Exhibit 1.1

 

eToro Group Ltd.

 

[●] Class A Common Shares

 

 

Underwriting Agreement

 

[●], 2025

 

Goldman Sachs & Co. LLC

Jefferies LLC

UBS Securities LLC

Citigroup Global Markets Inc.

 

As representatives (the “Representatives”) of the several Underwriters

named in Schedule I hereto,

 

c/o Goldman Sachs & Co. LLC

200 West Street

New York, New York 10282

 

c/o Jefferies LLC

520 Madison Avenue

New York, New York 10022

 

c/o UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

 

c/o Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

 

Ladies and Gentlemen:

 

eToro Group Ltd., a company organized under the laws of the British Virgin Islands (the “Company”), proposes, subject to the terms and conditions stated in this agreement (this “Agreement”), to issue and sell to the Underwriters named in Schedule I hereto (the “Underwriters”) an aggregate of [●] shares and, at the election of the Underwriters, up to [●] additional shares (the “Optional Shares”) of the Company’s Class A common shares, no par value (the “Class A Common Shares”) and the shareholders of the Company named in Schedule II hereto (the “Selling Shareholders”) propose, subject to the terms and conditions stated in this Agreement, to sell to the Underwriters an aggregate of [●] Class A Common Shares. The aggregate of [●] Class A Common Shares to be sold by the Company and the Selling Shareholders is herein called the “Firm Shares.” The Firm Shares and the Optional Shares that the Underwriters elect to purchase pursuant to Section 2 hereof being collectively called the “Shares.” The shares of Class A Common Shares of the Company, together with the shares of Class B common shares, no par value, of the Company, to be outstanding after giving effect to the sales contemplated hereby, are hereinafter referred to as the “Common Shares.”

 

 

1. (a) The Company represents and warrants to, and agrees with, each of the Underwriters that:

 

(i) A registration statement on Form F-1 (File No. 333-286050) (the “Initial Registration Statement”) in respect of the Shares has been filed with the U.S. Securities and Exchange Commission (the “Commission”); the Initial Registration Statement and any post-effective amendment thereto, each in the form heretofore delivered to you, have been declared effective by the Commission in such form; other than a registration statement, if any, increasing the size of the offering (a “Rule 462(b) Registration Statement”), filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Act”), which became effective upon filing, no other document with respect to the Initial Registration Statement has been filed with the Commission; and no stop order suspending the effectiveness of the Initial Registration Statement, any post-effective amendment thereto or the Rule 462(b) Registration Statement, if any, has been issued and no proceeding for that purpose or pursuant to Section 8A of the Act has been initiated or, to the Company’s knowledge, threatened by the Commission (any preliminary prospectus included in the Initial Registration Statement or filed with the Commission pursuant to Rule 424(a) of the rules and regulations of the Commission under the Act is hereinafter called a “Preliminary Prospectus”; the various parts of the Initial Registration Statement and the Rule 462(b) Registration Statement, if any, including all exhibits thereto and including the information contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the Initial Registration Statement at the time it was declared effective, each as amended at the time such part of the Initial Registration Statement became effective or such part of the Rule 462(b) Registration Statement, if any, became or hereafter becomes effective, are hereinafter collectively called the “Registration Statement”; the Preliminary Prospectus relating to the Shares that was included in the Registration Statement immediately prior to the Applicable Time (as defined in Section 1(c) hereof) is hereinafter called the “Pricing Prospectus”; and such final prospectus, in the form first filed pursuant to Rule 424(b) under the Act, is hereinafter called the “Prospectus”; any oral or written communication with potential investors undertaken in reliance on Rule 163B under the Act is hereinafter called a “Testing-the-Waters Communication”; and any Testing-the-Waters Communication that is a written communication within the meaning of Rule 405 under the Act is hereinafter called a “Written Testing-the-Waters Communication”; and any “issuer free writing prospectus” as defined in Rule 433 under the Act relating to the Shares is hereinafter called an “Issuer Free Writing Prospectus”);

 

(ii) (A) No order preventing or suspending the use of any Preliminary Prospectus or any Issuer Free Writing Prospectus has been issued by the Commission, and (B) each Preliminary Prospectus, at the time of filing thereof, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder, and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with the Underwriter Information (as defined in Section 9(c) of this Agreement);

 

 

(iii) For the purposes of this Agreement, the “Applicable Time” is [●] [a.m./p.m.] (New York City time) on the date of this Agreement. The Pricing Prospectus, as supplemented by the information listed on Schedule III(c) hereto, taken together (collectively, the “Pricing Disclosure Package”) as of the Applicable Time, did not, and as of each Time of Delivery (as defined in Section 4(a) of this Agreement) will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and each Issuer Free Writing Prospectus and each Written Testing-the-Waters Communication does not conflict with the information contained in the Registration Statement, the Pricing Prospectus or the Prospectus and each Issuer Free Writing Prospectus and each Written Testing-the-Waters Communication, as supplemented by and taken together with the Pricing Disclosure Package, as of the Applicable Time, did not, and as of each Time of Delivery will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to statements or omissions made in reliance upon and in conformity with the Underwriter Information;

 

(iv) No documents were filed with the Commission since the Commission’s close of business on the business day immediately prior to the date of this Agreement and prior to the execution of this Agreement, except as set forth on Schedule III(b) hereto;

 

(v) The Registration Statement, and any amendments or supplements to the Registration Statement, as of its applicable effective date, and the Prospectus and any further amendments or supplements to the Prospectus, as of its date and as of each Time of Delivery, will conform, in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to each part of the Registration Statement, as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, and as of each Time of Delivery, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with the Underwriter Information;

 

(vi) Neither the Company nor any of its subsidiaries has, since the date of the latest audited financial statements included in the Pricing Prospectus, (i) sustained any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree or (ii) entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Company and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Company and its subsidiaries taken as a whole, in each case otherwise than as set forth or contemplated in the Pricing Prospectus; and, since the respective dates as of which information is given in the Registration Statement and the Pricing Prospectus, there has not been (x) any change in the share capital (other than as a result of (i) the exercise, vesting or settlement, if any, of options or restricted share units (including any “net” or “cashless” exercises or settlements) or the award, if any, of options or restricted share units, in each case in the ordinary course of business pursuant to the Company’s equity plans that are described in the Pricing Prospectus and the Prospectus, or (ii) the issuance, if any, of shares upon exercise, conversion or reclassification of Company securities as described in the Pricing Prospectus and the Prospectus) or long-term or short-term debt of the Company or any of its subsidiaries or (y) any Material Adverse Effect (as defined below); as used in this Agreement, “Material Adverse Effect” shall mean any material adverse change or effect, or any development involving a prospective material adverse change or effect, in or affecting (i) the business, properties, general affairs, management, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth or contemplated in the Pricing Prospectus, or (ii) the ability of the Company to perform its obligations under this Agreement, including the issuance and sale of the Shares, or to consummate the transactions contemplated in the Pricing Prospectus and the Prospectus;

 

 

(vii) The Company and its subsidiaries do not own any real property. The Company and its subsidiaries have good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not materially interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries;

 

(viii) Each of the Company and each of its subsidiaries has been (i) duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization (where such concept exists), with power and authority (corporate and other) to own its properties and conduct its business as described in the Pricing Prospectus, and (ii) duly qualified as a foreign corporation for the transaction of business and is in good standing (where such concept exists) under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, except, in the case of this clause (ii), where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably expected to have a Material Adverse Effect, and each significant subsidiary (as such term is defined in Rule 1-02 of Regulation S-X promulgated under the Act), if any, of the Company has been listed in Exhibit 21.1 to the Registration Statement;

 

(ix) The Company has an authorized share capital as set forth in the Pricing Prospectus and all of the issued shares of the Company, including the Shares to be sold by the Selling Shareholders, have been duly and validly authorized and issued and are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Pricing Disclosure Package and Prospectus; and all of the issued shares of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and (except, in the case of any foreign subsidiary, for directors’ qualifying shares) are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims;

 

(x) The Shares to be issued and sold by the Company have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued and fully paid and non-assessable and will conform in all material respects to the description of the Class A Common Shares contained in the Pricing Disclosure Package and the Prospectus; and the issuance of such Shares is not subject to any preemptive or similar rights;

 

 

(xi) The issue and sale of the Shares to be sold by the Company and the compliance by the Company with this Agreement and the Paying Agent Agreement (as defined below) and the consummation of the transactions contemplated in this Agreement and the Pricing Prospectus will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, (A) any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (B) the memorandum and articles of association (or other applicable organizational document) of the Company or any of its subsidiaries, or (C) any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except, in the case of the foregoing clauses (A) and (C), for such defaults, breaches, or violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and no consent, filing, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue of the Shares to be sold by the Company and the sale of the Shares or the consummation by the Company of the transactions contemplated by this Agreement, except such as have been obtained under the Act, the approval by the Financial Industry Regulatory Authority (“FINRA”) of the underwriting terms and arrangements and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Shares by the Underwriters;

 

(xii) Neither the Company nor any of its subsidiaries is (i) in violation of its memorandum and articles of association (or other applicable organizational document), (ii) in violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except, in the case of the foregoing clauses (ii) and (iii), for such violations or defaults as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

 

(xiii) The statements set forth in the Pricing Prospectus and Prospectus under the caption “Description of Share Capital,” insofar as they purport to constitute a summary of the terms of the Common Shares, under the caption “Tax Considerations—U.S. Federal Income Tax Considerations,” insofar as they purport to constitute a summary of U.S. federal law or regulation or legal conclusions with respect thereto, under the caption “Tax Considerations—BVI Tax Considerations,” insofar as they purport to constitute a summary of British Virgin Islands law or regulation or legal conclusions with respect thereto, under the captions “Tax Considerations— BVI Tax Considerations,” “Tax Considerations—Material Israeli Tax Considerations,” “—Taxation of our shareholders—General,” and “Tax Considerations—U.S. Federal Income Tax Considerations,” insofar as they purport to constitute a summary of Israeli law or regulation or legal conclusions with respect thereto, and under the caption “Underwriting,” insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects; provided, however, with respect to statements set forth under the caption “Underwriting,” this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with the Underwriter Information (as defined herein);

 

 

(xiv) Other than as set forth in the Pricing Prospectus, there are no legal, governmental or regulatory investigations, demands, claims, arbitrations, inquiries or proceedings (“Actions”) ongoing or pending to which the Company or any of its subsidiaries or, to the Company’s knowledge, any officer or director of the Company or any of its subsidiaries, is a party or of which any property or assets of the Company or any of its subsidiaries or, to the Company’s knowledge, any officer or director of the Company or any of its subsidiaries, is the subject which, if determined adversely to the Company or any of its subsidiaries (or such officer or director), would individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and, to the Company’s knowledge, no such proceedings are threatened or contemplated by governmental authorities or others; there are no current or pending Actions that are required under the Act to be described in the Registration Statement or the Pricing Prospectus that are not so described in all material respects therein; and there are no statutes, regulations or contracts or other documents that are required under the Act to be filed as exhibits to the Registration Statement or described in the Registration Statement or the Pricing Prospectus that are not so filed as exhibits to the Registration Statement or described in all material respects in the Registration Statement and the Pricing Prospectus;

 

(xv) The Company is not and, immediately after giving effect to the offering and sale of the Shares and the application of the proceeds thereof, will not be an “investment company,” as such term is defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”);

 

(xvi) At the time of filing the Initial Registration Statement and any post-effective amendment thereto, at the earliest time thereafter that the Company or any offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the Act) of the Shares, and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined under Rule 405 under the Act;

 

(xvii) Kost Forer Gabbay & Kasierer, a member of EY Global, who have certified certain financial statements of the Company and its subsidiaries, is an independent registered public accounting firm as required by the Act and the rules and regulations of the Commission thereunder;

 

(xviii) The Company maintains a system of internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that (i) complies with the applicable requirements of the Exchange Act, (ii) has been designed by the Company’s principal executive officer and principal financial officer, or under their supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”) and (iii) is designed to provide reasonable assurance that (A) transactions are executed in accordance with management’s general or specific authorization, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management’s general or specific authorization and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and the Company’s internal control over financial reporting is effective and the Company is not aware of any material weaknesses in its internal control over financial reporting;

 

 

(xix) Since the date of the latest audited financial statements included in the Pricing Prospectus, there has been no change in the Company’s internal control over financial reporting that has materially and adversely affected, or is reasonably likely to materially and adversely affect, the Company’s internal control over financial reporting;

 

(xx) The Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that comply with the applicable requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer by others within those entities; and such disclosure controls and procedures are effective in all material respects;

 

(xxi) This Agreement and the Paying Agent Agreement have been duly authorized, executed and delivered by the Company;

 

(xxii) Neither the Company nor any of its subsidiaries, nor any director or officer of the Company or any of its subsidiaries nor, to the knowledge of the Company, any employee, agent, affiliate or other person who performs services for or on behalf of the Company or any of its subsidiaries has: (i) made, offered, promised or authorized any contribution, gift, entertainment or other expense (or taken any act in furtherance thereof) in violation of the Foreign Corrupt Practices Act of 1977, as amended, or the rules and regulations thereunder, the Bribery Act 2010 of the United Kingdom, or any other similar and applicable anti-corruption or anti-bribery related law, statute or regulation (collectively, “Anti-Corruption Laws”); (ii) made, offered, promised or authorized any direct or indirect payment in violation of applicable Anti-Corruption Laws; or (iii) violated or is in violation of applicable Anti-Corruption Laws; the Company and its subsidiaries have conducted their businesses in compliance with Anti-Corruption Laws and have instituted and maintained and will continue to maintain policies and procedures reasonably designed to promote and achieve compliance with such laws; and the Company will not use, directly or knowingly indirectly, the proceeds of the offering of the Shares hereunder in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of applicable Anti-Corruption Laws;

 

(xxiii) The operations of the Company and its subsidiaries are and have been conducted at all times in material compliance with the requirements of applicable anti-money laundering laws, counter-terrorist financing laws and anti-proliferation financing laws, including, but not limited to, the Bank Secrecy Act of 1970, as amended (including by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)) (collectively, the “Money Laundering Laws”), and the rules and regulations promulgated thereunder, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is in process, pending or, to the knowledge of the Company, threatened;

 

 

(xxiv) Neither the Company nor any of its subsidiaries, nor any director or officer of the Company or any of its subsidiaries nor, to the knowledge of the Company, any employee, agent, controlled affiliate or other person who performs services for or on behalf of the Company or any of its subsidiaries is: (i) currently the target of any economic or financial sanctions or trade embargoes administered or enforced by: the U.S. Government, including the Office of Foreign Assets Control of the U.S. Department of the Treasury, and the U.S. Department of State; the European Union or its Member States; His Majesty’s Treasury of the United Kingdom; or the United Nations Security Council (collectively, “Sanctions”), (ii) operating, organized, located, or resident in a country or territory that is itself the subject or target of any comprehensive Sanctions, which, as of the date of this Agreement, are Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, the non-government controlled areas of Kherson and Zaporizhzhia regions of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic (each, a “Sanctioned Jurisdiction”) or the Government of Venezuela, or (iii) directly or indirectly owned or controlled by any of the foregoing (as, and to the extent that, the terms “owned” or “controlled” are interpreted under relevant Sanctions regimes) (each, a “Sanctioned Person”); and the Company will not directly or knowingly indirectly use the proceeds of the offering of the Shares hereunder, to lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity: (i) who is a Sanctioned Person in violation of applicable Sanctions; (ii) to fund or facilitate any activities of or business in breach of applicable Sanctions, or (iii) in any manner that will result in a violation of applicable Sanctions by any person participating in the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise; except as described in the Pricing Prospectus and the Prospectus, neither the Company nor any of its subsidiaries is currently engaged or has, since April 24, 2019 been engaged in any direct or indirect transactions or dealings with any individual or entity that is or was at the time of such dealing or transaction a Sanctioned Person, or that is or was at the relevant time in violation of applicable Sanctions; and the Company and its subsidiaries have instituted and maintained policies and procedures reasonably designed to promote compliance with applicable Sanctions;

 

(xxv) Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (a) the operations of the Company and its subsidiaries, and the actions of their respective directors and officers, and, to the Company’s knowledge, the actions of their respective employees, agents and affiliates, are and have been conducted at all times in compliance with the requirements of applicable Financial Regulatory Laws in each jurisdiction in which the Company and its subsidiaries conduct business, and (b) no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator (including self-regulatory organizations) involving the Company or any of its subsidiaries with respect to such Financial Regulatory Laws is in progress, pending or, to the knowledge of the Company, threatened, except, in the case of the foregoing clauses (a) and (b), that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. For purposes of this paragraph the term Financial Regulatory Laws shall include the Broker-Dealer Laws, the Commodity Derivatives Laws, the Money Transmitter Laws, the Virtual Currency Laws and all other financial services laws, rules, regulations and guidance, at any time applicable to the Company or any of its subsidiaries. In addition, (i) “Broker-Dealer Laws” means all legal or regulatory requirements (including rules imposed by the SEC, FINRA and all other self-regulatory organizations) relating to the licensing, registration, and/or operations of a person that provides services relating to dealing in, brokering, marketing, or otherwise facilitating or enabling transactions in securities or other financial instruments, (ii) “Commodity Derivatives Laws” means the requirements applicable to commodity interest transactions under the U.S. Commodity Exchange Act of 1934, as amended, the regulations of the U.S. Commodity Futures Trading Commission thereunder, and the requirements of the National Futures Association; (iii) “Money Transmitter Laws” means all legal or regulatory requirements relating to the licensing, registration, and/or operations of a person that (x) provides services relating to the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means, (y) sells or issues payment instruments, or (z) sells or issues stored value, and (iv) “Virtual Currency Laws” means all legal or regulatory requirements relating to the licensing, registration, and/or operations of a person that engages in activities involving virtual currency, including, but not limited to, (A) receiving virtual currency for transmission or transmitting virtual currency, (B) storing, holding, or maintaining custody or control of virtual currency on behalf of others, (C) buying and selling virtual currency, (D) performing exchange services or (E) controlling, administering or issuing a virtual currency;

 

 

(xxvi) The financial statements included in the Registration Statement, the Pricing Prospectus and the Prospectus, together with the related schedules and notes, present fairly in all material respects the financial position of the Company and its subsidiaries at the dates indicated and the consolidated statements of income (loss) and other comprehensive income (loss), consolidated statements of financial position, consolidated statements of changes in equity and consolidated statements of cash flows of the Company and its subsidiaries for the periods specified; said financial statements have been prepared in conformity with IFRS applied on a consistent basis throughout the periods involved. The supporting schedules, if any, present fairly in all material respects in accordance with IFRS the information required to be stated therein. The summary consolidated financial and other data included in the Registration Statement, the Pricing Prospectus and the Prospectus present fairly in all material respects the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included therein. Except as included therein, no historical or pro forma financial statements or supporting schedules are required to be included in the Registration Statement, the Pricing Prospectus or the Prospectus under the Act or the rules and regulations promulgated thereunder. All disclosures contained in the Registration Statement, the Pricing Prospectus and the Prospectus regarding “non-IFRS financial measures” (as such term is defined by the rules and regulations of the Commission) comply in all material respects with Regulation G of the Exchange Act and Item 10 of Regulation S-K of the Act, to the extent applicable;

 

(xxvii) The Company and each of its subsidiaries own, have a license or otherwise possess adequate rights to use all patents, patent applications, trademarks, service marks, trade names, domain names, copyrights and registrations and applications thereof, software, systems, technology, trade secrets (including know-how, inventions, designs, methods, processes and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) and other intellectual property (collectively, “Intellectual Property Rights”) used in or necessary for the conduct of their respective businesses, except where failure to own or possess such rights would not reasonably be expected, individually or in the aggregate to have a Material Adverse Effect. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, (A) neither the Company, nor any of its subsidiaries, nor the conduct of their respective businesses, infringes, misappropriates or otherwise violates, or has infringed, misappropriated or otherwise violated, any third-party Intellectual Property Rights and (B) no third party is infringing, misappropriating or otherwise violating the Intellectual Property Rights owned by the Company or any of its subsidiaries, in each case of (A) and (B) except as would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect. There is no pending or, to the Company’s knowledge, threatened action, suit, proceeding or claim by others challenging the validity, enforceability, ownership, scope or registration of any Intellectual Property Rights owned or purported to be owned by the Company or any of its subsidiaries, and neither the Company nor any of its subsidiaries has received any written notice of any claim or infringement, misappropriation or other violation of any Intellectual Property Rights of others. The Company and its subsidiaries use commercially reasonable efforts to maintain, preserve, protect and police all material Intellectual Property Rights of the Company and each of its subsidiaries. All employees or contractors engaged in the development of Intellectual Property Rights for or on behalf of Company or any of its subsidiaries have executed an invention assignment agreement whereby such employee or contractor presently assigns all of their right, title and interest in and to such Intellectual Property Rights created within the scope of the performance of such services for the Company or any of its subsidiaries to the Company or the applicable subsidiary, except where a failure to enter into such agreement would not reasonably be expected to have a Material Adverse Effect, and to the Company’s knowledge, no such agreement has been breached or violated. The Company and each of its subsidiaries use, and have used, commercially reasonable efforts to appropriately maintain all material confidential information which the Company or its subsidiaries desired to maintain as confidential in their reasonable business judgment, including any information that is intended to be maintained as a trade secret. The Company and each of its subsidiaries use and have used all software and other materials used in their businesses that are distributed under a “free,” “open source” or similar licensing model (including, but not limited to, the MIT License, Apache License, GNU General Public License, GNU Lesser General Public License and GNU Affero General Public License) (collectively, “Open Source Software”) in compliance with all license terms applicable to such Open Source Software, except where the failure to comply would not have a Material Adverse Effect and the Company and each of its subsidiaries do not use or distribute and have not used or distributed any Open Source Software in any manner that requires or has required (1) the Company or any of its subsidiaries to permit the reverse engineering by a third party of any software code or other technology owned by the Company or any of its subsidiaries or (2) any software code or other technology owned by the Company or any of its subsidiaries to be (x) disclosed or distributed in source code form, (y) licensed for the purpose of making derivative works or (z) redistributed at no charge, except, in the cases of clauses (1) and (2), as would not have a Material Adverse Effect. The expected expiration of any Intellectual Property Rights owned or purported to be owned by the Company or any of its subsidiaries would not reasonably be expected to result in a Material Adverse Effect.

 

 

(xxviii) The Company and its subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all material respects in accordance with their documentation and technical specifications and otherwise as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted, and to the knowledge of the Company, are free and clear of all material bugs, errors, defects, Trojan horses, time bombs and malware. The Company and its subsidiaries have implemented and maintained commercially reasonable technical and administrative controls, policies, procedures, and safeguards, designed to maintain and protect the Company and its subsidiaries’ material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems and data (including all confidential Company data, protected financial information, “personal data” and “personally identifiable information,” as defined under applicable privacy laws and maintained or processed by or on behalf of the Company and its subsidiaries (“Personal Data”)), and there have been no breaches, violations, outages or unauthorized uses of or accesses to the same, except for those that have been remedied without material cost or liability or the duty to notify any other person or governmental or regulatory authority, nor any incidents under internal review or investigations relating to the same. The Company and its subsidiaries (and any third parties processing Personal Data on behalf of the Company or its subsidiaries) currently comply and have complied in each case in all material respects, with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or governmental or regulatory authority (“Applicable Data Protection Laws”), internal and external policies and contractual obligations, in each case relating to the privacy and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access, misappropriation or modification (collectively the “Data Protection Obligations”). Except as would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect, the Company and its subsidiaries (and any third parties processing Personal Data on behalf of the Company or its subsidiaries) have not received any, and to the knowledge of the Company there are no pending, notices, inquiries, requests, claims, complaints, correspondence or other communication from, or investigations or enforcement actions by, any person or governmental or regulatory authority relating to the Data Protection Obligations;

 

(xxix) No forward-looking statement (within the meaning of Section 27A of the Act and Section 21E of the Exchange Act) included in any of the Registration Statement, the Pricing Prospectus or the Prospectus has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith;

 

(xxx) Nothing has come to the attention of the Company that has caused the Company to believe that the statistical and market-related data included in each of the Registration Statement, the Pricing Prospectus and the Prospectus is not based on or derived from sources that are reliable and accurate in all material respects;

 

(xxxi) There is and has been no failure on the part of the Company or any of the Company’s directors or officers, in their capacities as such, to comply with any applicable provision of the Sarbanes-Oxley Act of 2002, as amended and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and Sections 302 and 906 related to certifications (it being understood that this subsection shall not require the Company to comply with any provision of the Sarbanes-Oxley Act as of an earlier date than it would otherwise be required to so comply under applicable law);

 

 

(xxxii) Neither the Company nor any of its affiliates has taken or will take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company or any of its subsidiaries in connection with the offering of the Shares;

 

(xxxiii) The Company and each of its subsidiaries have such permits, licenses, approvals, consents, franchises, certificates of need and other approvals or authorizations of governmental or regulatory authorities (“Permits”) as are necessary under applicable law to own their respective properties and conduct their respective businesses in the manner described in the Registration Statement, the Pricing Prospectus and the Prospectus, except for any of the foregoing that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Expect as described in the Pricing Prospectus and the Prospectus, neither the Company nor any of its subsidiaries has received notice of any proceedings related to the revocation or modification of any such Permits that, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to have a Material Adverse Effect;

 

(xxxiv) (A) The Company and its subsidiaries, taken as a whole, are insured against such losses and risks and in such amounts as are, in the Company’s reasonable judgment, prudent and customary in the businesses in which they are engaged and as required by law; (B) neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for; and (C) neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not, taken as a whole, reasonably be expected to have a Material Adverse Effect;

 

(xxxv) No material labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is threatened, and neither the Company nor any of its subsidiaries has received written notice of any pending activities or proceedings by any labor union or similar entity to organize any employees of the Company or its subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect; and the Company and its subsidiaries are in compliance in with applicable labor and employment laws, except where the failure to be in compliance would not, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

 

(xxxvi) The Company and each member of its “Controlled Group” (defined as any organization, whether or not incorporated, that is under common control with the Company within the meaning of Section 4001(a)(14) of the Employee Retirement Security Act of 1974, as amended (“ERISA”), or which is a member of a controlled group of corporations within the meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) currently do not and have not in the past 6 years sponsored, maintained, or contributed to or had any obligation to contribute to and have no current intentions or plans to create any employee benefit plan within the meaning of Section 3(3) of ERISA, subject to Title IV of ERISA or any “multiemployer plan” within the meaning of Section 4001(c)(3) of ERISA.

 

 

(xxxvii) The Company is a “foreign private issuer” as defined in Rule 405 of the Act;

 

(xxxviii) There are no persons with registration rights or other similar rights to have any securities registered for sale pursuant to the Registration Statement or otherwise registered for sale or sold by the Company under the Act pursuant to this Agreement, other than those rights that have been disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus and have been duly waived;

 

(xxxix) The Company (i) does not have any material lending or other relationship with any bank or lending affiliate of any Underwriter and (ii) does not intend to use any of the proceeds from the sale of the Shares to repay any outstanding debt owed to any affiliate of any Underwriter;

 

(xl) Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus, no stamp, registration, documentary or other similar issuance or transfer taxes or duties (“Stamp Taxes”), other than New York State stock transfer taxes, are payable by or on behalf of the Underwriters in the British Virgin Islands, Israel, the United States or any political subdivision or taxing authority thereof or therein solely in connection with (i) the execution, delivery and performance of this Agreement and the Paying Agent Agreement, (ii) the creation, issuance and delivery of the Shares in the manner contemplated by this Agreement and the Pricing Prospectus or (iii) the initial resale and delivery by the Underwriters of the Shares as contemplated herein and in the Pricing Disclosure Package; No transaction, documentary, stamp, registration, issuance or transfer taxes or similar taxes or duties are payable by or on behalf of the Underwriters in the State of Israel or any political subdivision or taxing authority thereof solely in connection with (i) the execution, delivery and performance of this Agreement and the Paying Agent Agreement, (ii) the issuance and delivery of the Shares in the manner contemplated by this Agreement and the Pricing Prospectus or (iii) the initial resale and delivery by the Underwriters of the Shares as contemplated herein and in the Pricing Disclosure Package;

 

(xli) Neither the Company nor any of its subsidiaries or their properties or assets has immunity under the British Virgin Islands, U.S. federal or New York state law from any legal action, suit or proceeding, from the giving of any relief in any such legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any British Virgin Islands, U.S. federal or New York state court, from service of process, attachment upon or prior to judgment, or attachment in aid of execution of judgment, or from execution of a judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of a judgment, in any such court with respect to their respective obligations, liabilities or any other matter under or arising out of or in connection herewith; and, to the extent that the Company or any of its subsidiaries or any of its properties, assets or revenues may have or may hereafter become entitled to any right of immunity in any court in which proceedings arising out of, or relating to the transactions contemplated by this Agreement, may at any time be commenced, the Company has, pursuant to Section 19 of this Agreement, waived, and it will waive, or will cause its subsidiaries to waive, such right to the extent permitted by law;

 

(xlii) Any final judgment for a fixed or determined sum of money rendered by any U.S. federal or New York state court located in the State of New York having jurisdiction under its own laws in respect of any suit, action or proceeding against the Company based upon this Agreement would be declared enforceable against the Company by the courts of the British Virgin Islands, without reconsideration or reexamination of the merits;

 

 

(xliii) The choice of laws of the State of New York as the governing law of this Agreement is a valid choice of law under the laws of the British Virgin Islands and will be honored by the courts of the British Virgin Islands, subject to the restrictions described under the caption “Service of Process and Enforcement of Civil Liabilities” in the Registration Statement, the Pricing Prospectus and the Prospectus. The Company has the power to submit, and pursuant to Section 18 of this Agreement, has legally, validly, effectively and irrevocably submitted, to the personal jurisdiction of each New York state and United States federal court sitting in the City of New York and has validly and irrevocably waived any objection to the laying of venue of any suit, action or proceeding brought in such court;

 

(xliv) The indemnification and contribution provisions set forth in Section 9 hereof do not contravene British Virgin Islands law or public policy;

 

(xlv) The legality, validity, enforceability or admissibility into evidence of any of the Registration Statement, the Pricing Disclosure Package, the Prospectus, the Paying Agent Agreement and this Agreement or the Shares in any jurisdiction in which the Company is organized or does business is not dependent upon such document being submitted into, filed or recorded with any court or other authority in any such jurisdiction on or before the date hereof or that any tax, imposition or charge be paid in any such jurisdiction on or in respect of any such document;

 

(xlvi) Except as disclosed in the Pricing Prospectus and the Prospectus, any holder of the Shares and each Underwriter are each entitled to sue as plaintiff in the court of the jurisdiction of formation and domicile of the Company for the enforcement of their respective rights under this Agreement and the Shares and such access to such courts will not be subject to any conditions which are not applicable to residents of such jurisdiction or a company incorporated in such jurisdiction except that plaintiffs not residing in the British Virgin Islands may be required to guarantee payment of a possible order for payment of costs or damages at the request of the defendant;

 

(xlvii) Neither the Company nor any of its subsidiaries is a “covered foreign person,” as that term is defined in 31 C.F.R. § 850.209. Neither the Company nor any of its subsidiaries currently engage, or have plans to engage, directly or indirectly, in a “covered activity”, as that term is defined in in 31 C.F.R. § 850.208; and

 

(xlviii) Neither the Company nor any of its subsidiaries currently engage, or have plans to engage, directly or indirectly, in a “covered activity,” as that term is defined in 31 C.F.R. § 850.208, except to the extent that the Company’s engagement in a “covered activity” is limited to customizing, configuring, or fine-tuning a third-party artificial intelligence model or machine-based system strictly for its own internal, non-commercial use (e.g., not for sale or licensing) where such internal, non-commercial use is not for government intelligence, mass-surveillance, or military end use, or for digital forensics tools, penetration testing tools, or the control of robotic systems.

 

 

(b) Each of the Selling Shareholders severally and not jointly represents and warrants to, and agrees with, each of the Underwriters and the Company that:

 

(i) All consents, approvals, authorizations and orders necessary for the execution and delivery by such Selling Shareholder of this Agreement, the Paying Agent Agreement and the Power of Attorney referred to below, and for the sale and delivery of the Shares to be sold by such Selling Shareholder hereunder, have been obtained, except for the registration under the Act of the Shares and such consents, approvals, authorizations and orders as may be required under state or non-US securities or blue sky laws, the rules and regulations of FINRA or the approval for listing on the Exchange or such other approvals as have been or will be made or obtained on or prior to the First Time of Delivery; and such Selling Shareholder has full right, power and authority to enter into this Agreement, the Paying Agent Agreement and the Power of Attorney and to sell, assign, transfer and deliver the Shares to be sold by such Selling Shareholder hereunder;

 

(ii) The sale of the Shares to be sold by such Selling Shareholder hereunder and the compliance by such Selling Shareholder with this Agreement, the Paying Agent Agreement and the Power of Attorney and the consummation of the transactions herein and therein contemplated will (A) not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any statute, indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which such Selling Shareholder is a party or by which such Selling Shareholder is bound or to which any of the property or assets of such Selling Shareholder is subject, (B) nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-laws of such Selling Shareholder if such Selling Shareholder is a corporation, the Partnership Agreement of such Selling Shareholder if such Selling Shareholder is a partnership (or similar applicable organizational document) or (C) any statute or any judgment, order, rule or regulation of any court or governmental agency or body having jurisdiction over such Selling Shareholder or any of its subsidiaries or any property or assets of such Selling Shareholder, except, in the case of clauses (A) and (C), for such defaults, breaches or violations that would not reasonably be expected to have a material adverse effect on the ability of such Selling Shareholder to consummate the transactions contemplated by this Agreement and the Paying Agent Agreement and perform its obligations under the Power of Attorney; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental body or agency is required for the performance by such Selling Shareholder of its obligations under this Agreement, the Paying Agent Agreement and the Power of Attorney and the consummation by such Selling Shareholder of the transactions contemplated by this Agreement, the Paying Agent Agreement and the Power of Attorney in connection with the Shares to be sold by such Selling Shareholder hereunder, except the registration under the Act of the Shares and such consents, approvals, authorizations, orders, registrations or qualifications as may be required under state securities, Blue Sky laws or non-US laws, the rules and regulations of FINRA or the listing on the Exchange in connection with the purchase and distribution of the Shares by the Underwriters and such consents, approvals, authorizations, orders, registrations or qualifications that have already been obtained, made or waived in connection with the purchase and distribution of the Shares by the Underwriters;

 

 

(iii) Such Selling Shareholder has, and immediately prior to the Time of Delivery (as defined in Section 4 hereof) such Selling Shareholder will have, good and valid title to, or a valid “security entitlement” within the meaning of Section 8-501 of the New York Uniform Commercial Code in respect of, the Shares to be sold by such Selling Shareholder hereunder, free and clear of all liens, encumbrances, equities or claims; and, upon delivery of such Shares and payment therefor pursuant hereto, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or claims, will pass to the several Underwriters;

 

(iv) On or prior to the date of the Pricing Prospectus, such Selling Shareholder has executed and delivered to the Underwriters an agreement substantially in the form of Annex II hereto.

