Document:

EXHIBIT 10.21

 

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

 

EXCLUSIVE LICENSE AGREEMENT

 

“ISOLATION AND APPLICATION OF P53 INHIBITORS TO CONTROLLING TISSUE
RESPONSE TO A VARIETY OF STRESSES AND FACILITATING ANTI-CANCER TREATMENT”

(UIC Tech ID #CS01)

 

TABLE OF CONTENTS

 

	
  PREAMBLE

  	
   

  	
   

  
	
  ARTICLES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  DEFINITIONS

  
	
  II

  	
   

  	
  GRANT

  
	
  III

  	
   

  	
  DUE DILIGENCE

  
	
  IV

  	
   

  	
  PAYMENTS

  
	
  V

  	
   

  	
  REPORTS AND RECORDS

  
	
  VI

  	
   

  	
  PATENT MAINTENANCE, ENFORCEMENT
  AND DEFENSE

  
	
  VII

  	
   

  	
  CONFIDENTIALITY

  
	
  VIII

  	
   

  	
  REPRESENTATIONS, WARRANTIES AND
  COVENANTS

  
	
  IX

  	
   

  	
  INDEMNIFICATION, PRODUCT
  LIABILITY

  
	
  X

  	
   

  	
  EXPORT CONTROLS

  
	
  XI

  	
   

  	
  NON-USE OF NAMES

  
	
  XII

  	
   

  	
  ASSIGNMENTS

  
	
  XIII

  	
   

  	
  TERMINATION

  
	
  XIV

  	
   

  	
  DISPUTE RESOLUTION

  
	
  XV

  	
   

  	
  PAYMENTS, NOTICES AND OTHER
  COMMUNICATIONS

  
	
  XVI

  	
   

  	
  MISCELLANEOUS PROVISIONS

  

 

i

 

This EXCLUSIVE LICENSE
AGREEMENT is effective on the date last subscribed below (the “Effective
Date”), and is by and between THE BOARD OF TRUSTEES OF
THE UNIVERSITY OF ILLINOIS, a body corporate and politic of the
State of Illinois (“UNIVERSITY”) with offices in Chicago, Illinois 60612, and QUARK BIOTECH, INC., a California corporation with principal
offices at 1059 Serpentine Lane, Pleasanton, California 94566, (“QBI”).

 

WITNESSETH

 

WHEREAS, in the course of
research conducted under UNIVERSITY auspices, Dr. Andrei Gudkov and Elena
Komarova in the Department of Molecular Genetics of UNIVERSITY (the “INVENTORS”),
have produced an invention entitled [ * ] (the “INVENTION”)
which is covered by the Patent Rights as defined in Article 1.5 below;

 

WHEREAS, pursuant to an
assignment by Drs. Gudkov and Komarova to UNIVERSITY of all their right, title
and interest in and to the INVENTION and any patents resulting therefrom,
UNIVERSITY is the owner of the INVENTION and the corresponding Patent Rights,
and has the right to grant licenses under said Patent Rights;

 

WHEREAS, UNIVERSITY desires to
have the Patent Rights utilized in the public interest and QBI seeks to
commercially develop the Patent Rights, and accordingly, the UNIVERSITY is
willing to grant to QBI an exclusive license to its interest in the INVENTION
and the Patent Rights on the terms and conditions set forth herein;

 

WHEREAS, LICENSEE seeks to
commercially develop the Patent Rights through a thorough, vigorous and
diligent program of exploiting the Patent Rights whereby public utilization
shall result therefrom; and

 

NOW, THEREFORE, in consideration
of the premises and the mutual covenants contained herein, the parties hereto
agree as follows:

 

ARTICLE I – DEFINITIONS

 

For the purpose of this Agreement, the following words
and phrases shall have the following meanings:

 

1.1          “LICENSEE” shall mean QBI.

 

1.2          “Affiliate” shall mean any person,
firm, corporation or other entity controlling, controlled by, or under common
control with a party hereto. The term “control” wherever used throughout this
Agreement shall mean ownership, directly or indirectly, of more than 50% of the
equity capital. Other than LICENSEE, any corporation, company, partnership,
joint venture, firm, individual or other entity which does not come within this
definition shall be a “Non-Affiliate”.

 

1.3          “University Existing Technology” and “Sponsor Existing Technology” have
the meaning given to them in the Research Agreement between UNIVERSITY and QBI
effective September 1, 1999, attached hereto as Appendix A and incorporated
herein by reference (“Research Agreement”).

 

1.4          “Confidential Information” means (i)
any proprietary or confidential information or material in tangible form
disclosed hereunder that is marked as “Confidential” at the time it is
delivered to the receiving party, (ii) any proprietary or confidential
information disclosed orally hereunder that is identified as confidential or
proprietary when disclosed and such disclosure is confirmed in writing to the
receiving party within 30 days by the disclosing party, and (iii) any information
concerning the terms of this Agreement.

 

1.5          “Patent Rights” shall mean all of the
following UNIVERSITY owned intellectual property:

 

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

 

1

 

(a)           the United States
patent application entitled [ * ] and all
foreign patent applications based on this U.S. application;

 

(b)           United States and
foreign patents issued from this application, and divisionals and continuations
of this application;

 

(c)           claims of U.S. and
foreign continuation-in-part applications, and of the resulting patents which
are directed to subject matter specifically described in the U.S. patent
application Serial Number [ * ]; and

 

(d)           any reissues or
re-examinations of patents described in (a), (b), or (c), above.

 

1.6          A “Licensed Product” shall mean any
product or part thereof developed by or on behalf of LICENSEE which:

 

(a)           is covered in whole
or in part by an issued, unexpired claim or a pending claim contained in the
Patent Rights which have not been held unenforceable or invalid by a court or
other governmental agency of competent jurisdiction and which have not been
admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise in any country in which such product is made, used or sold relative
to said product or part; or

 

(b)           is manufactured by
using a process which is covered in whole or in part by an issued, unexpired
claim or a pending claim contained in the Patent Rights which have not been
held unenforceable or invalid by a court or other governmental agency of
competent jurisdiction and which have not been admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise in the country in which
any such process is used or in which any such product is used or sold relative
to said process.

 

1.7          A “Licensed Process” shall mean any
process which is covered in whole or in part by an issued, unexpired claim or a
pending claim contained in the Patent Rights in any country in which such
process is practiced.

 

1.8          “Net Sales” shall mean the gross
amount invoiced by LICENSEE or Affiliate for sales of Licensed Products or
Licensed Processes to Non-Affiliate independent third parties, less the sum of
the following:

 

(a)           promotional
allowances, rebates, credits and cash, trade and quantity discounts, in amounts
customary in the trade, actually taken;

 

(b)           excise taxes,
sales, use, value added, and other consumption taxes and other compulsory
payments to governmental authorities, actually paid;

 

(c)           outbound
transportation charges and related insurance costs prepaid or allowed;

 

(d)           amounts allowed or
credited due to returns and uncollectible amounts;

 

(e)           cost of any
shipping packages and packing, if billed separately;

 

(f)            import and/or
export duties and tariffs actually paid;

 

(g)           rebates; and

 

(h)           interest, service,
finance, or sales or carrying charges paid by customers for extension of credit

 

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

 

2

 

No deductions shall be made for commissions paid to
individuals whether they be with independent sales agencies or regularly
employed by LICENSEE or Affiliates and on its payroll, or for cost of
collections. Licensed Products shall be considered “sold” when billed or
invoiced.

 

1.9          “Sublicense” shall mean the right to
make, use or sell Licensed Products or Licensed Processes, other than by
outright sale to any Non-Affiliate (including any Non-Affiliated distributor).

 

ARTICLE 2

GRANT

 

2.1          UNIVERSITY hereby
grants to LICENSEE an exclusive worldwide right and license in any field of
use, including the right to sublicense, to make, have made, use, lease, offer
to sell, export and otherwise exploit UNIVERSITY’s right, title and interest in
the Licensed Products or Licensed Processes derived from the Patent Rights, on
a royalty-bearing basis until the end of the last to expire patent of the
Patent Rights on a country by country basis, subject to the rights reserved in
Section 2.2 below.

 

2.2          Notwithstanding any
other provisions of this Agreement, it is agreed that UNIVERSITY shall retain
the right to use (subject to LICENSEE’s right to use) the technology being
licensed under the Patent Rights, including any improvements, solely for its
own non-commercial teaching and research activities; subject, however, to
confidentiality obligations as set forth in Article VII.

 

2.3          LICENSEE hereby
agrees that every Sublicense to which it shall be party and which shall relate
to the rights, privileges and license granted hereunder shall contain a
statement describing the date upon which LICENSEE’S exclusive rights,
privileges and license hereunder shall terminate.

 

2.4          LICENSEE agrees that
any Sublicenses granted will be in terms consistent and not in conflict with
any of the material terms and conditions of this Agreement including, without
limitation the provisions under Articles III, V, VII, VIII, IX, X, XI, XIII and
XVI of this Agreement.

 

2.5          LICENSEE agrees to
forward to UNIVERSITY a copy of any and all fully executed sublicense
agreements within [ * ] of
execution of same, and further agrees to forward to UNIVERSITY within [ * ] a copy of such reports received by LICENSEE from its
sublicensees during the preceding [ * ] period
under the Sublicenses as shall be pertinent to a royalty accounting under said
Sublicense agreements.

 

2.6          Subject to the
Research Agreement and other than the Existing Technology, the license granted
hereunder shall not be construed to confer any rights upon LICENSEE by
implication, estoppel or otherwise as to any technology not included in the
Patent Rights and to which or in which LICENSEE does not otherwise have rights,
title or an interest.

 

ARTICLE 3

DUE DILIGENCE

 

3.1          LICENSEE and its
sublicensees shall use commercially reasonable efforts to bring Licensed
Products or Licensed Processes to market [ * ]
exploitation of the Patent Rights. Non-compliance with this Section 3.1 shall
be grounds for termination.

 

3.2          In addition,
LICENSEE and UNIVERSITY shall adhere to the following:

 

(a)           LICENSEE shall
deliver to UNIVERSITY within [ * ] of
Effective Date of this Agreement a business plan including [ * ],
to the extent formed by LICENSEE. Similar reports shall be provided to
UNIVERSITY within [ * ] to relay
update and status information on LICENSEE’s progress on development of the
Patent Rights, including projections of activity anticipated for the next
reporting year.

 

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

 

3

 

(b)           LICENSEE shall be
responsible for diligently and promptly taking all reasonable steps to secure
all required and/or necessary governmental approvals to sell, exploit, or
market any and all Licensed Products. Subject to the terms and conditions of
the Research Agreement, the Licensee shall meet the Milestones set forth below.
Licensee can request extension of each Milestone deadline for a period of one
(1) year upon payment of a fee of [ * ] for each
extension requested (“Extended Deadline”).

 

(i)            If Licensee fails
to [ * ], or within the Extended Deadline,
than the licenses set forth in Section 2.1 for that particular Licensed Product
shall terminate and be no longer valid, unless Licensee shall have earlier
demonstrated to the satisfaction of the University that there is a valid cause
for delaying the [ * ].

 

(ii)           If Licensee fails
to [ * ], or within the Extended Deadline,
than the licenses set forth in Section 2.1 for that particular Licensed Product
shall terminate and be no longer valid, unless Licensee shall have earlier
demonstrated to the satisfaction of the University that there is a valid cause
for delaying the [ * ].

 

(c)           UNIVERSITY agrees
to provide existing back-up data and documentation as may be required by
regulatory agencies for purposes of supporting applications under government
review.

 

(d)           LICENSEE shall
advise UNIVERSITY, through [ * ] reports
to be provided [ * ] pursuant to Section 5.2
below, of its program of development for and status of obtaining said
approvals.

 

ARTICLE 4

PAYMENTS

 

4.1          For the rights,
privileges and licenses granted hereunder, LICENSEE shall pay to the
UNIVERSITY, in the manner hereinafter provided, until the end of the last to
expire patent of the Patent Rights on a country by country basis or until this
Agreement shall be terminated, as hereinafter provided, whichever occurs first:

 

(a)           a royalty in an
amount equal to [ * ] of the aggregate Net Sales
by LICENSEE or any Affiliate of the Licensed Products or Licensed Processes;

 

(b)           a [ * ] payments received by LICENSEE from sublicensees, based
on Net Sales of Licensed Products or Licensed Processes by sublicensees,
exclusive of [ * ] covered by Section 4.1(c)
below; and

 

(c)           a [ * ]. No payments will be made under this Section 4.1(c) to
the extent already covered under Section 4.1(b).

 

4.2          In the event a
competitive product is sold in a country by an unlicensed thirdpart, and such
third party’s activities demonstrably diminish LICENSEE’s capability to compete
in the market, UNIVERSITY agrees to meet with LICENSEE to negotiate a reduction
of royalties due for sales in that country, provided LICENSEE provides to the
UNIVERSITY, prior to such meeting, [ * ].

 

4.3          Only one royalty
shall be payable with respect to any unit of Licensed Product regardless of
whether it is covered by more than one of the Patent Rights patent applications
or Patent Rights patents licensed under this Agreement, or to be covered in
more than one subsection of Section 4.1 hereof.

 

4.4          Royalty payments
shall be paid quarterly within [ * ] of the
close of each calendar quarter ending March 31, June 30, September 30 and
December 31, in United States dollars in Chicago, Illinois,

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

or at such other place as UNIVERSITY may reasonably
designate consistent with the laws and regulations controlling in any foreign
country, but not in any other currency. If any currency conversion shall be
required in connection with the payment of royalties hereunder, such conversion
shall be made by using the exchange rate prevailing at [ * ]
on the last business day of the calendar quarterly reporting period to which
such royalty payments relate.

 

4.5          Any taxes required
to be paid or withheld on account of amounts payable to UNIVERSITY under this
Agreement shall be deducted from the amounts due pursuant to Section 4.1 at the
rates specified by applicable law or treaty. LICENSEE shall provide to
UNIVERSITY, as soon as practical, receipts of payment of any such taxes from
the appropriate taxing authority.

 

4.6          In the event that
the LICENSEE’s, the Affiliates or its Sublicensees development, manufacture,
use or sale of a Product would constitute an infringement of any patent right
or intellectual property right of any third party, the Parties shall together
use their reasonable endeavors to obtain an appropriate license from such third
party. If such license requires LICENSEE to pay royalties to such third party,
the royalty due and payable to the University under this Agreement for sale of
the Product shall be reduced by [ * ] the
amount which the Licensee is required to pay to said third party, provided that
no royalty due to the University hereunder shall be reduced by more than [ * ].

