WLDS Wearable Devices Ltd

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

For the month of August 2024

 

Commission file number: 001-41502

 

WEARABLE DEVICES Ltd.

(Translation of registrant’s name into English)

 

5 Ha-Tnufa Street

Yokne-am Illit, Israel 2066736

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒      Form 40-F ☐

 

 

 

 

CONTENTS

 

Approval of the 2024 Global Equity Incentive Plan 

 

On August 15, 2024, the Board of Directors (the “Board”) of Wearable Devices Ltd. (the “Company”) approved the Company’s 2024 Global Equity Incentive Plan (the “Incentive Plan”), which provides for the reservation from time-to-time, out of the Company’s authorized unissued share capital, such number of ordinary shares, par value NIS 0.01 per share (“Ordinary Shares”), as the Board deems appropriate. The Board has initially authorized the issuance of up to 4,570,606 Ordinary Shares under the Incentive Plan. The Incentive Plan includes an Annex that governs the grants of awards to employees and other service providers who are citizens or resident aliens of the United States, which is subject to the approval of the Company’s shareholders. The Incentive Plan, which is subject to filing with the Israeli tax authority, provides for the grant of options, shares, restricted shares or restricted share units to employees, non-employee directors, consultants, advisors, or service providers of the Company, as well as employees, non-employee directors, consultants, advisors, or service providers of any affiliate of the Company.

 

The Incentive Plan will continue for a term of ten years from the date of adoption by the Board, or until August 14, 2034, unless terminated earlier.

 

The foregoing description of the Incentive Plan is qualified in its entirety by the terms of the Incentive Plan, a copy of which is filed as Exhibit 10.1 hereto and is incorporated by reference herein.

 

 

Approval of the 2024 Employee Stock Purchase Plan 

 

Also on August 15, 2024, the Board approved the Company’s 2024 Employee Stock Purchase Plan (the “ESPP”), which provides for the issuance of up to 5,000,000 Ordinary Shares and includes an Annex that governs the grants of awards to employees who are residents of the State of Israel. The ESPP is subject to filing with the Israeli tax authority and the approval of the Company’s shareholders. Generally, all of the Company’s employees will be eligible to participate in the ESPP if they are employed by the Company, or employees of any participating subsidiary, provided that they have been employed by the Company or subsidiary for more than five months in a calendar year. The ESPP includes a component that allows the Company to make offerings intended to qualify under Section 423 of the U.S. Internal Revenue Code of 1986, as amended, and a component that allows the Company to make offerings not intended to qualify under Section 423. The ESPP currently provides that there will be at least one offering in any consecutive 12-month period. The ESPP permits participants to purchase ordinary shares through payroll deductions in an amount equal to a whole percentage of from one to 15% of their ESPP eligible compensation (or such other limited established by the administrator in accordance with the terms of our ESPP) in an offering. The purchase price of the shares will be determined by the Committee in accordance with the terms of the ESPP, but the option price shall not be less than the lesser of 85 percent of the fair market value of the shares on the offering date, or 85 percent of the fair market value of the shares on the exercise date.

 

The foregoing description of the ESPP is qualified in its entirety by the terms of the ESPP, a copy of which is filed as Exhibit 10.2 hereto and is incorporated by reference herein.

 

This Report of Foreign Private Issuer on Form 6-K, including its exhibit, is incorporated by reference into the registration statements on Form S-8 (File Nos. 333-269869 and 333-274343) and on Form F-3 (File No. 333-274841 ) of the Registrant, filed with the Securities and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

 

EXHIBIT INDEX

 

Exhibit No.
10.1		Wearable Devices Ltd. 2024 Global Equity Incentive Plan.
10.2		Wearable Devices Ltd. 2024 Employee Stock Purchase Plan.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Wearable Devices Ltd.
Date: August 22, 2024	By:	/s/ Asher Dahan
		Asher Dahan
		Chief Executive Officer

 

 

3

Exhibit 10.1

 

WEARABLE DEVICES LTD.

 

2024 GLOBAL EQUITY INCENTIVE PLAN

 

DEFINITIONS

 

For purposes of the 2024 Global Equity Incentive Plan and related documents, including without limitation, the Grant Notification Letter, the following definitions shall apply:

 

(a)	“Affiliate” or “affiliate” – a company controlled by, under common control with, or controlling, the Company.

 

(b)	“Award” - means any Option, Share, Restricted Share or Restricted Share Units.

 

(c)	“Board” - the Board of Directors of the Company.

 

(d)	“Cause” – any of the following:

 

(i)

conviction of any felony involving moral turpitude or affecting the Company or any of its affiliates;

 

(ii)

any refusal to carry out a reasonable directive of the chief executive officer, the Board or the Grantee’s direct supervisor, which involves the business of the Company or any of its affiliates and was capable of being lawfully performed;

 

(iii)

embezzlement of funds of the Company or any of its affiliates;

 

(iv)

any breach of the Grantee’s fiduciary duties or duties of care of the Company or any of its affiliates, including without limitation disclosure of confidential information of the Company or any of its affiliates;

 

(v)

any conduct (other than conduct in good faith), including without limitation, any act or omission, reasonably determined by the Board to be materially detrimental to the Company or any of its affiliates;

 

(vi)

if and as such term is or may be defined under the Grantee’s employment agreement, service agreement or any other engagement agreement with the Company or any of its affiliates; and/or

 

(vii)

should circumstances arise as a result of which the Grantees’ employment with the Company and/or any of its affiliates is or may be terminated without severance pay.

 

For the avoidance of any doubt, it is hereby clarified that in any event of a conflict between the definition of the term “Cause” in this Plan and the definition of the term “Cause” in a certain employment agreement, the definition in this Plan shall prevail in connection with the Award, with the Grant Notification Letter and with this Plan.

 

 

(e)	“Chairman” - the chairman of the Committee.

 

(f)	“Committee” - a share award compensation committee, if so appointed by the Board, which shall consist of no fewer than two members of the Board.

 

(g)	“Company” – Wearable Devices Ltd., an Israeli company.

 

(h)	“Date of Grant” - the date of grant of an Award, as determined by the Board or the Committee and set forth in the Grantee’s Grant Notification Letter.

 

(i)	“Employee” - a person who is employed by the Company or any affiliate.

 

(j)

“Exercise” or “exercise” - delivery of a Notice of Exercise and payment of the Purchase Price, provided that “Exercise,” “Exercised,” and words of similar import, when referring to an Award that does not require exercise or that is settled upon vesting (such as may be the case with RSUs or Restricted Shares, if so determined in their terms), shall be deemed to refer to the vesting of such an Award (regardless of whether or not the wording included reference to the vesting of such an Award explicitly).

 

(k)	“Expiration Date” - the date upon which an Option shall expire, as set forth in Section 7.2 of the Plan.

 

(l)	“Fair Market Value” - as of any date, the value of a Share determined as follows:

 

(i)

If the Shares are listed on any established share exchange or a national market system, including without limitation the Tel-Aviv Share Exchange, the New York Stock Exchange, the NYSE American LLC, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market, the Fair Market Value shall be the closing sales price for such Shares (or the closing bid, if no sales were reported), as quoted on such exchange or system on the day of determination (or the preceding trading day if such exchange or system is closed), as reported in the Wall Street Journal, or such other source as the Board deems reliable;

 

(ii)

If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean between the high bid and low asked prices for the Shares on the day of determination (or the preceding trading day if such exchange or system is closed); or

 

(iii)

In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Board.

 

(m)	“Grantee” - a person who receives or holds an Award under the Plan.

 

(n)	“Grant Notification Letter” or “Award Agreement” - a document to be signed between the Company and a Grantee that sets out and informs the Grantee with respect to the terms and conditions of the grant of an Award.

 

(o)

Reserved.

 

(p)	“Non-Employee” - a non-employee director, consultant, advisor, or service provider of the Company or any affiliate, or any other person who is not an Employee.

 

 

(q)	“Option” - an option to purchase one or more Shares of the Company pursuant to the Plan.

 

(r)	“Plan” - this 2024 Global Equity Incentive Plan, as amended.

 

(s)	“Purchase Price” - the price for each Share subject to an Option.

 

(t)	“Restricted Shares” or “RS” - means a Share Award granted to a Grantee pursuant to Section 8.3 below.

 

(u)	“Restricted Share Unit” or “RSU” - means a Share Award granted to a Grantee pursuant to Section 8.4 below.

 

(v)	“Share(s)” - the Ordinary Shares of the Company.

 

(w)	“Share Award” - means the right to receive Shares of the Company pursuant to the terms and conditions set forth in the pertinent Grant Notification Letter.

 

(x)	“Successor Company” - any entity the Company is merged into or is acquired by, in which the Company is not the surviving entity.

 

(y)	“Transaction” – each of the following:

 

(i)

a merger, acquisition or reorganization of the Company with one or more other entities in which the shareholders of the Company prior to the merger, acquisition or reorganization hold less than 50% of the voting power in the surviving entity as of immediately following the merger, acquisition or reorganization; or

 

(ii)

a sale of all or substantially all of the shares or assets of the Company.

 

(z)	“Vesting” or “vesting” and any words of similar import - any terms and conditions determined in the Grant Notification Letter which must be fulfilled in order for an Option to become Exercisable or an Award to vest or be issued.

 

(aa)	“Vested Award” - an Award, which has already been vested pursuant to any terms and conditions determined (including Vesting Dates) in the Grant Notification Letter which must be fulfilled in order for an Option to become Exercisable or an Award to vest or be issued.

 

(bb)	“Vesting Dates” - as determined by the Board or by the Committee, the date as of which the Grantee shall be entitled to exercise the Awards or part of the Awards, as set forth in Section 8 of the Plan and in the Grantee’s Grant Notification Letter.

 

 

THE PLAN

 

This Plan, as amended from time to time, shall be known as Wearable Devices Ltd. 2024 Global Equity Incentive Plan.

 

1.

PURPOSE OF THE PLAN

 

The Plan is intended to provide an incentive to retain in the employ of the Company and its Affiliates persons of training, experience, and ability, to attract new employees, directors, consultants, service providers and any other entity which the Board shall decide their services are considered valuable to the Company, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company by providing them with opportunities to purchase shares in the Company, pursuant to the Plan.

 

Incentives under the Plan shall only be issued to Grantees subject to the applicable law in their respective country of residence for tax purposes or any other purposes, as the case may be.

 

2.

ADMINISTRATION OF THE PLAN

 

2.1

The Board shall have the power to administer the Plan either directly or upon the recommendation of the Committee, all as provided by applicable law and in the Company’s Articles of Association. Notwithstanding the above, the Board shall automatically have residual authority if no Committee shall be constituted or if such Committee shall cease to operate for any reason. In such case, all references in the Plan to “Committee” shall be treated as references to the “Board.”

 

2.2

The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as the Chairman shall determine. The Committee shall keep records of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

 

2.3

Subject to applicable law, the Committee shall have the full power and authority to:

 

(i)

designate participants;

 

(ii)

determine the terms and provisions of the respective Grant Notification Letters, including, but not limited to, the number of Awards to be granted to each Grantee, if applicable, the number of Shares to be covered by each Award, provisions concerning the time and the extent to which the Options may be exercised and the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel or suspend Awards, as necessary;

 

(iii)

determine the Fair Market Value of the Shares covered by each Option;

 

(iv)

designate the type of Awards;

 

 

(v)

alter any restrictions and conditions of any Awards, including Options or Shares subject to any Options;

 

(vi)

interpret the provisions and supervise the administration of the Plan;

 

(vii)

accelerate the right of a Grantee to exercise in whole or in part, any previously granted Award;

 

(viii)

determine the Purchase Price of the Award;

 

(ix)

prescribe, amend and rescind rules and regulations relating to the Plan; and

 

(x)

make all other determinations deemed necessary or advisable for the administration of the Plan.

 

2.4

The Committee shall have the authority to grant, at its discretion, to the holder of an outstanding Award, in exchange for the surrender and cancellation of such Award, a new Award, which if applicable - having a purchase price equal to, lower than or higher than the Purchase Price of the original Award so surrendered and canceled and containing such other terms and conditions, or to change the Purchase Price as the Board or the Committee may prescribe in accordance with the provisions of the Plan.

 

2.5

Subject to the Company’s Articles of Association, as the same may be in effect from time to time, all decisions and selections made by the Board or the Committee pursuant to the provisions of the Plan shall be made by a majority of its members except that no member of the Board or the Committee shall vote on, or be counted for quorum purposes, with respect to any proposed action of the Board or the Committee relating to any Award to be granted to that member. Any decision reduced to writing shall be executed in accordance with the provisions of the Company’s Articles of Association, as the same may be in effect from time to time.