 

(v) Such Selling Shareholder has not taken and will not take, directly or indirectly, any action that is designed to or that has constituted or might reasonably be expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares;

 

(vi) To the extent that any statements or omissions made in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto are made in reliance upon and in conformity with written information furnished to the Company by such Selling Shareholder pursuant to Item 9(D) of Form 20-F expressly for use therein, such Registration Statement and Preliminary Prospectus did, and the Prospectus and any further amendments or supplements to the Registration Statement and the Prospectus will, when they become effective or are filed with the Commission, as the case may be, not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this representation and warranty shall (A) not apply to any statements or omissions made in reliance upon and in conformity with the Underwriter Information and (B) be limited to statements or omissions made in reliance upon and in conformity with information relating to such Selling Shareholder furnished to the Company in writing by such Selling Shareholder expressly for use in the Pricing Prospectus, the Prospectus or any amendments or supplements thereto, it being understood and agreed that the only information furnished by such Selling Shareholder consists of the name of such Selling Shareholder, the number of offered shares and the address and other information of such Selling Shareholder which appear in the Pricing Prospectus or any Prospectus in the table (and corresponding footnotes) under the caption “Principal and Selling Shareholders”, and, if such Selling Shareholder is an executive officer or director of the Company, the biographical information of such Selling Shareholder as set forth under the caption “Management” in the Pricing Prospectus or any Prospectus (with respect to each Selling Shareholder, the “Selling Shareholder Information”);

 

(vii) In order to document the Underwriters' compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated, such Selling Shareholder will deliver to you prior to or at the First Time of Delivery a properly completed and executed United States Treasury Department Form W-9 or applicable United States Treasury Department Form W-8 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof);

 

 

(viii) Such Selling Shareholder has duly executed and delivered a Power of Attorney, in the form heretofore furnished to you (the “Power of Attorney”), appointing Elad Lavi, Meron Shani and Debbie Kahal, and each of them, as such Selling Shareholder’s attorneys-in-fact (the "Attorneys-in-Fact") with authority to execute and deliver this Agreement and the Paying Agent Agreement on behalf of such Selling Shareholder, to determine the purchase price to be paid by the Underwriters to the Selling Shareholder as provided in Section 2 hereof, to determine the number of Firm Shares to be purchased from the Selling Shareholders set forth opposite the name of such Underwriter in Schedule I hereto, to authorize the delivery of the Shares to be sold by such Selling Shareholder hereunder and otherwise to act on behalf of such Selling Shareholder in connection with the transactions contemplated by this Agreement and the Paying Agent Agreement;

 

(ix) The appointment by such Selling Shareholder of the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable; the obligations of such Selling Shareholder hereunder shall not be terminated by operation of law, whether by the death or incapacity of any such Selling Shareholder, if an individual, or, in the case of an estate or trust, by the death or incapacity of any executor or trustee or the termination of such estate or trust, or in the case of a partnership or corporation, by the dissolution of such partnership, limited liability company or corporation, or by the occurrence of any other event; if such Selling Shareholder or any such executor or trustee should die or become incapacitated, or if any such estate or trust should be terminated, or if any such partnership, limited liability company or corporation should be dissolved, or if any other such event should occur, before the delivery of the Shares to be sold by such Selling Shareholder hereunder, certificates representing the Shares to be sold by such Selling Shareholder hereunder shall be delivered by or on behalf of such Selling Shareholder in accordance with the terms and conditions of this Agreement; and actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of whether or not the Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination, dissolution or other event;

 

(x) Such Selling Shareholder will not directly or indirectly use the proceeds of the offering of the Shares hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, (i) to fund or facilitate any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject or the target of Sanctions, or in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions, or (ii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any Money Laundering Laws or any Anti-Corruption Laws;

 

(xi) Such Selling Shareholder is not prompted by any material information concerning the Company or any of its subsidiaries that is not disclosed in the Pricing Prospectus to sell its Shares pursuant to this Agreement;

 

 

(xii) Such Selling Shareholder acknowledges, understands and agrees that (i) the Underwriters, the Representatives, the Paying Agent (as defined below), the 102 Trustee (as defined below) and anyone acting on their behalf is entitled to and may deduct and withhold from any amounts payable or otherwise deliverable pursuant to this Agreement to such Selling Shareholder amounts as are required to be deducted and withheld under Israeli and other applicable laws, (ii) any amounts so withheld or deducted shall be treated for all purposes of this Agreement as having been paid to the such Selling Shareholder, and (iii) any amounts payable or otherwise deliverable pursuant to this Agreement to such Selling Shareholder will be deposited with the Paying Agent and will be released by the Paying Agent to such Selling Shareholder only upon full satisfaction of all applicable withholding tax obligations with respect thereto and (iv) any payment for the Shares to be sold by such Selling Shareholder by the Underwriters to the Paying Agent shall be considered as if it was made to such Selling Shareholder and the Underwriters shall have no further obligations to such Selling Shareholder with respect to such payment and no interest shall accrue or be payable with respect to any such payment; such Selling Shareholder hereby validly and irrevocably waives, to the fullest extent permitted by applicable law, any claim, cause, or right of action against the Underwriters and the Representatives arising out of or relating to the arrangements contemplated by this clause (xii) and acknowledges that this waiver was an essential term of the Underwriters’ agreement to perform the actions described herein;

 

(xiii) Such Selling Shareholder, if organized or domiciled in a jurisdiction outside of the United States (a “Non-U.S. Selling Shareholder”) specifically represents and agrees that no Stamp Taxes are payable by or on behalf of the Underwriters, the Company or any of its subsidiaries in such Non-U.S. Selling Shareholder’s jurisdiction of organization or to any taxing authority thereof or therein in connection with (i) the execution, delivery or consummation of this Agreement or the Paying Agent Agreement or (ii) the sale and delivery of the Shares to the Underwriters or purchasers procured by the Underwriters; and

 

(xiv) Such Selling Shareholder, if such Selling Shareholder is a Non-U.S. Selling Shareholder, has the power to submit, and pursuant to Section 18 has, to the extent permitted by law, legally, validly, effectively and irrevocably submitted, to the exclusive jurisdiction of the U.S. federal and New York state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement, the Paying Agent Agreement or the transactions contemplated hereby.

 

2. Subject to the terms and conditions herein set forth, (a) the Company and each of the Selling Shareholders agree, severally and not jointly, to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company and each of the Selling Shareholders, at a purchase price per share of $[●], the number of Firm Shares set forth opposite the name of such Underwriter in Schedule I hereto and (b) in the event and to the extent that the Underwriters shall exercise the election to purchase Optional Shares as provided below, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company, at the purchase price per share set forth in clause (a) of this Section 2 (provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares), that portion of the number of Optional Shares as to which such election shall have been exercised (to be adjusted by you so as to eliminate fractional shares) determined by multiplying such number of Optional Shares by a fraction, the numerator of which is the maximum number of Optional Shares which such Underwriter is entitled to purchase as set forth opposite the name of such Underwriter in Schedule I hereto and the denominator of which is the maximum number of Optional Shares that all of the Underwriters are entitled to purchase hereunder.

 

 

The Company hereby grants to the Underwriters the right to purchase at their election up to [●] Optional Shares, at the purchase price per share set forth in the paragraph above; provided that the purchase price per Optional Share shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Firm Shares but not payable on the Optional Shares. Any such election to purchase Optional Shares may be exercised only by written notice from you to the Company, given within a period of 30 calendar days after the date of this Agreement, setting forth the aggregate number of Optional Shares to be purchased and the date on which such Optional Shares are to be delivered, as determined by you but in no event earlier than the First Time of Delivery (as defined in Section 4 hereof) or, unless you and the Company otherwise agree in writing, earlier than one or later than ten business days after the date of such notice.

 

3. Upon the authorization by you of the release of the Shares, the several Underwriters propose to offer the Shares for sale upon the terms and conditions set forth in the Pricing Disclosure Package and the Prospectus.

 

4. (a) The Shares to be purchased by each Underwriter hereunder, in definitive or book-entry form, and in such authorized denominations and registered in such names as the Representatives may request upon at least twenty-four hours’ prior notice to the Company and the Selling Shareholders shall be delivered by or on behalf of the Company and the Selling Shareholders to the Representatives, through the facilities of the Depository Trust Company (“DTC”), for the account of such Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by wire transfer of Federal (same-day) funds to the account specified by the Company (with regard to payment to the Company) and the account specified by IBI Trust Management (the “Paying Agent”) to be held in trust for the Selling Shareholders (with regard to payment to the Selling Shareholders) to the Representatives at least twenty-four hours in advance. The Company and the Selling Shareholders will cause the certificates, if any, representing the Shares to be made available for checking and packaging at least twenty-four hours prior to the Time of Delivery (as defined below) with respect thereto at the office of DTC or its designated custodian (the “Designated Office”). The time and date of such delivery and payment shall be, with respect to the Firm Shares, 9:30 a.m., New York City time, on [●], 2025 or such other time and date as the Representatives, the Company and the Attorneys-in-Fact may agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date specified by the Representatives in each written notice given by the Representatives of the Underwriters’ election to purchase such Optional Shares, or such other time and date as the Representatives and the Company may agree upon in writing. Such time and date for delivery of the Firm Shares is herein called the “First Time of Delivery,” each such time and date for delivery of the Optional Shares, if not the First Time of Delivery, is herein called the “Second Time of Delivery,” and each such time and date for delivery is herein called a “Time of Delivery.”

 

The Underwriters, the Representatives, the Paying Agent, the 102 Trustee and anyone acting on their behalf shall be entitled to deduct and withhold from any amounts payable or otherwise deliverable pursuant to this Agreement to any Selling Shareholder such amounts as are required to be deducted and withheld with respect to the making of any such payment under the Israeli Income Tax Ordinance (New Version), 5721-1961, and the rules and regulations promulgated thereunder or any other applicable law, provided, however, should the Paying Agent deliver to the Representatives prior to the First Time of Delivery, an undertaking in accordance with the provisions of the Income Tax Circular 19/2018 (Transaction for Sale of Rights in a Corporation that includes Consideration that will be Transferred to the Seller at Future Dates) in the form attached as an exhibit to the paying agent agreement with the Paying Agent in connection with the sale of Shares by the Selling Shareholders hereunder (the “Paying Agent Agreement”), payments made by the Underwriters or on their behalf to the Paying Agent shall be without any deduction or withholding of any taxes imposed under Israeli law, and in such case, any applicable withholding of Israeli taxes required to be made from any amounts payable to any such Selling Shareholder shall be made by the Paying Agent or the 102 Trustee, as applicable, pursuant to applicable Israeli law. The Paying Agent shall act as the withholding agent on behalf of the Underwriters, all in accordance with the provisions of the Paying Agent Agreement. With respect to any taxes withheld or deducted under applicable Israeli law, such withheld amounts, if any, shall be treated for all purposes of this Agreement as having been paid to the applicable Selling Shareholder. For the avoidance of doubt, any payment for the Shares to be sold by the Selling Shareholders by the Underwriters to the Paying Agent shall be considered as if it was made to the Selling Shareholders and the Underwriters shall have no further obligations to the Selling Shareholders with respect to such payment and no interest shall accrue or be payable with respect to any such payment. “102 Trustee” means the trustee appointed by the Company in accordance with the provisions of the Israeli Income Tax Ordinance (New Version), 5721-1961, and the rules and regulations promulgated thereunder and approved by the Israel Tax Authority with respect to Shares granted to or underlying equity awards granted to any Selling Shareholder pursuant to Section 102 of the Israeli Income Tax Ordinance (New Version), 5721-1961.

 

 

(b) The documents to be delivered at each Time of Delivery by or on behalf of the parties hereto pursuant to Section 8 hereof, including the cross receipt for the Shares and any additional documents reasonably requested by the Underwriters pursuant to Section 8(o) hereof, will be delivered at the offices of Latham & Watkins LLP, 1271 Avenue of the Americas, New York, New York, 10020 (the “Closing Location”), and the Shares will be delivered at the Designated Office, all at such Time of Delivery. A meeting will be held at the Closing Location at [●] [a.m./p.m.], New York City time, on the New York Business Day next preceding such Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, “New York Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close.

 

5. The Company agrees with each of the Underwriters:

 

(a) To prepare the Prospectus in a form approved by you and to file such Prospectus pursuant to Rule 424(b) under the Act prior to the earlier of (i) the First Time of Delivery and (ii) the Commission’s close of business on the second business day following the execution and delivery of this Agreement, or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Act; to make no further amendment or any supplement to the Registration Statement or the Prospectus prior to the last Time of Delivery which shall be disapproved by you promptly after reasonable notice thereof; to advise you, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any amendment or supplement to the Prospectus has been filed and to furnish you with copies thereof; to file promptly all material required to be filed by the Company with the Commission pursuant to Rule 433(d) under the Act; to advise you, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus in respect of the Shares, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or, to the Company’s knowledge, threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or other prospectus or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order;

 

(b) Promptly from time to time to take such action as you may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as you may reasonably request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares; provided that in connection therewith the Company shall not be required to qualify as a foreign corporation (where not otherwise required), subject itself to taxation for doing business in any jurisdiction in which it is not otherwise subject to taxation or file a general consent to service of process in any jurisdiction (where not otherwise required);

 

(c) Prior to 10:00 a.m., New York City time, on the New York Business Day next succeeding the date of this Agreement and from time to time, to furnish the Underwriters with written and electronic copies of the Prospectus in New York City in such quantities as you may reasonably request, and, if the delivery of a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is required at any time prior to the expiration of nine months after the time of issue of the Prospectus in connection with the offering or sale of the Shares and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus in order to comply with the Act, to notify you and upon your request to prepare and furnish without charge to each Underwriter and to any dealer in securities as many written and electronic copies as you may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; and in case any Underwriter is required to deliver a prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under the Act) in connection with sales of any of the Shares at any time nine months or more after the time of issue of the Prospectus, upon your request but at the expense of such Underwriter, to prepare and deliver to such Underwriter as many written and electronic copies as you may reasonably request of an amended or supplemented Prospectus complying with Section 10(a)(3) of the Act;

 

 

(d) To make generally available to its securityholders as soon as reasonably practicable, but in any event not later than sixteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); provided the Company will be deemed to have furnished such statements to its securityholders and the Representatives to the extent they have filed on the Commission’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”);

 

(e)(1) During the period beginning from the date hereof and continuing to and including the date 180 days after the date of the Prospectus (the “Lock-Up Period”), not to (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with or confidentially submit to the Commission a registration statement under the Act relating to, any securities of the Company that are substantially similar to the Shares, including, but not limited to, any options or warrants to purchase Common Shares or any securities that are convertible into or exchangeable for, or that represent the right to receive, Common Shares or any such substantially similar securities, or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Shares or any such other securities, or publicly disclose the intention to undertake any of the foregoing in clause (i) or (ii), whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise, without the prior written consent of the Representatives; provided, however, that the foregoing restrictions shall not apply to (1) the Shares to be sold hereunder, (2) any Common Shares issued upon the reclassification and exchange of Common Shares outstanding as of the date of this Agreement, including the stock split and subsequent distribution of Class B Common Shares, in connection with the offering contemplated by this Agreement and as described in the Pricing Prospectus and the Prospectus, (3) any Common Shares or any securities or other awards convertible into, exercisable for, or that represent the right to receive, shares of Common Shares pursuant to any employee share option plans existing on, or upon the conversion or exchange of convertible or exchangeable securities outstanding as of, the date of this Agreement, (4) the issuance by the Company of shares of Class A Common shares upon the conversion of shares of Class B common shares, (5) grants or settlement of options, restricted share units or other equity or equity-based awards or restricted shares to officers, directors, employees and consultants of the Company or its subsidiaries in accordance with the terms of the equity plans that are described in the Pricing Prospectus and the Prospectus or the issuance by the Company of Common Shares upon the exercise of such instruments (including by way of “net” or “cashless” exercise), (6) “sell to cover” or similar open market transactions by the Company conducted in order to satisfy certain tax withholding obligations of holders of the Company’s securities as a result of the exercise, vesting and/or settlement of options, restricted share units or other equity or equity-based awards or restricted shares, issued pursuant to a plan or arrangement described in the Prospectus; grants of any Common Shares, options, restricted share units or other equity or equity-based awards or restricted shares based on any escrow, holdback or similar provisions under agreements related to mergers or acquisitions by the Company entered into or prior to the date hereof and described in the Pricing Prospectus and the Prospectus, (7) the filing of any registration statement on Form S-8 or a successor form relating to the securities granted or to be granted pursuant to the equity plans that are described in the Pricing Prospectus and the Prospectus or any assumed incentive compensation plans or agreements pursuant to an acquisition or similar strategic transaction, (8) the offer or issuance of Common Shares in connection with an acquisition, joint venture, commercial or collaborative relationship or the acquisition or license by the Company of the securities, business property or other assets of another person or entity or pursuant to any employee benefit plan as assumed by the Company in connection with any such acquisition (collectively, a “Potential Acquisition”), provided that the aggregate number of Common Shares that the Company may offer or issue pursuant to this clause (8) shall not exceed 7.5% of the total number of Common Shares issued and outstanding immediately prior to a Potential Acquisition and any recipient of Common Shares pursuant to clause (8) shall enter into a written agreement substantially in the form of Annex II hereto for the remainder of the Lock-Up Period, (9) or the confidential submission of a registration statement with the Commission by the Company under the Act relating to any Lock-Up Securities, provided that, with respect to this clause (9), (i) no public filing with the Commission or any other public announcement may be made during the Lock-Up Period in relation to such registration and (ii) such registration shall not result in an offer, sale, contract to sell, pledge, option to purchase, short sale or other transfer or disposition of, directly or indirectly, any Lock-Up Securities during the Lock-Up Period or (10) the facilitation of establishing a trading plan for any officers or directors of the Company pursuant to Rule 10b5-1 under the Exchange Act for the transfer of Lock-Up Securities during the Lock-Up Period; provided that no public announcement, report filing under the Exchange Act or otherwise is required of or will be voluntarily made by the Company, or any such officer or director, during the Lock-Up Period regarding the establishment of such plan.

 

 

In addition, during the Lock-Up Period, the Company agrees to (a) enforce the Market Standoff Provisions and any similar transfer restrictions contained in any agreement between the Company and any of its securityholders, including, without limitation, through the issuance of stop transfer instructions to the Company’s transfer agent and registrar with respect to any transaction that would constitute a breach of, or default under, the transfer restrictions, except that this provision shall not prevent the Company from effecting such a waiver or amendment to permit a transfer of securities that would be permissible under the terms of the lock-up agreement in the form attached as Annex II hereto, (b) not amend or waive any such transfer restrictions with respect to any such holder without the prior written consent of the Representatives and (c) prevent any securityholder subject to Sanctions from transferring any securities including, without limitation, through the issuance of stop transfer instructions to the Company’s transfer agent and registrar with respect to any transaction.

 

(e)(2) If the Representatives agree to release or waive the restrictions set forth in lock-up letters pursuant to Section 8(m) hereof, in each case for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Annex I hereto through a major news service at least two business days before the effective date of the release or waiver;

 

(f) During a period of two years from the effective date of the Registration Statement, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act, furnish to its shareholders as soon as practicable after the end of each fiscal year an annual report (including the statements of financial position, comprehensive income (loss), changes in equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, as soon as practicable after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the effective date of the Registration Statement), to make available to its shareholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; provided that such information shall be deemed furnished if filed with EDGAR;

 

(g) During a period of two years from the effective date of the Registration Statement, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act, to furnish to you copies of all reports or other communications (financial or other) furnished to shareholders, and to deliver to you (i) as soon as practicable after the date that they are available, copies of any reports and financial statements furnished to or filed with the Commission or any national securities exchange on which any class of securities of the Company is listed; and (ii) such additional information concerning the business and financial condition of the Company as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its shareholders generally or to the Commission); provided that such information shall be deemed furnished if filed with EDGAR;

 

(h) To use the net proceeds received by it from the sale of the Shares pursuant to this Agreement in the manner specified in the Pricing Prospectus under the caption “Use of Proceeds”;

 

(i) To use its best efforts to list for trading, subject to official notice of issuance, the Shares on the Nasdaq Global Select Market (the “Exchange”);

 

(j) To file with the Commission such information on Form 6-K or Form 20-F as may be required by Rule 463 under the Act;

 

 

(k) If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 3a(c) of the Commission’s Informal and Other Procedures (16 CFR 202.3a);

 

(l) Upon reasonable request of any Underwriter, to furnish, or cause to be furnished, to such Underwriter an electronic version of the Company’s trademarks, servicemarks and corporate logo for use on the website, if any, operated by such Underwriter for the purpose of facilitating the on-line offering of the Shares (the “License”); provided, however, that the License shall be used solely for the purpose described above, is granted without any fee, may not be assigned or transferred and shall terminate at the later of (i) the completion of the distribution of the Shares within the meaning of the Act and (ii) the last time of Delivery; and

 

(m) The Company will deliver to the Representatives, on or prior to the date of execution of this Agreement, a properly completed and executed Certification Regarding Beneficial Owners of Legal Entity Customers, together with copies of identifying documentation, and the Company undertakes to provide such additional supporting documentation as the Representatives may reasonably request in connection with the verification of the foregoing certification.

 

6. (a) The Company represents and agrees that, without the prior consent of the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a “free writing prospectus” as defined in Rule 405 under the Act; each Selling Shareholder represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus; and each Underwriter represents and agrees that, without the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Shares that would constitute a free writing prospectus required to be filed with the Commission; any such free writing prospectus the use of which has been consented to by the Company and the Representatives is listed on Schedule III(a) hereto;

 

(b) The Company has complied and will comply with the requirements of Rule 433 under the Act applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission or retention where required and legending; and the Company represents that it has satisfied and agrees that it will satisfy the conditions under Rule 433 under the Act to avoid a requirement to file with the Commission any electronic road show;

 

(c) The Company agrees that if at any time following issuance of an Issuer Free Writing Prospectus or Written Testing-the-Waters Communication authorized by the Company any event occurred or occurs as a result of which such Issuer Free Writing Prospectus or Written Testing-the-Waters Communication would conflict with the information in the Registration Statement, the Pricing Prospectus or the Prospectus or would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances then prevailing, not misleading, the Company will give prompt notice thereof to the Representatives and, if requested by the Representatives, will prepare and furnish without charge to each Underwriter an Issuer Free Writing Prospectus, Written Testing-the-Waters Communication or other document which will correct such conflict, statement or omission; provided, however, that this covenant shall not apply to any statements or omissions in an Issuer Free Writing Prospectus or Written Testing-the-Waters Communication made in reliance upon and in conformity with the Underwriter Information;

 

 

(d) The Company represents and agrees that (i) it has not engaged in, or authorized any other person to engage in, any Testing-the-Waters Communications, other than Testing-the-Waters Communications with the prior consent of the Representatives with entities that the Company reasonably believes are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act; and (ii) it has not distributed, or authorized any other person to distribute, any Written Testing-the-Waters Communications, other than those distributed with the prior consent of the Representatives that are listed on Schedule III(d) hereto; and the Company reconfirms that the Underwriters have been authorized to act on its behalf in engaging in Testing-the-Waters Communications; and

 

(e) Each Underwriter represents and agrees that any Testing-the-Waters Communications undertaken by it were with entities that such Underwriter reasonably believes are qualified institutional buyers as defined in Rule 144A under the Act or institutions that are accredited investors as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act, and each Underwriter has not distributed or authorized any other person to distribute, and will not distribute or authorize any other person to distribute, any Written Testing-the-Waters Communication other than those distributed with the prior written consent or authorization of the Company.

 

7. The Company and each of the Selling Shareholders covenant and agree with one another and with the several Underwriters that (a) the Company will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company’s counsel and accountants in connection with the registration of the Shares under the Act and all other expenses in connection with the preparation, printing, reproduction and filing of the Registration Statement, any Preliminary Prospectus, any Written Testing-the-Waters Communication, any Issuer Free Writing Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of printing or producing any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum, if any, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Shares; (iii) all expenses incurred and documented in connection with the qualification of the Shares for offering and sale under state securities laws as provided in Section 5(b) hereof, including the documented fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky survey; (iv) all fees and expenses in connection with listing the Shares on the Exchange; (v) the filing fees incident to, and the fees and disbursements of counsel for the Underwriters in connection with, any required review by FINRA of the terms of the sale of the Shares; (vi) the cost of preparing share certificates, if applicable; (vii) the cost and charges of any transfer agent or registrar; and (viii) all other reasonable costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section; provided, however, that the amount payable by the Company for the fees and disbursements of counsel to the Underwriters described in (iii) and (v) of this Section 7 shall not exceed an aggregate of $50,000. It is understood, however, that, except as provided in this Section, and Sections 9 and 12 hereof, the Underwriters will pay (i) all of their own costs and expenses, including the fees of their counsel, travel, lodging and meal expenses in connection with any “roadshow” presentation to investors, share transfer taxes on resale of any of the Shares by them, including any New York State share transfer tax, any advertising expenses connected with any offers they may make and (ii) 50% of the cost of any chartered plane, jet, private aircraft or other transportation chartered in connection with any “roadshow” presentation to investors (it being understood that the use of any chartered plane, jet or private aircraft shall expressly be approved by the Company and the Representatives), with the Company bearing the remaining 50% of such costs; (b) such Selling Shareholder will pay or cause to be paid all costs and expenses incident to the performance of such Selling Shareholder’s obligations hereunder including, but not limited to, (i) any fees and expenses of counsel for such Selling Shareholder that are not being paid for by the Company, (ii) all taxes incident to the sale and delivery of the Shares to be sold by such Selling Shareholder to the Underwriters hereunder and (iii) such Selling Shareholder’s pro rata share of the fees and expenses of the Paying Agent.

 

 

8. The obligations of the Underwriters hereunder, as to the Shares to be delivered at each Time of Delivery, shall be subject, in their discretion, to the condition that all representations and warranties and other statements of the Company and the Selling Shareholders herein are, at and as of the Applicable Time and such Time of Delivery, true and correct, the condition that the Company and the Selling Shareholders shall have performed all of its and their obligations hereunder theretofore to be performed, and the following additional conditions:

 

(a) The Prospectus shall have been filed with the Commission pursuant to Rule 424(b) under the Act within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; all material required to be filed by the Company pursuant to Rule 433(d) under the Act shall have been filed with the Commission within the applicable time period prescribed for such filing by Rule 433; if the Company has elected to rely upon Rule 462(b) under the Act, the Rule 462(b) Registration Statement shall have become effective by 10:00 P.M., Washington, D.C. time, on the date of this Agreement; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose or pursuant to Section 8A of the Act shall have been initiated or, to the Company’s knowledge, threatened by the Commission; no stop order suspending or preventing the use of the Pricing Prospectus, Prospectus or any Issuer Free Writing Prospectus shall have been initiated or, to the Company’s knowledge, threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with to your reasonable satisfaction;

 

(b) Latham & Watkins LLP, counsel for the Underwriters, shall have furnished to you such written opinion or opinions and negative assurance letter or letters, dated such Time of Delivery, in form and substance reasonably satisfactory to you, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters;

 

(c) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the Company, shall have furnished to you their written opinion and negative assurance letter, dated such Time of Delivery, in form and substance reasonably satisfactory to you;

 

(d) Appleby (BVI) Limited, British Virgin Islands counsel for the Company, shall have furnished to you their written opinion, dated such Time of Delivery, in form and substance reasonably satisfactory to you;

 

(e) The respective counsel for each of the Selling Shareholders, as indicated in Schedule II hereto, each shall have furnished to you their written opinion with respect to each of the Selling Shareholders for whom they are acting as counsel, dated the First Time of Delivery, each in form and substance reasonably satisfactory to you;

 

(f) On the date of the Prospectus at a time prior to the execution of this Agreement, at 9:30 a.m., New York City time, on the effective date of any post-effective amendment to the Registration Statement filed subsequent to the date of this Agreement and also at each Time of Delivery, Kost Forer Gabbay & Kasierer, a member of EY Global, shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance reasonably satisfactory to you;

 

(g) The Company shall have delivered to the Representatives on the date of the Prospectus at a time prior to the execution of this Agreement and at such Time of Delivery a certificate of the Chief Financial Officer of the Company, in form and substance reasonably satisfactory to you;

 

(h) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Pricing Prospectus any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Pricing Prospectus, and (ii) since the respective dates as of which information is given in the Pricing Prospectus there shall not have been any change in the share capital or long-term debt of the Company or any of its subsidiaries or any change or effect, or any development involving a prospective change or effect, in or affecting (x) the business, properties, general affairs, management, financial position, shareholders’ equity or results of operations of the Company and its subsidiaries, taken as a whole, except as set forth or contemplated in the Pricing Prospectus, or (y) the ability of the Company to perform its obligations under this Agreement, including the issuance and sale of the Shares, or to consummate the transactions contemplated in the Pricing Prospectus and the Prospectus, the effect of which, in any such case described in clause (i) or (ii), is in your judgment so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus and the Prospectus;

 

 

(i) There are no debt securities or preferred shares issued or guaranteed by the Company or any of its subsidiaries that are rated by a “nationally recognized statistical rating organization,” as such term is defined in Section 3(a)(62) under the Exchange Act;

 

(j) On or after the Applicable Time there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or the Nasdaq Global Select Market; (ii) a suspension or material limitation in trading in the Company’s securities on the Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities or a material disruption in commercial banking or securities settlement or clearance services in the United States; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or (v) the occurrence of any other calamity or crisis or any change in financial, political or economic conditions in the United States or elsewhere, if the effect of any such event specified in clause (iv) or (v) in your judgment makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered at such Time of Delivery on the terms and in the manner contemplated in the Pricing Prospectus and the Prospectus;

 

(k) The Shares to be sold at such Time of Delivery shall have been duly listed, subject to official notice of issuance, on the Exchange;

 

(l) FINRA has confirmed that it has not raised any objection with respect to the fairness and reasonableness of the underwriting terms and arrangements relating to the offering of the Shares;

 

(m) The Company shall have obtained and delivered to the Underwriters executed copies of an agreement from each officer and director of the Company and substantially all of the shareholders of the Company, substantially to the effect set forth in Annex II hereto in form and substance reasonably satisfactory to you;

 

(n) The Company shall have complied with the provisions of Section 5(c) hereof with respect to the furnishing of prospectuses on the New York Business Day next succeeding the date of this Agreement; and

 

(o) The Company and the Selling Shareholders shall have furnished or caused to be furnished to you at such Time of Delivery certificates of officers of the Company and of an attorney in fact on behalf of the Selling Shareholders, respectively, reasonably satisfactory to you as to the accuracy of the representations and warranties of the Company and the Selling Shareholders, respectively, herein at and as of such Time of Delivery, as to the performance by the Company and the Selling Shareholders of all of their respective obligations hereunder to be performed at or prior to such Time of Delivery, as to such other matters as you may reasonably request, and the Company shall have furnished or cause to be furnished certificates as to the matters set forth in subsections (a) and (h) of this Section and as to such other matters as you may reasonably request.

 

 

9. (a) The Company will indemnify and hold harmless each Underwriter and each Selling Shareholder against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or Selling Shareholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus, any “roadshow” as defined in Rule 433(h) under the Act (a “roadshow”), any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Act or any Testing-the-Waters Communication prepared or authorized by the Company, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter and Selling Shareholder for any legal or other expenses reasonably incurred by such Underwriter and Selling Shareholder in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, any roadshow or any Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information.

 

(b) Each Selling Shareholder, severally and not jointly, will indemnify and hold harmless each Underwriter and the Company against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or the Company may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, any Issuer Free Writing Prospectus, any roadshow or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto or any Issuer Free Writing Prospectus, or any roadshow or any Testing-the-Waters Communication, in reliance upon and in conformity with written information furnished to the Company by such Selling Shareholder expressly for use therein; and will reimburse each Underwriter and the Company for any legal or other expenses reasonably incurred by such Underwriter or the Company in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that such Selling Shareholder shall only be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus or any amendment or supplement thereto or any Issuer Free Writing Prospectus in reliance upon and in conformity with its Selling Shareholder Information, and provided further, that the liability of such Selling Shareholder pursuant to this Section 9(b) shall not exceed the net proceeds (net of any underwriting discounts and commissions, but before deducting expenses) from the sale of the Shares sold by such Selling Shareholder hereunder (the “Selling Shareholder Proceeds”) less any amounts that such Selling Shareholder is obligated to contribute pursuant to Sections 9(e) and 9(f) below.

