April 7 ^th , 2017

To

Mr. Avner Gal

Agreement

 

Reference is hereby made to that certain Employment Agreement executed between you (the " Employee " or " you ") and A.D. Integrity Applications Ltd. (the " Company ") in October 2010, (together with all exhibits and amendments thereto, the “ Employment Agreement ”). All of the terms used in this Agreement have the same meanings as set out in the Employment Agreement, unless specifically stated otherwise.

 

The Company and you have reached a mutual agreement that you voluntarily separate from your employment with the Company and from your directorship in the Company and in Integrity Applications Inc. (" Parent ") (the Company and the Parent shall be referred herein collectively as " Integrity ") and transition to a consulting arrangement with the Company pursuant to this Agreement without having an employer-employee relationship.

 

In accordance with your Employment Agreement you are entitled to a notice of 180 days prior to the effective separation of the Employment Agreement (the “ Notice Period ”). Notwithstanding the aforesaid, your effective separation will be April 7, 2017 (the " Separation Date ") and the Company will pay you an amount equal to your Salary and the financial value of the other benefits you are entitled to receive under the Employment Agreement, that would have been paid to you during the Notice Period, in lieu of such prior notice.

 

You shall continue to be entitled to any and all rights and benefits owing and payable to you in connection with your Employment   Agreement until the Separation Date .

 

In addition, in consideration for your execution of this Agreement, the Company and the Parent agree to provide you the following payments and benefits:

 

(i)

The Adjustment Period pursuant to section 19 of your Employment Agreement, shall be extended to 24 Salaries, including all the benefits mentioned in your Employment Agreement, paid to you in monthly installments subsequent to the Separation Date (the " Adjustment   Period "), provided you will not work and/or provide services to any entity directly competing with the Company. In consideration for the aforesaid increased Adjustment Period, you shall provide the Company with consulting services during the Notice Period and the Adjustment Period as you and the CEO of the Parent agree provided that you shall not be required to provide more than 150 hours during the Adjustment Period, without such additional compensation as agreed to by you and the CEO of the Parent.

 

(ii)

Effective as of the date of this Agreement (the " Effective Date "), the Parent, shall accelerate the vesting of 88,259 outstanding unvested options to purchase common stock of the Parent at an exercise price per share equal to US$6.25 held by you as of the Effective Date. Additionally, the term of all your outstanding options (vested and unvested) shall be extended and be exercisable for five years from the Effective Date.

 

 

(iii)

On the Effective Date, the Parent shall grant you an option to purchase up to 300,000 shares of common stock of the Parent having an exercise price per share equal to US$4.50 and an option to purchase up to additional 50,000 shares of common stock of the Parent having an exercise price per share equal to US$7.75 (collectively the " Options "). The Options shall be exercisable for no more than seven years from the Effective Date, vest monthly over a 24 months period following the grant date and shall be subject to the terms and conditions set forth in the stock option agreement to be provided to you and pursuant to Parent's 2010 Incentive Compensation Plan, including the right to a cashless exercise. The Options shall be granted pursuant to Section 3(i) of the Israeli Income Tax Ordinance [new version]-1961.

 

Your undertakings pursuant to this Agreement are in addition to, and without derogation from, your undertakings towards the Company pursuant to the Employment Agreement or under any applicable law.

 

As part of the separation of your employment with the Company, the following actions will take place:

 

(i)

In the framework of the final account, the Company shall make the final payments due to you in connection with your employment and separation of employment with the Company as described under Annex A attached hereto;

 

(ii)

Upon the Separation Date, you will be provided with: (i) letters confirming the transfer to your name of the funds managed on your behalf, including your manager's insurance plan and pension funds (the " Funds Transfer Letters "); (ii) a letter confirming your period of employment with the Company; (iii) a letter of recommendation (the “ Additional Letters ”);

 

(iii)

On the Effective Date, you shall resign from the board of directors of both the Company and Parent, effective as of the Effective Date;

 

(iv)

You will serve as Chairman Emeritus of the Parent and member of its scientific advisory board.

