Exhibit 10.3


 


Alcobra
Ltd.


 


The 2010 Incentive Option Plan


 


		1.	PURPOSE OF THE PLAN



The purpose of this 2010 Incentive
Option Plan (the “Plan”) is to advance the interests of Alcobra Ltd. (the “Company”) and
its shareholders by attracting and retaining the best available personnel for positions of substantial responsibility, providing
additional incentive to employees, office holders and service providers and promoting a close identity of interests between those
individuals and entities and the Company.


 


		2.	DEFINITIONS



 


As used herein,
the following definitions shall apply:


 


		2.1.	"Administrator" means the Board or the Committee, as shall administer the Plan,
as set forth herein.



 


		2.2.	“Articles” mean the Company’s Articles of Association, as amended from
time to time.



 


		2.3.	"Board" means the Board of Directors of the Company.



 


		2.4.	"Committee" means the Company’s compensation committee, or in the case there
is no such committee, a committee appointed in order to administer the Plan, and until such committee is appointed, the Board.



 


		2.5.	“Companies Law” means the Israeli Companies Law 5759 - 1999.



 


		2.6.	"Employee" means: (I) any person, employed by the Company or employed by any Related
Entity; and (II) any Office Holder (as such term is defined in the Companies Law), officer or Director of the Company or a Related
Entity.



 


		2.7.	“Exercise Price” means the price that is to be paid in order to exercise an
Option.



 


		2.8.	“Group” means the Company and the Related Entities taken together.



 


		2.9.	“IPO” means an initial public offering of the Company's Shares.



 


		2.10.	"Option" means an option to purchase a Share according to the provisions of this
Plan.



 


		2.11.	“Option Grant” means a single grant of Options to a certain Participant as determined
by the Board or the Committee.



 


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		2.12.	"Option Grant Letter Agreement" means the notice letter attached to this Plan
as Exhibit A.



 


		2.13.	"Participant" means a person or entity that has been granted Options.



 


		2.14.	“Related Entity” means any parent or subsidiary of the Company. In addition,
Related Entity shall include any business, corporation, partnership, limited liability company or other entity in which the Company,
or the Company’s parent or a subsidiary holds a substantial ownership and/or interest, directly or indirectly, and is determined
by the Board to be a Related Entity.



 


		2.15.	“Service Provider” means a person or entity who is engaged by the Company or
any Related Entity to render services (e.g., consulting services, advisory services, development services, marketing and sale services
or any other services, including suppliers) to the Company or a Related Entity.



 


		2.16.	"Share" means the Company’s Ordinary Share of NIS 0.01 par value, or that
was issued following an exercise of an Option.



 


		2.17.	“Total Option Amount” means the amount of Options granted to a Participant in
a single Option Grant.



 


		3.	ADMINISTRATION OF THE PLAN



 


		3.1.	Subject to the provisions of the Plan, any applicable law, the Articles and any other binding commitments
taken by the Company, the Board or the Committee shall have the power and authority to administer the Plan. Such power and authority
shall include, but not be limited to: (i) approval of Option Grants and the determination of the terms and provisions of
respective Option Grants, including, the vesting schedules of the Options; the Exercise Price thereof; provisions concerning the
time or times when and the extent to which Options may be exercised; the nature and duration of restrictions as to transferability;
or any other special conditions relating to an Option Grant; (ii) the acceleration of any Participant’s right to exercise
Options, in whole or in part; (iii) the interpretation of the provisions of the Plan; (iv) altering, amending or rescinding any
resolution or act previously taken by the Committee; and (v) the determination of any other matter which is necessary or desirable
for, or incidental to, the administration of the Plan, as set forth in the Plan.



 


		3.2.	Notwithstanding the above, the Board shall have the power and authority to take any act the Committee
is empowered and authorized to take, and to alter amend or rescind any act or resolution taken by the Committee.



 


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		3.3.	The Committee shall consist of such number of directors as may be appointed by the Board.



 


		3.4.	The Board shall have the exclusive discretion and power to grant Options. Such power may be delegated
by the Board to the Committee subject to the provisions of the Companies Law.



 


		3.5.	All Committee resolutions and decisions, including the interpretation and construction of any provision
of the Plan, shall be final and conclusive unless otherwise determined by the Board.



 


		3.6.	No member of the Board or of the Committee shall be held liable for any act or determination made
in good faith with respect to the Plan or any Option Grant.



 


		4.	SHARES RESERVED FOR THE PLAN



 


		4.1.	Subject to adjustments, as set forth in Section 9 below, a total of 139,258 Ordinary Shares, of
NIS 0.01 par value each, from the Company’s authorized share capital shall be reserved and subject to the Plan (the “Reserved
Shares”).



 


		4.2.	Until termination of the Plan the Company shall at all times reserve sufficient number of Ordinary
Shares in its authorized share capital to cover for all Reserved Shares that were not issued.



 


		4.3.	Without derogating from Section 4.2 above:



 


		4.3.1.	The Company need not reserve Shares with respect to Options that terminated, expired or were canceled
for any reason prior to exercise thereof.



 


		4.3.2.	In the case that there are certain Reserved Shares, which remain unissued and which are not subject
to outstanding Options, then the Board may resolve that such Reserved Shares shall cease to be reserved.



 


		5.	DESIGNATION OF PARTICIPANTS; OPTION GRANTS



 


		5.1.	The Board may grant Option Grants to the following persons and entities:



 


		5.1.1.	Employees.



 


		5.1.2.	Service Providers and their employees.



 


		5.2.	Unless determined otherwise by the Board or Committee, a Participant shall not be required to pay
any consideration for an Option Grant.



 


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		6.	VESTING; EXERCISE PERIOD



 


		6.1.	Unless determined otherwise by the Committee or Board, upon approval of the Option Grant or thereafter,
Options underlying an Option Grant shall vest over four years, commencing on the vesting commencement date (the "Vesting
Commencement Date") as determined by the Committee.