 

 

(c) Each Underwriter, severally and not jointly, will indemnify and hold harmless the Company and each Selling Shareholder against any losses, claims, damages or liabilities to which the Company or such Selling Shareholder may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any roadshow or any Testing-the-Waters Communication, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, any Preliminary Prospectus, the Pricing Prospectus or the Prospectus, or any amendment or supplement thereto, or any Issuer Free Writing Prospectus, or any roadshow or any Testing-the-Waters Communication, in reliance upon and in conformity with the Underwriter Information; and will reimburse the Company and each Selling Shareholder for any legal or other expenses reasonably incurred by the Company or such Selling Shareholder in connection with investigating or defending any such action or claim as such expenses are incurred. As used in this Agreement with respect to an Underwriter and an applicable document, “Underwriter Information” shall mean the written information furnished to the Company by such Underwriter through the Representatives expressly for use therein; it being understood and agreed upon that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures appearing in the [fifth] paragraph under the caption “Underwriting,” and the information contained in the [thirteenth to fifteenth] paragraphs under the caption “Underwriting.”

 

(d) Promptly after receipt by an indemnified party under subsection (a), (b) or (c) of this Section 9 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; provided that the failure to notify the indemnifying party shall not relieve it from any liability that it may have under the preceding paragraphs of this Section 9 except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights and defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under the preceding paragraphs of this Section 9. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable and documented costs of investigation. No indemnifying party shall (x) without the prior written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party or (y) be liable for any settlement of any action effected without its prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement.

 

 

(e) If the indemnification provided for in this Section 9 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a), (b) or (c) of this Section 9 in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Shareholders on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Shareholders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Shareholders on the one hand (provided that, with respect to each of the Selling Shareholders, such determination shall be limited by reference only to such Selling Shareholder’s Selling Shareholder Information) or the Underwriters on the other and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, each of the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (e) to contribute are several in proportion to their respective underwriting obligations and not joint. The liability of each Selling Shareholder under this Section 9(e) is several and not joint and shall be limited to an amount equal to its Selling Shareholder Proceeds less any amounts such Selling Shareholder is obligated to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

 

(f) The obligations of the Company and the Selling Shareholders under this Section 9 shall be in addition to any liability which the Company and the Selling Shareholders may otherwise have and shall extend, upon the same terms and conditions, to each employee, officer and director of each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act and each broker-dealer or other affiliate of any Underwriter; and the obligations of the Underwriters under this Section 9 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company and to each person, if any, who controls the Company or any Selling Shareholder within the meaning of the Act.

 

 

(g) The Company and the Selling Shareholders, severally and not jointly, will indemnify and hold harmless to the extent permitted by applicable law the Underwriters against (to the extent actually paid by the Underwriters) any Stamp Taxes, including any interest and penalties with respect thereto, in connection with the sale and delivery of the Shares by the Company and such applicable Selling Shareholder to the Underwriters, as applicable, the initial resale and delivery by the Underwriters of the Shares as contemplated herein or the execution and delivery of this Agreement. All payments made or deemed to be made under this Agreement by, or on behalf of, the Company or a Selling Shareholder, as applicable, will be made exclusive of and without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges of whatsoever nature imposed or levied by or on behalf of the State of Israel, the British Virgin Islands or of any other jurisdiction in which the Company or a Selling Shareholder, as applicable, is organized or incorporated, engaged in business for tax purposes or is otherwise resident for tax purposes or has a permanent establishment, or any political subdivision, authority or agency in or of any of the foregoing having the power to tax (the “Relevant Taxing Jurisdiction”) unless the Company or a Selling Shareholder, as applicable, is or becomes required by law to withhold or deduct such taxes, duties, assessments or other governmental charges. In such event, except for any taxes on net income, capital gains or franchise taxes imposed on the Underwriters by a Relevant Taxing Jurisdiction as a result of any present or former connection (other than any connection resulting from the transactions contemplated by this Agreement) between the Underwriters and the Relevant Taxing Jurisdiction imposing such withholding or deductions, the Company or a Selling Shareholder, as applicable, will pay such additional amounts as may be necessary in order to ensure that the net amounts received by each Underwriter after such withholding or deduction shall equal the amounts that would have been received had such deduction or withholding not been required or made. If requested by the Company, the Underwriters shall reasonably cooperate with the Company by using commercially reasonable efforts to provide customary information or documentation, that the Underwriters are legally entitled to provide and the provision of which does not cause a material prejudice to the Underwriters’ legal or commercial position, to the extent necessary for the Company to obtain an exemption from, or reduction in, withholding or deduction in connection with the payments under this Agreement. Upon request, the Company or a Selling Shareholder, as applicable, shall provide to the Representatives evidence of any amounts withheld or deducted pursuant to the foregoing and shall also provide to the Representatives any official tax receipt or other documentation issued by the appropriate governmental authorities with respect to the payment of such amounts to such governmental authorities. All sums payable or deemed payable by the Company or a Selling Shareholder, as applicable, under this Agreement shall be considered exclusive of Israeli value added tax, sales tax or similar taxes, which taxes shall be borne, paid, collected and remitted by the Company or such Selling Shareholder, if and as applicable.

 

(h) The Company and each Selling Shareholder, severally and not jointly, agrees to indemnify each Underwriter, each employee, officer and director of each Underwriter, and each person, if any, who controls any Underwriter within the meaning of the Act and each broker-dealer or other affiliate of any Underwriter, against any loss incurred as a result of any judgment or order being given or made for any amount due hereunder and such judgment or order being expressed and paid in a currency (the “judgment currency”) other than U.S. dollars and as a result of any variation as between (i) the rate of exchange at which the U.S. dollar amount is converted into the judgment currency for the purpose of such judgment or order, and (ii) the rate of exchange at which such indemnified person is able to purchase U.S. dollars with the amount of the judgment currency actually received by the indemnified person. The foregoing indemnity shall constitute a separate and independent obligation of the Company and each Selling Shareholder and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid. The term “rate of exchange” shall include any premiums and costs of exchange payable in connection with the purchase of, or conversion into, the relevant currency.

 

 

10. (a) If any Underwriter shall default in its obligation to purchase the Shares which it has agreed to purchase hereunder at a Time of Delivery, you may in your discretion arrange for you or another party or other parties reasonably satisfactory to the Company to purchase such Shares on the terms contained herein. If within thirty-six hours after such default by any Underwriter you do not arrange for the purchase of such Shares, then the Company and the Selling Shareholders shall be entitled to a further period of thirty-six hours within which to procure another party or other parties reasonably satisfactory to you to purchase such Shares on such terms. In the event that, within the respective prescribed periods, you notify the Company and the Selling Shareholders that you have so arranged for the purchase of such Shares, or the Company or a Selling Shareholder notifies you that it has so arranged for the purchase of such Shares, you or the Company or the Selling Shareholders shall have the right to postpone such Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in your opinion may thereby be made necessary. The term “Underwriter” as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to this Agreement with respect to such Shares.

 

(b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Shareholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased does not exceed one-eleventh of the aggregate number of all the Shares to be purchased at such Time of Delivery, then the Company and the Selling Shareholders shall have the right to require each non-defaulting Underwriter to purchase the number of Shares which such Underwriter agreed to purchase hereunder at such Time of Delivery and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the number of Shares which such Underwriter agreed to purchase hereunder) of the Shares of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

 

(c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by you, the Company and the Selling Shareholders as provided in subsection (a) above, the aggregate number of such Shares which remains unpurchased exceeds one-eleventh of the aggregate number of all of the Shares to be purchased at such Time of Delivery, or if the Company and the Selling Shareholders shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement (or, with respect to the Second Time of Delivery, the obligations of the Underwriters to purchase and of the Company to sell the Optional Shares) shall thereupon terminate, without liability on the part of any non-defaulting Underwriter, the Company or the Selling Shareholders, except for the expenses to be borne by the Company, the Selling Shareholders and the Underwriters as provided in Section 7 hereof and the indemnity and contribution agreements in Section 9 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default.

 

 

11. The respective indemnities, rights of contribution, agreements, representations, warranties and other statements of the Company, the Selling Shareholders and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any director, officer, employee, affiliate or controlling person of any Underwriter, or the Company, or any of the Selling Shareholders, or any officer or director or controlling person of the Company, or any controlling person of any Selling Shareholder, and shall survive delivery of and payment for the Shares.

 

12. If this Agreement shall be terminated pursuant to Section 10 hereof, neither the Company nor the Selling Shareholders shall then be under any liability to any Underwriter except as provided in Sections 7 and 9 hereof; but, if for any other reason, any Shares are not delivered by or on behalf of the Company or the Selling Shareholders as provided herein or the Underwriters decline to purchase the Shares for any reason permitted under this Agreement, the Company will reimburse the Underwriters through you for all reasonable and documented out-of-pocket expenses approved in writing by you, including reasonable and documented fees and disbursements of counsel, incurred by the Underwriters in making preparations for the purchase, sale and delivery of the Shares not so delivered, but the Company and the Selling Shareholders shall then be under no further liability to any Underwriter except as provided in Sections 7 and 9 hereof.

 

13. In all dealings hereunder, the Representatives shall act on behalf of each of the Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by you jointly or by Goldman Sachs & Co. LLC on behalf of you as the Representatives; and in all dealings with any Selling Shareholder hereunder, you and the Company shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of such Selling Shareholder made or given by any or all of the Attorneys-in-Fact for such Selling Shareholder.

 

All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to you as the Representatives: Goldman Sachs & Co. LLC, 200 West Street, New York, New York 10282-2198, Attention: Registration Department; Jefferies LLC, 520 Madison Avenue, New York, New York 10022, Attention: Global Head of Syndicate; UBS Securities LLC, 1285 Avenue of the Americas, New York, New York 10019 Attention: Equity Syndicate, email: frank.windels@ubs.com; and Citigroup Global Markets Inc. at 388 Greenwich Street, New York, New York 10013, Attention: General Counsel, facsimile number: +1 (646) 291-1469; and if to the Company shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement, Attention: Chief Legal Officer (with a copy to David Goldschmidt, Skadden, Arps, Slate, Meagher & Flom LLP, One Manhattan West, New York, New York 10001); and if to the Selling Shareholders shall be delivered, mailed or sent to each of the Attorneys-in-Fact named in the Power of Attorney, c/o the Company at the address set forth on the cover of the Registration Statement, Attention: Chief Legal Officer, with a copy, which shall not constitute notice, to Whalen LLP, 4701 Von Karman Avenue, Suite 325, Newport Beach, California 92660; provided, however, that any notice to an Underwriter pursuant to Section 9(d) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters’ Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company or the Selling Shareholders by you upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof.

 

 

In accordance with the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), the Underwriters are required to obtain, verify and record information that identifies their respective clients, including the Company and the Selling Shareholders, which information may include the name and address of their respective clients, as well as other information that will allow the underwriters to properly identify their respective clients.

 

14. This Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company and the Selling Shareholders and, to the extent provided in Sections 9 and 11 hereof, the officers and directors of the Company and each person who controls the Company, any Selling Shareholder or any Underwriter, or any director, officer, employee, or affiliate of any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign by reason merely of such purchase.

 

15. Time shall be of the essence of this Agreement. As used herein, the term “business day” shall mean any day when the Commission’s office in Washington, D.C. is open for business.

 

16. The Company and the Selling Shareholders acknowledge and agree that (i) the purchase and sale of the Shares pursuant to this Agreement is an arm’s-length commercial transaction between the Company and the Selling Shareholders, on the one hand, and the several Underwriters, on the other, (ii) in connection therewith and with the process leading to such transaction each Underwriter is acting solely as a principal and not the agent or fiduciary of the Company or any Selling Shareholder, (iii) no Underwriter has assumed an advisory or fiduciary responsibility in favor of the Company or any Selling Shareholder with respect to the offering contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has advised or is currently advising the Company or any Selling Shareholder on other matters) or any other obligation to the Company or any Selling Shareholder except the obligations expressly set forth in this Agreement, (iv) the Company and each Selling Shareholder has consulted its own legal and financial advisors to the extent it deemed appropriate, and (v) none of the activities of the Underwriters in connection with the transactions contemplated herein constitutes a recommendation, investment advice, or solicitation of any action by the Underwriters with respect to any entity or natural person. The Company and each Selling Shareholder agrees that it will not claim that the Underwriters, or any of them, has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to the Company or any Selling Shareholder, in connection with such transaction or the process leading thereto.

 

17. This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company, the Selling Shareholders and the Underwriters, or any of them, with respect to the subject matter hereof.

 

 

18. This Agreement and any transaction contemplated by this Agreement and any claim, controversy or dispute arising under or related thereto shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws that would results in the application of any other law than the laws of the State of New York. The Company and each Selling Shareholder hereby submits to the exclusive jurisdiction of the U.S. federal and New York state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The Company and each Selling Shareholder waives any objection which it may now or hereafter have to the laying of venue of any such suit or proceeding in such courts. The Company and each Selling Shareholder agree that final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Company and each Selling Shareholder and may be enforced in any court to the jurisdiction of which Company and each Selling Shareholder is subject by a suit upon such judgment. The Company and each Selling Shareholder irrevocably appoints eToro USA LLC, located 221 River St 9^th floor, Hoboken, New Jersey 07030, as its authorized agent in the Borough of Manhattan in The City of New York upon which process may be served in any such suit or proceeding, and agrees that service of process upon such authorized agent, and written notice of such service to the Company or the Selling Shareholder, as the case may be, by the person serving the same to the address provided in this Section, shall be deemed in every respect effective service of process upon the Company or the each Selling Shareholder in any such suit or proceeding. The Company and each Selling Shareholder hereby represents and warrants that such authorized agent has accepted such appointment and has agreed to act as such authorized agent for service of process. The Company and each Selling Shareholder further agrees to take any and all action as may be necessary to maintain such designation and appointment of such authorized agent in full force and effect.

 

19. To the extent that the Company and each Selling Shareholder has or hereafter may acquire any immunity (sovereign or otherwise) from jurisdiction of any court of (i) the British Virgin Islands, or any political subdivision thereof, (ii) the United States or the State of New York, (iii) any jurisdiction in which it owns or leases property or assets or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution, set-off or otherwise) with respect to themselves or their respective property and assets or this Agreement, the Company and each Selling Shareholder hereby irrevocably waives such immunity in respect of its obligations under this Agreement to the fullest extent permitted by applicable law.

 

20. The Company, each Selling Shareholder and each of the Underwriters hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

21. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

22. Notwithstanding anything herein to the contrary, the Company and the Selling Shareholders are authorized to disclose to any persons the U.S. federal and state income tax treatment and tax structure of the potential transaction and all materials of any kind (including tax opinions and other tax analyses) provided to the Company and the Selling Shareholders relating to that treatment and structure, without the Underwriters imposing any limitation of any kind. However, any information relating to the tax treatment and tax structure shall remain confidential (and the foregoing sentence shall not apply) to the extent necessary to enable any person to comply with securities laws. For this purpose, “tax structure” is limited to any facts that may be relevant to that treatment.

 

 

23. Recognition of the U.S. Special Resolution Regimes.

 

(a) In the event that any Underwriter that is a Covered Entity becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from such Underwriter of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state of the United States.

 

(b) In the event that any Underwriter that is a Covered Entity or a BHC Act Affiliate of such Underwriter becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under this Agreement that may be exercised against such Underwriter are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or a state of the United States.

 

(c) As used in this section:

 

“BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in accordance with, 12 U.S.C. § 1841(k).

 

“Covered Entity” means any of the following:

 

(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

 

(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

 

(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

 

“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

 

“U.S. Special Resolution Regime” means each of (i) the Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder.

 

[Remainder of page intentionally left blank]

 

 

If the foregoing is in accordance with your understanding, please sign and return to us counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof shall constitute a binding agreement among each of the Underwriters, the Company and each of the Selling Shareholders. It is understood that your acceptance of this letter on behalf of each of the Underwriters is pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and the Selling Shareholders for examination upon request, but without warranty on your part as to the authority of the signers thereof.

 

Any person executing and delivering this Agreement as Attorney-in-Fact for a Selling Shareholder represents by so doing that he has been duly appointed as Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and binding Power of Attorney that authorizes such Attorney-in-Fact to take such action.

 

	Very truly yours,
	ETORO GROUP LTD.
	By:
		Name:
		Title:
	The Selling Shareholders named in Schedule II hereto, acting severally
	By:
		Name:
		Title:	Attorney-in-Fact

 

Accepted as of the date hereof:
GOLDMAN SACHS & CO. LLC
By:
Name:
Title:
JEFFERIES LLC
By:
Name:
Title:
UBS SECURITIES LLC
By:
Name:
Title:
By:
Name:
Title:
CITIGROUP GLOBAL MARKETS INC.
By:
Name:
Title:

 

On behalf of each of the Underwriters

 

 

SCHEDULE I

Underwriter

Total Number of Firm Shares to be Purchased from the Company

Number of Optional Shares to be Purchased from the Company if Maximum Option Exercised

Total Number of Firm Shares to be Purchased from the Selling Shareholders

Goldman Sachs & Co. LLC

Jefferies LLC

UBS Securities LLC

Citigroup Global Markets Inc.

Deutsche Bank Securities Inc.

BofA Securities, Inc.

Cantor Fitzgerald & Co.

Citizens JMP Securities, LLC

Keefe, Bruyette & Woods, Inc.

Mizuho Securities USA LLC

TD Securities (USA) LLC

Canaccord Genuity LLC

Moelis & Company LLC

Needham & Company, LLC

Rothschild & Co US Inc.

Susquehanna Financial Group, LLLP

Total

 

 

SCHEDULE II

 

		Total Number of
		Firm Shares
The Selling Shareholders		to be Sold
[●](a)		[●]
[●](b)		[●]
[●](c)		[●]

 

(a)

This Selling Shareholder is represented by [(i)] Whalen LLPP, 4701 Von Karman Avenue, Suite 325, Newport Beach, California 92660, as to matters of U.S. law [, and (ii) [Name and Address of Counsel], as to matters of [●] law].

 

(b)

This Selling Shareholder is represented by [(i)] Whalen LLPP, 4701 Von Karman Avenue, Suite 325, Newport Beach, California 92660, as to matters of U.S. law [, and (ii) [Name and Address of Counsel], as to matters of [●] law].

 

(c)

This Selling Shareholder is represented by [(i)] Whalen LLPP, 4701 Von Karman Avenue, Suite 325, Newport Beach, California 92660, as to matters of U.S. law [, and (ii) [Name and Address of Counsel], as to matters of [●] law].

 

 

SCHEDULE III

 

(a) Issuer Free Writing Prospectuses not included in the Pricing Disclosure Package:

Electronic roadshow dated [●]

 

(b) Additional Documents Incorporated by Reference:

[None]

 

(c) Information other than the Pricing Prospectus that comprise the Pricing Disclosure Package:

The price to the public for the Shares is $[●] per share.

The number of Firm Shares purchased by the Underwriters is [●].

 

(d) Written Testing-the-Waters Communications:

Investor Presentations dated [●].

 

 

ANNEX I

 

Form of Press Release

 

eToro Group Ltd.

[Date]

 

eToro Group Ltd. (the “Company”) announced today that Goldman Sachs & Co. LLC, Jefferies LLC, UBS Securities LLC and Citigroup Global Markets Inc., the lead book-running managers in the Company’s recent public sale of Class A common shares, are [waiving] [releasing] a lock-up restriction with respect to of the Company’s Class A common shares held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on , 20 , and the shares may be sold on or after such date.

 

This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.

 

ANNEX II

 

FORM OF LOCK-UP AGREEMENT

 

[Date]

 

Goldman Sachs & Co. LLC

Jefferies LLC

UBS Securities LLC

Citigroup Global Markets Inc.

 

As Representatives of the several Underwriters

named in Schedule I to the Underwriting Agreement

 

c/o Goldman Sachs & Co. LLC

200 West Street

New York, NY 10282-2198

 

c/o Jefferies LLC

520 Madison Avenue

New York, New York 10022

 

c/o UBS Securities LLC

1285 Avenue of the Americas

New York, New York 10019

 

c/o Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

 

Re:

eToro Group Ltd. - Lock-Up Agreement

 

Ladies and Gentlemen:

 

The undersigned understands that you, as representatives (the “Representatives”), propose to enter into an underwriting agreement (the “Underwriting Agreement”) on behalf of the several Underwriters named in Schedule I to such agreement (collectively, the “Underwriters”), with eToro Group Ltd., a company organized under the laws of the British Virgin Islands (the “Company”) and the selling shareholders listed on Schedule II to the Underwriting Agreement, providing for a public offering (the “Public Offering”) of shares (the “Shares”) of the Class A common shares, no par value, of the Company (the “Common Shares”) pursuant to a Registration Statement on Form F-1 (the “Registration Statement”) to be filed with the U.S. Securities and Exchange Commission (the “SEC”). Capitalized terms used but not defined herein have the meaning assigned to them in the Underwriting Agreement.

 

 

In consideration of the agreement by the Underwriters to offer and sell the Shares, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period beginning from the date of this agreement (the “Lock-Up Agreement”) and continuing to and including the date 180 days after the date of the final prospectus relating to the Public Offering (the “Prospectus”) (such period, the “Lock-Up Period”), the undersigned shall not, and shall not cause or direct any of his, her, its or their affiliates to, (i) offer, sell, contract to sell, pledge, grant any option, right or warrant to purchase, purchase any option or contract to sell, lend or otherwise transfer or dispose of any Common Shares, or any options or warrants to purchase any Common Shares, or any securities convertible into, exchangeable for or that represent the right to receive Common Shares (such options, rights, warrants or other securities, collectively, “Derivative Instruments”), including, without limitation, any such Common Shares or Derivative Instruments now owned or hereafter acquired by the undersigned (collectively, “Lock-Up Securities”), (ii) engage in any hedging or other transaction or arrangement (including, without limitation, any short sale or the purchase or sale of, or entry into, any put or call option, or combination thereof, forward, swap or any other derivative transaction or instrument, however described or defined) which is designed to or which reasonably could be expected to lead to or result in a sale, loan, pledge or other disposition (whether by the undersigned or someone other than the undersigned), or transfer of any of the economic consequences of ownership, in whole or in part, directly or indirectly, of any Lock-Up Securities, whether any such transaction or arrangement (or instrument provided for thereunder) would be settled by delivery of Common Shares or other securities, in cash or otherwise (any such sale, loan, pledge or other disposition, or transfer of economic consequences, a “Transfer”), (iii) make any demand for or exercise any right with respect to the registration of any Lock-Up Securities or (iv) otherwise publicly announce any intention to engage in or cause any action, activity, transaction or arrangement described in clause (i), (ii) or (iii) above. The undersigned represents and warrants that the undersigned is not, and has not caused or directed any of its affiliates to be or become, currently a party to any agreement or arrangement that provides for, is designed to or which reasonably could be expected to lead to or result in any Transfer during the Lock-Up Period.

 

Notwithstanding the foregoing, the undersigned may:

 

(a)

transfer the undersigned’s Lock-Up Securities:

 

(i) as one or more bona fide gifts or charitable contributions, or for bona fide estate planning purposes,

 

(ii) upon death by will, testamentary document or intestate succession,

 

 

(iii) if the undersigned is a natural person, to any member of the undersigned’s immediate family or to any trust for the direct or indirect benefit of the undersigned or the undersigned’s immediate family or, if the undersigned is a trust, to a trustor or beneficiary of the trust or the estate of a beneficiary of such trust or an entity wholly-owned by one or more members of the undersigned’s immediate family,

 

(iv) to a corporation, partnership, limited liability company or other entity of which the undersigned and the undersigned’s immediate family are the legal and beneficial owner of all of the outstanding equity securities or similar interests,

 

(v) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (a)(i) through (iv) above,

 

(vi) if the undersigned is a corporation, partnership, limited liability company, trust or other business entity, (A) to another corporation, partnership, limited liability company, trust or other business entity that is an affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended, the “Securities Act”) of the undersigned, or to any investment fund or other entity which fund or entity is controlling, controlled by, managing or managed by or under common control with the undersigned or affiliates of the undersigned, or (B) as part of a distribution, transfer or disposition by the undersigned to its shareholders, limited partners, general partners, limited liability company members or other equityholders or to the estate of any such shareholders, limited partners, general partners, limited liability company members or other equityholders,

 

(vii) by operation of law, such as pursuant to a qualified domestic order, divorce settlement, divorce decree, separation agreement or other court or regulatory agency order,

 

(viii) to the Company from an employee of the Company upon death, disability or in connection with termination of employment, in each case, of such employee,

 

(ix) if the undersigned is not an officer or director of the Company, in connection with a sale of the undersigned’s Common Shares acquired (A) from the Underwriters in the Public Offering or (B) in open market transactions after the closing date of the Public Offering,

 

(x) to the Company in connection with the vesting, settlement or exercise of restricted share units (“RSUs”), options, warrants or other rights to purchase Common Shares (including, in each case, by way of “net” or “cashless” exercise) that are scheduled to expire or vest during the Lock-Up Period, including any transfer to the Company for the payment of tax withholdings or remittance payments due as a result of the vesting, settlement or exercise of such RSUs, restricted shares, options, warrants or other rights, or in connection with the conversion or exchange of convertible securities, in all such cases pursuant to equity awards granted under a stock incentive plan or other equity award plan, or pursuant to the terms of convertible or exchangeable securities, as applicable, each as described in the Registration Statement, the preliminary prospectus relating to the Shares included in the Registration Statement immediately prior to the time the Underwriting Agreement is executed and the Prospectus; provided that any securities received upon such vesting, settlement, exercise or conversion that are not transferred to cover any such tax obligations shall be subject to the terms of this Lock-Up Agreement,

 

 

(xi) to the Company in connection with the conversion, exchange or reclassification of the outstanding equity securities of the Company into Common Shares, in connection with the Public Offering and as described in the Registration Statement and the Prospectus; provided that any such Common Shares received upon such conversion, exchange or reclassification shall be subject to the terms of this Lock-Up Agreement,

 

(xii) with the prior written consent of the Representatives on behalf of the Underwriters, or

 

(xiii) to the Underwriters pursuant to the Underwriting Agreement;

 

provided that (A) in the case of clauses (a)(i), (ii), (iii), (iv), (v) and (vi) above, such transfer or distribution shall not involve a disposition for value, (B) in the case of clauses (a)(i), (ii), (iii), (iv), (v), (vi) and (vii) above, it shall be a condition to the transfer or distribution that the donee, devisee, transferee or distributee, as the case may be, shall sign and deliver a lock-up agreement in the form of this Lock-Up Agreement, (C) in the case of clauses (a)(ii), (iii), (iv), (v) and (vi) above, no filing by any party (including, without limitation, any donor, donee, devisee, transferor, transferee, distributor or distributee) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or other public filing, report or announcement reporting a reduction in beneficial ownership of Lock-Up Securities shall be required or shall be voluntarily made in connection with such transfer or distribution, and (D) in the case of clauses (a)(i), (vii), (viii), (ix), (x) and (xi) above, no filing under the Exchange Act or other public filing, report or announcement shall be voluntarily made, and if any such filing, report or announcement shall be legally required during the Lock-Up Period, such filing, report or announcement shall clearly indicate in the footnotes thereto (A) the circumstances of such transfer or distribution and (B) in the case of a transfer or distribution pursuant to clauses (a)(i) or (vii) above, that the donee, devisee, transferee or distributee has agreed to be bound by a lock-up agreement in the form of this Lock-Up Agreement;

 

(b)

enter into a written plan meeting the requirements of Rule 10b5-1 under the Exchange Act relating to the transfer, sale or other disposition of the undersigned’s Lock-Up Securities, if then permitted by the Company; provided that none of the securities subject to such plan may be transferred, sold or otherwise disposed of until after the expiration of the Lock-Up Period and no public announcement, report or filing under the Exchange Act, or any other public filing, report or announcement, shall be voluntarily made regarding the establishment of such plan during the Lock-Up Period, and if any such filing, report or announcement shall be legally required during the Lock-Up Period, such filing, report or announcement shall clearly indicate in the footnotes thereto that that none of the securities subject to such plan may be transferred, sold or otherwise disposed of pursuant to such plan until after the expiration of the Lock-Up Period; and

 

 

(c)

transfer the undersigned’s Lock-Up Securities pursuant to a bona fide third-party tender offer, merger, consolidation or other similar transaction that is approved by the Board of Directors of the Company and made to all holders of the Company’s share capital involving a Change of Control of the Company; provided that in the event that such tender offer, merger, consolidation or other similar transaction is not completed, the undersigned’s Lock-Up Securities shall remain subject to the provisions of this Lock-Up Agreement.

 

If the undersigned is an officer or director of the Company, the undersigned further agrees that the foregoing provisions shall be equally applicable to any issuer-directed or other Shares the undersigned may purchase in the Public Offering.

 

In addition, and notwithstanding the foregoing provisions of this Lock-up Agreement, if the undersigned is not (i) a member of the Board of Directors of the Company, (ii) an “officer” of the Company (as defined in Rule 16a-1(f) under the Exchange Act) or (iii) an affiliate of the Company (as defined under Rule 144 under the Securities Act), the Lock-Up Period shall automatically expire with respect to 30% of the undersigned’s Lock-Up Securities (rounded down to the nearest whole share) that are subject to the restrictions hereunder (the “Release Shares”) upon the first Trading Day (as defined below) that (i) occurs at least ninety (90) days after the date of the Prospectus, (ii) occurs after the Company has publicly furnished at least one quarterly earnings release on a Form 6-K or has filed at least one annual report on Form 20-F and (iii) on such date, and for any five out of any 10 consecutive Trading Days ending on such date, the last reported closing price of the Common Shares on the exchange on which the Common Shares are listed is equal to at least 125% of the initial public offering price per share set forth on the cover of the Prospectus for the Public Offering (any such 10 Trading Day Period, the “Measurement Period” and the date of such release, the “Early Release Date”). The number of Release Shares shall be calculated based on the number of the Lock-Up Securities subject to such restrictions as of the last day of the Measurement Period and will be automatically released from such restrictions immediately prior to the opening of trading on the exchange on which the Common Shares are listed on two full Trading Days following the Early Release Date (the “Early Lock-Up Release”); provided that if the Early Release Date shall occur during a “black-out period” under the Company’s insider trading policy, the Early Release Date shall be deemed to be the first Trading Day after the expiration of the “black-out period.”

 

The Company shall announce by a press release issued through a major news service, or on a Form 6-K, any Early Release Date at least one full Trading Day prior to the opening of trading on the Early Release Date.

 

 

Notwithstanding the foregoing, in the event that the Representatives grant a release to any holder of Common Shares or Derivative Instruments other than the undersigned relating to the lock-up restrictions set forth herein (any such release, a “Triggering Release,” and the party receiving such release, the “Triggering Release Party”), then, if the undersigned is a Major Holder (as defined below), then a number of each of the undersigned’s Lock-Up Securities (rounded down to the nearest whole share) shall also be released (a “Pro Rata Release”) from the restrictions set forth in this Lock-Up Agreement, such number of Lock-Up Securities released being the total number of the undersigned’s Lock-Up Securities held on the date of such Triggering Release multiplied by a fraction, the numerator of which shall be the number of Lock-Up Securities released pursuant to the Triggering Release, and the denominator of which shall be the total number of Common Shares and Derivative Instruments held by the Triggering Release Party on such date; provided that such Pro Rata Release shall not be applied in the event of (a) releases effected solely to permit a transfer not involving a disposition for value and the transferee has agreed in writing to be bound by the same terms described in this Lock-Up Agreement to the extent and for the duration that such terms remain in effect at the time of such transfer, (b) releases granted to a natural person due to circumstances of an emergency or hardship as determined by the Representatives in their sole judgment, (c) releases granted from such lock-up restrictions to any individual by the Representatives in an amount less than or equal to 1% of the Company’s total outstanding Common Shares and Derivative Instruments, taken as a whole on a fully diluted basis, in the aggregate across all such releases and after giving effect to such release(s), or (d) any primary or secondary public offering or sale that is underwritten (the “Underwritten Sale”) of the Common Shares during the Lock-Up Period; provided, however, that the undersigned is offered the opportunity to participate on a pro rata basis with and otherwise on the same terms as any other equity holders in such Underwritten Sale.

 

For purposes of this Lock-Up Agreement, (i) a “Trading Day” shall mean a day on which the New York Stock Exchange and the Nasdaq Stock Market are open for the buying and selling of securities, (ii) “immediate family” shall mean any relationship by blood, current or former marriage, domestic partnership or adoption, not more remote than first cousin, (iii) “Change of Control” shall mean the transfer (whether by tender offer, merger, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons, of share capital if, after such transfer, such person or group of affiliated persons would hold at least a majority of the outstanding voting securities of the Company (or the surviving entity) and (iv) “Major Holder” shall mean each holder who is a party to the Company’s Investors’ Rights Agreement, dated as of February 1, 2023, as amended from time to time.

 

If the undersigned is not a natural person, the undersigned represents and warrants that no single natural person, entity or “group” (within the meaning of Section 13(d)(3) of the Exchange Act), other than a natural person, entity or “group” (as described above) that has executed a Lock-Up Agreement in substantially the same form as this Lock-Up Agreement, beneficially owns, directly or indirectly, 50% or more of the common equity interests, or 50% or more of the voting power, in the undersigned.

 

If the undersigned is an officer or director of the Company, (i) the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Common Shares, the Representatives will notify the Company of the impending release or waiver, and (ii) the Company has agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service (or such other method approved by the Representatives that satisfies the requirements of FINRA Rule 5131(d)(2)) at least two business days before the effective date of the release or waiver. Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (i) the release or waiver is effected solely to permit a transfer not for consideration or that is to an immediate family member as defined in FINRA Rule 5130(i)(5) and (ii) the transferee has agreed in writing to be bound by the same terms described in this Lock-Up Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.

 

 

The undersigned now has, and, except as contemplated by clauses (a) and (c) of the third paragraph of this Lock-Up Agreement, for the duration of this Lock-Up Agreement will have, good and marketable title to the undersigned’s Lock-Up Securities, free and clear of all liens, encumbrances and claims whatsoever. The undersigned also agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of the undersigned’s Lock-Up Securities except in compliance with the foregoing restrictions.

