UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
| ☐ |
Preliminary
Proxy Statement |
| ☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ |
Definitive
Proxy Statement |
| ☐ |
Definitive
Additional Materials |
| ☐ |
Soliciting
Material Pursuant to §240.14a-12 |
| NanoVibronix,
Inc. |
| (Name
of Registrant as Specified In Its Charter) |
|
|
| |
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| (Name
of Person(s) Filing Proxy Statement, if other than the Registrant) |
| Payment
of Filing Fee (Check all boxes that apply): |
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| ☒ |
No
fee required. |
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|
| ☐ |
Fee
paid previously with preliminary materials. |
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|
| ☐ |
Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
969
Pruitt Place
Tyler
TX 75703
(914)
233-3004
October
29, 2024
Dear
Stockholder:
You
are cordially invited to attend the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of NanoVibronix, Inc., a Delaware
corporation (“we,” “us,” “our” or the “Company”), which will be held on December 19,
2024, at 10:00 a.m. Eastern Time at www.virtualshareholdermeeting.com/NAOV2024. To provide access to our stockholders regardless of geographic
location, the Company has determined that the Annual Meeting will be a virtual meeting conducted exclusively via live webcast. You or
your proxyholder will be able to attend the virtual Annual Meeting online, vote, and submit questions during the Annual Meeting by visiting
www.virtualshareholdermeeting.com/NAOV2024 and entering the 16-digit control number included on the proxy card or voting instruction
form, as applicable. To receive access to the virtual Annual Meeting, registered stockholders and beneficial stockholders (those holding
shares through a stock brokerage account or by a bank or other holder of record) will need to follow the instructions applicable to them
provided in the accompanying proxy statement. Details regarding the Annual Meeting and the business to be conducted at the Annual Meeting
are more fully described in the accompanying Notice of Annual Stockholders Meeting and proxy statement. You are entitled to vote at our
Annual Meeting and any adjournments, continuations or postponements thereof only if you were a stockholder as of October 28, 2024.
We
are distributing our proxy materials to certain stockholders via the Internet under the U.S. Securities and Exchange Commission (the
“SEC”) “Notice and Access” rules. We believe this approach allows us to provide stockholders with a timely and
convenient way to receive proxy materials and vote, while lowering the costs of delivery and reducing the environmental impact of our
Annual Meeting. We are mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice of Internet
Availability”) beginning on or about October 29, 2024, rather than a paper copy of the proxy statement, the proxy card and
our 2023 Annual Report, which includes our annual report on Form 10-K, as amended, for the fiscal year ended December 31, 2023. The Notice
of Internet Availability contains instructions on how to access the proxy materials, vote and obtain, if desired, a paper copy of the
proxy materials.
Your
vote is very important, regardless of the number of shares of our voting securities that you own. Whether or not you expect to attend
the Annual Meeting online, after receiving the Notice of Internet Availability, please vote as promptly as possible to ensure your representation
and the presence of a quorum at the Annual Meeting. As an alternative to voting online during the Annual Meeting, you may vote via the
Internet, by telephone, or by signing, dating and returning the proxy card that is mailed to those that request paper copies
of the proxy statement and the other proxy materials.
If
your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials through your broker or through
another intermediary, please complete and return the materials in accordance with the instructions provided to you by such broker or
such other intermediary, or contact your broker directly in order to obtain a proxy issued to you by your nominee holder to virtually
attend the meeting and vote online during the meeting. Failure to do so may result in your shares not being eligible to be voted by proxy
at the meeting.
On
behalf of the board of directors, I urge you to submit your vote as soon as possible, even if you currently plan to attend the Annual
Meeting online.
Thank
you for your support of our company. I look forward to seeing you online at the Annual Meeting via remote communication.
| Sincerely, |
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| |
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| /s/
Brian Murphy |
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| Brian
Murphy |
|
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| Chief
Executive Officer and Director |
|
|
NanoVibronix,
Inc.
969
Pruitt Place
Tyler
TX 75703
(914)
233-3004
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on December 19, 2024
The
2024 Annual Meeting of Stockholders (the “Annual Meeting”) of NanoVibronix, Inc., a Delaware corporation (“we,”
“us,” “our” or the “Company”), will be held on December 19, 2024, at 10:00 a.m. Eastern Time, via
a live webcast on the Internet. You will be able to virtually attend the Annual Meeting online, vote and submit questions during the
Annual Meeting by visiting www.virtualshareholdermeeting.com/NAOV2024. Only stockholders of record of our common stock, as of the close
of business on October 28, 2024 (the “Record Date”), will be entitled to vote at the Annual Meeting and any adjournments,
continuations or postponements thereof that may take place.
We
will consider and act on the following items of business at the Annual Meeting:
| |
(1) |
Election
of the eight nominees to serve on the Company’s board of directors (the “Board”) for a term of one year or until
their respective successors are elected and qualified, for which the following are nominees: Aurora Cassirer, Christopher Fashek,
Michael Ferguson, Martin Goldstein, M.D., Harold Jacob, M.D., Thomas Mika, Brian Murphy, and Maria Schroeder (“Proposal 1”); |
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(2) |
Ratification
of the appointment of Zwick CPA, PLLC as our independent registered public accounting firm for the fiscal year ending December 31,
2024 (“Proposal 2”); |
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|
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(3) |
Approval
of the NanoVibronix, Inc. 2024 Long-Term Incentive Plan (“Proposal 3”); |
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(4) |
Approval,
on an advisory basis, of the compensation paid to our named executive officers (“Proposal 4”); |
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(5) |
Approval
of a proposal to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation
and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of any one
or more of the foregoing proposals (“Proposal 5”); and |
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(6) |
Such
other business as may arise and that may properly be conducted at the Annual Meeting or any adjournment or postponement thereof. |
Stockholders
are referred to the proxy statement accompanying this notice for more detailed information with respect to the matters to be considered
at the Annual Meeting. After careful consideration, the “Board has determined that each proposal listed above is in the best interests
of the Company and its stockholders and has approved each proposal. The Board recommends a vote “FOR” the election of
each of the nominees for director listed in Proposal 1 and “FOR” Proposals 2, 3, 4 and 5.
The
Board has fixed the close of business on October 28, 2024, as the record date (the “Record Date”) for the Annual Meeting.
Only stockholders of record of our common stock on the Record Date are entitled to receive notice of the Annual Meeting and vote at the
Annual Meeting. A complete list of registered stockholders entitled to vote at the Annual Meeting will be available for inspection at
the principal executive offices of the Company (upon request to us by mail at NanoVibronix, Inc., 969 Pruitt Place, Tyler TX 75703, Attn:
Stephen Brown or by calling 914-233-3004 and asking for Stephen Brown) during regular business hours for the 10 calendar days prior to
the Annual Meeting.
YOUR
VOTE AND PARTICIPATION IN THE COMPANY’S AFFAIRS ARE IMPORTANT.
Whether
or not you plan to attend the Annual Meeting online, we urge you to vote your shares as promptly as possible by Internet, telephone or
mail. For specific instructions on how to vote your shares, please see the section entitled “About the Annual Meeting” beginning
on page 7 of the proxy statement.
If
your shares are registered in your name, even if you plan to attend the Annual Meeting (or any postponement or adjournment of the
Annual Meeting) online, we request that you complete, date, sign and mail the proxy card in accordance with the instructions
set out in the form of proxy and in the proxy statement to ensure that your shares will be represented at the Annual Meeting.
If
your shares are held in the name of a broker, trust, bank or other nominee, and you receive these materials through your broker or
through another intermediary, please complete and return the materials in accordance with the instructions provided to you by such broker
or such other intermediary or contact your broker directly in order to obtain a proxy issued to you by your nominee holder to virtually
attend the Annual Meeting and vote online. Failure to do so may result in your shares not being eligible to be voted by proxy at the
Annual Meeting online.
| By
Order of the Board, |
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| /s/
Brian Murphy |
|
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| Brian
Murphy |
|
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| Chief
Executive Officer and Director |
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| October
29, 2024 |
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|
TABLE
OF CONTENTS
NanoVibronix,
Inc.
969
Pruitt Place
Tyler
TX 75703
(914)
233-3004
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held on December 19, 2024
Unless
the context otherwise requires, references in this proxy statement (this “Proxy Statement”) to “we,” “us,”
“our,” “the Company,” or “NanoVibronix” refer to NanoVibronix, Inc., a Delaware corporation, and
its consolidated subsidiary as a whole. In addition, unless the context otherwise requires, references to “stockholders”
are to the holders of our common stock.
The
accompanying proxy is solicited by the board of directors of the Company (the “Board”) on behalf of NanoVibronix, Inc. to
be voted at the 2024 annual meeting of stockholders of the Company (the “Annual Meeting”) to be held virtually via a live
webcast on the Internet on December 19, 2024 at 10:00 a.m. Eastern Time, at the Internet address and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders (the “Notice”). This Proxy Statement and accompanying form of proxy
are dated October 29, 2024, and are expected to be first sent, given or made available to stockholders on or about October 29, 2024.
If
you held shares of our common stock at the close of business on October 28, 2024 (the “Record Date”), you are invited to
attend the Annual Meeting virtually at www.virtualshareholdermeeting.com/NAOV2024 and vote on the proposals described in this Proxy Statement.
The
Company will pay the costs of soliciting proxies from stockholders. Our directors, officers and employees will solicit proxies on behalf
of the Company, without additional compensation, by telephone, facsimile, mail, on the Internet or in person.
The
executive offices of the Company are located at, and the mailing address of the Company, is 969 Pruitt Place, Tyler TX 75703.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 19, 2024:
As
permitted by the “Notice and Access” rules of the U.S. Securities and Exchange Commission (the “SEC”), we are
making this proxy statement, the proxy card and our 2023 Annual Report, which includes our annual report on Form 10-K, as amended, for
the fiscal year ended December 31, 2023 available to stockholders electronically via the Internet at the following website: www.proxyvote.com.
On or about October 29, 2024, we will begin mailing to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice
of Internet Availability”) that contains instructions on how stockholders may access and review all of the proxy materials and
how to vote. Also, on or about October 29, 2024, we will begin mailing printed copies of the proxy materials to stockholders that previously
requested printed copies. If you received a Notice of Internet Availability by mail, you will not receive a printed copy of the proxy
materials in the mail unless you request a copy. If you received a Notice of Internet Availability by mail and would like to receive
a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice of Internet
Availability.
ABOUT
THE ANNUAL MEETING
What
is a proxy?
A
proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document,
that document is also called a “proxy” or a “proxy card.”
What
is a proxy statement?
A
proxy statement is a document that regulations of the SEC require that we give to you when we ask you to sign a proxy card to vote your
stock at the Annual Meeting.
Why
did I receive a Notice of Internet Availability of Proxy Materials instead of paper copies of the proxy
materials?
We
are using the SEC’s Notice and Access model, which allows us to deliver proxy materials over the Internet, as the primary means
of furnishing proxy materials. We believe Notice and Access provides stockholders with a convenient method to access the proxy materials
and vote, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials. On or
about October 29, 2024, we expect to begin mailing to stockholders a Notice of Internet Availability containing instructions on how to
access our proxy materials on the Internet and how to vote online. The Notice of Internet Availability is not a proxy card and cannot
be used to vote your shares. If you received a Notice of Internet Availability this year, you will not receive paper copies of the proxy
materials unless you request the materials by following the instructions on the Notice of Internet Availability.
What
is the purpose of the Annual Meeting?
At
our Annual Meeting, stockholders will act upon the matters outlined in the Notice, which include the following:
| |
(7) |
Election
of the eight nominees to serve on the Company’s Board for a term of one year or until their respective successors are elected
and qualified, for which the following are nominees: Aurora Cassirer, Christopher Fashek, Michael Ferguson, Martin Goldstein, M.D.,
Harold Jacob, M.D., Thomas Mika, Brian Murphy, and Maria Schroeder (“Proposal 1”); |
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|
|
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(8) |
Ratification
of the appointment of Zwick CPA, PLLC as our independent registered public accounting firm for the fiscal year ending December 31,
2024 (“Proposal 2”); |
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|
|
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(9) |
Approval
of the NanoVibronix, Inc. 2024 Long-Term Incentive Plan (“Proposal 3”); |
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|
|
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(10) |
Approval,
on an advisory basis, of the compensation paid to our named executive officers (“Proposal 4”); |
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|
|
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(11) |
Approval
of a proposal to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation
and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of any one
or more of the foregoing proposals (“Proposal 5”); and |
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|
|
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(12) |
Such
other business as may arise and that may properly be conducted at the Annual Meeting or any adjournment or postponement thereof. |
What
should I do if I receive more than one set of voting materials?
You
may receive more than one Notice of Internet Availability (or, if you requested a printed copy of the proxy materials, including multiple
copies of this Proxy Statement and multiple proxy cards or voting instruction cards). For example, if you hold your shares in more than
one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly,
if you are a stockholder of record and hold shares in a brokerage account, you will receive a Notice of Internet Availability (or, if
you requested a printed copy of the proxy materials, a proxy card) for shares held in your name and a voting instruction card for shares
held in “street name.” Please follow the separate voting instructions that you received for your shares of common stock held
in each of your different accounts to ensure that all your shares are voted.
What
is the record date and what does it mean?
The
record date to determine the stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on October
28, 2024 (the “Record Date”). The Record Date is established by the Board as required by Delaware law. On the Record Date,
3,752,354 shares of common stock were issued and outstanding. See “What are the voting rights of the stockholders?”
below.
Who
is entitled to vote at the Annual Meeting and how many votes do they have?
Holders
of common stock at the close of business on the Record Date may vote at the Annual Meeting. There were 3,752,354 shares of common stock,
and no shares of any series of preferred stock outstanding on the Record Date. A complete list of registered stockholders entitled to
vote at the Annual Meeting will be available for inspection at the principal executive offices of the Company during regular business
hours for the 10 calendar days prior to the Annual Meeting.
Pursuant
to the rights of our stockholders contained in our charter documents, each share of our common stock is entitled to one vote on all matters
listed in this Proxy Statement. There is no cumulative voting.
What
is the difference between a stockholder of record and a “street name” holder?
If
your shares are registered directly in your name with VStock Transfer, LLC, the Company’s stock transfer agent, you are considered
the stockholder of record with respect to those shares. The Notice of Internet Availability has been sent directly to you by the Company.
If
your shares are held in a stock brokerage account or by a bank or other nominee, the nominee is considered the record holder of those
shares. You are considered the beneficial owner of these shares, and your shares are held in “street name.” The Notice of
Internet Availability has been forwarded to you by your nominee. As the beneficial owner, you have the right to direct your nominee concerning
how to vote your shares by using the voting instructions the nominee included in the mailing or by following such nominee’s instructions
for voting.
What
is a broker non-vote?
Broker
non-votes occur when shares are held indirectly through a broker, bank or other intermediary on behalf of a beneficial owner (referred
to as held in “street name”) and the broker submits a proxy but does not vote for a matter because the broker has not received
voting instructions from the beneficial owner and (i) the broker does not have discretionary voting authority on the matter or (ii) the
broker chooses not to vote on a matter for which it has discretionary voting authority.
With
respect to the ratification of the independent registered public accounting firm (Proposal 2) and adjournment of the Annual Meeting to
a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient
votes for, or otherwise in connection with, the approval of any one or more of the proposals presented at the Annual Meeting (Proposal
5), your broker will have the discretion to vote your shares and, therefore, will be able to vote your shares with respect to such proposals
even if you do not provide your broker with instructions on those proposals.
If
I am a beneficial owner of shares, can my brokerage firm vote my shares?
If
you are a beneficial owner and do not vote via the Internet or telephone or by returning a signed voting instruction card to your broker,
your shares may be voted only with respect to so-called “routine” matters where your broker has discretionary voting authority
over your shares. Under the rules of the New York Stock Exchange (the “NYSE”) that govern how brokers may vote shares for
which they have not received voting instructions from the beneficial owner, brokers will have such discretionary authority to vote on
the ratification of the independent registered public accounting firm (Proposal 2) and adjournment of the Annual Meeting to a later date
or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes
for, or otherwise in connection with, the approval of any one or more of the proposals presented at the Annual Meeting (Proposal 5),
and may vote “FOR” such proposals. In the absence of specific instructions from you, your broker does not have discretionary
authority to vote your shares with respect to the election of directors (Proposal 1), the approval of the NanoVibronix, Inc. 2024 Long-Term
Incentive (Proposal 3), or the non-binding advisory vote on the compensation of our named executive officers (Proposal 4).
We
encourage you to provide instructions to your brokerage firm via the Internet or telephone or by returning your signed voting instruction
card. This ensures that your shares will be voted at the Annual Meeting with respect to all of the proposals described in this Proxy
Statement.
When
and where is the Annual Meeting and what do I need to be able to attend online?
The
Annual Meeting will be held on December 19, 2024, at 10:00 a.m. Eastern Time at www.virtualshareholdermeeting.com/NAOV2024. Any stockholder
who owns our common stock on the Record Date can attend the Annual Meeting online.
You
will be able to attend the Annual Meeting online, vote, and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/NAOV2024.
To participate in the virtual meeting, you will need the 16-digit control number included on your proxy card or voting instruction form,
as applicable. The meeting webcast will begin promptly at 10:00 a.m. Eastern Time. We encourage you to access the meeting prior to the
start time and you should allow ample time for the check-in procedures. Because the Annual Meeting will be a completely virtual meeting,
there will be no physical location for stockholders to attend.
What
Constitutes a Quorum for the Annual Meeting?
The
presence, by virtual attendance or by proxy, of the holders of one-third of the voting power of all of the shares of the stock entitled
to vote at the Annual Meeting, is necessary to constitute a quorum at the Annual Meeting. Votes of stockholders of record who are present
at the Annual Meeting by virtual attendance or by proxy, abstentions and broker non-votes are counted for purposes of determining whether
a quorum exists.
How
do I vote my shares?
If
you are a record holder, you may choose one of the following methods to vote your shares:
| ● |
Via
Internet: as prompted by the menu found at www.proxyvote.com, follow the instructions to obtain your records and submit an electronic
ballot. Please have your Stockholder Control Number, which can be found on your proxy card, when you access this voting site. You
may vote via the Internet until 11:59 p.m., Eastern Time on December 18, 2024. |
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| ● |
Via
telephone: call 1-800-690-6903 and then follow the voice instructions. Please have your Stockholder Control Number, which can
be found on your proxy card, when you call. You may vote by telephone until 11:59 p.m., Eastern Time on December 18, 2024. |
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| ● |
Via
mail: You may vote by proxy by completing, signing, dating and promptly returning the proxy card in the postage-paid
envelope. If you submit a signed proxy without indicating your vote, the person voting the proxy will vote your shares according
to the Board’s recommendation. |
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|
| ● |
Online:
Online during the Annual Meeting at www.virtualshareholdermeeting.com/NAOV2024. You will need your Stockholder Control Number, which
can be found on your proxy card, in hand when you vote online during the Annual Meeting. |
The
proxy is fairly simple to complete, with specific instructions on the electronic ballot, telephone or card. By completing and submitting
it, you will direct the designated persons (known as “proxies”) to vote your stock at the Annual Meeting in accordance with
your instructions. The Board has appointed Brian Murphy, our chief executive officer and director and Stephen Brown, our chief financial
officer, to serve as the proxies for the Annual Meeting. Your proxy will be valid only if you complete and return it before the Annual
Meeting. If you properly complete and transmit your proxy but do not provide voting instructions with respect to a proposal, then the
designated proxies will vote your shares “FOR” the election of each of the nominees for director listed in Proposal
1 and “FOR” Proposal 2, Proposal 3, Proposal 4 and Proposal 5 to which you provided no voting instructions. We do
not anticipate that any other matters will come before the Annual Meeting, but if any other matters properly come before the meeting,
then the proxies will vote your shares in accordance with applicable law and their judgment.
If
you hold your shares in “street name,” your bank, broker or other nominee should provide to you a request for voting instructions
along with the Company’s proxy solicitation materials. By completing the voting instruction card, you may direct your nominee how
to vote your shares. If you partially complete the voting instruction but fail to complete one or more of the voting instructions, then
your nominee may be unable to vote your shares with respect to the proposal as to which you provided no voting instructions. See “What
is a broker non-vote?” Alternatively, if you want to vote your shares during the virtual Annual Meeting, you must contact your
nominee directly in order to obtain a proxy issued to you by your nominee holder. Note that a broker letter that identifies you as a
stockholder is not the same as a nominee-issued proxy. If you fail to obtain a nominee-issued proxy prior to the Annual Meeting, you
will not be able to vote your nominee-held shares during the Annual Meeting.
Who
counts the votes?
All
votes will be tabulated by the Inspector of Election appointed for the Annual Meeting. Each proposal will be tabulated separately.
Can
I vote my shares at the Annual Meeting?
Yes.
If you are a stockholder of record, you may vote your shares during the meeting by submitting your vote electronically at the Annual
Meeting.
If
you hold your shares in “street name,” you may vote your shares during the Annual Meeting only if you obtain a proxy issued
by your bank, broker or other nominee giving you the right to vote the shares.
Even
if you currently plan to attend the virtual Annual Meeting, we recommend that you also return your proxy or voting instructions as described
above so that your votes will be counted if you later decide not to attend the Annual Meeting or are unable to attend.
What
are my choices when voting?
When
you cast your vote on:
Proposal
1: You may vote for all director nominees or may withhold your vote as to one or more director nominees.
Proposal
2: You may vote for the proposal, against the proposal or abstain from voting on the proposal.
Proposal
3: You may vote for the proposal, against the proposal or abstain from voting on the proposal.
Proposal
4: You may vote for the proposal, against the proposal or abstain from voting on the proposal.
Proposal
5: You may vote for the proposal, against the proposal or abstain from voting on the proposal.
What
are the Board’s recommendations on how I should vote my shares?
The
Board recommends that you vote your shares as follows:
“FOR”
the election of each of the nominees listed in Proposal 1.
“FOR”
Proposals 2, 3, 4 and 5.
What
if I do not specify how I want my shares voted?
If
you are a record holder who returns a completed proxy that does not specify how you want to vote your shares on one or more proposals,
the proxies will vote your shares for each proposal as to which you provided no voting instructions, and such shares will be voted in
the following manner:
“FOR”
the election of each of the nominees listed in Proposal 1.
“FOR”
Proposals 2, 3, 4 and 5.
If
you are a “street name” holder and do not provide voting instructions on one or more proposals, your bank, broker or other
nominee will be unable to vote those shares with respect to the election of directors (Proposal 1), the approval of the NanoVibronix,
Inc. 2024 Long-Term Incentive (Proposal 3), or the non-binding advisory vote on the compensation of our named executive officers (Proposal
4). See “What is a broker non-vote?”
Can
I change my vote?
Yes.
If you are a record holder, you may revoke your proxy at any time by any of the following means:
| ● |
Attending
the virtual Annual Meeting and submitting your vote electronically. Your attendance at the Annual Meeting will not by itself revoke
a proxy. You must vote your shares by ballot at the virtual Annual Meeting to revoke your proxy. |
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| ● |
Completing
and submitting a new valid proxy bearing a later date. |
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|
| ● |
Giving
written notice of revocation to the Company addressed to Brian Murphy, our Chief Executive Officer and a director, at the Company’s
address above, which notice must be received before 6:00 p.m., Eastern Time on December 18, 2024. |
If
you are a “street name” holder, your bank, broker or other nominee should provide instructions explaining how you may change
or revoke your voting instructions.
What
votes are required to approve each proposal?
Assuming
the presence of a quorum, the following sets forth the voting requirement with respect to each Proposal:
| Proposal
1 — Election of Directors |
|
The
affirmative “FOR” vote of the holders of a plurality of the votes cast at the Annual Meeting is required for the election
of the director nominees, i.e., the eight director nominees who receive the most votes will be elected.
|
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Proposal
2 — Ratification of Appointment of Auditor
|
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The
affirmative “FOR” vote of a majority of the votes cast “FOR” or “AGAINST” the proposal. |
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|
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Proposal
3 – Approval of the NanoVibronix, Inc. 2024 Long-Term Incentive Plan
|
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The
affirmative “FOR” vote of a majority of the votes cast “FOR” or “AGAINST” the proposal. |
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|
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| Proposal
4- Approval, on an advisory basis, of the compensation paid to our named executive officers |
|
The
affirmative “FOR” vote of a majority of the votes cast “FOR” or “AGAINST” the proposal. |
| |
|
|
| Proposal
5- Approval to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and
vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of any one or more
of the foregoing proposals |
|
The
affirmative “FOR” vote of a majority of the votes cast “FOR” or “AGAINST” the proposal. |
How
are abstentions and broker non-votes treated?
Abstentions
are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at the meeting. Withholding
authority to vote your shares with respect to one or more director nominees will have no effect on the election of those nominees, and
abstentions will have no effect on the ratification of the independent registered public accounting firm (Proposal 2), the approval of
the NanoVibronix, Inc. 2024 Long-Term Incentive Plan (Proposal 3), the approval, on an advisory basis, the compensation paid to our named
executive officers (Proposal 4) or the approval to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate,
to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with,
the approval of any one or more of the foregoing proposals (Proposal 5).
Broker
non-votes are included in the determination of the number of shares present at the Annual Meeting for determining a quorum at the meeting.
Failure to instruct your broker how to vote with respect to the election of directors (Proposal 1), the ratification of the independent
registered public accounting firm (Proposal 2), the approval of the NanoVibronix, Inc. 2024 Long-Term Incentive Plan (Proposal 3), the
approval, on an advisory basis, the compensation paid to our named executive officers (Proposal 4) or the approval to adjourn the Annual
Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there
are insufficient votes for, or otherwise in connection with, the approval of any one or more of the foregoing proposals (Proposal 5)
will have no effect on the outcome of the votes because broker non-votes are not considered shares entitled to vote. However, if you
do not give your broker specific instructions on how to vote your shares with respect to the ratification of the independent registered
public accounting firm (Proposal 2) or the approval to adjourn the Annual Meeting to a later date or dates, if necessary or appropriate,
to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with,
the approval of any one or more of the foregoing proposals (Proposal 5), your broker may vote your shares at its discretion.
What
are the solicitation expenses and who pays the cost of this proxy solicitation?
Our
Board is asking for your proxy and we will pay all of the costs of asking for stockholder proxies. The Company will pay the costs of
soliciting proxies from stockholders. Our directors, officers and employees will solicit proxies on behalf of the Company, without additional
compensation, by telephone, facsimile, mail, on the Internet or in person. We will reimburse brokerage houses and other custodians, nominees
and fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation material to the beneficial owners of common stock
and collecting voting instructions.
Is
this Proxy Statement the only way that proxies are being solicited?
No.
In addition to the solicitation of proxies by use of the Notice of Internet Availability, officers and employees of the Company may solicit
the return of proxies, either by mail, telephone, telecopy, e-mail or through personal contact. Our officers and employees will not receive
additional compensation for their efforts but will be reimbursed for out-of-pocket expenses. Brokerage houses and other custodians, nominees
and fiduciaries, in connection with shares of the common stock registered in their names, will be requested to forward solicitation material
to the beneficial owners of shares of common stock.
When
will the next shareholder advisory vote on executive compensation occur?
At
our 2021 annual meeting of stockholders, we submitted to stockholders an advisory vote on whether an advisory vote on executive compensation
should be held every one, two, or three years. “Three years” was the frequency that received the highest number of votes.
In light of such outcome, we hold an advisory vote on executive compensation every three years (including this year, with the last vote
having occurred in 2021). The next “say-on-pay” vote is expected to occur at the annual meeting of our stockholders in 2027.
The
next time we will submit to stockholders an advisory vote on the frequency of the advisory vote on executive compensation will be at
the annual meeting of our shareholders in 2027 as well.
Are
there any other matters to be acted upon at the Annual Meeting?
Management
does not intend to present any business at the Annual Meeting for a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the stockholders properly come before the Annual Meeting, it is the intention
of the persons named in the form of proxy to vote the shares represented by the proxies held by them in accordance with applicable law
and their judgment on such matters.
Where
can I find voting results?
We
expect to publish the voting results in a current report on Form 8-K, which we expect to file with the SEC within four business days
after the Annual Meeting.
Who
can help answer my questions?
The
information provided above in this “Question and Answer” format is for your convenience only and is merely a summary of the
information contained in this Proxy Statement. We urge you to carefully read this entire proxy statement, including the documents we
refer to in this Proxy Statement. If you have any questions, or need additional materials, please feel free to contact Stephen Brown
by email at steve@nanovibronix.com or phone at 914-233-3004. You will also be able to submit questions during the Annual Meeting.