 


		6.2.	The vesting schedule of each Option Grant shall be as determined by the Committee. However, unless
determined otherwise by the Committee or Board, upon approval of the Option Grant or thereafter, the following shall apply:



 


25%
of the Total Option Amount shall vest on the first anniversary of the Vesting Commencement Date, and additional 6.25% of the Total
Option Amount shall vest on the last day of each three months period immediately after the first anniversary of the Vesting Commencement
Date.


 


In
the case that as a consequence of the vesting schedule mentioned above a fraction of vested Option is created, then such fraction
shall be rounded up or down, as determined by the Board.


 


		6.3.	Notwithstanding anything to the contrary in this Plan, all Options shall terminate and not bestow
any rights on their owner after ten years from the date the Options were granted. All Options that have not been exercised by such
date shall expire immediately and the Participants shall not have any claim against the Company with respect thereto.



 


		6.4.	The period within which Options are exercisable shall be called the “Exercise Period”.
Options which have not been exercised during the Exercise Period shall expire immediately, and will be automatically returned to
the Options pool and may be re-allocated.



 


		7.	TERMINATION OF EMPLOYMENT WITH THE GROUP



 


In
the event that the Participant is an Employee at the time of the Option Grant, whose employment with the Group was subsequently
terminated, for whatever reason but subject to Section 7.6 (including but not limited to (i) dismissal of a Participant or (ii)
a Participant’s resignation, or (iii) death of a Participant or (iv) disability of a Participant), then the following provisions
shall apply:


 


		7.1.	The date on which employment was terminated under applicable labor laws, or, in the case an Employee
is not an employee under applicable labor laws the date in which such Employee ceases to be an Employee as defined in the Plan,
shall be deemed the date in which such Employee’s employment was terminated (“Employment Termination Date”).



 


		7.2.	On the Employment Termination Date all Options that are not vested shall immediately expire.



 


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		7.3.	In the event that the Participant's termination of employment is not due to the Participant's death
(but does include termination due to Disability), then the Participant will be entitled to exercise all, or part of, the vested
Options that have not expired, for a period of thirty (30) days after the Employment Termination Date. After such thirty days period,
all unexercised Options will automatically expire.



 


For
purposes of this Section 7.3, "Disability" shall mean the inability in 100%, due to illness or injury, to engage in any
gainful occupation for which the individual is suited by education, training or experience, which condition continues for at least
six (6) months.


 


		7.4.	Notwithstanding the above, in the event of termination of employment due to the Participant's death
or Disability, the Participant (if applicable) or Participant's estate, or other person who acquired the right to exercise the
Options by way of bequest or inheritance, may, but only within six (6) months after the date of such death or the Employment Termination
Date (in the case of Disability), exercise all, or part of, the vested Options that have not expired. After such six (6) months
period, all unexercised options shall automatically expire.



 


		7.5.	Notwithstanding Section 7.3 above, all Options granted to a certain Employee (whether vested or
unvested) will immediately expire if the termination of the Participant’s employment is due to Participant’s breach
of his/her employment agreement (whether written or oral) including without limitation, a breach of non compete obligations, or
breach of his/her fiduciary duties towards the Company or a Related Entity as determined by the Committee or the Board, in their
sole discretion, or in the case that competent court or other authority resolves that such employee is not entitled to discharge
compensation.



 


		7.6.	For the purposes of this Plan, the Committee or Board is authorized to determine if and when a
Participant terminated his/her employment with the Company, and due to what reason, subject to the provisions of Israeli labor
laws with respect to Israeli employees.



 


		7.7.	The Committee or the Board shall be entitled, prospectively and retroactively, to extend the periods
in which Options (either vested or unvested) do not expire and remain exercisable after the Employment Termination Date.



 


		8.	TERMINATION OF ENGAGEMENT WITH THE GROUP



In the event that a Participant
is not an Employee, and the agreement of such Participant with the Group is terminated, then, unless otherwise specified in the
Option Grant Letter Agreement, or otherwise determined by the Committee, on the date of such termination, all Options that have
not vested by then shall expire and the vested options shall remain exercisable as specified in sections 7.3, 7.4 or 7.5, as the
case may be, which shall apply mutatis mutandis to such Participant (where if such Participant has more than one agreement
with the Group, then the foregoing shall apply to the Options underlying the terminated agreement or issued in connection therewith).


 


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		9.	ADJUSTMENTS



 


		9.1.	Merger, Sale of the Company or Sale of the Company’s Assets.



 


In
the event of a merger of the Company into another corporation, in a way that the Company shall no longer continue to exist as a
legal entity subsequent to such merger, the sale of all, or substantially all of the Company’s issued and outstanding shares
to a third party or the sale of all, or substantially all of the assets of the Company (each of them, a “Transaction”),
then the following provisions shall apply:


 


		9.1.1.	Each outstanding Option shall be assumed by, or an equivalent option shall be substituted by the
successor corporation or a parent or subsidiary of the successor corporation.



 


		9.1.2.	In the event that the successor corporation does not agree to assume the Options or to substitute
them with equivalent options, the Committee may in lieu of such assumption or substitution, provide for the Participant to have
the right to exercise the Options as to all, or part of the Shares, including certain Shares as to which it would not otherwise
be exercisable.



 


		9.1.3.	In addition to Section 9.1.2 above, and if Section 9.1.1 does not apply, the Committee may notify
the Participants that all Options that are exercisable shall remain so for a period of no less then seven (7) days from the date
of such notice, and that all Options will terminate upon the expiration of such period. In any case, the Committee may condition
the termination of all said Options upon consummation of the Transaction.



