Exhibit 10.14


 


QUARK BIOTECH, INC.


 


1997 STOCK PLAN


 


NOTICE OF STOCK OPTION GRANT


FOR ISRAELI EMPLOYEES


 


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


 


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

  
	
   

  	
   

  	
   

  
	
  Term/Expiration Date:

  	
   

  	
  «                »

  



 


Vesting Schedule:


 


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


 


Termination Period:


 


Subject to the provisions of Section 102, this Option
shall be exercisable for three months after Optionee ceases to be an Employee. Upon
Optionee’s death or Disability, this Option may be exercised for one year after
Optionee ceases to be an Employee. In no event may Optionee exercise this
Option after the Term/Expiration Date as provided above.


 

















 


QUARK BIOTECH, INC.


 


STOCK 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 1997 Stock Plan for Israeli Employees as amended and restated (the “Plan”)
adopted by the Company, which is incorporated herein by reference. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Option. Subject to 15(3) of 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. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Optionee on the date
on which the Option is exercised with respect to such Shares.


 


3.             Application of
Section 102.


 


(1)           It is the intention of
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. The
Optionee shall comply with the provisions of Section 102, the Rules and of the
Escrow Agreement to be entered into between the Trustee and QBI Ltd. (or the
Company).


 


(2)           In accordance with the
provisions of Section 102, the Option and any Optioned Stock shall be issued to
a Trustee and held by such Trustee for the benefit of Optionee for a period of
not less than two years from the date of issuance.


 


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(3)           After the two year
holding period the Trustee shall not release or transfer the Option or any
Optioned Stock before (i) withholding any applicable tax due pursuant to the
Ordinance and the Rules; or (ii) receipt of an authorization from the Israeli
Tax Authorities certifying that all such applicable taxes have been paid.


 


(4)           The Option and Optioned
Stock shall be subject to the terms and conditions of Section 102 and the
Rules.


 


(5)           No Optionee may claim
an exemption from Israeli Tax pursuant to Section 97(a) of the Ordinance or
pursuant to Part E’2 of the Ordinance in connection with a transfer by such
Optionee of an Option or Optioned Stock prior to the end of the Holding Period
(and defined in Section 1(1) of the Rules).


 


(6)           Each Optionee shall be
obligated to immediately notify the Company and the Trustee of his or her
request, if any, to the Income Tax Authorities pursuant to Section 6(b) of the
Rules in the event the Optioned Stock is registered on any stock exchange. Nothing
herein shall obligate the Company to register the Shares or any of the Company’s
stock on a stock exchange.


 


(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.


 


(8)           Under Section 102 and
the Rules, the tax relief thereunder shall not apply and the Optionee shall be
required to promptly pay any applicable tax at such time as: (i) the Optionee’s
employment is terminated during, the two year Holding Period (other than
because of death or other reasons beyond the Optionees control which are
acceptable to the Income Tax Authorities), (ii) the Company, QBI Ltd or the
Optionee fail to comply with any of the conditions of Section 102, the Rules or
other conditions prescribed by the Income Tax Authorities; or (iii) the Income
Tax Authorities withdraw or cancel their approval for the plan in which event,
the Trustee shall continue to hold the Optioned Stock or Option (to the extent
the Options remains exercisable following termination of employment) for the
remainder of the applicable Holding Period under Section 102.


 


(9)           The Optionee
acknowledges that the Option has been granted to him or her in lieu of wages.


 


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 


 


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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.


 


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
pursuant to the exercise of an Option, have been 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 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.


 


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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 the
Optioned Stock shall be borne solely by the Optionee. 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 Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS
AN EMPLOYEE, 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
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 AT ANY TIME, WITH OR WITHOUT CAUSE.


 


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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 the Rules, and hereby accepts this Option subject to all
of the 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.

  
	
   

  	
   

  	
  QBI LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By:

  	
  Daniel Zurr

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Residence
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					



 


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EXHIBIT A


 


1997 STOCK OPTION PLAN


 


EXERCISE NOTICE


FOR ISRAELI EMPLOYEES


 


Quark Biotech, Inc.


1059 Serpentine Lane


Pleasanton, CA 94566


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 1997 Stock Plan for Israeli Employees (the “Plan”, as
amended and restated) and the Stock Option Agreement dated                ,
              (the
“Option Agreement”).


 


2.             Delivery of
Payment. Purchaser herewith delivers to the Company the full purchase price
of the Shares, as set forth in the Option Agreement.


 


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 Optioned Stock,
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 14 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).


 


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(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.


 


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 


 


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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.


 


(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.


 


(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, 


 


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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 


 


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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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