Document:

[
* ] = 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.

    

    Exhibit 10.34

    LICENSE AND COLLABORATION
AGREEMENT

    June
30, 2010 (the “Effective Date”)

     

    In the
interest of commencing the Project, the Parties have executed this Agreement in
short form, recognizing that they are legally bound to the following terms and
conditions. At the request of either Party, the Parties will promptly negotiate
in good faith an expanded version of this Agreement containing additions terms
and conditions customary to agreements of this nature and mutually agreed by the
Parties.

     

    
      	
              1.  PARTIES

            	 
      	
              Nitto
      Denko Corporation (“Nitto”), whose address
      is HERBIS OSAKA, 2-5-25, Umeda, Kita-ku, Japan; and

               

              Quark
      Pharmaceuticals, Inc. (“Quark”), whose address
      is 6501 Dumbarton Circle, Fremont, CA 94555, USA.

            
	 
      	 
      	 
      
	
              2.  OBJECTIVES

            	 
      	
              As
      more fully described below, Nitto is interested in developing siRNA
      product(s) based on the suppression of the “Nitto Target Genes” (as
      defined below) alone or in combination with each other and/or with other
      genes (the “Products” as defined below). Quark has the know-how and the
      relevant intellectual property to generate and develop such products and
      has been performing a feasibility study for Nitto in this respect under
      the Collaborative Research Agreement dated the [*] as ammended between the
      Parties (the “Prior Agreement”).

            
	 
      	 
      	 
      
	 
      	 
      	
              Therefore,
      Nitto and Quark hereby enter into a License and Collaboration Agreement
      (the “Agreement”), pursuant to which the parties will collaborate to
      develop the Product(s) for commercialization by Nitto. The Agreement
      covers all stages of Product discovery and development activities as will
      be defined more in detail below until the first IND is approved for the
      first Product in the name of Nitto (the “Project”). Nitto, at its sole
      discretion, shall have the right to decide at each stage whether it wishes
      to proceed to the following stage or terminate the Agreement at the
      conditions set forth in Section 7.

            
	 
      	 
      	 
      
	
              3.  DEFINITIONS

            	 
      	 
      
	 
      	 
      	 
      
	
              3.1  “Background
      IP”

            	 
      	
              The
      patents and patent applications and all other proprietary information, and
      know-how owned or controlled (including but not limited to IP jointly
      owned by a Party with a third party) by a Party or its affiliates and, in
      the case of patents and patent applications, filed before the execution
      date of the Agreement, that are reasonably necessary or useful for the
      execution of the Project, except any Jointly Owned IP (as defined below)
      under the Prior Agreement.

            
	 
      	 
      	 
      
	
              3.2  “Change
      of Control”

            	 
      	
              (1)
      An acquisition of Quark by another entity by means of merger,
      consolidation, or a purchase of all or substantially all of its assets, or
      (2) an acquisition of a majority of the outstanding voting stock of Quark
      by a single entity acting alone or together with its affiliates
      (excluding, however, any current stockholder of Quark or affiliates of a
      current stockholder).

            

    

    
      
         

      

      
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                    3.3  “Compound”

                  	 
      	
                    Any
      siRNA compound directed to one or more Nitto Target Genes (as defined
      below), generated during or as a result of the Prior Agreement or this
      Agreement or through the use of any know how and intellectual property
      generated under this Agreement or the Prior Agreement.

                  
	 
      	 
      	 
      
	
                    3.4  “Conjugated
      Compound”

                  	 
      	
                    A
      Compound conjugated with [*].

                  
	 
      	 
      	 
      
	
                    3.5  “Field”

                  	 
      	
                    Treatment,
      prevention and diagnosis of [*].

                  
	 
      	 
      	 
      
	
                    3.6  “First
      Commercial Sale”

                  	 
      	
                    The
      first commercial sale in an arms-length transaction of the first Product
      in a country after receipt by Nitto or any of its affiliates or
      sublicensees of regulatory approval in such country.

                  
	 
      	 
      	 
      
	
                    3.7  “Formulation”

                  	 
      	
                    A
      Compound formulated together with a [*] owned or controlled by Nitto (such
      [*]), together with [*].

                  
	 
      	 
      	 
      
	
                    3.8  “Jointly Owned
      IP”

                  	 
      	
                    Patents
      and patent applications and all other proprietary information owned
      jointly by the Parties as a result of the Prior Agreement or this
      Agreement.

                  
	 
      	 
      	 
      
	
                    3.9  “Net
    Sales”

                  	 
      	
                    The
      gross amount invoiced by Nitto or its affiliates or sublicensees on sales
      or other dispositions of Products to third parties which are not
      affiliates in those countries, less customary deductions (such as actual
      bad debts, sales returns quantity and cash discounts, rejected goods,
      recalls, returns, rebates, chargebacks, reimbursements or similar payments
      granted or given to wholesalers or other distributors, customs or excise
      duties, sales and use taxes included within the gross amount invoiced, and
      charges for freight and insurance].

                  
	 
      	 
      	 
      
	
                    3.10  “Nitto Target
      Genes”

                  	 
      	
                    ·      [*]

                    Additional
      Nitto Target Genes may be nominated by either Party and added by mutual
      agreement.

                  
	
                    3.11  “Product”

                  	 
      	
                    Any
      product in pharmaceutical dosage form, containing one or more Compounds
      alone or in any combinations thereof that is being developed for potential
      commercialization in the Field. Products shall include the Formulation and
      the Conjugated Compound if these are elements of the pharmaceutical dosage
      form.

                  
	
                    3.12  “Project”

                  	 
      	
                    The
      aggregate of research and development tasks in stages as detailed below
      for the development of a Product in the Field. The detailed research and
      development plan shall be attached to the Agreement as Appendix A and
      includes the
followings:

                  

          

        

      

    

     

    [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
        
        

      

      
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                                                                                  Stage 1. All
      necessary tasks needed to [*] including [*] as well as [*]; Quark’s last
      task in this Stage 1 is [*] for [*] for [*] that is scheduled at the
      latest by [*]. Stage 1 is scheduled to end on [*], 2011;
    and

                                                                                
	 	 	 
	 
      	 
      	
                                                                                  Stage 2. All
      necessary tasks needed to [*]. Stage 2 is scheduled to end on [*];
      and

                                                                                
	 	 	 
	 
      	 
      	
                                                                                  Stage 3. All
      necessary tasks needed to complete all IND-enabling activities, including
      [*], and obtaining the legal right to commence human clinical trials of
      Product under the IND, in the name of Nitto. Stage 3 - that is submission
      of IND application in the name of Nitto - is scheduled to end on [*],
      2012.

                                                                                
	 	 	 
	 
      	 
      	
                                                                                  Appendix
      A also specifies which tasks will be performed by Quark and which
      will be performed by Nitto as well as the timelines of all tasks and
      deliverables.

                                                                                
	 	 	 
	 
      	 
      	
                                                                                  Appendix B
      attached to this Agreement is the Budget of Quark tasks according to Appendix
      A.

                                                                                
	 	 	 
	
                                                                                  3.13  “Quark Licensed
      IP”

                                                                                	 
      	
                                                                                  The
      patents and patent applications identified on the attached Exhibit 1, that
      are part of Quark Background IP, and all other proprietary information,
      and know-how owned or controlled by Quark or its affiliates as of the
      execution date of the Agreement or thereafter during the term of the
      Agreement that are reasonably necessary or useful for the research,
      development, manufacture, use, importation or sale of Compound,
      Formulation or Product in the Field, excluding, however, Jointly Owned
      IP.

                                                                                
	 	 	 
	
                                                                                  3.14  “Territory”

                                                                                	 
      	
                                                                                  Worldwide.

                                                                                
	 	 	 
	 	 	 
	
                                                                                  4.  GENERAL
      TERMS FOR PERFORMANCE OF R&D ACTIVITIES

                                                                                
	 	 	 
	
                                                                                  4.1  Governance of Research and
      Development

                                                                                	 
      	
                                                                                  Nitto
      and Quark will form a Joint Development Committee (“JDC”) composed of
      members of both Parties and chaired by a Nitto representative, to review
      and discuss all development and intellectual property protection
      activities including but not limited to achievement of the Project aims
      set forth at each stage of this Project (the “Project Goals”) and changes
      to be implemented in the program (thus changing the Appendix A attached
      hereto) as well as changes to the Budget, if necessary, to reflect changes
      in the Project program. It is agreed between the Parties, however, that
      changes to the Budget will have to be approved by each Party’s management.
      The JDC will meet once every [*] or as otherwise determined by its
      members, at times and locations to be determined. Each Party will bear its
      own expenses associated with the preparation and meetings of the JDC
      meetings. If the Parties are unable to agree, [*] provided that [*], and
      provided further that the JDC shall not have authority to [*] assigned to
      [*] in the Project to any material degree without the consent of
      [*].

                                                                                

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

     

    
      
        
        

      

      
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                The
      JDC shall not have any authority to amend the terms of the Agreement.
      Following the completion of Stage 3, the JDC shall continue to meet
      periodically solely for advisory purposes, and Quark shall have the right
      to discontinue its participation upon written notice, in which case the
      JDC shall disband.

              
	 
      	 
      	 
      
	
                4.2  Performance
      of the R&D, Quark Undertakings

              	 
      	
                Quark
      will use diligent efforts to carry out all of its tasks in the Project in
      a timely and effective manner. If the Project will contemplate tasks to be
      performed by Nitto, Nitto will make a similar
  undertaking.

              
	 
      	 
      	 
      
	 
      	 
      	
                Quark
      will nominate the key personnel to implement the Project (the “Project
      Team”), which will include a Project Manager and liaison manager (window
      person) for the communication between Nitto and Quark. The organization of
      the Project Team is attached to this Agreement as Appendix C.
      Nitto will also nominate a Project Manager and a window person for the
      smooth communication between the Parties.

              
	 
      	 
      	 
      
	 
      	 
      	
                Both
      Parties may change Project Manager and window person according to the
      Project stage being performed.

              
	 
      	 
      	 
      
	
                4.3  Reporting

              	 
      	
                During
      the Agreement, Quark shall keep Nitto informed of, and promptly provide,
      all data and information relating to the Compounds, Formulation, Products
      and Conjugated Compound that Quark generates. If the Project will
      contemplate tasks to be performed by Nitto, Nitto shall keep Quark
      informed of, and promptly provide, all data and information relating to
      the specific tasks that Nitto will perform. Nitto will also provide to
      Quark any other data, information and materials controlled by Nitto that
      are reasonably necessary for Quark to carry out its tasks under the
      Project.

              
	 
      	 
      	 
      
	 
      	 
      	
                For
      such purpose, the window persons of the Parties shall be in close contact
      with each other at all times and communicate with each other’s
      representatives by email or telephone frequently (daily if required).
      Absent unusual developments, written summary progress reports shall be
      provided by both Parties through the mechanism of JDC meetings
      ([*]).

              
	 
      	 
      	 
      
	 
      	 
      	
                Quark
      will submit detailed reports as follows:

              
	 
      	 
      	 
      
	 
      	 
      	
                Upon
      the end of the task [*], as stated in section 3.12, Quark shall submit to
      Nitto a detailed report (the “[*] Report”). Upon the end
      of Stage 1 Quark shall submit a detailed Stage 1 report (the “Stage 1 Final Report”)
      to the JDC. This Stage 1 Final Report together with the [*] shall be the
      basis for Nitto decision whether to move forward to Stage 2 as provided in
      paragraph 7.2.(iii).(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.

     

    
      
        
        

      

      
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              In
      the event that Nitto decides to continue to Stage 2, at the end of Stage 2
      Quark will submit a second detailed final report (the “Stage 2 Final Report”)
      to the JDC. This Stage 2 Final Report shall be the basis for Nitto
      decision whether to move forward to Stage 3 as provided in paragraph
      7.2.(iii).(b).

            
	 
      	 
      	 
      
	 
      	 
      	
              In
      the event that Nitto decides to continue to Stage 3, at the end of Stage
      3, a third detailed final report (the “Stage 3 Final Report”)
      will be submitted to the JDC. Upon submission of the IND for a Product
      Quark shall provide to Nitto the full IND documentation(s). The Stage 3
      Final Report shall be a basis for Nitto decisions provided in paragraph
      7.2.(iii).(c).

            
	 
      	 
      	 
      
	
              4.4  Intellectual
      Property

            	 
      	
              Each
      Party will own and continue to maintain its Background IP at its own
      expense.

            
	 
      	 
      	 
      
	 
      	 
      	
              With
      respect to new intellectual property (including patents), arising out of
      the performance of this Agreement (a) inventorship will be determined
      according to the US laws and regulations relating to patents; and (b) such
      new intellectual property will be jointly owned by Nitto and Quark on an
      equal basis. The Jointly Owned IP patents and patent applications will be
      filed by Quark in the name of both Nitto and Quark, and maintained by
      Quark in close consultation with Nitto. Quark shall have primary rights to
      enforce the Joint IP and handle litigation in close consultation with
      Nitto and shall have the primary rights to defend third party claims
      against the foregoing. Nitto and Quark shall share all expenses related to
      intellectual property protection on an equal basis, including filing,
      maintaining patent applications and patents and all costs associated with
      litigation related to Jointly Owned IP, including interferences and other
      administrative proceedings.

            
	 
      	 
      	 
      
	
              4.5  Quark’s
      Warranty/ Covenant

            	 
      	
              As
      of the Effective Date, Quark represents and warrants to Nitto
      that:

            
	 
      	 
      	 
      
	 
      	 
      	
              1)   
      Quark has neither contracts nor obligation with any third party, which
      would conflict with, result in any violation of, or give rise to an
      adverse effect on, this Agreement, and will not enter into or establish
      any such contract or obligation during the term of this
      Agreement.

            
	 
      	 
      	 
      
	 
      	 
      	
              2)   
      Quark understands Nitto’s purpose to develop a new drug for humans using
      the results of the Project, and therefore Quark shall conduct, and shall
      use reasonable efforts to cause its contractors and consultants to
      conduct, all its activities contemplated under this Agreement in
      accordance with (i) all applicable Laws of the country in which such
      activities are conducted, and (ii) known or published standards of the
      applicable Governmental Authority of such
  country.

            

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
        
           

          

           

        

         

      

      
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                      3)   
      The composition of the Compound selected by Quark for development under
      the IND will not infringe any third party IP. With respect to the Product,
      the Parties recognize that (i) the Formulation has been developed by Nitto
      and (ii) the elements of the Conjugated Compound, Formulation and Product
      have not yet been determined. However, to the best knowledge of Quark, in
      reliance on the assumption that [*] does not [*], Quark will be able to
      [*] and [*] that [*]. [*] shall [*] and report the result of [*] to [*] as
      rapidly as possible.

                    
	 
      	 	 
      
	
                      4.6  Clinical
      Development

                    	 	
                      After
      the IND, Nitto will be responsible for diligently conducting, at its sole
      expense, the remaining clinical and other development of the Product.
      Nitto shall report [*] to Quark the development progress and future
      development and commercialization plans. Nitto may request Quark to
      perform for Nitto part or all of such clinical trial. In such case, if
      Quark will accept Nitto’s offer, the Parties shall agree on the cost and
      other terms of Quark’s participation in the clinical development. It is
      clarified that the terms of the license granted to Nitto in this Agreement
      shall remain the same even if Quark performs part or all of the clinical
      development.

                    
	 
      	 	 
      
	
                      4.7
      Commercialization

                    	 	
                      Nitto
      will be solely responsible for the commercialization of the Product in the
      Field and Territory, including regulatory, manufacturing, marketing and
      sales activities, subject only to the terms of this
    Agreement.

                    
	 
      	 	 
      
	
                      4.8  Exclusivity of
      Research

                    	 	
                      During
      the term of this Agreement, and thereafter if Nitto purchases the share of
      Quark’s ownership of the jointly Owned IP and the grant of non-exclusive
      license of Quark Licensed IP in accordance with subsections 7.2 (iii)(a)
      through (d) or subsection 7.2 (iv)(c), or if Nitto terminates this
      Agreement because of Quark’s Change of Control or Quark’s material breach
      in accordance with subsection 7.2 (i) or 7.2 (ii) respectively, neither
      Quark nor any of its affiliates shall, directly or indirectly, whether on
      its own or with a third party, perform any research with respect to, or
      develop or commercialize, the Nitto Targets, Formulation, Products or
      Nitto Target-directed siRNA.

                    
	 
      	 	 
      
	
                      5.  LICENSE
      TO NITTO

                    	 	 
	 	 	 
	
                      5.1  Licenses 

                    	 	
                      Subject
      to the terms and conditions of the Agreement:

                       

                      (i) 
       Quark hereby grants Nitto, as of the Effective Date, an exclusive
      worldwide, royalty-bearing license, with the right to sublicense, under
      any Jointly Owned IP, to develop, make, have made, use, sell, have sold,
      offer for sale and import such Products in the Field in the Territory.
      This is license is subject to Quark’s use of Jointly Owned IP for internal
      research purposes and for other purposes outside of the scope of the
      foregoing
license. 

                    

            

          

        

      

    

    

    [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
        
        

      

      
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                        (ii) 
      Furthermore, Quark hereby grants, Nitto, as of the Effective Date, a
      non-exclusive worldwide, royalty-bearing license under Quark Licensed IP,
      for the sole and exclusive purposes to develop, make, have made, use,
      sell, have sold, offer for sale and import such Products in the Field in
      the Territory. Such license is granted with the limited right to
      sublicense only in conjunction with the sublicensing under (i) above. It
      is clarified that during the term of this Agreement, Quark undertakes that
      it shall not grant similar license to any third party for research,
      development and commercialization of siRNA compounds directed to Nitto
      Targets in the Field in the Territory. Except as specifically indicated in
      this subsection, Quark shall remain fully free to use, transfer rights and
      exploit the Quark Licensed IP without accounting to
  Nitto.

                      
	
                        6.  FINANCIAL
      PROVISIONS

                      
	 	 	 
	
                        6.1  Research
      Funding

                      	 	
                        As
      partial compensation for performing the Project by Quark, according to
      Appendix A but not including [*], Nitto shall pay to Quark the total sum
      of United States Dollars [*] (the “Initial Research Funding”) provided
      that if and when the [*], then additional United States Dollars [*] shall
      be added to the Initial Research Funding for a total sum of United States
      Dollars [*] for the full Project in Appendix A (the “Full Research
      Funding”), such additional [*] shall be paid to Quark within [*] after
      such JDC approval. The Initial Research Funding shall be paid by Nitto in
      installments as follows :

                      
	 
      	 	 
      
	 
      	 	
                        (i)  
      United States Dollars two million, two hundred thousand only
      (US$2,200,000) upon receipt of Nitto of Quark’s invoice containing its
      designated bank account information within [*] from the Effective
      Date.

                      
	 
      	 	 
      
	 
      	 	
                        (ii)  United
      States Dollars [*], upon receipt by Nitto
      of Quark’s invoice containing its designated bank account information,
      within [*] from the date of [*].

                      
	 
      	 	 
      
	 
      	 	
                        (iii)  United
      States Dollars [*], upon receipt by Nitto of Quark’s invoice containing
      its designated bank account information, within [*] from the date of
      [*].

                      
	 
      	 	 
      
	 
      	 	
                        (iv)  United
      States Dollars [*] upon receipt by Nitto of Quark’s invoice containing its
      designated bank account information, within [*] from the date of
      [*].

                      

              

            

          

        

      

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
        
        

      

      
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              (v)  
        United States Dollars [*] upon receipt by Nitto of Quark’s invoice
      containing its designated bank account information, within [*] from the
      date of [*].

            
	 
      	 
      	 
      
	 
      	 
      	
              (vi)  
        United States Dollars [*] upon receipt by Nitto of Quark’s invoice
      containing its designated bank account information, within [*] from the
      date of [*].

            
	 
      	 
      	 
      
	 
      	 
      	
              (vii)  
       United States Dollars [*] upon receipt by Nitto of Quark’s invoice
      containing its designated bank account information, within [*] from the
      [*].

            
	 
      	 
      	 
      
	 
      	 
      	
              (viii)  
      United States Dollars [*] upon receipt by Nitto of Quark’s invoice
      containing its designated bank account information, within [*] from the
      date [*].

            
	 
      	 
      	 
      
	 
      	 
      	
              The
      JDC shall [*].

            
	 
      	 
      	 
      
	
              6.2  Milestone
      Payments

            	 
      	
              If
      Nitto has not elected to purchase the ownership interest of Quark in the
      Jointly Owned IP and to obtain the non-exclusive license under the Quark
      Licensed IP, by payment of any of the lump sums provided in subsection
      7.2.(iii)(a) or (b) within [*].

            
	 
      	 
      	 
      
	
              6.3  Payments in case of
      sublicensing

            	 
      	
              If
      Nitto has not elected to purchase the ownership interest of Quark in the
      Jointly Owned IP and to obtain the non-exclusive license under the Quark
      Licensed IP, by payment of any of the lump sums provided in subsection
      7.2.(iii) (a) or (b) within [*].

            
	 
      	 
      	 
      
	
              6.4  Royalties

            	 
      	
              Nitto
      will pay a royalty on annual Net Sales (by Nitto or its affiliates or
      sublicensees) of the Products at the rate of [*] on a country-by-country
      basis.

            
	 
      	 
      	 
      
	 
      	 
      	
              Royalties
      will be payable for the period from the First Commercial Sale of the
      Product until the later of (a) 10 years and (b) the last to expire patent
      of the Jointly Owned IP.

            
	 
      	 
      	 
      
	
              6.5  Royalty
      Reductions

            	 
      	
              The
      royalties will be reduced to [*] of the royalty rate in Section 6.4 above
      on a country-by-country basis if there is no patent issued within the
      Jointly Owned IP or the Quark Licensed IP in a country, or there is
      generic competition in a country, with respect to the Products. However,
      such royalty reduction shall not apply if there is [*] (which has been [*]
      for not more than [*]) and there is no generic
  competition.

            
	 
      	 
      	 
      
	 
      	 
      	
              If
      Nitto determines that it must acquire rights of third party IP in order to
      research, develop, manufacture, use, import, sell or otherwise
      commercialize the Product (for reasons other than IP covering the [*]),
      Nitto shall have the right to acquire such rights through a license or
      otherwise and deduct from the payments due to Quark [*] of the amounts
      paid by Nitto to such third party, subject to a maximum reduction limit so
      that royalties payable to Quark are not reduced by more than
      [*].

            

    

    

    [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
        
        

      

      
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                  6.6  Reporting
      and Audit Rights

                	 
      	
                  Nitto
      shall submit reports of Net Sales and make royalty payments on a quarterly
      basis within [*] after the end of each calendar quarter. Quark shall have
      the right to audit the Net Sales of Nitto and its sublicensees at its own
      expense, provided that Nitto shall bear the expenses of any audit that
      establishes an underpayment of more than [*].

                
	 
      	 
      	 
      
	
                  7.  TERM
      AND TERMINATION

                
	 
      	 
      	 
      
	
                  7.1  Term

                	 
      	
                  The
      term of the Agreement will commence upon execution and continue until the
      expiration of the royalty obligations of Nitto, unless earlier terminated
      as permitted by the Agreement.

                
	 
      	 
      	 
      
	
                  7.2  Termination

                	 
      	
                  (i)
      Termination for Change of
      Control: In the event of a Change of Control of Quark prior to the
      completion of Stage 3, Quark shall notify Nitto of such event in writing
      immediately and cause such third party acquiring the control of Quark to
      deliver to Nitto a written commitment to comply with this Agreement. If
      Quark fails to do so, Nitto shall have the right to terminate promptly the
      Agreement. In case of termination, all Jointly Owned IP shall be
      completely assigned to Nitto for the development, commercialization and
      sale of Products in the Field, unconditionally and without any fee and
      compensation. Quark undertakes to process such assignment of its share in
      the Jointly Owned IP expeditiously and to provide to Nitto rights and
      title to all the results, documents, etc. related to the Product in the
      Field. In addition Quark shall provide a non-exclusive worldwide,
      royalty-free license of any Quark Licensed IP that may be necessary for
      development, commercialization and sale of the Product in the
      Field.

                
	 
      	 
      	 
      
	 
      	 
      	
                  (ii)
      Termination for Cause
      (Material Breach): Either Party will have customary rights to
      terminate the Agreement in the event of material breach of the other Party
      (subject to a [*] cure period). Either Party terminated by the other Party
      under this subsection shall transfer or assign its share of the Jointly
      Owned IP to the other Party unconditionally and without any fee and
      compensation. In case of the termination by Nitto of this Agreement due to
      Quark’s material breach, including but not limited to a material violation
      of Quark’s warranty and covenant set forth in Section 4.5, Quark shall
      provide to Nitto a non-exclusive worldwide, royalty-free license of any
      Quark Licensed IP that may be necessary for development, commercialization
      and sale of the Product. The scope of material breach if any and its
      damages shall be settled by mutual consultation of both Parties, and if
      not settled, by an arbitration set forth in Section 8.1, in addition to
      any other remedies provided under New York
law.

                

        

      

    

    

    [
* ] = 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

        
          

        

      

      
        
        

      

    

    
 

    
      	 
      	
              In
      the event of a dispute about whether a material breach has occurred,
      termination of this Agreement shall not be effective until after an
      arbitration under Section 8.1 has determined that a material breach
      occurred and was not cured on a timely basis.

            
	 
      	 
      
	 
      	
              (iii)
      Termination by Nitto
      Without Cause: Nitto may terminate this Agreement and the Licenses
      herein without cause, entirely at the following times (at the end of each
      Stage) and conditions.

            
	 
      	 
      
	 
      	
              (a)
      After
      completion of Stage 1 but before completion of Stage 2: Within [*]
      after [*] at the end of Stage 1 or [*] after the receipt by Nitto of the
      Stage 1 Final Report, whichever comes first, Nitto will inform Quark in
      writing if Nitto wishes to proceed on to Stage 2. It is clarified that
      during this [*] period, Quark will continue the research and development
      of the Project according to Appendix A. In the event that Nitto decides to
      not to continue to Stage 2, this Agreement shall automatically terminate.
      Nitto may purchase the share of the ownership of Quark of the Jointly
      Owned IP and, furthermore, Quark will grant Nitto a non-exclusive license
      under the Quark Licensed IP for researching, developing, commercializing,
      and sale of Products in the Field in the Territory, all provided that
      Nitto shall pay an irrevocable amount of United States Dollars [*]. Nitto
      shall advise Quark of its election to purchase such IP and license rights,
      and make the related payment (if it elects to purchase such IP and license
      rights) within [*] following termination of this Agreement. Even after
      such purchasing, the Quark’s obligation for the maintenance, enforcement
      and handling litigation relating to such IP shall remain in effect,
      provided however that Nitto shall bear all expenses related to the above
      intellectual property protection. For the avoidance of doubt, if Nitto
      purchases such IP, Nitto shall evade paying royalty, Sublicensing Payment
      and Milestone Payment hereunder to Quark. If Nitto decides not to proceed
      to Stage 2 or does not purchase the Quark’s share of the Jointly Owned IP,
      [*] and the non-exclusive license of Quark Licensed IP to Nitto under
      subsection 5.1(ii) shall automatically
  terminate.

            

    

    

    [
* ] = 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

        
          

        

      

      
        
        

      

    

    
 

    
      	 
      	
              (b)
      After
      completion of Stage 2 but before completion of Stage 3: Within [*]
      after the receipt by Nitto of the Stage 2 Final Report, Nitto will inform
      Quark in writing if Nitto wishes to proceed to Stage 3. In the event that
      Nitto decides not to continue to Stage 3, this Agreement shall
      automatically terminate. Nitto may purchase the share of the ownership of
      Quark of the Jointly Owned IP and, furthermore, Quark will grant Nitto a
      non-exclusive license under the Quark Licensed IP for researching,
      developing, commercializing and sale of Products in the Field in the
      Territory, all provided that Nitto shall pay an irrevocable amount of
      United States Dollars [*]. Nitto shall advise Quark of its election to
      purchase such IP and license rights, and make the related payment (if it
      elects to purchase such IP and license rights) within [*] following
      termination of this Agreement. Even after such purchasing, the Quark’s
      obligation for the maintenance, enforcement and handling litigation
      relating to such IP shall remain in effect, provided however that Nitto
      shall bear all expenses related to the above intellectual property
      protection. For the avoidance of doubt, if Nitto purchases such IP, Nitto
      shall evade paying royalty, Sublicensing Payment and Milestone Payment
      hereunder to Quark If Nitto decides not to proceed to Stage 3 or does not
      purchase the Quark’s share of the Jointly Owned IP, [*] and the
      non-exclusive license of Quark Licensed IP to Nitto under subsection
      5.1(ii) shall automatically terminate.

            
	 
      	 
      
	 
      	
              (c)
      After
      completion of Stage 3 and submission of IND in the name of Nitto.
      Nitto may terminate the Agreement on [*] prior written notice at any time
      after the submission of the IND. In such case Nitto may purchase the share
      of the ownership of Quark of the Jointly Owned IP and, furthermore, Quark
      will grant Nitto a non-exclusive license under the Quark Licensed IP for
      researching, developing, commercializing, and sale of Products in the
      Field in the Territory, all provided that Nitto shall pay an irrevocable
      amount of United States Dollars [*]. Nitto shall advise Quark of its
      election to purchase such IP and license rights, and make the related
      payment (if it elects to purchase such IP and license rights) within [*]
      following termination of this Agreement. Even after such purchasing, the
      Quark’s obligation for the maintenance, enforcement and handling
      litigation relating to such IP shall remain in effect, provided however
      that Nitto shall bear all expenses related to the above intellectual
      property protection. For the avoidance of doubt, if Nitto purchases such
      IP, Nitto shall evade paying royalty, Sublicensing Payment and Milestone
      Payment hereunder to Quark. If Nitto decides not to purchase the Quark’
      share of the Jointly Owned IP and license for the price indicated in this
      sub-section, then the provisions of section 7.2(iii)(e) below shall
      apply.

            
	 
      	 
      
	 
      	
              (d)
      Quark
      Bankruptcy or Insolvency. In the event of the bankruptcy or
      insolvency of Quark prior to the completion of Stage 3, Nitto shall have
      the right to immediately terminate this Agreement. If Nitto elects to
      purchase the ownership interest of Quark in the Jointly Owned IP and
      obtain the non-exclusive license under the Quark Licensed IP for
      researching, developing, commercializing, and sale of Products in the
      Field in the Territory, Nitto shall pay Quark [*] the amount applicable
      under the provisions of section 7.2(iii)(a) above (if Stage 1 has been
      completed but not Stage 2) or the provisions of section 7.2(iii)(b) above
      (if Stage 2 has been completed). The bankruptcy or insolvency of Quark
      after the completion of Stage 3 (or the bankruptcy or insolvency of Nitto
      at any time) shall have no effect under this
  Agreement.

            

    

    

    [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    
      	 
      	 
      	
              (e)  Consequences
      of Termination without Cause under subsection (c )above if Nitto does not
      purchase the Jointly Owned IP

            
	 
      	 
      	 
      
	 
      	 
      	
              e.1
      Any licenses and other rights granted by either Party to the other will
      terminate and revert to the granting Party; and except as set forth in
      this Section, the rights and obligations of the Parties hereunder shall
      terminate as of the date of such termination.

            
	 
      	 
      	 
      
	 
      	 
      	
              e.2
      Nitto hereby grants Quark, effective as of the date of such termination, a
      non-exclusive worldwide, royalty-bearing license, with the right to
      sublicense, under any Nitto Background IP (if necessary to practice the
      rights of this sub-Section) and agrees to assign to Quark Nitto’s interest
      in the Jointly Owned IP, to develop, make, have made, use, sell, have
      sold, offer for sale and import such Products as then being marketed or
      developed by Nitto subject only to commercially reasonable royalty and
      assignment price terms to be negotiated in good faith by the
      Parties;

            
	 
      	 
      	 
      
	 
      	 
      	
              e.3
      Any license granted to Quark as described in the preceding subsection
      (e.2) will include the right to use clinical and regulatory data and
      information generated by Nitto for regulatory purposes relating to the
      applicable Products; It will also include assignment to Quark of all of
      its right, title and interest in and to all US and foreign regulatory
      submissions and Regulatory Approvals with respect to the applicable
      Products and all drug master files and drug dossiers with respect to the
      applicable Products.

            
	 
      	 
      	 
      
	 
      	 
      	
              (iv)
      Termination In The Event
      of Project Failure: The Parties recognize that pharmaceutical
      product development is inherently uncertain and that there is no assurance
      of success. In the event there is a material failure to achieve the
      Project Goals at any stage of this Project, Nitto shall have the right to
      terminate this Agreement as follows:

            
	 
      	 
      	 
      
	 
      	 
      	
              (a)
      Any licenses and other rights granted by either Party to the other will
      terminate and revert to the granting Party; and the rights and obligations
      of the Parties hereunder shall terminate as of the date of such
      termination; 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.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
 

    
      
        	 
      	 
      	
                (b)
      Even after such termination, Quark’s obligation for the maintenance,
      enforcement and handling litigation relating to the Jointly Owned IP shall
      remain in effect, and Nitto and Quark shall share all expenses related to
      intellectual property protection on an equal basis; and

              
	 
      	 
      	 
      
	 
      	 
      	
                (c)
      If Nitto elects to purchase the ownership interest of Quark in the Jointly
      Owned IP and obtain the non-exclusive license under the Quark Licensed IP
      for researching, developing, commercializing, and sale of Products in the
      Field in the Territory, Nitto shall pay Quark [*] the amount applicable
      under the provisions of section 7.2(iii)(a) above (if Stage 1 has been
      completed but not Stage 2) or the provisions of section 7.2(iii)(b) above
      (if Stage 2 has been completed), provided however that if and when Nitto
      is able to [*] of [*] arising from the Project [*], then Nitto shall
      notify Quark in writing and shall pay Quark [*].

              
	 
      	 
      	 
      
	 
      	 
      	
                (v)
      Consequences of
      Termination. In the event of termination, the provisions of this
      Agreement which by their terms would survive shall continue in effect, as
      well as the rights and remedies of the Parties accruing prior to
      termination.

              
	 
      	 
      	 
      
	
                8.  MISCELLANEOUS

              	 
      	 
      
	 	 	 
	
                8.1  Governing
      Law and Disputes

              	 
      	
                The
      laws of the State of New York, USA and Commercial Arbitration in
      accordance with ICC rules. Such arbitration shall be conducted in the
      English language and shall be held in New York, USA.

              
	 
      	 
      	 
      
	
                8.2  Compliance
      With Laws

              	 
      	
                In
      carrying out activities under this Agreement, each Party shall comply with
      all applicable laws.

              
	 
      	 
      	 
      
	
                8.3  Press
      Release

              	 
      	
                The
      Parties will issue a mutually agreed form of press release regarding the
      signing of the Agreement within 15 days from signature. In addition, in
      the event that public announcement to stockholders or others relating to
      this Agreement or the Project is required by any law or regulation, the
      Party making any such announcement shall give the other Party an
      opportunity to review in advance the manner or form of the
      announcement.

              
	 
      	 
      	 
      
	
                8.4  Confidentiality

              	 
      	
                The
      Parties will keep confidential the terms of this Agreement, except as
      required by law or by confidential due diligence by potential investors or
      acquirors. Prior to the commencement of work under this Agreement, the
      Parties shall execute a Confidentiality Agreement which shall provide for
      the non-disclosure and non-use of data, information and materials
      exchanged between the Parties, except for use and disclosure as reasonably
      required to perform work or exercise rights under this Agreement. Such
      obligation of confidentiality shall extend for the term of the Agreement
      plus [*].

              

      

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    

    
      	
              8.5  Relationship With Previous
      Agreements

            	 
      	
              This
      Agreement will terminate and supersede the Prior Agreement, and the joint
      Patent Application Agreement and the Memorandum of Understanding if
      entered into prior to execution of this Agreement, provided, however, that
      intellectual property created under such prior agreements shall continue
      to be owned in accordance with the provisions of such agreements (subject
      to the provisions related to Jointly Owned IP provided for in this
      Agreement). The Non-Disclosure Agreements of the Parties dated [*] and [*]
      shall remain in effect and shall apply to information exchanged pursuant
      to this Agreement, until the Parties replace those agreements with a new
      Confidentiality Agreement.

            
	 
      	 
      	 
      
	
              8.6  No
      Assignment

            	 
      	
              Neither
      this Agreement nor any of the one Party’s rights and obligations
      thereunder shall be assignable without prior written consent of the other
      Party.

            
	 
      	 
      	 
      
	
              8.7  Tax
    Matter

            	 
      	
              The
      Parties shall take all necessary measures to avoid double taxation on
      payments to be made under this
Agreement.

