Document:

Exhibit
4.4

    

    THIS
WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.

     

    QUARK  PHARMACEUTICALS,
INC.

     

    WARRANT
TO PURCHASE SERIES H PREFERRED STOCK

     

    
      	
              No.
      PHW-__

            	
              May
      17, 2010

            

    

    Void
After  May 17, 2015

     

    This
Certifies That, for value received, «WarrantHolder», or assigns (the
“Holder”), is entitled to subscribe for and purchase at the Exercise Price
(defined below) from Quark
Pharmaceuticals,
Inc., a California corporation, with its principal office at 6501
Dumbarton Circle, Fremont, California 94555 (the “Company”) up to
«NumberOfShares» shares of the Series H Preferred Stock of the Company (the
“Preferred Stock”).

     

    Immediately
prior to the closing of the Company’s initial public offering, this warrant
shall become exercisable for that number of shares of Common Stock of the
Company into which the shares of Preferred Stock issuable under this warrant
would then be convertible, so long as such shares, if this warrant has been
exercised prior to such offering, would have been converted into shares of the
Company’s Common Stock pursuant to the automatic conversion provisions (or
otherwise) of the Company’s Articles of Incorporation.

     

    1.           Definitions.  As
used herein, the following terms shall have the following respective
meanings:

     

    (a)           “Exercise
Period” shall mean the period commencing with the date hereof and ending five
(5) years later, unless sooner terminated as provided below.

     

    (b)           “Exercise
Price” shall mean $5.00 per share, subject to adjustment pursuant to
Section 5 below.

     

    (c)           “Exercise
Shares” shall mean the shares of the Company’s Preferred Stock issuable upon
exercise of this Warrant, subject to adjustment pursuant to the terms herein,
including but not limited to adjustment pursuant to Section 5
below.

     

    2.           Exercise of
Warrant.  The rights represented by this Warrant may be
exercised in whole or in part at any time during the Exercise Period, by
delivery of the following to the Company at its address set forth above (or at
such other address as it may designate by notice in writing to the
Holder):

     

    (a)           An
executed Notice of Exercise in the form attached hereto;

    

    
      
        
           

        

        
          1.

          
            

          

        

        
           

        

      

    

    

    (b)           Payment
of the Exercise Price either (i) in cash or by check, or (ii) by cancellation of
indebtedness; and

     

    (c)           This
Warrant.

     

    Upon the
exercise of the rights represented by this Warrant, a certificate or
certificates for the Exercise Shares so purchased, registered in the name of the
Holder or persons affiliated with the Holder, if the Holder so designates, shall
be issued and delivered to the Holder within a reasonable time after the rights
represented by this Warrant shall have been so exercised.

     

    The
person in whose name any certificate or certificates for Exercise Shares are to
be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

     

    2.1           Net
Exercise.  Notwithstanding any provisions herein to the
contrary, if the fair market value of one share of the Company’s Preferred Stock
is greater than the Exercise Price (at the date of calculation as set forth
below), in lieu of exercising this Warrant by payment of cash, the Holder may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being canceled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Notice of
Exercise in which event the Company shall issue to the Holder a number of shares
of Preferred Stock computed using the following formula:

     

    X = Y (A-B)

    A

     

    Where    X
=         the number of shares of
Preferred Stock to be issued to the Holder

     

    
      	
               
      

            	
              Y
      =

            	
              the
      number of shares of Preferred Stock purchasable under the Warrant or, if
      only a portion of the Warrant is being exercised, the portion of the
      Warrant being canceled (at the date of such
  calculation)

            

    

     

    
      	
               
      

            	
              A
      =

            	
              the
      fair market value of one share of the Company’s Preferred Stock (at the
      date of such calculation)

            

    

     

    
      	
               
      

            	
              B
      =

            	
              Exercise
      Price (as adjusted to the date of such
  calculation)

            

    

     

    For
purposes of the above calculation, the fair market value of one share of
Preferred Stock shall be determined by the Company’s Board of Directors in good
faith; provided, however, that in the event that this Warrant is exercised
pursuant to this Section 2.1 in connection with the Company’s initial
public offering of its Common Stock, the fair market value per share shall be
the product of (i) the per share offering price to the public of the Company’s
initial public offering, and (ii) the number of shares of Common Stock into
which each share of Preferred Stock is convertible at the time of such
exercise.

    

    
      
        
           

        

        
          2.