 


		9.2.	Bonus Shares



 


In
the event that the Company issues any of its shares as bonus shares to all its shareholders, on a pro rata basis, then the number
of Shares received upon exercise of certain Options shall be increased to the number of Shares the Participant would have held
after the issuance of the bonus shares had such Participant exercised such Options immediately before the issuance of the bonus
shares.


 


		9.3.	Reorganization; Separation



 


If
the Company is separated, reorganized, or consolidated with another corporation (other than as part of a Transaction) while Options
which were not yet exercised remain outstanding under this Plan, the Company shall use reasonable efforts to maintain the rights
of each Participant through such separations, reorganizations or consolidations, or compensate the Participant for such event in
lieu of the Options such Participant holds. The Committee, at its sole discretion, shall determine what steps shall be taken according
to this section 9.3.


 


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		9.4.	Changes in Capitalization



 


If
the outstanding shares of the Company shall at anytime be changed or exchanged by declaration of a share split, reverse share split,
combination or reclassification of Ordinary Shares, or any other increase or decrease in the number Company’s Ordinary Shares
effected without receipt of consideration by the Company from the shareholders, then the number, class and kind of Shares subject
to this Plan or subject to any Options therefore granted, and the Exercise Prices of the Options, shall be appropriately and equitably
adjusted so as to maintain the proportionate number of Shares without changing the aggregate Exercise Prices of the Options (except
in case the Exercise Price is equal to the par value of the shares, in which case the Exercise Price will be increased respectively).
However no adjustment shall be made by reason of the distribution of subscription rights on outstanding shares, or conversion of
securities into shares of the Company.


 


		9.5.	Other terms and conditions



 


		9.5.1.	The allocation of each Option Grant hereunder is subject to the relevant Participant’s agreement
to sign any document he/she is required to sign pursuant to the provisions of this section 9. If a Participant refuses to sign
any such documents, the Committee or Board may determine that the Options held by the Participant or by a trustee for such Participant’s
benefit shall immediately expire.



 


		9.5.2.	Such adjustments as mentioned in this Section 9 shall be made by the Committee, whose determination
in such respect shall be final, binding and conclusive.



 


		9.5.3.	Anything herein to the contrary notwithstanding, if prior to an IPO, there is a bona fide offer
to purchase all or substantially all of the issued and outstanding shares of the Company, or upon a reorganization separation or
the like, all or substantially all of the shares of the Company are to be exchanged for securities of another company, then each
Participant shall be obliged to sell or exchange (in accordance with the value of such Participant’s Options and Shares pursuant
to the terms of such transaction) as the case may be, any Shares such Participant purchases hereunder, in accordance with the instructions
issued by the Board in connection with such transaction, which will be given according to a policy of the Board concerning all
of the Participants under the Plan.



 


		10.	ASSIGNABILITY AND SALE OF OPTIONS



 


No
Option shall be assignable, transferable, given as collateral, hypothecated pledged or encumbered and no right with respect to
the Options shall be given to any third party whatsoever, and during the lifetime of each Participant, each and all of such Participant’s
rights to purchase Shares hereunder shall be exercisable only by such Participant.


 


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		11.	TERM AND EXERCISE OF OPTIONS



 


		11.1.	Options shall be exercised by a Participant by giving written notice to the Company, in the form
substantially attached hereto as Exhibit B or such other form(s) and method as may be determined by the Company from
time to time (the “Exercise Notice”).



 


		11.2.	The Exercise Price shall be payable upon the exercise of the Option in cash or by check, or other
form satisfactory to the Committee.



 


		11.3.	The Exercise Price will be paid in NIS, or if the Exercise Price is fixed in U.S. dollars, in U.S.
dollars or in accordance with the representative rate of exchange of the U.S. dollar, last published by the Bank of Israel at the
time of actual payment, or as provided for by the Company.



 


		11.4.	Each Participant will be entitled to exercise, upon signing the Exercise Notice and any additional
documents as required by the Company, and paying the Exercise Price, all, or part of the Options that are vested at the Exercise
Period.



 


		11.5.	Options shall not be deemed exercised unless: (I) the Company receives duly signed Exercise Notice
including all relevant details; and (II) the Company receives the Exercise Price.



 


		11.6.	The Options may be exercised only to purchase whole Shares, and in no case may a fraction of a
Share be purchased. If any fractional Shares would be deliverable upon exercise, such fraction shall be rounded up or down, to
the nearest whole number. Half of a Share will be rounded up.



 


		11.7.	Each Option granted under this Plan shall be exercisable during the Exercise Period. Subject to
adjustments, as set forth in Section 9 above, the exercise of one Option shall entitle the Participant to hold one Share.



 


		11.8.	Without derogating from any restrictions mentioned hereinabove, the exercise of the Options is
being subject to the following terms, restrictions and conditions as may be in effect on the time of the exercise of the Options
is requested: (i) any applicable law or regulation; (ii) any order or limitation set by any stock exchange in which the Company’s
securities may be traded (e.g., blackout periods, and lock up after an IPO); and (iii) any limitation undertaken by the Company
with respect of the shares of the Company, including limitations set forth by Company’s underwriters. Such period of restriction
of sale or exercise shall not be counted as part of the applicable exercise period.



 


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		11.9.	Notwithstanding the foregoing, starting as of the Employment Termination Date of a certain Participant
and during the period that the vested Options are exercisable, the Company shall be entitled (subject to the provisions of applicable
law) to purchase the vested Options held by such Participant by sending the Participant a purchase notice (the "Purchase
Notice"). The purchase price of each Option shall be the Market Value of an Ordinary Share less the Exercise Price of
the Option. The Market Value of an Ordinary Share shall be determined as follows: (i) in case the Company's shares are listed on
a stock exchange, the Market Value shall be the average price of the Shares during 5 days prior to the Purchase Notice; or (ii)
in case the Company's shares are not traded, the Market Value shall be the value determined in good faith unanimously by the Board
and in the event the Board members are unable to reach an agreement with respect to the Market Value within 10 days of the
Purchase Notice to the Participant, the Board will refer to an external expert. The Committee or the Board shall be entitled
to establish further processes for the purchase of the Options as set forth above, provided, however, that if the Company receives
the Participant’s Exercise Notice prior to the receipt of the Purchase Notice from the Company, then the Company’s
right to purchase the said Options shall become null and void and the Participant may exercise the vested Options pursuant to their
terms.



