UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed
by the Registrant [X]
|
Filed
by a Party other than the Registrant [ ]
|
Check
the appropriate box:
|
[X]
|
Preliminary
Proxy Statement
|
[ ]
|
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
[ ]
|
Definitive
Proxy Statement
|
[ ]
|
Definitive
Additional Materials
|
[ ]
|
Soliciting
Material Pursuant to §240.14a-12
|
INSPIREMD,
INC.
|
(Name
of Registrant as Specified In Its Charter)
|
|
|
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
|
Payment
of Filing Fee (Check the appropriate box):
|
[X]
|
No
fee required.
|
[ ]
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
(1)
|
Title
of each class of securities to which transaction applies:
|
|
|
|
|
(2)
|
Aggregate
number of securities to which transaction applies:
|
|
|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
|
|
|
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
|
|
|
(5)
|
Total
fee paid:
|
|
|
|
[ ]
|
Fee
paid previously with preliminary materials.
|
|
|
[ ]
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule 0-11 and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
|
|
|
|
(1)
|
Amount
Previously Paid:
|
|
|
|
|
(2)
|
Form,
Schedule or Registration Statement No.:
|
|
|
|
|
(3)
|
Filing
Party:
|
|
|
|
|
(4)
|
Date
Filed:
|
|
|
|
InspireMD,
Inc.
4
Menorat Hamaor St.
Tel
Aviv, Israel 6744832
Telephone:
(888) 776-6804
[●],
2020
Dear
Stockholder:
You
are cordially invited to attend the annual meeting of stockholders of InspireMD, Inc. to be held at 11:30 a.m., local time, on
August 31, 2020, at Meitar | Law Offices, located at 16 Abba Hillel Road, Ramat Gan 5250608, Israel.
Please
note that in order to gain admission to the site of our annual meeting, all attendees will need to present a photo identification
card and have their name previously provided to building security. As such, in order to facilitate your attendance at the annual
meeting, we strongly encourage you to advise Craig Shore by email at craigs@inspiremd.com or phone at + 972-3-6917691 if you plan
to attend the meeting prior to 5:00 p.m., Eastern time, on August 30, 2020, so that we can timely provide your name to building
security. In the event that you do not advise us ahead of time that you will be attending the annual meeting, we encourage you
to arrive at the meeting no later than 11:00 a.m., local time, in order to ensure that you are able to pass through security prior
to the start of the meeting.
We
currently intend to hold the meeting in person. However, depending on developments with respect to the coronavirus (COVID-19)
pandemic, we might hold the meeting virtually on the above date and time instead of in person. If we determine that a change to
a virtual meeting format is advisable or required, an announcement of such change will be made on our Investor Relations website
at http://www.inspiremd.com/en/investors/investor-relations/ and in a Current Report on Form 8-K as promptly as practicable. We
encourage you to check that website one week prior to the meeting date if you are planning to attend the meeting. Given the public
health and safety concerns related to COVID-19, we ask that each stockholder evaluate the relative benefits of in-person attendance
at the annual meeting and take advantage of the ability to vote by proxy or to provide voting instructions in accordance with
the voting materials that have been provided to you.
Your
vote is very important, regardless of the number of shares of our voting securities that you own. I encourage you to vote by telephone,
over the Internet, or by marking, signing, dating and returning your proxy card so that your shares will be represented and voted
at the annual meeting, whether or not you plan to attend. If you attend the annual meeting, you will, of course, have the right
to revoke the proxy and vote your shares in person.
If
your shares are held in the name of a broker, trust, bank or other intermediary, and you receive notice of the annual meeting
through your broker or through another intermediary, please vote or return the materials in accordance with the instructions provided
to you by such broker or other intermediary, or contact your broker directly in order to obtain a proxy issued to you by your
intermediary holder to attend the meeting and vote in person. Failure to do so may result in your shares not being eligible to
be voted by proxy at the meeting.
On
behalf of the board of directors, I urge you to submit your proxy as soon as possible, even if you currently plan to attend the
meeting in person.
Thank
you for your support of our company.
|
Sincerely,
|
|
|
|
/s/
Paul Stuka
|
|
Paul
Stuka
|
|
Chairman
|
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
ANNUAL STOCKHOLDER MEETING TO BE HELD ON AUGUST 31, 2020:
Our
official Notice of Annual Meeting of Stockholders, Proxy Statement, Proxy Card and
2019
Annual Report to Stockholders are available at:
www.proxyvote.com
InspireMD,
Inc.
4
Menorat Hamaor St.
Tel
Aviv, Israel 6744832
Telephone:
(888) 776-6804
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held August 31, 2020
The
2020 Annual Meeting of Stockholders (the “Annual Meeting”) of InspireMD, Inc., a Delaware corporation (the “Company”),
will be held at 11:30 a.m., local time, on August 31, 2020, at Meitar | Law Offices, located at 16 Abba Hillel Road, Ramat Gan
5250608, Israel. We will consider and act on the following items of business at the Annual Meeting:
|
(1)
|
Election
of two Class 3 directors to serve on our board of directors for a term of three years or until their successors are elected
and qualified, for which Marvin Slosman and Thomas J. Kester are the nominees (the “Director Election Proposal”).
|
|
|
|
|
(2)
|
Approval
of the Sixth Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan to increase the number of shares of common stock
of the Company available for issuance pursuant to awards under such plan by 6,500,000 shares, to a total of 7,178,395 shares
of common stock (the “Incentive Plan Proposal”).
|
|
|
|
|
(3)
|
Approval
of an amendment to the Amended and Restated Certificate of Incorporation of the Company to increase the number of authorized
shares of common stock from 150,000,000 to 300,000,000 (the “Authorized Share Capital Proposal”).
|
|
|
|
|
(4)
|
Ratification
of the appointment of Kesselman & Kesselman, Certified Public Accountants, a member of PricewaterhouseCoopers International
Limited, as our independent registered public accounting firm for the year ending December 31, 2020 (the “Auditor Reappointment
Proposal”).
|
|
|
|
|
(5)
|
Such
other business as may properly come before the Annual Meeting.
|
Stockholders
are referred to the Proxy Statement accompanying this notice for more detailed information with respect to the matters to be considered
at the Annual Meeting. After careful consideration, our board of directors recommends a vote FOR the election of the nominees
for director named in the Director Election Proposal (Proposal 1); FOR the Incentive Plan Proposal (Proposal 2); FOR the approval
of the increase in the number of our authorized shares under the Authorized Share Capital Proposal (Proposal 3); and FOR the ratification
of the re-appointment of Kesselman & Kesselman, Certified Public Accountants, a member of PricewaterhouseCoopers International
Limited, as our independent registered public accounting firm for the year ending December 31, 2020, under the Auditor Reappointment
Proposal (Proposal 4).
The
board of directors has fixed the close of business on July 15, 2020 as the record date (the “Record Date”). Only holders
of record of shares of our common stock are entitled to receive notice of the Annual Meeting and to vote at the Annual Meeting
or at any postponement(s) or adjournment(s) of the Annual Meeting. A complete list of registered stockholders entitled to vote
at the Annual Meeting will be available for inspection at the office of the Company during regular business hours for the 10 calendar
days prior to and during the Annual Meeting.
Please
note that in order to gain admission to the site of our Annual Meeting, all attendees will need to present a photo identification
card and have their name previously provided to building security. As such, in order to facilitate your attendance at the Annual
Meeting, we strongly encourage you to advise Craig Shore by email at craigs@inspiremd.com or phone at + 972-3-6917691 if you plan
to attend the meeting prior to 5:00 p.m., Eastern time, on August 30, 2020, so that we can timely provide your name to building
security. In the event that you do not advise us ahead of time that you will be attending the Annual Meeting, we encourage you
to arrive at the meeting no later than 11:00 a.m., local time, in order to ensure that you are able to pass through security prior
to the start of the meeting.
We
currently intend to hold the meeting in person. However, depending on developments with respect to the coronavirus (COVID-19)
pandemic, we might hold the meeting virtually on the above date and time instead of in person. If we determine that a change to
a virtual meeting format is advisable or required, an announcement of such change will be made on our Investor Relations website
at http://www.inspiremd.com/en/investors/investor-relations/ and in a Current Report on Form 8-K as promptly as practicable. We
encourage you to check that website one week prior to the meeting date if you are planning to attend the meeting. Given the public
health and safety concerns related to COVID-19, we ask that each stockholder evaluate the relative benefits of in-person attendance
at the Annual Meeting and take advantage of the ability to vote by proxy or to provide voting instructions in accordance with
the voting materials that have been provided to you.
YOUR
VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE IMPORTANT.
If
your shares are registered in your name, even if you plan to attend the Annual Meeting or any postponement or adjournment
of the Annual Meeting in person, we request that you vote by telephone, over the Internet, or by completing, signing and mailing
your proxy card to ensure that your shares will be represented at the Annual Meeting.
If
your shares are held in the name of a broker, trust, bank or other intermediary, and you receive notice of the Annual Meeting
through your broker or through another intermediary, please vote online, by telephone or by completing and returning the voting
instruction form in accordance with the instructions provided to you by such broker or other intermediary, or contact your broker
directly in order to obtain a proxy issued to you by your intermediary holder to attend the Annual Meeting and vote in person.
Failure to do any of the foregoing may result in your shares not being eligible to be voted at the Annual Meeting.
|
By
Order of The Board of Directors,
|
|
|
|
/s/
Paul Stuka
|
|
Paul
Stuka
|
|
Chairman
|
|
|
[●],
2020
|
|
Table
of Contents
InspireMD,
Inc.
4
Menorat Hamaor St.
Tel
Aviv, Israel 6744832
Telephone:
(888) 776-6804
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held August 31, 2020
Unless
the context otherwise requires, references in this Proxy Statement to “we,” “us,” “our,” the
“Company,” or “InspireMD” refer to InspireMD, Inc., a Delaware corporation, and its direct and indirect
subsidiaries. In addition, unless the context otherwise requires, references to “stockholders” are to the holders
of our voting securities, which consist of our common stock, par value $0.0001 per share.
The
accompanying proxy is solicited by the board of directors on behalf of InspireMD, Inc., a Delaware corporation, to be voted at
the annual meeting of stockholders of the Company (the “Annual Meeting”) to be held on August 31, 2020, at the time
and place and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders (the “Notice”)
and at any adjournment(s) or postponement(s) of the Annual Meeting. This Proxy Statement and accompanying form of proxy are expected
to be first sent or given to stockholders on or about July 17, 2020.
The
executive office of the Company is located at, and the mailing address of the Company is, 4 Menorat Hamaor St., Tel Aviv, Israel
6744832.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS
FOR
THE
ANNUAL STOCKHOLDER MEETING TO BE HELD ON AUGUST 31, 2020:
Our
official Notice of Annual Meeting of Stockholders, Proxy Statement, Proxy Card and
2019
Annual Report to Stockholders are available at:
www.proxyvote.com
ABOUT
THE ANNUAL MEETING
What
is a proxy?
A
proxy is another person whom you legally designate to vote your stock. If you designate someone as your proxy in a written document,
that document is also called a “proxy” or a “proxy card.” If you are a street name holder, you must obtain
a proxy from your broker or intermediary in order to vote your shares in person at the Annual Meeting.
What
is a proxy statement?
A
proxy statement is a document that regulations of the Securities and Exchange Commission (the “SEC”) require that
we give to you when we ask you to sign a proxy card to vote your stock at the Annual Meeting.
What
is the purpose of the Annual Meeting?
At
our Annual Meeting, stockholders will act upon the matters outlined in the Notice, including the following:
|
(1)
|
Election
of two Class 3 directors to serve on our board of directors for a term of three years or until their successors are elected
and qualified, for which Marvin Slosman and Thomas J. Kester are the nominees (the “Director Election Proposal”).
|
|
|
|
|
(2)
|
Approval
of the Sixth Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan to increase the number of shares of common stock
of the Company available for issuance pursuant to awards under such plan by 6,500,000 shares, to a total of 7,178,395 shares
of common stock (the “Incentive Plan Proposal”).
|
|
|
|
|
(3)
|
Approval
of an amendment to the Amended and Restated Certificate of Incorporation of the Company to increase the number of authorized
shares of common stock from 150,000,000 to 300,000,000 (the “Authorized Share Capital Proposal”).
|
|
|
|
|
(4)
|
Ratification
of the re-appointment of Kesselman & Kesselman, Certified Public Accountants, a member of PricewaterhouseCoopers International
Limited, as our independent registered public accounting firm for the year ending December 31, 2020 (the “Auditor Reappointment
Proposal”).
|
|
|
|
|
(5)
|
Such
other business as may properly come before the Annual Meeting.
|
What
is “householding” and how does it affect me?
With
respect to eligible stockholders who share a single address, we may send only one Proxy Statement to that address unless we receive
instructions to the contrary from any stockholder at that address. This practice, known as “householding,” is designed
to reduce our printing and postage costs. However, if a stockholder of record residing at such address wishes to receive a separate
notice or proxy statement in the future, he or she may contact InspireMD, Inc., 4 Menorat Hamaor St., Tel Aviv, Israel 6744832,
Attn: Investor Relations, via email to craigs@inspiremd.com or by calling + 972-3-6917691 and asking for Investor Relations.
Eligible stockholders of record receiving multiple copies of our Notice and Proxy Statement can request householding by contacting
us in the same manner. Stockholders who own shares through a bank, broker or other intermediary can request householding by contacting
the intermediary.
We
hereby undertake to deliver promptly, upon written or oral request, a copy of the Notice or Proxy Statement to a stockholder at
a shared address to which a single copy of the document was delivered. Requests should be directed to our Investor Relations at
the address or phone number set forth above.
What
should I do if I receive more than one set of voting materials?
You
may receive more than one set of voting materials, including multiple proxy cards or voting instruction forms. For example, if
you hold your shares in more than one brokerage account, you may receive a separate voting instruction form for each brokerage
account in which you hold shares. Similarly, if you are a stockholder of record and also hold shares in a brokerage account, you
will receive a proxy card for shares held in your name and a voting instruction form for shares held in street name. Please follow
the directions provided in the Notice and in each proxy card or voting instruction form you receive to ensure that all your shares
are voted.
What
is the record date and what does it mean?
The
record date to determine the stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on
July 15, 2020 (the “Record Date”). The Record Date is established by the board of directors as required by Delaware
law. On the Record Date, [33,358,994] shares of common stock were issued and outstanding.
Who
is entitled to vote at the Annual Meeting?
Holders
of common stock at the close of business on the Record Date may vote at the Annual Meeting.
What
are the voting rights of the stockholders?
On
each matter to be voted upon at the Annual Meeting, you have one vote for each share of common stock you own as of the Record
Date.
What
is the quorum requirement?
The
presence, in person or by proxy, of the holders of a majority of the shares of the stock entitled to vote at the Annual Meeting
is necessary to constitute a quorum to transact business. If a quorum is not present or represented at the Annual Meeting, the
stockholders entitled to vote at the Annual Meeting, present in person or by proxy, may adjourn the Annual Meeting from time to
time without notice or other announcement until a quorum is present or represented.
What
is the difference between a stockholder of record and a “street name” holder?
If
your shares are registered directly in your name with Action Stock Transfer Corporation, our stock transfer agent, you are considered
the stockholder of record with respect to those shares. The Notice has been sent directly to you by us.
If
your shares are held in a stock brokerage account or by a bank or other intermediary, the intermediary is considered the record
holder of those shares. You are considered the beneficial owner of those shares, and your shares are held in “street name.”
A notice, and Proxy Statement, along with a voting instruction form, have been forwarded to you by your intermediary. As the beneficial
owner, you have the right to direct your intermediary concerning how to vote your shares by using the voting instruction form
they included in the mailing or by following their instructions for voting.
What
is a broker non-vote?
A
broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the
broker does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial
owner. Your broker does not have discretionary authority to vote your shares with respect to the Director Election Proposal (Proposal
1), or the Incentive Plan Proposal (Proposal 2) in the absence of specific instructions from you.
With
respect to each of the Authorized Share Capital Proposal (Proposal 3) and the Auditor Reappointment Proposal (Proposal 4), your
broker will have the discretion to vote your shares and, therefore, will be able to vote your shares with respect to such proposal
even if you do not provide your broker with instructions on that proposal.
How
do I vote my shares?
Your
vote is very important to us. Whether or not you plan to attend the Annual Meeting, please vote by proxy in accordance with the
instructions on your proxy card or voting instruction form (from your broker or other intermediary). There are three convenient
ways of submitting your vote:
|
●
|
By
Telephone or Internet - All record holders can vote by touchtone telephone from the United States using the toll free
telephone number on the proxy card, or over the Internet, using the procedures and instructions described on the proxy card.
“Street name” holders may vote by telephone or Internet if their bank, broker or other intermediary makes those
methods available, in which case the bank, broker or other intermediary will enclose the instructions with the proxy materials.
The telephone and Internet voting procedures are designed to authenticate stockholders’ identities, to allow stockholders
to vote their shares, and to confirm that their instructions have been recorded properly.
|
|
|
|
|
●
|
In
Person - All record holders may vote in person at the Annual Meeting. “Street name” holders may vote
in person at the Annual Meeting if their bank, broker or other intermediary has furnished a legal proxy. If you are a
“street name” holder and would like to vote your shares by proxy, you will need to ask your bank, broker or
other intermediary to furnish you with an intermediary issued proxy. You will need to bring the intermediary issued proxy
with you to the Annual Meeting and hand it in with a signed ballot that will be provided to you at the Annual Meeting.
You will not be able to vote your shares without an intermediary issued proxy. Note that a broker letter that identifies
you as a stockholder is not the same as an intermediary issued proxy.
There
may be limitations on our ability to hold the Annual Meeting in person this year. See “Do you plan to hold the Annual
Meeting in person this year?” below.
|
|
|
|
|
●
|
By
Written Proxy or Voting Instruction Form - All record holders can vote by written proxy card, if they have requested
to receive printed proxy materials. If you are a “street name” holder and you request to receive printed proxy
materials, you will receive a voting instruction form from your bank, broker or other intermediary.
|
The
board of directors has appointed Craig Shore, chief financial officer, chief administrative officer, treasurer and secretary,
and Marvin Slosman, president, chief executive officer and director, to serve as the proxies for the Annual Meeting.
If
you complete and sign the proxy card but do not provide instructions for one or more of the proposals, then the designated proxies
will or will not vote your shares as to those proposals, as described under “What if I do not specify how I want my shares
voted?” below. We do not anticipate that any other matters will come before the Annual Meeting, but if any other matters
properly come before the meeting, then the designated proxies will vote your shares in accordance with applicable law and their
judgment.
If
you hold your shares in “street name,” and complete the voting instruction form provided by your broker or other intermediary
except with respect to one or more of the proposals, then, depending on the proposal(s), your broker may be unable to vote your
shares with respect to those proposal(s). See “What is a broker non-vote?” above.
Even
if you currently plan to attend the Annual Meeting, we recommend that you vote by telephone or Internet or return your proxy card
or voting instructions as described above so that your votes will be counted if you later decide not to attend the Annual Meeting
or are unable to attend.
Who
counts the votes?
All
votes will be tabulated by Craig Shore, the inspector of election appointed for the Annual Meeting. Each proposal will be tabulated
separately.
What
are my choices when voting?
In
the Director Election Proposal (Proposal 1), stockholders may vote for all director nominees or may withhold their votes as to
one or both director nominees. With respect to the Incentive Plan Proposal (Proposal 2), Authorized Share Capital Proposal (Proposal
3) and the Auditor Reappointment Proposal (Proposal 4), stockholders may vote for the proposal, against the proposal, or abstain
from voting on the proposal.
What
are the board of directors’ recommendations on how I should vote my shares?
The
board of directors recommends that you vote your shares as follows:
Proposal
1—FOR the election of each of the nominees for director under the Director Election Proposal.
Proposal
2—FOR the Incentive Plan Proposal.
Proposal
3—FOR the Authorized Share Capital Proposal.
Proposal
4—FOR the Auditor Reappointment Proposal.
What
if I do not specify how I want my shares voted?
If
you are a record holder who returns a completed, executed proxy card that does not specify how you want to vote your shares on
one or more proposals, the proxies will vote your shares for each proposal as to which you provide no voting instructions, and
such shares will be voted in the following manner:
Proposal
1—FOR the election of each of the nominees for director under the Director Election Proposal.
Proposal
2—FOR the Incentive Plan Proposal.
Proposal
3—FOR the Authorized Share Capital Proposal.
Proposal
4—FOR the Auditor Reappointment Proposal.
If
you are a street name holder and do not provide voting instructions on one or more proposals, your bank, broker or other intermediary
may be unable to vote those shares. See “What is a broker non-vote?” above.
Can
I change my vote?
Yes.
If you are a record holder, you may revoke your proxy at any time by any of the following means:
|
●
|
Attending
the Annual Meeting and voting in person. Your attendance at the Annual Meeting will not by itself revoke a proxy. You must
vote your shares by ballot at the Annual Meeting to revoke your proxy.
|
|
|
|
|
●
|
Voting
again by telephone or over the Internet (only your latest telephone or Internet vote submitted prior to the Annual Meeting
will be counted).
|
|
|
|
|
●
|
If
you requested and received written proxy materials, completing and submitting a new valid proxy bearing a later date.
|
|
|
|
|
●
|
Giving
written notice of revocation to the Company addressed to Craig Shore, chief financial officer, chief administrative officer,
treasurer and secretary, at the Company’s address above, which notice must be received before noon, Eastern time on
August 30, 2020.
|
If
you are a street name holder, your bank, broker or other intermediary should provide instructions explaining how you may change
or revoke your voting instructions.
What
percentage of the vote is required to approve each proposal?
Assuming
the presence of a quorum, the two director nominees who receive the most votes cast in the election of directors will be elected
under the Director Election Proposal (Proposal 1).
Pursuant
to Section 711 of the NYSE MKT Company Guide, the Incentive Plan Proposal (Proposal 2) will require approval by a majority of
votes cast, with abstentions counting as a vote cast.
Approval
of the amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock under the Authorized
Share Capital Proposal (Proposal 3) will require the affirmative vote of the holders of a majority of the shares of our issued
and outstanding common stock entitled to vote on such proposal at the Annual Meeting, with abstentions counting as a vote cast
Assuming
the presence of a quorum, the ratification of the reappointment of the independent registered public accounting firm under the
Auditor Reappointment Proposal (Proposal 4) will require the affirmative vote of the holders of a majority of the shares of our
common stock represented in person or by proxy at the Annual Meeting entitled to vote on such proposal that are voted for or against
such proposal.
How
are abstentions and broker non-votes treated?
Abstentions
are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at the meeting.
Abstentions will have no effect with respect to the election of directors under the Director Election Proposal (Proposal 1) or
the ratification of the reappointment of the independent registered public accounting firm under the Auditor Reappointment Proposal
(Proposal 4). However, abstentions will have the same effect as a vote against the Incentive Plan Proposal (Proposal 2) and the
amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock under the Authorized
Share Capital Proposal (Proposal 3).
Broker
non-votes are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at
the meeting. Broker non-votes will have no effect upon the election of directors under the Director Election Proposal (Proposal
1) or the approval of the Incentive Plan Proposal (Proposal 2). With respect to the proposal to approve the amendment to our Certificate
of Incorporation to increase the number of authorized shares of common stock under the Authorized Share Capital Proposal (Proposal
3) and the ratification of the reappointment of the independent registered public accounting firm (Proposal 4), we do not expect
that there will be any broker-non-votes because those proposals are considered routine matters and a broker holding shares for
a beneficial owner will therefore have discretionary authority to vote those shares for those proposals in the absence of voting
instructions from the beneficial owner.
Do
I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Annual Meeting?
No.
None of our stockholders has any dissenters’ or appraisal rights with respect to the matters to be voted on at the Annual
Meeting.
When
will the next stockholder advisory vote on executive compensation occur?
At
our 2012 Annual Meeting of stockholders, we submitted to stockholders an advisory vote on whether an advisory vote on executive
compensation should be held every one, two or three years. “Three years” was the frequency that received the highest
number of votes. In light of that outcome, we intend to hold an advisory vote on executive compensation every three years. The
last stockholder advisory vote on executive compensation was held at our 2018 Annual Meeting of Stockholders. Therefore, we anticipate
that the next such vote will be held at our 2021 Annual Meeting of Stockholders.
What
are the solicitation expenses and who pays the cost of this proxy solicitation?
Our
board of directors is asking for your proxy and we will pay all of the costs of asking for stockholder proxies. We will reimburse
brokerage houses and other custodians, intermediaries and fiduciaries for their reasonable out-of-pocket expenses for forwarding
solicitation material to the beneficial owners of common stock and collecting voting instructions. We may use officers and employees
of the Company to ask for proxies, as described below. In addition, we have retained Kingsdale Advisors (“Kingsdale”)
to assist in the solicitation of proxies for a fee of $8,500 plus telephone solicitation fees and reimbursement of expenses.
Is
this Proxy Statement the only way that proxies are being solicited?
No.
In addition to the solicitation of proxies by use of the mail, officers and employees of the Company, as well as Kingsdale, the
proxy solicitation firm hired by the Company, may solicit the return of proxies, either by mail, telephone, fax, e-mail or through
personal contact. These officers and employees will not receive additional compensation for their efforts but will be reimbursed
for out-of-pocket expenses. The fees of Kingsdale as well as the reimbursement of expenses of Kingsdale will be borne by us. Brokerage
houses and other custodians, intermediaries and fiduciaries, in connection with shares of the common stock registered in their
names, will be requested to forward solicitation material to the beneficial owners of shares of common stock.
Do
you plan to hold the Annual Meeting in person this year?
We
currently intend to hold the Annual Meeting in person. However, depending on developments with respect to the coronavirus (COVID-19)
pandemic, we might hold the meeting virtually on the above date and time instead of in person. Given the public health and safety
concerns related to COVID-19, we ask that each stockholder evaluate the relative benefits to him, her or it personally of in-person
attendance at the Annual Meeting and take advantage of the ability to vote by proxy, by following the instructions on the proxy
card or voting instruction form that have been provided to you. If you elect to attend the Annual Meeting in person, we ask that
you follow applicable Israeli regulations, particularly as they relate to social distancing and attendance at public gatherings.
If you are not feeling well or think you may have been exposed to COVID-19, we ask that you vote by proxy for the meeting.
If
we determine that a change to a virtual meeting format is advisable or required, an announcement of such change will be made on
our Investor Relations website at http://www.inspiremd.com/en/investors/investor-relations/ and in a Current Report on Form 8-K
as promptly as practicable. We encourage you to check that website one week prior to the meeting date if you are planning to attend
the meeting.
Are
there any other matters to be acted upon at the Annual Meeting?
Management
does not intend to present any business at the Annual Meeting for a vote other than the matters set forth in the Notice and has
no information that others will do so. If other matters requiring a vote of the stockholders properly come before the Annual Meeting,
it is the intention of the persons named in the accompanying form of proxy to vote the shares represented by the proxies held
by them in accordance with applicable law and their judgment on such matters.
Where
can I find voting results?
The
Company expects to publish the voting results in a Current Report on Form 8-K, which it expects to file with the SEC within four
business days following the Annual Meeting.
Who
can help answer my questions?
The
information provided above in this “Question and Answer” format is for your convenience only and is merely a summary
of the information contained in this Proxy Statement. We urge you to carefully read this entire Proxy Statement, including the
documents we refer to in this Proxy Statement. If you have any questions, or need additional material, please feel free to contact
the firm assisting us in the solicitation of proxies, Kingsdale. Banks, brokers and shareholders may call Kingsdale at 1-866-581-1479
(North American toll free number) or 416-867-2272 (call collect outside North America).
CORPORATE
GOVERNANCE AND BOARD OF DIRECTORS MATTERS
Director
Independence
The
board of directors has determined that Dr. Rogers and Messrs. Stuka, Berman and Kester, satisfy the requirement for independence
set out in Section 803 of the NYSE American Company Guide and that each of these directors has no material relationship with us
(other than being a director and/or a stockholder). In making its independence determinations, the board of directors sought to
identify and analyze all of the facts and circumstances relating to any relationship between a director, his immediate family
or affiliates and our company and our affiliates and did not rely on categorical standards other than those contained in the NYSE
American rule referenced above.
Board
Committees
Our
board of directors has established an audit committee, a nominating and corporate governance committee and a compensation committee,
each of which has the composition and responsibilities described below.
Audit
Committee. Our audit committee is currently comprised of Messrs. Berman, Stuka and Kester, each of whom our board has determined
to be financially literate and qualify as an independent director under Section 803(B)(2) of the NYSE American Company Guide.
Mr. Kester is the chairman of our audit committee and qualifies as a financial expert, as defined in Item 407(d)(5)(ii) of Regulation
S-K. The audit committee’s duties are to recommend to our board of directors the engagement of independent auditors to audit
our financial statements and to review our accounting and auditing principles. The audit committee will review the scope, timing
and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent public
accountants, including their recommendations to improve the system of accounting and internal controls. The audit committee held
a total of 4 meetings during the twelve months ended December 31, 2019. The audit committee operates under a formal charter adopted
by the board of directors that governs its duties and conduct. Copies of the charter can be obtained free of charge from the Company’s
web site, www.inspiremd.com, by contacting the Company at the address appearing on the first page of this Proxy Statement to the
attention of Investor Relations, via email to craigs@inspiremd.com or by telephone to (888) 776-6804.
Nominating
and Corporate Governance Committee. Our nominating and corporate governance committee is currently comprised of Messrs. Berman
and Stuka, each of whom qualify as an independent director under Section 803(A) of the NYSE American rules. Mr. Berman is the
chairman of our nominating and corporate governance committee. The nominating and corporate governance committee identifies and
recommends to our board of directors individuals qualified to be director nominees. In addition, the nominating and corporate
governance committee recommends to our board of directors the members and chairman of each board committee who will periodically
review and assess our code of business conduct and ethics and our corporate governance guidelines. The nominating and corporate
governance committee also makes recommendations for changes to our code of business conduct and ethics and our corporate governance
guidelines to our board of directors, reviews any other matters related to our corporate governance and oversees the evaluation
of our board of directors and our management. The nominating and corporate governance committee did not hold any meetings during
the twelve months ended December 31, 2019. The nominating and corporate governance committee operates under a formal charter adopted
by the board of directors that governs its duties and conduct. Copies of the charter can be obtained free of charge from the Company’s
web site, www.inspiremd.com, by contacting the Company at the address appearing on the first page of this Proxy Statement to the
attention of Investor Relations, via email to craigs@inspiremd.com or by telephone to (888) 776-6804.
