Document:

Exhibit 4.5

    

     

    

    
      COMPENSATION POLICY

       

      SOL-GEL TECHNOLOGIES LTD.

       

      Compensation Policy for Executive Officers and Directors

       

      ADOPTED: October 2, 2017

       

      
        
          

      

      
       Table of Contents

       

      
        
          	 	 	Page
	 	 	 
	A.	Overview and Objectives	A - 3

        

      

      
        
          	 	 	 
	B.	Base Salary and Benefits	A - 5
	 	 	 

        

      

      
        
          	C.	Cash Bonuses (Excluding Directors)	A - 6

        

      

      
        
          	 	 	 
	D.	Equity-Based Compensation	A - 8
	 	 	 
	E.	
                  Retirement and Termination of Service Arrangements (Excluding Directors)

                	A - 9

                  

        

      

      
        
          	 	 	 
	F.	Exemption, Indemnification and Insurance	A - 10
	 	 	 

        

      

      
        
          	G.	Arrangements upon Change of Control	A - 11

        

      

      
        
          	 	 	 
	H.	Board of Directors Compensation	A - 11
	 	 	 

        

      

      
        
          	I.	Miscellaneous	A - 12

        

      

       

      
        A - 2

        
          

      

      A. Overview and Objectives

       

      	

            	1.	
              Introduction

            

       

      		

            	
              This document sets forth the
                  compensation policy for executive officers (this "Compensation Policy" or "Policy") of Sol-Gel Technologies Ltd. ("Sol-Gel" or the "Company" and "Executive Officers", accordingly), in accordance with the requirements of the Companies Law 5759-1999 (the "Companies Law").

               

              Compensation is a key component of Sol-Gel's overall human capital strategy to attract, retain, reward, and motivate
                highly skilled individuals that will enhance Sol-Gel's value and otherwise assist Sol-Gel to reach its business and financial short and long term goals. Accordingly, the structure of this Policy was established to tie the compensation of
                each Executive Officer to Sol-Gel's goals and performance.

               

              For purposes of this Policy, "Executive Officers" shall mean "Office Holders" as such term is defined in Section 1 of the Companies Law.

               

              This Compensation Policy shall apply to compensation agreements and arrangements which will be approved after the date
                on which this Compensation Policy is approved by the general meeting of Sol-Gel's shareholders and shall serve as Sol-Gel’s Compensation Policy for the maximum period of time permitted by any applicable law.

               

              The Compensation Committee (upon its appointment in accordance with the applicable law) and the Board of Directors of
                Sol-Gel (the "Compensation Committee" and "Board", respectively) shall review and reassess the adequacy of this Policy from time to time, as required by the Companies Law.

               

              It should be clarified, that wherever reference is made to the required approvals in this Compensation Policy, such
                reference relates to the applicable law as of the date of approval of this Compensation Policy and in any case is subject to the provisions of sections 32 and 34 below.

            

      

      	

            	2.	
              Objectives

            

       

      		

            	
              Sol-Gel's objectives and goals in setting this Compensation Policy are to attract, motivate and retain highly
                experienced personnel who will provide leadership for Sol-Gel's success and enhance the Company's shareholders' value, while supporting a performance culture that is based on merit, and rewards excellent performance in the short and long
                term, while recognizing Sol-Gel's core values. To that end, this Policy is designed, among others:

            

      

      

      	

            	2.1.	
              To closely align the interests of the Executive Officers with those of Sol-Gel's shareholders in order to enhance shareholder value;

            

       

      	

            	2.2.	
              To provide the Executive Officers with a structured compensation package, while creating a balance between the fixed components, i.e., the base salaries and benefits, and the variable compensation, such as bonuses and equity-based compensation in order to minimize potential conflicts between
                the interests of Executive Officers and those of Sol-Gel;

            

       

      	

            	2.3.	
              To strengthen the retention and the motivation of Executive Officers in the short and long term.

            

       

      	

            	2.4.	
              This Compensation Policy was prepared taking into account the Company's nature, size and business and financial characteristics.

            

       

      	

            	3.	
              Compensation structure and instruments

            

       

      		29.	
              Compensation instruments under this Compensation Policy may include the following:

            

      

      

      	

            	•	
              Base salary;

            

       

      
        A - 3

        
          

      

      	

            	•	
              Benefits and perquisites;

            

       

      	

            	•	
              Cash bonuses (short-to-medium term incentive);

            

       

      	

            	•	
              Equity based compensation (medium-to-long term incentive); and

            

       

      	

            	•	
              Retirement and termination of service arrangements payments.

            

       

      

      		

            	
              For the purpose of this Compensation Policy:

               

              

              "Base Salary" shall mean: gross salary, before contributions to social benefits ("Base Salary"); "Employment Cost" shall mean: any payment for the
                employment, including contributions to social benefits, car and expenses of the use thereof, bonuses and any other benefit or payment ("Employment Cost").

            

      

      	

            	4.	
              Overall Compensation - Ratio Between Fixed and Variable Compensation

            

       

      		

            	
              This Policy aims to balance the
                  mix of "fixed compensation", comprised of base salary and benefits ("Fixed Compensation") and "variable compensation", comprised of cash bonuses and equity based compensation1 (excluding
                  adjustment period/retirement bonuses, granted in accordance with section 21 below) ("Variable Compensation") in order to, among other things, appropriately incentivize Executive Officers to meet Sol-Gel's short and long term goals while taking into consideration
                  the Company’s need to manage a variety of business risks.

               

              The total Variable Compensation of each Executive Officer shall not exceed 85% of the total compensation package of
                such an Executive Officer on an annual basis. The Board believes that such range expresses the appropriate compensation mix in the event that all performance objectives are achieved and assumes that all compensation elements are granted
                with respect to a given year.

               

              It should be clarified, that the Fixed Compensation may constitute 100% of the total compensation package for an
                Executive Officer in any year (under circumstances in which a variable component will not be approved for that year and/or in the event of a failure to meet the set goals, if and when determined).