 

2.6

The interpretation and construction by the Committee of any provision of the Plan or of any Grant Notification Letter thereunder shall be final and conclusive unless otherwise determined by the Board.

 

3.

DESIGNATION OF PARTICIPANTS

 

The persons eligible for participation in the Plan as Grantees shall include any Employees and/or Non-Employees of the Company or of any affiliate.

 

The grant of an Award hereunder shall neither entitle the Grantee to participate, nor disqualify the Grantee from participating in, any other grant of Awards pursuant to the Plan or any other option or share plan of the Company or any of its affiliates.

 

 

4.

SHARES RESERVED FOR THE PLAN; RESTRICTION THEREON

 

4.1

The Company shall reserve from time-to-time, out of its authorized unissued share capital, such number of Shares as the Board deems appropriate.

 

4.2

Each Award granted pursuant to the Plan shall be evidenced by a written Grant Notification Letter between the Company and the Grantee, in such form as the Board or the Committee shall from time to time approve. Each Grant Notification Letter shall state, among other matters, the number of Shares to which the Award relates, the type of Award granted thereunder, the Vesting Dates, the Purchase Price per share (if applicable), the Expiration Date and such other terms and conditions as the Committee or the Board in its discretion may prescribe, provided that they are consistent with this Plan.

 

5.

PURCHASE PRICE

 

5.1

The Purchase Price of each Share subject to an Option shall be determined by the Committee in its sole and absolute discretion in accordance with applicable law, subject to any guidelines as may be determined by the Board from time-to-time. Each Grant Notification Letter will contain the Purchase Price determined for each Grantee.

 

5.2

Without derogating from the above and in addition thereto, the Purchase Price of each Share subject to an Option shall be payable upon the exercise of an Option in the following acceptable forms of payment:

 

(i)

cash, check or wire transfer;

 

(ii)

if, and only to the extent, explicitly permitted by the provisions of the applicable Grant Notification Letter - exercise of part or all of vested Options through a “Net Exercise” method so that the Grantee will be entitled to receive pursuant to the exercise of the Options only the number of Shares representing the benefit component in the Options, based on the following formula, in exchange to paying only the par value of the Share. For the avoidance of doubt, according to this exercise method, the Grantee will not actually pay the Purchase Price which is used only for calculating the benefit component.

 

 

Y = the number of vested exercisable Options that the Grantee wishes to exercise into Shares;

 

A = the Fair Market Value (as defined below) of the Share at the date of exercise;

 

B = the Purchase Price;

 

N = the par value of the Share

 

(iii)

at the discretion of the Committee, any combination of the methods of payment permitted by any paragraph of this Section 5.2.

 

5.3

The Purchase Price shall be denominated in the currency determined by the Committee.

 

 

6.

ADJUSTMENTS

 

Upon the occurrence of any of the following described events, Grantee’s rights to purchase Shares under the Plan shall be adjusted as hereafter provided:

 

6.1

In the event of Transaction, the unexercised Awards then outstanding under the Plan may, at the sole discretion of the Board, (i) be assumed or substituted for an appropriate number of shares of each class of shares or other securities of the Successor Company (or a parent or subsidiary of the Successor Company) as were distributed to the shareholders of the Company holding Shares in connection and with respect to the Transaction; or (ii) with respect to Options or any other unvested Awards - be cancelled, effective as of the effective date of such Transaction. In the case of such assumption and/or substitution of Awards, appropriate adjustments shall be made to the Purchase Price, or to the number of Awards (in case of Restricted Shares or RSUs) if applicable, so as to reflect such action and all other terms and conditions of the Grant Notification Letters shall remain unchanged, including but not limited to the vesting schedule, all subject to the determination of the Committee or the Board, which determination shall be in their sole discretion and final. The Company shall notify the Grantee of the Transaction in such form and method as it deems applicable within 5 days following the effective date of such Transaction. In the event that the Board elects to cancel the unexercised Awards, effective as of the effective date of the Transaction, the Company shall notify the Grantee of such election within 5 days following the effective date of such Transaction. To the extent that unexercised vested Awards are cancelled by election of the Board, the Company shall ensure that each Grantee holding unexercised vested Awards, receives, per Share underlying such Award (whether directly or by way of payment to a trustee holding such Grantees Award) – in the context of the Transaction and subject to any applicable deductions for withholding taxes, escrows, hold-backs, etc. – the positive excess (if any) of the per-Share consideration being received by the holders of Shares in the Transaction over the per-Share Purchase Price of the unexercised vested Award held by such Grantee. In order to remove any doubt, and unless otherwise determined by the Board (and if so determined, the provisions of Section 6.2 shall apply, mutatis-mutandis), any and all vested Restricted Shares shall be sold within the course of such Transaction, and Grantee shall be entitled to the applicable consideration thereof pursuant to the foregoing mechanism.

 

6.2

For the purposes of Section 6.1 above, an Option, or an unvested RSU or Restricted Share, shall be considered assumed or substituted if, following the Transaction, the respective foregoing Award confers the right to purchase or receive, for each Share underlying such an Award immediately prior to the Transaction, the consideration (whether shares, options, cash, or other securities or property) received in the Transaction by holders of Shares held on the effective date of the Transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Transaction is not solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary, the Committee may, with the consent of the Successor Company, provide for the per-share consideration to be received upon the exercise of the foregoing Award to be solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary equal in Fair Market Value to the per Share consideration received by holders of a majority of the outstanding Shares in the Transaction; and provided further that the Committee may determine, in its discretion, that in lieu of such assumption or substitution of such Award for awards of the Successor Company or its parent or subsidiary, such Awards will be substituted for any other type of asset or property, including cash, which is fair under the circumstances. In such case, the vesting terms shall continue to apply with respect to the substituted asset or property, unless otherwise determined by the Board.

 

 

6.3

Unless otherwise expressly determined by the Board, all Options and/or RSUs, whether vested or unvested, and unvested RS, shall expire and be cancelled (or forfeited, as applicable), automatically, in the event that the Company is under a liquidation or dissolution proceeding, whether voluntary or involuntary.

 

6.4

Reserved.

 

6.5

If the outstanding Shares of the Company shall at any time be changed or exchanged by declaration of a share dividend (bonus shares), share split, combination or exchange of shares, recapitalization, spin-off or any other like event by or of the Company, and as often as the same shall occur, then the number, class and kind of the Shares subject to an Award therefore granted, and the Purchase Prices, if applicable, shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares without changing the aggregate Purchase Price. Upon the happening of any of the foregoing, the class and aggregate number of Shares issuable pursuant to the Plan (as set forth in Section 6 hereof), in respect of which Awards have not yet been exercised and/or vested, shall be appropriately adjusted, all as will be determined by the Board whose determination shall be final.

 

6.6

Should the Company declare a cash dividend to its shareholders, the number of Awards and the per-share Purchase Price thereunder shall not be adjusted.

 

6.7

Notwithstanding anything to the contrary mentioned above, subject to this Section 6, the Grantee shall not be entitled to receive portion of Shares (or any substitute or asset exchanged therefor), and the number of shares (or other assets) allocated to the Grantee pursuant to any adjustments made pursuant to this Section 6, shall be rounded as to nearest whole number of shares (or other assets) and the provisions of this Plan shall apply accordingly.

 

6.8

Without derogating from the provisions of the Plan, it is to be clarified that in the event that the Company’s shares shall at any time in the future be registered for trading on the Tel-Aviv Stock Exchange Ltd., no exercise of an Option shall be made on the determination dates of the distribution of any share dividend (bonus shares), cash dividend, rights offering, share split, combination or exchange of shares, recapitalization, or any other like event by or of the Company (the “Company’s Event”). Also, it is to be clarified that if the “X” date of a Company’s Event occurs prior to the determination date of a Company’s Event, no exercise of an Option shall be made on the “X” date.

 

6.9

In the event that the Company’s Shares shall be registered for trading in any public market, the Grantee acknowledges that Grantee’s rights to sell the Shares may be subject to certain trading limitations and/or restrictions, including a legal lock-up and/or contractual lock-up period required by the Company or by its underwriters, and the Grantee unconditionally agrees and accepts any such limitations and/or restrictions and shall timely execute any required documents reflecting the same.

 

 

7

TERM AND EXERCISE OF AWARDS

 

7.1

Awards shall be exercised by the Grantee by giving written notice to the Company and/or to any third party designated by the Company (the “Representative”), in such form and method as may be determined by the Company, which exercise, where applicable, shall be effective upon receipt of such notice by the Company and/or the Representative and the payment of the Purchase Price at the Company’s or the Representative’s principal office. Where applicable, the notice shall specify the number of Shares with respect to which the Award is being exercised. Other Awards are exercisable in accordance with the respective terms under Section 8.

 

7.2

Always subject to the provisions of Sections 8.3 through 8.8 in connection with Awards issued therewith, Awards, to the extent not previously exercised, shall terminate forthwith upon the earlier of: (i) the date set forth in the Grant Notification Letter; (ii) the expiration of any extended period in any of the events set forth in Section 7.5 below; or (iii) the date upon which the Company becomes subject to a liquidation or dissolution proceeding, whether voluntary or involuntary (unless otherwise determined by the Board).

 

7.3

Where applicable, the Awards may be exercised by the Grantee in whole at any time or in part from time to time, to the extent that the Awards become vested and exercisable, prior to the Expiration Date, and provided that, subject to the provisions of Section 7.5 below, the Grantee is employed by or providing services to the Company or any of its affiliates, at all times during the period beginning with the granting of the Award and ending upon the date of exercise.

 

7.4

Subject to the provisions of Section 7.5 below and Sections 8.3 through 8.8, in the event of Termination of Grantee’s Employment or Services with the Company or any of its Affiliates, all Awards granted to such Grantee will immediately expire. For the avoidance of doubt, in case of such Termination of Grantee’s Employment or Services, the unvested portion of the Grantee’s Award shall not vest and shall not become exercisable and the Grantee shall have no claim against the Company and/or its Affiliate that his/her Awards were prevented from continuing to vest as of such termination. Notwithstanding anything to the contrary mentioned above, a Grantee shall not cease to be an Employee only due to the transfer of such Employee’s employment among the Company and its Affiliates.

 

 

7.5

Notwithstanding anything to the contrary hereinabove and unless otherwise determined in the Grantee’s Grant Notification Letter and/or with respect to Awards granted under Sections 8.3 and/or 8.4, a Vested Award may be exercised after the date of Termination of Grantee’s Employment or Services with the Company or any Affiliates during an additional period of time beyond the date of such termination, but only with respect to the number of Vested Awards at the time of such termination according to the Vesting Dates, if:

 

(i)

termination is without Cause, in which event any Vested Award still in force and unexpired may be exercised within a period of ninety (90) days from the Termination Date;

 

(ii)

termination is the result of death or Disability of the Grantee, in which event any Vested Award still in force and unexpired may be exercised within a period of twelve (12) months from the Termination Date; or

 

(iii)

prior to the date of such termination, the Committee shall authorize an extension of the terms of all or part of the Vested Awards beyond the date of such termination for a period not to exceed the period during which the Options by their terms would otherwise have been exercisable.

 

For the purpose of this Section 7.5 and Section 7.4 above, “Termination of Grantee’s Employment or Services” and/or “Termination Date” shall be considered the actual termination date, not the date of on which notice of termination was delivered to the Grantee; and the term “Disability” means a person’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months. An individual shall not be considered to have a Disability for the purposes hereof, unless sufficient proof of the existence thereof is provided to the Committee in such form and manner, and at such times, as the Committee may require.

 

For avoidance of any doubt, if Termination of Grantee’s Employment or Services is for Cause, any outstanding unexercised Award (whether vested or non-vested), will immediately expire and terminate, and the Grantee shall not have any right in connection to such outstanding Award.

 

7.6

Any form of Grant Notification Letter authorized by the Plan may contain such other provisions as the Committee may, from time to time, deem advisable.

 

7.7

The Awards and any underlying Shares are extraordinary, one-time benefits granted to the Grantee and are not and shall not be deemed a salary component for any purpose whatsoever, including in connection with calculating severance compensation under applicable law.

 

7.8

Neither the Grantee nor any other person, as the case may be, shall have any claim to be granted any Award, and there is no obligation by the Company for uniformity of treatment of Grantees or their beneficiaries (if applicable). The terms and conditions of the Awards granted under this Plan and any of the Board’s determinations and interpretations with respect thereto need not be the same with respect to each Grantee (whether or not such Grantees are similarly situated).

