Document:

EXHIBIT  10.3

 

TRANS WORLD

ENTERTAINMENT

 

Personal and Confidential

 

October 17, 2016

 

Dear Josh:

 

I am pleased to offer you the position of Chief Executive Officer
with etailz Inc. (“etailz”), a subsidiary of Trans World Entertainment Corporation (the “Company”).
As Chief Executive Officer with etailz, you will report to the Chief Executive Officer of the Company (or his successor).

 

This position is offered on and subject to the following terms
and conditions. The description of the terms of the employee benefit plans and programs below is subject to their terms, as in
effect from time to time, and which may be amended by etailz or the Company at any time.

 

The terms of this offer of employment will take effect from
the date of this Agreement, October 17, 2016 (the “Commencement Date”).

 

		1.	Base Salary: Subject to any increases as may be approved by the Company, your base salary will be at least $275,000
per annum (subject to withholdings) through the end of fiscal year 2017 and will be subject to annual performance reviews each
year. The annual review cycle runs from February 1 through January 31 with any merit increases being awarded around May 1 of the
following fiscal year.

 

		2.	Bonus Program: For fiscal year 2017, you will be eligible to earn a cash bonus in a target amount of 50% of your
base salary (the “Target Bonus Amount”), with a maximum cash bonus potential of 100% of your base salary (the
“Maximum Bonus Amount”) as determined by the Company. The terms of future bonus plans and targets, as set by
the Compensation Committee of the Board of Directors of the Company from time to time, will be communicated to you for each fiscal
year. Bonus payments will be made around May 1 of the following fiscal year.

 

		3.	Benefits; Group Health Insurance: During your employment, you shall be entitled to participate in all
employee benefit plans and programs available to etailz’s employees generally, subject to the terms of such plans or programs
as such plan and programs may change from time to time.

 

		4.	Employment At-Will; Termination: This offer of employment does not and shall not constitute any guarantee of
employment and, as such, your employment is “at will.” Your employment may be terminated by you or by etailz or the
Company at any time with or without cause, subject to the paragraph included below. In the event that your employment ends, for
whatever reason, you shall tender your resignation from all positions you hold with Trans World Entertainment, effective on the
date your employment is terminated. In addition to any other payments that may be payable to you in accordance with this

    	 

    	

    

Agreement, upon any termination of your employment
for any reason, you shall be entitled to receive (A) all accrued, but unpaid base salary, (B) all accrued and unpaid vacation;
and (C) reimbursement of all business expenses incurred prior to the date of termination. For purposes of this Agreement, these
amounts shall be collectively referred to as the “Accrued Obligations.”

 

In the event that you terminate your employment hereunder
for any reason, you shall give the Company not less than thirty (30) days written notice prior to the date on which you intend
to terminate such employment. The foregoing notwithstanding, the Company may, in its sole discretion, waive all or a portion of
such thirty (30) day notice requirement, in which event your resignation shall become effective on such earlier date as may be
designated by the Company.

 

		5.	Severance Pay Upon Certain Events: In addition to the payment to you of the Accrued Obligations, in the event
that (A) your employment is terminated by etailz or the Company other than for Cause (as defined in Section 13), or (B) by you
for Good Reason (as defined in Section 13) during the term commencing on the Commencement Date and continuing through May 1, 2019,
and subject to you signing a severance agreement containing a general release of all claims in a form prepared by the Company (and
not revoking the release during any applicable statutory revocation period), and which shall become effective not more than fifty
(50) days after the date of your termination, you shall be entitled to:  

 

(i) salary continuation for a period
of 26 weeks (the “Severance Period”);

 

(ii) all shares of stock issued to
you in accordance with Section 2.5(a)(iv) of the Share Purchase Agreement dated as of the date hereof by and among etailz, the
Sellers and Sellers’ Representative (as defined therein) and the Company (the “Purchase Agreement”) in
connection with the acquisition by the Company of etailz shall accelerate and become fully vested and no longer subject to any
restriction; and

 

(iii) provided that you, are participating
in the Company’s group health, dental and vision plans on the termination date and elect on a timely basis to continue that participation
in some or all of the offered plans through the federal law commonly known as “COBRA,” the Company will reimburse you
for your actual COBRA premiums paid for the Severance Period or until you are eligible to enroll in the health, dental and/or vision
plans of another employer, if earlier.