            

    

     

    [Remainder
of page intentionally left blank - Signatures found on next page]

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the
Parties hereto have caused this Agreement to be executed in duplicate, signed
and sealed by both Parties, and each original copy to be retained by each
Party.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	
                                                Signed
      for and behalf of:

                                              	 
      	Signed
      for and behalf of:
	 
      	 
      	 
      	 
      	 
      
	
                                                Nitto
      Denko Corporation

                                              	 
      	Quark
      Pharmaceuticals, Inc.
	 
      	 
      	 
      	 
      	 
      
	
                                                By 
      

                                              	
                                                /s/ Kageshi
      Maruyama

                                              	 
      	
                                                By 
      

                                              	
                                                /s/ D.
      Zurr

                                              
	 
      	 
      	 
      	 
      	 
      
	
                                                Name:   
      

                                              	
                                                Kageshi
      Maruyama

                                              	 
      	
                                                Name:   
      

                                              	
                                                Daniel
      Zurr

                                              
	 
      	
                                                Officer,
      General Manager of Corporate

                                              	 
      	
                                                Title: 
      

                                              	
                                                President &
      CEO

                                              
	
                                                Title: 
      

                                              	
                                                Business Development
      Dept.

                                              	 
      	 
      	 
      
	 	 	 	 	 
	
                                                Date: 
      

                                              	July 1st,
      2010             
      	
                                                in
      Japan

                                              	  
      	
                                                Date:

                                              	
                                                July
      4,
      2010                 
      

                                              	
                                                in
      USA

                                              

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    List
of Appendices and Exhibits:

     

    
      	
               
      

            	
              Appendix
      A- Project Description (Tasks, Project Goals, Timelines and
      Deliverables)

            

    

     

    
      	
               
      

            	
              Appendix
      B- Budget

            

    

     

    
      	
               
      

            	
              Appendix
      C- Initial Project Team

            

    

     

    
      	
               
      

            	
              Exhibit
      1- Patents and Patent Applications Included Within Quark Licensed
      IP

            

    

     

    
      [
* ] = 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

        
          

        

      

      
        
        

      

    

     

    Appendix
A – Project Description (Tasks, Project Goals, Timelines and
Deliverables)

     

    [*]

     

    
      [
* ] = 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.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Appendix
B – Budget

     

    [*]

     

    
      [
* ] = 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.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Appendix
C

     

    [*]

     

    
      [
* ] = 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.

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
1 Patents and Patent Applications Included Within Quark Licensed IP

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            	
                                                    Quark
      Ref. No./

                                                    Pending
      Patent

                                                    family
      members

                                                  	 	
                                                    Title

                                                  	 	
                                                    Priority
      Application(s)

                                                    No.

                                                    Priority
      Filing date (s)

                                                  	 	
                                                    International
      Appl. No.

                                                    Application
      Filing date

                                                    Publication
      No.

                                                    Publication
      filing date

                                                  
	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  
	 	 	 	 	 	 	 
	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
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                                                    [*]

                                                  	 	
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                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  
	 	 	 	 	 	 	 
	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  	 	
                                                    [*]

                                                  

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      [
* ] = 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.Execution
Copy

    CONFIDENTIAL

     

     [ * ] = 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.

     

    Exhibit
10.35

     

      
        

      

    

     

    Option
Agreement

     

    By
And Between

     

    Novartis
International Pharmaceutical Limited

     

    And

     

    Quark
Pharmaceuticals, Inc.

     

    
      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    1.

                                  	
                                    DEFINITIONS
      AND INTERPRETATION

                                  	
                                    2

                                  
	 	 	 
	
                                    2.

                                  	
                                    OPTION
      GRANT

                                  	
                                    9

                                  
	 	 	 
	
                                    3.

                                  	
                                    GOVERNANCE
      AND DEVELOPMENT DURING OPTION PERIOD

                                  	
                                    9

                                  
	 	 	 
	
                                    4.

                                  	
                                    EXERCISE
      OF OPTION AND GRANT OF LICENSE

                                  	
                                    15

                                  
	 	 	 
	
                                    5.

                                  	
                                    CONFIDENTIALITY

                                  	
                                    19

                                  
	 	 	 
	
                                    6.

                                  	
                                    INTELLECTUAL
      PROPERTY

                                  	
                                    20

                                  
	 	 	 
	
                                    7.

                                  	
                                    TERM
      AND TERMINATION

                                  	
                                    22

                                  
	 	 	 
	
                                    8.

                                  	
                                    REPRESENTATIONS,
      WARRANTIES, COVENANTS AND INDEMNITIES

                                  	
                                    23

                                  
	 	 	 
	
                                    9.

                                  	
                                    PUBLICATIONS
      AND PUBLICITY

                                  	
                                    27

                                  
	 	 	 
	
                                    10.

                                  	
                                    GENERAL
      PROVISIONS

                                  	
                                    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.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    OPTION
AGREEMENT

     

    This
OPTION AGREEMENT (“Option
Agreement”) is made as of this 17th day of
August, 2010 (“Option Agreement
Effective Date”), by and between Novartis International Pharmaceutical
Limited, located at 131 Front Street, Hamilton, Bermuda, a corporation organized
and existing under the laws of Bermuda (“Novartis”) and Quark
Pharmaceuticals, Inc., located at 6501 Dumbarton Circle, Fremont, CA 94555,
U.S.A., a corporation organized and existing under the laws of California,
U.S.A. (“Quark”).  Novartis
and Quark are each referred to individually as a “Party” and together as the
“Parties.”

     

    RECITALS

     

    WHEREAS,
Quark owns or controls the Quark Patents and Quark Know-How (each as defined
below) relating to the Quark Compounds (as defined below);

     

    WHEREAS,
Novartis wishes to obtain, and Quark wishes to grant to Novartis, an exclusive
option to obtain exclusive rights to the Quark Compounds in the Field (as
defined below).

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Parties agree as follows.

     

    
      	
              1.

            	
              DEFINITIONS
      AND INTERPRETATION

            

    

     

    
      	
              1.1

            	
              Definitions.  Unless
      the context otherwise requires, the terms in this Option Agreement with
      initial letters capitalized, shall have the meanings set forth below, or
      the meaning as designated in the indicated places throughout this Option
      Agreement.

            

    

     

    “Affiliate” has the meaning
set forth on Exhibit
A.

     

     “AKI Final Report” means
the complete, signed, detailed, data cleaned, statistically analyzed, unbiased,
unblinded, unblended and cGCP audited and compliant final report(s) of the AKI
Phase II Trial setting forth patient outcomes for [*] following dosing based on
a fully monitored, cleaned, QA/QC assessed and locked database, the format and
content of which shall be in accordance with the ICH E3 Guidelines, and which
shall include all available raw data in a user-friendly electronic format, as
well as primary and secondary efficacy endpoint data, all material efficacy,
safety, clinical and medical data, and any other information related
thereto.

     

    “AKI First Interpretable
Results” means an interim report of the AKI Phase II Trial setting forth
patient outcomes for [*] following dosing based on cleaned, unbiased, unblinded
data, the format and content of which shall be in accordance with the template
attached as Exhibit
J, and which shall include all available raw data in a user-friendly
electronic format on a fully monitored, cleaned QA/QC assessed and locked
database, as well as primary and secondary efficacy endpoint data, all material
efficacy, safety, clinical and medical data, and any other information related
thereto.

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    “AKI Indication” has the
meaning set forth on Exhibit
A.

     

    “AKI Phase II Trial” means the
Phase II Clinical Trial for use of a Product for the AKI Indication to be
conducted by Quark in accordance with the AKI Phase II Trial
Protocol.

     

    “AKI Phase II Trial Protocol”
means the draft protocol for the AKI Phase II Trial attached as Exhibit C, as such
protocol may be amended by Quark from time to time prior to the Option Exercise
Date.

     

    “AKI Phase II Trial [*]
Criteria” means the [*] criteria for the AKI Phase II Trial set forth on
Exhibit
D.

     

    “Business Day” has the meaning
set forth on Exhibit
A.

     

    “Calendar Quarter” has the
meaning set forth on Exhibit
A.

     

    “Calendar Year” has the meaning
set forth on Exhibit
A.

     

    “cGCP” means current good
clinical practice as required by the FDA and all applicable FDA rules,
regulations, orders and guidances, and the requirements with respect to current
good clinical practices prescribed by the European Community and the
ICH.

     

    “cGLP” means current good
laboratory practice as required by the FDA and all applicable FDA rules,
regulations, orders and guidances, and the requirements with respect to current
good clinical practices prescribed by the European Community and the
ICH.

     

    “cGMP” means current good
manufacturing practices as required by the FDA under provisions of 21 C.F.R.
parts 210 and 211 (as the same may be amended) and all applicable FDA rules,
regulations, orders and guidances, and the requirements with respect to current
good manufacturing practices prescribed by the European Community under
provisions of “The Rules Governing Medicinal Products in the European Community,
Volume 4, Good Manufacturing Practices, Annex 13, Manufacture of investigational
medicinal products, July 2003,” as each may, from time to time, be amended, and
the ICH.

     

    “Claims” means all Third Party
demands, claims, actions, proceedings and liability (whether criminal or civil,
in contract, tort or otherwise) for losses, damages, reasonable legal costs and
other reasonable expenses of any nature whatsoever.

     

    “Commercialize” and “Commercialization” have the
meaning set forth on Exhibit
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.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    “Commercially Reasonable
Efforts” means the expenditure of those efforts and resources used [*] in
pursuing development or commercialization of [*], or where [*] does not [*], the
expenditure of such efforts and use of such resources [*].  For
clarity, “Commercially Reasonable Efforts” shall be [*], accordingly, [*] with
respect to [*] may [*] with respect to [*].

     

    “Confidential Information”
means all Know-How and other proprietary information and data of a financial,
commercial or technical nature which the disclosing Party or any of its
Affiliates has supplied or otherwise made available to the other Party or its
Affiliates, whether made available orally, in writing or in electronic form,
including information comprising or relating to concepts, discoveries,
inventions, data, designs or formulae in relation to this Option
Agreement.

     

    “Damaged Party” has the
meaning set forth in Section 8.6.

     

    “Develop” and “Development” have the meaning
set forth on Exhibit
A.

     

    “Development Costs” means
expenses incurred by Quark in carrying out the remaining work under the Quark
Development Plan, as agreed by the Parties in accordance with Section 3.2(e),
calculated as the sum of the following:

     

    
      	
               
      

            	
              (a)

            	
              all
      [*] incurred by Quark with respect to the activities outlined in the Quark
      Development Plan, [*]; and

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      [*] in carrying out the activities outlined in the Quark Development Plan
      [*].

            

    

     

    “Development Cost Budget” has
the meaning set forth in Section 3.2(e).

     

    “DGF DMC Top Line Interim
Report” means an interim report(s) of DGF Phase II Trial (after each
interim analysis) setting forth patient outcomes for [*] following dosing based
on a partially monitored and source-verified data, provided however that all
data fields relating to the analysis of the efficacy success criteria are
[*].  All other data fields will be consistent with industry practices
for interim review in an on-going blinded trial.  All data will be
collected in a 21 C.F.R. 11 validated database with full audit
trail.  All the DMC recommendations [*] as based on their review of
un-blinded data, will be provided verbatim to Quark and
Novartis.  Interim blinded data will also be provided in a
user-friendly electronic format to Novartis.  Such blinded data shall
include all material efficacy, safety, clinical and medical data, and any other
information related thereto, including data relating to patient and graft
survival.  Serious Adverse Event (SAE) listings and adverse events
(AE) listings are based on the unlocked database.

     

    “DGF Final Report” means the
complete, signed, detailed, data cleaned, statistically analyzed, unbiased,
unblinded, unblended and cGCP audited and compliant final report(s) of the DGF
Phase II Trial setting forth patient outcomes for [*] following dosing based on
a fully monitored, cleaned, QA/QC assessed and locked database, the format and
content of which shall be in accordance with the ICH E3 Guidelines, and which
shall include all available raw data in a user-friendly electronic format, as
well as primary and secondary efficacy endpoint data, all material efficacy,
safety, clinical and medical data, and any other information related
thereto.

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    “DGF Indication” has the
meaning set forth on Exhibit
A.

     

    “DGF Phase II Trial” means the
Phase II Clinical Trial for use of a Product for the DGF Indication to be
conducted by Quark in accordance with the DGF Phase II Trial
Protocol.

     

    “DGF Phase II Trial Protocol”
means the protocol for the DGF Phase II Trial attached as Exhibit E, as such
protocol may be amended by Quark from time to time.

     

    “DGF Phase II Trial [*]
Criteria” means the [*] criteria for the DGF Phase II Trial set forth on
Exhibit
F.

     

    “DGF [*] Report” means the
complete, signed, detailed, data cleaned, statistically analyzed, unbiased,
unblinded and cGCP audited and compliant interim report(s) of the DGF Phase II
Trial setting forth patient outcomes for [*] following dosing based on a fully
monitored, cleaned, QA/QC assessed and locked database, the format and content
of which shall be in accordance with the ICH E3 Guidelines, and which shall
include all available raw data in a user-friendly electronic format, as well as
primary and secondary efficacy endpoint data, all efficacy, safety, clinical and
medical data, and any other information related thereto, including all available
top line data relating to patient and graft survival, Serious Adverse Event
(SAE) listings (including biopsy proven acute rejections) and adverse events
(AE) listings based on the unlocked database for the period beyond the [*]
locked data.

     

    “DMC” means the Independent
Data Monitoring Committee, consisting of external experts to the applicable
Phase II Clinical Trial, to assess the progress, safety data and endpoint
adjudication following a harmonized and standardized endpoint assessment and to
perform pre-defined, semi-blended interim analyses.

     

    “Draft Phase II Trial Report”
has the meaning set forth in Section 3.5(a).

     

    “Expiration Date” has the
meaning set forth in Section 4.1(b)(v).

     

    “Field” has the meaning set
forth in Exhibit
A.

     

    “FTE Rate” means a rate of [*]
US Dollars ($[*]) per Calendar Year based on the yearly time of an employee for
a full-time equivalent scientific person year (consisting of a total of [*]
hours per Calendar Year) of work, to be pro-rated on a daily basis if necessary
(per Calendar Year amount to be divided by [*] to produce the rate per whole day
consisting of eight (8) hours); such rate to [*] and [*]. For the avoidance of
doubt, such rate includes [*] for which [*].  The FTE Rate shall be
[*] to [*] in the [*] from the Option Agreement Effective Date.

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    “HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
promulgated thereunder.

     

    “HSR Filing Date” shall have
the meaning set forth in Section 4.2.

     

    “Insolvency Event” has the
meaning set forth in Exhibit
A.

     

    “Joint Development Technology”
means all Know-How and Patent Rights created, conceived, reduced to practice or
invented jointly by (a) Quark, its Affiliates, agents or Third Parties acting on
its behalf and (b) Novartis, its Affiliates, agents or Third Parties acting on
its behalf, under this Option Agreement.

     

    “Joint Discussion
Committee” or “JDC” means the committee
established as set forth in Section
3.1.

     

    “Know-How” has the meaning set
forth on Exhibit
A.

     

    “License” has the meaning set
forth in Section 4.1(c).

     

    “License Effective Date” means
the later of (i) the Option Exercise Date or (ii) the date on which the waiting
period provided by the HSR Act shall have terminated or expired without any
action by any government agency or challenge to the License (or any other
timeline required by another relevant agency or authority).

     

    “Novartis Development
Technology” means all Know-How and Patent Rights (if any) created,
conceived, reduced to practice or invented solely by Novartis, its Affiliates,
agents or by Third Parties acting on its behalf, in connection with the Quark
Program during the term of this Option Agreement.

     

    “Novartis Success Criteria
Notice” has the meaning set forth in Section 4.1(a)(i)

     

    “Option” has the meaning set
forth in Section 2.1.

     

    “Option Agreement Effective
Date” shall have the meaning set forth in the first paragraph of this
Option Agreement.

     

    “Option Exercise Date” means
the date (if any) on which Novartis exercises the Option in accordance with
Section 4.1(a) (or Section 3.4(b), if applicable).

     

    “Option Grant Fee” has the
meaning set forth in Section 2.2.

     

    “Option Period” means the
period of time commencing on the Option Agreement Effective Date and ending on
the earlier of (a) the Option Exercise Date; (b) the date on which the Option
expires in its entirety pursuant to Section 4.1(b).

     

    “Out-of-Pocket Cost” means
direct project related expenses paid or payable to Third Parties and
specifically identifiable and incurred in accordance with the Quark Development
Plan; such expenses shall have been recorded [*] in accordance with Quark’s
Accounting Standards and for the avoidance of doubt, [*].

     

    [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    “Patent Rights” has the
meaning set forth in Exhibit
A.

     

    “Person” means any individual,
partnership, limited liability company, firm, corporation, association, trust,
unincorporated organization or other entity.

     

     “Phase II Clinical
Trial” has the meaning set forth in Exhibit
A.

     

    “Phase II Trial Reports”
means, collectively, the DGF DMC Top Line Interim Report, the DGF [*] Report,
the DGF Final Report, the AKI First Interpretable Results, and the AKI Final
Report.

     

    “Product” has the meaning set
forth in Exhibit
A.

     

    “Quark Compounds” has the
meaning set forth in Exhibit
A.  

     

    “Quark Development Plan” means
Quark’s plan for the development of the Products through to completion of the
AKI Phase II Trial and the DGF Phase II Trial, as set forth on Exhibit G, as such
development plan may be amended by Quark from time to time prior to the Option
Exercise Date.

     

    “Quark Development Technology”
means all Know-How and Patent Rights created, conceived, reduced to practice or
invented solely by Quark, its Affiliates, agents or by Third Parties acting on
its behalf, in connection with the Quark Program during the term of this Option
Agreement.

     

    “Quark Know-How” has the
meaning set forth in Exhibit
A.

     

    “Quark Notice of [*]” has the
meaning set forth in Section [*]

     

    “Quark Patents” has the
meaning set forth in Exhibit
A.  

     

    “Quark Program” means Quark’s
program relating to the research and development of the Quark Compounds and the
Products, including the AKI Phase II Trial and the DGF Phase II
Trial.

     

    “Quark Program Confidential
Information” means information and data relating to the Quark Compounds,
Product and/or Quark Program and the Quark Know-How, Quark Patents (to the
extent not published) and other non-public Quark Technology, in each case, to
the extent that such information and data is of a type and character which is,
consistent with industry practice, kept confidential.

     

    “Quark Technology” has the
meaning set forth in Exhibit A, and shall
include, for the avoidance of doubt, all Quark Development
Technology.

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    “Regulatory Authority” has the
meaning set forth in Exhibit
A.

     

    “Regulatory Filings” has the
meaning set forth in Exhibit
A.

     

    “Section 8.1(a) Decision Period”
has the meaning set forth in Section 4.1(a)(i).

     

    “Senior Officers” means, for
Novartis, the Head of Development (for Development matters) and Head of Business
Development and Licensing (for all other matters) of Novartis Pharma AG, and for
Quark, the Chief Executive Officer (for all matters).

     

    “Territory” has the meaning
ascribed to such term in Exhibit
A.

     

    “Third Party” means any Person
other than a Party or an Affiliate of a Party.

     

    “United States” or “US” means the United States of
America, its territories and possessions.

     

    “USD” or “US$” means the lawful
currency of the United States.

     

    
      	
              1.2

            	
              Interpretation.  In
      this Option Agreement unless otherwise
  specified:

            

    

     

    
      	
               
      

            	
              (a)

            	
              “includes”
      and “including” shall mean respectively includes and including without
      limitation;

            

    

     

    
      	
               
      

            	
              (b)

            	
              a
      statute or statutory instrument or any of their provisions is to be
      construed as a reference to that statute or statutory instrument or such
      provision as the same may have been or may from time to time hereafter be
      amended or re-enacted;

            

    

     

    
      	
               
      

            	
              (c)

            	
              words
      denoting the singular shall include the plural and vice versa and words
      denoting any gender shall include all
genders;

            

    

     

    
      	
               
      

            	
              (d)

            	
              the
      Exhibits and other attachments form part of the operative provision of
      this Option Agreement and references to this Option Agreement shall,
      unless the context otherwise requires, include references to the Exhibits
      and attachments;

            

    

     

    
      	
               
      

            	
              (e)

            	
              the
      headings in this Option Agreement are for information only and shall not
      be considered in the interpretation of this Option
    Agreement;

            

    

     

    
      	
               
      

            	
              (f)

            	
              general
      words shall not be given a restrictive interpretation by reason of their
      being preceded or followed by words indicating a particular class of acts,
      matters or things; and

            

    

     

    
      	
               
      

            	
              (g)

            	
              the
      Parties agree that the terms and conditions of this Option Agreement are
      the result of negotiations between the Parties and that this Option
      Agreement shall not be construed in favor of or against any Party by
      reason of the extent to which any Party participated in the preparation of
      this Option 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.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
              2.

            	
              OPTION
      GRANT

            

    

     

    
      	
              2.1

            	
              Option Grant. Subject to
      the terms and conditions of this Option Agreement, Quark hereby grants to
      Novartis an exclusive option to obtain the License (“Option”). Novartis may
      exercise its rights and perform its obligations under this Option
      Agreement itself or through any of its Affiliates; provided that
      Novartis shall remain primarily liable for any acts or omissions of its
      Affiliates under this Option Agreement or the License
      Agreement.

            

    

     

    
      	
              2.2

            	
              Option Grant
      Fee.  In consideration of the Option granted to Novartis
      hereunder, Novartis shall pay to Quark a one-time, non-refundable,
      non-creditable payment of ten million USD (US$ 10,000,000) (“Option Grant Fee”)
      within [*] days after receipt by Novartis of an original invoice for such
      amount from Quark in the form attached hereto as Exhibit H,
      which invoice shall be issued no earlier than the Option Agreement
      Effective Date.

            

    

     

    
      	
              2.3

            	
              Exclusivity During Option
      Period.  Throughout the Option Period Quark shall not
      initiate, solicit, discuss, negotiate or enter into any agreement or
      arrangement with any Third Party regarding
any:

            

    

     

    
      
        	
                
                

              	
                (a)

              	
                license,
      assignment or other disposition of any of its rights (also by way of
      granting an option similar to the Option) in any Quark Compound, Product
      or [*] Quark Technology to any Third Party;
or

              

      

    

     

    
      
        	
                
                

              	
                (b)

              	
                collaboration
      or license agreement with any Third Party in connection with the
      development and/or commercialization of any
[*].

              

      

    

     

    
      	
              3.

            	
              GOVERNANCE
      AND DEVELOPMENT DURING OPTION
PERIOD

            

    

     

    
      	
              3.1

            	
              Joint Discussion
      Committee.

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Parties will establish a Joint Discussion Committee, composed of [*]
      senior personnel of Quark and [*] senior personnel of Novartis (one (1) of
      which will be the Party’s Alliance Manager and which personnel for each
      Party, collectively, shall have a general understanding of drug
      manufacturing, development and commercialization
      issues).  Within [*] following the Option Agreement Effective
      Date, each Party will designate its initial members to serve on the JDC
      and notify the other Party of the dates of availability for the first
      meeting of the JDC.  Each Party may replace its representatives
      on the JDC on written notice to the other
Party.

            

    

     

    
      	
               
      

            	
              (b)

            	
              At
      meetings of the JDC, Quark will update Novartis on, and the Parties
      will review and discuss, the status of Quark’s Development activities
      with respect to the Quark Compounds and the Product and any key issues
      encountered in the Development of the Quark Compounds and the
      Product.  Without limiting Quark’s obligations under
      Section 3.3(a), Quark shall deliver any data and/or information
      required to be delivered under Section 3.3(a) that has not yet been
      delivered within a reasonable period of time prior to the next JDC
      meeting.

            

    

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

            	
              The
      JDC shall meet at least [*] per Calendar Year during the Option Period and
      at such other times as the JDC or the Parties may agree.  The
      first meeting of the JDC shall be held as soon as reasonably practicable,
      but in no event later than [*] following the Option Agreement Effective
      Date.  Meetings shall be held at such place or places as are
      mutually agreed or by teleconference or videoconference.  Each
      Party may from time to time invite a reasonable number of participants who
      are under obligations of confidentiality consistent with this Option
      Agreement, in addition to its representatives, to attend JDC meetings in a
      non-voting capacity, with the consent of the other Party (which shall not
      be unreasonably withheld).

            

    

     

    
      	
               
      

            	
              (d)

            	
              The
      Parties agree that the costs incurred by each Party in connection with its
      participation at any meetings under this Section 3.1 shall be borne solely
      by such Party.

            

    

     

    
      	
               
      

            	
              (e)

            	
              For
      avoidance of doubt, during the Option Period, Quark retains all decision
      making rights regarding Development of the Quark Compounds and the
      Product.  Quark will consider in good faith Novartis’ opinions
      as discussed during the JDC meetings but may amend the DGF Phase II Trial
      Protocol and the AKI Phase II Trial Protocol without Novartis’
      consent.

            

    

     

    
      	
              3.2

            	
              Development During the Option
      Period.

            

    

     

    
      	
               
      

            	
              (a)

            	
              During
      the Option Period, Quark will have the sole right to conduct and will be
      responsible for conducting, at its sole expense, and shall use
      Commercially Reasonable Efforts to carry out, all research and
      preclinical, clinical and other development of the Quark Compounds and/or
      Product; provided that
      Novartis will provide, though its participation in the JDC, a reasonable degree
      of know-how and technical advice with respect to such activities; provided
      further that Quark shall not be obligated to conduct any research
      and preclinical, clinical and other development of the Quark Compounds
      and/or Product except as set forth below in Section
  3.2(b).

            

    

     

    
      	
               
      

            	
              (b)

            	
              Without
      limiting Section 3.2(a) above, Quark will be responsible for completing,
      and shall use Commercially Reasonable Efforts to complete, at its sole
      cost and expense (except as provided below) and in accordance with the
      Quark Development Plan, the DGF Phase II Trial and the AKI Phase II Trial,
      including the Phase II Trial Reports and the AKI [*] and [*] safety
      follow-up reports.  The DGF Phase II Trial shall be completed in
      accordance with the DGF Phase II Trial Protocol and the AKI Phase II Trial
      shall be completed in accordance with the AKI Phase II Trial
      Protocol.  Notwithstanding the foregoing, if [*] as specified in
      the [*], as applicable, after [*] specified therein by [*], [*], and the
      Parties [*].  For clarity, in no event shall Quark be obligated
      to implement any changes to the Quark Development Plan, the DGF Phase II
      Trial Protocol, or the AKI Phase II Trial Protocol that would have the
      effect of [*] of the DGF Phase II Trial and/or the AKI Phase II
      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.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

            	
              Quark
      covenants that in performing all such development (i) it shall comply
      with all applicable current international regulatory standards, including
      cGMP, cGLP, cGCP and other rules, regulations and requirements and
      (ii) it will not employ or use any person that has been debarred
      under Section 306(a) or 306(b) of the U.S. Federal Food, Drug and Cosmetic
      Act.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Subject
      to the foregoing, during the Option Period, Quark shall retain decision
      making authority on all matters in connection with the Development
      (including all agreements with Third Parties) of the Quark Compounds
      and/or Product and shall reasonably keep Novartis updated with respect to
      any material decisions, data, results and draft agreements related
      thereto.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Notwithstanding
      anything to the contrary in this Option Agreement, if [*] do not [*] and
      the [*] do not [*], and the [*], Quark may [*] and shall [*], provided, however, that
      [*]. For a period of [*] after [*] and the [*], the Parties shall [*].
       If the
      Parties [*], such [*] will [*] and [*], Quark will [*], and Novartis [*],
      and Quark shall [*], provided, however, that Novartis [*]. Quark shall [*]
      after the Parties [*].  Novartis shall [*].  Such [*]
      will be [*].

            

    

     

    
      	
              3.3

            	
              Covenants Prior to Option
      Exercise.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Information relating to Quark
      Compounds and/or Product.  During the Option Period,
      Quark shall promptly notify Novartis of, and promptly provide to Novartis,
      all data and/or information relating to the Quark Compounds and/or Product
      that Quark generates during the Option Period which, in Quark’s reasonable
      judgment, would be relevant for Novartis’ decision concerning the exercise
      of the Option, whether or not such data or information is specifically
      requested by Novartis.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Regulatory
      Developments.  During the Option Period, Quark will
      provide to Novartis copies of all substantive written communications
      between Quark (or its Affiliates) and Regulatory Authorities related to
      any Quark Compound or Product.  Novartis shall have the right to
      have representatives of Novartis attend (as observers) all meetings
      between Quark (or its Affiliates) and any Regulatory Authority relating to
      the DGF Phase II Trial and/or the AKI Phase II Trial, except to the extent
      prohibited by applicable law or
regulation.

            

    

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

            	
              Due
      Diligence.  During the Option Period, Quark shall permit
      Novartis to conduct a reasonable due diligence investigation to enable
      Novartis to make an informed decision on whether or not to exercise the
      Option and its other rights hereunder.  The key due diligence
      items shall include: (i) discussions with Quark on interactions with
      the Regulatory Authorities relating to the Quark Compounds and/or the
      Product and all past, current, and planned related clinical trials
      relating to Quark Compounds and/or Product, and review of all filings and
      correspondence with Regulatory Authorities relating to the Quark Compounds
      and/or the Product, including minutes of meetings and telephone calls with
      such Regulatory Authorities regarding such matters; (ii) review of
      all pre-clinical and clinical data, and of the formulation composition and
      CMC sections of Regulatory Filings, in each case, related to Quark
      Compounds and/or Product; (iii) review of all contracts related to
      the Development, manufacturing or Commercialization of the Quark Compounds
      or the Products, including all agreements entered into by Quark during the
      Option Period; (iv) review of all intellectual property relating to
      Quark Compounds and/or Product; (v) access to any contract research
      organization(s) and contract manufacturer(s) of the Quark Compounds of
      Product, including for purposes of conducting quality audits if requested
      by Novartis; and (vi) any other items reasonably related to Quark
      Compounds and/or Product or the License, as the case may
      be.  Such due diligence items shall be provided by Quark
      promptly upon reasonable request by Novartis from time to time, but shall
      be subject to Third Party confidentiality obligations of Quark which will
      be clearly identified and listed before entering due diligence (provided
      that if information material to Novartis’s decision about exercising its
      Option is subject to a Third Party confidentiality obligation, Quark shall
      so advise Novartis and work with Novartis to enable Novartis to make its
      decision about Option exercise in an informed
  manner).

            

    

     

    
      	
               
      

            	
              (d)

            	
              Financial
      Disclosures.  During the Option Exercise Period, Quark
      shall promptly notify Novartis:

            

    

     

    
      	
               
      

            	
              (i)

            	
              of
      the occurrence of the following:

            

    

     

    
      	
               
      

            	
              (A)

            	
              Quark’s
      [*] fall below US$[*];

            

    

     

    
      	
               
      

            	
              (B)

            	
              Quark’s
      [*] (excluding [*]) exceed US$[*], and any increase in Quark’s [*] of more
      than US$[*]; or

            

    

     

    
      	
               
      

            	
              (C)

            	
              any
      increase of more than US$[*] in Quark’s [*] as compared to
      [*],

            

    

     

    it being
agreed that, if any of the foregoing occurs, the Parties shall discuss possible
alternatives which may include (but are not limited to) [*], provided that, for
the sake of clarity, the occurrence of an event described in this Section
3.3(d)(i), in the absence of other circumstances, shall not be considered [*]
and such notification thereof by Quark shall not be considered [*] by Quark
which would give rise to [*] in accordance with [*];

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    (ii)         if
and when Quark first becomes aware of any proceedings, or the likely occurrence
of any proceedings, in connection with an Insolvency Event or other similar
arrangement or proceeding in regard to Quark (such notice, an “Insolvency Event Notice by
Quark”).

     

    
      	
              3.4

            	
              Option
      Acceleration.

            

    

     

    
      	
               
      

            	
              (a)

            	
              In
      the event that Novartis reasonably determines, during the Option Exercise
      Period, that [*] has or is likely to occur in connection with [*] it may
      issue written notice to Quark of such determination (such notice,
      [*]).

            

    

     

    
      	
               
      

            	
              (b)

            	
              Within
      [*] of any [*] by Quark or any [*] by Novartis, Novartis may exercise the
      Option by notice in writing to Quark, which will have the effect described
      in Section 8.3 of Exhibit A
      hereto.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Nothing
      in this Section 3.4 shall limit any other rights of Novartis under this
      Option Agreement, and for clarity, nothing in this Section 3.4 shall
      preclude Novartis from exercising the Option at any later time during the
      Option Period in the event that it does not exercise the Option under this
      Section 3.4.

            

    

     

    
      	
              3.5

            	
              Delivery of Study
      Reports.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Quark
      shall deliver to Novartis a draft of each of the Phase II Trial Reports
      except the DGF DMC Top Line Interim Report and the AKI First Interpretable
      Results, which will each only be delivered in a final form (all reports
      shall, in each case, include all available raw data in a user-friendly
      electronic format, as well as primary and secondary efficacy endpoint
      data, all material efficacy, safety, clinical and medical data, and any
      other information related thereto and shall be produced in a substantially
      similar form as the report template provided by Novartis from time to
      time) (each, a “Draft
      Phase II Trial Report”) no more than [*] following the date on
      which the applicable Draft Phase II Trial Report becomes available to
      Quark in essentially complete form.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Each
      Draft Phase II Trial Report shall be accompanied by a report setting forth
      all other material efficacy, safety, clinical and medical data,
      manufacturing data and a summary of the data generated from the
      pre-clinical and clinical studies in sufficient detail so as to reasonably
      demonstrate whether efficacy has been achieved in accordance with defined
      endpoints and whether any unexpected or untoward effects resulted from
      such studies which would limit further development of the
      Product.

            

    

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

            	
              For
      a period of [*] from and after the delivery of each Draft Phase II Trial
      Report, Novartis shall have the right to request from Quark such
      additional information then in the possession of or readily available to
      Quark as Novartis may reasonably require in order to make a scientific,
      legal and business evaluation of the development and commercialization
      potential of the Product.  Quark shall promptly respond in
      writing to any questions Novartis may have regarding the applicable Draft
      Phase II Trial Report and the report provided under Section 3.5(b), and
      shall promptly provide or make available any additional information
      relating thereto requested by Novartis, in any case, within [*] following
      any such questions and/or request.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Novartis
      will within [*] of receiving a Draft Phase II Trial Report issue a written
      notice to Quark either confirming or disputing whether such Draft Phase II
      Trial Report meets the requirements set forth in the relevant Phase II
      Trial Report definition under this Option Agreement, such confirmation not
      to be unreasonably withheld.  In the event such written notice
      disputes whether such Draft Phase II Trial Report meets the requirements
      set forth in the relevant Phase II Trial Report definition under this
      Option Agreement, such written notice shall include a list of specific
      deficiencies to be corrected in the final version of the applicable Phase
      II Trial Report.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Quark
      will provide Novartis with the final version of the following Phase II
      Trial Reports:

            

    

     

    
      	
               
      

            	
              (i)

            	
              The
      DGF DMC Top Line Interim Report within [*] of the final dosing of the last
      patient for each interim analysis in the DGF Phase II
    Trial;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              The
      DGF [*] Report within [*] of the final dosing of the last patient for the
      DGF Phase II Trial;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              The
      DGF Final Report within [*] of the final dosing of the last patient for
      the DGF Phase II Trial;

            

    

     

    
      	
               
      

            	
              (iv)

            	
              The
      AKI First Interpretable Results within [*] of the final dosing of the last
      patient in the AKI Phase II Trial;
and

            

    

     

    
      	
               
      

            	
              (v)

            	
              The
      AKI Final Report within [*] of the final dosing of the last patient for
      the AKI Phase II 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.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    Each such
Phase II Trial Report shall be deemed to have been accepted by Novartis [*]
after it was first made available to Novartis in final and complete form,
provided that such report reasonably addresses any deficiencies in the
corresponding Draft Phase II Trial Report that were identified by Novartis under
Section 3.5(d) above.  If Novartis believes the report, as submitted
by Quark in final and complete form, did not reasonably address such
deficiencies, it shall promptly advise Quark and the Parties shall seek to
resolve such dispute.  If the Parties do not reach agreement on such
matter, either Party may submit the issue to an arbitration under Section
10.5.  If the arbitration rules [*] the applicable [*] shall be [*]
but the [*] with respect to [*] shall be [*] following receipt of the written
decision of arbitration. If the arbitration rules [*], then [*] in accordance
with the ruling of the arbitrator and shall [*], and the [*].