 


		12.	RIGHTS AND OBLIGATIONS ATTACHED TO THE SHARES



 


		12.1.	No Participant shall have any of the rights or privileges of a shareholder of the Company with
respect to any of the Shares, unless and until, following exercise, the registration of the Participant as holder of such Shares
in the Company’s register of members is duly completed.



 


		12.2.	The rights and obligations attached to the Shares will be as set forth in the Articles. The Shares
may be subject to rights of first refusal, co-sale rights and other rights specified in the Articles.



 


		12.3.	The Participant waives any of the following rights to the extent such rights are attached to the
Shares: (i) pre-emptive rights in relation to issuance of new securities in the Company; (ii) rights of first refusal in relation
with any sale of shares of the Company; (iii) co-sale rights in relation with any sale of shares of the Company.



 


		12.4.	Unless provided otherwise by the Committee, until an IPO, all voting rights, and rights to receive
information from the Company with respect to the Shares shall be granted to the Board or as determined by the Board, in accordance
with Exhibit C attached hereto.



 


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		12.5.	Without derogating from any restrictions mentioned hereinabove, by accepting an Option Grant, each
Participant agrees that the sale or disposal of Shares is subject to the following terms, restrictions and conditions as may be
in effect on the time when such sale or disposal is requested: (i) any applicable law or regulation; (ii) any order or limitation
set by any stock exchange in which the Company’s securities may be traded (e.g., blackout periods, and lock up after an IPO);
and (iii) any limitation undertaken by the Company with respect of the shares of the Company, including limitations set forth by
Company’s underwriters.



 


		12.6.	Until an IPO the Company shall have the authority to endorse upon the certificate or certificates
representing the Shares such legends referring to the foregoing restrictions, and any other applicable restrictions, as it may
deem appropriate (and which do not violate the Participant's rights according to this Agreement).



 


		12.7.	By accepting an Option Grant, each Participant agrees that in the case of an IPO or after registering
the Company’s securities for trading, to sign any document and approve any resolution or restriction upon the Shares, or
modify the terms of allocation of the Shares, if such Participants signature or approval or such restriction or modification were
reasonably required, in the Committee’s discretion, in order to facilitate the Company in meeting all the underwriters and
stock exchange demands and all applicable securities and corporate laws and regulations.



 


		12.8.	The Participant shall not sell, pledge, transfer or otherwise dispose of any Shares in transactions
which violate, according to the Company’s sole discretion, any applicable laws, rules and regulations, or the Articles.



 


		12.9.	No transfer of Shares shall be effective if the Committee determines that the transferee is a competitor
of the Company (either directly or indirectly).



 


		12.10.	Notwithstanding anything to the contrary in this Section 12, as long as Shares are held by a trustee
for the benefit of a Participant (if applicable) the Shares shall not be sold, pledged, transferred or otherwise disposed of, by
the Participant until an IPO, or until such time or event as determined by the Committee, either individually or with respect to
all Participants.



 


		13.	TERM OF THE PLAN



This Plan shall be effective
as of January 1, 2010, which is the day it was adopted by the Board and shall terminate when all the Options are exercised into
Shares or expired in accordance with the provisions of this Plan or such other date as shall be determined by the Board, which
date shall be no later than January 1, 2020.


 


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		14.	AMENDMENTS; TERMINATION



 


		14.1.	The Board may, at any time and from time to time, amend, alter or terminate the Plan, provided,
however, that the rights of the Participants shall not be adversely affected, unless such Participants agreed to such amendment,
alteration or termination.



 


		14.2.	The Plan may be terminated at any time by an action of the Board, but any such termination will
not terminate any Options granted under this Plan, which are then outstanding, without the consent of the Participant that is holding
such Options.



 


		15.	BINDING EFFECT



The provisions of the Plan
shall be binding upon the heirs, executors, administrators, and successors of the Participants.


 


		16.	GOVERNMENT REGULATIONS AND OTHER RESTRICTIONS



 


		16.1.	This Plan, the Option Grant Letter Agreements, the grant and exercise of Options hereunder, the
obligation of the Company to issue the Shares, and any other act or obligation of the Company or any related individual or entity
acting in connection with this Plan are all subject to the Articles, all applicable laws, rules, and regulations, whether of the
State of Israel or of the United States or any other state having jurisdiction over the Company and any Participant.



 


		16.2.	By accepting an Option Grant, each Participant agrees not to sell, pledge, transfer or otherwise
dispose of any of the Shares such Participant may hold except in compliance with: (I) the United States Securities Act of 1933,
as amended, and the rules and regulations thereunder if applicable; and (II) the Israeli Securities Law 5728 – 1968; and
(III) any other applicable securities law, regulations or other rules set by any stock exchange in which the Company's securities
may be traded; and to further agree that certificates evidencing any of such Shares shall bear appropriate legend to reflect such
restrictions. The Company does not obligate itself to register any shares under the United States Securities Act of 1933, as amended
or any other securities laws.



 


		17.	TAX CONSEQUENCES, INDEMNIFICATION



 


		17.1.	Any tax consequences (pursuant to Israeli or any other applicable law that the relevant Participant
is subject to), including tax consequences due to adjustments, made in accordance with Section 9 above, arising from the grant
or exercise of any Option, the payment for Shares covered thereby, or any other event or act (of the Company or any Participant)
relating to the Plan, shall be borne solely by each Participant.