 

ARTICLE 5

REPORTS AND RECORDS

 

5.1          LICENSEE shall keep
full, true and accurate records pertaining to the sale or other disposition of
the Licensed Products or Licensed Processes in sufficient detail as may be
necessary to show the amounts payable to UNIVERSITY hereunder. Said records
shall be kept at LICENSEE’s principal place of business. For the term of this
Agreement, upon receipt of [ * ] prior
written notice, UNIVERSITY shall have the right to cause an independent,
certified public accountant to audit such records to confirm LICENSEE’s,
affiliate’s and sublicensee’s Net Sales and royalty payments and all other payments
or exchanges related to Patent Rights for the preceding year at UNIVERSITY’s
expense. Such audits may be exercised during normal business hours once a year.

 

5.2          LICENSEE, within [ * ] after [ * ] of each
year, shall deliver to UNIVERSITY true and accurate reports, giving such
particulars of the business conducted by LICENSEE and its sublicensees during
the preceding [ * ] period under this Agreement
as shall be pertinent to a royalty accounting hereunder. These shall include at
least the following, to be itemized per Licensed Product or Licensed Process:

 

(a)           number of Licensed
Products commercially used, manufactured and sold, rented or leased;

 

(b)           total billings for
Licensed Products and Licensed Processes commercially used, sold, rented or
leased;

 

(c)           deductions
applicable as provided in Paragraph 1.8.

 

(d)           total royalties
due;

 

(e)           [ * ];

 

(f)            [ * ].

 

(g)           [ * ]; and

 

(h)           [ * ].

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

5.3          If no royalties
shall be due, LICENSEE shall so report.

 

ARTICLE 6

PATENT MAINTENANCE, ENFORCEMENT AND DEFENSE

 

6.1          Subject to this
Article VI, UNIVERSITY shall control all decisions and activities related to
the preparation, pursuit, filing, issuance, maintenance, enforcement and
prosecution of the Patent Rights. UNIVERSITY shall diligently take all
reasonable steps to obtain issuance of pending patent application(s) included
in the Patent Rights in the name of The Board of Trustees of the University of
Illinois. UNIVERSITY shall promptly provide LICENSEE with copies of all
relevant documentation so that LICENSEE may be informed and appraised of the
status of the Patent Rights at all times. The parties shall coordinate and
communicate with each other during the term of this Agreement with respect to
the filing and prosecution of patent applications and foreign counterparts
thereto in respect of any invention in order to promote comprehensive
cost-efficient patent coverage. UNIVERSITY agrees it will not abandon any
patent application or issued patent if LICENSEE desires to continue prosecution
or maintenance, provided LICENSEE is not in default of its payment obligations
hereunder.

 

6.2          UNIVERSITY shall use
its best efforts to amend any patent application to include claims reasonably
requested by LICENSEE and required to protect the Licensed Products
contemplated to be sold under this agreement.

 

6.3          LICENSEE shall be
responsible for and pay all costs and expenses incurred by UNIVERSITY for the
preparation, filing, prosecution, issuance, and maintenance of the Patent
Rights pre-dating the Effective Date and post-dating the Effective Date for the
term of this Agreement.

 

6.4          LICENSEE and
UNIVERSITY shall promptly notify the other in writing of any alleged or
threatened infringement of any Patent included in the Patent Rights or claiming
the Invention. Both parties shall use their best efforts in cooperating with
each other to terminate such infringement without litigation. LICENSEE shall
have the first right to bring and control any action or proceeding with respect
to such infringement at its own expense and by counsel of its own choice, and
UNIVERSITY shall have the right, at its own expense, to be represented in any
action involving any Patent Rights by counsel of its choice. If LICENSEE fails
to bring an action or proceeding within (i) [ * ]
following the notice of alleged infringement or (ii) [ * ]
before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such actions, whichever comes first, UNIVERSITY
shall have the right to bring and control any such action at its own expense
and by counsel of its own choice, and LICENSEE shall have the right, at its own
expense, to be represented in any such action by counsel of its own choice. In
the event a party brings an infringement action, the other party shall
cooperate fully, including if required to bring such action, the furnishing of
a power of attorney. Neither party shall have the right to settle any patent
infringement litigation under this Section 6.4 in a manner that diminishes the
rights or interests of the other party without the consent of such other party,
which consent shall not be unreasonably withheld. All costs of any action to
enforce the Patent Rights taken by LICENSEE shall be borne by LICENSEE and
LICENSEE shall keep any recovery of damages derived therefrom, [ * ]. All costs of any action to enforce the Patent Rights
taken by UNIVERSITY shall be borne be UNIVERSITY and UNIVERSITY shall share
with LICENSEE any recovery of damages derived therefrom on a pro rata basis per
costs incurred by UNIVERSITY and LICENSEE respectively in such policing
activity.

 

6.5          LICENSEE, during the
exclusive period of this Agreement, shall have the sole right in accordance
with the terms and conditions herein to sublicense any alleged infringer for
future use of the Patent Rights, with any royalty covered by Section 4.1 above
to be paid to UNIVERSITY as required.

 

6.6          LICENSEE and
UNIVERSITY shall promptly notify the other in writing of any allegation by a
third party that the activity of either of the parties infringes or may
infringe the intellectual property rights on such third party. LICENSEE shall
defend the claim at its own expense and by counsel of its own choice including,
without limitation, the right to settle, compromise or otherwise pursue such
defense in

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

any manner and on such terms as LICENSEE shall
determine. UNIVERSITY agrees to provide assistance to LICENSEE as may be
reasonably necessary or appropriate to pursue such actions. If LICENSEE fails
to proceed with regard to such defense within (i) [ * ]
following the notice of alleged infringement or [ * ]
before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such actions, whichever comes first, or otherwise
elects not to defend such a claim, UNIVERSITY shall have the right to defend
the claim at its own expense and by counsel of its choice including, without
limitation, the right to settle, compromise or otherwise pursue such defense in
any manner and on such terms as UNIVERSITY shall determine. [ * ] of the royalty payments due from LICENSEE to
UNIVERSITY hereunder shall be placed in escrow pending a resolution of the
action. If it is determined by judgment or settlement that LICENSEE is required
to make payments to said third party in order to continue to market, distribute
or sell or otherwise use the Licensed Products, than any such payments owing to
such third party shall be credited and offset against the escrowed royalty
payments and LICENSEE may, at its option, terminate this Agreement pursuant to
Section 13.2.

 

ARTICLE 7

CONFIDENTIALITY

 

7.1          During the term of
this Agreement and for a period of [ * ] after
termination thereof, each party will maintain all Confidential Information in
trust and confidence and will not disclose any Confidential Information to any
third party or use any Confidential Information for any purpose except as
expressly authorized by this Agreement. Each party may use such Confidential
Information only to the extent required to accomplish the purposes of this
Agreement, including sublicensing. Each party will use the highest standard of
care to protect Confidential Information and to ensure that its employees,
agents, consultants and other representatives or, in the case of the
UNIVERSITY, students, do not disclose or make any unauthorized use of the
Confidential Information. Each party will promptly notify the other upon
discovery of any unauthorized use or disclosure of the Confidential
Information.

 

7.2          Confidential
Information shall not include information that:

 

(a)           is now, or
hereafter becomes, through no act or failure to act on the part of the
receiving party, in the public domain or published;

 

(b)           is in possession of
the receiving party at the time of receiving such information, as evidenced by
its prior written records;

 

(c)           is hereafter
furnished to the receiving party by a third party, as a matter of right and
without restriction on disclosure; or

 

(d)           is required by law
or a court order to be disclosed or is the subject of a written permission to
disclose provided by the disclosing party.

 

7.3          Notwithstanding the
above, a party may disclose Confidential Information of the other party:

 

(a)           to potential
sublicensees to the extent such disclosure is reasonably necessary and provided
sublicensee personnel are bound by obligations of confidentiality no less
restrictive than those provided hereunder; or

 

(b)           if required by law
or a court order to be disclosed or is the subject of a written permission to
disclose provided by the disclosing party; to regulatory agencies in order to
obtain registrations required; and to professional advisors, consultants and/or
potential investors in connection with a private placement or public offering.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

ARTICLE 8

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

8.1          Each party hereby
represents and warrants that such party is duly organized and validly existing
under the laws of the state of its incorporation and has full power and
authority to enter into this Agreement and to carry out the provisions hereof.

 

8.2          Each party hereby
represents and warrants that such party is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder and that this
Agreement is a legal and valid obligation binding upon each party, enforceable
in accordance with its terms. The execution, delivery and performance of this
Agreement by such party does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by which it may be bound,
nor violate any law or regulation of any court, governmental body or
administrative or other agency having authority over it.

 

8.3          UNIVERSITY hereby
represents that, to the best of its knowledge, no University patents or patent
applications, other than the rights granted to LICENSEE hereunder to the Patent
Rights, conflict with the representations and rights given to LICENSEE under
this Agreement.

 

ARTICLE 9

INDEMNIFICATION, PRODUCT LIABILITY

 

9.1          LICENSEE shall at
all times during the term of this Agreement and thereafter, indemnify, defend
and hold UNIVERSITY, its trustees, officers, employees and affiliates, harmless
against all claims, expenses, damages or liability (collectively, the “Losses”)
including legal expenses and reasonable attorneys’ fees, resulting from the
production, manufacture, sale, use, lease, consumption or advertisement of the
Licensed Product(s) or arising from any obligation of LICENSEE hereunder,
except to the extent that such Losses result from UNIVERSITY’s gross negligence
or willful misconduct.

 

9.2          For the term of this
Agreement, upon the commencement of production, sale, or transfer, whichever
occurs first, of any Licensed Product, LICENSEE shall obtain and carry in full
force and effect liability insurance which shall protect LICENSEE and
UNIVERSITY in regard to events covered by Section 8.1 above, the nature and
extent of which insurance coverage shall be commensurate with usual and
customary industry practices, as determined by LICENSEE’s good faith
assessment.

 

9.3          Except as otherwise
expressly set forth in this Agreement, UNIVERSITY AND SPONSOR MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR
PENDING.

 

ARTICLE 10

EXPORT CONTROLS

 

It is understood that UNIVERSITY is subject to United
States laws and regulations controlling the export of technical data, computer
software, laboratory prototypes and other commodities (including the Arms
Export Control Act, as amended and the Export Administration Act of 1979), and
that its obligations hereunder are contingent on compliance with applicable
United States export laws and regulations. The transfer of certain technical
data and commodities may require a license from the cognizant agency of the
United States Government and/or written assurances by LICENSEE that LICENSEE
shall not export data or commodities to certain foreign countries without prior
approval of such agency. UNIVERSITY neither represents that a license shall not
be required nor that, if required, it shall be issued, but shall provide to

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

LICENSEE reasonable
assistance for determining the need for and the procuring of such license or
other consent. LICENSEE agrees to comply with all applicable export and import
control laws governing sales of Licensed Products and Licensed Processes.

 

ARTICLE 11

NON-USE OF NAMES

 

LICENSEE shall not use the names of the University of
Illinois nor any of its employees, nor any adaptation thereof, in any
advertising, promotional or sales literature without prior written consent
obtained from UNIVERSITY in each case, except that LICENSEE may state that it
is licensed by UNIVERSITY under one or more of the Patents comprising the
Patent Rights and, if appropriate, that research related to the INVENTION or
Patent Rights is ongoing at UNIVERSITY.

 

ARTICLE 12

ASSIGNMENT

 

12.1        This Agreement may not
be assigned by LICENSEE other than to QBI Enterprises Ltd., an Israeli limited
liability company and a subsidiary of LICENSEE, without prior written consent
from UNIVERSITY.

 

12.2        Notwithstanding the
foregoing prohibition, LICENSEE may, without UNIVERSITY’s consent, merge into,
consolidate with, or transfer substantially all of its assets (“substantially”
being respectively [ * ] or more
thereof) as an entirety to any corporation, so long as the successor surviving
corporation in any such merger, consolidation, transfer or reorganization assumes
in writing the obligations of this Agreement. Such merger, consolidation,
transfer or reorganization shall not in any way be a breach of this Article
XII, nor be any default under this Agreement.

 

ARTICLE 13

TERMINATION

 

13.1        Either party may
terminate this Agreement upon [ * ] written
notice upon the occurrence of any of the following:

 

(a)           Upon or after the
bankruptcy, insolvency, dissolution or winding-up of the other party (other
than dissolution or winding-up for the purposes of reconstruction or amalgamation);
or

 

(b)           Upon or after the
breach of any material provision of this Agreement by the other party if the
breaching party has not cured such breach within [ * ]
following written notice of termination by the other party.

 

13.2        LICENSEE shall have
the right to terminate this Agreement with or without cause at any time upon [ * ] advance written notice to UNIVERSITY subject to
LICENSEE’s remittance of payments that may be due under this Agreement up to
the effective date of termination. All rights granted to LICENSEE hereunder
shall revert to UNIVERSITY upon the effective date of such termination.

 

13.3        Upon termination of
this Agreement for any reason, nothing herein shall be construed to release
either party from any obligation that matured prior to the effective date of
such termination. LICENSEE shall return to UNIVERSITY all materials containing
Licensed Product (exclusive of materials relating to Sponsor Existing
Technology); provided, however, that LICENSEE shall have the right for one year
thereafter to dispose of all Licensed Products then in its inventory, and shall
pay royalties thereon, in accordance with the provisions of Article IV and
shall submit the related reports as required by Article V, as though this
Agreement had not terminated. Each party shall, promptly upon termination,
return to the

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

other party Confidential Information received from the
other party and still subject to obligations of confidentiality hereunder, and
neither party shall thereafter be entitled under this Agreement to use any such
Confidential Information of the other party for any purpose.

 

ARTICLE 14

DISPUTE RESOLUTION

 

Other than any claim arising from LICENSEE’s failure
to pay royalties due under this Agreement, any controversy or bonafide disputed
claim arising under this Agreement between the parties, which dispute cannot be
resolved by mutual agreement, shall, by the election of either party, be
resolved by submitting to dispute resolution before a fact-finding body composed
of one or more experts in the field, selected by mutual agreement within thirty
days of written request by either party. Said dispute resolution shall be held
in Chicago or at such other place as shall be mutually agreed upon in writing
by the parties. The fact-finding body shall determine who shall bear the cost
of said resolution. In the event that the parties cannot mutually agree within
said thirty (30) days on the dispute resolution body, the parties will apply
the procedural rules of a mutually agreeable forum.

 

ARTICLE 15

PAYMENTS, NOTICES AND OTHER COMMUNICATIONS

 

Any payment, notice or other communication pursuant to
this Agreement shall be sufficiently made or given on the date of receipt if
sent to such party by telefax or overnight courier, or on the date three days
after mailing if sent by certified mail, postage prepaid, addressed to it at
its address below or as it shall designate by written notice given to the other
party:

 

In the case of
UNIVERSITY:

 

Intellectual Property Office

Office of the Vice Chancellor of Research

University of Illinois at Chicago

1737 West Polk Street, 312 AOB (M/C 672)

Chicago, Illinois 60612

ATTN: Director, Intellectual Property Office

 

In the case of LICENSEE:

 

Quark Biotech, Inc.

c/o QBI Enterprises, Ltd.

