Exhibit 10.16


 


QUARK BIOTECH, INC.


 


2003 ISRAELI STOCK OPTION PLAN


 


NOTICE OF STOCK OPTION GRANT


 


FOR ISRAELI OPTIONEES


 


Unless otherwise defined herein, the terms defined in
this Option Agreement shall have the same defined meanings in the Plan.


 


Dear:                                                   ,
Trustee for the benefit of «    »


 


The undersigned Optionee has been granted an Option to
purchase Common Stock of the Company, subject to the terms and conditions of
the Plan and this Option Agreement, as follows:


 


	
  Date of Grant:

  	
   

  	
  «                »

  
	
  Vesting Commencement Date:

  	
   

  	
  «                            »

  
	
  Exercise Price per
  Share:

  	
   

  	
  $«        »
  USD

  
	
  Total Number of Shares
  Granted:

  	
   

  	
  «                        »

  
	
  Total Exercise Price:

  	
   

  	
  $«                    »
  USD

  
	
  Type of Option

  	
   

  	
  Approved 102 Option:

  
	
   

  	
   

  	
  Capital Gain Option (CGO) ;or

  Ordinary Income Option (OIO)

  
	
   

  	
   

  	
  Unapproved 102 Option

  
	
   

  	
   

  	
  3(i) Option

  
	
  Term/Expiration Date:

  	
   

  	
  «                »

  



 


Vesting Schedule:


 


This Option shall be exercisable, in whole or in part,
according to the following schedule:


 


«                    »


 


 


1

















 


Termination Period:


 


The Option shall be exercisable for three (3) months
after Optionee ceases to be employed by or provide services to the Company or
to any Parent or Subsidiary of the Company to the extent the Option is vested
on the date of such termination. If Optionee ceases to be employed by or
provide services to the Company or to any Parent or Subsidiary of the Company
as the result of Optionee’s death or Disability, the Option may be exercised
for one (1) year after the date of such termination to the extent the Option is
vested on the date of such termination. In no event may the this Option be
exercised after the Term/Expiration Date as provided above.


 


 


2

















 


QUARK BIOTECH, INC.


 


STOCK OPTION AGREEMENT (the
“Option Agreement”)


 


1.             Grant of Option.
Quark Biotech, Inc., a California corporation (the “Company”),
hereby grants to the Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”)
to purchase the number of Shares of Common Stock (the “Shares”)
set forth in the Notice of Grant, at the exercise price per Share set forth in
the Notice of Grant (the “Exercise Price”)
subject to the terms, definitions and provisions of the 2003 Israeli Stock
Option Plan (the “Plan”) adopted
by the Company, which is incorporated herein by reference. Unless otherwise
defined herein, the terms defined in this Option Agreement shall have the same
defined meanings in the Plan. In the event of a conflict between the terms and
conditions of the Plan and this Option Agreement, the terms and conditions of
the Plan shall prevail.


 


2.             Exercise of Option.


 


(1)           Right to Exercise.
This Option shall be exercisable during its term in accordance with the Vesting
Schedule set out in the Notice of Grant and with the applicable provisions of
the Plan and this Option Agreement.


 


(2)           Method of Exercise.
This Option shall be exercisable by delivery of an exercise notice in the form
attached as Exhibit A (the “Exercise Notice”)
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised, and such other representations
and agreements may be required by the Company. Such Exercise Notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all exercised Shares. This Option
shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by the aggregate Exercise Price.


 


No Shares will be issued pursuant to the exercise of
an Option unless such issuance and such exercise shall comply with Applicable
Laws.


 


3.             Application of
Section 102.


 


(1)           It is the intention of
QBI Enterprises Ltd. (“QBI Ltd.”) and the Company that the provisions and tax
benefits of Section 102 apply to this Option and any Optioned Stock issued
pursuant to this Option. With respect to Approved 102 Options, the Optionee
hereby acknowledges that he is familiar with the provisions of Section 102 and
the regulations and rules promulgated thereunder, including without limitations
the type of Option granted hereunder and the tax implications applicable to
such grant. The Optionee shall comply with the provisions of Section 102 and
the Escrow Agreement between the Trustee, the Company and QBI Ltd., attached as
Exhibit C hereto.