Compensation
Committee. Our compensation committee is currently comprised of Messrs. Stuka and Kester, each of whom qualify as an independent
director under Sections 803(A) and 805(c)(1) of the NYSE American rules. Mr. Stuka is the chairman of our compensation committee.
The compensation committee reviews and approves our salary and benefits policies, including compensation of executive officers
and directors. The compensation committee also administers our stock option plans and recommends and approves grants of stock
options under such plans. The compensation committee held one meeting during the twelve months ended December 31, 2019. The compensation
committee operates under a formal charter adopted by the board of directors that governs its duties and conduct. Copies of the
charter can be obtained free of charge from the Company’s web site, www.inspiremd.com, by contacting the Company at the
address appearing on the first page of this Proxy Statement to the attention of Investor Relations, via email to craigs@inspiremd.com
or by telephone to (888) 776-6804.
Meetings
and Attendance
The
board of directors held a total of 10 meetings during the twelve months ended December 31, 2019, and
each director attended at least 75 percent of the aggregate number of all (i) board meetings held during the period for
which he was a director and (ii) committee meetings held during the period for which he was a committee member. We do not have
a policy requiring director attendance at stockholder meetings, but members of our board of directors are encouraged to attend.
One of five directors attended our 2019 Annual Meeting of Stockholders.
Board
Leadership Structure
The
board of directors is committed to promoting effective, independent governance of the Company. Our board believes it is in the
best interests of the stockholders and the Company for the board to have the flexibility to select the best director to serve
as chairman at any given time, regardless of whether that director is an independent director or the chief executive officer.
Consequently, we do not have a policy governing whether the roles of chairman of the board and chief executive officer should
be separate or combined. This decision is made by our board of directors, based on the best interests of the Company considering
the circumstances at the time.
Currently,
the offices of the chairman of the board and the chief executive officer are held by two different people. Mr. Stuka is our independent,
non-executive chairman of the board of directors and Mr. Slosman is our chief executive officer. The chief executive officer is
responsible for the day to day leadership and performance of the Company, while the chairman of the board of directors provides
guidance to the chief executive officer and sets the agenda for board meetings and presides over meetings of the board. We believe
that separation of the positions reinforces the independence of the board in its oversight of the business and affairs of the
Company, and creates an environment that is more conducive to objective evaluation and oversight of management’s performance,
increasing management accountability and improving the ability of the board to monitor whether management’s actions are
in the best interests of the Company and its stockholders. Furthermore, we believe that Mr. Stuka is especially suited to serve
as our chairman of the board, in light of his significant strategic and investment management experience in the U.S. healthcare
industry, which provide him with a unique perspective on the best methods of growth for a life sciences company.
Role
in Risk Oversight
Our
board of directors oversees an enterprise-wide approach to risk management, designed to support the achievement of business objectives,
including organizational and strategic objectives, to improve long-term organizational performance and enhance stockholder value.
The involvement of our board of directors in setting our business strategy is a key part of its assessment of management’s
plans for risk management and its determination of what constitutes an appropriate level of risk for the company. The participation
of our board of directors in our risk oversight process includes receiving regular reports from members of senior management on
areas of material risk to our company, including operational, financial, legal and regulatory, and strategic and reputational
risks.
While
our board of directors has the ultimate responsibility for the risk management process, senior management and various committees
of our board of directors also have responsibility for certain areas of risk management.
Our
senior management team is responsible for day-to-day risk management and regularly reports on risks to our full board of directors
or a relevant committee. Our finance and regulatory personnel serve as the primary monitoring and evaluation function for company-wide
policies and procedures, and manage the day-to-day oversight of the risk management strategy for our ongoing business. This oversight
includes identifying, evaluating and addressing potential risks that may exist at the enterprise, strategic, financial, operational,
compliance, cybersecurity and reporting levels.
The
audit committee focuses on monitoring and discussing our major financial risk exposures and the steps management has taken to
monitor and control such exposures, including our risk assessment and risk management policies. As appropriate, the audit committee
provides reports to and receives direction from the full board of directors regarding our risk management policies and guidelines,
as well as the audit committee’s risk oversight activities.
In
addition, the compensation committee assesses our compensation policies to confirm that the compensation policies and practices
do not encourage unnecessary risk taking. The compensation committee regularly reviews and discusses the relationship between
risk management policies and practices, corporate strategy and senior executive compensation and, when appropriate, reports on
the findings from the discussions with our board of directors. Our compensation committee intends to set performance metrics that
will create incentives for our senior executives that encourage an appropriate level of risk-taking that is commensurate with
our short-term and long-term strategies.
Code
of Ethics
We
have adopted a code of ethics and business conduct that applies to our officers, directors and employees, including our principal
executive officer, principal financial officer and principal accounting officer, which is posted on our website at www.inspiremd.com.
We intend to disclose future amendments to certain provisions of the code of ethics, or waivers of such provisions granted to
executive officers and directors, on this website within four business days following the date of such amendment or waiver.
Communications
with the Board of Directors
A
stockholder who wishes to communicate with our board of directors, any committee of our board of directors, the non-management
directors or any particular director, may do so by writing to such director or directors in care of the Secretary, c/o InspireMD,
Inc., 4 Menorat Hamaor St., Tel Aviv, Israel 6744832. Our secretary will forward such communication to the full board of directors,
to the appropriate committee or to any individual director or directors to whom the communication is addressed, unless the communication
is unrelated to the duties and responsibilities of our board of directors (such as spam, junk mail and mass mailings, ordinary
course disputes over fees or services, personal employee complaints, business inquiries, new product or service suggestions, resumes
and other forms of job inquiries, surveys, business solicitations or advertisements) or is unduly hostile, threatening, illegal,
or harassing, in which case our secretary has the authority to discard the communication or take appropriate legal action regarding
the communication.
Director
Nomination Policies
We
have a standing nominating and corporate governance committee consisting entirely of independent directors. The director nominees
for reelection at the Annual Meeting were recommended to the board by the nominating and corporate governance committee for selection.
The
nominating and corporate governance committee will consider all proposed nominees for the board of directors, including those
properly put forward by stockholders. Stockholder nominations should be addressed to the nominating and corporate governance committee
in care of the Secretary, c/o InspireMD, Inc., 4 Menorat Hamaor St., Tel Aviv, Israel 6744832, in accordance with the provisions
of the Company’s amended and restated bylaws. The nominating and corporate governance committee annually reviews with the
board the applicable skills and characteristics required of board nominees in the context of current board composition and our
circumstances. In making its recommendations to the board, the nominating and corporate governance committee considers all factors
it considers appropriate, which may include experience, accomplishments, education, understanding of the business and the industry
in which we operate, specific skills, general business acumen and the highest personal and professional integrity. Generally,
the nominating and corporate governance committee will first consider current board members because they meet the criteria listed
above and possess an in-depth knowledge of us, our history, strengths, weaknesses, goals and objectives. This level of knowledge
has proven very valuable to us. In determining whether to recommend a director for re-election, the nominating and corporate governance
committee also considers the director’s past attendance at meetings and participation in and contributions to the activities
of the board.
The
board and the nominating and corporate governance committee aim to assemble a diverse group of board members and believe that
no single criterion such as gender or minority status is determinative in obtaining diversity on the board. The board defines
diversity as differences of viewpoint, professional experience, education and skills such as a candidate’s range of experience
serving on other public company boards, the balance of the business interest and experience of the candidate as compared to the
incumbent or other nominated directors, and the need for any particular expertise on the board or one of its committees.
Certain
Related Transactions and Relationships
On
April 8, 2019, we closed an underwritten public offering of 486,957 shares of our common stock at a price to the public of $5.00
per share. We received net proceeds of approximately $2.0 million from the offering, after deducting underwriter discounts and
commissions and offering expenses payable by us. As a result of such offering, the conversion price for each of our Series B Preferred
Stock and Series C Preferred was reduced to $5.00 per share. In connection with this public offering, on April 12, 2019, the underwriter
partially exercised its over-allotment option and purchased an additional 12,393 shares of our common stock at a price to the
public of $5.00 per share. We received net proceeds of approximately $47,000 from the exercise of the over-allotment option. Certain
investors who purchased shares of our common stock in the offering exceeded 5% beneficial ownership in our common stock as a result
of the offering. Those investors reported their ownership interest (including shares purchased in the offering), in beneficial
ownership statements on Schedule 13G. The terms of the offering for those investors mimicked the terms for all other investors.
On
September 24, 2019, we closed an underwritten public offering of (i) 539,000 common units, with each common unit being comprised
of one share of our common stock, and one Series E warrant to purchase one share of common stock and (ii) 2,238,777 pre-funded
units, with each pre-funded unit being comprised of one pre-funded warrant to purchase one share of common stock and one Series
E Warrant. The offering price to the public was $1.80 per common unit and $1.79 per pre-funded unit. The underwriter partially
exercised its option to purchase shares of our common stock and/or up to additional Series E warrants, and ultimately purchased
an additional 194,444 Series E warrants to purchase 194,444 shares of common stock. Certain investors who purchased common units
and/or pre-funded units in the offering exceeded 5% beneficial ownership in our common stock as a result of the offering. Those
investors reported their ownership interest (including shares contained in common units or underlying pre-funded units purchased
in the offering), in beneficial ownership statements on Schedule 13G. The terms of the offering for those investors mimicked the
terms for all other investors.
On
June 5, 2020, we closed an underwritten public offering of (i) 7,635,800 units, with each unit being comprised of one share of
our common stock, and one Series F warrant to purchase one share of common stock, and (ii) 14,586,400 pre-funded units, with each
pre-funded unit being comprised of one pre-funded warrant to purchase one share of common stock and one Series F warrant. The
offering price to the public was $0.45 per unit and $0.449 per pre-funded unit. The underwriter exercised its option to purchase
an additional 3,333,300 shares of common stock and 3,333,300 Series F Warrants. Upon exercise of such over-allotment option, the
offering yielded gross proceeds of approximately $11.5 million for the Company. The underwriter for the Offering received discounts
and commissions of 7% in the offering, or 0.0315 per unit and $0.3143 per pre-funded unit. Certain investors who purchased units
and/or pre-funded units in the offering exceeded 5% beneficial ownership in our common stock as a result of the offering. Those
investors reported their ownership interest (including shares contained in units or underlying pre-funded units purchased in the
offering), in beneficial ownership statements on Schedule 13G. The terms of the offering for those investors mimicked the terms
for all other investors.
In
accordance with our audit committee charter, the audit committee is required to approve all related party transactions. In general,
the audit committee will review any proposed transaction that has been identified as a related party transaction under Item 404
of Regulation S-K, which means a transaction, arrangement or relationship in which we and any related party are participants in
which the amount involved exceeds $120,000. A related party includes (i) a director, director nominee or executive officer of
us, (ii) a security holder known to be an owner of more than 5% of our voting securities, (iii) an immediate family member of
the foregoing or (iv) a corporation or other entity in which any of the foregoing persons is an executive, principal or similar
control person or in which such person has a 5% or greater beneficial ownership interest.
REPORT
OF THE AUDIT COMMITTEE
The
audit committee has reviewed and discussed the Company’s audited financial statements and related footnotes for the year
ended December 31, 2019, and the independent auditor’s report on those financial statements, with management and with our
independent auditor, Kesselman & Kesselman, Certified Public Accountants, a member of PricewaterhouseCoopers International
Limited (“Kesselman”). The audit committee has also discussed with Kesselman the matters required to be discussed
by the Statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule
3200T. The audit committee has also received the written disclosures and the letter from Kesselman required by applicable requirements
of the Public Company Accounting Oversight Board regarding Kesselman’s communications with the audit committee concerning
independence, and has discussed with Kesselman that firm’s independence.
Based
on the review and the discussions referred to in the preceding paragraph, the audit committee determined that the Company’s
audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,
which was filed with the SEC.
|
The
Audit Committee:
|
|
|
|
Michael
Berman
|
|
Thomas
J. Kester (Chairman)
|
|
Paul
Stuka
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information with respect to the beneficial ownership of our common stock as of July 2, 2020 by:
|
●
|
each
person known by us to beneficially own more than 5.0% of our common stock;
|
|
|
|
|
●
|
each
of our directors;
|
|
|
|
|
●
|
each
of our named executive officers; and
|
|
|
|
|
●
|
all
of our directors and executive officers as a group.
|
The
percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination
of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if
that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment
power, which includes the power to dispose of or to direct the disposition of the security.
Except
as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment
power with respect to all shares beneficially owned and each person’s address is c/o InspireMD, Inc., 4 Menorat Hamaor St.,
Tel Aviv, Israel 6744832. As of July 2, 2020, we had 33,358,994 shares outstanding.
Name of Beneficial Owner
|
|
Number of Shares
Beneficially
Owned(1)
|
|
|
Percentage
Beneficially
Owned(1)
|
|
5% Owners
|
|
|
|
|
|
|
|
|
Sol J. Barer, Ph.D.
|
|
|
2,223,348
|
(2)
|
|
|
6.25
|
%
|
Officers and Directors
|
|
|
|
|
|
|
|
|
Craig Shore
|
|
|
17,621
|
(3)
|
|
|
*
|
|
Marvin Slosman
|
|
|
111,100
|
(4)
|
|
|
*
|
|
Michael Berman
|
|
|
16
|
(5)
|
|
|
*
|
|
Campbell Rogers, M.D.
|
|
|
2,617
|
(6)
|
|
|
*
|
|
Paul Stuka
|
|
|
4,684
|
(7)
|
|
|
*
|
|
Thomas Kester
|
|
|
52,608
|
(8)
|
|
|
*
|
|
All directors and executive officers as a group (6 persons)
|
|
|
188,646
|
|
|
|
*
|
|
*
|
Represents
ownership of less than one percent.
|
|
|
(1)
|
Shares
of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise
of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently
exercisable or exercisable within 60 days of July 15, 2020. Shares issuable pursuant to the exercise of stock options and
warrants exercisable within 60 days are deemed outstanding and held by the holder of such options or warrants for computing
the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing
the percentage of outstanding common stock beneficially owned by any other person.
|
|
|
(2)
|
Includes
(i) options to purchase 21 shares of common stock that are currently exercisable or exercisable within 60 days of July 15,
2020, (ii) warrants to purchase 87 shares of common stock that are currently exercisable or exercisable within 60 days of
July 15, 2020 (iii) 2,688 shares of common stock and (iv) includes 2,220,552 shares of common stock issuable upon conversion
of Series B Preferred Stock that are currently convertible within 60 days of July 15, 2020.
|
(3)
|
Consists
of (i) 2,021 shares of common stock, (ii) options to purchase 11 shares of common stock that are currently exercisable or
exercisable within 60 days of July 15, 2020, (iii) 3,994 shares of restricted stock granted under the Israeli Appendix of
the InspireMD, Inc. 2013 Long-Term Incentive Plan and (iv) 11,595 shares of restricted stock granted to employees under the
Israeli Appendix of the InspireMD, Inc. 2013 Long-Term Incentive Plan held in trust, and with respect to which Mr. Shore was
granted a proxy with the right to vote such shares at his discretion.
|
|
|
(4)
|
Consists
of (i) 55,550 shares of common stock, (ii) warrants to purchase 55,550 shares of common stock that are currently exercisable
or exercisable within 60 days of July 15, 2020.
|
|
|
(5)
|
Consists
of (i) 2 shares of common stock, (ii) options to purchase 14 shares of common stock that are currently exercisable or exercisable
within 60 days of July 15, 2020. Excludes 2,600 shares of restricted stock granted under the Israeli Appendix of InspireMD,
Inc. 2013 Long-Term Incentive Plan held in trust, with respect to which the trustee has a proxy with the right to vote such
shares at his discretion.
|
|
|
(6)
|
Consists
of (i) 2 shares of common stock, (ii) 2,600 shares of restricted stock granted under the InspireMD, Inc. 2013 Long-Term Incentive
Plan, (iii) options to purchase 14 shares of common stock that are currently exercisable or exercisable within 60 days of
July 15, 2020, and (iv) warrants to purchase 1 share of common stock that is currently exercisable or exercisable within 60
days of July 15, 2020.
|
|
|
(7)
|
Paul
Stuka is the principal and managing member of Osiris Investment Partners, L.P., and, as such, has beneficial ownership of
(A) (i) 255 shares of common stock, (ii) warrants to purchase 6 shares of common stock that are currently exercisable or exercisable
within 60 days of July 15, 2020, in addition to (B) personally holding (i) options to purchase 15 shares of common stock that
are currently exercisable or exercisable within 60 days of July 15, 2020, (ii) 3,900 shares of restricted stock granted under
the InspireMD, Inc. 2013 Long-Term Incentive Plan, (iii) warrants to purchase 7 shares of common stock that are currently
exercisable or exercisable within 60 days of July 15, 2020 and (iv) 501 shares of common stock.
|
|
|
(8)
|
Consists
of (i) 50,000 shares of common stock, (ii) 2,600 shares of restricted stock granted under the InspireMD, Inc. 2013 Long-Term
Incentive Plan, and (iii) options to purchase 8 shares of common stock that are currently exercisable or exercisable within
60 days of July 15, 2020.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who own more than ten
percent of our common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our common
stock. Directors, officers and persons who own more than ten percent of our common stock are required by SEC regulations to furnish
us with copies of all Section 16(a) forms they file.
To
our knowledge, based solely on a review of the copies of such reports furnished to us, during the twelve months ended December
31, 2019, each of our directors, officers and greater than ten percent stockholders complied with all Section 16(a) filing requirements
applicable to our directors, officers and greater than ten percent stockholders.
PROPOSAL
1: ELECTION OF CLASS 3 DIRECTORS
The
board of directors currently consists of five members and is classified into three classes of similar size. The members of each
class are elected in different years, so that only approximately one-third of the board is elected in any single year. As indicated
below, we currently have one director in Class 1 (with a term of office expiring in 2021), two directors in Class 2 (with a term
of office expiring in 2022), and two directors in Class 3 (with a term of office expiring this year). This year, the board of
directors has nominated Marvin Slosman and Thomas J. Kester, for re-election as Class 3 directors.
Each
of Mr. Slosman and Mr. Kester has been nominated to serve for a term of office to expire at the Annual Meeting of Stockholders
in 2023, to hold office until his successor has been duly elected and qualified. Stockholders will be unable to vote for more
than two persons. Directors are elected by a plurality of the votes present in person or represented by proxy and entitled to
vote at the Annual Meeting. Assuming the presence of a quorum, the two director nominees who receive the most votes cast in the
election of directors will be elected as Class 3 directors. Should any of the director nominees become unable or unwilling to
accept nomination or election, the proxy holders may vote the proxies for the election, in his stead, of any other person the
board of directors may nominate or designate. Each of the director nominees has expressed his intention to serve the entire term
for which election is sought.
Directors
and Nominees
The
following table and text set forth the name, age and positions of the director nominee and each director currently serving on
our board of directors:
Name
|
|
Age
|
|
Director
Class
|
|
Position
|
|
Term
Expiration
|
Paul
Stuka
|
|
65
|
|
Class
1
|
|
Chairman
of the Board of Directors
|
|
2021
Annual Meeting
|
Michael
Berman
|
|
62
|
|
Class
2
|
|
Director
|
|
2022
Annual Meeting
|
Campbell
Rogers, M.D.
|
|
58
|
|
Class
2
|
|
Director
|
|
2022
Annual Meeting
|
Marvin
Slosman
|
|
56
|
|
Class
3
|
|
President,
Chief Executive Officer and Director
|
|
2020
Annual Meeting
|
Thomas
J. Kester
|
|
73
|
|
Class
3
|
|
Director
|
|
2020
Annual Meeting
|
Biographies
Paul
Stuka has served as a director since August 8, 2011 and has served as our chairman since June 2, 2017. Mr. Stuka has served
as the managing member of Osiris Partners, LLC, an investment fund, since 2000. Prior to forming Osiris Partners, LLC, Mr. Stuka,
with 35 years of experience in the investment industry, was a managing director of Longwood Partners, managing small cap institutional
accounts. In 1995, Mr. Stuka joined State Street Research and Management as manager of its Market Neutral and Mid Cap Growth Funds.
From 1986 to 1994, Mr. Stuka served as the general partner of Stuka Associates, where he managed a U.S.-based investment partnership.
Mr. Stuka began his career in 1980 as an analyst at Fidelity Management and Research. As an analyst, Mr. Stuka followed a wide
array of industries including healthcare, energy, transportation, and lodging and gaming. Early in his career he became the assistant
portfolio manager for three Fidelity Funds, including the Select Healthcare Fund which was recognized as the top performing fund
in the United States for the five-year period ending December 31, 1985. Mr. Stuka has been serving as a director of Caliber Imaging
& Diagnostics, Inc. (formerly Lucid, Inc.) since June 2013. Mr. Stuka’s qualifications to serve on the board include
his significant strategic and business insight from his years of experience investing in the healthcare industry.
Michael
Berman has served as our director since February 7, 2013. Mr. Berman is a medical device entrepreneur who works with high-potential
development and early-stage commercial companies. From 2005 to 2012, when the company was sold to Boston Scientific, Mr. Berman
was a co-founder and the chairman of BridgePoint Medical, Inc., which developed technology to treat coronary and peripheral vascular
chronic total occlusions. Mr. Berman was also a member of the board of Lutonix, Inc. from 2007 until 2011, when the company was
sold to C.R. Bard, Inc. From 2011 to 2019, Mr. Berman served as a co-founder and director of Rebiotix Inc., a company developing
an innovative treatment for C Diff colitis. Rebiotix was sold to Ferring Pharmaceuticals in 2018. From 2014 till 2018 Mr. Berman
served as a director Mazor Robotics, a company pioneering Spinal Robotic Surgery. Mr. Berman has served (i) since 2011 as an advisor
to, and since 2012 as a director of, Cardiosonic, Inc., a company developing a system for hypertension reduction via renal denervation,
(ii) since 2005 as a director of PharmaCentra, LLC, which creates customizable marketing programs that help pharmaceutical companies
communicate with physicians and patients, (iii) since 2018 as a Director of STMedical, a medical device company that has developed
a temporary stent for the treatment of chronic sinusitis, (iv) since 2019 as a director of CardiacSense Inc, a medical device
company that has developed a smart watch vital sign monitor, (v) since 2017 as a Director of Owlytics Healthcare, (vi) since 2013
as a Director of ClearCut Inc., a medical device company that has developed an MRI system for tumor margin assessment, (vii) since
2013 as a director of PulmOne Ltd., a medical device company developing an innovative Pulmonary Function Testing system, (viii)
since 2014 as a director of SoniVie, a medical device company, (ix) since 2014 as a venture partner at RiverVest Ventures and
(x) since 2017 as a Director of Truleaf Medical. Mr. Berman brings to the board his extensive executive and entrepreneurial experiences
in the field of medical devices and vascular intervention, which should assist in strengthening and advancing our strategic focus.
Campbell
Rogers, M.D. has served as a director since September 3, 2013. Dr. Rogers is the executive vice president and chief medical
officer of HeartFlow, Inc., a cardiovascular diagnostics company, since March 2012. Prior to joining HeartFlow, Inc., he was the
chief scientific officer and global head of research and development at Cordis Corporation (currently part of Cardinal Health,
Inc.), Johnson & Johnson, where he was responsible for leading investments and research in cardiovascular devices. Prior to
that, he was associate professor of medicine at Harvard Medical School and the Harvard-M.I.T. Division of Health Sciences and
Technology and director of the cardiac catheterization and experimental cardiovascular interventional laboratories at Brigham
and Women’s Hospital. He served as principal investigator for numerous interventional cardiology device, diagnostic, and
pharmacology trials, is the author of numerous journal articles, chapters, and books in the area of coronary artery and other
cardiovascular diseases and was the recipient of research grant awards from the National Institute of Health and the American
Heart Association. He received his A.B. from Harvard College and his M.D. from Harvard Medical School. Dr. Rogers’ qualifications
to serve on the board include his significant experience in cardiovascular devices, as well as his familiarity with the operations
of medical device companies.
Marvin
Slosman has served as our president, chief executive officer and director since January 1, 2020. Mr. Slosman has served as
chief operating officer for MEDCURA Inc. from May 2019 to December 2019. From September 2017 to September 2019, Mr. Slosman served
as a Business Consultant, overseeing international commercial strategy and market development, at Integra Life Sciences, a leading
innovator in orthopedic extremity surgery, neurosurgery, and reconstructive and general surgery. From 2010 to 2014 Mr. Slosman
served as President of Itamar Medical, Inc., a medical technology company focused on cardiovascular and sleep diagnostics. Mr.
Slosman also served as chief executive officer of Ovalum Vascular Ltd. from 2008 to 2010. Mr. Slosman’s qualifications to
serve on the board of directors of the Company include his significant experience in senior management positions of leading medical
device companies.
Mr.
Slosman is a party to an agreement related to his service as president, chief executive officer and director described under “Executive
Compensation – Agreements with Executive Officers.”
Thomas
J. Kester has served as a director since September 6, 2016. Mr. Kester has been serving as the chief financial officer of
Kester Search Group, Inc., a private executive search firm specializing in sales force placement for medical, dental and diagnostic
device companies, since October 2014. From 2004 to 2010, Mr. Kester served as a director of Orthofix International, NV (NASDAQ:
OFIX), a global medical device company. Mr. Kester’s experience includes 28 years at KPMG LLP, including 18 years as an
audit partner, advising public and private companies in connection with annual audit and financings. Mr. Kester’s qualifications
to serve on the board include his significant strategic and business insight from his years of experience auditing global companies
and serving on the boards of several public and not-for-profit organizations. Mr. Kester received his B.S. in mechanical engineering
from Cornell University and an M.B.A. from Harvard University.
Family
Relationships
There
are no family relationships amongst our directors and executive officers.
Vote
Required
Directors
will be elected by a plurality of the votes cast by the holders of our common stock voting in person or by proxy at the Annual
Meeting. The two director nominees who receive the most votes cast in the election of directors will be elected as Class 3 directors.
|
Board
Recommendation
The
board of directors recommends a vote FOR each of the Class 3 director nominees under the Director Election Proposal.
|
|
EXECUTIVE
OFFICERS
In
addition to Marvin Slosman whose information is set forth above under the caption “Proposal 1: Election of Class 1 Director
– Directors and Nominee” and “– Biographies,” below is certain information with respect to our other
executive officers.
Name
|
|
Age
|
|
Position(s)
|
Craig
Shore
|
|
59
|
|
Chief
Financial Officer, Chief Administrative Officer, Secretary and Treasurer
|
Our
officers hold office until the earlier of their death, resignation or removal by our board of directors or until their successors
have been selected. They serve at the pleasure of our board of directors.
Craig
Shore has served as our chief financial officer, secretary and treasurer since March 31, 2011 and as our chief administrative
officer since May 3, 2013. In addition, from November 10, 2010 through March 31, 2011, Mr. Shore served as InspireMD Ltd.’s
vice president of business development. Mr. Shore has over 30 years of experience in financial management in the United States,
Europe and Israel for companies such as Pfizer Pharmaceuticals, Bristol Myers Squibb and General Electric. His experience includes
raising capital both in the private and public markets. Mr. Shore graduated with honors and received a B.Sc. in Finance from Pennsylvania
State University and an M.B.A. from George Washington University.
Mr.
Shore is a party to an agreement related to his service as chief financial officer described under “Executive Compensation
– Agreements with Executive Officers.”
EXECUTIVE
COMPENSATION
Compensation
Philosophy and Process
The
responsibility for establishing, administering and interpreting our policies governing the compensation and benefits for our executive
officers lies with our compensation committee and our board of directors. During the review of named executive officer compensation
for 2019, the compensation committee did not retain the services of any compensation consultants.
The
goals of our compensation policy are to ensure that executive compensation rewards management for helping us achieve our financial
goals (increased sales, profitability, etc.) and meet our clinical trial milestones and aligns management’s overall goals
and objectives with those of our stockholders. In 2019, we designed our executive compensation program to achieve the following
objectives:
|
●
|
provide
a competitive compensation package that enables us to attract and retain superior management personnel;
|
|
|
|
|
●
|
provide
incentives that reward the achievement of performance goals that directly correlate to the enhancement of stockholder value
and facilitate executive retention;
|
|
|
|
|
●
|
reward
our officers fairly for their role in our achievements; and
|
|
|
|
|
●
|
align
executives’ interests with those of stockholders through long-term incentives linked to specific performance.
|
We
have determined that in order to best meet these objectives, our executive compensation program should balance fixed and bonus
compensation, as well as cash and equity compensation. Historically, there has been no pre-established policy or target for the
allocation between either cash and non-cash or short-term and long-term incentive compensation for our executive officers.
Summary
Compensation Table
The
table below sets forth the compensation earned by our named executive officers for the twelve-month period ended December 31,
2019 and 2018.
Name and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(1)
|
|
All
Other Compensation
($)
|
|
|
Total
($)
|
|
James Barry,
Ph.D. (2)
|
|
2019
|
|
|
454,373
|
(3)
|
|
|
-
|
|
|
|
141,900
|
|
|
607,312
|
(4)
|
|
|
1,203,585
|
|
Former President and Chief
Executive Officer
|
|
2018
|
|
|
391,250
|
|
|
|
195,626
|
(5)
|
|
|
-
|
|
|
62,654
|
(6)
|
|
|
649,530
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig Shore
|
|
2019
|
|
|
269,758
|
(7)
|
|
|
60,000
|
(7)(8)(10)
|
|
|
57,000
|
|
|
114,395
|
(7)(9)
|
|
|
501,153
|
(7)
|
Chief Financial Officer,
Secretary and Treasurer
|
|
2018
|
|
|
267,306
|
(7)
|
|
|
76,961
|
(5)(7)
|
|
|
-
|
|
|
119,104
|
(9)
|
|
|
463,371
|
(7)
|
(1)
|
For
awards of stock, the aggregate grant date fair value is computed in accordance with FASB ASC Topic 718 For additional discussion
of the grant date fair value for Stock Awards, see Note 8 of the Financial Statements.
|
(2)
|
Dr.