 

Within 5 days of the Effective Date, you have offered to deliver and will deliver to the Company all documents and materials of any nature pertaining to your work with the Company and Integrity, and you will not take with you any documents or materials or copies thereof containing any information with respect to the Company and Integrity, including without limitation any such information contained on a laptop computer or mobile phone, except as necessary or requested by the CEO of the Parent in connection with your consulting duties. You may keep to yourself your laptop computer, mobile phone and your mobile phone number provided that any and all of Integrity’s documents, information and materials that are stored on the laptop and mobile phone, will be returned to the Company or destroyed (at Company’s option) and all copies thereof.

 

All entitlements under this Agreement are gross and shall be made after deduction of applicable taxes.

 

 

At the end of the Adjustment Period, you will be entitled to purchase the Car at its book value . If you decide not to purchase the Car, you shall   return the Car to the Company on the last day of the Adjustment Period. You agree and declare that you will pay all parking/police tickets regarding the Car, in accordance with the period it was and will be held by you, and that the Company is entitled to set-off these amounts with other amounts you are entitled to receive from the Company.

 

You hereby confirm, declare and agree that notwithstanding the Separation of your employment with the Company, you will continue to comply with all your obligations concerning proprietary information and disclosure, as detailed in Exhibit B of the Employment Agreement.

 

You hereby agree not to make any direct or indirect derogatory statements regarding, or disparage in any way, the business or reputation of the Company or the Parent, or any of their directors, officers, shareholders, managers or employees or any statements that would damage the Company or any of the foregoing. The Company and the Parent agrees that its officers and directors shall not intentionally make any direct or indirect derogatory statements regarding, or disparage in any way your reputation.

 

Nothing in this Agreement is intended to be or shall be construed as an admission by you, the Company or the Parent that you or they violated any law, interfered with any right, breached any obligation or otherwise engaged in any improper or illegal conduct with respect to the other or otherwise, the parties hereto expressly deny any such improper or illegal conduct.

 

You acknowledge that Integrity may use the image, likeness, voice, or other characteristics of you in the services, materials, computer programs, marketing and advertising and other deliverables created or used or distributed by or on behalf of Integrity in the course of its business.  You hereby consent to the use of such characteristics by Integrity and release Integrity, its directors, officers, employees, agents, contractors, licensees and assigns from any claims which you has or may have for invasion of privacy, right of publicity, defamation, copyright infringement, or any other causes of action arising out of the use, adaptation, reproduction, distribution, broadcast, or exhibition of such characteristics.

 

You hereby confirm, declare and agree, on your behalf and on behalf of all your heirs, successors and assigns (the “ Waiving Parties ”), that upon the payment of all the amounts and entitlements set forth hereinabove and under Annex A and the receipt of the Letters, you will receive the complete and full compensation due to you from Integrity, in connection with your employment and Separation of employment with Integrity. Subject to the receipt of all the amounts and entitlements set forth hereinabove and under Annex A and the receipt of the Letters, you, on your behalf and on behalf of the Waiving Parties, forever and irrevocably waive, release and discharge the Company, the Parent, and their officers, directors, shareholders, agents, servants, employees, affiliated entities and successors and assigns, past and present (the " Indemnitees "), from any and all claims, demands, causes of actions, fees, liabilities and expenses of any kind whatsoever, whether known or unknown, against any of the Indemnitees by reason of any actual or alleged act, omission, practice, conduct, occurrence, or other matter, with respect to your employment with the Company and/or directorship in Integrity until the Separation Date and the termination thereof, including, without limitation, salary, bonuses, payment for notice periods, entitlement to stock options, contributions to  managers insurance ( ביטוח מנהלים ), pension fund ( קרן פנסיה ), education funds ( (קרן השתלמות , severance pay, annual vacation and/or payment for accrual of unutilized vacation days, overtime pay (if and to the extent payable), car allowance, recreation (Convalescence) pay (דמי הבראה) sick pay, the conduct of a hearing process, and any other payment, entitlement, benefit or right. By countersigning this agreement you acknowledge that this agreement constitutes a waiver and release which applies to severance pay according to Section 29 of the Israeli Severance Pay Act, 5723-1963. For the avoidance of doubt it is clarified that the waiver referred to hereinabove does not derogate from the D&O insurance coverage.

