Quark Pharmaceuticals, Inc.

The Warrants are hereby offered as approved by the Board of Directors of the Company on March 8, 2011. The Warrants (Series 1) are registered in the name of the Nominee Company. On any Trading Day, commencing on the date of listing of the Warrants for trading on TASE and ending on _______ (inclusive) (the “Exercise Period”), the Warrants shall be exercisable for Ordinary Shares of the Company of a par value of USD 0.001 each (the “Exercise Shares”), such that every Warrant shall be exercisable in return for payment in cash of an exercise price in the sum of NIS _____. The exercise price shall be linked to the base rate as defined below (hereinafter the “Exercise Price”). The ability to exercise the warrants is also subject to, at the time of exercise, to maintaining the effectiveness of a registration statement filed with the Securities and Exchange Commission in the US covering the warrants and the shares underlying the warrants.  In the event at the time of exercise that an effective registration statement covering the warrants and the shares underlying the warrants is not available, a warrant holder will not be entitled under the terms of the warrants, to exchange the warrants for cash or to any compensation due to the lack of availability of an effective registration statement covering the warrants and the shares underlying the warrants.

A Warrant that has been exercised shall expire on the date of the Notice of Exercise, as defined in Section 1.5(a) below, and shall not afford its holder any rights.

A Warrant not exercised by _____ (the “end of the Exercise Period”), i.e., where the Notice of Exercise, Exercise Price and deed of allotment in respect of it have not been received by the Company (for Warrants held directly) or by the TASE Clearing House (for Warrants held through the Nominee Company) by such date, shall not afford the holder thereof any right whatsoever and shall expire on the aforesaid date.

Any person holding a Warrant (the “Applicant”) wishing to exercise his right to acquire the Exercise Shares by virtue of the Warrants held by him, shall do so through TASE Members, in the event that the holder is an unregistered holder, or directly, if the holder is registered in the register of Warrant holders, in the manner described below, by submitting a written application in the accepted form (the “Notice of Exercise”), together with deeds of allotment relating to the Warrants in the application, and together with the sum in cash equal to the product of the Warrants that the Applicant wishes to exercise by the Exercise Price of such Warrants.

The Notice of Exercise may not be cancelled or amended. A right of partial exercise of a Warrant will not be granted.

Where the final date for exercise of a Warrant falls on a date that is not a Trading Day, the date shall be postponed to the next Trading Day immediately thereafter.

The bylaws of the TASE Clearing House regarding the timetable for exercise of the Warrants provide as follows:

A customer's notice regarding exercise received by 12:00 p.m. at the offices of a TASE Member through whom the Warrants are held shall be delivered by such TASE Member to the TASE Clearing House no later than 12:00 p.m. on the following Trading Day.

Should the TASE Clearing House receive a notice regarding exercise from a TASE Member by 12:00 p.m., it shall charge the TASE Member with the fee and shall credit the Nominee Company in whose name the Securities of the Company are registered accordingly, no later than 12:00 p.m. on the first Trading Day following the delivery to it of such notice.

Should the Nominee Company receive a credit as described in Section 1.5(a)(3)(b) above by 12:00 p.m., the Nominee Company shall deliver the Notice of Exercise to the registered office of the Company not later than 12:00 p.m. on the first Trading Day following the date on which it receives such notice.

Any of the notices described in Sub-sections (1) to (3) above received after 12:00 p.m. on any Trading Day shall be deemed to have been received before 12:00 p.m. on the following Trading Day.

The Company shall retain a sufficient number of Ordinary Shares of USD 0.001 par value each in its registered capital to ensure implementation of the right of exercise, and if necessary increase its registered capital.

If the Company merges its Ordinary Shares of USD 0.001 par value each in its issued capital into shares of a greater par value, or sub-divides them into shares of a smaller par value, the number of Exercise Shares allotted following exercise of the Warrants shall be decreased or increased, as the case may be, following such action. In this case, the provisions of Section 1.7(b) above must be fulfilled, mutatis mutandis.

In the event of the passing of a resolution to wind up the Company voluntarily, the Company shall publish a notice of such in two (2) daily newspapers in Hebrew, with wide circulation in Israel. Every holder of Warrants shall be deemed to have exercised his Right to Exercise before the passing of the resolution (without the need for prior payment of the Exercise Price) unless he gives notice in writing to the Company within thirty (30) days of the date of publication as aforesaid, of waiver of the aforesaid right. Should a holder of Warrants not give notice as aforesaid within such time period, the holder shall be entitled to the sum that he would have obtained upon winding up of the Company as a holder of shares owing to the exercise of the Warrants held by him for shares prior to the passing of the winding-up resolution, less the Exercise Price for such Warrants, which shall be deducted from the monies that he may obtain from his portion of the winding-up as aforesaid, if any balance remains for distribution.

The Company shall make copies of the periodic reports and interim financial statements available for the inspection of the holders of Warrants at its registered office, during regular business hours. At the written request of a registered holder of Warrants, the Company shall send such holder a copy of the above reports.

The Company shall not pay any dividend in cash or stock the effective date for the right to receive which (the “Effective Date”) precedes the date of passing of the resolution by the Board of Directors. The Effective Date shall be at least ten (10) Trading Days after the date of passing of the resolution by the Board of Directors of the Company and of publication of an immediate report regarding the distribution, as aforesaid.

Not later than three weeks and not earlier than four weeks before the end of the Exercise Period, the Company shall submit an immediate report in which it shall give notice that the Exercise Period of the series is about to end, noting the final date for exercise of the Warrants and the Exercise Price, and shall publish a notice of such details in two (2) daily newspapers in Hebrew, with broad circulation in Israel.

Any notice from the Company to holders of Warrants, including to holders of the Warrants registered in the Register of Warrant Holders, shall be published in an immediate report and in two (2) daily newspapers in Hebrew, with broad circulation in Israel, and shall be deemed to have been delivered to them on the date of such publication in the newspaper.

Immediately after the effective date determining the entitlement to participate in the aforesaid distribution, the number of Exercise Shares to which the holder of the Warrants shall be entitled upon exercise thereof shall increase by way of increase of the number of shares to which such holder was entitled as a stock dividend, had he exercised the Warrants immediately before the aforesaid effective date.

A holder of Warrants shall not be entitled to the allotment of a fraction of a a stock dividend in accordance with the aforesaid, but any fractions of a stock dividend that arise at the time of the allotment and that accrue to whole shares shall be sold on TASE by a trustee appointed for such purpose, within thirty (30) days of the date of such allotment, and the net consideration (after deduction of sales costs and mandatory payments and levies) shall be distributed among the persons entitled within fifteen (15) days of the date of sale. A check in the sum of less than NIS 50.00 will not be sent to any individual registered person so entitled, and such sums may be collected at the offices of the Company during regular office hours. A registered entitled person who does not come to the offices of the Company to obtain such sum within twelve (12) months of the date of sale will lose his right to such sum.

Subject to the provisions of the Rules and Regulations of TASE and of its guidelines, the aforesaid method of adjustment may not be amended.