 

The undersigned acknowledges and agrees that none of the Underwriters has made any recommendation or provided any investment or other advice to the undersigned with respect to this Lock-Up Agreement or the subject matter hereof, and the undersigned has consulted his, her, its or their own legal, accounting, financial, regulatory, tax and other advisors with respect to this Lock-Up Agreement and the subject matter hereof to the extent the undersigned has deemed appropriate. The undersigned further acknowledges and agrees that, although the Underwriters may have provided or hereafter provide to the undersigned in connection with the Public Offering a Form CRS and/or certain other disclosures as contemplated by Regulation Best Interest, the Underwriters have not made and are not making a recommendation to the undersigned to enter into this Lock-Up Agreement or to transfer, sell or dispose of, or to refrain from transferring, selling or disposing of, any Common Shares, and nothing set forth in such disclosures or herein is intended to suggest that any Underwriter is making such a recommendation.

 

This Lock-Up Agreement shall automatically terminate and the undersigned shall be released from all of his, her or its obligations hereunder upon the earlier of (i) the date on which the Registration Statement filed with the SEC with respect to the Public Offering is withdrawn, (ii) the date on which for any reason the Underwriting Agreement is terminated (other than the provisions thereof that survive termination) prior to payment for and delivery of the Shares to be sold thereunder (other than pursuant to the Underwriters’ option thereunder to purchase additional Shares), (iii) the date on which the Company notifies the Representatives, in writing and prior to the execution of the Underwriting Agreement, that it does not intend to proceed with the Public Offering and (iv) June 30, 2025, in the event that the Underwriting Agreement has not been executed by such date (provided, however, that the Company may, by written notice to the undersigned prior to such date, extend such date by a period of up to an additional 90 days).

 

The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the Public Offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns. The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement. This Lock-Up Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflict of laws that would result in the application of any law other than the laws of the State of New York. This Lock-Up Agreement may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com or www.echosign.com) or other transmission method, and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

[Signature page follows]

 

 

Very truly yours,

 

IF AN INDIVIDUAL:			IF AN ENTITY:
By:
	(duly authorized signature)		(please print complete name of entity)
Name:			By:
	(please print full name)			(duly authorized signature)
			Name:
				(please print full name)
			Title:
				(please print full title)

 

 

8

 

Exhibit 3.1

 

No. 1373068

 

British Virgin Islands

Business Companies Act, 2004 

 

Memorandum of Association & Articles of Association of

eToro Group Ltd.

 

Incorporated the 14th day of December, 2006

 

As Amended the 17th day of February, 2021

As Amended the 8th day of February, 2023

 

 

 

 

 

 

BVI Company Formations Ltd

PO Box 146, Road Town, Tortola

British Virgin Islands

 

 

TERRITORY OF THE BRITISH VIRGIN ISLANDS

 

THE BVI BUSINESS COMPANIES ACT, 2004

 

MEMORANDUM OF ASSOCIATION

 

OF

 

eToro Group Ltd.

 

1.

Company Name

 

1.1.

The name of the Company is eToro Group Ltd.

 

1.2.

The directors or members may from time to time change the Company’s name by Resolution of Directors or Resolution of Members. The directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file an application for change of name with the Registrar, and any such change will take effect from the date of the certificate of change of name issued by the Registrar.

 

1.3.

A change of name of the Company shall constitute an amendment of the Memorandum and Articles and in the event of a resolution being passed to change the name of the Company, the provisions below in respect of amendments to the Memorandum and Articles must be complied with.

 

2.

Company Limited by Shares, Liability of Members

 

2.1.

The Company is a company limited by shares.

 

2.2.

The liability of each member is limited to:

 

(a)

the amount from time to time unpaid on that member’s shares;

 

(b)

any liability expressly provided for in the Memorandum or the Articles; and

 

(c)

any liability to repay a distribution pursuant to section 58(1) of the Act.

 

3.

Registered Office

 

3.1.

The first registered office of the Company will be situated at the office of the registered agent which is at P.O. Box 3321, Drake Chambers, Road Town, Tortola, British Virgin Islands.

 

3.2.

The current registered office shall be at the offices of Trident Trust Company at the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P. O. Box 146, Road Town, Tortola, British Virgin Islands.

 

3.3.

The directors or members may from time to time change the Company’s registered office by Resolution of Directors or Resolution of Members, provided that the Company’s registered office shall at all times be the office of the registered agent. The directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file with the Registrar a notice of change of registered office, and any such change of registered office will take effect from the date of the registration by the Registrar of such notice

 

4.

Registered Agent

 

4.1.

The first registered agent of the Company will be Commonwealth Trust Limited of P.O. Box 3321, Drake Chambers, Road Town, Tortola, British Virgin Islands.

 

 

4.2.

The current registered agent shall be at the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands.

 

4.3.

The directors or members may from time to time change the Company’s registered agent by Resolution of Directors or Resolution of Members. The directors shall give notice of such resolution to the registered agent of the Company (meaning the existing registered agent), for the registered agent to file with the Registrar a notice of change of registered agent, and any such change of registered agent will take effect from the date of the registration by the Registrar of such notice.

 

4.4.

If the existing registered agent does not file such notice on instruction by the directors, the directors shall procure that a notice of change of registered agent is filed with the Registrar by a legal practitioner in the British Virgin Islands acting on behalf of the Company, and any such change of registered agent will take effect from the date of the registration by the Registrar of such notice.

 

5.

General Objects and Powers

 

5.1.

Subject to the following provisions of this Memorandum, the objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Act or any other law of the British Virgin Islands.

 

5.2.

Without limiting the foregoing, the powers of the Company include the power to do the following:

 

(a)

grant options over unissued shares in the Company and treasury shares;

 

(b)

issue securities that are convertible into shares;

 

(c)

give financial assistance to any person in connection with the acquisition of the Company’s own shares;

 

(d)

issue debt obligations of every kind and grant options, warrants and rights to acquire debt obligations;

 

(e)

guarantee a liability or obligation of any person and secure any of its obligations by mortgage, pledge or other charge, of any of its assets for that purpose; and

 

(f)

protect the assets of the Company for the benefit of the Company, its creditors and its members and, at the discretion of the directors, for any person having a direct or indirect interest in the Company.

 

6.

Maximum Number of Authorised Shares

 

6.1.

Authorised Shares.

 

The Company is authorised to issue a maximum of 45,885,727 shares with no par value as follows:

 

(a)

30,000,000 shares, no par value per share (“Common Shares”);

 

(b)

15,885,727 Preferred Shares, no par value per share (“Preferred Shares”):

 

(i)

1,738,247 shares of which are designated as Class A Preferred Shares (“Class A Preferred Shares”);

 

(ii)

2,878,640 shares of which are designated as Class B Preferred Shares (“Class B Preferred Shares”);

 

(iii)

1,771,440 shares of which are designated as Class C Preferred Shares (“Class C Preferred Shares”);

 

 

(iv)

1,710,426 shares of which are designated as Class C-2 Preferred Shares (“Class C-2 Preferred Shares”); and

 

(v)

2,479,936 shares of which are designated as Class D Preferred Shares (“Class D Preferred Shares”).

 

(vi)

3,648,714 shares of which are designated as Class E Preferred Shares (“Class E Preferred Shares”).

 

(vii)

1,658,324 shares of which are designated as Class F Preferred Shares (“Class F Preferred Shares”).

 

6.2.

The maximum number of shares the Company is authorised to issue may be increased or decreased (but not below the number of shares thereof then outstanding) by (subject to any vote of the holders of one or more series of Preferred Shares that may be required by the terms of this Memorandum or the Articles) a Resolution of Members.

 

7.

Rights Conferred by Common Shares

 

7.1.

Each Common Share in the Company confers on the holder the following rights, all of which are subject to and qualified by the rights, powers and preferences of the holders of the Preferred Shares set forth in this Memorandum:

 

(a)

the right to one vote on any Resolution of Members;

 

(b)

the right to an equal share in any dividend paid by the Company in accordance with the Act; and

 

(c)

the right to an equal share in the distribution of the surplus assets of the Company.

 

8.

Rights Conferred by Preferred Shares

 

8.1.

The Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares and the Class F Preferred Shares shall have the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. The Class C-2 Preferred Shares and the Class C Preferred Shares shall be collectively referred to as the “Class C and C-2 Preferred Shares”. The Class F Preferred Shares, Class E Preferred Shares, the Class D Preferred Shares, the Class C-2 Preferred Shares and the Class C Preferred Shares shall be collectively referred to as the “Class F, E, D, C and C-2 Preferred Shares”. To the fullest extent permitted by law, the Class C Preferred Shares and the Class C-2 Preferred Shares shall vote in all matters together as a single class, including for the purpose of class votes, such that the consent of the Class C Preferred Shares and the Class C-2 Preferred Shares shall not be required independently, including without limitation, in cases where any modification or abrogation is made to the rights, preferences, or privileges of the Class C Preferred Shares or the Class C-2 Preferred Shares.   Unless otherwise indicated, references to “Sections” or “Subsections” in this clause ‎8.1 refer to sections and subsections of this clause ‎8.1.

 

 

 

9.

Dividends.

 

The Company shall not declare, pay or set aside any dividends on shares of any other class or series of shares of the Company (other than dividends on shares payable in shares) unless (in addition to the obtaining of any consents required elsewhere in this Memorandum or the Articles) the holders of the Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares and Class F Preferred Shares then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares and Class F Preferred Shares in an amount at least equal to in the case of a dividend on Common Shares or any class or series that is convertible into Common Shares, that dividend per share of Class A Preferred Shares, Class B Preferred, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Shares and (B) the number of shares issuable upon conversion of a share of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, in each case calculated on the record date for determination of holders entitled to receive such dividend. The “Class A Original Issue Price” shall mean $0.9617 per share, subject to appropriate adjustment in the event of any shares dividend, shares split, combination or other similar event with respect to the Class A Preferred Shares. The “Class B Original Issue Price” shall mean $2.2523 per share, subject to appropriate adjustment in the event of any shares dividend, shares split, combination or other similar event with respect to the Class B Preferred Shares. The “Class C Original Issue Price” shall mean $4.9 per share, subject to appropriate adjustment in the event of any shares dividend, shares split, combination or other similar event with respect to the Class C Preferred Shares. The “Class C-2 Original Issue Price” shall mean $9.6613 per share, subject to appropriate adjustment in the event of any shares dividend, shares split, combination or other similar event with respect to the Class C- 2 Preferred Shares. The “Class D Original Issue Price” shall mean $12.32065 per share, subject to appropriate adjustment in the event of any shares dividend, shares split, combination or other similar event with respect to the Class D Preferred Shares. The “Class E Original Issue Price” shall mean $41.11 per share, subject to appropriate adjustment in the event of any shares dividend, shares split, combination or other similar event with respect to the Class E Preferred Shares. The “Class F Original Issue Price” shall mean $150.754672 per share, subject to appropriate adjustment in the event of any shares dividend, shares split, combination or other similar event with respect to the Class F Preferred Shares.

 

10.

Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales. In the event of any (A) voluntary or involuntary (i) dissolution, liquidation or winding-up of the Company, (ii) bankruptcy, insolvency or reorganization proceeding under any bankruptcy or insolvency or similar law, whether voluntary or involuntary, properly commenced by the Company or against the Company and not withdrawn within 90 days or (iii) a receiver or liquidator is appointed to all or substantially all of the Company’s assets and such appointment is not withdrawn or vacated within 90 days (each a “Liquidation Event”) defined below) or (B) Deemed Liquidation Event (as defined in Section ‎10.8.1), funds, assets or proceeds (whether cash, capital, surplus, earnings, funds, shares, securities or assets of any kind) legally available for distribution to the Company’s shareholders or payable to the Company’s Shareholders in connection with such Liquidation Event or Deemed Liquidation Event, as the case may be (“Distributable Assets”), shall be distributed to the Company’s shareholders as follows:

 

10.1.

Payments to Holders of Class F Preferred Shares. The holders of Class F Preferred Shares then outstanding shall be entitled to receive out of any Distributable Assets, prior and in preference to the distribution of any Distributable Assets to the holders of Class A Preferred Shares, Class B Preferred Shares, Class C and C-2 Preferred Shares, Class D Preferred Shares and Class E Preferred Shares or Common Shares by reason of their ownership thereof, for each outstanding share of Class F Preferred Shares held by such holder, an amount per share equal to the greater of (i) the Class F Original Issue Price, plus any dividends declared but unpaid thereon, minus dividends declared following the Class F Original Issue Date (as defined in Section 12.4.1) and actually paid (without duplication), or (ii) such amount per share as would have been payable had each such share of the Class F Preferred Shares, been converted into Common Shares pursuant to Section 12 immediately prior to such Liquidation Event or Deemed Liquidation Event. The amount which a holder of Class F Preferred Shares is entitled to receive for each outstanding share of Class F Preferred Shares is hereinafter referred to as the “Class F Liquidation Amount”. If upon any such Liquidation Event or Deemed Liquidation Event, the Distributable Assets shall be insufficient to pay the holders of Class F Preferred Shares the full amount to which they shall be entitled under this Subsection 10.1, the holders of Class F Preferred Shares shall share ratably in any distribution of the Distributable Assets in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full up to the Class F Liquidation Amount.

 

 

10.2.

Payments to Holders of Class E Preferred Shares. The holders of Class E Preferred Shares then outstanding shall be entitled to receive out of any Distributable Assets, prior and in preference to the distribution of any Distributable Assets to the holders of Class A Preferred Shares, Class B Preferred Shares, Class C and C-2 Preferred Shares and Class D Preferred Shares or Common Shares by reason of their ownership thereof, for each outstanding share of Class E Preferred Shares held by such holder, an amount per share equal to the greater of (i) the Class E Original Issue Price, plus any dividends declared but unpaid thereon, minus dividends declared following the consummation of the initial closing under that certain class E preferred share purchase agreement, dated March 21, 2018 (the “Preferred E Initial Closing”) and actually paid (without duplication), or (ii) such amount per share as would have been payable had each such share of the Class E Preferred Shares, been converted into Common Shares pursuant to Section 12 immediately prior to such Liquidation Event or Deemed Liquidation Event. The amount which a holder of Class E Preferred Shares is entitled to receive for each outstanding share of Class E Preferred Shares is hereinafter referred to as the “Class E Liquidation Amount”. If upon any such Liquidation Event or Deemed Liquidation Event, the Distributable Assets shall be insufficient to pay the holders of Class E Preferred Shares the full amount to which they shall be entitled under this Subsection 10.1, the holders of Class E Preferred Shares shall share ratably in any distribution of the Distributable Assets in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full up to the Class E Liquidation Amount.

 

10.3.

Payments to Holders of Class D Preferred Shares. Upon payment in full of the amounts required to be paid by Subsection 10.1, the holders of Class D Preferred Shares then outstanding shall be entitled to receive out of any Distributable Assets, prior and in preference to the distribution of any Distributable Assets to the holders of Class A Preferred Shares, Class B Preferred Shares, Class C-2 Preferred Shares and Class C Preferred Shares or Common Shares by reason of their ownership thereof, for each outstanding share of Class D Preferred Shares held by such holder, an amount per share equal to the greater of (i) the Class D Original Issue Price, plus any dividends declared but unpaid thereon, minus dividends declared following the Preferred E Initial Closing and actually paid (without duplication), or (ii) such amount per share as would have been payable had each such share of the Class D Preferred Shares, been converted into Common Shares pursuant to Section 12 immediately prior to such Liquidation Event or Deemed Liquidation Event. The amount which a holder of Class D Preferred Shares is entitled to receive for each outstanding share of Class D Preferred Shares is hereinafter referred to as the “Class D Liquidation Amount”. If upon any such Liquidation Event or Deemed Liquidation Event, the Distributable Assets shall be insufficient to pay the holders of Class D Preferred Shares the full amount to which they shall be entitled under this Subsection 10.1, the holders of Class D Preferred Shares shall share ratably in any distribution of the Distributable Assets in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full up to the Class D Liquidation Amount.

 

10.4.

Payments to Holders of Class C-2 Preferred Shares and Class C Preferred Shares. Upon payment in full of the amounts required to be paid by Subsection ‎10.1 and ‎10.3, the holders of Class C-2 Preferred Shares and Class C Preferred Shares then outstanding shall be entitled to receive out of any remaining Distributable Assets (if any), prior and in preference to the distribution of any Distributable Assets to the holders of Class A Preferred Shares, Class B Preferred Shares or Common Shares by reason of their ownership thereof, for each outstanding share of Class C-2 Preferred Shares and Class C Preferred Shares held by such holder, an amount per share equal to the greater of (i) the Class C-2 Original Issue Price or the Class C Original Issue Price, as applicable, plus any dividends declared but unpaid thereon, minus dividends declared following the Preferred E Initial Closing and actually paid (without duplication), or (ii) such amount per share as would have been payable had each such share of the Class C-2 Preferred Shares or Class C Preferred Shares, as applicable, been converted into Common Shares pursuant to Section 12 immediately prior to such Liquidation Event or Deemed Liquidation Event. The amount which a holder of Class C-2 Preferred Shares is entitled to receive for each outstanding share of Class C-2 Preferred Shares is hereinafter referred to as the “Class C-2 Liquidation Amount” and the amount which a holder of Class C Preferred Shares is entitled to receive for each outstanding share of Class C Preferred Shares is hereinafter referred to as the “Class C Liquidation Amount”. If upon any such Liquidation Event or Deemed Liquidation Event, the Distributable Assets shall be insufficient to pay the holders of Class C-2 Preferred Shares and the Class C Preferred Shares the full amount to which they shall be entitled under this Subsection ‎10.4, the holders of Class C-2 Preferred Shares and Class C Preferred Shares shall share ratably in any distribution of the remaining Distributable Assets in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full up to the Class C-2 Liquidation Amount and the Class C Liquidation Amount.

 

10.5.

Payments to Holders of Class B Preferred Shares. Upon payment in full of the amounts required to be paid by Subsection ‎10.1, ‎10.3 and Subsection ‎10.4, the holders of Class B Preferred Shares then outstanding shall be entitled to receive out of any remaining Distributable Assets (if any), prior and in preference to the distribution of any Distributable Assets to the holders of Class A or Common Shares by reason of their ownership thereof, for each outstanding share of Class B Preferred Shares held by such holder, an amount per share equal to the greater of (i) the Class B Original Issue Price, minus dividends declared following the Preferred E Initial Closing and actually paid (without duplication), or (ii) such amount per share as would have been payable had each such share been converted into Common Shares pursuant to Section ‎12 immediately prior to such Liquidation Event or Deemed Liquidation Event (the amount payable pursuant to this sentence is hereinafter referred to as the “Class B Liquidation Amount”). If upon any such Liquidation Event or Deemed Liquidation Event, the Distributable Assets shall be insufficient to pay the holders of Class B Preferred Shares the full amount to which they shall be entitled under this Subsection ‎10.5, the holders of Class B Preferred Shares shall share ratably in any distribution of the remaining Distributable Assets in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full up to the Class B Liquidation Amount.

 

 

10.6.

Payments to Holders of Class A Preferred Shares. Upon payment in full of the amounts required to be paid by Subsection ‎10.1, Subsection ‎10.4, Subsection ‎10.5 and Subsection ‎10.4 ‎10.5, the holders of Class A Preferred Shares then outstanding shall be entitled to receive out of any remaining Distributable Assets (if any), prior and in preference to the distribution of any Distributable Assets to the holders of Common Shares by reason of their ownership thereof, for each outstanding share of Class A Preferred Shares held by such holder, an amount per share equal to the greater of (i) the Class A Original Issue Price, minus dividends declared following the Preferred E Initial Closing and actually paid (without duplication), or (ii) such amount per share as would have been payable had each such share been converted into Common Shares pursuant to Section 12 immediately prior to such Liquidation Event or Deemed Liquidation Event (the amount payable pursuant to this sentence is hereinafter referred to as the “Class A Liquidation Amount”). If upon any such Liquidation Event or Deemed Liquidation Event, the Distributable Assets shall be insufficient to pay the holders of Class A Preferred Shares the full amount to which they shall be entitled under this Subsection ‎10.6, the holders of Class A Preferred Shares shall share ratably in any distribution of the remaining Distributable Assets in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full up to the Class A Liquidation Amount.

 

10.7.

Distribution of Remaining Assets. After the payment of all preferential amounts required to be paid to the holders of Class F Preferred Shares, Class E Preferred Shares, Class D Preferred Shares, Class C-2 Preferred Shares, Class C Preferred Shares, Class B Preferred Shares and Class A Preferred Shares, the remaining Distributable Assets (if any) shall be distributed to the holders of Common Shares, pro rata, based on the number of Common Shares held by each such holder.

 

10.8.

Deemed Liquidation Events

 

10.8.1.

Definition. Each of the following events shall be considered a “Deemed Liquidation Event” unless (i) the holders of a majority of the outstanding Preferred Shares, voting together as a single class, and (ii) the holders of a majority of the outstanding Class F, E, D, C and Class C-2 Preferred Shares, voting together as a single class (the “Requisite Preferred Holders”), elect otherwise by written notice sent to the Company prior to the effective date of any such event, provided, however, and for avoidance of any doubt, that even in case where the Requisite Preferred Holders elect otherwise by written consent, the amounts payable to the holders of Class E Preferred Shares shall not be less than the Distributable Assets that would have been paid to the holders of Class E Preferred Shares in such Deemed Liquidation Event had the Requisite Preferred Holders not determined that such event shall not be considered a Deemed Liquidation Event, and the amounts payable to the holders of Class F Preferred Shares shall not be less than the Distributable Assets that would have been paid to the holders of Class F Preferred Shares in such Deemed Liquidation Event had the Requisite Preferred Holders not determined that such event shall not be considered a Deemed Liquidation Event:

 

(a)

a merger, consolidation or other reorganization in which

 

(i)

the Company is a constituent party or

 

(ii)

a Subsidiary of the Company is a constituent party and the Company issues shares pursuant to such merger or consolidation,

 

except any such merger, consolidation or other reorganization involving the Company or a Subsidiary in which the shares of the Company outstanding immediately prior to such merger, consolidation or other reorganization continue to represent, or are converted into or exchanged for shares that represent, immediately following such merger, consolidation or other reorganization, at least a majority by voting power, of the shares of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation (provided that, for the purpose of this Subsection ‎10.8.1, all shares issuable upon exercise of Options (as defined below) outstanding immediately prior to such merger or consolidation or upon conversion of Convertible Securities (as defined below) outstanding immediately prior to such merger, consolidation or other reorganization shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger, consolidation or other reorganization on the same terms as the actual outstanding shares are converted or exchanged);

 

 

(b)

the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any Subsidiary of the Company of all or substantially all the assets of the Company and its Subsidiaries taken as a whole or the sale or disposition (whether by merger or otherwise) of one or more Subsidiaries of the Company if substantially all of the assets of the Company and its Subsidiaries taken as a whole are held by such Subsidiary or Subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Subsidiary of the Company; or

 

(c)

the sale, exchange or transfer by the Company’s shareholders of voting control of the Company or any Subsidiary, in a single transaction or series of related transactions.

 

10.8.2.

Effecting a Deemed Liquidation Event.

 

(a)

The Company shall not have the power to effect a Deemed Liquidation Event referred to in Subsection ‎10.8.1(a)(i) above unless the agreement or plan of merger, consolidation or other reorganization for such transaction (the “Merger Agreement”) provides that the consideration payable to the shareholders of the Company shall be allocated among the holders of shares of the Company in accordance with Subsections ‎10.1 through ‎10.7 above.

 

(b)

In the event of a Deemed Liquidation Event referred to in Subsection 10.8.1(a)(ii) or 10.8.1(b) above, if the Company does not effect a dissolution of the Company or distribution of the consideration to the shareholders of the Company in accordance with Subsections 10.1 through 10.7 above within 120 days after such Deemed Liquidation Event, then (i) the Company shall send a written notice to each holder of Preferred Shares no later than the 120th day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such Preferred Shares pursuant to Section 14, and (ii) the Company shall use the consideration received by the Company for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Company) (the “Net Proceeds”), on the 150th day after such Deemed Liquidation Event, to redeem all outstanding Preferred Shares at a price per share equal to the Class F Liquidation Amount, Class E Liquidation Amount, Class D Liquidation Amount, the Class C-2 Liquidation Amount, the Class C Liquidation Amount, Class B Liquidation Amount or Class A Liquidation Amount, as applicable. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Net Proceeds are not sufficient to redeem all outstanding Preferred Shares or if the Company does not have sufficient lawfully available funds to effect such redemption, the Company shall first redeem a pro rata portion of each holder’s Class F Liquidation Amount, and then, if there are remaining Net Proceeds, redeem a pro rata portion of each holder’s Class E Liquidation Amount, and then, if there are remaining Net Proceeds, redeem a pro rata portion of each holder’s Class D Liquidation Amount, and then, if there are remaining Net Proceeds, redeem a pro rata portion of each holder’s Class C Preferred Shares and Class C-2 Preferred Shares, and then, if there are remaining Net Proceeds, redeem a pro rata portion of each holder’s Class B Preferred Shares, and then, if there are remaining Net Proceeds, redeem a pro rata portion of each holder’s Class A Preferred Shares, to the fullest extent of such available Net Proceeds or such lawfully available funds, as the case may be, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Company has funds legally available therefor. The provisions of Section 14 below shall apply, with such necessary changes in the details thereof as are necessitated by the context, to the redemption of the Preferred Shares pursuant to this Subsection 10.8.2(b). Prior to the distribution or redemption provided for in this Subsection 10.8.2(b), the Company shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.

 

 

10.8.3.

Amount Deemed Paid or Distributed. The amount deemed paid or distributed to the holders of shares of the Company upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Company or the acquiring person, firm or other entity. The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Company.

 

10.8.4.

Allocation of Escrow. In the case of a Deemed Liquidation Event pursuant to Subsection ‎10.8.1(a)(i) above, if any portion of the consideration payable to the shareholders of the Company is placed into escrow and/or is payable to the shareholders of the Company subject to contingencies, unless otherwise shall be determined in good faith by the Company’s Board of Directors, the Merger Agreement shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of shares of the Company in accordance with Subsections ‎10.1 through ‎10.7 above as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event and (b) any additional consideration which becomes payable to the shareholders of the Company upon release from escrow or satisfaction of contingencies shall be allocated among the holders of shares of the Company in accordance with Subsections ‎10.1 through ‎10.7 above after taking into account the previous payment of the Initial Consideration as part of the same transaction.

 

11.

Voting.

 

11.1.

General. On any matter presented to the shareholders of the Company for their action or consideration at any meeting of shareholders of the Company (or by written consent of shareholders in lieu of meeting), each holder of outstanding Preferred Shares shall be entitled to cast the number of votes equal to the number of whole shares into which the Preferred Shares held by such holder are convertible as of the record date for determining shareholders entitled to vote on such matter. Except as provided by law or by the other provisions of this Memorandum or the Articles, holders of Preferred Shares shall vote together with the holders of Common Shares as a single class.

 

11.2.

Election of Directors. The Shares shall confer rights to appoint directors in accordance with the Articles.

 

11.3.

Protective Provisions.

 

11.3.1.

At any time when Preferred Shares are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or other reorganization or otherwise, do any of the following and shall not permit any of its Subsidiaries to do any of the following without (in addition to any other vote required by law or this Memorandum or the Articles) the written consent or affirmative vote of the holders of a majority of the outstanding Preferred Shares, voting together as a single and separate class, given in writing or by vote at a meeting, if the matter is within the authority of the shareholders of the Company, or without the written consent or affirmative vote of either the Class C Director or the Class A/B Director, given in writing or by vote at a meeting, if the matter is within the authority of the Board of Directors of the Company, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

 

(a)

(i) create, or authorize the creation of, or issue or obligate itself to issue shares of, any class or series of shares unless the same ranks junior to the Class C Preferred Shares with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and redemption rights, (ii) increase the authorized number of Class F Preferred Shares, Class E Preferred Shares ,Class D Preferred Shares, Class C Preferred Shares or Class C-2 Preferred Shares or (iii) increase the authorized number of shares of any additional class or series of shares unless the same ranks junior to the Class C Preferred Shares with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and redemption rights;

 

 

(b)

create, or authorize the creation of, or issue, or authorize the issuance of any debt security, or permit any Subsidiary to take any such action with respect to any debt security (including guarantees other than for trade accounts of the Company or a Subsidiary and excluding for the purpose of payments to processors or clearing accounts arising in the ordinary course of business and further excluding any hedging, financial instruments (including securities, commodities and cryptocurrencies) lending and borrowing transactions or financial instruments repurchase transactions backed by financial instruments, and the collateral arrangements in respect thereof, entered into in the ordinary course of business), if the aggregate indebtedness of the Company and its Subsidiaries for borrowed money following such action would exceed $75,000,000;

 

(c)

purchase or redeem (or permit any Subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of the Company other than (i) redemptions of or dividends or distributions on the Preferred Shares as expressly authorized in this Memorandum, (ii) dividends or other distributions payable on the Common Shares solely in the form of additional shares, and (iii) repurchases of shares from former employees, officers, directors, consultants or other persons who performed services for the Company or any Subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof;

 

(d)

effect any (i) merger, consolidation or Liquidation Event, (ii) liquidation, dissolution or winding up of any Subsidiary or (iii) Deemed Liquidation Event, or consent to any of the foregoing, unless (1) such transaction results in the distribution of the Distributable Assets to the holders of the Class E, D, C and C-2 Preferred Shares which are allocated in accordance with Section 2 above, and which amount is payable in full at the closing of such transaction in cash or in publicly-traded securities on or through the facilities of the Nasdaq Global Market or the New York Shares Exchange or other stock exchange approved by the Company’s Board of Directors including the Class C Director or the Class A/B Director, and (2) the holders of Class F, E, D, C and C-2 Preferred Shares shall not be subject to escrow, indemnity, claw-back and any other similar forfeiture provisions in connection with the Sale of the Company more restrictive on a proportional or absolute basis than those to which the holders of Common Shares shall be subject to in connection with such transaction;

 

(e)

alter or change the rights, preferences or privileges of the shares of the Class F Preferred Shares, the Class E Preferred Shares, the Class D Preferred Shares, the Class C Preferred Shares, the Class C-2 Preferred Shares, the Class B Preferred Shares or the Class A Preferred Shares so as to affect adversely such shares;

 

(f)

create, or hold shares in, or otherwise acquire an interest in any entity that is not wholly owned (either directly or through one or more other Subsidiaries) by the Company;

 

(g)

sell, transfer or otherwise dispose of any shares or other interest of any direct or indirect Subsidiary of the Company, or permit any direct or indirect Subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such Subsidiary or permit direct or indirect Subsidiaries to issue any shares or other interest other than to the Company or any other Subsidiary of the Company;

 

(h)

amend, alter, waive or repeal, whether by merger, consolidation or other reorganization or otherwise, any provision of the Memorandum and Articles of Association of the Company in any manner that alters or changes the rights, preferences or privileges of the shares of the Class F Preferred Shares, Class E Preferred Shares, Class D Preferred Shares, the Class C Preferred Shares, the Class C-2 Preferred Shares, the Class B Preferred Shares or the Class A Preferred Shares, so as to adversely affect such shares, it being clarified that the creation, authorization or issuance of a new class of shares, whether or not having rights, preferences or privileges equal or senior to any of the Class F Preferred Shares, Class E Preferred Shares, Class D Preferred Shares, the Class C Preferred Shares, the Class C-2 Preferred Shares, the Class B Preferred Shares or the Class A Preferred Shares, shall not be deemed an alteration or change of the rights of any such class of shares;

 

(i)

increase or decrease the authorized number of directors constituting the Board of Directors, other than increases in connection with a bona fide equity financing of the Company in which the securities issued in connection therewith rank junior to the Class E, D, C and C-2 Preferred Shares with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends and redemption rights;

 

 

(j)

materially change the principal business of the Company or its Subsidiaries; or

 

(k)

otherwise enter into or be a party to any transaction with any director of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended) of any such person, except for transactions made in the ordinary course of business and pursuant to reasonable requirements of the Company’s business and upon fair and reasonable terms that are approved by a majority of the Board of Directors.

 

11.3.2.

At any time when Class F Preferred Shares are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or other reorganization or otherwise, do any of the following and shall not permit any of its Subsidiaries to do any of the following without (in addition to any other vote required by law or this Memorandum or the Articles) the written consent or affirmative vote of the holders of a majority of the Class F Preferred Shares, given in writing or by vote at a meeting, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

 

Alter or change the powers, preferences or special rights of the Class F Preferred Shares, including without limitation Sections 12.4.4 and 13.1, so as to affect the Class F Preferred Shares adversely, but shall not so affect the Class F, E, D, C and C-2 Preferred Shares together as a single class.

 

11.3.3.

At any time when Class E Preferred Shares are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or other reorganization or otherwise, do any of the following and shall not permit any of its Subsidiaries to do any of the following without (in addition to any other vote required by law or this Memorandum or the Articles) the written consent or affirmative vote of the holders of a majority of the Class E Preferred Shares, given in writing or by vote at a meeting, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

 

Alter or change the powers, preferences or special rights of the Class E Preferred Shares, including without limitation Sections 12.4.4 and 13.1, so as to affect the Class E Preferred Shares adversely, but shall not so affect the Class F, E, D, C and C-2 Preferred Shares together as a single class.

 

11.3.4.

At any time when Class D Preferred Shares are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or other reorganization or otherwise, do any of the following and shall not permit any of its Subsidiaries to do any of the following without (in addition to any other vote required by law or this Memorandum or the Articles) the written consent or affirmative vote of the holders of a majority of the Class D Preferred Shares, given in writing or by vote at a meeting, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

 

Alter or change the powers, preferences or special rights of the Class D Preferred Shares so as to affect the Class D Preferred Shares adversely, but shall not so affect the Class F, E, D, C and C-2 Preferred Shares together as a single class.

 

11.3.5.

At any time when Class C and C-2 Preferred Shares are outstanding, the Company shall not, either directly or indirectly by amendment, merger, consolidation or other reorganization or otherwise, do any of the following and shall not permit any of its Subsidiaries to do any of the following without (in addition to any other vote required by law or this Memorandum or the Articles) the written consent or affirmative vote of the holders of a majority of the Class C and C-2 Preferred Shares, given in writing or by vote at a meeting, and any such act or transaction entered into without such consent or vote shall be null and void ab initio, and of no force or effect:

 

Alter or change the powers, preferences or special rights of the Class C and C-2 Preferred Shares so as to affect the Class C and C-2 Preferred Shares adversely, but shall not so affect the Class F, E, D, C and C-2 Preferred Shares together as a single class.