 

 

You acknowledge that the restrictions contained in the two previous paragraphs are fair, reasonable, and necessary for the protection of the legitimate business interests of Integrity and that Integrity will suffer irreparable harm in the event of an actual or threatened breach of any such provision by you. 

 

Subject to your fulfillment of your undertakings pursuant to this Agreement and your undertakings towards the Company pursuant to the Employment Agreement or under applicable law, the Company, the Parent and anyone on their behalf hereby forever and irrevocably waive, release, and discharge you from any and all claims, demands, causes of actions, fees, liabilities and expenses of any kind whatsoever, whether known or unknown, against you by reason of any actual or alleged act, omission, practice, conduct, occurrence, or other matter with respect to your employment with the Company until the Separation Date.

All the terms of this agreement are highly confidential and cannot be disclosed to any person or entity without Company's prior written consent, which shall not be unreasonably withheld. This undertaking is in addition to and shall not derogate from any confidentiality undertaking previously signed by you.

 

If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement, or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid or unenforceable, shall not be affected thereby, and each provision hereof shall be enforced to the fullest extent permitted by law.  If the final judgment of a court of competent jurisdiction declares that any provision of this Agreement is invalid or unenforceable, you agree that the court making the determination of invalidity or unenforceability shall have the power, and is hereby directed, to reduce the scope, duration or area of the provision, to delete specific words or phrases and to replace any invalid or unenforceable provision with a provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable provision, and this Agreement shall be enforced as so modified.

 

The provisions of this Agreement which by their terms call for performance subsequent to Separation Date or termination of this Agreement, shall so survive such termination.

This Agreement shall take effect only upon the approval of the board of directors of both the Company and Parent.

We thank you for your contribution to the Company and the Parent and wish you success in your future.

              Sincerely yours,

                                 A.D. Integrity Applications Ltd.

   Integrity Applications Inc.

 

[Signature Page to Follow]

 

 

IN WITNESS WHEREOF , the undersigned has signed this Agreement on the date first mentioned above

 

___________________________________

Signature

 

Compulsory Deductions	Sum	Optional Deductions	Balance	Qty	Total
Income Tax	336,589.00	Expenses Reimbursement	509.00	‐1	‐509.00
Social Security	2,403.00	Non Taxable Study Fund	98,078.00	‐1	‐98,078.00
Convalescence fee	1,716.00
Convalescence allowance	516.00
Pension Allowance	16,666.00
Total	357,890.00	Total			‐98,587.00

 

 

Taxable Income		542,785.00
Salary for National Security		43,240.00
Total Payments		651,248.00
Total Deductions		357,890.00
Net Salary		293,358.00
Payment amount		391,945.00

Vacation days

	Current balance	Use	New Balance
Vacation Sick days	69.5 90.0	72.0 0.0	0.0 90.0
Days Per month		2.5

 

Cumulative Data
Payments	738,681.0			1,451	Total social security	129,720
Total Salary	56,087.0
Taxable Salary	643,156.0				Employer Provident Fund	27,015
Income tax	366,216.0			632		‐
Social Security	12,357.0				Employer Compensations	30,024
Study fund	21,626.0					151,612

 

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P ERSONAL EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED PERSONAL EMPLOYMENT AGREEMENT (the “ Agreement ”) is made and entered into this 7 ^th day of April, 2017 (the “ Effective Date ”)  by and between A.D. Integrity Applications Ltd. (No. of Company 51-315187-8), of 19 Ha’Yahalomim St., P.O. Box 12163, Ashdod 7760049 Israel (the “ Company ”) and David Malka (I.D. No 022129928) of 35 Muksay St, Rehovot, Israel (the “ Manager ”).