What
is “householding” and how does it affect me?
With
respect to eligible stockholders who share a single address, we may send a single copy of the proxy materials to that address unless
we received instructions to the contrary from any stockholder at that address. This practice, known as “householding,” is
designed to reduce our printing and postage costs. However, if a stockholder of record residing at such address wishes to receive a separate
proxy statement and other proxy materials in the future, he or she may contact us by mail at NanoVibronix, Inc., 969 Pruitt Place, Tyler
TX 75703, Attn: Brian Murphy or by calling 914-233-3004 and asking for Brian Murphy. Eligible stockholders of record receiving multiple
copies of our proxy materials can request householding by contacting us in the same manner. Stockholders who own shares through a bank,
broker or other nominee can request householding by contacting such nominee.
We
hereby undertake to deliver promptly, upon written or oral request, a copy of the proxy materials to a stockholder at a shared address
to which a single copy of the document was delivered. Requests should be directed to Brian Murphy at the address or phone number set
forth above.
PROPOSAL
1: ELECTION OF DIRECTORS
The
Board has nominated eight directors for election at the Annual Meeting by the stockholders (each referred to herein as a “Company
Nominee” and, collectively as the “Company Nominees”). The Board manages our company’s business and affairs,
exercises all corporate powers and establishes corporate policies. Our Certificate of Incorporation and Bylaws provide that the Board
will consist of such number of directors as may be determined from time to time by resolution of the majority of the whole Board. Proxies
cannot be voted for a greater number of persons than the number of Company Nominees named in the proxy statement.
Each
member of our Board is elected for a one-year term and is elected at each annual meeting of stockholders. If a quorum is present, the
Company Nominees will be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting
and entitled to vote on the election of directors. Abstentions and broker non-votes have no effect on the vote. The eight Company Nominees
receiving the highest number of affirmative votes will be elected directors of the Company. Shares of common stock entitled to vote at
the Annual Meeting represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the eight
nominees named below. Should any Company Nominee become unable or unwilling to accept nomination or election, the proxy holders may vote
the proxies for the election, in his or her stead, of any other person the Board may nominate or designate. Each Company Nominee has
agreed to serve, if elected, and the Board has no reason to believe that any Company Nominee will be unable to serve.
Nominee
Biographies and Qualifications
The
following table sets forth the name, age and position of each director currently serving on the Board and each Company Nominee for election
as a director as of the Record Date:
The
biographies for the Company Nominees are as follows:
| Name |
|
Age |
|
Position
with the Company |
| Brian
Murphy |
|
67 |
|
Chief
Executive Officer and Director |
| Harold
Jacob, M.D. |
|
71 |
|
Chief
Medical Officer and Director |
| Christopher
Fashek |
|
75 |
|
Chairman
of the Board |
| Martin
Goldstein, M.D. |
|
56 |
|
Director |
| Michael
Ferguson |
|
54 |
|
Director |
| Thomas
R. Mika |
|
73 |
|
Director |
| Aurora
Cassirer |
|
72 |
|
Director |
| Maria
Schroeder |
|
66 |
|
Director
|
The
following sets forth biographical information and the qualifications and skills for each director:
Brian
Murphy, Chief Executive Officer and Director. Mr. Murphy has served as our chief executive officer and director since October
2016. Mr. Murphy has over 25 years of senior sales, operations and general management experience in medical device and medical technology
companies, including ATI Medical Equipment Corporation, Mountain Medical Equipment Inc. and Healthdyne Technologies Inc. From 2012 to
2016, Mr. Murphy served in various roles at MiMedx Group, Inc., where he initiated and managed the commercial sales and national accounts
efforts within the advanced wound care segment. From 2010 to 2012, Mr. Murphy was the chief executive officer of O2 Insights, Inc., a
start-up wound care diagnostics company, and led the sale of the company to Systagenix Ltd. in June 2012. From 2008 to 2010, Mr. Murphy
served as vice president of sales for ConvaTec and led the negative pressure wound therapy business. From 1992 to 2008, Mr. Murphy served
a total of 17 years at Kinetic Concepts, Inc. (KCI) in various positions overseeing sales, operations and general management. Mr. Murphy
holds a bachelor of arts degree in communications from Southern Illinois University. Mr. Murphy’s qualifications to serve on our
Board include his significant sales, operations and general management experience in medical device and medical technology companies.
Harold
Jacob, M.D., Chief Medical Officer and Director. Dr. Jacob has served as our chief medical officer since March 1, 2014, and as
our director since September 2003. From September 2003 to February 4, 2014, Dr. Jacob served as chairman of the board of directors of
the Company (the “Board”), and from September 2003 to March 1, 2014, Dr. Jacob served as our chief executive officer. Dr.
Jacob also performed the functions of a principal financial officer until April 1, 2014. Dr. Jacob is our co-founder and has worked extensively
in medical device development. Dr. Jacob also served part-time as an attending gastroenterologist at Shaare Zedek Medical Center in Jerusalem,
Israel from 2004 to March 2011. Since April 2011, he has been an attending physician in Gastroenterology at Hadassah University Hospital
in Jerusalem, Israel. From 1999 to the present, Dr. Jacob has served as the president of Medical Instrument Development Inc., which provides
consulting services to start-up and early stage companies and patents its own proprietary medical devices. From 1997 to 2003, Dr. Jacob
served as director of medical affairs at Given Imaging Ltd., a company that developed the first swallowable wireless pill camera for
inspection of the intestines. Dr. Jacob also formerly served as a director for Oramed Pharmaceuticals Inc., a pharmaceutical company
focused on the development of innovative orally ingestible capsule medication. We believe that Dr. Jacob’s qualifications to serve
on our Board include his years of experience in the biomedical industry and with us and his experience serving in management roles of
various companies.
Christopher
Fashek, Chairman of the Board. Mr. Fashek has served as our director and chairman of the
Board since November 2016. Mr. Fashek is an accomplished healthcare executive with a record of leading global medical-device and pharmaceutical
businesses. Mr. Fashek led the team that introduced V.A.C.® therapy, a negative pressure wound therapy, to both the clinical community,
and patients with serious or complex wounds. From June 2018, to 2020, Mr. Fashek has served as Chief Executive Officer and Director of
Brain Sentinel, Inc. Mr. Fashek currently serves as a Director of the Wound Healing Foundation (WHF), and Bravida Medical. From 1995
to 2007, Mr. Fashek served as the Vice Chairman, Chief Executive Officer, and President of KCI USA. From 2008 to 2011, Mr. Fashek was
the Chairman of the Board of Directors at Systagenix, Ltd. From 2014 to 2015, Mr. Fashek was the Chairman of the Board of Directors and
Chief Executive Officer of Spiracur, Inc. Mr. Fashek currently serves as Chairman of MedTech Solutions Group, LLC, a global commercial
Medsurge business in San Antonio, Texas. Mr. Fashek has a Bachelor of Arts degree from Upsala College and Master of Business Administration
from Fairleigh Dickinson University. Mr. Fashek is recognized as developing highly productive and profitable leadership teams and corporate
cultures, while taking multiple healthcare products from idealization to commercialization, as well as turning around under-performing
corporations to profitability. Mr. Fashek’s extensive experience as an executive and leadership positions in the global medical
device and pharmaceutical businesses, as well as his network of industry partners, provide him the appropriate experience to serve on
our Board.
Martin
Goldstein, M.D., Director. Dr. Goldstein has served as our director since March 25, 2015 and is on our Corporate Governance Committee.
He has been a practicing urologist for more than 20 years and is also an accomplished healthcare entrepreneur. For more than ten years
Dr Goldstein presided over New Jersey Urology, one the largest urology group practices in the country. As President, he successfully
navigated New Jersey Urology through two private equity transactions and the subsequent acquisition by Village MD. He now serves as the
National Urology Service Line Chief for Village MD/Summit Health, a Walgreens & Cigna backed healthcare company. Previously, he served
as Senior Vice President of Corporate Development and Acquisitions of Urology Management Associates, a private equity backed entity providing
administrative practice management services to independent urology groups. Dr. Goldstein is a co-founder and executive board member of
Metropolitan Surgery Center, a large multispecialty ambulatory surgery center. Dr. Goldstein brings to our Board his medical practice
and healthcare business expertise. He is expected to make a valuable contribution in connection with marketing and facilitating the acceptance
of our product offerings within the medical community. He has provided assistance with the U.S. Food and Drug Administration regulatory
approval process of our products, particularly our urology offerings, and will continue to advise on new product development and innovations.
Michael
Ferguson, Director. The Honorable Mr. Ferguson has served as our director since April 27, 2015. Since November 2023, Mr. Ferguson
has served as executive vice president for federal legislative relations at AT&T. In addition, Mr. Ferguson founded Ferguson Strategies,
LLC, a government affairs and strategic business consulting firm, where he served as the chief executive officer and chairman. Before
joining AT&T, Mr. Ferguson served as a senior advisor at BakerHostetler, serving as the leader of their Federal Policy team. From
2001 to January 2009, he served in the U.S. House of Representatives, representing New Jersey’s 7th congressional district. While
in Congress, he was a member of the House Energy and Commerce Committee, which has wide jurisdiction over the healthcare, telecommunications
and energy industries. He served as vice chairman of the panel’s Health Subcommittee, where he became a key member on health care
issues and helped to ensure passage of the Medicare Part D prescription drug benefit in 2003. In addition, he served as a member of the
Telecommunications and Internet Subcommittee as well as the Oversight and Investigations Subcommittee. Mr. Ferguson was also a member
of the House Financial Services Committee, where he cosponsored the Sarbanes-Oxley Act of 2002 and helped enact the initial terrorism
risk insurance law. Mr. Ferguson was the former chairman of the Board of Commissioners of the New Jersey Sports and Exhibition Authority
and also serves as a senior fellow of the Center for Medicine in the Public Interest’s Odyssey Initiative for Biomedical Innovation
and Human Health. He has also served on various corporate advisory boards and committees, including for Pfizer, Inc., the National Italian
American Foundation and the United States Golf Association. Mr. Ferguson received a bachelor’s degree in government from the University
of Notre Dame and a master’s of public policy degree with a specialization in education policy from Georgetown University. Mr.
Ferguson also formerly served as the Chairman of the Board of Ohr Pharmaceutical Inc. and brings to the Board his extensive background
in government affairs, health care policy, and business strategy gained from his experiences in Congress and business consulting, which
we believe will assist in strengthening and advancing our strategic focus and regulatory compliance.
Thomas
R. Mika, Director. Mr. Mika has served as our director since April 27, 2015. Mr. Mika has over 30 years of senior management,
finance and consulting experience. Mr. Mika is currently executive vice president and chief financial officer of POET Technologies, Inc.
(TSX Venture: PTK, NASDAQ:POET) and previously served as chief executive officer of CollabRx, Inc. (NASDAQ: CLRX) and its predecessor,
Tegal Corporation (NASDAQ: TGAL). CollabRx was a pioneer in clinical decision-support and precision oncology based on genomic testing.
Mr. Mika was the chairman and chief executive officer of Tegal since March 2005, which became CollabRx in 2012, and served as its Chief
Financial Officer since 2002. From 1992 to 2002, Mr. Mika served on the Company’s Board, which included periods of service as the
chairman of the compensation committee and a member of the audit committee. Previously, Mr. Mika co-founded IMTEC, a boutique investment
and consulting firm whose areas of focus included health care, pharmaceuticals, media and information technology. As a partner of IMTEC,
Mr. Mika served clients in the United States, Europe and Japan over a period of 20 years, taking on the role of chief executive officer
in several ventures. Earlier in his career, Mr. Mika was a managing consultant with Cresap, McCormick & Paget and a policy analyst
for the National Science Foundation. Mr. Mika holds a bachelor of science degree in Microbiology from the University of Illinois at Urbana-Champaign
and a master of business administration degree from the Harvard Graduate School of Business. Mr. Mika’s qualifications to serve
on our Board include his significant strategic and business insight from his prior service on the Board of other publicly held companies,
as well as his substantial senior management, finance and consulting experience.
Aurora
Cassirer, Director. Ms. Cassirer has served on the Board since January 2022 and serves as the chair of the corporate governance
committee. Ms. Cassirer is also a member of our compensation committee. Ms. Cassirer is a highly experienced attorney, currently practicing
at Pierson Ferdinand LLP in the Business Litigation Section. She has previously served as a partner in other prominent law firms for
more than 30 years, including at Troutman Pepper Hamilton Sanders LLP, where she served on the Executive and Compensation Committee and
was the Managing Partner of its New York office for many years. Ms. Cassirer has a sophisticated practice focusing on business litigation
and corporate governance issues, as well as securities fraud and derivative litigation. Ms. Cassirer has developed a particular niche
in dealing with publicly and privately held biotech/healthtech and biopharma companies. Ms. Cassirer has been listed as AV Preeminent
by Martindale-Hubbell consistently for the last 20 years as well as being listed in Law & Politics’ New York Super Lawyers
for excellence in Business Litigation every year since 2008. Previously, Ms. Cassirer served as Chair of the Advisory Board of ReferWell,
f/k/a Urgent Consult, LLC, a start-up in the health tech business, and served on the Board of Advisors of Live Care LLC, a start-up engaged
in the remote monitoring of patients. Ms. Cassirer also served on the Board of Directors of Kids in Need of Defense (KIND), a not-for-profit
organization where she served on its Compensation Committee. Ms. Cassirer is also a member of the Board of Friends of Jerusalem College
of Technology and serves on its Development Committee. Ms. Cassirer currently serves as co-chair of the New York State Bar Association
International Corporate Compliance Committee. Ms. Cassirer received her JD from New York University. Ms. Cassirer’s extensive legal
experience and deep knowledge of corporate governance make her well-qualified to serve on our Board.
Maria
Schroeder, Director. Ms. Schroeder has served as our director since January 2022. Ms. Schroeder
has been a key Financial Executive at a number of public and privately-held companies including CST Brands, KCI and Brain Sentinel, where
she recently served as Chief Financial Officer. Prior to Brain Sentinel, Ms. Schroeder served as Vice President, Global Tax of CST Brands,
a Fortune 250 retail Oil and Gas company. Prior to that, she served as Vice President and Treasurer & Head of Tax at Kinetic Concepts,
Inc. (“KCI”) a $1.5 billion MedTech company, which was recently purchased by 3M for $6.7 billion. At KCI, she held key roles
in a number of strategic transactions, including two leveraged buyouts and an initial public offering. Ms. Schroeder began her career
at Ernst & Whinney before joining Deloitte Haskins & Sells. Ms. Schroeder is an alumnus of San Antonio Leadership, a premier
leadership program of the San Antonio Chamber of Commerce and has served on the Audit Committee for The University of Texas at San Antonio,
as Treasurer of Girls, Inc. of San Antonio and as a board member of KLRN, San Antonio’s public television station. Ms. Schroeder
is a Certified Public Accountant and Chartered Global Management Accountant with a B.B.A. in Accounting from the University of Texas
at San Antonio. Ms. Schroeder’s financial expertise and leadership experience make her well-qualified to serve on our Board.
Required
Vote and Board Recommendation
If
a quorum is present and voting, the eight Company Nominees receiving the highest number of votes will be elected as directors. Proxies
cannot be voted for a greater number of persons than the number of nominees named or for persons other than the named nominees. “WITHHOLD”
votes and broker non-votes will have no effect on the results for this proposal. If your shares are held by a broker and you do not give
the broker specific instructions on how to vote your shares, your broker may not vote your shares at its discretion.
| THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” EACH COMPANY NOMINEE (PROPOSAL 1) AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED
IN FAVOR OF EACH DIRECTOR NOMINEE UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY CARD. |
CORPORATE
GOVERNANCE
NanoVibronix,
Inc., with the oversight of the Board and its committees, operates within a comprehensive plan of corporate governance for the purpose
of defining independence, assigning responsibilities, setting high standards of professional and personal conduct and assuring compliance
with such responsibilities and standards. We regularly monitor developments in the area of corporate governance.
Code
of Business Conduct and Ethics
We
have adopted a code of business conduct and ethics that applies to all of our officers, directors and employees. The code of business
conduct and ethics addresses, among other things, competition and fair dealing, conflicts of interest, financial matters and external
reporting, our funds and assets, confidentiality and corporate opportunity requirements and the process for reporting violations of the
code of business conduct and ethics, employee misconduct, improper conflicts of interest or other violations. A copy of the code of ethics
was attached as Exhibit 14.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and filed with the Securities
and Exchange Commission on March 31, 2017. If we amend or grant a waiver of one or more of the provisions of our code of business conduct
and ethics, we intend to satisfy the requirements under Item 5.05 of Form 8-K regarding the disclosure of amendments to, or waivers from,
provisions of our code of business conduct and ethics that apply to our principal executive, financial and accounting officers by posting
the required information on our website at www.nanovibronix.com within four business days following the date of such amendment or waiver.
Board
Composition
Our
Certificate of Incorporation and Bylaws provide that our Board will consist of such number of directors as determined from time to time
by resolution adopted by our Board. The size of our Board is currently fixed at eight directors. Subject to any rights applicable to
any then outstanding preferred stock, any vacancies or newly created directorships resulting from an increase in the authorized number
of directors may be filled by a majority of the directors then in office. Each member of our Board is elected for a one-year term and
is elected at each annual meeting of stockholders.
Board
Diversity and Board Diversity Matrix
We
have no formal policy regarding Board diversity. Our Board believes that each director should have a basic understanding of our principal
operational and financial objectives and plans and strategies, our results of operations and financial condition and relative standing
in relation to our competitors. We take into consideration the overall composition and diversity of the Board and areas of expertise
that director nominees may be able to offer, including business experience, knowledge, abilities and customer relationships. Generally,
we will strive to assemble a Board that brings to us a variety of perspectives and skills derived from business and professional experience
as we may deem are in our and our stockholders’ best interests. In doing so, we will also consider candidates with appropriate
non-business backgrounds.
The
following Board Diversity Matrix presents certain diversity statistics, as voluntarily self-identified by our directors, in accordance
with Nasdaq Listing Rule 5606.
Our
current board composition is reflected in the following matrix:
| Board
Diversity Matrix as of October 28, 2024 |
| Total
Number of Directors |
|
8 |
| |
|
Female |
|
Male |
|
Non-Binary |
|
Did
Not Disclose Gender |
| Part
I: Gender Identity |
| Directors |
|
2 |
|
6 |
|
0 |
|
0 |
| Part
II: Demographic Background |
| African
American or Black |
|
0 |
|
0 |
|
0 |
|
0 |
| Alaskan
Native or American Indian |
|
0 |
|
0 |
|
0 |
|
0 |
| Asian |
|
0 |
|
0 |
|
0 |
|
0 |
| Hispanic
or Latinx |
|
1 |
|
0 |
|
0 |
|
0 |
| Native
Hawaiian or Pacific Islander |
|
0 |
|
0 |
|
0 |
|
0 |
| White |
|
1 |
|
6 |
|
0 |
|
0 |
| Two
or More Races or Ethnicities |
|
0 |
|
0 |
|
0 |
|
0 |
| LGBTQ+ |
|
0 |
| Did
Not Disclose Demographic Background |
|
0 |
As
a Smaller Reporting Company subject to the additional flexibility provided under Nasdaq’s Diversity Rule, we currently meet the
diversity objectives promulgated under this rule by having two female directors as well as a Hispanic or Latinx member as reflected in
the above matrix. The current two female directors are Company Nominees to serve as directors of the Company until the next Annual Meeting
or until the appointment or election and qualification of her successor.
Director
Independence
We
are currently listed on The Nasdaq Capital Market and therefore rely on the definition of independence set forth in the Nasdaq Listing
Rules (“Nasdaq Rules”). Under the Nasdaq Rules, a director only qualifies as an “independent director” if, in
the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise
of independent judgment in carrying out the responsibilities of a director.
In
order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other
than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly
or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or (2) be an affiliated
person of the listed company or any of its subsidiaries.
Our
Board undertook a review of its composition, the composition of its committees and the independence of each director. Based upon information
requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships,
our Board has determined that Christopher Fashek, Michael Ferguson, Martin Goldstein, M.D., Thomas R. Mika, Aurora Cassirer, and Maria
Schroeder or six of our eight directors, do not have a relationship (other than being a director and/or a stockholder) that would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent”
as that term is defined under the Nasdaq Rules.
Our
Board also determined that (i) Messrs. Thomas Mika and Michael Ferguson and Ms. Maria Schroeder, who compose our audit committee, (ii)
Ms. Aurora Cassirer and Messrs. Thomas Mika and Michael Ferguson, who compose our compensation committee, and (iii) Messrs. Martin Goldstein
and Christopher Fashek and Ms. Aurora Cassirer, who compose our nominating and corporate governance committee, each satisfy the independence
standards for those committees established by the applicable rules and regulations of the SEC and the Nasdaq Rules. In making this determination,
our Board considered the relationships that each non-employee director has with us and all other facts and circumstances our Board deemed
relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. We
intend to comply with all size and independence requirements for committees within the applicable time periods.
Board
Committees, Meetings and Attendance
During
the year ended December 31, 2023, the Board held four meetings. We expect our directors to attend Board meetings, meetings of any committees
and subcommittees on which they serve and each annual meeting of stockholders, either in person or by teleconference. During the year
ended December 31, 2023, each director attended at least 75% of the total number of meetings held by the Board and Board committees of
which such director was a member. Last year’s annual meeting was not attended by any directors.
Our
Board currently has three standing committees which consist of an audit committee, a nominating and corporate governance committee and
a compensation committee, each of which has the composition and responsibilities described below.
Each
of these committees operates under a charter that has been approved by our Board. The current charter of each of these committees is
available on our website at www.nanovibronix.com in the “Governance” section under “Investors.” The reference
to our website address does not constitute incorporation by reference of the information contained at or available through our website,
and you should not consider it to be a part of this Proxy Statement.
Audit
Committee. The audit committee consists of Messrs. Thomas Mika (chair) and Michael Ferguson and Ms. Maria Schroeder, each of whom our
Board has determined to be financially literate and qualify as an independent director under Sections 5605(a)(2) and 5605(c)(2) of the
Nasdaq Rules and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, Mr.
Thomas Mika qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5)(ii) of Regulation S-K. Our Board
also determined that each member of our audit committee can read and understand fundamental financial statements in accordance with applicable
requirements. In arriving at these determinations, the Board examined each audit committee member’s scope of experience and the
nature of their employment in the corporate finance sector.
The
function of the audit committee is to assist the Board in its oversight of (1) the integrity of our financial statements, (2) our compliance
with legal and regulatory requirements, (3) the qualifications, independence and performance of our independent auditors and (4) audit
and non-audit fees and services.
The
audit committee met five times during the year ended December 31, 2023.
Nominating
and Corporate Governance Committee. The nominating and corporate governance committee consist of Ms. Aurora Cassirer (chair) and Martin
Goldstein, Christofer Fashek and Ms. Maria Schroeder, each of whom our Board has determined qualifies as an independent director under
Section 5605(a)(2) of the Nasdaq Rules.
The
primary function of the nominating and corporate governance committee is to identify individuals qualified to become board members, consistent
with criteria approved by the Board, and select the director nominees for election at each annual meeting of stockholders as well as
reviewing the Company’s corporate governance policies and any related matters.
The
nominating and corporate governance committee met three times during the year ended December 31, 2023.
Compensation
Committee. The compensation committee consists of Messrs. Michael Ferguson (chair) and Thomas Mika and Ms. Aurora Cassirer, each of whom
our Board has determined qualifies as an independent director under Sections 5605(a)(2) and 5605(d)(2) of the Nasdaq Rules, as an “outside
director” for purposes of Section 162(m) of the Internal Revenue Code and as a “non-employee director” for purposes
of Section 16b-3 under the Exchange Act. The function of the compensation committee is to discharge the Board’s responsibilities
relating to compensation of our directors and executives and our overall compensation programs.
The
primary objective of the compensation committee is to develop and implement compensation policies and plans that are appropriate for
us in light of all relevant circumstances and which provide incentives that further our long-term strategic plan and are consistent with
our culture and the overall goal of enhancing enduring stockholder value.
The
compensation committee met four times during the year ended December 31, 2023.
Family
Relationships
There
are no family relationships among our directors and executive officers, or person nominated or chosen by the Company to become a director
or executive officer.
Involvement
in Certain Legal Proceedings
None
of our directors or executive officers, or person nominated to become a director, has been involved in any of the following events during
the past ten years:
●
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at
the time of the bankruptcy or within two years prior to that time;
●
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other
minor offences);
●
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of
business, securities or banking activities; or
●
being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Director
Nominations
Our
nominating and corporate governance committee considers all qualified candidates identified by members of the Board, by senior management
and by stockholders. The nominating and corporate governance committee follows the same process and uses the same criteria for evaluating
candidates proposed by stockholders, members of the Board and members of senior management. We did not pay fees to any third party to
assist in the process of identifying or evaluating director candidates during the year ended December 31, 2023.
Our
Bylaws contain provisions that address the process by which a stockholder may nominate an individual to stand for election to the Board
at our Annual Meeting. To recommend a nominee for election to the Board, a stockholder must submit his or her recommendation to the Secretary
at our corporate offices at 969 Pruitt Place, Tyler TX 75703. Such nomination must satisfy the notice, information and consent requirements
set forth in our Bylaws and must be received by us prior to the date set forth under “Stockholder Proposals” below. A stockholder’s
recommendation must be accompanied by the information with respect to stockholder nominees as specified in our Bylaws, including among
other things, the name, age, address and occupation of the recommended person, the proposing stockholder’s name and address, the
ownership interests of the proposing stockholder and any beneficial owner on whose behalf the nomination is being made (including the
number of shares beneficially owned, any hedging, derivative, short or other economic interests and any rights to vote any shares) and
any material monetary or other relationships between the recommended person and the proposing stockholder and/or the beneficial owners,
if any, on whose behalf the nomination is being made.
In
evaluating director nominees, the nominating and corporate governance committee considers the following factors:
●
the appropriate size and diversity of our Board;
●
our needs with respect to the particular knowledge, skills and experience of nominees, including experience in corporate finance, technology,
business, administration and sales, in light of the prevailing business conditions and the knowledge, skills and experience already possessed
by other members of the Board;
●
experience with accounting rules and practices, and whether such a person qualifies as an “audit committee financial expert”
pursuant to SEC rules; and
●
balancing continuity of our Board with periodic injection of fresh perspectives provided by new Board members.
Our
Board believes that each director should have a basic understanding of our principal operational and financial objectives and plans and
strategies, our results of operations and financial condition and our relative standing in relation to our competitors.
In
identifying director nominees, the Board will first evaluate the current members of the Board willing to continue in service. Current
members of the Board with skills and experience that are relevant to our business and who are willing to continue in service will be
considered for re-nomination.
If
any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the
Board will identify another nominee with the desired skills and experience described above. The Board takes into consideration the overall
composition and diversity of the Board and areas of expertise that director nominees may be able to offer, including business experience,
knowledge, abilities and customer relationships. Generally, the Board will strive to assemble a Board that brings to us a variety of
perspectives and skills derived from business and professional experience as it may deem are in our and our stockholders’ best
interests. In doing so, the Board will also consider candidates with appropriate non-business backgrounds.
Board
Leadership Structure
The
Board is committed to promoting our effective, independent governance. Our Board believes it is in our best interests and the best interests
of our stockholders for the Board to have the flexibility to select the best director to serve as chairman at any given time, regardless
of whether that director is an independent director or the chief executive officer. Consequently, we do not have a policy governing whether
the roles of chairman of the Board and chief executive officer should be separate or combined. This decision is made by our Board, based
on our best interests considering the circumstances at the time.
Currently,
the offices of the chairman of the Board and the chief executive officer are held by two different people. Christopher Fashek is our
independent, non-executive chairman of the Board, and Brian Murphy is our chief executive officer. The chief executive officer is responsible
for our day-to-day leadership and performance, while the chairman of the Board provides guidance to the chief executive officer and sets
the agenda for board meetings and presides over meetings of the Board. We believe that separation of the positions reinforces the independence
of the Board in its oversight of our business and affairs, and creates an environment that is more conducive to objective evaluation
and oversight of management’s performance, increasing management accountability and improving the ability of the Board to monitor
whether management’s actions are in our best interests and those of our stockholders.