          
            

          

        

        
           

        

      

    

     

    3.           Covenants
of the Company.

     

    3.1           Covenants as to Exercise
Shares.  The Company covenants and agrees that all Exercise
Shares that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issuance thereof.  The Company further covenants and agrees that the
Company will at all times during the Exercise Period, have authorized and
reserved, free from preemptive rights, a sufficient number of shares of its
Preferred Stock to provide for the exercise of the rights represented by this
Warrant.  If at any time during the Exercise Period the number of
authorized but unissued shares of Preferred Stock shall not be sufficient to
permit exercise of this Warrant, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Preferred Stock to such number of shares as shall be
sufficient for such purposes.

     

    3.2           No
Impairment.  Except and to the extent as waived or consented to
by the Holder, the Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment.

     

    3.3           Notices of Record
Date.  In the event of any taking by the Company of a record of
the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other than a cash
dividend which is the same as cash dividends paid in previous quarters) or other
distribution, the Company shall mail to the Holder, at least ten (10) days prior
to the date specified herein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend or
distribution.

     

    4.           Representations
of Holder.

     

    4.1           Acquisition of Warrant for Personal
Account.  The Holder represents and warrants that it is
acquiring the Warrant and the Exercise Shares solely for its account for
investment and not with a view to or for sale or distribution of said Warrant or
Exercise Shares or any part thereof.  The Holder also represents that
the entire legal and beneficial interests of the Warrant and Exercise Shares the
Holder is acquiring is being acquired for, and will be held for, its account
only.

     

    4.2           Securities
Are Not Registered.

     

    (a)           The
Holder understands that the Warrant and the Exercise Shares have not been
registered under the Securities Act of 1933, as amended (the “Act”) on the basis
that no distribution or public offering of the stock of the Company is to be
effected.  The Holder realizes that the basis for the exemption may
not be present if, notwithstanding its representations, the Holder has a present
intention of acquiring the securities for a fixed or determinable period in the
future, selling (in connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the securities.  The
Holder has no such present intention.

    

    
      
        
           

        

        
          3.

          
            

          

        

        
           

        

      

    

     

    (b)           The
Holder recognizes that the Warrant and the Exercise Shares must be held
indefinitely unless they are subsequently registered under the Act or an
exemption from such registration is available.  The Holder recognizes
that the Company has no obligation to register the Warrant or the Exercise
Shares of the Company, or to comply with any exemption from such
registration.

     

    (c)           The
Holder is aware that neither the Warrant nor the Exercise Shares may be sold
pursuant to Rule 144 adopted under the Act unless certain conditions are met,
including, among other things, the existence of a public market for the shares,
the availability of certain current public information about the Company, the
resale following the required holding period under Rule 144 and the number of
shares being sold during any three month period not exceeding specified
limitations.  Holder is aware that the conditions for resale set forth
in Rule 144 have not been satisfied and that the Company presently has no plans
to satisfy these conditions in the foreseeable future.

     

    4.3           Disposition
of Warrant and Exercise Shares.

     

    (a)           The
Holder further agrees not to make any disposition of all or any part of the
Warrant or Exercise Shares in any event unless and until:

     

    (i)           The
Company shall have received a letter secured by the Holder from the Securities
and Exchange Commission stating that no action will be recommended to the
Commission with respect to the proposed disposition;

     

    (ii)           There
is then in effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement; or

     

    (iii)           The
Holder shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by the
Company, the Holder shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, for the Holder to the effect that such
disposition will not require registration of such Warrant or Exercise Shares
under the Act or any applicable state securities laws.

     

    (b)           The
Holder understands and agrees that all certificates evidencing the shares to be
issued to the Holder may bear the following legend:

     

    THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”).  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.

    

    
      
        
           

        

        
          4.

          
            

          

        

        
           

        

      

    

     

    5.           Adjustment
of Exercise Price.  In the event of changes in the outstanding
Preferred Stock of the Company by reason of stock dividends, split-ups,
recapitalizations, reclassifications, combinations or exchanges of shares,
separations, reorganizations, liquidations, or the like, the number and class of
shares available under the Warrant in the aggregate and the Exercise Price shall
be correspondingly adjusted to give the Holder of the Warrant, on exercise for
the same aggregate Exercise Price, the total number, class, and kind of shares
as the Holder would have owned had the Warrant been exercised prior to the event
and had the Holder continued to hold such shares until after the event requiring
adjustment; provided, however, that such adjustment shall not be made with
respect to, and this Warrant shall terminate if not exercised prior to, the
events set forth in Section 7 below.  The form of this Warrant
need not be changed because of any adjustment in the number of Exercise Shares
subject to this Warrant.