Barry’s employment with the Company ceased as of December 31, 2019. Dr. Barry served as our President and Chief Executive
Officer.
|
|
|
(3)
|
Dr.
Barry’s salary for 2019 includes (i) $33,081 paid in lieu of accrued but unused vacation time through the calendar year
2018, which we agreed to pay in cash pursuant to the A&R Employment Agreement, dated February 4, 2019 (See “—Agreements
with Executive Officers—James Barry, Ph.D.— Employment Agreement in Effect Prior to Termination”), and (ii)
$21,292 paid in lieu of accrued but unused vacation time through the calendar year 2019 upon termination of Dr. Barry’s
employment.
|
|
|
(4)
|
Dr.
Barry’s other compensation for 2019 consisted of severance payments and other benefits related to the separation agreement
of $541,629 (See “—Agreements with Executive Officers—James Barry, Ph.D.— General Release and Severance
Agreement”) and benefits related to health insurance of $65,683.
|
|
|
(5)
|
Cash
bonus awards for the 2018 calendar year were approved by the compensation committee in January 2019.
|
|
|
(6)
|
Dr.
Barry’s other compensation for 2018 consisted of benefits related to health insurance.
|
|
|
(7)
|
Compensation
amounts received in non-U.S. currency have been converted into U.S. dollars using the average exchange rate for the applicable
period, except for bonus amounts which have been converted into U.S. dollars using the exchange rate of NIS 3.456 per dollar,
which was the exchange rate as of December 31, 2019. The average exchange rate for the twelve month periods ended December
31, 2019 and 2018 were NIS 3.564 per dollar and NIS 3.597 per dollar, respectively.
|
|
|
(8)
|
Cash
bonus awards for the 2019 calendar year were approved by the compensation committee in January 2020.
|
|
|
(9)
|
Mr.
Shore’s other compensation consisted solely of benefits in the twelve months ended December 31, 2019 and 2018. In each
of the periods reported, Mr. Shore’s benefits included our contributions to his severance, pension, vocational studies
and disability funds, an annual recreation payment, a company car or car allowance and cell phone, and a daily food allowance.
|
|
|
(10)
|
$30,000
was paid on February 1, 2020, and the remaining $30,000 was paid on July 1, 2020.
|
Agreements
with Executive Officers
Marvin
Slosman
On
December 9, 2019, we entered into an Employment Agreement with Marvin Slosman, which was subsequently amended on December 31,
2019 (as amended, the “Slosman Employment Agreement”), pursuant to which Mr. Slosman was appointed as our new chief
executive officer and president. Mr. Slosman’s term of employment commenced on January 1, 2020, which will remain in effect
for three years (the “Initial Employment Term”), unless earlier terminated, and to be automatically renewed for successive
one-year terms after the Initial Employment Term. Mr. Slosman was also appointed as a Class 3 director, effective January 1, 2020,
with a term expiring on the date of our 2020 annual meeting of stockholders.
As
consideration for his services as chief executive officer, Mr. Slosman is entitled to receive (i) an annual base salary of $400,000,
less applicable payroll deductions and tax (“Base Salary”), which will be reviewed by the Board on an annual basis
for increase; (ii) reimbursement of up to $50,000 for any reasonable and customary, documented out-of-pocket relocation expenses
actually incurred by Mr. Slosman in 2019 or 2020 calendar years, in connection with his relocation to Europe; (iii) annual performance
bonuses in an amount up to 50% percent of the Base Salary, as may be in effect from time to time, for each calendar year during
his employment with us based on the extent to which performance criteria/financial results for the applicable year have been met;
and (iv) equity awards as of the date of the Slosman Employment Agreement that represent, in the aggregate, 5% of the Company’s
issued and outstanding common stock determined on a fully diluted basis as of the date of grant (the “Equity Awards”),
with 75% of the Equity Awards being granted as restricted stock units and with the remaining 25% of the Equity Awards being granted
as stock options, all of which Equity Awards shall be outside of the 2013 Long-Term Incentive Plan and subject to terms and conditions
of the award agreements entered by Mr. Slosman. In addition, on or before December 31, 2020, Mr. Slosman shall become eligible
to receive an additional grant of equity awards under the 2013 Long-Term Incentive Plan and the applicable award agreements up
to 5% (including the Equity Awards) of the Company’s actual outstanding shares of Common Stock on the date of grant, provided
that the actual amount of the grant shall be based on the achievement of certain performance/financial criteria as established
by the Board after consultation with Mr. Slosman, in its reasonable discretion. For the purposes of the equity award calculation,
“fully diluted basis” is defined as the sum of the total shares of common stock then outstanding, the shares of common
stock issuable upon the conversion of our then outstanding shares of Series B Convertible Preferred Stock and Series C Convertible
Preferred Stock and the shares of common stock issuable upon the exercise of our then outstanding pre-funded warrant. On January
2, 2020, pursuant to the Slosman Employment Agreement, we granted Mr. Slosman restricted stock units for 182,381 shares and a
stock option to purchase 60,794 shares of common stock at $1.10 per share.
In
the event Mr. Slosman voluntarily resigns without good reason, we may, in our sole discretion, shorten the notice period and determine
the date of termination without any obligation to pay Mr. Slosman any additional compensation other than the accrued obligations
and without triggering a termination of Mr. Slosman’s employment without cause. In the event the Slosman Employment Agreement
expires, or we terminate Mr. Slosman’s employment for cause or Mr. Slosman voluntarily resigns without good reason, we shall
have no further liability or obligation to Mr. Slosman under the Slosman Employment Agreement. Notwithstanding the foregoing,
in the event that this the Slosman Employment Agreement expires as a result of our decision not to renew the Slosman Employment
Agreement, we shall, subject to the execution and timely return by Mr. Slosman of a release of claims, pay Mr. Slosman cash payments
totaling $100,000 in the aggregate, payable in equal installments on our regular pay dates that occur during the period commencing
on 60th day following his employment termination date and ending on the last day of the Restricted Period (as defined below);
provided, however, that if, at any time within the period commencing on the date that is 3 months prior to the expiration of the
Initial Employment Term or the then current renewal term, as applicable, and ending on the date that is 3 months following the
expiration of the Slosman Employment Agreement, we and a third party execute a definitive, written, and binding agreement (a “Sale
Agreement”) to enter into certain transactions described therein that, if consummated, would constitute a change in control
in us, then Mr. Slosman’s termination shall be deemed a termination by us without cause or for good reason, as of the date
such Sale Agreement is executed, provided further that any amounts payable to Mr. Slosman pursuant to such termination shall be
reduced by any amounts previously paid to him upon expiration of the Slosman Employment Agreement, termination by us for cause
or voluntary resignation by Mr. Slosman without good reason.
If
Mr. Slosman’s employment is terminated (i) by us without cause or (ii) by Mr. Slosman for good reason, then we must pay
Mr. Slosman, (a) a severance pay in an amount equal to twelve months of his then-current base salary, (b) his entire performance
bonus for any calendar year for which Mr. Slosman has already worked the entire year but the bonus has yet to be paid, (c) a pro-rated
performance bonus in an amount equal to the target annual performance bonus to which Mr. Slosman may have been entitled for the
year in which the termination occurs that he would have received had his employment not been terminated during such year. In addition,
50% of all unvested stock options, shares of restricted stock, restricted stock units, stock appreciation rights, or similar stock-based
rights granted to Mr. Slosman shall vest and, if applicable, be immediately exercisable and any risk of forfeiture included in
such restricted or other stock grants previously made to Mr. Slosman shall immediately lapse, and Mr. Slosman may exercise any
outstanding stock options or stock appreciation rights until the earlier of (x) the last date on which such stock options or stock
appreciation rights could have been exercised pursuant to the terms of the applicable award agreement, irrespective of Mr. Slosman’s
termination of employment; and (y) the date that is two years following his employment termination date.
On
April 21, 2020, Mr. Slosman signed a waiver reducing his monthly base salary from $33,333 to $16,666 for the period beginning
April 1, 2020 and ending on such date as Mr. Slosman was to determine. Effective as of June 1, 2020, and following a determination
made by Mr. Slosman on June 10, 2020, Mr. Slosman’s monthly base salary of $33,333 was reinstated.
Craig
Shore
We
have been a party to an employment agreement with Craig Shore since November 28, 2010. On May 5, 2014, we entered into an amended
and restated employment agreement with Mr. Shore, which was amended on January 5, 2015, July 25, 2016 and on March 25, 2019. The
employment agreement, as amended, has an initial term that ends on December 31, 2020 and will automatically renew for additional
one-year periods on January 1st thereafter unless either party gives the other party written notice of its election not to extend
such employment at least six months prior to the next January 1st renewal date. If a change in control occurs when less than two
full years remain in the initial term or during any renewal term, the employment agreement will automatically be extended for
two years from the change in control date and will terminate on the second anniversary of the change in control date.
Under
the terms of the employment agreement, as amended, Mr. Shore is entitled to an annual base salary of at least $250,000. Such amount
may be reduced only as part of an overall cost reduction program that affects all of our senior executives and does not disproportionately
affect Mr. Shore, so long as such reduction does not reduce the base salary to a rate that is less than 90% of the amount set
forth above (or 90% of the amount to which it has been increased). The base salary will be reviewed annually by our chief executive
officer for increase (but not decrease, except as permitted as part of an overall cost reduction program) as part of our annual
compensation review. Mr. Shore is also eligible to receive an annual bonus in an amount equal to 60% of his then-annual salary
upon the achievement of reasonable target objectives and performance goals, to be determined by the board of directors in consultation
with Mr. Shore. Mr. Shore is eligible to receive the percentage of his annual bonus corresponding to the percentage of his achievement
of such target objectives and performance goals. The annual bonus will be reviewed annually by our chief executive officer for
increase in the amount of the percentage of his then-base salary (but not decrease), as well as the criteria and the goals, as
part of our annual compensation review. In addition, Mr. Shore is eligible to receive such additional bonus or incentive compensation
as the board may establish from time to time in its sole discretion. Mr. Shore will also be considered for grants of equity awards
each year as part of the board’s annual compensation review, which will be made at the sole discretion of the board of directors.
Each grant will, with respect to any awards that are options, have an exercise price equal to the fair market value of our common
stock as of the date of grant, and will be subject to a three-year vesting period subject to Mr. Shore’s continued service
with us, with one-third of each additional grant vesting equally on the first, second, and third anniversary of the date of grant
for such awards.
If
during the term of the employment agreement, Mr. Shore’s employment is terminated upon his death or disability, by us without
cause (as such term is defined in Mr. Shore’s employment agreement), or upon his resignation for “good reason”
(as such term is defined in Mr. Shore’s employment agreement), Mr. Shore will be entitled to receive, in addition to any
amounts he is entitled to receive under the manager’s insurance policy: (i) any unpaid base salary and accrued unpaid vacation
or earned incentive compensation and the pro rata amount of any bonus plan incentive compensation for the fiscal year of such
termination (based on the number of business days he was actually employed by us during the fiscal year of such termination and
based on the percentage of the goals that he actually achieved under the bonus plan) that he would have received had his employment
not been terminated; (ii) a one-time lump sum severance payment equal to 100% of his base salary and car allowance, provided that
he executes a release relating to employment matters and the circumstances surrounding his termination in favor of us, our subsidiaries
and our officers, directors and related parties and agents, in a form reasonably acceptable to us at the time of such termination;
(iii) vesting of all unvested stock options, stock appreciation rights or similar stock-based rights granted to him and immediate
lapse of any risk of forfeiture included in restricted or other stock grants previously made to Mr. Shore; (iv) an extension of
the exercise period of all vested stock options granted to Mr. Shore until the earlier of (a) two years from the date of termination
or (b) the latest date that each stock option would otherwise expire by its original terms; (v) to the fullest extent permitted
by our then-current benefit plans, continuation of health, dental, vision and life insurance coverage for the lesser of 12 months
after termination or until Mr. Shore obtains coverage from a new employer; and (vi) reimbursement of up to $30,000 for executive
outplacement services, subject to certain restrictions. The severance payment described in (ii) of the foregoing sentence upon
Mr. Shore’s death or disability will be reduced by any payments received by Mr. Shore pursuant to any of our employee welfare
benefit plans providing for payments in the event of death or disability. If, during or after the term of his employment agreement,
Mr. Shore’s employment is terminated by us for cause or by Mr. Shore voluntarily, Mr. Shore will only be entitled to unpaid
amounts owed to him (e.g., base salary, accrued vacation and earned incentive compensation through the date of such termination)
and whatever rights, if any, are available to him pursuant to our stock-based compensation plan or any award documents related
to any stock-based compensation.
Mr.
Shore may terminate his employment for good reason by delivering a notice of termination to us 30 days in advance of the date
of termination; provided, however, that Mr. Shore agreed to not terminate his employment for good reason until he has given us
at least 30 days’ notice from which to cure the circumstances set forth in the notice of termination constituting good reason,
and if such circumstances are not cured by the 30th day, Mr. Shore’s employment shall terminate on such date.
Pursuant
to terms contained in Mr. Shore’s stock option and restricted stock award agreements, in the event of a change of control
of our company, the stock options and restricted stock granted to Mr. Shore that were unvested will vest immediately upon such
change of control, in the case of stock options, if such stock options are not assumed or substituted by the surviving company.
If
we terminate Mr. Shore’s employment without cause, Mr. Shore will be entitled, under Israeli law, to severance payments
equal to his last month’s salary multiplied by the number of years Mr. Shore has been employed with us. In order to finance
this obligation, we make monthly contributions equal to 8.33% of Mr. Shore’s salary to a severance payment fund. The total
amount accumulated in Mr. Shore’s severance payment fund as of December 31, 2019 was $171,000, as adjusted for conversion
from New Israeli Shekels to U.S. Dollars. However, if Mr. Shore’s employment is terminated without cause, on account of
a disability or upon his death, as of December 31, 2019, Mr. Shore would have been entitled to receive $211,000 in severance under
Israeli law, thereby requiring us to pay Mr. Shore $40,000, in addition to releasing the $171,000 in Mr. Shore’s severance
payment fund. On the other hand, pursuant to his employment agreement, Mr. Shore is entitled to the total amount contributed to
and accumulated in his severance payment fund in the event of the termination of his employment as a result of his voluntary resignation.
In addition, Mr. Shore would be entitled to receive his full severance payment under Israeli law, including the total amount contributed
to and accumulated in his severance payment fund, if he retires from our company at or after age 67.
We
are entitled to terminate Mr. Shore’s employment immediately at any time for “cause” (as such term is defined
in the agreement and the Israeli Severance Payment Act 1963), upon which, after meeting certain requirements under the applicable
law and recent Israeli Labor court requirements, we believe we will have no further obligation to compensate Mr. Shore.
Also,
upon termination of Mr. Shore’s employment for any reason, we will compensate him for all unused or previously uncompensated
vacation days accrued.
The
employment agreement also contains certain standard noncompetition, non-solicitation, confidentiality, and assignment of inventions
requirements for Mr. Shore.
Mr.
Shore is also entitled to participate in or receive benefits under our social insurance and benefits plans, including but not
limited to our manager’s insurance policy and education fund, which are customary benefits provided to executive employees
in Israel. A management insurance policy is a combination of severance savings (in accordance with Israeli law), defined contribution
tax-qualified pension savings and disability pension payments. An education fund is a savings fund of pre-tax contributions to
be used after a specified period of time for advanced educational training and other permitted purposes, as set forth in the by-laws
of the education fund. We will make periodic contributions to these insurance and social benefits plans based on certain percentages
of Mr. Shore’s base salary, including (i) 7.5% to the education fund and (ii) 15.83% to the manager’s insurance policy,
of which 8.33% will be allocated to severance pay, 5% to pension fund payments and 2.5% to disability pension payments. Upon the
termination of Mr. Shore’s employment for any reason other than for cause, Mr. Shore will be entitled to receive the total
amount contributed to and accumulated in his manager insurance policy fund.
On
April 21, 2020, Mr. Shore signed a waiver reducing his monthly base salary from NIS 80,125 to NIS 40,063 for the period beginning
April 1, 2020 and ending on such date as Mr. Shore was to determine. Effective as of June 1, 2020, and following a determination
made by Mr. Shore on June 10, 2020, Mr. Shore’s monthly base salary of NIS 80,125 was reinstated retroactive to June 1,
2020.
Outstanding
Equity Awards at December 31, 2019
The
following table shows information concerning unexercised options and unvested restricted shares outstanding as of December 31,
2019 for each of our named executive officers.
Option
Awards
|
|
Stock
Awards
|
|
Name
|
|
Number
of securities underlying unexercised options (#) exercisable
|
|
|
Number
of securities underlying unexercised options (#) unexercisable
|
|
|
Option
exercise price ($)
|
|
|
Option
expiration date
|
|
Number
of shares of stock that have not vested (#)
|
|
|
Market
value of shares of stock that have not vested ($)
|
|
James
Barry, Ph.D.(2)
|
|
|
41
|
|
|
|
-
|
|
|
|
8,312.50
|
|
|
07/25/2026
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig
Shore
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
(1)
|
|
$
|
6,480
|
|
|
|
|
11
|
|
|
|
-
|
|
|
|
8,312.50
|
|
|
07/25/2026
|
|
|
|
|
|
|
|
|
(1)
|
These
restricted shares vest annually, with one-third vesting on each of February 4, 2020, February 4, 2021 and February 4, 2022.
|
|
|
(2)
|
Dr.
Barry’s employment with the Company ceased as of December 31, 2019.
|
Option
Exercises and Stock Vested
There
were no stock options exercised by our named executive officers during the twelve months ended December 31, 2019.
2011
UMBRELLA Option Plan
On
March 28, 2011, our board of directors and stockholders adopted and approved the InspireMD, Inc. 2011 UMBRELLA Option Plan, which
was subsequently amended on October 31, 2011 and December 21, 2012. Under the InspireMD, Inc. 2011 UMBRELLA Option Plan, we have
reserved 571 shares of our common stock as awards to employees, consultants, and service providers to InspireMD, Inc. and its
subsidiaries and affiliates worldwide.
The
InspireMD, Inc. 2011 UMBRELLA Option Plan currently consists of three components, the primary plan document that governs all awards
granted under the InspireMD, Inc. 2011 UMBRELLA Option Plan, and two appendices: (i) Appendix A, designated for the purpose of
grants of stock options and restricted stock awards to Israeli employees, consultants, officers and other service providers and
other non-U.S. employees, consultants, and service providers, and (ii) Appendix B, which is the 2011 U.S. Equity Incentive Plan,
designated for the purpose of grants of stock options and restricted stock awards to U.S. employees, consultants, and service
providers who are subject to the U.S. income tax. On December 21, 2012, the stockholders approved the awarding of “incentive
stock options” pursuant to the U.S. portion of the plan.
The
purpose of the InspireMD, Inc. 2011 UMBRELLA Option Plan is to provide an incentive to attract and retain employees, officers,
consultants, directors, and service providers whose services are considered valuable, to encourage a sense of proprietorship and
to stimulate an active interest of such persons in our development and financial success. The InspireMD, Inc. 2011 UMBRELLA Option
Plan is administered by our compensation committee. Unless terminated earlier by the board of directors, the InspireMD, Inc. 2011
UMBRELLA Option Plan will expire on March 27, 2021. We have 310 shares of common stock available for future issuance under our
2011 UMBRELLA Option Plan.
2013
Long-Term Incentive Plan
On
December 16, 2013, our stockholders approved the 2013 Plan, which was adopted by our board of directors on October 25, 2013.
The
purpose of the 2013 Plan is to provide an incentive to attract and retain employees, officers, consultants, directors, and service
providers whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of
such persons in our development and financial success. The 2013 Plan provides for the granting of incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights,
and other awards, which may be granted singly, in combination, or in tandem. The 2013 Plan is administered by our compensation
committee.
The
2013 Plan is intended to serve as an “umbrella” plan for us and our subsidiaries worldwide. Therefore, if so required,
appendices may be added to the 2013 Plan in order to accommodate local regulations that do not correspond to the scope of the
2013 Plan. Attached as Appendix A to the 2013 Plan is the InspireMD, Inc. 2013 Employee Stock Incentive Plan, for the purpose
of making grants of stock options, restricted stock, and other stock incentive awards pursuant to Sections 102 and 3(i) of the
Israeli Income Tax Ordinance (New Version), 1961 to Israeli employees and officers and any other service providers or control
holders of us who are subject to Israeli Income Tax.
When
the 2013 Plan was adopted, a total of 571 shares of common stock were reserved for awards under the 2013 Plan.
On
September 9, 2015, our stockholders approved an amendment to the 2013 Plan to increase the number of shares of common stock available
for issuance pursuant to awards under the 2013 Plan by 537 shares of common stock, to a total of 1,108 shares of common stock.
On
May 24, 2016, our stockholders approved the second amendment to the 2013 Plan to increase the number of shares of common stock
available for issuance pursuant to awards under the 2013 Plan by 11,429 shares of common stock, to a total of 12,537 shares of
common stock.
On
September 28, 2016, our stockholders approved the third amendment to the 2013 Plan to increase the number of shares of common
stock available for issuance pursuant to awards under the 2013 Plan by 7,200 shares of common stock, to a total of 19,737 shares
of common stock.
On
October 24, 2018, our stockholders approved the fourth amendment to the 2013 Plan to further increase the number of shares of
common stock available for issuance pursuant to awards under the 2013 Plan by an additional 8,900,000 shares of common stock,
to a total of 8,919,737 shares of common stock.
On
March 21, 2019, our stockholders approved the Fifth Amendment to the InspireMD, Inc. 2013 Long-Term Incentive Plan to increase
the total number of shares of common stock issuable under the InspireMD, Inc. 2013 Long-Term Incentive Plan by 500,000 shares
to a total of 678,395 shares of common stock
As
of December 31, 2019, we had 443,450 shares of common stock available for future issuance under our 2013 Long-Term Incentive Plan.
As of July 2, 2020 we had 483,491 shares of common stock available for future issuance under our 2013 Long-Term Incentive Plan.
Equity
Compensation Plan Information
The
following table provides certain information as of December 31, 2019, with respect to our equity compensation plans under which
our equity securities are authorized for issuance:
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
173
|
|
|
$
|
372,088
|
|
|
|
443,450
|
|
Equity compensation plans not approved by security holders
|
|
|
3
|
(1)
|
|
$
|
3,412,500
|
|
|
|
—
|
|
Total
|
|
|
176
|
|
|
$
|
423,194
|
|
|
|
—
|
|
(1)
|
Comprised
of awards made to individuals outside the InspireMD, Inc. 2011 UMBRELLA Option Plan and 2013 Long Term Incentive Plan, as
described below:
|
|
●
|
Options
issued to former director: In November 2011, we issued options to purchase an aggregate of 3 shares of common stock to Dr.
Barer, then chairman of our board of directors who resigned from the board of directors effective as of June 2, 2017. The
exercise price of these options is $3,412,500 per share and the options may be exercised at any time prior to the tenth anniversary
of the grant date, pursuant to the nonqualified stock option agreement, as amended on June 2, 2017.
|
Change
of Control Agreements
We
do not currently have any plans providing for the payment of retirement benefits to our officers or directors, other than as described
under “Agreements with Executive Officers” above.
We
do not currently have any change-of-control or severance agreements with any of our executive officers or directors, other than
as described under “Agreements with Executive Officers” above. In the event of the termination of employment of the
named executive officers, any and all unexercised stock options shall expire and no longer be exercisable after a specified time
following the date of the termination, other than as described under “Agreements with Executive Officers” above.
DIRECTOR
COMPENSATION
The
following table shows information concerning our directors, other than James Barry, Ph.D., who resigned from the Board, effective
December 31, 2019, during the twelve months ended December 31, 2019.
Name
|
|
Fees Earned
or Paid in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Paul Stuka
|
|
|
54,000
|
|
|
|
37,050
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,050
|
|
Michael Berman
|
|
|
34,000
|
|
|
|
24,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
58,700
|
|
Campbell Rogers, M.D.
|
|
|
25,000
|
|
|
|
24,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
49,700
|
|
Thomas Kester
|
|
|
41,000
|
|
|
|
24,700
|
|
|
|
-
|
|
|
|
-
|
|
|
|
65,700
|
|
For
the 2019 calendar year, our board approved the following compensation for our independent directors: (i) a $40,000 stipend, payable
quarterly to the chairman of the board; (ii) a $25,000 stipend, payable quarterly to the other directors; (iii) annual committee
chair compensation of $12,000 for the chairman of the audit committee, $8,000 for the chairman of the compensation committee and
$5,000 for the chairmen of the nominating and corporate governance committee and the research and development committee; and (iv)
annual committee membership compensation of $4,000 for members of the audit committee and the compensation committee and $2,000
for members of the nominating and corporate governance committee and the research and development committee.
Directors’
and Officers’ Liability Insurance
We
currently have directors’ and officers’ liability insurance insuring our directors and officers against liability
for acts or omissions in their capacities as directors or officers, subject to certain exclusions. Such insurance also insures
us against losses which we may incur in indemnifying our officers and directors. In addition, we have entered into indemnification
agreements with key officers and directors and such persons shall also have indemnification rights under applicable laws, and
our certificate of incorporation and bylaws.
PROPOSAL
2: APPROVAL OF increase in number of shares available under 2013 LONG-TERM INCENTIVE
PLAN
Our
board of directors is seeking the approval of our stockholders of an amendment to the 2013 Plan, which was adopted by our board
of directors on [●], 2020, subject to stockholder approval (the “Sixth Amendment”). The 2013 Plan was originally
approved by our board of directors on October 25, 2013, and by our stockholders at our annual meeting held on December 16, 2013.
Under the 2013 Plan as originally adopted, we reserved a total of 5,000,000 shares of our common stock for issuance pursuant to
awards under the 2013 Plan. Our board of directors subsequently amended the 2013 Plan on July 16, 2015, which amendment was approved
by our stockholders on September 9, 2015, to increase the number of shares of common stock available for issuance pursuant to
awards under the 2013 Plan by 4,700,000 shares, to a total of 9,700,000 shares of our common stock. On October 1, 2015, we effected
a 1-for-10 reverse stock split such that, after giving effect to the reverse stock split, there were 970,000 shares of our common
stock reserved for issuance pursuant to awards under the 2013 Plan. On May 24, 2016, our stockholders approved the second amendment
to the 2013 Plan to increase the number of shares of common stock available for issuance pursuant to awards under the 2013 Plan
by 10,000,000 shares of common stock, to a total of 10,970,000 shares of common stock. On September 28, 2016, our stockholders
approved the third amendment to the 2013 Plan to further increase the number of shares of common stock available for issuance
pursuant to awards under the 2013 Plan by an additional 6,300,000 shares of common stock, to a total of 17,270,000 shares of common
stock. On October 7, 2016, we effected a 1-for-25 reverse stock split of our common stock such that, after giving effect to the
reverse stock split, there were 690,800 shares of our common stock reserved for issuance pursuant to awards under the 2013 Plan.
On February 7, 2018, we effected a 1-for-35 reverse stock split of our common stock such that, after giving effect to the reverse
stock split, there were 19,737 shares of our common stock reserved for issuance pursuant to awards under the 2013 Plan. On October
24, 2018, our stockholders approved the fourth amendment to the 2013 Plan to further increase the number of shares of common stock
available for issuance pursuant to awards under the 2013 Plan by an additional 8,900,000 shares of common stock, to a total of
8,919,737 shares of common stock. When adjusted to give effect to the 1-for-10 reverse stock split, the 1-for-25 reverse stock
split, and the 1-for-35 reverse stock split, as applicable, the first, second, third and fourth amendments to the 2013 Plan increased
the number of shares of common stock available for issuance pursuant to awards under the 2013 Plan by 537 shares, 11,429 shares,
7,200 shares, and 8,900,000 shares of our common stock, respectively. On March 21, 2019, our stockholders approved the fifth amendment
to the 2013 Plan to increase the total number of shares of common stock issuable under the 2013 Plan by 500,000 shares to a total
of 678,395 shares of common stock.
As
of July 2, 2020, out of 678,395 shares of our common stock reserved for issuance pursuant to awards under the 2013 Plan, there
were 483,491 shares available for future issuance under the 2013 Plan. The proposed Sixth Amendment further increases the number
of shares of common stock available for issuance pursuant to awards under the 2013 Plan by an additional 6,500,000 shares, to
a total of 7,178,395 shares of our common stock.
We
believe that operation of the 2013 Plan is a necessary and powerful tool in attracting and retaining the services of key employees,
key contractors, and outside directors in a competitive labor market, which is essential to our long-term growth and success.
We also need to ensure that we can continue to provide an incentive to our current employees, contractors and outside directors,
many of whom hold outstanding options that were previously awarded under the 2013 Plan with exercise prices above the current
fair market value of our common stock. We have strived to use our 2013 Plan resources effectively and maintain an appropriate
balance between stockholder interests and the ability to recruit and retain valuable employees. However, we believe that there
is an insufficient number of shares remaining under our 2013 Plan to meet our projected needs. As a result of past sales of our
equity securities to finance our operations and expected additional potential issuances of common stock in the near future pursuant
to our outstanding convertible securities and warrants, the number of shares issuable pursuant to the 2013 Plan relative to our
fully diluted capitalization is disproportionately low, compared to our peer companies. Much of the outstanding equity that we
have granted to our employees and directors in the past is significantly “out of the money”, and, as a result, our
current officers and directors hold little or no actual shares of common stock in our company. Moreover, having such a small percentage
of our fully diluted capitalization reserved for employees and directors will impair our ability to both attract and retain key
persons going forward. Accordingly, it is the judgment of our board of directors that increasing the number of shares of common
stock available for issuance under the 2013 Plan pursuant to the Sixth Amendment is in the best interest of the Company and its
stockholders. In addition, we believe that the Sixth Amendment to increase the number of shares of common stock available for
issuance pursuant to awards under the 2013 Plan reflects best practices in our industry.