Weizmann Scientific Park

Building 3, 4th Floor

P. O. Box 741

Nes Ziona, Israel 74106

ATTN: Daniel Zurr, President & CEO

FAX: 011-972-8-940-6476

 

ARTICLE 16

MISCELLANEOUS PROVISIONS

 

16.1        This Agreement shall
be construed, governed, interpreted and applied in accordance with the laws of
the State of Illinois, U.S.A., except that questions affecting the construction
and effect of any patent shall be determined by the law of the country in which
the patent was granted.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

16.2        The parties hereto
acknowledge that this Agreement together with the Research Agreement set forth
the entire Agreement and understanding of the parties hereto as to the subject
matter hereof, and shall not be subject to any change or modification except by
the execution of a written instrument subscribed to by the parties hereto.

 

16.3        The provisions of this
Agreement are severable, and in the event that any provisions of this Agreement
shall be determined to be invalid or unenforceable under any controlling body of
the law, such invalidity or unenforceability shall not in any way affect the
validity or enforceability of the remaining provisions hereof.

 

16.4        LICENSEE agrees to
mark the Licensed Products sold in the United States with all applicable United
States patent numbers. All Licensed Products shipped to or sold in other
countries shall be marked in such a manner as to conform with the patent laws
and practice of the country of manufacture or sale.

 

16.5        The failure of either
party to assert a right hereunder or to insist upon compliance with any term or
condition of this Agreement shall not constitute a waiver of that right or
excuse a similar subsequent failure to perform any such term or condition by
the other party.

 

16.6        This Agreement may be
executed in any number of counterparts and each of such counterparts shall for
all purposes be an original and all such counterparts shall together constitute
but one and the same agreement.

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

IN WITNESS WHEREOF, the parties
have hereunto set their hands and seals and duly executed this Agreement the
day and year set forth below.

 

THE BOARD OF TRUSTEES OF THE
UNIVERSITY OF ILLINOIS

 

 

	
  By:

  	
  /s/
  Craig S. Bazzani

  	
   

  	
   

  	
  Date:

  	
   

  	
  9/1/99

  	
   

  
	
   

  	
   

  	
  Craig
  S. Bazzani, Comptroller

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
    /s/
  Michele M. Thompson

  	
  9/2/99

  	
   

  	
   

  	
  Date:

  	
   

  	
  APPROVED:

  
	
   

  	
   

  	
  Michele
  M. Thompson, Secretary

  	
   

  	
   

  	
   

  	
  /s/
  Jill A. Tarzian Sorensen

  	
   

  	
  9-1-99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
     Jill
  A. Tarzian Sorensen            Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
     Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
     Intellectual
  Property Office

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QUARK
  BIOTECH, INC.

  	
   

  	
  Date:

  	
   

  	
  9.3.99

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
  /s/
  Daniel Zurr

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Dr.
  Daniel Zurr, President and CEO

  	
   

  	
   

  	
   

  	
   

  
															

 

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED
IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

APPENDIX A

RESEARCH 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.

 

13

 

RESEARCH
AGREEMENT

 

This Research Agreement is entered into as of
September 1, 1999 (“Effective
Date”) by and between The Board of Trustees of The University of
Illinois, a body corporate and politic of the State of Illinois, with principal
offices at Urbana, Illinois, and offices in Chicago, Illinois 60612 (“University”), and
Quark Biotech, Inc., a California corporation with principal offices at 1059
Serpentine Lane, Pleasanton, California 94566 (“Sponsor”).

 

WHEREAS, the University and Sponsor desire to
undertake a collaborative research program (“Research Program”) based on application
of Existing Technologies (as defined in Schedule I); and

 

WHEREAS, the Research Program is to be funded by
Sponsor and carried out, in part, in the University’s laboratories pursuant to
the terms and conditions set forth herein, and in part in the Sponsor’s
laboratories.

 

NOW, THEREFORE, in consideration of the premises
hereof and the mutual covenants and agreements contained herein, the parties
hereto agree as follows:

 

1.             STATEMENT OF WORK

 

a.             Objectives. The University and the Sponsor shall
collaborate in the research according to this Agreement directed towards [ * ], based on p53 gene [ * ].

 

b.             Resource Commitment. The University shall, with the
funds and/or equipment and/or technology made available by the Sponsor, furnish
the necessary and appropriate personnel, materials, services, laboratories and
other facilities and equipment for the conduct of its part of the work and
initial Research Program (“Program”)
described in Schedule II hereto and incorporated herein by reference. The
Program may be amended or modified from time to time as the parties shall
mutually agree. The University and Sponsor shall each permit the other party
and any of its personnel to visit the laboratories or other facilities where
the Research Program is being conducted at reasonable times and make all
personnel who are engaged in the Research Program available to consult with the
other party and any of its personnel during such visits or by telephone and/or
by correspondence during the term of the Research Program.

 

c.             Conduct of Research. The Research Program shall be
conducted in accordance with the Program and the Budget (as defined below)
within the time periods contemplated therein as set forth in Schedule II(a) and
(b) respectively. The Sponsor and the University agree to commence performance
of the Research Program within [ * ] of the
Effective Date hereof and each agrees to conduct the Research Program in a
prudent and skillful manner in accordance [ * ] with the
Program and Budget and all applicable federal, state and local laws, rules or
regulations, and subject to the terms and conditions hereof. With respect to
the Research Program set forth in Schedule II(a), Sponsor agrees that the
University will [ * ] provided that, (i) Sponsor
shall, [ * ]; (ii) the University shall [ * ]; and (iii) Sponsor [ * ].

 

2.             PRINCIPAL INVESTIGATOR.
All research at the University in the subject matter of the Research Program
shall be performed by Dr. Andrei Gudkov, as Principal Investigator, and the

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, 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

 

research team under his
supervision, and subject to this Agreement. The University hereby assigns Dr.
Andrei Gudkov as the Principal Investigator for directing the performance of
the Research Program. The University shall notify Sponsor immediately if such
Principal Investigator becomes unavailable and shall identify a successor,
subject to Sponsor’s approval. If Sponsor does not approve the successor
identified by the University or the University does not or cannot identify a
successor, this Agreement may be terminated by Sponsor subject to Section 13
hereof.

 

3.             PERIOD OF PERFORMANCE.

 

a.             Term of Research Program. The period of performance of
the Research Program set forth in Schedule II(a) will be three (3) years,
commencing on September 1, 1999, and ending on August 31, 2002. The period of
performance of the Research Program set forth in Schedule II(b) will be one (1)
year, commencing on September 1, 1999, and ending on August 31, 2000. The term
of the Research Program may be extended upon mutual written consent.

 

b.             Sponsor’s Right to Terminate Research Program. The
Research Program may be terminated at any time prior to its expiration if
Sponsor determines, at its sole discretion, that the Research Program is no
longer viable or commercially feasible. In such case. Sponsor will notify
University of that decision in writing, and the parties will work together to
(i) [ * ].

 

4.             RESEARCH PROGRAM FUNDING.

 

a.             Budget. The Sponsor will pay the University up to the
amounts set forth in the budget attached hereto as Schedule III and
incorporated herein by reference (“Budget”), which Budget shall reflect the
actual costs incurred in carrying out the performance of this Agreement plus
the indirect costs assessed at the rate(s) agreed to by the parties. The
University shall certify in writing, upon presentment of each Report (as
defined below) that work as budgeted has been actually performed and that the
University is in fact complying with all other provisions of this Agreement,
and shall provide Sponsor with a written expense report for all amounts
expended, pursuant to the Budget during the previous quarterly period. The
aggregate annual cost under this Agreement shall not exceed the amount stated
therefor in the Budget. The University is not obligated to expend any other
funds on the Program nor is the Sponsor obligated to pay the University in
excess of the stated amount set forth in the Budget, or to otherwise increase
the Budget. The University, together with the Principal Investigator, shall be
responsible for the correct and appropriate distribution and/or allocation of
the funds in accordance with the Budget.

 

b.             Payments. The University shall be reimbursed within [ * ] after it submits its quarterly Report and expense
report pursuant to Section 5(a) to Sponsor for costs incurred during the
previous quarter with final payment to the University due upon Sponsor’s
receipt of a final Report, marked as such, from the University no later than [ * ] after the expiration of the term of the Research
Program. Payments shall be by check payable to the University of Illinois, and
mailed to:

 

University of Illinois at Chicago

Office of Research Services

304 AOB, M/C 672

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

1737 W. Polk Street

Chicago, Illinois 60612-7227

ATTN:  Paula
Means, Director

 

c.             Equipment. Subject to Schedule II, [ * ]
under this Agreement.

 

5.             FISCAL MANAGEMENT. The University shall maintain complete and accurate accounting
records in accordance with accepted accounting practices for institutions of
higher education. These records shall be available for inspection, review and
audit at reasonable times during the term of this Agreement and for a period of
[ * ] after the termination hereof by
the Sponsor or any of its duly authorized representatives, at Sponsor’s
expense.

 

6.             WORK PRODUCT. Subject to the provisions of Section 8
herebelow, each party shall own the work product, tangible and intangible, that
it generates under this Agreement, and shall maintain records of its activities
with respect to the Research Program in sufficient detail so as to properly
reflect all work done and results achieved in the performance of the Research
Program. Each party shall have reasonable access to all materials and data
generated by or on behalf of the other party with respect to any and all work
carried out under the Research Program, for each party’s internal,
non-commercial use, not including work product licensed by Sponsor from
University hereunder, subject to the confidentiality obligations in Section 9
hereof.

 

7.             REPORTS. The
University and Sponsor, as collaborators in the Research Program, shall each
provide to the other party a written report within [ * ] after the end of each calendar quarter, commencing after
the end of the first full calendar quarter following the Effective Date of this
Agreement, summarizing the progress and status of the Program set forth in
Schedule II(a) (each, a “Report”). Within [
* ] following the end of the term of the Research Program set forth
in Schedule II(a), the University and Sponsor will each furnish to the
other party a final technical Report summarizing the work performed pursuant to
the Program and the results thereof.

 

8.             INTELLECTUAL PROPERTY.

 

a.             Ownership of Technology. It is hereby acknowledged and
agreed that each party has rights (including patent and other intellectual
property rights) to certain technologies related to the Research Program (“University Existing Technology”
as defined in Schedule I(a) hereto, and “Sponsor Existing Technology” as defined in
Schedule I (b) hereto, collectively the “Existing Technologies”), and each party
acknowledges that it does not have nor shall have any rights, title or interest
to the other party’s Existing Technology. With the exception of the Existing
Technologies, Sponsor and University agree that each shall notify the other of
inventions, discoveries and intellectual property conceived, reduced to
practice or otherwise developed under the Research Program (i) by the Principal
Investigator and his personnel (“UIC Invention”); (ii) by Sponsor and its
personnel at its laboratories in connection with the Research Program set forth
in Schedule II(a) (“Sponsor
Invention”); or (iii) jointly by personnel of the Sponsor and
the Principal Investigator and his personnel under the Research Program (“Joint Inventions”),
collectively referred to as “Inventions”.

 

b.             Notification of Inventions and Discoveries. Each party
shall promptly notify the other in writing of any Invention within [ * ] of such discovery. Disclosure to and from

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, 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

 

University shall be made
by filing of an Invention Disclosure statement with the University’s
Intellectual Property Office. Copy of each such Invention Disclosure statement
and the respective application filed with the patent office shall be sent
promptly to Sponsor. All disclosures and notifications made pursuant to this
clause 8(b) shall be deemed Confidential Information, as defined below, and
subject to the provisions respecting confidentiality in Section 9 below.

 

c.             License. The University hereby grants the Sponsor (i)
an exclusive worldwide license to the University’s right, title and interest in
the UIC Invention set forth in the Exclusive License Agreement between the
University and Sponsor dated as of the date hereof and attached hereto as
Exhibit A (“License A”),
and (ii) an exclusive option to obtain exclusive worldwide licenses to the
University’s right, title and interest in any other UIC Invention or Joint
Invention disclosed. Such option shall be for a [ * ]
period, commencing with the date the notification of such Invention is received
by Sponsor, and shall be exercised in writing by Sponsor, at which time the
parties agree to execute license agreements (“License B”) in the same form and of the
same terms and conditions as the Future Exclusive License Agreement attached
hereto as Exhibit B.

 

d.             Patents. University shall control the preparation,
filing, issuance, maintenance and prosecution of any U.S. or foreign patent
application, including any division, continuation, continuation-in-part and
substitution thereof, and any U.S. or foreign patent, including any
reexamination, reissue, renewal, extension, confirmation, registration,
revalidation and addition thereof with respect to any UIC Invention (the “UIC Patents”). Sponsor
shall control the preparation, filing, issuance, maintenance and prosecution of
any U.S. or foreign patent application, including any division, continuation,
continuation-in-part and substitution thereof, and any U.S. or foreign patent,
including any reexamination, reissue, renewal, extension, confirmation,
registration, revalidation or addition thereof with respect to any Joint
Invention (the “Joint
Patents”). The party controlling patenting shall be free to
decide in its sole discretion whether or not to file or continue prosecution or
maintain any patent and shall engage counsel of its choice and at its expense
to prepare, file, prosecute and maintain any such patents, in full consultation
with the other party. The party controlling patenting shall communicate and
coordinate with the other party its preparation, filing and prosecution of
patent applications and shall provide the other party with copies of draft
patent applications in sufficient time for the other party to comment thereon
prior to filing, and shall give proper attention to any comments offered by the
other party in preparing the final draft of the application for submission. The
controlling party shall use its best efforts to amend any patent application to
include claims reasonably requested by the other party and required to protect
the UIC Inventions or Joint Inventions. The controlling party shall promptly
provide the other party with copies of all relevant documentation and shall
promptly share all patent filing and prosecution information, including
notifying the other party of all filing and response deadlines so that the
other party may be informed and appraised of the continuing prosecution, and
the other party agrees to keep this documentation confidential. Should the
controlling party elect not to prepare, file, prosecute or maintain a patent or
discontinues its support of any of these activities, it shall promptly notify
the other party but in no event later than [ * ] predating
any response, filing or abandonment deadline, and the other party shall be free
to decide, in its sole discretion and at its expense, whether or not to support
or continue any such activities. The controlling party agrees to [ * ]

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, 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

 

promptly upon written
request from the other party after it receives notice from the controlling
party of its intention to abandon any patent rights in whole or in part,
subject to any pre-existing rights of the federal government.