     

    
      	
               
      

            	
              (f)

            	
              For
      a period of [*] from and after the delivery of the DGF DMC Top Line
      Interim Report, the AKI First Interpretable Results, the DGF [*] Report
      and the AKI Final Report, Novartis shall have the right to request from
      Quark such further additional information then in the possession of or
      readily available to Quark as Novartis may reasonably require in order to
      make a scientific, legal and business evaluation of the Development and
      Commercialization potential of the Product.  Quark shall
      promptly respond in writing to any questions Novartis may have regarding
      the DGF DMC Top Line Interim Report, the AKI First Interpretable Results,
      the DGF [*] Report or the AKI Final Report, as applicable, and the report
      provided under Section 3.5(b), and shall promptly provide or make
      available any additional information relating thereto requested by
      Novartis, in any case, within [*] following any such questions and/or
      request.

            

    

     

    
      	
              4.

            	
              EXERCISE
      OF OPTION AND GRANT OF LICENSE

            

    

     

    
      	
              4.1

            	
              Exercise of Option and Grant of
      License.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Subject
      to Sections 4.1(a)(i) and 4.1(a)(ii) below, Novartis may exercise the
      Option by written notice to Quark (“Novartis Option Exercise
      Notice”) during the Option Period pursuant to Section 8.1(a),
      8.1(b),8.1(c) or 8.1(d) of Exhibit
      A.

            

    

     

    (i)           Within
[*] of  the [*] of (A) the date on which [*] or (B) the date on which
[*], Novartis shall provide written notice to Quark [*]. [*], within [*] of [*],
[*] by written notice that [*]. If Novartis [*] during such [*] to provide [*]
to exercise the Option pursuant to [*]. The [*] shall not
exceed [*]. The [*] to provide [*].  If [*] within such [*], Novartis
shall [*] and [*] shall, [*] to exercise the Option [*].

     

    (ii)           The
Novartis Option Exercise Notice shall set forth which provision in Sections
8.1(a) through (d) in Exhibit A shall
apply.  For clarity, except as provided in Section 3.4 above, the
Option may only be exercised by Novartis pursuant to one of the provisions set
forth in Sections 8.1(a) through (d) of Exhibit
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.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (b)

            	
              Unless
      exercised by Novartis, the Option shall expire in its entirety as
      follows:

            

    

     

    (i)           Except
as provided in Sections 4.1(b)(ii), 4.1(b)(iii), 4.1(b)(iv) or 4.1(b)(v), the
Option shall expire in its entirety [*] after the [*] of (A) [*] or (B)
[*].

     

    (ii)          In
the event either [*] or [*], and [*], the Option shall expire in its entirety
upon the expiry of [*].

     

    (iii)         In
the event that (A) both [*] and [*], or [*], and (B) either [*] or [*], the
Option shall expire in its entirety on the date that is [*] after the earlier of
(X) the date on which the [*] that [*] was accepted by Novartis as set forth [*]
or (Y) the date on which the [*] that [*] was accepted by Novartis as set forth
[*].

     

    (iv)         In
the event Quark [*] as set forth[*]and the Parties [*] the Parties shall [*],
the Option shall expire in its entirety [*].

     

    (v)          In
the event that (A) both [*] and [*] and (B) neither [*] nor [*] and Novartis
does not exercise the Option pursuant to Section 4.1(b)(iv), the Option shall
expire in its entirety on the date that is [*] after the later of (X) the date
on which the [*] was accepted by Novartis [*] or (Y) the date on which the [*]
was accepted by Novartis [*]. If, after expiration of the Option pursuant to
this Section 4.1(b)(v), Quark [*] or otherwise [*] with respect to [*] or [*],
Quark [*]. Novartis will [*]. If Novartis [*], or if [*] during such [*], then
Quark [*].

     

    (vi)         In
the event Quark believes the Option is about the expire under the provisions of
any of paragraphs (i)-(v) above, Quark shall give written notice to Novartis not
less than [*] and nor more than [*] prior to the date on which Quark believes
such expiration would occur.

     

    
      	
               
      

            	
              (c)

            	
              Quark
      hereby grants to Novartis, effective as of the License Effective Date, an
      exclusive (even as to Quark), royalty-bearing, sub-licensable license
      under the Quark Technology and Quark’s interest in any Joint Development
      Technology to research, Develop, make, have made, use, import, export,
      offer for sale, sell and otherwise Commercialize the Quark Compounds and
      the Product in the Field in the Territory and to have the foregoing done
      on its behalf (the “License”) on the terms
      and conditions set forth in Exhibit
      A.  The Parties acknowledge and agree that Exhibit A sets
      forth all the material terms and conditions of the
      License.  Such License (and the Parties’ rights and obligations
      thereunder) shall automatically become effective on the License Effective
      Date without the need for further action by the
  Parties.

            

    

     

    [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (d)

            	
              If
      Novartis does not exercise the Option within the Option Period, then: (i)
      the Option shall no longer be exercisable and the License granted under
      Section 4.1(c) shall be of no force or effect; and (ii) Quark will be free
      to initiate, solicit, discuss, negotiate or enter into any agreement or
      arrangement with any Third Party regarding licensing or other disposition
      of any rights to the Quark Technology, the Quark Compounds or the Product,
      without further obligation to
Novartis.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Attached
      hereto as Exhibit B is a
      decision tree illustrating the option exercise mechanism set forth in this
      Section 4.1 and in Sections 8.1 and 8.2 of Exhibit
      A.  Such decision tree is included herein solely for
      illustrative purposes.  To the extent there exists any
      inconsistencies between Exhibit B and
      the language in the body of this Option Agreement or between Exhibit B and
      the language in Exhibit A, the
      language in the body of this Option Agreement and/or the language in Exhibit A (as
      applicable) shall control.

            

    

     

    
      
        	
                4.2

              	
                Antitrust
      Filings.  Upon request by Novartis (whether during the
      Option Period or following exercise of the Option by Novartis), Quark
      agrees to cooperate with Novartis and to prepare and make appropriate
      filings under the HSR Act and other antitrust requirements relating to the
      License as soon as reasonably practicable after the Option Exercise Date
      (“HSR Filing
      Date”).  The Parties agree to cooperate in the antitrust
      clearance process and to furnish promptly to the Federal Trade Commission
      (FTC), the Antitrust Division of the Department of Justice and any other
      agency or authority, any information reasonably requested by them in
      connection with such filings.  In the event a provision of the
      License needs to be deleted or substantially revised in order to obtain
      regulatory clearance of this transaction, the Parties will negotiate in
      good faith in accordance with Section 10.3.  Each Party shall
      bear its own expenses in connection with the Parties’ cooperation under
      this Section 4.2, except that Novartis shall pay all filing fees due with
      respect to any filings under the HSR
Act.

              

      

    

     

    
      	
              4.3

            	
              Cooperation and Transfer of
      Technology

            

    

     

    
      	
               
      

            	
              (a)

            	
              Within
      [*] of the License Effective Date (or such longer period as may be agreed
      between the Parties), Quark, without additional consideration, shall
      disclose to Novartis or its designated Affiliate all Quark Know-How in
      existence at the License Effective Date.  Such disclosures shall
      include all such Quark Know-How pertaining to the formulation, manufacture
      and Development of the Quark Compounds and/or Product and any other data,
      information and documents known to Quark which may be necessary or useful
      to Novartis to research, Develop, manufacture, register, use or
      Commercialize the Quark Compounds and/or Product and practice the License
      efficiently.  Quark will also provide reasonable assistance to
      Novartis or its designated Affiliate in connection with understanding and
      using the Quark Know-How within the scope of the License.  In
      providing Know-How under this paragraph (a), Quark shall deliver written
      and electronic materials to Novartis, during the period of [*] from the
      License Effective Date, such assistance from its professional staff for
      meetings (including travel to sites other than Quark facilities) telephone
      calls, studies, reports and other assistance as may reasonably required by
      Novartis to enable it to understand and use the Quark Know-How, shall be
      provided without charge to Novartis. After such [*] period and during the
      term of the License Agreement, Quark shall ensure that its professional
      staff shall continue to be available as reasonably required at Quark
      facilities and by telephone, without charge to Novartis, provided that
      [*].

            

    

     

    [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (b)

            	
              Within
      [*] following the License Effective Date (or such longer period as may be
      agreed between the Parties), Quark or its Affiliates shall, provide to
      Novartis or its designated Affiliate such quantities of the Quark
      Compounds and/or Product in Quark’s possession as may be reasonably
      requested by Novartis, which supplies shall be provided to Novartis at
      [*].

            

    

     

    
      	
               
      

            	
              (c)

            	
              During
      the term of the License, Quark shall fully cooperate with and provide
      reasonable assistance to Novartis or its designee, through documentation,
      consultation and face-to-face meetings, to enable Novartis or its designee
      in an efficient and timely manner to proceed with Development and
      manufacturing of the Quark Compounds and/or Product and to obtain all
      appropriate regulatory approvals for manufacturing (including
      qualification by the applicable Regulatory Authority of manufacturing
      sites), provided that during the period of [*] from the License Effective
      Date, such assistance (including travel to sites other than Quark
      facilities) shall be provided without charge to Novartis. After such [*]
      period such assistance shall, where provided at Quark facilities or by
      telephone, continue to be provided without charge, provided that
      [*].

            

    

     

    
      	
               
      

            	
              (d)

            	
              During
      the period from the License Effective Date until the First Commercial Sale
      of the Quark Compounds and/or Product under the License, Quark shall make
      appropriate personnel available to assist Novartis or its designee from
      time to time as reasonably requested by Novartis, and shall provide the
      appropriate personnel of Novartis or its designee with access to the
      personnel and manufacturing and other operations of Quark for such periods
      of time and in such manner as is reasonable in order to familiarize the
      personnel of Novartis or its designee with Quark Know-How relating to the
      Development and manufacture of the Quark Compounds and/or Product and the
      application of the same, provided that during the period of [*] from the
      License Effective Date, such assistance (including travel to sites other
      than Quark facilities) shall be provided without charge to Novartis. After
      such [*] period such assistance shall, where provided at Quark facilities
      or by telephone, continue to be provided without charge, provided that
      [*].

            

    

     

    [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    
      
        	
                4.4

              	
                Transition
      Plan.  Within [*] of the License Effective Date, the
      Parties shall agree to a plan (“Transition Plan”) for
      the transfer to Novartis of all Development and manufacturing activities
      then being undertaken by Quark, taking into account Quark’s obligations to
      complete the DGF Phase II Trial and/or the AKI Phase II Trial, and any
      other ongoing clinical or pre-clinical studies, as set forth in Section
      5.1(a) of Exhibit A.  Quark shall, without additional
      consideration, transition all such activities to Novartis in accordance
      with the Transition Plan.

              

      

    

     

    
      	
              5.

            	
              CONFIDENTIALITY

            

    

     

    
      	
              5.1

            	
              Duty of
      Confidence.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Subject
      to the other provisions of this Article 5, all Confidential Information
      disclosed by a Party or its Affiliates under this Option Agreement will be
      maintained in confidence and otherwise safeguarded by the recipient
      Party.  The recipient Party may only use the Confidential
      Information for the purposes of this Option Agreement (including the
      License granted hereunder).  Subject to the other provisions of
      this Article 5, each Party shall hold as confidential such Confidential
      Information of the other Party or its Affiliates in the same manner and
      with the same protection (in no case less than reasonable care) as such
      recipient Party maintains its own confidential
      information.  Subject to the other provisions of this Article 5,
      a recipient Party may only disclose Confidential Information of the other
      Party to employees, agents, contractors, consultants and advisers of the
      Party and its Affiliates and sublicensees to the extent reasonably
      necessary for the purposes of, and for those matters undertaken pursuant
      to, this Option Agreement; provided that
      such Persons are bound to maintain the confidentiality of the Confidential
      Information in a manner consistent with the confidentiality provisions of
      this Option Agreement.

            

    

     

    
      	
               
      

            	
              (b)

            	
              During
      the term of this Option Agreement Quark shall take all commercially
      reasonable precautions to protect the confidentiality of the Quark Program
      Confidential Information.

            

    

     

    
      	
              5.2

            	
              Exceptions.  The
      obligations under this Article 5 shall not apply to any information to the
      extent the recipient Party can demonstrate by competent evidence that such
      information:

            

    

     

    
      	
               
      

            	
              (a)

            	
              is
      (at the time of disclosure) or becomes (after the time of disclosure)
      known to the public or part of the public domain through no breach of this
      Option Agreement by the recipient Party or its
  Affiliates;

            

    

     

    
      	
               
      

            	
              (b)

            	
              was
      known to, or was otherwise in the possession of, the recipient Party or
      its Affiliates prior to the time of disclosure by the disclosing Party or
      any of its Affiliates;

            

    

     

    
      	
               
      

            	
              (c)

            	
              is
      disclosed to the recipient Party or an Affiliate on a non-confidential
      basis by a Third Party who is entitled to disclose it without breaching
      any confidentiality obligation to the disclosing Party or any of its
      Affiliates; 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.

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (d)

            	
              is
      independently developed by or on behalf of the recipient Party or its
      Affiliates, as evidenced by its written records, without access or
      reference to the Confidential Information disclosed by the disclosing
      Party or its Affiliates under this Option
  Agreement.

            

    

     

    Specific
aspects or details of Confidential Information shall not be deemed to be within
the public domain or in the possession of the recipient Party merely because the
Confidential Information is embraced by more general information in the public
domain or in the possession of the recipient Party.  Further, any
combination of Confidential Information shall not be considered in the public
domain or in the possession of the recipient Party merely because individual
elements of such Confidential Information are in the public domain or in the
possession of the recipient Party unless the combination and its principles are
in the public domain or in the possession of the recipient Party.

     

    
      	
              5.3

            	
              Authorized
      Disclosures.  In the event the recipient Party is
      required to disclose Confidential Information of the disclosing Party by
      law or regulation or in connection with bona fide legal process, such
      disclosure shall not be a breach of this Option Agreement; provided that
      the recipient Party (i) informs the disclosing Party as soon as
      reasonably practicable of the required disclosure; (ii) limits the
      disclosure to the required purpose; and (iii) at the disclosing
      Party’s reasonable request and expense, assists in an attempt to object to
      or limit the required disclosure.

            

    

     

    
      	
              5.4

            	
              Ongoing Obligation for
      Confidentiality.  In the event that Novartis does not
      exercise the Option before the end of the Option Period, each Party and
      its Affiliates shall immediately return to the other Party or destroy any
      Confidential Information disclosed by the other Party during the Option
      Period, except for one copy which may be retained in its confidential
      files for archive purposes.

            

    

     

    
      	
              5.5

            	
              Confidentiality Obligations
      Under License.  For clarity, in the event that Novartis
      exercises the Option, the provisions of Article 11 of Exhibit A shall
      apply with respect to all Confidential Information disclosed by a Party to
      the other Party under this Option Agreement, and the provisions of this
      Article 5 shall be of no further force or effect with respect to such
      Confidential Information.

            

    

     

    
      	
              6.

            	
              INTELLECTUAL
      PROPERTY

            

    

     

    
      	
              6.1

            	
              Ownership of Development
      Technology.  Each Party agrees promptly to disclose to
      the other Party all Know-How and Patent Rights created, conceived, reduced
      to practice or invented by either Party, its Affiliates, agents or by
      Third Parties acting on its behalf, as a direct result of a Party
      performing activities under this Option Agreement.  As between
      the Parties, (a) title to all Quark Development Technology shall be
      owned by Quark, (b) title to all Novartis Development Technology
      shall be owned by Novartis, and (c) title to all Joint Development
      Technology shall be jointly owned by Quark and Novartis as contemplated
      under US patent laws, including 35 U.S.C. §
262.

            

    

     

    [ * ] = 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

        
          

        

      

      
         

      

    

     

    
      	
              6.2

            	
              Joint Development
      Technology.  Subject to the rights herein including the
      Option, and if the Option is exercised, the License, each Party shall have
      the right to practice and exploit Joint Development Technology, without
      any obligation to account to the other for profits, or to obtain any
      approval of the other Party to license, assign or otherwise exploit Joint
      Development Technology, by reason of joint ownership thereof, and each
      Party hereby waives any right it may have under the laws of any
      jurisdiction to require any such approval or accounting; and to the extent
      there are any applicable laws that prohibit such a waiver, each Party will
      be deemed to so consent.  Should one or both Parties decide to
      file a patent application related to or claiming Joint Development
      Technology the Parties shall refer the preparation and filing of such
      application(s) to a mutually agreed-upon outside intellectual property
      counsel, the expenses of which shall be borne equally by the
      Parties.  Either Party may determine that it is no longer
      interested in supporting the continued prosecution or maintenance of a
      particular patent or patent application claiming Joint Development
      Technology in a particular country or jurisdiction, in which
      case:  (i) the disclaiming Party shall, if requested by the
      other Party, assigns its ownership interest in such patent or patent
      applications in such country or jurisdiction to the other Party for no
      additional consideration; and (ii) if such assignment is effected, the
      disclaiming Party and any Affiliates thereof would have immunity from suit
      under such patent or patent application in the applicable country or
      jurisdiction.  In the event of an infringement anywhere in the
      world of any Patent Rights which comprise Joint Development Technology,
      the Parties shall jointly decide how to proceed.  If one Party
      brings any action to enforce Patent Rights that has been agreed upon by
      the Parties, the other Party agrees to be joined as a party if necessary
      to prosecute the action and to give the first Party reasonable assistance
      and authority to file and prosecute the
action.

            

    

     

    
      	
              6.3

            	
              Data.  All
      data generated by Quark in the course of the Development of the Quark
      Compounds and/or the Product during the term of the Option Agreement shall
      be owned by Quark and included in the Quark Know-How.  All data
      generated by Novartis in the course of the Development of the Quark
      Compounds and/or the Product during the term of the Option Agreement shall
      be owned by Novartis.

            

    

     

    
      	
              6.4

            	
              Disputes as to
      Inventorship.  Should the Parties fail to agree regarding
      inventorship of any invention made in the conduct of activities under this
      Option Agreement, the Parties shall refer the matter to a mutually
      agreed-upon outside counsel, with expertise in intellectual property, for
      resolution, the expenses of which shall be borne equally by the
      Parties.  All determinations of inventive contribution for
      inventions arising hereunder shall be determined under United States
      patent law.

            

    

     

    
      	
              6.5

            	
              No Implied
      Rights.  No license or other right is or shall be created
      or granted hereunder by implication, estoppel or otherwise, except as
      expressly provided for herein.

            

    

     

    [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    
      	
              6.6

            	
              Infringement of Third Party
      Rights.  If Quark identifies any Third Party intellectual
      property rights that it believes would be relevant to the Development,
      manufacture, use or Commercialization of the Quark Compounds and/or the
      Product, Quark will so notify Novartis and the Parties shall confer to
      discuss the scope and relevance of such intellectual property rights and
      shall discuss whether and on what terms Quark should attempt to obtain
      rights to such intellectual property rights.  In the event that
      Quark wishes to enter into any agreement under which Quark would assign or
      grant to Novartis a sublicense if Novartis exercises the Option, Quark
      shall use Commercially Reasonable Efforts to negotiate and execute a
      license (or similar) agreement (each such agreement an “Option Term Agreement”)
      to acquire rights to such intellectual property rights that is
      (i) [*], and (ii) is [*].  Quark shall submit to the
      JDC a draft of such agreement for Novartis to review and Quark shall
      consider any comments Novartis may have in good faith.  Further,
      Quark shall send a copy of any such agreement entered into with a Third
      Party to Novartis within [*] following execution of any such
      agreement.

            

    

     

    
      	
              6.7

            	
              Patent
      Filings.  Prior to filing any patent application in Quark
      Patents or any amendment thereto, and prior to any decision not to file
      any patent application in Quark Patents or amendment thereto or to allow
      any patent or patent application in Quark Patents to lapse or become
      abandoned, or prior to any submission to the U.S. Patent and Trademark
      Office or similar foreign office, Quark shall provide to Novartis a
      written draft of any such filing or submission or written notice of any
      decision to not file such application, abandon an application or to allow
      any patent or patent application to lapse, as the case may be, in
      accordance with the notice provisions set forth in Section 10.9 within a
      reasonable time prior to such filing, submission or decision for Novartis
      to review and comment, in good faith, on such filing, submission or
      decision, provided, that
      Quark shall consider such comments in good faith but Quark retains final
      decision-making authority as to all such filings, submissions and
      decisions.

            

    

     

    
      	
              6.8

            	
              Requested
      Divisionals.  Quark has identified to Novartis, as of the
      Option Agreement Effective Date, those Quark Patents which have apparent
      utility with respect to Quark activities both within and outside the scope
      of this Option Agreement or the License Agreement (Table 6 of draft
      Exhibit A to Exhibit A).  Within [*] following the Option
      Agreement Effective Date, Novartis shall identify to Quark those
      divisional patent applications that Novartis would like to have filed
      specific to [*] of such Quark Patent, and Quark shall thereafter [*] such
      divisional patent applications and patents issuing
      therefrom.  The Parties shall cooperate to make such process
      practical and efficient.

            

    

     

    
      	
              7.

            	
              TERM
      AND TERMINATION

            

    

     

    
      	
              7.1

            	
              Term.  Unless
      earlier terminated as set forth in this Article 7, the term of this Option
      Agreement will commence upon the Option Agreement Effective Date and
      continue until the end of the Option
  Period.  

            

    

     

    
      	
              7.2

            	
              Termination by Novartis Without
      Cause.  Novartis may terminate this Option Agreement
      without cause at any time after the Option Agreement Effective Date by [*]
      prior written notice to Quark.  If this Option Agreement is
      terminated by Novartis pursuant to this Section 7.2, then, except as
      set forth in Section 7.4, neither Novartis nor Quark shall have any
      further obligations or liabilities under this Option
      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.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    
      	
              7.3

            	
              Termination by Quark for
      Cause.  If Novartis commits a material breach of this
      Option Agreement, Quark may give written notice to Novartis specifying the
      claimed particulars of such material breach, and in the event such
      material breach is not cured within [*] after such notice, Quark shall
      have the right thereafter to terminate this Option Agreement immediately
      by giving written notice to Novartis to such effect.  Any such
      termination shall be without prejudice to any damages or other legal or
      equitable remedies to which Quark may be entitled from
      Novartis.

            

    

     

    
      	
              7.4

            	
              Survival.  Expiration
      or termination of this Option Agreement or the License shall not relieve
      the Parties of any obligation accruing prior to such expiration or
      termination.  The provisions of [*], and the provisions of
      Article 5 (Confidentiality) shall survive the termination or expiration of
      this Option Agreement for a period of [*], and the provisions of
      Article 6 (Intellectual Property, except for Sections 6.6, 6.7 and
      6.8) shall survive the termination or expiration of this Option Agreement
      indefinitely.  Notwithstanding the foregoing, in the event that
      Novartis exercises the Option before the end of the Option Period, to the
      extent that any surviving provision of this Option Agreement is
      inconsistent with the provisions of the License, it shall be superseded
      and replaced by the provisions of the
License.

            

    

     

    
      	
              8.

            	
              REPRESENTATIONS,
      WARRANTIES, COVENANTS AND
INDEMNITIES

            

    

     

    
      	
              8.1

            	
              Representations, Warranties and
      Covenants by Each Party.  Each Party represents,
      warrants, covenants and/or agrees (as applicable) to the other as of the
      Option Agreement Effective Date
that:

            

    

     

    
      	
               
      

            	
              (a)

            	
              it
      is a corporation duly organized, validly existing, and in good standing
      under the laws of its jurisdiction of
formation;

            

    

     

    
      	
               
      

            	
              (b)

            	
              it
      has all requisite corporate power and authority to execute, deliver, and
      perform this Option Agreement, and has taken all corporate action required
      by law and its organizational documents to authorize the execution and
      delivery of this Option Agreement and the consummation of the transactions
      contemplated by this Option
Agreement;

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      execution and delivery of this Option Agreement by such Party and the
      performance by it of its obligations hereunder have been duly and validly
      authorized by all necessary corporate action on the part of such
      Party;

            

    

     

    
      	
               
      

            	
              (d)

            	
              this
      Option Agreement has been duly executed and delivered by such
      Party;

            

    

     

    
      	
               
      

            	
              (e)

            	
              this
      Option Agreement constitutes a valid and binding agreement enforceable
      against it in accordance with its
terms;

            

    

     

    
      	
               
      

            	
              (f)

            	
              it
      will use all reasonable precaution to preserve the confidentiality of this
      Option Agreement (including any exhibits attached hereto) and the terms
      hereof;

            

    

       

    [ * ] = 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.

       

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (g)

            	
              except
      for any HSR or other merger clearance filings that may be required, all
      consents, approvals and authorizations from all governmental authorities
      or other Third Parties required to be obtained by such Party in connection
      with this Option Agreement, and the transactions contemplated hereby, have
      been obtained;

            

    

     

    
      	
               
      

            	
              (h)

            	
              the
      execution and delivery of this Option Agreement and all other instruments
      and documents required to be executed pursuant to this Option Agreement,
      and the consummation of the transactions contemplated hereby, do not and
      shall not (i) conflict with or result in a breach of any provision of
      its organizational documents, (ii) result in a breach of any other
      agreement to which it is a party; or (iii) violate any law;
      and

            

    

     

    
      	
               
      

            	
              (i)

            	
              neither
      it nor its respective stockholders, directors, officers or employees have
      retained any broker, finder, or investment banker in connection with this
      Option Agreement or the transactions contemplated hereby, nor, in the case
      of Quark, does or will it, or any of its directors, officers or employees
      owe any fee or other amount to any broker, finder, or investment banker in
      connection with the Option Agreement or the transactions contemplated
      hereby.

            

    

     

    
      	
              8.2

            	
              Representations and Warranties
      by Each Party Regarding License Agreement.  Each Party
      represents and warrants to the other that, upon exercise by Novartis of
      the Option before the end of the Option Period, the terms and conditions
      set forth on Exhibit A to
      this Option Agreement shall constitute a complete, valid and binding
      agreement enforceable against it in accordance with such
      terms.

            

    

     

    
      	
              8.3

            	
              Representations and Warranties
      by Quark.  Quark represents and warrants to Novartis as
      of the Option Agreement Effective Date
that:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Quark
      has the right to grant to Novartis the rights that Quark purports to grant
      Novartis hereunder, including the right to grant exclusive licenses to the
      Quark Compounds and the Product under the Quark Patents and Quark
      Know-How;

            

    

     

    
      	
               
      

            	
              (b)

            	
              Quark
      has not granted to any Third Party, including any academic organization or
      agency, any rights to the Quark Compounds or
  Product;

            

    

     

    
      	
               
      

            	
              (c)

            	
              all
      of its employees, officers, and consultants involved or to be involved in
      the research or Development of the Quark Compound or Product have executed
      agreements or have existing obligations under applicable laws requiring
      assignment to Quark of all inventions made during the course of and as the
      result of their association with Quark and obligating the individual to
      maintain as confidential Quark’s Confidential Information as well as
      confidential information of other parties (including Novartis and its
      Affiliates) which such individual may
receive;

            

    

     

    
      	
               
      

            	
              (d)

            	
              Quark
      has not granted any Third Party rights that would otherwise interfere or
      be inconsistent with Novartis’ rights hereunder in a material manner, and
      there are no license or option agreements or other arrangements to which
      Quark or any of its Affiliates is a party relating to the Product, Quark
      Compounds, Quark Patents, Quark Know-How or otherwise that would limit the
      rights granted to Novartis under this Option Agreement or that restrict or
      will result in a restriction on Novartis’ ability to research, Develop,
      manufacture, register, use or Commercialize the Quark Compounds and the
      Product in the Territory;

            

    

     

    [ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as
amended.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (e)

            	
              [*]
      the research, Development, use and manufacture of the Quark Compounds and
      Products has been conducted by Quark without infringing or
      misappropriating the intellectual property rights of any Third
      Party;

            

    

     

    
      	
               
      

            	
              (f)

            	
              [*]
      neither Quark nor any of its Affiliate has committed any act which amounts
      to a material breach of any of Quark’s obligations under
      any agreement under which it obtains rights to any of the Quark
      Technology;

            

    

     

    
      	
               
      

            	
              (g)

            	
              (i)
      neither Quark nor any employee, agent or subcontractor of Quark involved
      or to be involved in the research or Development of the Quark Compounds or
      the Product has been debarred under Subsection (a) or (b) of Section 306
      of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 335a); (ii) no
      Person who is debarred under Subsection (a) or (b) of Section 306 of said
      Act will be employed by Quark in the performance of any activities
      hereunder; and (iii) no Person on any of the FDA Clinical Investigator
      Enforcement Lists (including, but not limited to, the (1)
      Disqualified/Totally Restricted List, (2) Restricted List and (3) Adequate
      Assurances List) will participate in the performance of any activities
      hereunder.

            

    

     

    
      	
               
      

            	
              (h)

            	
              Notwithstanding
      anything to the contrary contained in this Option Agreement, Quark has [*]
      and [*] that would be [*] to [*] in connection with this Option Agreement.
      [*], the [*] provided to Novartis regarding the Quark Compounds and the
      Products are true and complete in all material
  respects.

            

    

     

    
      	
              8.4

            	
              Covenants of
      Quark.  Quark covenants and agrees that during the term
      of this Option Agreement:

            

    

     

    
      	
               
      

            	
              (a)

            	
              neither
      it, nor any of its Affiliates, will grant any interest in the Quark
      Patents or Quark Know-How which is inconsistent with the terms and
      conditions of this Option Agreement, nor shall Quark assign its right,
      title or interest in or to the Quark Patents or Quark Know-How to any
      Third Party and will use all reasonable precautions to preserve the
      confidentiality of the Quark
Know-How;

            

    

     

    
      	
               
      

            	
              (b)

            	
              neither
      it nor any of its Affiliates shall grant to any Third Party, including any
      academic organization or agency, any rights to the Quark Compounds or
      Product;

            

    

     

    
      	
               
      

            	
              (c)

            	
              it
      will not amend or modify the terms of any agreement under which it obtains
      rights to any of the Quark Technology in a way that materially affects
      Novartis’ rights under this Option Agreement or the License without the
      prior written consent of Novartis;

            

    

     

    [ * ] = 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.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (d)

            	
              it
      will not exercise any right to terminate any agreement under which it
      obtains rights to any of the Quark Technology without the prior written
      consent of Novartis;

            

    

     

    
      	
               
      

            	
              (e)

            	
              Quark
      and its Affiliates will comply with, perform and observe in all material
      respects all obligations under each agreement under which it obtains
      rights to any of the Quark Technology, and will not commit any act or fail
      to perform any obligation which would amount to a default or event of
      default or which, with the giving of notice, the lapse of time or the
      happening of any other event or condition would become a default or event
      of default thereunder or give rise to any right of the applicable
      counterparty to terminate any such agreement or any part
      thereof;

            

    

     

    
      	
               
      

            	
              (f)

            	
              it
      will use all reasonable precautions to preserve the confidentiality of
      this Option Agreement (including any exhibits attached hereto) and the
      terms hereof;

            

    

     

    
      	
               
      

            	
              (g)

            	
              if,
      at any time after execution of this Option Agreement, it, or any of its
      Affiliates, becomes aware that it or any of its Affiliates, or its or
      their employees, agents or subcontractors who participated, or is
      participating, in the performance of any activities hereunder is on, or is
      being added to the FDA Debarment List or any of the three (3) FDA Clinical
      Investigator Restriction Lists referenced in Section 8.3(g), it will
      provide written notice of this to Novartis within two (2) Business Days of
      its becoming aware of this fact;
and

            

    

     

    
      	
               
      

            	
              (h)

            	
              it
      shall maintain insurance with respect to its activities and obligations
      under this Option Agreement in such amounts as are commercially reasonable
      in the industry for companies conducting similar business and shall
      require any of its Affiliates undertaking any activities under this Option
      Agreement to do the same.

            

    

     

    
      	
              8.5

            	
              No Other
      Warranties.  EXCEPT AS EXPRESSLY STATED IN SECTIONS 8.1 –
      8.4 OR IN EXHIBIT A,
      (A) NO REPRESENTATION, CONDITION OR WARRANTY WHATSOEVER IS MADE OR
      GIVEN BY OR ON BEHALF OF NOVARTIS OR QUARK; AND (B) ALL OTHER
      CONDITIONS AND WARRANTIES WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE
      ARE HEREBY EXPRESSLY EXCLUDED, INCLUDING ANY CONDITIONS AND WARRANTIES OF
      MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR
      NON-INFRINGEMENT.

            

    

     

    
      	
              8.6

            	
              Special, Indirect and Other
      Losses.  NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE
      LIABLE IN CONTRACT, TORT, NEGLIGENCE BREACH OF STATUTORY DUTY OR OTHERWISE
      FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR ANY
      ECONOMIC LOSS OR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY
      [*].

            

    

     

    
      	
              8.7

            	
              No
      Exclusion.  Neither Party excludes
  [*].

            

    

     

    [ * ] = 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.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    
      	
              9.

            	
              PUBLICATIONS
      AND PUBLICITY

            

    

     

    
      	
              9.1

            	
              Publications. If Quark intends
      making any public disclosure relating to any Quark Compounds or Products,
      including in any scientific journals, publications or scientific
      presentations or otherwise, Quark shall provide Novartis with an advance
      copy of any such proposed publication or summary of any such proposed oral
      presentation prior to its submission for publication or disclosure in
      sufficient time to allow Novartis a reasonable opportunity to review and
      comment upon such publication or summary.  Quark shall consider
      in good faith any such comments from
      Novartis.   

            

    

     

    
      	
              9.2

            	
              Publicity.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Neither
      Party shall use the name, symbol, trademark, trade name or logo of the
      other Party or its Affiliates in any press release, publication or other
      form of public disclosure without the prior written consent of the other
      Party in each instance (such consent not to be unreasonably withheld or
      delayed), except for (i) a press release in the form attached as Exhibit I and
      further disclosures of substantially the same information included therein
      and (ii) those disclosures for which consent has already been
      obtained.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Except
      as permitted under Section 9.2(a), each Party agrees not to issue any
      press release or other public statement, whether oral or written,
      disclosing the existence of this Option Agreement, the terms hereof or any
      information relating to this Option Agreement without the prior written
      consent of the other Party.  When seeking the consent of
      Novartis, Quark agrees to provide Novartis with at least [*] within which
      to grant or withhold its consent.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Notwithstanding
      the foregoing, each Party may make any disclosures required of it to
      comply with any duty of disclosure it may have pursuant to law or
      governmental regulation or pursuant to the rules of any recognized stock
      exchange.  In the event of a disclosure required by law,
      governmental regulation or the rules of any recognized stock exchange, the
      Parties shall coordinate with each other with respect to the timing, form
      and content of such required disclosure.  If so requested by the
      other Party, the Party subject to such obligation shall use commercially
      reasonable efforts to obtain an order protecting to the maximum extent
      possible the confidentiality of such provisions (including, without
      limitation, financial terms) of this Option Agreement as reasonably
      requested by the other Party.  If the Parties are unable to
      agree on the form or content of any required disclosure, such disclosure
      shall be limited to the minimum required as determined by the disclosing
      Party in consultation with its legal counsel.  Without limiting
      the foregoing, each Party shall consult with the other Party on the
      provisions of this Option Agreement, together with exhibits or other
      attachments attached hereto, to be redacted in any filings made by Quark
      or Novartis with the Securities and Exchange Commission (or other
      regulatory body) or as otherwise required by
  law.

            

    

     

    [ * ] = 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.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    
      	
              10.

            	
              GENERAL
      PROVISIONS

            

    

     

    
      	
              10.1

            	
              Assignment.  Neither
      Party may assign its rights and obligations under this Option Agreement
      [*], except that Novartis may without the consent of Quark (a) assign it
      rights and obligations under this Option Agreement or any part hereof to
      one or more of its Affiliates without the consent of Quark provided that
      Novartis shall remain primarily liable for any acts or omissions of its
      Affiliates under this Option Agreement; and (b) assign this Option
      Agreement in its entirety to a successor to all or substantially all of
      its business or assets to which this Option Agreement relates, and Quark
      may without the consent of Novartis assign this Option Agreement in its
      entirety to a successor to all or substantially all of its business or
      assets.  The assigning Party shall provide the other Party with
      prompt written notice of any such assignment.  Any permitted
      assignee shall assume all obligations of its assignor under this Option
      Agreement (or related to the assigned portion in case of a partial
      assignment to an Affiliate), and no permitted assignment shall relieve the
      assignor of liability hereunder.  Any attempted assignment in
      contravention of the foregoing shall be void.  Subject to the
      terms of this Option Agreement, this Option Agreement shall be binding
      upon and inure to the benefit of the Parties hereto and their respective
      successors and permitted assigns.

            

    

     

    
      	
              10.2

            	
              Performance by
      Affiliates.  Each Party
      shall have the right to perform its obligations under this Option
      Agreement through one or more of its Affiliates (provided that in the case
      of Quark, such Affiliates shall be limited to QBI Enterprises, Ltd., or
      any future Affiliates as to which Novartis grants its written
      consent).  All applicable terms and provisions of this Option
      Agreement shall apply to any such Affiliate that is performing obligations
      under this Option Agreement to the same extent as such terms and
      provisions apply to such Party.  Each Party shall remain
      primarily liable for any acts or omissions of its
    Affiliates.