A
copy of the Sixth Amendment and the 2013 Plan (including the Israeli Appendix to the 2013 Plan) are included as Annex A
and Annex B, respectively, to this Proxy Statement. Set forth below is a summary of certain key provisions of the 2013
Plan, which is qualified in its entirety by reference to the full text of the 2013 Plan.
The
board of directors recommends that the stockholders vote “FOR” the approval of the Incentive Plan Proposal (Proposal
2).
Summary
of the Proposed Sixth Amendment
Our
board of directors adopted the Sixth Amendment on [●], 2020, subject to stockholder approval, to increase the number of
shares of our common stock available for issuance pursuant to awards under the 2013 Plan by an additional 6,500,000 shares, to
a total of 7,178,395shares of common stock.
Description
of the 2013 Plan
Purpose.
The purpose of the 2013 Plan is to enable the Company and its subsidiaries and affiliates (together, the “Group”)
to remain competitive and innovative in our ability to attract, motivate, reward, and retain the services of key employees, key
contractors, and outside directors. The 2013 Plan provides for the granting of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other
awards which may be granted singly, in combination, or in tandem and which may be paid in cash, shares of common stock, or a combination
of cash and shares of common stock. The 2013 Plan is expected to provide flexibility to our compensation methods in order to adapt
the compensation of employees, contractors, and outside directors to a changing business environment, after giving due consideration
to competitive conditions and the impact of U.S. and Israeli tax laws.
The
2013 Plan consists of two components, the primary plan document which governs all awards granted under the 2013 Plan, and one
sub-part appendix: Appendix A, which is the 2013 Employee Stock Incentive Plan (the “Israeli Appendix”), designated
for grants of stock options, restricted stock, and other stock incentive awards to Israeli employees, consultants, officers, directors,
and other service providers and to other non-U.S. employees, consultants, and service providers subject to Israeli income tax.
Effective
Date and Expiration. The 2013 Plan became effective on October 25, 2013, subject to and conditioned upon stockholder approval
of the 2013 Plan, and will terminate on October 25, 2023. No award may be made under the 2013 Plan after its expiration date,
but awards made prior thereto may extend beyond that date in accordance with their terms and conditions.
Share
Authorization. Subject to certain adjustments, the maximum number of shares of our common stock that may be delivered pursuant
to awards under the 2013 Plan is currently 33,919,737 shares, 100% of which may be delivered pursuant to incentive stock options.
If the Sixth Amendment is approved, the total number of shares that may be issued pursuant to awards under the 2013 Plan will
be increased to 7,178,395 shares. The 2013 Plan also provides that no more than 10% of the shares of common stock that may be
issued pursuant to an award under the 2013 Plan may be designated as Exempt Shares (as defined in the 2013 Plan). The compensation
committee has greater flexibility to accelerate the vesting for shares designated as Exempt Shares.
Shares
to be issued may be made available from authorized but unissued shares of our common stock, shares held by the Company in its
treasury, or shares purchased by the Company on the open market or otherwise. During the term of the 2013 Plan, we will at all
times reserve and keep enough shares available to satisfy the requirements of the 2013 Plan. If an award under the 2013 Plan is
cancelled, forfeited, or expires, in whole or in part, the shares subject to such forfeited, expired, or cancelled award may again
be awarded under the 2013 Plan. In the event that previously acquired shares are delivered to us in full or partial payment of
the option price for the exercise of a stock option granted under the 2013 Plan, the number of shares available for future awards
under the 2013 Plan shall be reduced only by the net number of shares issued upon the exercise of the stock option or settlement
of an award. Awards that may be satisfied either by the issuance of common stock or by cash or other consideration shall be counted
against the maximum number of shares that may be issued under the 2013 Plan only during the period that the award is outstanding
or to the extent the award is ultimately satisfied by the issuance of shares. An award will not reduce the number of shares that
may be issued pursuant to the 2013 Plan if the settlement of the award will not require the issuance of shares, as, for example,
a stock appreciation right that can be satisfied only by the payment of cash. Only shares forfeited back to the Company; shares
cancelled on account of termination, expiration, or lapse of an award; shares surrendered in payment of the option price of an
option; or shares withheld for payment of applicable employment taxes and/or withholding obligations resulting from the exercise
of a stock option shall again be available for grants of incentive stock options under the 2013 Plan, but shall not increase the
maximum number of shares described above as the maximum number of shares that may be delivered pursuant to incentive stock options.
Administration.
The 2013 Plan may be administered by our board of directors or a committee of the board of directors consisting of two or more
members. The 2013 Plan is currently administered by the compensation committee of our board of directors. The compensation committee
will determine the persons to whom awards are to be made; determine the type, size, and terms of awards; interpret the 2013 Plan;
establish and revise rules and regulations relating to the 2013 Plan; and make any other determinations that it believes are necessary
for the administration of the 2013 Plan. To assure the viability of awards granted to participants employed in foreign countries,
the compensation committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences
in local law, tax policy, or custom. Moreover, the compensation committee may approve such supplements to, or amendments, restatements,
or alternative versions of, the 2013 Plan as the compensation committee determines is necessary or appropriate for such purposes.
Any such amendment, restatement, or alternative versions that the compensation committee approves for purposes of using the 2013
Plan in a foreign country will not affect the terms of the 2013 Plan for any other country. The compensation committee may delegate
certain duties to one or more officers of the Company as provided in the 2013 Plan.
Eligibility.
Employees (including any employee who is also a director or an officer), contractors, and outside directors of the Group whose
judgment, initiative and efforts contributed to or may be expected to contribute to the successful performance of the Group are
eligible to participate in the 2013 Plan. As of July 2, 2020, there were approximately 48 employees (including officers), in addition
to directors and external contractors, who may be eligible for awards under the 2013 Plan.
Stock
Options. For persons subject to U.S. income tax, the compensation committee may grant either incentive stock options (“ISOs”)
qualifying under Section 422 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) or nonqualified
stock options, provided that only employees of the Company and its subsidiaries (excluding subsidiaries that are not corporations)
are eligible to receive ISOs. Stock options may not be granted with an option price less than 100% of the fair market value of
a share of common stock on the date the stock option is granted. If an ISO is granted to an employee who owns or is deemed to
own more than 10% of the combined voting power of all classes of stock of the Company (or any parent or subsidiary), the option
price shall be at least 110% of the fair market value of a share of common stock on the date of grant. The compensation committee
will determine the terms of each stock option at the time of grant, including, without limitation, the methods by or forms in
which shares will be delivered to participants. The maximum term of each option, the times at which each option will be exercisable,
and provisions requiring forfeiture of unexercised options at or following termination of employment or service generally are
fixed by the compensation committee, except that the compensation committee may not grant stock options with a term exceeding
ten years, or in the case of an ISO granted to an employee who owns or is deemed to own 10% or more of the combined voting power
of all classes of our stock (or any parent or subsidiary), a term exceeding five years.
Recipients
of stock options may pay the option price (i) in cash, check, bank draft, or money order payable to the order of the Company;
(ii) by delivering to us shares of common stock (including restricted stock) already owned by the participant having a fair market
value equal to the aggregate option price and that the participant has not acquired from us within six months prior to the exercise
date; (iii) by delivering to us or our designated agent an executed irrevocable option exercise form together with irrevocable
instructions from the participant to a broker or dealer, reasonably acceptable to us, to sell certain of the shares purchased
upon the exercise of the option or to pledge such shares to the broker as collateral for a loan from the broker and to deliver
to us the amount of sale or loan proceeds necessary to pay the purchase price; or (iv) by any other form of valid consideration
that is acceptable to the compensation committee in its sole discretion.
Stock
Appreciation Rights. The compensation committee is authorized to grant stock appreciation rights (“SARs”) as a
stand-alone award, or freestanding SARs, or in conjunction with options granted under the 2013 Plan, or tandem SARs. SARs entitle
a participant to receive an amount, in cash, shares, or a combination of both, equal to the excess of the fair market value of
a share of common stock on the date of exercise over the fair market value of a share of common stock on the date of grant. The
grant price of a SAR cannot be less than 100% of the fair market value of a share of common stock on the date of grant. The compensation
committee will determine the terms of each SAR at the time of the grant, including, without limitation, the methods by or forms
in which shares will be delivered to participants. The maximum term of each SAR, the times at which each SAR will be exercisable,
and provisions requiring forfeiture of unexercised SARs at or following termination of employment or service generally are fixed
by the compensation committee, except that no freestanding SAR may have a term exceeding ten years and no tandem SAR may have
a term exceeding the term of the option granted in conjunction with the tandem SAR. The compensation committee, in its sole discretion,
may place a ceiling on the amount payable upon exercise of a SAR, but any such limitation shall be specified at the time that
the SAR is granted.
Restricted
Stock and Restricted Stock Units. The compensation committee is authorized to grant restricted stock and restricted stock
units. Restricted stock consists of shares of common stock that may not be sold, transferred, pledged, assigned, hypothecated,
encumbered, or otherwise disposed of, and that may be forfeited in the event of certain terminations of employment or service,
prior to the end of a restricted period as specified by the compensation committee. Restricted stock units are the right to receive
shares of common stock at a future date in accordance with the terms of such grant upon the attainment of certain conditions specified
by the compensation committee, which include a substantial risk of forfeiture and restrictions on their sale or other transfer
by the participant. The compensation committee determines the eligible participants to whom, and the time or times at which, grants
of restricted stock or restricted stock units will be made, the number of shares or units to be granted, the price to be paid,
if any, the time or times within which the shares covered by such grants will be subject to forfeiture, the time or times at which
the restrictions will terminate, and all other terms and conditions of the grants. Restrictions or conditions could include, but
are not limited to, the attainment of performance goals (as described below), continuous service with us, the passage of time,
or other restrictions and conditions.
Dividend
Equivalent Rights. The compensation committee is authorized to grant a dividend equivalent right to any participant either
as a component of another award or as a separate award, conferring on the participant the right to receive credits based on the
cash dividends that would have been paid on the shares of common stock specified in the grant if such shares were held by the
participant to whom the grant is made. The terms and conditions of the dividend equivalent right shall be specified by the grant.
Dividend equivalents credited to the holder of a dividend equivalent right may be paid currently or may be deemed to be reinvested
in additional shares of common stock. Any such reinvestment shall be at the fair market value at the time thereof. A dividend
equivalent right may be settled in cash, shares, or a combination thereof.
Performance
Awards. The compensation committee may grant performance awards of cash, shares of common stock, units, or rights based upon,
payable in, or otherwise related to shares of our common stock. Payment will be contingent upon achieving pre-established performance
goals (as described below) by the end of the performance period. The compensation committee will determine the length of the performance
period, the maximum payment value of an award, and the minimum performance goals required before payment will be made, so long
as such provisions are not inconsistent with the terms of the 2013 Plan, and to the extent an award is subject to Section 409A
of the Code, are in compliance with the applicable requirements of Section 409A of the Code and any applicable regulations or
guidance. In addition, to the extent we intended for Section 162(m) of the Code to apply to any Grandfathered Awards (as defined
in the Million Dollar Deduction Limit and Other Tax Matters section below), no participant has received in any calendar year Grandfathered
Awards with an aggregate value of more than five million dollars ($5,000,000), based on the fair market value of shares of our
common stock at the time such awards were granted. In certain circumstances, the compensation committee may, in its discretion,
determine that the amount payable with respect to certain performance awards will be reduced from the amount of any potential
awards. However, the compensation committee may not, in any event, increase the amount of compensation payable to an individual
upon the attainment of a performance goal intended to satisfy the requirements of Section 162(m) of the Code. With respect to
a performance award that is not intended to satisfy the requirements of Section 162(m), if the compensation committee determines,
in its sole discretion, that the established performance measures or objectives are no longer suitable because of a change in
our business, operations, corporate structure, or for other reasons that the compensation committee deemed satisfactory, the compensation
committee may modify the performance measures or objectives and/or the performance period.
Performance
Goals. Awards of restricted stock, restricted stock units, performance awards, and other awards (whether relating to cash
or shares of common stock) under the 2013 Plan may be made subject to the attainment of performance goals relating to one or more
business criteria which, where applicable, shall be within the meaning of Section 162(m) of the Code (i.e., Grandfathered Awards)
and consist of one or more or any combination of the following criteria (“Performance Criteria”): cash flow; cost;
revenues; sales; ratio of debt to debt plus equity; net borrowing, credit quality or debt ratings; profit before tax; economic
profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; gross margin; earnings
per share (whether on a pre-tax, after-tax, operational or other basis); operating earnings; capital expenditures; expenses or
expense levels; economic value added; ratio of operating earnings to capital spending or any other operating ratios; free cash
flow; net profit; net sales; net asset value per share; the accomplishment of mergers, acquisitions, dispositions, public offerings
or similar extraordinary business transactions; sales growth; price of our common stock; return on assets, equity or stockholders’
equity; market share; inventory levels, inventory turn or shrinkage; or total return to stockholders. Any Performance Criteria
may be used to measure our performance as a whole or any business unit of the Company and may be measured relative to a peer group
or index. Any Performance Criteria may include or exclude (i) extraordinary, unusual, and/or non-recurring items of gain or loss;
(ii) gains or losses on the disposition of a business; (iii) changes in tax or accounting regulations or laws; (iv) the effect
of a merger or acquisition, as identified in our quarterly and annual earnings releases; or (v) other similar occurrences. In
all other respects, Performance Criteria shall be calculated in accordance with our financial statements, under generally accepted
accounting principles, or under a methodology established by the compensation committee prior to the issuance of an award, which
is consistently applied and identified in the Company’s audited financial statements, including in footnotes, or the Compensation
Discussion and Analysis section of the Company’s annual report. However, to the extent Section 162(m) of the Code is applicable
to a Grandfathered Award, the compensation committee may not in any event increase the amount of compensation payable to an individual
upon the attainment of a Performance Goal.
Other
Awards. The compensation committee may grant other forms of awards, based upon, payable in, or otherwise related to, in whole
or in part, shares of our common stock, if the compensation committee determines that such other form of award is consistent with
the purpose and restrictions of the 2013 Plan. The terms and conditions of such other form of award shall be specified by the
grant. Such other awards may be granted for no cash consideration, for such minimum consideration as may be required by applicable
law, or for such other consideration as may be specified by the grant.
Israeli
Awards. For persons subject to the Israeli Income Tax Ordinance (the “Ordinance”), the compensation committee
is authorized to grant stock options pursuant to the terms of the Israeli Appendix. The compensation committee may grant (i) options
under Section 102 of the Ordinance (“Section 102 Options”) to employees, officers, and directors (excluding Controlling
Members, as defined below) and (ii) options under Section 3(i) of the Ordinance (“Section 3(i) Options”) to controlling
members as defined in the Ordinance (holding more than 10% of the Company’s outstanding voting shares of common stock) (the
“Controlling Members”), consultants and other service providers with no employer/employee relationship with the Group
and who are not office holders. The compensation committee may designate Section 102 Options as “Approved 102 Options,”
for which the options and shares upon exercise must be held in trust and granted through a trustee, and as “Unapproved 102
Options,” for which the options and shares upon exercise do not have to be held in trust. As described further below, the
determination of the compensation committee as to the taxation route of the incentive, the type of option, and the duration of
time the option and shares upon exercise are held in trust will determine the tax consequences to the participant. Of the Approved
102 Options, the compensation committee may grant options as “Work Income Options,” for which the options and shares
upon exercise must be held in trust for 12 months from the date of grant, or as “Capital Gain Options,” for which
the options and shares upon exercise must be held in trust for 24 months from the date of grant. If the requirements of the Approved
102 Options are not met, the options are regarded as Unapproved 102 Options. Section 3(i) Options and the shares upon exercise
may be held in trust as well, depending upon the agreement between the compensation committee, optionee, and the trustee of the
trust.
Israeli
participants can be granted other type of options under the 2013 Plan, but some of them will require a pre-ruling from the Israeli
Tax Authorities in order to be deemed Approved 102 Options. In addition, the compensation committee is authorized to grant restricted
stock and other stock incentives subject to restrictions as specified by the compensation committee. The compensation committee
may grant such incentives under (i) Section 102 of the Ordinance (“Section 102 Incentives”) to employees, officers,
and directors (excluding Controlling Members) and (ii) under Section 3(i) of the Ordinance (“Section 3(i) Incentives”)
to Controlling Members, consultants and other service providers with no employer/employee relationship with the Group and who
are not office holders.
Vesting,
Forfeiture, Assignment. The compensation committee, in its sole discretion, may determine that an award will be immediately
vested in whole or in part, or that all or any portion may not be vested until a date, or dates, subsequent to its date of grant,
or until the occurrence of one or more specified events, subject in any case to the terms of the 2013 Plan. If the compensation
committee imposes conditions upon vesting, then, except as otherwise provided below, subsequent to the date of grant, the compensation
committee may, in its sole discretion, accelerate the date on which all or any portion of the award may be vested. “Full
Value Awards” (i.e., restricted stock or restricted stock units) that constitute performance awards must vest no
earlier than one year after the date of grant, and Full Value Awards that are payable upon the completion of future services must
vest no earlier than over the three-year period commencing on the date of grant. Notwithstanding the foregoing, the compensation
committee may, in its sole discretion, accelerate the vesting or waive any applicable restriction period for such Full Value Awards,
provided that the shares of common stock subject to such awards shall be Exempt Shares, unless such acceleration or waiver occurs
by reason of the participant’s death, disability, retirement, or occurrence of a change in control. The number of Exempt
Shares is limited to 10% of the number of shares available for issuance under the 2013 Plan. For stock options granted pursuant
to the Israeli Appendix, unless otherwise provided in an award agreement, the options are subject to the following default vesting
provisions: 1/4 of the optioned shares shall vest annually over a four-year period, beginning with the first anniversary of the
date of grant.
The
compensation committee may impose on any award at the time of grant or thereafter, such additional terms and conditions as the
compensation committee determines, including, without limitation, terms requiring forfeiture of awards in the event of a participant’s
termination of service. The compensation committee will specify the circumstances on which performance awards may be forfeited
in the event of a termination of service by a participant prior to the end of a performance period or settlement of awards. Except
as otherwise determined by the compensation committee, restricted stock will be forfeited upon a participant’s termination
of service during the applicable restriction period. For stock options granted pursuant to the Israeli Appendix, unless otherwise
provided in an award agreement, the options are subject to the following forfeiture provisions: (i) upon any termination of service,
all unvested optioned shares are forfeited; (ii) upon a voluntary termination of service by a participant, vested optioned shares
terminate 30 days following the date of the termination of service; (iii) upon an involuntary termination of service by us other
than for “cause” (as defined in the Israeli Appendix), vested optioned shares terminate 60 days following the date
of the termination of service; (iv) upon a termination of service due to disability or the Participant’s retirement with
our consent, vested optioned shares terminate one year following the date of such termination of service; (v) upon a termination
of service due to death, vested optioned shares terminate two years from the date of death; and (vi) upon an involuntary termination
of service by us for “cause” (as defined in the Israeli Appendix), all optioned shares, including vested optioned
shares, terminate immediately.
Awards
granted under the 2013 Plan generally are not assignable or transferable except by will or by the laws of descent and distribution,
except that the compensation committee may, in its discretion and pursuant to the terms of an award agreement, permit transfers
of nonqualified stock options or SARs to (i) the spouse (or former spouse), children or grandchildren of the participant (“Immediate
Family Members”); (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members; (iii) a partnership
in which the only partners are (1) such Immediate Family Members and/or (2) entities which are controlled by Immediate Family
Members; (iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of the Code or any successor provision; or
(v) a split interest trust or pooled income fund described in Section 2522(c)(2) of the Code or any successor provision, provided
that (x) there shall be no consideration for any such transfer, (y) the applicable award agreement pursuant to which such award
is granted must be approved by the compensation committee and must expressly provide for such transferability and (z) subsequent
transfers of transferred awards shall be prohibited except those by will or the laws of descent and distribution.
Adjustments
Upon Changes in Capitalization. In the event that any dividend or other distribution (whether in the form of cash, common
stock, other securities, or other property), recapitalization, stock split, reverse stock split, rights offering, reorganization,
merger, consolidation, split-up, spin-off, split-off, combination, subdivision, repurchase, or exchange of shares of common stock
or other securities of the Company, issuance of warrants or other rights to purchase shares of common stock or other securities
of the Company, or other similar corporate transaction or event affects the fair value of an award, then the compensation committee
shall adjust any or all of the following so that the fair value of the award immediately after the transaction or event is equal
to the fair value of the award immediately prior to the transaction or event (i) the number of shares and type of common stock
(or the securities or property) which thereafter may be made the subject of awards; (ii) the number of shares and type of common
stock (or other securities or property) subject to outstanding awards; (iii) the number of shares and type of common stock (or
other securities or property) specified as the annual per-participant limitation under the 2013 Plan; (iv) the exercise price
of each outstanding award; (v) the amount, if any, we pay for forfeited shares in accordance with the terms of the 2013 Plan;
and (vi) the number of or exercise price of shares then subject to outstanding SARs previously granted and unexercised under the
2013 Plan to the end that the same proportion of our issued and outstanding shares common stock in each instance shall remain
subject to exercise at the same aggregate exercise price; provided however, that the number of shares of common stock (or other
securities or property) subject to any award shall always be a whole number. Notwithstanding the foregoing, no such adjustment
shall be made or authorized to the extent that such adjustment would cause the 2013 Plan or any stock option to violate Section
422 of the Code or Section 409A of the Code. All such adjustments must be made in accordance with the rules of any securities
exchange, stock market, or stock quotation system to which we are subject.
Amendment
or Discontinuance of the 2013 Plan. The board of directors may at any time and from time to time, without the consent of the
participants, alter, amend, revise, suspend, or discontinue the 2013 Plan in whole or in part, except that no amendment for which
stockholder approval is required either: (i) by any securities exchange or inter-dealer quotation system on which our common stock
is listed or traded, or (ii) in order for the 2013 Plan and incentives awarded under the 2013 Plan to continue to comply with
Sections 162(m) (but only for any Grandfathered Awards), 421, and 422 of the Code, including any successors to such Sections,
or other applicable law, shall be effective unless such amendment is approved by the requisite vote of our stockholders entitled
to vote thereon. Any amendments made shall, to the extent deemed necessary or advisable by the compensation committee, be applicable
to any outstanding awards theretofore granted under the 2013 Plan, notwithstanding any contrary provisions contained in any award
agreement. In the event of any such amendment to the 2013 Plan, the holder of any award outstanding under the 2013 Plan shall,
upon request of the compensation committee and as a condition to the exercisability thereof, execute a conforming amendment in
the form prescribed by the compensation committee to any award agreement relating thereto. Notwithstanding anything contained
in the 2013 Plan to the contrary, unless required by law, no action regarding amendment or discontinuance shall adversely affect
any rights of participants or obligations of the Company to participants with respect to any awards granted under the 2013 Plan
without the consent of the affected participant.
U.S.
Federal Income Tax Consequences- 2013 Plan
The
following is a brief summary of certain U.S. federal income tax consequences relating to the 2013 Plan, as set forth below. This
summary does not purport to address all aspects of U.S. federal income taxation and does not describe state, local, or foreign
tax consequences. This discussion is based upon provisions of the Code and the Treasury Regulations issued thereunder,
and judicial and administrative interpretations under the Code and the Treasury Regulations, all as in effect as of the date hereof,
and all of which are subject to change (possibly on a retroactive basis) or different interpretation.
Law
Affecting Deferred Compensation. In 2004, Section 409A was added to the Code to regulate all types of deferred compensation.
If the requirements of Section 409A of the Code are not satisfied, deferred compensation and earnings thereon will be subject
to tax as it vests, plus an interest charge at the underpayment rate plus 1% and a 20% penalty tax. Certain performance awards,
stock options, SARs, restricted stock units, and certain types of restricted stock are subject to Section 409A of the Code.
Incentive
Stock Options. A participant will not recognize income at the time an ISO is granted. When a participant exercises an ISO,
a participant also generally will not be required to recognize income (either as ordinary income or capital gain). However, to
the extent that the fair market value (determined as of the date of grant) of the shares with respect to which the participant’s
ISOs are exercisable for the first time during any year exceeds $100,000, the ISOs for the shares over $100,000 will be treated
as nonqualified stock options, and not ISOs, for U.S. federal tax purposes, and the participant will recognize income as if the
ISOs were nonqualified stock options. In addition to the foregoing, if the fair market value of the shares received upon exercise
of an ISO exceeds the exercise price, then the excess may be deemed a tax preference adjustment for purposes of the U.S. federal
alternative minimum tax calculation. The federal alternative minimum tax may produce significant tax repercussions depending upon
the participant’s particular tax status.
The
tax treatment of any shares acquired by exercise of an ISO will depend upon whether the participant disposes of his or her shares
prior to the later of: two years after the date the ISO was granted or one year after the shares were transferred to the participant
(referred to as, the “Holding Period”). If a participant disposes of shares acquired by exercise of an ISO after the
expiration of the Holding Period, the participant will recognize capital gain or loss equal to the difference between the amount
the participant received in the sale or exchange and the option exercise price.
If
the participant disposes of shares acquired by exercise of an ISO prior to the expiration of the Holding Period, the disposition
will be considered a “disqualifying disposition.” The participant generally will recognize taxable ordinary income
in the year of disposition equal to the excess, as of the date of exercise of the option, of the fair market value of the shares
received over the option exercise price (or, if less, the excess of the amount realized on the sale of the shares over the option
exercise price). Additionally, the participant will have long-term or short-term capital gain or loss equal to the difference
between the amount the participant received upon disposition of the shares and the option exercise price increased by the amount
of ordinary income, if any, the participant recognized.
Nonqualified
Stock Options. A participant generally will not recognize income at the time a nonqualified stock option is granted. When
a participant exercises a nonqualified stock option, the difference between the option price and any higher market value of the
shares of common stock on the date of exercise will be treated as compensation taxable as ordinary income to the participant.
The participant’s tax basis for the shares acquired under a nonqualified stock option will be equal to the option price
paid for such shares, plus any amounts included in the participant’s income as compensation. When a participant disposes
of shares acquired by exercise of a nonqualified stock option, any amount received in excess of the participant’s tax basis
for such shares will be treated as short-term or long-term capital gain, depending upon how long the participant has held the
shares. If the amount received is less than the participant’s tax basis for such shares, the loss will be treated as a short-term
or long-term capital loss, depending upon how long the participant has held the shares.
Special
Rule if Option Price is Paid for in Shares. If a participant pays the option price of a nonqualified stock option with previously-owned
shares of our common stock and the transaction is not a disqualifying disposition of shares previously acquired under an ISO,
the shares received equal to the number of shares surrendered are treated as having been received in a tax-free exchange. The
participant’s tax basis and holding period for these shares received will be equal to the participant’s tax basis
and holding period for the shares surrendered. The shares received in excess of the number of shares surrendered will be treated
as compensation taxable as ordinary income to the participant to the extent of such shares’ fair market value. The participant’s
tax basis in such shares will be equal to their fair market value on the date of exercise, and the participant’s holding
period for such shares will begin on the date of exercise.
If
the use of previously acquired shares to pay the exercise price of a nonqualified stock option constitutes a disqualifying disposition
of shares previously acquired under an ISO, the participant will have ordinary income as a result of the disqualifying disposition
in an amount equal to the excess of the fair market value of the shares surrendered, determined at the time such shares were originally
acquired on exercise of the ISO, over the aggregate option price paid for such shares. As discussed above, a disqualifying disposition
of shares previously acquired under an ISO occurs when the participant disposes of such shares before the end of the Holding Period.
The other tax results from paying the exercise price with previously-owned shares are as described above, except that the participant’s
tax basis in the shares that are treated as having been received in a tax-free exchange will be increased by the amount of ordinary
income recognized by the participant as a result of the disqualifying disposition.
Restricted
Stock. A participant who receives a grant of restricted stock generally will recognize as ordinary income the excess, if any,
of the fair market value of the shares granted as restricted stock at such time as the shares are no longer subject to forfeiture
or restrictions, over the amount paid, if any, by the participant for such shares. However, a participant who receives restricted
stock may make an election under Section 83(b) of the Code within 30 days of the date of transfer of the shares to recognize ordinary
income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard
to the restrictions on such shares) over the purchase price, if any, of such shares. If a participant does not make an election
under Section 83(b) of the Code, then the participant will recognize as ordinary income any dividends received during the restricted
period with respect to such shares. At the time of the sale of such shares, any gain or loss realized by the participant will
be treated as either short-term or long-term capital gain (or loss) depending on the holding period. For purposes of determining
any gain or loss realized, the participant’s tax basis will be the amount previously taxable as ordinary income, plus the
purchase price paid by the participant, if any, for such shares.
Stock
Appreciation Rights. Generally, a participant who receives a stand-alone SAR will not recognize taxable income at the time
the stand-alone SAR is granted, provided that the SAR is exempt from or complies with Section 409A of the Code. If an employee
receives the appreciation inherent in the SARs in cash, the cash will be taxed as ordinary income to the recipient at the time
it is received. If a recipient receives the appreciation inherent in the SARs in stock, the spread between the then current market
value and the grant price, if any, will be taxed as ordinary income to the employee at the time it is received.
Other
Awards. In the case of an award of restricted stock units, performance awards, dividend equivalent rights, or other stock
or cash awards, the recipient will generally recognize ordinary income in an amount equal to any cash received and the fair market
value of any shares received on the date of payment or delivery, provided that the award is exempt from or complies with Section
409A of the Code.
U.S.