 

The foregoing notwithstanding, if
you obtain a subsequent employment position or engagement prior to the expiration of the Severance Period, any compensation or
fees you earn or receive during the Severance Period pursuant to such subsequent employment or engagement shall reduce the Company’s
severance payment obligations hereunder on a dollar for dollar basis. You will provide the Company with written notice as soon
as practicable following the date you obtain a subsequent position, which notice shall further specify the amount of compensation
you will receive from such subsequent employment or engagement during the Severance Period.

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		6.	Death; Disability. In addition to any other amounts or benefits to which you may be entitled under the Company’s
benefit plans or as a matter of law, in the event your employment terminates as a result of your death or Disability (as defined
below), you shall be entitled to receive: (i) all Accrued Obligations, and (ii) all shares of stock issued to you in accordance
with Section 2.5(a)(iv) of the Purchase Agreement in connection with the acquisition by the Company of etailz shall accelerate
and become fully vested and no longer subject to any restriction.

 

For purposes of this Agreement, “Disability”
means your inability to perform the essential functions of your regular duties and responsibilities, as Chief Executive Officer
of etailz, with or without reasonable accommodation, due to a physical or mental injury, illness or impairment for a period of
(1) six consecutive months or (ii) an aggregate of nine months (whether or not consecutive) in any 12-month period.

 

		7.	Non-Solicitation: During your employment with, and for a period of twenty-four (24) months commencing on the
date you leave the employ of the Company, etailz and their respective subsidiaries and affiliates (“Trans World Entertainment”
or “TWE”), for whatever reason, you shall not, directly or indirectly, as a sole proprietor, member of a partnership,
an officer or director, a shareholder or investor in a non-public corporation, or as an employee, agent, associate or consultant
of any person, firm or corporation: (i) solicit, induce or attempt to induce any employee or service provider of TWE to leave the
employ of TWE, or in any way interfere with the relationship between TWE and any employee or service provider thereof, (ii) solicit
any business from any person or entity who was (A) a client, customer, supplier or other business relation of etailz as of the
date hereof, (B) a client, customer, supplier or other business relation of TWE with whom you or any employee directly or indirectly
supervised by you had direct contact at any time during the two-year period immediately preceding the termination of your employment
from TWE (each a “Restricted Party”), (iii) otherwise interfere with the relationship between TWE and any Restricted
Party, or (iv) accept or service any e-commerce or online marketplace or similar business of any type from any Restricted Party.

 

		8.	Non-Compete: During your employment with and for a period of twelve (12) months, commencing on the date
you leave the employ of TWE, for whatever reason, you shall not, directly or indirectly, without the prior written consent of the
Company, engage in or become employed by, or become an officer, employee, director, agent, consultant, contractor, shareholder,
member or partner of or lender to, or otherwise hold an interest in, any person or entity that competes with or engages in the
sale or provision of products or services similar to those sold, provided or offered by etailz at
any time, or otherwise sold, provided or offered by TWE during the two year period immediately prior to date on which your
employment with TWE, except for your ownership of less than 5% of the stock or other equity interests of a publicly traded firm
or corporation.

 

		9.	Confidentiality: In consideration of this offer of employment, you agree not to disclose Confidential
Information to any third party or misappropriate any Confidential Information, unless you are required by law to make any such
disclosure. The covenant shall run for the period of your employment and survive your separation from TWE for any

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reason whatsoever. “Confidential Information”
shall include trade secrets and other non-public or proprietary TWE information, reports, material and documents. You will execute
as a condition of employment such freestanding trade secrets, confidentiality and intellectual property agreement as shall be mutually
agreed to between you and the Company.

 

You also agree to keep the terms of this offer letter
confidential and not to disclose its contents, in whole or in part, to any persons other than to your family members and advisors,
unless TWE shall have publicly disclosed the contents hereof.