 


(2)           In accordance with the
provisions of Section 102, Approved 102 Options and any Shares issued upon the
exercise of Approved 102 Options shall be issued to a Trustee and held by such
Trustee for the benefit of Optionee for such period of time as required by Section
102 or any regulations, rules or orders or procedures promulgated thereunder
(the “Holding Period”).


 


 


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(3)           With respect to any
Approved 102 Option, subject to the provisions of Section 102 and any rules or
regulation or orders or procedures promulgated thereunder, an Optionee shall
not sell or release from trust any Share received upon the exercise of an
Approved 102 Option and/or any share received subsequently following any
realization of rights, including without limitation, bonus shares, until the
lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding
the above, if any such sale or release occurs during the Holding Period, the
sanctions under Section 102 of the Ordinance and under any rules or regulation
or orders or procedures promulgated thereunder shall apply to and shall be
borne by such Optionee.


 


(4)           At the lapse of the
Holding Period the Trustee shall not release or transfer the Option or any
Shares issued upon exercise of an Option before (i) withholding any applicable
tax due pursuant to the Ordinance and the regulations and rules promulgated
thereunder; or (ii) receipt of an authorization from the Israeli Tax
Authorities certifying that all such applicable taxes have been paid.


 


(5)           The Option and Optioned
Stock shall be subject to the terms and conditions of Section 102 and the
regulations and rules promulgated thereunder.


 


(6)           With respect to
Unapproved 102 Option, if the Optionee ceases to be employed by the Company or
any Parent or Subsidiary of the Company, the Optionee shall extend to the
Company and/or to a Parent or Subsidiary of the Company a security or guarantee
for the payment of tax due at the time of sale of Shares, all in accordance
with the provisions of Section 102 and the rules, regulation or orders
promulgated thereunder.


 


(7)           In the event a stock
split or stock dividend is declared on Shares, all post-split or post-dividend
Shares held by the Trustee for the benefit of Optionee shall be subject to the
provisions of this Section.


 


4.             Currency Control
Act Restrictions. Any payment made by the Optionee to the Company or QBI
Ltd. in connection with the exercise of this Option shall be made through an
account in the Optionee’s name (the “Account”) with
such commercial bank as is designated by the Company from time to time, and
shall comply in all respects with the Currency Control Law, 1978 of Israel (the
“CCL”). Any shares or other proceeds to
be delivered to the Optionee by the Company upon exercise of this Option shall
also be delivered to the Account. Similarly, all sales of Shares by the
Optionee will be made out of the Account. OPTIONEE REPRESENTS THAT OPTIONEE HAS
READ, UNDERSTANDS AND AGREES TO BE BOUND BY THE PROVISIONS OF THIS SECTION 4,
AND UNDERSTANDS AND AGREES THAT THIS SECTION 4 MAY BE AMENDED FROM TIME TO TIME
TO COMPLY WITH CHANGES IN THE CCL.


 


5.             Optionee’s
Representations. In the event the Shares have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B.


 


 


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6.             Lock-Up Period.
Optionee hereby agrees that, if so requested by the Company or any
representative of the underwriters (the “Managing Underwriter”)
in connection with any registration of the offering of any securities of the
Company under the Securities Act Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or
such other period as may be requested in writing by the Managing Underwriter
and agreed to in writing by the Company) (the “Market
Standoff Period”) following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.


 


7.             Method of Payment.
Payment of the aggregate Exercise Price shall be by any of the following, or a
combination thereof (in U.S. currency), at the election of the Optionee:


 


(1)           cash (including wire
transfer); or


 


(2)           certified check; or


 


(3)           consideration received
by the Company under a formal cashless exercise program adopted by the Company
in connection with the Plan; or


 


(4)           surrender of other
shares of Common Stock of the Company which (A) in the case of Shares acquired
from the Company , have been vested and owned by the Optionee for more than six
(6) months on the date of surrender, and (B) have a Fair Market Value on the
date of surrender equal to the Exercise Price of the Shares as to which the
Option is being exercised.


 


8.             Restrictions on
Exercise. This Option may not be exercised until such time as the U.S. Plan
has been approved by the shareholders of the Company, or if the issuance of
such Shares upon such exercise or the method of payment of consideration for
such Shares would constitute a violation of any Applicable Law.


 


9.             Non-Transferability
of Option. This Option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by the Optionee. The terms of the Plan and this
Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.


