Document:

EXHIBIT 10.28

[ * ]  = 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 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

  

 

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.

 

 

	
  1.27

  	
  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

  

 

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.

 

 

	
  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

  

 

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.

 

 

	
  10.4

  	
  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

  

 

 

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 

[ * ]  = 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

 

                                                proprietary positions of third parties,
regulatory structures, including the likelihood of 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 in humans of [ * ].

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.

[ * ]  = 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

 

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

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.  

[ * ]  = 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

 

                                                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.

1.34                           Target 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.

1.35                           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, 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

[ * ]  = 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

 

                                                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 [ * ] 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.

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.

[ * ]  = 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

 

	
  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 [ * ]

  	
   

  	
  [ * ]

  	
   

  

 

[ * ]  = 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

 

	
  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

4.1                                 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 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 

[ * ]  = 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.

 

7

 

                                                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 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 

[ * ]  = 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

 

                                                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.

 

9

 

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 [ * ] 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 

[ * ]  = 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.

 

12

 

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

[ * ]  = 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.

 

13

                                                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.

9.7                                 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

[ * ]  = 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.

 

14

                                                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.

10.2                           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 

[ * ]  = 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.

 

15

                                                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 

[ * ]  = 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.

 

16

                                                regulation, whether or not
statutory.  Excluded Claims shall be
resolved in a court 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 

[ * ]  = 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.

 

17

                                                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.

10.7                           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

[ * ]  = 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.

 

18

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.

[ * ]  = 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.

 

19

Remainder
of Page

Intentionally
Left Blank

 

[ * ]  = 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.

 

20

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

  

[ * ]  = 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.

 

21

EXHIBIT
A

ALNYLAM Patent Rights-CRT

	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  

 

[ * ]  = 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.

 

22

APPENDIX
I

TARGET

RTP801

[ * ]

 

[ * ]  = 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.

 

23EXHIBIT 10.29

[ * ]  = 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 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

  

 

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.

 

 

	
  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

  

 

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.

 

 

	
  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

  

 

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.

 

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.

1.1                                 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 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.

1.5                                 Approval 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.

1.6                                 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 

[ * ]  = 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

                                                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.

1.8                                 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 RNAi Products.

1.9                                 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.

1.10                           Effective Date means September 26, 2006.

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

1.12                           Field means the use of therapeutic RNAi Products against
p53 for the treatment of hypoxic injury in humans, including but not limited to
renal failure.

1.13                           First 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.

1.14                           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.

1.15                           Group I Patent Rights means the ALNYLAM Patent Rights
identified on Exhibit A as Group I Patent Rights.

1.16                           Group II Patent Rights means the ALNYLAM Patent Rights
identified on Exhibit A as Group II Patent Rights.

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

1.18                           Licensed RNAi Product means an RNAi Product, the
identification, characterization, 

[ * ]  = 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

                                                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.

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

1.20                           Net 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 

[ * ]  = 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

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.

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

1.22                           Phase 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.

1.23                           Phase 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.

[ * ]  = 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

1.24                           Phase 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.

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

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

1.27                           RNAi 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.

1.28                           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.

1.29                           siRNA 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.

1.30                           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 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.

1.31                           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.

1.32                           Term 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.

1.33                           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 

[ * ]  = 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

                                                technical data covered by this Agreement
is restricted under U.S. export laws, which restriction has not been removed or
waived.

1.34                           Valid Claim means any claim [ * ].

ARTICLE II — LICENSE
GRANT

2.1                                 Licenses 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.

2.2                                 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 ALNYLAM 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 RNAi Products [ * ] Development and Commercialization during the
Term.  The activities of QUARK’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.

6

                                                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; [ * ].

2.4                                 Regulatory Filings. 
QUARK, its Affiliates or Sublicensees will prepare, file, and prosecute
all appropriate governmental applications and/or filings to obtain Approval of
Licensed 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

3.1                                 Upfront 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).

3.2                                 Maintenance 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.

3.3                                 Milestone 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.

[ * ]  = 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.

7

	
  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)                                  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 

[ * ]  = 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

                                                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 [ * ]

  	
   

  	
  [ * ]

  	
   

  

 

3.5                                 Reduction 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

4.1                                 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. 
[ * ]

4.2                                 Infringement 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.

[ * ]  = 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.

9

(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.

4.3                                 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 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.

4.4                                 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 becomes the subject of a judgment, decree or decision
of a 

 

[ * ]  = 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

                                                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

5.1                                 Non-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.

[ * ]  = 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

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.

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 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 [ * ].

6.2                                 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 for 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.

12

                                                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

7.1                                 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
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.

7.2                                 Insurance.  With respect
to its activities under this agreement, QUARK will secure 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.

13

                                                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

8.1                                 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.

14

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 reason
upon [ * ] prior written notice to ALNYLAM.

9.5                                 Consequences 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.

9.6                                 License 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 

[ * ]  = 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.

15

                                                are third party beneficiaries of this
Agreement, including this Section 9.6.

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, 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 

[ * ]  = 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.

16

                                                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.

10.2                           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 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 

[ * ]  = 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.

17

                                                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.

10.3                           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.  

[ * ]  = 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.

18

                                                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; 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 

[ * ]  = 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.

19

                                                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

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

[ * ]  = 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.

20

                                                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
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.

10.13                     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.

[ * ]  = 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.

21

                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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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.

22

EXHIBIT A

ALNYLAM Patent Rights

Group I

	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  

 

Group II 

	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  

 

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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

EXHIBIT
B

IN-LICENSES COVERING ALNYLAM PATENT RIGHTS

 

[ * ]

 

 

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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

 

APPENDIX I

TARGET

P53

 

 

[ * ]

 

 

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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

APPENDIX II

 

[ * ]

 

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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

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