 

 

12.

Optional Conversion.

 

The holders of the Preferred Shares shall have conversion rights as follows (the “Conversion Rights”):

 

12.1.

Right to Convert.

 

12.1.1.

Conversion Ratio. Each Preferred Share shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares as is determined by dividing (i) in the case of the Class F Preferred Shares, the Class F Original Issue Price by the Class F Conversion Price (as defined below) in effect at the time of conversion; (ii) in the case of the Class E Preferred Shares, the Class E Original Issue Price by the Class E Conversion Price (as defined below) in effect at the time of conversion; (iii) in the case of the Class D Preferred Shares, the Class D Original Issue Price by the Class D Conversion Price (as defined below) in effect at the time of conversion; (iv) in the case of the Class C-2 Preferred Shares, the Class C-2 Original Issue Price by the Class C-2 Conversion Price (as defined below) in effect at the time of conversion, (v) in the case of the Class C Preferred Shares, the Class C Original Issue Price by the Class C Conversion Price (as defined below) in effect at the time of conversion, (vi) in the case of the Class B Preferred Shares, the Class B Original Issue Price by the Class B Conversion Price (as defined below) in effect at the time of conversion, and (vii) in the case of the Class A Preferred Shares, the Class A Original Issue Price by the Class A Conversion Price (as defined below) in effect at the time of conversion. The “Class F Conversion Price” shall initially be equal to $150.754672. The “Class E Conversion Price” shall initially be equal to $41.11. The “Class D Conversion Price” shall initially be equal to $12.32065. The “Class C- 2 Conversion Price” shall initially be equal to $9.6613. The “Class C Conversion Price” shall initially be equal to $4.9. The “Class B Conversion Price” shall initially be equal to $2.2523. The “Class A Conversion Price” shall initially be equal to $0.9617. Such Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C-2 Conversion Price, Class C Conversion Price, Class B Conversion Price, and Class A Conversion Price, and the rate at which Class F Preferred Shares, Class E Preferred Shares, Class D Preferred Shares, Class C-2 Preferred Shares, Class C Preferred Shares, Class B Preferred Shares, and Class A Preferred Shares may be converted into shares, shall be subject to adjustment as provided below.

 

12.1.2.

Termination of Conversion Rights. In the event of a Liquidation Event or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or the Class F Preferred Shares, as applicable.

 

12.2.

Fractional Shares. No fractional shares shall be issued upon conversion of the Preferred Shares. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Shares as determined in good faith by the Board of Directors of the Company. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of Preferred Shares the holder is at the time converting into Common Shares and the aggregate number of shares issuable upon such conversion.

 

12.3.

Mechanics of Conversion.

 

12.3.1.

Notice of Conversion. In order for a holder of Preferred Shares to voluntarily convert Preferred Shares into shares, such holder shall surrender the certificate or certificates for such Preferred Shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Preferred Shares (or at the principal office of the Company if the Company serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Preferred Shares represented by such certificate or certificates and, if applicable, any event on which such conversion is contingent. Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares to be issued. If required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or his, her or its attorney duly authorized in writing. The close of business on the date of receipt by the transfer agent (or by the Company if the Company serves as its own transfer agent) of such certificates (or lost certificate affidavit and agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such date. The Company shall, as soon as practicable after the Conversion Time, issue and deliver to such holder of Preferred Shares, or to his, her or its nominees, a certificate or certificates for the number of full shares issuable upon such conversion in accordance with the provisions hereof, a certificate for the number (if any) of the Preferred Shares represented by the surrendered certificate that were not converted into Common Shares, and cash as provided in Subsection 12.2 in lieu of any fraction of a share of Common Shares otherwise issuable upon such conversion and payment of any declared but unpaid dividends on the Preferred Shares converted.

 

 

12.3.2.

Reservation of Shares. The Company shall at all times when Preferred Shares shall be outstanding, reserve and keep available out of its authorized but unissued shares, for the purpose of effecting the conversion of the Preferred Shares, such number of its duly authorized shares as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Shares; and if at any time the number of authorized but unissued shares shall not be sufficient to effect the conversion of all then outstanding shares of the Preferred Shares, the Company shall take such corporate action as may be necessary to increase its authorized but unissued shares to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite shareholder approval of any necessary amendment to this Memorandum or the Articles. Before taking any action which would cause an adjustment reducing the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price or Class F Conversion Price below the then par value of the shares issuable upon conversion of the Preferred Shares, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares at such adjusted Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price or Class F Conversion Price.

 

12.3.3.

Effect of Conversion. All Preferred Shares which shall have been surrendered for conversion as provided in this Memorandum shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares in exchange therefor and to receive payment of any dividends declared but unpaid thereon. Any Preferred Shares so converted shall be cancelled and may not be reissued as shares of such class, and the Company may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of Preferred Shares accordingly.

 

12.3.4.

No Further Adjustment. Upon any such conversion, no adjustment to the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price or Class F Conversion Price shall be made for any declared but unpaid dividends on the Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares as applicable, surrendered for conversion or on the Common Shares delivered upon conversion.

 

12.3.5.

Taxes. The Company shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares upon conversion of Preferred Shares pursuant to this Section 12. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares in a name other than that in which the Preferred Shares so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

 

12.4.

Adjustments to Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price and Class C-2 Conversion Price for Diluting Issues.

 

12.4.1.

Special Definitions. For purposes of this section ‎12.4, the following definitions shall apply:

 

(a)

“Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Shares or Convertible Securities.

 

(b)

“Class F Original Issue Date” shall mean the date on which the first share of Class F Preferred Shares was issued.

 

(c)

“Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Shares, but excluding Options.

 

 

(d)

“Additional Shares” shall mean all shares issued (or, pursuant to Subsection 12.4.3 below, deemed to be issued) by the Company after the Class F Original Issue Date, other than the following shares, and shares deemed issued pursuant to the following Options and Convertible Securities (collectively “Exempted Securities”):

 

(i)

shares, Options or Convertible Securities issued as a dividend or distribution on Preferred Shares;

 

(ii)

shares, Options or Convertible Securities issued by reason of a dividend, shares split, split-up or other distribution on shares that is covered by Subsections 12.5, 12.6, 12.7 or 12.8 below;

 

(iii)

up to such number of shares or Options issued to employees or directors of, or consultants or advisors to, the Company or any of its Subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Company, including the Class C Director or the Class A/B Director;

 

(iv)

shares, Options or Convertible Securities issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors of the Company, including the Class C Director or the Class A/B Director;

 

(v)

shares, Options or Convertible Securities issued in strategic transactions for primarily non-equity financing purposes approved by the Board of Directors of the Company, including the Class C Director or the Class A/B Director;

 

(vi)

shares issued upon the exercise or conversion of Options or Convertible Securities, as applicable, which are outstanding prior to the Class F Original Issue Date, in each case provided such issuance is pursuant to the terms of such Option or Convertible Securities;

 

(vii)

shares or Convertible Securities issued pursuant to the bona fide acquisition of another company by the Company by merger, purchase of substantially all of the assets or other reorganization, provided that such issuances are approved by the Board of Directors of the Company;

 

(viii)

other than for purposes of the application of Article 12.4.4 to the Class F Preferred Shares, shares of Common Stock issued pursuant to the sale of such shares to the public in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended or the equivalent laws of another jurisdiction (“IPO”) or in connection with a Reverse Listing, provided that such issuance is approved by the Board of Directors of the Company; or

 

(ix)

which have been determined by holders of a majority of the then outstanding Class F, E, D, C and C-2 Preferred Shares, voting as a single class (the “Preferred C, C-2, D, E and F Majority”) not to be deemed “Additional Shares”.

 

12.4.2.

No Adjustment of the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, the Class C Conversion Price and the Class C-2 Conversion Price. No adjustment in the Class F Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares if the Company receives written notice from the holders of a majority of the then outstanding Class F Preferred Shares, voting as a single and separate class, agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares. No adjustment in the Class E Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares if the Company receives written notice from the holders of a majority of the then outstanding Class E Preferred Shares, voting as a single and separate class, agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares. No adjustment in the Class D Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares if the Company receives written notice from the holders of a majority of the then outstanding Class D Preferred Shares, voting as a single and separate class, agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares. No adjustment in the Class C Conversion Price or the Class C-2 Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares if the Company receives written notice from the holders of a majority of the then outstanding Class C Preferred Shares and Class C-2 Preferred Shares, voting together as a single class, agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares.

 

 

12.4.3.

Deemed Issue of Additional Shares.

 

(a)

If the Company at any time or from time to time after the Class F Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

 

(b)

If the terms of any Option or Convertible Securities, the issuance of which resulted in an adjustment to the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, the Class C Conversion Price or the Class C-2 Conversion Price, as applicable, pursuant to the terms of Subsection 12.4.4 below, are revised as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Securities (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Securities) to provide for either (1) any increase or decrease in the number of shares issuable upon the exercise, conversion and/or exchange of any such Option or Convertible Securities or (2) any increase or decrease in the consideration payable to the Company upon such exercise, conversion and/or exchange, then, effective upon such increase or decrease becoming effective the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, computed upon the original issue of such Option or Convertible Securities (or upon the occurrence of a record date with respect thereto) shall be readjusted to such Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, as would have obtained had such revised terms been in effect upon the original date of issuance of such Option or Convertible Securities. Notwithstanding the foregoing, no readjustment pursuant to this clause (b) shall have the effect of increasing the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, to an amount which exceeds the lower of (i) the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, in effect immediately prior to the original adjustment made as a result of the issuance of such Option or Convertible Securities, or (ii) the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, that would have resulted from any issuances of Additional Shares (other than deemed issuances of Additional Shares as a result of the issuance of such Option or Convertible Securities) between the original adjustment date and such readjustment date.

 

(c)

If the terms of any Option or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, pursuant to the terms of Subsection 12.4.4 below (either because the consideration per share (determined pursuant to Subsection 12.4.5 hereof) of the Additional Shares subject thereto was equal to or greater than the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, then in effect, or because such Option or Convertible Securities was issued before the Class F Original Issue Date, are revised after the Class F Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Securities (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Securities) to provide for either (1) any increase or decrease in the number of shares issuable upon the exercise, conversion or exchange of any such Option or Convertible Securities or (2) any increase or decrease in the consideration payable to the Company upon such exercise, conversion or exchange, then such Option or Convertible Securities, as so amended or adjusted, and the Additional Shares subject thereto (determined in the manner provided in Subsection 12.4.3(a) above) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

 

(d)

Upon the expiration or termination of any unexercised Option or unconverted or unexchanged Convertible Securities (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, pursuant to the terms of Subsection 12.4.4 below, the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, shall be readjusted to such Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, as would have obtained had such Option or Convertible Securities (or portion thereof) never been issued.

 

(e)

If the number of shares issuable upon the exercise, conversion and/or exchange of any Option or Convertible Securities, or the consideration payable to the Company upon such exercise, conversion and/or exchange, is calculable at the time such Option or Convertible Securities is issued or amended but is subject to adjustment based upon subsequent events, any adjustment to the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, provided for in this Subsection 12.4.3 shall be effected at the time of such issuance or amendment based on such number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequent adjustments shall be treated as provided in clauses (b) and (c) of this Subsection 12.4.3). If the number of shares issuable upon the exercise, conversion and/or exchange of any Option or Convertible Securities, or the consideration payable to the Company upon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Securities is issued or amended, any adjustment to the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, that would result under the terms of this Subsection 12.4.3 at the time of such issuance or amendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subject to subsequent adjustments), assuming for purposes of calculating such adjustment to the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, that such issuance or amendment took place at the time such calculation can first be made.

 

12.4.4.

Adjustment of the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price upon Issuance of Additional Shares.

 

In the event the Company shall at any time after the Class F Original Issue Date issue Additional Shares (including Additional Shares deemed to be issued pursuant to Subsection 12.4.3), without consideration or for a consideration per share less than the Class F Conversion Price, the Class E Conversion Price, the Class D Conversion Price, the Class C Conversion Price or the Class C-2 Conversion Price, as applicable, in effect immediately prior to such issue, then the Class F Conversion Price, the Class E Conversion Price, the Class D Conversion Price, the Class C Conversion Price or the Class C-2 Conversion Price, as applicable, shall be reduced, concurrently with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

 

CP2 = CP1 * (A + B) ÷ (A + C).

 

 

For purposes of the foregoing formula, the following definitions shall apply:

 

(i)

“CP2” shall mean the Class F Conversion Price, the Class E Conversion Price, the Class D Conversion Price, the Class C Conversion Price or the Class C-2 Conversion Price, as applicable, in effect immediately after such issue of Additional Shares;

 

(ii)

“CP1” shall mean the Class F Conversion Price, the Class E Conversion Price, the Class D Conversion Price, the Class C Conversion Price or the Class C-2 Conversion Price, as applicable, in effect immediately prior to such issue of Additional Shares;

 

(iii)

“A” shall mean the number of shares outstanding immediately prior to such issue of Additional Shares (treating for this purpose as outstanding all shares issuable upon exercise of Options outstanding immediately prior to such issue or upon conversion or exchange of Convertible Securities (including the Preferred Shares) outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such issue);

 

(iv)

“B” shall mean the number of shares that would have been issued if such Additional Shares had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by CP1); and

 

(v)

“C” shall mean the number of such Additional Shares issued in such transaction.

 

12.4.5.

Determination of Consideration. For purposes of this Subsection 12.4, the consideration received by the Company for the issue of any Additional Shares shall, subject to the Act, be computed as follows:

 

(a)

Cash and Property: Such consideration shall:

 

(i)

insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company, excluding amounts paid or payable for accrued interest;

 

(ii)

insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Company; and

 

(iii)

in the event Additional Shares are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Company.

 

(b)

Options and Convertible Securities. The consideration per share received by the Company for Additional Shares deemed to have been issued pursuant to Subsection 12.4.3, relating to Options and Convertible Securities, shall be determined by dividing:

 

(i)

the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

 

(ii)

the maximum number of shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

 

 

12.4.6.

Multiple Closing Dates. In the event the Company shall issue on more than one date Additional Shares that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price pursuant to the terms of Subsection 12.4.4 above then, upon the final such issuance, the Class F Conversion Price, Class E Conversion Price, Class D Conversion Price, Class C Conversion Price or Class C-2 Conversion Price, as applicable, shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

 

12.5.

Adjustment for Shares Splits and Combinations. If the Company shall at any time or from time to time after the Class F Original Issue Date, effect a stock split or subdivision of the outstanding Common Shares, the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price and the Class F Conversion Price in effect immediately before that stock split or subdivision shall be proportionately decreased so that the number of shares issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares outstanding. If the Company shall at any time or from time to time after the Class F Original Issue Date, combine the outstanding shares, the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price and the Class F Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares outstanding. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

12.6.

Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Class F Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Shares entitled to receive, a dividend or other distribution payable on the Common Shares in additional shares, then and in each such event the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price and the Class F Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Class A Conversion Price, the Class B Conversion Price, the Class C Conversion Price, the Class C-2 Conversion Price, the Class D Conversion Price, the Class E Conversion Price or the Class F Conversion Price as applicable, then in effect by a fraction:

 

(1)

the numerator of which shall be the total number of shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

 

(2)

the denominator of which shall be the total number of shares issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares issuable in payment of such dividend or distribution.

 

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price and Class F Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price and the Class F Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) no such adjustment shall be made if the holders of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, simultaneously receive a dividend or other distribution of shares in a number equal to the number of shares as they would have received if all outstanding Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, had been converted into Common Shares on the date of such event.

 

12.7.

Adjustments for Other Dividends and Distributions. In the event the Company at any time or from time to time after the Class F Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Shares entitled to receive, a dividend or other distribution payable in securities of the Company (other than a distribution of shares in respect of outstanding shares) or in other property and the provisions of Section 9 do not apply to such dividend or distribution, then and in each such event the holders of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares and Class F Preferred Shares shall receive, simultaneously with the distribution to the holders of Common Shares, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, had been converted into Common Shares on the date of such event.

 

 

12.8.

Adjustment for Merger or Reorganization, etc. Subject to the provisions of Subsection 10.7, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Shares (but not the Preferred Shares) are converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 12.4, 12.6 or 12.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each Preferred Share shall thereafter be convertible in lieu of the Common Shares into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of the Company issuable upon conversion of one share of such series immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Company) shall be made in the application of the provisions in this Section 12 with respect to the rights and interests thereafter of the holders of the Preferred Shares to the end that the provisions set forth in this Section 12 (including provisions with respect to changes in and other adjustments of the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price and the Class F Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or the Class F Preferred Shares.

 

12.9.

Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price or Class F Conversion Price pursuant to this Section 12, the Company at its expense shall, as promptly as reasonably practicable but in any event not later than 10 days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, a certificate setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, is convertible) and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, as promptly as reasonably practicable after the written request at any time of any holder of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable, (but in any event not later than 10 days thereafter), furnish or cause to be furnished to such holder a certificate setting forth (i) the Class A Conversion Price, Class B Conversion Price, Class C Conversion Price, Class C-2 Conversion Price, Class D Conversion Price, Class E Conversion Price or the Class F Conversion Price, as applicable, then in effect, and (ii) the number of shares and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable.

 

12.10.

Notice of Record Date. In the event:

 

(a)

the Company shall take a record of the holders of its Common Shares (or other shares or securities at the time issuable upon conversion of the Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of any class or any other securities, or to receive any other security; or

 

(b)

of any reorganization of the share structure of the Company, any reclassification of the Common Shares of the Company, or any Deemed Liquidation Event; or

 

(c)

of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will send or cause to be sent to the holders of the Preferred Shares a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Shares (or such other shares or securities at the time issuable upon the conversion of the Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares or Class F Preferred Shares, as applicable) shall be entitled to exchange their shares (or such other shares or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Class A Preferred Shares, Class B Preferred Shares, Class C Preferred Shares, Class C-2 Preferred Shares, Class D Preferred Shares, Class E Preferred Shares, Class F Preferred Shares and the Common Shares. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

 

 

13.

Mandatory Conversion.

 

13.1.

Trigger Events. Upon either (a) the date and time, or the occurrence of an event, specified in writing by the Preferred C, C-2, D, E and F Majority, or (b) the closing of an IPO approved by the Board of Directors provided that (1) such offering results in at least $100,000,000 of gross proceeds, net of the underwriting discount and commissions, to the Company; and (2) the Common Shares are listed for trading on either the New York Shares Exchange or the NASDAQ National Market or other stock exchange approved by the Company’s Board of Directors including the Class C Director or the Class A/B Director (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to in this Memorandum as the “Mandatory Conversion Time”) (this Subsection 13.1(b), a “QPO”), or (c) the closing of a Reverse Listing, (i) all outstanding Preferred Shares shall automatically be converted into Common Shares, at the then effective conversion ratio of each class of Preferred Shares and (ii) such shares may not be reissued by the Company; provided, however, that if the price per share in such QPO will be less than 1.5 times the Class E Original Issue Price, the Conversion of the Class E Preferred Shares shall also require the consent of the holders of a majority of the then outstanding Class E Preferred Shares.

 

Notwithstanding anything to the contrary, in the event of a conversion of all Preferred Shares pursuant to Section 13.1(a),

 

(i)

and the Company consummates a Deemed Liquidation Event prior to an IPO or Reverse Listing, THEN, the Distributable Assets payable to the holders of Class E Preferred Shares in such Deemed Liquidation Event shall not be less than the Distributable Assets that would have been paid to the holders of Class E Preferred Shares in such Deemed Liquidation Event had the Class E Preferred Shares not been converted into Common Shares, and the Distributable Assets payable to the holders of Class F Preferred Shares in such Deemed Liquidation Event shall not be less than the Distributable Assets that would have been paid to the holders of Class F Preferred Shares in such Deemed Liquidation Event had the Class F Preferred Shares not been converted into Common Shares.

 

(ii)

if such conversion is effected in conjunction with an IPO which does not qualify as a QPO or a Reverse Listing, and the price per share in such IPO or Reverse Listing is lower than the Class E Original Issue Price, then immediately prior to the closing of such IPO or Reverse Listing, the Class E Preferred Shares conversion price (and consequently the conversion ratio) shall be adjusted based on the following formula (i.e. the price per share in such IPO or Reverse Listing shall be deemed to be the issuance of Additional Shares):

 

CP2 = CP1 * (A + B) ÷ (A + C).

 

For purposes of the foregoing formula, the following definitions shall apply:

 

“CP2” shall mean the Class E Conversion Price in effect immediately after such issue of Additional Shares;

 

“CP1” shall mean the Class E Conversion Price, in effect immediately prior to such issue of Additional Shares;

 

“A” shall mean the number of Class E Preferred Shares outstanding immediately prior to such issue of Additional Shares (treating for this purpose as outstanding all Class E Preferred Shares issuable upon conversion or exchange of Convertible Securities outstanding immediately prior to such issue) (i.e., “narrow-based”); “B” shall mean the number of shares that would have been issued if such Additional Shares had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by the Company in respect of such issue by CP1); and

 

“C” shall mean the number of such Additional Shares issued in such transaction.

 

 

13.2.

Procedural Requirements. All holders of record of Preferred Shares shall be sent written notice of the Mandatory Conversion Time and the place designated for mandatory conversion of all such Preferred Shares pursuant to this Section ‎13. Such notice need not be sent in advance of the occurrence of the Mandatory Conversion Time. Upon receipt of such notice, each holder of Preferred Shares shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company at the place designated in such notice, and shall thereafter receive certificates for the number of shares to which such holder is entitled pursuant to this Section ‎13. At the Mandatory Conversion Time, all outstanding Preferred Shares shall be deemed to have been converted into shares, which shall be deemed to be outstanding of record, and all rights with respect to the Preferred Shares so converted, including the rights, if any, to receive notices and vote (other than as a holder of Common Shares), will terminate, except only the rights of the holders thereof, upon surrender of their certificate or certificates (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the last sentence of this Subsection ‎13.2. If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. As soon as practicable after the Mandatory Conversion Time and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for Preferred Shares, the Company shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares issuable on such conversion in accordance with the provisions hereof, together with cash as provided in Subsection ‎12.2 in lieu of any fraction of a share of Common Shares otherwise issuable upon such conversion and the payment of any declared but unpaid dividends on the Preferred Shares converted.

 

13.3.

Effect of Mandatory Conversion. All Preferred Shares shall, from and after the Mandatory Conversion Time, no longer be deemed to be outstanding and, notwithstanding the failure of the holder or holders thereof to surrender the certificates for such shares on or prior to such time, all rights with respect to such shares shall immediately cease and terminate at the Mandatory Conversion Time, except only the right of the holders thereof to receive shares in exchange therefor and to receive payment of any dividends declared but unpaid thereon. Such converted Preferred Shares shall be cancelled and may not be reissued as shares of such class, and the Company may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of Preferred Shares accordingly.

 

14.

Redemption Mechanics.

 

14.1.

Redemption Notice. Upon the occurrence of the event described in Subsection (b)10.8.2(b), a written notice of the mandatory redemption (the “Redemption Notice”) shall be sent to each holder of record of Preferred Shares not less than 40 days prior to each redemption date (the date of each such installment being referred to as a “Redemption Date”). Each Redemption Notice shall state:

 

(a)

the number of Preferred Shares held by the holder that the Company shall redeem on the Redemption Date specified in the Redemption Notice;

 

(b)

the Redemption Date and the price being paid per share (the “Redemption Price”);

 

(c)

the date upon which the holder’s right to convert such shares terminates (as determined in accordance with Subsection 12.1); and

 

(d)

that the holder is to surrender to the Company, in the manner and at the place designated, his, her or its certificate or certificates representing the Preferred Shares to be redeemed.

 

14.2.

Surrender of Certificates; Payment. On or before the applicable Redemption Date, each holder of Preferred Shares to be redeemed on such Redemption Date, unless such holder has exercised his, her or its right to convert such shares as provided in Section ‎12, shall surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the Preferred Shares represented by a certificate are redeemed, a new certificate representing the unredeemed Preferred Shares shall promptly be issued to such holder.

 

 

14.3.

Rights Subsequent to Redemption. If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the Redemption Price payable upon redemption of the Preferred Shares to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor, then notwithstanding that the certificates evidencing any of the Preferred Shares so called for redemption shall not have been surrendered, dividends with respect to such Preferred Shares shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Redemption Price without interest upon surrender of their certificate or certificates therefor.

 

14.4.

Except as set forth in Subsection ‎10.8.2(b), the holder of the Preferred Shares shall not be required the redemption of the Preferred Shares.

 

15.

Redeemed or Otherwise Acquired Shares. Any Preferred Shares which are redeemed or otherwise acquired by the Company or any of its Subsidiaries shall be automatically and immediately cancelled and shall not be reissued, sold or transferred. Neither the Company nor any of its Subsidiaries may exercise any voting or other rights granted to the holders of Preferred Shares following redemption.

 

16.

Waiver. Any of the rights, powers, preferences and other terms of the Class C Preferred Shares or the Class C-2 Preferred Shares, as applicable, set forth in this Memorandum may be waived on behalf of all holders of Class C Preferred Shares or Class C-2 Preferred Shares, as applicable, by the affirmative written consent or vote of the holders of a majority of the Class C and C-2 Preferred Shares then outstanding, voting together as a single and separate class. Any of the rights, powers, preferences and other terms of the Class E, D, C and C-2 Preferred Shares set forth in this Memorandum may be waived on behalf of all holders of Preferred Shares, by the affirmative written consent or vote of the Preferred C, C-2, D and E Majority. Any of the rights, powers, preferences and other terms of the Preferred Shares set forth in this Memorandum may be waived on behalf of all holders of Preferred Shares, by the affirmative written consent or vote of the Requisite Preferred Holders. Any of the rights, powers, preferences and other terms of the Class D Preferred Shares, as applicable, set forth in this Memorandum may be waived on behalf of all holders of Class D Preferred Shares, as applicable, by the affirmative written consent or vote of the holders of a majority of the Class D Preferred Shares then outstanding, voting together as a single and separate class. Any of the rights, powers, preferences and other terms of the Class E Preferred Shares, as applicable, set forth in this Memorandum may be waived on behalf of all holders of Class E Preferred Shares, as applicable, by the affirmative written consent or vote of the holders of a majority of the Class E Preferred Shares then outstanding, voting together as a single and separate class. Amendments to, or waivers of, matters that require approval of the Requisite Preferred Holders, may be waived or amended only by the Requisite Preferred Holders. Any of the rights, powers, preferences and other terms of the Class F Preferred Shares, as applicable, set forth in this Memorandum may be waived on behalf of all holders of Class FPreferred Shares, as applicable, by the affirmative written consent or vote of the holders of a majority of the Class F Preferred Shares then outstanding, voting together as a single and separate class. Amendments to, or waivers of, matters that require approval of the Requisite Preferred Holders, may be waived or amended only by the Requisite Preferred Holders.

 

17.

Notices. Any notice required or permitted by the provisions of this clause 17 to be given to a holder of Preferred Shares shall be mailed, postage prepaid, to the post office address last shown on the records of the Company, or given by electronic communication, and shall be deemed sent upon such mailing or electronic transmission.

 

18.

Registered Shares Only. Shares in the Company may only be issued as registered shares and the Company is not authorised to issue bearer shares. Registered shares may not be exchanged for bearer shares or converted to bearer shares.

 

19.

Amendments to the Memorandum and Articles

 

19.1.

Subject to the provisions of this Memorandum and the Act, the directors or members may from time to time amend the Memorandum or Articles by Resolution of Directors or Resolution of Members. The directors shall give notice of such resolution to the registered agent of the Company, for the registered agent to file with the Registrar a notice of the amendment to the Memorandum or Articles, or a restated memorandum and articles of association incorporating the amendment(s) made, and any such amendment to the Memorandum or Articles will take effect from the date of the registration by the Registrar of the notice of amendment or restated memorandum and articles of association incorporating the amendment(s) made.

 

 

19.2.

The directors shall not have the power to amend the Memorandum or Articles:

 

(a)

to restrict the rights or powers of the members to amend the Memorandum or Articles;

 

(b)

to change the percentage of members required to pass a resolution to amend the Memorandum or Articles; or

 

(c)

in circumstances where the Memorandum or Articles may only be amended by the members.

 

19.3.

A change of registered office or registered agent shall not constitute an amendment of the Memorandum or Articles.

 

19.4.

An amendment to the Memorandum or Articles which would have the effect of varying the rights of the holders of a class of shares may only be made in accordance with the provisions of the Memorandum and Articles relating to the variation of class rights.

 

20.

Stand Still Provisions

 

20.1.

Regulatory Standstill. The Company is engaged in a highly regulated business which requires from the Company to make Regulatory Filings to Regulatory Bodies and to obtain licenses and permits from Regulatory Bodies, and such Regulatory Filings in many cases require the submission of information and documents regarding significant or material shareholders. Therefore, notwithstanding anything herein to the contrary, unless otherwise approved by the Board of Directors (which consent shall be obtained in advance and in writing) at its sole and absolute discretion (the “Written Consent”), (A) no shareholder of the Company nor any Affiliate thereof, shall be entitled to sell transfer or otherwise dispose (“Transfer”) onto its name and to its holding and ownership any shares or other Equity Securities from the Company or any holder of such securities (e.g. any Shareholder, option holder, warrant holder etc.), if as a result of such Transfer such shareholder of the Company shall hold, together with its Affiliates (beneficially or of records) 5% or more of the Company’s share capital or the voting power represented thereby; (B) each of the Company’s Shareholders shall not Transfer to another shareholder of the Company or any Affiliate thereof, any Equity Securities held by such transferor shareholder of the Company, if as a result of such Transfer such other shareholder of the Company shall hold, together with its Affiliates (beneficially or of records) 5% or more of the Company’s share capital or the voting power represented thereby; and (C) the Company shall not issue or sell to a shareholder of the Company or any Affiliate thereof, any shares or Equity Securities of the Company, if as a result of such issuance or sale such shareholder shall hold, together with its Affiliates (beneficially or of records) 5% or more of the Company’s share capital or the voting power represented thereby. Such Written Consent (if and to the extent granted) shall specify the terms and conditions pursuant to which a shareholder of the Company may be allowed to Transfer, purchase or otherwise be issued shares or other Equity Securities onto his name. For the avoidance of doubt, such Written Consent shall be required for any additional proposed Transfer of shares or Equity Securities to a shareholder of the Company , even if such shareholder received a Written Consent with respect to the prior Transfer.

 

The term “Regulatory Body” as used herein shall mean any financial regulatory authority that the Company or any Subsidiary of the Company will be required to be registered with or that may be regulated under from time to time.

 

The term “Regulatory Filing” as used herein shall mean any filing or register with or provide any notification to any Regulatory Body.

 

The term “Equity Securities” as used herein shall mean, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

 

20.2.

Transaction Standstill. In the event that the Company is engaged, or proposes to be engaged, in discussions or negotiations regarding a potential Liquidity Event, and the Board of Directors of the Company resolves that any Transfers of Equity Securities during the time that the Company is engaged in such discussions or negotiations may interfere with, or otherwise be detrimental to or adversely affect, such discussions or negotiations or the ability of the Company to timely and effectively consummate such Liquidity Event, the Board of Directors may resolve that during the period commencing on the date resolved by the Board of Directors and ending on the date specified by the Board of Directors (such period not to exceed 120 days, provided that the Board of Directors may extend such period in the event that the discussions or negotiations regarding the Liquidity Event are ongoing or if the Company has entered into a definitive agreement with respect to the applicable Liquidity Event), no shareholder of the Company may, without the prior written consent of the Company, (a) lend, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Equity Securities or (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Equity Securities, whether any such transaction described in clause (a) or (b) above is to be settled by delivery of Equity Securities, in cash or otherwise. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to any Equity Securities until the end of such restricted period. The restrictions under this Section 20.2 shall not apply to the Transfer of Shares from a shareholder of the Company to a Permitted Transferee of such shareholder, from such Permitted Transferee back to the original shareholder, and among the Permitted Transferees of such original shareholder.

 

The term “Liquidity Event” as used herein shall mean any Deemed Liquidation, IPO or Reverse Listing.

 

The term “Permitted Transferee” as used herein shall have the meaning given to such term in the Right of First Refusal and Co-Sale Agreement.

  

21.

Restrictions Due to Sanctions Laws

 

21.1.

Restrictions on Issuance of Shares and Share Transfers. Shares, irrespective of their class, held directly or indirectly by a Sanctioned Person (“Sanctioned Shares”) are non-Transferable, and no Shares, irrespective of their class, may be issued directly or indirectly to a Sanctioned Person, and the Board of Directors shall not register a Transfer of any Sanctioned Shares or any such issuance of Shares, unless such Transfer or issuance, in the opinion of a reputable international law firm engaged by the Board of Directors of the Company, does not create any risk of the Company becoming a target of or breaching Sanctions Laws.

 

21.2.

Limitations on Voting Rights. Notwithstanding anything to the contrary, Sanctioned Shares shall not confer on its holder the right to vote or participate in any Written Resolution of the members or of any class(es) of members, or otherwise confer voting rights. Sanctioned Shares shall not be counted in order of meeting quorum requirements, nor for any applicable majority requirement in this Memorandum or for any purpose of the Act. Sanctioned Shares shall not be accounted in the total number of shares eligible for voting (i.e., the denominator), unless such vote, in the opinion of a reputable international law firm engaged by the Board of Directors of the Company, does not create any risk of the Company becoming a target of or breaching Sanctions Laws.

 

21.3.

Limitations on Distributions. Sanctioned Shares shall not confer on its holder a right in any dividend or other distribution under this Memorandum or the Act. The Board of Directors of the Company may allow for the distribution to be paid (i) into a blocked account, escrow account or in any other manner required, necessary or advisable under the applicable Sanctions Laws if in the opinion of a reputable international law firm engaged by the Board of Directors of the Company, it does not create any risk of the Company becoming a target of or breaching Sanctions Laws, or (ii) suspend such payment.

 

21.4.