 

Anything herein to the contrary notwithstanding, the
provisions of this Paragraph 9 shall not apply (i) when disclosure is required by law or legal process, (ii) with respect to any
litigation, arbitration or mediation involving this offer letter, or (iii) as to Confidential Information that becomes generally
known to the public or within the relevant trade or industry other than due to your violation of this Paragraph 9.

 

		10.	Intellectual Property. You agree that you shall promptly communicate and disclose in writing to the Company all
inventions (whether or not patentable), suggestions, concepts, formats, arrangements, discoveries, developments, ideas, licenses,
writings, designs, software (whether in source or object code form), patents, copyrights, trademarks, trade secrets, know-how and
patent, copyright and trademark applications which are made, conceived, developed or reduced to practice by you alone, or jointly
with others, whether or not during normal business hours, during the time of the your employment with etailz or the Company, so
long as they are within the scope your employment or applicable or related in any way to the present or potential businesses, products
or services of TWE, in each case as reasonably determined by the Company (hereafter, collectively “Inventions”).
You hereby assign all of your right, title and interest in all such Inventions to the Company, free and clear of any claims by
you of any character whatsoever, unless the Company notifies you in writing that the Invention belongs to you in whole or in part.
You agree that with respect to any Invention that may qualify as a “work made for hire” as defined in 17 U.S.C. §101,
such Invention is and will be deemed a “work made for hire” and the Company will have the sole right to the copyright
(or, in the event that any such Invention does not qualify as a “work made for hire”, the copyright and all other rights
thereto will be assigned as above). As to such Inventions, upon the Company’s request, you shall: (i) execute all documents
and provide all assistance necessary or proper to enable the Company to establish, record, perfect, transfer and defend title to
such Inventions and to enable the Company to file and prosecute patent, copyright and trademark applications in the United States
and any foreign country; and (ii) do all other things (including the giving of evidence in suits and proceedings) to obtain, maintain
and assert patents, copyrights, trademarks or other rights in such Inventions.

 

		11.	Miscellaneous: You hereby agree and acknowledge that (i) the foregoing restrictions under this Agreement (A)
are reasonable as to time and scope, (B) are reasonable and necessary in order to protect the legitimate interests of TWE, (C)
do not impose on you undue hardship and (D) are not injurious to the public, (ii) TWE competes for clients and customers throughout
the world, (iii) the Company would not have entered into this

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Agreement in the absence of the restrictions set forth
here, (iv) a breach or threatened breach of your covenants and restrictions could cause irreparable harm to TWE for which it would
have no adequate remedy at law. Accordingly, notwithstanding any language contained in this Agreement, and in addition to any remedies
which the Company may have at law, in the event of an actual or threatened breach of your covenants and restrictions contained
in this Agreement, the Company shall have the absolute right to apply to any court of competent jurisdiction for such injunctive
or other equitable relief as such court may deem necessary or appropriate in the circumstances (without the requirement of posting
a bond or any other type of undertaking). Additionally, you agree that in the event that any court of competent jurisdiction should
hold that the duration, area, scope or other term of a restriction set forth in this Agreement is unreasonable or unenforceable
under circumstances now or hereafter existing, the maximum duration, area and scope of restriction and other term reasonable under
the circumstances shall be substituted. In the event that you or the Company initiates any proceeding in an attempt to confirm
or enforce either of your rights under Paragraph 7 or 8 of this Agreement, the parties agree that the time period during which
you are restricted pursuant to this Agreement will be tolled to the furthest extent allowed under applicable law. In the event
of any proceeding relating to the foregoing, or otherwise relating to the enforcement of any of the provisions of this Agreement,
the prevailing party shall be entitled to recover its reasonable attorneys’ fees and expenses.

 

This offer letter shall be governed
by and construed and interpreted in accordance with the laws of the State of New York without reference to the principles of conflict
of laws. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement may
be brought against any of the parties in the courts of the State of New York, or, if it has or can acquire jurisdiction , in the
United States District Court for the Southern District of New York, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or proceeding and waives any objection to venue laid therein.
This offer letter may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument. Signatures delivered by facsimile or PDF shall be effective for all purposes.