            

       

      

      	

            	5.	
              Intra-Company Compensation Ratio

            

       

      		29.	
              In the process of drafting this
                  Policy, Sol-Gel’s Board has examined the ratio between employer cost, as such term is defined in the Companies Law, associated with the
                  engagement of the Executive Officers (the "Executive Officers Cost") and the average and median employer cost associated with the engagement of the other employees of Sol-Gel (the "Other Employees Cost" and the "Ratio", respectively). The Board
                  believes that the current Ratio does not adversely impact the work environment in Sol-Gel. The following are the ratios as of the date of the approval of this Compensation Policy:

            

       

      	
              Position

            	
              Ratio between the Executive Officers Cost and the average Other Employees Cost

            	
              Ratio between the Executive Officers Cost and the median Other Employees Cost

            
	
              CEO

            	
              8.12

            	
              10.64

            
	
              Other Executive Officers

            	
              3.12

            	
              4.16

            

       

        

        	1	
                Based on the fair value on the date of grant, calculated annually, on a linear basis.

              

      

      
        A - 4

        
          

      

      B. Base Salary and Benefits

       

      	

            	6.	
              Base Salary

            

       

      	

            	6.1.	
              The Base Salary varies between Executive Officers, is individually determined by the Company (subject to the approvals of the Compensation Committee and the Board,
                and with respect to the CEO, also the Company's general meeting of shareholders) and may be considered and adjusted by the Company (subject to the approvals of the abovementioned organs) on a periodically basis, according to, among others, the educational background, prior vocational experience, expertise and qualifications, role, business authorities and
                responsibilities, past performance and previous compensation arrangements of such Executive Officer, as well as the Company's financial state and cash position and any requirements or restrictions prescribed by any applicable legislation,
                from time to time. When determining the Base Salary, the Company may also decide to consider, at the sole discretion of the Compensation Committee and the Board and as required, the prevailing pay levels in the relevant market, Base Salary
                and the total compensation package of comparable Executive Officers in the Company, the proportion between the Executive Officer's compensation package and the salaries of other employees in the Company and specifically the median and
                average salaries and the effect of such proportions on the work relations in the Company.

            

       

      	

            	7.	
              Benefits

            

       

      	

            	7.1.	
              In addition to the Base Salary, the following benefits may be granted to the Executive Officers (subject to the approvals of the Compensation Committee and the Board,
                and with respect to the CEO- also the Company's general meeting pf shareholders), in order, among other things, to comply with legal requirements. It shall be clarified, that the list below is an open list and Sol-Gel (subject to the
                abovementioned required approvals) may grant to its Executive Officers other similar, comparable or customary benefits, subject to the applicable law. In addition, Executive Officers employed outside of Israel may receive other similar,
                comparable or customary benefits as applicable in the relevant jurisdiction in which they are employed.

            

       

      	

            	•	
              Vacation days in accordance with market practice and the applicable law, up to a cap of 30 days per annum;

            

       

      	

            	•	
              Sick days in accordance with market practice and the applicable law; However, the Company may decide to cover sick days from the first day;

            

       

      	

            	•	
              Convalescence pay according to the applicable law;

            

       

      	

            	•	
              Medical Insurance in accordance with market practice and the applicable law;

            

       

      	

            	•	
              With respect to Executive Officers employed in Israel: monthly remuneration for a study fund ("Keren Hishtalmut"), as allowed by applicable tax law and with reference
                to Sol-Gel’s practice and common market practice;

            

       

      	

            	•	
              Pension and savings – according to local market practices and legislation;

            

       

      	

            	•	
              Disability insurance – the Company may purchase disability insurance, according to applicable legislation.

            

       

      	

            	7.2.	
              Sol-Gel may offer additional benefits to its Executive Officers, including but not
                  limited to: communication, company car and travel benefits, insurances and other benefits (such as newspaper subscriptions,
                academic and professional studies), etc., including their gross up.

            

       

      	

            	7.3.	
              Sol-Gel may reimburse its Executive Officers for reasonable work-related expenses incurred as part of their activities, including without limitations, meeting
                participation expenses, reimbursement of business travel, including a daily stipend when traveling and accommodation expenses. Sol-Gel may provide advance payments to its Executive Officers in connection with work-related expenses.

            

       

      
        A - 5

        
          

      

      	

            	8.	
              Signing Bonus

            

       

      		

            	
              At the discretion of the Compensation Committee and the Board (and with respect to the CEO- also the Company's general
                meeting of shareholders), Sol-Gel may grant a newly recruited Executive Officer a signing bonus. Such bonus may be granted in cash, equity or a combination of both. The signing bonus will not exceed: (1) 50% of such Executive Officer's
                annual Base Salary, if the signing bonus is granted in cash; (2) 100% of such Executive Officer's annual Base Salary, if the signing bonus is granted by equity; (3) In case the signing bonus is a combination of cash and equity, its ceiling
                shall be proportional to the cash and equity components, calculated in accordance with the ratios mentioned in sections (1) and (2) above.

            

       

      C. Cash Bonuses (Excluding
            Directors)

       

      
        The Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's
          general meeting of shareholders) may grant cash bonuses to its Executive Officers (excluding directors) on a quarterly or annually basis, or on a shorter or longer period basis, in accordance with the principles detailed below.

      

       

      	

            	9.	
              Annual Bonuses

            

       

      	

            	9.1.	
              The annual bonus that may be paid to the Executive Officers for any fiscal year shall not exceed twelve (12) monthly Base Salaries to the CEO, and six (6) monthly
                Base Salaries to any other Executive Officer.

