Exhibit 10.35


 


QUARK PHARMACEUTICALS, INC.

2007 EMPLOYEE STOCK PURCHASE PLAN


 


ADOPTED BY THE BOARD OF DIRECTORS:  MAY 24, 2007


APPROVED
BY THE SHAREHOLDERS: JUNE 1, 2007


 


ADJUSTED
TO REFLECT 2.9:1 REVERSE

STOCK SPLIT EFFECTIVE JUNE 4, 2007


 


1.             GENERAL.


 


(a)           The purpose of the
Plan is to provide a means by which Eligible Employees of the Company and
certain designated Related Corporations may be given an opportunity to purchase
shares of Common Stock. The Plan is intended to permit the Company to grant a
series of Purchase Rights to Eligible Employees under an Employee Stock
Purchase Plan.


 


(b)           The Company, by
means of the Plan, seeks to retain the services of such Employees, to secure
and retain the services of new Employees and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its Related
Corporations.


 


2.             ADMINISTRATION.


 


(a)           The Board shall
administer the Plan unless and until the Board delegates administration of the
Plan to a Committee or Committees, as provided in Section 2(c).


 


(b)           The Board shall
have the power, subject to, and within the limitations of, the express
provisions of the Plan:


 


(i)            To determine how
and when Purchase Rights to purchase shares of Common Stock shall be granted
and the provisions of each Offering comprised of such Purchase Rights (which
need not be identical).


 


(ii)           To designate from
time to time which Related Corporations of the Company shall be eligible to
participate in the Plan.


 


(iii)         To construe and
interpret the Plan and Purchase Rights, and to establish, amend and revoke
rules and regulations for administration of the Plan. The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in
the Plan, in a manner and to the extent it shall deem necessary or expedient to
make the Plan or Purchase Rights fully effective.


 


(iv)          To settle all
controversies regarding the Plan and Purchase Rights granted under it.


 


(v)            To suspend or terminate the Plan at
any time. Suspension or termination of the Plan shall not impair rights and
obligations under any Purchase Right granted while the Plan is in effect except
with the written consent of the affected Participant.


 

















 


(vi)          To amend the Plan in
any respect the Board deems necessary or advisable. However, except as provided
in Section 12(a) relating to Capitalization Adjustments, stockholder approval
shall be required for any amendment of the Plan that either (1) materially
increases the number of shares of Common Stock available for issuance under the
Plan, (2) materially expands the class of individuals eligible to receive
Purchase Rights under the Plan, (3) materially increases the benefits accruing
to Participants under the Plan or materially reduces the price at which shares
of Common Stock may be purchased under the Plan, (4) materially extends the
term of the Plan, or (5) expands the types of awards available for issuance
under the Plan, but in each of (1) through (5) only to the extent required by
applicable law or listing requirements. Except as provided above, the rights
and obligations under any Purchase Rights granted before amendment of the Plan
shall not be impaired by any amendment of the Plan except: (a) with the consent
of the person to whom such Purchase Rights were granted, or (b) as necessary to
comply with any laws or governmental regulations (including, without
limitation, the provisions of the Code and the regulations promulgated
thereunder relating to Employee Stock Purchase Plans).


 


(vii)         Generally, to
exercise such powers and to perform such acts as it deems necessary or
expedient to promote the best interests of the Company and its Related
Corporations and to carry out the intent that the Plan be treated as an
Employee Stock Purchase Plan.


 


(viii)        To adopt such
procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed
outside the United States.


 


(c)           The Board may
delegate some or all of the administration of the Plan to a Committee or
Committees. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board that have been delegated to the Committee, including the
power to delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or subcommittee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may retain the authority to
concurrently administer the Plan with the Committee and may, at any time,
revest in the Board some or all of the powers previously delegated.


 


(d)           All determinations,
interpretations and constructions made by the Board in good faith shall not be
subject to review by any person and shall be final, binding and conclusive on
all persons.