 

9.             CONFIDENTIALITY.

 

a.             Confidential information. During the course of the
Research Program, the parties may each reveal to the other (i) any proprietary
or confidential information or material in tangible form disclosed hereunder
that is marked as “Confidential” at the time it is delivered to the receiving
party, (ii) any proprietary or confidential information disclosed orally
hereunder that is identified as confidential or proprietary when disclosed and
such disclosure is confirmed in writing to the receiving party within 30 days by
the disclosing party, and (iii) any information concerning the existence of
this Agreement or its terms or the Research Program (including the Program, the
Budget and any information or data generated pursuant thereto) (collectively,
“Confidential Information”). Except as expressly provided herein, the parties
agree that during the term of the Research Program and for a period of [ * ] thereafter, neither party shall use or disclose
Confidential Information to any third party except for the purposes contemplated
in this Agreement and the License. Notwithstanding the foregoing, the parties
agree that Confidential Information useful or necessary for the conduct of the
Program may be disclosed to the Principal Investigator and the authorized
personnel working under his direct supervision and to Sponsor’s personnel in
the course of conducting the Research Program, subject to such individuals
being bound by confidentiality restrictions at least as restrictive as those
herein.

 

b.             Protection of Confidential Information. Sponsor and
University agree to protect all Confidential Information received from the
other party from unauthorized use or disclosure with the highest degree of care
and shall not copy or disseminate any Confidential Information or allow it to
be copied or disseminated and shall return any Confidential Information given
to it when requested to do so. Each party shall promptly notify the other upon
discovery of any unauthorized use or disclosure of the other’s Confidential
Information. The University shall cause the Principal Investigator and each
individual working under his supervision with respect to the Research Program
(including any graduate or other students and whether or not such individuals
are employees of the University) to execute and deliver appropriate
Non-Disclosure Agreements in the form attached hereto as Exhibit C. No
individual shall be permitted to work on the Research Program unless he/she has
executed such agreement.

 

c.             Exceptions. Confidential Information shall not include
any information that (i) is now, or hereafter becomes, through no act or
failure to act on the part of the receiving party, in the public domain or
published; (ii) is in the possession of the receiving party prior to disclosure
by the disclosing party, as evidenced by its written records; or (iii) is
hereafter furnished to the receiving party by a third party, as a matter of
right and without restriction on disclosure.

 

d.             Permitted Disclosures. Notwithstanding the above, a
party may disclose Confidential Information of the other party:

 

(i)            to its personnel
to the extent such disclosure is reasonably necessary to achieve the objectives
of the Program and provided such personnel are bound by obligations of
confidentiality no less restrictive than those provided hereunder;

 

[ * ] = CERTAIN CONFIDENTIAL
INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

(ii)           to potential
sublicensees to the extent such disclosure is reasonably necessary and provided
sublicensee personnel are bound by obligations of confidentiality no less
restrictive than those provided hereunder;

 

(iii)         if required by law or
a court order to be disclosed or is the subject of a written permission to
disclose provided by the disclosing party; to regulatory agencies in order to
obtain registrations required; and to professional advisors, consultants and/or
potential investors in connection with a private placement or public offering.

 

10.          PUBLICATION; PUBLICITY.
University shall have the right to publish or otherwise present the results of
the Research Program at symposia or academic meetings; provided that it first
submit all proposed publications and presentations to the Sponsor [ * ] prior to submission of such proposed publication or
presentation to a journal, editor or other third party. Sponsor shall have [ * ] after the receipt of the publication or presentation
to review and comment upon it. Upon notice by Sponsor that Sponsor reasonably
believes a patent application relating to an Invention should be filed prior to
the publication or presentation or that exigent circumstances exist necessitating
a delay in publication or presentation. Sponsor may request the University to
delay and the University agrees to delay submission of the publication or
presentation for up to an additional [ * ] from the
date of Sponsor’s notification to the University or until a patent application
or applications are filed, whichever come first. University shall give Sponsor
appropriate recognition and credit for its contributions in all such
publications and presentations at symposia or meetings including, without limitation,
right of authorship and acknowledgement of QBI’s sponsorship. Any publicity,
including press releases, press conferences or other disclosures, about the
Research Program (including, without limitation, the establishment of any
aspects of the Program, its progress or any results generated therefrom) shall
be permitted only with the prior written approval of both the Sponsor and the
University.

 

11.          RELATIONSHIP
OF PARTIES. The University’s
relationship to the Sponsor under this Agreement shall be that of independent
contractor and not as an agent, joint venturer or partner of Sponsor,
notwithstanding the joint ownership by University and Sponsor of certain
Inventions hereunder.

 

12.          WARRANTIES AND INDEMNIFICATION. The
University and Sponsor disclaim any guaranty that the Research Program shall be
successful, in whole or in part. THE UNIVERSITY AND SPONSOR EXPRESSLY DISCLAIM
ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH
RESPECT TO THE RESEARCH PROGRAM, INCLUDING BUT NOT LIMITED TO, THE
MARKETABILITY, USE OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE RESEARCH
RESULTS DEVELOPED UNDER THE RESEARCH PROGRAM, OR THAT SUCH RESULTS DO NOT
INFRINGE UPON ANY THIRD PARTY’S INTELLECTUAL PROPERTY RIGHTS. Sponsor agrees to
indemnify and hold harmless the University and its employees and agents against
any and all costs, damages and expenses, including reasonably attorneys’ fees,
arising from any claim, damages and liabilities asserted by third parties
arising from Sponsor’s use of the research results from the Research Program,
except to the extent that the same is caused by any negligent or willful act or
omission by or on behalf of the University. The University agrees to be
responsible for any and all costs, damages and expenses, including reasonably
attorneys’ fees, arising from any misrepresentation or breach by University of
any of its covenants hereunder or

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, 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

 

the performance of any of
its obligations under this Agreement, except to the extent that the same, is
caused by any negligent or willful act or omission by or on behalf of the
Sponsor. Notwithstanding anything to the contrary in the foregoing, neither
party assumes any responsibility or liability for the nature, conduct or
results of any research, testing or other work performed by the other party on
such party’s premises.

 

13.          TERMINATION.

 

a.             Termination upon Default. Either party may terminate
this Agreement upon      [ * ] written notice upon the occurrence of any of the
following:

 

(i)            Upon or after the
bankruptcy, insolvency, dissolution or winding-up of the other party (other
than dissolution or winding-up for the purposes of reconstruction or
amalgamation); or

 

(ii)           Upon or after the
breach of any material provision of this Agreement by the other party if the
breaching party has not cured such breach within the [ * ]
following written notice of termination by the other party.

 

b.             Sponsor’s Right to Terminate. Sponsor shall have the
right to terminate this Agreement (i) upon [ * ] written notice
to the University if Sponsor does not approve of a successor Principal
Investigator or no such successor is identified in accordance with Section 2;
or (ii) upon [ * ] written notice to the
University if Sponsor determines that the Research Program is no longer
feasible in accordance with Section 3(b) and subject to the provisions of
Section 3(b).

 

c.             Effect of Termination.

 

(i)            In the event of
termination of this Agreement under the provisions of Section 13(b)(i)
hereabove, University shall issue a final Report and, within [ * ] of receipt thereof, Sponsor shall pay to University
the Pro rata portion of any
direct or applicable indirect costs due to the University pursuant to the
Budget which have been incurred up to and including the effective date of
termination, or the University shall reimburse the Sponsor, on a pro rata basis, for any direct or
applicable indirect costs that have been prepaid by Sponsor and which cover
costs that have not been incurred by or at the time of termination. The termination
of this Agreement under Section 13(b)(i) shall not relieve any party of
any obligation or liability accrued hereunder prior to such termination nor
affect or impair the rights of any party arising under this Agreement prior to
and as of such termination including, without limitation, the right of Sponsor
to obtain an exclusive license to Inventions and related patent and other
intellectual property rights pursuant to the terms hereof. Any termination or
cancellation of this Agreement or the Research Program under
Section 13(b)(i) shall not terminate or cancel the License A or any
License B executed, or options exercised for Inventions disclosed pursuant to
Sections 8(b) and 8(c) above, prior to such termination. Without limiting the
foregoing, Sections 7, 8, 9 and 12 shall survive termination of this Agreement
as provided therein.

 

(ii)           In the event of
termination of this Agreement under the provisions of Section 13(b)(ii)
hereabove, University shall issue a final Report. The termination of this

 

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, 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

 

Agreement under Section
13(b)(ii) shall not relieve any party of any obligation or liability accrued
hereunder prior to such termination nor affect or impair the rights of any
party arising under this Agreement prior to and as of such termination
including, without limitation, the right of Sponsor to obtain an exclusive
license to Inventions and related patent and other intellectual property rights
pursuant to the terms hereof. Any termination or cancellation of this Agreement
or the Research Program hereunder shall not terminate or cancel the License A
or any License B executed, or options exercised for Inventions disclosed
pursuant to Sections 8(b) and 8(c) above, prior to such termination, with the
exception that termination of the Research Program under the provisions of
Section 3(b)(i) or 3(b)(iii) will result in termination or cancellation of all
options exercised for Inventions disclosed pursuant to Sections 8(b) and 8(c)
above for which license agreements have not been executed. Without limiting the
foregoing, Sections 7, 8, 9 and 12 shall survive termination of this Agreement
as provided therein.

 

14.          AMENDMENTS. This
Agreement, together with the License and the Schedules and Exhibits attached
hereto, embodies the entire understanding of the parties and shall supersede
all previous communication, either verbal or written, between the parties
relating to this Agreement. This Agreement may only be amended by the mutual
written agreement of the parties hereto.

 

15.          ASSIGNMENT. This
Agreement may not be assigned by either party without the prior written consent
of the other; provided, however, that Sponsor may assign its rights, interest
and obligations under this Agreement at any time and without the University’s
consent, to QBI Enterprises, Ltd., an Israeli limited liability company and a
subsidiary of Sponsor.

 

16.          GOVERNING LAW. This
Agreement is to be governed by and construed in accordance with the laws of the
State of Illinois.

 

17.          NOTICES. Any payment, notice or other communication
pursuant to this Agreement shall be sufficiently made or given on the date of
receipt if sent to such party by telefax or overnight courier, or on the date
three days after mailing if sent by certified mail, postage prepaid, addressed
to it at its address below or as it shall designate by written notice given to
the other party:

 

In the case of UNIVERSITY:

 

University of Illinois at Chicago

Office of Research Services

304 AOB, M/C 672

1737 W. Polk Street

Chicago, Illinois 60612-7227

ATTN:  Paula Means,
Interim Director

 

In the case of SPONSOR:

 

Quark Biotech, Inc.

c/o QBI Enterprises, Ltd.

Weizmann Scientific Park

Building 3, 4th Floor

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

P.O. Box 741

Nes Ziona, Israel 74106

Attn: Daniel Zurr, President & CEO

FAX: 011-972-8-940-6476

 

18.          DISPUTE RESOLUTION. Any
controversy or bonafide dispute arising under this Agreement between the
parties, which dispute cannot be resolved by mutual agreement, shall, by the
election of either party, be resolved by submitting to dispute resolution
before a fact-finding body composed of one or more experts in the field,
selected by mutual agreement within thirty (30) days of written request by
either party. Said dispute resolution shall be held in Chicago or at such other
place as shall be mutually agreed upon in writing by the parties. The
fact-finding body shall determine who shall bear the cost of said resolution. In
the event that the parties cannot mutually agree within said thirty (30) days
on the dispute resolution body, the parties will apply the procedural rules of
a mutually agreeable forum.

 

[ * ] = CERTAIN CONFIDENTIAL
INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement by affixing, their respective signatures below as of
the day and year there noted.

 

THE BOARD OF TRUSTEES OF THE
UNIVERSITY OF ILLINOIS

 

 

	
   

  	
  /s/ Craig S. Bazzani

  	
   

  	
   

  	
   

  
	
  Craig S. Bazzani, Comptroller

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    /s/ Michele M. Thompson

  	
  9/15/99

  	
   

  	
   

  	
   

  
	
  Michele M. Thompson, Secretary

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPROVED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jill A. Tarzian Sorensen

  	
   

  	
  9-1-99

  	
   

  
	
  Jill A. Tarzian Sorensen

  	
   

  	
  Date

  
	
  Director

  	
   

  	
   

  
	
  Intellectual Property
  Office

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  QUARK BIOTECH, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Daniel Zurr

  	
   

  	
  9/15/99

  	
   

  
	
  Dr. Daniel Zurr, President & CEO

  	
   

  	
  Date:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AGREED
  AND ACKNOWLEDGED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PRINCIPAL
  INVESTIGATOR

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
    /s/ Andrei Gudkov

  	
   

  	
  9-14-99

  	
   

  
	
  Dr. Andrei Gudkov

  	
   

  	
  Date:

  	
   

  
						

 

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

SCHEDULE I:        DEFINITION OF EXISTING TECHNOLOGIES

 

(a)           UNIVERSITY
EXISTING TECHNOLOGY

 

(b)           SPONSOR
EXISTING TECHNOLOGY

 

SCHEDULE II:      RESEARCH PROGRAM

 

(a)           UNIVERSITY
RESEARCH PROGRAM

 

(b)           QBI
BIOCHIP TECHNOLOGY FACILITY PROGRAM

 

SCHEDULE III:     BUDGET FOR UNIVERSITY RESEARCH PROGRAM

 

EXHIBIT A:          EXCLUSIVE LICENSE AGREEMENT (“LICENSE
A”)

 

EXHIBIT B:           FUTURE EXCLUSIVE LICENSE AGREEMENT
(“LICENSE B”)

 

EXHIBIT C:           NON-DISCLOSURE AGREEMENT

 

 

Schedules
& Exhibits

 

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

 

 

SCHEDULE
I(a)

 

UNIVERSITY
EXISTING TECHNOLOGY

 

The United States patent application entitled [ * ]

 

 

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

 

 

SCHEDULE
I(b)

 

SPONSOR
EXISTING TECHNOLOGY

 

“Sponsor
Existing Technologies” shall mean QBI [ * ].

 

 

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

 

 

SCHEDULE
II(a)

 

UNIVERSITY
RESEARCH PROGRAM

 

[ * ]

 

 

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

 

 

SCHEDULE
II(b)

 

[ * ]

 

 

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

 

 

SCHEDULE
III

 

BUDGET
FOR UNIVERSITY RESEARCH PROGRAM

 

for the
program of studies of Pifithrin-a

(September 1, 1999 – August 31, 2002)

 

	
  Year 1

  	
   

  
	
   

  	
   

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
   

  	
   

  
	
  Year 2

  	
   

  
	
   

  	
   

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
   

  	
   

  
	
  Year 3

  	
   

  
	
   

  	
   

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  
	
  [ * ]

  	
  [ * ]

  

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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
A

 

EXCLUSIVE
LICENSE AGREEMENT (“LICENSE A”)

 

{This License A is
identical to the Exclusive License Agreement at the front of this Exhibit 10.21
to the Quark Biotech, Inc. Registration Statement on Form S-1 in executed
form.}

 

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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
B

 

 

FUTURE
EXCLUSIVE LICENSE AGREEMENT (LICENSE B)

 

(UIC Tech ID #                )

 

 

[ * ]

 

 

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

 

1

 

EXHIBIT
C

 

NONDISCLOSURE
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.

