent applications listed on Exhibit A, including all continuations, continuations-in-part, divisions, applications for certificate of invention, provisionals, or any substitute applications, any patents issued with respect to any such patent applications; and all reissues, substitutions, confirmations, re-registrations, re-examinations, invalidations, supplementary protection certificates, certificates of invention and patents of addition of any such patents; and all foreign equivalents of any of the foregoing.

1.5Approval means, with respect to each Licensed RNAi Product Developed and Commercialized, the receipt of sufficient authorization from the appropriate regulatory authority on a country-by-country basis to market such Licensed RNAi Product in a country, including (where necessary in a particular country prior to marketing a Licensed RNAi Product) all separate pricing and/or reimbursement approvals that may be required for marketing.

1.6Commercialize or Commercialization means any and all activities directed to manufacturing (including, without limitation, by means of contract manufacturers), marketing, promoting, distributing, importing, exporting and selling an RNAi Product, in each case for commercial purposes, and activities directed to obtaining pricing and reimbursement approvals, as applicable.

1.7Commercially Reasonable Efforts means the level of efforts and resources that would be employed by a biotechnology company with equivalent resources to QUARK in

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connection with Researching, Developing, and Commercializing its own products of similar market potential at a similar stage of its product life, taking into account the apparent attributes of the molecule, the competitiveness of the relevant marketplace, the proprietary positions of third parties, regulatory structures, including the likelihood of obtaining an Approval, and the anticipated profitability of such product.

1.8Confidential Information means all proprietary or confidential information and materials, patentable or otherwise, of a Party which are disclosed by or on behalf of such Party to the other Party hereunder, including, without limitation, chemical substances, formulations, techniques, methodology, equipment, data, reports, know how, sources of supply, patent positioning, business plans, and also including without limitation proprietary and confidential information of third parties in possession of such Party under an obligation of confidentiality, whether or not related to making, using or selling Licensed RNAi Products.

1.9Develop, Developing or Development means with respect to an RNAi Product, preclinical and clinical drug development activities, including: test method development and stability testing, toxicology, formulations, quality assurance/quality control development, statistical analysis and report writing; clinical studies and regulatory affairs; Approval and registration.

1.10Effective Date means September 26, 2006.

1.11FDA means the United States Food and Drug Administration or any successor agency thereto.

1.12Field means the use of therapeutic RNAi Products against p53 for the treatment of hypoxic injury in humans, including but not limited to renal failure.

1.13First Commercial Sale means, with respect to each Licensed RNAi Product, the first commercial sale in a country as part of a nationwide introduction after receipt by Quark or any of its Affiliates or Sublicensees of Approval in such country, excluding de minimis named patient and compassionate use sales.

1.14GAAP means United States generally accepted accounting principles applied on a consistent basis.  Unless otherwise defined or stated, financial references shall be calculated by the accrual method under GAAP.

1.15Group I Patent Rights means the ALNYLAM Patent Rights identified on Exhibit A as Group I Patent Rights.

1.16Group II Patent Rights means the ALNYLAM Patent Rights identified on Exhibit A as Group II Patent Rights.

1.17IND or Investigational New Drug Application means a United States investigational new drug application or its equivalent or any corresponding foreign application.

1.18Licensed RNAi Product means an RNAi Product, the identification, characterization,

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validation, synthesis, development, use, formulation, manufacture, production or sale of which would infringe a Valid Claim but for the grant of the licenses set forth in this Agreement.

1.19Major Market means, individually and collectively, [ * ].

1.20Net Sales means, with respect to Licensed RNAi Products, the gross amount invoiced by QUARK or its Affiliates or Sublicensees on sales or other dispositions of such Licensed RNAi Products to third parties which are not Affiliates in those countries where at least a Valid Claim covering such Licensed RNAi Product then exists, less actual bad debts, sales returns and allowances actually paid, granted or accrued, including trade, quantity and cash discounts and any other adjustments, including granted on account of price adjustments, billing errors, rejected goods, damaged or defective goods, recalls, returns, rebates, chargebacks, reimbursements or similar payments granted or given to wholesalers or other distributors, buying groups, health care insurance carriers or other institutions, adjustments arising from consumer discount programs or similar programs, or arising in connection with any Discount or Savings Program (as defined below), customs or excise duties, sales tax, consumption tax, value added tax, and other similar taxes (except income taxes) measured by the production, sale, or delivery of goods in each case only if included as a specific line item on an invoice to such third party or duties relating to sales and any payments in respect of sales to the United States government, any State government or any foreign government, or to any governmental authority, or with respect to any government subsidized program or managed care organization, and charges for freight and insurance related to the return of Licensed RNAi Products and not otherwise paid by the customer.  For purposes of this definition of “Net Sales” only, “Discount or Savings Program” means any discount, rebate or reimbursement program applicable to a Licensed RNAi Product under which QUARK or its Affiliates or Sublicensees provides to low income, uninsured or other patients the opportunity to purchase pharmaceutical products at discounted prices.

In the event that a Licensed RNAi Product is sold in any country in the form of a combination product containing one or more therapeutically active ingredients in addition to such Licensed RNAi Product in any year, Net Sales of such combination product will be adjusted by multiplying actual Net Sales of such combination product in such country by the fraction A/(A+B), where A is the average Net Sales prices per daily dose during such year of the Licensed RNAi Product in such country, if sold separately in such country, and B is the average Net Sales prices per daily dose of any product containing the other therapeutically active ingredients in the combination product in such country, if sold separately in such country.  If, in a specific country, the product containing the other therapeutically active ingredients in the combination product are not sold separately in such country, Net Sales will be calculated by multiplying actual Net Sales of such combination product by the fraction A/C, where A is the average Net Sales prices per daily dose of the Licensed RNAi Product in such country and C is the average Net Sales prices per daily dose of the combination product in such country.  If, in a specific country, the Licensed RNAi Product is not sold separately in such country, Net Sales will be calculated by multiplying actual Net Sales of such combination product by the fraction (C-B)/C, where B is the average Net Sales prices per daily dose of the product containing

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the other therapeutically active ingredients in the combination product in such country and C is the average Net Sales prices per daily dose of the combination product in such country.  If, in a specific country, both the Licensed RNAi Product and the product containing the other therapeutically active ingredients in the combination product are not sold separately in such country, the Net Sales price for the Licensed RNAi Product and the product containing the other therapeutically active ingredients in the combination product will be negotiated by the Parties in good faith based upon the costs, overhead and profit as are then incurred for the Licensed RNAi Product and all similar substances then being made and marketed by the selling Party and having an ascertainable market price.

In the event QUARK or any of its Affiliates or Sublicensees receive non-monetary consideration in exchange for the sale or other disposition of Licensed RNAi Products to Third Parties which are not Affiliates, Net Sales for such sale or other disposition shall include the fair market value of the non-cash consideration received as a result of such sale or other disposition.  If such sale or other disposition occurred in a country where QUARK or such Affiliate or Sublicensee sold the same Licensed RNAi Product in commercial quantities solely for monetary consideration, the fair market value of the non-cash consideration received for such Licensed RNAi Product shall be determined on the basis of the value received in such solely monetary transactions.  If QUARK or its Affiliate or Sublicensee did not have sales or other dispositions of Licensed RNAi Product in such country solely for monetary consideration, then the fair market value of such products shall be determined on the basis of all relevant facts and circumstances.

In the event that QUARK or any of its Affiliates or Sublicensees price and sell Licensed RNAi Products in conjunction with other products of QUARK or its Affiliates or Sublicensees at a single price or rate or at a discount for collectively buying such products, then Net Sales with respect to such Licensed RNAi Product shall equal the number of units of the Licensed RNAi Product sold together with the non-Licensed RNAi Products multiplied by the average Net Sales price at which QUARK or any of its Affiliates or Sublicensees sold the Licensed RNAi Product individually to similar customers for similarly sized orders.

Net Sales shall be determined from books and records maintained in accordance with generally accepted accounting principles in the United States, consistently applied throughout the organization and across all products of the entity whose sales of Licensed RNAi Product are giving rise to Net Sales.

1.21Party means either ALNYLAM or QUARK; Parties means both ALNYLAM and QUARK.

1.22Phase I Clinical Trial means a study of a Licensed RNAi Product in humans the purpose of which includes the determination of safety and/or pharmacokinetic and pharmacodynamic profile in healthy individuals or patients.

1.23Phase II Clinical Trial means a study of a Licensed RNAi Product in patients of dose range and efficacy of a Licensed RNAi Product, which is intended to generate sufficient data to commence a Phase III Clinical Trial.

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1.24Phase III Clinical Trial means a controlled study of a Licensed RNAi Product in patients of the efficacy and safety of a Licensed RNAi Product which is prospectively designed to demonstrate statistically whether such Licensed RNAi Product is effective and safe for use in a particular indication in a manner sufficient to obtain Approval to market such Licensed RNAi Product.

1.25QUARK means Quark Biotech, Inc., a California corporation, and its successors and assigns.

1.26Research or Researching means identifying, evaluating, validating and optimizing RNAi Products.

1.27RNAi Product means a therapeutic product containing, comprised or based on siRNAs or siRNA derivatives or other moieties effective in gene function modulation and designed to modulate the function of the Target through RNA interference.

1.28Royalty Quarter means each of the four (4) thirteen (13) week periods (i) with respect to the United States, commencing on January 1 of any year, and (ii) with respect to any country in the Territory other than the United States, commencing on December 1 of any year.

1.29siRNA means a double-stranded ribonucleic acid (RNA)  composition designed to act primarily through an RNA interference mechanism that consists of either (a) two separate oligomers of native or chemically modified RNA that are hybridized to one another along a substantial portion of their lengths, or (b) a single oligomer of native or chemically modified RNA that is hybridized to itself by self-complementary base-pairing along a substantial portion of its length to form a hairpin.

1.30Sublicensee means a third party which is not an Affiliate of QUARK and to whom QUARK has granted a sublicense of all or a portion of the rights granted hereunder.  Without limiting the generality of the foregoing, a Sublicensee will be deemed to include any third party (a) who is granted a sublicense hereunder by QUARK pursuant to the terms of the outcome or settlement of any infringement or threatened infringement action and (b) who enters into any form of agreement with QUARK under which such third party will distribute a Licensed RNAi Product in any country in the Territory and who has twenty-five percent (25%) or more of the market share for such Licensed RNAi Product in such country.

1.31Target means p53 as more specifically described in Appendix I, and its encoded gene products, including any fragment or common genetic variants thereof that result from or prevent mutation in, or a single nucleotide polymorphism with respect to such gene.

1.32Term means the period of time that begins upon the Effective Date and ends upon the expiration or abandonment of all issued patents and filed applications within the ALNYLAM Patent Rights.

1.33Territory means worldwide.  For clarity, at any time the Territory will not include any country to which the exportation or re-exportation of materials, products and related

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technical data covered by this Agreement is restricted under U.S. export laws, which restriction has not been removed or waived.

1.34Valid Claim means any claim [ * ].

ARTICLE II — LICENSE GRANT

2.1Licenses of ALNYLAM Patent Rights.

(a)ALNYLAM grants to QUARK: a non-exclusive royalty-bearing right and license under the ALNYLAM Patent Rights, subject to the terms and conditions of the in-license(s) identified on Exhibit B governing ALNYLAM’s rights, for the sole and exclusive purposes of Researching, Developing and Commercializing Licensed RNAi Products for the Target in the Field in the Territory.  The license granted in this Section 2.1(a) will be for the Term and such license will include the right to grant sublicenses within the Field [ * ], subject to Section 2.1(c) of this Agreement and other terms and conditions of this Agreement and the in-license(s) identified on Exhibit B governing ALNYLAM’s rights under the ALNYLAM Patent Rights.