Role
in Risk Oversight
Our
Board oversees an enterprise-wide approach to risk management, designed to support the achievement of business objectives, including
organizational and strategic objectives, to improve long-term organizational performance and enhance stockholder value. The involvement
of our Board in setting our business strategy is a key part of its assessment of management’s plans for risk management and its
determination of what constitutes an appropriate level of risk for the company. The participation of our Board in our risk oversight
process includes receiving regular reports from members of senior management on areas of material risk to our company, including operational,
financial, legal and regulatory, and strategic and reputational risks, including cybersecurity.
The
Board continually reviews the Company’s controls and procedures that involve cybersecurity matters to determine the potential material
impact to our financial results, operations, and/or reputation to insure such incidents are immediately reported by management to the
Board, or individual members or committees thereof, as appropriate, in accordance with our escalation framework.
While
our Board has the ultimate responsibility for the risk management process, senior management and various committees of our Board will
also have responsibility for certain areas of risk management.
Our
senior management team is responsible for day-to-day risk management and regularly reports on risks to our full Board or a relevant committee.
Our finance and regulatory personnel serve as the primary monitoring and evaluation function for company-wide policies and procedures,
and manage the day-to-day oversight of the risk management strategy for our ongoing business. This oversight includes identifying, evaluating,
and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance and reporting levels.
The
audit committee focuses on monitoring and discussing our major financial risk exposures and the steps management has taken to monitor
and control such exposures, including our risk assessment and risk management policies. As appropriate, the audit committee provides
reports to and receives direction from the full Board regarding our risk management policies and guidelines, as well as the audit committee’s
risk oversight activities.
In
addition, the compensation committee assesses our compensation policies to confirm that the compensation policies and practices do not
encourage unnecessary risk taking. The compensation committee reviews and discusses the relationship between risk management policies
and practices, corporate strategy and senior executive compensation and, when appropriate, reports on the findings from the discussions
to our Board. Our compensation committee intends to set performance metrics that will create incentives for our senior executives that
encourage an appropriate level of risk-taking that is commensurate with our short-term and long-term strategies.
Communications
with Directors
The
Board welcomes communication from our stockholders. Stockholders and other interested parties who wish to communicate with a member or
members of our Board or a committee thereof may do so by addressing correspondence to the Board member, members or committee, c/o NanoVibronix,
Inc., 969 Pruitt Place, Tyler TX 75703, ATTN: Brian Murphy, Chief Executive Officer. Our Chief Executive Officer will review and forward
correspondence to the appropriate person or persons.
All
communications received as set forth in the preceding paragraph will be opened by the Chief Executive Officer for the sole purpose of
determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions
of a product or service or patently offensive material will be forwarded promptly to the addressee(s). In the case of communications
to the Board or any group or committee of directors, the Chief Executive Officer will make sufficient copies of the contents to send
to each director who is a member of the group or committee to whom the communication is addressed. If the amount of correspondence received
through the foregoing process becomes excessive, our Board may consider approving a process for review, organization and screening of
the correspondence by the corporate secretary or another appropriate person.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires that each of our directors and executive officers, and any other person who owns more than ten percent
(10%) of our common stock, file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. To
our knowledge, based solely on information furnished to us and written representations by such persons that no such other reports were
required to be filed, we believe that all such SEC filing requirements were met in a timely manner during 2023 other than with respect
to the following:
On
December 4, 2023, a Form 4 for each of Aurora Cassirer, Martin Goldstein, Stephen Brown, Michael Ferguson, Thomas Mika, Harold Jacob
and Maria Schroeder was filed late due to an administrative error, to report the grant of stock options granted under the NanoVibronix,
Inc. 2014 Long-Term Incentive Plan, which was granted on November 15, 2023, and the cancellation of certain outstanding stock options
that occurred on November 29, 2023.
On
December 6, 2023, a Form 4 for each of Christopher Fashek and Brian M. Murphy was filed late due to an administrative error, to report
the grant of stock options granted under the NanoVibronix, Inc. 2014 Long-Term Incentive Plan, which was granted on November 15, 2023,
and the cancellation of certain outstanding stock options that occurred on November 29, 2023.
DIRECTOR
COMPENSATION
The
following table shows the compensation earned by persons who served on our Board during the fiscal year ended December 31, 2023 (amounts
have been adjusted to reflect the 1-for-20 reverse stock split effected by the Company on February 9, 2023), who are not one of our named
executive officers. Other than as set forth in the table and described more fully below, we did not pay any compensation, reimburse any
expense of, make any equity awards or non-equity awards to, or pay any other compensation to any of the other members of our Board for
their services rendered in such period.
| Name | |
Fees earned or paid in cash ($) | | |
Option Awards ($) (1) | | |
Total ($) | |
| | |
| | |
| | |
| |
| Christopher Fashek (2) | |
| 150,000 | | |
| 30,520 | | |
| 180,520 | |
| | |
| | | |
| | | |
| | |
| Thomas Mika (3) | |
| - | | |
| 18,702 | | |
| 418,702 | |
| | |
| | | |
| | | |
| | |
| Michael Ferguson (4) | |
| - | | |
| 18,225 | | |
| 18,225 | |
| | |
| | | |
| | | |
| | |
| Martin Goldstein (5) | |
| - | | |
| 16,794 | | |
| 16,794 | |
| | |
| | | |
| | | |
| | |
| Harold Jacob, M. D. (6) | |
| - | | |
| 16,535 | | |
| 16,535 | |
| | |
| | | |
| | | |
| | |
| Aurora Cassirer (7) | |
| - | | |
| 16,794 | | |
| 16,794 | |
| | |
| | | |
| | | |
| | |
| Maria Schroeder (8) | |
| - | | |
| 16,794 | | |
| 16,794 | |
(1)
In accordance with SEC rules, the amounts in this column reflect the dollar amounts to be recognized for financial statement reporting
purposes with respect to the 2023 fiscal year in accordance with ASC Topic 718. Fair value is based on the Black-Scholes option pricing
model using the market price of the underlying shares at the grant date. For additional discussion of the valuation assumptions used
in determining stock-based compensation and the grant date fair value for stock options, see “Management’s Discussion and
Analysis of Financial Condition and Results of Operation - Critical Accounting Policies - Stock-based compensation” and Note 3—”Significant
Accounting Policies” and Note 6—”Stockholders’ Equity” to our audited consolidated financial statements
for the fiscal year ended December 31, 2023, included in our Annual Report on Form 10-K, as amended.
(2)
As of December 31, 2023, Mr. Fashek had outstanding options representing the right to purchase 14,000 shares of our common stock
and no outstanding stock awards of shares of common stock.
(3)
As of December 31, 2023, Mr. Mika had outstanding options representing the right to purchase 3,334 shares of our common stock and
no outstanding stock awards of shares of common stock.
(4)
As of December 31, 2023, Mr. Ferguson had outstanding options representing the right to purchase 3,334 shares of our common stock
and no outstanding stock awards of shares of common stock.
(5)
As of December 31, 2023, Mr. Goldstein had outstanding options representing the right to purchase 3,333 shares of our common stock
and no outstanding stock awards of shares of common stock.
(6)
As of December 31, 2023, Dr. Jacob had outstanding options representing the right to purchase 3,333 shares of our common stock
and no outstanding stock awards of shares of common stock.
(7)
As of December 31, 2023, Ms. Cassirer had outstanding options representing the right to purchase 3,333 shares of our common stock
and no outstanding stock awards of shares of common stock.
(8)
As of December 31, 2023, Ms. Schroeder had outstanding options representing the right to purchase 20,000 shares of our common stock
and no outstanding stock awards of shares of common stock.
On
October 13, 2016, we entered into an agreement with Christopher Fashek to serve as the chairman of our Board. Under this agreement Mr.
Fashek was paid $100,000 per year payable in semi-monthly installments. On November 1, 2018, the Compensation committee voted to increase
Mr. Fashek’s consulting fee to $150,000 per year. On July 30, 2024, the Compensation committee voted to increase Mr. Fashek’s
consulting fee to $160,500 per year.
On
November 29, 2023, the Company entered into an option cancellation and release agreement with each of Brian Murphy, Christopher Fashek,
Martin Goldstein, Michael Ferguson, Stephen Brown, Aurora Cassirer, Dr. Harold Jacob, Maria Schroeder and Thomas Mika (collectively,
the “Option Holders”), pursuant to which the parties agreed to cancel options to purchase an aggregate of 102,038 shares
of common stock of the Company at exercise prices ranging from $8.94 to $51.40 (the “Options”) previously granted to each
of the Option Holders. In exchange for the cancellation of the Options, the Company paid $1.00 to each Option Holder.
Outside
of compensation to our chairman, Christopher Fashek, we paid no compensation to our non-employee directors for the one-year period ended
December 31, 2023.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Other
than compensation agreements and other arrangements which are described as required under “Director Compensation” and “Executive
Compensation,” since January 1, 2022, there has not been, and there is not currently proposed, any transaction or series of similar
transactions to which we were or will be a party in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent
(1%) of the average of our total assets at year-end for the last two completed fiscal years and in which any director, executive officer,
holder of 5% or more of any class of our capital stock, or any member of their immediate family had or will have a direct or indirect
material interest, other than described below.
In
March 2022 we engaged the law firm FisherBroyles LLP to handle our litigation matter with Protrade Systems, Inc. For the year ended December
31, 2023, we have accrued and paid legal fees of FisherBroyles LLP equal to $360,000, which fees were recorded as part of “General
and administrative expenses” in our condensed consolidated statements of operations. As has been previously disclosed, one of our
board members, Aurora Cassirer, is a partner at FisherBroyles LLP. Ms. Cassirer does not provide any legal services or legal advice to
the Company.
On
November 29, 2023, we entered into an option cancellation and release agreement with each of Brian Murphy, Christopher Fashek, Martin
Goldstein, Michael Ferguson, Stephen Brown, Aurora Cassirer, Dr. Harold Jacob, Maria Schroeder and Thomas Mika, our directors and officers,
pursuant to which the parties agreed to cancel certain outstanding options to purchase an aggregate of 102,038 shares of common stock
of the Company at exercise prices ranging from $8.94 to $51.40 per share previously granted to each of the option holders. In exchange
for the cancellation of the options, we paid $1.00 to each option holder. See “Director Compensation.”
Review,
Approval or Ratification of Transactions with Related Parties
Generally,
we do not enter into related party transactions unless the members of the Board who do not have an interest in the potential transaction
have reviewed the transaction and determined that (i) we would not be able to obtain better terms by engaging in a transaction with a
non-related party and (ii) the transaction is in our best interest. In approving or rejecting any such proposal, our Board considers
all of the relevant facts and circumstances of the related party transaction and the related party’s relationship and interest
in the transaction. This policy applies generally to any transaction in which we are to be a participant and the amount involved exceeds
the lesser of $120,000 or one percent of the average of our total assets at year-end for the previous two completed fiscal years, and
in which any related person had or will have a direct or indirect material interest. This policy is not currently in writing.
The
audit committee is charged with reviewing, approving and overseeing any transaction between the Company and any related person (as defined
in Item 404 of Regulation S-K) and any other potential conflict of interest situations in accordance with Company policies and procedures.
All of the transactions described above were evaluated in accordance with the policy described in the paragraph above. Prior to approving
such transactions, the material facts as to a director’s or officer’s relationship or interest as to the agreement or transaction
were disclosed to our Board. Our Board took this information into account when evaluating the transaction and in determining whether
such transaction was fair to us and in the best interest of all of our stockholders.
EXECUTIVE
OFFICERS
The
following table sets forth the names, ages and positions of our executive officers and certain significant employees as of October 28,
2024:
| Name |
|
Age |
|
Position |
| Brian
Murphy |
|
67 |
|
Chief
Executive Officer and Director |
| Stephen
Brown |
|
68 |
|
Chief
Financial Officer |
| Harold
Jacob, M.D. |
|
71 |
|
Chief
Medical Officer and Director |
Brian
Murphy Please see biography of Mr. Murphy on page 14 of this Proxy Statement.
Stephen
Brown. Mr. Brown has served as our chief financial officer since October 5, 2020. Previously, Mr. Brown served as the Company’s
Chief Financial Officer from February 3, 2015 through April 30, 2019 and continued to serve as a financial consultant for the Company
until his appointment as Chief Financial Officer on October 5, 2020. Mr. Brown previously served as Chief Financial Officer for IDT Corporation
(NYSE: IDT) from April 1995 to January 2009, during which time he oversaw the initial public offering of a start-up telecommunications
company and guided it through the spin-offs of two subsidiaries, various public offerings and bank facilities. During his tenure at IDT,
Mr. Brown also served on IDT’s board of directors for six years and on the board of directors of Net2Phone Inc. for five years.
Mr. Brown was also the founder and chairman of IDT Entertainment Inc., a movie studio and media subsidiary of IDT. From 2009 to the present,
Mr. Brown has served as a managing partner of The Mcguffin Group Financial, a financial and business consulting firm concentrating on
advising early stage and micro-cap companies. He is also a partner in an accounting and tax practice, Brown, Brown and Associates. Mr.
Brown was formerly a certified public accountant, is a member of the Academy of Television Arts and Sciences and serves on the board
of directors for several educational institutions, including on the Board of Governors for Touro College.
Harold
Jacob, M.D. Please see biography of Dr. Jacob on page 15 of this Proxy Statement.
EXECUTIVE
COMPENSATION
The
following table sets forth the names and positions of: (i) each person who served as our principal executive officer during the year
ended December 31, 2023; (ii) if applicable, the two most highly compensated executive officers, other than our principal executive officer,
who were serving as executive officers, as determined in accordance with the rules and regulations promulgated by the SEC, as of December
31, 2023; (iii) up to two additional individuals for whom disclosure would have been provided pursuant to clause (ii) but for the fact
that the person was not serving as our executive officer at December 31, 2023 (collectively our “Named Executive Officers”):
| Name |
|
Position |
| Brian
Murphy |
|
Chief
Executive Officer |
| Stephen
Brown |
|
Chief
Financial Officer |
Summary
Compensation Table
The
following table sets forth all compensation earned, in all capacities, during the fiscal years ended December 31, 2023 and 2022 by our
Named Executive Officers (amounts have been adjusted to reflect the 1-for-20 reverse stock split effected by the Company on February
9, 2023).
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($)(1) | | |
Option Awards ($)(2) | | |
All Other Compensation ($) | | |
Total ($)(2) | |
| Brian Murphy | |
| 2023 | | |
| 300,000 | | |
| 82,500 | | |
| 159,631 | | |
| - | | |
| 541,861 | |
| | |
| 2022 | | |
| 300,000 | | |
| 42,500 | | |
| 66,304 | | |
| - | | |
| 408,804 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stephen Brown | |
| 2023 | | |
| 250,000 | | |
| 42,500 | | |
| 69,167 | | |
| - | | |
| 361,667 | |
| | |
| 2022 | | |
| 200,000 | | |
| 26,500 | | |
| 22,101 | | |
| - | | |
| 298,601 | |
| (1) |
Represents
incentive compensation payments earned. |
| (2) |
In
accordance with SEC rules, the amounts in this column reflect the dollar amounts to be recognized for financial statement reporting
purposes with respect to the twelve-month period ended December 31, 2023 in accordance with ASC Topic 718. Fair value is based on
the Black-Scholes option pricing model using the market price of the underlying shares at the grant date. For additional discussion
of the valuation assumptions used in determining stock-based compensation and the grant date fair value for stock options, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operation - Critical Accounting Policies - Stock-based compensation”
and Note 3—”Significant Accounting Policies” and Note 7—”Stockholders’ Equity (Deficiency)”
to our audited consolidated financial statements for the fiscal year ended December 31, 2023, included in the 2023 Annual Report. |
Narrative
Disclosure to Summary Compensation Table
Employment
Agreements
We
have entered into agreements with each of our Named Executive Officers. A description of each of these agreements follows.
Brian
Murphy
On
October 13, 2016, we entered into an employment agreement with Mr. Murphy, effective as of the same date. Under the terms of the employment
agreement, the term of Mr. Murphy’s employment as the chief executive officer of the Company is three years unless earlier terminated.
The employment agreement expired on October 13, 2019. After that date, Mr. Murphy became an employee at will.
Under
the employment agreement, Mr. Murphy was entitled to an annual base salary of $181,000 less applicable payroll deductions and tax withholdings
for all services rendered by him under the employment agreement. Notwithstanding the foregoing, his base salary was automatically increased
to: (i) $200,000, less applicable payroll deductions and tax withholdings, effective as of January 1 of the calendar year immediately
following any calendar year during which we generated gross sales (as determined in accordance with generally accepted accounting principles
consistently applied) exceeding $1,000,000; and (ii) $225,000, less applicable payroll deductions and tax withholdings, effective as
of January 1 of the calendar year immediately following any calendar year during which we generated gross sales (as determined in accordance
with generally accepted accounting principles consistently applied) exceeding $2,000,000.
Pursuant
to the employment agreement, commencing in 2017, Mr. Murphy was eligible to receive an annual bonus (“Performance Bonus”)
during each year of the term of the agreement. For 2019 and 2020, Mr. Murphy was eligible to receive a target bonus in an amount of up
to $100,000, less applicable payroll deductions and tax withholdings, based on the extent to which Mr. Murphy has met performance criteria
for the year, as determined in good faith by the Board, which shall be paid in the calendar year after the calendar year to which the
Performance Bonus relates within thirty (30) days of our issuance of our audited financial statements on Form 10-K. In 2019 and 2020,
Mr. Murphy received a target bonus in an amount of $57,231 and $90,000, respectively.
Mr.
Murphy’s employment agreement also contained certain noncompetition, non-solicitation, non-disparagement, confidentiality and assignment
of work product requirements for Mr. Murphy.
On
November 1, 2018, the compensation committee voted to increase Mr. Murphy’s annual base salary to $231,000 per year and a discretionary
annual bonus of $100,000 to be decided by the compensation committee annually.
On
January 1, 2022, we entered into a new employment agreement with Mr. Murphy (the “2022 Murphy Employment Agreement”), with
an annual base salary of $300,000 less applicable payroll deductions and tax withholdings for all services rendered by him under the
2022 Murphy Employment Agreement and a target bonus in an amount of up to $100,000, less applicable payroll deductions and tax withholdings,
based on the extent to which Mr. Murphy has met performance criteria for the year, as determined in good faith by the Board.
In
addition, pursuant to the 2022 Murphy Employment Agreement, Mr. Murphy was eligible to receive certain stock options, restricted stock,
stock appreciation rights or similar stock-based rights granted to Mr. Murphy as set forth separately in applicable award agreements.
The 2022 Murphy Employment Agreement had a term of two years and also contained certain noncompetition, non-solicitation, non-disparagement,
confidentiality and assignment of work product requirements for Mr. Murphy. The 2022 Murphy Agreement terminated upon effectiveness of
the 2024 Murphy Agreement (as defined below).
On
September 20, 2024, the Company entered into a new Employment Agreement with Mr. Murphy (the “2024 Murphy Agreement”), pursuant
to which the parties agreed to have Mr. Murphy continue to serve as Chief Executive Officer of the Company, effective September 20, 2024,
through August 31, 2025, unless earlier terminated by either party pursuant to the 2024 Murphy Agreement. Pursuant to the 2024 Murphy
Agreement, as consideration for his services as Chief Executive Officer, Mr. Murphy will be entitled to receive (i) an annual base salary
of $321,000, less applicable payroll deductions and tax withholdings; (ii) reimbursement of any reasonable and customary, documented
out-of-pocket expenses actually incurred by Mr. Murphy in connection with the performance of his services under the 2024 Murphy Agreement;
and (iii) an annual bonus of up to $100,000, less applicable payroll deductions and tax withholdings, based on the extent to which Mr.
Murphy met performance criteria for the calendar year, as determined by the Company in good faith. Mr. Murphy may also be eligible to
receive certain grants of incentive stock options to purchase shares of common stock of the Company. Either party may terminate the 2024
Murphy Agreement at any time upon ninety (90) days written notice. Upon termination of Mr. Murphy’s employment, the Company shall
pay Mr. Murphy (i) any unpaid salary accrued through the date of termination, (ii) any accrued and unpaid vacation or similar pay to
which Mr. Murphy is entitled as a matter of law or Company policy, and (iii) any unreimbursed expenses properly incurred prior to the
date of termination (the “Murphy Accrued Obligations”). In the event the Company terminates Mr. Murphy’s employment
for cause, the Company shall have no further liability or obligation to Mr. Murphy under the 2024 Murphy Agreement or in connection with
Mr. Murphy’s employment, except for the Murphy Accrued Obligations. The 2024 Murphy Agreement also contains certain standard non-competition,
non-solicitation, confidentiality, and assignment of inventions requirements for Mr. Murphy.
For
the years ended December 31, 2023 and December 31, 2022, the compensation committee approved performance bonuses of $82,500 and $42,500,
respectively.
Stephen
Brown
On
October 5, 2020, we entered into an Employment Agreement with Stephen Brown, pursuant to which we appointed Mr. Brown as Chief Financial
Officer, effective October 5, 2020, with a term to continue in effect until terminated by either party. As consideration for his services
as Chief Financial Officer, Mr. Brown is entitled to receive (i) an annual base salary of $200,000, less applicable payroll deductions
and tax; (ii) reimbursement of any reasonable and customary, documented out-of-pocket expenses actually incurred by Mr. Brown in connection
with the performance of his services under the Employment Agreement; and (iii) an annual bonus of $25,000, if earned, as determined by
us in our sole discretion. Mr. Brown is also eligible to receive certain grants of incentive stock options to purchase shares of our
common stock.
On
January 1, 2022, we entered into a new employment agreement with Mr. Brown (the “2022 Brown Employment Agreement”), with
an annual base salary of $250,000 less applicable payroll deductions and tax withholdings for all services rendered by him under the
employment agreement and a target bonus in an amount of up to $50,000, less applicable payroll deductions and tax withholdings, based
on the extent to which Mr. Brown has met performance criteria for the year, as determined in good faith by the Board.
The
2022 Brown Employment Agreement had an initial term of two years and thereafter automatically renewed on an annual basis unless written
notification is provided by Mr. Brown or the Company of the desire to not renew for the subsequent year. The 2022 Brown Employment Agreement
also contained certain noncompetition, non-solicitation, non-disparagement, confidentiality and assignment of work product requirements
for Mr. Brown. The 2022 Brown Agreement terminated upon effectiveness of the 2024 Brown Agreement (as defined below).
On
September 20, 2024, the Company entered into a new Employment Agreement with Stephen Brown (the “2024 Brown Agreement”),
pursuant to which the parties agreed to have Mr. Brown continue to serve as Chief Financial Officer of the Company, effective September
20, 2024, through August 31, 2025, unless earlier terminated by either party pursuant to the 2024 Brown Agreement. Pursuant to the 2024
Brown Agreement, as consideration for his services as Chief Financial Officer, Mr. Brown will be entitled to receive (i) an annual base
salary of $267,500, less applicable payroll deductions and tax withholdings; (ii) reimbursement of any reasonable and customary, documented
out-of-pocket expenses actually incurred by Mr. Brown in connection with the performance of his services under the 2024 Brown Agreement;
and (iii) an annual bonus of up to $50,000, less applicable payroll deductions and tax withholdings, based on the extent to which Mr.
Brown has met performance criteria for the calendar year, as determined by the Company in good faith. Mr. Brown may also be eligible
to receive certain grants of incentive stock options to purchase shares of common stock of the Company. Either party may terminate the
2024 Brown Agreement at any time upon ninety (90) days written notice. Upon termination of Mr. Brown’s employment, the Company
shall pay Mr. Brown (i) any unpaid salary accrued through the date of termination, (ii) any accrued and unpaid vacation or similar pay
to which Mr. Brown is entitled as a matter of law or Company policy, and (iii) any unreimbursed expenses properly incurred prior to the
date of termination (the “Brown Accrued Obligations”). In the event the Company terminates Mr. Brown’s employment for
cause, the Company shall have no further liability or obligation to Mr. Brown under the 2024 Brown Agreement or in connection with Mr.
Brown’s employment, except for the Brown Accrued Obligations. The 2024 Brown Agreement also contains certain standard non-competition,
non-solicitation, confidentiality, and assignment of inventions requirements for Mr. Brown.
For
the years ended December 31, 2023 and December 31, 2022, the compensation committee approved performance bonus of $42,500 and $26,500,
respectively.
Retirement,
Health, Welfare and Additional Benefits
All
of our Named Executive Officers are eligible to participate in our employee benefit plans and programs, including medical benefits, to
the same extent as our other full-time employees, subject to the terms and eligibility requirements of those plans.
NanoVibronix,
Inc. 2014 Long-Term Incentive Plan
On
February 28, 2014, our stockholders approved the NanoVibronix, Inc. 2014 Long-Term Incentive Plan (as amended, the “2014 Plan”),
which was adopted by our Board on February 19, 2014.
Under
the 2014 Plan, we originally reserved a total of five million (5,000,000) shares of our common stock for issuance pursuant to awards
to key employees, key contractors, and non-employee directors, of which, the maximum number of shares of common stock covering awards
of stock options or stock appreciation rights that could be granted to certain of our executive officers during any calendar year was
one million (1,000,000) shares. On May 7, 2014, we effected a one-for-seven reverse stock split of our common stock. Consequently, the
number of shares of our common stock reserved for issuance pursuant to awards under the 2014 Plan was reduced to seven hundred fourteen
thousand two hundred eighty-six (714,286) shares, and the maximum number of shares of our common stock covered by awards of stock options
or stock appreciation rights that could be granted to certain of our executive officers during any calendar year was reduced to one hundred
forty-two thousand eight hundred fifty-seven (142,857) shares.
On
June 13, 2018, the stockholders approved an amendment to the 2014 Plan to increase the number of shares of our common stock reserved
for issuance pursuant to awards under the 2014 Plan by an additional seven hundred and fifty thousand (750,000) shares of our common
stock to one million four hundred sixty-four thousand two hundred eighty-six (1,464,286) shares.
On
June 13, 2019, the stockholders approved a second amendment to the 2014 Plan to increase (i) the number of shares of our common stock
available for issuance pursuant to awards under the 2014 Plan by four hundred thousand (400,000) shares of our common stock, to a total
of one million eight hundred and sixty-four thousand two hundred eighty-six (1,864,286) shares of our common stock and (ii) the maximum
number of shares of our common stock covering awards of stock options or stock appreciation rights that could be granted to certain of
our executive officers during any calendar year was increased to three hundred fifty-four thousand two hundred fourteen (354,214) shares.
On
December 29, 2021, the stockholders approved a third amendment to the 2014 Plan that (i) intended to increase the number of shares of
our common stock available for issuance pursuant to awards under the 2014 Plan by one million five hundred thousand (1,500,000) shares
of our common stock to a total of three million three hundred sixty-four thousand two-hundred eighty-six (3,364,286) shares of our common
stock, but a scrivener’s error in this amendment only increased the number of shares of our common stock available for issuance
pursuant to awards under the 2014 Plan to a total of three million three hundred forty-six thousand two-hundred eighty-six (3,346,286)
shares of our common stock, and (ii) increased the maximum number of shares of our common stock covering awards of stock options or stock
appreciation rights that could be granted to certain of our executive officers during any calendar year to six hundred sixty-nine thousand
two-hundred fifty-seven (669,257) shares of our common stock.
On
December 15, 2022, the stockholders approved a fourth amendment to the 2014 Plan to increase (i) the number of shares of our common stock
available for issuance pursuant to awards under the 2014 Plan by one million five hundred and eighteen thousand (1,518,000) shares of
our common stock, to a total of four million eight hundred and sixty-four thousand two hundred eighty-six (4,864,286) shares of our common
stock. On February 9, 2023, we effected a one-for-twenty reverse stock split of our common stock. Consequently, the number of shares
of our common stock reserved for issuance pursuant to awards under the 2014 Plan was reduced to two hundred forty-three thousand two
hundred fourteen (243,214) shares.
On
February 19, 2024, the 2014 Plan expired in accordance with its terms and no further awards have been or will be made under the 2014
Plan on or after this date. Any awards granted on or before such date will continue in accordance with the terms of the applicable award
agreements and the 2014 Plan.
Outstanding
Equity Awards at Fiscal Year-End
None.