     

    6.           Fractional
Shares.  No fractional shares shall be issued upon the exercise
of this Warrant as a consequence of any adjustment pursuant
hereto.  All Exercise Shares (including fractions) issuable upon
exercise of this Warrant may be aggregated for purposes of determining whether
the exercise would result in the issuance of any fractional
share.  If, after aggregation, the exercise would result in the
issuance of a fractional share, the Company shall, in lieu of issuance of any
fractional share, pay the Holder otherwise entitled to such fraction a sum in
cash equal to the product resulting from multiplying the then current fair
market value of an Exercise Share by such fraction.

     

    7.           Early
Termination.  In the event of, at any time during the Exercise
Period, an initial public offering of securities of the Company registered under
the Act, or any capital reorganization, or any reclassification of the capital
stock of the Company (other than a change in par value or from par value to no
par value or no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Company with or into another corporation (other than a merger solely to
effect a reincorporation of the Company into another state), or the sale or
other disposition of all or substantially all the properties and assets of the
Company in its entirety to any other person, the Company shall provide to the
Holder twenty (20) days advance written notice of such public offering,
reorganization, reclassification, consolidation, merger or sale or other
disposition of the Company’s assets, and this Warrant shall terminate unless
exercised prior to the date such public offering is closed or the occurrence of
such reorganization, reclassification, consolidation, merger or sale or other
disposition of the Company’s assets.

     

    8.           Market
Stand-Off Agreement.  Holder shall not sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock (or other securities) of the Company held by Holder, for a
period of time specified by the managing underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of a registration
statement of the Company filed under the Act.  Holder agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the managing underwriter(s) which are consistent with the
foregoing or which are necessary to give further effect thereto.  In
order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to such Common Stock (or other securities) until the
end of such period.  The underwriters of the Company’s stock are
intended third party beneficiaries of this Section 8 and shall have the right,
power and authority to enforce the provisions hereof as though they were a party
hereto.

    

    
      
        
           

        

        
          5.

          
            

          

        

        
           

        

      

    

     

    9.           No
Stockholder Rights.  This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of the
Company.

     

    10.           Transfer of
Warrant.  Subject to applicable laws and the restriction on
transfer set forth on the first page of this Warrant, this Warrant and all
rights hereunder are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto to any transferee designated by Holder.  The transferee shall
sign an investment letter in form and substance satisfactory to the
Company.

     

    11.           Lost,
Stolen, Mutilated or Destroyed Warrant.  If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed.  Any such new Warrant shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time enforceable by
anyone.

     

    12.           Notices,
etc.  All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed telex or facsimile
if sent during normal business hours of the recipient, if not, then on the next
business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt.  All
communications shall be sent to the Company at the address listed on the
signature page and to Holder at the address set forth in the Series H Preferred
Stock Purchase Agreement or at such other address as the Company or Holder may
designate by ten (10) days advance written notice to the other parties
hereto.

     

    13.           Acceptance.  Receipt
of this Warrant by the Holder shall constitute acceptance of and agreement to
all of the terms and conditions contained herein.

     

    14.           Governing
Law.  This Warrant and all rights, obligations and liabilities
hereunder shall be governed by the laws of the State of California.

    

    
      
        
           

        

        
          6.

          
            

          

        

        
           

        

      

    

    

    In Witness
Whereof, the Company has caused this Warrant to be executed by its duly
authorized officer as of May 17, 2010.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          QUARK  PHARMACEUTICALS,
      INC.

                                        
	 
      	 
      
	
                                          By:

                                        	 
      
	 	 
	
                                          Name:

                                        	 
      
	 	 
	
                                          Title:

                                        	 
      
	 	 
	
                                          Address: 

                                        	 
      

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
           

        

        
          7.

          
            

          

        

        
           

        

      

    

     

    NOTICE
OF EXERCISE

     

    TO:  QUARK  PHARMACEUTICALS,
INC.

     

    (1)           ̈           The
undersigned hereby elects to purchase ________ shares of the Series H Preferred
Stock of Quark Pharmaceuticals, Inc. (the “Company”) pursuant to the terms of
the attached Warrant, and tenders herewith payment of the exercise price in
full, together with all applicable transfer taxes, if any.

     

     ̈           The
undersigned hereby elects to purchase ________ shares of the Series H Preferred
Stock of Quark Pharmaceuticals, Inc. (the “Company”) pursuant to the terms of
the net exercise provisions set forth in Section 2.1 of the attached
Warrant, and shall tender payment of all applicable transfer taxes, if
any.