(b)The license granted in Section 2.1(a) of this Agreement will include the right to grant sublicenses for indications within the Field [ * ], subject to Section 2.1(c) of this Agreement and other terms and conditions of this Agreement and the in-license(s) identified on Exhibit B governing ALNYLAM’s rights under the ALNYLAM Patent Rights; [ * ], QUARK will notify ALNYLAM [ * ] in writing.  QUARK will enter into good faith negotiations [ * ] promptly after such notice is provided [ * ].

(c)In the event that QUARK sublicenses the rights granted under Section 2.1(a) above, QUARK will notify ALNYLAM within [ * ] after such sublicense becomes effective and provide a copy of the fully executed sublicense agreement to ALNYLAM within the same time frame (with such reasonable redactions as QUARK may make, provided that such redactions do not include provisions necessary to demonstrate compliance with the requirements of this Agreement), which shall be treated as Confidential Information of QUARK, provided that ALNYLAM may disclose such sublicense agreement(s) to third parties under confidence if and to the extent required in order to comply with ALNYLAM’s contractual obligations.

2.2Retained Rights of ALNYLAM.  Any rights of ALNYLAM not expressly granted to QUARK under this Agreement will be retained by ALNYLAM.  For clarity, this license does not include a license under ALNYLAM trade secrets, and no communication of significant technical information of either Party is expected to occur pursuant to this Agreement.

2.3Commercially Reasonable Efforts.  QUARK shall use Commercially Reasonable Efforts to carry out Research, Development, and Commercialization of Licensed RNAi Products [ * ] Development and Commercialization during the Term.  The activities of QUARK’s

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Affiliates, Sublicensees, subcontractors, collaborators, transferees, and successors shall be attributed to QUARK for purposes of determining QUARK’s satisfactions of the foregoing diligence obligations.  QUARK will [ * ] in written progress reports to be provided [ * ].  Such reports will include a summary of all significant Development and Commercialization events in respect of Licensed RNAi Products, including without limitation, the status of clinical trials underway (but not the results of such trials) and the achievement of any of the milestone events set forth in Article III of this Agreement; [ * ].

2.4Regulatory Filings.  QUARK, its Affiliates or Sublicensees will prepare, file, and prosecute all appropriate governmental applications and/or filings to obtain Approval of Licensed RNAi Products in the Field.  QUARK, its Affiliates or Sublicensees will own and maintain all such applications and/or filings and Approvals of the Licensed RNAi Products in the Field.

ARTICLE III — FEES AND ROYALTIES

3.1Upfront Fee.  Within [ * ] of the Effective Date of this Agreement, QUARK will pay to ALNYLAM an upfront, non-refundable fee of [ * ] as consideration for the license granted in Section 2.1(a).

3.2Maintenance Fee.  Until the First Commercial Sale of a Licensed RNAi Product, QUARK will pay to ALNYLAM an annual maintenance fee in the amount of [ * ] for the license granted under this Agreement.  Such annual maintenance fee shall be due within [ * ] after the anniversary of the Effective Date of this Agreement.

3.3Milestone Payments.  With respect to Licensed RNAi Products and the achievement by QUARK, its Affiliates or Sublicensees of the milestones in the table below for Licensed RNAi Products, QUARK will provide notice to ALNYLAM of the occurrence of a milestone event within [ * ] of such event, and make the indicated milestone payment to ALNYLAM within [ * ] after the occurrence of the relevant event.  Milestone payments will be due only once for the first RNAi Product against the Target being developed by QUARK, or an Affiliate or Sublicensee of QUARK, to achieve the relevant milestone event that is a Licensed RNAi Product or would be a Licensed RNAi Product if all of the claims included in the patent applications under ALNYLAM Patent Rights in existence in Major Market countries as of the date such milestone event is achieved were to issue in their then-current form.  For clarity, only one payment shall be due hereunder with respect to each of the following milestone events against the Target, regardless of the number of such RNAi Products that achieve such milestone.

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Milestone Event	Payment
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]

In the event one or more milestone events set out above are skipped for any reason, the payment for such skipped milestone events(s) will be due at the same time as the payment for the next achieved milestone event.

3.4Royalties.

(a)Royalties on Net Sales will be due and payable by QUARK to ALNYLAM on a Licensed RNAi Product-by-Licensed RNAi Product basis and on a country-by-country basis in the Territory until the expiration of the last Valid Claim covering such Licensed RNAi Product in such country.  Beginning with the first Royalty Quarter in which a First Commercial Sale in a country occurs, and during subsequent Royalty Quarters, running royalties are payable on Net Sales in the Territory in accordance with the applicable running royalty rates set out in subsections (b) and (c) of this Section 3.4.  If at the time of the First Commercial Sale or at any time thereafter all Valid Claims covering a Licensed RNAi Product expire in a particular country, then such RNAi Product shall be royalty-free in such country; [ * ]

(b)Subject to subsections (a) and (c) of this Section 3.4, the following royalties will be due to ALNYLAM (all references are to U.S. dollars):

Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]

(c)In the event a Licensed RNAi Product is covered by the license granted under that agreement between the Parties of even date with this Agreement which provides

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for the grant of rights to QUARK under patent rights in-licensed by ALNYLAM from Cancer Research Technology Limited, subject to subsection (a) of this Section 3.4, the applicable running royalty rates set out below will apply (all references are to U.S. dollars):

Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Products in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]
Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]	[ * ]

3.5Reduction in Royalty Payments.  In the event QUARK or any Affiliate or Sublicensee has Net Sales of Licensed RNAi Product in a country during the Term at a time when there are also sales of Generic Product in such country in the same calendar year, the Parties shall meet and confer for the purpose of determining an equitable reduction in the royalties payable by QUARK in respect of such Net Sales, taking into consideration factors such as the reduced margins realized by QUARK or its Affiliate or Sublicensee and also any Third Party obligations of ALNYLAM.  As used herein, the term “Generic Product” means any pharmaceutical product sold by a third party, not authorized by QUARK or any Affiliate or Sublicensee, that contains the same active pharmaceutical ingredient as a Licensed RNAi Product and is approved in reliance on the prior approval of a Licensed RNAi Product as determined by the applicable regulatory authority.

ARTICLE IV — INTELLECTUAL PROPERTY

4.1Prosecution and Maintenance of Patent Rights.  ALNYLAM will have the right and responsibility to file, prosecute and maintain patent protection in the Territory for all ALNYLAM Patent Rights.  [ * ]

4.2Infringement of ALNYLAM Rights.

(a)Each Party will promptly report in writing to the other Party during the Term any known or suspected infringement by a third party of any of the ALNYLAM Patent Rights of which such Party becomes aware, as such infringement relates to Research, Development or Commercialization of Licensed RNAi Products in the Field directed to the Target (a “Licensed Rights Infringement”) and will provide the other Party with all available evidence supporting such Licensed Rights Infringement.

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(b)ALNYLAM will have the sole and exclusive right to initiate an infringement or other appropriate suit in the Territory against any third party who at any time has infringed, or is suspected of infringing, any of the ALNYLAM Patent Rights.

(c)ALNYLAM will have the sole and exclusive right to select counsel for any suit referred to in subsection (b) above initiated by it and will pay all expenses of the suit, including without limitation attorneys’ fees and court costs.

4.3Claimed Infringement of Third Party Rights.

(a)In the event that a third party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliates or Sublicensees, claiming infringement of its patent rights based upon an assertion or claim arising out of the development, use, manufacture, distribution, importation or sale of Licensed RNAi Products (“Third Party Claim”), such Party will promptly notify the other Party of the claim or the commencement of such action, suit or proceeding, enclosing a copy of the claim and all papers served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

(b)Each Party shall have sole and exclusive responsibility for the defense of its own interests in actions in which they are named in connection with any Third Party Claim brought against either Party or any of their respective Affiliates or Sublicensees.  All litigation costs and expenses incurred by either Party in connection with the defense of such Third Party Claim will be borne by such Party.  Each Party will keep the other Party promptly informed, and may from time to time consult with the other Party regarding the status of any such Third Party Claims.

(c)Neither Party will settle any Third Party Claim in a manner that is in derogation of the rights of the other Party without obtaining the prior written consent of such other Party.

(d)THE PROVISIONS OF THIS SECTION 4.3 STATE THE ENTIRE RESPONSIBILITY OF THE PARTIES, AND THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES, IN THE CASE OF ANY THIRD PARTY CLAIMS OR VIOLATION OF ANY THIRD PARTY’S RIGHTS.

4.4Other Infringement Resolutions.   In the event of a dispute or potential dispute which has not ripened into a demand, claim or suit of the types described in Sections 4.2 and 4.3 of this Agreement, the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute will apply.

4.5Interpretation of Patent Judgments. If any claim relating to a patent under the ALNYLAM Patent Rights becomes the subject of a judgment, decree or decision of a

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court, tribunal, or other authority of competent jurisdiction in any country, which judgment, decree, or decision is or becomes final (there being no further right of review) and adjudicates the validity, enforceability, scope, or infringement of the same, the construction of such claim in such judgment, decree or decision shall be followed thereafter in such country in determining whether a product is a Licensed RNAi Product hereunder, not only as to such claim but also as to all other claims in such country to which such construction reasonably applies.  If at any time there are two or more conflicting final judgments, decrees, or decisions with respect to the same claim, the decision of the higher tribunal shall thereafter control, but if the tribunal be of equal rank, then the final judgment, decree, or decision more favorable to such claim shall control unless and until the majority of such tribunals of equal rank adopt or follow a less favorable final judgment, decree, or decision, in which event the latter shall control.

ARTICLE V — CONFIDENTIAL INFORMATION

5.1Non-Use and Non-Disclosure of Confidential Information.  Each Party agrees that all Confidential Information of a Party that is disclosed by a Party to the other Party (a) will not be used by the receiving Party except in connection with the activities contemplated by this Agreement or in order to further the purposes of this Agreement (b) will be maintained in confidence by the receiving Party and (c) will not be disclosed by the receiving Party to any third party who is not a consultant or advisor under an obligation of confidentiality to, the receiving Party or an Affiliate or Sublicensee of the receiving Party, without the prior written consent of the disclosing Party.  Notwithstanding the foregoing, the receiving Party will be entitled to use and disclose Confidential Information of the disclosing Party which (i) was known by the receiving Party or its Affiliates prior to its date of disclosure by the disclosing Party to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (ii) either before or after the date of the disclosure such Confidential Information is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party, (iii) either before or after the date of the disclosure by the disclosing Party to the receiving Party such Confidential Information becomes published or otherwise part of the public domain through no fault or omission on the part of the receiving Party or its Affiliates, (iv) is independently developed by or for the receiving Party or its Affiliates without reference to or in reliance upon the Confidential Information as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (v) is reasonably necessary to conduct clinical trials or to obtain regulatory approval of Licensed RNAi Products or for the prosecution and maintenance of Patent Rights, (vi) is reasonably required in order for a Party to obtain financing or conduct discussions with Development or Commercialization partners so long as such third party recipients are bound by an obligation of confidentiality or (vii) is required to be disclosed by the receiving Party to comply with applicable laws or regulations or legal process, including without limitation 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, provided that the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid or minimize the extent of such disclosure.

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5.2Limitation on Disclosures.  Each Party agrees that it will provide Confidential Information received from the other Party solely to its employees, consultants and advisors, and the employees, consultants and advisors of its Affiliates or Sublicensees as applicable, who have a legitimate business need to know and an obligation to maintain in confidence the Confidential Information of the disclosing Party.  The disclosing Party is liable for any breach of the non-disclosure obligation of its consultants, advisors, Affiliates and Sublicensees as applicable.