 

1Exhibit 10.22

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION

PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

 

COLLABORATION AGREEMENT

 

THIS AGREEMENT is made the sixth day of December, 2004

 

Between

 

atugen AG, a company
incorporated under the laws of Germany, whose registered office is at
Robert-Rössle-Str. 10, D13125 Berlin, Germany (hereinafter “Atugen”), of the first
Part; and

 

Quark Biotech, Inc.,
a private limited company incorporated under the laws of California whose
principal office is at 6540 Kaiser Drive, Fremont CA 94555, U.S.A. and QBI Enterprises Ltd., a private company
incorporated under the laws of the State of Israel whose principal office is at
Weizmann Science Park, P.O. box 4071, Nes Ziona 70400, ISRAEL, of the second
Part (together hereinafter, “QBI”)

 

WHEREAS

 

A.                         Atugen has established
proprietary technology and patent rights related to the development and
manufacture of siRNA molecules potentially silencing any target in any species
and has filed a patent application directed to biological aspects relating to
the 801 gene in the field of cancer

 

B.                           QBI owns patent rights and
know-how directed to the structure and function of the 801 gene and its role in
diseases;

 

C.                           Atugen and QBI wish to
engage in a collaborative research program with the aim of using Atugen’s
technology to develop products directed to the 801 gene, for the treatment of
cancer and other diseases in humans;

 

NOW, THEREFORE, it is agreed as follows:

 

1.             DEFINITIONS

 

“Affiliate” means
any enterprise which controls, is controlled by, or is under common control
with, such party as long as such control exists. For the purpose of the preceding
sentence, the word “control” means the ownership of at least 50% of the
outstanding voting stock of such enterprise or, a comparable equity interest in
any other type of entity

 

“Atugen Background Technology”
means any and all inventions, discoveries, methods and processes, improvements,
know-how, technical information, data or other technology that is heretofore or
hereafter discovered, conceived, made, developed

 

 

and/or reduced to practice by Atugen or its Affiliates, or owned in
whole or in part by, or licensed (with a right to sublicense) to Atugen or its
Affiliates and relates to: (i) the development and manufacture of siRNA
molecules silencing gene targets in animals and humans, and (ii) the
preparation of (liposome-based) formulations for the delivery of siRNA
therapeutic products, as well as any and all intellectual property rights
therein, including without limitation Patent Rights, copyright, trademark or
trade secret rights. Atugen Background Technology related to patents and patent
applications as of the date of this Agreement is identified in Schedule A1. The term Atugen Background
Technology does not include the Atugen Program IP.

 

“Atugen Existing IP” means
the Atugen Background Technology, and the Atugen Program IP.

 

“Atugen Products” – shall
mean Products and Drug Products for the treatment of cancer in humans.

 

“Atugen Program IP” means
certain stabilized, chemically modified siRNA molecule(s) silencing the human
801 gene and the mouse 801 gene that have been developed by Atugen prior to the
date of this Agreement and certain lipids and liposome-based formulations, as
identified in Schedule A2
hereto, and any and all intellectual property rights therein, including without
limitation Patent Rights, copyright, trademark or trade secret rights.

 

“Clinical Development”
means the trials conducted in human subjects to determine the safety, efficacy
and pharmacokinetics of a compound as required by the US FDA. Clinical
Development includes Phase I, Phase II, Phase III (and IV if required), and the
New Drug Application (NDA) for Regulatory Approval by the FDA .

 

“First Commercial Sale”
means the first sale to a third party in an arm’s length transaction for use or
consumption in such country after required Regulatory Approval has been granted
by the relevant regulatory authority in such country, provided that in a Major
Market the First Commercial Sale shall not be deemed to have commenced until
the annual Net Sales in that market exceeds [ * ].

 

“Formal Preclinical Development”
means the aggregate of in vitro and in vivo studies required by the US FDA to
determine the potential risk a compound poses to man and the environment,
necessary and sufficient for an IND approval.

 

“Drug Product” means the
Product formulated (such as e.g. using liposome-based Atugen Background
Technology) for administration to man.

 

“IND” means an
Investigational New Drug application filed with the FDA for a Drug Product in
order to obtain approval for the commencement of clinical trials

 

“Know-How” means
unpatented technical and other information, including information comprising or
relating to concepts, discoveries, inventions, data, designs, formulae, ideas,
methods, models, assays, research plans, procedures, designs for experiments
and tests and results of experimentation and testing (including results of
research or development) processes (including manufacturing processes,
specifications and techniques), laboratory records, chemical, pharmacological,
toxicological, clinical,

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

analytical and quality control data, trial data, case report forms,
data analyses, reports or summaries and information contained in submissions
to, and information from, ethical committees and regulatory authorities.

 

“Major Markets” shall mean
any of: [ * ].

 

“Net Sales” shall mean the aggregate gross sales of any Product
invoiced to third parties in an arm’s length transaction by QBI or Atugen or
their Affiliates, less the following deductions (to the extent that such
deductions are actually shown on the relevant invoices to third-party customers):

 

(a)          any tax, duty or other
governmental charge on the import or export, sale or use of any royalty-bearing
Product (not including franchise tax or income tax);;
and

 

(b)         actual costs of transportation
and insurance if invoiced to the customer; and

 

(c)          and
[ * ] deduction of [ * ]
of the price invoiced for Products to cover all the usual sales expenses such
as charges or allowances given or normal trade discounts allowed or commissions
paid in lieu of trade discounts as well as credits or allowances given or made
on account of return or rejection of any royalty-bearing Product;

 

“Patent Rights” shall mean
any and all (a) patents, (b) pending patent applications, including,
without limitation, all provisional applications, continuations, continuations-in-part,
divisions, reissues, renewals, and all patents granted thereon, and
(c) all patents-of-addition, reissue patents, reexaminations and
extensions or restorations by existing or future extension or restoration mechanisms,
including, without limitation, supplementary protection certificates or the
equivalent thereof.

 

“Products” means RNAi
products that are (i) based on the Existing Atugen IP or discovered, developed
or produced using the Existing Atugen IP, and (ii) are based on the QBI
Existing IP and directed to the 801 gene.

 

“Proof of Concept” means
those [ * ] that a Party deems [ * ].

 

“QBI Existing IP” means
the present and future Patent Rights and Know-How owned by QBI and directed to
the 801 polypeptide, to nucleic acid encoding the 801 polypeptide, antibody to
the 801 polypeptide, antisense and siRNA to 801 gene and methods of treatment
of diseases using these,including but not limited to rights to patents and
patent applications listed in Schedule B.

 

“QBI Products” means
Products and Drug Products for the treatment of human diseases other than
cancer.

 

“Regulatory Approval”
shall mean any and all MAA (Marketing Authorization Application) approvals or
post-MAA approvals (including any applicable governmental price and
reimbursement approvals), licenses, registrations, or authorizations of any
federal, national, multinational, state, provincial or local regulatory agency,
department,

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

bureau or other governmental entity necessary for the development,
manufacture, use, storage, import, transport, promotion, marketing and sale of
a product in a country.

 

“Sublicense Royalties”
shall mean net revenues from any royalties or similar payments that a Party or
an Affiliate of a Party receives from a sublicensee on account of sales of
Products by such sublicensee or its sublicensee

 

“Valid Patent Claim” shall mean:
(i) a claim under an issued and unexpired patent which has not been
revoked, held unenforceable or invalidated by a decision of a court or other
governmental agency of competent jurisdiction, is unappealable or for which an
appeal has not been filed within the time allowed for appeal and which has not
been discharged, denied or admitted to be invalid or unenforceable through reissue
or disclaimer or otherwise; or (ii) a claim in a pending patent
application, which application: (a) is under active prosecution; or
(b) for which formal examination has been requested; or (c) is a
provisional application, the benefit of which can be claimed in a
non-provisional application.

 

2.             SCOPE
OF THE COLLABORATION

 

The Parties shall undertake the following activities in accordance with
the terms of this Agreement, all of which shall together comprise the
“Collaboration” for the purposes of this Agreement:

 

2.1           In the first stage
of the Collaboration the Parties shall undertake a joint research program for
the purpose of developing a Product or Products, which shall potentially have
application in both Parties’ therapeutic area of interest. Such program shall
include all research required for the development of such Products towards submission
of an IND up to and including the Proof of Concept studies in animals, in accordance
with the provisions of Section 3 herein (the “Joint
Research Stage”);

 

2.2           In the second stage of the Collaboration, following the
Joint Research Stage, each Party or its sublicensee shall independently
undertake, at its own expense, such further pre-clinical and clinical drug
development activities as are necessary to obtain Regulatory Approvals for the
commercialization of Products in such Party’s therapeutic area of interest (the
“Development Stage”). During the
Development Stage of Collaboration the Parties shall determine which, if any,
Formal Preclinical Development or Clinical Development studies are suitable to
both Parties’ therapeutic category of interest and benefit both their Formal
Preclinical Development or Clinical Development and shall cooperate with each
other in the performance of such studies, in accordance with the provisions of
Section 4.3 herein (the “Joint Development
Program” ).

 

3.             THE
JOINT RESEARCH STAGE

 

3.1.          Objectives of the
Joint Research Stage The Parties shall undertake a joint research program
with the overall objective of identifying and developing Product candidates
related to 801 gene in each Party’s therapeutic area of interest up to and including
Proof of Concept in vitro cell culture studies , in accordance with a detailed
research plan which shall be agreed upon by the Parties as provided in Section
3.3.1

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

(the “Joint Research Program”).
For the avoidance of doubt, it is agreed that any studies in animals shall be
made by either party on its own account unless the Parties otherwise agree
upon. Once agreed upon, the Joint Research Program shall be attached as Schedule C to this Agreement and shall form
an integral part thereof. The Joint Research Program may be up-dated and
amended with the written consent of both Parties or the unanimous approval of
the Steering Committee.

 

3.2.          Research Period. The
Joint Research Program shall commence on the date upon which the Joint Research
Plan is approved by the Parties in accordance with Section 3.3.1 below (the “Commencement Date”). The Joint Research
Program shall continue for a period of [ * ] from the
Commencement Date (the “Research Period”),
and may be extended by the decision of the Steering Committee (as defined
below) or by mutual written consent of the Parties.

 

3.3          Conduct
of the Joint Research Program

 

3.3.1           The
Joint Research Program. The Joint Research Program, comprising a detailed
research plan and time-frame, shall be prepared and approved by the Parties by
no later than [ * ] from the date first above
written (the “Effective Date”). The
Joint Research Program shall be divided into the tasks to be performed by each
Party (each, a “Research Task”),
and shall provide the following details with respect to each Research Task:

 

(a)                                            The
objectives of the Research Task

 

(b)                                           The Party
who shall be responsible for performing the Research Task (each, a “Performing Party”);

 

(c)                                            The
specific activities that must be performed to complete the Research Task and
the work product that must be produced and delivered by the Performing Party
(the “Research Task Deliverables”).

 

(d)                                           The Party or
Parties who will benefit from the results of the Research Task and bear the
costs thereof as provided in Section 3.6.

 

(e)                                            The
timeframe for performance of the Research Task (a “Research Task Timeframe”); and

 

(f)                                              The
anticipated cost of the Research Task (the “Cost
Estimate”).

 

3.3.2           Preparation
of Research Task Costs Estimates The Party or Parties responsible for each
Research Task shall be responsible for preparing the Cost Estimate, and shall
submit it to the other Party for its approval.

 

3.4          Steering Committee

 

3.4.1        Membership and Functions.  The parties hereto agree to establish a
Steering Committee (SC) which shall comprise four members, two representatives,
designed by either party. the chairperson of the SC shall be designated semi-annually
on an alternating basis between the parties. The initial

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

chairperson shall be selected by
[ * ]. The party not designating the
chairperson shall designate one of its representative members as secretary to
the SC for such period. Each party shall be free to change its representative
members upon notice to the other party.

 

3.4.2 The Steering Committee
shall manage the specific objectives and activities of the Joint Research
Program and the Joint Development Program. Specifically, the Steering Committee
shall be responsible for the following functions:

 

(a)                                 Updating the Joint Research Program from time to time in
accordance with the recommendations of the Parties. Such updates, once
approved, shall be recorded and signed by both Parties and shall be
incorporated herein as amendments to Schedule D. Such updates may involve the
addition, alteration, or cancellation of entire Research Tasks or the
alteration of specific details within each Research Task, such as the Research
Task Deliverables, Research Task Timeframe, or Research Task Cost Estimate.

 

(b)                                Monitoring implementation of the Joint Research
Program and Joint Development Program by the Parties, including the
accomplishment of key objectives and the devotion of appropriate resources.

 

(c)                                 Determining whether the Research Task Deliverables have been
achieved at the end of each Research Task.

 

(d)                                Determining
patenting strategy with respect to the Joint Program IP, including the timing
of patent application filing and the choice of the prosecuting party for each
invention within the Joint Program IP.

 

(e)                                 Determining
the policy on the publication of the results of the Joint Research Program and
the Joint Development Program.

 

(f)                                   Acting as the first forum in the resolution of disputes.

 

3.4.2        Meetings of the Steering Committee. Meetings of the S
C shall be held at least once every [ * ] during
the Joint Research Program and the Joint Development Program, at times and
places as agreed upon at the prior meeting of the S C, and may be
conducted in person or by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Either Party may also convene a special meeting of
the S C at any time for the purpose of deciding any matter within the authority
of the Steering Committee, by providing [ * ] written
notice to the other Party. The chairperson shall be responsible for sending
notices of the meetings to all members.

 

Two weeks prior to each SC
meeting, a summary of progress of the development work of either party shall be
provided by either party to the members of the SC.

 

3.4.3                Decisions of the Steering Committee. The
Steering Committee shall make all decisions unanimously. Deadlock will be
resolved by submission of the issue

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

jointly to the CEO’s of QBI
and Atugen, and if the parties are unable to reach a solution within [ * ] of such submission, the matter may be referred for resolution
by either Party under Section 12. The Steering Committee will keep full records
of all its decisions and minutes of its meetings will be circulated to each
party and available for inspection by the parties on request.

 

Within [ * ]
after each SC meeting, the secretary of the DMC shall prepare and distribute
minutes of the meetings, which shall provide a description in reasonable detail
of the discussions held at the meeting and list any actions, decisions or
determinations approved by the SC.

 

The secretary shall be responsible
for circulation of all draft and final minutes. The draft shall first be
circulated to the chairperson, edited by the chairperson and then circulated in
the final draft form to all members of the SC, sufficiently in advance of the
next meeting to allow adequate review and comment prior to the meeting.

 

The minutes shall be approved or
disapproved and revised as necessary, at the next meeting. Final minutes shall
be distributed to the members of the SC.

 

3.4.4                Expenses of Steering Committee Members. For the
avoidance of doubt, each party shall bear the travel accommodation and
subsistence expenses of its staff involved in Steering Committee meetings.