Equity
Compensation Plan Information
The
following table provides certain information as of December 31, 2023 with respect to our equity compensation plans under which our equity
securities were authorized for issuance (amounts have been adjusted to reflect the 1-for-20 reverse stock split effected by the Company
on February 9, 2023):
| | |
(a) | | |
(b) | | |
(c) | |
| Plan Category | |
Number of securities to be issued upon exercise of outstanding options, warrants, and rights | | |
Weighted- average exercise price of outstanding options, warrants and rights | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |
| Equity compensation plans approved by security holders (1) | |
| 112,686 | | |
$ | 13.10 | | |
| - | |
| Equity compensation plans not approved by security holders | |
| - | | |
| - | | |
| - | |
| Total | |
| 112,686 | | |
$ | 13.10 | | |
| - | |
| (1) |
Represents
shares available for issuance under the 2014 Plan as of December 31, 2023. The 2014 Plan expired on February 19, 2024, and no further
equity awards may be granted under the 2014 Plan. |
Pay
Versus Performance Disclosure
The
following section has been prepared in accordance with pay versus performance rules adopted by the Securities and Exchange Commission
(“SEC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under these new rules, the SEC
has developed a definition of pay, referred to as Compensation Actually Paid (“CAP”). We are required to calculate CAP for
our Named Executive Officers and then compare it with certain Company performance measures. Shareholders should refer to our compensation
philosophy discussion and analysis in this Proxy Statement for a complete description of how executive compensation relates to Company
performance measures and how the Compensation Committee makes it decisions related thereto. The Compensation Committee did not consider
the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay
Versus Performance Table
The
following table provides the information required to be disclosed for our NEOs for each of the fiscal years ended December 31, 2023,
December 31, 2022 and December 31, 2021, along with the financial information required to be disclosed for each fiscal year. As an early
commercial-stage company, we do not tie executive compensation to net income performance, and we do not have other financial metrics
that are used to determine executive compensation.
| Year | |
Summary Compensation Table Total for PEO (1)(2) | | |
CAP to PEO (3) | | |
Average Summary Compensation Table Total for Non-PEO NEOs(2)(4) | | |
Average CAP to Non-PEO NEOs(3)(4) | | |
Value of Initial Fixed $100 Investment Based on TSR(5) | | |
Net Income (in millions) | |
| 2023 | |
$ | 541,861 | | |
$ | 309,767 | | |
$ | 361,667 | | |
$ | 284,373 | | |
$ | 27.01 | | |
$ | (3,711 | ) |
| 2022 | |
$ | 408,804 | | |
$ | 110,347 | | |
$ | 298,601 | | |
$ | 199,116 | | |
$ | 36.13 | | |
$ | (5,448 | ) |
| 2021 | |
$ | 404,939 | | |
$ | 778,725 | | |
$ | 271,475 | | |
$ | 365,194 | | |
$ | 30.10 | | |
$ | (14,282 | ) |
| |
(1) |
The
principal executive officer in each reporting year is Brian Murphy, our Chief Executive Officer (“CEO). |
| |
|
|
| |
(2) |
Summary
Compensation Table (“SCT”) numbers include the values as reported in this Proxy Statement for the year ended December
31, 2021, as reported in the definitive proxy statement on Schedule 14A filed with the SEC on October 31, 2022 and for the year ended
December 31, 2022, as reported in the definitive proxy statement on Schedule 14A filed with the SEC on May 1, 2023. |
| |
|
|
| |
(3) |
Subtractions
from, and additions to, total CAP in the pay versus performance table by year include: |
| | |
2023 | | |
2022 | | |
2021 | |
| | |
PEO($) | | |
Average of Other Non-PEO NEOs ($) | | |
PEO($) | | |
Average of Other Non-PEO NEOs ($) | | |
PEO($) | | |
Average of Other Non-PEO NEOs ($) | |
| Total Compensation from SCT | |
| 541,861 | | |
| 361,667 | | |
| 408,804 | | |
| 298,601 | | |
| 404,939 | | |
| 271,475 | |
| Subtractions: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| SCT Value of Stock and Option Awards | |
| (159,631 | ) | |
| (69,167 | ) | |
| (66,364 | ) | |
| (22,101 | ) | |
| (21,485 | ) | |
| (5,371 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Addition: Fair value at year-end of awards granted during the covered fiscal year that are outstanding and unvested at year-end | |
| - | | |
| - | | |
| - | | |
| - | | |
| 236,818 | | |
| 83,654 | |
| Addition: Fair value at vest date of awards granted and vested during the covered fiscal year | |
| 43,599 | | |
| 30,520 | | |
| - | | |
| - | | |
| - | | |
| - | |
| Addition (Subtraction): Year-over-year change in fair value of awards granted in any prior fiscal year that are outstanding and unvested at year end | |
| - | | |
| - | | |
| (154,769 | ) | |
| (51,589 | ) | |
| - | | |
| - | |
| Addition (Subtraction): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied at the end of or during the covered fiscal year | |
| - | | |
| - | | |
| (77,384 | ) | |
| (25,795 | ) | |
| 158,453 | | |
| 15,436 | |
| (Subtraction): Fair value at end of prior year of awards granted in any prior fiscal year that fail to meet the applicable vesting conditions during the covered fiscal year | |
| (116,032 | ) | |
| (38,647 | ) | |
| - | | |
| - | | |
| - | | |
| - | |
| Total Adjustments for Equity Awards | |
| (232,064 | ) | |
| (77,294 | ) | |
| (298,457 | ) | |
| (99,485 | ) | |
| 372,786 | | |
| 93,194 | |
| Compensation Actually Paid (as calculated) | |
| 309,767 | | |
| 284,373 | | |
| 110,347 | | |
| 199,116 | | |
| 778,725 | | |
| 365,194 | |
| |
(4) |
The
sole Non-PEO NEO in each reporting year is Stephen Brown (Chief Financial Officer). |
| |
|
|
| |
(5) |
The
Company’s cumulative total shareholder return (“TSR”) assumes $100 was invested in the Company for the period starting
December 31, 2020 through the end of each listed year. |
Pay
Versus Performance: Graphical Description
The
illustrations below provide a graphical description of CAP (as calculated in accordance with the SEC rules) and the following measures:
| |
● |
NAOV’S
cumulative TSR; and |
| |
● |
NAOV’s
net income |
CAP
and Cumulative TSR
The
following chart sets forth the relationship between CAP to our CEO, the average CAP to our Non-CEO NEOs, and the Company’s cumulative
TSR over the three most recently completed fiscal years.
CAP
and Company Net Income
The
following chart sets forth the relationship between CAP to our CEO, the average CAP to our Non-CEO NEOs, and our net income during the
three most recently completed fiscal years.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information with respect to the beneficial ownership of our common stock as of the Record Date by:
| ● |
each
person known by us to beneficially own more than 5.0% of our common stock; |
| |
|
| ● |
each
of our directors; |
| |
|
| ● |
each
of the Named Executive Officers; and |
| |
|
| ● |
all
of our directors and executive officers as a group. |
The
percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial
ownership of securities. Under the rules of the SEC, a person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the
power to dispose of or to direct the disposition of the security.
Except
as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power
with respect to all shares beneficially owned and each person’s address is c/o NanoVibronix, Inc., 969 Pruitt Place, Tyler TX 75703.
As of the Record Date, we had 3,752,354 shares of common stock, 0 shares of Series C Preferred Stock, 0 shares of Series D Preferred
Stock, 0 shares of Series E Preferred Stock and 0 shares of Series F Preferred Stock outstanding.
| Name of Beneficial Owner | |
Number of Shares Beneficially Owned (1) | | |
Percentage of Shares Outstanding (1) | |
| 5% Owners | |
| | | |
| | |
| Armistice Capital, LLC | |
| 374,956 | (2) | |
| 9.99 | % (2) |
| | |
| | | |
| | |
| Directors and Executive Officers | |
| | | |
| | |
| Stephen Brown | |
| 14,200 | (3) | |
| * | |
| Harold Jacob, M.D. | |
| 13,827 | (4) | |
| * | |
| Martin Goldstein, M.D. | |
| 20,000 | (5) | |
| * | |
| Michael Ferguson | |
| 20,000 | (6) | |
| * | |
| Thomas R. Mika | |
| 20,000 | (7) | |
| * | |
| Christopher Fashek | |
| 17,750 | (8) | |
| * | |
| Brian Murphy | |
| 20,000 | (9) | |
| * | |
| Aurora Cassirer | |
| 20,100 | (10) | |
| * | |
| Maria Schroeder | |
| 20,000 | (11) | |
| * | |
| All directors and executive officers as a group (9 persons) | |
| 165,877 | | |
| 4.24 | % |
| * |
Represents
Ownership of Less than 1% |
| |
|
| (1) |
Shares
of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assume the exercise of
all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable
or exercisable within 60 days of the Record Date. Shares issuable pursuant to the exercise of stock options and warrants exercisable
within 60 days are deemed outstanding and held by the holder of such options or warrants for computing the percentage of outstanding
common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common
Stock beneficially owned by any other person.
|
| |
|
| (2) |
The
shares are directly held by Armistice Capital Master Fund Ltd., a Cayman Islands exempted company (the “Master Fund”)
and may be deemed to be indirectly beneficially owned by: (i) Armistice Capital, LLC (“Armistice Capital”), as the investment
manager of the Master Fund; and (ii) Steven Boyd, as the Managing Member of Armistice Capital. Comprised of (i) 374,000 shares of
common stock, and (ii) 956 shares of common stock issuable upon the exercise of certain pre-funded warrants and the exercise of A-1
Warrants (“A-1 Warrants”), and excludes 3,723,021 shares of common stock issuable upon the exercise of certain pre-funded
warrants and upon the exercise of certain A-1 Warrants. The A-1 Warrants are subject to a beneficial ownership limitation of 4.99%,
and the pre-funded warrants are subject to a beneficial ownership limitation of 9.99%, which such limitation restricts the stockholder
from exercising that portion of the A-1 Warrants, or the pre-funded warrants, as applicable, that would result in the stockholder
and its affiliates owning, after exercise, a number of shares of common stock in excess of the beneficial ownership limitation. The
address of Armistice Capital, LLC is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY 10022. |
| |
|
| (3) |
Comprised
of 200 shares of common stock held by Mr. Brown and 14,000 shares of common stock that may be purchased by Mr. Brown upon exercise
of stock options that are currently exercisable or exercisable within 60 days following the Record Date. |
| |
|
| (4) |
Comprised
of (i) 3,209 shares of common stock held by Medical Instrument Development Inc., an entity controlled by Dr. Jacob, (ii) 618 shares
of common stock held by Dr. Jacob, and (iii) 10,000 shares of common stock that may be purchased by Dr. Jacob upon the exercise of
stock options. |
| |
|
| (5) |
Comprised
of 20,000 shares of common stock that may be purchased by Dr. Goldstein upon exercise of stock options that are currently exercisable
or exercisable within 60 days following the Record Date. |
| |
|
| (6) |
Comprised
of 20,000 shares of common stock that may be purchased by Mr. Ferguson upon exercise of stock options that are currently exercisable
or exercisable within 60 days following the Record Date. |
| |
|
| (7) |
Comprised
of 20,000 shares of common stock that may be purchased by Mr. Mika upon exercise of stock options that are currently exercisable
or exercisable within 60 days following the Record Date. |
| |
|
| (8) |
Comprised
of 3,750 shares of common stock held by Mr. Fashek and 14,000 shares of common stock that may be purchased by Mr. Fashek upon exercise
of stock options that are currently exercisable or exercisable within 60 days following the Record Date. |
| |
|
| (9) |
Comprised
of 20,000 shares of common stock that may be purchased by Mr. Murphy upon exercise of stock options that are currently exercisable
or exercisable within 60 days following the Record Date. |
| |
|
| (10) |
Comprised
of 100 shares of common stock held by Ms. Cassirer and 20,000 shares of common stock that may be purchased by Ms. Cassirer upon exercise
of stock options that are currently exercisable or exercisable within 60 days following the Record Date. |
| |
|
| (11) |
Comprised
of 1,875 shares of common stock that may be purchased by Ms. Schroeder upon exercise of stock options that are currently exercisable
or exercisable within 60 days following the Record Date. |
REPORT
OF THE AUDIT COMMITTEE
The
audit committee assists the Board in its general oversight of the Company’s financial reporting processes. The audit committee
charter describes in greater detail the full responsibilities of the audit committee. During each fiscal year, the audit committee reviews
the Company’s financial statements, management reports, internal control over financial reporting and audit matters. In connection
with these reviews, the audit committee meets with management and independent public accountants at least once each quarter. The audit
committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. These meetings include,
whenever appropriate, executive sessions in which the audit committee meets separately with the independent public accountants, financial
management personnel and legal counsel.
As
part of its review of audit matters, the audit committee supervises the relationship between the Company and its independent registered
public accountants, including: having direct responsibility for their appointment, compensation and retention; reviewing the scope of
their audit services; approving audit and non-audit services; and confirming the independence of the independent public accountants.
Together with senior members of the Company’s financial management team, the audit committee reviewed the overall audit scope and
plans of the independent public accountants, the results of external audit examinations, and evaluations by management of the Company’s
internal control over financial reporting and the quality of the Company’s financial reporting.
In
addition, the audit committee reviewed key initiatives and programs aimed at designing and maintaining an effective internal and disclosure
control structure. As part of this process, the audit committee continued to monitor the scope and adequacy of the steps taken to maintain
the effectiveness of internal procedures and controls.
In
performing all of these functions, the audit committee acts in an oversight capacity. The audit committee reviews and discusses the quarterly
and annual consolidated financial statements with management, and the Company’s independent public accountants prior to their issuance.
In its oversight role, the audit committee relies on the work and assurances of the Company’s management, which is responsible
for establishing and maintaining adequate internal control over financial reporting, preparing the financial statements and other reports
and maintaining policies relating to legal and regulatory compliance, ethics and conflicts of interest. Zwick CPA, PLLC, is responsible
for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial
statements with accounting principles generally accepted in the United States of America. The audit committee has reviewed and discussed
the Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2023, and the independent
auditor’s report on those financial statements, with management and with our independent auditor, Zwick CPA, PLLC.
The
audit committee has reviewed with the independent public accountants the matters required to be discussed by Statement on Auditing Standards
No. 16, as amended, “Communication with audit committees,” including a discussion with management and the independent public
accountants of the quality (and not merely the acceptability) of the Company’s accounting principles, the reasonableness of significant
estimates and judgments and the disclosures in the Company’s financial statements. In addition, the audit committee reviewed and
discussed with Zwick CPA, PLLC matters related to its independence, including a review of audit and non-audit fees and the written disclosures
in the letter from Zwick CPA, PLLC, to the audit committee required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent public accountant’s communication with the audit committee concerning independence. The audit committee
concluded that Zwick CPA, PLLC is independent from the Company and its management.
Taking
all these reviews and discussions into account, the audit committee recommended to the Board that the audited financial statements be
included in NanoVibronix, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, for filing with the SEC.
AUDIT
COMMITTEE
Thomas
Mika, Chair
Michael
Ferguson
Maria
Schroeder
The
Report of the audit committee set forth in this Proxy Statement shall not be deemed to be “soliciting material” or to be
“filed” with the SEC or subject to Regulation 14A or 14C under the Exchange Act, or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended. In addition, it shall not be deemed incorporated by reference by any statement that incorporates
this Proxy Statement by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, as amended, except
to the extent that we specifically incorporate this information by reference.
PROPOSAL
2: RATIFICATION OF APPOINTMENT OF ZWICK CPA, PLLC AS OUR
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
audit committee of the Board has selected Zwick CPA, PLLC as our independent registered public accounting firm for the fiscal year ending
December 31, 2024, and the Board has directed that management submit the selection of independent registered public accountants for ratification
by the stockholders at the Annual Meeting.
The
Audit Committee has reviewed the independence of Zwick CPA, PLLC as auditor. The Audit Committee has concluded that Zwick CPA, PLLC is
independent and that it is in the best interests of the Company and its stockholders to retain Zwick CPA, PLLC as independent auditor
for 2024.
Stockholder
ratification of the selection of Zwick CPA, PLLC as our independent registered public accounting firm is not required by our Bylaws or
otherwise. However, the Board is submitting the selection of Zwick CPA, PLLC to the stockholders for ratification as a matter of good
corporate practice. If the stockholders fail to ratify the selection, the audit committee will reconsider whether or not to retain Zwick
CPA, PLLC. Even if the selection is ratified, the Audit Committee, at its discretion, may direct the appointment of a different independent
registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the
Company and its stockholders.
A
representative of Zwick CPA, PLLC will be present at the Annual Meeting, will have the opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Marcum
LLP (“Marcum”) served as the Company’s independent registered public accounting firm from April 27, 2018 until December
7, 2023. As previously disclosed in the Company’s Current Report on Form 8-K filed with the SEC on December 11, 2022, on December
6, 2023, the Company dismissed Marcum as the Company’s independent registered public accounting firm, effective as of December
7, 2023. On December 7, 2023, the Company engaged Zwick CPA, PLLC as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2023, effective as of such date.
The
reports of Marcum on the Company’s consolidated financial statements for the two most recent fiscal years, ended December 31, 2022
and December 31, 2021, did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty,
audit scope, or accounting principles, except Marcum’s report on the consolidated financial statements of the Company as of and
for the years ended December 31, 2022 and 2021, contained an explanatory paragraph stating there was substantial doubt about the Company’s
ability to continue as a going concern.
During
the two fiscal years ended December 31, 2022 and December 31, 2021, and the subsequent interim period through December 7, 2023, there
were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K)
with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Marcum, would have caused Marcum to make reference to the subject matter of the
disagreements in connection with its reports on the Company’s consolidated financial statements for such years. Also during this
time, there were no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K, except that, for the years ended
December 31, 2022 and December 31, 2021 and for each of the quarters within the years ended December 31, 2022 and 2021, management identified
deficiencies in the Company’s design and effectiveness of their internal control over financial reporting that were considered
to be material weaknesses.
During
the fiscal years ended December 31, 2022 and December 31, 2021, and the subsequent interim period through December 7, 2023, neither the
Company nor anyone on its behalf has consulted with Zwick CPA, PLLC regarding (i) the application of accounting principles to any specified
transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements,
and neither a written report nor oral advice was provided to the Company that Zwick CPA, PLLC concluded was an important factor considered
by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii) any matter that was either
the subject of a “disagreement,” as defined in Item 304(a)(1)(iv) of Regulation S-K, or a “reportable event,”
as defined in Item 304(a)(1)(v) of Regulation S-K.
Fees
to Independent Registered Public Accounting Firm
The
following is a summary of the fees billed or expected to be billed to us by Zwick CPA, PLLC, our independent registered public accountants,
for professional services rendered with respect to the fiscal year ended December 31, 2023 and by Marcum LLP, our former independent
registered public accountants, for professional services rendered with respect to the fiscal years ended December 31, 2023 and December
31, 2022:
| | |
Zwick CPA, PLLC | | |
Marcum LLP | |
| | |
2023 | | |
2023 | | |
2022 | |
| Audit fees (1) | |
$ | 0 | | |
$ | 274,338 | | |
$ | 205,000 | |
| Audit-related fees (2) | |
| - | | |
| | | |
| - | |
| Tax fees (3) | |
| - | | |
| | | |
| - | |
| All other fees (4) | |
| - | | |
$ | 75,000 | | |
| - | |
| Total | |
$ | 0 | | |
$ | 349,338 | | |
$ | 205,000 | |
| |
(1) |
Audit Fees. This category includes the fees related
to the audit of our annual financial statements and the review of our interim quarterly financial statements and services that are normally
provided by our independent registered public accounting firm in connection with its engagements for those years. This category also
includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of our interim financial
statements. |
| |
|
|
| |
(2) |
Audit-Related Fees. This category typically consists
of assurance and related services by our independent registered public accounting firm that are reasonably related to the performance
of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees
disclosed under this category include consents regarding equity issuances. |
| |
|
|
| |
(3) |
Tax Fees. This category typically consists of professional
services rendered by our independent registered public accounting firm for tax compliance and tax advice. |
| |
|
|
| |
(4) |
All Other Fees. This category includes aggregate fees
billed in each of the last two fiscal years for Marcum LLP and the last fiscal year for Zwick CPA, PLLC for products and services provided
by the relevant independent registered public accounting firm other than the services reported in the categories above. |
Pre-Approval
Policies and Procedures
Under
the audit committee’s pre-approval policies and procedures, the audit committee is required to pre-approve the audit and non-audit
services performed by our independent registered public accounting firm. On an annual basis, the audit committee pre-approves a list
of services that may be provided by the independent registered public accounting firm without obtaining specific pre-approval from the
audit committee. In addition, the audit committee sets pre-approved fee levels for each of the listed services. Any type of service that
is not included on the list of pre-approved services must be specifically approved by the audit committee or its designee. Any proposed
service that is included on the list of pre-approved services but will cause the pre-approved fee level to be exceeded will also require
specific pre-approval by the audit committee or its designee.
The
audit committee has delegated pre-approval authority to the audit committee chairman and any pre-approved actions by the audit committee
chairman as designee are reported to the audit committee for approval at its next scheduled meeting.
All
of the services rendered by Marcum LLC and Zwick CPA, PLLC were pre-approved by the audit committee.
The
Board considered the audit fees, audit-related fees, tax fees and other fees paid to our accountants, as disclosed above, and determined
that the payment of such fees was compatible with maintaining the independence of the accountants.
Required
Vote and Board Recommendation
The
affirmative vote of a majority of the votes cast affirmatively or negatively is required for approval to adopt the proposal to ratify
the appointment of Zwick CPA, PPLC as our independent registered public accounting firm for the fiscal year ending December 31, 2024.
“ABSTAIN” votes will have no effect on the outcome of this proposal. Because the ratification of the independent registered
public accounting firm is considered a routine matter, your bank, broker, trustee or other nominee, as the case may be, may vote your
shares without your instruction with respect to the ratification of the independent registered public accounting firm unless you instruct
your them otherwise. If a bank, broker, trustee or other nominee does not exercise this authority, such broker non-votes will have no
effect on the results for the vote on this proposal.
| THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ZWICK CPA, PLLC, AND PROXIES SOLICITED BY
THE BOARD WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY CARD. |
PROPOSAL
3: APPROVAL OF NanoVibronix, INC. 2024 LONG-TERM INCENTIVE PLAN
The
Board is seeking the approval of our stockholders of a new NanoVibronix 2024 Long-Term Incentive Plan (the “2024 Plan”),
which was adopted by the Board on November 6, 2023, subject to stockholder approval. The 2024 Plan is intended to be a successor to the
NanoVibronix 2014 Long-Term Incentive Plan (the “2014 Plan”), which expired on February 19, 2024 (the “Expiration Date”).
No further awards have been or will be made under the 2014 Plan on or after the Expiration Date, and awards granted under the 2014 Plan
prior to the Expiration Date will continue in accordance with the terms of the applicable award agreements and the 2014 Plan.
The
2024 Plan consists of two components, the primary plan document which governs all awards granted under the 2024 Plan, and one sub-part
appendix: Israeli Appendix to the 2024 Plan (the “Israeli Appendix”), designated for the purpose of grants of stock options
to participants who are, or are deemed to be, residents of the State of Israel for tax purposes. The purpose of the 2024 Plan is to enable
us to remain competitive and innovative in our ability to attract and retain the services of key employees, key contractors, and outside
directors. The 2024 Plan provides for the granting of incentive stock options, nonqualified stock options, stock appreciation rights,
restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, which may be granted singly,
in combination, or in tandem, and which may be paid in cash or shares of common stock. The 2024 Plan is expected to provide flexibility
to our compensation methods in order to adapt the compensation of key employees, key contractors, and outside directors to a changing
business environment, after giving due consideration to competitive conditions and the impact of applicable tax laws. The 2024 Plan is
administered by the compensation committee of our Board.
A
copy of the 2024 Plan is included as Annex A to this Proxy Statement. Below is a summary of certain key provisions of the 2024 Plan,
which is qualified in its entirety by reference to the full text of the 2024 Plan.
Description
of the 2024 Plan
Purpose.
The purpose of the 2024 Plan is to enable us to remain competitive and innovative in our ability to attract and retain the services of
key employees, key contractors, and outside directors. The 2024 Plan provides for the granting of incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and
other awards, which may be granted singly, in combination, or in tandem, and which may be paid in cash or shares of our common stock.
The 2024 Plan is expected to provide flexibility to our compensation methods in order to adapt the compensation of key employees, key
contractors, and outside directors to a changing business environment, after giving due consideration to competitive conditions and the
impact of applicable tax laws.
Effective
Date and Expiration. The 2024 Plan was originally approved by our Board on November 6, 2023, subject to stockholder approval. The
2024 Plan will be effective upon approval by our stockholders (such date being, the “Effective Date”), and the 2024 Plan
will terminate on the tenth anniversary of the Effective Date, unless sooner terminated by our Board. No award may be made under the
2024 Plan after its termination date, but awards made prior to the termination date may extend beyond that date.
Share
Authorization. Subject to certain adjustments and to increase by any shares subject to Prior Plan Awards (defined below) that are
eligible for reuse, the number of shares of our common stock that are reserved for issuance pursuant to awards under the 2024 Plan is
six hundred thousand (600,000) shares, of which 100% may be delivered pursuant to incentive stock options. “Prior Plan Awards”
means (i) any awards under the Prior Plan (defined below) that are outstanding on the Effective Date and that, on or after the Effective
Date, are forfeited, expire, or are canceled; and (ii) any shares subject to awards relating to common stock under the Prior Plan that,
on or after the Effective Date, are settled in cash. “Prior Plan” means the 2014 Plan. Any awards outstanding under the Prior
Plan as of the Effective Date will continue to be governed by the terms and conditions of the Prior Plan and the applicable award agreement.
Shares
to be issued may be made available from authorized but unissued shares of our common stock, shares held by us in our treasury, or shares
purchased by us on the open market or otherwise. During the term of the 2024 Plan, we will at all times reserve and keep enough shares
available to satisfy the requirements of the 2024 Plan. If an award under the 2024 Plan or any Prior Plan Award is cancelled, forfeited,
or expires, in whole or in part, the shares subject to such forfeited, expired, or cancelled award may again be awarded under the 2024
Plan. In the event that previously acquired shares are delivered to us in full or partial payment of the option price for the exercise
of a stock option granted under the 2024 Plan, the number of shares available for future awards under the 2024 Plan shall be reduced
only by the net number of shares issued upon the exercise of the stock option or settlement of an award. Awards that may be satisfied
either by the issuance of common stock or by cash or other consideration shall be counted against the maximum number of shares that may
be issued under the 2024 Plan only during the period that the award is outstanding or to the extent the award is ultimately satisfied
by the issuance of shares. An award will not reduce the number of shares that may be issued pursuant to the 2024 Plan if the settlement
of the award will not require the issuance of shares, as, for example, a stock appreciation right that can be satisfied only by the payment
of cash. Only shares forfeited back to us; shares cancelled on account of termination, expiration, or lapse of an award; shares surrendered
in payment of the option price of an option; or shares withheld for payment of applicable employment taxes and/or withholding obligations
resulting from the exercise of a stock option shall again be available for grant as incentive stock options under the 2024 Plan, but
shall not increase the maximum number of shares described above as the maximum number of shares that may be delivered pursuant to incentive
stock options.
Limitation
on Outside Director Awards. Outside directors may not be granted awards under the 2024 Plan in any calendar year that exceed seven
hundred thousand dollars ($700,000) in the aggregate (with the fair market value of any equity awards determined as of the date of grant),
other than a one-time award granted to a newly appointed or elected outside director not to exceed an additional seven hundred thousand
dollars ($700,000) in the aggregate; provided, however, that these limits shall not apply to any awards made pursuant to a deferred compensation
arrangement in lieu of all or a portion of cash retainers otherwise payable to an outside director.
Administration.
The 2024 Plan is administered by the compensation committee of our Board (the “Committee”). At any time there is no Committee
to administer the 2024 Plan, any reference to the Committee is a reference to the Board. The Committee will determine the persons to
whom awards are to be made; determine the type, size, and terms of awards; interpret the 2024 Plan; establish and revise rules and regulations
relating to the 2024 Plan and any sub-plans, including, without limitation, any sub-plans for awards made to participants who are not
residents of the United States; establish performance goals for awards and certify the extent of their achievement; and make any other
determinations that it believes necessary for the administration of the 2024 Plan. The Committee may delegate certain duties to one or
more of our officers as provided in the 2024 Plan.
Eligibility.
Employees (including any employee who is also a director or an officer), contractors, and outside directors of us or our subsidiaries
whose judgment, initiative, and efforts contributed to or may be expected to contribute to our successful performance are eligible to
participate in the 2024 Plan. As of the Record Date, we had 7 employees, 7 contractors, and 7 non-employee directors who would be eligible
for awards under the 2024 Plan.