ARTICLE VI — REPORTS, TAXES AND PAYMENTS

6.1Reports.  As to each Royalty Quarter commencing with the Royalty Quarter during which the First Commercial Sale occurs, within [ * ] after the end of such Royalty Quarter (if QUARK has not entered into an agreement with a Sublicensee) and within [ * ] after the receipt by QUARK from a Sublicensee of such Sublicensee’s report, as required by such Sublicensee’s sublicense for each Royalty Quarter (if QUARK has entered into an agreement with a Sublicensee), QUARK will deliver to ALNYLAM a written report showing, on a country-by-country basis, the Net Sales of Licensed RNAi Products calculated under GAAP and its royalty obligation for such quarter with respect to such Net Sales under this Agreement together with wire transfer of an amount equal to such royalty obligation.  All Net Sales will be segmented in each such report according to sales by QUARK and each Affiliate and Sublicensee, as well as on a product-by-product basis, including the rates of exchange used to convert Net Sales to United States Dollars from the currency in which such sales were made.  For the purposes of this Agreement, the rates of exchange to be used for converting Net Sales to United States Dollars will be [ * ].

6.2Tax Withholding.  QUARK will use all reasonable and legal efforts to reduce tax withholding with respect to payments to be made to ALNYLAM.  Notwithstanding such efforts, if QUARK concludes that tax withholdings under the laws of any country are required with respect to payments to ALNYLAM, QUARK will make the full amount of the required payment to ALNYLAM after any tax withholding.  In any such case, QUARK shall provide ALNYLAM with a written explanation of such withholding and original receipts or other evidence reasonably desirable and sufficient to allow ALNYLAM to document such tax withholdings for purposes of claiming foreign tax credits and similar benefits.  For purposes of clarity, any payment due to ALNYLAM in respect of fees set out in Article III of this Agreement will be paid in the full amount specified after any tax withholding, with the amount of any tax withholding associated with such payments to be paid by QUARK to the appropriate government authority.

6.3Payments.  Unless otherwise agreed by the Parties, all payments required to be made under this Agreement will be made in United States Dollars via wire transfer to an account designated in advance by the receiving Party.

6.4Audits.

(a)           At any given point in time, QUARK will have on file and will require its Affiliates and Sublicensees to have on file complete and accurate records for the

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last [ * ] of all Net Sales of Licensed RNAi Products (including associated data).  ALNYLAM will have the right, [ * ] during each [ * ] period, to retain at its own expense an independent qualified certified public accountant reasonably acceptable to QUARK to review such records upon reasonable notice, during regular business hours.  If the audit demonstrates that the payments owed under this Agreement have been understated, QUARK will pay the balance to ALNYLAM together with interest on such amounts from the date on which such payment obligation accrued at a rate equal to [ * ].  If the underpayment is greater than [ * ] of the amount owed, then QUARK will reimburse ALNYLAM for its reasonable out-of-pocket costs of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, ALNYLAM will credit the balance against the next payment due from QUARK (without interest).

(b)QUARK shall require that the terms of any sublicense under its rights in this Agreement are fully in compliance with the terms and conditions of the in-licenses governing ALNYLAM’s rights under the ALNYLAM Patent Rights identified on Exhibit B, including without limitation, all obligations with respect to maintenance of records and audit rights.  ALNYLAM will provide QUARK in a timely manner with a true and complete copy (subject to redaction of financial and other information not material to ALNYLAM’s ability to sublicense rights licensed thereunder to QUARK under this Agreement) of all such in-licenses.

ARTICLE VII — INDEMNIFICATION AND INSURANCE

7.1QUARK Indemnification.  QUARK agrees to indemnify and hold harmless ALNYLAM and its Affiliates, and their respective agents, directors, officers and employees and their respective successors and assigns (the “ALNYLAM Indemnitees”) from and against any and all losses, costs, damages, fees or expenses (“Losses”) incurred by an ALNYLAM Indemnitee arising out of or in connection with any claim, suit, demand, investigation or proceeding brought by a third party (“Claim”) based on (a) the development, use, manufacture, distribution or sale of any Licensed RNAi Product by QUARK or any of its Affiliates or Sublicensees, including, but not limited to, any claims made against ALNYLAM by third parties alleging infringement, injury, damage, death or other consequence occurring to any person claimed to result, directly or indirectly, from the possession, use or consumption of, or treatment with, any Licensed RNAi Product, whether claimed by reason of breach of warranty, negligence, product defect or otherwise, and regardless of the form or forum in which any such claim is made, (b) any breach of any representation, warranty or covenant of QUARK in this Agreement, and (c) actions taken or omitted to be taken by QUARK or its Affiliates, subcontractors or Sublicensees, or the employees, agents or representatives of any of them in performing QUARK’s obligations under this Agreement.

The above indemnification shall not apply to the extent that any Losses are due to a material breach of any of ALNYLAM’s representations, warranties, covenants and/or obligations under this Agreement.

7.2Insurance.  With respect to its activities under this agreement, QUARK will secure and

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maintain in full force and effect throughout the term of this Agreement (and for at least [ * ] thereafter for claims made coverage), the following types and amounts of insurance coverage with carriers having a minimum AM Best rating of A, with per claim deductibles that do not exceed twenty thousand U.S. dollars ($20,000):

Comprehensive General Liability and Personal Injury, including coverage for contractual liability assumed by QUARK and coverage for QUARK independent contractor(s), with limits of at least [ * ] per occurrence and a general aggregate limit of [ * ].

Umbrella Liability, exclusive of the coverage provided by the policies listed above, with a limit of at least [ * ].

Products/Clinical/Professional Liability, exclusive of the coverage provided by the Comprehensive General Liability policy, with an aggregate limit of at least [ * ] with ALNYLAM to be named as an additional insured party with respect to each Licensed RNAi Product under such coverage.

Notwithstanding the above, the obligations under this Section 7.2 shall not apply to (i) QUARK after such time that QUARK achieves aggregate annual revenues for all pharmaceutical and diagnostic products in excess of [ * ], or (ii) any Affiliate or Sublicensee that has aggregate annual revenues for all pharmaceutical and diagnostic products in excess of one billion U.S. dollars [ * ]; provided, however, that QUARK shall provide written notice to ALNYLAM at such time as it determines this Section is in effect.

ARTICLE VIII — EXPORT

8.1General.  The Parties acknowledge that the exportation from the United States of materials, products and related technical data (and the re-export from elsewhere of United States origin items) may be subject to compliance with United States export laws, including without limitation the United States Bureau of Export Administration’s Export Administration Regulations, the Act and regulations of the FDA issued thereunder, and the United States Department of State’s International Traffic and Arms Regulations which restrict export, re-export, and release of materials, products and their related technical data, and the direct products of such technical data.  The Parties agree to comply with all applicable exports laws and to commit no act that, directly or indirectly, would violate any United States law, regulation, or treaty, or any other international treaty or agreement, relating to the export, re-export, or release of any materials, products or their related technical data to which the United States adheres or with which the United States complies.

8.2Delays.  The Parties acknowledge that they cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party.

8.3Assistance.  The Parties agree to provide assistance to one another in connection with each Party’s efforts to fulfill its obligations under this Article VIII.

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ARTICLE IX — TERM AND TERMINATION

9.1Term.  This Agreement will remain in effect until it expires as set forth in Section 9.2 unless terminated in accordance with this Article IX.

9.2Expiration.  Unless terminated earlier, this Agreement will expire at the end of the Term.

9.3Material Breach.

(a)ALNYLAM will have the right to terminate this Agreement, upon written notice to QUARK, in the event QUARK materially breaches its obligations under this Agreement and does not remedy such breach within [ * ] after receipt of written notice from ALNYLAM specifically identifying the breach and stating that ALNYLAM intends to terminate the Agreement if QUARK fails to remedy the breach within the [ * ] time period.

(b)In the event that ALNYLAM materially breaches its obligations under this Agreement, and does not remedy such breach within [ * ] after receipt of written notice from QUARK specifically identifying the breach, [ * ].

9.4Termination by QUARK.  QUARK will have the right to terminate this Agreement for any reason upon [ * ] prior written notice to ALNYLAM.

9.5Consequences of Termination; Survival.  Subject to Section 9.6, in the event this Agreement is terminated under Section 9.4 above, or by ALNYLAM under Section 9.3(a) above, all licenses and rights granted by ALNYLAM to QUARK under this Agreement will terminate; provided, however, that to the extent such licenses and rights are required in respect of clinical trials that are ongoing and cannot reasonably be terminated promptly due to health or safety reasons or the requirements of applicable law, such licenses and rights will continue in effect until such clinical trials are properly terminated.  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 without limitation the obligation to pay royalties for Licensed RNAi Product sold prior to such expiration or termination.  The provisions of Article V shall survive the expiration or termination of this Agreement and shall continue in effect as applicable for [ * ] from the date of initial disclosure.  In addition, the provisions of Article VII and Article X (other than 10.1), and Sections 9.5 and 9.6 shall survive any expiration or termination of this Agreement.

9.6License upon Termination.  Upon any termination of this Agreement pursuant to Sections 9.3, ALNYLAM shall enter into an agreement containing substantially the same provisions as this Agreement with any Sublicensees of QUARK existing at the time of such termination, covering the RNAi Products that had been licensed to such Sublicensee by QUARK, provided that at the time of any termination of this Agreement, such Sublicensees are in full compliance with the terms and conditions of the sublicense agreement.  ALNYLAM acknowledges that such Sublicensees of QUARK that are then in full compliance with the terms and conditions of their respective sublicense agreement

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are third party beneficiaries of this Agreement, including this Section 9.6.

ARTICLE X — MISCELLANEOUS

10.1Representations by QUARK and ALNYLAM.

(a)Subject to Section 10.1 (e) below, each Party hereby represents and warrants to the other Party as of the Effective Date:

(i)Such Party is a corporation duly organized under the laws of the state of its incorporation, and has all necessary power and authority to conduct its business in the manner in which it is currently being conducted, to own and use its assets in the manner in which its assets are currently owned and used, and to enter into and perform its obligations under this Agreement.

(ii)The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Party and its Board of Directors and no consent, approval, order or authorization of, or registration, declaration or filing with any third party or governmental authority is necessary for the execution, delivery or performance of this Agreement.

(iii)This Agreement constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to (A) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (B) rules of law governing specific performance, injunctive relief and other equitable remedies.

(b)QUARK represents and warrants to ALNYLAM that as of the Effective Date:

(i)Neither QUARK nor any of its Affiliates has been found in breach of any laws or regulations governing the production of medicinal products in the United States or any other jurisdiction within the Territory.

(ii)Neither QUARK nor any of its Affiliates has been debarred (nor is QUARK or any of its Affiliates using in any capacity in connection with its activities under this Agreement any person who has been debarred) by the FDA from working for or providing services to any pharmaceutical or biotechnology company under Section 306 of the United States Food, Drug and Cosmetic Act.

(iii)QUARK has never approved or commenced any proceeding, or made any election contemplating, the winding up or cessation of QUARK’s business or affairs or the assignment of QUARK’s material assets for the benefit of creditors.  To QUARK’s knowledge, no such proceeding is pending or threatened.

(c)QUARK acknowledges and agrees that ALNYLAM has not made any

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representation or warranty that it has or can provide all the rights that are necessary or useful to Research, Develop or Commercialize (as applicable) a Licensed RNAi Product.

(d)ALNYLAM represents and warrants to QUARK that as of the Effective Date of this Agreement it has the right to grant QUARK, its Affiliates and Sublicensees the licenses granted hereunder and has not granted any conflicting rights to any other person or entity.  ALNYLAM has delivered to QUARK a true and complete copy (except for the redaction of financial and other information not relevant to QUARK’s understanding of its rights and obligations under this Agreement) of each in-license identified on Exhibit B of this Agreement.  ALNYLAM shall maintain such in-licenses in effect and shall not amend any such in-license in a manner that is detrimental to the rights of QUARK under this Agreement without the prior written consent of QUARK.