 


3.             SHARES OF COMMON
STOCK SUBJECT TO THE PLAN.


 


(a)           Subject to the
provisions of Section 12(a) relating to Capitalization Adjustments, the
aggregate number of shares of Common Stock that may be sold pursuant to
Purchase Rights shall not exceed two hundred thousand (200,000) shares (as
adjusted to reflect the June 4, 2007 2.9:1 reverse split of the Company’s
Common Stock). In addition, the number of shares of Common Stock available for
issuance under the Plan shall automatically increase on January 1st of each
year commencing in 2008 and ending on (and including) January 1, 2017, in an
amount equal to one hundred thousand (100,000) shares of Common Stock (as
adjusted to reflect the


 


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June 4, 2007 2.9:1
reverse split of the Company’s Common Stock). Notwithstanding the foregoing,
the Board may act prior to the first day of any calendar year, to provide that
there shall be no increase in the share reserve for such calendar year or that
the increase in the share reserve for such calendar year shall be a lesser
number of shares of Common Stock than would otherwise occur pursuant to the
preceding sentence.


 


(b)           If any Purchase
Right granted under the Plan shall for any reason terminate without having been
exercised, the shares of Common Stock not purchased under such Purchase Right
shall again become available for issuance under the Plan.


 


(c)           The stock
purchasable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Company on the
open market.


 


4.             GRANT OF PURCHASE
RIGHTS; OFFERING.


 


(a)           The Board may from
time to time grant or provide for the grant of Purchase Rights to purchase
shares of Common Stock under the Plan to Eligible Employees in an Offering
(consisting of one or more Purchase Periods) on an Offering Date or Offering Dates
selected by the Board. Each Offering shall be in such form and shall contain
such terms and conditions as the Board shall deem appropriate, which shall
comply with the requirement of Section 423(b)(5) of the Code that all Employees
granted Purchase Rights shall have the same rights and privileges. The terms
and conditions of an Offering shall be incorporated by reference into the Plan
and treated as part of the Plan. The provisions of separate Offerings need not
be identical, but each Offering shall include (through incorporation of the
provisions of this Plan by reference in the document comprising the Offering or
otherwise) the period during which the Offering shall be effective, which
period shall not exceed twenty-seven (27) months beginning with the Offering
Date, and the substance of the provisions contained in Sections 5 through 8.


 


(b)           If a Participant
has more than one Purchase Right outstanding under the Plan, unless he or she
otherwise indicates in agreements or notices delivered hereunder: (i) each
agreement or notice delivered by that Participant shall be deemed to apply to
all of his or her Purchase Rights under the Plan, and (ii) a Purchase Right
with a lower exercise price (or an earlier-granted Purchase Right, if different
Purchase Rights have identical exercise prices) shall be exercised to the
fullest possible extent before a Purchase Right with a higher exercise price
(or a later-granted Purchase Right if different Purchase Rights have identical
exercise prices) shall be exercised.


 


(c)           The Board shall
have the discretion to structure an Offering so that if the Fair Market Value
of a share of Common Stock on any Purchase Date within that Offering is less
than or equal to the Fair Market Value of a share of Common Stock on the
Offering Date for that Offering, then (i) that Offering shall terminate
immediately following the purchase of shares of Common Stock on such Purchase
Date, and (ii) Participants in the terminated Offering automatically shall be
enrolled in the Offering that commences immediately after such Purchase Date.


 


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5.             ELIGIBILITY.


 


(a)           Purchase Rights may
be granted only to Employees of the Company or, as the Board may designate as
provided in Section 2(b), to Employees of a Related Corporation. Except as
provided in Section 5(b), an Employee shall not be eligible to be granted
Purchase Rights under the Plan unless, on the Offering Date, such Employee has
been in the employ of the Company or the Related Corporation, as the case may
be, for such continuous period preceding such Offering Date as the Board may
require, but in no event shall the required period of continuous employment be
greater than two (2) years. In addition, the Board may provide that no Employee
shall be eligible to be granted Purchase Rights under the Plan unless, on the
Offering Date, such Employee’s customary employment with the Company or the
Related Corporation is more than twenty (20) hours per week and more than five
(5) months per calendar year or such other criteria as the Board may determine
consistent with Section 423 of the Code.