Stock
Options. The Committee may grant either incentive stock options (“ISOs”) qualifying under Section 422 of the Internal
Revenue Code of 1986, as amended (the “Code”) or nonqualified stock options, provided that only employees of us and our subsidiaries
(excluding subsidiaries that are not corporations) are eligible to receive ISOs. Stock options may not be granted with an option price
less than 100% of the fair market value of a share of common stock on the date the stock option is granted. If an ISO is granted to an
employee who owns or is deemed to own more than 10% of the combined voting power of all classes of our stock (or any parent or subsidiary),
the option price shall be at least 110% of the fair market value of a share of common stock on the date of grant. The Committee will
determine the terms of each stock option at the time of grant, including, without limitation, the methods by or forms in which shares
will be delivered to participants. The maximum term of each option, the times at which each option will be exercisable, and provisions
requiring forfeiture of unexercised options at or following termination of employment or service generally are fixed by the Committee,
except that the Committee may not grant stock options with a term exceeding 10 years or, in the case of an ISO granted to an employee
who owns or is deemed to own more than 10% of the combined voting power of all classes of our stock (or any parent or subsidiary), a
term exceeding five years.
Recipients
of stock options may pay the option price (i) in cash, check, bank draft, or money order payable to the order of the Company; (ii) by
delivering to us shares of common stock (included restricted stock) already owned by the participant having a fair market value equal
to the aggregate option price and that the participant has not acquired from us within six months prior to the exercise date; (iii) by
delivering to us or our designated agent an executed irrevocable option exercise form together with irrevocable instructions from the
participant to a broker or dealer, reasonably acceptable to us, to sell certain of the shares purchased upon the exercise of the option
or to pledge such shares to the broker as collateral for a loan from the broker and to deliver to us the amount of sale or loan proceeds
necessary to pay the purchase price; and (iv) by any other form of valid consideration that is acceptable to the Committee in its sole
discretion.
Stock
Appreciation Rights. The Committee is authorized to grant stock appreciation rights (“SARs”) as a stand-alone award,
or freestanding SARs, or in conjunction with options granted under the 2024 Plan, or tandem SARs. SARs entitle a participant to receive
an amount equal to the excess of the fair market value of a share of common stock on the date of exercise over the fair market value
of a share of our common stock on the date of grant. The grant price of a SAR cannot be less than 100% of the fair market value of a
share of our common stock on the date of grant. The Committee will determine the terms of each SAR at the time of the grant, including,
without limitation, the methods by or forms in which shares will be delivered to participants. The maximum term of each SAR, the times
at which each SAR will be exercisable, and provisions requiring forfeiture of unexercised SARs at or following termination of employment
or service generally are fixed by the Committee, except that no freestanding SAR may have a term exceeding 10 years and no tandem SAR
may have a term exceeding the term of the option granted in conjunction with the tandem SAR. Distributions to the recipient may be made
in common stock, cash, or a combination of both as determined by the Committee.
Restricted
Stock and Restricted Stock Units. The Committee is authorized to grant restricted stock and restricted stock units. Restricted stock
consists of shares of our common stock that may not be sold, assigned, transferred, pledged, hypothecated, encumbered, or otherwise disposed
of, and that may be forfeited in the event of certain terminations of employment or service, prior to the end of a restricted period
as specified by the Committee. Restricted stock units are the right to receive shares of common stock at a future date in accordance
with the terms of such grant upon the attainment of certain conditions specified by the Committee, which include a substantial risk of
forfeiture and restrictions on their sale or other transfer by the participant. The Committee determines the eligible participants to
whom, and the time or times at which, grants of restricted stock or restricted stock units will be made; the number of shares or units
to be granted; the price to be paid, if any; the time or times within which the shares covered by such grants will be subject to forfeiture;
the time or times at which the restrictions will terminate; and all other terms and conditions of the grants. Restrictions or conditions
could include, but are not limited to, the attainment of performance goals (as described below), continuous service with us, the passage
of time, or other restrictions or conditions. Except as otherwise provided in the 2024 Plan or the applicable award agreement, a participant
shall have, with respect to shares of restricted stock, all of the rights of a stockholder of the Company holding the class of common
stock that is the subject of the restricted stock, including, if applicable, the right to vote the common stock and the right to receive
any dividends thereon.
Dividend
Equivalent Rights. The Committee is authorized to grant a dividend equivalent right to any participant, either as a component of
another award or as a separate award, conferring on the participant the right to receive credits based on the cash dividends that would
have been paid on the shares of common stock specified in the award as if such shares were held by the participant. The terms and conditions
of the dividend equivalent right shall be specified by the grant. Dividend equivalents credited to the holder of a dividend equivalent
right may be paid currently or may be deemed to be reinvested in additional shares. Any such reinvestment shall be at the fair market
value at the time thereof. A dividend equivalent right may be settled in cash, shares, or a combination thereof.
Performance
Awards. The Committee may grant performance awards payable in cash, shares of common stock, other consideration, or a combination
thereof at the end of a specified performance period. Payment will be contingent upon achieving pre-established performance goals (as
discussed below) by the end of the performance period. The Committee will determine the length of the performance period, the maximum
payment value of an award, and the minimum performance goals required before payment will be made, so long as such provisions are not
inconsistent with the terms of the 2024 Plan, and to the extent an award is subject to Section 409A of the Code, are in compliance with
the applicable requirements of Section 409A of the Code and any applicable regulations or guidance issued thereunder. In certain circumstances,
the Committee may, in its discretion, determine that the amount payable with respect to certain performance awards will be reduced from
the amount of any potential awards, if the Committee determines, in its sole discretion, that the established performance measures or
objectives are no longer suitable because of a change in our business, operations, corporate structure, or for other reasons that the
Committee deemed satisfactory, in which case, the Committee may modify the performance measures or objectives and/or the performance
period as the Committee deems appropriate in its sole discretion.
Performance
Goals. Awards under the 2024 Plan may be made subject to the attainment of performance goals relating to one or more business criteria
which, where applicable, shall consist of one or more or any combination of the following criteria (the “Performance Criteria”):
cash flow; cost; revenues; sales; ratio of debt to debt plus equity; net borrowing, credit quality, or debt ratings; profit before tax;
economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; gross margin; earnings
per share (whether on a pre-tax, after-tax, operational, or other basis); operating earnings; capital expenditures; expenses or expense
levels; economic value added; ratio of operating earnings to capital spending or any other operating ratios; free cash flow; net profit;
net sales; net asset value per share; the accomplishment of mergers, acquisitions, dispositions, public offerings, or similar extraordinary
business transactions; sales growth; price of the shares; return on assets, equity, or stockholders’ equity; market share; inventory
levels, inventory turn, or shrinkage; or total return to stockholders. Any Performance Criteria may be used to measure our performance
as a whole or any of our business units and may be measured relative to a peer group or index. Any Performance Criteria may include or
exclude (i) events that are of an unusual nature or indicate infrequency of occurrence; (ii) gains or losses on the disposition of a
business; (iii) changes in tax or accounting regulations or laws; (iv) the effect of a merger or acquisition, as identified in our quarterly
and annual earnings releases; or (v) other similar occurrences. In all other respects, Performance Criteria shall be calculated in accordance
with our financial statements, under generally accepted accounting principles, or under a methodology established by the Committee prior
to the issuance of an award, which is consistently applied and identified in the Company’s audited financial statements, including
in footnotes, or the Compensation Discussion and Analysis section of the Company’s annual report.
Israeli
Awards
For
persons subject to the Israeli Income Tax Ordinance [New Version], 5721-1961 (the “Ordinance”), the Committee is authorized
to grant stock options pursuant to the terms of the Israeli Appendix. The Committee may grant to participants who are employees and office
holders options under Section 102 of the Ordinance (“Section 102 Options”) and to Controlling Shareholders (as defined in
the Israeli Appendix) and outside participants options under Section 3(i) of the Ordinance (“Section 3(i) Options”). The
Committee may designate Section 102 Options as “Approved 102 Options,” for which the options and shares upon exercise must
be held in trust and granted through a trustee, or as “Unapproved 102 Options,” for which the options and shares upon exercise
do not have to be held in trust. As described further below, the determination of the Committee as to the taxation route of the stock
options, the type of option, and duration of time the option and shares upon exercise are held in trust will determine the tax consequences
to the participant. Of the Approved 102 Options, the Committee may grant options as “Ordinary Income Options,” for which
the options and shares upon exercise must be held in trust for twelve (12) months from the date of grant, or as “Capital Gain Options,”
for which the options and shares upon exercise must be held in trust for twenty-four (24) months from the date of grant. If the requirements
of the Approved 102 Options are not met, the options are regarded as Unapproved 102 Options. Section 3(i) Options and the shares upon
exercise may, but need not, be held in trust as well, depending upon the agreement between the Committee, the participant, and the trustee
of the trust. Israeli participants can be granted other types of options under the 2024 Plan, but some of them will require a pre-ruling
from the Israeli Tax Authorities in order to be deemed Approved 102 Options.
Other
Awards. The Committee may grant other forms of awards, based upon, payable in, or that otherwise relate to, in whole or in part,
shares of common stock, if the Committee determines that such other form of award is consistent with the purpose and restrictions of
the 2024 Plan. The terms and conditions of such other form of award shall be specified by the grant. Such other awards may be granted
for no cash consideration, for such minimum consideration as may be required by applicable law, or for such other consideration as may
be specified by the grant.
Vesting,
Forfeiture, Recoupment and Assignment. The Committee, in its sole discretion, may determine that an award will be immediately vested
in whole or in part, or that all or any portion may not be vested until a date, or dates, subsequent to its date of grant, or until the
occurrence of one or more specified events, subject in any case to the terms of the 2024 Plan. If the Committee imposes conditions upon
vesting, then, except as otherwise provided below, subsequent to the date of grant, the Committee may, in its sole discretion, accelerate
the date on which all or any portion of the award may be vested.
The
Committee may impose on any award at the time of grant or thereafter, such additional terms and conditions as the Committee determines,
including terms requiring forfeiture of awards in the event of a participant’s termination of service. The Committee will specify
the circumstances on which performance awards may be forfeited in the event of a termination of service by a participant prior to the
end of a performance period or settlement of awards. Except as otherwise determined by the Committee, restricted stock will be forfeited
upon a participant’s termination of service during the applicable restriction period. In addition, we may recoup all or any portion
of any shares or cash paid to a participant in connection with any award in the event of a restatement of our financial statements as
set forth in our clawback policy, as such policy may be approved or modified by our Board from time to time.
Awards
granted under the 2024 Plan generally are not assignable or transferable except by will or by the laws of descent and distribution, except
that the Committee may, in its discretion and pursuant to the terms of an award agreement, permit transfers of certain award of nonqualified
stock options or SARs to (i) the spouse (or former spouse), children, or grandchildren of the participant (“Immediate Family Members”);
(ii) a trust or trusts for the exclusive benefit of such Immediate Family Members; (iii) a partnership in which the only partners are
(x) such Immediate Family Members, and/or (y) entities which are controlled by Immediate Family Members; (iv) an entity exempt from federal
income tax pursuant to Section 501(c)(3) of the Code or any successor provision; or (v) a split interest trust or pooled income fund
described in Section 2522(c)(2) of the Code or any successor provision, provided that (x) there shall be no consideration for any such
transfer, (y) the applicable award agreement pursuant to which such award is granted must be approved by the Committee and must expressly
provide for such transferability, and (z) subsequent transfers of transferred awards shall be prohibited except those by will or the
laws of descent and distribution.
Adjustments
Upon Changes in Capitalization. In the event that any dividend or other distribution, recapitalization, stock split, reverse stock
split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination, subdivision, repurchase, or
exchange of shares of common stock or other securities of the Company, issuance of warrants or other rights to purchase shares of common
stock or other securities of the Company, or other similar corporate transaction or event affects the fair value of an award, then the
Committee shall adjust any or all of the following so that the fair value of the award immediately after the transaction or event is
equal to the fair value of the award immediately prior to the transaction or event (i) the number of shares and type of common stock
(or the securities or property) which thereafter may be made the subject of awards; (ii) the number of shares and type of common stock
(or other securities or property) subject to outstanding awards; (iii) the number of shares and type of common stock (or other securities
or property) specified as the annual per-participant limitation under the 2024 Plan; (iv) the option price of each outstanding award;
(v) the amount, if any, we pay for forfeited shares in accordance with the terms of the 2024 Plan; and (vi) the number of or exercise
price of shares then subject to outstanding SARs previously granted and unexercised under the 2024 Plan to the end that the same proportion
of our issued and outstanding shares of common stock in each instance shall remain subject to exercise at the same aggregate exercise
price; provided, however, that the number of shares of common stock (or other securities or property) subject to any award shall always
be a whole number. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that such adjustment would
cause the 2024 Plan or any stock option to violate Section 422 of the Code or Section 409A of the Code. All such adjustments must be
made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which we are subject.
Amendment
or Discontinuance of the 2024 Plan. The Board may, at any time and from time to time, without the consent of participants, alter,
amend, revise, suspend, or discontinue the 2024 Plan in whole or in part; provided, however, that (i) no amendment that requires stockholder
approval in order for the 2024 Plan and any awards under the 2024 Plan to continue to comply with Sections 421 and 422 of the Code (including
any successors to such sections, or other applicable law) or any applicable requirements of any securities exchange or inter-dealer quotation
system on which our stock is listed or traded, shall be effective unless such amendment is approved by the requisite vote of our stockholders
entitled to vote on the amendment; and (ii) unless required by law, no action by the Board regarding amendment or discontinuance of the
2024 Plan may adversely affect any rights of any participants or obligations of us to any participants with respect to any outstanding
awards under the 2024 Plan without the consent of the affected participant.
U.S.
Federal Income Tax Consequences
The
following is a brief summary of certain U.S. federal income tax consequences relating to the transactions described under the 2024 Plan
as set forth below. This summary does not purport to address all aspects of U.S. federal income taxation and does not describe state,
local, or foreign tax consequences. This discussion is based upon provisions of the Code and the Treasury Regulations issued thereunder,
and judicial and administrative interpretations under the Code and Treasury Regulations, all as in effect as of the date hereof, and
all of which are subject to change (possibly on a retroactive basis) or different interpretation.
Law
Affecting Deferred Compensation. In 2004, Section 409A was added to the Code to regulate all types of deferred compensation. If the
requirements of Section 409A of the Code are not satisfied, deferred compensation and earnings thereon will be subject to tax as it vests,
plus an interest charge at the underpayment rate plus 1% and a 20% penalty tax. Certain performance awards, stock options, stock appreciation
rights, restricted stock units, and certain types of restricted stock are subject to Section 409A of the Code.
Incentive
Stock Options. A participant will not recognize income at the time an ISO is granted. When a participant exercises an ISO, a participant
also generally will not be required to recognize income (either as ordinary income or capital gain). However, to the extent that the
fair market value (determined as of the date of grant) of the shares with respect to which the participant’s ISOs are exercisable
for the first time during any year exceeds $100,000, the ISOs for the shares over $100,000 will be treated as nonqualified stock options,
and not ISOs, for U.S. federal tax purposes, and the participant will recognize income as if the ISOs were nonqualified stock options.
In addition to the foregoing, if the fair market value of the shares received upon exercise of an ISO exceeds the exercise price, then
the excess may be deemed a tax preference adjustment for purposes of the U.S. federal alternative minimum tax calculation. The federal
alternative minimum tax may produce significant tax repercussions depending upon the participant’s particular tax status.
The
tax treatment of any shares acquired by exercise of an ISO will depend upon whether the participant disposes of his or her shares prior
to the later of: (i) two years after the date the ISO was granted or (ii) one year after the shares were transferred to the participant
upon exercise of the ISO (referred to as the “Holding Period”). If a participant disposes of shares acquired by exercise
of an ISO after the expiration of the Holding Period, any amount received in excess of the participant’s tax basis for such shares
will be treated as a short-term or long-term capital gain, depending upon how long the participant has held the shares. If the amount
received is less than the participant’s tax basis for such shares, the loss will be treated as a short-term or long-term capital
loss, depending upon how long the participant has held the shares. If the participant disposes of shares acquired by exercise of an ISO
prior to the expiration of the Holding Period, the disposition will be considered a “disqualifying disposition.” If the amount
received for the shares is greater than the fair market value of the shares on the exercise date, then the difference between the ISO’s
exercise price and the fair market value of the shares at the time of exercise will be treated as ordinary income for the tax year in
which the “disqualifying disposition” occurs. The participant’s basis in the shares will be increased by an amount
equal to the amount treated as ordinary income due to such “disqualifying disposition.” In addition, the amount received
in such “disqualifying disposition” over the participant’s increased basis in the shares will be treated as capital
gain. However, if the price received for shares acquired by exercise of an ISO is less than the fair market value of the shares on the
exercise date and the disposition is a transaction in which the participant sustains a loss which otherwise would be recognizable under
the Code, then the amount of ordinary income that the participant will recognize is the excess, if any, of the amount realized on the
“disqualifying disposition” over the basis of the shares.
Nonqualified
Stock Options. A participant generally will not recognize income at the time a nonqualified stock option is granted. When a participant
exercises a nonqualified stock option, the difference between the option price and any higher market value of the shares of common stock
on the date of exercise will be treated as compensation taxable as ordinary income to the participant. The participant’s tax basis
for the shares acquired under a nonqualified stock option will be equal to the option price paid for such shares, plus any amounts included
in the participant’s income as compensation. When a participant disposes of shares acquired by exercise of a nonqualified stock
option, any amount received in excess of the participant’s tax basis for such shares will be treated as short-term or long-term
capital gain, depending upon how long the participant has held the shares. If the amount received is less than the participant’s
tax basis for such shares, the loss will be treated as a short-term or long-term capital loss, depending upon how long the participant
has held the shares.
Special
Rule if Option Price is Paid for in Shares. If a participant pays the option price of a nonqualified stock option with previously-owned
shares of our common stock and the transaction is not a disqualifying disposition of shares previously acquired under an ISO, the shares
received equal to the number of shares surrendered are treated as having been received in a tax-free exchange. The participant’s
tax basis and holding period for these shares received will be equal to the participant’s tax basis and holding period for the
shares surrendered. The shares received in excess of the number of shares surrendered will be treated as compensation taxable as ordinary
income to the participant to the extent of their fair market value. The participant’s tax basis in these shares will be equal to
their fair market value on the date of exercise, and the participant’s holding period for such shares will begin on the date of
exercise.
If
the use of previously acquired shares to pay the exercise price of a nonqualified stock option constitutes a disqualifying disposition
of shares previously acquired under an ISO, the participant will have ordinary income as a result of the disqualifying disposition in
an amount equal to the excess of the fair market value of the shares surrendered, determined at the time such shares were originally
acquired on exercise of the ISO, over the aggregate option price paid for such shares. As discussed above, a disqualifying disposition
of shares previously acquired under an ISO occurs when the participant disposes of such shares before the end of the Holding Period.
The other tax results from paying the exercise price with previously-owned shares are as described above, except that the participant’s
tax basis in the shares that are treated as having been received in a tax-free exchange will be increased by the amount of ordinary income
recognized by the participant as a result of the disqualifying disposition.
Restricted
Stock. A participant who receives restricted stock generally will recognize as ordinary income the excess, if any, of the fair market
value of the shares granted as restricted stock at such time as the shares are no longer subject to forfeiture or restrictions, over
the amount paid, if any, by the participant for such shares. However, a participant who receives restricted stock may make an election
under Section 83(b) of the Code within 30 days of the date of transfer of the shares to recognize ordinary income on the date of transfer
of the shares equal to the excess of the fair market value of such shares (determined without regard to the restrictions on such shares)
over the purchase price, if any, of such shares. If a participant does not make an election under Section 83(b) of the Code, then the
participant will recognize as ordinary income any dividends received with respect to such shares. At the time of sale of such shares,
any gain or loss realized by the participant will be treated as either short-term or long-term capital gain (or loss) depending on the
holding period. For purposes of determining any gain or loss realized, the participant’s tax basis will be the amount previously
taxable as ordinary income, plus the purchase price paid by the participant, if any, for such shares.
Stock
Appreciation Rights. Generally, a participant who receives a stand-alone SAR will not recognize taxable income at the time the stand-alone
SAR is granted, provided that the SAR is exempt from or complies with Section 409A of the Code. If an employee receives the appreciation
inherent in the SARs in cash, the cash will be taxed as ordinary income to the recipient at the time it is received. If a recipient receives
the appreciation inherent in the SARs in stock, the spread between the then current market value and the grant price, if any, will be
taxed as ordinary income to the employee at the time it is received. In general, there will be no federal income tax deduction allowed
to us upon the grant or termination of SARs. However, upon the exercise of a SAR, we will be entitled to a deduction equal to the amount
of ordinary income the recipient is required to recognize as a result of the exercise.
Other
Awards. In the case of an award of restricted stock units, performance awards, dividend equivalent rights, or other stock or cash
awards, the recipient will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any
shares received on the date of payment or delivery, provided that the award is exempt from or complies with Section 409A of the Code.
In that taxable year, we will receive a federal income tax deduction in an amount equal to the ordinary income which the participant
has recognized.
Federal
Tax Withholding. Any ordinary income realized by a participant upon the exercise of an award under the 2024 Plan is subject to withholding
of U.S. federal, state, and local income tax and to withholding of the participant’s share of tax under the Federal Insurance Contribution
Act and the Federal Unemployment Tax Act. To satisfy our federal income tax withholding requirements, we will have the right to require
that, as a condition to delivery of any certificate for shares of common stock or the registration of the shares in the participant’s
name, the participant remit to us an amount sufficient to satisfy the withholding requirements. Alternatively, we may withhold a portion
of the shares (valued at fair market value) that otherwise would be issued to the participant to satisfy all or part of the withholding
tax obligations or may, if we consent, accept delivery of shares (that the participant has not acquired from us within six months prior
to the date of exercise) with an aggregate fair market value that equals or exceeds the required tax withholding payment. Withholding
does not represent an increase in the participant’s total income tax obligation, since it is fully credited toward his or her tax
liability for the year. Additionally, withholding does not affect the participant’s tax basis in the shares. Compensation income
realized and tax withheld will be reflected on Forms W-2 supplied by us to employees by January 31 of the succeeding year. Deferred compensation
that is subject to Section 409A of the Code will be subject to certain federal income tax withholding and reporting requirements.
Tax
Consequences to Us. To the extent that a participant recognizes ordinary income in the circumstances described above, we will be
entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary
and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code, and
is not disallowed by the $1,000,000 limitation on certain executive compensation under Section 162(m) of the Code. While deductibility
of executive compensation for federal income tax purposes is among the factors the Board and Committee consider when structuring executive
compensation arrangements, it is not the sole or primary factor considered. We retain the flexibility to authorize compensation that
may not be deductible if we believe it is in the best interests of the Company.
Million
Dollar Deduction Limit and Other Tax Matters. We may not deduct compensation of more than $1,000,000 that is paid to “covered
employees” (as defined in Section 162(m) of the Code), which include (i) an individual (or, in certain circumstances, his or her
beneficiaries) who, at any time during the taxable year, is either our principal executive officer or principal financial officer; (ii)
an individual who is among our three highest compensated officers for the taxable year (other than an individual who was either our principal
executive officer or principal financial officer at any time during the taxable year); or (iii) anyone who was a covered employee for
purposes of Section 162(m) of the Code for any tax year beginning on or after January 1, 2018. This limitation on deductions (x) only
applies to compensation paid by a publicly-traded corporation (and not compensation paid by non-corporate entities) and (z) may not apply
to certain types of compensation, such as qualified performance-based compensation that is payable pursuant to a written, binding contract
that was in effect as of November 2, 2018, so long as the contract is not materially modified after that date.
If
an individual’s rights under the 2024 Plan are accelerated as a result of a change in control and the individual is a “disqualified
individual” under Section 280G of the Code, the value of any such accelerated rights received by such individual may be included
in determining whether or not such individual has received an “excess parachute payment” under Section 280G of the Code,
which could result in (i) the imposition of a 20% federal excise tax (in addition to federal income tax) payable by the individual on
the value of such accelerated rights, and (ii) the loss by us of a compensation deduction.
Israeli
Income Tax Consequences
The
following description of the Israel income tax consequences of awards under Israeli Appendix of the 2024 Plan is general and does not
purport to be complete.
Pursuant
to Section 102 of the Ordinance, which came into effect on January 1, 2003, options, shares, and other securities (including Restricted
Shares) (together “Options”) may be granted through a trustee (i.e., Approved 102 Options) or not through a trustee
(i.e., Unapproved 102 Options). The following is a brief discussion of the tax consequences applicable to both types of Section
102 Options.
Grant
Through a Trustee
Options
granted through a trustee and held in trust are made either through the capital gains tax track (i.e., Capital Gains Options)
or the compensation income tax track (i.e., Ordinary Income Options). Capital Gains Options and Ordinary Income Options can be
granted only through a trustee. Under the capital gains tax track, the Capital Gains Options and the underlying shares have to be held
in trust for at least twenty-four (24) months from their date of grant. Any gain made on the sale of shares following the twenty-four
(24) month period is subject to a capital gains tax at a current rate of 25%; the amount of gain is the difference between the sales
proceeds from the sale of shares and the exercise price paid for such shares. Generally, Capital Gains Options are not taxed on their
date of grant. However, in the event that the exercise price of the options is less than the fair market value of the Company’s
common stock on the date of grant, a portion of the gain will be deemed compensation income, taxable at the personal marginal tax rate
of the participant. The payment of such tax is made at the time of exercise of the Capital Gains Options. The portion of the gain that
is deemed compensation income is the difference between the average value of the shares as listed on the stock exchange during the thirty
(30) day period prior to the date of grant and the exercise price of the option. If the Capital Gains Options or the underlying shares
of such options are sold by the trustee or transferred from the trustee to the beneficiary before the end of the twenty-four (24) month
period, any resulting income (cash or equivalent) is taxed as compensation income. If the options have not been exercised and transferred
from the trustee to the beneficiary, the taxable amount of income is the value of the option. If the options have been exercised, the
taxable amount of income is the difference between the aggregate fair market value of the shares at the time of such sale or transfer
and the aggregate exercise price paid for such shares.
Under
the compensation income tax track, the Ordinary Income Options and the underlying shares have to be held in trust for at least twelve
(12) months from their date of grant. Any gain made on the sale of shares is subject to compensation income tax at the personal marginal
tax rate of the respective participant; the amount of gain is the difference between the sales proceeds from the sale of shares and the
exercise price paid for such shares. Ordinary Income Options are not taxed on their date of grant, but rather when the options or the
underlying shares of such options are sold by the trustee or transferred from the trustee to the beneficiary. At such time, if the options
have not been exercised, the taxable amount of income is value of the Option. If the Options have been exercised, the taxable amount
of income is the difference between the aggregate fair market value of the shares at the time of such sale or transfer and the aggregate
exercise price paid for such shares.
A
corporate tax deduction is available for the employer in the tax year in which tax is withheld. The deductible amount is equal to any
amount included by a participant as compensation income, except when a participant is granted Capital Gains Options, including in the
event that such Capital Gains Options or the underlying shares of such options are sold by the trustee or transferred from the trustee
to the beneficiary before the end of the applicable twenty-four (24) month period. In such event, any resulting income to the participant
is deemed to be compensation income for tax purposes, but there would be no corresponding corporate tax deduction available to the employer.
Grant
Not Through a Trustee
In
the case of Options not made through a trustee, if the shares are non-marketable securities, the Option will not be subject to tax at
the date of grant of the option or the exercise of the Option. However, ordinary income tax will be payable upon the sale of the shares
acquired upon exercise of the Option. The taxable amount will be the sales proceeds less the aggregate exercise price paid by the participant.
If the shares covered by the option have a market value, then the value of the Option is treated as compensation income, and subject
to tax at the date of grant. There is no tax upon the exercise of the Option. However, capital gains tax will be payable on the sale
of the shares upon exercise of the Option. The taxable amount will be the sales proceeds, less the value that was taxed at the date of
grant and the aggregate exercise price paid by the participant.