10.2Dispute Resolution; Arbitration Procedures.

(a)In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof, the Parties will try to settle such dispute, controversy or claim amicably between themselves, including referring such dispute, controversy or claim to the Chief Operating Officer of ALNYLAM or his designee, and the Chief Executive Officer of QUARK, or any other officer designated by such Chief Executive Officer.  In the event that after [ * ] the designated officers of both Parties fail to resolve the matter, either Party may submit such dispute, controversy or claim that is not an “Excluded Claim” for resolution by binding arbitration under the Rules of Arbitration of the International Chamber of Commerce.  Judgment on the arbitration award may be entered in any court of competent jurisdiction.  The arbitration will be conducted in New York, New York and the language of all communications and proceedings relating to the arbitration will be English.

(b)The arbitration shall be conducted by a panel of three persons experienced in the pharmaceutical business.  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 of their appointment.  If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the Parties shall select two replacement arbitrators to replace the arbitrators originally selected, which replacement arbitrators shall select a third arbitrator within thirty (30) days of their appointment.  The Parties agree (a) to meet with the arbitrator(s) within thirty (30) days of selection and (b) to agree at that meeting or before upon procedures for discovery and as to the conduct of the hearing which will result in the hearing being concluded within no more than six (6) months after selection of the arbitrator(s) and in the award being rendered within thirty (30) days of any post-hearing briefing, which briefing will be completed by both sides within thirty (30) days after the conclusion of the hearings, or within sixty (60) days of the conclusion of the hearings if there is no post-hearing briefing.   In the event the Parties cannot agree upon procedures for

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discovery as set forth in (a) above, the arbitrator(s) shall provide that discovery be limited so that the schedule may be met without difficulty and so that neither side obtains more than a total of twenty-five (25) hours of deposition testimony from all witnesses, including both fact and expert witnesses, or serves more than ten (10) individual requests for documents or ten (10) individual requests for admission or interrogatories.  In no event will the arbitrator(s), absent agreement of the Parties, allow more than three (3) days per side for the hearing or more than a total of six (6) days for the hearing.  Multiple hearing days will be scheduled consecutively to the greatest extent possible.

(c)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 an equal share of the arbitrators’ fees and any administrative fees of arbitration.

(d)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 when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations.

(e)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.  The Parties further agree that any payments made pursuant to this Agreement pending resolution of the dispute shall be refunded if an arbitrator or court determines that such payments are not due.

(f)As used in this Section 10.2, the term “Excluded Claim” shall mean a dispute, controversy or claim that concerns (a) the validity or infringement of a patent, trademark or copyright; or (b) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory.  Excluded Claims shall be resolved in a court of competent jurisdiction.

10.3Publicity.  No disclosure of the existence of, or the terms of, this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by law or as set forth in this Section 10.3. The Parties acknowledge and agree that, upon and following the Effective Date, one or both of the Parties intends to issue a press release announcing the execution of this Agreement. 

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Notwithstanding the foregoing, the Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases prior to the issuance thereof.  Either Party may issue such press releases or otherwise make such public statements or disclosures (such as in annual reports to stockholders or filings with the Securities and Exchange Commission) as it determines, based on advice of counsel, are reasonably necessary to comply with applicable laws and regulations.  In addition, following any initial press release(s) announcing this Agreement or other public disclosure approved by both Parties, either Party shall be free to disclose, without the other Party’s prior written consent, the existence of this Agreement, the identity of the other Party and those terms of the Agreement which have already been publicly disclosed in accordance herewith.

10.4Force Majeure.  No failure or omission by the Parties in the performance of any obligation of this Agreement will be deemed a breach of this Agreement or create any liability if the same will arise from any cause or causes beyond the control of the Parties, including, but not limited to, the following: acts of God; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; flood; storm; earthquake; accident; war; rebellion; insurrection; riot; and invasion.  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.

10.5Consequential Damages.  NEITHER PARTY (INCLUDING ITS AFFILIATES AND SUBLICENSEES) SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFIT OR LOST REVENUE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 10.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OF A PARTY OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE V.

10.6Assignment.

(a)This Agreement and any of its rights and obligations may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent may not be unreasonably withheld, delayed or conditioned; provided, however, that either Party may assign this Agreement, without the consent of the other Party, in connection with such Party’s merger, consolidation or transfer or sale of all or substantially all of the assets of such Party; provided further that the successor, surviving entity, purchaser of assets, or transferee, as applicable, expressly assumes in writing such Party’s obligations under this Agreement.  Any purported assignment in contravention of this Section 10.6 shall, at the option of the non-assigning Party, be null and void and of no effect.

(b)This Agreement will be binding upon and inure to the benefit of the Parties and

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their permitted successors and assigns.

10.7Notices.

Notices to ALNYLAM will be addressed to:

Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, Massachusetts  02142

U.S.A.

Attention: Chief Operating Officer

Facsimile No.: (617) 551-8101

With copy to:

Faber Daeufer & Rosenberg PC

950 Winter Street, Suite 4500

Waltham, Massachusetts  02451

Attention: James R. McGarrah, Esq.

Facsimile No.: (781) 795-4747

Notices to QUARK will be addressed to:

Quark Biotech Inc.

6536 Kaiser Avenue

Fremont, CA 94555

Attention: Chief Executive Officer

Facsimile No.:  (510) 402-4021

With copy to:

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attention: Robert L. Jones, Esq.

Facsimile No.: (650) 849-7400

Any Party may change its address by giving notice to the other Party in the manner provided in this Section 10.7.  Any notice required or provided for by the terms of this Agreement will be in writing and will be (a) sent by certified mail, return receipt requested, postage prepaid, (b) sent via a reputable international express courier service, or (c) sent by facsimile transmission, with a copy by regular mail.  The effective date of the notice will be the actual date of receipt by the receiving Party.

10.8Independent Contractors.  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement will be

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construed as authorization for either Party to act as the agent for the other Party.

10.9Governing Law; Jurisdiction.  This Agreement will be governed and interpreted in accordance with the substantive laws of the State of New York, notwithstanding the provisions governing conflict of laws under such law of the State of New York to the contrary, provided that matters of intellectual property law will be determined in accordance with the national intellectual property laws relevant to the intellectual property in question.  Each Party agrees to submit to the jurisdiction of the state and federal courts located in the State of New York and waives any defense of inconvenient forum to the maintenance of any action or proceeding in such courts.

10.10Severability.  In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of the relevant jurisdiction, the validity of the remaining provisions will not be affected and the rights and obligations of the Parties will be construed and enforced as if the Agreement did not contain the particular provisions held to be unenforceable, provided that the Parties will negotiate in good faith a modification of this Agreement with a view to revising this Agreement in a manner which reflects, as closely as is reasonably practicable, the commercial terms of this Agreement as originally signed.

10.11No Implied Waivers.  The waiver by either Party of a breach or default of any provision of this Agreement by the other Party will not be construed as a waiver of any succeeding breach of the same or any other provision, nor will any delay or omission on the part of either Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

10.12Entire Agreement.  This Agreement, along with that certain Confidential Disclosure Agreement by and between the Parties dated as of June 1, 2004, as amended, and the related License Agreement by and between the Parties of even date herewith related to the Target and covering sublicense of patent rights owned by Cancer Research Technology Limited, constitute the entire agreement between the Parties with respect to its subject matter and supersedes all previous written or oral representations, agreements and understandings between the Parties.  This Agreement may be amended only by a writing signed by both Parties.

10.13Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

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                IN WITNESS WHEREOF, the Parties hereto have set their hand as of the Effective Date.

ALNYLAM PHARMACEUTICALS, INC.
By:	/s/ Barry Greene
	Name:
	Title:
QUARK BIOTECH INC.
By:	/s/ Daniel Zurr
	Name: Daniel Zurr
	Title: President and CEO

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EXHIBIT A

ALNYLAM Patent Rights

Group I

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

Group II

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

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EXHIBIT B

IN-LICENSES COVERING ALNYLAM PATENT RIGHTS

[ * ]

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APPENDIX I

TARGET

P53

[ * ]

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APPENDIX II

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EX-10.31

EXHIBIT 10.31

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LICENSE AGREEMENT

This License Agreement (this “Agreement”) is entered into by and between ALNYLAM PHARMACEUTICALS, INC., a corporation organized under the laws of the State of Delaware having a principal office at 300 Third Street, Cambridge MA 02142 U.S.A. (“ALNYLAM”), and Quark Biotech, Inc. a corporation organized under the laws of the State of California having offices located at 6536 Kaiser Avenue, Fremont CA 94555 U.S.A. (“QUARK”).

INTRODUCTION

ALNYLAM owns or has rights to certain intellectual property covering technology useful for the discovery, development, manufacture, characterization, or use of therapeutic products that function through RNA interference (“RNAi”).

QUARK desires to research and potentially develop and commercialize products that function through RNAi directed at inhibition of expression of the target identified as p53, and QUARK seeks a non-exclusive license under certain intellectual property of ALNYLAM to research, develop and commercialize such products.

ALNYLAM is licensed under certain intellectual property pursuant to an agreement with Cancer Research Technology Limited effective July 18, 2003 (“CRT Agreement”) and is permitted to grant sublicenses thereunder.

ALNYLAM is willing to grant a non-exclusive license under its rights under the CRT Agreement to research, develop and commercialize products as described above to QUARK under the terms and conditions of this Agreement, and a related agreement of even date concerning other intellectual property.

In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt of which is hereby acknowledged, ALNYLAM and QUARK agree as follows:

TABLE OF CONTENTS

		PAGE
ARTICLE I — DEFINITIONS		1
1.1	Act	1
1.2	Affiliate	1
1.3	ALNYLAM	1
1.4	ALNYLAM Patent Rights-CRT	1
1.5	Approval	1
1.6	Commercialize or Commercialization	1
1.7	Commercially Reasonable Efforts	1
1.8	Confidential Information	2
1.9	CRT	2
1.10	Develop, Developing or Development	2
1.11	Effective Date	2
1.12	FDA	2
1.13	Field	2
1.14	First Commercial Sale	2
1.15	GAAP	2
1.16	Group I Patent Rights	2
1.17	Group II Patent Rights	2
1.18	IND or Investigational New Drug Application	2
1.19	Issued Valid Claim	2
1.20	Licensed Product	3
1.21	Major Market	3
1.22	Net Sales	3
1.23	Party	3
1.24	Phase I Clinical Trial	3
1.25	Phase II Clinical Trial	3
1.26	Phase III Clinical Trial	3
1.27	QUARK	3
1.29	Research or Researching	3
1.30	RNAi Product	3

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1.31	Royalty Licensed Product	3
1.32	Royalty Quarter	3
1.33	Sublicensee	3
1.34	Target	4
1.35	Term	4
1.36	Territory	4
1.37	Third Party	4
1.38	Valid Claim	4
ARTICLE II — LICENSE GRANT		4
2.1	Licenses of ALNYLAM Patent Rights-CRT	4
2.2	Retained Rights of ALNYLAM	5
2.3	Commercially Reasonable Efforts.	6
2.4	Regulatory Filings	6
ARTICLE III — FEES AND ROYALTIES		6
3.1	Upfront Fee	6
3.2	Maintenance Fee	6
3.3	Milestone Payments	6
3.4	Royalties	7
ARTICLE IV — INTELLECTUAL PROPERTY		8
4.1	Prosecution and Maintenance of Patent Rights	8
4.2	Infringement of ALNYLAM Rights-CRT	8
4.3	Claimed Infringement of Third Party Rights	8
4.4	Other Infringement Resolutions	9
4.5	Interpretation of Patent Judgments	9
ARTICLE V — CONFIDENTIAL INFORMATION		9
5.1	Non-Use and Non-Disclosure of Confidential Information	9
5.2	Limitation on Disclosures	10
ARTICLE VI — REPORTS, TAXES AND PAYMENTS		11
6.1	Reports	11
6.2	Tax Withholding	11