WHEREAS ,

the Company and the Manager previously entered into a Personal Employment Agreement effective as of October 19, 2010 (the “ Prior Agreement ”); and

 

NOW, THEREFORE , in consideration of the mutual premises, covenants and other agreements contained herein, the parties hereby agree as follows:

 

General

1. Position . The Manager shall serve in the position described in Exhibit A attached hereto. In such position the Manager shall report regularly and shall be subject to the direction and control of the Company’s Chief Executive Officer. The Manager shall have all of the powers, authorities, duties and responsibilities usually incident to the position of a Vice President of Operations of a corporation, including responsibility of the entire daily operations and infrastructures of the Company, maintenance, subcontractors and manufacturing of the Company. The Manager shall perform his duties diligently, conscientiously and in furtherance of the Company’s best interests.  In addition, the Manager will be entitled to attend, discuss and otherwise participate in all functions of the Company’s Board of Directors (the “ Board ”) as an observer, but shall have no voting rights designated, for an initial term of twelve (12) months, with renewable annual terms thereafter upon approval of the Board, as long as the Manager remains an employee of the Company.  The Manager shall receive notice of all meetings of the Board and all written materials distributed to the members of the Board prior to the meeting to which they apply.  The Board reserves the right to withhold any information and to exclude the Manager from access to any meeting or portion thereof if the Board reasonably believes in good faith upon advice of counsel that such exclusion is necessary in order to preserve the attorney client privilege or could result in disclosure of trade secrets or a conflict of interest, or if the Manager is a competitor of the Company, as determined by a majority of the members of the Board.

2. Scope of Employment . The Manager agrees to devote the working time and attention to the business and affairs of the Company, as shall be required to discharge the responsibilities assigned to the Manager hereunder. The Manager shall devote the required time and attention to the business of the Company. The Manager hereby acknowledges that the performance of his employment with the Company may require working overtime. However, Manager acknowledges that he holds a senior position in the Company requiring a special degree of trust and therefore is not entitled to receive, pursuant to the Hours of Work and Rest Law 5711-1951, separate and/or additional payments in respect of additional hours or for working on weekends or on holidays.

 

  

3. Location . The Manager shall perform his duties hereunder at the Company’s office in Ashdod, Israel or from his home, as shall be decided by the Manager, and he understands and agrees that his position may involve international travels. It is clarified that any international travel of the Manager shall be coordinated between the Manager and the Company.

4. Manager’s Representations and Warranties . The Manager represents and warrants that the execution and delivery of this Agreement and the fulfillment of its terms: (i) will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound; and (ii) do not require the consent of any person or entity.

Term of Employment

5. Term . The Manager’s employment with the Company had commenced on the date set forth in Exhibit A (the “ Commencement   Date ”), and shall continue until it is terminated pursuant to the terms set forth herein.

6. Termination at Will . Either party may terminate the employment relationship hereunder at any time, by giving the other party a prior written notice as set forth in Exhibit A   (the “ Notice Period ”). Notwithstanding the foregoing, the Company is entitled to terminate this Agreement with immediate effect or at any time during the Notice Period (including to waive the work of the Manager during the Notice Period) upon a written notice to Manager and payment to the Manager a one-time amount equal to the Salary (as defined below) and the financial value of all other benefits the Manager would have been entitled to receive in respect of the portion of the Notice Period which was forfeited, in lieu of such prior notice period.