Limitations in Liquidity Event. Any right, including but not limited to consideration, conversion, adjustment, recapitalization, reclassification, consolidation, registration, or other right that may otherwise be attributable to a share in the event of a Liquidity Event, will be suspended in connection with any Sanctioned Shares, unless such right, in the opinion of a reputable international law firm engaged by the Board of Directors of the Company, does not create any risk of the Company becoming a target of or breaching Sanctions Laws. The Board of Directors of the Company shall have the authority to take any and all actions, or refrain from actions, that are required, necessary or advisable in order to consummate the Liquidity Event and to allocate or distribute the proceeds of any Liquidity Event in a manner that does not create any risk of the Company becoming a target of or breaching Sanctions Laws in accordance with the opinion of an international law firm engaged by the Board of Directors of the Company.

 

 

21.5.

Relevant Definitions.

 

“Sanctioned Person” means any person or entity: (a) that is listed on any Sanctions List or is otherwise the target of Sanctions Laws; (b) which is a Subsidiary of a Sanctioned Person; (c) which is a SSI Person.

 

“Sanctions Laws” means any laws, regulations, executive orders or other restrictive measures in respect of economic or financial sanctions or trade embargoes promulgated, issued, implemented, administered or enforced by: (a) the United Nations Security Council; (b) the United States; (c) the European Union; (d) the United Kingdom; and/or (e) the State of Israel; (f) any other similar law applicable to the Company and its Subsidiaries.

 

“Sanctions List” means any list of sanctioned persons maintained by the United Nations Security Council, the United States, the European Union, the United Kingdom and the State of Israel, including but not limited to the OFAC List of Specially Designated Nationals and Blocked Persons, the OFAC Sectoral Sanctions Identification List, the EU Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions and the UK Consolidated List of Financial Sanctions Targets, each as amended, supplemented or substituted from time to time.

 

“SSI Person” means (a) (i) any person or entity designated in Annex III, V or VI of EU Council Regulation No. 833/2014, as amended, supplemented or substituted from time to time, or any executive order, law, rule or regulation having similar effect and application; (ii) any person or entity established outside the European Union whose proprietary rights are directly or indirectly owned for more than fifty percent (50%) by an entity referred to in paragraph (i); or (iii) any person or entity acting on behalf of or at the direction of any of the foregoing. (b) any organisation designated on a Sectoral Sanctions Identification list published by the Secretary of the Treasury pursuant to Executive Order 13662, as amended, supplemented or substituted from time to time, or any executive order, law, rule or regulation having similar effect and application, or owned directly or indirectly for fifty percent (50%) or more in the aggregate by one or more such organisations. (c) (i) any person or entity designated in Schedule 2 to the Russia (Sanctions) (EU Exit) Regulation 2019, as amended, supplemented or substituted from time to time, or any executive order, law, rule or regulation having similar effect and application; (ii) any person or entity established outside the United Kingdom whose proprietary rights are directly or indirectly owned for more than fifty percent (50%) by an entity referred to in paragraph (i); or (iii) any person or entity acting on behalf of or at the direction of any of the foregoing.

 

22.

Definitions and Interpretation

 

22.1.

In this memorandum of association and the attached articles of association:

 

	“Act”	means the BVI Business Companies Act, 2004;
	“Articles”	means the Company’s articles of association as attached to this Memorandum, and “Article” shall be construed accordingly;
	“Memorandum”	means the Company’s memorandum of association;
	“Right of First Refusal and Co-Sale Agreement”	means the Fourth Amended and Restated Right of First Refusal and Co-Sale Agreement dated            , 2023, among the Company and the parties thereto, as may be further amended and/or restated from time to time;
	“Registrar”	means the Registrar of Corporate Affairs appointed under the Act;
	“Resolution of Directors”	means a resolution by the majority of the directors of the Company passed either at a meeting of directors, or by way of a Written Resolution, in either case in accordance with the provisions of the Articles;
	“Resolution of Members”	means a resolution by the members holding a majority of the voting rights in respect of such resolution passed either at a meeting of members, or by way of a Written Resolution, in either case in accordance with the provisions of the Articles;

 

 

	“Reverse Listing”	means a merger, consolidation, share exchange, share purchase or other business combination between (1) the shareholders of the Company, the Company and/or a subsidiary of the Company and (2) a publicly listed “operating company” or “special purpose acquisition company” and/or its shareholders (or a subsidiary of the publicly listed company), in connection with which either (x) the Company becomes a publicly listed Company (or a subsidiary of a publicly listed company), or (y) the shareholders of the Company immediately prior to the closing of such merger, consolidation, share exchange, share purchase or other business combination hold or have the right, by virtue of their shareholdings in the Company, to acquire or to be issued, immediately following the closing of such merger, consolidation, share exchange, share purchase or other business combination, the majority shareholding in a publicly listed company that is the surviving entity of such merger, consolidation, share exchange, share purchase or other business combination;
	“Subsidiary”	means, with respect to the Company or any other person or entity, any corporation, association, partnership, limited liability company, trust or other entity of which more than fifty percent (50%) of the total voting power, whether by way of contract or otherwise, of shares or other equity interests (including limited liability company or partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly (e.g., through another Subsidiary), by (a) the Company or such other person or entity (b) the Company or such other person or entity and one or more of its Subsidiaries, or (c) one or more Subsidiaries of the Company or such other person or entity.
	“Transfer”	means any direct or indirect assignment, sale, offer to sell, pledge, mortgage, hypothecation, encumbrance, disposition of or any other like transfer or encumbrance; and
	“Written Resolution”	means a resolution of members or directors (as applicable) consented to in writing or by telex, telegram, cable or other written electronic communication, without the need for any notice.  A Written Resolution may consist of several documents, including written electronic communications, in like form each signed or assented to by one or more members or directors (as applicable).  A Written Resolution shall be passed if so consented by a majority of those members or directors (as applicable) entitled to vote on the resolution.

 

22.2.

In the Memorandum and Articles:

 

(a)

words and expressions defined in the Act shall have the same meaning and, unless otherwise required by the context, the singular shall include the plural and vice versa, the masculine shall include the feminine and the neuter and references to persons shall include corporations and all entities capable of having a legal existence;

 

(b)

reference to a provision of law is a reference to that provision as extended, applied, amended or re-enacted and includes any subordinate legislation;

 

(c)

the headings are for convenience only and shall not affect the construction of the Memorandum or Articles;

 

(d)

reference to a thing being “written” or “in writing” includes all forms of writing, including all electronic records which satisfy the requirements of the Electronic Transactions Act, 2001;

 

(e)

reference to a thing being “signed” or to a person’s “signature” shall include reference to an electronic signature which satisfies the requirements of the Electronic Transactions Act, 2001, and reference to the Company’s “seal” shall include reference to an electronic seal which satisfies the requirements of the Electronic Transactions Act, 2001.

 

 

We, Commonwealth Trust Limited of P.O. Box 3321, Drake Chambers, Road Town, Tortola, British Virgin Islands, in our capacity as registered agent for the Company, hereby apply to the Registrar for the incorporation of the Company this 14th day of December, 2006.

 

Incorporator
Sgd : Deneshar Meade
Deneshar Meade
Authorised Signatory
Commonwealth Trust Limited

 

 

TERRITORY OF THE BRITISH VIRGIN ISLANDS

 

THE BVI BUSINESS COMPANIES ACT, 2004

 

ARTICLES OF ASSOCIATION

 

OF

 

eToro Group Ltd.

 

1

Share Certificates

 

1.1

The Company may, but shall not be required or obligated to, issue a share certificate to a person whose name is entered as a member in the share register, being the holder of registered shares.

 

1.2

Such certificate shall be signed by a director or under the common seal of the Company (which the registered agent of the Company is authorised to affix to such certificate) with or without the signature of any director or officer of the Company specifying the share or shares held and the par value thereof (if the Company is authorised at the relevant time to issue shares with a par value).

 

1.3

If a certificate is worn out or lost it may, subject to the prior written consent of any mortgagee or chargee whose interest has been noted on the register of members, be renewed on production of the worn out certificate, or on satisfactory proof of its loss together with such indemnity as the directors may reasonably require. Any member receiving a share certificate shall indemnify and hold the Company and its officers harmless from any loss or liability which it or they may incur by reason of wrongful or fraudulent use or representation made by any person by virtue of the possession of such a certificate.

 

2

Issue of Shares

 

2.1

Subject to the provisions of the Memorandum and these Articles, the unissued shares of the Company (whether forming part of the original or any increased authorised shares) shall be at the disposal of the directors who may offer, allot, grant options over or otherwise dispose of them to such persons at such times and for such consideration, being not less than the par value (if any) of the shares being disposed of, and upon such terms and conditions as the directors may determine. Such consideration may take any form acceptable to the directors, including money, a promissory note, or other written obligation to contribute money or property, real property, personal property (including goodwill and know-how), services rendered or a contract for future services. Before issuing shares for a consideration other than money, the directors shall pass a Resolution of Directors stating:

 

(a)

the amount to be credited for the issue of the shares;

 

(b)

their determination of the reasonable present cash value of the non-money consideration for the issue; and

 

(c)

that, in their opinion, the present cash value of the non-money consideration for the issue is not less than the amount to be credited for the issue of the shares.

 

2.2

Subject to the provisions of the Memorandum and the Act in this regard, shares may be issued on the terms that they are redeemable, or at the option of the Company be liable to be redeemed on such terms and in such manner as the directors before or at the time of the issue of such shares may determine.

 

2.3

The Company may issue bonus shares, partly paid shares and nil paid shares.

 

 

2.4

The directors may redeem any share issued by the Company at a premium.

 

2.5

Except as required by the Act, and notwithstanding that a share certificate may refer to a member holding shares “as trustee” or similar expression, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any share or any interest in any fractional part of a share or (except as provided by these Articles or by the Act) any other rights in respect of any share except any absolute right to the entirety thereof by the registered holder.

 

3

Forfeiture of Shares

 

3.1

The Company may, at any time after the due date for payment, serve on a member who has not paid in full for shares registered in the name of that member, a written notice of call (“Notice of Call”) specifying a date for payment to be made. The Notice of Call shall name a further date not earlier than the expiration of 14 days from the date of service of the Notice of Call on or before which the payment required by the Notice of Call is to be made and shall contain a statement that in the event of non-payment at or before the time named in the Notice of Call the shares, or any of them, in respect of which payment is not made will be liable to be forfeited.

 

3.2

Where a written Notice of Call has been issued under the foregoing Article and the requirements of the Notice of Call have not been complied with, the directors may, at any time before tender of payment, forfeit and cancel the shares to which the Notice of Call relates. The Company is under no obligation to refund any moneys to the member whose shares have been cancelled pursuant to this Article and that member shall be discharged from any further obligation to the Company.

 

4

Transfer of Shares

 

4.1

Subject to the Memorandum and the terms of the Third Amended and Restated Right of First Refusal and Co-Sale Agreement and the Third Amended and Restated Voting Agreement, shares in the Company shall be transferred by a written instrument of transfer signed by the transferor and containing the name and address of the transferee. The instrument of transfer shall also be signed by the transferee if registration as a holder of the shares imposes a liability to the Company on the transferee. The instrument of transfer of a registered share shall be sent to the Company for registration.

 

4.2

Subject to the Memorandum, these Articles and to section 54(5) of the Act, the Company shall, on receipt of an instrument of transfer, enter the name of the transferee of the share in the register of members unless the directors resolve to refuse or delay the registration of the transfer for reasons that shall be specified in the resolution. Where the directors pass such a resolution, the Company shall send to the transferor and the transferee a notice of the refusal or delay. Notwithstanding anything contained in the Memorandum or Articles, the directors shall not decline to register any transfer of shares, nor may they suspend registration thereof where such transfer is:

 

(a)

to any mortgagee or chargee whose interest has been noted on the register of members;

 

(b)

by any such mortgagee or chargee, pursuant to the power of sale under its security; or

 

(c)

by any such mortgagee or chargee in accordance with the terms of the relevant security document.

 

4.3

The transfer of a registered share is effective when the name of the transferee is entered in the register of members.

 

 

5

Mortgages of Shares and Charges over Shares

 

5.1

Subject to the Memorandum, members may mortgage or create a charge or other form of security over their shares.

 

5.2

The directors shall, at the written request of a member who has mortgaged or created a charge over his shares, enter in the register of members of the Company:

 

(a)

a statement that such shares are mortgaged or charged;

 

(b)

the name of the mortgagee or chargee (where such information has been stated by the member); and

 

(c)

the date on which the statement and name are entered in the register of members.

 

6

Transmission of Shares

 

6.1

Subject to sections 52(2) and 53 of the Act, the executor or administrator of a deceased member, the guardian of an incompetent member or the trustee of a bankrupt member shall be the only person recognised by the Company as having any title to his share, save that and only in the event of death, incompetence or bankruptcy of any member or members of the Company as a consequence of which the Company no longer has any directors or members, then upon the production of any documentation which is reasonable evidence of the applicant being entitled to:

 

(a)

a grant of probate of the deceased’s will, or grant of letters of administration of the deceased’s estate, or confirmation of the appointment as executor or administrator (as the case may be, or analogous position in the relevant jurisdiction), of a deceased member’s estate;

 

(b)

the appointment of a guardian (or analogous position in the relevant jurisdiction) of an incompetent member;

 

(c)

the appointment as trustee (or analogous position in the relevant jurisdiction) of a bankrupt member; or

 

(d)

upon production of any other reasonable evidence of the applicant’s beneficial ownership of, or entitlement to the shares,

 

to the Company’s registered agent in the British Virgin Islands together with (if so requested by the registered agent) a notarised copy of the share certificate(s) of the deceased, incompetent or bankrupt member, an indemnity in favour of the registered agent and/or appropriate legal advice in respect of any document issued by a foreign court, then the administrator, executor, guardian or trustee in bankruptcy (as the case may be) notwithstanding that their name has not been entered in the share register of the Company, may by written resolution of the applicant, endorsed with written approval by the registered agent, be appointed a director of the Company and/or entered in the share register as the legal and/or beneficial owner of the shares.

 

6.2

Without limiting the foregoing, the production to the Company of any document which is reasonable evidence of:

 

(a)

a grant of probate of the will, or grant of letters of administration of the estate, or confirmation of the appointment as executor (or analogous position in the relevant jurisdiction), of a deceased member;

 

(b)

the appointment of a guardian (or analogous position in the relevant jurisdiction) of an incompetent member;

 

(c)

the trustee (or analogous position in the relevant jurisdiction) of a bankrupt member; or

 

(d)

the applicant’s legal and/or beneficial ownership of the shares,

 

shall be accepted by the Company even if the deceased, incompetent member or bankrupt member is resident and/or domiciled outside the British Virgin Islands if the document is issued by a foreign court which had competent jurisdiction in the matter. For the purposes of establishing whether or not a foreign court had competent jurisdiction in such a matter the directors may obtain appropriate legal advice. The directors may also require an indemnity to be given by the executor, administrator, guardian, trustee in bankruptcy or the applicant.

 

 

6.3

Any person becoming entitled by operation of law or otherwise to a share or shares in consequence of the death, incompetence or bankruptcy of any member may be registered as a member upon such evidence being produced as may reasonably be required by the directors. An application by any such person to be registered as a member shall for all purposes be deemed to be a transfer of shares of the deceased, incompetent or bankrupt member and the directors shall treat it as such.

 

6.4

Any person who has become entitled to a share or shares in consequence of the death, incompetence or bankruptcy of any member may, instead of being registered himself, request in writing that some person to be named by him be registered as the transferee of such share or shares and such request shall likewise be treated as if it were a transfer.

 

6.5

What amounts to incompetence on the part of a person is a matter to be determined by the court having regard to all the relevant evidence and the circumstances of the case.

 

7

Acquisition of Own Shares

 

7.1

Subject to the Memorandum, the directors may, on behalf of the Company, subject to the written consent of all the members whose shares are to be purchased, redeemed or otherwise acquired, purchase, redeem or otherwise acquire any of the Company’s own shares for such consideration as the directors consider fit, and either cancel or hold such shares as treasury shares. Shares may be purchased or otherwise acquired in exchange for newly issued shares in the Company.

 

7.2

The directors shall not, unless permitted pursuant to the Act, purchase, redeem or otherwise acquire any of the Company’s own shares unless immediately after such purchase, redemption or other acquisition:

 

(a)

the value of the Company’s assets exceeds it liabilities; and

 

(b)

the Company is able to pay its debts as they fall due.

 

7.3

Sections 60 and 61 of the Act shall not apply to the Company.

 

8

Treasury Shares

 

8.1

Shares may only be held as treasury shares by the Company to the extent that the number of treasury shares does not exceed 50% of the shares of that class previously issued by the Company, excluding shares that have been cancelled.

 

8.2

The directors may dispose of any shares held as treasury shares on such terms and conditions as they may from time to time determine.

 

9

Notice of Meetings of Members

 

9.1

The directors may convene meetings of the members of the Company at such times and in such manner and places (within or outside the British Virgin Islands) as the directors consider necessary or desirable, and they shall convene such a meeting upon the written request of members entitled to exercise at least nine (9) percent of the voting rights in respect of the matter for which the meeting is requested.

 

 

9.2

Not less than seven (7) days’ notice specifying at least the place, the day and the hour of the meeting and general nature of the business to be conducted shall be given in the manner hereinafter mentioned to such persons whose names on the date the notice is given appear as members in the share register of the Company and are entitled to vote at the meeting. Notwithstanding the foregoing, a meeting of members held in contravention of the requirement to give notice is valid if members holding a ninety-five (95) percent majority of:

 

(a)

the total voting rights on all the matters to be considered at the meeting; or

 

(b)

the votes of each class or series of shares where members are entitled to vote thereon as a class or series together with an absolute majority of the remaining votes,

 

have waived notice of the meeting and, for this purpose, the presence of a member at the meeting shall be deemed to constitute waiver on his part (unless such member objects in writing before or at the meeting).

 

9.3

The inadvertent failure of the directors to give notice of a meeting to a member or the fact that a member has not received a notice that has been properly given, shall not invalidate the meeting.

 

10

Proceedings at Meetings of Members

 

10.1

No business shall be transacted at any meeting of members unless a quorum of members is present at the time when the meeting proceeds to business. A quorum shall consist of the holder or holders present in person or by proxy entitled to exercise at least fifty (50) percent of the voting rights of the shares of each class or series of shares entitled to vote as a class or series thereon and the same proportion of the votes of the remaining shares entitled to vote thereon.

 

10.2

A member of the Company shall be deemed to be present at a meeting of members if:

 

(a)

he or his proxy participates by telephone or other electronic means; and

 

(b)

all members and proxies participating in the meeting are able to hear each other.

 

10.3

If, within half an hour from the time appointed for the meeting, a quorum is not present, the meeting shall be dissolved and the meeting shall stand adjourned to the same place and time one week from the date of the original meeting. If a notice of the adjourned meeting has been given to the members, and a quorum is not present at the adjourned meeting within half an hour from the time appointed for the meeting, two or more members present personally or by proxy, shall be a quorum, and shall be entitled to deliberate and resolve in respect of the matters for which the meeting was convened. Notwithstanding the foregoing, in no event shall quorum be present unless holders of a majority of the Class E, D, C and C-2 Preferred Shares are present, unless the prior two validly called meetings were adjourned for lack of quorum due to the absence of the holders of a majority of the Class E, D, C and C-2 Preferred Shares.

 

 

10.4

A member may attend a meeting of members personally or be represented by a proxy who may speak and vote on behalf of the member.

 

10.5

The instrument appointing a proxy shall be produced at the place appointed for the meeting before the time for holding the meeting at which the person named in such instrument proposes to vote. An instrument appointing a proxy shall be in such form as the Chairman of the meeting shall accept as properly evidencing the wishes of the member appointing the proxy, but must be in writing under the hand of the appointer unless the appointer is a corporation or other form of legal entity (other than one or more individuals holding as joint owner) in which case the instrument appointing a proxy shall be in writing under the hand of an individual duly authorised by such corporation or legal entity to execute the same.

 

10.6

At every meeting the members present shall choose someone of their number to be the chairman (the “Chairman”). If the members are unable to choose a Chairman for any reason, then the person representing the greatest number of voting shares present at the meeting shall preside as Chairman.

 

10.7

The Chairman may, with the consent of the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

 

10.8

At any meeting a resolution put to the vote of the meeting shall be decided on a show of hands by a simple majority of those members (or their duly appointed proxies) entitled to vote and voting on the resolution, unless a poll is (before or on the declaration of the result of the show of hands) demanded:

 

(a)

by the Chairman; or

 

(b)

by any member present in person or by proxy and holding not less than five percent (5%) of the total voting shares issued by the Company and having the right to vote on such resolution.

 

10.9

Unless a poll be so demanded, a declaration by the Chairman that a resolution has, on a show of hands been carried, and an entry to that effect in the book containing the minutes of the proceedings of the Company, shall be sufficient evidence of the fact, without proof of the number or proportion of the votes recorded in favour of or against such resolution.

 

10.10

If a poll is duly demanded it shall be taken in such manner as the Chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn, at the discretion of the Chairman.

 

10.11

On a poll, every holder of a voting share present in person or by proxy shall have one vote for every voting share of which he is the holder which confers the right to a vote on the resolution.

 

10.12

In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall not be entitled to a second or casting vote.

 

10.13

Subject to the Memorandum or these Articles, an action that may be taken by members of the Company at a meeting of members may also be taken by Written Resolution.

 

10.14

If a committee is appointed for any member who is of unsound mind, that member may vote by such committee.

 

 

11

Jointly Held Shares

 

11.1

Where shares are registered in the names of joint owners:

 

(a)

each registered owner may be present in person or by proxy at a meeting of members and may speak as a member;

 

(b)

if only one of them is present in person or by proxy, he may vote on behalf of all of them; and

 

(c)

if two or more are present in person or by proxy, they must vote as one. If more than one joint owner votes in person or by proxy at any meeting of members or by Written Resolution, the vote of the joint owner whose name appears first among such voting joint holders in the share register shall alone be counted.

 

12

Corporations Acting by Representatives at Meetings

 

Any corporation or other form of corporate legal entity which is a member of the Company may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the members or any class of members of the Company, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual member of the Company.

 

13

Appointment and Removal of Directors

 

13.1

The first director or directors shall be appointed by the registered agent of the Company. Thereafter, the holders of record of Class C and C-2 Preferred Shares, exclusively as a single and separate class, shall be entitled to elect one (1) director of the Company (the “Class C Director”). The holders of record of Class A Preferred Shares and Class B Preferred Shares, together as a separate class, shall be entitled to elect one (1) director of the Company (the “Class A/B Director”). The holders of record of Common Shares, exclusively as a separate class, shall be entitled to elect one (1) director of the Company (the “Common Director”). The holders of record of Common Shares, the holders of record of Class A Preferred Shares and Class B Preferred Shares, together as a single class, shall be entitled to elect one (1) director of the Company. The Company’s Chief Executive Officer, who shall initially be Yoni Assia will serve as a director of the Company. Any director elected as provided in the preceding sentences of this Article ‎13.1may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of shares entitled to elect such director or directors, given either at a special meeting of such shareholders duly called for that purpose or pursuant to a written consent of shareholders. The holders of record of the shares and of any other class or series of voting shares (including the Preferred Shares), exclusively and voting together as a single class, shall be entitled to elect the balance of the total number of directors of the Company. At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or series entitled to elect such director shall constitute a quorum for the purpose of electing such director. A vacancy in any directorship filled by the holders of any class or series shall be filled only by vote or written consent in lieu of a meeting of the holders of such class or series or by any remaining director or directors elected by the holders of such class or series pursuant to this Article 13.1. Sections 114(2) and 114(3) of the Act shall not apply to the Company.

 

13.2

A person shall not be appointed as a director of the Company unless he has consented in writing to be a director.

 

13.3

Each director holds office until:

 

(a)

his disqualification to act as a director under section 111 of the Act (on which his office as director shall be automatically terminated if he has not resigned in accordance with section 115(2) of the Act);

 

 

(b)

his death;

 

(c)

his resignation; or

 

(d)

the effective date of his removal in accordance with Article 13.1.

 

13.4

The following are disqualified for appointment as the director of the Company:

 

(a)

an individual who is under 18 years of age;

 

(b)

a person who is a disqualified person within the meaning of section 260(4) of the Insolvency Act, 2003;

 

(c)

a person who is a restricted person within the meaning of section 409 of the Insolvency Act, 2003; and

 

(d)

an undischarged bankrupt.

 

13.5

A director shall not require a share qualification, but nevertheless shall be entitled to attend and speak at any meeting of the directors and meeting of the members and at any separate meeting of the holders of any class of shares in the Company.

 

13.6

The remuneration of directors (whether by way of salary, commission, participation in profits or otherwise) in respect of services rendered or to be rendered in any capacity to the Company (including to any company in which the Company may be interested) shall be fixed by Resolution of Directors or Resolution of Members. The directors may also be paid such travelling, hotel and other expenses properly incurred by them in attending and returning from meetings of the directors, or any committee of the directors or meetings of the members, or in connection with the business of the Company as shall be approved by Resolution of Directors or Resolution of Members.

 

14

Alternate and Reserve Directors

 

14.1

A director, by written instrument deposited at the registered office of the Company, may from time to time appoint another director or another person to be his alternate. Every such alternate shall be entitled to be given notice of meetings of the directors and to attend and vote as a director at any such meeting at which the director appointing him is not personally present and generally at such meeting to have and exercise all the powers, rights, duties and authorities of the director appointing him. Every such alternate shall be deemed to be an officer of the Company and shall not be deemed to be an agent of the director appointing him. Unless stated otherwise in the notice of the appointment of the alternate, if undue delay or difficulty would be occasioned by giving notice to a director of a resolution of which his approval is sought in accordance with these Articles his alternate (if any) shall be entitled to signify approval of the same on behalf of that director. The remuneration of an alternate shall be payable out of the remuneration payable to the director appointing him, as agreed between such alternate and the director appointing him. A director, by writing under his hand deposited at the registered office of the Company, may at any time vary or revoke the appointment of an alternate appointed by him. If a director shall die or cease to hold the office of director, the appointment of his alternate shall thereupon cease and terminate.

 

 

14.2

Where the Company has only one member with voting rights who is an individual and that member is also the sole director of the Company (the “sole member/director”), that sole member/director may, by instrument in writing, nominate a person who is not disqualified from being a director of the Company under section 111(1) of the Act as a reserve director of the Company to act in the place of the sole director in the event of his death. A person shall not be nominated as a reserve director unless he has consented in writing to be nominated as a reserve director. The nomination of a person as a reserve director of the Company ceases to have effect if:

 

(a)

before the death of the sole member/director who nominated him:

 

(i)

he resigns as reserve director, or

 

(ii)

the sole member/director revokes the nomination in writing; or

 

(b)

the sole member/director who nominated him ceases to be the sole member/director of the company for any reason other than his death.

 

15

Duties of Directors and Conflicts of Interests

 

15.1

A director of the Company, in exercising his powers or performing his duties, shall act honestly and in good faith and in what the director believes to be in the best interests of the Company.

 

15.2

Notwithstanding the foregoing Article, if the Company is a wholly-owned subsidiary, a director of the Company may, when exercising powers or performing duties as a director, act in a manner which he believes is in the best interests of that Company’s holding company (as defined in the Act) even though it may not be in the best interests of the Company.

 

15.3

A director shall exercise his powers as a director for a proper purpose and shall not act, or agree to the Company acting, in a manner that contravenes the Act or the Memorandum or Articles.

 

15.4

A director, when exercising powers or performing duties as a director, shall exercise the care, diligence, and skill that a reasonable director would exercise in the same circumstances taking into account, but without limitation:

 

(a)

the nature of the Company;

 

(b)

the nature of the decision; and

 

(c)

the position of the director and the nature of the responsibilities undertaken by him.

 

15.5

A director of the Company, when exercising his powers or performing his duties as a director, is entitled to rely upon the register of members and upon books, records, financial statements and other information prepared or supplied, and on professional or expert advice given, by:

 

(a)

an employee of the Company whom the director believes on reasonable grounds to be reliable and competent in relation to the matters concerned;

 

(b)

a professional adviser or expert in relation to matters which the director believes on reasonable grounds to be within the person’s professional or expert competence; and

 

(c)

any other director, or committee of directors upon which the director did not serve, in relation to matters within the director’s or committee’s designated authority,

 

provided that the director:

 

(d)

acts in good faith;

 

(e)

makes proper inquiry where the need for the inquiry is indicated by the circumstances; and

 

(f)

has no knowledge that his reliance on the register of members or the books, records, financial statements and other information or expert advice is not warranted.

 

 

15.6

A director may hold any other office or position of profit under the Company (except that of auditor) in conjunction with his office of director, and may act in a professional capacity to the Company on such terms as to remuneration and otherwise as the directors shall approve.

 

15.7

A director may be or become a director or officer of, or otherwise be interested in any company promoted by the Company, or in which the Company may be interested, as a member or otherwise and no such director shall be accountable for any remuneration or other benefits received by him as director or officer or from his interest in such other company. The directors may also exercise the voting powers conferred by the shares in any other company held or owned by the Company in such manner in all respects as they think fit, including the exercise thereof in favour of any resolutions appointing them, or of their number, directors or officers of such other company, or voting or providing for the payment of remuneration to the directors or officers of such other company. A director may vote in favour of the exercise of such voting rights in the manner aforesaid notwithstanding that he may be, or be about to become, a director or officer of such other company, and as such in any other manner is, or may be, interested in the exercise of such voting rights in the manner aforesaid.

 

15.8

No director shall be disqualified by his office from contracting with the Company either as a buyer, seller or otherwise, nor shall any such contract or arrangement entered into by or on behalf of the Company in which any director shall be in any way interested be voided, nor shall any director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement, by reason of such director holding that office or by reason of the fiduciary relationship thereby established, provided such director shall, immediately after becoming aware of the fact that he is interested in a transaction entered into or to be entered into by the Company, disclose such interest to the board of directors. For the purposes of this Article:

 

(a)

a director of the Company is not required to make such a disclosure if:

 

(i)

the transaction or proposed transaction is between the director and the Company; and

 

(ii)

the transaction or proposed transaction is or is to be entered into in the ordinary course of the Company’s business and on usual terms and conditions;

 

(b)

a disclosure to the board to the effect that a director is a member, director, officer or trustee of another named company or other person and is to be regarded as interested in any transaction which may, after the date of the entry or disclosure, be entered into with that company or person, is a sufficient disclosure of interest in relation to that transaction. Such a disclosure is not made to the board unless it is made or brought to the attention of every director on the board; and

 

(c)

subject to section 125(1) of the Act, the failure by a director to comply with this Article does not affect the validity of a transaction entered into by the director or the Company.

 

15.9

A director of the Company who is interested in a transaction entered into or to be entered into by the Company may:

 

(a)

vote on a matter relating to the transaction;

 

(b)

attend a meeting of directors at which a matter relating to the transaction arises and be included among the directors present at the meeting for the purposes of a quorum; and

 

(c)

sign a document on behalf of the Company, or do any other thing in his capacity as a director, that relates to the transaction.

 

 

16

Powers of Directors

 

16.1

The business of the Company shall be managed by the directors who may pay all expenses incurred preliminary to and in connection with the formation and registration of the Company, and may exercise all such powers of the Company necessary for managing and for directing and supervising, the business and affairs of the Company as are not by the Act or by the Memorandum or these Articles required to be exercised by the members, subject to any delegation of such powers as may be authorised by these Articles and permitted by the Act and to such requirements as may be prescribed by Resolution of the Members, but no requirement made by Resolution of the Members shall prevail if it be inconsistent with these Articles nor shall such requirement invalidate any prior act of the directors which would have been valid if such requirement had not been made.

 

16.2

Subject to the provisions of the Memorandum, if the number of directors shall have been fixed at two or more persons and by reason of vacancies having occurred in the board of directors there shall be only one continuing director, he shall be authorised to act alone only for the purpose of appointing another director.

 

17

Delegation by the Board to Directors, Committees, Officers, Attorneys and Agents

 

17.1

The board of directors may entrust to and confer upon any director or officer any of the powers exercisable by it upon such terms and conditions and with such restrictions as it thinks fit, and either collaterally with, or to the exclusion of, its own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers. Subject to the provisions of section 110 of the Act, the directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit. Any committees so formed shall in the exercise of powers so delegated conform to any regulations that may be imposed on it by the directors or the provisions of the Act.

 

17.2

The directors have no power to delegate the following powers to a committee of directors:

 

(a)

to amend the Memorandum or Articles;

 

(b)

to designate committees of directors;

 

(c)

to delegate powers to a committee of directors; (This and the preceding sub-Article do not prevent a committee of directors, where authorised by the directors, from appointing a sub-committee and delegating powers exercisable by the committee to the sub-committee);

 

(d)

to appoint or remove directors;

 

(e)

to appoint or remove an agent;

 

(f)

to approve a plan or merger, consolidation or arrangement;

 

(g)

to make a declaration of solvency for the purposes of section 198(1)(a) of the Act or approve a liquidation plan; or

 

(h)

to make a determination under section 57(1) of the Act that the Company will, immediately after a proposed distribution, satisfy the solvency test.

 

17.3

Where the directors of the Company delegate their powers to a committee of directors, they remain responsible for the exercise of that power by the committee, unless they believed on reasonable grounds that at all times before the exercise of the power that the committee would exercise the power in conformity with the duties imposed on directors of the Company by the Act.

 

17.4

The directors of the Company may, by Resolution of Directors, appoint officers of the Company at such times as shall be considered necessary or expedient. The officers shall perform such duties as shall be prescribed at the time of their appointment subject to any modifications in such duties as may be prescribed by the directors thereafter.

 

 

17.5

Any person may hold more than one office and no officer need be a director or member of the Company. The officers shall remain in office until removed from office by the directors, whether or not a successor is appointed.

 

17.6

Any officer who is a body corporate may appoint any person as its duly authorised representative for the purpose of representing it and of transacting any of the business of the officers.

 

17.7

The directors may from time to time by power of attorney appoint any company, firm or person or body of persons to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles) and for such period and subject to such conditions as the directors think fit.

