EXHIBIT 10.31


[ * ]  = 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.


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

  



 


i






[ * ]  = 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.


 

















 


	
  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

  



 


ii






[ * ]  = 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.


 

















 


	
  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

  



 


iii






[ * ]  = 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.


 

















 


	
  10.13

  	
  Counterparts

  	
  21

  
	
  EXHIBIT A

  	
  ALNYLAM Patent
  Rights

  	
  23

  
	
  APPENDIX I

  	
  TARGET

  	
  24

  
	
  APPENDIX
  II

  	
  [ * ]

  	
  25

  



 


iv






[ * ]  = 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.


 

















 


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).


1.1                                 Act 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.


1.2                                 Affiliate 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.


1.3                                 ALNYLAM 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.


1.4                                 ALNYLAM 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.


1.5                                 Approval 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.


1.6                                 Commercialize 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.


1.7                                 Commercially 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 






[ * ]  = 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.


1

















                                                obtaining an Approval, and the
anticipated profitability of such product.


1.8                                 Confidential 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.


1.9                                 CRT 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.


1.10                           Develop, 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.


1.11                           Effective Date means September 26, 2006.


1.12                           FDA means the United States Food and Drug Administration
or any successor agency thereto.


1.13                           Field 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.


1.14                           First 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.


1.15                           GAAP 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.


1.16                           Group I Patent Rights means the ALNYLAM patent rights
identified on Exhibit A of the QUARK License Agreement.


1.17                           Group II Patent Rights means the ALNYLAM patent rights
identified on Exhibit A of the QUARK License Agreement.


1.18                           IND or Investigational New Drug
Application means
a United States investigational new drug application or its equivalent or any
corresponding foreign application.


1.19                           Issued Valid Claim means “Issued Valid Claim” as defined in
the CRT 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.


2

















1.20                           Licensed Product means “Licensed Product”, as defined in
the CRT Agreement.


1.21                           Major Market means, individually and collectively, [ * ].


1.22                           Net Sales means “Net Sales” as defined in the CRT Agreement.


1.23                           Party means either ALNYLAM or QUARK; Parties means
both ALNYLAM and QUARK.


1.24                           Phase 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.


1.25                           Phase 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.


1.26                           Phase 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.


1.27                           QUARK means Quark Biotech, Inc., a California corporation,
and its successors and assigns.


1.28                           QUARK License Agreement means the License Agreement entered into
by and between QUARK and ALNYLAM dated September 25, 2006 with respect to the
Target.


1.29                           Research or Researching means identifying, evaluating,
validating and optimizing RNAi Products.


1.30                           RNAi 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.


1.31                           Royalty Licensed Product means “Royalty Licensed Product”, as
defined in the CRT Agreement, against the Target.


1.32                           Royalty 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.


1.33                           Sublicensee 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 






[ * ]  = 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.


3

















                                                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.


1.34                           Target 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.


1.35                           Term 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.


1.36                           Territory 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.


1.37                           Third Party means any entity or person other than
the Parties or an Affiliate of a Party.


1.38                           Valid Claim means “Valid Claim” as defined in the
CRT Agreement.


ARTICLE II — LICENSE
GRANT


2.1                                 Licenses 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 [ * ]






[ * ]  = 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.


4

















(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.


2.2                                 Retained 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.


2.3                                 Commercially
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; [ * ]


2.4                                 Regulatory 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


3.1                                 Upfront 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).


3.2                                 Maintenance 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.






[ * ]  = 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.


5

















3.3                                 Milestone 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.


3.4                                 Royalties.


(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 [ * ]

  	
   

  	
  [ * ]

  	
   

  






 


 






[ * ]  = 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.


6

















 


(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


4.1                                 Prosecution 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. 
[ * ]


4.2                                 Infringement 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.


4.3                                 Claimed 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 






[ * ]  = 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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                                                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.


4.4                                 Other 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.


4.5                                 Interpretation 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


5.1                                 Non-Use and Non-Disclosure of
Confidential Information.  Each Party agrees that all 






[ * ]  = 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.


8

















                                                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.


5.2                                 Limitation 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.






[ * ]  = 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 VI — REPORTS, TAXES AND PAYMENTS


6.1                                 Reports.  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 [ * ].


6.2                                 Tax 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.


6.3                                 Payments.  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.


6.4                                 Audits.


(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 






[ * ]  = 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.


10

















                                                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


7.1                                 QUARK 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.


7.2                                 Insurance.  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






[ * ]  = 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.


11

















                                                [ * ] 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


8.1                                 General.  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.


8.2                                 Delays.  The Parties
acknowledge that they cannot be responsible for any delays attributable to
export controls which are beyond the reasonable control of either Party.


8.3                                 Assistance.  The Parties
agree to provide assistance to one another in connection with each Party’s
efforts to fulfill its obligations under this Article VIII.






[ * ]  = 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 IX — TERM AND
TERMINATION


9.1                                 Term.  This
Agreement will remain in effect until it expires as set forth in Section 9.2
unless terminated in accordance with this Article IX.


9.2                                 Expiration.  Unless
terminated earlier, this Agreement will expire at the end of the Term.


9.3                                 Material 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, [ * ]


9.4                                 Termination by QUARK. 
QUARK will have the right to terminate this Agreement for any or no
reason upon [ * ] prior written notice to
ALNYLAM.


9.5                                 Consequences 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.


9.6                                 License 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 






[ * ]  = 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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                                                are third party beneficiaries of this
Agreement, including this Section 9.6.


9.7                                 Termination 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


10.1                           Representations 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, 






[ * ]  = 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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                                                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.


10.2                           Dispute 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 






[ * ]  = 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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                                                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.


10.3                           Publicity.  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.


10.4                           Force 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.


10.5                           Consequential 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.


10.6                           Assignment.


(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.


10.7                           Notices.


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.


10.8                           Independent 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.


10.9                           Governing 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.


10.10                     Severability.  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.


10.11                     No 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.


10.12                     Entire 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.


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






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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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