 

7.9

For the purposes of this Plan, the termination, expiration or cancellation of an Award which is an RS and/or an RSU, shall mean the forfeiture of such Award, without any further actions on behalf of Grantee or Company, unless otherwise decided by the Board or the Committee (if applicable).

 

 

8.

GRANT AND VESTING OF AWARDS

 

8.1

Subject to the provisions of the Plan, the Board may grant Awards to Grantees. Each Award shall vest following the Vesting Dates and for the number of Shares as shall be provided in the Grant Notification Letter. However, no Award shall be exercisable after the Expiration Date.

 

8.2

An Award may be subject to such other terms and conditions on the time or times when it may be exercised, as the Committee may deem appropriate. The vesting provisions of individual Awards may vary.

 

Restricted shares

 

8.3

The Board may award Restricted Shares to any Grantee. Each Award of Restricted Shares under this Plan shall be evidenced by an applicable Grant Notification Letter, in such form as the Board shall from time to time approve. The Restricted Shares shall be subject to all applicable terms of this Plan, which in the case of Restricted Shares granted under any local Annex shall include the respective tax provisions under this Plan and/or respective Annex thereof, and may be subject to any other terms that are not inconsistent with this Plan. The Restricted Share Grant Notification Letters shall comply with and be subject to the Plan unless otherwise specifically provided in such Grant Notification Letter and not inconsistent with this Plan, or applicable law:

 

(a)

Each Restricted Share Grant Notification Letter shall state an amount of Exercise Price to be paid by the Grantee, if any, in consideration for the issuance of the Restricted Shares and the terms of payment thereof, which may (but is not require to) include, payment in cash or by issuance of promissory notes or other evidence of indebtedness on such terms and conditions as determined by the Board. For avoidance of any doubt, no payment of Exercise Price shall be required as consideration for RSs, unless included in the Grant Notification Letter or as required by applicable law.

 

(b)

Restricted Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution (in which case they shall be transferred subject to all restrictions then or thereafter applicable thereto), until such Restricted Shares shall have vested (the period from the date on which the Award is granted until the date of vesting of the Restricted Share thereunder being referred to herein as the “Restricted Period”). The Board may also impose such additional or alternative restrictions and conditions on the Restricted Shares, as it deems appropriate, including the satisfaction of performance criteria. Such performance criteria may include, but are not limited to, sales, earnings before interest and taxes, return on investment, earnings per share, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Administrator or pursuant to the provisions of any Company policy required under mandatory provisions of applicable Law. Certificates for shares issued pursuant to Restricted Share Awards shall bear an appropriate legend referring to such restrictions, if applicable, and any attempt to dispose of any such shares in contravention of such restrictions shall be null and void and without effect. Such certificates may, if so determined by the Board, be held in escrow by an escrow agent appointed by the Board. In determining the Restricted Period of an Award, the Board may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded Restricted Shares on successive anniversaries of the date of such Award.

 

 

(c)

Subject to such exceptions as may be determined by the Board, if the Grantee’s continuous employment with or service to the Company or any Affiliate thereof shall terminate for any reason prior to the expiration of the Restricted Period of an Award or prior to the timely payment in full of the Exercise Price of any Restricted Shares (if any), any Shares remaining subject to vesting or if applicable, with respect to which the purchase price has not been paid in full, shall thereupon be forfeited, transferred to, and redeemed, repurchased or cancelled by, as the case may be, in any manner as set forth in this Plan, subject to applicable Laws and the Grantee shall have no further rights with respect to such Restricted Shares.

 

(d)

During the Restricted Period the Grantee shall possess all incidents of ownership of such Restricted Shares, subject to the other terms of this Plan, including the right to vote and receive dividends with respect to such Shares. All securities, if any, received by a Grantee with respect to Restricted Shares as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award.

 

Restricted Share Units

 

8.4

A Restricted Share Unit, or RSU, is an Award covering a number of Shares that is settled, if vested, and if applicable, exercised, by issuance of those Shares. Grant Notification Letter relating to the grant of RSUs under this Plan, shall be in such form as the Board shall from time to time approve. The RSUs shall be subject to all applicable terms of this Plan, mutatis mutandis, which in the case of RSUs shall include Section 17 herein (and other applicable tax provisions prescribed under the applicable Annex) and may be subject to any other terms that are not inconsistent with this Plan. The provisions of the various Grant Notification Letters need not be identical. RSUs may be granted in consideration of a reduction in the Grantee’s other compensation.

 

8.5

No payment of Exercise Price shall be required as consideration for RSUs, unless included in the Grant Notification Letter or as required by applicable law.

 

8.6

The Grantee shall not possess or own any ownership rights in the Shares underlying the RSUs and no rights as a shareholder shall exist prior to the actual issuance of Shares in the name of the Grantee.

 

 

8.7

Shares shall be issued to or for the benefit of Grantee promptly following each Vesting Date determined by the Administrator, provided that Grantee is still engaged by the Company on the applicable Vesting Date. After each such Vesting Date the Company shall promptly cause to be issued, for the benefit of Grantee, Shares with respect to RSUs that became vested on such Vesting Date. It is clarified that no Shares shall be issued pursuant to the RSUs to Grantee until the vesting criteria determined by the Administrator is met.

 

8.8

Settlement of vested RSUs shall be made in the form of Shares. Distribution to a Grantee of an amount (or amounts) from settlement of vested RSUs can be deferred to a date after settlement as determined by the Board. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until the grant of RSUs is settled, the number of Shares underlying such RSUs shall be subject to adjustment pursuant hereto, mutatis mutandis.

 

9.

SHARES NOT SUBJECT TO RIGHT OF FIRST REFUSAL

 

Notwithstanding anything to the contrary in the Articles of Association of the Company, none of the Grantees shall have a right of first refusal in relation with any sale of shares in the Company.

 

10.

DIVIDENDS

 

Notwithstanding anything mentioned above, and in addition thereto, with respect to all Shares (but excluding, for avoidance of any doubt, any unexercised Options or unvested RSUs) allocated or issued upon the exercise of Awards purchased by the Grantee and held by the Grantee or by a trustee, as the case may be, the Grantee shall be entitled to receive dividends in accordance with the quantity of such Shares, subject to the provisions of the Company’s Articles of Association (and all amendments thereto) and subject to any applicable taxation on distribution of dividends.

 

11.

PURCHASE FOR INVESTMENT

 

The Company’s obligation to issue or allocate Shares upon exercise or vesting of an Award, as applicable, granted under the Plan is expressly conditioned upon:

 

(i)

the Company’s completion of any registration or other qualifications of such Shares under all applicable laws, rules and regulations, or;

 

(ii)

representations and undertakings by the Grantee (or his legal representative, heir or legatee, in the event of the Grantee’s death) to assure that the sale of the Shares complies with any registration exemption requirements which the Company in its sole discretion shall deem necessary or advisable.

 

Such required representations and undertakings may include representations and agreements that such Grantee (or his legal representative, heir, or legatee):

 

(i)

is purchasing such Shares for investment and not with any present intention of selling or otherwise disposing thereof; and;

 

(ii)

agrees to have placed upon the face and reverse of any certificates evidencing such Shares a legend setting forth (a) any representations and undertakings which such Grantee has given to the Company or a reference thereto, and (b) that, prior to effecting any sale or other disposition of any such Shares, the Grantee must furnish to the Company an opinion of counsel, satisfactory to the Company, that such sale or disposition will not violate the applicable laws, rules and regulations of the United States or any other state having jurisdiction over the Company and the Grantee.

 

 

12.

RESTRICTIONS ON ASSIGNABILITY AND SALE OF AWARDS

 

Subject further to the provisions of Section 8, no Award, or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to it given to any third party whatsoever, other than by will or by laws of decent and distribution, or as specifically otherwise allowed under the Plan, and during the lifetime of the Grantee each and all of such Grantee’s rights to purchase Shares hereunder shall be exercisable only by the Grantee; provided however, that Vested Awards which are RS shall be transferable subject to the limitations under this Plan and the provisions of the Company’s Articles of Association (as amended) and/or any other shareholders agreement in effect at such time, to which the Company has been made a party.

 

Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.

 

13.

EFFECTIVE DATE, DURATION, AMENDMENTS OR TERMINATION OF THE PLAN

 

13.1

The Plan shall be effective as of the day it was adopted by the Board and shall terminate at the end of ten (10) years from such day of adoption (the: “Termination Date”).

 

13.2

The Company shall obtain the approval of the Company’s shareholders for the adoption of this Plan and/or the Annexes thereto, or for any amendment to this Plan and/or the Annexes thereto, if shareholders’ approval is required under any applicable law, including without limitation, the U.S. securities law or the securities laws of other jurisdiction applicable to Awards granted to Grantees under this Plan and/or the Annexes thereto, or if shareholders’ approval is required by any authority or by any governmental agencies or national securities exchanges, including without limitation, the U.S. Securities and Exchange Commission.

 

13.3

The Board may at any time, subject to the provisions of Section 13.2 above and all applicable law, amend, alter, suspend or terminate the Plan, provided, however, that

 

(i)

the Board may not extend the term of the Plan specified in Section 13.1 above and;

 

(ii)

no amendment, alteration, suspension or termination of the Plan shall impair the rights of any Grantee, unless mutually agreed otherwise by the Grantee and the Company, which agreement must be in writing and signed by the Grantee and the Company.

 

Earlier termination of the Plan prior to the Termination Date shall not affect the Board’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such earlier termination.

 

 

14.

GOVERNMENT REGULATIONS

 

The Plan, and the granting and exercise of Awards hereunder, and the obligation of the Company to sell and deliver Shares under such Awards, shall be subject to all applicable laws, rules, and regulations, whether of the State of Israel or of the United States or any other State having jurisdiction over the Company and the Grantee, including the registration of the Shares under the United States Securities Act of 1933, and the Ordinance and to such approvals by any governmental agencies or national securities exchanges as may be required. Nothing herein shall be deemed to require the Company to register the Shares under the securities laws of any jurisdiction.

 

15.

CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

 

Neither the Plan nor the Grant Notification Letter with the Grantee shall impose any obligation on the Company or an Affiliate thereof, to continue any Grantee in its employ or service, and nothing in the Plan or in any Awards granted pursuant thereto shall confer upon any Grantee any right to continue in the employ or service of the Company or an Affiliate thereof or restrict the right of the Company or an Affiliate thereof to terminate such employment or service at any time.

 

16.

GOVERNING LAW & JURISDICTION

 

The Plan shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to the Plan.

 

17.

TAX CONSEQUENCES

 

17.1

Any tax consequences to any Grantee arising from the grant or exercise of any Award, from the payment for Shares covered thereby or from any other event or act (of the Company and/or its affiliates, or the Grantee) hereunder shall be borne solely by the Grantee. The Company and/or its affiliates and any applicable trustee, if and as applicable, shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Grantee shall indemnify the Company and/or its representatives and/or its officers and/or its directors and/or its affiliates and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Grantee.

 

17.2

The Company shall not be required to release any Share or Share certificate to a Grantee until all required payments, including tax payments, have been fully made.

 

18.

NON-EXCLUSIVITY OF THE PLAN

 

The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of Awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

 

For the avoidance of doubt, prior promises to or grant of options or shares to Grantees of the Company under their employment agreements, and not in the framework of any previous equity incentive plan, shall not be deemed an approved incentive arrangement for the purpose of this Section.

 

19.

MULTIPLE AGREEMENTS

 

The terms of each Award may differ from other Awards granted under the Plan at the same time, or at any other time. The Board may also grant more than one Award to a given Grantee during the term of the Plan, either in addition to, or in substitution for, one or more Awards previously granted to that Grantee.

 

20.

RULES PARTICULAR TO SPECIFIC COUNTRIES

 

Notwithstanding anything herein to the contrary, the terms and conditions of the Plan may be adjusted with respect to a particular country by means of an addendum to the Plan in the form of an annex (the: “Annex”), and to the extent that the terms and conditions set forth in the Annex conflict with any provisions of the Plan, the provisions of the Annex shall govern. Terms and conditions set forth in the Annex shall apply only to Awards issued to Grantees under the jurisdiction of the specific country that is subject of the Annex and shall not apply to Awards issued to any other Grantee. The adoption of any such Annex shall be subject to the approval of the Board and if required the approval of the shareholders of the Company.

 

********

 

 

WEARABLE DEVICES LTD.

 

ANNEX A - ISRAEL

TO THE 2024 GLOBAL EQUITY INCENTIVE PLAN

 

DEFINITIONS

 

For purposes of this Annex and the Grant Notification Letter, the following definitions shall apply:

 

(a)

“Affiliate” - any “employing company” within the meaning of Section 102(a) of the Ordinance.