 

3.5           Obligations of the Parties Pursuant to the Joint
Research Program

 

3.5.1        Diligence Obligations of the Parties.  Each of the Parties agrees to diligently and
timely perform its obligations pursuant to the Joint Research Program. Without
limiting the generality of the foregoing, each Party undertakes to commit its
resources and to exert the efforts necessary and reasonable and consistent with
its normal business practices to execute and perform the Research Tasks
assigned to such Party in the Joint Research Program, to maintain and utilize
the scientific staff, laboratories, offices and other facilities consistent
with such undertaking, and to reasonably cooperate with the other Party in the
conduct of the Joint Research Program.

 

3.5.2        Supply of Products and Product Candidates by Atugen during
the Joint Research Program.  During
the Joint Research Program, Atugen shall be responsible for developing and
manufacturing (or having manufactured) the siRNA molecules in quantities of up
to [ * ] that are identified as potential
Product candidates by the Parties (“Product
Candidates”), and shall manufacture (or have manufactured) and
supply quantities of up to [ * ] of such
Product Candidates to the Parties, as needed by the Parties to perform their
obligations pursuant to the Joint Research Program. The supply of Product
Candidates by Atugen during the Research Stage shall be detailed as Research
Tasks within the Joint Research Program, and the timing, quality and quantity
of Product Candidates supplied by Atugen shall be defined as Research
Deliverables for the purposes of this Agreement.

 

3.5.3        Transparency of
Research. The Parties shall communicate frequently by way of written
communication such as reports, letters, e-mails, by phone conversations,
meetings and visits to each other’s site in order to keep each other informed
at all times of the work performed by each Party under the Joint Research
Program. Each Party shall provide the other party and the Steering Committee
with quarterly

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

written summary reports at the end of each three-month period
specifying the activities undertaken by that party pursuant to the Joint
Research Program and the results in such details to allow a qualified
judgement. Specifically the Parties undertake to inform the Steering Committee
of any and all results of all Research Tasks performed under this Agreement,
including studies (if any) performed for them by third parties, including the
Proof of Concept in vivo studies. Further, each Party shall provide all
necessary data, results, documentation and information in its possession that
was generated in the course of the Joint Research Program and in the event that
the parties jointly participated in a Joint Development Program pursuant to
Section 4, the Joint Development Program, to support regulatory applications
such as for example IND or NDA/BLA. Each Party shall have the right to send
members of its staff to visit the sites at which work on the Joint Research
Program is being conducted by the other Party, or its Affiliates, in order to
review and discuss the progress and results of the Joint Research Program
and/or Joint Development Program, provided such visits are at reasonable times
and are for a period to be agreed between the parties, and provided reasonable
prior notice is given. The Party sending such visitors shall be responsible for
meeting the travel, subsistence and accommodation expenses of its staff.

 

3.6          Funding
of the Joint Research Program.

 

3.6.1        Funding of
Research Tasks for the Benefit of Both Parties.  Where a Research Task has been identified in
the Joint Research Program as being for the joint benefit of the Parties, each
Party shall [ * ] such Research Task, up to
the amount set forth in the applicable Cost Estimate according to the then
current Joint Research Program (Schedule C).

 

3.6.2        Funding of
Research Tasks for the Benefit of One Party.  Where a Research Task has been identified in
the Joint Research Program as being for the sole benefit of one Party, such
Party shall [ * ] such Research Task, up to
the amount set forth in the applicable Cost Estimate according to the then
current Joint Research Program (Schedule C).

 

3.6.3        Payments. Upon
Successful Completion of each Research Task, the Performing Party shall issue
an invoice to the other Party for its share (if any, in accordance with
Sections 3.6.1 and 3.6.2 above) of the actual costs incurred by the Performing
Party, up to the amount set forth in the relevant Cost Estimate, and the other
Party shall pay the amount invoiced within thirty days of receipt thereof. A
Party performing several Research Tasks may issue a consolidated invoice for
all such Research Tasks upon Successful Completion of the last thereof. For the
purposes of this Section the term “Successful Completion” shall mean
achievement of the relevant Research Task Deliverables as determined by the
Steering Committee.

 

3.6.4        Failure to Perform
Notwithstanding anything to the contrary in this Section 3.6, a Party shall not
be required to pay its share of the costs for a Research Task if the Performing
Party failed to deliver the Research Task Deliverables as set forth in the then
current Joint Research Program within the Research Timeframe, provided that (i)
such failure is not due to a good scientific reason or other reasons beyond the
control of the Party, and (ii) such failure or delay has not been cured and
continued for a period in excess of [ * ] (a “Failure to Perform”). In the event of a
Failure to Perform, the non-Performing Party shall have the right, at its sole
discretion,

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

to (i) assume performance of the Research Task from the Performing
Party, and the Performing Party shall be required to transfer to the other
Party, at its request, any and all Know How and Material in the possession of
the Performing Party that is useful or necessary for the performance of the
Research Task, and shall grant the other Party a license to use the same to the
extent necessary to perform the Research Task, or (ii) to terminate this
Agreement in accordance with Section 11.3.

 

4.             DEVELOPMENT
STAGE

 

4.1          Preparation
of Third Party Manufacturer for the Joint Development Stage

 

3.7.1        The Parties agree
that [ * ] shall be approached first as the
potential major third party manufacturer for the purpose of manufacturing
Products and Drug Products meeting the cGMP standards required by the U.S FDA
and supplying Products in suitable quantities for use in each Party’s
individual development program and (if applicable) in the Joint Development
Program. As QBI will be the first Party requiring such cGMP quality of
Products, QBI will negotiate and enter into a Manufacturing and Supply Agreements
securing, however, that Atugen is fully embedded into the flow of information
by receiving copies of reports, changes of the program and project, quantities
produced and delivered and that Atugen shall have the right and option to be
supplied byQBI’s selected manufacturers. on Atugen’s expense  Atugen shall prepare and provide to such
common third-party manufacturers and to QBI an up-to-date dossier, which atugen has developed with its partner and
which has proven to be suitable for a production of specific 801-siRNA
molecules at such partners’ manufacturing facilities. It is understood and
agreed that the manufacturers will have to adapt such Manufacturing Process
File (the “Manufacturing Process File
“) to its own conditions. The Manufacturing
Process File intends to describe the Product manufacturing process in sufficient
detail (and in any event, at least that level of detail indicated in Schedule D) to (i) enable the preparation
of a Drug Master File (DMF) for submission in the IND application and (ii) to
enable the selected third party manufacturer (or manufacturers) to practice the
Product manufacturing process. For the removal of doubt it is clarified that
Atugen’s obligations to prepare, deliver, and update the Manufacturing Process
File pursuant to this Section 4.1 shall remain in effect even if Atugen does
not participate in the Joint Development Program or its participation in the
Collaboration is terminated pursuant to Section 11; however, if Atugen terminates this Agreement in its entirety
pursuant to Section 11.2 (ii), Atugen has no longer such obligation pursuant to
this Section 4.1. For the removal of doubt Atugen has no further obligation to
prepare and provide additional information other than given in the Manufacturing Process File, even if this
information may not be sufficient for the preparation of a DMF.

 

4.2.          Completion of
Joint Research Program. The Joint Research Program shall be deemed
completed upon decision of the Parties to proceed to Development Stage and
perform the Joint Development Program. In the event that the Parties do not
make such decision at the same time, the Development Stage shall commence when
one Party notifies the other in writing that it has commenced Formal
Preclinical Development of a Product following completion of Proof of Concept
studies (i.e. in vitro cell

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

culture studies) in such Party’s therapeutic area of interest (the “Development Commencement Date”). The first
Party to commence Formal Preclinical Studies shall promptly notify the other
Party thereof and shall be referred to hereinafter as the “Initiating Party”, and the other Party
shall be referred to hereinafter as the “Non-Initiating
Party”. For the removal of doubt, it is clarified that a Party has
the right to initiate Formal Preclinical Development of the Product even if the
other Party has not yet completed the Proof of Concept studies for the Product
in his therapeutic category of interest. It is agreed, however, that the
Initiating Party shall keep the other party informed of the progress of its
Formal Preclinical Development by sending [ * ] summary
reports with the essential data and results to enable the other party to a
qualified decision.

 

4.3           Initiation of the
Joint Development Program. For a period of [ * ]
after the Development Commencement Date, the Non-Initiating Party shall have
the right, but not the obligation, to join with the Initiating Party in the
performance of a Joint Development Program, by providing the Initiating Party
with a notice of participation (a “Participation Notice”). The Non-Initiating
Party may participate in the Joint Development Program even if it has not yet
completed its Proof of Concept studies in its therapeutic area of interest.
Upon delivery of a Notice of Participation by the Non-Initiating Party, the
Parties shall prepare and implement the Joint Development Program in accordance
with the provisions of Section 4.5 below.

 

(a)                      In the event that the
Non-Initiating Party joins the Development Program during the period of [ * ] after the Development Commencement Date, the
Non-Initiating Party shall reimburse to the Initiating party [ * ] of all costs incurred by the Initiating Party during
the period between the Development Commencement Date and the Participation Notice.

 

(b)                     In the event that the
Non-Initiating Party joins the Development Program during the period between [ * ] after the Development Commencement Date, the
Non-Initiating Party shall reimburse to the Initiating party [ * ] of all costs incurred by the Initiating Party during
the period between the Development Commencement Date and the Participation
Notice.

 

It is clarified that the Non-Initiating Party shall not be obliged to
join the Initiating Party in performing a Joint Development Program even if it
has completed its Proof of Concept studies in its therapeutic area of interest
or at any time. In the event that the Non-Initiating Party does not notify the
Initiating Party of its decision to join in for the performance of the Joint Development
Program within [ * ] from the Development
Commencement Date, no Joint Development Program shall be performed. For the
removal of doubt, the non-performance of the Joint Development Program shall
not, except in the circumstances set forth in Section 4.4 below, affect any of
the other rights and obligations of the Parties pursuant to this Agreement

 

Notwithstanding anything to the contrary in this Section 4.3, in the
event that a Party has sublicensed the development of Products in its
therapeutic area of interest to a sublicensee in accordance with Section 6.3,
such sublicensee shall not be obliged to enter into a Joint Development Program
with the other Party in accordance with this Section 4.3.

 

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

 

10

 

4.4. Preparation of the Joint Development Program. Upon receipt
of a Participation Notice from the Non-Initiating Party in accordance with
Section 4.3, the Parties shall prepare and the Steering Committee shall meet to
determine the Joint Development Program. The Joint Development Program shall
include specifically those studies of the Formal Preclinical Development or
Clinical Development studies required by each Party for their specific
independent development program, and that are suitable to both Parties’
therapeutic category of interest and benefit both their Formal Preclinical
Development and Clinical Development. The Joint Development Program shall
detail the studies, timetable, Cost Estimates and payment terms and schedules
and shall be incorporated into this agreement as a new Schedule F. Other than as provided in the
Joint Development Program each Party shall be responsible for [ * ].

 

4.5.          Implementation of
the Joint Development Program. Unless otherwise agreed, the Initiating
Party shall be responsible for implementing the Joint Development Program and
shall report to the Steering Committee and to the Non-Initiating Party. It is
clarified that the Steering Committee shall be operative during the Joint
Development stage in accordance with Section 3.4 above and the Parties shall
cooperate with each other as provided in Section 3.5.3.

 

4.6           Funding of the
Joint Development Program. Each Party shall each bear [ * ]
by QBI or Atugen in the performance of the Joint Development Program. The payment
schedule shall be agreed upon by the Parties and detailed in Schedule F to this
Agreement. In the event that either Party withdraws from the Joint Development
Program in accordance with Section 4.7 below, such Party shall [ * ].

 

4.7.          Termination of
Participation in the Joint Development Program. Either Party may terminate
its participation in the Joint Development Program by providing the other Party
with [ * ] written notice. In such case the
followings shall apply:

 

(a)          The rights and licenses granted by one Party
to the Other Party pursuant to this Agreement shall remain in full force and effect,
subject to the obligations of the Parties pursuant to this Agreement.

 

(b)         Each Party shall transfer to the other Party,
and shall cause all of its sublicenses or Affiliates to transfer to the other
Party, by no later than [ * ] from the
date of termination of participation under this Section 4.7 all Know-How and
Materials relating to (a) the Joint Program IP, and (b), the information, data,
Know How developed under this Agreement, to the extent necessary or useful for
the development, manufacture, marketing and sale of Products and Drug Products
in the other Party’s therapeutic area of interest.

 

(c)          Atugen shall update the Product Manufacturing
Process file and shall forward it to QBI in sufficient detail to enable preparation
of a DMF or the IND and further to enable QBI to manufacture or have
manufactured the Product and the Drug Product during the Development Stage and
for commercial purposes. Atugen’s obligations under 3.7.1 shall survive such
termination of participation in the Joint Development Program.

 

4.8   Diligent Performance of the Development
and Commercialization Obligations of the Parties. 

 

4.8.1. Diligent Performance of Development. Each Party, by
itself or through

 

[
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 

its
Affiliates or sub licensees, undertakes to employ commercially reasonable
efforts, including funding consistent with such efforts, to develop Products in
accordance with such Party’s own individual development plan and (if applicable)
the Joint Development Program and to achieve the Development Milestones set
forth in Section 11.4. Specifically, each Party, by itself or through
Affiliates or sublicensees, undertakes to employ its best efforts, including
funding consistent with such efforts, to carry out all efficacy, pharmaceutical,
safety, toxicological and clinical tests, trials and studies and all other
activities necessary in order to obtain Regulatory Approval for the production,
use and sale of Products in such Party’s therapeutic area of interest. In the
event that a Party (or its Affiliates of sublicensees) does not achieve the
Development Milestones set, the other Party may terminate the licenses granted
to the Non-Achieving Party as set forth in Section 11.4.

 

4.8.2. Progress Reports. During the period commencing on the
Development Commencement Date and ending upon the receipt of the Regulatory
Approval for a Product each Party (or Affiliate or sublicensee) shall make
periodic progress reports to the other Party with a frequency of not less than
each [ * ] (the “Progress Reports”) whether
or not the Joint Development Program has been initiated.

 

4.8.3. Commercial Manufacture of Product.
Following completion of the Development Stage, each Party shall be entitled, at
such Party’s sole discretion, to (i) continue obtaining supplies of the
Products and Drug Products for all of such Party’s commercial needs from the
third party-manufacturer appointed by the Parties in accordance with Section
3.7.1 or (ii) to appoint and qualify a different or additional manufacturer to
supply such Party with commercial quantities of Products and Drug Products, and
the provisions of Section 3.7.1 shall apply, mutatis mutandis, to such
additional or different manufacturer.

 

4.8.4        Diligence in Commercialization.
During
the period commencing with the receipt of Regulatory Approval by a Party or sub
licensee for Products in a given country, such Party shall, and shall ensure
that its Affiliates and sub licensees shall, use its or their best efforts, including
funding consistent with such efforts, to promote, market and sell such
Products in such country.