            

    

     

    
      	
              10.3

            	
              Severability.  Should
      one or more of the provisions of this Option Agreement become void or
      unenforceable as a matter of law, then this Option Agreement shall be
      construed as if such provision were not contained herein and the remainder
      of this Option Agreement shall be in full force and effect, and the
      Parties will use their commercially reasonable efforts to substitute for
      the invalid or unenforceable provision a valid and enforceable provision
      which conforms as nearly as possible with the original intent of the
      Parties.

            

    

     

    
      	
              10.4

            	
              Governing Law and
      Jurisdiction.  This Option Agreement shall be governed by
      and construed under the laws of [*], without giving effect to the
      conflicts of laws provision
      thereof.  Subject to Section 10.5, any dispute arising out of or relating to
      this Option Agreement shall be subject to the exclusive jurisdiction of
      the courts located in [*].

            

    

     

    
      	
              10.5

            	
              Dispute
      Resolution.

            

    

     

    
      	
               
      

            	
              (a)

            	
              In
      the event of a dispute under this Option Agreement, either Party may
      require that the Parties refer the dispute to the Joint Discussion
      Committee for discussion and resolution and decisions to resolve disputes
      shall be made by unanimous vote of the Joint Discussion Committee, with
      each Party’s representative having one (1) vote.  If the Parties
      are unable, through discussions at the Joint Discussion Committee, to
      resolve such a dispute within [*] of the dispute being referred to them,
      either Party may require that the Parties forward the matter to the
      Senior Officers (or designees with similar authority to resolve such
      dispute), who shall attempt in good faith to resolve such
      dispute.  If the Senior Officers cannot resolve such dispute
      within [*] of the matter being referred to them, either Party shall be
      free to initiate the arbitration proceedings outlined in sub-Section (b)
      below.

            

    

     

    [ * ] = 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.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (b)

            	
              Any
      unresolved disputes between the Parties relating to, arising out of or in
      any way connected with this Option Agreement or any term or condition
      hereof, or the performance by either Party of its obligations hereunder,
      whether before or after termination of this Option Agreement, shall be
      resolved by final and binding arbitration.  Whenever a Party
      shall decide to institute arbitration proceedings, it shall give written
      notice to that effect to the other Party.  Arbitration shall be
      held in New York, New York, according to the Rules of Arbitration of the
      International Chamber of Commerce (“ICC”).  The
      arbitration will be conducted in English by a panel of arbitrators
      appointed in accordance with ICC rules; provided that each Party shall
      within [*] after the institution of the arbitration proceedings appoint an
      arbitrator, and such arbitrators shall together, within [*], select a
      third arbitrator as the chairman of the arbitration panel, each arbitrator
      shall have significant experience in the pharmaceutical
      business.  If the two initial arbitrators are unable to select a
      third arbitrator within such [*] period, the third arbitrator shall be
      appointed in accordance with ICC rules. Discovery shall be governed by ICC
      rules, except that discovery shall be limited to: (i) the production of
      documents in the producing Party’s possession, not otherwise available to
      the Party seeking the documents, that are [*] to [*] to the [*]; (ii) [*]
      per side of a maximum of [*] (provided, however, that for good cause
      shown, the arbitrators may authorize additional [*]); and (iii) [*]
      per side.  In addition, requests for production of documents
      shall contain a description of specific documents or classes of documents,
      along with [*].  The arbitrators may condition any exchange of
      documents subject to claims of commercial or technical confidentiality on
      appropriate measures to protect such confidentiality.  When
      documents to be exchanged are maintained in electronic form, the Party in
      possession of such documents may make them available in the form (which
      may be paper copies) most convenient and economical for it, unless the
      arbitrators determine, on application and for good cause, that there is a
      compelling need for access to the documents in a different
      form.  The Party seeking the production of documents shall
      ensure that [*] for [*] are [*] to make [*] as [*].  The
      arbitrators shall render their opinion within [*] of the final arbitration
      hearing.  No arbitrator (nor the panel of arbitrators) shall
      have the power to award punitive damages under this Option Agreement and
      such award is expressly prohibited.  Decisions of the panel of
      arbitrators shall be final and binding on the Parties.  Judgment
      on the award so rendered may be entered in any court of competent
      jurisdiction.  The losing Party to the arbitration (if any) as
      determined by the arbitrator shall pay the fees and costs of
      arbitration.

            

    

     

    [ * ] = 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.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	
              10.6

            	
              Force
      Majeure.  Neither Party shall be responsible to the other
      for any failure or delay in performing any of its obligations under this
      Option Agreement or for other nonperformance hereunder if such delay or
      nonperformance is caused by strike, stoppage of labor, lockout or other
      labor trouble, fire, flood, accident, war, act of terrorism, act of God or
      of the government of any country or of any local government, or by cause
      unavoidable or beyond the control of any Party hereto.  In such
      event, the Party affected will use commercially reasonable efforts to
      resume performance of its
obligations.

            

    

     

    
      	
              10.7

            	
              Waivers and
      Amendments.  The failure of any Party to assert a right
      hereunder or to insist upon compliance with any term or condition of this
      Option Agreement shall not constitute a waiver of that right or excuse a
      similar subsequent failure to perform any such term or condition by the
      other Party.  No waiver shall be effective unless it has been
      given in writing and signed by the Party giving such waiver.  No
      provision of this Option Agreement may be amended or modified other than
      by a written document signed by authorized representatives of each
      Party.

            

    

     

    
      	
              10.8

            	
              Relationship of the
      Parties.  Nothing contained in this Option Agreement
      shall be deemed to constitute a partnership, joint venture, or legal
      entity of any type between Quark and Novartis, or to constitute one as the
      agent of the other.  Each Party shall act solely as an
      independent contractor, and nothing in this Option Agreement shall be
      construed to give any Party the power or authority to act for, bind, or
      commit the other.

            

    

     

    
      	
              10.9

            	
              Notices.  All
      notices, consents, waivers, and other communications under this Option
      Agreement must be in writing and will be deemed to have been duly given
      when: (a) delivered by hand (with written confirmation of receipt);
      (b) sent by fax (with written confirmation of receipt), provided that
      a copy is immediately sent by an internationally recognized overnight
      delivery service (receipt requested); or (c) when received by the
      addressee, if sent by an internationally recognized overnight delivery
      service (receipt requested), in each case to the appropriate addresses and
      fax numbers set forth below (or to such other addresses and fax numbers as
      a Party may designate by notice):

            

    

     

    
      If to
Quark:

    

     

    Quark
Pharmaceuticals, Inc.

    6501
Dumbarton Circle

    Fremont,
CA 94555

    U.S.A.

    Attn:
Chief Executive Officer

    Fax:
(510) 402-4021

     

    
      With a
copy to:

    

     

    Cooley
LLP

    Five Palo
Alto Square

    3000 El
Camino Real

    Palo
Alto, CA  94306

    U.S.A.

    Attention:
Robert. L. Jones

    Fax:
(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.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    
      If to
Novartis:

    

     

    Novartis
International Pharmaceutical Ltd.

    131 Front
Street

    Hamilton

    Bermuda
HM 12

    Attn:
General Counsel

    Fax:
[*]

     

    with a
copy to:

     

    Novartis
Pharma AG

    Lichtstrasse
35

    CH - 4002
Basel

    Switzerland

    Attn:  General
Counsel

    Fax:  [*]

    
    

    and

    
    

    Novartis
Pharma AG

    Lichtstrasse
35

    CH - 4002
Basel

    Switzerland

    Attn:  Head,
Business Development and Licensing

    Fax:
[*]

     

    
      	
              10.10

            	
              Further
      Assurances.  Novartis and Quark hereby covenant and agree
      without the necessity of any further consideration, upon request of the
      other Party, to execute, acknowledge and deliver any and all such other
      documents and take any such other action as may be reasonably necessary to
      carry out the intent and purposes of this Option
  Agreement.

            

    

     

    
      	
              10.11

            	
              Compliance with
      Law.  Each Party shall perform its obligations under this
      Option Agreement in accordance with all applicable laws.  No
      Party shall, or shall be required to, undertake any activity under or in
      connection with this Option Agreement which violates, or which it
      believes, in good faith, may violate, any applicable law.
  

            

    

     

    
      	
              10.12

            	
              No Third Party Beneficiary
      Rights.  Other than
      as provided in Section 10.2, the provisions of this Option Agreement are
      for the sole benefit of the Parties and their successors and permitted
      assigns, and they shall not be construed as conferring any rights to any
      Third Party (including any Third Party beneficiary
  rights).

            

    

     

    [ * ] = 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.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    
      	
              10.13

            	
              English
      Language.  This Option Agreement is written and executed
      in the English language.  Any translation into any other
      language shall not be an official version of this Option Agreement and in
      the event of any conflict in interpretation between the English version
      and such translation, the English version shall
  prevail.

            

    

     

    
      	
              10.14

            	
              Expenses.  Except
      as otherwise expressly provided in this Option Agreement, each Party shall
      pay the fees and expenses of its respective lawyers and other experts and
      all other expenses and costs incurred by such Party incidental to the
      negotiation, preparation, execution and delivery of this Option
      Agreement.

            

    

     

    
      	
              10.15

            	
              Entire
      Agreement.  This Option Agreement, together with its
      Exhibits, sets forth the entire agreement and understanding of the Parties
      as to the subject matter hereof and supersedes all proposals, oral or
      written, and all other prior communications between the Parties with
      respect to such subject matter.

            

    

     

    
      	
              10.16

            	
              Counterparts.  This
      Option Agreement may be executed (a) in one or more partially or fully
      executed counterparts, each of which shall be deemed an original and shall
      bind the signatory, but all of which together shall constitute the same
      instrument, and (b) by facsimile or other electronic means, which
      facsimile or other electronic signatures shall be deemed an original and
      shall bind the signatory.  The execution and delivery of a
      signature page in the form attached to this Option Agreement by any Party
      hereto who shall have been furnished the final form of this Option
      Agreement shall constitute the execution and delivery of this Option
      Agreement by such Party. 

            

    

     

    
      	
              10.17

            	
              Cumulative
      Remedies.  No remedy referred to in this Option Agreement
      is intended to be exclusive, but each shall be cumulative and in addition
      to any other remedy referred to in this Option Agreement or otherwise
      available under law.

            

    

     

    IN
WITNESS WHEREOF, the Parties intending to be bound have caused this Option
Agreement to be executed by their duly authorized representatives.

     

    
      [ * ] = 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.

    

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                	
                        NOVARTIS
      INTERNATIONAL

                      	 	
                        QUARK
      PHARMACEUTICALS, INC.

                      
	
                        PHARMACEUTICAL
      LIMITED

                      	 	 
      
	 
      	 	 
      
	
                        By:

                      	
                        /s/
      H. S. Zivi

                      	 	
                        By:

                      	
                        /s/
      D. Zurr

                      
	
                        Name:

                      	
                        H.S.
      Zivi

                      	 	
                        Name:

                      	
                        Daniel
      Zurr

                      
	
                        Title:

                      	
                        Director

                      	 	
                        Title:

                      	
                        President
      & CEO

                      
	 
      	 	 
      
	
                        Date:

                      	  
    	 	
                        Date:

                      	
                        August
      17, 2010

                      
	 
      	 	 
      
	
                        By:

                      	
                        /s/
      Robert L. Thompson

                      	 	 
      
	
                        Name:

                      	
                        Robert
      L. Thompson

                      	 	 
      
	
                        Title:

                      	
                        Director

                      	 	 
      
	 
      	 	 
      
	
                        Date:

                      	
                        August
      17th, 2010

                      	 	 
      

              

            

          

        

      

    

     

    [
* ] = 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.

    

    
      
        
           

        

        
          33

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
A

     

    LICENSE
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.

     

    
      
        
           

        

        
          34

          
            

          

        

        
           

        

      

    

     

    

      Execution
Copy

      CONFIDENTIAL

       

      
        

      

       

      License
Agreement

       

      By
And Between

       

      Novartis
International Pharmaceutical Ltd.

       

      And

       

      Quark
Pharmaceuticals, Inc.

       

      
        
 

      
        [ * ] = 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.

                	
                  DEFINITIONS
      AND INTERPRETATION

                	
                  2

                
	 
      	 
      	 
      
	
                  2.

                	
                  LICENSE

                	
                  13

                
	 
      	 
      	 
      
	
                  3.

                	
                  GOVERNANCE

                	
                  14

                
	 
      	 
      	 
      
	
                  4.

                	
                  DISCLOSURE
      OF QUARK KNOW-HOW & COOPERATION

                	
                  16

                
	 
      	 
      	 
      
	
                  5.

                	
                  DEVELOPMENT

                	
                  17

                
	 
      	 
      	 
      
	
                  6.

                	
                  MANUFACTURING

                	
                  22

                
	 
      	 
      	 
      
	
                  7.

                	
                  COMMERCIALIZATION

                	
                  23

                
	 
      	 
      	 
      
	
                  8.

                	
                  FINANCIAL
      PROVISIONS

                	
                  24

                
	 
      	 
      	 
      
	
                  9.

                	
                  REPORTS
      AND PAYMENT TERMS

                	
                  36

                
	 
      	 
      	 
      
	
                  10.

                	
                  INTELLECTUAL
      PROPERTY RIGHTS

                	
                  40

                
	 
      	 
      	 
      
	
                  11.

                	
                  CONFIDENTIALITY

                	
                  44

                
	 
      	 
      	 
      
	
                  12.

                	
                  TERM
      AND TERMINATION

                	
                  46

                
	 
      	 
      	 
      
	
                  13.

                	
                  EFFECT
      OF TERMINATION

                	
                  48

                
	 
      	 
      	 
      
	
                  14.

                	
                  REPRESENTATIONS,
      WARRANTIES AND COVENANTS

                	
                  51

                
	 
      	 
      	 
      
	
                  15.

                	
                  INDEMNIFICATION;
      LIABILITY

                	
                  55

                
	 
      	 
      	 
      
	
                  16.

                	
                  PUBLICATIONS
      AND PUBLICITY

                	
                  57

                
	 
      	 
      	 
      
	
                  17.

                	
                  GENERAL
      PROVISIONS

                	
                  59

                

        

      

       

      [ * ] = 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 (“Agreement”) is made as of this
__ day of ________, 20__ (“Execution Date”), by and
between Novartis International Pharmaceutical Ltd., a limited company organized
and existing under the laws of Bermuda (“Novartis”) and Quark
Pharmaceuticals, Inc., a corporation company organized and existing under the
laws of California, U.S.A. (“Quark”).  Novartis
and Quark are each referred to individually as a “Party” and together as the
“Parties.”

       

      RECITALS

       

      WHEREAS,
Quark owns or controls the Quark Patents and Quark Know-How (each as defined
below) relating to the Quark Compounds (as defined below);

       

      WHEREAS,
the Parties entered into an Option Agreement dated August 17, 2010 (“Option Agreement”) under which
Quark granted Novartis an Option (as defined in the Option Agreement) to obtain
rights to the Quark Compounds in the Field (as defined below);

       

      WHEREAS,
Novartis has exercised the Option; and

       

      WHEREAS,
Novartis now has the right to develop and commercialize Products (as defined
below) on a worldwide basis in the Field, subject to paying Quark the royalty
and milestone payments set out herein.

       

      NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the Parties agree as follows.

       

      1.         DEFINITIONS
AND INTERPRETATION

       

      
        	
                 
      

              	
                1.1

              	
                Definitions.  Unless
      the context otherwise requires, the terms in this Agreement with initial
      letters capitalized, shall have the meanings set forth below, or the
      meaning as designated in the indicated places throughout this
      Agreement.

              

      

       

      “Accounting Standards” means,
with respect to Quark, US GAAP (United States Generally Accepted Accounting
Principles) and means, with respect to Novartis, the IFRS (International
Financial Reporting Standards), in each case, as generally and consistently
applied throughout the Party’s organization.

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      “Affiliate” means, with
respect to a Party, any Person that controls, is controlled by, or is under
common control with that Party.  For the purpose of this definition,
“control” shall mean, direct or indirect, ownership of fifty percent (50%) or
more of the shares of stock entitled to vote for the election of directors, in
the case of a corporation, or fifty percent (50%) or more of the equity interest
in the case of any other type of legal entity, status as a general partner in
any partnership, or any other arrangement whereby the entity or person controls
or has the right to control the board of directors or equivalent governing body
of a corporation or other entity, or the ability to cause the direction of the
management or policies of a corporation or other entity.  In the case
of entities organized under the laws of certain countries, the maximum
percentage ownership permitted by law for a foreign investor may be less than
fifty percent (50%), and in such case such lower percentage shall be substituted
in the preceding sentence, provided that such
foreign investor has the power to direct the management and policies of such
entity.

       

      “AKI Final Report” has the
meaning set forth in the Option Agreement.

       

      “AKI First Interpretable
Results” has the meaning set forth in the Option Agreement.

       

      “AKI Indication” means the
treatment and/or prevention of acute kidney injury following cardiac
surgery.

       

      “AKI Phase II Trial” has the
meaning set forth in the Option Agreement.

       

      “AKI Phase II Trial Protocol”
has the meaning set forth in the Option Agreement; provided that,
following the License Effective Date, any changes to the AKI Phase II Trial
Protocol (as it exists at the License Effective Date) must be mutually agreed
between the Parties.

       

      “AKI Phase II Trial [*]
Criteria” has the meaning set forth in the Option Agreement.

       

      “Alliance Manager” shall have
the meaning set forth in Section 3.1.

       

      “Alnylam License” means each
(or, as the context requires, both) of the two (2) License Agreements between
Quark and Alnylam Pharmaceuticals, Inc., both dated September 26,
2006.

       

      “Business Day” means any day
other than a Saturday, a Sunday or a day on which commercial banks located in
Basel, Switzerland, Hamilton, Bermuda or California, USA, are authorized or
required by law to remain closed.

       

      “Calendar Quarter” means the
respective periods of three (3) consecutive calendar months ending on March 31,
June 30, September 30 and December 31.

       

      “Calendar Year” means a period
of twelve (12) consecutive calendar months ending on December 31.

       

      “cGCP” has the meaning set
forth in the Option Agreement.

       

      “cGLP” has the meaning set
forth in the Option Agreement.

       

      “cGMP” has the meaning set
forth in the Option 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.

         

      

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      “Change of Control” means any
of the following events with respect to either Party: (a) any Third Party
(or group of Third Parties acting in concert) becomes the beneficial owner,
directly or indirectly, of more than fifty percent (50%) of the total voting
power of the stock then outstanding of such Party normally entitled to vote in
elections of directors; (b) such Party consolidates with or merges into
another corporation or entity, or any corporation or entity consolidates with or
merges into such Party, in either event pursuant to a transaction in which more
than fifty percent (50%) of the total voting power of the stock outstanding of
the surviving entity normally entitled to vote in elections of directors is not
held by the parties holding at least fifty percent (50%) of the outstanding
shares of such Party preceding such consolidation or merger; or (c) such
Party conveys, transfers or leases all or substantially all of its assets to any
Third Party.

       

      “Claims” means all Third Party
demands, claims, actions, proceedings and liability (whether criminal or civil,
in contract, tort or otherwise) for losses, damages, reasonable legal costs and
other reasonable expenses of any nature whatsoever.

       

      “Combination Products” mean
any pharmaceutical product (in any formulation) containing one or more active
pharmaceutical ingredients in addition to the Quark Compound.

       

      “Commencement of First Phase III
Clinical Trial” means with respect to any indication, the first dosing of
the first patient with Product in the first Phase III Clinical Trial of the
first Product to be developed for such indication.

       

      “Commercialize” means to
market, promote, distribute, import, export, offer to sell and/or sell Product
and/or conduct other Commercialization, and “Commercialization” means
commercialization activities relating to Product, including activities relating
to marketing, promoting, distributing, importing, exporting, offering for sale
and/or selling Product.

       

      “Commercially Reasonable
Efforts” means the expenditure of those efforts and resources used [*]
pursuing the development or commercialization of [*], or  where [*]
does not [*], the expenditure of such efforts and use of such resources
[*].  For clarity, “Commercially Reasonable Efforts” shall be [*],
accordingly, [*] with respect to [*] may [*] with respect to [*].

       

      “Competing Product” means any
product, other than any Product, comprising or including [*].

       

      “Confidential Information”
means all Know-How and other proprietary information and data of a financial,
commercial or technical nature which the disclosing Party or any of its
Affiliates has supplied or otherwise made available to the other Party or its
Affiliates, whether made available orally, in writing or in electronic form,
including information comprising or relating to concepts, discoveries,
inventions, data, designs or formulae in relation to 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.

         

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      “Control” or “Controlled” means, with
respect to any Know How, Patent Rights, other intellectual property rights, or
any proprietary or trade secret information, the legal authority or right
(whether by ownership, license or otherwise) of a Party to grant a license or a
sublicense of or under such Know How, Patent Rights, or intellectual property
rights to another Person, or to otherwise disclose such proprietary or trade
secret information to another Person, without breaching the terms of any
agreement with a Third Party, or misappropriating the proprietary or trade
secret information of a Third Party.

       

      “Develop” or “Development” means drug
development activities, including, without limitation, test method development
and stability testing, assay development and audit development, toxicology,
formulation, quality assurance/quality control development, statistical
analysis, clinical studies, packaging development, regulatory affairs, and the
preparation, filing and prosecution of NDAs and MAAs.

       

      “Development Costs” has the
meaning set forth in the Option Agreement.

       

      “DGF DMC Top Line Interim
Report” has the meaning set forth in the Option Agreement.

       

      “DGF Final Report” has the
meaning set forth in the Option Agreement.

       

      “DGF Indication” means the
treatment and/or prevention of delayed graft function following renal
transplantation.

       

      “DGF Phase II Trial” has the
meaning set forth in the Option Agreement.

       

      “DGF Phase II Trial Protocol”
has the meaning set forth in the Option Agreement; provided that,
following the License Effective Date, any changes to the DGF Phase II Trial
Protocol (as it exists at the License Effective Date) must be mutually agreed
between the Parties.

       

      “DGF Phase II Trial [*]
Criteria” has the meaning set forth in the Option Agreement.

       

      “DGF [*] Report” has the
meaning set forth in the Option Agreement.

       

      “Dharmacon License” means the
Patent License Agreement between Quark and Dharmacon, Inc., dated January 29,
2010.

       

      “EMA” means the European
Medicines Agency or any successor entity thereto.

       

      “Encumbrance” means any claim,
charge, equitable interest, hypothecation, lien, mortgage, pledge, option,
license, assignment, power of sale, retention of title, right of pre-emption,
right of first refusal or security interest of any kind.

       

      “EU Regulatory Approval” means
(a) marketing authorization approval from the EMA and pricing and reimbursement
approval [*] or (b) marketing authorization approval and pricing and
reimbursement approval [*].

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      “Execution Date” shall have
the meaning set forth in the first paragraph of this Agreement.

       

      “FDA” means the United States
Food and Drug Administration or any successor entity thereto.

       

      “Field” means the, diagnosis,
prevention or treatment of diseases and other conditions in all indications in
humans and animals.

       

      “First Commercial Sale” means,
with respect to any Product, the first arm’s length sale to a Third Party for
use or consumption of any such Product in a country.

       

      “FTE Rate” means a rate of [*]
US Dollars ($[*]) per Calendar Year based on the yearly time for a full-time
equivalent scientific person year (consisting of a total of [*] hours per
Calendar Year) of work, to be pro-rated on a daily basis if necessary (per
Calendar Year amount to be divided by [*] to produce the rate per whole day
consisting of eight (8) hours); such rate to [*] and [*]. For the avoidance of
doubt, such rate includes [*] for which [*].  The FTE Rate shall be
[*] from the Option Agreement Effective Date.

       

      “Fully-Burdened Manufacturing
Cost” of Novartis means the cost of all resources and any and all
operations (including packaging for shipment) carried out by or on behalf of
Novartis or its Affiliates or subcontractors in order to manufacture and supply
the Quark Compound and/or Product, established in accordance with Novartis’
accounting procedures and Accounting Standards as consistently applied by
Novartis.

       

      “HSR Act” means the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
promulgated thereunder.

       

      “HSR Filing Date” has the
meaning set forth in the Option Agreement.

       

      “IND” means an Investigational
New Drug application in the US filed with the FDA or the corresponding
application for the investigation of Products in any other country or group of
countries, as defined in the applicable laws and regulations and filed with the
Regulatory Authority of a given country or group of countries.

       

      “Insolvency Event” means, in
relation to either Party, any one of the following: (a) that Party becomes
insolvent; (b) that Party is the subject of voluntary or involuntary
bankruptcy proceedings instituted on behalf of or against such Party (except for
involuntary bankruptcy proceedings which are dismissed within [*]); (c) an
administrative receiver, receiver and manager, interim receiver, custodian,
sequestrator or similar officer is appointed in respect of that Party;
(d) a notice shall have been issued to convene a meeting for the purpose of
passing a resolution to wind up that Party, or such a resolution shall have been
passed other than a resolution for the solvent reconstruction or reorganization
of that Party; or (e) a resolution shall have been passed by that Party or
that Party’s directors to make an application for an administration order or to
appoint an administrator or (f) that Party suspends or threatens to suspend
making payments (excluding payments subject to good faith dispute) to all or
some of that Party’s creditors or makes a general assignment, composition or
arrangement with or for the benefit of all or the majority of that Party’s
creditors.

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      “Joint Know-How” means any
Know-How which is jointly owned by Quark (or any of its Affiliates) and Novartis
(or any of its Affiliates) as of the Execution Date or thereafter during the
Term of this Agreement.

       

      “Joint Patents” means any
Patent Rights which are jointly owned by Quark (or any of its Affiliates) and
Novartis (or any of its Affiliates) as of the Execution Date or thereafter
during the Term of this Agreement.

       

      “Joint Steering Committee” or “JSC” means the committee
established as set forth in Section
3.2.

       

      “Joint Technology” means the
Joint Know-How and Joint Patents.

       

      “Know-How” means all technical
information, know-how and data, including inventions (whether patentable or
not), discoveries, trade secrets, specifications, instructions, processes,
formulae, materials, expertise and other technology applicable to compounds,
formulations, compositions, products or to their manufacture, development,
registration, use or commercialization or methods of assaying or testing them or
processes for their manufacture, formulations containing them, compositions
incorporating or comprising them and including all biological, chemical,
pharmacological, biochemical, toxicological, pharmaceutical, physical and
analytical, safety, quality control, manufacturing, preclinical and clinical
data, instructions, processes, formulae, expertise and information, regulatory
filings and copies thereof, relevant to the development, manufacture, use or
commercialization of and/or which may be useful in studying, testing,
development, production or formulation of products, or intermediates for the
synthesis thereof.

       

      “License Effective Date” has
the meaning set forth in the Option Agreement.

       

      “Loss of Market Exclusivity”
means, with respect to any Product in any country, the following has occurred:
(a) a Third Party Competitive Product is being marketed or sold in such country
by a Third Party; and (b) the [*] of such Product in [*] in any [*] are [*] of
the [*] of such Product in [*] in the [*] of such Third Party Competitive
Product.

       

      “MAA” means an application for
the authorization to market a Product in any country or group of countries
outside the United States, as defined in the applicable laws and regulations and
filed with the Regulatory Authority of a given country or group of
countries.

       

      “Major Markets” means the
[*].

       

      “Milestones” means the
milestones relating to the Products as set forth in Section 8.4.

       

      “Milestone Payments” means the
payments to be made by Novartis to Quark upon the achievement of the
corresponding Milestones as set forth in Section 8.4.

       

      
        [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

         

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

      “NDA” means a New Drug
Application in the United States for authorization to market a Product, as
defined in the applicable laws and regulations and filed with the
FDA.

       

      “Net Sales” means the net
sales recorded by Novartis or any of its Affiliates or sublicensees (other than
distributors or wholesalers) for Product sold to Third Parties other than
sublicensees in bona fide, arms-length transactions, [*], less
[*].  The deductions [*] by Novartis and its Affiliates [*] to
calculate the recorded net sales from gross sales shall be as
follows:

      
        	  	
                (i) 

              	
                [*];

              

      

      
        	  	
                (ii) 

              	
                [*];

              

      

      
        	  	
                (iii) 

              	
                [*];

              

      

      
        	  	
                (iv) 

              	
                [*];

              

      

      
        	  	
                (v) 

              	
                [*];

              

      

      
        	  	
                (vi) 

              	
                [*];

              

      

      
        	  	
                (vii)

              	
                [*];
      and

              

      

      
        	 	
                (viii)

              	
                [*].

              

      

       

      With
respect to the calculation of Net Sales:

       

      
        	
                 
      

              	
                (i)

              	
                Net
      Sales only include [*] and [*] shall be disregarded for purposes of
      calculating Net Sales;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                If
      a Product is delivered to a Third Party before being invoiced (or is not
      invoiced), Net Sales will be calculated at [*];
  and

              

      

       

      
        
          	  	
                  (iii)

                	
                  In
      the event the Product is sold as a Combination Product, Net Sales of the
      Product will be calculated by [*].  Regarding [*], if these are
      available for [*]. If the
[*].

                

        

      

       

      “[*] Patents” has the meaning
set forth in Section 10.2(d).

       

      “Option” has the meaning set
forth in the Option Agreement.

       

      “Option Agreement” has the
meaning set forth in the recitals.

       

      “Out-of-Pocket Costs” means
direct project related expenses paid or payable to Third Parties and
specifically identifiable and incurred to procure supplies of the Product in the
Territory;  such expenses to have been recorded [*] in accordance with
the Quark’s Accounting Standards and for the avoidance of doubt,
[*].

       

      “p-53-directed siRNA” means
any small interfering RNA molecule which interferes with the expression of the
p53 gene in humans or animals [*].

       

      “Patent Rights” means all
patents and patent applications, including all divisionals, continuations,
substitutions, continuations-in-part, re-examinations, reissues, additions,
renewals, extensions, registrations, and supplemental protection certificates
and the like of any of the foregoing.

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      “Person” means any individual,
partnership, limited liability company, firm, corporation, association, trust,
unincorporated organization or other entity.

       

      “Phase II Clinical Trial”
means a controlled clinical study of a Product in patients designed to establish
the dosing range for such Product and the safety and efficacy of such
Product.

       

      “Phase II Trial Reports” has
the meaning set forth in the Option Agreement.

       

      “Phase II/III Adaptive Design
Clinical Study means for the purpose of Section [*] a clinical trial which
combines Phase II and Phase III data into one single confirmatory clinical
trial, where the selected dose is well established and further investigations in
Phase II are performed in the same patient population and the same endpoints as
are relevant in Phase III. The study design consists of two stages. The first
stage aims [*] (learning stage corresponding to Phase II). An interim analysis
is performed at the end of the first stage to select the most suited treatment
for the second stage aimed at [*] selected at such interim analysis [*]
(confirmatory stage corresponding to Phase III).

       

       “Phase III Clinical
Trial” means a pivotal clinical study of a Product in patients designed
to establish efficacy and safety of such Product for the purpose of preparing
and submitting a filing for NDA approval in the US or EU Regulatory
Approval.  Phase III Clinical Trial also includes any Phase II
Clinical Trial that is extended with the intent of establishing efficacy and
safety of a Product for the purpose of preparing and submitting a filing for NDA
approval in the US or EU Regulatory Approval.

       

       “Product” means a
product developed under this Agreement incorporating or comprising one or more
Quark Compounds in finished dosage pharmaceutical form, including, in each case,
all formulations and modes of administration thereof, the manufacture, use,
Development or Commercialization of which: (a) would, but for the license
granted hereunder, infringe a Valid Claim; or (b) incorporates or embodies
Quark Know-How or Joint Know-How.

       

      “Quark Compounds” means all
p53-directed siRNA owned or controlled by Quark, [*].

       

      “Quark Development Plan” has
the meaning set forth in the Option Agreement; provided that,
following the License Effective Date, any changes to the Quark Development Plan
(as it exists at the License Effective Date) [*].

       

      “Quark Know-How” means any
Know-How owned (whether solely or jointly with any Third Party) or Controlled by
Quark or any of its Affiliates as of the Execution Date or thereafter during the
term of this Agreement relating to the Quark Compounds and/or Product that is
reasonably necessary or useful for the research, Development, manufacture,
preparation, use or Commercialization of the Quark Compounds and/or Product in
the Field.  For the avoidance of doubt, “Quark Know-How” shall not
include any Joint Know-How.

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      “Quark Patents” means the
Patent Rights identified in Exhibit A, and, any
other Patent Rights owned (whether solely or jointly with any Third Party) or
Controlled by Quark or any of its Affiliates as of the Execution Date or
thereafter during the Term of this Agreement having claims covering the Quark
Compounds and/or Product, their use, composition, formulation, preparation or
manufacture or having claims that are reasonably necessary or useful for the
research, Development, manufacture, preparation, use or Commercialization of the
Quark Compounds and/or Product in the Field.  For the avoidance of
doubt, “Quark Patents” shall not include any Joint Patents or any [*]
Patents.

       

      “Quark Technology” means the
Quark Know-How and Quark Patents.

       

      “Regulatory Approval” means, with respect to a
Product in any country or jurisdiction, any approval (including where required,
pricing and reimbursement approvals), registration, license or authorization
from a Regulatory Authority in a country or other jurisdiction that is necessary
to market and sell such Product in such country or jurisdiction.

       

      “Regulatory Authority” means
any governmental agency or authority responsible for granting Regulatory
Approvals for Products, including the FDA, EMA and any corresponding national or
regional regulatory authorities.

       

      “Regulatory Exclusivity”
means, with respect a given country in the Territory, any regulatory exclusivity, beyond
patent rights, granted by a Regulatory Authority in such country, which confers
an exclusive Commercialization period during which: (i) Novartis has the
exclusive right to market, price and sell a Product in such country through a
regulatory exclusivity right such as a new chemical entity exclusivity, new use
or indication exclusivity, new formulation exclusivity, orphan drug exclusivity
and pediatric exclusivity, or any equivalent of the foregoing; and (ii) no Third
Party Competitive Product is marketed in any such country by any Third
Party.

       

      “Regulatory Filings” means,
with respect to the Quark Compounds or Product, any submission to a Regulatory
Authority of any appropriate regulatory application, and shall include, without
limitation, any submission to a regulatory advisory board, marketing
authorization application, and any supplement or amendment
thereto.  For the avoidance of doubt, Regulatory Filings shall include
any IND, NDA or the corresponding application in any other country or group of
countries.

       

      “Sales & Royalty Report”
means a written report or reports, substantially in the form attached at
Exhibit B,
showing each of: (a) the Net Sales in US dollars of each Product in the
Territory [*] during the reporting period by Novartis and its Affiliates and
sublicensees; and (b) the royalties payable, in United States Dollars,
which shall have accrued hereunder with respect to such Net Sales.

       

      “Senior Officers” means, for
Quark, its Chief Executive Officer, and for Novartis:

       

      
        	
                 
      

              	
                (a)

              	
                [*]
      related to JSC decisions regarding Commercialization issues, the Global
      Head of Marketing and Sales, General Medicines, for Novartis Pharma
      AG;

              

      

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                [*]
      related to JSC decisions regarding Development issues, the Global Head of
      Development for Novartis Pharma AG;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                [*]
      related to JSC decisions regarding alliance management issues, the Global
      Head of Business Development and Licensing for Novartis Pharma AG;
      and

              

      

       

      
        	
                 
      

              	
                (d)

              	
                with
      respect to any other matter, including any dispute under Section 17.5, the
      Global Head of Business and Development and Licensing for Novartis Pharma
      AG.

              

      

       

      “Silence License” means the
Option and License Agreement between Quark and Silence Therapeutics AG (formerly
known as Atugen AG), dated April 19, 2005.

       

      “Territory” means worldwide,
subject to Quark’s rights in Israel described Sections 5.4 and 7.2
below.

       

      “Third Party” means any Person
other than a Party or an Affiliate of a Party.

       

      “Third Party Competitive Product”
means, with respect to any Product being commercialized by or on behalf
of Novartis in a particular country in the Field, any preparation in final form
being commercialized by a Third Party (other than a sublicensee of Novartis [*]
in such country in the Field, which contains either:

       

      
        	
                 
      

              	
                (a)

              	
                any
      [*]; or

              

      

       

      
        	
                 
      

              	
                (b)

              	
                any
      compound which is [*] to [*], where the [*] is [*] a [*] under [*], and
      [*].

              

      

       

      “Third Qualifying Indication”
means the first indication, other than the AKI Indication and the DGF
Indication, for which the Product is developed and for which Novartis has, in
good faith, [*].