 

(b)

“Approved 102 Award” - an Award granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Grantee.

 

(c)

“Capital Gain Award (CGA)” - an Approved 102 Award elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) of the Ordinance.

 

(d)

“Controlling Shareholder” - shall have the meaning ascribed to it in Section 32(9) of the Ordinance.

 

(e)

“Employee” - a person who is employed by the Company or its Affiliates, including an individual who is serving as a director or an office holder, but excluding any Controlling Shareholder, all as determined in Section 102 of the Ordinance.

 

(f)

“ITA” - the Israeli Tax Authorities.

 

(g)

“Ordinary Income Award (OIA)” - an Approved 102 Award elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the Ordinance.

 

(h)

“102 Award” - any Award granted to Employees pursuant to Section 102 of the Ordinance.

 

(i)

“3(i) Award” - an Award granted pursuant to Section 3(i) of the Ordinance to Controlling Shareholder and/or service providers/consultants.

 

(j)

“Ordinance” - the Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended.

 

(k)

“Section 102” - Section 102 of the Ordinance and any regulations, rules, orders or procedures promulgated thereunder as now in effect or as hereafter amended.

 

(l)

“Trustee” - any individual appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.

 

(m)

“Unapproved 102 Award” - an Option granted pursuant to Section 102(c) of the Ordinance or not held in trust by a Trustee.

 

For the avoidance of any doubt, it is hereby clarified that any capitalized term not specifically defined in this Annex shall be construed according to the interpretation given to it in the Plan.

 

 

ANNEX A - ISRAEL

 

1.

GENERAL

 

1.1.

This Annex (the: “Annex”) shall apply only to Grantees who are residents of the State of Israel on the Date of Grant or those who are deemed to be residents of the State of Israel for the payment of tax on the Date of Grant. The provisions specified hereunder shall form an integral part of the 2024 Incentive Equity Plan of Wearable Devices Ltd. (hereinafter: the “Plan”), which applies to the issuance of Awards to purchase Shares of Wearable Devices Ltd. (hereinafter: the “Company”). According to the Plan, Awards may be issued to Employees, and/or Controlling Shareholders and/or service providers/consultants of the Company or its Affiliates.

 

1.2

This Annex is effective with respect to Awards granted following Amendment no. 132 of the Ordinance, which entered into force on January 1, 2003.

 

1.3

This Annex is to be read as a continuation of the Plan and only modifies Awards granted to Israeli Grantees so that they comply with the requirements set by the Israeli law in general, and in particular with the provisions of Section 102 (as specified herein), as may be amended or replaced from time to time. For the avoidance of doubt, this Annex does not add to or modify the Plan in respect of any other category of Grantees.

 

1.4

The Plan and this Annex are complimentary to each other and shall be deemed as one. In any case of contradiction, whether explicit or implied, between the provisions of this Annex and the Plan, the provisions set out in the Annex shall prevail.

 

2.

ISSUANCE OF AWARDS

 

2.1

The persons eligible for participation in the Plan as Grantees shall include any Employees and/or Controlling Shareholders of the Company or of any Affiliate; provided, however, that (i) Employees may only be granted 102 Awards; and (ii) Controlling Shareholders and service providers/consultants may only be granted 3(i) Awards.

 

2.2

The Company may designate Awards granted to Employees pursuant to Section 102 as Unapproved 102 Awards or Approved 102 Awards.

 

2.3

The grant of Approved 102 Awards shall be made under this Annex adopted by the Board, and shall be conditioned upon the approval of this Annex by the ITA.

 

2.4

Approved 102 Awards may either be classified as Capital Gain Awards (“CGAs”) or Ordinary Income Options (“OIAs”).

 

 

2.5

No Approved 102 Awards may be granted under this Annex to any eligible Employee, unless and until, the Company’s election of the type of Approved 102 Awards as CGA or OIA granted to Employees (the: “Election”), is appropriately filed with the ITA. Such Election shall become effective beginning the first date of grant of an Approved 102 Awards under this Annex and shall remain in effect at least until the end of the year following the year during which the Company first granted Approved 102 Awards. The Election shall obligate the Company to grant only the type of Approved 102 Award it has elected, and shall apply to all Grantees who were granted Approved 102 Awards during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Awards simultaneously.

 

2.6

All Approved 102 Awards must be held in trust by a Trustee, as described in Section 3 below. The Company may replace the Trustee, both with respect to Approved 102 Awards and any Shares issued upon the exercise thereof and then held by the then-current Trustee, at its own discretion and without the need to receive the consent of the Grantees or the beneficial owners of the Shares, subject to the consent of the ITA.

 

2.7

For the avoidance of doubt, the designation of Unapproved 102 Awards and Approved 102 Awards shall be subject to the terms and conditions set forth in Section 102.

 

3.

TRUSTEE

 

3.1

Approved 102 Awards which shall be granted under this Annex and/or any Shares allocated or issued upon exercise of such Approved 102 Options and/or other shares received subsequently following any realization of rights, including without limitation bonus shares, shall be allocated or issued to the Trustee and held for the benefit of the Grantees for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder in connection with such type of Approved 102 Awards (the: “Holding Period”). In the case the requirements for Approved 102 Awards are not met, then the Approved 102 Awards may be regarded as Unapproved 102 Awards, all in accordance with the provisions of Section 102.

 

3.2

Notwithstanding anything to the contrary, the Trustee shall not release any Shares allocated or issued upon exercise of Approved 102 Awards prior to the full payment of the Grantee’s tax liabilities arising from Approved 102 Awards which were granted to him and/or any Shares allocated or issued upon exercise of such Awards.

 

3.3

With respect to any Approved 102 Awards, subject to the provisions of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, a Grantee shall not sell or release from trust any Share received upon the exercise of an Approved 102 Awards and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Grantee.

 

3.4

Upon receipt of Approved 102 Awards, the Grantee will sign an undertaking in which he or she will give his or her consent to the grant of the Awards under the relevant tax track under Section 102, and will undertake to comply with the terms of Section 102 and the trust agreement between the Company and the Trustee.

 

 

4.

THE AWARDS

 

The terms and conditions upon which the Awards shall be issued and exercised, shall be as specified in the Grant Notification Letter to be executed pursuant to the Plan and to this Annex. Each Grant Notification Letter shall state, inter alia, the number of Shares to which the Award relates or covers, the type of Awards granted thereunder (whether a CGA, OIA, Unapproved 102 Awards or a 3(i) Awards), the vesting provisions and the Purchase Price (if applicable).

 

To the extent required by the Ordinance, the Restricted Shares or Shares underlying settlement of RSUs issued pursuant to Section 102 shall be issued to the Trustee in accordance with the provisions of the Ordinance and the Restricted Shares shall be held for the benefit of the Grantee for such period as may be required by the Ordinance.

 

RSU and/or RS Awards may be awarded to any Grantee, to the extent required by applicable law, a specific ruling is obtained from the ITA to grant RSUs as Approved 102 Awards.

 

5.

FAIR MARKET VALUE

 

Without derogating from the definition of “Fair Market Value” enclosed in the Plan and solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if on the date of grant the Company’s shares are listed on any established stock exchange or a national market system or if the Company’s shares are expected to be registered for trading within ninety (90) days following the date of grant of the CGAs, the fair market value of the Shares on the date of grant shall be determined in accordance with the average value of the Company’s shares during the thirty (30) trading days preceding the date of grant or during the thirty (30) trading days following the date of registration for trading, as the case may be.

 

6.

EXERCISE OF AWARDS

 

Options

 

6.1

Options shall be exercised by the Grantee by delivering a written notice to the Company and/or to any third party designated by the Company (the: “Representative”), in such form and method as may be determined by the Company and, when applicable, by the Trustee, in accordance with the requirements of Section 102, which exercise shall be effective upon receipt of such notice by the Company and/or the Representative and the payment of the Purchase Price for the number of Shares with respect to which the option is being exercised, at the Company’s or the Representative’s principal office. The notice shall specify the number of Shares with respect to which the option is being exercised.

 

 

Restricted Shares

 

6.2

Each Restricted Share Grant Notification Letter shall state an amount of Exercise Price to be paid by the Grantee, if any, in consideration for the issuance of the Restricted Shares and the terms of payment thereof, which may include, payment in cash or by issuance of promissory notes or other evidence of indebtedness on such terms and conditions as determined by the Board. For avoidance of any doubt, no payment of Exercise Price shall be required as consideration for RSUs, unless included in the Grant Notification Letter or as required by applicable law. Subject to the foregoing, Restricted Shares shall be issued on the Date of Grant.

 

6.3

In case the Company issues certificates evidencing the Restricted Shares, such certificates may, if so determined by the Board, be held in escrow by an escrow agent appointed by the Board, or, if a Restricted Share Award is made pursuant to Section 102, by the Trustee.

 

Restricted Share Units

 

6.4

Shares shall be issued to or for the benefit of Grantee promptly following each Vesting Date determined by the Administrator, provided that Grantee is still engaged by the Company on the applicable Vesting Date. For avoidance of any doubt, no payment of Exercise Price shall be required as consideration for RSUs, unless included in the Grant Notification Letter or as required by applicable law. After each such Vesting Date the Company shall promptly cause to be issued, for the benefit of Grantee, Shares with respect to RSUs that became vested on such Vesting Date. It is clarified that no Shares shall be issued pursuant to the RSUs to Grantee until the vesting criteria determined by the Administrator is met.

 

6.5

Settlement of vested RSUs shall be made in the form of Shares. Distribution to a Grantee of an amount (or amounts) from settlement of vested RSUs can be deferred to a date after settlement as determined by the Board. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until the grant of RSUs is settled, the number of Shares underlying such RSUs shall be subject to adjustment pursuant to the Plan.

 

General

 

6.6

Without derogating from Section 4.3 of the Plan, and in addition thereto, with respect to Approved 102 Awards, any Shares allocated or issued upon the exercise of an Approved 102 Award, shall be voted in accordance with the provisions of Section 102 and any rules, regulations or orders promulgated thereunder.

 

 

7.

ASSIGNABILITY AND SALE OF AWARDS

 

7.1

Notwithstanding any other provision of the Plan, no Award or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to them given to any third party whatsoever, and during the lifetime of the Grantee each and all of such Grantee’s rights to purchase Shares hereunder shall be exercisable only by the Grantee.

 

Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.

 

7.2

As long as Awards or Shares purchased pursuant to thereto are held by the Trustee on behalf of the Grantee, all rights of the Grantee over the shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution. Subject to the foregoing, Awards other than Options or RSUs may be transferable if expressly permitted under the Plan.

 

8.

INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER’S PERMIT

 

8.1

With regards to Approved 102 Awards, the provisions of the Plan and/or the Annex and/or the Grant Notification Letter shall be subject to the applicable provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the Plan and of the Annex and of the Grant Notification Letter, and they shall bind the Grantee. The Grantee agrees to execute any documents which the Company or the Trustee may reasonably determine to be necessary in order to comply with the provisions of Section 102 and the Tax Assessing Officer’s Permit.

 

8.2

Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan or the Annex or the Grant Notification Letter, shall be considered binding upon the Company and the Grantees.

 

9.

DIVIDEND

 

Subject to the Company’s Articles of Association, with respect to all Shares (but excluding, for avoidance of any doubt, any unexercised options or unvested RSUs) allocated or issued upon the exercise of Awards and held by the Grantee or by the Trustee as the case may be, the Grantee shall be entitled to receive dividends in accordance with the quantity of such shares, and subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder.

 

 

10.

TAX CONSEQUENCES

 

10.1

Any tax consequences arising from the grant or exercise of any Award, from the payment for Shares covered thereby or from any other event or act (of the Company, and/or its Affiliates, and the Trustee or the Grantee), hereunder, shall be borne solely by the Grantee. The Company and/or its Affiliates, and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Grantee shall agree to indemnify the Company, its representatives, its directors, its officers, its Affiliates (and their representatives, its directors, its officers) and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Grantee.

 

10.2

The Company and/or, when applicable, the Trustee shall not be required to release any Shares or share certificate to a Grantee until all required payments have been fully made. In the event that the Company or the Trustee, as applicable, is uncertain as to the sum of the full tax payment due or which is subject to withholding, the Company or the Trustee, as applicable, may refuse to release the Shares until such time as the ITA verifies the sum of the full tax payment which is due, and the Grantee shall not have any claims in connection with such refusal.