 

		12.	Section 409A.

 

The parties intend that this Agreement and the
payments and benefits provided hereunder be exempt from the application of Section 409A, and the rules and regulations issued
thereunder, to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury
Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section
1.409A-1(b)(9)(iii), or otherwise. To the extent Section 409A is applicable to this Agreement, the parties intend that this
Agreement and any payments and benefits hereunder comply with the deferral, payout and other limitations and restrictions
imposed under Section 409A so as to avoid the imputation of any tax, penalties, accelerated taxation or interest under
Section 409A. Notwithstanding anything herein to the contrary, this Agreement shall be construed, interpreted, operated and
administered in a manner consistent with such inten-

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tions; provided that no action or failure to act
pursuant to this Section 12 shall subject the Company or etailz to any claim, liability, or expense, and the Company and etailz
shall not have any obligation to indemnify or otherwise protect you from any obligation to pay any taxes, interest or penalties
pursuant to Section 409A.

 

Without limiting the generality of the foregoing, and
notwithstanding any other provision of this Agreement to the contrary, the parties agree that if (i) it is determined that you
are a “specified employee” within the meaning of Section 409A upon the date of your termination, and (ii) some or any
portion of the amounts payable to you, when considered together with any other severance payments or separation benefits which
may be considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”)
would result in the imposition of the penalty tax under Section 409A if paid to you on or within the six (6) month period following
the termination date, then to the extent such portion of the Deferred Compensation Separation Benefits resulting in the imposition
of additional tax would otherwise have been payable on or within the first six (6) months following the date of your termination,
it will instead become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following
the termination date (or such longer period as is required to avoid the imposition of additional tax under Section 409A). All subsequent
Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment
or benefit.

 

		13.	“Cause” For purposes of this Agreement, you shall be deemed terminated for Cause if the Company terminates
your employment because you: (a) committed fraud, theft, misappropriation or embezzlement of the Company’s funds; (b) have
been indicted for or entered a plea of guilty or nolo contendere to (i) any felony or any other crime involving fraud or misrepresentation
or (ii) any other crime (whether or not connected with your employment) the effect of which is likely to adversely affect TWE;
(c) have committed intentional acts that materially impair or cause material damage to the goodwill or business of TWE; (d) breached
any material provision of this Agreement or any material policy of TWE; or (e) have refused to perform or have materially neglected
or engaged in misconduct in the performance of your material job duties and responsibilities.

 

Any voluntary termination by you in anticipation of
a termination for Cause under this definition, or a separation for other than Cause at a time when grounds for termination for
Cause exist, shall be deemed a termination for Cause.

 

“Good Reason” For purposes of this
Agreement, your resignation shall be deemed to be for Good Reason if you resign following any one or more of the following without
your consent:

 

		a.	A material reduction of your base salary;

 

		b.	Any failure to pay you any of the compensation amount described in Section 1 of this Agreement;

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		c.	Assignment of duties by the Company that are materially inconsistent with your position of Chief Executive Officer of etailz;
or

 

		d.	Relocation of more than 25 miles from the location of etailz headquarters as of the date of this Agreement in Spokane, Washington;

 

provided however, that for purposes of “Good
Reason”, nothing described above shall constitute Good Reason unless you have notified the Company in writing describing the
event which constitutes Good Reason within 45 days after the occurrence of such event and then only if the Company shall have failed
to cure such event within 45 days after the Company’s receipt of such written notice and you elect to terminate your employment
as a result at the end of such 45 day cure period.

 

[Remainder of Page Intentionally Left
Blank]

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If you have any questions, please do not hesitate to contact
me.

 

Sincerely,

 

/s/ Mike Feurer

	Mike Feurer	 
	Chief Executive Officer	 

 

ACKNOWLEDGED AND AGREED TO:

 

/s/ Josh Neblett

	Josh Neblett	 

 

October 17, 2016

    	-8-exhibit_4-1.htm

Exhibit 4.1

 

ARTEMIS THERAPEUTICS INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

 

Artemis Therapeutics Inc., a Delaware corporation (the "Company"), hereby grants the following stock option (the "Option") pursuant to its 2016 Stock Option and Incentive Plan. The terms and conditions attached hereto are also a part hereof.