 


(b)           The Board may
provide that each person who, during the course of an Offering, first becomes
an Eligible Employee shall, on a date or dates specified in the Offering which coincides
with the day on which such person becomes an Eligible Employee or which occurs
thereafter, receive a Purchase Right under that Offering, which Purchase Right
shall thereafter be deemed to be a part of that Offering. Such Purchase Right
shall have the same characteristics as any Purchase Rights originally granted
under that Offering, as described herein, except that:


 


(i)            the date on which
such Purchase Right is granted shall be the “Offering Date” of such Purchase
Right for all purposes, including determination of the exercise price of such
Purchase Right;


 


(ii)           the period of the
Offering with respect to such Purchase Right shall begin on its Offering Date
and end coincident with the end of such Offering; and


 


(iii)         the Board may provide
that if such person first becomes an Eligible Employee within a specified
period of time before the end of the Offering, he or she shall not receive any
Purchase Right under that Offering.


 


(c)           No Employee shall
be eligible for the grant of any Purchase Rights under the Plan if, immediately
after any such Purchase Rights are granted, such Employee owns stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of the Company or of any Related Corporation. For purposes of
this Section 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any Employee, and stock which such Employee
may purchase under all outstanding Purchase Rights and options shall be treated
as stock owned by such Employee.


 


(d)           As specified by
Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase
Rights under the Plan only if such Purchase Rights, together with any other
rights granted under all Employee Stock Purchase Plans of the Company and any
Related Corporations, do not permit such Eligible Employee’s rights to purchase
stock of the Company or any Related Corporation to accrue at a rate which
exceeds twenty five thousand dollars ($25,000) of Fair Market Value of such
stock (determined at the time such rights are granted, and


 


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which, with respect to
the Plan, shall be determined as of their respective Offering Dates) for each
calendar year in which such rights are outstanding at any time.


 


(e)           Officers of the
Company and any designated Related Corporation, if they are otherwise Eligible
Employees, shall be eligible to participate in Offerings under the Plan.
Notwithstanding the foregoing, the Board may provide in an Offering that Employees
who are highly compensated Employees within the meaning of Section 423(b)(4)(D)
of the Code shall not be eligible to participate.


 


6.             PURCHASE RIGHTS;
PURCHASE PRICE.


 


(a)           On each Offering
Date, each Eligible Employee, pursuant to an Offering made under the Plan,
shall be granted a Purchase Right to purchase up to that number of shares of
Common Stock purchasable either with a percentage or with a maximum dollar
amount, as designated by the Board, but in either case not exceeding fifteen percent (15%) of such Employee’s
earnings (as defined by the Board in each Offering) during the period that
begins on the Offering Date (or such later date as the Board determines for a
particular Offering) and ends on the date stated in the Offering, which date
shall be no later than the end of the Offering.


 


(b)           The Board shall
establish one (1) or more Purchase Dates during an Offering as of which
Purchase Rights granted pursuant to that Offering shall be exercised and
purchases of shares of Common Stock shall be carried out in accordance with
such Offering.


 


(c)           In connection with
each Offering made under the Plan, the Board may specify a maximum number of
shares of Common Stock that may be purchased by any Participant on any Purchase
Date during such Offering. In connection with each Offering made under the
Plan, the Board may specify a maximum aggregate number of shares of Common
Stock that may be purchased by all Participants pursuant to such Offering. In
addition, in connection with each Offering that contains more than one Purchase
Date, the Board may specify a maximum aggregate number of shares of Common
Stock that may be purchased by all Participants on any Purchase Date under the
Offering. If the aggregate purchase of shares of Common Stock issuable upon
exercise of Purchase Rights granted under the Offering would exceed any such
maximum aggregate number, then, in the absence of any Board action otherwise, a
pro rata allocation of the shares of Common Stock available shall be made in as
nearly a uniform manner as shall be practicable and equitable.