 


10.           Term of Option. This
Option may be exercised only within the term set out in the Notice of Grant,
and may be exercised during such term only in accordance with the Plan and the
terms of this Option.


 


11.           Tax Consequences.
Any tax consequences arising in connection with the grant or exercise of any
Option, from the payment for Shares covered thereby, from the exercise of the


 


 


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Options, and from the sale of the Shares, hereunder,
shall be borne solely by the Optionee. The Company and/or any Parent or
Subsidiary of the Company and/or the Trustee shall withhold taxes according to
the requirements under the Applicable Laws, including withholding taxes at
source. Furthermore, the Optionee hereby agrees to indemnify the Company and/or
any Parent or Subsidiary of the Company and/or the Trustee and hold them
harmless against and from any and all liability for any such tax or interest or
penalty thereon, including without limitation, liabilities relating to the
necessity to withhold any such tax from any payment made to the Optionee.


 


The Optionee will not be
entitled to receive from the Company and/or the Trustee any Shares allocated or
issued upon the exercise of Options prior to the full payments of the
Optionee’s tax liabilities arising from Options which were granted to him
and/or Shares issued upon the exercise of Options. For the avoidance of doubt,
neither the Company nor the Trustee shall be required to release any share
certificate to the Optionee until all payments required to be made by the
Optionee have been fully satisfied.


 


The receipt of the
Options and the acquisition of the Shares to be issued upon the exercise of the
Options may result in tax consequences. OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE ENTERING THIS AGREEMENT AND EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.


 


12.           Entire Agreement;
Governing Law. The Plan is incorporated herein by reference. The Plan and
this Option Agreement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionee’s
interest except by means of a writing signed by the Company and Optionee. This
agreement is governed by the internal substantive laws but not the choice of
law rules of Israel.


 


13.           No Guarantee of
Continued Employment or Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS AN EMPLOYEE OR A SERVICE PROVIDER, AT THE WILL OF QBI LTD OR THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET
FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS AN EMPLOYEE OR A SERVICE PROVIDER OF THE COMPANY FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH
OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS
AN EMPLOYEE OR A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.


 


Optionee acknowledges receipt of a copy of the Plan
and represents that he or she is familiar with the terms and provisions thereof
and of Section 102 and any rules or regulation or orders or procedures
promulgated thereunder, and hereby accepts this Option subject to all of the


 


 


4

















 


terms and provisions
thereof Optionee has reviewed the Plan and this Option in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Option and fully understands all provisions of the Option. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan
or this Option. Optionee further agrees to notify the Company upon any change
in the residence address indicated below.


 


	
  OPTIONEE:

  	
   

  	
  QUARK BIOTECH, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By:

  	
  Daniel Zurr

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Residence Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 


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EXHIBIT A


 


2003 ISRAELI STOCK OPTION PLAN


 


EXERCISE NOTICE


 


FOR ISRAELI OPTIONEES


 


Quark Biotech, Inc.


6501 Dumbarton Circle


Fremont, CA 94555


Attention: President


 


1.             Exercise of Option.
Effective as of today,                        ,
      , the undersigned (“Optionee”)
hereby elects to exercise Optionee’s option to purchase              shares
of the Common Stock (the “Shares”) of
Quark Biotech, Inc. (the “Company”) under
and pursuant to the 2003 Israeli Stock Option Plan (the “Plan”,
as amended and restated) and the Stock Option Agreement dated                      ,         (the
“Option Agreement”).


 


2.             Delivery of
Payment. Optionee herewith delivers to the Company the full exercise price
of the Shares, as set forth in the Option Agreement, together with any and all
withholding taxes due in connection with the exercise of the Option.


 


3.             Representations of
Optionee. Optionee acknowledges that Optionee has received, read and
understood the Plan and the Option Agreement and agrees to abide by and be
bound by their terms and conditions.


 


4.             Rights as
Shareholder. Until the issuance of the Shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Shares, notwithstanding
the exercise of the Option. The Shares shall be issued to the Optionee as soon
as practicable after the Option is exercised. No adjustment shall be made for a
dividend or other right for which the record date is prior to the date of
issuance, except as provided in Section 16 of the Plan.