 

	
Name of optionee (the "Optionee"):

	
Dana Wolf

	 	 
	
Date of this Option grant ("Date of Grant")

	
August 22, 2016

	 	 
	
Percentage and number of shares of the Company's Common Stock subject to this Option ("Shares"):

	
2.499%, or 250 Shares, on the Date of Grant

	 	 
	
Option exercise price per Share:

	
$0.01

	 	 
	
Number, if any, of Options that are vested on Date of Grant:

	
84

	 	 
	
Number of Options that are unvested on the Date of Grant:

	
166

	 	 
	
Vesting Start Date:

	
August 22, 2016

	
Expiration Date

	
10 years from the Date of Grant

 

  Vesting Schedule:

 

	
Percentage

Vested

	
Number of Options Vested

	
Vesting Event

	
33% of the total number of Shares subject to the Option

	
84

	
 Date of Grant

	
33% of the total number of Shares subject to the Option

	
83

	
First anniversary of the Date of Grant, subject to continued engagement

	
33% of the total number of Shares subject to the Option

	
83

	
 Second anniversary of the Date of Grant, subject to continued engagement

Notwithstanding the foregoing, all the shares subject to the Option shall immediately vest and become exercisable upon the occurrence of any of the following events: (i) the Company shall terminate that certain Consulting Agreement by and between Hadasit Medical Research Services and Development Ltd. ("Hadasit"), Optionee, and the Company, dated August 22, 2016 (the "Consulting Agreement") pursuant to Section 2.3(c) of the Consulting Agreement; or (ii) upon termination of the Consulting Agreement by Hadasit pursuant to Sections 2.2(b) or 2.2(c) of the Consulting Agreement.

	 	
ARTEMIS THERAPEUTICS, INC.

	 	 
	
/s/ Dana Wolf

	
By: /s/ Israel Alfassi

	
Signature of Optionee

	
Name of Officer: Israel Alfassi

	 	
Title: Chief Executive Officer

	
Kiryat Hadassah

	 
	
Address

	 
	 	 
	
Jerusalem 911201

	 
	
City/State/Zip Code

	 

 

ARTEMIS THERAPEUTICS INC.

 

STOCK OPTION AGREEMENT -- INCORPORATED TERMS AND CONDITIONS

 

  1.         Grant Under Plan. This Option is granted pursuant to and is governed by the Company's 2016 Stock Option and Incentive Plan (the "Plan") and, unless the context otherwise requires, terms used herein shall have the same meanings as in the Plan.

 

2.          Not an Incentive Stock Option. This Option is not intended to qualify as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Code").

 

3.          Exercisability of Option; Vesting.

 

(a)          Full Exercisability. This Option may be exercised at any time and from time to time for all or any portion of the Shares, subject to the Vesting Schedule. The foregoing right may be exercised only before the date which is ten (10) years from the Date of Grant.

 

(b)          Vesting. Subject to the acceleration provisions set out under the Vesting Schedule hereinabove on the cover page hereof, if the Optionee has continuously maintained a Business Relationship with the Company through the vesting dates specified on the cover page hereof, Options shall become vested (or shall "vest") on such dates in an amount equal to the number of shares set opposite the applicable date on the cover page. No Options may be exercised unless and until it is vested in accordance with the applicable vesting date on the cover page. The Optionee agrees not to sell, assign, transfer, pledge, hypothecate, gift, mortgage or otherwise encumber or dispose of (except to the Company or any successor to the Company) any Options or any interest therein.

 

Subject to the acceleration provisions set out under the Vesting Schedule hereinabove on the cover page hereof, if the Optionee's Business Relationship with the Company ceases, any unvested Options at such time shall expire. Any determination under this agreement as to the status of a Business Relationship or other matters referred to above shall be made in good faith by the Board of Directors of the Company. The Board of Directors, in its discretion, may accelerate any vesting dates.