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6.3	Payments	11
6.4	Audits	11
ARTICLE VII — INDEMNIFICATION AND INSURANCE		12
7.1	QUARK Indemnification	12
7.2	Insurance	13
ARTICLE VIII — EXPORT		13
8.1	General	13
8.2	Delays	13
8.3	Assistance	14
ARTICLE IX — TERM AND TERMINATION		14
9.1	Term	14
9.2	Expiration	14
9.3	Material Breach	14
9.4	Termination by QUARK	14
9.5	Consequences of Termination; Survival	14
9.6	License upon Termination	15
9.7	Termination of CRT Agreement	15
ARTICLE X — MISCELLANEOUS		15
10.1	Representations by QUARK and ALNYLAM	15
10.2	Dispute Resolution; Arbitration Procedures	17
10.3	Publicity	18
10.4	Force Majeure	18
10.5	Consequential Damages	19
10.6	Assignment	19
10.7	Notices	19
10.8	Independent Contractors	20
10.9	Governing Law; Jurisdiction	20
10.10	Severability	20
10.11	No Implied Waivers	21
10.12	Entire Agreement	21

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10.13	Counterparts	21
EXHIBIT A	ALNYLAM Patent Rights	23
APPENDIX I	TARGET	24
APPENDIX II	[ * ]	25

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ARTICLE I — DEFINITIONS

General.  When used in this Agreement, each of the following terms, whether used in the singular or plural, will have the meanings set forth in this Article I.  Capitalized terms not defined herein may be defined in the CRT Agreement, as specifically referenced in the context of the sentence applying such capitalized term(s).

1.1Act means the United States Food, Drug and Cosmetic Act of 1938, 21 U.S.C.  §§ 301, 42 U.S.C., as such may be amended from time to time, and its implementing regulations.

1.2Affiliate means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by, or is under common control with a Party.  For purposes of the foregoing sentence, “control” will mean (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities, and (c) in any country where local law does not permit foreign entities to own stock or shares or have equity interest of fifty percent (50%) or more in such entities, the direct or indirect ownership or control of the maximum percentage of such stock or shares or equity interest as is permitted under local law.

1.3ALNYLAM means Alnylam Pharmaceuticals, Inc., a Delaware corporation, its Affiliates (including its subsidiaries, Alnylam U.S., Inc. and Alnylam Europe AG), and their respective successors and assigns.

1.4ALNYLAM Patent Rights-CRT means the CRT Patent Rights as defined in the CRT Agreement, which include the Patent Rights listed in Exhibit A attached to this Agreement.

1.5Approval means, with respect to each Licensed Product Developed and Commercialized, the receipt of sufficient authorization from the appropriate regulatory authority on a country-by-country basis to market such Licensed Product in a country, including (where necessary in a particular country prior to marketing a Licensed Product) all separate pricing and/or reimbursement approvals that may be required for marketing.

1.6Commercialize or Commercialization means any and all activities directed to manufacturing (including, without limitation, by means of contract manufacturers), marketing, promoting, distributing, importing, exporting and selling an RNAi Product, in each case for commercial purposes, and activities directed to obtaining pricing and reimbursement approvals, as applicable.

1.7Commercially Reasonable Efforts means the level of efforts and resources that would be employed by a biotechnology company with equivalent resources to QUARK in connection with Researching, Developing, and Commercializing its own products of similar market potential at a similar stage of its product life, taking into account the apparent attributes of the molecule, the competitiveness of the relevant marketplace, the proprietary positions of third parties, regulatory structures, including the likelihood of

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obtaining an Approval, and the anticipated profitability of such product.

1.8Confidential Information means all proprietary or confidential information and materials, patentable or otherwise, of a Party which are disclosed by or on behalf of such Party to the other Party hereunder, including, without limitation, chemical substances, formulations, techniques, methodology, equipment, data, reports, know how, sources of supply, patent positioning, business plans, and also including without limitation proprietary and confidential information of third parties in possession of such Party under an obligation of confidentiality, whether or not related to making, using or selling Licensed Products.

1.9CRT means Cancer Research Technology Limited, a company registered in England (registered number 1626049) whose registered office is at Sardinia House, Sardinia Street 61, London WC2A 3NL.

1.10Develop, Developing or Development means with respect to an RNAi Product, preclinical and clinical drug development activities, including: test method development and stability testing, toxicology, formulations, quality assurance/quality control development, statistical analysis and report writing; clinical studies and regulatory affairs; Approval and registration.

1.11Effective Date means September 26, 2006.

1.12FDA means the United States Food and Drug Administration or any successor agency thereto.

1.13Field means the use of therapeutic RNAi Products against the Target for the treatment of hypoxic injury in humans, including but not limited to renal failure.

1.14First Commercial Sale means, with respect to each Licensed Product, the first commercial sale in a country as part of a nationwide introduction after receipt by Quark or any of its Affiliates or Sublicensees of Approval in such country, excluding de minimis named patient and compassionate use sales.

1.15GAAP means United States generally accepted accounting principles applied on a consistent basis.  Unless otherwise defined or stated, financial references shall be calculated by the accrual method under GAAP.

1.16Group I Patent Rights means the ALNYLAM patent rights identified on Exhibit A of the QUARK License Agreement.

1.17Group II Patent Rights means the ALNYLAM patent rights identified on Exhibit A of the QUARK License Agreement.

1.18IND or Investigational New Drug Application means a United States investigational new drug application or its equivalent or any corresponding foreign application.

1.19Issued Valid Claim means “Issued Valid Claim” as defined in the CRT Agreement.

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1.20Licensed Product means “Licensed Product”, as defined in the CRT Agreement.

1.21Major Market means, individually and collectively, [ * ].

1.22Net Sales means “Net Sales” as defined in the CRT Agreement.

1.23Party means either ALNYLAM or QUARK; Parties means both ALNYLAM and QUARK.

1.24Phase I Clinical Trial means a study of a Licensed Product in humans the purpose of which includes the determination of safety and/or pharmacokinetic and pharmacodynamic profile in healthy individuals or patients.

1.25Phase II Clinical Trial means a study of a Licensed Product in patients of dose range and efficacy of a Licensed Product, which is intended to generate sufficient data to commence a Phase III Clinical Trial.

1.26Phase III Clinical Trial means a controlled study of a Licensed Product in patients of the efficacy and safety of a Licensed Product which is prospectively designed to demonstrate statistically whether such Licensed Product is effective and safe for use in a particular indication in a manner sufficient to obtain Approval to market such Licensed Product.

1.27QUARK means Quark Biotech, Inc., a California corporation, and its successors and assigns.

1.28QUARK License Agreement means the License Agreement entered into by and between QUARK and ALNYLAM dated September 25, 2006 with respect to the Target.

1.29Research or Researching means identifying, evaluating, validating and optimizing RNAi Products.

1.30RNAi Product means a therapeutic product containing, comprised or based on small interfering RNAs or small interfering RNA derivatives or other moieties effective in gene function modulation and designed to modulate the function of the Target through RNA interference.

1.31Royalty Licensed Product means “Royalty Licensed Product”, as defined in the CRT Agreement, against the Target.

1.32Royalty Quarter means each of the four (4) thirteen (13) week periods (i) with respect to the United States, commencing on January 1 of any year, and (ii) with respect to any country in the Territory other than the United States, commencing on December 1 of any year.

1.33Sublicensee means a third party which is not an Affiliate of QUARK and to whom QUARK has granted a sublicense of all or a portion of the rights granted hereunder.  Without limiting the generality of the foregoing, a Sublicensee will be deemed to include any third party (a) who is granted a sublicense hereunder by QUARK pursuant to the

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terms of the outcome or settlement of any infringement or threatened infringement action and (b) who enters into any form of agreement with QUARK under which such third party will distribute a Licensed Product in any country in the Territory and who has twenty-five percent (25%) or more of the market share for such Licensed Product in such country.

1.34Target means p53 as more specifically described in Appendix I, and its encoded gene products, including any fragment or common genetic variants thereof that result from or prevent mutation in, or a single nucleotide polymorphism with respect to such gene.

1.35Term means the period of time that begins upon the Effective Date and ends upon the later of (a) the expiration of the last to expire of the ALNYLAM Patent Rights-CRT with a Valid Claim in the Territory, or (b) the expiration of the obligation to pay royalties in this Agreement.

1.36Territory means worldwide.  For clarity, at any time the Territory will not include any country to which the exportation or re-exportation of materials, products and related technical data covered by this Agreement is restricted under U.S. export laws, which restriction has not been removed or waived.

1.37Third Party means any entity or person other than the Parties or an Affiliate of a Party.

1.38Valid Claim means “Valid Claim” as defined in the CRT Agreement.

ARTICLE II — LICENSE GRANT

2.1Licenses of ALNYLAM Patent Rights-CRT.

(a)ALNYLAM grants to QUARK:  a non-exclusive royalty-bearing right and license under the ALNYLAM  Patent Rights-CRT, subject to and under the terms and conditions of the CRT Agreement, for the sole and exclusive purposes of Researching, Developing, having Developed, using, keeping, making, having made, importing, having imported, selling, having sold, Commercializing, and otherwise disposing or offering to dispose of Licensed Products for the Target in the Field in the Territory.  The license granted in this Section 2.1(a) will be for the Term and such license will include the right to grant sublicenses within the Field  [ * ], subject to Section 2.1(d) of this Agreement and other terms and conditions of this Agreement and the CRT Agreement, including without limitation Clauses 2.4 and 15 of the CRT Agreement.  [ * ]

(b)The license granted in Section 2.1(a) of this Agreement will include the right to grant sublicenses for indications within the Field [ * ], subject to Section 2.1(d) of this Agreement and other terms and conditions of this Agreement and the CRT Agreement, including without limitation Clauses 2.4 and 15 of the CRT Agreement; [ * ] QUARK will notify ALNYLAM and [ * ] in writing.  QUARK will enter into good faith negotiations [ * ] promptly after such notice is provided [ * ]

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(c)QUARK acknowledges and agrees that, pursuant to Clause 2.3 of the CRT Agreement, [ * ]

(d)In the event that QUARK sublicenses the rights granted under Section 2.1(a) above, QUARK will notify ALNYLAM within [ * ] after such sublicense becomes effective and provide a copy of the fully executed sublicense agreement to ALNYLAM within the same time frame (with such reasonable redactions as QUARK may make, provided that such redactions do not include provisions necessary to demonstrate compliance with the requirements of this Agreement or the CRT Agreement), which shall be treated as Confidential Information of QUARK, provided that ALNYLAM may disclose such sublicense agreement(s) to Third Parties under confidence if and to the extent required in order to comply with ALNYLAM’s contractual obligations.

2.2Retained Rights of ALNYLAM.  Any rights of ALNYLAM not expressly granted to QUARK under this Agreement will be retained by ALNYLAM. For clarity, this license does not include a license under CRT trade secrets, and no communication of significant technical information of either party is expected to occur pursuant to this Agreement.

2.3Commercially Reasonable Efforts.  QUARK shall use Commercially Reasonable Efforts to carry out Research, Development, and Commercialization of Licensed Products [ * ] Development and Commercialization during the Term.  The activities of QUARK’s Affiliates, Sublicensees, subcontractors, collaborators, transferees, and successors shall be attributed to QUARK for purposes of determining QUARK’s satisfactions of the foregoing diligence obligations.  QUARK will [ * ] in written progress reports to be provided [ * ]  Such reports will include a summary of all significant Development and Commercialization events in respect of Licensed Products, including without limitation, the status of clinical trials underway (but not the results of such trials) and the achievement of any of the milestone events set forth in Article III of this Agreement; [ * ]

2.4Regulatory Filings.  QUARK, its Affiliates or Sublicensees will prepare, file, and prosecute all appropriate governmental applications and/or filings to obtain Approval of Licensed Products in the Field.  QUARK, its Affiliates or Sublicensees will own and maintain all such applications and/or filings and Approvals of the Licensed Products in the Field.

