Lock-Up Agreement September 27, 2017

Lock-Up Agreement
September 27, 2017

Ladies and Gentlemen:

The undersigned (the “Shareholder”) understands that: (i) Alcobra Ltd., an Israeli company (“Alcobra”), has entered into an Agreement and Plan of Merger and Reorganization, dated as of September 27, 2017 (the “Merger Agreement”), with Arcturus Therapeutics, Inc., a Delaware corporation (“Arcturus”) and Aleph MergerSub, Inc., a Delaware corporation and wholly-owned subsidiary of Alcobra (“Merger Sub”), pursuant to which Merger Sub will be merged with and into Arcturus (the “Merger”) and the separate corporate existence of Merger Sub will cease and Arcturus will continue as the surviving corporation and (ii) in connection with the Merger, stockholders of Arcturus will receive shares of Alcobra Ordinary Shares (the “Merger Shares”). Capitalized terms used but not otherwise defined in this letter agreement will have the meanings ascribed to such terms in the Merger Agreement.

As a material inducement to the willingness of each of Arcturus and Alcobra to enter into the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Shareholder hereby agrees that the Shareholder will not, subject to the exceptions set forth in this letter agreement, without the prior written consent of Alcobra and during the period commencing at the Effective Time and ending 180 days after the Closing Date (the “Restricted Period”), directly or indirectly (a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of any Alcobra Ordinary Shares, or any securities convertible into or exercisable or exchangeable for Alcobra Ordinary Shares, whether now owned or hereinafter acquired, including without limitation, Alcobra Ordinary Shares or such other securities which may be deemed to be beneficially owned by the Shareholder in accordance with the rules and regulations of the Securities and Exchange Commission and securities of Arcturus which may be issued upon exercise of a stock option or warrant (collectively, the “Shareholder’s Shares”), (b) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Alcobra Ordinary Shares or such other securities, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Alcobra Ordinary Shares or such other securities, in cash or otherwise, in each case other than (i) transfers of the Shareholder’s Shares as charitable gifts or donations, (ii) transfers or dispositions of the Shareholder’s Shares to any trust for the direct or indirect benefit of the Shareholder or the immediate family of the Shareholder, (iii) transfers or dispositions of the Shareholder’s Shares by will, other testamentary document or intestate succession to the legal representative, heir, beneficiary or a member of the immediate family of the Shareholder, (iv) transfers of the Shareholder’s Shares to stockholders, direct or indirect affiliates (within the meaning set forth in Rule 405 under the Securities Act of 1933, as amended), current or former partners (general or limited), members or managers of the Shareholder, as applicable, or to the estates of any such stockholders, affiliates, partners, members or managers, or to another corporation, partnership, limited liability company or other business entity that controls, is controlled by or is under common control with the Shareholder, (v) transfers that occur by operation of law pursuant to a qualified domestic order or in connection with a divorce settlement, (vi) transfers or dispositions not involving a change in beneficial ownership, and (vii) if the Shareholder is a trust, transfers or dispositions to any beneficiary of the Shareholder or the estate of any such beneficiary; provided that, in each case, the transferee agrees in writing to be bound by the terms and conditions of this letter agreement and either the Shareholder or the transferee provides Arcturus with a copy of such agreement promptly upon consummation of any such Transfer; and provided, further, that in each case, no filing by any party (donor, donee, transferor or transferee) under the Exchange Act or other public announcement shall be required or shall be made voluntarily in connection with such transfer or distribution (other than filings made in respect of involuntary transfers or dispositions or a filing on a Form 5 made after the expiration of the Restricted Period) and any such transfer or distribution shall not involve a disposition for value. For purposes of this letter agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.

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Notwithstanding the restrictions imposed by this letter agreement, the Shareholder may (a) exercise an option (including a net or cashless exercise of an option) to purchase shares of Alcobra Ordinary Shares, and transfer shares of Alcobra Ordinary Shares to Arcturus to cover tax withholding obligations of the Shareholder in connection with any such option exercise, provided that the underlying shares of Alcobra Ordinary Shares shall continue to be subject to the restrictions on transfer set forth in this letter agreement, (b) establish a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Alcobra Ordinary Shares, provided that such plan does not provide for any transfers of Alcobra Ordinary Shares during the Restricted Period, and (c) transfer or dispose of shares of Alcobra Ordinary Shares acquired on the open market following the Closing Date, provided that, with respect to (a) above, any filing under the Exchange Act, if required, shall include a footnote disclosure explaining that such exercise and sale was to cover tax withholding obligations of such Shareholder, and with respect to (b) above, no filing under the Exchange Act or other public announcement shall be required or shall be made voluntarily in connection with the establishment of such a plan, provided that reasonable notice shall be provided to Arcturus prior to any such filing, and provided further that, for the avoidance of doubt, the underlying shares of Alcobra Ordinary Shares shall continue to be subject to the restrictions on transfer set forth in this letter agreement).

An attempted transfer in violation of this letter agreement will be of no effect and null and void, regardless of whether the purported transferee has any actual or constructive knowledge of the transfer restrictions set forth in this letter agreement, and will not be recorded on the stock transfer books of Alcobra. In order to ensure compliance with the restrictions referred to herein, the Shareholder agrees that Alcobra may issue appropriate “stop transfer” certificates or instructions. Alcobra may cause the legend set forth below, or a legend substantially equivalent thereto, to be placed upon any certificate(s) or other documents or instruments evidencing ownership of the Shareholder’s Shares:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND MAY ONLY BE TRANSFERRED IN COMPLIANCE WITH A LOCK-UP AGREEMENT, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

The Shareholder hereby represents and warrants that the Shareholder has full power and authority to enter into this letter agreement. All authority conferred or agreed to be conferred and any obligations of the Shareholder under this letter agreement will be binding upon the successors, assigns, heirs or personal representatives of the Shareholder.

Upon the release of any of the Shareholder’s Shares from this letter agreement, Alcobra will cooperate with the Shareholder to facilitate the timely preparation and delivery of certificates representing the Shareholder’s Shares without the restrictive legend above or the withdrawal of any stop transfer instructions.

The Shareholder understands that each of Alcobra and Arcturus is relying upon this letter agreement in proceeding toward consummation of the Merger. The Shareholder further understands that this letter agreement is irrevocable and is binding upon the Shareholder’s heirs, legal representatives, successors and assigns.

This letter agreement and any claim, controversy or dispute arising under or related to this letter agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflict of laws principles thereof.

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The Shareholder understands that if the Merger Agreement is terminated in accordance with its terms, the Shareholder will be released from all obligations under this letter agreement.

This letter agreement may be executed by facsimile or electronic (i.e., PDF) transmission, which is deemed an original.

[Signature Page Follows]

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			Very truly yours,
	Print Name of Shareholder:		Xxxxxx X. Xxxxx
			Signature (for individuals):
			/s/ Xxxxxx X. Xxxxx
			Signature (for entities):
			By:
				Name:
				Title:

[SIGNATURE PAGE TO LOCK-UP AGREEMENT]

Acknowledged and accepted:

Alcobra Ltd.

By:	/s/ Xxxxx Xxxxxxx			By:	/s/ Xxxxx Xxxxx
	Name:	Xxxxx Xxxxxxx			Name:	Xxxxx Xxxxx
	Title:	Chair			Title:	Interim CEO