 

(c)          Definitions. The following definitions shall apply:

 

"Business Relationship" means service to the Company or its successor in the capacity of an employee, officer, director or consultant.

 

"Cause" means: (i) gross negligence or willful misconduct in the performance of the Optionee's work or a breach of fiduciary duty or confidentiality obligations to the Company by the Optionee; (ii) failure to follow the proper directions of the Optionee's direct or indirect supervisor after written notice of such failure; (iii) the commission by the Optionee of illegal conduct relating to the Company; (iv) disregard by the Optionee of the material rules or material policies of the Company which has not been cured within 15 days after notice thereof from the Company; (v) intentional acts on the part of the Optionee that have generated material adverse publicity toward or about the Company or (vi) unsatisfactory performance by the Optionee with respect to the Company, as determined by the Board of Directors of the Company in its sole discretion.

 

4.          Termination of Business Relationship.

 

(a)          Termination. Subject to the acceleration provisions set out under the Vesting Schedule hereinabove on the cover page hereof, if the Optionee ceases to maintain a Business Relationship with the Company, vesting of unvested Options shall immediately cease, this Option may be exercised only as to any Options that are vested on the date of termination of the Optionee's Business Relationship and this Option may be exercised only until the Expiration Date.

 

(b)          Termination for Cause. If the Business Relationship of the Optionee is terminated for Cause (as defined above), this Option, to the extent not already exercised, may no longer be exercised from and after the Optionee's receipt of written notice of such termination.

 

5.          Death; Disability.

 

(a)          Death. Upon the death of the Optionee while the Optionee is maintaining a Business Relationship with the Company, vesting of unvested Options shall immediately cease. In such event, this Option may be exercised only as to any Options that are vested on the date of the Optionee's death, by the Optionee's estate, personal representative or beneficiary to whom this Option has been transferred pursuant to Section 10. and this Option may be exercised only on or prior to the Expiration Date.

 

(b)          Disability. If the Optionee ceases to maintain a Business Relationship with the Company by reason of his or her disability, vesting of Options shall immediately cease; this Option may be exercised only as to any Options that are Vested on the date of termination of the Business Relationship; and this Option may be exercised only on or prior to the Expiration Date. For purposes hereof, "disability" means "permanent and  total disability" as defined in Section 22(e)(3) of the Code.

 

  6.          Restrictions on Transfer; Purchase by the Company. The Optionee may not sell, assign, transfer, pledge, encumber or dispose of ("Transfer") all or any of his or her Options, and may Transfer Shares only in accordance with the transfer restrictions in this Section 6 or provided elsewhere in this agreement. The Optionee may not at any time transfer any Shares to any individual, corporation, partnership or other entity that engages in any business activity that is in competition, directly or indirectly, with the products or services being developed, manufactured or sold by the Company. The determination of whether any proposed transferee engages in any business activity that is in competition with those of the Company shall be made by the Board of Directors of the Company in good faith. This prohibition shall be applicable in addition to and separately from the other provisions hereof.

 

  Notwithstanding the foregoing or the provisions of Section 15, an Optionee may transfer: (i) all or any Shares as a gift to any family member or to any trust or similar estate planning entity for the benefit of any such family member or the Optionee provided that any such transferee shall agree in writing with the Company, as a condition precedent to such transfer, to be bound by all of the provisions of this agreement to the same extent as if such transferee were the Optionee, or (ii) any or all Shares by will or the laws of descent and distribution, in which event each such transferee shall be bound by all of the provisions of this agreement to the same extent as if such transferee were the Optionee or (iii) any or all Shares by court order, in which event each such transferee shall be bound by all of the provisions of this agreement to the same extent as if such transferee were the Optionee. As used herein, the word "family" shall include any spouse, lineal ancestor or descendant (whether natural or adoptive), brother or sister of the Optionee.