 

5.             INTELLECTUAL
PROPERTY

 

5.1           Ownership
 
5.1.1        Existing IP. Each Party shall remain the sole owner of its Existing IP, and shall have no right in or to the Existing IP of the other Party, except in accordance with the licenses set forth herein.
 
5.1.2        Improvements to Atugen Background Technology  Atugen shall own any improvements that relate directly to the Atugen Background Technology and are of a general technology nature, rather than directed to specific target genes or products, which are made, invented, discovered, or reduced to practice by either Party in the course of the Collaboration.
 
5.1.3        Joint Program IP  The Parties shall jointly own all inventions, discoveries, know-how, trade secrets, methods, information, data, or Materials that are first

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 
made, invented, discovered or reduced to practice by either Party in the conduct of the Joint Research Program, or the Joint Development Program (hereinafter, “Joint Program IP”). The Joint Program IP shall include patent applications directed to specific anti-801 siRNAs.
 
5.2           Assignment and Perfection of Interest. Each Party agrees to cooperate with the other Party and to take all reasonable action and to execute, or have its employees, agents or consultants execute, all documents necessary to effectuate any assignment necessary to achieve joint ownership of the Joint Program IP. All patent applications and issued patents covering Joint Program IP shall be jointly owned and shall be prosecuted in accordance with Section 7.
 
6.             LICENSES
 
6.1.          Grant By QBI
 
6.1.1. Research License. Subject to the terms of this Agreement, QBI hereby grants to Atugen a non-exclusive, world-wide, royalty free license, without the right to sublicense, under the QBI Existing IP and the Joint Program IP, to perform the Joint Research Program and the Joint Development Program.
 
6.1.2        Development and Commercialization License Subject to the terms of this Agreement, QBI hereby grants to Atugen an exclusive, royalty bearing, world-wide license with the right to sublicense as set forth in Section 6.3, under the QBI Existing IP and the Joint Program IP, to develop, manufacture and/or have manufactured and commercialize import, market, sell and otherwise commercialize Atugen Products.
 
6.2           Grant By Atugen
 
6.2.1        Research License. Subject to the terms of this Agreement, Atugen hereby grants to QBI a non-exclusive, world-wide, royalty free license, without the right to sublicense, under the Atugen Existing IP and the Joint Program IP, to perform the Joint Research Program and the Joint Development Program.
 
6.2.2.       Development and Commercialization License Subject to the terms of this Agreement, Atugen hereby grants to QBI an exclusive, royalty bearing, world-wide license, with the right to sublicense as set forth in Section 6.3 under the Atugen Existing IP and the Joint Program IP, to develop, use, manufacture and/or have manufactured, import, market, sell and otherwise commercialize QBI Products.
 
6.3           Sublicenses
 
6.3.1. Sublicense Grant. Each Party shall be entitled to grant sublicenses to third parties under the development and commercialization license granted to such Party pursuant to Section 6.2.1.6 or 6.2.2.6 above, on terms and conditions in compliance with and not inconsistent with the terms of this Agreement (a “Sublicense”). Such Sublicenses shall be made for consideration and in arm’s length transactions.

 

[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, 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

 
6.3.2. Sublicense Agreements. Sublicenses shall only be granted pursuant to written agreements, which shall be in compliance and not inconsistent with and shall be subject and subordinate to the terms and conditions of this Agreement. Any act or omission by a sub licensee, which would have constituted a breach of this Agreement had it been an act or omission by the Party granting such Sublicense, shall constitute a breach of this Agreement
 

7.             PATENT
PROSECUTION AND MAINTENANCE

 

7.1           Upon decision of the
Steering Committee to file a Patent Application for the Joint Program IP (such Patent
Applications, and all Patent Rights issued with respect thereto, the “Joint Patents”), such Patent Application
shall be filed, prosecuted and maintained by the Party nominated by the
Steering Committee for the specific Patent Application (the “Filing Party”) in the joint names of Atugen
and QBI. The Filing Party shall consult with the other Party about the contents
of each Joint Patent Application prior to its filing, and shall obtain the
other Party’s approval thereto, such approval not to be unreasonably withheld. Unless
otherwise determined by the Steering Committee each Joint Patent shall be filed
in [ * ] and in such additional countries,
as the parties will agree. The costs of filing and maintaining the Joint
Patents shall be borne equally by the Parties. Each Party shall promptly
provide to the Filing Party all information, data or other assistance
including, without limitation, the execution of any documents or instruments,
necessary to enable such party to file, prosecute and defend the Patents and
Patent Applications.

 

7.2           If either Party gives written notice to the other Party
that it does not wish to fund a Joint Patent (i) for a specific claim relating
to the Joint Program IP, or (ii) in a particular country, or fails to respond
within [ * ] to a written request by the other
party that it state its intention with respect to such Joint Program IP, or if
a Party fails to reimburse the Filing Party for its half of the patent prosecution
and/or maintenance expenses relating to such Joint Patent within thirty days of
Filing Party’s invoice for the same, the other Party shall have the right to
file, in its own name and at its own expense, such Patent Application, or
application for such specific claim or in such country. In such event, the
Filing Party shall have the exclusive right to develop Products derived from or
covered by the claims in such patent application.

 

7.3           Infringement of IP by
Third Parties

 

7.3.1        If
either Party by itself or through an Affiliate or sublicensee becomes aware
that a third party is infringing any rights in the Joint Program IP, or if
either Party becomes aware of any allegation by a third party that the activity
of either of the Parties hereunder infringes or may infringe a patent of such
third party, that party will promptly provide the other with written notice
thereof. The Filing Party (or its sublicensee) shall have the initial right to
bring a claim for infringement or to defend such claim at the parties’ joint
expense, except that it shall keep the other Party reasonably informed of its
progress on the claim.

 

7.3.2   In the event that the Filing Party or its
sublicensee fails to institute a suit for infringement or fails to defend such
claim (as the case may be) or take other reasonable action in response to such
action pursuant to subsection 7.3.1 within [ * ] after
notice of such infringement, the other Party or its sublicensee will have the
right,

 

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

 

14

 

but not the obligation, to
institute such suit or defend the claim as the case may be or take other
appropriate action in its own name to enforce the applicable patent or infringed
right or defend the claim. Regardless of which party brings the action, the
non-enforcing party agrees to provide the enforcing party with all assistance
reasonably requested by the enforcing party, and at the expense of the
enforcing party, including without limitation, joining as a party to such
action where legally required for the conduct or prosecution of such action. Any
damages or other monetary recovery, whether by settlement or otherwise, shall [ * ], and if done jointly, shall [ * ].
Neither party shall have the right to settle any patent infringement litigation
under this Section in a manner that diminishes the rights or interests of the
other party without the consent of such other party, which consent shall not be
unreasonably withheld.

 

7.3.3. Cooperation. Each
party agrees to cooperate fully with the other party in the preparation,
filing, prosecution, maintenance, enforcement and defense of the Joint Patents.
Such cooperation shall include, without limitation: (i) executing all papers
and instruments, or requiring its employees or agents to execute such papers
and instruments, so as to vest the ownership of the Joint Patents jointly in
the Parties, and to enable the party having the right hereunder to do so to
apply for, prosecute, maintain, enforce and defend its rights to the Joint
Patents; (ii) providing the other party with notice of any matters coming to
such party’s attention that may affect the preparation, filing, prosecution,
maintenance, enforcement or defense of such rights in the Joint Patents; and
(iii) undertaking no actions that are potentially deleterious to the preparation,
filing, prosecution, maintenance, enforcement or defense of such rights on the
Joint Patents.

 

8.             ROYALTIES

 

8.1  Royalties on Sales of
Products by the Parties  Each Party
(the “Royalty Paying Party” shall pay to the other Party (the “Royalty Receiving
Party”) royalties on world-wide Net Sales of Products by the Royalty Paying
Party, its Affiliates, or its sub-licensees, as follows:

 

8.1.1        For Products that are
developed and/or marketed directly by the Royalty Paying Party or its
Affiliates, the Royalty Receiving Party shall be entitled to receive a royalty
equal to [ * ] of the annual Net Sales of such
Products.

 

8.1.2        For Products that are
developed and/or sold by sub licensees of the Royalty Paying Party, the Royalty
Receiving Party shall be entitled to receive a royalty equal to [ * ] of the Sublicense Royalties.

 

8.2           Royalty Reductions

 

8.2.1  Notwithstanding the
foregoing, in the event that (i) a Product of either Royalty Paying Party [ * ], and (ii) [ * ], the royalties
payable pursuant to Section 8.1.1 and Section 8.1.2 above shall be [ * ] as of the beginning of [ * ],
provided, however that such reduction shall only affect the royalty payable for
sales effected [ * ].

 

8.2.2        Offset of Third
Party License Fees.  The
Royalty Paying Party may offset [ * ] of any
royalties or license fees it must pay to third parties pursuant to any licenses

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

necessary to commercialize such Party’s Products (the “Royalty Offset”)
against the royalties payable by the commercializing Party to the other Party;
provided, however, that the necessity of obtaining such licenses arose or
became known following the date of this Agreement.

 

8.2.3        No royalty reduction
as set forth in Sections 8.2.1 and 8.2.2 or resulting from combination of Sections
8.2.1 and 8.2.2 shall have the effect to reduce the royalties payable by the
commercializing Party to the other Party to less than [ * ]
of the amounts that would have otherwise been due under the percentages set
forth in Section 8.1, if the Product is covered by a Valid Patent Claim in the
Joint Patents

 

8.3           Sublicensing
Receipts. Where a Party receives payments, other than sublicensee Royalties
from a sub licensee, in consideration for the grant of the sublicense, or the
grant of an option to obtain a Sublicense, including without limitation license
fees, down-payments, milestone payments, and license maintenance fees, but
excluding payments specifically committed to cover costs actually incurred by
such Party or their Affiliates in the development of the Products (herein,
“Sublicense Fees”) such Party shall pay to the other Party an amount equal to [ * ] of such Sublicense Fees, within [ * ]
of the date on which such Sublicense Fees are paid by the sub licensee.

 

8.4           Royalty Term The royalties specified in Sections 8.1 1 and
8.1.2 shall be payable on a country-by-country basis commencing with the First
Commercial Sale of each Product and shall continue until the later of: (i) the
expiration of ten (10) years from the first commercial sale of each such
Product in that country (provided that in the case of a country within the
European Union such ten (10) year period shall run from the date of First
Commercial Sale of such Product anywhere in the European Union), and (ii) until
the last to expire of any Valid Patent Claims claiming such Product which are
included in the Joint Patents.

 

8.5           Royalty Calculation 
Royalties shall be
computed at the end of each calendar quarter, which, for the purpose of this
Agreement, shall end on the last day of the month of March, June, September and
December. If this Agreement is terminated for any reason during a quarter then,
for the purpose of this clause only, the date of termination shall be the end
of that current quarter. Royalties shall be paid for each quarter within [ * ] of the end of the quarter. All sums due under this
Agreement are exclusive of any value added tax, which shall be payable in
addition, against the rendering by the other party of any appropriate value
added tax invoice.

 

8.6           Records  Each Party will maintain, and will cause its
sublicensees to maintain, complete and accurate books and records which enable
the royalties and other amounts payable hereunder to be verified. Upon
reasonable prior notice to the commercializing Party, an auditor paid for and
selected by the other Party shall have access, during normal business hours, to
the books and records of the commercializing Party and its sublicensees to
conduct a review or audit thereof. The auditor shall agree not to use or
disclose any information contained in the commercializing Party’s or its
sublicensees’ books or records, except for the purpose of fulfilling its duties
as set forth in this provision. If the auditor determines that the
commercializing Party or any sublicensee has underpaid royalties and other
amounts payable by [ * ] or more,
the Commercializing Party shall pay promptly, in addition to any such
underpayment, the costs and expenses of such auditor in connection with its
review or audit, provided

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

that no Party shall be liable to reimburse the other Party for any
underpayment that occurred more than [ * ] prior to
such audit.

 

8.7           Currency
Conversion Royalties shall be calculated and paid in Euro. For the purpose
of computing the Net Sales revenue made in a currency other than Euro, the
royalty-paying Party shall convert such currency from local currency to Euro in
accordance with [ * ].

 

8.8           Taxes In the
event that either Party (the “Paying Party”) is required to withhold any tax to
the tax or revenue authorities in any country regarding any payment to the
other Party (the “Recipient Party”) due to the laws of such country, such
amount shall be deducted from the payment to be made to the Recipient Party,
and the Paying Party shall promptly notify the Recipient Party of such
withholding and, within a reasonable time after making such deduction, furnish
the Recipient Party with copies of any tax certificate or other documentation
evidencing such withholding. Each Party agrees to cooperate with the other
Party in claiming exemptions from such deductions or withholdings under any
agreement or treaty from time to time in effect.

 

9.             WARRANTIES
AND LIMITATION OF LIABILITY

 

9.1           Organization and
Consents. Each of the Party’s hereby represents and warrants to the other
Party that as of the Effective Date it has full right, power and authority to
enter into this Agreement, this Agreement has been duly executed by such Party
and constitutes a legal, valid and binding obligation of such Party,
enforceable in accordance with its terms, and all necessary consents, approvals
and authorizations of all government authorities and other persons required to
be obtained by such Party in connection with the execution, delivery and
performance of this Agreement have been and shall be obtained.

 

9.2           No Conflict.
Each Party represents to the other Party that notwithstanding anything to the
contrary in this Agreement, the execution and delivery of this Agreement and
the performance of such Party’s obligations hereunder (a) do not conflict with
or violate such Party’s corporate charter and bylaws or any requirement of
applicable laws of regulations and (b) do not and shall not conflict with,
violate or breach or constitute a default or require any consent under, any
contractual obligation of such Party.

 

9.3           Intellectual
Property. Each Party warrants that it independently developed, and is the
owner or licensee (with the right to sublicense) or otherwise has rightful
possession of, such Party’s Existing IP, including patents and patent
applications. Each Party further warrants that as of the Effective Date such
Party is not aware of any actual or threatened proceedings in which it is
claimed or is implied that the use of such Party’s Existing IP infringes the
rights of a third party, [ * ] and to
the best of each Party’s knowledge, use of such Party’s Existing IP as set
forth in this Agreement will not infringe the rights of any third party.

 

9.4           Disclaimer.

 

EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY
DISCLAIMS, WAIVES, RELEASES, AND RENOUNCES ANY

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE PARTIES EXPRESSLY DO NOT WARRANT
(I) THE SUCCESS OF ANY STUDY OR TEST COMMENCED PURSUANT TO THE JOINT RESEARCH
PROGRAM OR THE DEVELOPMENT PROGRAM (II) THE SAFETY OR USEFULNESS FOR ANY PURPOSE
OF THE EXISTING IP PROVIDED BY EACH PARTY.

 

9.5           Limitation of Liability.

 

NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OF THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING WITHOUT LIMITATION LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.
 