The Company and Manager agree and acknowledge that the Company’s Severance Contribution to the Pension Scheme (as defined in Section 11) in accordance with Section 11 below, shall, provided contribution is made in full, be instead of severance payment to which the Manager (or his beneficiaries) shall be entitled with respect to the Salary upon which such contributions were made and for the period in which they were made (the “ Exempt Salary ”), pursuant to Section 14 of the Severance Pay Law 5723 – 1963 (the “ Severance Law ”). The parties hereby adopt the General Approval of the Minister of Labor and Welfare, which is attached hereto as Exhibit C . The Company hereby forfeits any right it may have in the reimbursement of sums paid by Company into the Pension Scheme, except: (i) in the event that Manager withdraws such sums from the Pension Scheme, other than in the event of death, disability or retirement at the age of 60 or more; or (ii) upon the occurrence of any of the events provided for in Sections 16 and 17 of the Severance Law. Nothing in this Agreement shall derogate from the Manager’s rights to severance payment in accordance with the Severance Law or agreement or applicable ministerial order in connection with remuneration other than the Exempt Salary, to the extent such remuneration exists.

7. Termination for Cause . The Company may immediately terminate the employment relationship for Cause, and such termination shall be effective as of the time of notice of the same. “ Cause ” means the good faith and reasonable determination of the Board that the Manager has (i)   been grossly negligent or engaged in willful misconduct, fraud, embezzlement, acts of dishonesty or a conflict of interest (to the extent such conflict of interest materially harms the Company), in each case, relating to the affairs of the Company; provided, that “Cause” shall not be deemed to exist under this clause (i) unless the Manager has been given written notice specifying the act or omission constituting Cause and the Manager has failed to cure such act or omission within thirty (30) days after receiving such notice; provided further, that such notice and cure right shall not be required to be given if the act or omission giving rise to the determination that Cause exists is not, in the reasonable determination of the  Board, susceptible of cure; (ii) been convicted of or pleaded nolo contendere to any felony crime or been involved in the commission of any act (A) involving (1) misuse or misappropriation of money or other property of Company or (2) repeated use of illegal substances; or (B) which disparages the business integrity of the Company, their directors, employees or customers, and materially and adversely affects the business reputation of Company; or (iii) engaged in a willful violation of any U.S. federal or state securities laws.

 

8. Notice Period; End of Relations . During the Notice Period and unless otherwise determined by the Company in a written notice to the Manager, the employment relationship hereunder shall remain in full force and effect, the Manager shall be obligated to continue to discharge and perform all of his duties and obligations with Company, and the Manager shall cooperate with the Company and assist the Company with the integration into the Company of the person who will assume the Manager’s responsibilities.

Covenants

9. Proprietary Information; Assignment of Inventions and Non-Competition . Upon the execution of this Agreement, the Manager will execute the Company’s Proprietary Information, Assignment of Inventions and Non-Competition Agreement attached as Exhibit B hereto.

 

Salary and Additional Compensation; Pension/Insurance Scheme

10. Salary . The Company shall pay to the Manager as compensation for the employment services an aggregate monthly salary in the amount set forth in Exhibit A (the “ Salary ”). Except as specifically set forth herein, the Salary includes any and all payments to which the Manager is entitled from the Company hereunder and under any applicable law, regulation or agreement. The Manager’s Salary and other terms of employment may be reviewed and upgraded by the Board, from time to time, at the CEO discretion. The Salary is to be paid to the Manager no later than by the 9 ^th day of each calendar month after the month for which the Salary is paid, after deduction of applicable taxes and like payments.