     

    (2)           Please
issue a certificate or certificates representing said shares of Series H
Preferred Stock in the name of the undersigned or in such other name as is
specified below:

     

    
      
        
          
            
              	 
      
	
                      (Name)

                    
	 
      
	 
      
	
                      (Address)

                    

            

          

        

      

    

    

    (3)           The
undersigned represents that (i) the aforesaid shares of Series H Preferred Stock
are being acquired for the account of the undersigned for investment and not
with a view to, or for resale in connection with, the distribution thereof and
that the undersigned has no present intention of distributing or reselling such
shares; (ii) the undersigned is aware of the Company’s business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision regarding its investment in the
Company; (iii) the undersigned is experienced in making investments of this type
and has such knowledge and background in financial and business matters that the
undersigned is capable of evaluating the merits and risks of this investment and
protecting the undersigned’s own interests; (iv) the undersigned understands
that the shares of Series H Preferred Stock issuable upon exercise of this
Warrant have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), by reason of a specific exemption from the registration
provisions of the Securities Act, which exemption depends upon, among other
things, the bona fide nature of the investment intent as expressed herein, and,
because such securities have not been registered under the Securities Act, they
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available; (v) the undersigned is
aware that the aforesaid shares of Series H Preferred Stock may not be sold
pursuant to Rule 144 adopted under the Securities Act unless certain conditions
are met and until the undersigned has held the shares for the number of years
prescribed by Rule 144, that among the conditions for use of the Rule is the
availability of current information to the public about the Company and the
Company has not made such information available and has no present plans to do
so; and (vi) the undersigned agrees not to make any disposition of all or any
part of the aforesaid shares of Series H Preferred Stock unless and until there
is then in effect a registration statement under the Securities Act covering
such proposed disposition and such disposition is made in accordance with said
registration statement, or the undersigned has provided the Company with an
opinion of counsel satisfactory to the Company, stating that such registration
is not required.

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    
      
        
          
            
              
                	 
      	 
      	 
      
	
                        (Date)

                      	 
      	
                        (Signature)

                      
	 	 	 
	 
      	 
      	 
      
	 
      	 
      	
                        (Print
      name)

                      

              

            

          

        

      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    ASSIGNMENT
FORM

     

    (To
assign the foregoing Warrant, execute this form and supply required
information.  Do not use this form to purchase shares.)

     

    For Value
Received, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to

     

    
      
        
          
            
              
                
                  	
                          Name:

                        	 
      
	
                          (Please
      Print)

                        
	 
	
                          Address:

                        	 
      
	
                          (Please
      Print)

                        

                

              

            

          

        

      

    

    

    Dated:  __________,
20__

     

    
      
        
          
            	
                    Holder’s

                  	 
      
	
                    Signature:

                  	 
      
	 
      	 
      
	
                    Holder’s

                  	 
      
	
                    Address:

                  	 
      

          

        

      

    

    

    NOTE:  The signature
to this Assignment Form must correspond with the name as it appears on the face
of the Warrant, without alteration or enlargement or any change
whatever.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.Exhibit
10.2

     

    EMPLOYMENT
AGREEMENT

     

    THIS
EMPLOYMENT AGREEMENT, effective as of January 1, 2008 (the “Effective Date”), is
made by and between Quark Pharmaceuticals, Inc., a California Corporation (the
“Company”), and Daniel Zurr (“Executive”).

     

    RECITALS

     

    WHEREAS,
Executive is currently employed by the Company under terms and conditions that
expired on December 31, 2007;

     

    WHEREAS,
the Company seeks to continue to employ Executive; and

     

    WHEREAS,
the Company and Executive seek to enter into a new Employment Agreement which
shall govern Executive’s employment as of the Effective Date;

     

    AGREEMENT

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
below and other good and valuable consideration, the receipt of which is hereby
acknowledged, Executive and the Company hereby agree as follows:

     

    1.           Position and
Duties.  The Company hereby agrees to employ Executive as Chief
Executive Officer or in such other capacity as the Company’s Board of Directors
(the “Board”) may from time to time request.  While Executive is
employed by the Company, Executive shall devote his full time and best efforts,
energies and talents to serving the Company in accordance with this
Agreement.  Executive shall not be engaged in any other employment nor
engage in any other business activities for any other person, firm or company
without the prior written consent of the Company.  Executive shall
report to the Board and shall perform the duties, undertake the responsibilities
and exercise the authority assigned to him by the Board.  Executive
agrees that he shall perform his duties faithfully and efficiently subject to
the direction of the Board.