Grant
of Section 3(i) Options
Options
under Section 3(i) of the Ordinance may be granted to Controlling Shareholders, consultants, and controlling stockholders (which are
excluded from the term employees under Section 102 of the Ordinance). Grants of Options for shares which are non-marketable are not taxed
under the income tax rules on the date of grant, but such event creates VAT liability. However, they are subject to tax at the time of
exercise at the ordinary income tax rate, and at the day such shares are sold at the capital gains tax rate. The difference between the
fair market value of the shares at the time of exercise and the exercise price is taxed at the ordinary income tax rate. Any gain above
such value at the time of sale of the shares is taxed at the capital gains rate. Grants of Options for shares which have a market value
are subject to tax on the date of grant, exercise of the Option, and the sale of the shares. The value of the Option is taxed on the
date of grant at the ordinary income tax rate. The difference between the fair market value of the shares at the time of exercise and
the sum of the exercise price and the amounts previously taxed at grant, is taxed at the ordinary income tax rate. Any gain above such
value at the time of sale of the shares is taxed at the capital gains rate.
Other
Stock Incentives
All
other awards under the Israeli Appendix need tax ruling from the Israeli Tax Authority for the postponement of the tax event arising
from the issuance thereof. Otherwise, there is an immediate tax event.
Interest
of Directors and Executive Officers.
All
members of our Board and all of our executive officers are eligible for awards under the 2024 Plan and, thus, have a personal interest
in the approval of the 2024 Plan.
New
Plan Benefits
We
cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to eligible participants
under the 2024 Plan because the grant of awards and the terms of such awards are to be determined in the sole discretion of the Committee.
The
fair market value of our common stock is $0.532 per share based on the closing price of our common stock on October 28, 2024.
Vote
Required
The
affirmative vote of a majority of the votes cast affirmatively or negatively is required for the approval of the 2024 Plan. “ABSTAIN”
votes will have no effect on the results of the vote on this proposal. Brokerage firms do not have authority to vote customers’
unvoted shares held by the firms in street name on this proposal. If your shares are held by a broker and you do not give the broker
specific instructions on how to vote your shares, your broker may not vote your shares at its discretion. Broker non-votes will have
no effect on the results of the vote on this proposal.
| THE
BOARD RECOMMENDS THAT YOU VOTE “FOR” THE NANOVIBRONIX, INC. 2024 LONG-TERM INCENTIVE PLAN, AND PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY CARD. |
PROPOSAL
NO. 4 - APPROVAL, ON AN ADVISORY BASIS, OF THE
COMPENSATION
PAID TO OUR NAMED EXECUTIVE OFFICERS
The
Company is seeking your advisory vote as required by Section 14A of the Securities Exchange Act of 1934, as amended, on the approval
of the compensation of the Company’s named executive officers as described in the compensation tables and related material contained
in this Proxy Statement. Because your vote is advisory, it will not be binding on the Compensation Committee or the Company’s Board
of Directors. However, the Compensation Committee and Petros’ Board of Directors will review the voting results and take them into
consideration when making future decisions regarding executive compensation.
The
Company’s compensation philosophy is designed to align each executive’s compensation with the Company’s short-term
and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are
crucial to the Company’s long-term success. Consistent with this philosophy, a significant portion of the total compensation opportunity
for each of the Company’s executives is directly related to performance factors that measure the Company’s progress toward
the goals of the Company’s strategic and operating plans, as well as the Company’s performance relative to that of its peer
companies.
In
accordance with the rules of the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted
for a stockholder vote at the Annual Meeting:
“RESOLVED,
that the compensation paid to the named executive officers of Petros Pharmaceuticals, Inc., as disclosed pursuant to the compensation
disclosure rules of the Securities and Exchange Commission, including the compensation tables and the related material disclosed in this
proxy statement, is hereby APPROVED.”
Our
current policy is to hold future advisory votes on executive compensation every three years, and the next “say-on-pay” vote
is expected to occur at the annual meeting of our stockholders in 2027.
Required
Vote and Board Recommendation
The
affirmative vote of a majority of the votes cast affirmatively or negatively is required for approval, on an advisory basis, of the executive
compensation. This is a non-binding advisory vote. “ABSTAIN” votes will have no effect on the results for this proposal.
Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If your
shares are held by a broker and you do not give the broker specific instructions on how to vote your shares, your broker may not vote
your shares at its discretion. Broker non-votes will have no effect on the results for the advisory vote on this proposal.
| THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY VOTE ON EXECUTIVE COMPENSATION DISCLOSED IN THIS PROXY
STATEMENT, INCLUDING THE COMPENSATION TABLES AND THE RELATED NARRATIVE DISCLOSURE, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED
IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY CARD. |
PROPOSAL
NO. 5 — ADJOURNMENT OF THE ANNUAL MEETING, IF
NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE
INSUFFICIENT VOTES AT THE TIME OF THE ANNUAL MEETING TO
APPROVE ONE OR MORE PROPOSALS PRESENTED AT THE ANNUAL MEETING
Background
of and Rationale for the Adjournment Proposal
The
Board believes that if the number of shares of the Company’s common stock outstanding and entitled to vote at the Annual Meeting
and voting in favor of any one or more of the proposals presented at the Annual Meeting is insufficient to approve such proposals, it
is in the best interests of the stockholders to enable the Board to continue to seek to obtain a sufficient number of additional votes
to approve such proposals.
In
the Adjournment Proposal, we are asking stockholders to authorize the holder of any proxy solicited by the Board to vote in favor of
adjourning or postponing the Annual Meeting or any adjournment or postponement thereof. If our stockholders approve this proposal, we
could adjourn or postpone the Annual Meeting, and any adjourned session of the Annual Meeting, to use the additional time to solicit
additional proxies in favor of any one or more of the proposals presented at the Annual Meeting.
Additionally,
approval of the Adjournment Proposal could mean that, in the event we receive proxies indicating that we will not obtain approval for
one or more of the proposals presented at the Annual Meeting, we could adjourn or postpone the Annual Meeting without a vote on such
proposals and use the additional time to solicit the holders of those shares to change their vote in favor of such proposals.
Required
Vote
The
affirmative vote of a majority of the votes cast affirmatively or negatively is required for approval for this proposal. “ABSTAIN”
votes will have the same effect as votes cast “AGAINST” this proposal. Because this proposal is considered a routine matter,
your bank, broker, trustee or other nominee, as the case may be, may vote your shares without your instruction with respect to this proposal
unless you instruct them otherwise. If a bank, broker, trustee or other nominee does not exercise this authority, such broker non-votes
will have no effect on the results for the vote on this proposal.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ADJOURNMENT OF THE ANNUAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL
PROXIES IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF THE ANNUAL MEETING TO
APPROVE ONE OR MORE PROPOSALS PRESENTED AT THE ANNUAL MEETING, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF
UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY CARD. |
OTHER
BUSINESS
The
Board knows of no other business to be brought before the Annual Meeting. If, however, any other business should properly come before
the Annual Meeting, the persons named in the accompanying proxy will vote the proxy in accordance with applicable law and as they may
deem appropriate in their discretion, unless directed by the proxy to do otherwise.
SUBMISSION
OF FUTURE STOCKHOLDER PROPOSALS
Pursuant
to Rule 14a-8 under the Exchange Act (“Rule 14a-8”), a stockholder who intends to present a proposal at our next annual meeting
of stockholders and who wishes the proposal to be included in the proxy statement for that meeting must submit the proposal in writing
not less than 120 calendar days before the one year anniversary of the date this Proxy Statement is released to stockholders in connection
with the 2024 annual meeting of stockholders, or August 21, 2025, after which date such stockholder proposal will be considered untimely.
Such proposal must be submitted to the attention of Secretary, at our corporate offices at 969 Pruitt Place, Tyler TX 75703. However,
pursuant to Rule 14a-8, if the date of the 2025 annual meeting has been changed by more than 30 days from the date of the 2024 annual
meeting, or is held on a date that is before November 19, 2025 or after January 18, 2026, then a stockholder proposal submitted for inclusion
in our proxy statement for the 2025 annual meeting must be received by us a reasonable time before we begin to print and mail our proxy
statement for the 2025 annual meeting.
Stockholders
wishing to nominate a director or submit proposals to be presented directly at our next annual meeting instead of by inclusion in next
year’s proxy statement must follow the submission criteria and deadlines set forth in our Bylaws concerning stockholder nominations
and proposals. Stockholder nominations for director and other proposals that are not to be included in such materials must be received
by our Secretary in writing at our corporate offices at 969 Pruitt Place, Tyler TX 75703, not later than 90 or more than 120 days prior
to the one-year anniversary of the date of the this Annual Meeting (i.e., the date that is between August 21, 2025 and September 20,
2025); provided, however, that in the event that the 2025 annual meeting is called for a date that is 60 days prior to the date that
is one year from the date of the 2024 annual meeting date or a date which is 30 days after the date of the 2024 annual meeting date (i.e.,
the date that is between October 20, 2025 and January 18, 2026), notice must be received by our Secretary at our principal executive
offices not earlier than 120 days prior to the date of the 2025 annual meeting and not later than the later of (A) the date which is
90 days prior to the date of the 2025 annual meeting, or (B) if the first public announcement of the date of the 2025 annual meeting
is less than 100 days prior to the date of such annual meeting, the tenth day following the date of the public announcement of the date
of the 2025 annual meeting. Any such stockholder proposals or nominations for director must also satisfy the requirements set forth in
our Bylaws. To be eligible for inclusion in our proxy materials, stockholder proposals must also comply with the requirements of Rule
14a-8. Stockholders are also advised to review our Bylaws, which contain additional advance notice requirements, including requirements
with respect to advance notice of stockholder proposals and director nominations. A proxy granted by a stockholder will give discretionary
authority to the proxies to vote on any matters introduced pursuant to the above advance notice Bylaw provisions, subject to applicable
rules of the SEC.
In
addition to satisfying the requirements under our By-laws, to comply with the universal proxy rules, stockholders who intend to solicit
proxies in support of director nominees other than Company nominees must provide notice that sets forth the information required by Rule
14a-19 under the Exchange Act no later than October 10, 2025 (i.e., the date that is 60 days prior to the anniversary date of this annual
meeting of stockholders).
A
copy of our 2023 Annual Report on Form 10-K is available without charge (except for exhibits, which are available upon payment of a reasonable
fee) upon written request to NanoVibronix, Inc., Attention: Chief Executive Officer, 969 Pruitt Place, Tyler TX 75703.
Annex
A
NANOVIBRONIX,
INC.
2024
LONG-TERM INCENTIVE PLAN
The
NanoVibronix, Inc. 2024 Long-Term Incentive Plan (the “Plan”) was adopted by the Board of Directors of NanoVibronix,
Inc., a Delaware corporation (the “Company”), on November 6, 2023 (the “Board Approval Date”),
to be effective as of the date the Plan is approved by the Company’s stockholders (the “Effective Date”).
ARTICLE
1
PURPOSE
The
purpose of the Plan is to attract and retain the services of key Employees, key Contractors, and Outside Directors of the Company and
its Subsidiaries and to provide such persons with a proprietary interest in the Company through the granting of Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Awards, Dividend Equivalent
Rights, and Other Awards, whether granted singly, or in combination, or in tandem, that will:
(a)
increase the interest of such persons in the Company’s welfare;
(b)
furnish an incentive to such persons to continue their services for the Company or its Subsidiaries; and
(c)
provide a means through which the Company may attract able persons as Employees, Contractors, and Outside Directors.
With
respect to Reporting Participants, the Plan and all transactions under the Plan are intended to comply with all applicable conditions
of Rule 16b-3 promulgated under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply,
such provision or action shall be deemed null and void ab initio, to the extent permitted by law and deemed advisable by the Committee.
ARTICLE
2
DEFINITIONS
For
the purpose of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:
2.1
“Applicable Law” means all legal requirements relating to the administration of equity incentive plans and
the issuance and distribution of shares of Common Stock, if any, under applicable corporate laws, applicable securities laws, the rules
of any exchange or inter-dealer quotation system upon which the Company’s securities are listed or quoted, the rules of any foreign
jurisdiction applicable to Incentives granted to residents therein, and any other applicable law, rule or restriction.
2.2
“Award” means the grant of any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, SAR, Restricted
Stock Units, Performance Award, Dividend Equivalent Right or Other Award, whether granted singly or in combination or in tandem (each
individually referred to herein as an “Incentive”).
2.3
“Award Agreement” means a written agreement between a Participant and the Company which sets out the terms
of the grant of an Award.
2.4
“Award Period” means the period set forth in the Award Agreement during which one or more Incentives granted
under an Award may be exercised.
2.5
“Board” means the board of directors of the Company.
2.6
“Change in Control” means the occurrence of the event set forth in any one of the following paragraphs, except
as otherwise provided herein:
(a)
any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing fifty percent (50%)
or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in clause (i) of paragraph (c) below;
(b)
the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on
the effective date of this Plan, constitute the Board and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders
was approved or recommended by a vote of at least two-thirds (2/3rds) of the directors then still in office who either were
directors on the effective date of this Plan or whose appointment, election or nomination for election was previously so approved or
recommended;
(c)
there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation,
other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least sixty percent (60%) of the combined voting power of the securities of the Company
or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including the securities Beneficially Owned by such Person any securities acquired
directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business)
representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; or
(d)
the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition
by the Company of all or substantially all of the Company’s assets to an entity, at least sixty percent (60%) of the combined voting
power of the voting securities of which are owned by stockholders of the Company in substantially the same proportions as their ownership
of the Company immediately prior to such sale.
For
purposes hereof:
“Affiliate”
shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.
“Beneficial
Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.
“Person”
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially
the same proportions as their ownership of stock of the Company.
Notwithstanding
the foregoing provisions of this Section 2.6, if an Award issued under the Plan is subject to Section 409A of the Code, then an
event shall not constitute a Change in Control for purposes of such Award under the Plan unless such event also constitutes a change
in the Company’s ownership, its effective control or the ownership of a substantial portion of its assets within the meaning of
Section 409A of the Code.
2.7
“Claim” means any claim, liability or obligation of any nature, arising out of or relating to this Plan or
an alleged breach of this Plan or an Award Agreement.
2.8
“Code” means the United States Internal Revenue Code of 1986, as amended.
2.9
“Committee” means the committee appointed or designated by the Board to administer the Plan in accordance with
Article 3 of this Plan.
2.10
“Common Stock” means the common stock, par value $0.001 per share, which the Company is currently authorized
to issue or may in the future be authorized to issue, or any securities into which or for which the common stock of the Company may be
converted or exchanged, as the case may be, pursuant to the terms of this Plan.
2.11
“Company” means NanoVibronix, Inc., a Delaware corporation, and any successor entity.
2.12
“Contractor” means any natural person, who is not an Employee, rendering bona fide services to the Company
or a Subsidiary, with compensation, pursuant to a written independent contractor agreement between such person (or any entity employing
such person) and the Company or a Subsidiary, provided that such services are not rendered in connection with the offer or sale of securities
in a capital raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.
2.13
“Corporation” means any entity that (a) is defined as a corporation under Section 7701 of the Code and (b)
is the Company or is in an unbroken chain of corporations (other than the Company) beginning with the Company, if each of the corporations
other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes
of stock in one of the other corporations in the chain. For purposes of clause (b) hereof, an entity shall be treated as a “corporation”
if it satisfies the definition of a corporation under Section 7701 of the Code.
2.14
“Date of Grant” means the effective date on which an Award is made to a Participant as set forth in the applicable
Award Agreement; provided, however, that solely for purposes of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder, the Date of Grant of an Award shall be the date of stockholder approval of the Plan if such date is later than the effective
date of such Award as set forth in the Award Agreement.
2.15
“Dividend Equivalent Right” means the right of the holder thereof to receive credits based on the cash dividends
that would have been paid on the shares of Common Stock specified in the Award if such shares were held by the Participant to whom the
Award is made.
2.16
“Employee” means a common law employee (as defined in accordance with the Regulations and Revenue Rulings then
applicable under Section 3401(c) of the Code) of the Company or any Subsidiary of the Company; provided, however, in the case
of individuals whose employment status, by virtue of their employer or residence, is not determined under Section 3401(c) of the Code,
“Employee” shall mean an individual treated as an employee for local payroll tax or employment purposes by
the applicable employer under Applicable Law for the relevant period.
2.17
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.
2.18
“Fair Market Value” means, as of a particular date, (a) if the shares of Common Stock are listed on any established
national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction reporting system for
the principal securities exchange for the Common Stock on that date, or, if there shall have been no such sale so reported on that date,
on the last preceding date on which such a sale was so reported; (b) if the shares of Common Stock are not so listed, but are quoted
on an automated quotation system, the closing sales price per share of Common Stock reported on the automated quotation system on that
date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported;
(c) if the Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no
quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by the OTC Bulletin
Board operated by the Financial Industry Regulation Authority, Inc. or the OTC Markets Group Inc., formerly known as Pink OTC Markets
Inc.; or (d) if none of the above is applicable, such amount as may be determined by the Committee (acting on the advice of an Independent
Third Party, should the Committee elect in its sole discretion to utilize an Independent Third Party for this purpose), in good faith,
to be the fair market value per share of Common Stock. The determination of Fair Market Value shall, where applicable, be in compliance
with Section 409A of the Code.
2.19
“Incentive” is defined in Section 2.2 hereof.
2.20
“Incentive Stock Option” means an incentive stock option within the meaning of Section 422 of the Code, granted
pursuant to this Plan.
2.21
“Independent Third Party” means an individual or entity independent of the Company having experience in providing
investment banking or similar appraisal or valuation services and with expertise generally in the valuation of securities or other property
for purposes of this Plan. The Committee may utilize one or more Independent Third Parties.
2.22
“Nonqualified Stock Option” means a nonqualified stock option, granted pursuant to this Plan, which is not
an Incentive Stock Option.
2.23
“Option Price” means the price which must be paid by a Participant upon exercise of a Stock Option to purchase
a share of Common Stock.
2.24
“Other Award” means an Award issued pursuant to Section 6.9 hereof.
2.25
“Outside Director” means a director of the Company who is not an Employee or a Contractor.
2.26
“Participant” means an Employee or Contractor of the Company or a Subsidiary or an Outside Director to whom
an Award is granted under this Plan.
2.27
“Performance Award” means an Award hereunder of cash, shares of Common Stock, units or rights based upon, payable
in, or otherwise related to, Common Stock pursuant to Section 6.7 hereof.
2.28
“Performance Goal” means any of the Performance Criteria set forth in Section 6.10 hereof.
2.29
“Plan” means this NanoVibronix, Inc. 2024 Long-Term Incentive Plan, as amended from time to time.
2.30
“Prior Plan” means the NanoVibronix, Inc. 2014 Long-Term Incentive Plan, as amended.
2.31
“Prior Plan Awards” means (a) any awards under the Prior Plan that are outstanding on the Effective Date, and
that on or after the Effective Date, are forfeited, expire or are canceled; and (b) any shares subject to awards relating to Common Stock
under the Prior Plan that, on or after the Effective Date are settled in cash. Prior Plan Awards that remain outstanding as of the Effective
Date shall continue to be governed by the terms and conditions of the Prior Plan.
2.32
“Reporting Participant” means a Participant who is subject to the reporting requirements of Section 16 of the
Exchange Act.
2.33
“Restricted Stock” means shares of Common Stock issued or transferred to a Participant pursuant to Section
6.4 of this Plan which are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.
2.34
“Restricted Stock Units” means units awarded to Participants pursuant to Section 6.6 hereof, which are
convertible into Common Stock at such time as such units are no longer subject to restrictions as established by the Committee.
2.35
“Retirement” means any Termination of Service solely due to retirement upon or after attainment of age sixty-five
(65), or permitted early retirement as determined by the Committee; provided, however, in the case of Participants who reside
in the European Economic Area, “Retirement” shall mean any Termination of Service as of a date they are eligible
for mandatory retirement benefits under local law, without regard to age.
2.36
“SAR” or “Stock Appreciation Right” means the right to receive an amount, in cash
and/or Common Stock, equal to the excess of the Fair Market Value of a specified number of shares of Common Stock as of the date the
SAR is exercised (or, as provided in the Award Agreement, converted) over the SAR Price for such shares.
2.37
“SAR Price” means the exercise price or conversion price of each share of Common Stock covered by a SAR, determined
on the Date of Grant of the SAR.
2.38
“Stock Option” means a Nonqualified Stock Option or an Incentive Stock Option.
2.39
“Subsidiary” means (a) any corporation in an unbroken chain of corporations beginning with the Company, if
each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined
voting power of all classes of stock in one of the other corporations in the chain, (b) any limited partnership, if the Company or any
corporation described in item (a) above owns a majority of the general partnership interest and a majority of the limited partnership
interests entitled to vote on the removal and replacement of the general partner, and (c) any partnership or limited liability company,
if the partners or members thereof are composed only of the Company, any corporation listed in item (a) above or any limited partnership
listed in item (b) above. “Subsidiaries” means more than one of any such corporations, limited partnerships,
partnerships or limited liability companies.
2.40
“Termination of Service” occurs when a Participant who is (a) an Employee of the Company or any Subsidiary
ceases to serve as an Employee of the Company and its Subsidiaries, for any reason; (b) an Outside Director of the Company or a Subsidiary
ceases to serve as a director of the Company and its Subsidiaries for any reason; or (c) a Contractor of the Company or a Subsidiary
ceases to serve as a Contractor of the Company and its Subsidiaries for any reason. Except as may be necessary or desirable to comply
with applicable federal or state law, a “Termination of Service” shall not be deemed to have occurred when a Participant
who is an Employee becomes an Outside Director or Contractor or vice versa. If, however, a Participant who is an Employee and who has
an Incentive Stock Option ceases to be an Employee but does not suffer a Termination of Service, and if that Participant does not exercise
the Incentive Stock Option within the time required under Section 422 of the Code upon ceasing to be an Employee, the Incentive Stock
Option shall thereafter become a Nonqualified Stock Option. Notwithstanding the foregoing provisions of this Section 2.40, in
the event an Award issued under the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing definition and to the
extent necessary to comply with the requirements of Section 409A of the Code, the definition of “Termination of Service”
for purposes of such Award shall be the definition of “separation from service” provided for under Section 409A of the Code
and the regulations or other guidance issued thereunder.
2.41
“Total and Permanent Disability” means a Participant is qualified for long-term disability benefits under the
Company’s or Subsidiary’s disability plan or insurance policy; or, if no such plan or policy is then in existence or if the
Participant is not eligible to participate in such plan or policy, that the Participant, because of a physical or mental condition resulting
from bodily injury, disease, or mental disorder, is unable to perform his or her duties of employment for a period of six (6) continuous
months, as determined in good faith by the Committee, based upon medical reports or other evidence satisfactory to the Committee; provided
that, with respect to any Incentive Stock Option, Total and Permanent Disability shall have the meaning given it under the rules governing
Incentive Stock Options under the Code. Notwithstanding the foregoing provisions of this Section 2.41, in the event an Award issued
under the Plan is subject to Section 409A of the Code, then, in lieu of the foregoing definition and to the extent necessary to comply
with the requirements of Section 409A of the Code, the definition of “Total and Permanent Disability” for purposes of such
Award shall be the definition of “disability” provided for under Section 409A of the Code and the regulations or other guidance
issued thereunder.
ARTICLE
3
ADMINISTRATION
3.1
General Administration; Establishment of Committee. Subject to the terms of this Article 3, the Plan shall be administered
by the Board or such committee of the Board as is designated by the Board to administer the Plan (the “Committee”).
The Committee shall consist of not fewer than two persons. Any member of the Committee may be removed at any time, with or without cause,
by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by the Board. At any
time there is no Committee to administer the Plan, any references in this Plan to the Committee shall be deemed to refer to the Board.
Membership
on the Committee shall be limited to those members of the Board who are “non-employee directors” as defined in Rule 16b-3
promulgated under the Exchange Act. The Committee shall select one of its members to act as its Chairman. A majority of the Committee
shall constitute a quorum, and the act of a majority of the members of the Committee present at a meeting at which a quorum is present
shall be the act of the Committee.
3.2
Designation of Participants and Awards.
(a)
The Committee or the Board shall determine and designate from time to time the eligible persons to whom Awards will be granted and shall
set forth in each related Award Agreement, where applicable, the Award Period, the Date of Grant, and such other terms, provisions, limitations,
and performance requirements, as are approved by the Committee, but not inconsistent with the Plan. The Committee shall determine whether
an Award shall include one type of Incentive or two or more Incentives granted in combination or two or more Incentives granted in tandem
(that is, a joint grant where exercise of one Incentive results in cancellation of all or a portion of the other Incentive). Although
the members of the Committee shall be eligible to receive Awards, all decisions with respect to any Award, and the terms and conditions
thereof, to be granted under the Plan to any member of the Committee shall be made solely and exclusively by the other members of the
Committee, or if such member is the only member of the Committee, by the Board.
(b)
Notwithstanding Section 3.2(a), to the extent permitted by Applicable Law, the Board may, in its discretion and by a resolution
adopted by the Board, authorize one or more officers of the Company (an “Authorized Officer”) to (i) designate
one or more Employees as eligible persons to whom Awards will be granted under the Plan, and (ii) determine the number of shares of Common
Stock that will be subject to such Awards; provided, however, that the resolution of the Board granting such authority shall (x) specify
the total number of shares of Common Stock that may be made subject to the Awards, (y) set forth the price or prices (or a formula by
which such price or prices may be determined) to be paid for the purchase of the Common Stock subject to such Awards, and (z) not authorize
an officer to designate himself as a recipient of any Award.
3.3
Authority of the Committee. The Committee, in its discretion, shall (a) interpret the Plan and Award Agreements, (b) prescribe,
amend, and rescind any rules and regulations and sub-plans (including sub-plans for Awards made to Participants who are not resident
in the United States, such as the sub-plan for Participants who are subject to Israeli taxation attached hereto as the “Israeli
Appendix”), as necessary or appropriate for the administration of the Plan, (c) establish performance goals for an Award and certify
the extent of their achievement, and (d) make such other determinations or certifications and take such other action as it deems necessary
or advisable in the administration of the Plan. Any interpretation, determination, or other action made or taken by the Committee shall
be final, binding, and conclusive on all interested parties. The Committee’s discretion set forth herein shall not be limited by
any provision of the Plan, including any provision which by its terms is applicable notwithstanding any other provision of the Plan to
the contrary.
The
Committee may delegate to officers of the Company, pursuant to a written delegation, the authority to perform specified functions under
the Plan. Any actions taken by any officers of the Company pursuant to such written delegation of authority shall be deemed to have been
taken by the Committee.
With
respect to restrictions in the Plan that are based on the requirements of Rule 16b-3 promulgated under the Exchange Act, Section 422
of the Code, the rules of any exchange or inter-dealer quotation system upon which the Company’s securities are listed or quoted,
or any other Applicable Law, to the extent that any such restrictions are no longer required by Applicable Law, the Committee shall have
the sole discretion and authority to grant Awards that are not subject to such mandated restrictions and/or to waive any such mandated
restrictions with respect to outstanding Awards.
ARTICLE
4
ELIGIBILITY
Any
Employee (including an Employee who is also a director or an officer), Contractor or Outside Director of the Company whose judgment,
initiative, and efforts contributed or may be expected to contribute to the successful performance of the Company is eligible to participate
in the Plan; provided that only Employees of a Corporation shall be eligible to receive Incentive Stock Options. The Committee, upon
its own action, may grant, but shall not be required to grant, an Award to any Employee, Contractor or Outside Director. Awards may be
granted by the Committee at any time and from time to time to new Participants, or to then Participants, or to a greater or lesser number
of Participants, and may include or exclude previous Participants, as the Committee shall determine. Except as required by this Plan,
Awards need not contain similar provisions. The Committee’s determinations under the Plan (including without limitation determinations
of which Employees, Contractors or Outside Directors, if any, are to receive Awards, the form, amount and timing of such Awards, the
terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among Participants
who receive, or are eligible to receive, Awards under the Plan.
ARTICLE
5
SHARES
SUBJECT TO PLAN
5.1
Number Available for Awards. Subject to adjustment as provided in Articles 11 and 12 and any increase by any Prior Plan
Awards eligible for reuse pursuant to Section 5.2 below, the maximum number of shares of Common Stock that may be delivered pursuant
to Awards granted under the Plan is six hundred thousand (600,000) shares, of which one hundred percent (100%) may be delivered pursuant
to Incentive Stock Options. Shares to be issued may be made available from authorized but unissued Common Stock, Common Stock held by
the Company in its treasury, or Common Stock purchased by the Company on the open market or otherwise. During the term of this Plan,
the Company will at all times reserve and keep available the number of shares of Common Stock that shall be sufficient to satisfy the
requirements of this Plan. After the Effective Date, no awards may be granted under the Prior Plan.