       

      “Transition Plan” has the
meaning set forth in Section 4.2.

       

      “Trial [*] Criteria” means the
AKI Phase II Trial [*] Criteria and/or the DGF Phase II Trial [*] Criteria, each
as defined in the Option Agreement.

       

      “UIC License” means the Option
and License Agreement between Quark and the Board of Trustees of the University
of Illinois, dated September 3, 1999.

       

      “United States” or “US” means the United States of
America, its territories and possessions.

       

      “USD” or “US$” means the lawful
currency of the United States.

       

      “US Regulatory Approval” means
final Regulatory Approval from the FDA and, if applicable, pricing and
reimbursement approval in the US.

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      “Valid Claim” means, with
respect to any country, a claim of: (i) an issued patent included within the
Quark Patents or Joint Patents in such country, which has not expired or been
revoked, or held invalid or unenforceable by a patent office, court or other
governmental agency of competent jurisdiction in a final and non-appealable
judgment (or judgment from which no appeal was taken within the allowable time
period), and which has not been admitted to be invalid or unenforceable through
reissue, disclaimer or otherwise; and (ii) a patent application within the Quark
Patents (not including any Joint Patents) which is being prosecuted in good
faith, which has not been revoked, cancelled, withdrawn, held invalid or
abandoned, and which has not been pending for more than [*] from its first
priority filing date.

       

      
        	
                1.2

              	
                Interpretation.  In
      this agreement unless otherwise
specified:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                “includes”
      and “including” shall mean respectively includes and including without
      limitation;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                a
      Party includes its permitted assignees and/or the respective successors in
      title to substantially the whole of its undertaking, subject to the
      provisions of Sections 3.6 and
17.1;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                a
      statute or statutory instrument or any of their provisions is to be
      construed as a reference to that statute or statutory instrument or such
      provision as the same may have been or may from time to time hereafter be
      amended or re-enacted;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                words
      denoting the singular shall include the plural and vice versa and words
      denoting any gender shall include all
genders;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                the
      Exhibits and other attachments form part of the operative provision of
      this Agreement and references to this Agreement shall, unless the context
      otherwise requires, include references to the Exhibits and
      attachments;

              

      

       

      
        	
                 
      

              	
                (f)

              	
                the
      headings in this Agreement are for information only and shall not be
      considered in the interpretation of this
  Agreement;

              

      

       

      
        	
                 
      

              	
                (g)

              	
                general
      words shall not be given a restrictive interpretation by reason of their
      being preceded or followed by words indicating a particular class of acts,
      matters or things; and

              

      

       

      
        	
                 
      

              	
                (h)

              	
                the
      Parties agree that the terms and conditions of this Agreement are the
      result of negotiations between the Parties and that this Agreement shall
      not be construed in favor of or against any Party by reason of the extent
      to which any Party participated in the preparation 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.

         

      

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      
        	
                2.

              	
                LICENSE

              

      

       

      
        
          	
                  2.1

                	
                  License Grant. Subject
      to the terms and conditions of this Agreement, Quark hereby grants to
      Novartis an exclusive (even as to Quark), sub-licensable (pursuant to
      Section 2.2) license, under the Quark Technology and Quark’s interest in
      any Joint Technology to research, Develop, make, use, import, offer for
      sale, sell and otherwise Commercialize, or to have any of the foregoing
      done on its behalf, the Quark Compounds and Product in the Field in the
      Territory, subject to Quark’s retained rights in Israel as set forth in
      Section 5.4 and 7.2 below. For the avoidance of doubt, the foregoing
      license is exclusive to Novartis and Quark has no retained rights (and
      will not attempt to license any rights, directly or indirectly, to any
      Third Party) with respect to the Quark Compounds and Products in the Field
      in the Territory; except for activities undertaken pursuant to the terms
      of this Agreement. For further clarity, Quark retains all the rights in
      Quark Technology and Quark’s interest in any Joint Technology outside the
      scope of the foregoing license. Exhibit A separately identifies those
      Quark Patents that also have utility outside of such foregoing license.
      Novartis acknowledges that Quark’s licenses under the Silence License and
      the Alnylam License are non-exclusive, and accordingly, that Novartis’
      licenses under this Section 2.1 with respect to these two upstream
      licenses are non-exclusive.

                

        

      

       

      
        	
                2.2

              	
                Sublicense and Subcontract
      Rights.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Novartis
      may exercise its rights and perform its obligations under this Agreement
      itself or through any of its Affiliates; provided that
      Novartis shall remain primarily liable for any acts or omissions of its
      Affiliates.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Novartis
      may sublicense the rights granted to it by Quark under this Agreement to
      one or more Third Parties at any time at its sole discretion and without
      reference to Quark, provided that such sublicense shall comply with all
      applicable provision of this Agreement and [*].  In addition,
      Novartis may subcontract to Third Parties the performance of tasks and
      obligations with respect to the Development, manufacture and
      Commercialization of Products as Novartis deems
      appropriate.  Novartis shall be responsible for the performance
      of its sublicensees and
subcontractors.

              

      

       

      
        	
                2.3

              	
                Exclusivity.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                During
      the term of the Agreement, neither Quark nor any of its Affiliates will,
      directly or indirectly: (i) license, assign or otherwise dispose of
      any of its rights (also by way of granting an option similar to the
      Option) in the Quark Compounds, Product or p53-specific Quark Technology
      to any Third Party; (ii) enter into any collaboration or license
      agreement with any Third Party in connection with the development and/or
      commercialization of any Quark Compound, Product or Competing Product; or
      (iii) research (except as provided in the last sentence of this Section
      2.3(a)) Develop, manufacture or Commercialize any Quark Compound, Product
      or Competing Product.  Notwithstanding any other provision
      hereof, this Section shall not apply to activities conducted by Quark or
      its Affiliates pursuant to and in accordance with this Agreement.  For clarity, this
      Section 2.3(a) shall not prevent Quark from performing [*] research
      relating to a Quark Compound, Product or Competing Product, provided that
      [*].

              

      

       

      
        [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

         

      

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                For
      the period from the License Effective Date until [*] after [*] in [*],
      neither [*] nor any [*] will, directly or indirectly, [*], other than for
      [*] in [*] in [*].

              

      

       

      
        	
                3.

              	
                GOVERNANCE

              

      

       

      
        	
                3.1

              	
                Alliance
      Managers.  Within [*] following the License Effective
      Date, each Party will appoint (and notify the other Party of the identity
      of) a senior representative having a general understanding of
      pharmaceutical development and commercialization issues to act as its
      alliance manager under this Agreement (“Alliance
      Manager”).  The Alliance Managers will serve as the
      contact point between the Parties for the purpose of providing Quark with
      information on the progress of Novartis’ Development and Commercialization
      of the Product(s) and will be primarily responsible for facilitating the
      flow of information and otherwise promoting communication, coordination
      and collaboration between the Parties; providing single point
      communication for seeking consensus both internally within the respective
      Party’s organization and together regarding key global strategy and
      planning issues, as appropriate, including facilitating review of external
      corporate communications; and raising cross-Party and/or cross-functional
      disputes in a timely manner.  Each Party may replace its
      Alliance Manager on written notice to the other
  Party.

              

      

       

      
        	
                3.2

              	
                Joint Steering
      Committee.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                The
      Parties will establish a Joint Steering Committee, composed of [*] senior
      personnel of Quark and [*] senior personnel of Novartis (one (1) of which
      will be the Party’s Alliance Manager and which personnel for each Party,
      collectively, shall have a general understanding of drug manufacturing,
      development and commercialization
issues).

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Within
      [*] following the License Effective Date, each Party will designate its
      initial members to serve on the JSC and notify the other Party of the
      dates of availability for the first meeting of the JSC.  Each
      Party may replace its representatives on the JSC on written notice to the
      other Party.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                The
      JSC will:  (i) oversee the Know-How and technology
      transfers contemplated in Sections 4.1, 4.2, 4.5 and 6.2 of this
      Agreement; (ii) review and discuss Development activities with respect to
      the Quark Compounds and the Product, including any activities of Quark in
      Israel under Section 5.4; (iii) discuss and approve the clinical
      trial protocols for the Product (other than the DGF Phase II Trial
      Protocol and the AKI Phase II Trial Protocol), including any material
      revisions thereto, in each indication; (iv) review and discuss Novartis’
      Commercialization strategies with respect to the Product, and, in the
      event that Quark distributes Products in Israel pursuant to Section 7.2,
      oversee such distribution activities; and (v) consider and act upon
      such other matters as specified in this
  Agreement.

              

      

       

      
        [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

         

      

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (d)

              	
                The
      JSC also may, at any time it deems necessary or appropriate, establish
      additional joint committees and delegate such of its responsibilities as
      it determines appropriate to such joint
  committees.

              

      

       

      
        	
                3.3

              	
                Meetings of the Joint Steering
      Committee.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                The
      JSC shall meet [*] per Calendar Year and at such other times as the
      Parties may agree.  The first meeting of the JSC shall be held
      as soon as reasonably practicable, but in no event later than [*]
      following the License Effective Date.  Meetings shall be held at
      such place or places as are mutually agreed or by teleconference or
      videoconference; provided, however, that
      there shall be at least one face-to-face meeting per Calendar Year, unless
      the Parties otherwise agree.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Each
      Party may from time to time invite a reasonable number of participants, in
      addition to its representatives, to attend JSC meetings in a non-voting
      capacity, with the consent of the other Party (which shall not be
      unreasonably withheld); provided, that
      that if Quark intends to have any Third Party (including any consultant)
      attend such a meeting, such Third Party will be subject to the prior
      approval of Novartis and must be bound by confidentiality obligations
      consistent with the terms of this
Agreement.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Novartis
      shall appoint one of its representatives on the JSC to act as chairperson
      of the JSC.  The chairperson shall set agendas for JSC meetings,
      provided
      that the agendas will include any matter requested by either
      Party.  The chairperson shall be responsible for recording,
      preparing and, within a reasonable time, issuing (i) draft minutes of each
      JSC meeting, which draft minutes shall be subject to review and approval
      by all JSC members, and (ii) final minutes following such
      approval.

              

      

       

      
        	
                3.4

              	
                Decision Making.
      Decisions of the JSC shall be made by unanimous vote, with each
      Party’s representatives to the JSC collectively having one
      vote.  In the event of a disagreement among the JSC with respect
      to any matter other than a matter related to [*], Novartis shall have a
      casting vote; provided, however, that,
      in the event that Novartis exercises such casting vote with respect to any
      issue which is [*], and in the event that Quark objects to such decision,
      Quark may, by notice in writing within [*] of Novartis’ exercise of its
      casting vote, refer the matter to the Senior Officers who shall attempt in
      good faith to resolve such disagreement.  If they cannot resolve
      such issue within [*] of the matter being referred to them, then the
      resolution and/or course of conduct shall be determined by
      [*].  However, in no event shall [*] have the
    right:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                to
      modify or amend the terms and conditions of this Agreement;
    or

              

      

       

      
        	
                 
      

              	
                (b)

              	
                to
      determine any such issue in a manner that would conflict with the express
      terms and conditions of this Agreement;
or

              

      

       

      
        	
                 
      

              	
                (c)

              	
                to
      increase the performance obligations of [*] beyond those set forth
      herein.

              

      

       

      
        [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

         

      

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      
        
          	
                  3.5

                	
                  Costs of
      Governance.  The Parties agree that the costs incurred by
      each Party in connection with its participation at any meetings under this
      Article 3 shall be borne solely by such
Party.

                

        

      

       

      
        	
                3.6

              	
                Change of
      Control.  In the event of a Change of Control of Quark,
      Novartis may provide written notice to Quark (or its successor entity) to
      [*] and upon such notice, [*] shall be [*], and [*] shall thereafter be
      [*].

              

      

       

      
        	
                3.7

              	
                Discontinuance of JSC
      Participation.  Quark shall have the right to discontinue
      its participation in the JSC upon written notice to Novartis at any time
      during the Term.  Once Quark has provided written notice to
      discontinue its participation in the JSC, [*] shall be deleted from this
      Agreement, and any decisions otherwise assigned to the JSC shall
      thereafter be [*].

              

      

       

      
        	
                4.

              	
                DISCLOSURE
      OF QUARK KNOW-HOW & COOPERATION

              

      

       

      
        	
                4.1

              	
                Disclosure of Quark
      Know-How.   Following the License Effective Date, Quark
      shall disclose the Quark Know-How to Novartis in accordance with Section
      4.3 of the Option Agreement (without regard to the termination of the
      Option Agreement).  Thereafter, on a continuing basis during the
      term of this Agreement, Quark, without additional consideration [*], shall
      disclose to Novartis or its designated Affiliate all additional Quark
      Know-How or Joint Know-How of which Quark becomes aware from time to time,
      to the extent reasonably relevant to Novartis’ practice of the license
      granted under Section 2.1. Without limiting the foregoing, Quark will
      deliver to Novartis (or its designee) all manufacturing batch records,
      Development reports, analytical results, filings and correspondence with
      any Regulatory Authority (including notes or minutes of any meetings with
      any Regulatory Authority), raw material and excipient sourcing
      information, quality audit findings and any other relevant technical
      information relating to any Quark Compounds and/or
    Products.

              

      

       

      
        	
                4.2

              	
                Transition
      Plan.  Within [*] of the License Effective Date, the
      Parties shall agree a plan (“Transition Plan”) for
      the transfer to Novartis of all Development and manufacturing activities
      then being undertaken by Quark, taking into account Quark’s obligations to
      complete the DGF Phase II Trial and/or the AKI Phase II Trial, and any
      other ongoing clinical or pre-clinical studies, as set forth in Section
      5.1(a).  Quark shall, without additional consideration,
      transition all such activities to Novartis in accordance with the
      Transition Plan.

              

      

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      
        	
                4.3

              	
                Assignment of
      Agreements.  Quark shall cooperate and assist Novartis by
      assigning to Novartis or its designee any agreements which Quark may have
      entered into prior to the License Effective Date specifically relating to
      the development, manufacture or supply of any Quark Compound or Product
      which Novartis, in its sole discretion, deems useful or necessary to
      further its obligations under this Agreement, provided however that Quark
      shall not be obligated to assign to Novartis any intellectual property
      rights obtained under such agreements and Quark shall not be obligated to
      assign to Novartis any agreement relating solely to non-clinical
      research.  If any such assignment requires the consent of the
      applicable counterparty, Quark shall not be obligated to make such
      assignment until such consent is obtained; provided, however, that Quark
      shall use commercially reasonable efforts to obtain such consent (it being
      understood that Quark shall in no event be obligated to make any payment
      to a counterparty to secure such consent).  Quark shall stop any
      work related to Quark Compound or Product under any agreements not
      assigned to Novartis. In cases where Quark is unable to or elect not to
      assign such intellectual property rights obtained under such agreements,
      Quark shall ensure (at a minimum) that Novartis has an exclusive (where
      possible and if not possible, a non-exclusive), sub-licensable license
      under such intellectual property rights to research, Develop, make, use,
      import, export, offer for sale, sell and otherwise Commercialize, or have
      any of the foregoing done on its behalf, the Quark Compounds and Product
      in Field in the Territory.

              

      

       

      
        	
                4.4

              	
                Compound
      Transfer.  Within [*] following the License Effective
      Date, Quark or its Affiliates, shall provide to Novartis or its designated
      Affiliate such quantities of the Quark Compounds and/or Product in Quark’s
      possession as may be reasonably requested by Novartis for use by Novartis
      and its Affiliates in connection with its Development activities under
      this Agreement, which supplies shall be provided to Novartis at
      [*].

              

      

       

      
        	
                4.5

              	
                Cooperation.  From
      time to time during the term of this Agreement at the request of Novartis,
      Quark will provide reasonable assistance to Novartis or its designated
      Affiliate in connection with understanding and using the Quark Know-How
      and Joint Know-How for purposes consistent with licenses and rights
      granted to Novartis hereunder, including by providing information to
      assist Novartis or its designated Affiliate in developing formulations of
      any Product and its related activities, provided that during the period of
      [*] from the License Effective date, such assistance (including travel to
      sites other than Quark facilities) shall be provided without charge to
      Novartis. After such [*] period such assistance shall, where provided at
      Quark facilities or by telephone, continue to be provided without charge,
      provided [*].

              

      

       

      
        	
                5.

              	
                DEVELOPMENT

              

      

       

      
        	
                5.1

              	
                Completion of DGF Phase II
      Trial and AKI Phase II
Trial.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                To
      the extent that either or both of the DGF Phase II Trial and/or the AKI
      Phase II Trial have not been completed as of the License Effective Date,
      Quark will be responsible for completing, and shall use Commercially
      Reasonable Efforts to complete, at its sole cost and expense and in
      accordance with the Quark Development Plan, such trial(s), including the
      preparation and finalization of all Phase II Trial Reports.  The
      DGF Phase II Trial shall be completed in accordance with the DGF Phase II
      Trial Protocol and the AKI Phase II Trial shall be completed in accordance
      with the AKI Phase II Trial Protocol.  Quark shall also be
      responsible for completing, and shall use Commercially Reasonable Efforts
      to complete, at its sole cost and expense and in accordance with the Quark
      Development Plan, any other clinical or pre-clinical studies that are
      ongoing as of the License Effective Date, including the preparation and
      finalization of complete, signed, detailed, data cleaned, statistically
      analyzed, unbiased, unblended, unblinded and cGCP/cGLP audited and
      compliant final report(s) for any such studies.  Notwithstanding
      the foregoing, if Quark is unable to [*] as specified in the [*] and/or
      the [*], as applicable, after [*], Quark [*], and the Parties shall
      negotiate in good faith as to how to proceed.  Notwithstanding
      the foregoing, [*].  For clarity, in no event shall Quark be
      obligated to implement any changes to the Quark Development Plan, the DGF
      Phase II Trial Protocol, or the AKI Phase II Trial Protocol that would
      have the effect of increasing the cost of the DGF Phase II Trial and/or
      the AKI Phase II 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.

      

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                No
      less than [*] prior to each scheduled meeting of the JSC, Quark will
      provide the Novartis members of the JSC with a written report on the
      status and progress of its activities under Section 5.1(a), which reports
      shall include information on progress versus plan, protocol deviations,
      notable safety and efficacy findings (including serious adverse events and
      events of interest from risk management perspective), audit findings, and
      summaries of all interactions, and copies of all correspondence, with
      Regulatory Authorities since the previous such
  report.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Quark
      shall make available such information about any ongoing studies under
      Section 5.1(a) as may be reasonably requested by Novartis from time to
      time, including such information as may be reasonably required to
      facilitate scientific/medical publications regarding the Quark Compounds
      or Products; provided, however, that
      all such releases of information shall be subject to Novartis’ approval in
      accordance with Section 16.3(a).  In addition, and without
      limiting the foregoing, Quark will provide Novartis with (to the extent
      not previously disclosed under the Option
  Agreement):

              

      

       

      
        	
                 
      

              	
                (i)

              	
                The
      DGF DMC Top Line Interim Report within [*] of the final dosing of the last
      patient for each interim analysis in the DGF Phase II
    Trial;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                The
      DGF [*] Report within [*] of the final dosing of the last patient for the
      DGF Phase II Trial;

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                The
      DGF Final Report within [*] of the final dosing of the last patient for
      the DGF Phase II Trial;

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                The
      AKI First Interpretable Results within [*] of the final dosing of the last
      patient for the AKI Phase II Trial;
and

              

      

       

      
        	
                 
      

              	
                (v)

              	
                The
      AKI Final Report within [*] of the final dosing of the last patient for
      the AKI Phase II 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.

      

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

       

      Each such
report shall be deemed to have been accepted by Novartis [*] after it was first
made available to Novartis in final and complete form; provided, that
Novartis has not, during such [*] period, issued notice to Quark reasonably
disputing whether the applicable report meets the requirements set forth in the
definition of such report under the Option Agreement and stating a list of
specific deficiencies that, if corrected, would cause the applicable report to
meet such requirements.  If Quark provides a corrected report that
reasonably addresses such deficiencies, such report shall be deemed to have been
accepted by Novartis [*] after it was first made available to Novartis in such
revised final and complete form.  If Novartis believes the report, as
submitted by Quark in such revised final and complete form, did not reasonably
address such deficiencies, it shall promptly advise Quark and the Parties shall
seek to resolve such dispute.  If the Parties do not reach agreement
on such matter, either Party may submit the issue to an arbitration under
Section 17.5.  If the arbitration rules in favor of Quark, the
applicable Phase II Trial Report shall be deemed to have been accepted by
Novartis upon the issuance of such ruling but the applicable time period set
forth in Section 8.2(a)(ii), 8.2(a)(iii), 8.2(a)(iv), 8.2(a)(v), 8.2(b)(i),
8.2(b)(ii), 8.2(c), 8.2(d)(i), 8.2(d)(ii) or 8.2(e) with respect to the election
of discretionary payment after the acceptance of such report shall be [*]
following receipt of the written decision of the arbitration.  If the
arbitration rules in favor of Novartis, then Quark shall revise the report in
accordance with the ruling of the arbitrator and shall resubmit it to Novartis,
and the applicable time period set forth in Section 8.2(a)(ii), 8.2(a)(iii),
8.2(a)(iv), 8.2(a)(v), 8.2(b)(i), 8.2(b)(ii), 8.2(c), 8.2(d)(i), 8.2(d)(ii) or
8.2(e) shall then commence.

       

      
        	
                 
      

              	
                (d)

              	
                Until
      completion of the DGF Phase II Trial and the AKI Phase II
      Trial:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                Quark
      will be responsible for, and will use diligent efforts in, obtaining and
      maintaining all Regulatory Approvals necessary for the conduct of the
      applicable trial;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                Quark
      will provide to Novartis copies of all substantive written communications
      received by Quark (or its Affiliates) from any Regulatory Authority
      related to the applicable trial or otherwise relevant to any Quark
      Compound or Product;

              

      

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (iii)

              	
                While
      Quark is conducting the DGF Phase II Trial and/or the AKI Phase II Trial,
      Quark will, where possible, advise Novartis not less than [*] in advance
      of entering into any correspondence or substantive discussion with any
      Regulatory Authority related to the applicable trial or otherwise relevant
      to any Quark Compound or Product, and will provide to Novartis copies of
      all substantive written communication to and from such Regulatory
      Authority.  Novartis’ approval shall be required for Quark to
      enter into such correspondence or discussion, except as may be required by
      applicable laws or regulations.  After Quark has completed both
      the DGF Phase II Trial and AKI Phase II Trial, Quark will not enter into
      any correspondence or discussion with any Regulatory Authority related to
      the applicable trial or otherwise relevant to any Quark Compound or
      Product, except as may be required by applicable laws or regulations and
      except that Quark may send to Regulatory Authorities correspondence which
      relates to the DGF Phase II Trial or the AKI Phase II Trial (as
      applicable) and which has been previously approved by
      Novartis;

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                At
      Novartis’ request, Quark will request and seek to arrange meetings and
      consultations with Regulatory Authorities to the extent required for the
      DGF Phase II Trial and/or the AKI Phase II Trial or for any other purpose
      related to Novartis’ ongoing or planned Development activities with
      respect to any Product; and

              

      

       

      
        	
                 
      

              	
                (v)

              	
                Novartis
      shall have the right to have representatives of Novartis attend and
      participate in all meetings between Quark (or its Affiliates) and any
      Regulatory Authority relating to the DGF Phase II Trial and/or the AKI
      Phase II Trial, except to the extent prohibited by applicable laws or
      regulations.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Upon
      the latter of closure of the [*] database for the DGF Phase II Trial and
      (ii) closure of the [*] database for the AKI Phase II Trial, all
      Regulatory Filings with any Regulatory Authority relating to the Quark
      Compounds and/or the Products which Quark was required to retain in order
      to complete the DGF Phase II Trial and/or the AKI Phase II Trial, shall be
      deemed assigned and transferred by Quark to Novartis, and upon request by
      Novartis, Quark shall deliver notices of such assignment and transfer to
      applicable Regulatory Authorities.

              

      

       

      
        	
                5.2

              	
                Development.  Subject
      to Sections 5.1, 5.3 and 5.4, with effect from the License Effective Date,
      Novartis will be responsible for conducting, at its sole expense, such
      research and preclinical, clinical and other Development of the Quark
      Compounds and/or Product as it determines appropriate in its sole
      discretion.

              

      

       

      
        	
                5.3

              	
                Development
      Diligence.  Novartis shall itself, or through its
      Affiliates or sublicensees, use Commercially Reasonable Efforts to Develop
      at least one Product in the Field.  Subject to compliance with
      the foregoing, the Development of the Products shall be in Novartis’ sole
      discretion.

              

      

       

      
        [ * ] = 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

          
            

          

        

        
           

        

      

       

      
        	
                5.4

              	
                Quark Development Activities In
      Israel.  Novartis shall notify Quark in writing the
      planned commencement date for the first Phase III Clinical Trial for the
      Product.  Quark shall have the right, exercisable by notice in
      writing to Novartis no later than [*] prior to such planned commencement
      for the first Phase III Clinical Trial for the Product (or, if later, not
      more than [*] after receipt of the foregoing Novartis notice), to conduct
      (itself or through one of its Affiliates) a portion of each Phase III
      Clinical Trial of any Product in Israel in accordance with the protocols
      and other governing documents developed by, and under the oversight of,
      the JSC.  Novartis shall pay a [*] to Quark for any clinical
      trial activities conducted by Quark in Israel consistent with [*] that [*]
      for [*] for the [*], and the Parties shall execute a customary agreement
      covering Quark’s performance of such clinical trials, it being understood
      and agreed that Quark shall conduct all such activities: (i) at Novartis’
      direction and in accordance with Novartis’ development plan and protocols
      for the applicable trial and the agreed budget; and (ii) in accordance
      with all applicable laws and regulations regarding the conduct of clinical
      trials, including but not limited to compliance with cGLP, cGMP, cGCP and
      if appropriate ICH guidance or if higher, Novartis standards as
      communicated to Quark.  For each Product, the JSC shall agree
      [*] in [*] for each [*]; provided however, if Novartis reasonably
      determines that the indication being studied is [*] in the [*], Quark’s
      right to [*] in [*] shall not apply to any Product in such
      indication.  [*]

              

      

       

      
        	
                5.5

              	
                Regulatory.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Promptly
      after the License Effective Date, Quark will assign or transfer to
      Novartis the ownership of all existing Regulatory Filings for the Products
      in the Territory, other than any Regulatory Filing which Quark is required
      to retain in order to complete its activities under Section 5.1(a), which
      Regulatory Filings shall be assigned or transferred to Novartis as set
      forth in Section 5.1(e).  Other than as expressly set forth in
      Section 5.1 above, Novartis will own all Regulatory Filings and Regulatory
      Approvals for the Product in the Territory, and for clarity, Novartis will
      (i) determine the regulatory plans and strategies for the Quark
      Compounds and/or Product, (ii) make all Regulatory Filings with respect to
      the Product and (iii) will be responsible for obtaining and maintaining
      Regulatory Approvals throughout the Territory in the name of Novartis or
      its Affiliates or sublicensees.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Quark
      shall fully cooperate with and provide assistance to Novartis in
      connection with filings to any Regulatory Authority relating to the Quark
      Compounds and/or Product(s), including by executing any required
      documents, providing access to personnel and providing Novartis with
      copies of all reasonably required
documentation.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                To
      the extent requested by Novartis, Quark shall grant or use commercially
      reasonable efforts to cause to be granted to Novartis and its Affiliates
      or sublicensees cross-reference rights to any relevant drug master files
      and other filings submitted by Quark or its Affiliates with any Regulatory
      Authority.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Novartis
      shall have the right to disclose the existence of, and the results from,
      any clinical trials conducted under this Agreement in accordance with
      Section 16.3(b) 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.

         

      

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

       

      
        	
                5.6

              	
                Compliance. Each Party
      agrees that in performing its obligations under this Agreement (a) it
      shall comply with all applicable current international regulatory
      standards, including cGMP, cGLP, cGCP and other rules, regulations and
      requirements and (b) it will not employ or use any person that has
      been debarred under Section 306(a) or 306(b) of the U.S. Federal Food,
      Drug and Cosmetic Act.

              

      

       

      
        	
                6.

              	
                MANUFACTURING

              

      

       

      
        	
                6.1

              	
                Manufacturing.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Quark
      shall be solely responsible for procuring such quantities of any Quark
      Compounds and Products as may be required to complete the DGF Phase II
      Trial and the AKI Phase II Trial, and any other pre-clinical and other
      clinical studies to be completed by Quark under Section
    5.1.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Upon
      request by Novartis in its sole discretion, Quark shall also procure such
      quantities of any Quark Compounds and Products as may be required by
      Novartis, its Affiliates or sublicensees for Phase III Clinical Trials for
      the AKI Indication and the DGF Indication, and any pre-clinical and other
      clinical studies planned as of the License Effective Date, subject to the
      terms and conditions of any existing Third Party manufacturing
      agreement.  Quark shall supply Novartis with all such
      requirements at a price equal to
[*].

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Other
      than as set forth in Sections 6.1(a) and (b), with effect from the License
      Effective Date, Novartis or its designated sublicensee(s) will be solely
      responsible for the manufacture and supply of the Quark Compounds and
      Products being Developed or Commercialized under this
      Agreement.

              

      

       

      
        	
                6.2

              	
                Manufacturing Know-How and
      Assistance.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Without
      limiting the provisions of Sections 4.1 and 4.5, during the period from
      the License Effective Date until the First Commercial Sale of the Quark
      Compounds and/or Products under this Agreement, Quark
    shall:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                fully
      cooperate with and provide assistance to Novartis or its designee, through
      documentation, consultation, training and face-to-face meetings, to enable
      Novartis or its designee in an efficient and timely manner to proceed with
      Development and manufacturing of the Quark Compounds and/or Product and to
      obtain all appropriate Regulatory Approvals for manufacturing (including
      qualification by the applicable Regulatory Authority of manufacturing
      sites); 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.

      

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (ii)

              	
                make
      appropriate personnel available to assist Novartis or its designee at any
      time and from time to time as reasonably requested by Novartis, and shall
      provide the appropriate personnel of Novartis or its designee with access
      to the personnel and manufacturing and other operations of Quark (or its
      Third Party supplier(s)) for such periods of time and in such manner as is
      reasonable in order to familiarize the personnel of Novartis or its
      designee with Quark Know-How and Joint Know-How relating to the
      Development and manufacture of the Quark Compounds and/or Products and the
      application of the same.  At Novartis’ request, such assistance
      shall also be furnished at the manufacturing facilities of Novartis or its
      designee.

              

      

       

      During
the period of [*] from the License Effective Date, such assistance (including
travel to sites other than Quark facilities) shall be provided without charge to
Novartis. After such [*] period such assistance shall, where provided at Quark
facilities or by telephone, continue to be provided without charge, provided that
[*].

       

      
        	
                 
      

              	
                (b)

              	
                Quark
      shall fully cooperate with Novartis in complying with requirements of 35
      U.S.C. §200 through 212, including requesting waivers where
      appropriate.

              

      

       

      
        	
                7.

              	
                COMMERCIALIZATION

              

      

       

      
        	
                7.1

              	
                Commercialization. Other
      than as set forth in Section 7.2, Novartis will be solely responsible for
      all aspects of Commercialization of the Product in the Territory,
      including planning and implementation, distribution, booking of sales,
      pricing and reimbursement.  Novartis shall itself, or through
      its Affiliates or sublicensees, use Commercially Reasonable Efforts
      [*].  Notwithstanding the foregoing, Novartis’ application of
      Commercially Reasonable Efforts shall not require Novartis to
      commercialize a Product in any country or territory in which Novartis
      determines it is not commercially reasonable to do so for such
      Product.  Subject to compliance with the foregoing, the
      Commercialization of the Products shall be in Novartis’ sole
      discretion.

              

      

       

      
        	
                7.2

              	
                Quark Distribution Activities
      In Israel.   Quark shall have the right, exercisable by
      notice in writing to Novartis no later than [*] following the date on
      which Novartis advises Quark of Novartis’ first submission of an
      application for Regulatory Approval of a Product anywhere in the
      Territory, to be appointed (itself or through one of its Affiliates) as
      the [*] distributor for Products in Israel.  In the event that
      Quark exercises such right, the Parties shall negotiate in good faith a
      separate agreement with respect to such distribution arrangement on
      commercially reasonable terms.

              

      

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

       

      
        	
                7.3

              	
                Pharmacovigilance.

              

      

       

      
        	
              	
                (a)

              	
                Until
      completion of the DGF Phase II Trial and the AKI Phase II Trial, Quark
      will be responsible for maintaining a unified global adverse event
      database for the Product and for performing all pharmacovigilance-related
      activities in accordance with laws (including current Eudralex volume 9A
      and current ICH E2 guidelines) applicable to a clinical trial
      sponsor.

              

      

       

      
        	
              	
                (b)

              	
                Following
      completion of the DGF Phase II Trial and the AKI Phase II Trial, Novartis
      will be responsible for maintaining a unified global adverse event
      database for the Product and for performing all pharmacovigilance-related
      activities in countries where the Product is being Developed or
      Commercialized by Novartis, its Affiliates or sublicensees in accordance
      with laws (including current Eudralex volume 9A and current ICH E2
      guidelines) applicable to a marketing authorization holder or to a
      clinical trial sponsor, as applicable. Such activities for which Novartis
      will be responsible include in particular the maintenance of a
      pharmacovigilance system for the timely reporting of product quality
      complaints, adverse events and product safety data related to the Product
      to the relevant Regulatory Authorities in the Territory, and for
      responding to safety issues and to all requests of Regulatory Authorities
      in the Territory.

              

      

       

      
        	
              	
                (c)

              	
                Within
      [*] following the License Effective Date, the Parties shall agree upon and
      implement a procedure for the mutual exchange of adverse event reports and
      safety information associated with the Products. Details of the operating
      procedure respecting such adverse event reports and safety information
      exchange shall be the subject of a mutually-agreed written
      pharmacovigilance agreement between the Parties which shall be entered
      into within such [*] period and in any event entered into prior to
      transfer of any IND or corresponding application in any other country or
      group of countries to Novartis.

              

      

       

      
        	
                8.

              	
                FINANCIAL
      PROVISIONS

              

      

       

      
        	
                 
      

              	
                8.1

              	
                Upfront
      Payment.  In partial consideration of the licenses and
      rights granted to Novartis hereunder, Novartis shall pay to Quark a
      one-time, non-refundable, non-creditable [*] upfront payment in the amount
      specified in the applicable subsection below.  For clarity, only
      a single payment shall be due under this Section 8.1, depending on the
      circumstances under which Novartis exercises the
      Option.  However, also depending on the circumstances of the
      Option exercise and the occurrence of later events, discretionary license
      fee payments may also arise under Section 8.2, in addition to milestones
      and royalties.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                If
      either [*] or [*], and the Option is exercised before the termination of
      the Option pursuant to Section [*] of the Option Agreement, then the
      upfront payment shall be [*] USD (US$
[*]);

              

      

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                If
      both [*] and [*], or [*] pursuant to Section [*] of the Option Agreement,
      then, subject to Section 8.1(c)
below,

              

      

       

      (i)           If
[*] and

       

       

      
        	
                 
      

              	
                (A)

              	
                If
      [*], and the Option is exercised prior to the termination of the Option
      pursuant to Section [*] of the Option Agreement, then the upfront payment
      shall be [*] USD (US$ [*]);

              

      

       

      
        	
                 
      

              	
                (B)

              	
                If
      [*], and if [*], and the Option is exercised prior to the termination of
      the Option pursuant to Section [*] of the Option Agreement, then the
      upfront payment shall be [*] USD (US$
[*]);

              

      

       

      (ii)          If
[*] and

       

      
        	
                 
      

              	
                (A)

              	
                If
      [*], and the Option is exercised prior to the termination of the Option
      pursuant to Section [*] of the Option Agreement, then the upfront payment
      shall be [*] USD (US$ [*]);

              

      

       

      
        	
                 
      

              	
                (B)

              	
                If
      [*], and if [*], and the Option is exercised prior to the termination of
      the Option pursuant to Section [*] of the Option Agreement, then the
      upfront payment shall be [*] USD (US$
[*]).

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Notwithstanding
      Section 8.1(b) above, if the Parties agree that Quark continues the DGF
      Phase II Trial as set forth in [*], and the Option is exercised pursuant
      to [*], then no upfront payment shall be payable and Novartis shall [*]
      any discretionary payments which may become payable under the License
      Agreement in accordance with Section
[*];

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Notwithstanding
      Sections 8.1(a), 8.1(b) and 8.1(c) above, Novartis may, at its sole
      discretion, exercise the Option at any time prior to termination of the
      Option pursuant to Section 4.1(b) of the Option Agreement and pay Quark an
      upfront payment of [*] USD (US$ [*]), provided that if the Option is
      exercised pursuant to this Section 8.1(d), the provisions of Section 8.2
      shall not apply.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Any
      amounts payable under this Section 8.1 shall be made within [*] after
      receipt by Novartis of an invoice in the form of Exhibit C,
      which invoice shall be issued no earlier than the License Effective
      Date.