     

    2.           Compensation and
Benefits.  Subject to the terms of this Agreement, the Company
shall compensate the Executive for his services as follows:

     

    (a)           Base
Salary.  Executive shall earn a base salary at an annual rate
of US $325,000, subject to applicable tax withholdings and payable on the
Company’s regular payroll schedule.

     

    (b)           Standard Company
Benefits.  Executive shall be eligible to participate in the
Company’s standard employee benefit plans as in effect ‘tom time to time,
subject to the terms and conditions of the plans.  These benefits
currently include group insurance plans (such as health, life, and disability)
and a retirement savings plan.

    
      
         

      

      
        1.

        
          

        

      

      
         

      

    

    (c)           Equity
Awards.  The Company has granted Executive certain options to
purchase shares of common stock in the Company (the “Existing
Options”).  Executive shall also be eligible for additional equity
awards from time to time in the future as shall be determined by the Board in
its sole discretion, and subject to such vesting, exercisability, and other
provisions as the Board may determine in its sole discretion (the “Future Equity
Awards”).  Both the Existing Options and the Future Equity Awards
shall be governed in all respects by the terms of the applicable equity plan
document(s), grant notice(s) and award agreement(s).

     

    (d)           Expenses.  The
Company will reimburse Executive for reasonable business expenses incurred by
Executive in the furtherance of or in connection with the performance of
Executive’s duties hereunder in accordance with the Company’s established
policies (including reimbursement for telephone expenses and business
(ravel).  Executive shall furnish the Company with evidence of the
incurrence of such expenses in accordance with the Company’s policies on expense
reimbursement from time to time.

     

    3.           At-Will
Employment.  Executive’s employment with the Company is at
will, and may be terminated by either party at any time, with or without Cause
(as defined herein) or advance notice.

     

    4.           Severance
Benefits.

     

    (a)           Termination Without Cause
and/or Resignation For Good Reason.  If Executive’s employment
is terminated by the Company without Cause (as defined below), and not due to
Executive’s death or disability, or it’ Executive resigns from his employment
for Good Reason (as defined below), then (in either ease) the Company shall pay
Executive, in one lump sum, twelve (12) months of Executive’s then current base
salary (subject to standard payroll deductions and withholdings), with such
payment to be made within fifteen days after the effective date of the release
referenced in subsection (b) below; provided, however, that if Executive remains
a member of the Board following the termination of his employment, or serves as
a consultant to the Company following the termination of his employment, then
this severance payment shall be offset by any compensation paid to Executive by
the Company in connection with such role(s).  Executive shall not be
entitled to any other severance benefits from the Company other than those
expressly set forth in this paragraph.

     

    (b)           Release.  As
a condition to receipt of the severance benefits set forth in subsection
(a).  Executive shall be required to provide the Company with an
effective general release of any and all known and unknown claims against the
Company and its officers, directors, employees, shareholders, parents,
subsidiaries, successors, agents, and affiliates in a form acceptable to the
Company.  Executive must provide such release within thirty (30) days
after Executive’s receipt of such release (but in no event later than February
28 of the year following the year in which the termination occurs).

     

    (c)           Termination For Cause and/or
Resignation Without Good Reason.  If the Company terminates
Executive’s employment for Cause (as defined below) or Executive resigns from
his employment without Good Reason (as defined below), Executive shall not
receive any severance benefits from the Company, including (without limitation)
those set forth in subsection (a).

    
      
         

      

      
        2.

        
          

        

      

      
         

      

    

    (d)          Cause.  For
purposes o f this Agreement, “Cause” shall mean (1) gross negligence or willful
failure by Executive to perform his duties, (2) willful misconduct by the
Executive that is materially injurious to the Company, monetarily or otherwise,
(3) the engaging by Executive in egregious misconduct involving moral turpitude
to the extent that his creditability and reputation no longer conforms to the
standard of senior executives of the Company, (4) the commission by Executive of
an act of dishonesty or breach of trust; or (5) a material breach of this
Agreement or any other agreement between Executive and the Company.

     

    (e)          Good
Reason.  For purposes of this Agreement, a resignation for
“Good Reason” shall mean that Executive has resigned from all positions he
then-holds with the Company if:

     

    (1)           one
of the following actions has been taken: (i) there is a material reduction in
Executive’s compensation, except to the extent the compensation of other
similarly situated officers of the Company is similarly reduced, or (ii) the
Company materially breaches its obligations under any agreement with
Executive;

     

    (2)           Executive
provides written notice to the Chairman of the Board within the 60-day period
immediately following such reduction or breach;

     

    (3)           such
reduction or breach is not remedied by the Company within thirty (30) days
following the Company’s receipt of such written notice; and

     

    (4)           Executive’s
resignation is effective not later than one hundred and twenty (120) days after
the expiration of such thirty (30) day cure period.