5.2
Reuse of Shares. To the extent that any Award under this Plan or any Prior Plan Award shall be forfeited, shall expire or be canceled,
in whole or in part, then the number of shares of Common Stock covered by the Award Prior Plan Award so forfeited, shall expire or be
canceled, in whole or in part, then the number of shares of Common Stock covered by the Award or stock option so forfeited, expired or
canceled may again be awarded pursuant to the provisions of this Plan. In the event that previously acquired shares of Common Stock are
delivered to the Company in full or partial payment of the exercise price for the exercise of a Stock Option granted under this Plan,
the number of shares of Common Stock available for future Awards under this Plan shall be reduced only by the net number of shares of
Common Stock issued upon the exercise of the Stock Option. Awards that may be satisfied either by the issuance of shares of Common Stock
or by cash or other consideration shall be counted against the maximum number of shares of Common Stock that may be issued under this
Plan only during the period that the Award is outstanding or to the extent the Award is ultimately satisfied by the issuance of shares
of Common Stock. Awards will not reduce the number of shares of Common Stock that may be issued pursuant to this Plan if the settlement
of the Award will not require the issuance of shares of Common Stock, as, for example, a SAR that can be satisfied only by the payment
of cash. Notwithstanding any provisions of the Plan to the contrary, only shares forfeited back to the Company, shares canceled on account
of termination, expiration or lapse of an Award, shares surrendered in payment of the exercise price of a Stock Option or shares withheld
for payment of applicable employment taxes and/or withholding obligations resulting from the exercise of an option shall again be available
for grant of Incentive Stock Options under the Plan, but shall not increase the maximum number of shares described in Section 5.1
above as the maximum number of shares of Common Stock that may be delivered pursuant to Incentive Stock Options.
5.3
Limitation on Outside Director Awards. No Outside Director may be granted any Award or Awards denominated in shares that exceed
in the aggregate $700,000 in Fair Market Value (such Fair Market Value computed as of the Date of Grant) in any calendar year period,
plus an additional $700,000 in Fair Market Value (determined as of the Date of Grant) for one-time awards to a newly appointed or elected
Outside Director. The foregoing limit shall not apply to any Award made pursuant to deferred compensation arrangements in lieu of all
or a portion of cash retainers.
ARTICLE
6
GRANT
OF AWARDS
6.1
In General.
(a)
The grant of an Award shall be authorized by the Committee and shall be evidenced by an Award Agreement setting forth the Incentive or
Incentives being granted, the total number of shares of Common Stock subject to the Incentive(s), the Option Price (if applicable), the
Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance objectives, as are approved by the Committee,
but (i) not inconsistent with the Plan, and (ii) to the extent an Award issued under the Plan is subject to Section 409A of the Code,
in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. The
Company shall execute an Award Agreement with a Participant after the Committee approves the issuance of an Award. Any Award granted
pursuant to this Plan must be granted within the term of the Plan, as set forth in Article 10 below. The Plan shall be submitted
to the Company’s stockholders for approval at the first stockholder meeting after the Board Approval Date, and no Awards may be
granted under the Plan prior to the Effective Date. The grant of an Award to a Participant shall not be deemed either to entitle the
Participant to, or to disqualify the Participant from, receipt of any other Award under the Plan.
(b)
If the Committee establishes a purchase price for an Award, the Participant must accept such Award within a period of thirty (30) days
(or such shorter period as the Committee may specify) after the Date of Grant by executing the applicable Award Agreement and paying
such purchase price.
(c)
Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as
may be specified by the grant.
6.2
Option Price. The Option Price for any share of Common Stock which may be purchased under a Nonqualified Stock Option for any
share of Common Stock may be equal to or greater than the Fair Market Value of the share on the Date of Grant. The Option Price for any
share of Common Stock which may be purchased under an Incentive Stock Option must be at least equal to the Fair Market Value of the share
on the Date of Grant; if an Incentive Stock Option is granted to an Employee who owns or is deemed to own (by reason of the attribution
rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company
(or any parent or Subsidiary), the Option Price shall be at least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock on the Date of Grant.
6.3
Maximum ISO Grants. The Committee may not grant Incentive Stock Options under the Plan to any Employee which would permit the
aggregate Fair Market Value (determined on the Date of Grant) of the Common Stock with respect to which Incentive Stock Options (under
this and any other plan of the Company and its Subsidiaries) are exercisable for the first time by such Employee during any calendar
year to exceed $100,000. To the extent any Stock Option granted under this Plan which is designated as an Incentive Stock Option exceeds
this limit or otherwise fails to qualify as an Incentive Stock Option, such Stock Option (or any such portion thereof) shall be a Nonqualified
Stock Option. In such case, the Committee shall designate which stock will be treated as Incentive Stock Option stock by causing the
issuance of a separate stock certificate and identifying such stock as Incentive Stock Option stock on the Company’s stock transfer
records.
6.4
Restricted Stock. If Restricted Stock is granted to or received by a Participant under an Award (including a Stock Option), the
Committee shall set forth in the related Award Agreement: (a) the number of shares of Common Stock awarded, (b) the price, if any, to
be paid by the Participant for such Restricted Stock and the method of payment of the price, (c) the time or times within which such
Award may be subject to forfeiture, (d) specified Performance Goals of the Company, a Subsidiary, any division thereof or any group of
Employees of the Company, or other criteria, which the Committee determines must be met in order to remove any restrictions (including
vesting) on such Award, and (e) all other terms, limitations, restrictions, and conditions of the Restricted Stock, which shall be consistent
with this Plan, to the extent applicable and, to the extent Restricted Stock granted under the Plan is subject to Section 409A of the
Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder.
The provisions of Restricted Stock need not be the same with respect to each Participant.
(a)
Legend on Shares. The Company shall electronically register the Restricted Stock awarded to a Participant in the name of such
Participant, which shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted
Stock, substantially as provided in Section 15.10 of the Plan. No stock certificate or certificates shall be issued with respect
to such shares of Common Stock, unless, following the expiration of the Restriction Period (as defined in Section 6.4(b)(i)) without
forfeiture in respect of such shares of Common Stock, the Participant requests delivery of the certificate or certificates by submitting
a written request to the Committee (or such party designated by the Company) requesting delivery of the certificates. The Company shall
deliver the certificates requested by the Participant to the Participant as soon as administratively practicable following the Company’s
receipt of such request.
(b)
Restrictions and Conditions. Shares of Restricted Stock shall be subject to the following restrictions and conditions:
(i)
Subject to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as may be determined
by the Committee commencing on the Date of Grant or the date of exercise of an Award (the “Restriction Period”),
the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock. Except for these limitations,
the Committee may in its sole discretion, remove any or all of the restrictions on such Restricted Stock whenever it may determine that,
by reason of changes in Applicable Laws or other changes in circumstances arising after the date of the Award, such action is appropriate.
(ii)
Except as provided in sub-paragraph (i) above or in the applicable Award Agreement, the Participant shall have, with respect to his or
her Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive
any dividends thereon. Certificates for shares of Common Stock free of restriction under this Plan shall be delivered to the Participant
promptly after, and only after, the Restriction Period shall expire without forfeiture in respect of such shares of Common Stock or after
any other restrictions imposed on such shares of Common Stock by the applicable Award Agreement or other agreement have expired. Certificates
for the shares of Common Stock forfeited under the provisions of the Plan and the applicable Award Agreement shall be promptly returned
to the Company by the forfeiting Participant. Each Award Agreement shall require that each Participant, in connection with the issuance
of a certificate for Restricted Stock, shall endorse such certificate in blank or execute a stock power in form satisfactory to the Company
in blank and deliver such certificate and executed stock power to the Company.
(iii)
The Restriction Period of Restricted Stock shall commence on the Date of Grant or the date of exercise of an Award, as specified in the
Award Agreement, and, subject to Article 12 of the Plan, unless otherwise established by the Committee in the Award Agreement
setting forth the terms of the Restricted Stock, shall expire upon satisfaction of the conditions set forth in the Award Agreement; such
conditions may provide for vesting based on length of continuous service or such Performance Goals, as may be determined by the Committee
in its sole discretion.
(iv)
Except as otherwise provided in the particular Award Agreement, upon Termination of Service for any reason during the Restriction Period,
the nonvested shares of Restricted Stock shall be forfeited by the Participant. In the event a Participant has paid any consideration
to the Company for such forfeited Restricted Stock, the Committee shall specify in the Award Agreement that either (1) the Company shall
be obligated to, or (2) the Company may, in its sole discretion, elect to, pay to the Participant, as soon as practicable after the event
causing forfeiture, in cash, an amount equal to the lesser of the total consideration paid by the Participant for such forfeited shares
or the Fair Market Value of such forfeited shares as of the date of Termination of Service, as the Committee, in its sole discretion
shall select. Upon any forfeiture, all rights of a Participant with respect to the forfeited shares of the Restricted Stock shall cease
and terminate, without any further obligation on the part of the Company.
6.5
SARs. The Committee may grant SARs to any Participant, either as a separate Award or in connection with a Stock Option. SARs shall
be subject to such terms and conditions as the Committee shall impose, provided that such terms and conditions are (a) not inconsistent
with the Plan, and (b) to the extent a SAR issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable
requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. The grant of the SAR may provide that
the holder may be paid for the value of the SAR either in cash or in shares of Common Stock, or a combination thereof. In the event of
the exercise of a SAR payable in shares of Common Stock, the holder of the SAR shall receive that number of whole shares of Common Stock
having an aggregate Fair Market Value on the date of exercise equal to the value obtained by multiplying (x) the difference between the
Fair Market Value of a share of Common Stock on the date of exercise over the SAR Price as set forth in such SAR (or other value specified
in the Award Agreement granting the SAR), by (y) the number of shares of Common Stock as to which the SAR is exercised, with a cash settlement
to be made for any fractional shares of Common Stock. The SAR Price for any share of Common Stock subject to a SAR may be equal to or
greater than the Fair Market Value of the share on the Date of Grant. The Committee, in its sole discretion, may place a ceiling on the
amount payable upon exercise of a SAR, but any such limitation shall be specified at the time that the SAR is granted.
6.6
Restricted Stock Units. Restricted Stock Units may be awarded or sold to any Participant under such terms and conditions as shall
be established by the Committee, provided, however, that such terms and conditions are (a) not inconsistent with the Plan, and (b) to
the extent a Restricted Stock Unit issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements
of Section 409A of the Code and the regulations or other guidance issued thereunder. Restricted Stock Units shall be subject to such
restrictions as the Committee determines, including, without limitation, (a) a prohibition against sale, assignment, transfer, pledge,
hypothecation or other encumbrance for a specified period; or (b) a requirement that the holder forfeit (or in the case of shares of
Common Stock or units sold to the Participant, resell to the Company at cost) such shares or units in the event of Termination of Service
during the period of restriction.
6.7
Performance Awards.
(a)
The Committee may grant Performance Awards to one or more Participants. The terms and conditions of Performance Awards shall be specified
at the time of the grant and may include provisions establishing the performance period, the Performance Goals to be achieved during
a performance period, and the maximum or minimum settlement values, provided that such terms and conditions are (i) not inconsistent
with the Plan and (ii) to the extent a Performance Award issued under the Plan is subject to Section 409A of the Code, in compliance
with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. If the Performance
Award is to be in shares of Common Stock, the Performance Awards may provide for the issuance of the shares of Common Stock at the time
of the grant of the Performance Award or at the time of the certification by the Committee that the Performance Goals for the performance
period have been met; provided, however, if shares of Common Stock are issued at the time of the grant of the Performance Award and if,
at the end of the performance period, the Performance Goals are not certified by the Committee to have been fully satisfied, then, notwithstanding
any other provisions of this Plan to the contrary, the Common Stock shall be forfeited in accordance with the terms of the grant to the
extent the Committee determines that the Performance Goals were not met. The forfeiture of shares of Common Stock issued at the time
of the grant of the Performance Award due to failure to achieve the established Performance Goals shall be separate from and in addition
to any other restrictions provided for in this Plan that may be applicable to such shares of Common Stock. Each Performance Award granted
to one or more
If
the Committee determines, in its sole discretion, that the established performance measures or objectives are no longer suitable because
of a change in the Company’s business, operations, corporate structure, or for other reasons that the Committee deemed satisfactory,
the Committee may modify the performance measures or objectives and/or the performance period.
(b)
Performance Awards may be valued by reference to the Fair Market Value of a share of Common Stock or according to any formula or method
deemed appropriate by the Committee, in its sole discretion, including, but not limited to, achievement of Performance Goals or other
specific financial, production, sales or cost performance objectives that the Committee believes to be relevant to the Company’s
business and/or remaining in the employ of the Company or a Subsidiary for a specified period of time. Performance Awards may be paid
in cash, shares of Common Stock, or other consideration, or any combination thereof. If payable in shares of Common Stock, the consideration
for the issuance of such shares may be the achievement of the performance objective established at the time of the grant of the Performance
Award. Performance Awards may be payable in a single payment or in installments and may be payable at a specified date or dates or upon
attaining the performance objective. The extent to which any applicable performance objective has been achieved shall be conclusively
determined by the Committee.
6.8
Dividend Equivalent Rights. The Committee may grant a Dividend Equivalent Right to any Participant, either as a component of another
Award or as a separate Award. The terms and conditions of the Dividend Equivalent Right shall be specified by the grant. Dividend equivalents
credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of
Common Stock (which may thereafter accrue additional dividend equivalents). Any such reinvestment shall be at the Fair Market Value at
the time thereof. Dividend Equivalent Rights may be settled in cash or shares of Common Stock, or a combination thereof, in a single
payment or in installments. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent
Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend
Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award.
6.9
Other Awards. The Committee may grant to any Participant other forms of Awards, based upon, payable in, or otherwise related to,
in whole or in part, shares of Common Stock, if the Committee determines that such other form of Award is consistent with the purpose
and restrictions of this Plan. The terms and conditions of such other form of Award shall be specified by the grant. Such Other Awards
may be granted for no cash consideration, for such minimum consideration as may be required by Applicable Law, or for such other consideration
as may be specified by the grant.
6.10
Performance Goals. Awards of Restricted Stock, Restricted Stock Units, Performance Award and Other Awards (whether relating to
cash or shares of Common Stock) under the Plan may be made subject to the attainment of Performance Goals relating to one or more business
criteria which may consist of one or more or any combination of the following criteria or of any other criteria established by the Committee
in its sole discretion: cash flow; cost; revenues; sales; ratio of debt to debt plus equity; net borrowing, credit quality or debt ratings;
profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization;
gross margin; earnings per share (whether on a pre-tax, after-tax, operational or other basis); operating earnings; capital expenditures;
expenses or expense levels; economic value added; ratio of operating earnings to capital spending or any other operating ratios; free
cash flow; net profit; net sales; net asset value per share; the accomplishment of mergers, acquisitions, dispositions, public offerings
or similar extraordinary business transactions; sales growth; price of the Company’s Common Stock; return on assets, equity or
stockholders’ equity; market share; inventory levels, inventory turn or shrinkage; or total return to stockholders (“Performance
Criteria”). Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit
of the Company and may be measured relative to a peer group or index. Any Performance Criteria may include or exclude (a) events that
are of an unusual nature or indicate infrequency of occurrence, (b) gains or losses on the disposition of a business, (c) changes in
tax or accounting regulations or laws, (d) the effect of a merger or acquisition, as identified in the Company’s quarterly and
annual earnings releases, or (e) other similar occurrences. In all other respects, Performance Criteria shall be calculated in accordance
with the Company’s financial statements, under generally accepted accounting principles, or under a methodology established by
the Committee prior to the issuance of an Award which is consistently applied and identified in the audited financial statements, including
footnotes, or the Compensation Discussion and Analysis section of the Company’s annual report.
6.11
Tandem Awards. The Committee may grant two or more Incentives in one Award in the form of a “tandem Award,” so that
the right of the Participant to exercise one Incentive shall be canceled if, and to the extent, the other Incentive is exercised. For
example, if a Stock Option and a SAR are issued in a tandem Award, and the Participant exercises the SAR with respect to one hundred
(100) shares of Common Stock, the right of the Participant to exercise the related Stock Option shall be canceled to the extent of one
hundred (100) shares of Common Stock.
6.12
Recoupment for Restatements. Notwithstanding any other language in this Plan to the contrary, the Company may recoup all or any
portion of any shares or cash paid to a Participant in connection with an Award, in the event of a restatement of the Company’s
financial statements as set forth in the Company’s clawback policy as approved by the Company’s Board from time to time.
ARTICLE
7
AWARD
PERIOD; VESTING
7.1
Award Period. Subject to the other provisions of this Plan, the Committee may, in its discretion, provide that an Incentive may
not be exercised in whole or in part for any period or periods of time or beyond any date specified in the Award Agreement. Except as
provided in the Award Agreement, an Incentive may be exercised in whole or in part at any time during its term. The Award Period for
an Incentive shall be reduced or terminated upon Termination of Service. No Incentive granted under the Plan may be exercised at any
time after the end of its Award Period. No portion of any Incentive may be exercised after the expiration of ten (10) years from its
Date of Grant. However, if an Employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more
than ten percent (10%) of the combined voting power of all classes of stock of the Company (or any parent or Subsidiary) and an Incentive
Stock Option is granted to such Employee, the term of such Incentive Stock Option (to the extent required by the Code at the time of
grant) shall be no more than five (5) years from the Date of Grant.
7.2
Vesting. The Committee, in its sole discretion, may determine that an Incentive will be immediately vested in whole or in part,
or that all or any portion may not be vested until a date, or dates, subsequent to its Date of Grant, or until the occurrence of one
or more specified events, subject in any case to the terms of the Plan. If the Committee imposes conditions upon vesting, then, subsequent
to the Date of Grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the Incentive may
be vested.
ARTICLE
8
EXERCISE
OR CONVERSION OF INCENTIVE
8.1
In General. A vested Incentive may be exercised or converted, during its Award Period, subject to limitations and restrictions
set forth in the Award Agreement.
8.2
Securities Law and Exchange Restrictions. In no event may an Incentive be exercised or shares of Common Stock issued pursuant
to an Award if a necessary listing or quotation of the shares of Common Stock on a stock exchange or inter-dealer quotation system or
any registration under state or federal securities laws required under the circumstances has not been accomplished.
8.3
Exercise of Stock Option.
(a)
In General. If a Stock Option is exercisable prior to the time it is vested, the Common Stock obtained on the exercise of the
Stock Option shall be Restricted Stock which is subject to the applicable provisions of the Plan and the Award Agreement. If the Committee
imposes conditions upon exercise, then subsequent to the Date of Grant, the Committee may, in its sole discretion, accelerate the date
on which all or any portion of the Stock Option may be exercised. No Stock Option may be exercised for a fractional share of Common Stock.
The granting of a Stock Option shall impose no obligation upon the Participant to exercise that Stock Option.
(b)
Notice and Payment. Subject to such administrative regulations as the Committee may from time to time adopt, a Stock Option may
be exercised by the delivery of written notice to the Committee setting forth the number of shares of Common Stock with respect to which
the Stock Option is to be exercised and the date of exercise thereof (the “Exercise Date”) which shall be at
least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, the
Participant shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased (plus
any employment tax withholding or other tax payment due with respect to such Award), payable as provided in the Award Agreement, which
may provide for payment in any one or more of the following ways: (i) cash or check, bank draft, or money order payable to the order
of the Company, (ii) Common Stock (including Restricted Stock) owned by the Participant on the Exercise Date, valued at its Fair Market
Value on the Exercise Date, and which the Participant has not acquired from the Company within six (6) months prior to the Exercise Date,
(iii) by delivery (including by FAX or electronic transmission) to the Company or its designated agent of an executed irrevocable option
exercise form together with irrevocable instructions from the Participant to a broker or dealer, reasonably acceptable to the Company,
to sell certain of the shares of Common Stock purchased upon exercise of the Stock Option or to pledge such shares as collateral for
a loan and promptly deliver to the Company the amount of sale or loan proceeds necessary to pay such purchase price, and/or (iv) in any
other form of valid consideration that is acceptable to the Committee in its sole discretion. In the event that shares of Restricted
Stock are tendered as consideration for the exercise of a Stock Option, a number of shares of Common Stock issued upon the exercise of
the Stock Option equal to the number of shares of Restricted Stock used as consideration therefor shall be subject to the same restrictions
and provisions as the Restricted Stock so tendered.
(c)
Issuance of Certificate. Except as otherwise provided in Section 6.4 hereof (with respect to shares of Restricted Stock)
or in the applicable Award Agreement, upon payment of all amounts due from the Participant, the Company shall cause the Common Stock
then being purchased to be registered in the Participant’s name (or the person exercising the Participant’s Stock Option
in the event of his or her death), but shall not issue certificates for the Common Stock unless the Participant or such other person
requests delivery of the certificates for the Common Stock, in writing in accordance with the procedures established by the Committee.
The Company shall deliver certificates to the Participant (or the person exercising the Participant’s Stock Option in the event
of his or her death) as soon as administratively practicable following the Company’s receipt of a written request from the Participant
or such other person for delivery of the certificates. Notwithstanding the forgoing, if the Participant has exercised an Incentive Stock
Option, the Company may at its option retain physical possession of the certificate evidencing the shares acquired upon exercise until
the expiration of the holding periods described in Section 422(a)(1) of the Code. Any obligation of the Company to deliver shares of
Common Stock shall, however, be subject to the condition that, if at any time the Committee shall determine in its discretion that the
listing, registration, or qualification of the Stock Option or the Common Stock upon any securities exchange or inter-dealer quotation
system or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary as a condition
of, or in connection with, the Stock Option or the issuance or purchase of shares of Common Stock thereunder, the Stock Option may not
be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained
free of any conditions not reasonably acceptable to the Committee.
(d)
Failure to Pay. Except as may otherwise be provided in an Award Agreement, if the Participant fails to pay for any of the Common
Stock specified in such notice or fails to accept delivery thereof, that portion of the Participant’s Stock Option and right to
purchase such Common Stock may be forfeited by the Participant.
8.4
SARs. Subject to the conditions of this Section 8.4 and such administrative regulations as the Committee may from time
to time adopt, a SAR may be exercised by the delivery (including by FAX) of written notice to the Committee setting forth the number
of shares of Common Stock with respect to which the SAR is to be exercised and the date of exercise thereof (the “Exercise
Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually
agreed upon. Subject to the terms of the Award Agreement and only if permissible under Section 409A of the Code and the regulations or
other guidance issued thereunder (or, if not so permissible, at such time as permitted by Section 409A of the Code and the regulations
or other guidance issued thereunder), the Participant shall receive from the Company in exchange therefor in the discretion of the Committee,
and subject to the terms of the Award Agreement:
(a)
cash in an amount equal to the excess (if any) of the Fair Market Value (as of the Exercise Date, or if provided in the Award Agreement,
conversion, of the SAR) per share of Common Stock over the SAR Price per share specified in such SAR, multiplied by the total number
of shares of Common Stock of the SAR being surrendered;
(b)
that number of shares of Common Stock having an aggregate Fair Market Value (as of the Exercise Date, or if provided in the Award Agreement,
conversion, of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to be made for any fractional
share interests; or
(c)
the Company may settle such obligation in part with shares of Common Stock and in part with cash.
The
distribution of any cash or Common Stock pursuant to the foregoing sentence shall be made at such time as set forth in the Award Agreement.
8.5
Disqualifying Disposition of Incentive Stock Option. If shares of Common Stock acquired upon exercise of an Incentive Stock Option
are disposed of by a Participant prior to the expiration of either two (2) years from the Date of Grant of such Stock Option or one (1)
year from the transfer of shares of Common Stock to the Participant pursuant to the exercise of such Stock Option, or in any other disqualifying
disposition within the meaning of Section 422 of the Code, such Participant shall notify the Company in writing of the date and terms
of such disposition. A disqualifying disposition by a Participant shall not affect the status of any other Stock Option granted under
the Plan as an Incentive Stock Option within the meaning of Section 422 of the Code.
ARTICLE
9
AMENDMENT
OR DISCONTINUANCE
Subject
to the limitations set forth in this Article 9, the Board may at any time and from time to time, without the consent of the Participants,
alter, amend, revise, suspend, or discontinue the Plan in whole or in part; provided, however, that no amendment for which stockholder
approval is required either (a) by any securities exchange or inter-dealer quotation system on which the Common Stock is listed or traded
or (b) in order for the Plan and Incentives awarded under the Plan to continue to comply with Sections 421, and 422 of the Code, including
any successors to such Sections, or other Applicable Law, shall be effective unless such amendment shall be approved by the requisite
vote of the stockholders of the Company entitled to vote thereon. Any such amendment shall, to the extent deemed necessary or advisable
by the Committee, be applicable to any outstanding Incentives theretofore granted under the Plan, notwithstanding any contrary provisions
contained in any Award Agreement. In the event of any such amendment to the Plan, the holder of any Incentive outstanding under the Plan
shall, upon request of the Committee and as a condition to the exercisability thereof, execute a conforming amendment in the form prescribed
by the Committee to any Award Agreement relating thereto. Notwithstanding anything contained in this Plan to the contrary, unless required
by law, no action contemplated or permitted by this Article 9 shall adversely affect any rights of Participants or obligations
of the Company to Participants with respect to any Incentive theretofore granted under the Plan without the consent of the affected Participant.
ARTICLE
10
TERM
The
Plan shall be effective from the Effective Date. Unless sooner terminated by action of the Board, the Plan will terminate on the tenth
anniversary of the Effective Date, but Incentives granted before that date will continue to be effective in accordance with their terms
and conditions.
ARTICLE
11
CAPITAL
ADJUSTMENTS
In
the event that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization,
stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination,
subdivision, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate transaction or event affects the fair value of an Award,
then the Committee shall adjust any or all of the following so that the fair value of the Award immediately after the transaction or
event is equal to the fair value of the Award immediately prior to the transaction or event (a) the number of shares and type of Common
Stock (or the securities or property) which thereafter may be made the subject of Awards, (b) the number of shares and type of Common
Stock (or other securities or property) subject to outstanding Awards, (c) the number of shares and type of Common Stock (or other securities
or property) specified as the annual per-participant limitation under Section 5.1 of the Plan, (d) the Option Price of each outstanding
Award, (v) the amount, if any, the Company pays for forfeited shares of Common Stock in accordance with Section 6.4, and (e) the
number of or SAR Price of shares of Common Stock then subject to outstanding SARs previously granted and unexercised under the Plan,
to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock in each instance shall remain
subject to exercise at the same aggregate SAR Price; provided, however, that the number of shares of Common Stock (or other securities
or property) subject to any Award shall always be a whole number. Notwithstanding the foregoing, no such adjustment shall be made or
authorized to the extent that such adjustment would cause the Plan or any Stock Option to violate Section 422 of the Code or Section
409A of the Code. Such adjustments shall be made in accordance with the rules of any securities exchange, stock market, or stock quotation
system to which the Company is subject.
Upon
the occurrence of any such adjustment, the Company shall provide notice to each affected Participant of its computation of such adjustment
which shall be conclusive and shall be binding upon each such Participant.
ARTICLE
12
RECAPITALIZATION,
MERGER AND CONSOLIDATION
12.1
No Effect on Company’s Authority. The existence of this Plan and Incentives granted hereunder shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations,
or other changes in the Company’s capital structure and its business, or any Change in Control, or any merger or consolidation
of the Company, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the Common
Stock or the rights thereof (or any rights, options, or warrants to purchase same), or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
12.2
Conversion of Incentives Where Company Survives. Subject to any required action by the stockholders and except as otherwise provided
by Section 12.4 hereof or as may be required to comply with Section 409A of the Code and the regulations or other guidance issued
thereunder, if the Company shall be the surviving or resulting corporation in any merger, consolidation or share exchange, any Incentive
granted hereunder shall pertain to and apply to the securities or rights (including cash, property, or assets) to which a holder of the
number of shares of Common Stock subject to the Incentive would have been entitled.
12.3
Exchange or Cancellation of Incentives Where Company Does Not Survive. Except as otherwise provided by Section 12.4 hereof
or as may be required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, in the event of
any merger, consolidation or share exchange pursuant to which the Company is not the surviving or resulting corporation, there shall
be substituted for each share of Common Stock subject to the unexercised portions of outstanding Incentives, that number of shares of
each class of stock or other securities or that amount of cash, property, or assets of the surviving, resulting or consolidated company
which were distributed or distributable to the stockholders of the Company in respect to each share of Common Stock held by them, such
outstanding Incentives to be thereafter exercisable for such stock, securities, cash, or property in accordance with their terms.