 

17.8

The directors may appoint any person, including a person who is a director, to be an agent of the company. An agent of the Company has such powers and authority of the directors, including the power and authority to affix the common seal of the Company, as are set forth in the Resolution of Directors appointing the agent, except that no agent has any power or authority with respect to the following:

 

(a)

to amend the Memorandum or Articles;

 

(b)

to change the registered office or registered agent;

 

(c)

to designate committees of directors;

 

(d)

to delegate powers to a committee of directors;

 

(e)

to appoint or remove directors;

 

(f)

to appoint or remove an agent;

 

(g)

to fix emoluments of directors;

 

(h)

to approve a plan of merger, consolidation or arrangement;

 

(i)

to make a declaration of solvency for the purposes of section 198(1)(a) of the Act or to approve a liquidation plan;

 

(j)

to make a determination under section 57(1) of the Act that the Company will, immediately after a proposed distribution, satisfy the solvency test as stipulated in section 56 of the Act; or

 

(k)

to authorise the Company to continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands.

 

17.9

Where the directors appoint any person to be an agent of the Company, they may authorise the agent to appoint one or more substitutes or delegates to exercise some or all of the powers conferred on the agent by the Company.

 

17.10

The directors may at any time remove an agent and may revoke or vary a power conferred on him.

 

18

Proceedings of Directors

 

18.1

The directors may meet together for the dispatch of business, adjourn and otherwise regulate their meetings as they think fit. The meetings of the board of directors and any committee thereof shall be held at such place or places (within or outside the British Virgin Islands) as the directors shall decide.

 

 

18.2

A director may at any time summon a meeting of the directors. A director shall be given not less than three (3) business days’ (being full business days in the place of the director’s residence) notice of a meeting of the directors, save that a meeting of directors held on less notice is valid if a majority of the directors (including the Class C Director) entitled to vote at the meeting have waived the notice of the meeting; and, for this purpose, the presence of a director at the meeting shall be deemed to constitute waiver on his part (unless he objects in writing before or at the meeting).

 

18.3

The inadvertent failure to give notice of a meeting to a director, or the fact that a director has not received the notice, shall not invalidate the meeting.

 

18.4

Any director who is a body corporate may appoint any person its duly authorised representative for the purpose of representing it at meetings of the directors and of transacting any of the business of the directors.

 

18.5

A meeting of the directors is duly constituted for all purposes if at the commencement of the meeting there are present in person or by alternate not less than one-third of the total number of directors with a minimum of two (2), including the Class C Director and the Common Director.

 

18.6

If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be dissolved. If within an hour from the time appointed for a meeting a quorum is not present, the meeting shall stand adjourned to the same day the following week, at the same time and place, or to such day and such time and place as the Chairman may determine, provided that not less than seventy two (72) hours’ written notice shall have been provided to each of the Directors of such meeting. No business shall be transacted at any adjourned meeting except business that might lawfully have been transacted at the meeting as originally called. At such adjourned meeting, any two (2) directors present in person or represented by an alternate director shall constitute a quorum. Notwithstanding the foregoing, in no event shall quorum be present unless either the Class C Director or the Class A/B Director is present, unless the prior two validly called meetings were adjourned for lack of quorum due to the absence of the Class C Director or Class A/B Director.

 

18.7

A director of the Company shall be deemed to be present at a meeting of the board if:

 

(a)

he or his alternate participates by telephone or other electronic means; and

 

(b)

all directors and alternates participating in the meeting are able to hear each other.

 

18.8

The directors may elect a chairman (the “Chairman of the Board”) of their meeting and determine the period for which he is to hold office. If no such Chairman of the Board is elected, or if at any meeting the Chairman of the Board is not present at the time appointed for holding the meeting, the directors present may choose one of their number to be Chairman of the Board for the meeting. If the directors are unable to choose a Chairman of the Board, for any reason, then the longest serving director present at the meeting shall preside as the Chairman of the Board.

 

18.9

Questions arising at any meeting of directors shall be decided by a majority of votes. In case of an equality in votes the Chairman of the Board shall not have any second or casting vote.

 

18.10

A resolution approved by a majority of the directors for the time being entitled to receive notice of a meeting of the directors or of a committee of the directors and taking the form of a Written Resolution shall be as valid and effectual as if it had been passed at a meeting of the directors or of such committee duly convened and held, without the need for any notice.

 

18.11

If the Company shall have only one director, the foregoing provisions for meetings of the directors shall not apply but such sole director shall have full power to represent and act for the Company in all matters and in lieu of minutes of a meeting shall record in writing and sign a note of memorandum of all matters requiring a resolution of the directors. Such note or memorandum shall constitute sufficient evidence of such resolution for all purposes.

 

 

19

Indemnification and Insurance

 

19.1

Subject to the provisions of the Act and the subsequent provisions of this Article, the Company shall indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who:

 

(a)

is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director of the Company; or

 

(b)

is or was, at the request of the Company, serving as a director of, or in any other capacity is or was acting for, another company or a partnership, joint venture, trust or other enterprise.

 

19.2

This Article applies only to a person who has acted honestly and in good faith and in what he believed to be the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful. The Company shall not indemnify a person who has not so acted, and any indemnity given to such a person is void and of no effect. A director acts in the best interests of the Company if he acts in the best interests of:

 

(a)

the Company’s holding company; or

 

(b)

a shareholder or shareholders of the Company;

 

in either case, in the circumstances specified in the sub-Articles below, as the case may be.

 

19.3

The termination of any proceedings by any judgment, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the person did not act honestly and in good faith and with a view to the best interests of the Company or that the person had reasonable cause to believe that his conduct was unlawful.

 

19.4

Expenses, including legal fees, incurred by a director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the director to repay the amount if it shall ultimately be determined that the director is not entitled to be indemnified by the Company in accordance with this Article.

 

19.5

Expenses, including legal fees, incurred by a former director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the former director to repay the amount if it shall ultimately be determined that the former director is not entitled to be indemnified by the Company in accordance with this Article and upon such other terms and conditions, if any, as the Company deems appropriate.

 

19.6

The indemnification and advancement of expenses provided by, or granted pursuant to, this Article is not exclusive of any other rights to which the person seeking indemnification or advancement of expenses may be entitled under any agreement, resolution of members, resolution of disinterested directors or otherwise, both as to acting in the person’s official capacity and as to acting in another capacity while serving as a director of the Company.

 

19.7

The Company may purchase and maintain insurance in relation to any person who is or was a director of the Company, or who at the request of the Company is or was serving as a director of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not the Company has or would have had the power to indemnify the person against the liability under the foregoing Article.

 

 

20

Exclusive Jurisdiction of the Courts of the British Virgin Islands

 

Unless the Company consents in writing to the selection of an alternative forum, the courts of the British Virgin Islands shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s members, or (c) any action asserting a claim arising pursuant to any provision of British Virgin Islands law or the Memorandum or these Articles, or (c) any action asserting a claim against the Company governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of the Company shall be deemed to have notice of and consented to the provisions of this Section 20.

 

21

Company Seal and Entry into Contracts and Deeds

 

21.1

The directors shall provide for the safe custody of the common seal of the Company. The common seal when affixed to any instrument (save for a share certificate in accordance with these Articles) shall be witnessed by a director or officer of the Company or any other person so authorised from time to time by the directors.

 

21.2

A contract may be entered into by the Company as follows:

 

(a)

a contract that, if entered into by an individual, would be required by law to be in writing and under seal, may be entered into by or on behalf of the Company in writing under the common seal of the Company, or executed by or on behalf of the Company by a director or an authorised agent of the Company, and may be varied or discharged in the same manner;

 

(b)

a contract that, if entered into by an individual, would be required by law to be in writing and signed, may be entered into by or on behalf of the Company in writing and signed by a person acting under the express or implied authority of the company, and may be varied or discharged in the same manner; and

 

(c)

a contract that, if entered into by an individual, would be valid although entered into orally, and not reduced to writing, may be entered into orally by or on behalf of the Company by a person acting under the express or implied authority of the Company, and may be varied or discharged in the same manner.

 

21.3

Notwithstanding the foregoing Article, an instrument is validly executed by the Company as a deed, or an instrument under seal, if it is either:

 

(a)

sealed with the common seal of the Company and witnessed by a director of the Company and/or such other person who is authorised by the Memorandum or Articles to witness the application of the Company’s seal; or

 

(b)

expressed to be, or is expressed to be executed as, or otherwise makes clear on its face that it is intended to be, a deed and it is signed by a director and/or by a person acting under the express or implied authority of the Company.

 

22

Distributions

 

22.1

Subject to the provisions of the Memorandum and the Act, the directors of a Company may, by Resolution of Directors, authorise a distribution by the Company at a time, and of an amount, and to any members they think fit if they are satisfied, on reasonable grounds that, immediately after the distribution, the value of the Company’s assets will exceed the Company’s liabilities and the Company is able to pay its debts as they fall due.

 

 

22.2

No distribution shall be paid on those shares which are held by the Company as treasury shares at the date of declaration of the distribution.

 

22.3

The directors may, before recommending any distribution, set aside out of the profits of the Company such sums as they think proper as a reserve or reserves which shall, at their discretion, either be employed in the business of the Company or be invested in such investments as the directors may from time to time think fit.

 

22.4

If several persons are registered as joint holders of any share, any of them may give effectual receipt for any distribution or other monies payable on or in respect of the share.

 

22.5

Notice of any distribution that may have been declared shall be given to each member in manner hereinafter mentioned and all distributions unclaimed for three years after having been declared may be forfeited by the directors for the benefit of the Company.

 

22.6

No distribution shall bear interest against the Company.

 

23

Company Records

 

23.1

The Company shall keep records that:

 

(a)

are sufficient to show and explain the Company’s transactions; and

 

(b)

will, at any time, enable the financial position of the Company to be determined with reasonable accuracy.

 

23.2

The Company shall keep the following records at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the directors may determine:

 

(a)

minutes of all meetings and all resolutions of members and of classes of members; and

 

(b)

minutes of all meetings and all resolutions of directors and committees of directors.

 

23.3

Where any such records are kept at a place other than at the office of the Company’s registered agent, the Company shall provide the registered agent with a written record of the physical address of the place or places at which the records are kept. Where the place at which any such records is changed, the Company shall provide the registered agent with the physical address of the new location of the records within fourteen days of the change of location.

 

23.4

The Company shall keep a register to be known as a register of directors containing the names and addresses of the persons who are directors of the Company, the date on which each person whose name is entered in the register was appointed as a director of the Company, the date on which each person named as a director ceased to be a director of the Company, and such other information as may be prescribed from time to time by law.

 

23.5

The Company shall maintain an accurate and complete register of members showing the full names and addresses of all persons holding registered shares in the Company, the number of each class and series of registered shares held by such person, the date on which the name of each member was entered in the register of members and where applicable, the date such person ceased to hold any registered shares in the Company.

 

 

23.6

The Company shall keep the following at the office of its registered agent:

 

(a)

the Memorandum and Articles of the Company;

 

(b)

the register of members maintained in accordance with these Articles or a copy of the register of members;

 

(c)

the register of directors maintained in accordance with these Articles or a copy of the register of directors;

 

(d)

copies of all notices and other documents filed by the Company in the previous ten years;

 

(e)

a copy of the register of charges kept by the Company pursuant to section 162(1) of the Act; and

 

(f)

an imprint of the common seal.

 

23.7

Where the Company keeps a copy of the register of members or the register of directors at the office of its registered agent, it shall:

 

(a)

within 15 days of any change in the register, notify the registered agent, in writing, of the change; and

 

(b)

provide the registered agent with a written record of the physical address of the place or places at which the original register of members or the original register of directors is kept.

 

(c)

Where the place at which the original register of members or the original register of directors is changed, the Company shall provide the registered agent with the physical address of the new location of the records within 14 days of the change of location.

 

23.8

The records, documents and registers required by these Articles shall be open to the inspection of the directors at all times.

 

23.9

The directors shall from time to time determine whether and to what extent and at what times and places and under what conditions the records, documents and registers of the Company or any of them shall be open to the inspection of members not being directors, and no member (not being a director) shall have any right to inspect any records, documents or registers of the Company except as conferred by the Act or authorised by a Resolution of Directors.

 

24

Audit

 

24.1

The directors may by a Resolution of Directors call for the accounts of the Company to be examined by an auditor or auditors to be appointed by them at such remuneration as may from time to time be agreed.

 

24.2

The auditor may be a member of the Company but no director or officer shall be eligible during his continuance in office.

 

24.3

Every auditor of the Company shall have a right of access at all times to the books of accounts of the Company, and shall be entitled to require from the officers of the Company such information and explanations as he thinks necessary for the performance of his duties.

 

24.4

The report of the auditor shall be annexed to the accounts upon which he reports, and the auditor shall be entitled to receive notice of, and to attend, any meeting at which the Company’s audited profit and loss account and/or balance sheet is to be presented.

 

 

25

Notices

 

25.1

Any notice, information or written statement required to be given to members shall be served by mail (air-mail service if available), electronic mail, facsimile or by hand addressed to each member at the address shown in the share register.

 

25.2

All notices directed to be given to the members shall, with respect to any registered shares to which persons are jointly entitled, be given to whichever of such persons is named first in the share register, and notice so given shall be sufficient notice to all the holders of such shares.

 

25.3

Any notice, if served by post, shall be deemed to have been served within 5 days of posting, if served by electronic mail or facsimile on the next business day after delivery and if served by hand upon delivery and in proving such service it shall be sufficient to prove that the letter containing the notice was properly addressed and mailed with the postage prepaid.

 

26

Continuation

 

Subject to the provisions of the Memorandum, the Company may, by a Resolution of Directors or by a Resolution of Members, continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws.

 

27

Winding Up

 

27.1

The Company may be voluntarily liquidated under Part XII of the Act if it has no liabilities and it is able to pay its debts as they become due. A liquidator may, subject to the terms of the Act, be appointed by a Resolution of Directors or by a Resolution of Members.

 

27.2

If the Company shall be wound up, the liquidator may, in accordance with a Resolution of Members, divide amongst the members in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as he deems fair upon any such property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidator may vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributors as the liquidator shall think fit, but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

 

 

We, Commonwealth Trust Limited, of P.O. Box 3321, Drake Chambers, Road Town, Tortola, British Virgin Islands in our capacity as registered agent for the Company hereby apply to the Registrar for the incorporation of the Company this 14th day of December, 2006.

 

Incorporator
Sgd : Deneshar Meade
Deneshar Meade
Authorised Signatory
Commonwealth Trust Limited

 

 

45

 

Exhibit 3.2

 

 

British Virgin Islands
BVI Business Companies Act, 2004

 

Memorandum of Association
and
Articles of Association
of

 

eToro Group Ltd.

 

A COMPANY LIMITED BY SHARES

 

Incorporated on the 14th day of December, 2006

Amended and Restated on the [●] day of [●], 2025

 

 

TERRITORY OF THE BRITISH VIRGIN ISLANDS

 

THE BVI BUSINESS COMPANIES ACT, 2004

 

AMENDED AND RESTATED

 

MEMORANDUM OF ASSOCIATION

 

OF

 

eToro Group Ltd.

 

A COMPANY LIMITED BY SHARES

 

1.

DEFINITIONS AND INTERPRETATION

 

1.1

In this Memorandum of Association and the attached Articles of Association, if not inconsistent with the subject or context:

 

“Act” means the BVI Business Companies Act, 2004 (No. 16 of 2004), as amended from time to time, and includes any regulations promulgated under the Act;

 

“Affiliate” shall mean, as applied to any Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with, such Person. For purposes of this definition, “control” (including with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise;

 

“Articles” means the attached Articles of Association of the Company, as amended or restated from time to time;

 

“Beneficially Own” has the meaning ascribed to it at Section 12 of this Memorandum;

 

“Board” means the board of Directors of the Company appointed or elected pursuant to the Articles and acting by Resolution of Directors;

 

“Chairman of the Board” has the meaning ascribed to it at Section 10.8 of the Articles;

 

 

“Change of Control Transaction” means (i) the merger, consolidation, business combination, or other similar transaction of the Company with any other entity, other than a merger, consolidation, business combination, or other similar transaction that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company and more than fifty percent (50%) of the total number of outstanding shares of the Company, in each case as outstanding immediately after such merger, consolidation, business combination, or other similar transaction, and the shareholders of the Company immediately prior to the merger, consolidation, business combination, or other similar transaction own voting securities of the Company, the surviving entity or its parent immediately following the merger, consolidation, business combination, or other similar transaction in substantially the same proportions (vis-à-vis each other) as such shareholders owned the voting securities of the Company immediately prior to the transaction, (ii) a recapitalization, liquidation, dissolution, or other similar transaction involving the Company, other than a recapitalization, liquidation, dissolution, or other similar transaction that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or its parent) more than fifty percent (50%) of the total voting power represented by the voting securities of the Company and more than fifty percent (50%) of the total number of outstanding shares of the Company, in each case as outstanding immediately after such recapitalization, liquidation, dissolution or other similar transaction, and the shareholders of the Company immediately prior to the recapitalization, liquidation, dissolution or other similar transaction own voting securities of the Company, the surviving entity or its parent immediately following the recapitalization, liquidation, dissolution or other similar transaction in substantially the same proportions (vis-à-vis each other) as such shareholders owned the voting securities of the Company immediately prior to the transaction;

 

“Class A Shares” has the meaning ascribed to it at Paragraph 6.1(a) of this Memorandum;

 

“Class B Shares” has the meaning ascribed to it at Paragraph 6.1(b) of this Memorandum;

 

“Class B Transfer” means any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of a Class B Share or any legal or beneficial interest in a Class B Share, whether or not for value and whether voluntary or involuntary or by operation of law or court order (including any such order that results in the designation of any other person which is not a Permitted Transferee to exercise the voting rights attached to the Share). A “Class B Transfer” shall also include, without limitation, a transfer of a Class B Share to a broker or other nominee (regardless of whether or not there is a corresponding change in beneficial ownership);

 

“Common Shares” means the Class A Shares and the Class B Shares;

 

“Company” means eToro Group Ltd.;

 

“Controlling Person” has the meaning ascribed to it at Paragraph 7.1(d) of this Memorandum;

 

“Directors” mean those Persons appointed or elected pursuant to the Articles to hold office as directors of the Company from time to time;

 

“Distribution” includes, in relation to a distribution by the Company to a Shareholder: (a) the direct or indirect transfer of an asset, other than Shares, to or for the benefit of the Shareholder; or (b) in relation to Shares held by a Shareholder, and whether by means of the purchase of an asset, the purchase, redemption or other acquisition of Shares, a transfer of indebtedness or otherwise, and includes a dividend;

 

 

“electronic” means actuated by electric, magnetic, electro-magnetic, electro-chemical or electro- mechanical energy and “by electronic means” means by any manner capable of being so actuated and shall include e-mail and/or other data transmission service;

 

“Equity Securities” means, collectively, any and all equity securities of the Company, whether or not currently authorised, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities;

 

“Excess Shares” has the meaning ascribed to it at Section 12 of this Memorandum;

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

 

“Family Member” means the spouse, domestic partner, parent, child (whether natural or adopted), siblings or any direct lineal descendant of a holder of Class B Shares;

 

“Final Conversion Date” shall mean 5:00 p.m. in New York, New York on the first Trading Day falling on or after the tenth (10th) year anniversary of the IPO Effective Time;

 

“Grantor” has the meaning ascribed to it at Paragraph 7.1(d) of this Memorandum;

 

“held” means, in relation to Shares, the Shares held by a Shareholder whose details are shown in the Transfer Agent Records and term “holds” and “holder” shall be construed accordingly;

 

“Incapacity” has the meaning ascribed to it at Paragraph 7.1(e) of this Memorandum;

 

“IPO Effective Time” means the effective time of the Company’s initial public offering on a Stock Exchange;

 

“Memorandum” means this Memorandum of Association of the Company, as amended or restated from time to time;

 

“month” means a calendar month;

 

“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury;

 

“Permitted Transferee” has the meaning ascribed to it at Paragraph 7.1(d) of this Memorandum;

 

“Person” means any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organisation, entity or governmental entity;

 

 

“Preferred Shares” has the meaning ascribed to it at Paragraph 6.1(c) of this Memorandum;

 

“present in person” means, in the case of an individual, that individual or his lawfully appointed attorney being present in person and, in the case of a non-natural Person, being present by duly authorised representative or lawfully appointed attorney and, in relation to meetings, “in person” shall be construed accordingly;

 

“Registrar” means the Registrar of Corporate Affairs appointed under section 229 of the Act;

 

“Regulatory Body” or “Regulatory Bodies” means any financial regulatory authority that the Company or any Subsidiary thereof will be required to be registered with or that they may be regulated under from time to time;

 

“Regulatory Filing” means any filing or register with or provide any notification to any Regulatory Body;

 

“Regulatory Threshold” has the meaning ascribed to it at Section 12 of this Memorandum;

 

“Resolution of Directors” means either:

 

(a)

a resolution approved at a duly convened and constituted meeting of the Board, or of a committee of the Board (solely with respect to the matters within the scope of such committee’s authority), by the affirmative vote of a majority of the Directors present at the meeting who voted and did not abstain; or

 

(b)

a resolution consented to in writing by a majority of the Directors or such other majority as may be specified in these Memorandum and Articles, or by a majority of members of the committee of the Board, as the case may be;

 

“Resolution of Shareholders” means a resolution approved at a duly convened and constituted meeting of the Shareholders by the affirmative vote of a majority of the votes of the Shares entitled to vote thereon which were present at the meeting and were voted and not abstained, unless a higher percentage is otherwise required by law, or by these Memorandum and Articles. Actions by the Shareholders may be effected by written consent in lieu of a duly convened and constituted meeting of the Shareholders if approved by the affirmative vote of a majority of the votes of the Shares entitled to vote thereon and provided that such action has expressly been approved in advance by the Board or recommended by the Board for the approval by the Shareholders;

 

“Rights” shall mean any option, warrant, restricted share unit, conversion right or contractual right of any kind to acquire shares of the Company;

 

 

“Sanctioned Person” means any Person that is: (a) listed on any Sanctions List, (b) owned or controlled by, or acting on behalf of or at the direction of, a Person listed on any Sanctions List (as the terms “owned,” “controlled” and “acting on behalf of or at the direction of” are interpreted under relevant Sanctions Laws) or (c) otherwise the target of Sanctions Laws;

 

“Sanctioned Shares” means Shares and/or Rights, irrespective of their class, owned, held or controlled, directly or indirectly by a Sanctioned Person;

 

“Sanctions Laws” means any laws, regulations, executive orders or other restrictive measures in respect of economic or financial sanctions or trade embargoes promulgated, issued, implemented, administered or enforced by the governments and official departments, committees, institutions, bodies or agencies of: (a) the United States, (b) the European Union; (c) the United Kingdom, (d) the State of Israel and/or (e) any other country or territory with jurisdiction over the Company and/or its Subsidiaries;

 

“Sanctions List” means any list of or designated Persons maintained, promulgated, issued, implemented, administered or enforced pursuant to or under Sanctions Laws, including but not limited to the OFAC List of Specially Designated Nationals and Blocked Persons, the OFAC Sectoral Sanctions Identification List, the Consolidated List of Persons, Groups and Entities Subject to EU Financial Sanctions, the Consolidated List of Financial Sanctions Targets in the UK and the lists of Persons named in Annex XIX to Council Regulation (EU) No 833/2014, each as amended, supplemented or substituted from time to time;

 

“Seal” means any seal which has been duly adopted as the common seal of the Company;

 

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder;

 

“Share” means any share issued or to be issued by the Company, including the Common Shares and the Preferred Shares;

 

“Shareholder” means a Person reflected in the Transfer Agent Records as the holder of one or more Shares or fractional Shares;

 

“Stock Exchange” means the Nasdaq Stock Market LLC or other equivalent national securities exchange upon which the Shares are registered and tradeable, and any successor bodies carrying on their functions;

 

“Subsidiary” means (i) with respect to a corporation, an entity in which more than fifty percent (50%) of the combined voting power of the outstanding voting stock is owned, directly or indirectly, by the Company or by one or more other Subsidiaries or by the Company and one or more other Subsidiaries, or in which the Company or one or more Subsidiaries or the Company and or more other Subsidiaries has the right to appoint a majority of the directors; (ii) with respect to a partnership, an entity which the Company or one or more other Subsidiaries or the Company and one or more other Subsidiaries, directly or indirectly, is or are the general partner or partners and has or have the power to direct the policies, management and affairs of such partnership; (iii) with respect to a limited liability company, an entity which the Company or one or more other Subsidiaries or the Company and one or more other Subsidiaries, directly or indirectly, is or are the managing member or members and has or have the power to direct the policies, management and affairs of such company; and (iv) any other person in which the Company or one or more other Subsidiaries or the Company and one or more other Subsidiaries, directly or indirectly, has or have at least a majority ownership or the power to direct the policies, management and affairs thereof (including by contract);

 

 

“Transfer Agent” has the meaning ascribed to it at Section 11 of the Memorandum; 

 

“Transfer Agent Records” has the meaning ascribed to it at Section 2.6 of the Articles; and

 

“Treasury Share” means a Share that was previously issued but was repurchased, redeemed or otherwise acquired by the Company and not cancelled.

 

1.2

In these Memorandum and Articles, unless the context otherwise requires a reference to:

 

(a)

a Paragraph is a reference to a paragraph of the Memorandum;

 

(b)

a Section is a reference to a section of the Articles;

 

(c)

a reference to voting in relation to Shares shall be construed as a reference to voting by Shareholders holding the Shares, except that it is the number of Shares that shall be counted, based on the respective Share’s voting rights, and not the number of Shareholders who actually voted and a reference to Shares being present at a meeting shall be given a corresponding construction;

 

(d)

a reference to money is, unless otherwise stated, a reference to the currency in which shares of the Company shall be issued;

 

(e)

any words or expressions defined in the Act unless the context otherwise requires bear the same meaning in the Memorandum and the Articles unless otherwise defined herein;

 

(f)

whenever the singular or plural number, or the masculine, feminine or neuter gender is used in these Memorandum and Articles, it shall equally, where the context admits, include the others; and

 

(g)

headings are inserted for convenience only and shall be disregarded in interpreting these Memorandum and the Articles.

 

2.

NAME

 

The name of the Company is eToro Group Ltd.

 

 

3.

STATUS

 

The Company is a company limited by shares.

 

4.

REGISTERED OFFICE AND REGISTERED AGENT

 

4.1

The first registered office of the Company is at the office of the registered agent which is at Palm Grove House, P.O. Box 438, Drake Chambers, Road Town, Tortola, British Virgin Islands.

 

4.2

The first registered agent of the Company is Commonwealth Trust Limited of Palm Grove House, P.O. Box 438, Drake Chambers, Road Town, Tortola, British Virgin Islands.

 

4.3

The current registered office of the Company shall be at the offices of Trident Trust Company at the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P. O. Box 146, Road Town, Tortola, British Virgin Islands.

 

4.4

The current registered agent of the Company shall be at the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands.

 

4.5

The Company may, from time to time, by Resolution of Directors, change the location of its registered office or change its registered agent.

 

4.6

Any change of registered office or registered agent will take effect on the registration by the Registrar of a notice of the change filed by the existing registered agent or a legal practitioner in the British Virgin Islands acting on behalf of the Company. If the existing registered agent does not file such notice on instruction by the Company, the Company shall procure that a notice of change of registered agent is filed with the Registrar by a legal practitioner in the British Virgin Islands acting on behalf of the Company, and any such change of registered agent will take effect on the registration by the Registrar of such notice.

 

5.

CAPACITY AND POWERS

 

5.1

Subject to the Act and any other British Virgin Islands legislation, the Company has, irrespective of corporate benefit:

 

(a)

full capacity to carry on or undertake any business or activity, do any act or enter into any transaction; and

 

(b)

for the purposes of Paragraph 5.1(a), full rights, powers and privileges.

 

5.2

For the purposes of section 9(4) of the Act, there are no limitations on the business that the Company may carry on.

 

6.

NUMBER AND CLASSES OF SHARES

 

6.1

The Company is authorised to issue a maximum of [●] Shares divided into:

 

(a)

[●] common A shares, no par value per share (the “Class A Shares”);

 

 

(b)

[●] common B shares, no par value per share (the “Class B Shares”) and

 

(c)

[●] preferred shares, no par value per share (the “Preferred Shares”).

 

6.2

The Company may issue fractions of a Share, and such fractional Share shall have the same corresponding fractional designations, powers, preferences, rights, qualifications, limitations and restrictions of a whole Share of the same class or series of Shares.

 

6.3

Shares authorised for issuance under these Memorandum and Articles may be issued in one or more series of Shares as the Board may by Resolution of Directors determine from time to time.

 

6.4

Except as otherwise set forth in Paragraph 7.2, the Company may, by Resolution of Shareholders, subject to section 12 of the Act and Paragraph 12, by amending this Memorandum and, where necessary, the Articles, create additional classes of Shares and determine the rights, privileges, restrictions and conditions thereof including without limitation, new classes of Preferred Shares or other Shares issued by the Company from time to time. To the extent legally permitted, such number of Shares may be increased or decreased by Resolution of Shareholders, provided that no decrease shall reduce the number of Shares of a class to a number less than the number of Shares of such class then issued and outstanding plus the number of Shares of such class reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into such class of Shares.

 

7.

RIGHTS OF SHARES

 

7.1

Rights Attaching to the Class A Shares and Class B Shares. Each Common Share in the Company confers upon the Shareholder holding such Common Share the following rights (in addition to any designations, powers, preferences, rights, qualifications, limitations and restrictions attaching to any of the Common Shares as provided for elsewhere in this Memorandum or in the Articles):

 

(a)

Voting Rights:

 

(i)

Except as otherwise expressly provided herein or required by applicable law, the holders of Class A Shares and Class B Shares shall vote together as one class on all matters subject to any Resolution of Shareholders.

 

(ii)

Except as otherwise expressly provided herein or required by applicable law, on any matter that is subject to any Resolution of Shareholders, each holder of Class A Shares shall be entitled to one (1) vote for each Class A Share, and each holder of Class B Shares shall be entitled to ten (10) votes for each Class B Share.

 

 

(b)

Identical Rights. Except as otherwise expressly provided herein or required by applicable law and subject to Section 7.1(a) above, the Class A Shares and Class B Shares shall have the same rights and privileges and rank equally, share ratably and be identical in all respects as to all matters, including without limitation:

 

(i)

Dividends and Distributions. Class A Shares and Class B Shares shall be treated equally and ratably, on a per share basis with respect to any dividend or Distribution paid or distributed by the Company, including any distribution of surplus assets upon the Company’s liquidation, dissolution, or other similar transaction, unless different treatment of the shares of each such class is approved in a general meeting of each of the Class A Shares and Class B Shares, each voting separately as a class, and in which a majority of the shares of each such class present and voting in such meeting affirmatively vote in favor of such treatment, provided, however, that in the event a distribution is paid in the form of Class A Shares or Class B Shares (or rights to acquire such shares), then holders of Class A Shares shall receive Class A Shares (or rights to acquire such shares, as the case may be) and holders of Class B Shares shall receive Class B Shares (or rights to acquire such shares, as the case may be).

 

(ii)

Subdivision and Combination. If the Company effects a split, reverse split, subdivision or combination of the outstanding Class A Shares or Class B Shares, the outstanding shares of the other class will be subject to the same split, reverse split, subdivision or combination in the same proportion and manner, unless different treatment is approved in a general meeting of each of the Class A Shares and Class B Shares, each voting separately as a class, and in which a majority of the shares of each such class present and voting in such meeting affirmatively vote in favor of such treatment.

 

(iii)

Change of Control Transaction. Class A Shares and Class B Shares shall be treated equally, identically and ratably on a per share basis with respect to any consideration into which such Shares are converted or any consideration paid or otherwise distributed to shareholders of the Company in connection with a Change of Control Transaction, unless different treatment of the shares of each such class is approved in a general meeting of each of the Class A Shares and Class B Shares, each voting separately as a class, and in which a majority of the shares of each such class present and voting in such meeting affirmatively vote in favor of such treatment.

 

(c)

Voluntary Conversion. Except as otherwise expressly provided herein or required by applicable law, each one (1) Class B Share shall be convertible into one (1) Class A Share at the option of the holder thereof, at any time, upon written notice to the Company and the Transfer Agent.

 

 

(d)

Automatic Conversion. Except as otherwise expressly provided herein or required by applicable law, Class B Shares shall automatically convert into an equal number of Class A Shares upon the earlier of:

 

(i)

a Class B Transfer of the respective Class B Shares, provided, however, that no such conversion shall occur upon the Class B Transfer to a Permitted Transferee or from a Permitted Transferee back to the original holder of the Class B Shares, and provided further, that the Company and the Transfer Agent are each notified in writing of such Class B Transfer no later than five (5) business days prior to the Class B Transfer. “Permitted Transferee” shall mean any of the following, provided that the transferring Shareholder shall have provided to the Company and the Transfer Agent evidence that is reasonably satisfactory to the Board that the transferee meets the applicable definition below:

 

(1)

a Family Member of such holder of Class B Shares;

 

(2)

a trust exclusively for the benefit of such holder of Class B Shares or one or more Family Members of such holder so long as the holder of Class B Shares and/or such Family Members have sole dispositive power and exclusive voting control the Class B Shares held by such trust; provided such Class B Transfer does not involve any payment of cash, securities, property or other consideration to the holder of Class B Shares, and provided further, that in the event such holder of Class B Shares and/or Family Members of such holder no longer have sole dispositive power and exclusive voting control with respect to the Class B Shares held by such trust, each share of Class B Share then held by such trust shall automatically convert into one (1) fully paid and nonassessable Class A Share;

 

(3)

the beneficiaries or trustee of a trust; provided that the original grantor of the trust (the “Grantor”) and/or Family Members of such Grantor have sole dispositive power and exclusive voting control the Class B Shares; provided further, that in the event such Grantor and/or Family Members of such Grantor no longer have sole dispositive power and exclusive voting control the Class B Shares, each Class B Share then held shall automatically convert into one (1) fully paid and nonassessable Class A Share;

 

(4)

a company, corporation, partnership or limited liability company in which such holder of Class B Shares and/or Family Members of such holder of Class B Shares directly, or indirectly through one or more Permitted Transferees, own shares, partnership interests or membership interests, as applicable, with sufficient voting control in the company, corporation, partnership or limited liability company, as applicable, or otherwise have legally enforceable rights, such that the holder of Class B Shares and/or Family Members of such holder of Class B Shares retain sole dispositive power and exclusive voting control with respect to the Class B Shares held by such company, corporation, partnership or limited liability company after the Class B Transfer; provided, however, that in the event the holder of Class B Shares and/or Family Members of such holder no longer own sufficient shares, partnership interests or membership interests, as applicable, or no longer have sufficient legally enforceable rights to ensure the holder of Class B Shares and/or Family Members of such holder retain sole dispositive power and exclusive voting control with respect to the Class B Shares held by such company, corporation, partnership or limited liability company, as applicable, then each Class B Share then held by such company, corporation, partnership or limited liability company, as applicable, shall automatically convert into one (1) fully paid and nonassessable Class A Share; or

 

 

(5)

an Affiliate of a holder of Class B Shares; provided, however, that the person or entity holding sole dispositive power and exclusive voting control with respect to the Class B Shares held by such Affiliate after the Class B Transfer (in this clause, the “Controlling Person”) retains, directly or indirectly, sole dispositive power and exclusive voting control with respect to the shares following such Class B Transfer; provided further, that in the event the Controlling Person no longer has sole dispositive power and exclusive voting control with respect to the Class B Shares held by such Affiliate, each such Class B Share then held by such Affiliate shall automatically convert into one (1) Class A Share.