 

  7.          Payment of Exercise Price.

 

 (a)          Payment Options. The exercise price shall be paid by one or any combination of the following forms of payment that are applicable to this Option, as indicated on the cover page hereof:

 

	 	(i)	
by check payable to the order of the Company; or

 

	 	(ii)	
if the Common Stock is then traded on a national securities exchange or on the Nasdaq Capital Market (or successor trading system), delivery of an irrevocable and unconditional undertaking, satisfactory in form and substance to the Company, by a creditworthy broker to deliver promptly to the Company sufficient funds to pay the exercise price, or delivery by the Optionee to the Company of a copy of irrevocable and unconditional instructions, satisfactory in form and substance to the Company, to a creditworthy broker to deliver promptly to the Company cash or a check sufficient to pay the exercise price; or

 

	 	(iii)	
subject to Section 7(b) below, if the Common Stock is then traded on a national securities exchange or on the Nasdaq Capital Market (or successor trading system), by delivery of shares of Common Stock having a fair market value equal as of the date of exercise to the option price; or

 

	 	(iv)	
by check payable to the order of the Company for the par value of the shares being purchased plus delivery of the Optionee's three-year personal full recourse promissory note for the balance of the exercise price, with such note bearing interest payable not less than annually at the applicable Federal rate, as defined in Section 1274(d) of the Code.

 

In the case of (iii) above, fair market value as of the date of exercise shall be determined as of the last business day for which such prices or quotes are available prior to the date of exercise and shall mean (i) the last reported sale price (on that date) of the Common Stock on the principal national securities exchange on which the Common Stock is traded. if the Common Stock is then traded on a national securities exchange; or (ii) the last reported sale price (on that date) of the Common Stock on the Nasdaq Capital Market (or successor trading system), if the Common Stock is not then traded on a national securities exchange.

 

(b)          Limitations on Payment by Delivery of Common Stock. If Section 7(a)(iii) is applicable, and if the Optionee delivers Common Stock held by the Optionee ("Old Stock") to the Company in full or partial payment of the exercise price and the Old Stock so delivered is subject to restrictions or limitations imposed by agreement between the Optionee and the Company, an equivalent number of Shares shall be subject to all restrictions and limitations applicable to the Old Stock to the extent that the Optionee paid for the Shares by delivery of Old Stock, in addition to any restrictions or limitations imposed by this agreement. Notwithstanding the foregoing, the Optionee may not pay any part of the exercise price hereof by transferring Common Stock to the Company unless such Common Stock has been owned by the Optionee free of any substantial risk of forfeiture for at least six months.

 

8.          Securities Laws Restrictions on Resale. Until registered under the Securities Act of 1933, as amended, or any successor statute (the "Securities Act"), the Shares will be illiquid and will be deemed to be "restricted securities" for purposes of the Securities Act. Accordingly, such shares must be sold in compliance with the registration requirements of the Securities Act or an exemption therefrom and may need to be held indefinitely. Unless the Shares have been registered under the Securities Act, each certificate evidencing any of the Shares shall bear a restrictive legend specified by the Company.

 

9.          Method of Exercising Option. Subject to the terms and conditions of this agreement, this Option may be exercised by written notice to the Company at its principal executive office, or to such transfer agent as the Company shall designate. Such notice shall state the election to exercise this Option and the number of Shares for which it is being exercised and shall be signed by the person or persons so exercising this Option. Such notice shall be accompanied by payment of the Exercise Price of such shares, and the Company shall deliver a certificate or certificates representing such shares as soon as practicable after the notice shall be received. Such certificate or certificates shall be registered in the name of the person or persons so exercising this Option (or, if this Option shall be exercised by the Optionee and if the Optionee shall so request in the notice exercising this Option, shall be registered in the name of the Optionee and another person jointly, with right of survivorship). in the event this Option shall be exercised, pursuant to Section 5 hereof, by any person or persons other than the Optionee, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise this Option.

 

10.          Option Not Transferable. This Option is not transferable or assignable except by will or by the laws of descent and distribution. During the Optionee's lifetime only the Optionee can exercise this Option.

 

11.          No Obligation to Exercise Option. The grant and acceptance of this Option imposes no obligation on the Optionee to exercise it.

 

12.          No Obligation to Continue . Neither the Plan, this agreement, nor the grant of this Option imposes any obligation on the Company to continue the Optionee in employment or other Business Relationship.