 

11.  Insurance and Social Benefits . The Company shall, on a monthly basis, pay to a pension scheme for the benefit of the Manager and shall deduct from the Manager’s Salary a respective payment towards such pension scheme (the “ Pension Scheme ”). The contributions to the Pension Scheme will be as follows:

 

(i)

The Company will pay an amount equal to 8 1/3% (eight percent and one third of a percent) of the Salary as a severance pay component;

 

(ii)

In case of a Pension Scheme of a managers insurance type (and not a pension fund), the Company shall pay for a disability insurance in an amount of 2.5% of the Salary or a lower amount as required to insure 75% of the Salary (the " Disability Insurance Component ");

 

(iii)

The Company will pay towards a savings component (A) an amount equal to 6.5% of the Salary in case the Pension Scheme is through a pension fund or (B) an amount equal to 6.5% of the Salary less the Disability Insurance Component, but in no event less than 5%, in case of a managers insurance type Pension Scheme; and

 

(iv)

The Company shall deduct from the net Salary an amount equal to 6% which amount shall be allocated to a savings component.

 

The above contributions and deductions are subject to applicable law and therefore may be adjusted accordingly.

 

 

Additionally, the Company, together with the Manager will maintain an advanced study fund (“ Keren Hishtalmut ”) and the Manager and the Company shall contribute to such fund an amount equal to 2.5% of the Salary (payable by the Manager) and 7.5% of the Salary (payable by the Company), respectively.

The contributions set out above shall be made with respect to the total amount of the Salary notwithstanding the maximum amounts exempt from tax payment under applicable laws, provided that the Manager shall bear all tax liability associated therewith.

Additional Benefits

12. Bonus .  The Manager shall be eligible to earn an annual performance bonus having a threshold bonus opportunity equal to 420% of his current Salary, a target bonus opportunity equal to 720% of his current Salary, and a maximum bonus equal to 864% of his current Salary, in each case based on satisfaction of performance criteria to be established by the Board within the first ninety (90) days of each fiscal year that begins during the period in which the Manager is employed with the Company pursuant to the terms of this Agreement (the “ Performance Bonus ”).  Payment of any Performance Bonus shall be made based on the Board’s determination regarding the Manager’s satisfaction of the criteria applicable to such Performance Bonus opportunity.  Any payment in respect of a Performance Bonus shall be subject to tax and other standard payroll withholdings and shall be paid within thirty (30) days following the final determination of the amount of the Performance Bonus to be paid and during the immediately following calendar year to which the Performance Bonus related and provided that Manager is employed with the Company pursuant to the terms of this Agreement through and on such payment date .

In addition, the Manager shall be eligible to earn a retention bonus equal to 60% of his aggregate Salary earned through the one-year anniversary of the Effective Date, payable within thirty (30) days following the one-year anniversary of the Effective Date, provided that the Manager remains employed with the Company through and on the one-year anniversary of the Effective Date.

13. Vacation . The Manager shall be entitled to the number of vacation days per year as set forth in Exhibit A , to be taken at times subject to the reasonable approval of the Company. In the event that the demands of the Manager’s activities shall preclude or limit the Manager’s ability to actually use such vacation days in any specific year, the Manager shall be entitled to the balance of the unused vacation days in the next succeeding three years (and any unused days of vacation above the days mandatory pursuant to applicable law during such period shall be redeemed to the Manager by the Company).

 

14. Sick Leave; Convalescence Pay . The Manager shall be entitled to that number of paid sick leave per year as set forth in Exhibit A (with unused days to be accumulated without limitation), and also to Convalescence Pay (“Dmei Havra’a”) as set forth in Exhibit A .

15. Company Car . During the term of this Agreement the Company will provide the Manager with a car of make and model equal to group 3 (as defined by the tax authorities for “Shovi Shimush Berechev”) pursuant to Company’s discretion (the “ Car ”). The Car shall belong to or be leased by the Company for use by the Manager during the period of his employment with the Company, including the Notice Period. The Car will be returned to the Company by the Manager immediately after termination of the Manager’s employment by the Company (i.e. at the end of the Notice Period). The Company shall bear all the fixed and variable costs of the Car, including licenses, insurance, gasoline, regular maintenance and repairs and toll road fees. The Company shall not, at any time, bear the costs of any tickets, traffic offense or fines of any kind. The Company shall bear all the personal tax consequences of the allocation of a company car to the benefit (“Gilum Male”). Any expenses, payments or other benefits that are made in connection with the Car shall not be regarded as part of the Salary, for any purpose or matter, and no social benefits or other payments shall be paid on its account.