              

      

       

      
        [ * ] = 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.

      

       

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

       

      
        	
                8.2

              	
                Discretionary License
      Payments.  In order to maintain the licenses and rights
      granted to it hereunder, Novartis may elect to make certain discretionary
      payments, as follows:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                If
      Novartis’ exercise of the Option gave rise to a payment under Section [*],
      then

              

      

       

      (i)           Novartis
may [*] either a payment made under Section [*], a payment made under Section
[*], or a payment made under Section [*], whichever is paid first;

       

      (ii)           If
[*], Novartis may elect in its sole discretion, but subject to Section 8.2(h),
to make a one-time, non-refundable, non-creditable payment to Quark of [*] USD
(US$ [*]), provided such election is made no later than [*] after the date on
which [*] was accepted by Novartis pursuant to Section 5.1(c);

       

      (iii)           If
[*], Novartis may elect in its sole discretion, but subject to Section 8.2(h),
to make a one-time, non-refundable, non-creditable payment to Quark of [*] USD
(US$ [*]), provided such election is made no later than [*] after the date on
which [*] was accepted by Novartis pursuant to Section 5.1(c);

       

      (iv)           If
Novartis has made the payment set forth in Section [*] above, and [*], Novartis
may elect in its sole discretion, but subject to Section 8.2(h), to make a
one-time, non-refundable payment to Quark of [*] USD (US$ [*]), provided such
election is made no later than [*] after the date on which [*] have been
accepted by Novartis pursuant to Section 5.1(c); and

       

      (v)           If
Novartis has made the payment set forth in Section [*] above, and [*], Novartis
may elect in its sole discretion, but subject to Section 8.2(h), to make a
one-time, non-refundable payment to Quark of [*] USD (US$ [*]), provided such
election is made no later than [*] after the date on which [*] have been
accepted by Novartis pursuant to Section 5.1(c).

       

      For
clarity, the election by Novartis under each clause above is distinct from (and
in addition to) its election under any other clause.

       

      
        	
                 
      

              	
                (b)

              	
                If
      Novartis’ exercise of the Option gave rise to a payment under Section [*],
      then

              

      

       

      (i)           If
[*], then Novartis may elect in its sole discretion, but subject to Section
8.2(h), to make a one-time, non-refundable, non-creditable payment to Quark of
[*] USD (US$ [*]), provided such election is made no later than [*] after the
date on which [*] was accepted by Novartis pursuant to Section 5.1(c);
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.

      

       

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

       

      (ii)           If
[*], then Novartis may elect in its sole discretion, but subject to Section
8.2(h), to make a one-time, non-refundable payment to Quark of [*] USD (US$
[*]), provided such election is made no later than [*] after the date on which
[*] was accepted by Novartis pursuant to Section 5.1(c).

       

      
        	
                 
      

              	
                (c)

              	
                If
      Novartis’ exercise of the Option gave rise to a payment under Section [*],
      then Novartis may elect in its sole discretion, but subject to Section
      8.2(h), to make a one-time, non-refundable payment to Quark of [*] USD
      (US$ [*]), provided such election is made no later than [*] after the date
      on which [*] was accepted by Novartis pursuant to Section
      5.1(c).

              

      

       

      
        	
                 
      

              	
                (d)

              	
                If
      Novartis’ exercise of the Option gave rise to a payment under Section [*],
      then

              

      

       

      (i)           If
[*], then Novartis may elect in its sole discretion, but subject to Section
8.2(h), to make a one-time, non-refundable, non-creditable payment to Quark of
[*] USD (US$ [*]), provided such election is made no later than [*] after the
date on which [*] was accepted by Novartis pursuant to Section 5.1(c);
and

       

      (ii)           If
[*], then Novartis may elect in its sole discretion, but subject to Section
8.2(h), to make a one-time, non-refundable payment to Quark of [*] USD (US$
[*]), provided such election is made no later than [*] after the date on which
[*] was accepted by Novartis pursuant to Section 5.1(c).

       

      
        	
                 
      

              	
                (e)

              	
                If
      Novartis’ exercise of the Option gave rise to a payment under Section [*],
      then Novartis may elect in its sole discretion, but subject to Section
      8.2(h), to make a one-time, non-refundable payment to Quark of [*] USD
      (US$ [*]), provided such election is made no later than [*] after the date
      on which [*] was accepted by Novartis pursuant to Section
      5.1(c).

              

      

       

      
        	
                 
      

              	
                (f)

              	
                If
      Novartis exercised the Option (A) pursuant to Section [*] or (B) because
      either [*] or [*] (as applicable), but [*] or [*] (as applicable), then,
      subject to [*],  Novartis may make the following discretionary
      payments-

              

      

       

      (i)           Where
Novartis [*] for the [*], Novartis may elect in its sole discretion, but subject
to Section 8.2(h), to make a one-time, non-refundable payment to Quark of [*]
USD (US$[*]) provided that such election is made no later than [*] after the
date on which [*] by Novartis, or an Affiliate or sublicensee.

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          27

          
            

          

        

        
           

        

      

       

      (ii)          Where
such [*] in Section 8.2(f)(i) above has been [*] and [*] for [*] then Novartis
may elect in its sole discretion, but subject to Section 8.2(h), to make a
one-time, non-refundable payment to Quark of [*] USD US$[*] provided that such
election is made no later than [*] after the date on which [*] by Novartis or an
Affiliate or sublicensee.

       

      (iii)         Where
Novartis [*] for the [*], Novartis may elect in its sole discretion, but subject
to Section 8.2(h), to make a one-time, non-refundable payment to Quark of [*]
USD US$([*]) provided that such election is made no later than [*] after the
date on which [*] by Novartis, or an Affiliate or sublicensee.

       

      (iv)    
    Where such [*] in Section 8.2(f)(iii) above has been [*]
and [*] for [*] then Novartis may elect in its sole discretion, but subject to
Section 8.2(h), to make a one-time, non-refundable payment to Quark of [*] USD
US$[*] provided that such election is made no later than [*] after the date on
which [*] by Novartis or an Affiliate or sublicensee.

       

      (v)      
   Upon [*] for the [*] by Novartis (and Sections [*] and [*] do
not apply), Novartis may elect in its sole discretion, but subject to Section
8.2(h), to make a one-time, non-refundable payment to Quark of [*] USD (US$[*])
provided that such election is made no later than [*] after the date [*] by
Novartis, or an Affiliate or sublicensee.

       

      (vi)         Upon
[*] for the [*] by Novartis (and Sections [*] and [*] do not apply), Novartis
may elect in its sole discretion, but subject to Section 8.2(g), to make a
one-time, non-refundable payment to Quark of [*] USD (US$[*]) provided that such
election is made no later than [*] after the date [*] by Novartis, or an
Affiliate or sublicensee.

       

      (vii)        For
clarity, any payment due under this Section 8.2(f) is in addition to the
payments due under Section 8.4.

       

      
        	
                 
      

              	
                (g)

              	
                Novartis
      shall issue written notice to Quark as to whether or not Novartis intends
      making the applicable discretionary payments under Section 8.2(a)(ii),
      8.2(a)(iii), 8.2(a)(iv), 8.2(a)(v), 8.2(b)(i), 8.2(b)(ii), 8.2(c),
      8.2(d)(i), 8.2(d)(ii), 8.2(e), 8.2(f)(i), 8.2(f)(ii), 8.2(f)(iii),
      8.2(f)(iv), 8.2(f)(v) or 8.2(f)(vi), as applicable, by the deadline set
      forth therein.  Quark may treat any failure by Novartis to issue
      written notice to Quark by the applicable deadline as notice that Novartis
      does not intend to make such discretionary payment (subject to a [*] cure
      period).  In the event that Novartis issues timely notice that
      it intends making any such payment, such payment shall be made within [*]
      after receipt by Novartis of an invoice in the form of Exhibit C
      (subject to a [*] cure period), which invoice shall be issued no
      earlier than the date of Novartis’ notice that it intends making the
      applicable payment.

              

      

       

      
        [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

         

      

      
        
           

        

        
          28

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (h)

              	
                If
      Novartis does not elect to make the payments described in Section
      8.2(a)(ii), 8.2(a)(iii), 8.2(a)(iv), 8.2(a)(v), 8.2(b)(i), 8.2(b)(ii),
      8.2(c), 8.2(d)(i), 8.2(d)(ii),  8.2(e), 8.2(f)(i), 8.2(f)(ii),
      8.2(f)(iii), 8.2(f)(iv), 8.2(f)(v)  or 8.2(f)(vi), as
      applicable, then (subject to a [*] cure period) Quark shall have the right
      to terminate this Agreement in its entirety, as set forth in Section
      12.5.

              

      

       

      
        	
                8.3

              	
                Financial Terms Following
      Option Acceleration.  Notwithstanding anything to the
      contrary herein, if the Option is exercised by Novartis pursuant Section
      3.4 of the Option Agreement, then the upfront payment and the
      discretionary license payments set forth above in Sections 8.1 and 8.2
      shall be adjusted as follows:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                No
      upfront or discretionary payments contained in Sections 8.1 and 8.2 shall
      be due;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Novartis
      shall pay to Quark a one-time, non-refundable payment to Quark of [*] USD
      (US$[*]), which amount shall be made within [*] after receipt by Novartis
      of an invoice in the form of Exhibit
      C.  For clarity, such [*] USD (US$[*]) is in addition to
      the ten million USD (US$10,000,000) paid under Section 2.2 of the Option
      Agreement;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                The
      amount of any Milestone Payments shall be reduced by
  [*];

              

      

       

      
        	
                 
      

              	
                (d)

              	
                The
      amount of any royalties applicable to Net Sales of Product shall be
      reduced by [*] at each applicable royalty tier;
  and

              

      

       

      
        	
                 
      

              	
                (e)

              	
                If
      Quark believes that Novartis’ determination that an Insolvency Event has
      or is likely to occur in connection with Quark was not reasonable, then
      Quark may submit such dispute to binding arbitration pursuant to Section
      17.5(b).  If the arbitration determines that Novartis’s
      determination that an Insolvency Event has or is likely to occur in
      connection with Quark was not reasonable, then the following shall apply:
      (i) Sections 8.3(a), (c) and (d) shall have no effect; (ii) Novartis shall
      be deemed to have exercised its Option under Section [*] of this
      Agreement, the [*] USD ($[*]) payment made by Novartis shall remain
      non-refundable, the [*] USD (US$ [*]) payment under Section [*] shall be
      deemed to have been paid, and Novartis may credit [*] USD ($[*]) against
      any discretionary payments under Section 8.2; and (iii) [*].  In
      any event, if Quark actually experiences an Insolvency Event prior to the
      fulfillment of its obligations to deliver the DGF Final Report and the AKI
      Final Report (e.g., actually becomes insolvent), then the Novartis
      determination shall be deemed to have been
  reasonable.

              

      

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          29

          
            

          

        

        
           

        

      

       

      
        	
                8.4

              	
                Milestone
      Payments.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                DGF Indication
      Milestones.  In further consideration of the licenses and
      rights granted to Novartis hereunder, upon first achievement of each of
      the Milestones set forth below by Novartis, its Affiliates or sublicensees
      with respect to the first Product developed for the DGF
      Indication,

              

      

       

      (i)           Novartis
shall pay to Quark the corresponding one-time non-refundable non-creditable
Milestone Payments set forth below under the column heading “Milestone Payment
(USD)”; and

       

      (ii)           If
Novartis has made the discretionary payment set forth in Section [*], and
Novartis nonetheless continue the Development of Products for the DGF Indication
such that one or more Milestones set forth below are achieved, Novartis shall
pay to Quark the corresponding one-time non-refundable non-creditable Milestone
Payments set forth below under the column heading “Additional Milestone Payment
(USD)”, which represents [*] associated with the DGF Indication, provided
however, that [*] i.e. [*].

       

      
        
          
            
              
                
                  
                    	
                            Milestone

                          	 	
                            Milestone

                            Payment (USD)

                          	 	
                            Additional Milestone

                            Payment (USD)

                          
	
                            [*]
      Milestones

                          	 	
                            [*]

                          
	
                            [*]
      for the DGF Indication by Novartis, its Affiliates or
      sublicensees

                          	 	
                            US$[*]

                          	 	
                            US$[*]

                          
	
                            [*]
      Milestones

                          	 	 
      
	
                            [*]
      by Novartis, its Affiliates or sublicensees for the use of the Product for
      the DGF Indication [*]

                          	 	
                            US$[*]

                          	 	
                            US$[*]

                          
	
                            [*]
      by Novartis, its Affiliates or sublicensees for the use of the Product for
      the DGF Indication [*]

                          	 	
                            US$[*]

                          	 	
                            US$[*]

                          
	
                            [*]
      by Novartis, its Affiliates or sublicensees [*] for the use of the Product
      for the DGF Indication [*]

                          	 	
                            US[*]

                          	 	
                            US$[*]

                          
	
                            [*]
      by Novartis, its Affiliates or sublicensees [*] for the use of the Product
      for the DGF Indication [*]

                          	 	
                            US$[*]

                          	 	
                            US$[*]

                          

                  

                

              

            

          

        

      

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          30

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                AKI Indication
      Milestones.  In further consideration of the licenses and
      rights granted to Novartis hereunder, upon first achievement of each of
      the Milestones set forth below by Novartis, its Affiliates or sublicensees
      with respect to the first Product developed for the AKI
      Indication,

              

      

       

      (i)           Novartis
shall pay to Quark the corresponding one-time non-refundable, non-creditable
Milestone Payments set forth below under the column heading “Milestone Payment
(USD)”; and

       

      (ii)          If
Novartis has made the discretionary payment set forth in Section [*], and
Novartis nonetheless continue the Development of Products for the AKI Indication
such that one or more Milestones set forth below are achieved, Novartis shall
pay to Quark the corresponding one-time non-refundable non-creditable Milestone
Payments set forth below under the column heading “Additional Milestone Payment
(USD)”, which represents [*], provided however, that [*] i.e. [*].

       

      
        
          
            
              
                
                  
                    
                      	
                              Milestone

                            	 	
                              Milestone

                              Payment (USD)

                            	 	
                              Additional Milestone

                              Payment (USD)

                            
	
                              [*]
      Milestones

                            	 	
                              [*]

                            
	
                              [*]
      for the AKI Indication by Novartis, its Affiliates or
      sublicensees

                            	 	
                              US$[*]

                            	 	
                              US$[*]

                            
	
                              [*]
      Milestones

                            	 	 
      
	
                              [*]
      by Novartis, its Affiliates or sublicensees for the use of the Product for
      the AKI Indication [*]

                            	 	
                              US$[*]

                            	 	
                              US$[*]

                            
	
                              [*]
      by Novartis, its Affiliates or sublicensees for the use of the Product for
      the AKI Indication [*]

                            	 	
                              US$[*]

                            	 	
                              US$[*]

                            
	
                              [*]
      by Novartis, its Affiliates or sublicensees [*] for the use of the Product
      for the AKI Indication [*]

                            	 	
                              US$[*]

                            	 	
                              US$[*]

                            
	
                              [*]
      by Novartis, its Affiliates or sublicensees [*] for the use of the Product
      for the AKI Indication [*]

                            	 	
                              US$[*]

                            	 	
                              US$[*]

                            

                    

                  

                

              

            

          

        

      

       

      
        	
                 
      

              	
                (c)

              	
                Milestones for Third Qualifying
      Indication.  In further consideration of the licenses and
      rights granted to Novartis hereunder, upon first achievement of each of
      the Milestones set forth below by Novartis, its Affiliates or
      sublicensees, the corresponding one-time non-refundable non-creditable
      Milestone Payments shall be payable by Novartis to Quark with respect to
      the first Product developed for the Third Qualifying
      Indication:

              

      

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          31

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  	
                          Milestone

                        	 	
                          Milestone Payment (USD)

                        
	
                          [*]
      Milestones

                        
	
                          [*]
      for the Third Qualifying Indication by Novartis, its Affiliates or
      sublicensees

                        	 	
                          US$[*]

                        
	
                          [*]
      Milestones

                        
	
                          [*]
      by Novartis, its Affiliates or sublicensees for the use of the Product for
      the Third Qualifying Indication [*]

                        	 	
                          US$[*]

                        
	
                          [*]
      by Novartis, its Affiliates or sublicensees for the use of the Product for
      the Third Qualifying Indication [*]

                        	 	
                          US$[*]

                        
	
                          [*]
      by Novartis, its Affiliates or sublicensees [*] for the use of the Product
      for the Third Qualifying Indication [*]

                        	 	
                          US$[*]

                        
	
                          [*]t
      by Novartis, its Affiliates or sublicensees [*] for the use of the Product
      for the Third Qualifying Indication [*]

                        	 	
                          US$[*]

                        

                

              

            

          

        

      

       

      
        	
                 
      

              	
                (d)

              	
                Commercial
      Milestones.  In further consideration of the licenses and
      rights granted to Novartis hereunder, upon first achievement of each of
      the Milestones set forth below by Novartis, its Affiliates or
      sublicensees, the corresponding one-time non-refundable non-creditable
      Milestone Payments shall be payable by Novartis to
  Quark:

              

      

       

      
        
          
            
              
                
                  	
                          Milestone

                        	 	
                          Milestone Payment (USD)

                        
	
                          Commercial
      Milestones

                        
	
                          First
      Calendar Year in which worldwide annual Net Sales for any given Product
      exceed US[*]

                        	 	
                          US$[*]

                        
	
                          First
      Calendar Year in which worldwide annual Net Sales for any given Product
      exceed US[*]

                        	 	
                          US$[*]

                        
	
                          First
      Calendar Year in which worldwide annual Net Sales for any given Product
      exceed US[*]

                        	 	
                          US$[*]

                        
	
                          First
      Calendar Year in which worldwide annual Net Sales for any given Product
      exceed US$[*]

                        	 	
                          US$[*]

                        
	
                          First
      Calendar Year in which worldwide annual Net Sales for any given Product
      exceed US$[*]

                        	 	
                          US$[*]

                        

                

              

            

          

        

      

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          32

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (e)

              	
                Each
      Milestone Payment shall be deemed earned as of the first achievement of
      the corresponding Milestone by any of the Products, and shall be notified
      by Novartis to Quark within [*] after achievement of the Milestone, or in
      the case of the Commercial Milestones, in the Sales and Royalty Report for
      the Calendar Quarter in which such Commercial Milestone is
      achieved.  For the avoidance of doubt: (i) each Milestone
      Payment shall be payable only on the first occurrence of the Milestone;
      (ii) none of the Milestone Payments shall be payable more than once; and
      (iii) other than as expressly set forth above, no additional Milestone
      Payments shall be due for Milestones completed for the Development and
      Commercialization of additional Products or of Products for any additional
      indications or for any different Quark Compounds or Combination
      Products.

              

      

       

      
        	
                8.5

              	
                Royalty
      Payments.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                In
      consideration of the licenses and rights to Novartis hereunder, during the applicable
      Royalty Term, Novartis will make royalty payments to Quark, on a
      Product-by-Product basis, based on Net Sales of the applicable Product in
      the Territory by Novartis, its Affiliates and sublicensees, at the
      applicable rates set forth below.

              

      

       

      
        
          
            
              
                
                  	
                          Aggregate Net Sales of Applicable Product

                          throughout the Territory in any Calendar

                          Year by Novartis, its Affiliates or

                          Sublicensees

                        	 	
                          Royalty Rate

                        
	
                          Portion
      of annual Net Sales of the applicable Product which are less than or equal
      to US$[*]

                        	 	
                          [*]%

                        
	
                          Portion
      of annual Net Sales of the applicable Product which are greater than
      US$[*] and less than or equal to US$[*]

                        	 	
                          [*]%

                        
	
                          Portion
      of annual Net Sales of the applicable Product which are greater than
      US$[*] and less than or equal to US$[*]

                        	 	
                          [*]%

                        
	
                          Portion
      of annual Net Sales of the applicable Product which are greater than
      US$[*] and less than or equal to US$[*]

                        	 	
                          [*]%

                        
	
                          Portion
      of annual Net Sales of the applicable Product which are greater than
      US$[*]

                        	 	
                          [*]%

                        

                

              

            

          

        

      

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          33

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                For
      example, if Net Sales of a given Product in a calendar year are $[*], the
      royalty on such Net Sales shall be equal to
$[*]

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Notwithstanding
      the provisions of Section 8.9(a), for each Calendar Quarter in which there
      has been any sale of a Product by Novartis, its Affiliates or
      sublicensees, which, but for the licenses granted under the [*] (and the
      sub-licenses thereto granted under this Agreement) would infringe an
      issued patent within the [*] Patent Rights which has not expired or been
      revoked, or held invalid or unenforceable, and which has not been admitted
      to be invalid or unenforceable through reissue, disclaimer or otherwise,
      Novartis shall pay to Quark an additional amount [*] with respect to such
      sale of such Product under the [*], which shall [*] of Net Sales of such
      Product in such Calendar Quarter.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Unless
      otherwise provided in this Agreement, Royalties will be payable on a
      Product-by-Product and country-by-country basis from First Commercial Sale
      of such Product in such country until the later of (i) the expiration
      of the last to expire Valid Claim covering the Compound, claiming the
      Product or claiming the use for which the Product is being sold in such
      country; (ii) [*];  and (iii) ten (10) years from the
      First Commercial Sale of such Product in such country (“Royalty
      Term”).  Following the Royalty Term on a
      Product-by-Product and country-by-country basis, the licenses granted to
      Novartis with respect to the Product shall continue in effect, but become
      fully paid-up, sub-licensable, royalty-free, transferable, perpetual and
      irrevocable with respect to such Product and such country,
      [*].

              

      

       

      
        	
                 
      

              	
                (e)

              	
                For
      the avoidance of doubt, royalties shall be payable only once with respect
      to the same unit of Product.

              

      

       

      
        	
                 
      

              	
                8.6

              	
                Royalty
      Step-Downs.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                On
      a Product-by-Product and country-by-country basis, for any period during
      the Royalty Term but after the expiration
of:

              

      

       

      (i)           the
last to expire Valid Claim of a [*] covering the Compound, claiming the Product
or claiming the use for which the Product is being sold in such
country;

       

      (ii)          [*];
and

       

      (iii)         ten
(10) years from the
First Commercial Sale of such Product in such country,

       

      in which
the sale of the Product in such country would, but for the license granted
hereunder, infringe a Valid Claim of a [*] in such country such that there is no
[*] being [*] in such country, the royalty applicable to Net Sales of such
Product in such country for the remainder of the Royalty Term shall be equal to
[*] of the weighted average royalty rate otherwise applicable to worldwide Net
Sales.

       

      
        [ * ] = 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.

         

      

      
        
           

        

        
          34

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                On
      a Product-by-Product and country-by-country basis, for any period during
      the Royalty Term, but after ten (10) years from the First Commercial Sale
      of such Product in such country, in which the sale of a Product in any
      country is covered by a Valid Claim and such Valid
      Claim is [*] and there is a [*] in such country, then [*] in such country
      for the remainder for the Royalty Term, except that [*] and the provisions
      of Section [*] and Section [*] shall not
apply.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                For
      any period during the Royalty Term in which the sale of a Product in any
      country is not covered by a Valid Claim or any Regulatory Exclusivity, the
      royalty applicable to Net Sales of such Product in such country during
      such period shall be equal to [*] of the weighted average royalty rate
      otherwise applicable to worldwide Net Sales. The reduction set forth in
      this Section 8.6(c) shall be [*] under this Agreement. This Section 8.6(c)
      shall not apply if Section [*] applies or Section [*]
    applies.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                By
      way of illustration of the Section 8.6(c) above, if Net Sales in a country
      not covered by a Valid Claim were $[*] and total Net Sales for that year
      were $[*], the following will apply.
[*]

              

      

       

      
        	
                8.7

              	
                Loss of Market
      Exclusivity. In the event of a Loss of Market Exclusivity in any
      country, for the remainder of the Royalty Term, the royalty applicable to
      Net Sales of such Product in such country shall be equal to [*] of the
      weighted average royalty rate described above on worldwide Net Sales. The
      reduction set forth in this Section 8.7 shall be [*] under this Agreement.
      This Section 8.7 shall not apply if Section [*] or Section [*] applies or
      Section [*] applies.

              

      

       

      
        	
                8.8

              	
                No Valid Claim or Regulatory
      Exclusivity and Loss of Market Exclusivity. For any period during
      the Royalty Term in which the sale of a Product in any country is not
      covered by a Valid Claim [*] and there is a Loss of Market Exclusivity in
      such country, the royalty applicable to Net Sales of such Product in such
      country during such period shall be equal to [*] of the weighted average
      royalty rate otherwise applicable to worldwide Net Sales. The reduction
      set forth in this Section 8.8 shall be [*] under this Agreement. This
      Section 8.8 shall not apply if Section [*] applies. 

              

      

       

      
        	
                8.9

              	
                Third Party
      Obligations.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Notwithstanding
      the provisions of this Section 8.9, Quark shall remain responsible for the
      payment of royalty, milestone and other payment obligations, if any, due
      to Third Parties under any Quark Patents or Quark Know-How which have been
      licensed to Quark and are sublicensed to Novartis under this Agreement,
      including under the Alnylam License, the Silence License, the UIC License
      and the Dharmacon License. All such payments shall be made promptly by
      Quark in accordance with the terms of the applicable license
      agreement(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.

       

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                In
      the event that Novartis reasonably determines that rights to intellectual
      property related to p53 or siRNA owned or controlled by a Third Party are
      required to research, Develop, manufacture, use, or Commercialize any
      Product under this Agreement (in addition to the Quark Technology and
      outside the intellectual property falling under the scope of sub-Section
      8.9(a)), Novartis shall have the right to negotiate to and acquire such
      rights through a license or otherwise and to deduct from the royalty
      payments due to Quark [*] of the royalties paid by Novartis to such Third
      Party; provided, however, that
      in no event shall the royalty amounts due to Quark from Novartis be
      reduced by more than [*] in any Calendar Quarter through this sub-Section
      8.9(b). [*] Quark agrees to fully cooperate with Novartis to acquire such
      rights.

              

      

       

      
        	
                8.10

              	
                Royalty Floor.
      Notwithstanding anything to the contrary in this Agreement, the
      application of Sections [*], individually or in combination, shall not
      during the Royalty Term reduce the royalty payment due to Quark below, on
      a country-by-country basis, an amount equal to [*], provided, however,
      that in any countries in which Loss of Market Exclusivity has occurred or
      if the sale of a Product is not covered by a Valid Claim, such [*] shall
      be [*] of the Net Sales. [*]

              

      

       

      
        	
                8.11

              	
                No Projections. Quark
      and Novartis acknowledge and agree that nothing in this Agreement shall be
      construed as representing an estimate or projection of anticipated sales
      of any Product, and that the Milestones and Net Sales levels set forth
      above or elsewhere in this Agreement or that have otherwise been discussed
      by the Parties are merely intended to define the Milestone Payments and
      royalty obligations to Quark in the event such Milestones or Net Sales
      levels are achieved. NEITHER QUARK NOR NOVARTIS MAKES ANY REPRESENTATION
      OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT NOVARTIS, ITS AFFILIATES OR
      SUBLICENSEES WILL BE ABLE TO SUCCESSFULLY DEVELOP OR COMMERCIALIZE ANY
      PRODUCT OR, IF COMMERCIALIZED, THAT ANY PARTICULAR NET SALES LEVEL OF SUCH
      PRODUCT WILL BE ACHIEVED. 

              

      

       

      
        	
                9.

              	
                REPORTS
      AND PAYMENT TERMS

              

      

       

      
        	
                9.1

              	
                Payment
      Terms.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Novartis
      shall provide Quark with written notice of the achievement of each
      clinical or regulatory Milestone within [*] after such Milestone is
      achieved. After receipt of such notice, Quark shall submit an invoice to
      Novartis substantially in the form of Exhibit C for
      the corresponding Milestone Payment, provided that
      no such invoice shall be submitted prior to the License Effective Date.
      Novartis shall make the corresponding Milestone Payment within [*] after
      receipt of such invoice. Within [*] after each Calendar Quarter during the
      term of this Agreement, Quark shall submit an invoice to Novartis
      substantially in the form of Exhibit C for
      the costs incurred during such Calendar Quarter providing the assistance
      under Sections 4.3(a), 4.3(c) and 4.3(d) of the Option Agreement and
      Sections 4.5 and 6.2(a)(ii) of this Agreement. Novartis shall pay such
      invoiced amount within [*] after receipt of such
  invoice.

              

      

      

      [ * ] = 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.

       

      
        
           

        

        
          36

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                Within
      [*] after each Calendar Quarter during the term of this Agreement
      following the First Commercial Sale of a Product, Novartis will provide to
      Quark a Sales & Royalty Report in the form of Exhibit B. Such
      Sales and Royalty Report will also inform Quark of the achievement of any
      commercial Milestone. If requested by Quark, Novartis shall provide to
      Quark additional information as reasonably necessary for Quark to fulfill
      its reporting obligations to its upstream licensors. After receipt of such
      report, Quark shall submit an invoice to Novartis substantially in the
      form of Exhibit
      C with respect to the royalty amount or Milestone Payment shown
      therein. Novartis shall pay such royalty amount or Milestone Payment
      within [*] after receipt of such
invoice.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                All
      payments from Novartis to Quark shall be made by wire transfer in US
      Dollars to the credit of such bank account as may be designated by Quark
      in this Agreement or in writing to Novartis. Any payment which falls due
      on a date which is not a Business Day may be made on the next succeeding
      Business Day.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                For
      the avoidance of doubt, no payments shall become due and payable and
      neither Party will be obligated to reimburse the other Party for any costs
      incurred by the other Party under or in connection with this Agreement
      until the License Effective Date.

              

      

       

      
        	
                9.2

              	
                Currency. All payments
      under this Agreement shall be payable in US dollars. When conversion of
      payments from any foreign currency is required to be undertaken by
      Novartis, the USD equivalent shall be calculated using Novartis’
      then-current standard exchange rate methodology as applied in its external
      reporting.

              

      

       

      
        	
                9.3

              	
                Taxes.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                If
      any taxes are required to be withheld by Novartis from a payment made to
      Quark pursuant to this Agreement, Novartis will: (i) deduct such taxes
      from the payment made to Quark; (ii) timely pay the taxes to the proper
      taxing authority for the account of Quark; (iii) send proof of payment to
      Quark; and (iv) reasonably assist Quark in its efforts to obtain a credit
      for such tax payment. Each Party agrees to reasonably assist the other
      Party in lawfully claiming exemptions from and/or minimizing such
      deductions or withholdings under an applicable tax treaty and any
      applicable law.

              

      

       

      [ * ] = 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.

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                If
      Novartis, its Affiliates, successors or sublicensees make payments under
      this Agreement that are subject to withholding tax and such withholding
      tax is in excess of the tax that would have been imposed on or deducted
      from such payment had it been made by [*] to [*] eligible to claim
      benefits under [*] between [*] and [*] (if any) in force at the time of
      the payment, the applicable payor shall increase its payment to the extent
      necessary so that after the deduction and withholding of the tax, Quark
      receives the amount that it would have received had such payment been made
      by [*] to [*] eligible to claim benefits under [*] between [*] and [*]. In
      the event Novartis exercises its rights or performs its obligations under
      this Agreement pursuant to the authority granted in Section 2.2 in a
      manner that would increase the tax burden on Quark in a manner other than
      withholding taxes provided for in this Section 9.3(b), Novartis shall
      compensate Quark for such additional tax
burden.

              

      

       

      
        	
                9.4

              	
                Late Payment. All
      payments under this Agreement which is not paid on the date due shall bear
      interest from the date due until paid at a rate equal to [*] per annum,
      effective for the date that payment was due, as published by
      [*].

              

      

       

      
        	
                9.5

              	
                Records and Audit
      Rights.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Each
      Party shall, and Novartis shall ensure that its sublicensees hereunder,
      keep complete, true and accurate books and records in accordance with its
      Accounting Standards in relation to this Agreement, including, with
      respect to Novartis and its sublicensees, in relation to Net Sales and
      royalties. Each Party will keep such books and records for at least [*]
      following the Calendar Quarter to which they pertain, provided that if [*]
      in accordance with Section 9.5(b) below, such [*] retention period for
      books and records by Novartis shall be
[*].

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Quark
      shall have the right for a period of [*] after receiving any Sales &
      Royalty Report to appoint an internationally-recognized independent
      accounting firm (which is reasonably acceptable to Novartis) (the “Auditor”) to inspect the
      relevant records of Novartis or its Affiliates to verify such reports,
      statements, records or books of accounts, as applicable. In the sole event
      [*] exercises its rights under the [*] to conduct an audit of Quark, Quark
      shall have the right, for a period of [*] after receiving any Sales &
      Royalty Report to appoint an Auditor to inspect the relevant records of
      Novartis or its Affiliates to the extent required or necessary under the
      [*]. In the event Novartis exercises the Option, [*]. Before beginning its
      audit, the Auditor shall execute an undertaking acceptable to Novartis
      pursuant to which the Auditor shall keep confidential all information
      reviewed during such audit. The Auditor shall have the right to disclose
      to Quark only its conclusions regarding any payments owed under this
      Agreement.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Novartis
      and its Affiliates shall make their records available for inspection by
      such Auditor during regular business hours at such place or places where
      such records are customarily kept, upon receipt of reasonable advance
      notice from Quark, solely to verify the accuracy of the Sales &
      Royalty Reports. Such inspection right shall not be exercised more than
      [*] and not more [*]. Quark agrees to hold in strict confidence all
      information received and all information learned in the course of any
      audit or inspection, except to the extent necessary to enforce its rights
      under this Agreement or if disclosure is required by law, regulation or
      judicial order.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          38

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (d)

              	
                The
      audit report and basis for any determination by an Auditor shall be made
      available for review and comment by Novartis following Novartis’ request,
      and Novartis shall have the right, at its expense, to request a further
      determination by such Auditor as to matters which Novartis disputes within
      [*] following receipt of such report. Novartis will provide Quark and the
      Auditor with a reasonably detailed statement of the grounds upon which it
      disputes any findings in the audit report and the Auditor shall undertake
      to complete such further determination within [*] after the dispute notice
      is provided by Novartis, which determination shall be limited to the
      disputed matters. If the Parties disagree as to results of such further
      determination, the dispute shall be subject to the dispute resolution
      procedure specified in Section
17.5.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Unless
      disputed, if an audit discloses any underpayment by Novartis, Novartis
      shall promptly pay to Quark the amount of any such underpayment, together
      with interest calculated pursuant to Section 9.4, within [*] of receiving
      the final audit report establishing such obligation. Quark shall pay for
      such audits, as well as its own expenses associated with such audit,
      except that in the event there is any upward adjustment in aggregate
      amounts payable for any year shown by such audit of more than [*] of the
      amount paid, Novartis shall pay for such
audit.

              

      

       

      
        	
                 
      

              	
                (f)

              	
                If
      Novartis discovers, whether by audit or otherwise that it has made an
      overpayment, it will deduct such overpayment in the Sales and Royalty
      Report for the next Calendar Quarter. To the extent that any overpayment
      cannot be fully deducted from the royalty payment for such Calendar
      Quarter, Novartis may deduct such amount from subsequent amounts due to
      Quark until the full amount that Novartis was entitled to receive is
      deducted. If the full amount cannot be deducted from subsequent amounts,
      Quark shall promptly pay to Novartis the amount of any such overpayment
      within [*] of receiving an invoice from
  Novartis.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Quark
      shall keep all books and records relating to any Development Costs
      required to be reimbursed by Novartis pursuant to the Option Agreement
      and/or this Agreement. Novartis shall have the right for the period of [*]
      following the Calendar Quarter to which they pertain to appoint an
      internationally-recognized independent accounting firm (which is
      reasonably acceptable to Quark) to inspect the relevant records of Quark
      or its Affiliates to verify such reports and statements, or books of
      account, as applicable. Before beginning the audit, the Auditor shall
      execute an undertaking acceptable to Quark pursuant to which the Auditor
      will keep confidential all information reviewed during such audit. The
      Auditor shall have the right to disclose to Novartis only its conclusions
      regarding any payment owed under this Agreement. Quark and its Affiliates
      shall make their records available for inspection by such Auditor during
      regular business hours at such place or places where such records are
      customarily kept, upon receipt of reasonable advance notice form Novartis.
      The provisions of Section 9.5(d) and Novartis rights and obligations
      contained therein shall apply mutatis mutandis to Quark in respect of any
      such audit report. Unless disputed, if an audit discloses any overpayment
      by Novartis, Quark shall promptly pay to Novartis the amount of any such
      overpayment, together with interest calculated pursuant to Section 9.4,
      within [*] of receiving the final audit report establishing such
      obligation.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          39

          
            

          

        

        
           

        

      

       

      
        	
                10.