ARTICLE III — FEES AND ROYALTIES

3.1Upfront Fee.  Within [ * ] days of the Effective Date of this Agreement, QUARK will pay to ALNYLAM an upfront, non-refundable fee of [ * ] as consideration for the license granted in Section 2.1(a).

3.2Maintenance Fee.  Until the First Commercial Sale of a Licensed Product, QUARK will pay to ALNYLAM an annual maintenance fee in the amount of [ * ] for the license granted under this Agreement.  Such annual maintenance fee shall be due within [ * ] after the anniversary of the Effective Date of this Agreement.

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3.3Milestone Payments.  With respect to Licensed Products and the achievement by QUARK, its Affiliates or Sublicensees of the milestones in the table below for Licensed Products, QUARK will provide notice to ALNYLAM of the occurrence of a milestone event within [ * ] of such event, and make the indicated milestone payment to ALNYLAM within [ * ] after the occurrence of the relevant event.  Milestone payments will be due only once for the first Licensed Product against the Target to achieve the relevant milestone event.  For clarity, only one payment shall be due hereunder with respect to each of the following milestone events against the Target, regardless of the number of such Licensed Products that achieve such milestone.

Milestone Event	Payment
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]
[ * ]	[ * ]

In the event one or more milestone events set out above are skipped for any reason, the payment for such skipped milestone events(s) will be due at the same time as the payment for the next achieved milestone event.

3.4Royalties.

(a)With respect to each Royalty Licensed Product, running royalties on Net Sales will be due and payable by QUARK to ALNYLAM on a country-by-country basis in the Territory until the expiration of the last ALNYLAM Patent Rights-CRT with an Issued Valid Claim covering such Royalty Licensed Product in such country.  Beginning with the first Royalty Quarter in which a First Commercial Sale in a country occurs, and during subsequent Royalty Quarters, running royalties are payable on Net Sales in the Territory occurring in a calendar year in accordance with the applicable running royalty rates set out in subsections (b) and (c) of this Section 3.4.  If at the time of the First Commercial Sale or at any time thereafter all Issued Valid Claims covering a Royalty Licensed Product expire in a particular country, then such Royalty Product shall be royalty-free in such country; [ * ]

(b)For Net Sales in the Territory in the Field, subject to subsection (c) of this Section 3.4, the following royalties will be due to ALNYLAM (all references are to U.S. dollars):

Royalty Rate for Net Sales of Royalty Licensed Products [ * ]	[ * ]
Royalty Rate for Net Sales of Royalty Licensed Products [ * ]	[ * ]
Royalty Rate for Net Sales of Royalty Licensed Products [ * ]	[ * ]

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(c)In the event a Royalty Licensed Product is covered by the license granted under the Quark License Agreement (either the Group I Patent Rights or Group II Patents Rights as defined therein, or both), the applicable running royalty rates set out below will apply (all references are to U.S. dollars):

Royalty Rate for Net Sales of Royalty Licensed Product [ * ]

ARTICLE IV — INTELLECTUAL PROPERTY

4.1Prosecution and Maintenance of Patent Rights.  ALNYLAM will have the right and responsibility to file, prosecute and maintain patent protection in the Territory for all ALNYLAM Patent Rights-CRT.  [ * ]

4.2Infringement of ALNYLAM Rights-CRT.

(a)Each Party will promptly report in writing to the other Party during the Term any known or suspected infringement by a third party of any of the ALNYLAM Patent Rights-CRT of which such Party becomes aware, as such infringement relates to Research, Development or Commercialization of Licensed Products in the Field directed to the Target (a “Licensed Rights Infringement”) and will provide the other Party with all available evidence supporting such Licensed Rights Infringement.

(b)ALNYLAM will have the sole and exclusive right to initiate an infringement or other appropriate suit in the Territory against any third party who at any time has infringed, or is suspected of infringing, any of the ALNYLAM Patent Rights-CRT.

(c)ALNYLAM will have the sole and exclusive right to select counsel for any suit referred to in subsection (b) above initiated by it and will pay all expenses of the suit, including without limitation attorneys’ fees and court costs.

4.3Claimed Infringement of Third Party Rights.

(a)In the event that a third party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, either Party, or any of their respective Affiliates or Sublicensees, claiming infringement of its Patent Rights based upon an assertion or claim arising out of the development, use, manufacture, distribution, importation or sale of Licensed Products (“Third Party Claim”), such Party will promptly notify the other Party of the claim or the commencement of such action, suit or proceeding, enclosing a copy of the claim and all papers

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served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

(b)Each Party shall have sole and exclusive responsibility for the defense of its own interests in actions in which they are named in connection with any Third Party Claim brought against either Party or any of their respective Affiliates or Sublicensees.  All litigation costs and expenses incurred by either Party in connection with the defense of such Third Party Claim will be borne by such Party.  Each Party will keep the other Party promptly informed, and may from time to time consult with the other Party regarding the status of any such Third Party Claims.

(c)Neither Party will settle any Third Party Claim in a manner that is in derogation of the rights of the other Party without obtaining the prior written consent of such other Party.

(d)THE PROVISIONS OF THIS SECTION 4.3 STATE THE ENTIRE RESPONSIBILITY OF THE PARTIES, AND THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES, IN THE CASE OF ANY THIRD PARTY CLAIMS OR VIOLATION OF ANY THIRD PARTY’S RIGHTS.

4.4Other Infringement Resolutions.  In the event of a dispute or potential dispute which has not ripened into a demand, claim or suit of the types described in Sections 4.2 and 4.3 of this Agreement, the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute will apply.

4.5Interpretation of Patent Judgments.  If any claim relating to a patent under the ALNYLAM Patent Rights-CRT becomes the subject of a judgment, decree or decision of a court, tribunal, or other authority of competent jurisdiction in any country, which judgment, decree, or decision is or becomes final (there being no further right of review) and adjudicates the validity, enforceability, scope, or infringement of the same, the construction of such claim in such judgment, decree or decision shall be followed thereafter in such country in determining whether a product is a Licensed Product hereunder, not only as to such claim but also as to all other claims in such country to which such construction reasonably applies.  If at any time there are two or more conflicting final judgments, decrees, or decisions with respect to the same claim, the decision of the higher tribunal shall thereafter control, but if the tribunal be of equal rank, then the final judgment, decree, or decision more favorable to such claim shall control unless and until the majority of such tribunals of equal rank adopt or follow a less favorable final judgment, decree, or decision, in which event the latter shall control.

ARTICLE V — CONFIDENTIAL INFORMATION

5.1Non-Use and Non-Disclosure of Confidential Information.  Each Party agrees that all

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Confidential Information of a Party that is disclosed by a Party to the other Party (a) will not be used by the receiving Party except in connection with the activities contemplated by this Agreement or in order to further the purposes of this Agreement (b) will be maintained in confidence by the receiving Party and (c) will not be disclosed by the receiving Party to any third party who is not a consultant or advisor under an obligation of confidentiality to, the receiving Party or an Affiliate or Sublicensee of the receiving Party, without the prior written consent of the disclosing Party.  Notwithstanding the foregoing, the receiving Party will be entitled to use and disclose Confidential Information of the disclosing Party which (i) was known by the receiving Party or its Affiliates prior to its date of disclosure by the disclosing Party to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (ii) either before or after the date of the disclosure such Confidential Information is lawfully disclosed to the receiving Party or its Affiliates by sources other than the disclosing Party, (iii) either before or after the date of the disclosure by the disclosing Party to the receiving Party such Confidential Information becomes published or otherwise part of the public domain through no fault or omission on the part of the receiving Party or its Affiliates, (iv) is independently developed by or for the receiving Party or its Affiliates without reference to or in reliance upon the Confidential Information as demonstrated by legally admissible evidence available to the receiving Party or its Affiliates, (v) is reasonably necessary to conduct clinical trials or to obtain regulatory approval of Licensed Products or for the prosecution and maintenance of Patent Rights, (vi) is reasonably required in order for a Party to obtain financing or conduct discussions with Development or Commercialization partners so long as such third party recipients are bound by an obligation of confidentiality or (vii) is required to be disclosed by the receiving Party to comply with applicable laws or regulations or legal process, including without limitation 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, provided that the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid or minimize the extent of such disclosure.

5.2Limitation on Disclosures.  Each Party agrees that it will provide Confidential Information received from the other Party solely to its employees, consultants and advisors, and the employees, consultants and advisors of its Affiliates or Sublicensees as applicable, who have a legitimate business need to know and an obligation to maintain in confidence the Confidential Information of the disclosing Party.  The disclosing Party is liable for any breach of the non-disclosure obligation of its consultants, advisors, Affiliates and Sublicensees as applicable.

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ARTICLE VI — REPORTS, TAXES AND PAYMENTS

6.1Reports.  As to each Royalty Quarter commencing with the Royalty Quarter during which the First Commercial Sale occurs, within [ * ] after the end of such Royalty Quarter (if QUARK has not entered into an agreement with a Sublicensee) and within [ * ] after the receipt by QUARK from a Sublicensee of such Sublicensee’s report, as required by such Sublicensee’s sublicense for each Royalty Quarter (if QUARK has entered into an agreement with a Sublicensee), QUARK will deliver to ALNYLAM a written report showing , on a country-by-country basis, the Net Sales of Royalty Licensed Products calculated under GAAP and its royalty obligation for such quarter with respect to such Net Sales under this Agreement together with wire transfer of an amount equal to such royalty obligation.  All Net Sales will be segmented in each such report according to sales by QUARK and each Affiliate and Sublicensee, as well as on a product-by-product basis, including the rates of exchange used to convert Net Sales to United States Dollars from the currency in which such sales were made.  For the purposes of this Agreement, the rates of exchange to be used for converting Net Sales to United States Dollars will be [ * ].

6.2Tax Withholding.  QUARK will use all reasonable and legal efforts to reduce tax withholding with respect to payments to be made to ALNYLAM.  Notwithstanding such efforts, if QUARK concludes that tax withholdings under the laws of any country are required with respect to payments to ALNYLAM, QUARK will make the full amount of the required payment to ALNYLAM after any tax withholding.  In any such case, QUARK shall provide ALNYLAM with a written explanation of such withholding and original receipts or other evidence reasonably desirable and sufficient to allow ALNYLAM to document such tax withholdings for purposes of claiming foreign tax credits and similar benefits.  For purposes of clarity, any payment due to ALNYLAM in respect of fees set out in Article III of this Agreement will be paid in the full amount specified after any tax withholding, with the amount of any tax withholding associated with such payments to be paid by QUARK to the appropriate government authority.

6.3Payments.  Unless otherwise agreed by the Parties, all payments required to be made under this Agreement will be made in United States Dollars via wire transfer to an account designated in advance by the receiving Party.

6.4Audits.

(a)At any given point in time, QUARK will have on file and will require its Affiliates and Sublicensees to have on file complete and accurate records containing all data necessary for the calculation of the amounts payable by it to ALNYLAM pursuant to this Agreement.  Such records and books of account shall be kept for [ * ] following the end of the calendar year to which they relate.  ALNYLAM will have the right, [ * ] during each [ * ] period, to retain at its own expense an independent qualified certified public accountant reasonably acceptable to QUARK to review such records upon reasonable notice during regular business hours, subject to the confidentiality terms set forth in this Agreement.  If the audit demonstrates that the payments owed under this

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Agreement have been understated, QUARK will pay the balance to ALNYLAM together with interest on such amounts from the date on which such payment obligation accrued at a rate equal to [ * ]  If the underpayment is greater than [ * ] of the amount owed, then QUARK will reimburse ALNYLAM for its reasonable out-of-pocket costs of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, ALNYLAM will credit the balance against the next payment due from QUARK (without interest).