 

13.          Adjustments. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to such date of exercise.

 

14.          Withholding Taxes: Section 83(b) Election.

 

(a)          Withholding Taxes. If the Company in its discretion determines that it is obligated to withhold any tax in connection with the exercise of this Option, or in connection with the issuance of any Shares thereunder or other property acquired pursuant to this Option, the Optionee hereby agrees that the Company may withhold from the Optionee's wages or other remuneration the appropriate amount of tax. At the discretion of the Company, the amount required to be withheld may be withheld in cash from such wages or other remuneration or in kind from the Common Stock or other property otherwise deliverable to the Optionee on exercise of this Option. The Optionee further agrees that, if the Company does not withhold an amount from the Optionee's wages or other remuneration sufficient to satisfy the withholding obligation of the Company, the Optionee will make reimbursement on demand, in cash, for the amount underwithheld.

 

THE FILING OF AN ELECTION, IF MADE, UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, MUST BE FILED WITH THE INTERNAL REVENUE SERVICE WITHIN 30 DAYS FOLLOWING EACH EXERCISE OF THIS  OPTION.

 

(b)          Section 83(b) Election. The Optionee acknowledges that the Shares acquired upon exercise of this Option may be treated as subject to a substantial risk of forfeiture within the meaning of Section 83 of the Code and that, in the absence of an election under Section 83(b) of the Code, such treatment could delay the determination of the tax consequences of such exercise for both the Company and Optionee. In order to ensure that the tax consequences of such exercise will be determined at the time of exercise, Optionee may file a timely election under Section 83(b) of the Code to include in Optionee's taxable income, at the time of exercise, the difference between the fair market value of the Shares received upon exercise of this Option and the amount paid for such shares:

 

15.          Restrictions on Transfer of Shares. Shares may not be transferred without the prior written consent of the Board of Directors of the Company.

16.          Lock-up Agreement. The Optionee agrees that in the event that the Company effects an underwritten public offering of Common Stock registered under the Securities Act, the Shares may not be sold, offered for sale or otherwise disposed of, directly or indirectly, without the prior written consent of the managing underwriter(s) of the offering, for such period of time after the execution of an underwriting agreement in connection with such offering that all of the Company's then directors and executive officers agree to be similarly bound.

 

18.          Provision of Documentation to Optionee. By signing this agreement the Optionee acknowledges receipt of a copy of this agreement and a copy of the Plan.

 

19.          Miscellaneous.

(a)          Notices. All notices hereunder shall be in writing and shall be deemed given when mailed, if to the Optionee, to the address set forth below or at the address shown on the records of the Company, and if to the Company, to the Company's principal executive offices, attention of the Corporate Secretary.

 

(b)          Entire Agreement; Modification. This agreement constitutes the entire agreement between the parties relative to the subject matter hereof, and supersedes all proposals, written or oral, and all other communications between the parties relating to the subject matter of this agreement. This agreement may be modified, amended or rescinded only by a written agreement executed by both parties.

 

(c)          Fractional Shares. If this Option becomes exercisable for a fraction of a share because of the adjustment provisions contained in the Plan, such fraction shall be rounded down.

 

(d)          Issuances of Securities; Changes in Capital Structure. Except as expressly provided herein or in the Plan, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to this Option. If there shall be any change in the Common Stock of the Company through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares, spin-off, split-up or other similar change in capitalization or event, the restrictions and other provisions contained in this agreement shall apply with equal force to additional and/or substitute securities, if any, received by the Optionee in exchange for, or by virtue of his or her ownership of, Options and/or Shares, except as otherwise determined by the Board.

 

(e)          Severability. The invalidity, illegality or unenforceability of any provision of this agreement shall in no way affect the validity, legality or enforceability of any other provision.

 

 

(f)            Successors and Assigns. This agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, subject to the limitations set forth in Section 10 hereof

 

(g)           Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Israel. The competent courts in Jerusalem, Israel shall have exclusive jurisdiction over any dispute that may arise with respect to this Agreement.

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