 


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		17.2.	The Company and/or the Board and/or the Committee and/or a trustee for the Plan shall not be required
to release any Share certificates or transfer any Shares to a Participant until all required tax payments have been fully made.



 


		17.3.	The Company may withhold taxes according to the requirements under the applicable laws, rules,
and regulations, including withholding taxes at source. In the case that applicable law requires so, the Company shall deduct taxes
at source. Such deduction may be made from any proceeds attributed to the exercise of the Options and sale of Shares, or from any
proceeds the Participant is entitled to receive from the Group or other proceeds such Participant owns and are held by the Group,
including from Participant’s salary or other proceeds he/she is entitled to receive from the Company or a Related Entity.
It is explicitly stated herein that each Participant who is an Employee, by accepting an Option Grant agrees to the deduction from
his/her salary of any amounts that in the Company’s determination are required to be deducted under applicable law in connection
with the Plan. In any such case, the Company shall be entitled
to offset any amounts due to such Participant on account of such taxes.



 


		17.4.	In the case that the Company, or any other person on its behalf is required to pay taxes, that
under applicable law should have been paid by the Participant, then such Participant shall immediately either pay such tax, or,
if such tax was already paid, reimburse the Company, or such other person for the total amount paid.



 


		17.5.	Neither the Company, nor any Related Entity nor anyone on their behalf, shall give, or be deemed
to be giving any Participant, or a potential Participant, advice regarding tax consequences relating to the Plan and issuance of
securities thereunder. Each Participant shall rely solely, while considering participation in the Plan, on the advice of such Participant’s
consultants.



 


		18.	CONTINUANCE OF EMPLOYMENT OR ENGAGEMENT



Neither the Plan nor any Option
Grant shall be construed to impose any obligation on any entity included in the Group to continue any Participant’s employment
with it (in the case that the Participant is an Employee) or to maintain any business engagement with such Participant. Nothing
in the Plan or in any Option Grant shall confer upon any Participant any right to continue to be employed by the Group or to maintain
any other business engagement with it, or restrict the right of any entity included in the Group to terminate such employment or
business engagement at any time.


 


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		19.	RULES PARTICULAR TO SPECIFIC COUNTRIES



 


		19.1.	Notwithstanding anything herein to the contrary, the terms and conditions of the Plan may be amended
with respect to particular types of Participants as determined by the Board (for example, Israeli employees, employees that are
subject to US taxation) by an addendum to the Plan (the “Appendix”).



 


		19.2.	The Company may adopt one or more Appendixes. Each Appendix shall be approved by the Board and
as required or advisable under applicable law.



 


		19.3.	The terms of an Appendix shall govern only with respect to the types of Participants specified
in such Appendix.



 


		19.4.	In the case that the terms and conditions set forth in an Appendix conflict with any provisions
of the Plan, the provisions of the Appendix shall govern with respect to Participants that are subject to such Appendix, provided,
however, that such Appendix shall not be construed to grant the Participants rights not consistent with the terms of the Plan,
unless specifically provided in such Appendix.



 


		20.	NON-EXCLUSIVITY OF THE PLAN



 


		20.1.	The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding
any previously approved incentive arrangements or as creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the granting of Options other than under this Plan, and such
arrangements may be either applicable generally or only in specific cases.



 


		20.2.	The grant of Options hereunder shall neither entitle the recipient thereof to participate, nor
disqualify him from participating in, any other grant of Options pursuant to this Plan or any other option or stock plan of the
Company.



 


		21.	MULTIPLE AGREEMENTS; OTHER CORPORATE ACTIONS



 


		21.1.	The terms of each Option Grant may differ from other Options Grants granted under the Plan at the
same time, or at any other time. The Board may also grant more than one Option Grant to a certain Participant during the term of
this Plan, either in addition to, or in substitution for, one or more Option Grants previously granted to such Participant.



 


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		21.2.	Under no circumstances shall the Plan be construed to grant any right to a Participant, or any
other third party, to postpone, delay or affect any corporate action resolved by the Company.



 


		22.	GOVERNING LAW & JURISDICTION



This Plan shall be governed
by, construed and enforced in accordance with the laws of the State of Israel, without giving effect to the principles of conflict
of laws. Any dispute or claim shall be put to the Board’s resolution. Subject to the above, the competent courts of Tel-Aviv,
Israel shall have sole jurisdiction in any matter pertaining to this Plan, and any other issue related to it.


 


		23.	NO WAIVER



The failure of the Company
or any other party acting on its behalf or assisting it in implementing the Plan to enforce at any time any provisions of the Plan
shall not be construed to constitute a waiver of such provision or of any other provision hereof.


 


		24.	NOTICES



 


		24.1.	Any notice, request, demand or other communication required or permitted under the Plan shall be
in writing and shall be deemed to have been duly given, made and received only by personal delivery or if sent by certified mail,
postage prepaid, return receipt requested, overnight delivery service, facsimile transmission (with confirmation of delivery),
or confirmed e-mail to the address of the Company (if sent to the Company), or to the address of the Participant as such was provided
by him in the Option Grant Letter Agreement, unless such address is changed by written notice received by the Company.



 


		24.2.	Except as otherwise set forth herein, any notice sent by mail shall be deemed to be given six days
after deposit with the relevant post service; any notice sent by overnight delivery service shall be deemed given the first business
day after deposited with the delivery service; and any notice sent by facsimile transmission or e-mail, shall be deemed given when
transmitted if sent during normal business hours or if not, on the next business day; and any notice given by personal delivery
shall be deemed given on the date of delivery.