(b)QUARK shall require that the terms of any sublicense under its rights in this Agreement are fully in compliance with the terms and conditions of the CRT Agreement governing ALNYLAM’s rights under the ALNYLAM Patent Rights-CRT, including without limitation, all obligations with respect to maintenance of records and audit rights.  ALNYLAM will provide QUARK in a timely manner with a true and complete copy (subject to redaction of financial and other information not material to ALNYLAM’s ability to sublicense rights licensed thereunder to QUARK under this Agreement) of all such in-licenses.

(c)QUARK shall use reasonable efforts to allow CRT the same access to QUARK’s books and records as it has to ALNYLAM’s books and records under the CRT Agreement.

ARTICLE VII — INDEMNIFICATION AND INSURANCE

7.1QUARK Indemnification.  QUARK agrees to indemnify and hold harmless ALNYLAM and its Affiliates, and their respective agents, directors, officers and employees and their respective successors and assigns (the “ALNYLAM Indemnitees”) from and against any and all losses, costs, damages, fees or expenses (“Losses”) incurred by an ALNYLAM Indemnitee arising out of or in connection with any claim, suit, demand, investigation or proceeding brought by a third party (“Claim”) based on (a) the development, use, manufacture, distribution or sale of any Licensed Product by QUARK or any of its Affiliates or Sublicensees, including, but not limited to, any claims made against ALNYLAM by third parties alleging infringement, injury, damage, death or other consequence occurring to any person claimed to result, directly or indirectly, from the possession, use or consumption of, or treatment with, any Licensed Product, whether claimed by reason of breach of warranty, negligence, product defect or otherwise, and regardless of the form or forum in which any such claim is made, (b) any breach of any representation, warranty or covenant of QUARK in this Agreement, and (c) actions taken or omitted to be taken by QUARK or its Affiliates, subcontractors or Sublicensees, or the employees, agents or representatives of any of them in performing QUARK’s obligations under this Agreement.

The above indemnification shall not apply to the extent that any Losses are due to a material breach of any of ALNYLAM’s representations, warranties, covenants and/or obligations under this Agreement.

7.2Insurance.  With respect to its activities under this agreement, QUARK will secure and maintain in full force and effect throughout the term of this Agreement (and for at least

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[ * ] thereafter for claims made coverage), the following types and amounts of insurance coverage with carriers having a minimum AM Best rating of A, with per claim deductibles that do not exceed twenty thousand U.S. dollars ($20,000):

Comprehensive General Liability and Personal Injury, including coverage for contractual liability assumed by QUARK and coverage for QUARK independent contractor(s), with limits of at least [ * ] per occurrence and a general aggregate limit of [ * ].

Umbrella Liability, exclusive of the coverage provided by the policies listed above, with a limit of at least [ * ].

Products/Clinical/Professional Liability, exclusive of the coverage provided by the Comprehensive General Liability policy, with an aggregate limit of at least [ * ] with ALNYLAM to be named as an additional insured party with respect to each Licensed Product under such coverage.

Notwithstanding the above, the obligations under this Section 7.2 shall not apply to (i) QUARK after such time that QUARK achieves aggregate annual revenues for all pharmaceutical and diagnostic products in excess of [ * ] or (ii) any Affiliate or Sublicensee that has aggregate annual revenues for all pharmaceutical and diagnostic products in excess of [ * ] provided, however, that QUARK shall provide written notice to ALNYLAM at such time as it determines this Section is in effect.

ARTICLE VIII — EXPORT

8.1General.  The Parties acknowledge that the exportation from the United States of materials, products and related technical data (and the re-export from elsewhere of United States origin items) may be subject to compliance with United States export laws, including without limitation the United States Bureau of Export Administration’s Export Administration Regulations, the Act and regulations of the FDA issued thereunder, and the United States Department of State’s International Traffic and Arms Regulations which restrict export, re-export, and release of materials, products and their related technical data, and the direct products of such technical data.  The Parties agree to comply with all applicable exports laws and to commit no act that, directly or indirectly, would violate any United States law, regulation, or treaty, or any other international treaty or agreement, relating to the export, re-export, or release of any materials, products or their related technical data to which the United States adheres or with which the United States complies.

8.2Delays.  The Parties acknowledge that they cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party.

8.3Assistance.  The Parties agree to provide assistance to one another in connection with each Party’s efforts to fulfill its obligations under this Article VIII.

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ARTICLE IX — TERM AND TERMINATION

9.1Term.  This Agreement will remain in effect until it expires as set forth in Section 9.2 unless terminated in accordance with this Article IX.

9.2Expiration.  Unless terminated earlier, this Agreement will expire at the end of the Term.

9.3Material Breach.

(a)ALNYLAM will have the right to terminate this Agreement, upon written notice to QUARK, in the event QUARK materially breaches its obligations under this Agreement and does not remedy such breach within [ * ] after receipt of written notice from ALNYLAM specifically identifying the breach and stating that ALNYLAM intends to terminate the Agreement if QUARK fails to remedy the breach within the [ * ] time period.

(b)In the event that ALNYLAM materially breaches its obligations under this Agreement, and does not remedy such breach within [ * ] after receipt of written notice from QUARK specifically identifying the breach, [ * ]

9.4Termination by QUARK.  QUARK will have the right to terminate this Agreement for any or no reason upon [ * ] prior written notice to ALNYLAM.

9.5Consequences of Termination; Survival.  In the event this Agreement is terminated under Section 9.4 above, or by ALNYLAM under Section 9.3(a) above, all licenses and rights granted by ALNYLAM to QUARK under this Agreement will terminate; provided, however, that to the extent such licenses and rights are required in respect of clinical trials that are on-going and cannot reasonably be terminated promptly due to health or safety reasons or the requirements of applicable law, such licenses and rights will continue in effect until such clinical trials are properly terminated.  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 without limitation the obligation to pay royalties for Royalty Licensed Products sold prior to such expiration or termination.  The provisions of Article V shall survive the expiration or termination of this Agreement shall continue in effect as applicable for [ * ] from the date of initial disclosure.  In addition, the provisions of Article VII and Article X (other than Section 10.1), and Sections 9.5 and 9.6 shall survive any expiration or termination of this Agreement.

9.6License upon Termination.  Upon any termination of this Agreement pursuant to Sections 10.3, ALNYLAM shall enter into an agreement containing substantially the same provisions as this Agreement with any Sublicensees of QUARK existing at the time of such termination, covering the RNAi Products that had been licensed to such Sublicensee by QUARK, provided that at the time of any termination of this Agreement, such Sublicensees are in full compliance with the terms and conditions of the sublicense agreement.  ALNYLAM acknowledges that such Sublicensees of QUARK that are then in full compliance with the terms and conditions of their respective sublicense agreement

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are third party beneficiaries of this Agreement, including this Section 9.6.

9.7Termination of CRT Agreement.  ALNYLAM shall promptly notify QUARK in the event of a termination of the CRT Agreement.  Provided that QUARK is not then in material breach of this Agreement, ALNYLAM shall facilitate communications between QUARK and CRT so that QUARK may enter into a direct licensing arrangement with CRT on terms substantially similar to those contained herein.  ALNYLAM hereby confirms the intent of Section 2.4(b) of the CRT Agreement to cause the direct grant of a license by CRT to QUARK in the event of termination of the CRT Agreement, subject to the conditions of such Section 2.4(b).

ARTICLE X — MISCELLANEOUS

10.1Representations by QUARK and ALNYLAM.

(a)Subject to Section 10.1(e) below, each Party hereby represents and warrants to the other Party as of the Effective Date:

(i)Such Party is a corporation duly organized under the laws of the state of its incorporation, and has all necessary power and authority to conduct its business in the manner in which it is currently being conducted, to own and use its assets in the manner in which its assets are currently owned and used, and to enter into and perform its obligations under this Agreement.

(ii)The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Party and its Board of Directors and no consent, approval, order or authorization of, or registration, declaration or filing with any third party or governmental authority is necessary for the execution, delivery or performance of this Agreement.

(iii)This Agreement constitutes the legal, valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to (A) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (B) rules of law governing specific performance, injunctive relief and other equitable remedies.

(b)QUARK represents and warrants to ALNYLAM that as of the Effective Date:

(i)Neither QUARK nor any of its Affiliates has been found in breach of any laws or regulations governing the production of medicinal products in the United States or any other jurisdiction within the Territory.

(ii)Neither QUARK nor any of its Affiliates has been debarred (nor is QUARK or any of its Affiliates using in any capacity in connection with its activities under this Agreement any person who has been debarred) by the FDA from working for or providing services to any pharmaceutical or biotechnology company under Section 306 of the United States Food,

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Drug and Cosmetic Act.

(iii)QUARK has never approved or commenced any proceeding, or made any election contemplating, the winding up or cessation of QUARK’s business or affairs or the assignment of QUARK’s material assets for the benefit of creditors.  To QUARK’s knowledge, no such proceeding is pending or threatened.

(c)QUARK acknowledges and agrees that ALNYLAM has not made any representation or warranty that it has or can provide all the rights that are necessary or useful to Research, Develop or Commercialize (as applicable) a Licensed Product.

(d)ALNYLAM represents and warrants to QUARK that as of the Effective Date of this Agreement it has the right to grant QUARK, its Affiliates and Sublicensees the licenses granted hereunder and has not granted any conflicting rights to any other person or entity.  ALNYLAM has delivered to QUARK a true and complete copy (except for the redaction of financial and other information not relevant to QUARK’s understanding of its rights and obligations under this Agreement) of the CRT Agreement.  ALNYLAM shall maintain such CRT Agreement in effect and shall not amend any such in-license in a manner that is detrimental to the rights of QUARK under this Agreement without the prior written consent of QUARK.

10.2Dispute Resolution; Arbitration Procedures.

(a)In the event of any dispute, controversy or claim arising out of or relating to this Agreement or the breach thereof, the Parties will try to settle such dispute, controversy or claim amicably between themselves, including referring such dispute, controversy or claim to the Chief Operating Officer of ALNYLAM or his designee, and the Chief Executive Officer of QUARK, or any other officer designated by such Chief Executive Officer.  In the event that after [ * ] the designated officers of both Parties fail to resolve the matter, either Party may submit such dispute, controversy or claim that is not an “Excluded Claim” for resolution by binding arbitration under the Rules of Arbitration of the International Chamber of Commerce.  Judgment on the arbitration award may be entered in any court of competent jurisdiction.  The arbitration will be conducted in New York, New York and the language of all communications and proceedings relating to the arbitration will be English.

(b)The arbitration shall be conducted by a panel of three persons experienced in the pharmaceutical business.  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 of their appointment.  If the arbitrators selected by the Parties are unable or fail to agree upon the third arbitrator, the Parties shall select two replacement arbitrators to replace the arbitrators originally selected, which replacement arbitrators shall

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select a third arbitrator within thirty (30) days of their appointment.  The Parties agree (a) to meet with the arbitrator(s) within thirty (30) days of selection and (b) to agree at that meeting or before upon procedures for discovery and as to the conduct of the hearing which will result in the hearing being concluded within no more than six (6) months after selection of the arbitrator(s) and in the award being rendered within thirty (30) days of any post-hearing briefing, which briefing will be completed by both sides within thirty (30) days after the conclusion of the hearings, or within sixty (60) days of the conclusion of the hearings if there is no post-hearing briefing.   In the event the Parties cannot agree upon procedures for discovery as set forth in (a) above, the arbitrator(s) shall provide that discovery be limited so that the schedule may be met without difficulty and so that neither side obtains more than a total of twenty-five (25) hours of deposition testimony from all witnesses, including both fact and expert witnesses, or serves more than ten (10) individual requests for documents or ten (10) individual requests for admission or interrogatories.  In no event will the arbitrator(s), absent agreement of the Parties, allow more than three (3) days per side for the hearing or more than a total of six (6) days for the hearing.  Multiple hearing days will be scheduled consecutively to the greatest extent possible.