Federal Tax Withholding. Any ordinary income realized by a participant upon the exercise of an award under the 2013 Plan is
subject to withholding of U.S. federal, state, and local income tax and to withholding of the participant’s share of tax
under the Federal Insurance Contribution Act and the Federal Unemployment Tax Act. To satisfy federal income tax withholding requirements,
we will have the right to require that, as a condition to delivery of any certificate for shares of common stock or the registration
of the shares in the participant’s name, the participant remit to us an amount sufficient to satisfy the withholding requirements.
Such payment may be made by (i) the delivery of cash to us in an amount that equals or exceeds (to avoid the issuance of fractional
shares under (iii) below) the required tax withholding payment; (ii) if we, in our sole discretion, so consent in writing, the
actual delivery by the participant to us of shares of common stock that the participant has not acquired from us within six months
prior to the date of exercise, which shares so delivered have an aggregate fair market value that equals or exceeds (to avoid
the issuance of fractional shares under (iii) below) the required tax withholding payment; (iii) if we, in our sole discretion,
so consent in writing, our withholding of a number of shares to be delivered upon the exercise of a stock option, which shares
so withheld have an aggregate fair market value that equals (but does not exceed) the required tax withholding payment; or (iv)
any combination of (i), (ii), or (iii). We also may, in our sole discretion, withhold any such taxes from any other cash remuneration
otherwise paid by us to the participant.
Withholding
does not represent an increase in the participant’s total income tax obligation, since it is fully credited toward his or
her tax liability for the year. Additionally, withholding does not affect the participant’s tax basis in the shares. Compensation
income realized and tax withheld will be reflected on Forms W-2 supplied by us to employees by January 31 of the succeeding year.
Deferred compensation that is subject to Section 409A of the Code will be subject to certain federal income tax withholding and
reporting requirements.
Tax
Consequences to the Company. To the extent that a participant recognizes ordinary income in the circumstances described above,
we will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness,
is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section
280G of the Code, and is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m) of
the Code.
Million
Dollar Deduction Limit and Other Tax Matters. We may not deduct compensation of more than $1,000,000 that is paid to “covered
employees” (as defined in Section 162(m) of the Code), which include (i) an individual (or, in certain circumstances, his
or her beneficiaries) who, at any time during the taxable year, is either our principal executive officer or principal financial
officer; (ii) an individual who is among our three highest compensated officers for the taxable year (other than an individual
who was either our principal executive officer or principal financial officer at any time during the taxable year); or (iii) anyone
who was a covered employee for purposes of Section 162(m) of the Code for any tax year beginning on or after January 1, 2017.
This limitation on deductions may not apply to certain types of compensation, such as qualified performance-based compensation
that is payable pursuant to a written, binding contract that was in effect as of November 2, 2017 (each, a “Grandfathered
Award”), so long as the contract is not materially modified after that date. To the extent that compensation is payable
pursuant to a Grandfathered Award, and if we determine that Section 162(m) of the Code will apply to such Grandfathered Award,
the Company intends to interpret and operate the 2013 Plan so that the terms of the Grandfathered Award will not be materially
modified and will be constructed so as to constitute qualified performance-based compensation and, as such, will be exempt from
the $1,000,000 limitation on deductible compensation.
If
an individual’s rights under the 2013 Plan are accelerated as a result of a change in control and the individual is a “disqualified
individual” under Section 280G of the Code, the value of any such accelerated rights received by such individual may be
included in determining whether or not such individual has received an “excess parachute payment” under Section 280G
of the Code, which could result in (i) the imposition of a 20% federal excise tax (in addition to federal income tax) payable
by the individual on the value of such accelerated rights; and (ii) the loss by us of a compensation deduction.
Israeli
Income Tax Consequences- 2013 Plan
The
following description of the primary Israel income tax consequences of certain awards that may be granted under the Israeli Appendix
of the 2013 Plan is general and does not purport to be complete.
Pursuant
to the current version of Section 102 of the Ordinance, which came into effect on January 1, 2003, options and other rights to
purchase shares (together “Options”) may be granted through a trustee (i.e., 102 Trustee Options) or not through
a trustee (i.e., 102 Non-Trustee Options). Options granted through a trustee and held in trust are made either through
the capital gains tax track (i.e., Capital Gains Options) or the ordinary income tax track (i.e., Ordinary Income
Options). Capital Gains Options and Ordinary Income Options can be granted only through a trustee. The following is a brief discussion
of the certain tax consequences applicable to both types of Section 102 Options and Section 3(i) Options.
Grant
Through a Trustee. Under the capital gains tax track, the Capital Gains Options and the underlying shares have to be held
in trust for at least 24 months from the date of grant of the options. Any gain made on the sale of shares following the 24-month
period is subject to capital gains tax at a current rate of 25%; the amount of gain is the difference between the sales proceeds
from the sale of shares and the exercise price paid for such shares, adjusted as of their payment until the date of sale. However,
in the event that the exercise price of the options is less than the average fair market value of our common stock during the
30-day period prior to the date of grant, a portion of the gain will be deemed ordinary income, taxable at the personal marginal
tax rate of the participant. The payment of such tax is made at the time of sale or the transfer of the Capital Gains Options
from the trustee to the beneficiary. If the Capital Gains Options or the underlying shares of such options are sold by the trustee
or transferred from the trustee to the beneficiary before the end of the 24-month period, any resulting income (cash or equivalent)
is taxed as ordinary income. If the options have not been exercised and transferred from the trustee to the beneficiary, the taxable
amount of income is the value of the options. If the options have been exercised, the taxable amount of income is the difference
between the sales proceeds or the aggregate fair market value of the shares at the time of transfer and the aggregate exercise
price paid for such shares. In the event that restricted stock is issued through the capital gains tax track and held with a trustee,
the above tax treatment will apply with the required changes (e.g., no exercise price etc.)
Under
the ordinary income tax track, the Ordinary Income Options and the underlying shares have to be held in trust for at least 12
months from their date of grant of the options. Any gain made on the sale of shares is subject to ordinary income tax at the personal
marginal tax rate of the respective participant; the amount of gain is the difference between the sales proceeds from the sale
of shares and the exercise price paid for such shares, adjusted as of their payment until the date of sale. Ordinary Income Options
are not taxed on their date of grant, but rather when the options or the underlying shares of such options are sold by the trustee
or transferred from the trustee to the beneficiary. At such time, if the options have not been exercised, the taxable amount of
income is the value of the options. If the options have been exercised, the taxable amount of income is the difference between
the sales proceeds or the aggregate fair market value of the shares at the time of transfer and the aggregate exercise price paid
for such shares, adjusted as of their payment until the date of sale. In the event that restricted stock is issued under Section
102 of the Ordinance through the ordinary income tax track and held with a trustee, the above tax treatment will apply with the
required changes (e.g., no exercise price etc.).
A
corporate tax deduction is available for the employer in the tax year in which tax is withheld. The deductible amount is equal
to any amount included by a participant as ordinary income, except when a participant is granted Capital Gains Options and such
options or underlying shares are sold by the trustee or transferred from the trustee to the beneficiary before the end of the
applicable 24-month period. In such event, any resulting income to the participant is deemed to be ordinary income for tax purposes,
but there might not be corresponding corporate tax deduction available to the employer.
Grant
Not Through a Trustee. In the case of options not made through a trustee, if the options are non-marketable securities, the
option will not be subject to tax at the date of grant of the option or the exercise of the option. However, ordinary income tax
will be payable upon the sale of the shares acquired upon exercise of the option. The taxable amount will be the sales proceeds
less the aggregate exercise price paid by the participant, adjusted as of their payment until the date of sale. If the options
are marketable securities or the equity issued by the Company is shares, then the value of the options or shares is treated as
ordinary income, and subject to tax at the date of grant. There is no tax upon the exercise of the option. However, capital gains
tax will be payable on the sale of the shares. The taxable amount will be the sales proceeds, less the value that was taxed at
the date of grant and the aggregate exercise price paid by the participant. In the event that restricted stock is issued under
Section 102 of the Ordinance not through a trustee, then the value of the restricted stock is treated as ordinary income and subject
to tax at the date of grant. However, capital gains tax will be payable on the sale of the restricted stock. The taxable amount
will be the sales proceeds, less the value that was taxed at the date of grant and the aggregate purchase price paid by the participant,
if any.
Grant
of Section 3(i) Options. Options to purchase shares under Section 3(i) of the Ordinance may be granted to Controlling Members,
consultants, service providers and controlling stockholders (which are excluded from the term employees under Section 102 of the
Ordinance). The difference between the fair market value of the shares at the time of exercise and the exercise price is taxed
at the ordinary income tax rate. Any gain above such value at the time of sale of the shares is taxed at the capital gains tax
rate. Restricted stock cannot be issued under Section 3(i).
Interest
of Directors and Executive Officers.
All
members of our board of directors and all of our executive officers are eligible for awards under the 2013 Plan and, thus, have
a personal interest in the approval of the Sixth Amendment.
New
Plan Benefits
With
respect to the increased number of shares reserved under the 2013 Plan pursuant to the Sixth Amendment, we cannot currently determine
the benefits or number of shares subject to awards that may be granted in the future to eligible participants under the 2013 Plan
because the grant of awards and terms of such awards are to be determined in the sole discretion of the compensation committee.
The
market value of our common stock is $0.4571 per share based on the closing price of our common stock on July 1, 2020.
Vote
Required
Pursuant
to Section 711 of the NYSE American Company Guide, the Incentive Plan Proposal (Proposal 2) must be approved by a majority of
the votes cast on such proposal with abstentions counting as votes cast. Therefore, the affirmative vote of the holders of a majority
of the shares of our voting securities represented in person or by proxy at the Special Meeting entitled to vote on such proposal
that cast a vote for, against or abstain from such proposal is required for the approval of the Incentive Plan Proposal (Proposal
2).
Board
Recommendation:
The
board of directors recommends a vote FOR the approval of the Incentive Plan Proposal (Proposal 2).
|
PROPOSAL
3: APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Under
the Authorized Share Capital Proposal (Proposal 3) at the Annual Meeting, our board of directors is seeking the approval of our
stockholders of an amendment to our Certificate of Incorporation (the “Certificate Amendment”) to increase the number
of authorized shares of common stock from 150,000,000 to 300,000,000. The Certificate Amendment will not change the number of
authorized shares of preferred stock, which currently consists of 5,000,000 shares of preferred stock. The full text of the proposed
Certificate Amendment is attached to this Proxy Statement as Annex C.
The
additional shares of common stock authorized for issuance under the Certificate Amendment would be a part of the existing class
of common stock and, if and when issued, would have the same rights and privileges as the common stock presently issued and outstanding.
Our common stock has no preemptive rights to purchase common stock or other securities.
If
the Authorized Share Capital Proposal is approved by the requisite vote of the stockholders, the proposed Certificate Amendment
will become effective upon the filing and recording of it with the Secretary of State of Delaware.
Reasons
for the Increase in the Number of Authorized Shares
The
proposed increase in the authorized number of shares of common stock is intended to ensure that we will continue to have an adequate
number of authorized and unissued shares of common stock for future use. Of the 150,000,000 shares of our common stock currently
authorized, as of the close of business on July 1, 2020, there were 33,358,994 shares of common stock outstanding. In addition
to the shares of common stock outstanding on July 1, 2020, we had an aggregate of 678,395 shares of common stock, of which 194,904
have been allocated to outstanding awards, reserved for future issuance under our equity compensation plans. In addition, we have
reserved 29,202,685 shares of common stock for issuance upon conversion or exercise of currently outstanding preferred shares,
prefunded warrants, options and warrants, which leaves only 87,438,321 authorized and unissued shares of common stock that remain
available for issuance (including 483,491 shares of common stock authorized and unallocated to existing grants under our 2013
Plan). As a result of the foregoing, our authorized shares of common stock available for future issuance in connection with potential
financing transactions, business expansion opportunities, grants pursuant to equity compensation plans and other general corporate
purposes will be limited if the Certificate Amendment is not approved by our stockholders.
Our
board of directors is recommending the proposed increase in the authorized number of shares of common stock for the primary purpose
of providing the Company with appropriate flexibility to issue shares in the future on a timely basis in the event that the board
of directors determines that it is necessary or appropriate to (i) raise additional capital through the sale of equity securities,
(ii) enter into strategic business transactions, (iii) provide equity incentives to directors, officers and employees pursuant
to equity compensation plans or (iv) further other corporate purposes. The availability of additional shares of common stock is
particularly important in the event that the board of directors needs to undertake any of the foregoing actions on an expedited
basis, as market conditions permit and favorable financing and business opportunities become available, and thus without the potential
delay and expense associated with convening a special stockholders’ meeting. As such, in considering and planning for our
current and future corporate needs, our board of directors believes that the current number of authorized and unreserved shares
of common stock available for issuance is inadequate.
Effects
of the Increase in the Number of Authorized Shares
If
our stockholders approve this proposal to increase the number of authorized shares of common stock, unless otherwise required
by applicable law or stock exchange rules, our board of directors will be able to issue the additional shares of common stock
from time to time in its discretion without further action or authorization by stockholders. The newly authorized shares of common
stock would be issuable for any proper corporate purposes, including future capital raising transactions of equity or convertible
debt securities, acquisitions, investment opportunities, the establishment of collaborations or other strategic agreements, stock
splits, stock dividends, issuance under current or future equity incentive plans or for other corporate purposes.
The
proposed increase in the number of authorized shares of common stock will not, by itself, have an immediate dilutive effect on
our current stockholders. However, the future issuance of additional shares of common stock or securities convertible into our
common stock could, depending on the circumstances, have a dilutive effect on the earnings per share, book value per share, voting
power and percentage interest of our existing stockholders, none of whom have preemptive rights to subscribe for additional shares
of common stock that we may issue.
Potential
Anti-Takeover Effect
An
increase in the number of authorized shares of common stock may also, under certain circumstances, be construed as having an anti-takeover
effect. Although not designed or intended for such purposes, the effect of the proposed increase might be to render more difficult
or to discourage a merger, tender offer, proxy contest or change in control of us and the removal of management, which stockholders
might otherwise deem favorable. For example, the authority of our board of directors to issue common stock might be used to create
voting impediments or to frustrate an attempt by another person or entity to effect a takeover or otherwise gain control of us
because the issuance of additional shares of common stock would dilute the voting power of the common stock and preferred stock
then outstanding. Our common stock could also be issued to purchasers who would support our board of directors in opposing a takeover
bid which our board determines not to be in our best interests and those of our stockholders.
In
addition to the proposed Certificate Amendment, our Certificate of Incorporation and amended and restated bylaws also include
other provisions that may have an anti-takeover effect. These provisions, among other things, permit our board to issue preferred
stock with rights senior to those of the common stock without any further vote or action by the stockholders, provide that special
meetings of stockholders may only be called by our board of directors, and do not provide for cumulative voting rights, which
could make it more difficult for stockholders to effect certain corporation actions and may delay or discourage a change in control.
The
board of directors is not presently aware of any attempt, or contemplated attempt, to acquire control of the Company and the proposed
Certificate Amendment to increase the number of authorized shares of common stock is not part of any plan by our board of directors
to recommend or implement a series of anti-takeover measures.
Vote
Required
The
affirmative vote of the holders of a majority of the shares of our issued and outstanding common stock is required for the approval
of the Certificate Amendment to increase the number of authorized shares of common stock.
Board
Recommendation
The
board of directors recommends a vote FOR the approval of the Certificate Amendment under the Authorized Share Capital
Proposal.
|
PROPOSAL
4: RATIFICATION OF RE-APPOINTMENT OF KESSELMAN & KESSELMAN, CERTIFIED PUBLIC ACCOUNTANTS,
A MEMBER OF PRICEWATERHOUSECOOPERS INTERNATIONAL LIMITED, AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
audit committee of our board of directors has re-appointed Kesselman & Kesselman, Certified Public Accountants, a member of
PricewaterhouseCoopers International Limited (“Kesselman”), a member of PricewaterhouseCoopers International Limited,
as the independent registered public accounting firm for the year ending December 31, 2020, subject to stockholder ratification
pursuant to the Auditor Reappointment Proposal (Proposal 4) at the Annual Meeting.
Kesselman
served as our independent registered public accounting firm for the years ended December 31, 2019 and 2018. Representatives of
Kesselman will not be present at the Annual Meeting, will not have the opportunity to make a statement if they so desire and will
not be available to respond to appropriate questions.
The
fees billed for professional services provided to us by Kesselman for the years ended December 31, 2019 and 2018 are described
below.
Audit
Fees
Kesselman
billed us audit fees in aggregate amounts of $160,000 and $161,500 for the years ended December 31, 2019 and 2018, respectively.
These fees relate to the audit of our annual financial statements and the review of our interim quarterly financial statements.
Audit-Related
Fees
Kesselman
billed us audit-related fees in aggregate amounts of $60,000 and $89,300 for the years ended December 31, 2019 and 2018, respectively.
The fees for the year ended December 31, 2019 mostly related to our prospectus supplements filed with the SEC in April 2019 and
to our registration statement on Form S-1 filed with the SEC in August and September of 2019.
The
fees for the year ended December 31, 2018 mostly related to our prospectus supplements and registration statements filed with
the SEC in March, April and July of 2018.
Tax
Fees
Kesselman
billed us tax fees in aggregate amounts of $38,675 and $39,200 for the years ended December 31, 2019 and 2018, respectively. These
fees relate to professional services rendered for tax compliance, tax advice and tax planning.
All
Other Fees
Kesselman
did not bill us for any other fees for the years ended December 31, 2019 and 2018.
Pre-Approval
of Independent Registered Public Accounting Firm Fees and Services Policy
Our
audit committee pre-approves all auditing services, internal control-related services and permitted non-audit services (including
the fees and terms thereof) to be performed for us by our independent auditor, except for de minimis non-audit services that are
approved by the audit committee prior to the completion of the audit. The audit committee may form and delegate authority to subcommittees
consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit
services, provided that decisions of such subcommittee to grant pre-approvals is presented to the full audit committee at its
next scheduled meeting. The Audit Committee pre-approved all of the fees set forth above.
Approval
of Independent Registered Public Accounting Firm Services and Fees
The
board of directors requests that stockholders ratify the re-appointment of Kesselman as the independent registered public accounting
firm to conduct the audit of our financial statements for the year ending December 31, 2020. In the event that the stockholders
fail to ratify the selection, the audit committee will reconsider whether or not to continue to retain that firm. Even if the
selection is ratified, the audit committee, in its discretion, may direct the appointment of a different independent registered
public accounting firm at any time during the fiscal year if the audit committee determines that such a change could be in the
best interest of our stockholders.
Vote
Required
The
affirmative vote of the holders of a majority of the shares of our voting securities represented in person or by proxy at the
Annual Meeting entitled to vote on such proposal that vote for or against such proposal is required to adopt the proposal to ratify
the re-appointment of Kesselman as our independent registered public accounting firm for the year ending December 31, 2020.
Board
Recommendation
The
board of directors recommends a vote FOR the ratification of the re-appointment of Kesselman
& Kesselman, Certified Public Accountants, a member of PricewaterhouseCoopers International Limited, pursuant to the Auditor
Reappointment Proposal at the Meeting.
OTHER
BUSINESS
The
board of directors knows of no other business to be brought before the Annual Meeting. If, however, any other business should
properly come before the Annual Meeting, the persons named in the accompanying proxy will vote the proxy in accordance with applicable
law and as they may deem appropriate in their discretion, unless directed by the proxy to do otherwise.
SUBMISSION
OF FUTURE STOCKHOLDER PROPOSALS
Pursuant
to rules of the SEC, a stockholder who intends to present a proposal at our next annual meeting of stockholders and who wishes
the proposal to be included in the proxy statement for that meeting must submit the proposal to us in writing to the attention
of the Secretary at InspireMD, Inc., 4 Menorat Hamaor St., Tel Aviv, Israel 6744832. The proposal must be received no later than
March 21, 2021, after which date such stockholder proposal will be considered untimely. In the event that the date of the 2021
annual meeting has been changed more than 30 days from the one year anniversary of the date of the 2020 annual meeting, then the
deadline for receipt of a proposal by a stockholder is within a reasonable time before we begin to print and send our proxy materials,
in order to be eligible for inclusion in our proxy statement relating to that 2021 meeting. Stockholders wishing to submit nominations
of persons for election to the board of directors or proposals of business to be presented directly at the annual meeting instead
of for inclusion in next year’s proxy statement must follow the submission criteria and deadlines set forth in our amended
and restated bylaws. To be timely in connection with our next annual meeting, such a stockholder nomination or proposal must be
received by our Secretary at our principal executive offices between May 3, 2021 and June 2, 2021.
A
copy of InspireMD, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, is available without charge
(except for exhibits, which are available upon payment of a reasonable fee) upon written request to InspireMD, Inc., 4 Menorat
Hamaor St., Tel Aviv, Israel 6744832.
Annex
A
SIXTH
AMENDMENT TO THE
INSPIREMD,
INC. 2013 LONG-TERM INCENTIVE PLAN
This
SIXTH AMENDMENT TO THE INSPIREMD, INC. 2013 LONG-TERM INCENTIVE PLAN (this “Amendment”), dated as of
[●], 2020 (the “Effective Date”) is made and entered into by InspireMD, Inc., a Delaware corporation
(the “Company”). Terms used in this Amendment with initial capital letters that are not otherwise defined
herein shall have the meanings ascribed to such terms in the InspireMD, Inc. 2013 Long-Term Incentive Plan, as amended (the “Plan”).
RECITALS
WHEREAS,
Article 9 of the Plan provides that the Company’s Board of Directors (the “Board”) may amend the
Plan at any time and from time to time;
WHEREAS,
the Company previously reserved a total of nine million seven hundred thousand (9,700,000) shares of common stock of the Company,
par value $0.0001 (“Common Stock”), to be delivered pursuant to awards under the Plan;
WHEREAS,
on October 1, 2015, the Company effected a one-for-ten reverse stock split such that, after giving effect to the reverse stock
split, there were nine hundred seventy thousand (970,000) shares of Common Stock reserved for issuance under the Plan;
WHEREAS,
on April 18, 2016, the Board and, on May 24, 2016, at the Company’s 2016 annual meeting of stockholders, the stockholders,
approved an amendment to the Plan to increase the number of shares of Common Stock available for issuance pursuant to awards under
the Plan by ten million (10,000,000) shares, to a total of ten million nine hundred seventy thousand (10,970,000) shares of Common
Stock;
WHEREAS,
on August 4, 2016, the Board and, on September 28, 2016, at the Company’s special meeting of stockholders, the stockholders,
approved an amendment to the Plan to increase the number of shares of Common Stock available for issuance under the Plan by six
million three hundred thousand (6,300,000) shares, to a total of seventeen million two hundred seventy thousand (17,270,000) shares
of Common Stock;
WHEREAS,
on October 7, 2016, the Company effected a 1-for-25 reverse stock split such that, after giving effect to the reverse stock split,
there were six hundred ninety thousand eight hundred (690,800) shares of Common Stock reserved for issuance pursuant to awards
under the Plan;
WHEREAS,
on February 7, 2018, the Company effected a 1-for-35 reverse stock split such that, after giving effect to the reverse stock split,
there were nineteen thousand seven hundred thirty-seven (19,737) shares of Common Stock reserved for issuance pursuant to awards
under the Plan;
WHEREAS,
on May 23, 2018, the Board and, on October 24, 2018, at the Company’s 2018 annual meeting of stockholders, the stockholders,
approved an amendment to the Plan to increase the number of shares of Common Stock available for issuance under the Plan by eight
million nine hundred thousand (8,900,000) shares, to a total of eight million nine hundred nineteen thousand seven hundred thirty-seven
(8,919,737) shares of Common Stock;
WHEREAS,
on February 4, 2019, the Board and, on March 21, 2019, at the Company’s 2019 annual meeting of stockholders, the stockholders,
approved an amendment to the Plan to increase the number of shares of Common Stock available for issuance under the Plan by five
hundred thousand (500,000) shares, to a total of six hundred and seventy eight thousand, three hundred and ninety five (678,395)
shares of Common Stock;
WHEREAS,
the Board desires to amend the Plan to increase the number of shares of Common Stock that may be delivered pursuant to awards
under the Plan by an additional 6,500,000 shares, for an aggregate maximum total of 7,178,395 shares of Common Stock available
for issuance under the Plan; and
WHEREAS,
the Board intends to submit this Amendment to the Company’s stockholders for their approval.
NOW,
THEREFORE, in accordance with Article 9 of the Plan and subject to stockholder approval, the Plan is hereby amended, effective
as of the date hereof, as follows:
1.
Section 5.1 of the Plan is hereby amended by deleting said section in its entirety and substituting in lieu thereof the following
new Section 5.1:
5.1 Number
Available for Awards. Subject to adjustment as provided in Articles 11 and 12, the maximum number of shares
of Common Stock that may be delivered pursuant to Awards granted under the Plan is 7,178,395 shares, of which one hundred
percent (100%) may be delivered pursuant to Incentive Stock Options. Shares to be issued may be made available from
authorized but unissued Common Stock, Common Stock held by the Company in its treasury, or Common Stock purchased by the
Company on the open market or otherwise. During the term of this Plan, the Company will at all times reserve and keep
available the number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan.
2.
Except as expressly amended by this Amendment, the Plan shall continue in full force and effect in accordance with the provisions
thereof, and all awards granted under the Plan prior to the Effective Date shall continue to be governed pursuant to the terms
of the Plan as in effect immediately prior to the Effective Date.
[Remainder
of Page Intentionally Left Blank;
Signature
Page Follows.]
IN
WITNESS WHEREOF, the Company has caused this Amendment to be duly executed as of the date first written above.
|
INSPIREMD,
INC.
|
|
|
|
|
By:
|
|
|
Name:
|
Craig
Shore
|
|
Title:
|
Chief
Financial Officer, Chief Administrative Officer, Treasurer and Secretary
|
Annex
B
INSPIREMD,
INC.
2013
LONG-TERM INCENTIVE PLAN
[in
the form originally adopted, excluding any amendments to date]
The
InspireMD, Inc. 2013 Long-Term Incentive Plan (the “Plan”) was adopted by the Board of Directors of
InspireMD, Inc., a Delaware corporation (the “Company”), effective as of October 25, 2013, subject to
approval by the Company’s stockholders.
ARTICLE
1
PURPOSE
The
purpose of the Plan is to attract and retain the services of key Employees, key Contractors, and Outside Directors of the Company
and its Subsidiaries (together, the “Group”) and to provide such persons with a proprietary interest
in the Company through the granting of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Awards, Dividend Equivalent Rights, and Other Awards, whether granted singly, or in
combination, or in tandem, that will:
(a)
increase the interest of such persons in the Group’s welfare;
(b)
furnish an incentive to such persons to continue their services for the Company or its Subsidiaries; and
(c)
provide a means through which the Group may attract able persons as Employees, Contractors, and Outside Directors.
This
Plan is intended serve as an “umbrella” plan for the Company and the entire Group worldwide. Therefore, if so required,
appendices may be added to the Plan for the various international Subsidiaries in order to accommodate local regulations that
do not correspond to the scope of the Plan, at the discretion of the Board. Any such appendices that the Company approves for
purposes of using this Plan for an international Subsidiary will not affect the terms of this Plan for any other country.
Attached
hereto as Appendix A is the InspireMD, Inc. 2013 Employee Stock Incentive Plan (the “Israeli Plan”),
designated for the purpose of making grants pursuant to Sections 102 and 3(i) of the Israeli Income Tax Ordinance (New Version),
1961 to Israeli employees and officers of the Group and any other service providers or control holders of the Company who are
subject to Israeli Income Tax.
With
respect to Reporting Participants, the Plan and all transactions under the Plan are intended to comply with all applicable conditions
of Rule 16b-3 promulgated under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to
so comply, such provision or action shall be deemed null and void ab initio, to the extent permitted by law and deemed
advisable by the Committee.
ARTICLE
2
DEFINITIONS
For
the purpose of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:
2.1
“Applicable Law” means all legal requirements relating to the administration of equity incentive plans
and the issuance and distribution of shares of Common Stock, if any, under applicable corporate laws, applicable securities laws,
the rules of any exchange or inter-dealer quotation system upon which the Company’s securities are listed or quoted, the
rules of any foreign jurisdiction applicable to Incentives granted to residents therein, and any other applicable law, rule or
restriction.
2.2
“Award” means the grant of any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock,
SAR, Restricted Stock Units, Performance Award, Dividend Equivalent Right or Other Award, whether granted singly or in combination
or in tandem (each individually referred to herein as an “Incentive”).
2.3
“Award Agreement” means a written agreement between a Participant and the Company which sets out the
terms of the grant of an Award.
2.4
“Award Period” means the period set forth in the Award Agreement during which one or more Incentives
granted under an Award may be exercised.
2.5
“Board” means the board of directors of the Company.
2.6
“Change in Control” means any of the following, except as otherwise provided herein: (i) any consolidation,
merger or share exchange of the Company in which the Company is not the continuing or surviving corporation or pursuant to which
shares of the Company’s Common Stock would be converted into cash, securities or other property, other than a consolidation,
merger or share exchange of the Company in which the holders of the Company’s Common Stock immediately prior to such transaction
have the same proportionate ownership of Common Stock of the surviving corporation immediately after such transaction; (ii) any
sale, lease, exchange or other transfer (excluding transfer by way of pledge or hypothecation) in one transaction or a series
of related transactions, of all or substantially all of the assets of the Company; (iii) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company; (iv) the cessation of control (by virtue of their not
constituting a majority of directors) of the Board by the individuals (the “Continuing Directors”) who
(x) at the date of this Plan were directors or (y) become directors after the date of this Plan and whose election or nomination
for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3rds) of the directors
then in office who were directors at the date of this Plan or whose election or nomination for election was previously so approved;
(v) the acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of an aggregate of fifty
percent (50%) or more of the voting power of the Company’s outstanding voting securities by any person or group (as such
term is used in Rule 13d-5 under the Exchange Act) who beneficially owned less than fifty percent (50%) of the voting power of
the Company’s outstanding voting securities on the date of this Plan; provided, however, that notwithstanding
the foregoing, an acquisition shall not constitute a Change in Control hereunder if the acquirer is (x) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company and acting in such capacity, (y) a Subsidiary of the Company
or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their
ownership of voting securities of the Company or (z) any other person whose acquisition of shares of voting securities is approved
in advance by a majority of the Continuing Directors; or (vi) in a Title 11 bankruptcy proceeding, the appointment of a trustee
or the conversion of a case involving the Company to a case under Chapter 7.