 


		24.3.	In the case a certain Participant changes his or her contact details, in a way that the contact
details provided to the Company by him do not enable the Company to provide notices and other communications to such Participant,
then such Participant shall be deemed to have waived his or her right to receive any notices, and the Committee shall have the
right, in its sole discretion, to take any appropriate action under the circumstances.



 


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Appendixes


 


Appendix A: Terms of grant of options to Israeli
employees


 


Exhibits:


 


Exhibit A: Option Grant Letter Agreement


 


Exhibit B: Form of Exercise Notice


 


Exhibit C: Proxy


 


 


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Appendix A


 


Terms of grant of Options to Israeli
employees


 


		1.	Purpose of the Appendix



 


		1.1.	This Appendix (the “Appendix”) is made as part of the Plan (as defined herein
whereas all terms not otherwise defined herein shall have the meaning ascribed to them in the Plan) and pursuant to the provisions
of Section 102 of the Income Tax Ordinance (as defined herein).



 


		1.2.	This Appendix governs grants of Options to Israeli Employees, either by a Trustee, or without a
Trustee.



 


		2.	Definitions



 


As used herein,
the following definitions shall apply:


 


		2.1.	“Capital Gain Method” means choosing the alternative of capital gain method
under Section 102.



 


		2.2.	“Eligible Participant” means any employee as such term is defined in Section
102. Without derogating from the foregoing Eligible Participant shall include any employee or Office Holder (as such term is defined
in the Companies Law) of the Company or any Subsidiary except for such persons that are deemed to be ‘Ba’al Shlita’
under Section 32 to the Income Tax Ordinance.



 


		2.3.	"Deposit Date" means the date in which options were deposited with the Trustee
for the benefit of a certain Participant.



 


		2.4.	“Income Tax Authorities” mean the Israeli income tax authorities that are authorized
to give approvals in relation with this Appendix and Option Grants to Eligible Participants.



 


		2.5.	“Income Tax Ordinance” means the Israeli Income Tax Ordinance (New Version)
1961, as amended from time to time.



 


		2.6.	“Labor Income Method” means choosing the alternative of labor income method
under Section 102.



 


		2.7.	“Participant” means any Eligible Participant who is granted with Options.



 


		2.8.	“Plan” means the 2010 Incentive Option Plan this Appendix is attached to.



 


		2.9.	“Realization Event” means, with respect to each Option Grant granted to a certain
Participant, the earlier to occur of: (I) transfer of Securities from the Trustee to such Participant; or (II) the sale of Shares
by the Trustee; or (III) one day before such Participant is no longer an Israeli resident (as provided for in Section 100A to the
Income Tax Ordinance).



 


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		2.10.	“Release Term” means: (i) in the case of Capital Gains Method, a period ending
twenty four (24) months after the Deposit Date; (ii) In the case of Labor Income Method ‘Release Term’ shall mean a
period ending twelve (12) months after the Deposit Date.



 


		2.11.	“Section 102” means Section 102 to the Income Tax Ordinance as amended from
time to time, and / or as superseded and any rules regulations or instructions promulgated or enacted under such Section 102.



 


		2.12.	“Securities” mean Options subject to a certain Option Grant and Shares received
subsequent exercise of such Options.



 


		2.13.	“Tax Method” means either Capital Gains Method or Labor Income Method.



 


		2.14.	“Trust” means a trust, maintained under the Trust Agreement entered into between
the Company and the Trustee for administration of grant of Options
under Section 102.



 


		2.15.	“Trust Agreement”
means the agreement between the Company and the Trustee as may be in effect from time to time specifying the duties and authorities
of the Trustee.



 


		2.16.	“Trust Assets” mean all Securities and other assets held in Trust for the benefit
of the Participants pursuant to this Appendix and the Trust Agreement



 


		2.17.	“Trustee” means __________ (and any successor Trustee) who was, or shall be
appointed by the Board of Directors of the Company and approved by the Income Tax Authorities to hold the Trust Assets.



 


		3.	Provisions of the Appendix shall govern



 


The
provisions of the Appendix shall supersede and govern in the case of any inconsistency or conflict arising between the provisions
of the Appendix and the provisions of the Plan, provided, however, that this Appendix shall not be construed to grant Participant
rights not consistent with the terms of the Plan, unless specifically provided herein.


 


		4.	Selection of Tax Method – Capital Gains Method



 


The
Company chooses the Capital Gain Method (‘Maslul Revach Hon’). This choice may be changed in the future, by
a Board resolution, provided, however, that the change in selection is permissible under the provisions of Section 102.


 


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		5.	Holding of Securities by the Trustee



 


		5.1.	All Securities shall be issued to the Trustee to be held in the Trust for the benefit of the relevant
Participants. All certificates representing Securities issued to the Trustee under this Appendix shall be deposited with the Trustee,
and shall be held by the Trustee until such time that such Options or Shares are released from the Trust as herein provided.



 


		5.2.	After the Release Term is over, a Participant shall be entitled to instruct the Trustee to transfer
the Shares held for such Participant’s benefit to such Participant, provided, however, that the Trustee confirms that all
applicable tax as set in Section 102 was actually paid and the Trustee holds a confirmation to that effect from Income Tax Authorities.



 


		5.3.	In the case that the Company distributes dividends, than the amount of dividends with respect of
Shares held in Trust shall be paid to the Participants that are the beneficial holders of such Shares, subject to deduction at
source of the applicable tax.



 


		6.	Provisions governing this Appendix and Plan



Notwithstanding anything to
the contrary in the Plan or elsewhere in this Appendix:


 


		6.1.	The Plan shall have one, sole, Trustee.



 


		6.2.	The Appendix shall be subject to one Tax Method, unless the provisions of Section 102 allow otherwise.



 


		6.3.	The Participants shall not be entitled to cause a Realization Event to occur unless the Release
Term is fulfilled.



 


		6.4.	All rights or benefits that are received subsequent to the grant or exercise the Options or the
Shares underlying such Options (including and not limited to bonus shares) shall be deposited with the Trustee until the end of
the Release Term, and all such rights and benefits shall be subject to the Tax Method selected by the Company.