 


5.             Company’s Right of
First Refusal. Before any Shares held by Optionee or any transferee (either
being sometimes referred to herein as the “Holder”) may be
sold or otherwise transferred (including transfer by gift or operation of law),
the Company or its assignee(s) shall have a right of first refusal to purchase
the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”).


 


(1)           Notice of Proposed
Transfer. The Holder of the Shares shall deliver to the Company a written
notice (the “Notice”) stating: (i) the Holder’s
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee (“Proposed
Transferee”); (iii) the number of Shares to be transferred to each
Proposed Transferee; and (iv) the bona fide cash price or other consideration
for which the Holder proposes to transfer the Shares (the “Offered Price”),
and the Holder shall offer the Shares at the Offered Price to the Company or
its assignee(s).


 


 


1

















 


(2)           Exercise of Right of
First Refusal. At any time within thirty (30) days after receipt of the Notice,
the Company and/or its assignee(s) may, by giving written notice to the Holder,
elect to purchase all, but not less than all, of the Shares proposed to be
transferred to any one or more of the Proposed Transferees, at the purchase
price determined in accordance with subsection (c) below.


 


(3)           Purchase Price. The
purchase price (“Purchase Price”) for the Shares
purchased by the Company or its assignee(s) under this Section shall be the
Offered Price. If the Offered Price includes consideration other than cash, the
cash equivalent value of the non-cash consideration shall be determined by the
Board of Directors of the Company in good faith.


 


(4)           Payment. Payment
of the Purchase Price shall be made, at the option of the Company or its
assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Holder to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof
within 30 days after receipt of the Notice or in the manner and at the times
set forth in the Notice.


 


(5)           Holder’s Right to
Transfer. If all of the Shares proposed in the Notice to be transferred to
a given Proposed Transferee are not purchased by the Company and/or its
assignee(s) as provided in this Section, then the Holder may sell or otherwise
transfer such Shares to that Proposed Transferee at the Offered Price or at a
higher price, provided that such sale or other transfer is consummated within
120 days after the date of the Notice and provided further that any such sale
or other transfer is effected in accordance with any applicable securities laws
and the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Proposed Transferee.
If the Shares described in the Notice are not transferred to the Proposed
Transferee within such period, a new Notice shall be given to the Company, and
the Company and/or its assignees shall again be offered the Right of First
Refusal before any Shares held by the Holder may be sold or otherwise
transferred.


 


(6)           Exception for
Certain Family Transfers. Anything to the contrary contained in this
Section notwithstanding, the transfer of any or all of the Shares during the
Optionee’s lifetime or on the Optionee’s death by will or intestacy to the
Optionee’s immediate family or a trust for the benefit of the Optionee’s
immediate family shall be exempt from the provisions of this Section. “Immediate Family” as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In such case, the
transferee or other recipient shall receive and hold the Shares so transferred
subject to the provisions of this Section, and there shall be no further
transfer of such Shares except in accordance with the terms of this Section.


 


(7)           Termination of Right
of First Refusal. The Right of First Refusal shall terminate as to any
Shares 90 days after the first sale of Common Stock of the Company to the
general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended.


 


 


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6.             Tax Consultation.
Optionee understands that Optionee may suffer adverse tax consequences as a
result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee has consulted with any tax consultants Optionee deems advisable
in connection with the purchase or disposition of the Shares and that Optionee
is not relying on the Company for any tax advice.


 


7.             Restrictive
Legends and Stop-Transfer Orders.


 


(1)           Legends. Optionee
understands and agrees that the Company shall cause the legends set forth below
or legends substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by state or federal securities laws:


 


THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.


 


THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY
THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE
ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED
AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF
FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.


 


THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS ON TRANSFER FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE
EFFECTIVE DATE OF UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF
THE COMPANY OR THE MANAGING UNDERWRITER.


 


(2)           Stop-Transfer
Notices. Optionee agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.


 


 


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(3)           Refusal to Transfer.
The Company shall not be required (i) to transfer on its books any Shares that
have been sold or otherwise transferred in violation of any of the provisions
of this Agreement or (ii) to treat as owner of such Shares or to accord the
right to vote or pay dividends to any purchaser or other transferee to whom
such Shares shall have been so transferred.