              	
                INTELLECTUAL
      PROPERTY RIGHTS

              

      

       

      
        	
                10.1

              	
                Ownership of
      Inventions.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                All
      Know-How arising from the Parties’ activities under this Agreement,
      including any Patent Rights covering such inventions, made solely by
      employees or consultants of a Party shall be owned by such
      Party.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                All
      such Know-How arising from the Parties’ activities under this Agreement,
      including any Patent Rights covering such inventions, made jointly by
      employees or consultants of both Parties shall be owned jointly by the
      Parties as contemplated under US patent laws, including 35 U.S.C. § 262.
      Quark acknowledges and agrees that Quark’s rights in any such Know-How and
      Patent Rights are exclusively licensed to Novartis for the Quark Compounds
      and Products in the Field. Each Party may use, or license to any Third
      Party, any Joint Know-How and Joint Patents for any other purpose outside
      Quark Compounds and Products without accounting to or obtaining the
      approval of the other Party’s prior written consent. However, neither
      Party shall assign to any Third Party its interest in any Joint Patent
      without the other Party’s prior written consent (not to be unreasonably
      withheld).

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Determination
      of inventorship shall be made in accordance with US patent laws and any
      Patent Rights with a named inventor that is an employee or consultant of
      each Party will be jointly owned by the Parties.
  

              

      

       

      
        	
                10.2

              	
                Patent
      Prosecution.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Quark
      will be responsible for filing, prosecuting and maintaining the Quark
      Patents and any Joint Patents at its own cost and expense, through a Third
      Party law firm mutually agreed between the Parties. Novartis will fully
      cooperate with Quark in connection with the filing, prosecution and
      maintenance of the Quark Patents and any Joint Patents, including by
      providing access to relevant persons and executing all documentation
      reasonably requested by Quark. Quark will consult with Novartis and keep
      Novartis reasonably informed of the status of such Quark Patents and Joint
      Patents, it being understood and agreed that Quark shall make all
      decisions relating thereto.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          40

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                Quark
      will notify Novartis of its decision as to the countries of the world in
      which it elects to file, prosecute and maintain each Quark Patent and
      Joint Patent, and shall notify Novartis as to any decision to cease
      prosecution and/or maintenance of, or not to continue to pay the expenses
      of prosecution and/or maintenance of, any such Quark Patent or Joint
      Patent in any country in which it was filed. Quark will provide such
      notices at least [*] prior to any filing or payment due date, or any other
      due date that requires action, in connection with such Patent Right. In
      the event that Novartis wants to file patent applications in countries
      beyond those in which Quark decided to seek patent protection, or if
      Novartis wants to prosecute and maintain such Quark Patents or Joint
      Patents in countries where Quark has elected not to continue such
      prosecution or maintenance, Quark shall permit Novartis, at its sole
      discretion and expense but in the name of Quark (for Quark Patents) and in
      the name of Quark and Novartis jointly (for Joint Patents), to file or to
      continue prosecution or maintenance of such Quark Patent or Joint
      Patent.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                In
      the event that any patent or patent application included in Quark Patents
      or Joint Patents is challenged by a Third Party, including opposition or
      reexamination, the Parties agree to cooperate with each other in the
      defense of such patent or patent application, with each of Quark and
      Novartis responsible for [*] of the cost associated with such defense.
      Notwithstanding the foregoing, the defense of any patent challenges filed
      (e.g. as a counterclaim) in connection with a infringement action brought
      under Section 10.3 shall be controlled by the Party bringing such
      infringement action. In the event Novartis is controlling the defense of a
      challenge to a Quark Patent by reason of this Section 10.2(c), Novartis
      shall meet and confer with Quark on a periodic basis to discuss such
      defense and shall consider in good faith any issues raised by
      Quark.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                The
      Parties acknowledge that Quark shall have the right to separate any claims
      of a Quark Patent that are specific to the [*] of a Quark Patent and to
      file such claims in a separate patent application [*], including without
      limitation through the filing of one or more divisional applications at
      the request of Novartis pursuant to Section 6.8 of the Option Agreement.
      For the avoidance of doubt, any patent applications resulting from the
      foregoing process that do not claim any [*] (“[*] Patents”) shall be
      excluded from the definition of Quark Patents and Quark Technology for
      purposes of this Agreement and the Option Agreement. Quark shall keep
      Novartis reasonably informed of the status of such [*] Patents, it being
      understood and agreed that Quark shall make all decisions relating
      thereto.

              

      

       

      
        	
                10.3

              	
                Patent
      Infringement.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Each
      Party will promptly notify the other of any infringement by a Third Party
      of any of the Quark Technology or Joint Technology in the Field in the
      Territory of which it becomes aware, including any “patent certification”
      filed in the United States under 21 U.S.C. §355(b)(2) or 21 U.S.C.
      §355(j)(2) or similar provisions in other jurisdictions and of any
      declaratory judgment, opposition, or similar action alleging the
      invalidity, unenforceability or non-infringement of any of the Quark
      Patents or Joint Patents which relates to Products or Competing Products
      (collectively “Third
      Party 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.

      
        
           

        

        
          41

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                Novartis
      will have the first right to bring and control any legal action in
      connection with the Third Party Infringement at its own expense as it
      reasonably determines appropriate, and Quark shall have the right, at its
      own expense, to be represented in any such action by counsel of its own
      choice. If Novartis fails to either (i) bring an action or proceeding with
      respect to, or (ii) otherwise terminate, infringement of any Quark Patent
      or Joint Patent (A) within [*] following the notice of alleged
      infringement or (B) prior to [*] before the time limit,
      if any, set forth in the appropriate laws and regulations for the filing
      of such actions, whichever comes first, Quark shall have the right, upon
      written notice to Novartis, to bring and control any such action at its
      own expense and by counsel of its own choice, and Novartis shall have the
      right, at its own expense, to be represented in any such action by counsel
      of its own choice; provided, however, that
      if Novartis notifies Quark in writing prior to [*] before such time limit
      for the filing of any such action that Novartis intends to file such
      action before the time limit, then Novartis shall be obligated to file
      such action before the time limit, and Quark will not have the right to
      bring and control such action.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                At
      the request of the enforcing Party, the other Party shall provide
      reasonable assistance in connection therewith, including by executing
      reasonably appropriate documents, cooperating in discovery and joining as
      a party to the action if required.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                In
      connection with any such proceeding, Novartis shall not enter into any
      settlement admitting the invalidity of, or otherwise impairing Quark’s
      rights in, the Quark Patents without the prior written consent of Quark,
      which will not be unreasonably withheld or
  delayed.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Any
      recoveries resulting from such an action relating to a claim of Third
      Party Infringement shall be first applied against payment of each Party’s
      costs and expenses in connection therewith. In the event that Novartis
      brought such action, any remainder will be retained by (or if received by
      Quark, paid to) Novartis; provided, however, that
      any portion of such remainder that is attributable to lost profits with
      respect to the applicable Product(s) shall be [*]. In the event that Quark
      brought such action, any remainder shall be
[*].

              

      

       

      
        	
                 
      

              	
                (f)

              	
                Notwithstanding
      the foregoing, Novartis acknowledges that as the Silence License and the
      Alnylam License are non-exclusive, Novartis has no right to take actions
      against Third Party Infringement with respect to the Patent Rights covered
      by these two upstream licenses.

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Quark
      shall retain the exclusive right, at its own expense, to control the
      enforcement of Quark Technology for Third Party activities which do not
      relate to Products or Competing Products, provided, however, that, in the
      event that not all of the [*] claims in a particular Quark Patent have
      been separated into new application(s) (as described in Section 10.2(d)),
      Quark shall [*] in advance of commencing an enforcement action for such
      Quark Patent for Third Party activities that do not relate to Products or
      Competing Products, [*]. The parties agree that
  [*].

              

      

      

      [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

      
        
           

        

        
          42

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (h)

              	
                Quark
      shall also retain the exclusive right, at its own expense, to control the
      enforcement of the [*] Patents.

              

      

       

      
        	
                10.4

              	
                Trademarks. Novartis
      shall have the right to brand the Products using Novartis related
      trademarks and any other trademarks and trade names it determines
      appropriate for the Products, which may vary by country or within a
      country (“Product
      Marks”). Novartis shall own all rights in the Product Marks and
      register and maintain the Product Marks in the countries and regions it
      determines reasonably necessary.

              

      

       

      
        	
                10.5

              	
                Patent extensions.
      

              

      

       

      
        	
                 
      

              	
                (a)

              	
                If
      requested by Novartis, Quark shall cooperate in obtaining patent term
      restoration (under but not limited to Drug Price Competition and Patent
      Term Restoration Act), supplemental protection certificates or their
      equivalents, and patent term extensions with respect to the Quark Patents
      and/or Joint Patents in any country and/or region where applicable. Quark
      shall provide all reasonable assistance requested by Novartis, including
      permitting Novartis to proceed with applications for such in the name of
      Quark, if deemed appropriate by Novartis, and executing documents and
      providing any relevant information to
Novartis.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                [*]
      shall in [*] determine which, if any, Quark Patents and/or Joint Patents
      it will apply to extend.

              

      

       

      
        	
                10.6

              	
                [*]. The Parties
      acknowledge and agree that, for any given Product, [*], depending on a
      number of factors. As result, Quark may, in its discretion but subject to
      the remainder of this Section 10.6, decide on a Product-by-Product and
      country-by-country basis, whether [*] and may, in its discretion but
      subject to the remainder of this Section 10.6, decide to [*]. In the event
      that Novartis disagrees with any such decision by Quark in good faith, and
      the Parties are unable to resolve such dispute within a reasonable time
      period, then Parties agree to submit to a mutually agreed, independent [*]
      having relevant experience in the field of siRNA technology the question
      of whether [*] with respect to the applicable country(-ies) and
      Product(s). The decision of such [*] shall be binding on the Parties. The
      Parties shall share equally the fees and costs of such
  [*].

              

      

       

      
        	
                10.7

              	
                UIC License. Novartis
      acknowledges that the UIC License contains a provision whereby
      [*].

              

      

       

      
        	
                10.8

              	
                Patent Marking. Novartis
      agrees to mark the Product sold in the US with all applicable United
      States patent numbers which are required pursuant to the terms of the [*].
      All Products shipped or sold in other countries shall be marked in such a
      manner as to conform with patent laws and practices of the country of
      manufacture or sale. Immediately after the License Effective Date, Quark
      [*].

              

      

       

      
        	
                10.9

              	
                No Patent Challenge.
      Quark may [*], to the extent it relates to the Quark Patents in the
      territory [*], at any time on [*] written notice to Novartis (subject to
      the [*] cure period in Section 12.2) if Novartis its Affiliates and
      sublicenses, [*].

              

      

      

      [ * ] = 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.

      
        
           

        

        
          43

          
            

          

        

        
           

        

      

       

      
        	
                11.

              	
                CONFIDENTIALITY

              

      

       

      
        	
                11.1

              	
                Duty of
      Confidence.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Subject
      to the other provisions of this Article 11, all Confidential Information
      disclosed by a Party or its Affiliates under this Agreement and/or the
      Option Agreement will be maintained in confidence and otherwise
      safeguarded by the recipient Party and its Affiliates. The recipient Party
      may only use any such Confidential Information for the purposes of this
      Agreement and pursuant to the rights granted to the recipient Party under
      this Agreement. Subject to the other provisions of this Article 11, the
      recipient Party and its Affiliates shall hold as confidential such
      Confidential Information of the other Party or its Affiliates in the same
      manner and with the same protection (in no case less than reasonable care)
      as such recipient Party maintains its own confidential information.
      Subject to the other provisions of this Article 11, a recipient Party may
      only disclose Confidential Information of the other Party to: (i) its
      Affiliates and sublicensees; and (ii) employees, agents, contractors,
      consultants and advisers of the Party and its Affiliates and sublicensees,
      in each case to the extent reasonably necessary for the purposes of, and
      for those matters undertaken pursuant to, this Agreement, and, in the case
      of Quark, pursuant to Quark’s retained rights hereunder; provided that
      such Persons are bound to maintain the confidentiality of the Confidential
      Information in a manner consistent with the confidentiality provisions of
      this Agreement.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                With
      respect to Quark’s obligations under this Article 11, all Quark Know-How
      and Joint Know-How shall be considered Confidential Information of
      Novartis and Quark shall maintain in confidence and otherwise safeguard
      such Quark Know-How and Joint Know-How as such in accordance with this
      Article 11 (it being understood that the exceptions in sub-Sections
      11.2(b) and (c) shall not apply to Quark with respect to Quark Know-How or
      Joint Know-How), provided that
      Quark may use Quark Know-How and Joint Know-How for those matters
      undertaken pursuant to its retained rights
  hereunder.

              

      

       

      
        	
                11.2

              	
                Exceptions. The
      obligations under this Article 11 shall not apply to any information to
      the extent the recipient Party can demonstrate by competent evidence that
      such information:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                is
      (at the time of disclosure) or becomes (after the time of disclosure)
      known to the public or part of the public domain through no breach of this
      Agreement by the recipient Party or its
  Affiliates;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                was
      known to, or was otherwise in the possession of, the recipient Party or
      its Affiliates prior to the time of disclosure by the disclosing Party or
      any of its Affiliates;

              

      

      

      [ * ] = 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.

      
        
           

        

        
          44

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (c)

              	
                is
      disclosed to the recipient Party or an Affiliate on a non-confidential
      basis by a Third Party who is entitled to disclose it without breaching
      any confidentiality obligation to the disclosing Party or any of its
      Affiliates; or

              

      

       

      
        	
                 
      

              	
                (d)

              	
                is
      independently developed by or on behalf of the recipient Party or its
      Affiliates, as evidenced by written records, without access or reference
      to the Confidential Information disclosed by the disclosing Party or its
      Affiliates under this Agreement.

              

      

       

      Specific
aspects or details of Confidential Information shall not be deemed to be within
the public domain or in the possession of the recipient Party merely because the
Confidential Information is embraced by more general information in the public
domain or in the possession of the recipient Party. Further, any combination of
Confidential Information shall not be considered in the public domain or in the
possession of the recipient Party merely because individual elements of such
Confidential Information are in the public domain or in the possession of the
recipient Party unless the combination and its principles are in the public
domain or in the possession of the recipient Party.

       

      
        	
                11.3

              	
                Authorized
      Disclosures.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                In
      addition to disclosures allowed under Section 11.2, each Party, its
      Affiliates and sublicensees may disclose the other Party’s Confidential
      Information to the extent such disclosure is necessary in the following
      instances: (i) filing or prosecuting Patent Rights as contemplated by this
      Agreement; (ii) in connection with Regulatory Filings for Products; (iii)
      prosecuting or defending litigation as contemplated by this Agreement;
      (iv) complying with applicable court orders or governmental regulations;
      or (v) to the extent otherwise necessary or appropriate in order to
      fulfill its obligations or exercise its rights
  hereunder.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                In
      addition, Novartis and its Affiliates and sublicensees may disclose
      Confidential Information of Quark to Third Parties as may be necessary or
      useful in connection with the research, Development, manufacture or
      Commercialization of the Quark Compounds and/or Product(s) as contemplated
      by this Agreement, including in connection with sublicensing and
      subcontracting transactions, provided that such disclosee are bound by
      obligations of confidentiality and non-use at least as equivalent in scope
      as those set forth in this Article 11 prior to 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.

      
        
           

        

        
          45

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (c)

              	
                (A)
      Quark and its Affiliates may disclose Confidential Information of Novartis
      to any bona fide potential or actual investor other than (i) any potential
      investor that is (or is an Affiliate of) a healthcare company and (ii) any
      potential investor in which the sole limited partner is a healthcare
      company, subject to entering into the confidentiality obligations
      described below. (B) Quark may disclose the terms of this Agreement
      (excluding financial terms) to potential acquirors, subject to entering
      into the confidentiality obligations described below provided that
      (i) any such potential acquirors have been formally accepted by Quark in
      writing to conduct full due diligence for the purpose of the potential
      acquisition; (ii) such due diligence in connection with the terms of this
      Agreement shall be conducted at the offices of an
      internationally-recognized law firm acceptable to Novartis and (iii) Quark
      has notified Novartis in writing of the disclosure for the purpose of the
      conduct of the due diligence by the potential acquiror without obligation
      to identify such potential acquiror(s). In the case of a potential
      acquiror and provided Quark has fulfilled the conditions described above
      under (B)(i), (ii) and (iii) above, Quark may disclose the financial terms
      of this Agreement to a Third Party advisor to such potential acquiror,
      subject to entering into the confidentiality obligations described below.
      Such advisor may not disclose the financial terms of this Agreement to the
      potential acquiror but shall be permitted to review the valuation
      assumptions of the potential acquiror and advise the potential acquiror
      only whether the financial value of this transaction to Quark, taken as a
      whole, is materially consistent with the assumptions made by the potential
      acquiror or is materially superior to, or materially inferior to, such
      assumptions. Any disclosure made by Quark pursuant to this Section 11.3(c)
      may only be made to persons who have, prior to any disclosure, agreed in
      writing to be bound by confidentiality obligations no less strict than
      those set forth herein, including without limitation, obligations to use
      the confidential information so disclosed for the sole purpose of
      assessing a potential investment and/or acquisition of Quark as described
      under this Section 11.3(c).

              

      

       

      
        	
                 
      

              	
                (d)

              	
                In
      the event the recipient Party is required to disclose Confidential
      Information of the disclosing Party by law or in connection with bona fide
      legal process, such disclosure shall not be a breach of this Agreement;
      provided
      that the recipient Party (i) informs the disclosing Party as soon as
      reasonably practicable of the required disclosure; (ii) limits the
      disclosure to the required purpose; and (iii) at the disclosing Party’s
      request and expense, assists in an attempt to object to or limit the
      required disclosure.

              

      

       

      
        	
                11.4

              	
                Ongoing Obligation for
      Confidentiality. Upon early termination of this Agreement for any
      reason, each Party and its Affiliates shall immediately return to the
      other Party or destroy any Confidential Information disclosed by the other
      Party, except for one copy which may be retained in its confidential files
      for archive purposes.

              

      

       

      
        	
                12.

              	
                TERM
      AND TERMINATION

              

      

       

      
        	
                12.1

              	
                Term. The term of this
      Agreement will commence upon the License Effective Date and continue, on a
      Product-by-Product and country-by-country basis, until the expiration of
      the royalty obligations of Novartis with respect to the applicable
      Product, unless earlier terminated as permitted by this Agreement. Upon
      expiration of the term of this Agreement, on a Product-by-Product and
      country-by-country basis, the licenses granted to Novartis hereunder shall
      continue in effect, as fully paid-up (except as set forth in the last
      sentence in Section 8.5(d)), sub-licensable, royalty-free, transferable,
      perpetual and irrevocable with respect to such Product and such
      country.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          46

          
            

          

        

        
           

        

      

       

      
        	
                12.2

              	
                Termination for
      Cause. If
      either Novartis or Quark is in material breach of any material obligation
      hereunder, the non-breaching Party may give written notice to the
      breaching Party specifying the claimed particulars of such breach, and in
      the event such material breach is not cured within [*] after such notice,
      the non-breaching Party shall have the right thereafter to terminate this
      Agreement immediately by giving written notice to the breaching Party to
      such effect; provided, however, that
      if such breach is capable of being cured but cannot be cured within such
      [*] period and the breaching Party initiates actions to cure such breach
      within such period and thereafter diligently pursues such actions, the
      breaching Party shall have such additional period as is reasonable in the
      circumstances to cure such breach. In the event that arbitration is
      commenced with respect to any alleged breach hereunder, no purported
      termination of this Agreement pursuant to this Section 12.2 shall take
      effect until the resolution of such arbitration. Any termination by any
      Party under this Section 12.2 and the effects of termination provided
      herein shall be without prejudice to any damages or other legal or
      equitable remedies to which it may be entitled from the other
      Party.

              

      

       

      
        	
                12.3

              	
                Termination for Insolvency.
      Either Quark or Novartis may terminate this Agreement without
      notice if an Insolvency Event occurs in relation to the other Party. In
      any event when a Party first becomes aware of the likely occurrence of any
      Insolvency Event in regard to that Party, it shall promptly so notify the
      other Party in sufficient time to give the other Party sufficient notice
      to protect its interests under this
Agreement.

              

      

       

      
        	
                12.4

              	
                Termination by Novartis Without
      Cause. Novartis may terminate this Agreement without cause at any
      time after the License Effective Date in its entirety or on a
      Product-by-Product or country-by-country basis at any time on [*] prior
      written notice.

              

      

       

      
        	
                12.5

              	
                Termination by Quark. In
      the event that Novartis does not elect to make the payment described in
      Section 8.2(a)(ii), 8.2(a)(iii), 8.2(a)(iv), 8.2(a)(v), 8.2(b)(i),
      8.2(b)(ii), 8.2(c), 8.2(d)(i), 8.2(d)(ii), 8.2(e), 8.2(f)(i), 8.2(f)(ii),
      8.2(f)(iii), 8.2(f)(iv), 8.2(f)(v) or 8.2(f)(vi), as applicable, then
      Quark shall have the right to terminate this Agreement in its entirety, by
      notice in writing within [*] after the [*] period after the date on which
      [*] have been accepted by Novartis as set forth in Section
      5.1(c).

              

      

       

      
        	
                12.6

              	
                Rights in
      Bankruptcy.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                All
      licenses granted under or pursuant to this Agreement are, and will
      otherwise be deemed to be, for purposes of Section 365(n) of the US
      Bankruptcy Code (the “Code”) and any similar
      laws in any other country in the Territory, licenses of rights to
      “intellectual property” as defined under Section 101 of the Code. The
      Parties agree that Novartis, as licensee of such rights under this
      Agreement, will retain and may fully exercise all of its protections,
      rights and elections under the Code and any similar laws in any other
      country in the Territory. The Parties further agree that, in the event of
      the commencement of a bankruptcy proceeding by or against any Quark under
      the Code and any similar laws in any other country in the Territory,
      Novartis will be entitled to a complete duplicate of (or complete access
      to, as appropriate) any such intellectual property and all embodiments of
      such intellectual property, and the same, if not already in its
      possession, will be promptly delivered to it (i) upon any such
      commencement of a bankruptcy proceeding upon its written request therefor,
      unless Quark elects to continue to perform all of its obligations under
      this Agreement, or (ii) if not delivered under (i) above, upon written
      request therefor by Novartis following the rejection of this Agreement by
      or on behalf of Quark.

              

      

      

      [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

      
        
           

        

        
          47

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (b)

              	
                All
      rights, powers and remedies of Novartis provided for in this Section 12.6
      are in addition to and not in substitution for any and all other rights,
      powers and remedies now or hereafter existing at law or in equity
      (including, without limitation, under the Code and any similar laws in any
      other country in the Territory). In the event of the Bankruptcy of Quark,
      Novartis, in addition to the rights, power and remedies expressly provided
      herein, shall be entitled to exercise all other such rights and powers and
      resort to all other such remedies as may now or hereafter exist at law or
      in equity (including, without limitation, under the Code and any similar
      laws in any other country in the Territory). The Parties agree that they
      intend the following Novartis rights to extend to the maximum extent
      permitted by law, including, without limitation, for purposes of the Code
      and any similar laws in any other country in the Territory: (i) the right
      of access to any intellectual property (including all embodiments thereof)
      of Quark, or any Third Party with whom Quark contracts to perform an
      obligation of Quark under this Agreement which is necessary for the
      Development, registration, manufacture and/or Commercialization of
      Products in the Territory; (ii) the right to contract directly with any
      Third Party described in (i) to complete the contracted work, and (iii)
      the right to cure any breach of or default under any such agreement with a
      Third Party and set off the costs thereof against amounts payable to Quark
      under this Agreement.

              

      

       

      
        	
                13.

              	
                EFFECT
      OF TERMINATION

              

      

       

      
        	
                13.1

              	
                Termination by Novartis for
      Cause. Upon termination of this Agreement by Novartis pursuant to
      Sections 12.2 or 12.3:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                the
      licenses and other rights granted by Quark to Novartis under the Quark
      Technology and Quark’s interest in any Joint Technology will remain in
      effect in accordance with their respective terms; provided, however,
      that

              

      

       

      (i)         
  the license granted to Novartis in Section 2.1 shall become a
perpetual and irrevocable license;

       

       

      (ii)           Novartis
s shall continue to make all Milestone Payments and royalty payments in
accordance with the terms of this Agreement, except that solely with respect to
a termination under Section 12.2 for a material breach by Quark that [*], the
amount of any future Milestone Payments and royalties applicable to future Net
Sales of Product shall be reduced by [*], provided that such reduction in
royalties shall in no event reduce the royalty payment due to Quark to an amount
less than [*].  Such reduction in Milestone Payments and royalties
shall be credited against any monetary damages obtained by Novartis in a final
judgment or arbitration award as a result of Quark’s breach. [*]

       

      [ * ] = 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.

      
        
           

        

        
          48

          
            

          

        

        
           

        

      

       

      (iii)          Novartis
shall have the right to offset the full amount of any remaining monetary damages
(i.e. in excess of the reduction set forth in subsection (ii) above) against any
Milestone Payments and/or royalties; 

       

      
        	
                 
      

              	
                (b)

              	
                Quark
      and Novartis shall continue to have the right to prosecute, maintain,
      enforce and defend the Quark Patents and Joint Patents as specified in
      Section 10.2;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Section
      2.3 shall survive
      with respect to Quark in accordance with its terms on a Product-by-Product
      and country-by-country basis until the expiration of the royalty
      obligations of Novartis; and

              

      

       

      
        	
                 
      

              	
                (d)

              	
                Except
      as set forth in this Section 13.1 and in Section 13.3, the rights and
      obligations of the Parties hereunder shall terminate as of the date of
      such termination.

              

      

       

      In the
event that this Agreement is terminated with respect to only certain Product(s)
or certain country(ies), the provisions of this Section 13.1 shall apply only
with respect to the terminated Product(s) or country(ies), as
applicable.

       

      
        	
                13.2

              	
                Termination by Quark for Cause
      or by Novartis Without Cause. Upon termination of this Agreement by
      Quark pursuant to Sections 12.2, 12.3 or 12.5 or by Novartis pursuant to
      Section 12.4:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Any
      licenses and other rights granted by either Party to the other will
      terminate and revert to the granting
Party;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Novartis
      will grant Quark a right of first negotiation, exercisable by written
      notice to Novartis at any time within [*] to obtain an exclusive
      worldwide, royalty-bearing license, with the right to sublicense, under
      any Patent Rights of Novartis, including Novartis’ interest in Joint
      Patents, to develop, make, have made, use, sell, have sold, offer for sale
      and import such Products as are then being marketed or developed by
      Novartis on commercially reasonable royalty terms to be negotiated in good
      faith by the Parties for up to an additional [*] following exercise of
      such right of first negotiation;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                any
      exclusive license granted to Quark as described in the preceding
      sub-Section (b) will include the right to use clinical and regulatory data
      and information generated by Novartis for regulatory purposes relating to
      the applicable Products;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                any
      exclusive license agreement entered into as described in sub-Section (b)
      will provide for Novartis to transfer and assign to Quark all of its
      right, title and interest in and to all US and foreign regulatory
      submissions and Regulatory Approvals with respect to the applicable
      Products and all drug master files and drug dossiers with respect to the
      applicable Products (other than those related to Novartis’ manufacturing
      facilities);

              

      

      

      [ * ] = 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.

      
        
           

        

        
          49

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (e)

              	
                Quark
      shall have the right, but not the obligation, to purchase from Novartis
      some or all of the Quark Compound and/or Product then in Novartis’
      inventory at a price equal to [*]. Quark shall notify Novartis whether
      Quark elects to exercise such purchase right within [*] after the grant of
      a license to Quark pursuant to Section 13.2(b), or, where no such
      negotiation takes place within [*] after the date of such
      termination;

              

      

       

      
        	
                 
      

              	
                (f)

              	
                If
      this Agreement is terminated by Novartis on a country-by-country basis,
      then Novartis covenants that Novartis shall cease (and not restart)
      Development and Commercialization of the Quark Compounds and/or Products
      in any country where this Agreement has been terminated;
    and

              

      

       

      
        	
                 
      

              	
                (g)

              	
                Except
      as set forth in this Section 13.2 and in Section 13.3, the rights and
      obligations of the Parties hereunder shall terminate as of the date of
      such termination.

              

      

       

      In the
event that this Agreement is terminated with respect to only certain Product(s)
or certain country(ies), the provisions of this Section 13.2 shall apply only
with respect to the terminated Product(s) or country(ies), as
applicable.

       

      
        	
                13.3

              	
                Survival. Expiration or
      termination of this Agreement shall not relieve the Parties of any
      obligation accruing prior to such expiration or termination. Without
      limiting the foregoing, the provisions of Sections 1, 9.1 – 9.3 (to the
      extent that Novartis continues to be obligated to pay Milestone Payments
      and/or royalties to Quark pursuant to the applicable provisions of Article
      13), 9.5, 10.1, 10.3 – 10.5 (to the extent that the licenses granted to
      Novartis survive pursuant to the applicable provisions of Article 13),
      10.8 – 10.9 (to the extent that the licenses granted to Novartis survive
      pursuant to the applicable provisions of Article 13 and the relevant
      upstream licenses are still in effect), 11, 13, 15, 16 and 17 shall survive
      expiration or termination of this Agreement; provided, however, that in
      the event of termination of this Agreement in its entirety by Quark
      pursuant to Section 12.2, 12.3 or 12.5, or by Novartis in its entirety
      pursuant to Section 12.4, Sections 11.1(b), 11.3(b) and 16.3, as well as
      the proviso in the first sentence of Section 16.2 and the entire second
      sentence of Section 16.2, shall not survive. The provisions of Article 11
      (Confidentiality) shall survive the termination or expiration of this
      Agreement for a period of [*].

              

      

       

      
        	
                13.4

              	
                Termination Not Sole
      Remedy. Termination is not the sole remedy under this Agreement
      and, whether or not termination is effected and notwithstanding anything
      contained in this Agreement to the contrary, all other remedies will
      remain available except as agreed to otherwise
  herein.

              

      

      

      [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

      
        
           

        

        
          50

          
            

          

        

        
           

        

      

       

      
        	
                14.

              	
                REPRESENTATIONS,
      WARRANTIES AND COVENANTS

              

      

       

      
        	
                14.1

              	
                Representations and Warranties
      by Each Party.  Each Party represents and warrants to the
      other as of the Execution Date that:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                it
      is a corporation duly organized, validly existing, and in good standing
      under the laws of its jurisdiction of
formation;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                it
      has full corporate power and authority to execute, deliver, and perform
      this Agreement, and has taken all corporate action required by law and its
      organizational documents to authorize the execution and delivery of this
      Agreement and the consummation of the transactions contemplated by this
      Agreement;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                this
      Agreement constitutes a valid and binding agreement enforceable against it
      in accordance with its terms;

              

      

       

      
        	
                 
      

              	
                (d)

              	
                other
      than compliance with the HSR Act, all consents, approvals and
      authorizations from all governmental authorities or other Third Parties
      required to be obtained by such Party in connection with this Agreement
      have been obtained; and

              

      

       

      
        	
                 
      

              	
                (e)

              	
                the
      execution and delivery of this Agreement and all other instruments and
      documents required to be executed pursuant to this Agreement, and the
      consummation of the transactions contemplated hereby and thereby do not
      and shall not (i) conflict with or result in a breach of any provision of
      its organizational documents, (ii) result in a breach of any agreement to
      which it is a party; or (iii) violate any
law.

              

      

       

      
        	
                14.2

              	
                Representations and Warranties
      by Quark. Quark represents and warrants to Novartis as of the
      Execution Date that:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Exhibit A sets
      forth a complete and accurate list of (i) all Quark Patents in existence
      as of the Execution Date, indicating the owner, Quark and/or co-owner(s)
      thereof if any such Quark Patent is not solely owned by Quark and (ii) all
      agreements that are in force as of the Execution Date under which any of
      the Quark Patents are licensed to
Quark;

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Quark
      is the sole and exclusive owner, or exclusive licensee of all of the Quark
      Patents (other than the Patent Rights licensed under the Silence License
      and Alnylam License) existing on the Execution Date free from Encumbrances
      and is listed in the records of the appropriate governmental agencies as
      the sole and exclusive owner of record of each registration, grant and
      application included in the Quark Patents that is owned by
      Quark;

              

      

       

      
        	
                 
      

              	
                (c)

              	
                all
      of its employees, officers, and consultants involved or to be involved in
      the research or Development of the Quark Compound or Product have executed
      agreements or have existing obligations under applicable laws requiring
      assignment to Quark of all inventions made during the course of and as the
      result of their association with Quark and obligating the individual to
      maintain as confidential Quark’s Confidential Information as well as
      confidential information of other parties (including Novartis and its
      Affiliates) which such individual may receive, to the extent required to
      support Quark’s obligations under this
  Agreement;

              

      

      

      [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

      
        
           

        

        
          51

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (d)

              	
                Quark
      has the right to grant to Novartis the licenses under the Quark Patents
      and Quark Know-How that it purports to grant
  hereunder;

              

      

       

      
        	
                 
      

              	
                (e)

              	
                Quark
      has the right to use and disclose and to enable Novartis to use and
      disclose (in each case under appropriate conditions of confidentiality)
      the Quark Know-How within the scope of the license(s) granted to Novartis
      hereunder, free from Encumbrances;

              

      

       

      
        	
                 
      

              	
                (f)

              	
                [*],
      there are no claims, challenges, oppositions, interference or other
      proceedings pending or threatened against the Quark Patents, and Quark has
      filed and prosecuted patent applications within the Quark Patents in good
      faith and complied with all duties of disclosure with respect
      thereto;

              

      

       

      
        	
                 
      

              	
                (g)

              	
                [*],
      there are no claims, challenges or other proceedings pending or threatened
      against any of the Quark Know-How;

              

      

       

      
        	
                 
      

              	
                (h)

              	
                [*],
      Quark has not committed any act, or omitted to commit any act, that is
      reasonably likely to cause the Quark Patents to expire prematurely or be
      declared invalid or unenforceable;

              

      

       

      
        	
                 
      

              	
                (i)

              	
                all
      application, registration, maintenance and renewal fees in respect of the
      Quark Patents as of the Execution Date have been paid (to the extent due)
      and all necessary documents and certificates have been filed with the
      relevant agencies for the purpose of maintaining the Quark
      Patents;

              

      

       

      
        	
                 
      

              	
                (j)

              	
                Quark
      has not granted to any Third Party, including any academic organization or
      agency, any rights to Commercialize the Quark Compounds or Product and has
      disclosed any agreement with a Third Party pursuant to which such Third
      Party has been granted rights to research or Develop the Quark Compounds
      or Product ;

              

      

       

      
        	
                 
      

              	
                (k)

              	
                As
      of the License Effective Date, Quark is not aware, after reasonable
      inquiry, of any Third Party rights or technology not included in the Quark
      Technology that is necessary and/or used for the Development of the Quark
      Compounds and/or Products as they exist as of the License Effective
      Date;

              

      

       

      
        	
                 
      

              	
                (l)

              	
                [*]
      the research, Development, registration, manufacture, use or
      Commercialization of the Quark Compounds or Product as they exist as of
      the License Effective Date do not infringe the Patent rights of any Third
      Party and the research, Development, use and manufacture of the Quark
      Compounds and Product has been conducted by Quark without infringing the
      Patent Rights or misappropriating the Know-How of any Third Party, and
      Quark has not received any written notice alleging such infringement or
      misappropriation;

              

      

      

      [ * ] = 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.