 


		7.	Effectiveness of the Appendix.



 


This
Appendix shall become effective, and Option Grants may be granted hereunder only after receipt the required approvals under Section
102 from the Income Tax Authorities.


 


		8.	Additional limitations



 


		8.1.	The Company shall not issue Options to a Participant unless such Participant confirmed in writing
that he/she is aware of the provisions of Section 102 and the applicable Tax Method, and such Participant agreed in writing to
the terms of the Trust Agreement, and that he/she shall not cause a Realization Event to occur before the Release Term is over.
The form for the above confirmation shall be determined by the Committee, and shall be attached to the Plan as Exhibit A.



 


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		8.2.	By accepting an Option Grant, each Participant agrees irrevocably to discharge the Trustee, the
Company and any other office holder, employee or agent thereof from any liability with respect of any action or decision duly taken
and bona fide executed in relation with the Plan, or relating to any Option Grant or Shares.



 


		8.3.	The Trustee shall use the voting rights vested in any such shares issued upon the exercise of any
Options granted under the Plan, in accordance with Exhibit C of the Plan.



 


		9.	Grant of Options not by a Trustee



 


Notwithstanding
the above, the Company shall be entitled to allocate Option Grants not according to the Tax Methods, but by direct grant to Participants,
provided, however, that the requirements of Section 102 are met.


 


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Exhibit A


 


Option
Grant Letter Agreement


 


This letter agreement (the “Agreement”)
is made is made as of _______ __, 20__, by and among Alcobra Ltd. (the “Company”), an Israeli Company with main
place of business at 8 Menachem Plaut St., Rehovot 76326, Israel, and _________, an [Israeli citizen], I.D number _______ (the
“Participant”).


 


		Whereas	The Company adopted an Incentive Option Plan (together with applicable Appendixes, the “Plan”),
a copy of which was reviewed by the Participant; and



 


		Whereas	The Company resolved to grant to the Participant an Option Grant, subject to the terms and conditions
herein; and



 


NOW,
THEREFORE, it is agreed as follows:


 


		1.	All terms not defined herein shall have the meaning ascribed to them in the Plan.



 


		2.	The Company resolved to grant certain options (the “Option Grant”) to purchase
the Company’s Ordinary Shares to the Participant.



 


		3.	The terms of the Option Grant are as follows:



 


		3.1.	Number of Options: _______ (____________________).



 


		3.2.	Vesting Schedule – as defined in the Plan / ___________________. [Choose the relevant alternative]



 


		3.3.	Vesting Commencement Date: _____ __, 200_.



 


		3.4.	Exercise Price per options: US$____ per share.



 


		3.5.	[Acceleration Terms: ________________________]



 


		4.	The grant of the Option Grant is conditioned upon, and shall not become effective unless and until
the Participant agreeing to the terms of this Agreement.



 


		5.	Contact details and personal details of the Participant as supplied by it:



 


		5.1.	Full name: _________.



 


		5.2.	Identification / registration number: _____________. [For Israeli citizens or entities]



 


		5.3.	Address: ______________.



 


		5.4.	Telephone (home): _________.



 


		5.5.	Cellular Phone: ____________.



 


		5.6.	Facsimile: __________.



 


		5.7.	E-mail: ____________.



 


		6.	The grant is made in accordance with the terms of the Plan.



 


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		7.	Prior to signing this Agreement Participant had the reasonable opportunity to review the Plan and
consult with his / her advisors (such advisors shall not include the Company or anyone on the Company’s behalf) as Participant
deemed fit.



 


		8.	Participant hereby confirms that he /she received reasonable opportunity to review the Plan and
understand its terms, and that Participant agrees to the terms and provisions of the Plan.



 


		9.	The Participant acknowledges and agrees that the Company may be merged, or acquired or sold to
a third party, and in such case, by signing this Agreement, the Participant grants the Board, or anyone on behalf of the Board,
the right to sign on behalf of such Participant any document or agreement reasonably necessary, in the Board’s discretion,
in order to consummate such acquisition, merger or sale.



 


		10.	Participant hereby confirms that he /she is aware of the provisions of Section 102 (the updated
Section 102 is attached hereto as Schedule A) and the applicable Tax Method.



 


		11.	Participant shall not exercise shares (as such term is defined in Section 102) before the Release
Term.



 


		12.	Participant agrees to the terms in the Trust Agreement (attached hereto as Schedule B).



 


[Sections
10 – 12 are applicable only to grants under Appendix A]


 


Sincerely yours,


 


	 	 	 
	Alcobra Ltd.	 	____________________ [Participant]
	 	 	 	 	 
	By:	 	 	Name:	 
	Title:	 	 	 	 


 


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[for consultant use this form]


 


Option
Grant Letter Agreement


 


This letter agreement (the “Agreement”)
is made is made as of _______ __, 20__, by and among Alcobra Ltd. (the “Company”), an Israeli Company with main
place of business at 8 Menachem Plaut St., Rehovot 76326, Israel, and _________, an [Israeli citizen], I.D number _______ (the
“Participant”).


 


		Whereas	The Company adopted an Incentive Option Plan (together with applicable Appendixes, the “Plan”),
a copy of which was reviewed by the Participant; and



 


		Whereas	The Company resolved to grant to the Participant an Option Grant, subject to the terms and conditions
herein; and



 


NOW,
THEREFORE, it is agreed as follows:


 


		1.	All terms not defined herein shall have the meaning ascribed to them in the Plan.



 


		2.	The Company resolved to grant certain options (the “Option Grant”) to purchase
the Company’s Ordinary Shares to the Participant.