 

10.3

With respect to Unapproved 102 Award, if the Grantee ceases to be employed by the Company or any Affiliate, the Grantee shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

 

10.4

The Company is not providing any guarantee that Approved 102 Award will achieve the tax benefits generally associated therewith. In the event that such benefits are not achieved, whether by fault of the Company, the Grantee or otherwise, the Grantee shall not have any claims against: (i) the Company, and/or (ii) its representatives, its directors, its officers, and its Affiliates (and their representatives, directors, and officers), and/or (iii) the Trustee.

 

11.

GOVERNING LAW & JURISDICTION

 

This Annex shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel Aviv shall have sole jurisdiction in any matters pertaining to this Annex.

 

*      *      *

 

 

WEARABLE DEVICES LTD.

 

ANNEX B – UNITED STATES SUB-PLAN

TO 2024 GLOBAL EQUITY INCENTIVE PLAN

 

1.

Purpose of this Annex

 

This Annex (also referred to as the “Annex”) is part of the Wearable Devices Ltd. (“Company”) 2024 Global Equity Incentive Plan (the “Plan”) and was adopted by the Board on August 15, 2024 (“Annex Adoption Date”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Plan. This Annex governs grants of Awards to Employees and other Service Providers who are United States citizens or who are resident aliens of the United States for United States federal tax purposes (collectively, “U.S. Persons”).

 

2.

Provisions of the Annex

 

The provisions of the Annex shall supersede and govern in the case of any inconsistency between the provisions of the Annex and the provisions of the Plan; provided, however, that this Annex shall not be construed to grant to any Grantee rights not consistent with the terms of the Plan, unless specifically provided herein.

 

Any provisions or limitations of the Plan applicable to Awards held by a trustee shall be inapplicable to an Award granted pursuant to or governed by the provisions of this Annex.

 

The provisions of this Annex that authorize the award of ISOs (as defined in Section 5 below) shall be effective as of the Annex Adoption Date and ISOs may be granted if and only if the holders of a majority of the outstanding share capital present, or represented, and entitled to vote thereon (voting as a single class) at a duly held meeting of the shareholders of the Company approve the Plan within twelve (12) months of such date. If approved by the shareholders, ISOs may be granted under this Annex from time to time until the earlier of (a) the term of the Plan; or (b) the close of business on the tenth anniversary of the Annex Adoption Date.

 

3.

Eligibility

 

(a) The individuals who shall be eligible to receive Awards under the Plan that are subject to the provisions of this Annex shall be all Employees and Non-Employees who are U.S. Persons, and who render services of special importance to the management, operation or development of the Company or an Affiliate and who have contributed or may be expected to contribute materially to the success of the Company or an Affiliate. ISOs (as defined in Section 5 below) shall only be granted to any individual who is an employee of the Company, provided it is treated as a corporation for United States federal tax purposes, or an Affiliate that also satisfies the requirements of Sections 424(e) or 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”), which is generally a corporation in the group with respect to which there is at least fifty percent (50%) voting power (for purposes of this Annex, an “ISO Corporation”). NSOs (as defined in Section 5 below) shall only be granted with respect to “service recipient stock” within the meaning of United States Treasury Regulation Section 1.409A-1(b)(5)(iii).

 

 

4.

Shares Available; Other Board Limitations

 

Notwithstanding anything to the contrary in the Plan, a total of 500,000 Shares, subject to adjustments as set forth in Section 6 of the Plan, shall be available for grant pursuant to this Annex as ISOs. Shares underlying ISOs that fail to vest or be fully exercised prior to expiration or other termination shall again become available for grant as ISOs pursuant to this Annex as permitted by applicable law.

 

Notwithstanding anything to the contrary in the Plan, no changes by the Board shall, without approval of the Company’s shareholders: (a) increase the total number of Shares available for Award pursuant to this Annex as ISOs, except by operation of the provisions of Section 6 of the Plan; (b) change the class of persons eligible to receive ISOs pursuant to this Annex; or (c) extend the date on which ISOs can be granted pursuant to this Annex beyond the tenth anniversary of the Annex Adoption Date.

 

5.

Terms and Conditions of Options

 

Every Option granted to a U.S. Person shall be evidenced by an Award Agreement in such form as the Committee all approve from time to time, specifying the number of Shares that may be purchased pursuant to the Option, the time or times at which the Option shall become exercisable in whole or in part, whether the Option is intended to be an incentive stock option (“ISO”) or a nonqualified stock option (“NSO”) and such other terms and conditions as the Committee shall approve, and containing or incorporating by reference the following terms and conditions. The Plan and this Annex shall be administered in such a manner as to permit those Options granted hereunder and specially designated as an ISO to qualify as incentive stock options as described in Section 422 of the Code.

 

(a) Duration. In no event shall an Option granted under this Annex expire later than ten (10) years from its grant date; provided, however, that an Option under this Annex may expire earlier as provided by the Plan or the Award Agreement; and provided, further, that no ISO granted to an Employee who owns (directly or under the attribution rules of Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any ISO Corporation shall expire later than five (5) years from its date of grant.

 

The authority afforded the Committee in Section 7.5(iii) of the Plan shall not apply to an ISO and shall apply to an NSO only to the extent the NSO remains exempt from Section 409A of the Code.

 

(b) Purchase Price. The Purchase Price of each Option shall be as specified by the Committee in its discretion; provided, however, that the Purchase Price shall be at least 100 percent (100%) of the Fair Market Value of the Shares on the date on which the Board grants the Option, which shall be considered the date of grant of the Option for purposes of fixing the Purchase Price; and provided, further, that the Purchase Price with respect to an ISO granted to an Employee who at the time of grant owns (directly or under the attribution rules of Section 424(d) of the Code) stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or of any ISO Corporation shall be at least 110 percent (110%) of the Fair Market Value of the Shares on the date of grant of the ISO.

 

 

(c) Method of Exercise. To the extent that it has become exercisable under the terms of the Award Agreement, an Option may be exercised from time to time in accordance with the Plan by providing notice pursuant to the provisions of Section 7 of the Plan and stating the number of Shares with respect to which the Option is being exercised and accompanied by payment of the Purchase Price in a manner provided by the Plan or Award Agreement, as applicable. If the Grantee fails to pay for or to accept delivery of all or any part of the number of Shares specified in his or her notice upon tender of delivery thereof, his or her right to exercise the Option with respect to those Shares not paid for or accepted shall be terminated, unless the Company otherwise agrees.

 

Notwithstanding Section 5 of the Plan, in no event shall the “net exercise” method be used to exercise an ISO.

 

(d) Notice of ISO Stock Disposition. The Grantee must notify the Company promptly in the event that he or she sells, transfers, exchanges or otherwise disposes of any Shares issued upon exercise of an ISO before the later of (i) the second anniversary of the date of grant of the ISO or (ii) the first anniversary of the date the shares were issued upon his or her exercise of the ISO.

 

(e) Effect of Cessation of Employment or Service Relationship. The Committee shall determine in its discretion and specify in each Award Agreement the effect, if any, of the termination of the Grantee’s employment with or performance of services for the Company or any Affiliate on the exercisability of the Option. Because the special United States federal tax rules applicable to ISOs are not generally available to an Option otherwise eligible for ISO treatment if it is exercised at any time later than three (3) months following termination of employment with the Company or an ISO Corporation (one (1) year in the event of death or disability within the meaning of Section 22(e)(4) of the Code), such an Option (if otherwise exercisable and actually exercised beyond the three (3) month or one (1) year period, as applicable) shall be treated as an NSO upon exercise, rather than an ISO, for United States federal tax purposes.

 

(f) No Rights as Shareholder. A Grantee shall have no rights as a shareholder with respect to any Shares covered by an Option until the date of issuance of a share certificate with respect to, or a book entry record of, the Shares. No adjustment shall be made for dividends, bonus shares or other rights for which the record date is earlier than the date the stock certificate is issued or book entry record is made, other than as required or permitted by the Plan; provided, however, that in no event shall an adjustment be made that would otherwise result in a loss of ISO status or result in adverse tax consequences under Section 409A of the Code.

 

(g) Transferability of Option. Except as permitted by the Committee, and set forth in the terms of a Grantee’s Award Agreement, an Option shall not be assignable or transferable by the Grantee except by will or by the laws of descent and distribution. During the life of the Grantee, an Option shall be exercisable only by the Grantee, by a conservator or guardian duly appointed for the Grantee by reason of Grantee’s incapacity or by the person appointed by the Grantee in a durable power of attorney acceptable to the Company’s counsel.

 

 

6.

Restricted Share Units

 

(a) Delivery. In the case of a U.S. Person, settlement of an RSU shall occur no later than the fifteenth day of the third month following the close of the year in which the Vesting Date occurs; provided, however, that the Committee may, in its sole discretion and at the time of grant, provide for the further deferral of payment in an applicable Award Agreement.

 

(b) Transactions. In the case of outstanding Restricted Share Units that constitute deferred compensation subject to Section 409A of the Code: (i) if the Award Agreement provides that the Restricted Share Units shall be settled upon a change in control event within the meaning of United States Treasury Regulation Section 1.409A-3(i)(5), and the Transaction constitutes such a change in control event, then no assumption or substitution shall be permitted and the Restricted Share Units shall instead be settled in accordance with the terms of the applicable Award Agreement; and (ii) the Committee may only undertake actions pursuant to its authority in Section 6 of the Plan if the action is permitted or required by Section 409A of the Code without adverse tax consequences to the Grantee.

 

7.

Requirements of Law

 

All other provisions of this Annex and the Plan notwithstanding, this Annex and the Plan shall be administered and construed so as to avoid any person who receives an Award incurring any adverse tax consequences under Section 409A of the Code. The Committee shall suspend the application of any provisions of the Plan that could, in its sole determination, result in an adverse tax consequence to any person under Section 409A of the Code.

 

8.

Forfeiture for Dishonesty or Termination for Cause

 

Notwithstanding any provision of the Plan to the contrary, if the Board determines, after full consideration of the facts, that

 

(a) the Grantee has been engaged in fraud, embezzlement, theft or commission of a felony in the course of his or her employment by or involvement with the Company or has made unauthorized disclosure of trade secrets or other proprietary information of the Company or of a third party who has entrusted such information to the Company, or

 

(b) the Grantee has violated the terms of any employment, non-competition, non-solicitation or proprietary information agreement (each to the extent not otherwise prohibited under applicable law of the states) to which he or she is a party,

 

then the Grantee’s rights with respect to an Award shall terminate as of the date of such act, the Grantee shall forfeit all unexercised Awards and shall be required to sell to the Company or, in the case the Company is not allowed to repurchase its own shares, to a third party approved by the Company, all or any part of the Shares acquired by the Grantee prior to such event, at a price equal to the lesser of their Fair Market Value or the amount paid to the Company upon such transfer or exercise. If a Grantee whose behavior the Company asserts falls within the provisions of (a) or (b) above has exercised or attempts to exercise an Award prior to consideration of the application of this Section 8, the Company shall not be required to recognize such exercise until the Board has made its decision and, in the event any exercise shall have taken place, it shall be of no force and effect (and shall be void ab initio) if the Board makes an adverse determination; provided, however, that if the Board finds in favor of the Grantee then the Grantee will be deemed to have exercised the Award retroactively as of the date he or she originally gave notice of his or her attempt to exercise or actual exercise, as the case may be. The decision of the Board as to the cause of a Grantee’s discharge and the damage done to the Company shall be final, binding and conclusive. No decision of the Board, however, shall affect in any manner the finality of the discharge of such Grantee by the Company. For purposes of this Section 8, reference to the Company shall include any Affiliate.

 

9.

Tax Withholding

 

To the extent required by law, the Company may withhold or cause to be withheld income and other taxes with respect to any income recognized by a Grantee by reason of the issuance, exercise or settlement of an Award, and as a condition to the receipt of any Award the Grantee shall agree that if the amount payable to him or her by the Company and any Affiliate in the ordinary course is insufficient to pay such taxes, then he or she shall upon the request of the Company pay to the Company an amount sufficient to satisfy its tax.

 

Exhibit 10.2

 

WEARABLE DEVICES LTD.

 

2024 EMPLOYEE STOCK PURCHASE PLAN

 

1.

PURPOSE

 

The purpose of the Wearable Devices Ltd. 2024 Employee Stock Purchase Plan is to provide employees of Wearable Devices Ltd. (the “Company”) and its Participating Subsidiaries the opportunity to acquire an equity interest in the Company by providing favorable terms for them to purchase its Shares.

 

This Plan is intended to qualify as an employee stock purchase plan within the meaning of Section 423 of the Code but may also include one or more sub-plans that may, but are not required, to qualify as an employee stock purchase plan within the meaning of Section 423 of the Code (each a “Sub-Plan”).

 

2.