      
        
           

        

        
          52

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (m)

              	
                Quark
      has not initiated or been involved in any proceedings or claims in which
      it alleges that any Third Party is or was infringing or misappropriating
      any Quark Technology, nor have any such proceedings been threatened by
      Quark, nor does Quark know of any valid basis for any such
      proceedings;

              

      

       

      
        	
                 
      

              	
                (n)

              	
                no
      officer or employee of Quark is subject to any agreement with any other
      Third Party which requires such officer or employee to assign any interest
      in any Quark Technology relating to the Quark Compounds or Product to any
      Third Party;

              

      

       

      
        	
                 
      

              	
                (o)

              	
                Quark
      has taken all reasonable precautions to preserve the confidentiality of
      the Quark Know-How, to the extent such Quark Know-How is not generally
      known in the relevant technical
field;

              

      

       

      
        	
                 
      

              	
                (p)

              	
                Quark
      has not entered into a government funding relationship that would result
      in rights to any Quark Compounds or Product residing in the US Government,
      National Institutes of Health, National Institute for Drug Abuse or other
      agency, and the licenses granted hereunder are not subject to overriding
      obligations to the US Government as set forth in Public Law 96-517 (35
      U.S.C. 200-204), as amended, or any similar obligations under the laws of
      any other country;

              

      

       

      
        	
                 
      

              	
                (q)

              	
                Quark
      has not granted any Third Party rights that would otherwise interfere or
      be inconsistent with Novartis’ rights hereunder in a material manner, and
      there are no agreements or arrangements to which Quark or any of its
      Affiliates is a party relating to the Products, Quark Compounds, Quark
      Patents, or Quark Know-How that limit or are reasonably likely to limit
      the rights granted to Novartis under this Agreement or that restrict or
      are reasonably likely to result in a restriction on Novartis’ ability to
      Develop, manufacture, register, use or Commercialize the Quark Compounds
      and the Products in the Territory;

              

      

       

      
        	
                 
      

              	
                (r)

              	
                Quark
      has provided Novartis with a redacted copy of each agreement under which
      it obtains rights to any of the Quark Patents, which copy sets forth all
      of Quark’s rights and obligations with regard to such
      agreement;

              

      

       

      
        	
                 
      

              	
                (s)

              	
                [*],
      neither Quark nor any of its Affiliates has committed any act which
      amounts to a material breach of any of Quark’s obligations under any
      agreement under which it obtains rights to any of the Quark
      Technology;

              

      

       

      
        	
                 
      

              	
                (t)

              	
                neither
      Quark nor, to the knowledge of Quark, any employee, agent or subcontractor
      of Quark involved in the research and Development of the Quark Compounds
      or the Products has been debarred under Subsection (a) or (b) of Section
      306 of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 335a);
      and

              

      

       

      
        	
                 
      

              	
                (u)

              	
                Notwithstanding
      anything to the contrary contained in this Agreement, Quark has [*] and
      [*] that would be [*] to [*] in connection with this Agreement or the
      transactions contemplated herein. [*], [*] provided by Quark to Novartis
      regarding the Quark Compounds and Product as part of Novartis’ due
      diligence under the Option Agreement are true and complete in all material
      respects.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          53

          
            

          

        

        
           

        

      

       

      
        	
                14.3

              	
                Covenants.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Quark
      covenants and agrees that:

              

      

       

      
        	
                 
      

              	
                (i)

              	
                it
      will not grant any interest in the Quark Technology or Joint Technology
      which is inconsistent with the terms and conditions of this Agreement, nor
      shall Quark assign its right, title or interest in or to the Quark
      Technology or Joint Technology to any Third Party and will use all
      reasonable precautions to preserve the confidentiality of the Quark
      Know-How and the Joint Know-How;

              

      

       

      
        	
                 
      

              	
                (ii)

              	
                it
      will not grant any Third Party, including any academic organization or
      agency, any rights to the Quark Compounds or Product (other than research
      rights with the prior approval of the
JSC);

              

      

       

      
        	
                 
      

              	
                (iii)

              	
                it
      will not amend or modify the terms of any agreement under which it obtains
      rights to any of the Quark Technology in a way that materially affects
      Novartis’ rights under this Agreement without the prior written consent of
      Novartis;

              

      

       

      
        	
                 
      

              	
                (iv)

              	
                it
      will not exercise any right to terminate any agreement under which it
      obtains rights to any of the Quark Technology, provided such rights fall
      with the scope of the license(s) granted to Novartis hereunder, without
      the prior written consent of Novartis, except as provided in Section
      10.6;

              

      

       

      
        	
                 
      

              	
                (v)

              	
                Quark
      and its Affiliates will comply with, perform and observe in all material
      respects all obligations under each agreement under which it obtains
      rights to any of the Quark Technology, and will not commit any act or fail
      to perform any obligation which would amount to a default or event of
      default or which, with the giving of notice, the lapse of time or the
      happening of any other event or condition would become a default or event
      of default thereunder or give rise to any right of the applicable
      counterparty to terminate any such agreement or any part
      thereof;

              

      

       

      
        	
                 
      

              	
                (vi)

              	
                if,
      at any time after execution of this Agreement, it becomes aware that it or
      any employee, agent or subcontractor of Quark who participated, or is
      participating, in the performance of any activities hereunder is on, or is
      being added to the FDA Debarment List or any of the three (3) FDA Clinical
      Investigator Restriction Lists referenced in Section 14.3(b), it will
      provide written notice of this to Novartis within two (2) business days of
      its becoming aware of this fact;
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.

      
        
           

        

        
          54

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (vii)

              	
                it
      shall maintain insurance with respect to its activities and obligations
      under this Agreement in such amounts as are commercially reasonable in the
      industry for companies conducting similar business and shall require any
      of its Affiliates undertaking activities under this Agreement to do the
      same.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Each
      Party covenants that (i) neither such Party nor, to the actual knowledge
      of such Party, any employee, agent or subcontractor of such Party to be
      involved in the Development of the Quark Compounds or the Products, has
      been debarred under Subsection (a) or (b) of Section 306 of the Federal
      Food, Drug and Cosmetic Act (21 U.S.C. 335a); (ii) no Person who is known
      by such Party to have been debarred under Subsection (a) or (b) of Section
      306 of said Act will be employed by such Party in the performance of any
      activities hereunder; and (iii) to the actual knowledge of such Party, no
      Person on any of the FDA clinical investigator enforcement lists
      (including, but not limited to, the (1) Disqualified/Totally Restricted
      List, (2) Restricted List and (3) Adequate Assurances List) will
      participate in the performance of any activities
  hereunder.

              

      

       

      
        	
                14.4

              	
                No Other Warranties.
      EXCEPT AS EXPRESSLY STATED IN THIS ARTICLE 14, (A) NO REPRESENTATION,
      CONDITION OR WARRANTY WHATSOEVER IS MADE OR GIVEN BY OR ON BEHALF OF
      NOVARTIS OR QUARK; AND (B) ALL OTHER CONDITIONS AND WARRANTIES WHETHER
      ARISING BY OPERATION OF LAW OR OTHERWISE ARE HEREBY EXPRESSLY EXCLUDED,
      INCLUDING ANY CONDITIONS AND WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
      PARTICULAR PURPOSE OR
NON-INFRINGEMENT.

              

      

       

      
        	
                15.

              	
                INDEMNIFICATION;
      LIABILITY

              

      

       

      
        	
                15.1

              	
                Indemnification by
      Quark. Quark shall indemnify and hold Novartis, its Affiliates and
      sublicensees, and their respective officers, directors and employees
      (“Novartis
      Indemnitees”) harmless from and against any Claims against them [*]
      from:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                [*];

              

      

       

      
        	
                 
      

              	
                (b)

              	
                [*];
      or

              

      

       

      
        	
                 
      

              	
                (c)

              	
                [*];

              

      

       

      provided, however, that Quark
[*].

      

      [ * ] = Certain confidential information
contained in this document, marked by brackets, has been omitted and filed
separately with the Securities and Exchange Commission pursuant to Rule 406 of
the Securities Act of 1933, as amended.

      
        
           

        

        
          55

          
            

          

        

        
           

        

      

       

      
        	
                15.2

              	
                Indemnification by
      Novartis. Novartis shall indemnify and hold Quark, its Affiliates,
      and their respective officers, directors and employees (“Quark Indemnitees”)
      harmless from and against any Claims against them [*]
  from:

              

      

       

      
        	
                 
      

              	
                (a)

              	
                [*];

              

      

       

      
        	
                 
      

              	
                (b)

              	
                [*];
      or

              

      

       

      
        	
                 
      

              	
                (c)

              	
                [*];

              

      

       

      provided, however, that
Novartis [*].

       

      
        	
                15.3

              	
                Indemnification
      Procedure.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                For
      the avoidance of doubt, all indemnification claims in respect of a
      Novartis Indemnitee or Quark Indemnitee shall be made solely by Novartis
      or Quark, respectively.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                A
      Party seeking indemnification hereunder (“Indemnified Party”)
      shall notify the other Party (“Indemnifying Party”) in
      writing reasonably promptly after the assertion against the Indemnified
      Party of any Claim or fact in respect of which the Indemnified Party
      intends to base a claim for indemnification hereunder (“Indemnification Claim
      Notice”), but the failure or delay to so notify the Indemnifying
      Party shall not relieve the Indemnifying Party of any obligation or
      liability that it may have to the Indemnified Party, except to the extent
      that the Indemnifying Party demonstrates that its ability to defend or
      resolve such Claim is adversely affected thereby. The Indemnification
      Claim Notice shall contain a description of the claim and the nature and
      amount of the Claim (to the extent that the nature and amount of such
      Claim is known at such time). Upon the request of the Indemnifying Party,
      the Indemnified Party shall furnish promptly to the Indemnifying Party
      copies of all correspondence, communications and official documents
      (including court documents) received or sent in respect of such
      Claim.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                Subject
      to the provisions of sub-Sections (d) and (e) below, the Indemnifying
      Party shall have the right, upon written notice given to the Indemnified
      Party within [*] after receipt of the Indemnification Claim Notice to
      assume the defense and handling of such Claim, at the Indemnifying Party’s
      sole expense, in which case the provisions of sub-Section (d) below shall
      govern. The assumption of the defense of a Claim by the Indemnifying Party
      [*]. In the event that it is [*]. If the Indemnifying Party does not give
      written notice to the Indemnified Party, within [*] after receipt of the
      Indemnification Claim Notice, of the Indemnifying Party’s election to
      assume the defense and handling of such Claim, the provisions of
      sub-Section (e) below shall govern.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          56

          
            

          

        

        
           

        

      

       

      
        	
                 
      

              	
                (d)

              	
                Upon
      assumption of the defense of a Claim by the Indemnifying Party: (i) the
      Indemnifying Party shall have the right to and shall assume [*] control
      and responsibility for dealing with the Claim; (ii) the Indemnifying Party
      may, at its own cost, appoint as counsel in connection with conducting the
      defense and handling of such Claim any law firm or counsel reasonably
      selected by [*]; (iii) the Indemnifying Party shall keep the Indemnified
      Party informed of the status of such Claim; and (iv) the Indemnifying
      Party shall have the right to [*]. The Indemnified Party [*] and shall be
      [*]. In particular, the Indemnified Party shall furnish such records,
      information and testimony, provide witnesses and attend such conferences,
      discovery proceedings, hearings, trials and appeals as may be reasonably
      requested in connection therewith. Such cooperation shall include access
      during normal business hours by the Indemnifying Party to, and reasonable
      retention by the Indemnified Party of, records and information that are
      reasonably relevant to such Claim, and making the Indemnified Party, the
      indemnitees and its and their employees and agents available on a mutually
      convenient basis to provide additional information and explanation of any
      records or information provided.

              

      

       

      
        	
                 
      

              	
                (e)

              	
                If
      the Indemnifying Party does not give written notice to the Indemnified
      Party as set forth in sub-Section (c) or fails to conduct the defense and
      handling of any Claim in good faith after having assumed such, the
      Indemnified Party may, at the Indemnifying Party’s expense, [*]. In such
      event, the Indemnified Party shall keep the Indemnifying Party timely
      apprised of the status of such Claim [*]. If the Indemnified Party defends
      or handles such Claim, the Indemnifying Party [*], and shall be
      [*].

              

      

       

      
        	
                15.4

              	
                Mitigation of Loss. Each
      Indemnified Party will take and will procure that its Affiliates take all
      such reasonable steps and action as are necessary or as the Indemnifying
      Party may reasonably require in order to mitigate any Claims (or potential
      losses or damages) under this Article 15. Nothing in this Agreement shall
      or shall be deemed to relieve any Party of any common law or other duty to
      mitigate any losses incurred by it.

              

      

       

      
        	
                15.5

              	
                Special, Indirect and Other
      Losses. NEITHER PARTY NOR ANY OF ITS AFFILIATES SHALL BE LIABLE IN
      CONTRACT, TORT, NEGLIGENCE BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY
      SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR FOR ANY ECONOMIC
      LOSS OR LOSS OF PROFITS SUFFERED BY THE OTHER
  PARTY[*].

              

      

       

      
        	
                15.6

              	
                No Exclusion. Neither
      Party excludes any [*].

              

      

       

      
        	
                16.

              	
                PUBLICATIONS
      AND PUBLICITY

              

      

       

      
        	
                16.1

              	
                Use of Names. Neither
      Party shall use the name, symbol, trademark, trade name or logo of the
      other Party or its Affiliates in any press release, publication or other
      form of public disclosure without the prior written consent of the other
      Party in each instance (such consent not to be unreasonably withheld or
      delayed), except for those disclosures for which consent has already been
      obtained. Notwithstanding the foregoing, Novartis shall be entitled to use
      the name of Quark to the extent necessary or useful in connection with the
      Development or Commercialization of Products, including in connection with
      sublicensing and subcontracting
transactions.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          57

          
            

          

        

        
           

        

      

       

      
        	
                16.2

              	
                Press Releases and Publicity
      Related to this Agreement. Each Party agrees not to issue any press
      release or other public statement, whether oral or written, disclosing the
      existence of this Agreement, the terms hereof or any information relating
      to this Agreement without the prior written consent of the other Party;
      provided,
      however,
      that Novartis may issue press releases and other public statements as it
      deems appropriate in connection with the Development and Commercialization
      of Products under this Agreement, and that Quark may (with the prior
      written consent of Novartis) issue press releases and other public
      statements upon exercise of the Option by Novartis including the
      applicable upfront payment described in Section 8.1 (without disclosing
      any other financial amounts). When seeking the consent of Novartis, Quark
      agrees to provide Novartis with at least [*] within which to grant or
      withhold its consent. Novartis agree to consider in good faith Quark’s
      interest in seeing that significant development or commercial events under
      this Agreement are promptly
disclosed.

              

      

       

      
        	
                16.3

              	
                Public Disclosures and
      Publications Related to Quark Compounds or Products.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                Any
      proposed public disclosure (whether written, electronic, oral or
      otherwise) by Quark relating to any Quark Compounds or Product shall
      require the prior written consent of Novartis; provided, that
      the foregoing shall not apply to information which is in the public
      domain.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                For
      the avoidance of doubt, Novartis or any of its Affiliates may, without any
      required consents from Quark (i) issue press releases and other public
      statements as it deems appropriate in connection with the Development and
      Commercialization of Products under this Agreement; and (ii) publish or
      have published information about clinical trials related to any Product,
      including the results of such clinical
trials.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          58

          
            

          

        

        
           

        

      

       

      
        	
                16.4

              	
                Disclosures Required By
      Law. Notwithstanding the provisions of Sections 16.2 and 16.3, each
      Party may make any disclosures required of it to comply with any duty of
      disclosure it may have pursuant to law or governmental regulation or
      pursuant to the rules of any recognized stock exchange. In the event of a
      disclosure required by law, governmental regulation or the rules of any
      recognized stock exchange, the Parties shall coordinate with each other
      with respect to the timing, form and content of such required disclosure.
      If so requested by the other Party, the Party subject to such obligation
      shall use commercially reasonable efforts to obtain an order protecting to
      the maximum extent possible the confidentiality of such provisions
      (including, without limitation, financial terms) of this Agreement as
      reasonably requested by the other Party. If the Parties are unable to
      agree on the form or content of any required disclosure, such disclosure
      shall be limited to the minimum required as determined by the disclosing
      Party in consultation with its legal counsel. Without limiting the
      foregoing, each Party shall consult with the other Party on the provisions
      of this Agreement, together with exhibits or other attachments attached
      hereto, to be redacted in any filings made by Quark or Novartis with the
      Securities and Exchange Commission (or other regulatory body) or as
      otherwise required by law.

              

      

       

      
        	
                16.5

              	
                No Liability for Public
      Disclosures by Other Party. Nothing in this Agreement shall be
      construed to impose upon either Party any liability or other obligation
      (either to the other Party or to any other Person) with respect to any
      press release, publication or other form of public disclosure or statement
      of the other Party.

              

      

       

      
        	
                17.

              	
                GENERAL
      PROVISIONS

              

      

       

      
        	
                17.1

              	
                Assignment. Neither
      Party may assign its rights and obligations under this Agreement without
      the other Party’s [*], except that Novartis may without the consent of
      Quark (a) assign its rights and obligations under this Agreement or any
      part thereof to one or more of its Affiliates and (b) assign this
      Agreement in its entirety to a successor to all or substantially all of
      its business or assets to which this Agreement relates, and Quark may
      without the consent of Novartis assign this Agreement in its entirety to a
      successor to all or substantially all of its business or assets. The
      assigning Party shall provide the other Party with prompt written notice
      of any such assignment. Any permitted assignee shall assume all
      obligations of its assignor under this Agreement (or related to the
      assigned portion in case of a partial assignment to an Affiliate), and no
      permitted assignment shall relieve the assignor of liability hereunder.
      Any attempted assignment in contravention of the foregoing shall be void.
      Subject to the terms of this Agreement, this Agreement shall be binding
      upon and inure to the benefit of the Parties hereto and their respective
      successors and permitted assigns. Notwithstanding anything to the contrary
      herein, in the event that Quark is acquired by a Third Party, then the
      intellectual property held, owned, controlled, or developed by such Third
      Party prior to or as of such acquisition shall be excluded from Quark
      Technology.

              

      

       

      
        	
                17.2

              	
                Extension to
      Affiliates.
      Each Party shall have the right to extend the rights, immunities and
      obligations granted in this Agreement to one or more of its Affiliates
      (provided that in the case of Quark, such Affiliates shall be limited to
      QBI Enterprises, Ltd., or any future Affiliates as to which Novartis
      grants its written consent). All applicable terms and provisions of this
      Agreement shall apply to any such Affiliate to which this Agreement has
      been extended to the same extent as such terms and provisions apply to
      such Party. Each Party shall remain primarily liable for any acts or
      omissions of its Affiliates.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          59

          
            

          

        

        
           

        

      

       

      
        	
                17.3

              	
                Severability. Should one
      or more of the provisions of this Agreement become void or unenforceable
      as a matter of law, then this Agreement shall be construed as if such
      provision were not contained herein and the remainder of this Agreement
      shall continue in full force and effect. The Parties will use their
      commercially reasonable efforts to substitute for the invalid or
      unenforceable provision a valid and enforceable provision which conforms
      as nearly as possible to the original intent of the
    Parties.

              

      

       

      
        	
                17.4

              	
                Governing Law and
      Jurisdiction. This Agreement shall be governed by and construed
      under the laws of [*],
      without giving effect to the conflicts of laws provision thereof. Subject to
      Section 17.5, any dispute arising out of or relating to this Agreement
      shall be subject to the exclusive jurisdiction of the courts located in
      [*].

              

      

       

      
        	
                17.5

              	
                Dispute
      Resolution.

              

      

       

      
        	
                 
      

              	
                (a)

              	
                In
      the event of a dispute under this Agreement, either Party may require that
      the Parties refer the dispute to the Alliance Managers for discussion and
      resolution. If the Alliance Managers are unable to resolve any such
      dispute within [*] of the dispute being referred to them, either Party may
      require that the Parties forward the matter to the
      Senior Officers (or designees with similar authority to resolve such
      dispute), who shall attempt in good faith to resolve such dispute. If the
      Senior Officers cannot resolve such dispute within [*] of the matter being
      referred to them, either Party shall be free to initiate the arbitration
      proceedings outlined in sub-Section (b)
below.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Any
      unresolved disputes between the Parties relating to, arising out of or in
      any way connected with this Agreement or any term or condition hereof, or
      the performance by either Party of its obligations hereunder, whether
      before or after termination of this Agreement, shall be resolved by final
      and binding arbitration. Whenever a Party shall decide to institute
      arbitration proceedings, it shall give written notice to that effect to
      the other Party. Arbitration shall be held in New York, New York,
      according to the Rules of Arbitration of the International Chamber of
      Commerce (“ICC”).
      The arbitration will be conducted in English by a panel of three
      arbitrators appointed in accordance with ICC rules; provided that
      each Party shall, within [*] after the institution of the arbitration
      proceedings, appoint an arbitrator, and such arbitrators shall together,
      within [*], select a third arbitrator as the chairman of the arbitration
      panel. Each arbitrator shall have significant experience in the
      pharmaceutical business. If the two initial arbitrators are unable to
      select a third arbitrator within such [*] period, the third arbitrator
      shall be appointed in accordance with ICC rules. Discovery shall be
      governed by ICC rules, except that discovery shall be limited to: (i) the
      production of documents in the producing Party’s possession, not otherwise
      available to the Party seeking the documents, that are [*] to [*] to the
      [*]; (ii) [*] per side of a maximum of [*] (provided, however, that for
      good cause shown, the arbitrators may authorize additional [*]); and (iii)
      [*] per side. In addition, requests for production of documents shall
      contain a description of specific documents or classes of documents, along
      with [*]. The arbitrators may condition any exchange of documents subject
      to claims of commercial or technical confidentiality on appropriate
      measures to protect such confidentiality. When documents to be exchanged
      are maintained in electronic form, the Party in possession of such
      documents may make them available in the form (which may be paper copies)
      most convenient and economical for it, unless the arbitrators determine,
      on application and for good cause, that there is a compelling need for
      access to the documents in a different form. The Party seeking the
      production of documents shall ensure that [*] for [*] are [*] to make [*]
      as [*]. The Parties shall request that the arbitrators render their
      opinion within [*] of the final arbitration hearing. No arbitrator (nor
      the panel of arbitrators) shall have the power to award punitive damages
      under this Agreement and such award is expressly prohibited. Decisions of
      the panel of arbitrators shall be final and binding on the Parties.
      Judgment on the award so rendered may be entered in any court of competent
      jurisdiction. The losing Party to the arbitration (if any) as determined
      by the arbitrator shall pay the fees and costs of
    arbitration.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          60

          
            

          

        

        
           

        

      

       

      
        	
                17.6

              	
                Force Majeure. Neither
      Party shall be responsible to the other for any failure or delay in
      performing any of its obligations under this Agreement, or for other
      nonperformance hereunder, if such delay or nonperformance is caused by
      strike, stoppage of labor, lockout or other labor trouble, fire, flood,
      accident, war, act of terrorism, act of God or of the government of any
      country or of any local government, or by cause unavoidable or beyond the
      control of any Party hereto. In such event, the Party affected will use
      commercially reasonable efforts to resume performance of its
      obligations.

              

      

       

      
        	
                17.7

              	
                Waivers and Amendments.
      The failure of any Party to assert a right hereunder or to insist upon
      compliance with any term or condition of this Agreement shall not
      constitute a waiver of that right or excuse a similar subsequent failure
      to perform any such term or condition by the other Party. No waiver shall
      be effective unless it has been given in writing and signed by the Party
      giving such waiver. No provision of this Agreement may be amended or
      modified other than by a written document signed by authorized
      representatives of each Party.

              

      

       

      
        	
                17.8

              	
                Relationship of the
      Parties. Nothing contained in this Agreement shall be deemed to
      constitute a partnership, joint venture, or legal entity of any type
      between Quark and Novartis, or to constitute one as the agent of the
      other. Moreover, each Party agrees not to construe this Agreement, or any
      of the transactions contemplated hereby, as a partnership for any tax
      purposes. Each Party shall act solely as an independent contractor, and
      nothing in this Agreement shall be construed to give any Party the power
      or authority to act for, bind, or commit 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.

      
        
           

        

        
          61

          
            

          

        

        
           

        

      

       

      
        	
                17.9

              	
                Notices. All notices,
      consents, waivers, and other communications under this Agreement must be
      in writing and will be deemed to have been duly given when: (a) delivered
      by hand (with written confirmation of receipt); (b) sent by fax (with
      written confirmation of receipt), provided that a
      copy is immediately sent by an internationally recognized overnight
      delivery service (receipt requested); or (c) when received by the
      addressee, if sent by an internationally recognized overnight delivery
      service (receipt requested), in each case to the appropriate addresses and
      fax numbers set forth below (or to such other addresses and fax numbers as
      a Party may designate by notice):

              

      

       

      
        If to
Quark:

      

       

      Quark
Pharmaceuticals, Inc.

      6501
Dumbarton Circle

      Fremont,
CA 94555

      U.S.A.

      Attn:
Chief Executive Officer

      Fax:
(510) 402-4021

       

      
        With a
copy to:

      

       

      Cooley
LLP

      Five Palo
Alto Square

      3000 El
Camino Real

      Palo
Alto, CA 94306

      U.S.A.

      Attention:
Robert. L. Jones

      Fax:
(650) 849-7400

       

      
        If to
Novartis:

      

       

      Novartis
International Pharmaceutical Ltd.

      131 Front
Street

      Hamilton

      Bermuda
HM 12

      Attn:
General Counsel

      Fax: 
[*]

       

      with a
copy to:

       

      Novartis
Pharma AG

      P.O.
Box

      CH - 4002
Basel

      Switzerland

      Attn:
Head, Legal Department

      Fax: 
[*]

      

      [ * ] = 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.

      
        
           

        

        
          62

          
            

          

        

        
           

        

      

       

      and

       

      Novartis
Pharma AG

      P.O.
Box

      CH - 4002
Basel

      Switzerland

      Attn:
Head, Business Development and Licensing

      Fax:
[*]

       

      
        	
                17.10

              	
                Further Assurances.
      Novartis and Quark hereby covenant and agree without the necessity of any
      further consideration, to execute, acknowledge and deliver any and all
      such other documents and take any such other action as may be reasonably
      necessary to carry out the intent and purposes of this
      Agreement.

              

      

       

      
        	
                17.11

              	
                Compliance with Law.
      Each Party shall perform its obligations under this Agreement in
      accordance with all applicable laws. No Party shall, or shall be required
      to, undertake any activity under or in connection with this Agreement
      which violates, or which it believes, in good faith, may violate, any
      applicable law. 

              

      

       

      
        	
                17.12

              	
                No Third Party Beneficiary
      Rights. The
      provisions of this Agreement are for the sole benefit of the Parties and
      their successors and permitted assigns, and they shall not be construed as
      conferring any rights to any Third Party (including any third party
      beneficiary rights).

              

      

       

      
        	
                17.13

              	
                English Language. This
      Agreement is written and executed in the English language. Any translation
      into any other language shall not be an official version of this Agreement
      and in the event of any conflict in interpretation between the English
      version and such translation, the English version shall
      prevail.

              

      

       

      
        	
                17.14

              	
                Expenses. Except as
      otherwise expressly provided in this Agreement, each Party shall pay the
      fees and expenses of its respective lawyers and other experts and all
      other expenses and costs incurred by such Party incidental to the
      negotiation, preparation, execution and delivery of this
      Agreement.

              

      

       

      
        	
                17.15

              	
                Entire Agreement. This
      Agreement, together with its Exhibits, sets forth the entire agreement and
      understanding of the Parties as to the subject matter hereof and
      supersedes all proposals, oral or written, and all other prior
      communications between the Parties with respect to such subject matter. In
      the event of any conflict between a substantive provision of this
      Agreement and any Exhibit hereto, the substantive provisions of this
      Agreement shall prevail.

              

      

       

      
        	
                17.16

              	
                Counterparts. This
      Agreement may be executed in two or more counterparts, each of which shall
      be deemed an original, but all of which together shall constitute one and
      the same instrument. 

              

      

      

      [ * ] = 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.

      
        
           

        

        
          63

          
            

          

        

        
           

        

      

       

      
        	
                17.17

              	
                Antitrust Filings.
      

              

      

       

      
        	
                 
      

              	
                (a)

              	
                The
      provisions of Section 4.2 of the Option Agreement shall apply to this
      Agreement as if set forth in full in this
  Agreement.

              

      

       

      
        	
                 
      

              	
                (b)

              	
                Other
      than the provisions of this Section and Sections 1, 11, 16, 17.4, 17.5,
      17.7-17.11, and 17.13-17.16, the rights and obligations of the Parties
      under this Agreement shall not become effective until the waiting period
      provided by the HSR Act shall have terminated or expired without any
      action by any government agency or challenge to the transaction or any
      other timeline required by another relevant agency or authority (the date
      of such termination or expiration shall be the “License Effective Date”
      of this Agreement).  Upon the occurrence of the License Effective
      Date, all provisions of this Agreement shall become effective
      automatically without the need for further action by the
      Parties.

              

      

       

      
        	
                 
      

              	
                (c)

              	
                In
      the event that antitrust clearance from the FTC, Antitrust Division of the
      Department of Justice or any other required agency or authority is not
      obtained within [*] after the Execution Date, or such other date as the
      Parties may mutually agree, this Agreement may be terminated by either
      Party on written notice to the other.  In the event a provision
      of this Agreement needs to be deleted or substantially revised in order to
      obtain regulatory clearance of this transaction, the Parties will
      negotiate in good faith in accordance with Section
  17.3.

              

      

       

      
        	
                17.18

              	
                Cumulative
      Remedies.  No remedy referred to in this Agreement is
      intended to be exclusive, but each shall be cumulative and in addition to
      any other remedy referred to in this Agreement or otherwise available
      under law.

              

      

      

      [ * ] = 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.

      
        
           

        

        
          64

          
            

          

        

        
           

        

      

       

      IN
WITNESS WHEREOF, the Parties intending to be bound have caused this Agreement to
be executed by their duly authorized representatives.

       

      
        
          
            	
                    NOVARTIS
      INTERNATIONAL

                    PHARMACEUTICAL
      LTD.

                  	 
      	
                    QUARK
      PHARMACEUTICALS, INC.

                  
	 
      	 
      	 
      
	
                    By:

                  	 
      	 
      	
                    By:

                  	 
      
	 
      	 
      	 
      	 
      	 
      
	
                    Name:

                  	 
      	 
      	
                    Name:

                  	 
      
	 
      	 
      	 
      	 
      	 
      
	
                    Title:

                  	 
      	 
      	
                    Title:

                  	 
      
	 
      	 
      	 
      
	
                    By:

                  	 
      	 
      	
                    By:

                  	 
      
	 
      	 
      	 
      	 
      	 
      
	
                    Name:

                  	 
      	 
      	
                    Name:

                  	 
      
	 
      	 
      	 
      	 
      	 
      
	
                    Title:

                  	 
      	 
      	
                    Title:

                  	 
      

          

        

      

      

      [ * ] = 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.

       

      
        
           

        

        
          65

          
            

          

        

        
           

        

      

       

      EXHIBIT
A

       

      QUARK
PATENTS

       

      [*]

      

      [ * ] = 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.

      
        
           

        

        
          66

          
            

          

        

        
           

        

      

       

      EXHIBIT
B

       

      Form
of Sales & Royalty Report

       

      [*]

       

      [ * ] = 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.

       

      
        
           

        

        
          67

          
            

          

        

        
           

        

      

       

      EXHIBIT
C

       

      SAMPLE
INVOICE

       

      [*]

      

      [ * ] = 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.

       

      
        
           

        

        
          68

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
B

     

    DECISION
TREE FOR ILLUSTRATIVE PURPOSE ONLY

     

    [*]

     

    [ * ] = 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.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

     

    AKI
PHASE II TRIAL PROTOCOL

     

    [*]

     

    [ * ] = 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.

    
      
        
           

        

        
          36

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
D

     

    [*]

     

    [ * ] = Certain
confidential information contained in this document, marked by brackets, has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as
amended.

    
      
        
           

        

        
          37

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
E

     

    DGF
PHASE II TRIAL PROTOCOL

     

    [*]

     

    [ * ] = 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.

    
      
        
           

        

        
          38

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
F

     

    [*]

     

    [ * ] = 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.

    
      
        
           

        

        
          39

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
G

     

    QUARK
DEVELOPMENT PLAN

     

    [*]

     

    [ * ] = 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.

    
      
        
           

        

        
          40

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
H

     

    SAMPLE
INVOICE

     

    [*]

      

    [ * ] = 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.

    
    

    
      
        
           

        

        
          41

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
I

     

    PRESS
RELEASE

    

    FOR
IMMEDIATE RELEASE

    

    
      
        	
                Quark
      Pharmaceuticals, Inc.

                Juliana
      Friedman

                +972
      89 30 5111

                jfriedman@quarkpharma.com

              	 
      	
                The
      Ruth Group (investors / media)

                Sara
      Pellegrino / Jason Rando

                (646)
      536-7002 / 7025

                spellegrino@theruthgroup.com

                jrando@theruthgroup.com

              

      

    

    

    Quark
Pharmaceuticals and Major Pharmaceutical Company Enter into Licensing Option
Agreement for the p53 Suppressor Drug QPI-1002, the First siRNA Administered
Systemically in Human

    

    Fremont,
CA August ____, 2010, — Quark Pharmaceuticals, Inc., a world leader in the
discovery and development of RNAi-based therapeutics, today announced that it
has granted Novartis an option to obtain an exclusive worldwide license to
develop and commercialize its p53 temporary inhibitor siRNA drug QPI-1002,
currently the subject of a Phase II clinical trial.

    

    Quark
will receive initially a non-refundable fee of 10 million USD. In the event that
Novartis exercises the option, Quark would receive option exercise fees and
milestone payments that could potentially total 670 million USD. In addition
Quark would be entitled to potential royalties on sales of licensed products.
Dr. Daniel Zurr, Quark’s Chief Executive Officer, stated, “We are very pleased
to have reached this agreement with Novartis. We believe that Novartis
represents an outstanding partner for Quark. With its world-leading expertise in
transplantation and acute care Novartis will provide invaluable support to the
global development of QPI-1002, in development for the prevention of acute
kidney injury (AKI) in patients undergoing cardiac surgery and for delayed graft
function (DGF) in kidney transplant patients. The gene target of QPI-1002, p53,
is a major player in apoptotic cell death; its temporary suppression rescues
cells, prevents them from dying in conditions of severe stress such as ischemia,
potentially opening opportunities for Novartis to novel treatments in additional
indications.”

    

    About
QPI-1002

    

    QPI-1002
is designed to temporarily inhibit expression of the stress-response gene, p53
and is the first synthetic siRNA to be administered systemically to humans.
QPI-1002 is being developed for the prevention of acute kidney injury (AKI) in
patients undergoing major cardiovascular surgery, and for the prophylaxis of
delayed graft function (DGF) in patients receiving deceased donor kidney
transplants. QPI 1002 completed Phase I studies in these patient populations and
an independent Data Safety Monitoring Board recommended continuation of QPI-1002
clinical development in both diseases. QPI-1002 was granted Orphan designation
by the US Food and Drug Administration (FDA) and the European Medicines Agency
(EMA) for the prophylaxis of delayed graft function in kidney transplant
patients.

     

    
    

    [ * ] = 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.

    
    

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    About
Quark Pharmaceuticals, Inc.

    

    Quark
Pharmaceuticals, Inc., a world leader in novel RNAi discovery and development,
has the largest clinical-stage siRNA pipeline in the industry. The Company’s
fully integrated drug development platform spans therapeutic target
identification to drug development. Quark’s approach to delivery allows
targeting of tissues and organs including the eye, kidney, ear, lung, spinal
cord and brain.

    

    In
addition to QPI-1002, Quark’s pipeline includes PF-655, currently in two Phase
II clinical trials for the treatment of wet age-related macular degeneration
(AMD) and diabetic macular edema (DME). The siRNA therapeutic candidate PF-655
is licensed to Pfizer, who is conducting both trials in collaboration with
Quark. PF-655 targets Quark’s proprietary gene, RTP801, discovered using its
BiFARTM target discovery platform that identifies clinically relevant critical
genes and proteins that reverse the disease phenotype when inhibited. The
Company owns a family of patents covering the RTP801 gene, its RNA and protein
product sequences, specific antibodies, and gene inhibition across different
pathologies. For the structure of these products, Quark has obtained licenses
from Silence Therapeutics and from Alnylam Pharmaceuticals.

    

    Quark is
currently conducting clinical trials of QPI-1007, its proprietary synthetic
siRNA drug candidate for ocular neuroprotection. QPI-1007 utilizes a proprietary
structure developed in collaboration with BioSpring GmbH that provides Quark
with freedom to operate in the siRNA intellectual property arena and chemical
modifications that are designed to preserve RNAi activity while ameliorating
potential off-target and immunostimulatory effects of siRNAs.

    

    Quark is
also committed to leveraging a broad research pipeline of siRNA drug candidates
and novel siRNA structures to develop additional RNAi drug
candidates.

     

    Quark is
headquartered in Fremont, California and operates research and development
facilities in Boulder, Colorado and Ness-Ziona, Israel. Additional information
is available at www.quarkpharma.com

     

    [ * ] = 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.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        
 

    

    EXHIBIT
J

     

    TEMPLATE
FOR AKI FIRST INTERPRETABLE RESULTS

     

    [*]

      

    [ * ] = 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.

     

    
      
        
           

        

        
          44

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