10.          INDEMNITY

 

10.1         Indemnification by
QBI. QBI agrees to indemnify, defend, and hold harmless Atugen, its
Affiliates and its sublicensees and their respective directors, officers,
employees and agents (the “Atugen Indemnified Parties”) from and against any
losses, costs, damages, fees or expenses arising out of any third party claim
relating to (i) any breach by QBI of any of its representations, warranties or
obligations pursuant to this Agreement, (ii) the gross negligence or willful
misconduct of QBI, or (iii) injuries resulting from the development,
manufacture, use, sale or other disposition of any QBI Product in any country.
In the event of any such claim against the Atugen Indemnified Parties by any
third party, Atugen shall promptly notify QBI in writing of the claim and QBI
shall manage and control, at its sole expense, the defense of the claim and its
settlement. The Atugen Indemnified Parties shall cooperate with QBI and may, at
their option and expense, be represented in any such action or proceeding. QBI
shall not be liable for any litigation costs or expenses incurred by the Atugen
Indemnified Parties without QBI’s prior written authorization. In addition, QBI
shall not be responsible for the indemnification or defense of any Atugen
Indemnified Party arising from any negligent or intentional acts by any Atugen
Indemnified Party or the breach by Atugen of any obligation or warranty under
this Agreement, or any claims compromised or settled without Atugen’s prior
written consent.

 

10.2         Indemnification by
Atugen. Atugen agrees to indemnify, defend, and hold harmless QBI, its
Affiliates and its sublicensees, and their respective directors, officers,
employees and agents (the “QBI Indemnified Parties”) from and against any
losses, costs, damages, fees or expenses arising out of any third party claim
relating to (i) any breach by Atugen of any of its representations, warranties
or obligations pursuant to this Agreement, (ii) the gross negligence or willful
misconduct of Atugen, or (iii) injuries resulting from the development,
manufacture, use, sale or other disposition of any Atugen Product in any
country. In the event of any such claim against the

 

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

 

18

 

QBI Indemnified Parties by any third party, QBI shall promptly notify
Atugen in writing of the claim and Atugen shall manage and control, at its sole
expense, the defense of the claim and its settlement. The QBI Indemnified
Parties shall cooperate with Atugen and may, at their option and expense, be
represented in any such action or proceeding. Atugen shall not be liable for
any litigation costs or expenses incurred by the QBI Indemnified Parties
without QBI’s prior written authorization. In addition, Atugen shall not be
responsible for the indemnification or defense of any QBI Indemnified Party
arising from any negligent or intentional acts by any QBI Indemnified Party or
the breach by QBI of any obligation or warranty under this Agreement, or any
claims compromised or settled without QBI’s prior written consent.

 

11.          TERM AND TERMINATION

 

11.1         Term  This Agreement shall be effective as of the
date first above written and shall continue in full force and effect until the
expiration of the Royalty term as set forth in Section 8.3, unless sooner
terminated under this Section 11 (“Term” of the Agreement).

 

11.2.1      Termination
for Breach. Either Party (the “Terminating Party”) shall be entitled, at
such Party’s sole and absolute discretion to (i) terminate the licenses granted
to the other Party (the “Non-Terminating Party”) pursuant to this Agreement, or
(ii) terminate this Agreement in its entirety, in the event that the
other Party commits a material breach of any of the terms of the Agreement and
fails to remedy such breach within [ * ] of
written notice given by the non-breaching party.

 

11.2.2      Effect
of Termination for Breach: In the event that the Terminating Party elects
to terminate only the licenses granted to the other Party pursuant to Subsection
11.2(i) above, the licenses granted to the Terminating Party hereunder shall
remain in full force and effect, subject to payment of the royalty obligations
set forth herein. In the event of termination for breach as set
forth in this Article 11.2, the Non-Terminating Party shall transfer to the
Terminating Party, and shall cause all of its sub licensees or Affiliates to
transfer to the Terminating Party, by no later than [ * ]
from the date of termination of participation under this Section 4.7. all
Know-How and Materials relating to (a) the Joint Program IP, and (b) the
information, data, Know How developed under this Agreement, to the extent
necessary or useful for the development, manufacture, marketing and sale of
Products and Drug Products in the other Party’s therapeutic area of interest.

 

11.3         Termination
due to Failure to Perform in the Joint Research Stage 

 

Without derogating from the generality of
Section 11.2, either Party shall be entitled to terminate the Joint Research
Program and to (i) terminate the licenses granted to the other Party or (ii)
terminate the Agreement in the event of Failure to Perform of the other Party
as provided in Section 3.6.4.

 

11.4.        Termination
due to non-achievement of Development Milestones. Either Party (or its
Affiliate or sub licensee) may (but is not obliged to) terminate the licenses
granted to the other Party (the “Terminating Party”) in the event that the
other party (the “Non-Achieving Party”) does not achieve its Development
Milestones set forth [ * ], i.e.
cancer indications for Atugen and a non-cancer indications for QBI, as set

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

forth in the following table (the
“Development Milestones”) within the timeframe set therefore:

 

	
  Development Milestone

  	
   

  	
  Atugen or sublicensee

  	
   

  	
  Quark or sublicensee

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
   

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  

 

In the event of any termination
according to this Section 11.4 the licenses granted by the Non-Achieving Party to the
Terminating Party shall remain in full force and effect, subject to payment of
royalties as provided in this Agreement.

 

Notwithstanding the foregoing, if the
Non-Achieving Party is QBI and the reason for QBI’s failure to achieve the
Development Milestones is due only to a failure of the siRNA molecules
generated under this Agreement including Products or Drug Products to inhibit
the 801 gene in a manner that is suitable for drug development, then the
licenses granted to Atugen shall become non-exclusive.

 

11.5         Termination
by Either Party  Either Party shall be entitled to terminate
this Agreement should the other Party hereto become insolvent, or if
proceedings in voluntary or involuntary bankruptcy or pursuant to any other
insolvency law shall be instituted by, on behalf of or against the other party,
or if a trustee or receiver of the party’s property shall be appointed.

 

12.          DISPUTE
RESOLUTION

 

Any disputes between the Parties which relates to an alleged breach of
this Agreement, or is otherwise connected with this Agreement or any term or
condition hereof, and cannot be resolved amicably by the Parties, shall be
finally resolved by binding arbitration, except disputes regarding the
validity, scope or enforceability of patents or trademarks, which shall be
submitted to a court of competent jurisdiction. The arbitration shall be held
in The Hague, Netherlands according to the rules of the International Chamber of
Commerce (“ICC”) and the laws of the Netherlands. The arbitration will be
conducted by a panel of three (3) arbitrators with significant experience in
the pharmaceutical industry appointed in accordance with applicable ICC rules.
Any arbitration herewith shall be conducted in the English language to the
maximum extent possible. Judgment on the award so rendered shall be final and
may be entered in any court having jurisdiction thereof.

 

13.          PUBLIC
ANNOUNCEMENTS; PUBLICATIONS

 

Promptly following execution of this Agreement by the Parties, either
Party may issue an initial press release in such form as the Party may
hereafter agree upon. Neither Party shall issue any further news release or
other public announcement relating to this Agreement, including any of its
terms, or to the performance of either party hereunder, without the prior
written approval of the other Party, such approval not to be

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

unreasonably withheld. Once the text or substance of any announcement
has been so approved, it may be repeated without further approval.

 

14.          SCIENTIFIC
PUBLICATIONS

 

Each Party will submit to the other for review and approval, such
approval not to be unreasonably withheld, all proposed academic, scientific and
medical publications and public presentations relating to research and
development of Products or otherwise involving the Joint Program IP or their
share therein, for review in connection with protection of such Intellectual
Property rights, including without limitation, the preservation of exclusive
Patent rights and/or to determine whether any confidential information set out
therein should be modified or deleted. Written copies of such proposed
publications and presentations shall be submitted to a party no later than [ * ] before submission for publication or presentation and
the other party shall provide its comments with respect to such publications
and presentations with [ * ] of its
receipt of such written copy. Notwithstanding the foregoing, no such
publication or presentation shall be made until such publication or
presentation has been approved by each party’s patent counsel. Each party will
comply with standard academic practice regarding authorship or scientific
publication and recognition of contribution of other parties in any such
publication.

 

15.          CONFIDENTIALITY

 

15.1         Each Party undertakes
to keep and treat as confidential and not disclose to any third party, any
information relating to the business or trade secrets of the other, nor make
use of such information for any purpose whatsoever, except to those employees
of the party who need to know for the purposes of this Agreement, provided that
the foregoing obligation shall not extend to information which:

 

(a)           is or will have been
known to the receiving party prior to the disclosure by the other party as
evidenced by written record or other proof; or

 

(b)           is or will have been
public knowledge through no fault of the receiving party; or

 

(c)           has been received
from a third party who did not acquire it directly or indirectly from the
disclosing party.

 

16.          NOTICES

 

All notices required to be given hereunder shall be given in writing to
the recipient at the address stated below, or to such other address as the
recipient may from time to time specify in writing by sending the same by
pre-paid registered postage or facsimile and shall if sent by registered post
be deemed to be five days after posting, and if sent by facsimile, shall be
deemed to have been received at the time of delivery as indicated on the
facsimile activity report.

 

If to Atugen,
addressed to:

 

Thomas
Christély, COO and CFO

Telephone: +49 30 9489 2800, Facsimile: +49 30 9489 2801

email: christely@atugen.com

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

With a copy to:

Dr. Klaus
Giese, CSO and VP Research

Telephone: +49 30 9489 2800, Facsimile: +49 30 9489 2801

email: giese@atugen.com

 

If to QBI, addressed
to:

 

Dr. Daniel
Zurr, President and CEO

Telephone: +972 8 9305111, Facsimile: +972-8-9406476

email: zurr@qbi.co.il

 

With a copy to:

Dr. Rami
Skaliter, EVP Research and Development

Telephone: +972 8 9305111, Facsimile: +972-8-9406476

email: skaliter@qbi.co.il

 

17.          MISCELLANEOUS

 

17.1         Amendment of
Agreement

 

Neither any alteration, modification or addition to this Agreement, nor
any waiver of any of the terms hereof shall be valid unless made in writing and
signed by the duly authorized representatives from both parties.

 

17.2         Force Majeure

 

Neither Party shall be deemed to be in breach of this Agreement or
otherwise liable to the other Party for any delay in performance or any
non-performance of any obligations under this Agreement (and the time for
performance shall be extended accordingly) if and to the extent that the delay
or non-performance is due to circumstances beyond its reasonable control
including without limitation flood, fire, earthquake, riots or industrial
disputes not involving employees of such party (“Force Majeure”).

 

A party suffering an event of Force Majeure
shall promptly notify the other of the nature and extent of the circumstances
giving rise to Force Majeure. If the relevant Force Majeure prevails for a
continuous or aggregate period in excess of two months after the date on which
the Force Majeure begins, the Party not suffering the event of Force Majeure is
entitled to give notice to the other party terminating the Agreement forthwith.
Neither party shall have any liability to the other in respect of termination
of this Agreement due to Force Majeure, but rights and liabilities which have
accrued prior to termination shall subsist and the parties shall meet to agree
on the process for their continuing use.

 

17.3         Severability.
If any part of this Agreement is declared invalid by any legal authority having
jurisdiction over either Party, then such declaration shall not affect the
remainder of the Agreement, which shall continue in full force and effect. The
Parties shall revise the invalidated part in a manner that will render such
provision valid and closely approximate the Parties’ original intent.

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

17.4         Waiver. Except
as specifically provided for herein, the waiver from time to time by either of
the Parties of any of their rights or their failure to exercise any remedy
shall not operate or be construed as a continuing waiver of same or of any
other of such Party’s rights or remedies provided in this Agreement.

 

17.5         Independent
Contractors.  It is understood and
agreed that the relationship between the Parties is that of independent contractors
and that nothing in this Agreement shall be construed as authorization for
either Atugen or QBI to act as agent for the other. Members of the Steering
Committee shall remain, employees of Atugen or QBI, as the case may be.

 

17.6         Consents Not
Unreasonably Withheld. Whenever provision is made in this Agreement for
either Party to secure the consent or approval of the other, that consent or
approval shall not unreasonably be withheld, and whenever in this Agreement
provision is made for one Party to object to or disapprove a matter, such
objection or disapproval shall not unreasonably be exercised.

 

17.7         Further Action.
Each Party agrees to execute, acknowledge and deliver such further instruments,
and to do all such other acts, as may be necessary or appropriate in order to
carry out the purposes and intent of this Agreement.

 

17.8         Assignment.
This Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their permitted successors and assigns; provided, however, that
neither Party shall assign any of its rights and obligations hereunder except
(i) as incident to the merger, consolidation, reorganization or acquisition of
stock or assets affecting substantially all of the assets or actual voting control
of the assigning Party or (ii) to an Affiliate; provided, however, that in no
event shall either Party’s obligations under the Joint Research Program be
assigned to an Affiliate without the prior written consent of the other Party.
Atugen acknowledges and agrees that the Research Program may be performed in
whole or in party on behalf of QBI by QBI Enterprises Ltd...

 

17.9         Headings. The
section and paragraph headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections or paragraphs.

 

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

 

In witness whereof, the Parties have signed this Agreement effective as of the date first above written,
 

	QBI
	 
	Atugen

	Quark Biotech Inc./QBI Enterprises Ltd.
	 
	 

	 
	 
	 

	
  By

  	
   

  	
  /s/ Daniel Zurr

  	
   

  	
   

  	
  By

  	
  /s/ P. Buckel, /s/ T. Christely

  	
   

  
	
  Name

  	
  Daniel Zurr

  	
   

  	
   

  	
  Name

  	
  P. Buckel, T. Christely

  	
   

  
	
  Title

  	
  CEO

  	
   

  	
   

  	
  Title

  	
  CEO, COO/CFO

  	
   

  
	
  Date

  	
  December 6, 2004

  	
   

  	
   

  	
  Date

  	
  November 30, 2004

  	
   

  
												

 

[ * ]  = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

 

Schedule A1

 

•                  [ * ]

 

Schedule A2

 

•                  [ * ]

 

Schedule B

 

•                  [ * ]

 

Schedule C

General description of the Joint
Research and the specific Research Tasks. For each Research Task specify:

 

1.               Objectives of the Research Task

 

2.               Performing Party, responsible for
performing the Research Task

 

3.               The specific activities that must be
performed to complete the Research Task and the Research Task Deliverables

 

4.               The Party or Parties who will benefit
from the results of the Research Task and bear the costs thereof as provided in
Section 3.6.

 

5.               The Research Task Timeframe

 

6.               The Cost
Estimate of the Research Task.

 

Schedule D

In relation to the Manufacturing
Process File – specify the level of detail required (that enables the
preparation of a Drug Master File (DMF) for submission in the IND application)

 

[ * ] = CERTAIN CONFIDENTIAL
INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, 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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]