Notwithstanding
the foregoing provisions of this Section 2.6, if an Award issued under the Plan is subject to Section 409A of the
Code, then an event shall not constitute a Change in Control for purposes of such Award under the Plan unless such event also
constitutes a change in the Company’s ownership, its effective control or the ownership of a substantial portion of its
assets within the meaning of Section 409A of the Code.
2.7
“Code” means the United States Internal Revenue Code of 1986, as amended.
2.8
“Committee” means the committee appointed or designated by the Board to administer the Plan in accordance
with Article 3 of this Plan.
2.9
“Common Stock” means the common stock, par value $0.0001 per share, which the Company is currently authorized
to issue or may in the future be authorized to issue, or any securities into which or for which the common stock of the Company
may be converted or exchanged, as the case may be, pursuant to the terms of this Plan.
2.10
“Company” means InspireMD, Inc., a Delaware corporation, and any successor entity.
2.11
“Contractor” means any natural person, who is not an Employee, rendering bona fide services
to the Company or a Subsidiary, with compensation, pursuant to a written independent contractor agreement between such person
(or any entity employing such person) and the Company or a Subsidiary, provided that such services are not rendered in connection
with the offer or sale of securities in a capital raising transaction and do not directly or indirectly promote or maintain a
market for the Company’s securities.
2.12
“Corporation” means any entity that (i) is defined as a corporation under Section 7701 of the Code and
(ii) is the Company or is in an unbroken chain of corporations (other than the Company) beginning with the Company, if each of
the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined
voting power of all classes of stock in one of the other corporations in the chain. For purposes of clause (ii) hereof, an entity
shall be treated as a “corporation” if it satisfies the definition of a corporation under Section 7701 of the Code.
2.13
“Date of Grant” means the effective date on which an Award is made to a Participant as set forth in
the applicable Award Agreement; provided, however, that solely for purposes of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder, the Date of Grant of an Award shall be the date of stockholder approval of the Plan if such
date is later than the effective date of such Award as set forth in the Award Agreement.
2.14
“Dividend Equivalent Right” means the right of the holder thereof to receive credits based on the cash
dividends that would have been paid on the shares of Common Stock specified in the Award if such shares were held by the Participant
to whom the Award is made.
2.15
“Employee” means a common law employee (as defined in accordance with the Regulations and Revenue Rulings
then applicable under Section 3401(c) of the Code) of the Company or any Subsidiary of the Company; provided, however,
in the case of individuals whose employment status, by virtue of their employer or residence, is not determined under Section
3401(c) of the Code, “Employee” shall mean an individual treated as an employee for local payroll tax or employment
purposes by the applicable employer under Applicable Law for the relevant period.
2.16
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
2.17
“Executive Officer” means an officer of the Company or a Subsidiary subject to Section 16 of the Exchange
Act or a “covered employee” as defined in Section 162(m)(3) of the Code.
2.18
“Fair Market Value” means, as of a particular date, (a) if the shares of Common Stock are listed on
any established national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction
reporting system for the principal securities exchange for the Common Stock on that date, or, if there shall have been no such
sale so reported on that date, on the last preceding date on which such a sale was so reported; (b) if the shares of Common Stock
are not so listed, but are quoted on an automated quotation system, the closing sales price per share of Common Stock reported
on the automated quotation system on that date, or, if there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported; (c) if the Common Stock is not so listed or quoted, the mean between the
closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on
which such quotations shall be available, as reported by the OTC Bulletin Board operated by the Financial Industry Regulation
Authority, Inc. or the OTC Markets Group Inc., formerly known as Pink OTC Markets Inc.; or (d) if none of the above is applicable,
such amount as may be determined by the Committee (acting on the advice of an Independent Third Party, should the Committee elect
in its sole discretion to utilize an Independent Third Party for this purpose), in good faith, to be the fair market value per
share of Common Stock. The determination of Fair Market Value shall, where applicable, be in compliance with Section 409A of the
Code.
2.19
“Incentive” is defined in Section 2.2 hereof.
2.20
“Incentive Stock Option” means an incentive stock option within the meaning of Section 422 of the Code,
granted pursuant to this Plan.
2.21
“Independent Third Party” means an individual or entity independent of the Company having experience
in providing investment banking or similar appraisal or valuation services and with expertise generally in the valuation of securities
or other property for purposes of this Plan. The Committee may utilize one or more Independent Third Parties.
2.22
“Nonqualified Stock Option” means a nonqualified stock option, granted pursuant to this Plan, which
is not an Incentive Stock Option.
2.23
“Option Price” means the price which must be paid by a Participant upon exercise of a Stock Option to
purchase a share of Common Stock.
2.24
“Other Award” means an Award issued pursuant to Section 6.9 hereof.
2.25
“Outside Director” means a director of the Company who is not an Employee or a Contractor.
2.26
“Participant” means an Employee or Contractor of the Company or a Subsidiary or an Outside Director
to whom an Award is granted under this Plan.
2.27
“Performance Award” means an Award hereunder of cash, shares of Common Stock, units or rights based
upon, payable in, or otherwise related to, Common Stock pursuant to Section 6.7 hereof.
2.28
“Performance Goal” means any of the goals set forth in Section 6.10 hereof.
2.29
“Plan” means this InspireMD, Inc. 2013 Long-Term Incentive Plan, as amended from time to time.
2.30
“Reporting Participant” means a Participant who is subject to the reporting requirements of Section
16 of the Exchange Act.
2.31
“Restricted Stock” means shares of Common Stock issued or transferred to a Participant pursuant to Section
6.4 of this Plan which are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.
2.32
“Restricted Stock Units” means units awarded to Participants pursuant to Section 6.6 hereof,
which are convertible into Common Stock at such time as such units are no longer subject to restrictions as established by the
Committee.
2.33
“Retirement” means any Termination of Service solely due to retirement upon or after attainment of age
sixty-five (65), or permitted early retirement as determined by the Committee; provided, however, in the
case of Participants who reside in the European Economic Area, “Retirement” shall mean any Termination of Service
as of a date they are eligible for mandatory retirement benefits under local law, without regard to age.
2.34
“SAR” or “Stock Appreciation Right” means the right to receive an amount,
in cash and/or Common Stock, equal to the excess of the Fair Market Value of a specified number of shares of Common Stock as of
the date the SAR is exercised (or, as provided in the Award Agreement, converted) over the SAR Price for such shares.
2.35
“SAR Price” means the exercise price or conversion price of each share of Common Stock covered by a
SAR, determined on the Date of Grant of the SAR.
2.36
“Stock Option” means a Nonqualified Stock Option or an Incentive Stock Option.
2.37
“Subsidiary” means (i) any corporation in an unbroken chain of corporations beginning with the Company,
if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total
combined voting power of all classes of stock in one of the other corporations in the chain, (ii) any limited partnership, if
the Company or any corporation described in item (i) above owns a majority of the general partnership interest and a majority
of the limited partnership interests entitled to vote on the removal and replacement of the general partner, and (iii) any partnership
or limited liability company, if the partners or members thereof are composed only of the Company, any corporation listed in item
(i) above or any limited partnership listed in item (ii) above. “Subsidiaries” means more than one of
any such corporations, limited partnerships, partnerships or limited liability companies.
2.38
“Termination of Service” occurs when a Participant who is (i) an Employee of the Company or any Subsidiary
ceases to serve as an Employee of the Company and its Subsidiaries, for any reason; (ii) an Outside Director of the Company or
a Subsidiary ceases to serve as a director of the Company and its Subsidiaries for any reason; or (iii) a Contractor of the Company
or a Subsidiary ceases to serve as a Contractor of the Company and its Subsidiaries for any reason. Except as may be necessary
or desirable to comply with applicable federal or state law, a “Termination of Service” shall not be deemed to have
occurred when a Participant who is an Employee becomes an Outside Director or Contractor or vice versa. If, however, a Participant
who is an Employee and who has an Incentive Stock Option ceases to be an Employee but does not suffer a Termination of Service,
and if that Participant does not exercise the Incentive Stock Option within the time required under Section 422 of the Code upon
ceasing to be an Employee, the Incentive Stock Option shall thereafter become a Nonqualified Stock Option. Notwithstanding the
foregoing provisions of this Section 2.38, in the event an Award issued under the Plan is subject to Section 409A
of the Code, then, in lieu of the foregoing definition and to the extent necessary to comply with the requirements of Section
409A of the Code, the definition of “Termination of Service” for purposes of such Award shall be the definition of
“separation from service” provided for under Section 409A of the Code and the regulations or other guidance issued
thereunder.
2.39
“Total and Permanent Disability” means a Participant is qualified for long-term disability benefits
under the Company’s or Subsidiary’s disability plan or insurance policy; or, if no such plan or policy is then in
existence or if the Participant is not eligible to participate in such plan or policy, that the Participant, because of a physical
or mental condition resulting from bodily injury, disease, or mental disorder, is unable to perform his or her duties of employment
for a period of six (6) continuous months, as determined in good faith by the Committee, based upon medical reports or other evidence
satisfactory to the Committee; provided that, with respect to any Incentive Stock Option, Total and Permanent Disability
shall have the meaning given it under the rules governing Incentive Stock Options under the Code. Notwithstanding the foregoing
provisions of this Section 2.39, in the event an Award issued under the Plan is subject to Section 409A of the Code,
then, in lieu of the foregoing definition and to the extent necessary to comply with the requirements of Section 409A of the Code,
the definition of “Total and Permanent Disability” for purposes of such Award shall be the definition of “disability”
provided for under Section 409A of the Code and the regulations or other guidance issued thereunder.
ARTICLE
3
ADMINISTRATION
3.1 General
Administration; Establishment of Committee. Subject to the terms of this Article 3, the Plan shall be administered
by the Board or such committee of the Board as is designated by the Board to administer the Plan (the “Committee”).
The Committee shall consist of not fewer than two persons. Any member of the Committee may be removed at any time, with or without
cause, by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by the
Board. At any time there is no Committee to administer the Plan, any references in this Plan to the Committee shall be deemed
to refer to the Board.
Membership
on the Committee shall be limited to those members of the Board who are “outside directors” under Section 162(m) of
the Code and “non-employee directors” as defined in Rule 16b-3 promulgated under the Exchange Act. The Committee shall
select one of its members to act as its Chairman. A majority of the Committee shall constitute a quorum, and the act of a majority
of the members of the Committee present at a meeting at which a quorum is present shall be the act of the Committee.
3.2 Designation
of Participants and Awards.
(a)
The Committee or the Board shall determine and designate from time to time the eligible persons to whom Awards will be granted
and shall set forth in each related Award Agreement, where applicable, the Award Period, the Date of Grant, and such other terms,
provisions, limitations, and performance requirements, as are approved by the Committee, but not inconsistent with the Plan. The
Committee shall determine whether an Award shall include one type of Incentive or two or more Incentives granted in combination
or two or more Incentives granted in tandem (that is, a joint grant where exercise of one Incentive results in cancellation of
all or a portion of the other Incentive). Although the members of the Committee shall be eligible to receive Awards, all decisions
with respect to any Award, and the terms and conditions thereof, to be granted under the Plan to any member of the Committee shall
be made solely and exclusively by the other members of the Committee, or if such member is the only member of the Committee, by
the Board.
(b)
Notwithstanding Section 3.2(a), to the extent permitted by Applicable Law, the Board may, in its discretion and by
a resolution adopted by the Board, authorize one or more officers of the Company (an “Authorized Officer”)
to (i) designate one or more Employees as eligible persons to whom Awards will be granted under the Plan, and (ii) determine the
number of shares of Common Stock that will be subject to such Awards; provided, however, that the resolution
of the Board granting such authority shall (x) specify the total number of shares of Common Stock that may be made subject to
the Awards, (y) set forth the price or prices (or a formula by which such price or prices may be determined) to be paid for the
purchase of the Common Stock subject to such Awards, and (z) not authorize an officer to designate himself as a recipient of any
Award.
3.3 Authority
of the Committee. The Committee, in its discretion, shall (i) interpret the Plan and Award Agreements, (ii) prescribe,
amend, and rescind any rules and regulations and sub-plans (including sub-plans for Awards made to Participants who are not resident
in the United States), as necessary or appropriate for the administration of the Plan, (iii) establish performance goals for an
Award and certify the extent of their achievement, and (iv) make such other determinations or certifications and take such other
action as it deems necessary or advisable in the administration of the Plan. Any interpretation, determination, or other action
made or taken by the Committee shall be final, binding, and conclusive on all interested parties. The Committee’s discretion
set forth herein shall not be limited by any provision of the Plan, including any provision which by its terms is applicable notwithstanding
any other provision of the Plan to the contrary.
The
Committee may delegate to officers of the Company, pursuant to a written delegation, the authority to perform specified functions
under the Plan. Any actions taken by any officers of the Company pursuant to such written delegation of authority shall be deemed
to have been taken by the Committee.
With
respect to restrictions in the Plan that are based on the requirements of Rule 16b-3 promulgated under the Exchange Act, Section
422 of the Code, Section 162(m) of the Code, the rules of any exchange or inter-dealer quotation system upon which the Company’s
securities are listed or quoted, or any other Applicable Law, to the extent that any such restrictions are no longer required
by Applicable Law, the Committee shall have the sole discretion and authority to grant Awards that are not subject to such mandated
restrictions and/or to waive any such mandated restrictions with respect to outstanding Awards.
ARTICLE
4
ELIGIBILITY
Any
Employee (including an Employee who is also a director or an officer), Contractor or Outside Director of the Company whose judgment,
initiative, and efforts contributed or may be expected to contribute to the successful performance of the Company is eligible
to participate in the Plan; provided that only Employees of a Corporation shall be eligible to receive Incentive Stock Options.
The Committee, upon its own action, may grant, but shall not be required to grant, an Award to any Employee, Contractor or Outside
Director. Awards may be granted by the Committee at any time and from time to time to new Participants, or to then Participants,
or to a greater or lesser number of Participants, and may include or exclude previous Participants, as the Committee shall determine.
Except as required by this Plan, Awards need not contain similar provisions. The Committee’s determinations under the Plan
(including without limitation determinations of which Employees, Contractors or Outside Directors, if any, are to receive Awards,
the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not
be uniform and may be made by it selectively among Participants who receive, or are eligible to receive, Awards under the Plan.
ARTICLE
5
SHARES
SUBJECT TO PLAN
5.1 Number
Available for Awards. Subject to adjustment as provided in Articles 11 and 12, the maximum number of shares
of Common Stock that may be delivered pursuant to Awards granted under the Plan is five million (5,000,000) shares, of which one
hundred percent (100%) may be delivered pursuant to Incentive Stock Options. Subject to adjustment pursuant to Articles
11 and 12, the maximum number of shares of Common Stock with respect to which Stock Options or SARs may be granted to an Executive
Officer during any calendar year is one million (1,000,000) shares of Common Stock. Shares to be issued may be made available
from authorized but unissued Common Stock, Common Stock held by the Company in its treasury, or Common Stock purchased by the
Company on the open market or otherwise. During the term of this Plan, the Company will at all times reserve and keep available
the number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan.
5.2 Reuse
of Shares. To the extent that any Award under this Plan shall be forfeited, shall expire or be canceled, in whole or
in part, then the number of shares of Common Stock covered by the Award or stock option so forfeited, expired or canceled may
again be awarded pursuant to the provisions of this Plan. In the event that previously acquired shares of Common Stock are delivered
to the Company in full or partial payment of the exercise price for the exercise of a Stock Option granted under this Plan, the
number of shares of Common Stock available for future Awards under this Plan shall be reduced only by the net number of shares
of Common Stock issued upon the exercise of the Stock Option. Awards that may be satisfied either by the issuance of shares of
Common Stock or by cash or other consideration shall be counted against the maximum number of shares of Common Stock that may
be issued under this Plan only during the period that the Award is outstanding or to the extent the Award is ultimately satisfied
by the issuance of shares of Common Stock. Awards will not reduce the number of shares of Common Stock that may be issued pursuant
to this Plan if the settlement of the Award will not require the issuance of shares of Common Stock, as, for example, a SAR that
can be satisfied only by the payment of cash. Notwithstanding any provisions of the Plan to the contrary, only shares forfeited
back to the Company, shares canceled on account of termination, expiration or lapse of an Award, shares surrendered in payment
of the exercise price of an option or shares withheld for payment of applicable employment taxes and/or withholding obligations
resulting from the exercise of an option shall again be available for grant of Incentive Stock Options under the Plan, but shall
not increase the maximum number of shares described in Section 5.1 above as the maximum number of shares of Common
Stock that may be delivered pursuant to Incentive Stock Options.
ARTICLE
6
GRANT
OF AWARDS
6.1 In
General.
(a)
The grant of an Award shall be authorized by the Committee and shall be evidenced by an Award Agreement setting forth the Incentive
or Incentives being granted, the total number of shares of Common Stock subject to the Incentive(s), the Option Price (if applicable),
the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance objectives, as are approved
by the Committee, but (i) not inconsistent with the Plan, (ii) to the extent an Award issued under the Plan is subject to Section
409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance
issued thereunder, and (iii) to the extent the Committee determines that an Award shall comply with the requirements of Section
162(m) of the Code, in compliance with the applicable requirements of Section 162(m) of the Code and the regulations and other
guidance issued thereunder. The Company shall execute an Award Agreement with a Participant after the Committee approves the issuance
of an Award. Any Award granted pursuant to this Plan must be granted within ten (10) years of the date of adoption of this Plan
by the Board. The Plan shall be submitted to the Company’s stockholders for approval; however, the Committee may grant Awards
under the Plan prior to the time of stockholder approval. Any such Award granted prior to such stockholder approval shall be made
subject to such stockholder approval. The grant of an Award to a Participant shall not be deemed either to entitle the Participant
to, or to disqualify the Participant from, receipt of any other Award under the Plan.
(b)
If the Committee establishes a purchase price for an Award, the Participant must accept such Award within a period of thirty (30)
days (or such shorter period as the Committee may specify) after the Date of Grant by executing the applicable Award Agreement
and paying such purchase price.
(c)
Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide for interest equivalents
to be credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and
conditions as may be specified by the grant.
6.2 Option
Price. The Option Price for any share of Common Stock which may be purchased under a Nonqualified Stock Option for any
share of Common Stock may be equal to or greater than the Fair Market Value of the share on the Date of Grant. The Option Price
for any share of Common Stock which may be purchased under an Incentive Stock Option must be at least equal to the Fair Market
Value of the share on the Date of Grant; if an Incentive Stock Option is granted to an Employee who owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all
classes of stock of the Company (or any parent or Subsidiary), the Option Price shall be at least one hundred ten percent (110%)
of the Fair Market Value of the Common Stock on the Date of Grant.
6.3 Maximum
ISO Grants. The Committee may not grant Incentive Stock Options under the Plan to any Employee which would permit the
aggregate Fair Market Value (determined on the Date of Grant) of the Common Stock with respect to which Incentive Stock Options
(under this and any other plan of the Company and its Subsidiaries) are exercisable for the first time by such Employee during
any calendar year to exceed $100,000. To the extent any Stock Option granted under this Plan which is designated as an Incentive
Stock Option exceeds this limit or otherwise fails to qualify as an Incentive Stock Option, such Stock Option (or any such portion
thereof) shall be a Nonqualified Stock Option. In such case, the Committee shall designate which stock will be treated as Incentive
Stock Option stock by causing the issuance of a separate stock certificate and identifying such stock as Incentive Stock Option
stock on the Company’s stock transfer records.
6.4 Restricted
Stock. If Restricted Stock is granted to or received by a Participant under an Award (including a Stock Option), the
Committee shall set forth in the related Award Agreement: (i) the number of shares of Common Stock awarded, (ii) the price, if
any, to be paid by the Participant for such Restricted Stock and the method of payment of the price, (iii) the time or times within
which such Award may be subject to forfeiture, (iv) specified Performance Goals of the Company, a Subsidiary, any division thereof
or any group of Employees of the Company, or other criteria, which the Committee determines must be met in order to remove any
restrictions (including vesting) on such Award, and (v) all other terms, limitations, restrictions, and conditions of the Restricted
Stock, which shall be consistent with this Plan, to the extent applicable and in the event the Committee determines that an Award
shall comply with the requirements of Section 162(m) of the Code, in compliance with the requirements of Section 162(m) of the
Code and the regulations and other guidance issued thereunder and, to the extent Restricted Stock granted under the Plan is subject
to Section 409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or
other guidance issued thereunder. The provisions of Restricted Stock need not be the same with respect to each Participant.
(a) Legend
on Shares. The Company shall electronically register the Restricted Stock awarded to a Participant in the name of such
Participant, which shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted
Stock, substantially as provided in Section 15.10 of the Plan. No stock certificate or certificates shall be
issued with respect to such shares of Common Stock, unless, following the expiration of the Restriction Period (as defined in Section
6.4(b)(i)(a)(i)) without forfeiture in respect of such shares of Common Stock, the Participant requests delivery of the certificate
or certificates by submitting a written request to the Committee (or such party designated by the Company) requesting delivery
of the certificates. The Company shall deliver the certificates requested by the Participant to the Participant as soon as administratively
practicable following the Company’s receipt of such request.
(b) Restrictions
and Conditions. Shares of Restricted Stock shall be subject to the following restrictions and conditions:
(i)
Subject to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as may be determined
by the Committee commencing on the Date of Grant or the date of exercise of an Award (the “Restriction Period”),
the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock. Except for these limitations,
the Committee may in its sole discretion, remove any or all of the restrictions on such Restricted Stock whenever it may determine
that, by reason of changes in Applicable Laws or other changes in circumstances arising after the date of the Award, such action
is appropriate.
(ii)
Except as provided in sub-paragraph (i) above or in the applicable Award Agreement, the Participant shall have, with respect to
his or her Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the
right to receive any dividends thereon. Certificates for shares of Common Stock free of restriction under this Plan shall be delivered
to the Participant promptly after, and only after, the Restriction Period shall expire without forfeiture in respect of such shares
of Common Stock or after any other restrictions imposed on such shares of Common Stock by the applicable Award Agreement or other
agreement have expired. Certificates for the shares of Common Stock forfeited under the provisions of the Plan and the applicable
Award Agreement shall be promptly returned to the Company by the forfeiting Participant. Each Award Agreement shall require that
each Participant, in connection with the issuance of a certificate for Restricted Stock, shall endorse such certificate in blank
or execute a stock power in form satisfactory to the Company in blank and deliver such certificate and executed stock power to
the Company.
(iii)
The Restriction Period of Restricted Stock shall commence on the Date of Grant or the date of exercise of an Award, as specified
in the Award Agreement, and, subject to Article 12 of the Plan, unless otherwise established by the Committee
in the Award Agreement setting forth the terms of the Restricted Stock, shall expire upon satisfaction of the conditions set forth
in the Award Agreement; such conditions may provide for vesting based on such Performance Goals, as may be determined by the Committee
in its sole discretion.
(iv)
Except as otherwise provided in the particular Award Agreement, upon Termination of Service for any reason during the Restriction
Period, the nonvested shares of Restricted Stock shall be forfeited by the Participant. In the event a Participant has paid any
consideration to the Company for such forfeited Restricted Stock, the Committee shall specify in the Award Agreement that either
(i) the Company shall be obligated to, or (ii) the Company may, in its sole discretion, elect to, pay to the Participant, as soon
as practicable after the event causing forfeiture, in cash, an amount equal to the lesser of the total consideration paid by the
Participant for such forfeited shares or the Fair Market Value of such forfeited shares as of the date of Termination of Service,
as the Committee, in its sole discretion shall select. Upon any forfeiture, all rights of a Participant with respect to the forfeited
shares of the Restricted Stock shall cease and terminate, without any further obligation on the part of the Company.
6.5 SARs. The
Committee may grant SARs to any Participant, either as a separate Award or in connection with a Stock Option. SARs shall be subject
to such terms and conditions as the Committee shall impose, provided that such terms and conditions are (i) not inconsistent with
the Plan, (ii) to the extent a SAR issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable
requirements of Section 409A of the Code and the regulations or other guidance issued thereunder, and (iii) to the extent the
Committee determines that a SAR shall comply with the requirements of Section 162(m) of the Code, in compliance with the applicable
requirements of Section 162(m) and the regulations and other guidance issued thereunder. The grant of the SAR may provide that
the holder may be paid for the value of the SAR either in cash or in shares of Common Stock, or a combination thereof. In the
event of the exercise of a SAR payable in shares of Common Stock, the holder of the SAR shall receive that number of whole shares
of Common Stock having an aggregate Fair Market Value on the date of exercise equal to the value obtained by multiplying (i) the
difference between the Fair Market Value of a share of Common Stock on the date of exercise over the SAR Price as set forth in
such SAR (or other value specified in the agreement granting the SAR), by (ii) the number of shares of Common Stock as to which
the SAR is exercised, with a cash settlement to be made for any fractional shares of Common Stock. The SAR Price for any share
of Common Stock subject to a SAR may be equal to or greater than the Fair Market Value of the share on the Date of Grant. The
Committee, in its sole discretion, may place a ceiling on the amount payable upon exercise of a SAR, but any such limitation shall
be specified at the time that the SAR is granted.
6.6 Restricted
Stock Units. Restricted Stock Units may be awarded or sold to any Participant under such terms and conditions as shall
be established by the Committee, provided, however, that such terms and conditions are (i) not inconsistent with the Plan, (ii)
to the extent a Restricted Stock Unit issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable
requirements of Section 409A of the Code and the regulations or other guidance issued thereunder, and (iii) to the extent the
Committee determines that a Restricted Stock Unit award shall comply with the requirements of Section 162(m) of the Code, in compliance
with the applicable requirements of Section 162(m) and the regulations and other guidance issued thereunder. Restricted Stock
Units shall be subject to such restrictions as the Committee determines, including, without limitation, (a) a prohibition against
sale, assignment, transfer, pledge, hypothecation or other encumbrance for a specified period; or (b) a requirement that the holder
forfeit (or in the case of shares of Common Stock or units sold to the Participant, resell to the Company at cost) such shares
or units in the event of Termination of Service during the period of restriction.
6.7 Performance
Awards.
(a)
The Committee may grant Performance Awards to one or more Participants. The terms and conditions of Performance Awards shall be
specified at the time of the grant and may include provisions establishing the performance period, the Performance Goals to be
achieved during a performance period, and the maximum or minimum settlement values, provided that such terms and conditions are
(i) not inconsistent with the Plan and (ii) to the extent a Performance Award issued under the Plan is subject to Section 409A
of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance
issued thereunder. If the Performance Award is to be in shares of Common Stock, the Performance Awards may provide for the issuance
of the shares of Common Stock at the time of the grant of the Performance Award or at the time of the certification by the Committee
that the Performance Goals for the performance period have been met; provided, however, if shares of Common
Stock are issued at the time of the grant of the Performance Award and if, at the end of the performance period, the Performance
Goals are not certified by the Committee to have been fully satisfied, then, notwithstanding any other provisions of this Plan
to the contrary, the Common Stock shall be forfeited in accordance with the terms of the grant to the extent the Committee determines
that the Performance Goals were not met. The forfeiture of shares of Common Stock issued at the time of the grant of the Performance
Award due to failure to achieve the established Performance Goals shall be separate from and in addition to any other restrictions
provided for in this Plan that may be applicable to such shares of Common Stock. Each Performance Award granted to one or more
Participants shall have its own terms and conditions.
To
the extent the Committee determines that a Performance Award shall comply with the requirements of Section 162(m) of the Code
and the regulations and other guidance issued thereunder, and if it is determined to be necessary in order to satisfy Section
162(m) of the Code, at the time of the grant of a Performance Award (other than a Stock Option) and to the extent permitted under
Section 162(m) of the Code and the regulations issued thereunder, the Committee shall provide for the manner in which the Performance
Goals shall be reduced to take into account the negative effect on the achievement of specified levels of the Performance Goals
which may result from enumerated corporate transactions, extraordinary events, accounting changes and other similar occurrences
which were unanticipated at the time the Performance Goal was initially established. In no event, however, may the Committee increase
the amount earned under such a Performance Award, unless the reduction in the Performance Goals would reduce or eliminate the
amount to be earned under the Performance Award and the Committee determines not to make such reduction or elimination.
With
respect to a Performance Award that is not intended to satisfy the requirements of Code Section 162(m), if the Committee determines,
in its sole discretion, that the established performance measures or objectives are no longer suitable because of a change in
the Company’s business, operations, corporate structure, or for other reasons that the Committee deemed satisfactory, the
Committee may modify the performance measures or objectives and/or the performance period.
(b)
Performance Awards may be valued by reference to the Fair Market Value of a share of Common Stock or according to any formula
or method deemed appropriate by the Committee, in its sole discretion, including, but not limited to, achievement of Performance
Goals or other specific financial, production, sales or cost performance objectives that the Committee believes to be relevant
to the Company’s business and/or remaining in the employ of the Company or a Subsidiary for a specified period of time.
Performance Awards may be paid in cash, shares of Common Stock, or other consideration, or any combination thereof. If payable
in shares of Common Stock, the consideration for the issuance of such shares may be the achievement of the performance objective
established at the time of the grant of the Performance Award. Performance Awards may be payable in a single payment or in installments
and may be payable at a specified date or dates or upon attaining the performance objective. The extent to which any applicable
performance objective has been achieved shall be conclusively determined by the Committee.