DEFINITIONS

 

(a) “Board” shall mean the Board of Directors of the Company.

 

(b) “Change of Control” of the Company shall be deemed to have occurred if any person (as such term is used in Section 13(d) and 14(d)(2) of the Exchange Act) other than a trust related to an employee benefit plan maintained by the Company becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50 percent or more of the Company’s outstanding Shares, and within the period of 24 consecutive months immediately thereafter, individuals other than (i) individuals who at the beginning of such period constitute the entire Board or (ii) individuals whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, become a majority of the Board.

 

(c) “Code” shall mean the Internal Revenue Code of 1986, as amended. Any reference to a particular Section shall include any successor and regulation thereto.

 

(d) “Committee” shall mean a share award compensation committee, if so appointed by the Board, which shall consist of no fewer than two members of the Board.

 

(e) “Company” shall have the meaning set forth in Section 1.

 

(f) “Compensation” shall mean base salary.

 

(g) “Employee” shall mean any individual who is customarily employed for more than five months in a calendar year by the Company or any Subsidiary. The term Employee shall not include: (i) any individual who is not a common law employee of the Company or a Subsidiary; (ii) any individual who owns, directly or indirectly, as of the Offering Date five percent or more of the total combined voting power or value of all classes of stock of the Company or a Subsidiary; (iii) any individual who is not employed by a Participating Subsidiary; (iv) any Employee who is a member of a collective bargaining unit with which the Company or a Subsidiary has bargained in good faith with respect to participation in the Plan and as a result of such bargaining the labor organization made an affirmative decision not to participate in the Plan; and (v) any Employee whose employment commencement date is fewer than six months prior to the commencement of an Offering.

 

 

(h) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(i) “Exercise Date” shall mean the date(s) designated by the Committee from time to time on which an Optionee may exercise an Option; provided, however, that no Exercise Date shall be more than 12 months after the applicable Offering Date; and provided, further, that if such date is not a business day, the Exercise Date shall be the business day immediately preceding the applicable date.

 

(j) “Fair Market Value” shall mean, as of any date, the value of a Share determined as follows:

 

(i)

If the Shares are listed on any established share exchange or a national market system, including without limitation the Tel-Aviv Share Exchange, the New York Stock Exchange, the NYSE American LLC, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market, the Fair Market Value shall be the closing sales price for such Shares (or the closing bid, if no sales were reported), as quoted on such exchange or system on the day of determination (or the preceding trading day if such exchange or system is closed), as reported in the Wall Street Journal, or such other source as the Board deems reliable;

 

(ii)

If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean between the high bid and low asked prices for the Shares on the day of determination (or the preceding trading day if such exchange or system is closed); or

 

(iii)

In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Board.

 

(k) “Offering” shall mean any offering of Shares in accordance with Section 7.

 

(l) “Offering Date” shall mean the date(s) designated by the Committee from time to time on which an Option is granted; provided, however, that there shall be at least one Offering Date in any consecutive 12-month period while the Plan remains in effect; and provided, further, that if such date is not a business day, the Offering Date shall be the business day immediately preceding the applicable date.

 

(m) “Option” shall mean the right of a Participant to purchase Shares pursuant to an Offering.

 

(n) “Option Price” shall have the meaning set forth in Section 8.

 

(o) “Optionee” shall mean any individual who has been granted an Option that remains outstanding under the terms of any Offering or who owns Shares as a result of an Offering.

 

 

(p) “Participant” shall mean an Employee who has in effect a payroll deduction authorization in accordance with Section 6 or is otherwise participating in the Plan pursuant to a Sub-Plan.

 

(q) “Participating Subsidiary” shall mean a Subsidiary the Employees of which are eligible to participate in the Plan. The Committee shall have the authority to designate a Subsidiary as a Participating Subsidiary.

 

(r) “Plan” shall mean the Wearable Devices Ltd. 2024 Employee Stock Purchase Plan as set forth herein, with any and all amendments hereto that may be in effect.

 

(s) “Securities Act” shall mean the Securities Act of 1933, as amended.

 

(t) “Shares” shall mean the ordinary shares of the Company.

 

(u) “Sub-Plan” shall have the meaning set forth in Section 1.

 

(v) “Subsidiary” shall mean a domestic or foreign corporation of which the Company owns, directly or indirectly through an unbroken chain of ownership, 50 percent or more of the total combined voting power of all classes of stock, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary. An entity may be treated as a Subsidiary for purposes of this Plan if, consistent with Sections 423 and 424 of the Code, it is owned by a corporation and is disregarded for federal income tax purposes or it is (or would if it were a domestic entity be) treated as a corporation for federal income tax purposes.

 

3.

ADMINISTRATION OF THE PLAN

 

Unless the Board shall designate another person or persons, the Plan shall be administered by the Committee. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan.

 

The Committee shall have the authority to adopt, amend and rescind such rules and regulations as, in its opinion, may be advisable in the administration of the Plan. All questions of interpretation and application of such rules and regulations of the Plan and of Options granted hereunder shall be subject to the determination of the Committee, which determination shall be final and binding.

 

The Committee shall have the authority, without the need for further approval, to establish a different Offering Date and/or Exercise Date, to modify the amount of time between an Offering Date and an Exercise Date, to increase or decrease the number of Offerings in a year and to limit the number of Shares that may be available in an Offering.

 

The Committee shall also have the authority to determine whether any accumulated payroll deductions remaining in a Participant’s account after the close of an Offering shall be carried forward for use in the next Offering (if the Participant will participate in that Offering) or paid to the Participant in cash, without regard to the reason such accumulated amount exists. The Committee shall further have the right to use different approaches for different reasons; provided, however, that the same approach will be applied to all Participants affected by the same reason.

 

 

4.

OPTION SHARES

 

The total amount of Shares with respect to which Options may be granted under the Plan shall not exceed in the aggregate 5,000,000 Shares from either authorized but unissued shares or treasury shares; provided, however, that such aggregate number of Shares shall be subject to adjustment in accordance with Section 15. If any outstanding Option expires for any reason, including a withdrawal pursuant to Section 10, or terminates by reason of the severance of employment of the Participant or any other cause, or is surrendered, the Shares allocable to the unexercised portion of the Option may again be made subject to an Option under the Plan.

 

5.

ELIGIBILITY

 

An Employee shall be eligible to become a Participant in the Plan on any Offering Date on which the Employee is employed by the Company or a Subsidiary; provided, however, that no Employee shall be granted an Option:

 

(a) if immediately after the grant the aggregate amount of Shares the Employee would be considered to own under Section 424(d) of the Code, including Shares that may be purchased with outstanding options, would represent five percent or more of the total combined voting power or value of all classes of capital stock of the Company or of any Subsidiary; or

 

(b) that permits the Employee’s right to purchase shares under all employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate that exceeds $25,000 for any calendar year, determined by reference to the Fair Market Value of the Shares at the time any Option is granted.

 

6.

PARTICIPATION

 

(a) An Employee may become a Participant in any Offering by completing an authorization for payroll deductions in connection with the Offering at such time (prior to the Offering Date) and in such manner as the Committee may prescribe. Payroll deductions pursuant to an authorization shall commence with the payroll period in which the Offering Date occurs and shall end with the last payroll completed prior to the Exercise Date for the Offering to which the authorization applies, unless the authorization is sooner terminated by the Participant as provided in Section 10. All payroll deductions shall be made on an after-tax basis.

 

(b) A Participant shall elect in the authorization for payroll deduction to have deductions made from his or her Compensation on each payday in an amount equal to a whole percentage of from one to 15 percent of his or her Compensation. All payroll deductions made for a Participant shall be credited to a bookkeeping account maintained for such Participant under the Plan. In no event shall interest be paid to a Participant with respect to payroll deductions credited to the Participant’s account, whether such deductions are used in connection with the exercise of an Option or are returned to the Participant or the Participant’s estate in cash.

 

 

(c) Except as may be required by law, a Participant may not make any payments to the Participant’s account other than by authorization for payroll deduction. A Participant may elect to decrease the payroll deduction rate at such time and in such manner as the Committee may prescribe. In no event shall a Participant increase the amount of payroll deductions during an Offering. A Participant may discontinue participation in the Offering as provided in Section 10.

 

(d) The Committee may provide for a separate election or different percentages or another method of payment under a Sub-Plan to the extent payroll deductions may not otherwise be practicable or permitted in a particular jurisdiction. Except as otherwise provided by the Committee, payroll deductions and any equivalents thereto may be accumulated in the local currency applicable under a Sub-Plan and converted to United States dollars on the Exercise Date.

 

(e) Except to the extent that doing so would jeopardize the status of the Plan as an employee stock purchase plan within the meaning of Section 423 of the Code, an Employee outside the United States may be excluded from the Plan (i) if their participation is prohibited under local law, (ii) if complying with local law would cause the Plan (other than a Sub-Plan) to violate the requirements of Section 423 of the Code, (iii) if their participation would result in adverse tax consequences to the Employee under Section 409A of the Code or (iv) for such other reason(s) as the Committee may in its discretion determine.

 

7.

GRANT OF OPTIONS

 

(a) Options under the Plan shall be granted in a series of Offerings, the first of which shall begin on the first Offering Date designated by the Committee. Successive Offerings shall begin on each Offering Date thereafter until all of the Shares available under the Plan are exhausted or until the Plan is terminated pursuant to Section 19 or Section 20. Participation by an Employee in any Offering shall neither limit nor require his or her participation in any other Offering.

 

(b) Subject to any limitation otherwise provided under the Plan, each Participant in an Offering shall be granted, as of the applicable Offering Date, an Option to purchase that number of Shares that the accumulated payroll deductions credited to his or her account during the Offering are able to purchase at the Option Price.

 

(c) If the total number of Shares for which Options are to be granted as of any Offering Date exceeds the number of Shares available for the Offering, the Committee shall make a pro rata allocation of the available Shares in a manner as nearly uniform as practicable, and as it shall determine to be equitable. In the event a shortfall in Shares appears likely, the Committee may, but shall not be required to, reduce remaining payroll deductions to be made pursuant to authorizations for that Offering.

 

(d) In no event shall a Participant be permitted to acquire in any particular Offering more than that number of Shares equal to $25,000 divided by the Fair Market Value of the Shares as of the first date of the Offering; provided, however, that such limit shall be further subject to the limit set forth in Section 5(b) and to any adjustment made in accordance with Section 15.

 

 

8.

OPTION PRICE

 

The Option Price of Shares for any Offering shall be determined by the Committee and announced from time to time in advance of the commencement of an Offering, but in no event shall the Option Price be less than the lesser of: (a) 85 percent of the Fair Market Value of the Shares on the Offering Date; or (b) 85 percent of the Fair Market Value of the Shares on the Exercise Date.

 

9.

EXERCISE OF OPTIONS

 

(a) A Participant’s Option for an Offering will be exercised automatically as of the Exercise Date for the Offering to purchase that number of Shares equal to the accumulated payroll deductions credited to the Participant’s account as of the Exercise Date divided by the Option Price.

 

(b) A Participant may elect prior to the Exercise Date at such time and in such manner as the Committee may prescribe to receive in cash an amount equal to the accumulated payroll deductions in his or her account on the Exercise Date, rather than exercising his or her Option.

 

(c) As promptly as practicable after each Exercise Date the Company shall deliver to each Participant in the Offering, in accordance with the Participant’s election, either (i) the Shares purchased upon the exercise of the Participant’s Option or (ii) a cash payment equal to the total of the payroll deductions credited to the Participant’s account during the Offering.

 

(d) The Shares purchased upon exercise of an Option shall be deemed to be transferred to the Participant on the Exercise Date.

 

(e) The Committee may, in its discretion, limit the Shares purchased in an Offering to whole Shares, in which event amounts representing fractional Shares may, at the discretion of the Committee, either be carried forward for use in the next Offering if the Participant will participate in that Offering or paid to the Participant in cash.

 

10.

WITHDRAWAL FROM OFFERING

 

A Participant may at any time prior to the Exercise Date at such time and in such manner as the Committee may prescribe withdraw from an Offering and request payment of an amount in cash equal to the accumulated payroll deductions credited to the Participant’s account under the Plan. Such amount will be paid to the Participant as promptly as practicable after receipt of the Participant’s request to withdraw, and no further payroll deductions will be made from the Participant’s Compensation with respect to the Offering then in progress and any outstanding Option shall be cancelled. A Participant’s withdrawal from an Offering will have no effect upon his or her eligibility to participate in any subsequent Offering or in any employee stock purchase plan (within the meaning of Section 423 of the Code) that may hereafter be adopted by the Company or a Subsidiary.