16. Mobile Phone . During the term of this Agreement the Company shall provide the Manager a mobile phone, for use in connection with Manager’s duties hereunder. The Company shall bear all expenses relating to the Manager’s use and maintenance of the phone attributed to the Manager under this subsection. The Company shall bear all the personal tax consequences of the allocation of the mobile phone to his benefit.

17.  Equity .

Effective as of the Effective Date, INTEGRITY APPLICATIONS, INC. (“ Integrity ”), a Delaware corporation and parent of the Company, shall accelerate the vesting of all outstanding unvested options to purchase common stock of Integrity at an exercise price per share equal to US$6.25 held by the Manager as of the Effective Date.

Provided that on or before the one-year anniversary of the Effective Date, the Company receives full payment for the revenue order having a value equal to or greater than US$1,700,000, which the Manager has advised the Company is pending as of the Effective Date, Integrity shall grant the Manager an option to purchase up to 25,000 shares of common stock of Integrity having an exercise price per share equal to US$4.50, which shall vest monthly over a three-year period following the grant date and shall be subject to the terms and conditions set forth in the stock option agreement to be provided to the Manager and pursuant to Integrity's 2010 Incentive Compensation Plan and the provisions of Section 102(b)(3) of the Israeli Tax Ordinance as a grant according to Capital Gain Tax Track with a Trusty, as soon as possible after the Company receives full payment for such revenue order described in this paragraph.

As soon as possible after the execution of the Agreement, Integrity shall grant the Manager an option to purchase 361,875 shares of common stock of Integrity at an exercise price per share equal to US$4.50, on a fully diluted basis, which shall vest over a three-year period following the grant date and shall be subject to the terms and conditions set forth in the stock option agreement to be provided to the Manager and pursuant to Integrity's 2010 Incentive Compensation Plan and the provisions of Section 102(b)(3) of the Israeli Tax Ordinance as a grant according to Capital Gain Tax Track with a Trustee.

 

Integrity shall grant the Manager an option to purchase 266,617 shares of common stock of Integrity at an exercise price per share equal to US$7.75, which shall vest 50% upon CFDA approval and 50% upon FDA approval and shall be subject to the terms and conditions set forth in the stock option agreement to be provided to the Manager and pursuant to Integrity's 2010 Incentive Compensation Plan, and the provisions of Section 102(b)(3) of the Israeli Tax Ordinance as a grant according to Capital Gain Tax Track with a Trustee.   The Company and the Manager  may modify or refine these milestones within the first 90 days after the execution and delivery of this Agreement, based on the recommendation of the CEO of the Company and subsequent approval by the Compensation Committee or Board.

 

 

18. Adjustment Period . In the event the Manager’s employment with the Company is terminated for any reason, other than by the Company for Cause, the Manager shall be entitled to 3 Salaries, including all the benefits mentioned above, payable over the three month period immediately following the termination of this Agreement.  The 3 Salaries shall be paid in equal installments over the three month period immediately following the termination of this Agreement.  The payments and benefits provided under this Paragraph 18 are conditioned upon (i) the Manager not working and/or providing services to any entity directly competing with the Company, (ii) the Manager complying with the terms and conditions of the Company’s Proprietary Information, Assignment of Inventions and Non-Competition Agreement, and (iii) the Manager’s execution of a general release of claims in a form the Company may reasonably request that becomes irrevocable within 60 days following the date on which this Agreement is terminated.    Payment of any amounts subject to the Manager’s release shall be delayed until the 61 ^st day following the date on which this Agreement is terminated and any payments that are so delayed shall be paid on such date.

19. Renegotiation of Terms . Following 12 months from the execution date of this Agreement, the Company and the Manager shall discuss the possibility to upgrade the Manger’s remuneration terms.