(c)
Notwithstanding the foregoing, in order to comply with the requirements of Section 162(m) of the Code, if applicable, no Participant
may receive in any calendar year Performance Awards intended to comply with the requirements of Section 162(m) of the Code which
have an aggregate value of more than $5,000,000, and if such Performance Awards involve the issuance of shares of Common Stock,
said aggregate value shall be based on the Fair Market Value of such shares on the time of the grant of the Performance Award.
In no event, however, shall any Performance Awards not intended to comply with the requirements of Section 162(m) of the Code
be issued contingent upon the failure to attain the Performance Goals applicable to any Performance Awards granted hereunder that
the Committee intends to comply with the requirements of Section 162(m) of the Code.
6.8 Dividend
Equivalent Rights. The Committee may grant a Dividend Equivalent Right to any Participant, either as a component of another
Award or as a separate Award. The terms and conditions of the Dividend Equivalent Right shall be specified by the grant. Dividend
equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional
shares of Common Stock (which may thereafter accrue additional dividend equivalents). Any such reinvestment shall be at the Fair
Market Value at the time thereof. Dividend Equivalent Rights may be settled in cash or shares of Common Stock, or a combination
thereof, in a single payment or in installments. A Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such
other Award, and that such Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions
different from such other Award.
6.9 Other
Awards. The Committee may grant to any Participant other forms of Awards, based upon, payable in, or otherwise related
to, in whole or in part, shares of Common Stock, if the Committee determines that such other form of Award is consistent with
the purpose and restrictions of this Plan. The terms and conditions of such other form of Award shall be specified by the grant.
Such Other Awards may be granted for no cash consideration, for such minimum consideration as may be required by Applicable Law,
or for such other consideration as may be specified by the grant.
6.10 Performance
Goals. Awards of Restricted Stock, Restricted Stock Units, Performance Award and Other Awards (whether relating to cash
or shares of Common Stock) under the Plan may be made subject to the attainment of Performance Goals relating to one or more business
criteria which, where applicable, shall be within the meaning of Section 162(m) of the Code and consist of one or more or any
combination of the following criteria: cash flow; cost; revenues; sales; ratio of debt to debt plus equity; net borrowing, credit
quality or debt ratings; profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; gross margin; earnings per share (whether on a pre-tax, after-tax, operational or other basis);
operating earnings; capital expenditures; expenses or expense levels; economic value added; ratio of operating earnings to capital
spending or any other operating ratios; free cash flow; net profit; net sales; net asset value per share; the accomplishment of
mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions; sales growth; price of the
Company’s Common Stock; return on assets, equity or stockholders’ equity; market share; inventory levels, inventory
turn or shrinkage; or total return to stockholders (“Performance Criteria”). Any Performance Criteria
may be used to measure the performance of the Company as a whole or any business unit of the Company and may be measured relative
to a peer group or index. Any Performance Criteria may include or exclude (i) extraordinary, unusual and/or non-recurring items
of gain or loss, (ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting regulations or laws,
(iv) the effect of a merger or acquisition, as identified in the Company’s quarterly and annual earnings releases, or (v)
other similar occurrences. In all other respects, Performance Criteria shall be calculated in accordance with the Company’s
financial statements, under generally accepted accounting principles, or under a methodology established by the Committee prior
to the issuance of an Award which is consistently applied and identified in the audited financial statements, including footnotes,
or the Compensation Discussion and Analysis section of the Company’s annual report. However, to the extent Section 162(m)
of the Code is applicable, the Committee may not in any event increase the amount of compensation payable to an individual upon
the attainment of a Performance Goal.
6.11 Tandem
Awards. The Committee may grant two or more Incentives in one Award in the form of a “tandem Award,” so that
the right of the Participant to exercise one Incentive shall be canceled if, and to the extent, the other Incentive is exercised.
For example, if a Stock Option and a SAR are issued in a tandem Award, and the Participant exercises the SAR with respect to one
hundred (100) shares of Common Stock, the right of the Participant to exercise the related Stock Option shall be canceled to the
extent of one hundred (100) shares of Common Stock.
ARTICLE
7
AWARD
PERIOD; VESTING
7.1 Award
Period. Subject to the other provisions of this Plan, the Committee may, in its discretion, provide that an Incentive
may not be exercised in whole or in part for any period or periods of time or beyond any date specified in the Award Agreement.
Except as provided in the Award Agreement, an Incentive may be exercised in whole or in part at any time during its term. The
Award Period for an Incentive shall be reduced or terminated upon Termination of Service. No Incentive granted under the Plan
may be exercised at any time after the end of its Award Period. No portion of any Incentive may be exercised after the expiration
of ten (10) years from its Date of Grant. However, if an Employee owns or is deemed to own (by reason of the attribution rules
of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company
(or any parent or Subsidiary) and an Incentive Stock Option is granted to such Employee, the term of such Incentive Stock Option
(to the extent required by the Code at the time of grant) shall be no more than five (5) years from the Date of Grant.
7.2 Vesting. The
Committee, in its sole discretion, may determine that an Incentive will be immediately vested in whole or in part, or that all
or any portion may not be vested until a date, or dates, subsequent to its Date of Grant, or until the occurrence of one or more
specified events, subject in any case to the terms of the Plan. If the Committee imposes conditions upon vesting, then, subsequent
to the Date of Grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the Incentive
may be vested.
ARTICLE
8
EXERCISE
OR CONVERSION OF INCENTIVE
8.1 In
General. A vested Incentive may be exercised or converted, during its Award Period, subject to limitations and restrictions
set forth in the Award Agreement.
8.2 Securities
Law and Exchange Restrictions. In no event may an Incentive be exercised or shares of Common Stock issued pursuant to
an Award if a necessary listing or quotation of the shares of Common Stock on a stock exchange or inter-dealer quotation system
or any registration under state or federal securities laws required under the circumstances has not been accomplished.
8.3 Exercise
of Stock Option.
(a) In
General. If a Stock Option is exercisable prior to the time it is vested, the Common Stock obtained on the exercise of
the Stock Option shall be Restricted Stock which is subject to the applicable provisions of the Plan and the Award Agreement.
If the Committee imposes conditions upon exercise, then subsequent to the Date of Grant, the Committee may, in its sole discretion,
accelerate the date on which all or any portion of the Stock Option may be exercised. No Stock Option may be exercised for a fractional
share of Common Stock. The granting of a Stock Option shall impose no obligation upon the Participant to exercise that Stock Option.
(b) Notice
and Payment. Subject to such administrative regulations as the Committee may from time to time adopt, a Stock Option
may be exercised by the delivery of written notice to the Committee setting forth the number of shares of Common Stock with respect
to which the Stock Option is to be exercised and the date of exercise thereof (the “Exercise Date”)
which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On
the Exercise Date, the Participant shall deliver to the Company consideration with a value equal to the total Option Price of
the shares to be purchased, payable as provided in the Award Agreement, which may provide for payment in any one or more of the
following ways: (a) cash or check, bank draft, or money order payable to the order of the Company, (b) Common Stock (including
Restricted Stock) owned by the Participant on the Exercise Date, valued at its Fair Market Value on the Exercise Date, and which
the Participant has not acquired from the Company within six (6) months prior to the Exercise Date, (c) by delivery (including
by FAX) to the Company or its designated agent of an executed irrevocable option exercise form together with irrevocable instructions
from the Participant to a broker or dealer, reasonably acceptable to the Company, to sell certain of the shares of Common Stock
purchased upon exercise of the Stock Option or to pledge such shares as collateral for a loan and promptly deliver to the Company
the amount of sale or loan proceeds necessary to pay such purchase price, and/or (d) in any other form of valid consideration
that is acceptable to the Committee in its sole discretion. In the event that shares of Restricted Stock are tendered as consideration
for the exercise of a Stock Option, a number of shares of Common Stock issued upon the exercise of the Stock Option equal to the
number of shares of Restricted Stock used as consideration therefor shall be subject to the same restrictions and provisions as
the Restricted Stock so tendered.
(c) Issuance
of Certificate. Except as otherwise provided in Section 6.4 hereof (with respect to shares of Restricted
Stock) or in the applicable Award Agreement, upon payment of all amounts due from the Participant, the Company shall cause the
Common Stock then being purchased to be registered in the Participant’s name (or the person exercising the Participant’s
Stock Option in the event of his or her death), but shall not issue certificates for the Common Stock unless the Participant or
such other person requests delivery of the certificates for the Common Stock, in writing in accordance with the procedures established
by the Committee. The Company shall deliver certificates to the Participant (or the person exercising the Participant’s
Stock Option in the event of his or her death) as soon as administratively practicable following the Company’s receipt of
a written request from the Participant or such other person for delivery of the certificates. Notwithstanding the forgoing, if
the Participant has exercised an Incentive Stock Option, the Company may at its option retain physical possession of the certificate
evidencing the shares acquired upon exercise until the expiration of the holding periods described in Section 422(a)(1) of the
Code. Any obligation of the Company to deliver shares of Common Stock shall, however, be subject to the condition that, if at
any time the Committee shall determine in its discretion that the listing, registration, or qualification of the Stock Option
or the Common Stock upon any securities exchange or inter-dealer quotation system or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary as a condition of, or in connection with, the Stock Option or the
issuance or purchase of shares of Common Stock thereunder, the Stock Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not reasonably
acceptable to the Committee.
(d) Failure
to Pay. Except as may otherwise be provided in an Award Agreement, if the Participant fails to pay for any of the Common
Stock specified in such notice or fails to accept delivery thereof, that portion of the Participant’s Stock Option and right
to purchase such Common Stock may be forfeited by the Participant.
8.4 SARs. Subject
to the conditions of this Section 8.4 and such administrative regulations as the Committee may from time to time
adopt, a SAR may be exercised by the delivery (including by FAX) of written notice to the Committee setting forth the number of
shares of Common Stock with respect to which the SAR is to be exercised and the date of exercise thereof (the “Exercise
Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually
agreed upon. Subject to the terms of the Award Agreement and only if permissible under Section 409A of the Code and the regulations
or other guidance issued thereunder (or, if not so permissible, at such time as permitted by Section 409A of the Code and the
regulations or other guidance issued thereunder), the Participant shall receive from the Company in exchange therefor in the discretion
of the Committee, and subject to the terms of the Award Agreement:
(a)
cash in an amount equal to the excess (if any) of the Fair Market Value (as of the Exercise Date, or if provided in the Award
Agreement, conversion, of the SAR) per share of Common Stock over the SAR Price per share specified in such SAR, multiplied by
the total number of shares of Common Stock of the SAR being surrendered;
(b)
that number of shares of Common Stock having an aggregate Fair Market Value (as of the Exercise Date, or if provided in the Award
Agreement, conversion, of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to
be made for any fractional share interests; or
(c)
the Company may settle such obligation in part with shares of Common Stock and in part with cash.
The
distribution of any cash or Common Stock pursuant to the foregoing sentence shall be made at such time as set forth in the Award
Agreement.
8.5 Disqualifying
Disposition of Incentive Stock Option. If shares of Common Stock acquired upon exercise of an Incentive Stock Option
are disposed of by a Participant prior to the expiration of either two (2) years from the Date of Grant of such Stock Option or
one (1) year from the transfer of shares of Common Stock to the Participant pursuant to the exercise of such Stock Option, or
in any other disqualifying disposition within the meaning of Section 422 of the Code, such Participant shall notify the Company
in writing of the date and terms of such disposition. A disqualifying disposition by a Participant shall not affect the status
of any other Stock Option granted under the Plan as an Incentive Stock Option within the meaning of Section 422 of the Code.
ARTICLE
9
AMENDMENT
OR DISCONTINUANCE
Subject
to the limitations set forth in this Article 9, the Board may at any time and from time to time, without the consent
of the Participants, alter, amend, revise, suspend, or discontinue the Plan in whole or in part; provided, however, that no amendment
for which stockholder approval is required either (i) by any securities exchange or inter-dealer quotation system on which the
Common Stock is listed or traded or (ii) in order for the Plan and Incentives awarded under the Plan to continue to comply with
Sections 162(m), 421, and 422 of the Code, including any successors to such Sections, or other Applicable Law, shall be effective
unless such amendment shall be approved by the requisite vote of the stockholders of the Company entitled to vote thereon. Any
such amendment shall, to the extent deemed necessary or advisable by the Committee, be applicable to any outstanding Incentives
theretofore granted under the Plan, notwithstanding any contrary provisions contained in any Award Agreement. In the event of
any such amendment to the Plan, the holder of any Incentive outstanding under the Plan shall, upon request of the Committee and
as a condition to the exercisability thereof, execute a conforming amendment in the form prescribed by the Committee to any Award
Agreement relating thereto. Notwithstanding anything contained in this Plan to the contrary, unless required by law, no action
contemplated or permitted by this Article 9 shall adversely affect any rights of Participants or obligations
of the Company to Participants with respect to any Incentive theretofore granted under the Plan without the consent of the affected
Participant.
ARTICLE
10
TERM
The
Plan shall be effective from the date that this Plan is adopted by the Board. Unless sooner terminated by action of the Board,
the Plan will terminate on October 25, 2023, but Incentives granted before that date will continue to be effective in accordance
with their terms and conditions.
ARTICLE
11
CAPITAL
ADJUSTMENTS
In
the event that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property),
recapitalization, stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off,
split-off, combination, subdivision, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants
or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event affects
the fair value of an Award, then the Committee shall adjust any or all of the following so that the fair value of the Award immediately
after the transaction or event is equal to the fair value of the Award immediately prior to the transaction or event (i) the number
of shares and type of Common Stock (or the securities or property) which thereafter may be made the subject of Awards, (ii) the
number of shares and type of Common Stock (or other securities or property) subject to outstanding Awards, (iii) the number of
shares and type of Common Stock (or other securities or property) specified as the annual per-participant limitation under Section
5.1 of the Plan, (iv) the Option Price of each outstanding Award, (v) the amount, if any, the Company pays for forfeited
shares of Common Stock in accordance with Section 6.4, and (vi) the number of or SAR Price of shares of Common Stock
then subject to outstanding SARs previously granted and unexercised under the Plan, to the end that the same proportion of the
Company’s issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate
SAR Price; provided however, that the number of shares of Common Stock (or other securities or property) subject to any Award
shall always be a whole number. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that
such adjustment would cause the Plan or any Stock Option to violate Section 422 of the Code or Section 409A of the Code. Such
adjustments shall be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to
which the Company is subject.
Upon
the occurrence of any such adjustment, the Company shall provide notice to each affected Participant of its computation of such
adjustment which shall be conclusive and shall be binding upon each such Participant.
ARTICLE
12
RECAPITALIZATION,
MERGER AND CONSOLIDATION
12.1 No
Effect on Company’s Authority. The existence of this Plan and Incentives granted hereunder shall not affect in
any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, or other changes in the Company’s capital structure and its business, or any Change in Control, or any
merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to
or otherwise affecting the Common Stock or the rights thereof (or any rights, options, or warrants to purchase same), or the dissolution
or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act
or proceeding, whether of a similar character or otherwise.
12.2 Conversion
of Incentives Where Company Survives. Subject to any required action by the stockholders and except as otherwise provided
by Section 12.4 hereof or as may be required to comply with Section 409A of the Code and the regulations or other
guidance issued thereunder, if the Company shall be the surviving or resulting corporation in any merger, consolidation or share
exchange, any Incentive granted hereunder shall pertain to and apply to the securities or rights (including cash, property, or
assets) to which a holder of the number of shares of Common Stock subject to the Incentive would have been entitled.
12.3 Exchange
or Cancellation of Incentives Where Company Does Not Survive. Except as otherwise provided by Section 12.4 hereof
or as may be required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, in the
event of any merger, consolidation or share exchange pursuant to which the Company is not the surviving or resulting corporation,
there shall be substituted for each share of Common Stock subject to the unexercised portions of outstanding Incentives, that
number of shares of each class of stock or other securities or that amount of cash, property, or assets of the surviving, resulting
or consolidated company which were distributed or distributable to the stockholders of the Company in respect to each share of
Common Stock held by them, such outstanding Incentives to be thereafter exercisable for such stock, securities, cash, or property
in accordance with their terms.
12.4 Cancellation
of Incentives. Notwithstanding the provisions of Sections 12.2 and 12.3 hereof, and except as may be
required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, all Incentives granted
hereunder may be canceled by the Company, in its sole discretion, as of the effective date of any Change in Control, merger, consolidation
or share exchange, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting
the Common Stock or the rights thereof (or any rights, options, or warrants to purchase same), or of any proposed sale of all
or substantially all of the assets of the Company, or of any dissolution or liquidation of the Company, by either:
(a)
giving notice to each holder thereof or his personal representative of its intention to cancel those Incentives for which the
issuance of shares of Common Stock involved payment by the Participant for such shares, and permitting the purchase during the
thirty (30) day period next preceding such effective date of any or all of the shares of Common Stock subject to such outstanding
Incentives, including in the Board’s discretion some or all of the shares as to which such Incentives would not otherwise
be vested and exercisable; or
(b)
in the case of Incentives that are either (i) settled only in shares of Common Stock, or (ii) at the election of the Participant,
settled in shares of Common Stock, paying the holder thereof an amount equal to a reasonable estimate of the difference between
the net amount per share payable in such transaction or as a result of such transaction, and the price per share of such Incentive
to be paid by the Participant (hereinafter the “Spread”), multiplied by the number of shares subject
to the Incentive. In cases where the shares constitute, or would after exercise, constitute Restricted Stock, the Company, in
its discretion, may include some or all of those shares in the calculation of the amount payable hereunder. In estimating the
Spread, appropriate adjustments to give effect to the existence of the Incentives shall be made, such as deeming the Incentives
to have been exercised, with the Company receiving the exercise price payable thereunder, and treating the shares receivable upon
exercise of the Incentives as being outstanding in determining the net amount per share. In cases where the proposed transaction
consists of the acquisition of assets of the Company, the net amount per share shall be calculated on the basis of the net amount
receivable with respect to shares of Common Stock upon a distribution and liquidation by the Company after giving effect to expenses
and charges, including but not limited to taxes, payable by the Company before such liquidation could be completed.
(c)
An Award that by its terms would be fully vested or exercisable upon a Change in Control will be considered vested or exercisable
for purposes of Section 12.4(a) hereof.
ARTICLE
13
LIQUIDATION
OR DISSOLUTION
Subject
to Section 12.4 hereof, in case the Company shall, at any time while any Incentive under this Plan shall be in
force and remain unexpired, (i) sell all or substantially all of its property, or (ii) dissolve, liquidate, or wind up its affairs,
then each Participant shall be entitled to receive, in lieu of each share of Common Stock of the Company which such Participant
would have been entitled to receive under the Incentive, the same kind and amount of any securities or assets as may be issuable,
distributable, or payable upon any such sale, dissolution, liquidation, or winding up with respect to each share of Common Stock
of the Company. If the Company shall, at any time prior to the expiration of any Incentive, make any partial distribution of its
assets, in the nature of a partial liquidation, whether payable in cash or in kind (but excluding the distribution of a cash dividend
payable out of earned surplus and designated as such) and an adjustment is determined by the Committee to be appropriate to prevent
the dilution of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in
such manner as it may deem equitable, make such adjustment in accordance with the provisions of Article 11 hereof.
ARTICLE
14
INCENTIVES
IN SUBSTITUTION FOR
INCENTIVES
GRANTED BY OTHER ENTITIES
Incentives
may be granted under the Plan from time to time in substitution for similar instruments held by employees, independent contractors
or directors of a corporation, partnership, or limited liability company who become or are about to become Employees, Contractors
or Outside Directors of the Company or any Subsidiary as a result of a merger or consolidation of the employing corporation with
the Company, the acquisition by the Company of equity of the employing entity, or any other similar transaction pursuant to which
the Company becomes the successor employer. The terms and conditions of the substitute Incentives so granted may vary from the
terms and conditions set forth in this Plan to such extent as the Committee at the time of grant may deem appropriate to conform,
in whole or in part, to the provisions of the Incentives in substitution for which they are granted.
ARTICLE
15
MISCELLANEOUS
PROVISIONS
15.1 Investment
Intent. The Company may require that there be presented to and filed with it by any Participant under the Plan, such
evidence as it may deem necessary to establish that the Incentives granted or the shares of Common Stock to be purchased or transferred
are being acquired for investment and not with a view to their distribution.
15.2 No
Right to Continued Employment. Neither the Plan nor any Incentive granted under the Plan shall confer upon any Participant
any right with respect to continuance of employment by the Company or any Subsidiary.
15.3 Indemnification
of Board and Committee. No member of the Board or the Committee, nor any officer or Employee of the Company acting on
behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made
in good faith with respect to the Plan, and all members of the Board and the Committee, each officer of the Company, and each
Employee of the Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified
and protected by the Company in respect of any such action, determination, or interpretation.
15.4 Effect
of the Plan. Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any
person any right to be granted an Award or any other rights except as may be evidenced by an Award Agreement, or any amendment
thereto, duly authorized by the Committee and executed on behalf of the Company, and then only to the extent and upon the terms
and conditions expressly set forth therein.
15.5 Compliance
With Other Laws and Regulations. Notwithstanding anything contained herein to the contrary, the Company shall not be
required to sell or issue shares of Common Stock under any Incentive if the issuance thereof would constitute a violation by the
Participant or the Company of any provisions of any law or regulation of any governmental authority or any national securities
exchange or inter-dealer quotation system or other forum in which shares of Common Stock are quoted or traded (including without
limitation Section 16 of the Exchange Act and Section 162(m) of the Code); and, as a condition of any sale or issuance of shares
of Common Stock under an Incentive, the Committee may require such agreements or undertakings, if any, as the Committee may deem
necessary or advisable to assure compliance with any such law or regulation. The Plan, the grant and exercise of Incentives hereunder,
and the obligation of the Company to sell and deliver shares of Common Stock, shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.
15.6 Foreign
Participation. To assure the viability of Awards granted to Participants employed in foreign countries, the Committee
may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy
or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this
Plan as it determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that
the Committee approves for purposes of using this Plan in a foreign country will not affect the terms of this Plan for any other
country.
15.7 Tax
Requirements. The Company or, if applicable, any Subsidiary (for purposes of this Section 15.7, the term
“Company” shall be deemed to include any applicable Subsidiary), shall have the right to deduct from
all amounts paid in cash or other form in connection with the Plan, any Federal, state, local, or other taxes required by law
to be withheld in connection with an Award granted under this Plan. The Company may, in its sole discretion, also require the
Participant receiving shares of Common Stock issued under the Plan to pay the Company the amount of any taxes that the Company
is required to withhold in connection with the Participant’s income arising with respect to the Award. Such payments shall
be required to be made when requested by Company and may be required to be made prior to the delivery of any certificate representing
shares of Common Stock. Such payment may be made (i) by the delivery of cash to the Company in an amount that equals or exceeds
(to avoid the issuance of fractional shares under (iii) below) the required tax withholding obligations of the Company; (ii) if
the Company, in its sole discretion, so consents in writing, the actual delivery by the exercising Participant to the Company
of shares of Common Stock that the Participant has not acquired from the Company within six (6) months prior to the date of exercise,
which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid the issuance of fractional shares
under (iii) below) the required tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing,
the Company’s withholding of a number of shares to be delivered upon the exercise of the Stock Option, which shares so withheld
have an aggregate fair market value that equals (but does not exceed) the required tax withholding payment; or (iv) any combination
of (i), (ii), or (iii). The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration otherwise
paid by the Company to the Participant. The Committee may in the Award Agreement impose any additional tax requirements or provisions
that the Committee deems necessary or desirable.
15.8 Assignability. Incentive
Stock Options may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than by will or
the laws of descent and distribution and may be exercised during the lifetime of the Participant only by the Participant or the
Participant’s legally authorized representative, and each Award Agreement in respect of an Incentive Stock Option shall
so provide. The designation by a Participant of a beneficiary will not constitute a transfer of the Stock Option. The Committee
may waive or modify any limitation contained in the preceding sentences of this Section 15.8 that is not required
for compliance with Section 422 of the Code.
Except
as otherwise provided herein, Nonqualified Stock Options and SARs may not be transferred, assigned, pledged, hypothecated or otherwise
conveyed or encumbered other than by will or the laws of descent and distribution. The Committee may, in its discretion, authorize
all or a portion of a Nonqualified Stock Option or SAR to be granted to a Participant on terms which permit transfer by such Participant
to (i) the spouse (or former spouse), children or grandchildren of the Participant (“Immediate Family Members”),
(ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, (iii) a partnership in which the only partners
are (1) such Immediate Family Members and/or (2) entities which are controlled by Immediate Family Members, (iv) an entity exempt
from federal income tax pursuant to Section 501(c)(3) of the Code or any successor provision, or (v) a split interest trust or
pooled income fund described in Section 2522(c)(2) of the Code or any successor provision, provided that (x)
there shall be no consideration for any such transfer, (y) the Award Agreement pursuant to which such Nonqualified Stock Option
or SAR is granted must be approved by the Committee and must expressly provide for transferability in a manner consistent with
this Section, and (z) subsequent transfers of transferred Nonqualified Stock Options or SARs shall be prohibited except those
by will or the laws of descent and distribution.
Following
any transfer, any such Nonqualified Stock Option and SAR shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that for purposes of Articles 8, 9, 11, 13 and 15 hereof the
term “Participant” shall be deemed to include the transferee. The events of Termination of Service shall
continue to be applied with respect to the original Participant, following which the Nonqualified Stock Options and SARs shall
be exercisable or convertible by the transferee only to the extent and for the periods specified in the Award Agreement. The Committee
and the Company shall have no obligation to inform any transferee of a Nonqualified Stock Option or SAR of any expiration, termination,
lapse or acceleration of such Stock Option or SAR. The Company shall have no obligation to register with any federal or state
securities commission or agency any Common Stock issuable or issued under a Nonqualified Stock Option or SAR that has been transferred
by a Participant under this Section 15.8.
15.9 Use
of Proceeds. Proceeds from the sale of shares of Common Stock pursuant to Incentives granted under this Plan shall constitute
general funds of the Company.
15.10 Legend. Each
certificate representing shares of Restricted Stock issued to a Participant shall bear the following legend, or a similar legend
deemed by the Company to constitute an appropriate notice of the provisions hereof (any such certificate not having such legend
shall be surrendered upon demand by the Company and so endorsed):
On
the face of the certificate:
“Transfer
of this stock is restricted in accordance with conditions printed on the reverse of this certificate.”
On
the reverse:
“The
shares of stock evidenced by this certificate are subject to and transferable only in accordance with that certain InspireMD,
Inc. 2013 Long-Term Incentive Plan, a copy of which is on file at the principal office of the Company in Boston, Massachusetts.
No transfer or pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said
Plan. By acceptance of this certificate, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions
of said Plan.”
The
following legend shall be inserted on a certificate evidencing Common Stock issued under the Plan if the shares were not issued
in a transaction registered under the applicable federal and state securities laws:
“Shares
of stock represented by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution,
have been issued pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and
may not be offered for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions
otherwise in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which
the Company may rely upon an opinion of counsel satisfactory to the Company.”
ARTICLE
16
ACCELERATION
OF AWARD VESTING
16.1 Application. The
provisions of this Article 16 shall apply notwithstanding any provisions of this Plan to the contrary.
16.2 Definitions.
(a)
“Exempt Shares” means shares of Common Stock designated as “Exempt Shares” pursuant to Section
16.3.
(b)
“Full Value Award” means any Award with a net benefit to the Participant, without regard to any restrictions
such as those described in Section 6.4(b), equal to the aggregate Fair Market Value of the total shares of Common
Stock subject to the Award. Full Value Awards include Restricted Stock and Restricted Stock Units, but do not include Stock Options
and SARs.
(c)
“Tenure Award” means an Award hereunder of cash, shares of Common Stock, units or rights based
upon, payable in, or otherwise related to, Common Stock that vests over time based upon the Participant’s continued employment
with or service to the Company or its Subsidiaries.
16.3 Number
of Shares Available for Awards. No more than ten percent (10%) of the shares of Common Stock that may be delivered pursuant
to Awards under Section 5.1 may be shares designated as “Exempt Shares.”
16.4 Full
Value Award Vesting. Except as otherwise provided herein, the Committee must grant all Full Value Awards in accordance
with the following provisions:
(a)
All Full Value Awards granted by the Committee that constitute Performance Awards must vest no earlier than one (1) year after
the Date of Grant.
(b)
All Full Value Awards granted by the Committee that constitute Tenure Awards must vest no earlier than over the three (3) year
period commencing on the Date of Grant on a pro rata basis.
(c)
The Committee may not accelerate the date on which all or any portion of a Full Value Award may be vested or waive the Restriction
Period on a Full Value Award except upon the Participant’s death, Total and Permanent Disability or Retirement or the occurrence
of a Change in Control.
Notwithstanding
the foregoing, the Committee may, in its sole discretion, grant Full Value Awards with more favorable vesting provisions than
set forth in this Section 16.4 or accelerate the vesting or waive the Restriction Period for Full Value Awards
at any time, provided that the shares of Common Stock subject to such Awards shall be Exempt Shares.
A
copy of this Plan shall be kept on file in the principal office of the Company in Boston, Massachusetts.
***************
IN
WITNESS WHEREOF, the Company has caused this instrument to be executed as of October 25, 2013, by its Chief Executive Officer
and Secretary pursuant to prior action taken by the Board.
|
INSPIREMD,
INC.
|
|
|
|
By:
|
/s/
Alan Milinazzo
|
|
Name:
|
Alan
Milinazzo
|
|
Title:
|
Chief
Executive Officer
|
Attest:
By:
|
/s/
Craig Shore
|
|
Name:
|
Craig
Shore
|
|
Title:
|
Secretary
|
|
APPENDIX
A
INSPIREMD,
INC.