            

       

      	

            	9.2.	
              CEO

               

                

              
                The annual bonus to the CEO will be based mainly on measurable criteria, and with respect to its less significant
                  part shall be determined at the discretion of the Compensation Committee and the Board, in accordance with the following:

                 

            

       

      	
              Position

            	
              Company/Individual

                Performance Measures

               

            	
              Company's Discretion

            
	
              CEO

            	
              75%-100%

            	
              0%-25%

            

       

      

      		

            	
              The measurable criteria and their relative weight shall be determined by the Compensation Committee and the Board in
                respect of each calendar year. These measurable criteria will include, inter alia, objectives relating to compliance with the
                Company's work plans and with various budget objectives, including, inter alia, compliance with objectives relating to
                revenues, expenses, investments, etc., meeting various financial objectives, such as objectives relating to the annual profit (net profit, pre-tax profit, etc.) and the Company's EBITDA, objectives relating to the recruitment and
                development of professional personnel, objectives relating to raising investments, debt, etc., objectives relating to the Company's business operations and the Company's operations as a company traded on NASDAQ, objectives relating to the
                realization of the Company's assets, the acquisition of new activities and/or companies and objectives relating to an increase of the return on the Company's assets.

            

       

      	

            	9.3.	
              Other Executive Officers (Excluding CEO and Directors)

               

                

              
                The Company may also award (subject to the approvals of the Compensation Committee and the Board) an annual bonus to
                  its Executive Officers, due to their unique contribution to the Company. Such grant will be based, inter alia, on measurable
                  criteria, based on the Company's financial results, the scope of the Company's business activity, the CEO's opinion on the contribution of the Executive Officer to the Company, the distribution of the annual bonus over the year, etc. It
                  should be clarified, that the annual bonus may be based in whole or in part on discretion, provided that it does not exceed the ceiling specified in section 9.1 above. The CEO of the Company shall be entitled to determine the
                  abovementioned targets for each such an Executive Officer. Notwithstanding the foregoing, it is hereby clarified, that the grant of annual bonus to an Executive Officer, of up to three Base Salaries, shall be approved by the CEO of the
                  Company.

                 

            

       

      
        A - 6

        
          

      

      	

            	10.	
              Special Bonuses

            

       

      		

            	
              In addition to the annual bonus,
                  Sol-Gel may grant Executive Officers a special bonus as an award for special achievements (outstanding personal achievement, outstanding personal effort or outstanding Company's performance, such as in connection with mergers and
                  acquisitions, offerings, achieving target budget or business plan under exceptional circumstances and special recognition in case of retirement),
                  at the discretion of the Compensation Committee and the Board (and with respect to the CEO- also the Company's general meeting of shareholders) which shall not exceed six (6) monthly Base Salaries.

            

       

      	

            	11.	
              Additional Provisions Relating to Cash Bonuses

            

       

      	

            	11.1.	
              Pro Rata Payment

               

                Should the employment or service of the Executive Officer terminate prior to the end of a fiscal year, Sol-Gel may pay the Executive Officer his/her pro-rata share of that fiscal year’s bonus, based on the period such Executive Officer
                  was employed by the Company or has served in the Company.

              

            

       

      	

            	11.2.	
              Compensation Recovery ("Clawback")

            

       

      	

            	11.2.2.	
              In the event of an accounting restatement, Sol-Gel shall be entitled to recover from its Executive Officers the bonus compensation in the amount in which such bonus
                exceeded what would have been paid under the financial statements, as restated ("Compensation Recovery"), provided that a claim is made
                by Sol-Gel prior to the third anniversary of fiscal year end of the restated financial statements.

            

       

      	

            	11.2.3.	
              Notwithstanding the aforesaid, the Compensation Recovery will not be triggered in the following events:

            

       

      	

            	•	
              The financial restatement is required due to changes in the applicable financial reporting standards; or

            

       

      	

            	•	
              The Company (subject to any required approval by the applicable law) has determined that clawback proceedings in the specific case would be impossible, impractical or
                not commercially or legally efficient; or

            

       

      	

            	•	
              The amount to be paid under the clawback proceedings is less than 10% of the relevant bonus received by the Executive Officer.

            

       

      	

            	11.2.4.	
              It shall be clarified, that Sol-Gel shall not be entitled to Compensation Recovery with respect to equity-based compensation granted to its Executive Officers.

            

       

      	

            	11.3.	
              Reduction or Postponement

            

       

      

      		

            	
              In the event of the termination of office of an Executive Officer under circumstances in which he/she will not be
                entitled to severance pay, the Company (subject to the approvals of the Compensation Committee and the Board) may revoke the entitlement of such an Executive Officer to an annual bonus and to all parts of the annual bonus which have not yet
                been paid to him.

            

    

    
      A - 7

      
        

    

    
       

      D. Equity-Based Compensation

       

       

      	

            	12.	
              General and Objectives

            

       

      	

            	12.1.	
              The Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general
                meeting of shareholders) may grant from time to time equity-based compensation which will be individually determined and awarded according to, inter
                  alia, the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the Executive Officer. Equity-based compensation may also be awarded to the Company's directors,
                including, for the avoidance of doubt, the Executive Chairman, provided that such directors do not also serve as officers in the Company.

            

       

      	

            	12.2.	
              The main objectives of the equity-based compensation is to enhance the alignment between the Executive Officers' and directors' interests with the long term interests
                of Sol-Gel and its shareholders, and to strengthen the retention and the motivation of Executive Officers in the medium-to-long term. In addition, since equity-based awards are structured to vest over several years, their incentive value to
                recipients is aligned with longer-term strategic plans.

            

       

      	

            	12.3.	
              The equity based compensation offered by Sol-Gel is intended to be in a form of options exercisable into shares, restricted shares and/or other equity based awards,
                such as restricted share units (RSUs), in accordance with the Company's incentive plan in place as may be updated from time to time.2

            

       

      	

            	13.	
              Fair Market Value

            

       

      		

            	
              The fair market value of the equity-based compensation for each Executive Officer during a fiscal year, shall not
                exceed 200% of his/her annual Base Salary, as shall be determined according to acceptable valuation practices at the time of grant.3

            

       

      	

            	14.	
              Taxation Regime

            

       

      		

            	
              Subject to any applicable law, Sol-Gel may determine, at the discretion of the Compensation Committee and the Board
                (and with respect to the Company's directors and CEO- also the Company's general meeting of shareholders), the tax regime under which equity-based compensation may be granted, including a tax regime which will maximize the benefit to the
                Executive Officers.