 


8.             Successors and
Assigns. The Company may assign any of its rights under this Agreement to
single or multiple assignees, and this Agreement shall inure to the benefit of
the successors and assigns of the Company. Subject to the restrictions on
transfer herein set forth, this Agreement shall be binding upon Optionee and
his or her heirs, executors, administrators, successors and assigns.


 


9.             Interpretation.
Any dispute regarding the interpretation of this Agreement shall be submitted
by Optionee or by the Company forthwith to the Administrator which shall review
such dispute at its next regular meeting. The resolution of such a dispute by
the Administrator shall be final and binding on all parties.


 


10.           Governing Law;
Severability. This Agreement is governed by the internal substantive laws
but not the choice of law rules, of Israel.


 


11.           Entire Agreement.
The Plan and Notice of Grant/Option Agreement are incorporated herein by
reference. This Agreement, the Plan, the Option Agreement and the Investment
Representation Statement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionee’s
interest except by means of a writing signed by the Company and Optionee.


 


	
  Submitted by:

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  OPTIONEE

  	
   

  	
  QUARK BIOTECH, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By:

  	
  Daniel Zurr

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 


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EXHIBIT B


 


INVESTMENT REPRESENTATION
STATEMENT


 


	
  OPTIONEE

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPANY

  	
  :

  	
  QUARK BIOTECH, INC.

  
	
   

  	
   

  	
   

  
	
  SECURITY

  	
  :

  	
  COMMON STOCK

  
	
   

  	
   

  	
   

  
	
  AMOUNT

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE

  	
  :

  	
   

  



 


 


In connection with the
purchase of the above-listed Securities, the undersigned Optionee represents to
the Company the following:


 


(1)           Optionee 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 to acquire the Securities. Optionee is acquiring these Securities for
investment for Optionee’s own account only and not with a view to, or for
resale in connection with, any “distribution” thereof within the meaning of the
Securities Act of 1933, as amended (the “Securities Act”).


 


(2)           Optionee acknowledges
and understands that the Securities constitute “restricted securities” under
the Securities Act and have not been registered under the Securities Act in
reliance upon a specific exemption therefrom, which exemption depends upon,
among other things, the bona fide nature of Optionee’s investment intent as
expressed herein. In this connection, Optionee understands that, in the view of
the Securities and Exchange Commission, the statutory basis for such exemption
may be unavailable if Optionee’s representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future. Optionee further understands that the
Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available. Optionee
further acknowledges and understands that the Company is under no obligation to
register the Securities. Optionee understands that the certificate evidencing
the Securities will be imprinted with a legend which prohibits the transfer of
the Securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company, a legend prohibiting
their transfer without the consent of the Commissioner of Corporations of the
State of California and any other legend required under applicable state
securities laws.


 


(3)           Optionee is familiar
with the provisions of Rule 701 and Rule 144, each promulgated under the
Securities Act, which, in substance, permit limited public resale of
“restricted securities” acquired, directly or indirectly from the issuer
thereof, in a non-public offering subject to the satisfaction of certain conditions.
Rule 701 provides that if the issuer


 


 


1

















 


qualifies under Rule 701 at the time of the grant of
the Option to the Optionee, the exercise will be exempt from registration under
the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
“broker’s transaction” or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.


 


In the event that the Company does not qualify under
Rule 701 at the time of grant of the Option, then the Securities may be resold
in certain limited circumstances subject to the provisions of Rule 144, which
requires the resale to occur not less than two years after the later of the
date the Securities were sold by the Company or the date they were sold by an
affiliate of the Company, within the meaning of Rule 144, the Securities to be
sold; and, in the case of an affiliate, or of a non-affiliate who has held the
Securities less than three years, the satisfaction of the conditions set forth
in sections (1), (2), (3) and (4) of the paragraph immediately above.


 


(4)           Optionee further
understands that in the event all of the applicable requirements of Rule 701 or
144 are not satisfied, registration under the Securities Act, compliance with
Regulation A, or some other registration exemption will be required; and that, notwithstanding
the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities
and Exchange Commission has expressed its opinion that persons proposing to
sell private placement securities other than in a registered offering and
otherwise than pursuant to Rules 144 or 701 will have a substantial burden of
proof in establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Optionee understands
that no assurances can be given that any such other registration exemption will
be available in such event.


 


	
   

  	
   

  	
  Signature
  of Optionee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
					



 


 


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