2013
Employee Stock Incentive Plan
Designated
for the Israeli Income Tax Ordinance
ARTICLE
I
Purpose
1.
|
The
purpose of this 2013 Employee Stock Incentive Plan (the “Israeli Plan”) shall be as defined in the
InspireMD, Inc. 2013 Long-Term Incentive Plan (the “Incentive Plan”), and is intended to harmonize
the terms and conditions of the Incentive Plan with applicable Israeli law and provide specific provisions regarding Participants
(as defined in the Incentive Plan) who are subject to the Ordinance (as defined below). Unless expressly provided in this
Israeli Plan, the provisions of the Incentive Plan shall apply. Capitalized terms not expressly defined in this Israeli Plan
shall have the meaning ascribed to them under the Incentive Plan.
|
|
|
2.
|
This
Israeli Plan is intended to promote the interests of InspireMD, Inc. (the “Company”) and its Affiliates,
if any, (the “Group Companies”) by providing present and future officers of the Group Companies,
other employees of the Group Companies (including directors of the Group Companies) and consultants of the Group Companies
with an incentive to enter into and continue in the employ of the Group Companies and to acquire a proprietary interest in
the long-term success of the Group Companies.
|
|
|
3.
|
The
word “Affiliate”, when used in the Israeli Plan, shall mean any “employer company” within
the meaning of Section 102(a) of the Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Ordinance”).1
|
ARTICLE
II
Administration
4.
|
The
Israeli Plan shall be administered by the Board or the Committee (the “Administrator”) as shall
be resolved by the Board. The Administrator shall have the authority in its sole discretion, subject and not inconsistent
with the express provisions of the Israeli Plan, to administer the Israeli Plan and to exercise all the powers and authorities
specifically granted to it under the Israeli Plan as necessary and advisable in the administration of the Israeli Plan, including,
without limitation:
|
1 s.
102 (a) of the Ordinance: “employer company” – any of the following: (1) an employer that is an Israeli resident
company or a foreign resident company with a permanent enterprise or a research and development center in Israel, if the Commissioner
so approved (for this purpose: the employer), (2) a company that is a controlling member of the employer or of which the employer
is a controlling member, or (3) a company controlled by a person if the same person controls the employer.
|
a.
|
To
determine which of the eligible, officers, employees, directors, and consultants of the Group Companies or other person shall
be granted options to purchase Common Stock (each an “Option”), as that term is defined below, or
other Awards, provided however, that (a) employees, officers and directors (excluding controlling members as defined in Section
32(9) of the Ordinance2) (“Employees”, and each an “Employee”)
may only be granted Awards, pursuant to Section 102 of the Ordinance and the rules and regulations promulgated thereunder,
including the Income Tax Regulations (Tax Relief for Issue of Shares to Employees), 5763 -2003, (“Section 102
Incentives”); and (b) those who have no employee/employer relationship with the Group Companies and are not
‘office holders’ (such as consultants and service providers), and Controlling Members (“Consultants”,
and each a “Consultant”), may only be granted Incentives pursuant to Section 3(i) of the Ordinance
(“Section 3(i) Incentives”);
|
|
|
|
|
b.
|
To
determine the type of Incentives to be granted, i.e. Section 102 Incentives or Section 3(i) Incentives ,
or any other type of Incentive provided in Section 6 of the Incentive Plan, and their Date of Grant;
|
|
|
|
|
c.
|
To
determine the number of shares of Common Stock, to which an Incentive may relate, the terms, conditions and restrictions of
each Award and Incentive, the exercise price of each Option (the “Option Exercise Price”), the date
on which each Option or other Incentives becomes exercisable or free of any restrictions (the “Exercise Date”),
the Award Period and any other restrictions on (i) the exercise of Options issued hereunder, or (ii) other Incentives;
|
|
|
|
|
d.
|
To
determine the form or forms of the award agreements under the Israeli Plan (the “Award Agreement”)
(which forms shall be consistent with the terms of the Incentive Plan but need not be identical), any other instruments that
constitute or contain a Company obligation to grant an Incentive under the Israeli Plan (each, a “Grant Instrument”),
as that term is defined below, and ancillary documentation;
|
|
|
|
|
e.
|
To
determine whether, to what extent, and under what circumstances, an Incentive may be settled, canceled, forfeited, exchanged
or surrendered;
|
|
|
|
|
f.
|
To
construe and interpret the Israeli Plan, Award Agreements, any Incentive, Grant Instruments and ancillary documentation and
to make all other determinations deemed necessary or advisable for the administration of the Israeli Plan; and
|
|
|
|
|
g.
|
To
prescribe, amend and rescind rules and regulations relating to the Israeli Plan.
|
5.
|
All
decisions, determinations and interpretations of the Administrator shall be final and binding on all Participants, unless
otherwise determined by the Board of Directors.
|
2 s.
32(9) of the Ordinance: “controlling member” – a person who holds, directly or indirectly, alone or with
a relative, one of the following: (a) at least 10% of the issued share capital or at least 10% of the voting power; the right
to hold at least 10% of the issued share capital or at least 10% of the voting power, or a right to acquire either; (c) the right
to receive at least 10% of the profits; (d) the right to appoint a director.
6.
|
Insofar
as the Board is entitled by law to delegate all and any of its powers and authority granted it under this Israeli Plan to
a Committee, the Board shall be entitled to do so. The Committee’s authorities shall be as provided in the Incentive
Plan. Any action may be taken by a written document (in lieu of meeting) signed by the Committee, and action so taken shall
be fully as effective as if it had been taken by a vote of the majority of the members at a meeting duly called and held.
The Committee may appoint a Secretary who shall keep records of its meetings, and shall make such rules and regulations for
the conduct of its business as it shall determine.
|
7.
|
No
member or former member of the Administrator shall be liable for any action, failure to act, or determination made in good
faith with respect to the Israeli Plan or any right granted thereunder.
|
|
|
8.
|
The
Administrator may designate Incentives granted pursuant to Section 102 as (1) “Approved 102 Incentives”
(i.e. Incentives granted pursuant to Section 102(b) of the Ordinance and held in trust by a trustee for the benefit of the
Participant); or (2) “Unapproved 102 Incentives” (i.e. Incentives granted pursuant to
Section 102(c) of the Ordinance and not held in trust by a trustee).
|
|
|
9.
|
The
Administrator may elect for Approved 102 Incentives to be classified as either (1) “Work Income Incentives”
that qualify for tax treatment in accordance with the provisions of Section 102(b)(1) of the Ordinance; or (2) “Capital
Gain Incentives” that qualify for tax treatment in accordance with the provisions of Section 102(b)(2) of the
Ordinance (the “Election”).
|
|
|
10.
|
Unapproved
102 Incentives may be granted until the Administrator’s Election has been appropriately filed with the Israeli tax authorities,
which election must be made at least thirty days before the date of the first grant of an Approved 102 Incentive under this
Israeli Plan or according to the instructions published by the Israeli tax authorities from time to time. The Election shall
remain in effect until the end of the subsequent year following the year during which the Administrator first granted such
Approved 102 Incentives. During the period indicated in the sentence above, the Administrator may grant only the type of Approved
102 Incentive it has elected, which Election shall apply to all Participants who were granted Approved 102 Incentives during
the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance, as amended. For the
avoidance of doubt, such Election shall not prevent the Administrator from granting, at all times, Unapproved 102 Incentives
to Employees or Section 3(i) Incentives to Consultants.
|
ARTICLE
III
Incentive
Shares
11.
|
The
shares to be issued under the Israeli Plan (the “Incentive Shares”) shall be authorized but unissued
Common Stock (the “Shares”). The total number of Shares reserved for issuance under the Israeli
Plan shall be equal to the total number of Shares reserved under Section 5.1 of the Incentive Plan, subject
to any adjustments and reductions made pursuant to the Incentive Plan. Such Shares are reserved out of the total number of
Shares reserved under Section 5.1 of the Incentive Plan.
|
|
|
12.
|
The
number of Shares available for grant of Incentives under the Israeli Plan shall be decreased by the sum of the number of Shares
with respect to which Incentives have been issued and are then outstanding and the number of Shares issued upon exercise of
Options. In the event that any outstanding Incentive under the Israeli Plan for any reason expires, is terminated, or is canceled,
the Shares covered by the unexercised portion of such Incentive may again be subject to Awards under the Israeli Plan.
|
13.
|
The
Company shall at all times during the term of the Israeli Plan reserve and keep available such number of Shares as will be
sufficient to satisfy the requirements of the Incentives granted according to this Israeli Plan, shall pay all original issue
taxes (which shall not include income taxes of the Participant), if any, with respect to the issuance of Shares pursuant hereto
and all other fees and expenses necessarily incurred by the Company in connection therewith, and shall, from time to time,
use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable
thereto.
|
ARTICLE
IV
Incentive
Price
14.
|
Each
Award Agreement and Grant Instrument with respect to an Award shall set forth the amount (the “Incentive Price”)
which will be paid by the Participant to the Company upon exercise of the Options or allocation of other Incentives. Payment
shall be made in cash, or by certified check in the manner prescribed in Article VI (Exercise of Options, Termination) hereof.
|
ARTICLE
V
Terms
of Awards
15.
|
The
Administrator shall determine the dates after which, or circumstances in which, Options may be exercised or other Incentives
may be released of any restriction thereto, in whole or in part. If Incentives are exercisable in installments, then the installments
or portions thereof which are exercisable and not exercised shall remain exercisable until such Incentives expire or terminate
in accordance with the provisions herein.
|
|
|
16.
|
Notwithstanding
any other provision of the Israeli Plan but subject to Section 7.1 of the Incentive Plan, no Incentive shall
be exercisable or otherwise valid after a date ten years from the date of grant of such Award (the “Expiration
Date”).
|
|
|
17.
|
Unless
determined otherwise by the Administrator with regard to all or any of the Participants or the Options and subject to Section
7.2 of the Incentive Plan, the Options will be exercisable into Shares, as follows:
|
|
a.
|
One
fourth (1/4th) of the optioned Shares shall vest and that portion of the Option shall become exercisable upon the
expiration of twelve (12) months after their Date of Grant (the “First Vesting Date”), provided, that the
Participant is continuously employed or engaged by a Group Company from the Date of Grant until the end of First Vesting Date;
|
|
|
|
|
b.
|
an
additional one fourth (1/4th) of the optioned Shares shall vest and that portion of the Option
shall become exercisable upon the expiration of twenty four (24) months after their Date of Grant (the “Second
Vesting Date”), provided, that that the Participant is continuously employed or
engaged by a Group Company from the First Vesting Date until the end of Second Vesting Date;
|
|
|
|
|
c.
|
an
additional one fourth (1/4th) of the optioned Shares shall vest and that portion of the Option
shall become exercisable upon the expiration of thirty six (36) months after their Date of Grant the Award (the “Third
Vesting Date”), provided, that the Participant is continuously employed or engaged
by a Group Company from the Second Vesting Date until the end of Third Vesting Date; and
|
|
d.
|
an
additional one fourth (1/4th) of the optioned Shares shall vest and that portion of the Option
shall become exercisable upon the expiration of forty eight (48) months after their Date of Grant (the “Fourth
Vesting Date”), provided, that the Participant is continuously employed or engaged
by a Group Company from the Third Vesting Date until the end of Forth Vesting Date.
|
ARTICLE
VI
Exercise
of Options, Termination
18.
|
Subject
to Article X (Trustee) below and as more fully provided in Section 8.3 of the Incentive Plan, the exercise of any
Option shall be effected by a Participant signing and returning to the Company at its principal office a notice of exercise
in the form prescribed from time to time by the Company or the Committee (a “Notice of Exercise”),
along with payment for the Incentive Shares purchased thereby. Such payment will be made in dollars or shekels in accordance
with the terms of the specific Award Agreement.
|
|
|
19.
|
Subject
to Article X (Trustee) below, the Company shall issue Incentive Shares, in the name of the respective Participant, and deliver
to him a certificate or certificates, as the case may be, representing such Shares as soon as practicable after a Notice of
Exercise and payment for the Shares shall be received. If Article X (Trustee) applies, then exercise of the Incentives will
be subject to the agreement with the Trustee, as that term is defined below, and in accordance with Section 102 of the Ordinance.
|
|
|
20.
|
The
Company may, if required under any Applicable Law, require that an Participant deposit with the Company, in cash, at the time
of exercise, such amount as the Company deems necessary to satisfy its obligations to withhold taxes or other amounts incurred
by reason of the exercise or the transfer of Shares thereupon.
|
|
|
21.
|
All
Shares purchased upon the exercise of an Option or other grant of an Incentive as provided herein shall be fully paid and
non-assessable.
|
|
|
22.
|
In
the event that an Option is exercised by any person or persons other than the Participant, pursuant to Article VII (Non-Transferability
of Incentive Rights), such Notice of Exercise shall be accompanied by appropriate proof of the right of such person or persons
to exercise the Option.
|
|
|
23.
|
If
the Participant shall cease to be employed or engaged by a Group Company, as the result of his resignation, then the Participant
shall have the right to exercise the Options, but only to the extent that the Options are exercisable as of the date Participant
resigns (according to the provisions of Article V (Terms of Awards)), within thirty (30) days as of the Termination Date.
|
24.
|
If
the Participant shall cease to be employed or engaged by a Group Company, as the result of his dismissal without Cause, then
the Participant shall have the right to exercise the Options, but only to the extent that the Options are exercisable on the
date of Participant’s dismissal (according to the provisions of Article V (Terms of Awards)), within sixty (60) days
after the Termination Date.
|
|
|
25.
|
If
the Participant shall cease to be employed or engaged by a Group Company as the result of his disability or retirement with
the consent of the Group Company, then the Option, to the extent that it is exercisable by him at the time he ceases to be
employed or engaged by the Group Company, and only to the extent that the Option is exercisable as of such time as defined
in Article V (Terms of Awards), may be exercised by him within one (1) year, after the Termination Date.
|
26.
|
If
the Participant shall die while employed or engaged by a Group Company, his estate, personal representative, or beneficiary
shall have the right, subject to the provisions of Article V (Terms of Options), to exercise the Option (to the extent that
the Participant would have been entitled to do so at the time of his death) at any time within two (2) years from the date
of his death.
|
|
|
27.
|
If
the Participants shall be terminated for Cause, then, all Options, whether exercisable or not on the date that the Group Company
delivers to the employee a termination notice, will expire and may not be further exercised.
|
|
|
28.
|
For
the purpose of this Israeli Plan, “Cause” shall exist if the Participant (i) breaches any of the
material terms or conditions of his employment agreement, or agreement to provide services to the Group Company, including,
without limitation, the breach of any duty of non-disclosure or non-competition; (ii) engages in willful misconduct or acts
in bad faith with respect to any Group Company in connection with his employment or other agreement with a Group Company;
or (iii) is convicted of a felony.
|
|
|
29.
|
In
the event of the institution of any legal proceedings directed to the validity of the Israeli Plan or any Option, the Company
may, in its sole discretion, and without incurring any liability therefore to the Participant, terminate the Option.
|
|
|
30.
|
All
terms and conditions herein are subject to any Applicable Law.
|
|
|
31.
|
For
purposes of this Article VI, “Termination Date” shall mean the date on which Participant’s
employment or engagement with a Group Company is terminated.
|
ARTICLE
VII
Non-Transferability
of Incentive Rights
32.
|
An
Incentive that is granted hereunder shall not be transferable otherwise than by will or the laws of descent and distribution.
To the extent provided in Article VI (Exercise of Options, Termination), an Option may be exercised, during the lifetime of
the Participant, only by the Participant. More particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided above), pledged or hypothecated in any way, shall not be assignable by
operation of law, and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of an Incentive contrary to the provisions of the AwardAgreement or the Israeli
Plan, and the levy of any execution, attachment, or similar process upon the Incentive, shall be null and void and without
effect; provided, however, that if the Participant shall die while in the employ of the Company or any subsidiary, his estate,
personal representative, or beneficiary shall have the right to exercise the Option to the extent exercisable in accordance
with Article VI (Exercise of Options, Termination).
|
ARTICLE
VIII
Adjustments
33.
|
Except
as otherwise provided by Section 12.4 of the Incentive Plan, upon the occurrence of any of the following
events (each a “Transaction”):
|
|
a.
|
a
merger or consolidation of the Company (a “Merger”) with or into any company (the “Successor
Company”) resulting in the Successor Company being the surviving entity; or
|
|
|
|
|
b.
|
an
acquisition of: (i) all or substantially all of the shares or assets of the Company in one or more related transactions to
another party (a “Share Sale”), or (ii) all or substantially all of the assets of the Company, in
one or more related transactions to another party, in each case such acquirer of shares or assets is referred to herein as
the “Acquiring Company”;
|
for
any unexercised Incentive remain outstanding under the Israeli Plan (the “Unexercised Incentive”), there
shall be substituted for the Shares subject to the Unexercised Incentive an appropriate number of shares of such class of shares
or other securities of the Successor Company or the Acquiring Company, as the case may be (or, if such company is not an operating
company, of the first operating company in the ownership chain of such company) (the “Substitute Shares”).
Appropriate equitable adjustments shall be made in the purchase price per share of the Substitute Shares subject to the Unexercised
Incentive, and all other terms and conditions of the Award Agreements, such as the vesting dates, shall remain in force, all as
will be determined by the Board whose determination shall be final.
34.
|
The
Committee shall have full authority to determine any provisions regarding the acceleration of the vesting period of any Incentive
or the cancellation of all or any portion of any outstanding restrictions with respect to any Incentive upon certain events
or occurrences, and to include such provisions in the Award Agreement on such terms and conditions as the Committee shall
deem appropriate.
|
|
|
35.
|
Subject
to Applicable Law, the Committee shall have full authority to, at any time and from time to time, without the approval of
the stockholders of the Company, (i) grant in its discretion to the holder of an outstanding Incentive, in exchange for the
surrender and cancellation of such Incentive, a new Incentive having an exercise price or purchase price, as the case may
be, lower than provided in the Award (and related Award Agreement) so surrendered and canceled and containing such other terms
and conditions as the Committee may prescribe in accordance with the provisions of the Israeli Plan and any Applicable Law,
or (ii) effectuate a decrease in the Incentive Price of outstanding Incentives. At the full discretion of the Administrator,
such actions may be brought before the stockholders of the Company for their approval.
|
|
|
36.
|
In
the event of a Share Sale or a Merger, each Participant shall participate in the Share Sale or the Merger and sell or exchange,
as the case may be, all of his or her Shares and Incentives in the Company, provided, however, that
each such Share or Incentive shall be sold or exchanged at a price or ratio (as the case may be) equal to that of any other
share sold or exchanged under the Share Sale or the Merger (minus the applicable exercise price), while accounting for changes
in such price or ratio due to the respective terms of any such Award.
|
37.
|
With
respect to Incentive Shares held in trust the following procedure will be applied: the Trustee (as defined below) will transfer
the Incentive Shares held in trust and sign any document in order to effectuate the transfer of Incentive Shares, including
share transfer deeds, provided, however, that the Trustee receives a notice from the Board, specifying
that: (i) all or substantially all of the issued outstanding share capital of the Company is to be sold or exchanged, and
therefore the Trustee is obligated to transfer the Incentive Shares held in trust; (ii) the Company is obligated to withhold
at the source all taxes required to be paid upon release of the Incentive Shares from the trust and to provide the Trustee
with evidence, satisfactory to the Trustee, that such taxes indeed have been paid; (iii) the Company is obligated to transfer
the consideration for the Incentive Shares directly to the Participant.
|
ARTICLE
IX
Changes
in Capitalization
38.
|
In
case of any change in capitalization event as provided in Article 11 of the Incentive Plan, appropriate equitable
adjustments shall be made by the Board, whose determination shall be final, to the number of Shares which may be purchased
under the Israeli Plan, the number of Shares subject to Awards, and the Incentive Price per Share which may be purchased under
outstanding Award Agreements, all as in accordance with Article 11 of the Incentive Plan.
|
ARTICLE
X
Trustee
39.
|
Approved
102 Incentives granted under the Israeli Plan and any Shares allocated or issued upon exercise of such Approved 102 Incentives,
including all rights attaching to such shares, and other shares received subsequently following any realization of rights
(including bonus shares), will be allocated or issued to a trustee nominated by the Board (the “Trustee”)
and approved in accordance with the provisions of Section 102 of the Ordinance, and will be held by the Trustee for the benefit
of the Participants.
|
|
|
40.
|
Approved
102 Incentives and any Shares received following exercise of Approved 102 Incentives, including all rights attached to such
Shares, and other Shares received subsequently following any realization of rights (including bonus Shares), will be held
by the Trustee for a period of (i) at least twenty four (24) months from the Date of Grant of the Capital Gain Incentives
, or (ii) at least twelve (12) months from the Date of Grant of the Work Income Incentives (the “Trust Period”).
If the requirements for Approved 102 Incentives are not met, then the Approved 102 Incentives will be regarded as Unapproved
102 Incentives. Notwithstanding the aforesaid, Shares received upon the exercise of Incentives may be sold or transferred,
and the Trustee may release such Shares (or Approved 102 Incentives) from trust, prior to the lapse of the Trust Period, provided,
however, that tax is paid or withheld in accordance with Section 102(b)(4) of the Ordinance and Section 7 of the Income Tax
Rules (Tax Relief in Issuance of Shares to Employees), 2003. However, the Administrator may, in its sole discretion, require
a Participant not to sell the Shares or transfer the Incentives in the Participant’s name prior to the lapse of the
Trust Period.
|
|
|
41.
|
All
rights attaching to any Shares received following exercise of Approved 102 Incentives, and other shares received subsequently
following any realization of rights (including bonus Shares), will be subject to the same taxation treatment applicable to
such received Shares.
|
|
|
42.
|
Section
3(i) Incentives granted under the Israeli Plan and any Shares allocated or issued upon exercise of such Section 3(i) Incentives
and other Shares received following any realization of rights, in the Administrator’s discretion, may be allocated or
issued to a Trustee and will be held by the Trustee until all of the terms required for release thereof, as set forth herein
and in the applicable Award agreement with the Participant, are fulfilled, including payment of the required taxes. Anything
to the contrary notwithstanding, the Trustee shall not transfer to a Participant any Section 3(i) Incentives which were not
already exercised into Shares by the Participant.
|
43.
|
The
Trustee shall not transfer to the Participant any Shares allocated or issued upon exercise of Incentives prior to the full
payment of the Participant’s tax liabilities arising from or relating to Incentives, which were granted to the Participant
or any Shares allocated or issued upon exercise of such Incentives.
|
ARTICLE
XI
No
Obligation to Exercise Incentive
44.
|
Granting
of an Incentive shall impose no obligation on the recipient to exercise such Incentive.
|
ARTICLE
XII
Use
of Proceeds
45.
|
The
proceeds received from the issuance of Shares upon exercise of Incentives pursuant to the Israeli Plan shall be used for general
corporate purposes.
|
ARTICLE
XIII
Rights
of a Stockholder; Voting Rights
46.
|
The
Participant shall have no rights of a stockholder with respect to Shares to be acquired by the exercise of an Incentive until
a certificate or certificates representing such Shares are issued to him following exercise of those Incentives which are
fully vested and exercisable. Upon issuance of a certificate or certificates, the Participant shall have the rights of a stockholder
attaching to Shares subject to any restrictions or legends under any law, this Israeli Plan or the Incentive Plan.
|
ARTICLE
XIV
Employment
Rights
47.
|
Nothing
in the Israeli Plan or in any Approved 102 Incentive granted hereunder shall confer on any Participant who is an employee
or service provider any right to continue in the employ of the Company or a Group Company, or to interfere in any way with
the right of the Company or a Group Company to terminate the Participant’s employment or engagement at any time.
|
ARTICLE
XV
Compliance
with the Law
48.
|
The
Company and each of its Affiliates shall be relieved from any liability for the non-issuance or non-transfer or any delay
in issuance or transfer of any Shares subject to Incentives under the Israeli Plan which results from the inability of the
Company or its Affiliates to obtain, or from any delay in obtaining, from any regulatory body having jurisdiction, all requisite
authority to issue or transfer the Shares upon exercise of the Incentives under the Israeli Plan, if counsel for the Company
deems such authority necessary for lawful issuance or transfer of any such shares. Appropriate legends may be placed on the
stock certificates evidencing shares issued upon exercise of Incentives to reflect such transfer restrictions.
|
ARTICLE
XVI
Transfer
of Shares
49.
|
Any
issued Shares shall, unless such shares are registered in accordance with the United States Securities Act of 1933, as amended
(the “Act”), be sold only in accordance with exemptions under such Act. There shall be no exercises,
transfers, sales or other dispositions of issued Shares unless such shares are either registered or exempt from registration,
provided, however, that such exercise, transfer or other disposition may be subject to any lock up provision as agreed by
the Company.
|
ARTICLE
XVII
Investment
Representation
50.
|
Each
Participant exercising any Incentive under the Israeli Plan acknowledges, by virtue of such exercise, that the Company has
not, as of the date of the approval of this Plan by the Board, registered the Shares covered thereby under the Act. The Participant
shall sign and deliver to the Company, if requested, a separate investment representation, certificate or such other document
as may be required by the Company’s counsel, to such effect; provided, however, that such Incentive,
representation, certificate or other document may provide that the said investment restriction shall not be operative as to
such Shares as may in the future be registered with the Securities and Exchange Commission pursuant to the Act. Furthermore,
the Company may place a legend on any Shares certificate delivered to the Participant to the effect that such Shares were
acquired pursuant to an investment representation and without registration of the Shares.
|
ARTICLE
XVIII
Effectiveness
and Term of Plan
51.
|
This
Israeli Plan was originally adopted by the Board on October 25, 2013. The Israeli Plan shall expire on October 25, 2023, except
as to Incentives outstanding on that date. No Incentive shall be granted pursuant to the Israeli Plan after its expiration.
All Shares reserved for issuance under the Israeli Plan, in respect of which the right of a Participant to purchase the same
shall for any reason terminate, expire or otherwise cease to exist, shall again be available for grant through Incentives
under the Israeli Plan.
|
ARTICLE
XIX
Amendment
or Discontinuance of Plan
52.
|
The
Board may, without the consent of the stockholders of the Company or the Participants under the Israeli Plan, at any time
terminate the Israeli Plan entirely and at any time, from time to time, amend or modify the Israeli Plan, provided that no
such action shall adversely affect Incentives granted hereunder without the Participant’s consent, and provided further
that no such action by the Board, without the approval of the stockholders, may increase the total number of Shares which
may be purchased pursuant to Incentives granted under the Israeli Plan.
|
ARTICLE
XX
Tax
Consequences and Other Requirements
53.
|
The
exercise of an Incentive that is granted hereunder shall be subject to the condition that if at any time the Company shall
determine in its discretion that the satisfaction of withholding tax or other withholding liabilities, or that the listing,
registration, or qualification of any shares otherwise deliverable upon such exercise upon any securities exchange or under
any national, state or federal law, or that the consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, such exercise in the delivery or purchase of shares pursuant thereto, then in any such
event, such exercise shall not be effective unless such withholding, listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to the Company. Any tax obligations arising from
the grant or exercise of an Incentive, from the payment for the Shares covered thereby or from any other event or act (of
the Company or the Participant) hereunder, shall be borne solely by the Participant. Furthermore, the Participant hereby agrees
and undertakes to indemnify the Company, its directors and officers and any Trustee that holds the Incentives, and hold them
harmless against and from any and all liability for any such tax or interest thereon, including without limitation, liabilities
relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Participants.
|
ARTICLE
XXI
Governing
Law
54.
|
The
Israeli Plan and all instruments issued hereunder shall be governed by and interpreted in accordance with the laws of the
State of Israel.
|
ARTICLE
XXII
Notices
55.
|
Each
notice relating to the Israeli Plan shall be in writing and delivered in person or by first class mail; postage prepaid, to
the address as hereinafter provided. Each notice shall be deemed to have been given on the date it is received. Each notice
to the Company shall be addressed to it at its principal offices. Each notice to the Participant or other person or persons
then entitled to exercise an Incentive shall be addressed to the Participant or such other person or persons at the Participant’s
last known address.
|
ARTICLE
XXIII
Interpretation
56.
|
The
interpretation and construction of any terms or conditions of the Israeli Plan, or of the Award Agreement or other matters
related to the Israeli Plan by the Administrator shall be final and conclusive.
|
***************
Annex
C
FORM
OF CERTIFICATE OF AMENDMENT
OF
CERTIFICATE
OF INCORPORATION
OF
INSPIREMD,
INC.
InspireMD,
Inc. (the “Corporation”), a corporation organized and existing under the General Corporation Law of the State
of Delaware, does hereby certify that:
1.
Resolutions were duly adopted by the Board of Directors of the Corporation setting forth this proposed Amendment to the Certificate
of Incorporation and declaring said amendment to be advisable and calling for the consideration and approval thereof at a meeting
of the stockholders of the Corporation.
2.
The Certificate of Incorporation of the Corporation is hereby amended by deleting subsection (A) of ARTICLE FOURTH in its entirety
and inserting the following in lieu thereof:
“FOURTH: A.
The total number of shares of all classes of stock which the Corporation shall have authority to issue is three hundred five million
(305,000,000), consisting of three hundred million (300,000,000) shares of Common Stock, par value $0.0001 per share (the “Common
Stock”) and five million (5,000,000) shares of Preferred Stock, par value $0.0001 per share (the “Preferred Stock”).”
3.
Pursuant to the resolution of the Board of Directors, an annual meeting of the stockholders of the Company was duly called and
held upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary
number of shares as required by statute were voted in favor of the foregoing amendment.
4.
The foregoing amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the
State of Delaware.
[SIGNATURE
PAGE FOLLOWS]
[SIGNATURE
PAGE TO CERTIFICATE OF AMENDMENT]
IN
WITNESS WHEREOF, InpsireMD, Inc., has caused this Certificate to be executed by its duly authorized officer on this __ day of
__, 2020.
|
INSPIREMD,
INC.
|
|
|
|
|
By:
|
|
|
|
Craig
Shore
|
|
|
Chief
Financial Officer, Treasurer and Secretary
|
InspireMD (AMEX:NSPR)
Historical Stock Chart
From Aug 2024 to Sep 2024
InspireMD (AMEX:NSPR)
Historical Stock Chart
From Sep 2023 to Sep 2024