            

       

      	

            	15.	
              Exercise Period

            

       

      

      		

            	
              The exercise price for each option shall not be less than the average closing Company's share price on NASDAQ over the
                30 trading days preceding the Board’s decision on the grant of the relevant option.

               

              It is hereby clarified, that unless otherwise determined by the Company (subject to the approvals of the Compensation
                Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general meeting of shareholders), and subject to the provisions of any applicable law, the exercise price of restricted shares and restricted
                share units (RSUs) is zero. In addition, it shall be clarified, that the exercise of restricted shares and RSUs may be subject to the achievement of goals set in advance and approved in accordance with the applicable law.

               

              Options, restricted shares and restricted share units (RSUs) may also be exercised by a method of "Cashless" exercise.

               

              The Board considered the possibility of determining a ceiling for the exercise value of the variable equity components
                and decided, taking into account the purpose of the equity-based compensation, not to set such a ceiling in this Policy.

            

       

      
        

         

        

        	2	
                The equity based compensation is based on the fair value on the date of grant, calculated annually, on a linear basis.

              

         

        

        	3	
                Calculated annually, on a linear basis.

              

         

      

      
        A - 8

        
          

      

      	

            	16.	
              Vesting

            

       

      		

            	
              All equity-based incentives granted to Executive Officers and directors shall be subject to vesting periods in order
                to promote long-term retention of such recipients. Grants to Executive Officers (excluding directors) shall vest gradually over a period of at least two years, while grants to directors shall vest over a period of at least one year. Such
                grants may be vested on a quarterly, semi-annual or an annual basis, or based on other time periods (which may not be necessarily equal), as determined by the Company (subject to the approvals of the Compensation Committee and the Board,
                and with respect to the Company's directors and CEO- also the Company's general meeting of shareholders). The Company (subject to the abovementioned required approvals) may condition the vesting of part or all of the equity-based
                incentives, for some or all of its Executive Officers, upon the achievement of predetermined performance goals. The Company (subject to the abovementioned required approvals) may also set terms relating to vesting in connection with an
                Executive Officer leaving the Company (due to a dismissal, resignation, death or disability).

            

      

      

      	

            	17.	
              For details regarding ceilings with respect to director's equity-based compensation see section 29 below.

            

       

      	

            	18.	
              General

            

       

      

      		

            	
              All other terms of the equity awards shall be in accordance with Sol-Gel's incentive plans and other related practices
                and policies. Accordingly, the Company may (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general meeting of shareholders) extend the period of
                time for which an award is to remain exercisable and make provisions with respect to the acceleration of the vesting period of any Executive Officer's awards, including, without limitation, in connection with a corporate transaction
                involving a change of control, subject to any additional approval as may be required by the Companies Law.

            

      

      E. Retirement and Termination of
            Service Arrangements (Excluding Directors)

       

      	

            	19.	
              Advanced Notice Period

            

       

      	

            	19.1.	
              Sol-Gel (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's general meeting of shareholders) may
                provide each Executive Officer (excluding directors), pursuant to an Executive Officer's employment agreement and according to the Company's decision per each case, a prior notice of termination of up to six (6) months, except for the CEO
                whose prior notice may be of up to twelve (12) months (the "Advance Notice Period"). During the Advance Notice Period, the Executive
                Officer may be entitled to all of the compensation elements, and to the continuation of vesting of his/her options, restricted shares, RSUs and/or any other equity based awards.

            

       

      	

            	19.2.	
              During the Advance Notice Period, an Executive Officer will be required to keep performing his/her duties pursuant to his/her agreement with the Company, unless the
                Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's general meeting of shareholders) has waived the Executive Officer’s services to the Company during the Advance
                Notice Period and pay the amount payable in lieu of notice, plus the value of benefits.

            

       

      	

            	19.3.	
              In the event of a change of control in the Company, the Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO-
                also the Company's general meeting of shareholders) may decide to extend the Advance Notice Period as provided in section 19.1 above (and the compensation paid for such Advance Notice Period, accordingly) to up to two times the original
                Advance Notice Period of the Executive Officer, in accordance with the applicable law as of that time.

            

       

      
        A - 9

        
          

      

      	

            	20.	
              Adjustment Period/Retirement Bonus

            

       

      

      		

            	
              In addition to the Advance Notice
                  Period, the Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's general meeting of shareholders) may provide an additional adjustment period/retirement payment
                  that will be determined, among other things, taking into consideration the Executive Officer's seniority in the Company, performance during employment, contribution to Sol-Gel achieving its goals and the circumstances of
                retirement or termination. The maximum adjustment period/retirement bonus that may be paid to each Executive Officer shall be up to six (6) month Base Salaries and may only be granted to Executive Officers who have served in the Company for
                at least one year.

            

       

      	

            	21.	
              Additional Retirement and Termination Benefits

            

       

      		

            	
              Sol-Gel may provide additional retirement and terminations benefits and payments as may be required by applicable law
                (e.g., mandatory severance pay under Israeli labor laws- unless employment/term of service was terminated for cause), or which will be comparable to customary market practices.

            

       

      F. Exemption, Indemnification and
            Insurance

       

      	

            	22.	
              Exemption

            

       

      		

            	
              Sol-Gel (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's
                directors and CEO- also the Company's general meeting of shareholders) may exempt in advance and retroactively its Executive Officers, from any liability to the Company, in whole or in part, for damages in consequence of his or her duty of
                care vis-a-vis the Company, to the fullest extent permitted by law and subject to the provisions of the Company’s Articles of Association.