 


(d)           The purchase price
of shares of Common Stock acquired pursuant to Purchase Rights shall be not
less than the lesser of:


 


(i)            an amount equal to
eighty-five percent (85%) of the Fair Market Value of the shares of Common
Stock on the Offering Date; or


 


(ii)           an amount equal to
eighty-five percent (85%) of the Fair Market Value of the shares of Common
Stock on the applicable Purchase Date.


 


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7.             PARTICIPATION;
WITHDRAWAL; TERMINATION.


 


(a)           A Participant may
elect to authorize payroll deductions pursuant to an Offering under the Plan by
completing and delivering to the Company, within the time specified in the
Offering, an enrollment form (in such form as the Company may provide). Each
such enrollment form shall authorize an amount of Contributions expressed as a
percentage of the submitting Participant’s earnings (as defined in each
Offering) during the Offering (not to exceed the maximum percentage specified
by the Board). Each Participant’s Contributions shall be credited to a
bookkeeping account for such Participant under the Plan and shall be deposited
with the general funds of the Company except where applicable law requires that
Contributions be deposited with a third party. To the extent provided in the
Offering, a Participant may begin such Contributions after the beginning of the
Offering. To the extent provided in the Offering, a Participant may thereafter
reduce (including to zero) or increase his or her Contributions. To the extent
specifically provided in the Offering, in addition to making Contributions by
payroll deductions, a Participant may make Contributions through the payment by
cash or check prior to each Purchase Date of the Offering.


 


(b)           During an Offering,
a Participant may cease making Contributions and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
may provide. Such withdrawal may be elected at any time prior to the end of the
Offering, except as provided otherwise in the Offering. Upon such withdrawal
from the Offering by a Participant, the Company shall distribute to such
Participant all of his or her accumulated Contributions (reduced to the extent,
if any, such Contributions have been used to acquire shares of Common Stock for
the Participant) under the Offering, and such Participant’s Purchase Right in
that Offering shall thereupon terminate. A Participant’s withdrawal from an
Offering shall have no effect upon such Participant’s eligibility to
participate in any other Offerings under the Plan, but such Participant shall
be required to deliver a new enrollment form in order to participate in
subsequent Offerings.


 


(c)           Purchase Rights
granted pursuant to any Offering under the Plan shall terminate immediately
upon a Participant ceasing to be an Employee for any reason or for no reason
(subject to any post-employment participation period required by law) or other
lack of eligibility. The Company shall distribute to such terminated or otherwise
ineligible Employee all of his or her accumulated Contributions (reduced to the
extent, if any, such Contributions have been used to acquire shares of Common
Stock for the terminated or otherwise ineligible Employee) under the Offering.


 


(d)           Purchase Rights
shall not be transferable by a Participant except by will, the laws of descent
and distribution, or by a beneficiary designation as provided in Section 10.
During a Participant’s lifetime, Purchase Rights shall be exercisable only by
such Participant.


 


(e)           Unless otherwise
specified in an Offering, the Company shall have no obligation to pay interest
on Contributions.


 


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8.             EXERCISE OF PURCHASE
RIGHTS.


 


(a)           On each Purchase
Date during an Offering, each Participant’s accumulated Contributions shall be
applied to the purchase of shares of Common Stock up to the maximum number of
shares of Common Stock permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of Purchase Rights unless
specifically provided for in the Offering.