 

 

11.

EXPIRATION OF OPTIONS ON TERMINATION OF EMPLOYMENT

 

(a) Options shall not be transferable by a Participant and no amount credited to a Participant’s account may be assigned, transferred, pledged or otherwise disposed of in any way by a Participant. An Option shall expire unexercised immediately if a Participant ceases to satisfy the definition of the term Employee for any reason other than death and the amount of the accumulated payroll deductions then credited to the Participant’s account under the Plan will be paid to the Participant in cash. In the case of a Participant’s death, the provisions of Section 16 shall control.

 

(b) An authorized leave of absence or absence on military or government service shall not constitute severance of the employment relationship between the Company or Participating Subsidiary and the Participant for purposes of this Section 11, provided that either (i) the absence is for a period of no more than 90 days or (ii) the Employee’s right to be re-employed after the absence is guaranteed either by statute or by contract.

 

12.

REQUIREMENTS OF LAW

 

The Company shall not be required to sell or issue any Shares under the Plan if the issuance of such Shares would constitute or result in a violation by the Optionee or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically, in connection with the Securities Act, upon the exercise of any Option the Company shall not be required to issue Shares unless the Board has received evidence satisfactory to it to the effect that the Optionee will not transfer such Shares except pursuant to a registration statement in effect under the Securities Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Board shall be final, binding and conclusive. The Company shall not be obligated to take any affirmative action to cause the exercise of an Option or the issuance of Shares pursuant to an Option to comply with any laws or regulations of any governmental authority including, without limitation, the Securities Act or applicable state securities laws.

 

13.

NO RIGHTS AS SHAREHOLDER

 

No Participant shall have rights as a shareholder with respect to Shares covered by his or her Option until the applicable Exercise Date and, except as otherwise provided in Section 15, no adjustment shall be made for dividends of which the record date precedes the applicable Exercise Date.

 

14.

FORFEITURE FOR DISHONESTY

 

Notwithstanding anything to the contrary in the Plan, if the Board determines, after full consideration of the facts presented on behalf of both the Company and the individual, that a Participant or an Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment by the Company or a Subsidiary, which damaged the Company or Subsidiary, or has disclosed trade secrets or other proprietary information of the Company or a Subsidiary, (a) such individual’s participation in an Offering shall terminate and he or she shall forfeit his or her right to receive any Shares pursuant to an Offering that has not yet been delivered and (b) the Company shall have the right to repurchase all or any part of the Shares acquired by an Optionee upon the earlier exercise of any Option, at a price equal to the amount paid to the Company upon such exercise, increased by an amount equal to the interest that would have accrued in the period between the date of exercise of the Option and the date of such repurchase upon a debt in the amount of the exercise price, at the prime rate(s) announced from time to time during such period in the Federal Reserve Statistical Release Selected Interest Rates. The decision of the Board as to the cause of a Participant’s or Optionee’s discharge and the damage done to the Company or a Subsidiary shall be final, binding and conclusive. No decision of the Board, however, shall affect in any manner the finality of the discharge of a Participant or Optionee by the Company or a Subsidiary.

 

 

15.

CHANGES IN THE COMPANY’S CAPITAL STRUCTURE

 

(a) In the event of a reorganization, recapitalization, exchange of shares, stock split, combination of shares or dividend payable in shares or other securities, a corresponding adjustment shall be made by the Committee in the number and kind of shares or other securities, and in the Option Price, covered by outstanding Options, and for which Options may be granted under the Plan. In the event of a declaration of an extraordinary dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate. No adjustment shall be made pursuant to the provisions of this Section 15(a) that would constitute a modification as defined in Section 424 of the Code. Any such adjustment made by the Committee shall be conclusive and binding upon all affected persons, including the Company and all Participants and Optionees.

 

(b) If while unexercised Options remain outstanding under the Plan the Company merges or consolidates with a wholly-owned subsidiary for the purpose of reincorporating itself under the laws of another jurisdiction, the Optionees will be entitled to acquire Shares of the reincorporated company upon the same terms and conditions as were in effect immediately prior to such reincorporation (unless such reincorporation involves a change in the number of shares or the capitalization of the Company, in which case proportional adjustments shall be made as provided above), and the Plan, unless otherwise rescinded by the Board, will remain the Plan of the reincorporated company.

 

(c) Except as otherwise provided in (a) or (b) above, if while unexercised Options remain outstanding under the Plan the Company merges or consolidates with one or more corporations (whether or not the Company is the surviving corporation), or is liquidated or sells or otherwise disposes of substantially all of its assets to another entity, or upon a Change of Control, then the Committee, in its discretion, shall provide that either:

 

(i) after the effective date of such merger, consolidation, liquidation, sale or Change of Control, as the case may be, each Optionee shall be entitled, upon exercise of an Option to receive in lieu of Shares the number and class of shares of such stock or other securities to which he or she would have been entitled pursuant to the terms of the merger, consolidation, liquidation, sale or Change of Control if he or she had been the holder of record of the number of Shares as to which the Option is being exercised immediately prior to such merger consolidation, liquidation or sale; or

 

 

(ii) all outstanding Options shall be exercised as of the day preceding the effective date of any such merger, consolidation, liquidation, sale or Change of Control, which day shall be the Exercise Date for purposes of the Offering; provided, however, that each Optionee shall be notified of the right to withdraw from the Offering in accordance with the requirements of Section 10.

 

(d) Except as expressly provided to the contrary in this Section 15, the issuance by the Company of shares of any class for cash or property or for services, either upon direct sale or upon the exercise of rights or warrants, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect the number, class or price of Shares then subject to outstanding Options.

 

16.

DISPOSITION OF ACCOUNT AT DEATH

 

In the event that a Participant dies after the Exercise Date but before the delivery of the Shares, the Shares when issued together with any cash remaining in the Participant’s account shall be transferred to the Participant’s estate. In the event that a Participant dies prior to the Exercise Date, a payment shall be made to the Participant’s estate of an amount in cash equal to the accumulated payroll deductions credited to the Participant’s account under the Plan.

 

17.

SUBPLAN(S)

 

Notwithstanding any provision of the Plan to the contrary, the Committee may but shall not be required to adopt one or more Sub-Plans to facilitate participation in the Plan by Employees outside the United States and to accommodate the requirements of local securities, tax, foreign exchange or other laws of foreign jurisdictions. Any such Sub-Plan shall, to the extent practicable and as determined by the Committee in its discretion, reflect the same terms and conditions available with respect to non-Sub-Plan Participants. This authority shall include the right to establish one or more Sub-Plans that are not intended to satisfy the requirements of Section 423 of the Code; provided, however, that in no event shall the authority of the Board to amend or terminate the Plan pursuant to Section 19 be limited.

 

18.

MISCELLANEOUS

 

(a) Accumulated payroll deductions and the proceeds from the sale of Shares pursuant to the exercise of Options shall constitute general funds of the Company.

 

(b) To the extent required by law, the Company or a Participating Subsidiary shall withhold or cause to be withheld income and other taxes with respect to any income recognized by an Optionee by reason of the exercise of an Option. An Optionee shall agree that if the amount payable to him or her by the Company and any Participating Subsidiary in the ordinary course is insufficient to pay such taxes, then he or she shall upon request of the Company pay to the Company an amount sufficient to satisfy its tax withholding obligations.

 

 

(c) All notices or other communications by a Participant or Optionee to the Company pursuant to the Plan shall be deemed to have been given when received in the form specified by the Company at the location or by the person designated by the Company for the receipt thereof.

 

(d) Neither the Plan nor the grant of an Option pursuant to the Plan shall impose upon the Company or a Subsidiary any obligation to employ or continue to employ any Participant, and the right of the Company or a Subsidiary to terminate the employment of any person shall not be diminished or affected by reason of the fact that an Option has been granted to him or her.

 

(e) The title of the sections of the Plan are included for convenience only and shall not be construed as modifying or affecting their provisions. References to gender shall include both sexes; the singular shall include the plural and the plural the singular unless the context otherwise requires.

 

(f) The Plan shall be governed by and construed in accordance with the laws of the State of Israel, without regard to the principles of conflicts of law.

 

19.

AMENDMENT OR TERMINATION OF PLAN

 

The Board may at any time terminate or from time to time amend, modify or suspend this Plan (or any part thereof); provided, however, that without approval by an affirmative vote of a majority of the votes properly cast at a duly held meeting of the shareholders of the Corporation at which a quorum representing a majority of all outstanding Shares are present, in person or by proxy there shall be no: (a) change in the number of Shares that may be issued under the Plan, except by operation of the provisions of Section 15; (b) change in the class of persons eligible to participate in the Plan; or (c) other change in the Plan that requires shareholder approval under applicable law. Notwithstanding the preceding sentence, the Board shall in all events have the power to make such changes in the Plan and the Committee shall in all events have the power to make such changes in the regulations and administrative provisions under the Plan or in any outstanding Option as, in the opinion of counsel for the Company, may be necessary or appropriate from time to time to enable the Plan to qualify as an employee stock purchase plan as defined in Section 423 of the Code, so as to enable any Option to receive preferential federal income tax treatment. No amendment shall materially affect outstanding Options without the consent of the Optionee and the termination of the Plan will not terminate Options then outstanding, without the consent of the Optionee.

 

Notwithstanding the foregoing, at such time after the Company is not required to file periodic reports under the Exchange Act, at its option, the Company may terminate the Plan and, upon the termination, outstanding Options shall be cancelled and each Participant shall receive in cash an amount equal to the accumulated payroll deductions without interest credited to the Participant’s account under the Plan immediately prior to termination.

 

20.

EFFECTIVE DATE AND DURATION OF THE PLAN

 

The Plan shall be effective as of September 26, 2024 upon ratification by the holders of a majority of the outstanding Shares present, or represented, and entitled to vote thereon (voting as a single class) at a duly held meeting (or written consents in lieu thereof) of the shareholders. Unless the Plan shall have terminated earlier, the Plan shall terminate on the date as of which there are no longer any Shares available pursuant to Section 4 to be offered and no Option shall be granted pursuant to the Plan after that date.

 

 

Israeli Sub-Plan

 

Special Provisions for Persons who are Israeli Taxpayers

 

This Sub-Plan (the “Sub-Plan”) supplements the Wearable Devices 2024 Employee Stock Purchase Plan, as amended from time to time (the “Plan”), in accordance with the Committee’s authority pursuant to Section 17 of the Plan.

 

The Sub-Plan hereunder applies only to persons who are deemed to be residents of the State of Israel for tax purposes or are otherwise subject to taxation in Israel with respect to participation in the Plan and Sub-Plan, as determined by the Committee.

 

The purpose of the Sub-Plan is to establish certain rules and limitations applicable to participation in the Plan from time to time, in compliance with the tax and other applicable laws currently in force in the State of Israel. The Sub-Plan is applicable to participation in the Plan and is intended to comply with and be subject to the ITO and Section 102.

 

The Sub-Plan and the Plan shall be read together. Except as otherwise explicitly provided herein, participation in the Plan shall be governed by the terms of the Plan. In any case of contradiction, whether explicit or implied, between the provisions of the Plan and the Sub-Plan, the Sub-Plan shall govern.

 

Definitions

 

Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Plan. The following additional definitions shall apply to the Sub-Plan.

 

“102 Capital Gains Track” shall mean the tax alternative set forth in Sections 102(b)(2) and 102(b)(3) of the ITO pursuant to which income resulting from the sale of Shares is generally taxed as a capital gain.

 

“102 Capital Gains Track Grant” shall mean a 102 Trustee Grant qualifying for the special tax treatment under the 102 Capital Gains Track.

 

“102 Ordinary Income Track” shall mean the tax alternative set forth in Section 102(b)(1) of the ITO pursuant to which income resulting from the sale of Shares is taxed as ordinary income.

 

“102 Ordinary Income Track Grant” shall mean a 102 Trustee Grant qualifying for the ordinary income tax treatment under the 102 Ordinary Income Track.

 

“102 Trustee Grant” shall mean Shares issued under the Plan in accordance with the Sub-Plan and Section 102(b) of the ITO, and subject to a trust with a Trustee for the benefit of the Eligible 102 Participant, and includes both 102 Capital Gains Track Grants and 102 Ordinary Income Track Grants.

 

“Affiliate” for the purpose of grants made under this Sub-Plan, shall mean any Subsidiary (as such term is defined in the Plan) that is an “employing company” within the meaning of Section 102(a) of the ITO.