            

       

      	

            	23.	
              Indemnification

            

       

      		

            	
              Sol-Gel (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's
                directors and CEO- also the Company's general meeting of shareholders) may indemnify its Executive Officers to the fullest extent permitted by applicable law and the Company's Articles of Association, for any liability and expense that may
                be imposed on the Executive Officer, as provided in the Indemnity Agreement between such individuals and Sol-Gel, all subject to applicable law and the Company’s Articles of Association.

            

       

      	

            	24.	
              Insurance

            

       

      	

            	24.1.	
              Sol-Gel (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general meeting
                of shareholders) will provide "Directors’ and Officers’ Liability Insurance" (the "Insurance Policy"), as well as a "run off" insurance
                policy for its Executive Officers as follows:

            

       

      	

            	•	
              The annual premium to be paid by Sol-Gel shall not exceed $1.5 million of the aggregate coverage of the Insurance Policy;

            

       

      	

            	•	
              The limit of liability of the insurer shall be up to $75 million per event and in the aggregate in the insurance period.

            

       

      	

            	•	
              The deductible amount per each claim shall not exceed $5 million.

            

       

      	

            	•	
              The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Company, which shall determine (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general meeting of
                  shareholders) that the sums are reasonable considering Sol-Gel's exposures, the scope of coverage and the market conditions and that the Insurance Policy reflects the current market conditions, and it shall not materially affect
                the Company's profitability, assets or liabilities.

            

       

      	

            	•	
              The policy will also cover the liability of the controlling shareholders due to their positions as Executive Officers in the Company, from time to time, provided that
                the coverage terms in this respect do not exceed those of the other Executive Officers in the Company.

            

       

      
        A - 10

        
          

      

      G. Arrangements upon Change of Control

       

      	

            	25.	
              The following benefits may be granted to the Executive Officers in addition to the benefits applicable in the case of any retirement or termination of
                  service upon a "Change of Control" following of which the employment
                  of the Executive Officer is terminated or adversely adjusted in a material way:

            

       

      	

            	25.1.	
              Vesting acceleration of outstanding options, restricted shares, restricted share units (RSUs) and/or other equity based awards.

            

       

      	

            	25.2.	
              Extension of the exercising period of options, restricted shares, restricted share units (RSUs) and/or other equity based awards for Sol-Gel’s Executive Officers for
                a period of up to five (5) years, following the date of termination of employment.

            

       

      	

            	25.3.	
              An Advance Notice Period, in accordance with section 19.3 above.

            

       

      	

            	25.4.	
              An Adjustment period/retirement bonus in accordance with section 20 above, of up to
                  twelve (12) months of Employment Cost.

            

       

      H. Board of Directors Compensation

       

      	

            	26.	
              The compensation of the Company's directors shall be in accordance with the amounts
                  provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of
                  2000, as such regulations may be amended from time to time, or in accordance with section 27 below, subject to any required approvals by the applicable law.

            

       

      	

            	27.	
              The compensation of the Company's directors (including external directors and independent directors) shall not exceed the following:

            

       

      	

            	27.1.	
              Base payment of $45,000 per year (the "Base Payment");

            

       

      	

            	27.2.	
              Chairman of the Board- an additional amount of $25,000 per year to the Base Payment;

            

       

      	

            	27.3.	
              Committee Chairman- an additional amount of $10,000 per year to the Base Payment;

            

       

      	

            	27.4.	
              Committee member- an additional amount of $5,000 per year to the Base Payment;

            

       

      	

            	28.	
              In addition, the Company may engage with its directors (excluding external and independent directors) for the receipt of consulting services and/or other special
                services, for a consideration of up to $1,000 per day, plus reasonable expense reimbursement. Such compensation shall be paid for a maximum of 6 days per year for each director.

            

       

      
        A - 11

        
          

      

      	

            	29.	
              Directors may be granted equity-based compensation in accordance with the applicable principles detailed in section D of this Policy, and subject to the provisions of
                the Companies Law and the regulations thereunder.4

            

       

      		

            	
              Equity based-compensation granted to the Company's directors, shall not exceed the following amounts (subject to any
                applicable law):5

            

       

      	

            	29.1.	
              Director: $55,000 per year (the "Equity Compensation");

            

       

      	

            	29.2.	
              Chairman of the Board- an additional amount of $55,000 per year to the Equity Compensation;

            

       

      	

            	29.3.	
              Committee Chairman- an additional amount of $10,000 per year per year to the Equity Compensation;

            

       

      	

            	29.4.	
              Committee member- an additional amount of $5,000 per year to the Equity Compensation;

            

       

      	

            	30.	
              Sol-Gel's external and independent directors may be entitled to reimbursement of expenses
                in accordance with the Companies Law and the regulations thereunder.

            

       

      I. Miscellaneous

       

      	

            	31.	
              This Policy is designed solely for the benefit of Sol-Gel. Nothing in this Compensation Policy shall be deemed to grant any of Sol-Gel’s Executive Officers or
                employees or any third party any right or privilege in connection with their employment by the Company and their compensation thereof. Such rights and privileges, to which Executive Officers or employees serving in the Company or that will
                serve in the Company in the future, are entitled for, shall be governed by the respective personal employment agreements.

            

       

      	

            	32.	
              This Policy is subject to applicable law and is not intended, and should not be interpreted as limiting or derogating from, provisions of applicable law to the extent
                not permitted, nor should it be interpreted as limiting or derogating from the Company’s Articles of Association.

            

       

      	

            	33.	
              This Policy is not intended to affect current agreements nor affect obligating customs (if applicable) between the Company and its Executive Officers as such may
                exist prior to the approval of this Compensation Policy, subject to any applicable law.

            

       

      	

            	34.	
              In the event of amendments made to the Companies Law or any regulations promulgated thereunder providing relief in connection with Sol-Gel’s compensation to its
                Executive Officers, Sol-Gel may elect to act pursuant to such relief without regard to any contradiction with this Policy.