(c)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 an equal share of the arbitrators’ fees and any administrative fees of arbitration.

(d)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 when commencement of a legal or equitable proceeding based on the dispute, controversy or claim would be barred by the applicable New York statute of limitations.

(e)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.  The Parties further agree that any payments made pursuant to this Agreement pending resolution of the dispute shall be refunded if an arbitrator or court determines that such payments are not due.

(f)As used in this Section 10.2, the term “Excluded Claim” shall mean a dispute, controversy or claim that concerns (a) the validity or infringement of a patent, trademark or copyright; or (b) any antitrust, anti-monopoly or competition law or regulation, whether or not statutory.  Excluded Claims shall be resolved in a court

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of competent jurisdiction.

10.3Publicity.  No disclosure of the existence of, or the terms of, this Agreement may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, without the prior express written permission of the other Party, except as may be required by law or as set forth in this Section 10.3. The Parties acknowledge and agree that, upon and following the Effective Date, one or both of the Parties intends to issue a press release announcing the execution of this Agreement.  Notwithstanding the foregoing, the Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases prior to the issuance thereof.  Either Party may issue such press releases or otherwise make such public statements or disclosures (such as in annual reports to stockholders or filings with the Securities and Exchange Commission) as it determines, based on advice of counsel, are reasonably necessary to comply with applicable laws and regulations.  In addition, following any initial press release(s) announcing this Agreement or other public disclosure approved by both Parties, either Party shall be free to disclose, without the other Party’s prior written consent, the existence of this Agreement, the identity of the other Party and those terms of the Agreement which have already been publicly disclosed in accordance herewith.

10.4Force Majeure.  No failure or omission by the Parties in the performance of any obligation of this Agreement will be deemed a breach of this Agreement or create any liability if the same will arise from any cause or causes beyond the control of the Parties, including, but not limited to, the following: acts of God; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; flood; storm; earthquake; accident; war; rebellion; insurrection; riot; and invasion.  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.

10.5Consequential Damages.  NEITHER PARTY (INCLUDING ITS AFFILIATES AND SUBLICENSEES) SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFIT OR LOST REVENUE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 10.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OF A PARTY OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE V.

10.6Assignment.

(a)This Agreement and any of its rights and obligations may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party, which consent may not be unreasonably withheld, delayed or conditioned;

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provided, however, that either Party may assign this Agreement, without the consent of the other Party, in connection with such Party’s merger, consolidation or transfer or sale of all or substantially all of the assets of such Party; provided further that the successor, surviving entity, purchaser of assets, or transferee, as applicable, expressly assumes in writing such Party’s obligations under this Agreement.  Any purported assignment in contravention of this Section 10.6 shall, at the option of the non-assigning Party, be null and void and of no effect.

(b)This Agreement will be binding upon and inure to the benefit of the Parties and their permitted successors and assigns.

10.7Notices.

Notices to ALNYLAM will be addressed to:

Alnylam Pharmaceuticals, Inc.

300 Third Street

Cambridge, Massachusetts  02142

U.S.A.

Attention: Chief Operating Officer

Facsimile No.: (617) 551-8101

With copy to:

Faber Daeufer & Rosenberg PC

950 Winter Street, Suite 4500

Waltham, Massachusetts  02451

Attention: James R. McGarrah, Esq.

Facsimile No.: (781) 795-4747

Notices to QUARK will be addressed to:

Quark Biotech Inc.

6536 Kaiser Avenue

Fremont, CA 94555

Attention: Chief Executive Officer

Facsimile No.:  (510) 402-4021

With copy to:

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attention: Robert L. Jones, Esq.

Facsimile No.: (650) 849-7400

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Any Party may change its address by giving notice to the other Party in the manner provided in this Section 10.7.  Any notice required or provided for by the terms of this Agreement will be in writing and will be (a) sent by certified mail, return receipt requested, postage prepaid, (b) sent via a reputable international express courier service, or (c) sent by facsimile transmission, with a copy by regular mail.  The effective date of the notice will be the actual date of receipt by the receiving Party.

10.8Independent Contractors.  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement will be construed as authorization for either Party to act as the agent for the other Party.

10.9Governing Law; Jurisdiction.  This Agreement will be governed and interpreted in accordance with the substantive laws of the State of New York, notwithstanding the provisions governing conflict of laws under such law of the State of New York to the contrary, provided that matters of intellectual property law will be determined in accordance with the national intellectual property laws relevant to the intellectual property in question.  Each Party agrees to submit to the jurisdiction of the state and federal courts located in the State of New York and waives any defense of inconvenient forum to the maintenance of any action or proceeding in such courts.

10.10Severability.  In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of the relevant jurisdiction, the validity of the remaining provisions will not be affected and the rights and obligations of the Parties will be construed and enforced as if the Agreement did not contain the particular provisions held to be unenforceable, provided that the Parties will negotiate in good faith a modification of this Agreement with a view to revising this Agreement in a manner which reflects, as closely as is reasonably practicable, the commercial terms of this Agreement as originally signed.

10.11No Implied Waivers.  The waiver by either Party of a breach or default of any provision of this Agreement by the other Party will not be construed as a waiver of any succeeding breach of the same or any other provision, nor will any delay or omission on the part of either Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

10.12Entire Agreement.  This Agreement, along with that certain Confidential Disclosure Agreement by and between the Parties dated as of June 1, 2004, as amended, and the related QUARK License Agreement by and between the Parties of even date herewith, constitute the entire agreement between the Parties with respect to its subject matter and supersedes all previous written or oral representations, agreements and understandings between the Parties.  This Agreement may be amended only by a writing signed by both Parties.

10.13Counterparts.  This Agreement may be executed in any number of counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

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Remainder of Page

Intentionally Left Blank

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IN WITNESS WHEREOF, the Parties hereto have set their hand as of the Effective Date.

ALNYLAM PHARMACEUTICALS, INC.
By:	/s/ Barry Greene
	Name: Barry Greene
	Title:
QUARK BIOTECH INC.
By:	/s/ Daniel Zurr
	Name: Daniel Zurr, Ph.D.
	Title: President and CEO

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EXHIBIT A

ALNYLAM Patent Rights-CRT

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

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APPENDIX I

TARGET

p53

[ * ]

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Appendix II

[ * ]

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EX-10.32

Exhibit 10.32

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FIRST AMENDMENT TO THE LICENSE AGREEMENT BETWEEN THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS AND QUARK BIOTECHNOLOGY, INC.

THIS FIRST AMENDMENT TO THE EXCLUSIVE LICENSE AGREEMENT (the “First Amendment”) is made and entered into as of March 23, 2007 (“Amendment Date”) by and between THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS, a body corporate and politic of the State of Illinois, 1737 W. Polk St., Chicago, IL 60612 (“UNIVERSITY”) and QUARK BIOTECH, INC a California corporation, with a principal place of business at 6536 Kaiser Drive, Fremont, CA 94555 (“LICENSEE”).

     WHEREAS, UNIVERSITY and LICENSEE entered into an EXCLUSIVE LICENSE AGREEMENT effective September 3, 1999 dated (“Agreement”) to license certain technology;

     WHEREAS, UNIVERSITY and LICENSEE wish to amend the Agreement in the manner set forth in this First Amendment;

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree to amend the Agreement as follows:

Amendments:

I.   ARTICLE IV- PAYMENTS - Sections 4.1 and 4.6 of the Agreement shall be deleted and replaced with the following:

4.1For the rights, privileges and licenses granted hereunder, LICENSEE shall pay to the UNIVERSITY, in the manner hereinafter provided, on a country by country basis, until the end of the last to expire patent of the Patent Rights in such country, or until this Agreement shall be terminated, as hereinafter provided, whichever occurs first:

a)in the event of sales of Licensed Products or Licensed Processes by LICENSEE or any Affiliate -a royalty in an amount equal to [ * ] of the aggregate Net Sales by LICENSEE or any Affiliate, of the Licensed Products or Licensed Processes.

b)in the event of a Sublicense -

(i) a [ * ] payments received by LICENSEE from sublicensees, based on sales of Licensed Products or Licensed Processes by sublicensees, exclusive of  [ * ] covered by Section 4.1(b)(ii) below; and amounts received by

LICENSEE as reimbursement of costs and expenses related to research or development of Licensed Products;

(ii) a [ * ].  No payments will be made under this Section 4.1(b)(ii) to the extent already covered under Section 4.1(b)(i); and

(iii) a [ * ] license fee payment due within [ * ] of execution of a sublicense agreement granting a third party an exclusive Sublicense for [ * ].

c)a [ * ] license fee to be payable within [ * ] of execution of this First Amendment.

d)a [ * ] license fee payment due within [ * ] of [ * ].

It is clarified that the above milestone payments will be due [ * ] Licensed Product to achieve the relevant milestone event, and [ * ] shall be due hereunder with respect to each milestone events [ * ] such Licensed Products that achieve such milestone [ * ] countries in which they are achieved.

4.6In the event that the LICENSEE’s, the Affiliate’s or its Sublicensee’s development, manufacture, use or sale of a Licensed Product or Licensed Process would constitute an infringement of patent right or intellectual property right of any third party, the Parties shall together use their reasonable endeavors to obtain an appropriate license from such third party. If such license requires LICENSEE to pay royalties to such third party, the royalty due and payable to UNIVERSITY under Sections 4.1(a) and (b) of this Agreement for sale of the Licensed Product or Licensed Process shall be reduced by [ * ] the amount which the LICENSEE is required to pay to said third party, provided that the royalty due to the UNIVERSITY hereunder shall not be reduced by more than [ * ]. The UNIVERSITY acknowledges for the purposes of this section 4.6, that the LICENSEE has obtained from Atugen AG and Alnylam Pharmaceuticals Inc. licenses for RNAi technology and relevant intellectual property.

II.   ARTICLE XIII- TERMINATION - Section 13.4 shall be added to Article XIII:

13.4         Upon termination of this Agreement for any reason, all Sublicenses shall terminate.  Provided that a Sublicensee is in compliance in all material respects with the terms of its Sublicense in effect on the date of termination, the UNIVERSITY will grant such Sublicensee that so requests, a license with royalty terms and such use rights and other terms as are substantially similar to this Agreement.  In no event shall UNIVERSITY have any obligations of any nature whatsoever with respect to (i) any past, current or future obligations that LICENSEE may have had, or may in the future have, for the payment of any obligations owing to Sublicensee pursuant to such Sublicense, (ii) any past obligations whatsoever, and (iii) any future obligations to Sublicensee beyond

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those to LICENSEE as set forth herein.

All other terms set forth in the Agreement shall remain unchanged.

IN WITNESS WHEREOF, the parties have executed this First Amendment effective as of March 23, 2007.

THE BOARD OF TRUSTEES OF THE UNIVERSITY OF ILLINOIS

By	/s/ Walter K. Knorr	Date:	4/9/07
	Walter K. Knorr, Comptroller
By	/s/ Michele M. Thompson	Date:	4/9/07
	Michele M. Thompson, Secretary

QUARK BIOTECH, INC.

By	/s/ D. Zurr	Date:	4/10/07
Printed Name:	Daniel Zurr, Ph.D.
Title:	President & CEO

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