 


(b)           If any amount of
accumulated Contributions remains in a Participant’s account after the purchase
of shares of Common Stock and such remaining amount is less than the amount
required to purchase one share of Common Stock on the final Purchase Date of an
Offering, then such remaining amount shall be held in such Participant’s
account for the purchase of shares of Common Stock under the next Offering
under the Plan, unless such Participant withdraws from such next Offering, as
provided in Section 7(b), or is not eligible to participate in such Offering,
as provided in Section 5, in which case such amount shall be distributed to
such Participant after the final Purchase Date, without interest. If the amount
of Contributions remaining in a Participant’s account after the purchase of
shares of Common Stock is at least equal to the amount required to purchase one
(1) whole share of Common Stock on the final Purchase Date of the Offering,
then such remaining amount shall be distributed in full to such Participant at
the end of the Offering without interest.


 


(c)           No Purchase Rights
may be exercised to any extent unless the shares of Common Stock to be issued
upon such exercise under the Plan are covered by an effective registration
statement pursuant to the Securities Act and the Plan is in material compliance
with all applicable federal, state, foreign and other securities and other laws
applicable to the Plan. If on a Purchase Date during any Offering hereunder the
shares of Common Stock are not so registered or the Plan is not in such
compliance, no Purchase Rights or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the shares of
Common Stock are subject to such an effective registration statement and the
Plan is in such compliance, except that the Purchase Date shall not be delayed
more than twelve (12) months and the Purchase Date shall in no event be more
than twenty-seven (27) months from the Offering Date. If, on the Purchase Date
under any Offering hereunder, as delayed to the maximum extent permissible, the
shares of Common Stock are not registered and the Plan is not in such
compliance, no Purchase Rights or any Offering shall be exercised and all
Contributions accumulated during the Offering (reduced to the extent, if any,
such Contributions have been used to acquire shares of Common Stock) shall be
distributed to the Participants without interest.


 


9.             COVENANTS OF THE
COMPANY.


 


The Company shall seek to obtain from each federal,
state, foreign or other regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to issue and sell shares of
Common Stock upon exercise of the Purchase Rights. If, after commercially
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell Common Stock
upon exercise of such Purchase Rights unless and until such authority is
obtained.


 


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10.          DESIGNATION OF
BENEFICIARY.


 


(a)           A Participant may
file a written designation of a beneficiary who is to receive any shares of
Common Stock and/or cash, if any, from the Participant’s account under the Plan
in the event of such Participant’s death subsequent to the end of an Offering
but prior to delivery to the Participant of such shares of Common Stock or
cash. In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant’s account under the
Plan in the event of such Participant’s death during an Offering. Any such
designation shall be on a form provided by or otherwise acceptable to the
Company.


 


(b)           The Participant may
change such designation of beneficiary at any time by written notice to the
Company. In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Participant’s death, the Company shall deliver such shares of Common Stock and/or
cash to the executor or administrator of the estate of the Participant, or if
no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its sole discretion, may deliver such shares of
Common Stock and/or cash to the spouse or to any one or more dependents or
relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.


 


11.          MISCELLANEOUS
PROVISIONS.


 


(a)           The Plan and Offering
do not constitute an employment contract. Nothing in the Plan or in the
Offering shall in any way alter the at will nature of a Participant’s
employment or be deemed to create in any way whatsoever any obligation on the
part of any Participant to continue in the employ of the Company or a Related
Corporation, or on the part of the Company or a Related Corporation to continue
the employment of a Participant.


 


(b)           The provisions of
the Plan shall be governed by the laws of the State of Delaware without resort to that state’s conflicts of laws rules.


 


(c)           Proceeds from the
sale of shares of Common Stock pursuant to Purchase Rights shall constitute
general funds of the Company.


 


(d)           A Participant shall
not be deemed to be the holder of, or to have any of the rights of a holder
with respect to, shares of Common Stock subject to Purchase Rights unless and
until the Participant’s shares of Common Stock acquired upon exercise of
Purchase Rights are recorded in the books of the Company (or its transfer
agent).