            

       

      	

            	35.	
              The Company (subject to any required approvals by the applicable law) may determine that none or only part of the payments, benefits and perquisites shall be granted,
                and is authorized to cancel or suspend a compensation package or part of it.

            

       

      	

            	36.	
              An immaterial change in the terms of office of Executive Officers (excluding directors, a controlling shareholder or a controlling shareholder's relative) during the
                term of this Compensation Policy, will be subject to the approval of the Company's CEO only (changes in the terms of office of the CEO shall be approved in accordance with the Companies Law). An immaterial change in this matter shall be
                deemed to be a change that does not exceed 5% of the annual Employment Cost with respect to the employment of such an Executive Officer in the Company, subject to the conditions prescribed in this Compensation Policy.

            

       

      	

            	37.	
              It should be clarified, that the compensation components detailed in this Policy do not relate to various components that the Company may provide to all or part of
                its employees and/or its Executive Officers, such as: parking spaces, entry permits for its assets, reimbursement for meals and accommodation expenses, vacations, company events, etc.

            

       

      *********************

      

      

      

       

       

      

      	4	
              The equity based compensation is based on the fair value on the date of grant, calculated annually, on a linear basis.

            

       

      

      	5	
              Based on the fair value on the date of grant, calculated annually, on a linear basis.

            

       

      

    

  

  A - 12Document

Exhibit 10.1 

SECOND AMENDMENT TO
SIXTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT

THIS SECOND AMENDMENT TO SIXTH AMENDED AND RESTATED CREDIT FACILITY AGREEMENT (this “Amendment”) is made effective as of the 1st day of March, 2021 by and between IEC ELECTRONICS CORP., a corporation formed under the laws of the State of Delaware (“Borrower”) and MANUFACTURERS AND TRADERS TRUST COMPANY (the “Lender”).

W I T N E S S E T H:
WHEREAS, the parties hereto are parties to a Sixth Amended and Restated Credit Facility Agreement dated as of June 4, 2020, as amended by that certain Consent and First Amendment to Sixth Amended and Restated Credit Facility Agreement dated as of September 30, 2020 (as amended, and as the same may be further amended, modified, supplemented or restated from time to time, the “Credit Agreement”);  

WHEREAS, (i) Borrower has agreed to lease to the County of Monroe Industrial Development Agency, a public benefit corporation of the state of New York (“Agency”), an interest in the property secured by the Monroe County Mortgage (as hereinafter defined) pursuant to a certain Lease Agreement dated as of February 1, 2021 by and between Borrower, as lessor, and Agency, as lessee (as the same may from time to time be extended, amended, restated, supplemented or otherwise modified, the “Lease Agreement”) and (ii) Agency has agreed to sublease to Borrower the property secured by the Monroe County Mortgage pursuant to a certain Leaseback Agreement dated as of February 1, 2021 by and between Agency, as sublessor, and Borrower, as sublessee (as the same may from time to time be extended, amended, restated, supplemented or otherwise modified, the “Leaseback Agreement”) (the execution and delivery of the Lease Agreement and the Leaseback Agreement are collectively referred to herein as the “Transaction”, and the Lease Agreement, the Leaseback Agreement and each other agreement, certificate, instrument and other document executed and delivered pursuant thereto are collectively referred to herein as the “Transaction Documents”); and 

WHEREAS, Borrower has (i) requested that the Lender consent, and the Lender has agreed to consent, to the Transaction and (ii) requested and the Lender has agreed make certain amendments to the Credit Agreement, all on the terms and conditions herein set forth.

NOW, THEREFORE, for due consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 

    1.    DEFINITIONS.    All capitalized terms used herein and not defined shall have the meaning given such terms in the Credit Agreement.

     2.    CONSENT AND AGREEMENT.  Lender hereby consents to the Transaction (including Borrower’s execution, delivery and performance, in accordance with their terms, of 

the Transaction Documents); provided, that (i) the Transaction takes place as described in the Transaction Documents, (ii) the Transaction is consummated on terms and conditions and pursuant to documents in form and substance acceptable to Lender, and (iii) at closing of the Transaction, Borrower delivers to Lender a fully executed copy each Transaction Document and such other documents as Lender may request, certified by Borrower as true and complete copies.

3.    AMENDMENTS.  Effective as of the Second Amendment Closing Date:

(A)    Section 1.1 of the Credit Agreement is hereby amended by amending and restating the following definitions in their entirety to read as follows:

“Monroe County Mortgage” means the Mortgage in favor of the Lender made by Borrower covering the premises described therein located in Monroe County, New York and dated as of the Second Amendment Closing Date. 

“Mortgage(s)” means, collectively, the Wayne County Mortgage and the Monroe County Mortgage. 

“Mortgage Secured Term Loan” means the Three Million Seven Hundred Twenty Thousand Dollars ($3,720,000) aggregate original outstanding principal balance term loan described in Article 2A hereof.

“Mortgage Secured Term Loan Note” means that certain Term Note dated as of the Second Amendment Closing Date by Borrower for the benefit of the Lender in the principal amount of Three Million Seven Hundred Twenty Thousand Dollars ($3,720,000) as described in Article 2A hereof, as such note may be amended, modified, restated or replaced from time to time.

“Notes” means the Revolving Credit Note and the Mortgage Secured Term Loan Note.

“Second Amendment Closing Date” means March 1, 2021.

(B)    Article 2A of the Credit Agreement is hereby added in its entirety to read as follows: 

“ARTICLE 2A – MORTGAGE SECURED TERM LOAN

2A.1     Mortgage Secured Term Loan.  The Lender agrees, subject to this Article 2A and the other terms and conditions hereinafter set forth, to make the Mortgage Secured Term Loan to Borrower in a principal amount of Three Million Seven Hundred Twenty Thousand Dollars ($3,720,000).    