 


		3.	The terms of the Option Grant are as follows:



 


		3.1.	Number of Options: _______ (____________________).



 


		3.2.	Vesting Schedule – as defined in the Plan / ___________________. [Choose the relevant alternative]



 


		3.3.	Vesting Commencement Date: _____ __, 200_.



 


		3.4.	Exercise Price per options: US$____ per share.



 


		3.5.	[Acceleration Terms: ________________________]



 


		4.	The grant of the Option Grant is conditioned upon, and shall not become effective unless and until
the Participant agreeing to the terms of this Agreement.



 


		5.	Contact details and personal details of the Participant as supplied by it:



 


		5.1.	Full name: _________.



 


		5.2.	Identification / registration number: _____________. [For Israeli citizens or entities]



 


		5.3.	Address: ______________.



 


		5.4.	Telephone (home): _________.



 


		5.5.	Cellular Phone: ____________.



 


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		5.6.	Facsimile: __________.



 


		5.7.	E-mail: ____________.



 


		6.	The grant is made in accordance with the terms of the Plan.



 


		7.	Prior to signing this Agreement Participant had the reasonable opportunity to review the Plan and
consult with his / her advisors (such advisors shall not include the Company or anyone on the Company’s behalf) as Participant
deemed fit.



 


		8.	Participant hereby confirms that he /she received reasonable opportunity to review the Plan and
understand its terms, and that Participant agrees to the terms and provisions of the Plan.



 


		9.	The Participant acknowledges and agrees that the Company may be merged, or acquired or sold to
a third party, and in such case, by signing this Agreement, the Participant grants the Board, or anyone on behalf of the Board,
the right to sign on behalf of such Participant any document or agreement reasonably necessary, in the Board’s discretion,
in order to consummate such acquisition, merger or sale.



 


Sincerely yours,


 


	 	 	 
	Alcobra Ltd.	 	____________________ [Participant]
	 	 	 	 	 
	By:	 	 	Name:	 
	Title:	 	 	 	 


 


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Exhibit B


 


Form of Exercise Notice


 


To: Alcobra Ltd. (the “Company”)


 


Attention: Secretary, CFO


 


1.          Exercise of
Option. Effective as of today, _________ ___, 200_, I the undersigned ("Participant") hereby elects to exercise
Participant's option to _________ Shares, each 0.01 NIS par value of the Company (hereinafter the: “Shares”),
under and pursuant to the Company’s 2010 Incentive Option Plan (the "Plan") and the Option Grant Letter
Agreement dated ________ __, 200_ (the "Option Agreement").


 


2.          Delivery of
Payment. Participant herewith delivers to the Company the full payment for the Shares, as set forth in the Option Agreement.


 


3.          Representations
of Participant. Participant acknowledges that Participant 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 receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Shares, notwithstanding the exercise of the Option. The Shares shall be issued to Participant 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 of the Shares.


 


5.          Waiver
of Rights. The Participant hereby waives any of the following rights to the extent such rights are attached to the Shares:
(i) pre-emptive rights in relation to issuance of new securities in the Company; (ii) rights of first refusal in relation with
any sale of shares of the Company; (iii) co-sale rights in relation with any sale of shares of the Company


 


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


 


Submitted by:


PARTICIPANT


 


	Signature:	 	 


 


	Print Name:	 	 


 


Address:


 


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Exhibit C


 


ALCOBRA LTD.


 


IRREVOCABLE PROXY


 


The undersigned holder, being an [employee/service
provider/Director] of Alcobra Ltd. (the “Company”), an Israeli corporation, or a subsidiary thereof, who holds
(or will hold, after exercising options to purchase the Company’s Ordinary Shares) Ordinary Shares of the Company (the “Shares”),
hereby appoint the Company’s Secretary (or another person, in the Company’s discretion) (the
“Proxy Holder”) as my proxy to vote for me and on my behalf at shareholders meetings of the Company with
respect to the Shares. The Proxy Holder is hereby appointed as my true and lawful proxy and attorney-in-fact, with full power of
substitution and revocation, to attend meetings of the shareholders of the Company to be held at any time, or any continuation
or adjournment thereof, to vote or take action by written consent with respect to the Shares, on all matters as the Proxy Holder
shall determine in its discretion, including, without limitation, shareholders meetings, shareholders actions by written consent
and waivers. In addition, the undersigned hereby appoint the Proxy Holder as my true and lawful proxy and attorney-in-fact, with
full power of substitution, to receive all notices to which I am entitled to by virtue of contract or the Company’s Articles
of Association. Furthermore, the undersigned hereby appoint the Proxy Holder as my exclusive true and lawful proxy and attorney-in-fact,
with full power of substitution, to request from the Company and to receive all information or documentation which I am entitled
to by virtue of contract, the Company’s Articles of Association or applicable law, as the Proxy Holder shall deem fit in
its discretion.


 


This Proxy is irrevocable, for an indefinite
time, or until another date as determined by the Company’s Compensation Committee or Board. Notwithstanding the foregoing,
this Proxy shall terminate automatically upon the consummation of an initial public offering of the Company’s securities.
The undersigned further agrees that this proxy is coupled with an interest.


 


In the case that the Shares shall be held
for my benefit by a trustee (the “Trustee”), then this Proxy shall act as irrevocable instructions in writing
to the Trustee, so the Trustee shall perform all of the above with respect to the Shares.


 


This Irrevocable Proxy shall be governed
by and construed in accordance with the laws of the State of Israel, without regard to its conflict of laws principles.


 


This Irrevocable Proxy is effective as
of ______, 200_.


 


	 	 
	Signature	 
	Name:	 	 
	Date:	 	 
	 	 	 
	Witness:	 	 
	Witness Name:	 	 


 


	 	Acknowledged and Agreed to:
	 	 
	 	Proxy Holder:
	 	 	 


 


214\1\90400


 


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