 


12.          ADJUSTMENTS UPON CHANGES
IN COMMON STOCK; CORPORATE TRANSACTIONS.


 


(a)           In the event of a
Capitalization Adjustment, the Board shall appropriately and proportionately
adjust: (i) the class(es) and maximum number of securities subject to the Plan
pursuant to Section 3(a), (ii) the class(es) and maximum number of securities
by which the share reserve is to increase automatically each year pursuant to
Section 3(a), (iii) the class(es) and number of securities subject to
outstanding Purchase Rights, and (iv) the class(es) and number of securities
imposed by purchase limits under each ongoing Offering. The Board shall make
such adjustments, and its determination shall be final, binding and conclusive.


 


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(b)           In the event of a
Corporate Transaction, then: (i) any surviving corporation or acquiring
corporation (or the surviving or acquiring corporation’s parent company) may
assume or continue Purchase Rights outstanding under the Plan or may substitute
similar rights (including a right to acquire the same consideration paid to the
stockholders in the Corporate Transaction) for those outstanding under the
Plan, or (ii) if any surviving or acquiring corporation (or its parent company)  does not assume or continue such Purchase
Rights or does not substitute similar rights for Purchase Rights outstanding
under the Plan, then the Participants’ accumulated Contributions shall be used
to purchase shares of Common Stock within ten (10) business days prior to the
Corporate Transaction under any ongoing Offerings, and the Participants’
Purchase Rights under the ongoing Offerings shall terminate immediately after
such purchase.


 


13.          TERMINATION OR
SUSPENSION OF THE PLAN.


 


(a)           The Board may
suspend or terminate the Plan at any time. Unless sooner terminated, the Plan
shall terminate at the time that all of the shares of Common Stock reserved for
issuance under the Plan, as increased and/or adjusted from time to time, have
been issued under the terms of the Plan. No Purchase Rights may be granted
under the Plan while the Plan is suspended or after it is terminated.


 


(b)           Any benefits,
privileges, entitlements and obligations under any Purchase Rights while the
Plan is in effect shall not be impaired by suspension or termination of the Plan
except (i) as expressly provided in the Plan or with the consent of the person
to whom such Purchase Rights were granted, (ii) as necessary to comply with any
laws, regulations or listing requirements, or (iii) as necessary to ensure that
the Plan and/or Purchase Rights comply with the requirements of Section 423 of
the Code.


 


14.          EFFECTIVE DATE OF PLAN.


 


The Plan shall become effective on the IPO
Date, but no Purchase Rights shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board.


 


15.          DEFINITIONS.


 


As used in the Plan, the following definitions shall
apply to the capitalized terms indicated below:


 


(a)           “Board”  means
the Board of Directors of the Company.


 


(b)           “Capitalization Adjustment” means any
change that is made in, or other events that occur with respect to, the Common
Stock subject to the Plan or subject to any Purchase Right after the Effective
Date without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the Company). Notwithstanding the foregoing, the conversion of any


 


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convertible securities of
the Company shall not be treated as a transaction “without the receipt of
consideration” by the Company.


 


(c)           “Code”  means
the Internal Revenue Code of 1986, as amended.


 


(d)           “Committee”  means
a committee of one (1) or more members of the Board to whom authority has been
delegated by the Board in accordance with Section 2(b)(viii).


 


(e)           “Common Stock” means the common stock
of the Company.


 


(f)            “Company” means Quark Biotech Inc., a
Delaware corporation.


 


(g)           “Contributions” means the payroll
deductions and other additional payments specifically provided for in the
Offering, that a Participant contributes to fund the exercise of a Purchase
Right. A Participant may make additional payments into his or her account, if
specifically provided for in the Offering, and then only if the Participant has
not already had the maximum permitted amount withheld during the Offering
through payroll deductions.


 


(h)           “Corporate Transaction” means the
occurrence, in a single transaction or in a series of related transactions, of
any one or more of the following events:


 


(i)            the consummation
of a sale  or other disposition of all or
substantially all, as determined by the Board in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;


 


(ii)           the consummation of
a sale or other disposition of at least ninety
percent (90%) of the
outstanding securities of the Company;


 


(iii)         the consummation of a
merger, consolidation or similar transaction following which the Company is not
the surviving corporation; or


 


(iv)          the consummation of
a merger, consolidation or similar transaction following which the Company is
the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.