2A.2    Mortgage Secured Term Loan Note.  Interest shall accrue on the Mortgage Secured Term Loan in accordance with the Mortgage Secured Term Loan Note.  Borrower’s obligation to repay the Mortgage Secured Term Loan shall be evidenced by 
- 2 -

the Mortgage Secured Term Loan Note. Notwithstanding anything to the contrary herein, any and all obligations outstanding under the Mortgage Secured Term Loan Note shall be subject to the terms contained in the Mortgage Secured Term Loan Note and shall be payable in full to the Lender under the terms described therein.

2A.3    Use of Proceeds. The proceeds of the Mortgage Secured Term Loan shall be used by Borrower to refinance the existing credit line used to finance the purchase of the premises described in the Monroe County Mortgage.  

(C)    The introductory paragraph to Section 9.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“9.1    Environmental Representations.  Borrower represents and warrants that to the best of Borrower’s knowledge and except as disclosed in (i) the Environmental Report delivered to the Lender related to the property and improvements located at 1450 Mission Avenue NE, Albuquerque, New Mexico, (ii) the Phase II Environmental Site Assessment prepared for Celmet by LCS Inc. dated December 7, 2009, (iii) the Landfill Methane Gas Evaluation Report prepared for Celmet by Bergmann Associates dated March 10, 2010, (iv) the IEC Electronics Corp. Final Phase I Environmental Site Assessment and Limited Compliance Review Southern California Braiding Company, Inc. prepared by ERM and dated December 13, 2010, (v) the Phase I Environmental Assessment Report (Project No. 15R2534.39) prepared for the Lender by LCS, Inc. dated June 25, 2015, (vi) the Phase I Environmental Site Assessment Report (Project No. 15R2533.39) prepared for the Lender by LCS, Inc. dated July 2, 2015, (vii) the Phase II Environmental Site Assessment Report (Project No. 15R2533.22) prepared for the Lender by LCS, Inc. dated August 28, 2015, (viii) the Soil and Groundwater Management Plan (the “SGMP”) for the premises described in the Wayne County Mortgage (the “Newark Site”), prepared by Borrower for submittal to the New York State Department of Environmental Conservation (the “DEC”) regarding DEC Spill No. 1506227, submitted to DEC in October 2015, (ix) the DEC letter to Borrower regarding the SGMP and closure of Spill No. 1506227, dated October 6, 2015, (x) the LCS, Inc. “Site Status Update” letter-report (Project No. 15R2533.39/.22/.70), prepared for the Lender regarding the Newark Site and the DEC’s October 6, 2015 closure letter for Spill No. 1506227, dated October 13, 2015, (xi) the Environmental Audit letter-report for the General Technology Corp. facility at 1450 Mission Avenue NE, in Albuquerque, New Mexico (the “Albuquerque Site”), prepared by AMEC Geomatrix and submitted to the Crane Company, dated October 12, 2009, and the Overview of Findings and Corrective Actions for the Albuquerque Site, prepared by AMEC and submitted to the Crane Company, dated November 18, 2009, both of which are listed in Schedule B of the Environmental Compliance and Indemnity Agreement given by GTC and Borrower to the Lender for the Albuquerque Site, dated December 16, 2009, (xii) the Environmental Site Assessment Report (Project No. 09R2963.29) prepared for the Lender by LCS, Inc. dated December 14, 2009 and (xiii) the Environmental Report delivered to the Lender related to the property and improvements located at 50 Jet View Drive, Rochester, New York:” 

- 3 -

(D)    Schedule 1.1(A) Security Documents attached to the Credit Agreement shall be replaced in its entirety by the Schedule 1.1(A) Security Documents attached to this Amendment. 

4.    REPRESENTATIONS AND WARRANTIES.  Borrower hereby makes the following representations and warranties to the Lender as of the Second Amendment Closing Date, each of which shall survive the effectiveness of this Amendment and continue in effect as of the date hereof so long as any Obligations remain unpaid:

4.1    Authorization.  Borrower has full power and authority to borrow under the Credit Agreement, as amended by this Amendment, and to execute, deliver and perform this Amendment and any documents delivered in connection with it and all other related documents and transactions, all of which have been duly authorized by all proper and necessary corporate action.  The execution and delivery of this Amendment by Borrower will not violate the provisions of, or cause a default under, Borrower’s Organizational Documents, any law or any agreement to which Borrower is a party or by which it or its assets are bound.

4.2    Binding Effect.  This Amendment has been duly executed and delivered by Borrower, and the Credit Agreement, as amended by this Amendment, is the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with its terms, except to the extent that enforcement of any such obligations of Borrower may be limited by bankruptcy, insolvency, reorganization or similar laws of general application affecting the rights and remedies of creditors generally.

4.3    Consents; Governmental Approvals.  Except as may be specifically identified in a written agreement to which Borrower and the Lender are parties, no consent, approval or authorization of, or registration, declaration or filing with, any Governmental Authority or any other Person is required in connection with the valid execution, delivery or performance of this Amendment or any other document executed and delivered by Borrower herewith or in connection with any other transactions contemplated hereby.

4.4    Representations and Warranties.  The representations and warranties contained in the Credit Agreement, as amended by this Amendment, are true on and as of the date hereof with the same force and effect as if made on and as of the date hereof, except for those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

4.5    No Events of Default.  No Default or Event of Default has occurred, except that waived by this Amendment, and no Default or Event of Default is continuing.

4.6    No Material Misstatements.  Neither this Amendment nor any document delivered to the Lender by Borrower or any Credit Party to induce the Lender to enter into this Amendment contains any untrue statement of a material fact or, taken as a whole with the other Loan Documents, omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

- 4 -

5.    CONDITIONS OF AMENDMENT.  The Lender shall have no obligation to execute or deliver this Amendment until each of the following conditions shall have been satisfied:

5.1    Authorization.  Borrower shall have taken all appropriate corporate action to authorize, and its directors, if and as required by Borrower’s Organizational Documents, shall have adopted resolutions authorizing the execution, delivery and performance of this Amendment and the taking of all other action contemplated by this Amendment, and the Lender shall have been furnished with copies of all such corporate action, certified by an authorized officer of Borrower as being true and correct and in full force and effect without amendment on the date hereof, and such other corporate documents as the Lender may request.   