Miscellaneous

20. The laws of the State of Israel shall apply to this Agreement and the sole and exclusive place of jurisdiction in any matter arising out of or in connection with this Agreement shall be the Tel-Aviv-Yafo Regional Labor Court.

21. The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement, and therefore, no collective bargaining agreement shall apply with respect to the relationship between the parties hereto (subject to the applicable provisions of law).

22. No failure, delay or forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party’s rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms or conditions hereof.

23. In the event it shall be determined under any applicable law that a certain provision set forth in this Agreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement unless the business purpose of this Agreement is substantially frustrated thereby.

 

24. The preface and exhibits to this Agreement constitute an integral and indivisible part hereof.

25. This Agreement constitutes the entire understanding and agreement between the parties hereto, supersedes any and all prior discussions, agreements and correspondence with regard to the subject matter hereof (including, without limitation the Prior Agreement), and may not be amended, modified or supplemented in any respect, except by a subsequent writing executed by both parties hereto.

26. The Manager acknowledges and confirms that all terms of the Manager’s employment are personal and confidential, and undertake to keep such terms in confidence and refrain from disclosing such terms to any third party.

27. All references to applicable laws are deemed to include all applicable and relevant laws and ordinances and all regulations and orders promulgated there under, unless the context otherwise requires. The parties agree that this Agreement constitutes, among others, notification in accordance with the Notice to Employees (Employment Terms) Law, 2002. Nothing in this agreement shall derogate from the Manager’s rights according to applicable laws.

28. The Company will be bound by this Agreement subject to its authorization by all necessary corporate actions.

29. This Agreement may be assigned by the Company (whether by operation of law or otherwise) to Integrity, without the prior written consent of the Manager; provided, however, that the Company may assign its rights and delegate its duties hereunder without derogating from the Manager’s rights or influencing them in any manner.

IN WITNESS WHEREOF the parties have signed this Agreement as of the date first hereinabove set forth.

 

______________________________ A.D. Integrity Applications Ltd.

______________________________ David Malka

 

AMENDMENT NO.  2

TO THE

INTEGRITY APPLICATIONS, INC.

2010 INCENTIVE COMPENSATION PLAN

 

WHEREAS , Integrity Applications, Inc., a Delaware corporation (the “ Company ”), adopted the Integrity Applications, Inc. 2010 Incentive Compensation Plan (the “ Plan ”), which was approved by the Company’s shareholders on July 22, 2010 at the Company’s 2010 Annual Meeting of Shareholders;

WHEREAS , capitalized terms used herein and not herein defined shall have the respective meanings ascribed thereto in the Plan;

WHEREAS , on March 17, 2016, the Company entered into an amendment to the Plan to, among other things, increase the number of Shares reserved for delivery under the Plan to 1,000,000 Shares; and

WHEREAS , the Company desires to amend the Plan to increase the number of Shares reserved for delivery under the Plan to 5,625,000 Shares (as such number of Shares may be adjusted from time to time in accordance with the provisions of the Plan), resulting in 5,625,000 Shares being available for delivery under the Plan, effective April 7, 2017.

NOW THEREFORE , the Plan is hereby amended, effective as of April 7, 2017, as follows:

1.

Section 4(a) of the Plan is hereby amended and restated in its entirety, as follows:   “ Limitation on Overall Number of Shares Available for Delivery Under Plan .  Subject to adjustment as provided in Section 10(c) hereof, the total number of Shares reserved and available for delivery under the Plan shall be 5,625,000. Any Shares delivered under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares.”

 

2.	Except as amended herein, all other provisions of the Plan remain unchanged and in full force and effect.

 

[ Signature Page Follows ]

 

 

IN WITNESS WHEREOF , the Company has caused the Plan to be amended as set forth herein as of April 7, 2017.

 

Integrity Applications, Inc.   By:                                                       Name: John Graham Title: Chief Executive Officer

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