 


(i)            “Director”  means
a member of the Board.


 


(j)            “Eligible Employee”  means an Employee who meets the requirements set forth in
the Offering for eligibility to participate in the Offering, provided that such
Employee also meets the requirements for eligibility to participate set forth
in the Plan.


 


(k)           “Employee”  means
any person, including Officers and Directors, who is employed for purposes of
Section 423(b)(4) of the Code by the Company or a Related Corporation. However,
service solely as a Director, or payment of a fee for such services, shall not
cause a Director to be considered an “Employee” for purposes of the Plan.


 


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(l)            “Employee Stock Purchase Plan”  means a plan that grants Purchase Rights intended to be
options issued under an “employee stock purchase plan,” as that term is defined
in Section 423(b) of the Code.


 


(m)          “Exchange Act”  means
the Securities Exchange Act of 1934, as amended.


 


(n)           “Fair Market Value” means, as of any
date, the value of the Common Stock determined as follows:


 


(i)            If the Common
Stock is listed on any established stock exchange or traded on the Nasdaq
Global Select Market or the Nasdaq Global Market (formerly the Nasdaq National
Market), the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange (or the exchange or market with the greatest volume of
trading in the Common Stock) on the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable.


 


(ii)           If the Common Stock
is listed or traded on the Nasdaq Capital Market (formerly the Nasdaq SmallCap
Market), the Fair Market Value of a share of Common Stock shall be the mean
between the bid and asked prices for the Common Stock on the date of
determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable.
Unless otherwise provided by the Board, if there is no closing sales price (or
closing bid if no sales were reported) for the Common Stock on the date of
determination, then the Fair Market Value shall be the mean between the bid and
asked prices for the Common Stock on the last preceding date for which such
quotation exists.


 


(iii)         In the absence of
such markets for the Common Stock, the Fair Market Value shall be determined by
the Board in good faith.


 


(o)           “IPO Date”  means
the date of the underwriting agreement between the Company and the
underwriter(s) managing the initial public offering of the Common Stock,
pursuant to which the Common Stock is priced for the initial public offering.


 


(p)           “Offering”  means
the grant of Purchase Rights to purchase shares of Common Stock under the Plan
to Eligible Employees.


 


(q)           “Offering Date” means a date selected
by the Board for an Offering to commence.


 


(r)           “Officer”  means  a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.


 


(s)           “Participant”  means
an Eligible Employee who holds an outstanding Purchase Right granted pursuant
to the Plan.


 


(t)            “Plan”  means
this Quark Pharmaceuticals, Inc. 2007 Employee Stock Purchase Plan.


 


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(u)           “Purchase Date”  means
one or more dates during an Offering established by the Board on which Purchase
Rights shall be exercised and as of which purchases of shares of Common Stock
shall be carried out in accordance with such Offering.


 


(v)            “Purchase Period” means a period of
time specified within an Offering beginning on the Offering Date or on the next
day following a Purchase Date within an Offering and ending on a Purchase Date.
An Offering may consist of one or more Purchase Periods.


 


(w)           “Purchase Right”  means
an option to purchase shares of Common Stock granted pursuant to the Plan.


 


(x)           “Related Corporation”  means any “parent corporation” or “subsidiary corporation”
of the Company whether now or subsequently established, as those terms are
defined in Sections 424(e) and 424(f), respectively, of the Code.


 


(y)           “Securities Act”  means
the Securities Act of 1933, as amended.


 


(z)           “Trading Day”  means
any day on which the exchange(s) or market(s) on which shares of Common Stock
are listed, including an established stock exchange, the Nasdaq Global Select
Market or the Nasdaq Global Market (formerly the Nasdaq National Market), the
Nasdaq Capital Market (formerly the Nasdaq Small Cap Market), is open for
trading.


 


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