12.4
Cancellation of Incentives. Notwithstanding the provisions of Sections 12.2 and 12.3 hereof, and except as may be required
to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, all Incentives granted hereunder may
be canceled by the Company, in its sole discretion, as of the effective date of any Change in Control, merger, consolidation or share
exchange, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the Common Stock
or the rights thereof (or any rights, options, or warrants to purchase same), or of any proposed sale of all or substantially all of
the assets of the Company, or of any dissolution or liquidation of the Company, by either:
(a)
giving notice to each holder thereof or his personal representative of its intention to cancel those Incentives for which the issuance
of shares of Common Stock involved payment by the Participant for such shares, and permitting the purchase during the thirty (30) day
period next preceding such effective date of any or all of the shares of Common Stock subject to such outstanding Incentives, including
in the Board’s discretion some or all of the shares as to which such Incentives would not otherwise be vested and exercisable;
or
(b)
in the case of Incentives that are either (i) settled only in shares of Common Stock, or (ii) at the election of the Participant, settled
in shares of Common Stock, paying the holder thereof an amount equal to a reasonable estimate of the difference between the net amount
per share payable in such transaction or as a result of such transaction, and the price per share of such Incentive to be paid by the
Participant (hereinafter the “Spread”), multiplied by the number of shares subject to the Incentive. In cases
where the shares constitute, or would after exercise, constitute Restricted Stock, the Company, in its discretion, may include some or
all of those shares in the calculation of the amount payable hereunder. In estimating the Spread, appropriate adjustments to give effect
to the existence of the Incentives shall be made, such as deeming the Incentives to have been exercised, with the Company receiving the
exercise price payable thereunder, and treating the shares receivable upon exercise of the Incentives as being outstanding in determining
the net amount per share. In cases where the proposed transaction consists of the acquisition of assets of the Company, the net amount
per share shall be calculated on the basis of the net amount receivable with respect to shares of Common Stock upon a distribution and
liquidation by the Company after giving effect to expenses and charges, including, but not limited to, taxes, payable by the Company
before such liquidation could be completed.
(c)
An Award that by its terms would be fully vested or exercisable upon a Change in Control will be considered vested or exercisable for
purposes of Section 12.4(a) hereof.
ARTICLE
13
LIQUIDATION
OR DISSOLUTION
Subject
to Section 12.4 hereof, in case the Company shall, at any time while any Incentive under this Plan shall be in force and remain
unexpired, (a) sell all or substantially all of its property, or (b) dissolve, liquidate, or wind up its affairs, then each Participant
shall be entitled to receive, in lieu of each share of Common Stock of the Company which such Participant would have been entitled to
receive under the Incentive, the same kind and amount of any securities or assets as may be issuable, distributable, or payable upon
any such sale, dissolution, liquidation, or winding up with respect to each share of Common Stock of the Company. If the Company shall,
at any time prior to the expiration of any Incentive, make any partial distribution of its assets, in the nature of a partial liquidation,
whether payable in cash or in kind (but excluding the distribution of a cash dividend payable out of earned surplus and designated as
such) and an adjustment is determined by the Committee to be appropriate to prevent the dilution of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, make such adjustment
in accordance with the provisions of Article 11 hereof.
ARTICLE
14
INCENTIVES
IN SUBSTITUTION FOR
INCENTIVES
GRANTED BY OTHER ENTITIES
Incentives
may be granted under the Plan from time to time in substitution for similar instruments held by employees, independent contractors or
directors of a corporation, partnership, or limited liability company who become or are about to become Employees, Contractors or Outside
Directors of the Company or any Subsidiary as a result of a merger or consolidation of the employing corporation with the Company, the
acquisition by the Company of equity of the employing entity, or any other similar transaction pursuant to which the Company becomes
the successor employer. The terms and conditions of the substitute Incentives so granted may vary from the terms and conditions set forth
in this Plan to such extent as the Committee at the time of grant may deem appropriate to conform, in whole or in part, to the provisions
of the Incentives in substitution for which they are granted.
ARTICLE
15
MISCELLANEOUS
PROVISIONS
15.1
Investment Intent. The Company may require that there be presented to and filed with it by any Participant under the Plan, such
evidence as it may deem necessary to establish that the Incentives granted or the shares of Common Stock to be purchased or transferred
are being acquired for investment and not with a view to their distribution.
15.2
No Right to Continued Employment. Neither the Plan nor any Incentive granted under the Plan shall confer upon any Participant
any right with respect to continuance of employment by the Company or any Subsidiary.
15.3
Indemnification of Board and Committee. No member of the Board or the Committee, nor any officer or Employee of the Company acting
on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in
good faith with respect to the Plan, and all members of the Board and the Committee, each officer of the Company, and each Employee of
the Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected
by the Company in respect of any such action, determination, or interpretation to the fullest extent provided by law. Except to the extent
required by any unwaiveable requirement under any applicable law, no member of the Board or the Committee (and no Subsidiary of the Company)
shall have any duties or liabilities, including, without limitation, any fiduciary duties, to any Participant (or any Person claiming
by or through any Participant) as a result of this Plan, any Award Agreement, or any Claim arising hereunder and, to the fullest extent
permitted under any applicable law, each Participant (as consideration for receiving and accepting an Award Agreement) irrevocably waives
and releases any right or opportunity such Participant might have to assert (or participate or cooperate in) any Claim against any member
of the Board or the Committee and any Subsidiary of the Company arising out of this Plan.
15.4
Effect of the Plan. Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any
person any right to be granted an Award or any other rights except as may be evidenced by an Award Agreement, or any amendment thereto,
duly authorized by the Committee and executed on behalf of the Company, and then only to the extent and upon the terms and conditions
expressly set forth therein.
15.5
Compliance With Other Laws and Regulations. Notwithstanding anything contained herein to the contrary, the Company shall not be
required to sell or issue shares of Common Stock under any Incentive if the issuance thereof would constitute a violation by the Participant
or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange or inter-dealer
quotation system or other forum in which shares of Common Stock are quoted or traded (including without limitation Section 16 of the
Exchange Act); and, as a condition of any sale or issuance of shares of Common Stock under an Incentive, the Committee may require such
agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation.
The Plan, the grant and exercise of Incentives hereunder, and the obligation of the Company to sell and deliver shares of Common Stock,
shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory
agency as may be required.
15.6
Foreign Participation. To assure the viability of Awards granted to Participants employed in foreign countries, the Committee
may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or
custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as
it determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that the Committee
approves for purposes of using this Plan in a foreign country will not affect the terms of this Plan for any other country.
15.7
Tax Requirements. The Company or, if applicable, any Subsidiary (for purposes of this Section 15.7, the term “Company”
shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form in
connection with the Plan, any federal, state, local, or other taxes required by law to be withheld in connection with an Award granted
under this Plan. The Company may, in its sole discretion, also require the Participant receiving shares of Common Stock issued under
the Plan to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Participant’s
income arising with respect to the Award. Such payments shall be required to be made when requested by the Company and may be required
to be made prior to the delivery of any certificate representing shares of Common Stock. Such payment may be made by (a) the delivery
of cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares under (c) below) the required
tax withholding obligations of the Company; (b) if the Company, in its sole discretion, so consents in writing, the actual delivery by
the exercising Participant to the Company of shares of Common Stock that the Participant has not acquired from the Company within six
(6) months prior to the date of exercise, which shares so delivered have an aggregate Fair Market Value that equals or exceeds (to avoid
the issuance of fractional shares under (c) below) the required tax withholding payment; (c) if the Company, in its sole discretion,
so consents in writing, the Company’s withholding of a number of shares to be delivered upon the exercise of the Stock Option,
which shares so withheld have an aggregate Fair Market Value that equals (but does not exceed) the required tax withholding payment;
or (d) any combination of (a), (b), or (c). The Company may, in its sole discretion, withhold any such taxes from any other cash remuneration
otherwise paid by the Company to the Participant. The Committee may in the Award Agreement impose any additional tax requirements or
provisions that the Committee deems necessary or desirable.
15.8
Assignability. Incentive Stock Options may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered
other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Participant only by the Participant
or the Participant’s legally authorized representative, and each Award Agreement in respect of an Incentive Stock Option shall
so provide. The designation by a Participant of a beneficiary will not constitute a transfer of the Stock Option. The Committee may waive
or modify any limitation contained in the preceding sentences of this Section 15.8 that is not required for compliance with Section
422 of the Code.
Except
as otherwise provided herein, Awards may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other
than by will or the laws of descent and distribution. Notwithstanding the foregoing, the Committee may, in its discretion, authorize
all or a portion of a Nonqualified Stock Option or SAR to be granted to a Participant on terms which permit transfer by such Participant
to (a) the spouse (or former spouse), children or grandchildren of the Participant (“Immediate Family Members”),
(b) a trust or trusts for the exclusive benefit of such Immediate Family Members, (c) a partnership in which the only partners are (1)
such Immediate Family Members and/or (2) entities which are controlled by the Participant and/or Immediate Family Members, (d) an entity
exempt from federal income tax pursuant to Section 501(c)(3) of the Code or any successor provision, or (e) a split interest trust or
pooled income fund described in Section 2522(c)(2) of the Code or any successor provision, provided that (x) there shall be no consideration
for any such transfer, (y) the Award Agreement pursuant to which such Nonqualified Stock Option or SAR is granted must be approved by
the Committee and must expressly provide for transferability in a manner consistent with this Section, and (z) subsequent transfers of
transferred Nonqualified Stock Options or SARs shall be prohibited except those by will or the laws of descent and distribution.
Following
any transfer, any such Nonqualified Stock Option and SAR shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, provided that for purposes of Articles 8, 9, 11, 13 and 15 hereof the term “Participant”
shall be deemed to include the transferee. The events of Termination of Service shall continue to be applied with respect to the original
Participant, following which the Nonqualified Stock Options and SARs shall be exercisable or convertible by the transferee only to the
extent and for the periods specified in the Award Agreement. The Committee and the Company shall have no obligation to inform any transferee
of a Nonqualified Stock Option or SAR of any expiration, termination, lapse or acceleration of such Stock Option or SAR. The Company
shall have no obligation to register with any federal or state securities commission or agency any Common Stock issuable or issued under
a Nonqualified Stock Option or SAR that has been transferred by a Participant under this Section 15.8.
15.9
Use of Proceeds. Proceeds from the sale of shares of Common Stock pursuant to Incentives granted under this Plan shall constitute
general funds of the Company.
15.10
Legend. Each certificate representing shares of Restricted Stock issued to a Participant shall bear the following legend, or a
similar legend deemed by the Company to constitute an appropriate notice of the provisions hereof (any such certificate not having such
legend shall be surrendered upon demand by the Company and so endorsed):
On
the face of the certificate:
“Transfer
of this stock is restricted in accordance with conditions printed on the reverse of this certificate.”
On
the reverse:
“The
shares of stock evidenced by this certificate are subject to and transferable only in accordance with that certain NanoVibronix, Inc.
2024 Long-Term Incentive Plan, a copy of which is on file at the principal office of the Company in Tyler, Texas. No transfer or pledge
of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said Plan. By acceptance of this
certificate, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan.”
The
following legend shall be inserted on a certificate evidencing Common Stock issued under the Plan if the shares were not issued in a
transaction registered under the applicable federal and state securities laws:
“Shares
of stock represented by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution,
have been issued pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not
be offered for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise
in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may
rely upon an opinion of counsel satisfactory to the Company.”
15.11
Governing Law. The Plan shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding
any conflict of laws, rule, or principle of Delaware law that might refer the governance, construction, or interpretation of this Plan
to the laws of another state). A Participant’s sole remedy for any Claim shall be against the Company, and no Participant shall
have any claim or right of any nature against any Subsidiary of the Company or any stockholder or existing or former director, officer,
or Employee of the Company or any Subsidiary of the Company. The individuals and entities described above in this Section 15.11
(other than the Company) shall be third-party beneficiaries of this Plan for purposes of enforcing the terms of this Section 15.11.
A
copy of this Plan shall be kept on file in the principal office of the Company in Tyler, Texas.
***************
IN
WITNESS WHEREOF, the Company has caused this instrument to be executed as of __ 2024, by its Chief Executive Officer and Secretary pursuant
to prior action taken by the Board.
| NANOVIBRONIX, INC. |
|
| |
|
| By: |
|
|
| Name: |
Brian Murphy |
|
| Title: |
Chief Executive
Officer |
|
Attest:
| By: |
|
|
| Name: |
|
|
| Title: |
Secretary |
|
ISRAELI
APPENDIX TO THE
NanoVibronix,
Inc. 2024 LONG-TERM INCENTIVE PLAN
| 1.1. |
This appendix, as amended
from time to time (the “Appendix”) shall apply only to Participants who are residents of the State of Israel
or those who are deemed to be residents of the State of Israel for the purposes of tax payment. The provisions specified hereunder
shall form an integral part of the NanoVibronix, Inc. 2024 Long-Term Incentive Plan (the “Plan”). |
| |
| 1.2. |
This Appendix is effective
with respect to Stock Options to be granted according to the resolution of the Administrator as such term is defined in Section 2
herein and shall comply with Amendment no. 147 of the Israeli Tax Ordinance [New Version], 5721-1961 (the “Ordinance”). |
| |
| 1.3. |
This Appendix is to be
read as a continuation of the Plan and only refers to Stock Options granted to Israeli Participants so that they comply with the
requirements set by the Israeli law in general, and in particular with the provisions of Section 102 of the Ordinance, and any regulations,
rules, orders or procedures promulgated thereunder, as may be amended or replaced from time to time. For the avoidance of doubt,
except as expressly provided herein, this Appendix does not add to or modify the Plan in respect of any other category of Participants. |
| |
| 1.4. |
The Plan and this Appendix
are complementary to each other and shall be deemed one. In any case of contradiction, whether explicit or implied, between the provisions
of this Appendix and the Plan, the provisions set out in this Appendix shall prevail with respect to Stock Options granted to Israeli
Participants. |
| |
| 1.5. |
Any capitalized terms not
specifically defined in this Appendix shall be construed according to the interpretation given to them in the Plan. |
| 2.1 |
“Administrator”
means the Board or the Committee as such terms are defined in the Plan. |
| |
| 2.2 |
“Affiliate”
means any company eligible to be qualified as an “employing company”, with respect to the Company, within the meaning
of Section 102(a) of the Ordinance including any and all rules and regulations promulgated thereunder, as now in effect or as hereafter
amended. |
| |
| 2.3 |
“Approved 102
Stock Option” means a 102 Stock Option granted pursuant to Section 102(b) of the Ordinance, including any and all rules
and regulations promulgated thereunder, as now in effect or as hereafter amended, and held in trust by a Trustee for the benefit
of the Participant, pursuant to Section 102. Approved 102 Stock Options may either be classified as Capital Gain Stock Options or
as Ordinary Income Stock Options. |
| |
| 2.4 |
“Capital Gain
Stock Option” or “ CGSO” means an Approved 102 Stock Option 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. |
| 2.5 |
“Companies
Law” means the Israeli Companies Law, 5759-1999, including any rules and regulations promulgated thereunder and any
provisions of the Companies Ordinance [New Version], 5743-1983 still in effect, as amended from time to time. |
| |
| 2.6 |
“Controlling
Shareholder” means a controlling shareholder (“Ba’al Shlita”) as such term is defined
in Section 32(9) of the Ordinance. |
| |
| 2.7 |
“Date of Grant”
shall have the meaning ascribed to it in the Plan, provided, however, that for the purposes of this Appendix, such date shall not
be earlier than the first date on which the Company is permitted to effect Stock Option grants under this Appendix and under the
provisions of the Ordinance, including any and all rules and regulations promulgated thereunder, as now in effect or as hereafter
amended. For the avoidance of doubt, no Approved 102 Stock Option shall be deemed granted before the lapse of thirty (30) days from
the due submission of this Appendix to the ITA. |
| |
| 2.8 |
“Employee”
shall have the meaning ascribed to it in the Plan, and for the purpose hereof, shall also include a director and an individual who
is serving as an Office Holder or director of any Affiliate of the Company, but excluding any Controlling Shareholder. |
| |
| 2.9 |
“ITA”
means the Israeli Tax Authorities. |
| |
| 2.10 |
“Non-Employee”
means a consultant, adviser, service provider, including, inter alia, any other person who is part of the upper management
of the Company and who grants managerial services to the Company, Controlling Shareholder or any other person who is not an Employee. |
| |
| 2.11 |
“Office Holder”
(“Nose Misra”) as such term is defined in the Companies Law. |
| |
| 2.12 |
“Participant”
shall have the meaning ascribed to it in the Plan, and for the purpose hereof, shall also mean a person who receives or holds a Stock
Option under this Appendix. |
| |
| 2.13 |
“Ordinary Income
Stock Option” or “OISO” means an Approved 102 Stock Option 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. |
| |
| 2.14 |
“102 Stock
Option” means a Stock Option that the Administrator intends to be a “102 Stock Option”, which shall only
be granted to Employees of the Company who are not Controlling Shareholders, and shall be subject to and construed consistently with
the requirements of Section 102. The Company shall have no liability to a Participant or to any other party, if a Stock Option (or
any part thereof), which is intended to be a 102 Stock Option, is not a 102 Stock Option. Approved 102 Stock Options may either be
classified as Capital Gain Stock Options or as Ordinary Income Stock Options. |
| |
| 2.15 |
“3(i) Stock
Option” means Stock Options that do not contain such terms as will qualify under Section 102 of the Ordinance. |
| |
| 2.16 |
“Section 102”
means Section 102 of the Ordinance and any regulations, rules, orders or procedures promulgated thereunder as now in effect or
as hereafter amended. |
| |
| 2.17 |
“Trustee”
shall mean any individual or entity 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. |
| |
| 2.18 |
“Unapproved
102 Stock Option” means a 102 Stock Option granted pursuant to Section 102(c) of the Ordinance, including any and all
rules and regulations promulgated thereunder, as now in effect or as hereafter amended, and not held in trust by a Trustee. |
This
Appendix shall be administered by the Administrator, pursuant to Article 3 of the Plan. The Administrator may issue shares of Common
Stock and/or Stock Options pursuant to this Appendix. In the event of issuance of shares of Common Stock the recipient of such shares
shall be deemed a Participant hereunder and the provisions of this Appendix shall apply to such issuance and to the issued shares of
Common Stock, mutatis mutandis.
| 4. |
ISSUANCE OF STOCK OPTIONS;
ELIGIBILITY |
| 4.1. |
The persons eligible for
participation in the Plan as Participants under this Appendix shall include any Employees, Office Holders and/or Non-Employees of
the Company as such term is defined above, who are residents of the State of Israel or who are deemed to be residents of the State
of Israel for the purposes of tax payment; provided, however, that (i) such Employees and Office Holders may only be granted 102
Stock Options; and (ii) such Non-Employees and/or Controlling Shareholders may only be granted 3(i) Stock Options. |
| |
| 4.2. |
The Administrator may designate
Stock Options granted to Israeli Employees pursuant to Section 102 as Approved 102 Stock Options or as Unapproved 102 Incentive Stock
Options. |
| |
| 4.3. |
The grant of 102 Stock
Options shall be made under this Appendix adopted by the Board. Furthermore, the grant of Approved 102 Stock Options shall be conditioned
upon the approval of this Appendix by the ITA. |
| |
| 4.4. |
Without derogating from
the above, the Administrator’s election of the type of an Approved 102 Stock Options as CGSO or OISO to be granted to Israeli
Employees and Office Holders (the “Election”), shall be appropriately filed with the ITA before the Date
of Grant of the first Approved 102 Stock Option under such Election. Such Election shall remain in effect until changed, not earlier
than the end of the year following the calendar year during which the Company first granted Approved 102 Stock Options under such
Election. The Company shall grant only the type of Approved 102 Stock Option it has elected in accordance with the Election to all
Participants who were granted Approved 102 Stock Options during the period indicated above, all in accordance with the provisions
of Section 102(g) of the Ordinance, including any and all rules and regulations promulgated thereunder, as now in effect or as hereafter
amended. For avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Stock Options simultaneously. |
| |
| 4.5. |
All Approved 102 Stock
Options must be held in trust by a Trustee as described in Section 5 below. |
| |
| 4.6. |
Each Stock Option granted
pursuant to this Appendix shall be evidenced by an Award Agreement, substantially in such form attached hereto as approved by the
Administrator. Each Award Agreement shall state, among other matters, the number of shares of Common Stock to which the Stock Option
relates, the type of Stock Option granted thereunder (whether an CGSO, OISO, Unapproved 102 Stock Option or a 3(i) Stock Option),
the vesting dates, the exercise price per share, the expiration date and such other terms and conditions included in the agreement,
including any such other terms that the Administrator in its discretion may prescribe, provided in all cases that they are consistent
with this Appendix and the Plan. The Award Agreement shall be delivered to the Participant and executed by the Participant and shall
incorporate the terms of the Plan and this Appendix by reference, and specify the terms and conditions thereof and any rules applicable
thereto. |
| 4.7. |
The designation of Unapproved
102 Stock Options and Approved 102 Stock Options shall be subject to the terms and conditions set forth in Section 102 and the regulations
promulgated thereunder. |
| |
| 4.8. |
Anything in the Plan to
the contrary notwithstanding, all grants of Stock Options to directors and Office Holders shall be authorized and implemented in
accordance with the provisions of the Companies Law or any successor act or regulation, as in effect from time to time. |
| 5.1. |
Approved 102 Stock Options
or shares of Common Stock which shall be granted under the Plan and this Appendix and/or any shares of Common Stock allocated or
issued upon exercise of such Approved 102 Stock Options, shall – notwithstanding anything in the Plan to the contrary –
be allocated or issued to the Trustee (and registered in the Trustee’s name in the register of shareholders of the Company)
and held for the benefit of the Participants for such period of time as required by Section 102 (the “Restricted Period”).
All certificates representing shares of Common Stock issued to the Trustee under the Plan and this Appendix shall be deposited with
the Trustee, and shall be held by the Trustee until such time that such shares of Common Stock are released from the aforesaid trust
as herein provided. In case the requirements for Approved 102 Stock Options are not met, then the Approved 102 Stock Options may
be treated as Unapproved 102 Stock Options, all in accordance with the provisions of Section 102. |
| |
| 5.2. |
Anything in the Plan to
the contrary notwithstanding, the Trustee shall not release any shares of Common Stock allocated or issued upon exercise of Approved
102 Stock Options prior to the full payment of the Participant’s tax liabilities arising from Approved 102 Stock Options, which
were granted to such Participant, and/or from any shares of Common Stock allocated or issued upon exercise of such Stock Options. |
| |
| 5.3. |
With respect to any Approved
102 Stock Option, subject to the provisions of Section 102, a Participant shall not be entitled to sell or release from the trust
any share of Common Stock received upon the exercise of an Approved 102 Stock Option until the lapse of the Restricted Period required
under Section 102. Notwithstanding the above, if any such sale or release occurs during the Restricted Period, the tax liabilities
under Section 102 shall apply to and shall be borne by such Participant. |
| |
| 5.4. |
Upon receipt of an Approved
102 Stock Option, the Participant will sign an undertaking to release the Trustee from any liability in respect of any action or
decision duly taken and bona fide executed in relation with the Plan and this Appendix, or any Approved 102 Stock Option or share
of Common Stock granted to the Participant thereunder. Such release may be incorporated into the Award Agreement. |
| |
| 5.5. |
3(i) Stock Options which
shall be granted under this Appendix, may, but need not, be issued to the Trustee, and if so issued to the Trustee, shall be held
for the benefit of the Participant. The Trustee shall hold such Stock Options and the shares of Common Stock issued upon the exercise
thereof (in the event of an exercise of such Stock Options) pursuant and subject to Section 3(i) of the Ordinance, including any
and all rules, regulations, orders and procedures promulgated thereunder, as now in effect or as hereafter amended. Anything to the
contrary notwithstanding, the Trustee shall not release any 3(i) Stock Options held by it and which were not already exercised into
shares of Common Stock by the Participant, nor shall the Trustee release any shares of Common Stock issued upon the exercise of 3(i)
Stock Options – in both cases – prior to the full payment of the relevant Participant’s tax liabilities arising
from those 3(i) Stock Options which were granted to him and from any shares of Common Stock issued upon the exercise of such 3(i)
Stock Options. |
| 6. |
FAIR MARKET VALUE FOR
TAX PURPOSES |
The
per share exercise price for the shares of Common Stock underlying the Stock Options, shall be determined by the Administrator pursuant
to the Plan (the “Exercise Price”). The form of consideration for exercising a Stock Option shall be determined
by the Administrator pursuant to the Plan, provided, however, that cashless exercise for Stock Options granted under this Appendix, may
be implemented by the Company only following the lapse of the Restricted Period, unless otherwise determined by the Administrator with
the approval of the ITA, to the extent such approval is necessary to receive and/or to keep any tax benefit pursuant to Section 102.
Without
derogating from the terms and conditions of the Plan and this Appendix, solely for the purpose of determining the tax liability pursuant
to Section 102(b)(3) of the Ordinance, if at the Date of Grant the Company’s shares of Common Stock are listed on any established
national securities exchange or a national market system or if the Company’s shares of Common Stock will be registered for trading
within ninety (90) days following the Date of Grant, the Fair Market Value of a share of Common Stock at the Date of Grant shall be determined
in accordance with the average value of the Company’s shares on the thirty (30) trading days preceding the Date of Grant or on
the thirty (30) trading days following the date of registration for trading, as the case may be.
| 7. |
EXERCISE OF STOCK OPTIONS |
Stock
Options shall be exercised by the Participant’s giving a written notice and remitting payment of the total Option Price to the
Administrator or to any third party designated by the Administrator (the “Representative”), in such form and
method as may be determined by the Administrator and the Trustee and, when applicable, in accordance with the requirements of Section
102, which exercise shall be effective upon receipt of such notice by the Administrator or the Representative and the payment of the
Option Price at the Company’s or the Representative’s principal office. With respect to Unapproved 102 Stock Options, if
the Participant ceases to be employed by the Company or any Affiliate, the 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 the shares of Common Stock, all in accordance with the provisions
of Section 102.
In
the event that the Trustee holds shares of Common Stock in trust, the Trustee shall not, with respect to such shares, represent the holder
of such shares in any meeting of the stockholders of the Company or any action of the stockholders of the Company by written consent.
The Trustee shall provide the Company on such date or as shall be mutually agreed between the Trustee and the Company, with a power-of-attorney
to participate and vote in such meetings and execute such actions by written consent with respect to all shares of Common Stock held
in trust, if so requested by the Company.
| 8. |
INTEGRATION OF SECTION
102 AND TAX COMMISSIONER’S APPROVAL |
| 8.1. |
With regards to Approved
102 Stock Options, the provisions of the Plan, this Appendix and the Award of any Award Agreement, the Award Agreement shall be subject
to the provisions of Section 102 and the Income Tax Commissioner’s approval, and the said provisions and permit shall be deemed
an integral part of the Plan and of the Award Agreement. |
| |
| 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, this Appendix or the Award Agreement, shall be considered binding upon the Company and the Participants. |
| 9.1. |
To the extent permitted
by Applicable Law, any tax consequences arising from the grant or exercise of any Stock Option, from the payment for shares of Common
Stock covered thereby or from any other event or act (of the Company, and/or its Affiliates, and/or the Trustee or the Participant),
hereunder, shall be borne solely by the Participant. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according
to the requirements under Applicable Law, rules, and regulations, including withholding taxes at source. Furthermore, the Participant
agrees 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 Participant. |
| |
| 9.2. |
The Company and/or the
Trustee shall not be required to release any share certificate to a Participant until all required payments have been fully made
by the Participant and unless the Participant requests delivery of such certificate, in writing in accordance with the procedures
established by the Administrator. |
| 10. |
GOVERNING LAW &
JURISDICTION |
This
Appendix 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. Notwithstanding anything stated herein to the
contrary, if and to the extent any issue or matter arises hereunder which involves the application of another jurisdiction or the requirements
relating to the administration of Stock Options of any stock exchange or quotation system, then such laws and requirements shall apply
and shall govern such issues or matters, in accordance with any Applicable Law. The competent courts of Tel-Aviv, Israel shall have sole
jurisdiction to adjudicate any dispute that may arise in connection with the application, interpretation or enforcement of Section 102
including (without limitation) matters involving the Trustee and the Israeli tax consequences of the Stock Options or the shares of Common
Stock in trust and the release and transfer of such Stock Options or shares of Common Stock by the Trustee.
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