5.2    Consents.  Borrower shall have delivered to the Lender any and all consents, if any, necessary to permit the transactions contemplated by this Amendment.

5.3    Expenses.  Borrower shall have paid to the Lender all reasonable fees and disbursements of the Lender’s counsel and all reasonable out-of-pocket expenses incurred by the Lender, recording fees, search fees, charges and taxes in connection with this Amendment and all transactions contemplated hereby or made other arrangements with respect to such payment as are satisfactory to the Lender.  

5.4    Deliveries.  Borrower shall have delivered to the Lender, each of the following documents, duly executed by Borrower or as specified: (i) this Amendment, (ii) the Mortgage Secured Term Loan Note, (iii) a Reaffirmation executed by the Borrower and each of the Guarantors, (iii) the Monroe County Mortgage, (iv) the Transaction Documents executed by the Borrower and Agency, and (v) such additional documents, consents, authorizations, insurance certificates, governmental consents and other instruments and agreements as the Lender or its counsel may reasonably require (including for purposes of evidencing and/or facilitating Borrower’s and the Lender’s compliance with all applicable laws and regulations, including all “know your customer” rules in effect from time to time pursuant to the Bank Secrecy Act, USA PATRIOT Act and other applicable laws) and all documents, instruments and other legal matters in connection with the Loan Documents shall be reasonably satisfactory to the Lender and its counsel.

5.5    Representations and Warranties.  The representations and warranties set forth in this Amendment and in the Loan Documents shall be true, correct and complete as of the Second Amendment Closing Date, except those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

5.6    No Event of Default.  No Event of Default or Default shall have occurred as of the Second Amendment Closing Date, except that waived by this Amendment, and no Event of Default or Default shall be continuing after giving effect to such waiver.

- 5 -

5.7    No Material Misstatements.  Neither this Amendment nor any document delivered to the Lender by or on behalf of Borrower to induce the Lender to enter into this Amendment contains any untrue statement of a material fact or, taken as a whole with the other Loan Documents, omits to state a material fact necessary to make the statements herein or therein not misleading in light of the circumstances in which they were made.

5.8    No Material Adverse Change.  As of the Second Amendment Closing Date, no Material Adverse Effect shall have occurred with respect to Borrower and its Subsidiaries taken as a whole since September 30, 2020, including, without limitation, the Credit Parties’ ability to meet the projections delivered by Borrower to the Lender prior to the Second Amendment Closing Date.

5.9    No Litigation.  As of the Second Amendment Closing Date there shall not be any claim, action, suit, investigation, litigation, or legal proceeding pending or threatened in any court or before any arbitrator or governmental authority which relates to the legality, validity or enforceability of the Credit Agreement (as amended by this Amendment) or the transactions contemplated hereby or that, if adversely determined, is not adequately covered by insurance or would have a Material Adverse Effect on Borrower or its Subsidiaries.

5.10    Diligence.  The Lender shall have satisfactorily completed all business, financial, tax, collateral due diligence. The Lender shall have satisfactorily completed survey, title insurance, hazard insurance, appraisal, environmental, and flood review due diligence.

5.11    Commitment Fee.  Borrower shall pay to the Lender a commitment fee equal to 0.25% of the final commitment amount in the Mortgage Secured Term Loan Note.

6.    MISCELLANEOUS.

6.1    Reaffirmation of Security Documents. As of the Second Amendment Closing Date, Borrower hereby (a) acknowledges and reaffirms the execution and delivery of the Security Documents, (b) acknowledges, reaffirms and agrees that the security interests granted under the Security Documents continue in full force and effect as security for all indebtedness, obligations and liabilities under the Loan Documents, as may be amended from time to time, and (c) remakes the representations and warranties set forth in the Security Documents, except those representations and warranties that by their terms are made as of a specific date, which representations and warranties Borrower hereby remakes as of such date.

6.2    Entire Agreement; Binding Effect.  The Credit Agreement, as amended by this Amendment, represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof.  This Amendment supersedes all prior negotiations and any course of dealing between the parties with respect to the subject matter hereof.   This Amendment shall be binding upon Borrower and its successors and assigns, and shall inure to the benefit of, and be enforceable by the Lender and its successors and assigns.  The Credit Agreement, as amended hereby, is in full force and effect and, as so amended, is hereby ratified and reaffirmed in its entirety.
- 6 -

6.3    Severability.  If any provision of this Amendment shall be determined by a court to be invalid, such provision shall be deemed modified to conform to the minimum requirements of applicable law.

6.4    Headings.  The section headings inserted in this Amendment are provided for convenience of reference only and shall not be used in the construction or interpretation of this Amendment.

6.5    Counterparts.  This Amendment may be executed by the parties hereto in separate counterparts (including those delivered by facsimile or other electronic means), each of which, when so executed and delivered, shall be an original, but all such counterparts shall together constitute one and the same instrument.

[signature page follows]
- 7 -

[Second Amendment to Sixth Amended and Restated Credit Facility Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be signed by their duly authorized officers as of the day and year first above written.

MANUFACTURERS AND TRADERS TRUST COMPANY
By:    /s/ John Casey            
Name:    John Casey
Title:    Vice President
IEC ELECTRONICS CORP.
By:    /s/ Thomas L. Barbato        
    Name: Thomas L. Barbato
Title:    Chief Financial Officer

 

SCHEDULE 1.1(A)
SECURITY DOCUMENTS*

*Schedule has been omitted pursuant to Item 601(a)(5) of Regulation S-K.  The registrant will provide a copy of any omitted exhibit or schedule to the Securities and Exchange Commission or its staff upon request.

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