     

    5.           Proprietary Information
Agreement.  Executive shall continue to be bound by the terms
and conditions of the Proprietary Information Agreement between Executive and
the Company.

     

    6.           Representations and
Warranties.

     

    (a)          Executive
represents and warrants that: (i) the execution and delivery of this Agreement
and the fulfillment of the terms hereof will not constitute a default under or
breach of any agreement or other instrument to which he is a party or by which
he is bound, including without limitation, any confidentiality or
non-competition agreement, and do not require the consent of any person or
entity; (ii) he shall not utilize, during his employment with the Company any
proprietary information of any of his previous employers.

     

    (b)          Executive
shall inform the Company, immediately upon becoming aware of any matter in which
he or a member of his immediate family or affiliate has a personal interest or
which might create a conflict of interests with his duties to the
Company.

     

    7.           Successors.  This
Agreement shall be binding upon, and inure to the benefit of, the Company and
its successors and assigns and upon any person acquiring, whether, by merger,
consolidation, purchase of assets or otherwise, all or substantially all of the
Company’s assets and business.

    
      
         

      

      
        3.

        
          

        

      

      
         

      

    

    8.           Notices.  Notices
and all other communications provided for in this Agreement shall be in writing
and shall be delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid, or sent by facsimile or prepaid
overnight courier to the parties at the addresses set forth below (or such other
addresses as shall be specified by the parties by like notice):

     

    To the
Company:

     

    Quark
Pharmaceuticals, Inc.

    6501
Dumbarton Circle

    Fremont,
California 94555

    Attn:
Chairman of the Board of Directors

     

    To
Executive:

     

    Daniel
Zurr, at the most recent address shown in the records of the
Company.

     

    9.           Severability.  The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable
provision were omitted (but only to the extent that such provision cannot be
appropriately reformed or modified).

     

    10.         Waiver of
Breach.  No waiver of any party hereto of a breach of any
provision of this Agreement by any other party will operate or be construed as a
waiver of any subsequent breach by such other party.  The failure of
any party hereto to take any action by reason of such breach will not deprive
such party of the right to take action at any time while such breach
continues.

     

    11.         Amendment.  This
Agreement may not he amended, modified or canceled other than by a written
instrument executed by both Parties, or by their duly authorized
representatives.

     

    12.         Survival of
Agreement.  Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of the Executive’s employment with the
Company.

     

    13.         Entire
Agreement.  This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior agreements between Executive and the Company relating to the subject
matter hereof

     

    14.         Governing
Law.  This Agreement shall be governed by the laws of the State
of California.  Any proceeding related to or arising out of this
Agreement shall be commenced, prosecuted or continued in the State of
California.

     

    15.         Acknowledgement by
Executive.  Executive represents to the Company that he is
knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, that he has read this Agreement and that he
understands its terms.  Executive acknowledges that, prior to
assenting to the terms of this Agreement, he has been given a reasonable time to
review it, to consult with counsel of his choice, and to negotiate at
arm’s-length with the Company as to the contents.  Executive and the
Company agree that the language used in this Agreement is the language chosen by
the parties to express their mutual intent, and that no rule of strict
construction is to be applied against any party hereto.

    
      
         

      

      
        4.

        
          

        

      

      
         

      

    

     

    IN WITNESS WHEREOF, the
parties execute and deliver this Employment Agreement as of the day and year
written below.

     

    
      
        
          
            	 
      	
                    QUARK
      PHARMACEUTICALS, INC.

                  
	 	 
	 
      	
                    By:

                  	
                    /s/ Philip B.
  Simon

                  

          

        

      

    

    

    
      
        
          
            
              
                
                  
                    
                      	 
      	
                              Print
      Name: 

                            	
                              Philip B. Simon

                            
	 	 	 
	 
      	
                              Print
      Title:

                            	
                              Chairman of the Board of
      Directors

                            
	 
      	 
      	 
      
	 
      	
                              DANIEL
      ZURR

                            
	 	 
	 
      	
                                /s/ D.
  Zurr

                            

                    

                  

                

              

            

          

        

      

    
 

    
      
         

      

      
        5.

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