 

“Controlling Shareholder,” as defined under Section 32(9) of the ITO, shall mean an individual who prior to issuance of Shares or as a result of the issuance of any Shares, holds or would hold, directly or indirectly, in his name or with a relative (as defined in the ITO) at least (i) 10 percent of the outstanding shares of the Company, (ii) 10 percent of the voting power of the Company, (iii) the right to hold or purchase 10 percent of the outstanding equity or voting power, (iv) the right to obtain 10 percent of the “profits” of the Company (as defined in the ITO) or (v) the right to appoint a director of the Company.

 

“Deposit Requirements” shall mean with respect a 102 Trustee Grant, the requirement to deposit Shares with the Trustee, in accordance with Section 102, in order to qualify as a 102 Trustee Grant.

 

“Election,” “Elected” or “Elects” shall mean the Company’s (or its Affiliate’s) choice of the type of 102 Trustee Grants it shall make under the Sub-Plan, (as between capital gains track or ordinary income track) as filed with the ITA.

 

“Eligible 102 Participant” shall mean an eligible employee or an individual who is serving as a director (as defined in the ITO) or an office holder (as defined in the ITO) of the Company or an Affiliate, who is not a Controlling Shareholder.

 

“ITA” shall mean the Israeli Tax Authority.

 

“ITO” shall mean the Israeli Income Tax Ordinance (New Version), 1961, and the rules, regulations, orders or procedures promulgated thereunder and any amendments thereto, including specifically the Rules, all as may be amended from time to time.

 

“Non-Trustee Grant” shall mean Shares issued under the Plan in accordance with the Sub-Plan to an Eligible 102 Participant pursuant to Section 102(c) of the ITO and not held in trust by a Trustee.

 

“Required Holding Period” shall mean the requisite period prescribed by the ITO and the Rules, or such other period as may be required by the ITA, with respect to 102 Trustee Grants, during which Shares issued by the Company must be held by the Trustee for the benefit of the person to whom it was granted.

 

“Rules” shall mean the Income Tax Rules (Tax Benefits in Share Issuance to Employees), 2003.

 

“Section 102” shall mean the provisions of Section 102 of the ITO, as amended from time to time.

 

“Trustee” shall mean a person or entity designated by the Committee to serve as a trustee and approved by the ITA in accordance with the provisions of Section 102(a) of the ITO.

 

 

Types of Grants and Section 102 Election

 

Shares issued under the Plan pursuant to Section 102 shall be issued pursuant to either: (a) Section 102(b)(2) and 102(b)(3) of the ITO as 102 Capital Gains Track Grants; or (b) Section 102(b)(1) of the ITO as 102 Ordinary Income Track Grants.

 

The Company’s (or its Affiliate’s) Election regarding the type of 102 Trustee Grant it chooses to make shall be filed with the ITA. Once the Company (or its Affiliate) has filed such Election, it may change the type of 102 Trustee Grant that it chooses to make only after the lapse of at least 12 months from the end of the calendar year in which the first grant was made in accordance with the previous Election, in accordance with Section 102. For the avoidance of doubt, such Election shall not prevent the Company (or its Affiliate) from granting Non-Trustee Grants to Eligible 102 Participants at any time.

 

Eligible 102 Participants may receive only 102 Trustee Grants or Non-Trustee Grants under this Sub-Plan. Employees who are not Eligible 102 Participants may not participate in the Sub-Plan.

 

No 102 Trustee Grants may be made effective pursuant to the Sub-Plan until 30 days after the requisite filings required by the ITO and the Rules have been made with the ITA. This Sub-Plan and the issuance of qualifying Section 102 Grants is contingent upon the approval (or deemed approval) of the ITA, and subject to the terms and conditions of such approval, if and when obtained.

 

The enrollment documents evidencing participation in the Plan and Sub-Plan shall indicate whether the Shares purchased under the Plan and the Sub-Plan are a 102 Trustee Grant or a Non-Trustee Grant; and, if the grant is a 102 Trustee Grant, whether it is a 102 Capital Gains Track Grant or a 102 Ordinary Income Track Grant.

 

Sub-Plan and Conditions of 102 Trustee Grants

 

Each 102 Trustee Grant shall be deemed granted for the purposes of the ITO on the date of actual purchase of the Shares under the Plan and the Sub-Plan. With effect as of such date: (i) the Company (or its Affiliate) shall provide notice thereof to the Trustee; and (ii) the Eligible 102 Participant shall sign all documents or provide other confirmation in a form acceptable to the Company (or its Affiliate) and the Trustee required pursuant to this Section of the Sub-Plan, including, to the extent required, a separate form of consent to any tax ruling issued by the ITA in connection with participation in the Sub-Plan.

 

Each 102 Trustee Grant granted to an Eligible 102 Participant and each certificate for Shares acquired pursuant to a 102 Trustee Grant shall be deposited with a Trustee in compliance with the Deposit Requirements and held in trust by the Trustee for the benefit of the Eligible 102 Participant for the Required Holding Period (or be subject to a supervisory trustee arrangement if approved by the ITA). After termination of the Required Holding Period, the Trustee may release or confirm release of any such Shares, provided that (i) the Trustee has received an acknowledgment from the ITA that the Eligible 102 Participant has paid any applicable tax due pursuant to the ITO or (ii) the Trustee and/or the Company or its Affiliate withholds any applicable tax due pursuant to the ITO. The Trustee shall not release or confirm release of any 102 Trustee Grants prior to the full payment of the Eligible 102 Participant’s tax liabilities.

 

 

Each 102 Trustee Grant shall be subject to the relevant terms of Section 102 and the ITO, which shall be deemed an integral part of the 102 Trustee Grant and shall prevail over any term contained in the Plan, this Sub-Plan or any enrollment documents that are not consistent therewith. In addition, the withholding of applicable taxes shall be performed before the deduction from Compensation pursuant to the enrollment documents with respect to 102 Trustee Grants. Any provision of the ITO and any approvals or rulings by the ITA not expressly specified in this Sub-Plan or any document evidencing a grant that are necessary to receive or maintain any tax benefit pursuant to the Section 102 shall be binding on the Eligible 102 Participant. The Trustee and the Eligible 102 Participant granted a 102 Trustee Grant shall comply with the ITO and the terms and conditions of the trust agreement entered into between the Company and the Trustee (the “Trust Agreement”). For avoidance of doubt, it is reiterated that compliance with the ITO specifically includes compliance with the Rules. Further, the Eligible 102 Participant agrees to execute any and all documents which the Company or the Trustee may reasonably determine to be necessary in order to comply with the provision of any applicable law and, particularly, Section 102 and/or any ruling obtained from the ITA in connection with the Sub-Plan.

 

During the Required Holding Period, the Eligible 102 Participant shall not require the Trustee (or a broker) to release or sell Shares and other shares received subsequently following any realization of rights derived from Shares (including share dividends, if any) to the Eligible 102 Participant or to a third party, unless permitted to do so by applicable law. Notwithstanding the foregoing, the Trustee (or a broker) may, pursuant to a written request and subject to applicable law, release and transfer such Shares to a designated third party, provided that both of the following conditions have been fulfilled prior to such transfer: (i) all taxes required to be paid upon the release and transfer of the Shares have been withheld for transfer to the tax authorities; and (ii) the Trustee has received written confirmation from the Company that all requirements for such release and transfer have been fulfilled according to the terms of the Company’s corporate documents, the Plan, any applicable agreement and any applicable laws. To avoid doubt, such sale or release during the Required Holding Period shall result in different tax ramifications to the Eligible 102 Participant under Section 102 of the ITO and the Rules and/or any other regulations or orders or procedures promulgated thereunder, which shall apply to and shall be borne solely by such Eligible 102 Participant (including tax and mandatory payments otherwise payable by the Company or its or Affiliates, which would not apply absent a sale or release during the Required Holding Period).

 

In the event a share dividend is declared and/or additional rights are granted with respect to Shares that are 102 Trustee Grants, such dividend shall also be subject to the provisions of this Section of the Sub-Plan and the Required Holding Period for such dividend shares and/or rights shall be measured from the commencement of the Required Holding Period for the Shares with respect to which the dividend was declared and/or rights granted. In the event of a cash dividend on Shares, the Trustee shall transfer the dividend proceeds to the Eligible 102 Participant after deduction of taxes and mandatory payments in compliance with applicable withholding requirements.

 

Shares shall be issued in the name of the Trustee for the benefit of the Eligible 102 Participant (or be subject to a supervisory trustee arrangement if approved by the ITA). If such Shares are issued after the Required Holding Period has elapsed, the Shares issued shall, at the election of the Eligible 102 Participant, either (i) be issued in the name of the Trustee for the benefit of the Eligible 102 Participant (or be subject to a supervisory trustee arrangement if approved by the ITA) or (ii) be transferred to the Eligible 102 Participant directly, provided that the Eligible 102 Participant first complies with all applicable provisions of the Plan and the Sub-Plan.

 

 

Notwithstanding anything to the contrary in the Plan, it is clarified that 102 Capital Gains Track Grants are subject to the confirmation and approval of the ITA. In addition, any 102 Capital Gains Track Grants are meant to comply in full with the terms and conditions of Section 102 and the requirements of the ITA, and therefore the Plan and the Sub-Plan are to be read such that they comply with the requirements of Section 102. Should any provision in the Plan and/or the Sub-Plan disqualify the Plan and/or the Sub-Plan and/or any 102 Capital Gains Track Grants thereunder from beneficial tax treatment pursuant to the provisions of Section 102, such provision shall not apply to such 102 Capital Gains Track Grants and the underlying Shares unless the ITA provides approval of compliance with Section 102.

 

Assignability

 

As long as Shares are held by the Trustee on behalf of the Eligible 102 Participant (or otherwise subject to a supervisory trustee arrangement if approved by the ITA), all rights of the Eligible 102 Participant over the Shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.

 

Tax Consequences

 

Any tax consequences arising from participation in the Sub-Plan and/or the purchase of Shares thereunder, or from any other event or act (of the Company and/or its Affiliates, and/or the Trustee and/or the Eligible 102 Participant), hereunder (including without any limitation any taxes and compulsory payments, such as National Insurance Institute and health tax payments) shall be borne solely by the Eligible 102 Participant. The Company and/or its Affiliates, and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules and regulations, including withholding taxes at source. Furthermore, the Eligible 102 Participant shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Eligible 102 Participant.

 

The Company or any of its Affiliates and the Trustee may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all taxes required by law to be withheld with respect to Shares issued under the Plan or the sale thereof, including, but not limited, to (i) deducting the amount so required to be withheld from any other amount (or Shares issuable) then or thereafter payable to an Eligible 102 Participant, including to the maximum extent permitted under law, and/or (ii) requiring an Eligible 102 Participant to pay to the Company or any of its Affiliates the amount so required to be withheld as a condition of the issuance, delivery, distribution or release of any Shares; and/or (iii) withholding otherwise deliverable Shares having a Fair Market Value equal to the minimum amount statutorily required to be withheld; and/or (iv) causing the exercise and sale of any awards or Shares held by on behalf of the Employee or selling a sufficient number of such Shares otherwise deliverable to the Employee through such means as the Company may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld either through a voluntary sale or through a mandatory sale arranged by the Company (on the Employee’s behalf pursuant to the Employee’s authorization as expressed by acceptance of the award under the terms herein), to the extent permitted by applicable law or pursuant to the approval of the ITA. In addition, the Employee shall be required to pay any amount (including penalties) that exceeds the tax to be withheld and transferred to the tax authorities, pursuant to applicable tax laws, regulations and rules.

 

The Company does not represent or undertake that a grant under the Plan shall qualify for or comply with the requisites of any particular tax treatment (such as the 102 Capital Gains Track), nor shall the Company, its assignees or successors be required to take any action for the qualification of any grant under such tax treatment. The Company shall have no liability of any kind or nature in the event that, as a result of applicable law, actions by the Trustee or any position or interpretation of the ITA, or for any other reason whatsoever, a grant shall be deemed to not qualify for any particular tax treatment.

 

With respect to Non-Trustee Grants, if the Eligible 102 Participant ceases to be employed by the Company or any Affiliate, the Eligible 102 Participant shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares to the satisfaction of the Company and/or its Affiliate, all in accordance with the provisions of Section 102 of the ITO and the Rules.

 

The Company and/or the Trustee shall not be required with respect to a Participant to release any Share certificate or make a book entry with respect to such Share until all required payments have been fully made. In the event that the Company or its Affiliate, or the Trustee, as applicable, is uncertain as to the sum of the full tax payment due or which is subject to withholding, the Company or the Trustee, as applicable, may refuse to release the Shares until such time as the ITA verifies the sum of the full tax payment which is due, and the Participant shall not have any claims in connection with such refusal.

 

 

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