 

(ii)

the date specified by a written notice and certification request of the Company to the holder of such Class B Shares requesting a certification, in a form satisfactory to the Company, verifying such holder’s ownership of Class B Shares and confirming that a conversion to Class A Shares has not occurred, which date shall not be less than thirty (30) calendar days after the date of such notice and certification request; provided, however, that no such automatic conversion pursuant to this subsection (ii) shall occur in the case of a holder of Class B Shares or its Permitted Transferees that furnishes a certification satisfactory to the Company prior to the specified date.

 

(e)

Conversion upon Death or Incapacity. Except as otherwise expressly provided herein or required by applicable law, each Class B Share held of record by a natural person, or by any Permitted Transferee which is a natural person, shall automatically, without any further action, convert into one (1) Class A Share upon the death or Incapacity of such Class B Shareholder. In the event of a dispute regarding whether a holder of Class B Shares has suffered an Incapacity, no Incapacity of such holder will be deemed to have occurred unless and until an affirmative ruling regarding such Incapacity has been made by a court of competent jurisdiction. “Incapacity” shall mean that such holder is incapable of managing his or her financial affairs under the criteria set forth in the applicable probate code of such holder’s jurisdiction that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than six (6) months as determined by a licensed medical practitioner.

 

 

(f)

Automatic Conversion of All Outstanding Class B Shares. Except as otherwise expressly provided herein or required by applicable law, each issued and outstanding Class B Share shall automatically, without any further action, convert into one (1) Class A Share upon (i) the date specified by affirmative vote or written consent of the holders of at least sixty-six and two-thirds percent (66 2⁄3%) of the outstanding Class B Shares, voting or acting as a separate class, or (ii) such time on which the total number of issued and outstanding Class B Shares on a fully diluted basis (assuming for such purpose the conversion and exercise of any and all outstanding rights or securities that are convertible or exercisable into Class B Shares) represent less than fifteen percent (15%) of the total number of issued and outstanding Class B Shares on a fully diluted basis (calculated in the same manner) as of the IPO Effective Time.

 

(g)

Final Conversion of Class B Shares. Except as otherwise expressly provided herein or required by applicable law, on the Final Conversion Date, each issued and outstanding Class B Share shall automatically, without any further action, convert into one (1) Class A Share.

 

(h)

Procedures. The Company may, from time to time, establish such policies and procedures relating to the conversion of Class B Shares to Class A Shares and the general administration of this dual class share structure, including the issuance of share certificates (or the establishment of book-entry positions) with respect thereto, as it may deem necessary or advisable, and may request that holders of Class B Shares furnish affidavits or other proof to the Company, as it, in its sole discretion, deems necessary, to verify the ownership of Class B Shares and to confirm that a conversion to Class A Shares has not occurred. A determination by the Board that a Class B Transfer or other event has occurred which results in a conversion to Class A Shares shall be conclusive and binding.

 

(i)

Immediate Effect of Conversion. In the event of a conversion of Class B Shares to Class A Shares pursuant to this Paragraph 7.2, such conversion shall be deemed to have been made, as applicable, (i) at the time that the Transfer Agent receives the written notice required, either from the Company or the holder of Class B Shares, (ii) the time that the Class B Transfer occurred, (iii) the death or Incapacity of the holder of Class B Shares, (iv) the time specified in clause (f) above, or (v) immediately upon the Final Conversion Date. Upon any conversion of Class B Shares to Class A Shares, all rights of the holder of such Class B Shares shall cease and the person or persons in whose names or names the certificate or certificates (or book-entry position(s)) representing the Class B Shares) are to be issued shall be treated for all purposes as having become the record holder or holders of such number of Class A Shares into which such Class B Shares were convertible. Class B Shares that are converted into Class A Shares pursuant to this Paragraph 7.2 shall not be reissued. Any proxy issued with respect to Class B Shares shall, unless otherwise stated in such proxy, continue to apply with respect to the Class A Shares into which the Class B shares have been converted.

 

 

(j)

Reservation of Shares. The Company shall at all times reserve and keep available out of its authorized but unissued Class A Shares, solely for the purpose of effecting the conversion of the Class B Shares, such number of its Class A Shares as shall from time to time be sufficient to effect the conversion of all outstanding Class B Shares into Class A Shares.

 

(k)

No Further Issuances. Except for the issuance of Class B Shares issuable upon exercise of Rights outstanding at the IPO Effective Time or a dividend payable in accordance with this Paragraph 7.2, the Company shall not at any time after the IPO Effective Time issue any additional Class B Shares, unless such issuance is approved by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2⁄3%) of the outstanding Class B Shares. After the Final Conversion Date, the Company shall not issue any additional Class B Shares.

 

(l)

Amendments. Notwithstanding anything to the contrary herein, this Paragraph 7.2 may only be amended, replaced or suspended by both (a) a resolution adopted by a Resolution of Shareholders by a majority of the total voting power present and voting at such Resolution of Shareholders, and (b) a resolution adopted at a separate class meeting of the Class B Shares by at least sixty-six and two-thirds percent (66 2⁄3%) of the total voting power of the then issued and outstanding Class B Shares or the written consent of holders of at least sixty-six and two-thirds percent (66 2⁄3%) of the total voting power of the then issued and outstanding Class B Shares.

 

7.2

Rights Attaching to the Preferred Shares. The Preferred Shares in the Company shall have such designations, powers, preferences, rights, qualifications, limitations and restrictions as specified by the Board pursuant to the Resolution of Directors approving the issuance of such Preferred Share(s); provided, however, that prior to such issuance, the Board shall determine the designations, powers, preferences, rights, qualifications, limitations and restrictions of such Preferred Shares, including:

 

(a)

the designation of such series, the number of Preferred Shares to constitute such series and the subscription price thereof if different from the par value thereof;

 

(b)

whether the Preferred Shares of such series shall have voting rights, in addition to any voting rights provided for by law, and, if so, the terms of such voting rights, which may be general or limited;

 

(c)

the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, and the preference or relation which such dividends shall bear to the dividends payable on any Common Shares of any other class or any other series of Shares;

 

(d)

whether the Preferred Shares of such series shall be subject to redemption by the Company, and, if so, the times, prices and other conditions of such redemption;

 

(e)

whether the Preferred Shares of such series shall have any rights to receive any Distribution amongst the Shareholders upon the liquidation of the Company, and, if so, the terms of such liquidation preference, and the relation which such liquidation preference shall bear to the entitlements of the holders of Shares of any other class or any other series of Shares;

 

 

(f)

whether the Preferred Shares of such series shall be convertible into, or exchangeable for, Shares of any other class or any other series of Preferred Shares or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;

 

(g)

the limitations and restrictions, if any, to be effective while any Preferred Shares of such series are outstanding upon the payment of dividends or the making of other Distributions on, and upon the purchase, redemption or other acquisition by the Company of, the existing Shares or Shares of any other class of shares or any other series of Preferred Shares;

 

(h)

the conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issue of any additional Shares, including additional Shares of such series or of any other class of Shares or any other series of Preferred Shares; and

 

(i)

any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions thereof.

 

The Board shall not require any approval of the Shareholders in respect of the issuance of Preferred Shares and the related amendments (if any) to this Memorandum and the Articles.

 

7.3

Redemption. The Company may, at its sole discretion by a Resolution of Directors, redeem, purchase or otherwise acquire all or any of the Shares in the Company subject to Section 3 of the Articles.

 

7.4

Equal Status. Other than as explicitly set forth in Paragraph 7.2, the Common Shares shall have the same rights and privileges and rank equally, share ratably and be identical in all respect to all matters.

 

8.

VARIATION OF RIGHTS

 

The rights attached to any Shares as specified in Paragraph 7 of this Memorandum, whether or not the Company is being liquidated, dissolved or wound up, may be varied only by a resolution adopted at a general meeting of the shareholders of the Company by the holders of a majority of the voting power of all the issued Shares, as one class, which are present and voting in such meeting, or the written consent of holders of at least a majority of the total outstanding voting power of the then issued and outstanding shares, as one class, and, in addition to the foregoing (i) in the event that such variation of rights relates to the rights of a specific class in a manner different than other classes, a resolution adopted at a separate class meeting of such class of Shares by at least a majority of the total voting power of the then issued and outstanding shares of such class or the written consent of holders of at least a majority of the total voting power of the then issued and outstanding shares of such class, and (ii) solely in relation to the rights attached to the Class B Shares, a resolution adopted at a separate class meeting of the Class B Shares by at least sixty-six and two-thirds percent (66 ²⁄₃%) of the total voting power of the then issued and outstanding Class B Shares or the written consent of holders of at least sixty-six and two-thirds percent (66 ²⁄₃%) of the total voting power of the then issued and outstanding Class B Shares.

 

 

9.

RIGHTS NOT VARIED BY THE ISSUE OF SHARES PARI PASSU

 

The rights conferred upon the holders of the Shares of any class shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith or superior thereto.

 

10.

REGISTERED SHARES

 

10.1

The Company is not authorised to issue bearer Shares, convert registered Shares to bearer Shares or exchange registered Shares for bearer Shares.

 

11.

TRANSFER OF SHARES

 

The Company shall procure that upon a transfer of Shares permitted pursuant to Section 6 of the Articles or section 54A of the Act, the transfer agent (the “Transfer Agent”) shall retain the Transfer Agent Records required pursuant to Section 2.6 of the Articles.

 

12.

REGULATORY RESTRICTIONS

 

The Company is engaged in a highly regulated business which requires the Company to make Regulatory Filings to Regulatory Bodies and to obtain licenses and permits from Regulatory Bodies, and such Regulatory Filings in many cases require the submission of information and documents regarding significant or material shareholders. Therefore, notwithstanding anything to the contrary in this Memorandum or the Articles, unless otherwise approved by a Resolution of Directors, (a) in the event that the Company becomes aware that any Person “beneficially owns” (as such term is defined and as shall be calculated in accordance with Section 13(d) of the Exchange Act) (“Beneficially Own”) together with its Affiliates more than 9.99% of the Company’s issued share capital or voting power (the (“Regulatory Threshold”), then all shares that exceed the Regulatory Threshold (the “Excess Shares”) shall be deemed not to have any voting rights and/or any rights to receive Distribution from the Company, and the Company may disregard any voting or distribution rights attached to such Excess Shares, until such time that the Company is satisfied, in its sole discretion, that all regulatory requirements applicable to the Excess Shares have been fully complied with and that all licenses and permits to which the Company or any Subsidiary is subject are not adversely affected as a result of such Excess Shares. The Company may determine procedures for determination of Excess Shares and administration of the rights attached thereto, including in connection with any vote of shareholders. In the event that the total number of shares Beneficially Owned as described above are Beneficially Owned by more than one Person, then the number of Excess Shares shall be allocated among each such Person pro rata to the total number of shares held by such Person. The Board may determine that Excess Shares shall cease to constitute Excess Shares subject to conditions or qualifications that the Board shall determine in its sole discretion.

 

 

13.

Restrictions Due to Sanctions Laws

 

13.1

Restrictions on Issuance of Shares and Share Transfers. Sanctioned Shares cannot be sold, transferred or otherwise disposed of, and no Shares, irrespective of their class, may be issued directly or indirectly to or for the benefit of a Sanctioned Person, and the Transfer Agent shall not register a transfer of any Sanctioned Shares or any such issuance of Shares.

 

13.2

Limitations on Voting Rights. Notwithstanding anything to the contrary, Sanctioned Shares shall not confer on its holder the right to vote or participate in any Resolution of Shareholders or of any class(es) of Shares, or otherwise confer voting rights. Sanctioned Shares shall not be counted in order of meeting quorum requirements, nor for any applicable majority requirement in this Memorandum or Articles or for any purpose of the Act. Sanctioned Shares shall not be accounted in the total number of Shares eligible for voting.

 

13.3

Limitations on Distributions. Sanctioned Shares shall not confer on its holder a right in any dividend or other Distribution under this Memorandum or the Act. The Board may allow for the Distribution to be paid (i) into a blocked account, escrow account or in any other manner required, necessary or advisable under applicable Sanctions Laws, or (ii) suspend such payment.

 

13.4

Limitations in Change of Control. Any right, including but not limited to consideration, conversion, adjustment, recapitalization, reclassification, consolidation, registration, or other right that may otherwise be attributable to a share in the event of a Change of Control, will be suspended in connection with any Sanctioned Shares. The Board shall have the authority to take any and all actions, or refrain from actions, that are required, necessary or advisable in order to consummate the Change of Control and to allocate or distribute the proceeds of any Change of Control in a manner that does not breach Sanctions Laws, and the foregoing actions, or inactions, by the Board shall under no circumstances derogate or adversely affect the validity of the Change of Control nor in any way invalidate the transfer of good title of any Shares acquired in connection with the Change of Control.

 

13.5

Notwithstanding anything to the contrary, the Board, in its sole discretion and upon the advice of a reputable international law firm, may determine that Sanctioned Shares shall not be subject to certain, or any, restrictions set out in this Section 13, or may modify the scope of any or all such restrictions, if the determination, treatment of the Sanctioned Shares, and exercise or enjoyment of the resulting rights afforded to the relevant shareholder by the Sanctioned Shares will not violate applicable Sanctions Laws. If, following such a determination by the Board, any such determination (or the effect of such determination) becomes prohibited by applicable Sanctions Laws, the relevant restriction(s) in this Section 13 shall automatically return into effect. For the avoidance of doubt, no restriction on Sanctioned Shares established by this Section 13 may be waived, or remain waived, if it would violate, or cause a violation of, applicable Sanctions Laws.

 

 

14.

AMENDMENT OF THE MEMORANDUM AND THE ARTICLES

 

14.1

Except as otherwise explicitly provided herein, the Company may amend this Memorandum or the Articles by a resolution adopted at a general meeting of the shareholders of the Company by the holders of a majority of the voting power of all the issued Shares, as one class, which are present and voting in such meeting, or the written consent of holders of at least a majority of the total outstanding voting power of the then issued and outstanding shares, as one class; provided that in no event shall such amendment be made unless the Board has recommended to the Shareholders by Resolution of Directors to vote in favor of adoption of such amendment.

 

14.2

Any amendment of this Memorandum or the Articles will take effect on the registration by the Registrar of a notice of amendment, or restated Memorandum and Articles, filed by the registered agent.

 

We, Commonwealth Trust Limited of Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands, in our capacity as registered agent for the Company, hereby apply to the Registrar for the incorporation of the Company this 14th day of December, 2006.

 

Incorporator

 

Sgd: Deneshar Meade
Deneshar Meade
Authorised Signatory
Commonwealth Trust Limited

 

 

TERRITORY OF THE BRITISH VIRGIN ISLANDS

 

THE BVI BUSINESS COMPANIES ACT, 2004

 

AMENDED AND RESTATED

 

ARTICLES OF ASSOCIATION

 

OF

 

eToro Group Ltd.

 

A COMPANY LIMITED BY SHARES

 

1.

REGISTERED SHARES

 

1.1

The Company is not required to issue certificates in respect of the Shares to any Shareholder, unless otherwise determined by the Board by Resolution of Directors.

 

1.2

To the extent any certificate is issued in respect of Shares, any Shareholder receiving such certificate shall indemnify and hold the Company and its Board and officers harmless from any loss or liability which it or they may incur by reason of any wrongful or fraudulent use or representation made by any Person by virtue of the possession thereof. If a certificate for Shares is worn out or lost it may be renewed on production of the worn out certificate or on satisfactory proof of its loss together with such indemnity as may be required by Resolution of Directors.

 

1.3

If several Persons are registered as joint holders of any Shares, any one of such Persons may give an effectual receipt for any Distribution.

 

2.

SHARES

 

2.1

Without prejudice to any rights previously conferred on the holders of any existing Shares or class of Shares, any Share or other Equity Securities in the Company may be issued with such preferred, deferred or other special rights or such restrictions, whether in regard to dividend, voting or otherwise as the Board may from time to time determine.

 

2.2

Section 46 (Pre-emptive rights) of the Act shall not apply to the Company.

 

2.3

Subject to the provisions of these Articles and the Memorandum, the unissued Shares of the Company shall be at the disposal of the Board, who may, without limiting or affecting any rights previously conferred on the holders of any existing Shares or class or series of Shares, by Resolution of Directors:

 

(a)

offer, allot, grant options over or otherwise dispose of them to such Persons at such times, in such manner and for such consideration, being not less than the par value of the Shares being disposed of, on such terms and having such rights and being subject to such restrictions and upon such terms and conditions as the Board may determine; and

 

 

(b)

grant rights over Shares or other Equity Securities to be issued in one or more classes or series as the Board deems necessary or appropriate and determine the designations, powers, preferences, privileges and other rights attaching to such Shares or other Equity Securities, including dividend rights, voting rights, conversion rights, terms of redemption and liquidation preferences, at such times and on such other terms as Board deems necessary or appropriate.

 

2.4

Subject to Section 2.5, a Share may be issued for consideration in any form, including money, a promissory note, or other written obligation to contribute money or property, real property, personal property (including goodwill and know-how), services rendered or a contract for future services or any combination of the foregoing.

 

2.5

No Shares may be issued for a consideration that is, in whole or in part, other than money, unless a Resolution of Directors has been passed stating:

 

(a)

the amount to be credited for the issue of the Shares;

 

(b)

the determination of the Board of the reasonable present cash value of the non-money consideration for the issue; and

 

(c)

that, in the opinion of the Board, the present cash value of the non-money consideration for the issue is not less than the amount to be credited for the issue of the Shares.

 

2.6

The Company shall cause its Transfer Agent to maintain a record (the “Transfer Agent Records”) containing the information with respect to the Shareholders that the transfer agent receives, including but not limited to:

 

(a)

the names and addresses of the Persons who hold Shares;

 

(b)

the number of each class and series of Shares held by each Shareholder;

 

(c)

the date on which the Shareholder acquired the Shares; and

 

(d)

the date on which any Person ceased to be a Shareholder.

 

2.7

The Transfer Agent Records may be kept in any such form as the Board may approve, but if it is in magnetic, electronic or other data storage form, the Company shall procure that the Transfer Agent must be able to produce legible evidence of its contents. Until the Board otherwise determines, the magnetic, electronic or other data storage form shall be the original Transfer Agent Records.

 

 

3.

REDEMPTION OF SHARES AND TREASURY SHARES

 

3.1

The Company may not purchase, redeem or otherwise acquire its own Shares without the consent of Shareholders whose Shares are to be purchased, redeemed or otherwise acquired, unless the Company is permitted by the Act or any other provision in the Memorandum or these Articles to purchase, redeem or otherwise acquire the Shares without their consent.

 

3.2

No purchase, redemption or other acquisition of Shares by the Company shall be made unless the Resolution of Directors authorising such purchase, redemption or other acquisition contains a statement that the Board is satisfied, on reasonable grounds, that immediately after the purchase, redemption or other acquisition, the value of the Company’s assets will exceed its liabilities, and the Company will be able to pay its debts as they fall due.

 

3.3

A determination by the Board under Section 3.2 is not required when the Shares are purchased, redeemed or otherwise acquired by the Company by virtue of the provisions of the Act.

 

3.4

Shares that the Company purchases, redeems or otherwise acquires pursuant to this Section 3 may be cancelled or held as Treasury Shares except to the extent that such Shares are in excess of fifty percent (50%) of the issued Shares of the Company, in which case they shall be cancelled but they shall be available for reissue.

 

3.5

All rights and obligations attaching to a Treasury Share shall be suspended and shall not be exercised by the Company while it holds the Share as a Treasury Share.

 

3.6

Treasury Shares may be transferred by the Company on such terms and conditions (not otherwise inconsistent with the Memorandum and these Articles) as the Company may by Resolution of Directors determine.

 

3.7

Sections 60 (Process for acquisition of own shares), 61 (Offer to one or more shareholders) and 62 (Shares redeemed otherwise than at the option of company) of the Act shall not apply to the Company.

 

4.

MORTGAGES AND CHARGES OF SHARES

 

Shareholders may mortgage or charge their Shares.

 

5.

FORFEITURE

 

5.1

When a Share is not fully paid for on issue, the Board may at any time, subject to the terms on which such Share was issued, serve upon the defaulting Shareholder a written notice of call specifying the date for payment to be made.

 

5.2

The written notice of call referred to in Section 5.1 shall name a further date not earlier than the expiration of fourteen (14) days from the date of service of the notice on or before which the payment required by the notice is to be made and shall contain a statement that in the event of non-payment at or before the time named in the notice, the Shares in respect of which payment is not made will be liable to be forfeited.

 

 

5.3

Where a written notice of call has been issued pursuant to Section 5.2 and the obligations of the defaulting Shareholder under such notice have not been complied with, the Board by Resolution of Directors may, at any time before tender of payment, forfeit and cancel the Shares to which the notice relates and direct that the Transfer Agent Records be updated.

 

5.4

Upon forfeiture and cancellation pursuant to Section 5.3, the Company shall be under no obligation to refund any moneys to the defaulting Shareholder whose Shares have been cancelled and that defaulting Shareholder shall be discharged from any further obligation to the Company with respect to such forfeited Shares.

 

6.

TRANSFER OF SHARES

 

6.1

Except as otherwise expressly provided in the Memorandum, any person becoming entitled by operation of law or otherwise to a Share or Shares in consequence of the death, incompetence or bankruptcy of any Shareholder may, subject to all applicable probate requirements, be registered as a Shareholder upon such evidence being produced as may reasonably be required by the Board or the Transfer Agent and subject also to the facilities and requirements of the relevant system concerned. An application by any such person to be registered as a Shareholder shall for all purposes be deemed to be a transfer of Shares of the deceased, incompetent or bankrupt Shareholder and the Board shall treat it as such and procure that the Transfer Agent shall treat it as such.

 

7.

MEETINGS AND CONSENTS OF SHAREHOLDERS

 

7.1

The Board may convene meetings of the Shareholders at such times and in such manner and places within or outside the British Virgin Islands as the Board considers necessary or desirable; provided that at least one meeting of the Shareholders must be held each year.

 

7.2

Upon the written request of Shareholder(s) holding at least the required percentage under the Act of the voting rights of the Company entitled to vote in respect of the matter for which the meeting is requested, the Board shall convene a meeting of Shareholders. Any such request shall contain the evidence reasonably satisfactory to the Board, in its sole discretion, with respect to the identity of such requesting Shareholder(s) (including the ownership of Shares) and state in writing and in sufficient detail the proposed purpose of the meeting. The Board shall be entitled to determine the date, time and place, if any, of such requested meeting of Shareholders.

 

7.3

The Board shall give not less than seven (7) days’ notice of a meeting of Shareholders to those Shareholders whose names on the date the notice is given appear as Shareholders in the Transfer Agent Records of the Company and are entitled to vote at the meeting.

 

7.4

The Board may fix as the record date for determining those Shareholders that are entitled to vote at the meeting the date notice is given of the meeting, or such other date as may be specified in the notice, being a date not earlier than the date of the notice.

 

 

7.5

The inadvertent failure of the Board to give notice of a meeting to a Shareholder, or the fact that a Shareholder has not received a notice that has been properly given, shall not invalidate the meeting.

 

7.6

A Shareholder may be represented at a meeting of Shareholders by a proxy who may speak and vote on behalf of the Shareholder.

 

7.7

The instrument appointing a proxy shall be produced at the place designated for the meeting before the time for holding the meeting at which the Person named in such instrument proposes to vote. The notice of the meeting may specify an alternative or additional place or time at which the proxy shall be presented.

 

7.8

A proxy need not be a Shareholder, and a Shareholder may appoint one or more than one Person to act as such Shareholder’s proxy. On a poll, votes may be given in person or by proxy, and a Shareholder entitled to more than one vote need not, if such Shareholder votes, use all of such Shareholder’s votes or cast all the votes such Shareholder uses in the same way. The appointment of a proxy does not prevent a Shareholder from attending and voting in person at the meeting or an adjournment or on a poll. The appointment of a proxy is (unless the contrary is stated in such proxy) valid for an adjournment of the meeting as well as for the meeting or meetings to which it relates and is valid for twelve (12) months following the date of execution unless terminated earlier.

 

7.9

The instrument appointing a proxy shall be in substantially the following form or such other form as the chairman of the meeting shall accept as properly evidencing the wishes of the Shareholder appointing the proxy.

 

[NAME OF COMPANY]

 

[I/We] being a Shareholder of the above Company HEREBY APPOINT […………………………] of [……………………………] or failing him [………………………] of [……………………………] to be my/our proxy to vote for [me/us] at the meeting of Shareholders to be held on the [……] day of [           ], 20 [……] and at any adjournment thereof.

 

(Any restrictions on voting to be inserted here.)

 

Signed this [……] day of [……………………], 20 [……]

 

______________________________

 

[Shareholder]

 

7.10

The following applies where Shares are jointly owned:

 

(a)

if two or more Persons hold Shares jointly, each of them may be present in person or by proxy at a meeting of Shareholders and may speak as a Shareholder;

 

 

(b)

if only one of the joint owners is present in person or by proxy, such owner may vote on behalf of all joint owners; and

 

(c)

if two or more of the joint owners are present in person or by proxy, they must vote as one.

 

7.11

A Shareholder shall be deemed to be present in person at a meeting of Shareholders if such Shareholder participates by telephone or other electronic means and all Shareholders participating in person at the meeting are able to hear each other.

 

7.12

In the absence of contrary provisions in these Articles, the requisite quorum for any meeting of Shareholders shall be two or more Shareholders present in person or by proxy and holding shares conferring in the aggregate at least thirty-three and one-third percent (33 1⁄3%) of the voting power of the Company; provided, however, that with respect to any meeting of Shareholders that was initiated by and convened pursuant to a Resolution of Directors (and not pursuant to the request of any other person) and if at the time of such meeting of Shareholders the Company is qualified to use the forms of a “foreign private issuer” under U.S. securities laws, then the requisite quorum shall be a single Shareholder present in person or by proxy and holding Shares conferring in the aggregate at least twenty-five percent (25%) of the voting power of the Company.

 

7.13

If within two (2) hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Shareholders, shall be dissolved; in any other case it shall stand adjourned to the next business day in the jurisdiction in which the meeting was to have been held at the same time and place or to such other time and place as the Board may determine, and if at the adjourned meeting there are present within one (1) hour from the time appointed for the meeting in person or by proxy not less than one third (1⁄3) of the votes of the Shares or each class or series of Shares entitled to vote on the matters to be considered by the meeting, those present shall constitute a quorum but otherwise the meeting shall be dissolved. Notice of the adjourned meeting need not be given if the date, time and place of such meeting are announced at the meeting at which the adjournment is taken.

 

7.14

At every meeting of Shareholders, the Chairman of the Board shall preside as chairman of the meeting. If there is no Chairman of the Board or if the Chairman of the Board is not present at the meeting, the Shareholders present shall choose one of the Shareholders present to be the chairman of the meeting. If the Shareholders are unable to choose such chairman for any reason, then the Person representing the greatest number of voting Shares present in person or by proxy at the meeting shall preside as chairman of the meeting, failing which the oldest individual Shareholder or representative of a Shareholder present shall take the chair.

 

7.15

The chairman of the meeting may, with the consent of a majority of the Shares represented at the meeting, adjourn any meeting from time to time, and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

 

 

7.16

At any meeting of the Shareholders, the chairman of the meeting is responsible for deciding in such manner as he or she considers appropriate whether any resolution proposed has been carried or not and the result of his or her decision shall be announced to the meeting and recorded in the minutes thereof. If the chairman of the meeting has any doubt as to the outcome of the vote on a proposed resolution, he or she shall cause a poll to be taken of all votes cast upon such resolution. If the chairman fails to take a poll, then any Shareholder present in person or by proxy who disputes the announcement by the chairman of the meeting of the result of any vote may immediately following such announcement demand that a poll be taken and the chairman shall cause a poll to be taken. If a poll is taken at any meeting, the result shall be announced to the meeting and recorded in the minutes thereof.

 

7.17

Any Shareholder that is not a natural person may by resolution of its board of directors or other governing body authorise an individual as it thinks fit to act as its representative at any meeting of Shareholders or of any class of Shareholders, and the individual so authorised shall be entitled to exercise the same rights on behalf of the Shareholder which he represents as that Shareholder could exercise if it were an individual.

 

7.18

The chairman of any meeting at which a vote is cast by proxy or on behalf of any Person other than an individual may call for a notarially certified copy (in accordance with the applicable law of the jurisdiction in which such proxy or authority was made) of such proxy or authority which shall be produced within seven (7) days of being so requested or the votes cast by such proxy or on behalf of such Person shall be disregarded.

 

7.19

Directors may attend and speak at any meeting of Shareholders and at any separate meeting of the holders of any class or series of Shares.

 

7.20

A Resolution of Shareholders is valid only if approved at a duly convened and constituted meeting of the Shareholders by the affirmative vote of a majority of the votes of the Shares entitled to vote thereon which were present at the meeting and were voted and not abstained, unless a higher percentage is otherwise required by law, or by these Memorandum and Articles. Actions by the Shareholders may be effected by written consent in lieu of a duly convened and constituted meeting of the Shareholders if approved by the affirmative vote of a majority of the votes of the Shares entitled to vote thereon and provided that such action has expressly been approved in advance by the Board.

 

8.

DIRECTORS

 

8.1

The first Directors of the Company shall be appointed by the first registered agent within six (6) months of the date of incorporation of the Company, and thereafter, the Directors shall be elected by a Resolution of Shareholders at the annual meeting of Shareholders, except for situations in which the Board fills a vacancy pursuant to Section 8.6 below.

 

8.2

No Person shall be appointed as a director of the Company unless he or she has consented in writing to be a director.

 

8.3

The authorised number of Directors shall be fixed by the Board from time to time in accordance with these Articles. A Director is not required to hold a Share as a qualification to the office. If for any cause, the Directors shall not have been elected at an annual meeting of Shareholders, they may be elected as soon thereafter as convenient at a special meeting of the Shareholders called for that purpose in the manner provided in these Articles. Notwithstanding anything to the contrary herein, this Section 8.3 may only be amended or replaced by a resolution adopted at a meeting of the Shareholders by a majority of at least sixty-six and two-thirds percent (66 2⁄3%) of the votes of the Shares entitled to vote at a meeting.

 

 

8.4

The Board shall be divided into three classes, as nearly equal in number as possible, designated Class I, Class II and Class III. Class I Directors shall initially serve until the first annual meeting of Shareholders following the IPO Effective Time; Class II directors shall initially serve until the second annual meeting of Shareholders following the IPO Effective Time; and Class III directors shall initially serve until the third annual meeting of Shareholders following the IPO Effective Time. Commencing with the first annual meeting of Shareholders following the IPO Effective Time, Directors of each class the term of which shall then expire shall be elected to hold office until the third annual meeting of Shareholders following the commencement of such Director’s term and until the election and qualification of their respective successors in office. In case of any increase or decrease, from time to time, in the number of Directors, the number of Directors in each class shall be apportioned by the Board as nearly equal as possible. No decrease in the number of directors shall shorten the term of any incumbent directors. Notwithstanding anything to the contrary herein, this Section 8.4 may only be amended or replaced by a resolution adopted at a meeting of the Shareholders by a majority of at least sixty-six and two-thirds percent (66 2⁄3%) of the votes of the Shares entitled to vote at a meeting.

 

8.5

Any Director may be removed from office at any time, but only by the affirmative vote of at least sixty-six and two-thirds percent (66 2⁄3%) of the votes of the Shares entitled to vote at a meeting for the election of Directors. Notice of a meeting called under this Section 8.5 shall state that the purpose of the meeting is, or the purposes of the meeting include, the removal of a Director. Notwithstanding anything to the contrary herein, this Section 8.5 may only be amended or replaced by a resolution adopted at a meeting of the Shareholders by a majority of at least sixty-six and two-thirds percent (66 2⁄3%) of the votes of the Shares entitled to vote at a meeting.

 

8.6

The Board may at any time appoint by Resolution of Directors any Person to be a Director either to fill (a) a vacancy resulting from death, resignation, disqualification, removal or other causes or (b) any newly created directorship resulting from any increase in the number of Directors. Where the Board appoints a Person as a Director to fill such vacancy or newly created directorship, the term shall not exceed the term that remained when the Director whose departure from the Board created such vacancy ceased to hold office.

 

8.7

The Company may determine by Resolution of Directors to keep a register of directors containing:

 

(a)

the names and addresses of the Directors;

 

(b)

the date on which each Director was appointed as a Director;

 

 

(c)

the date on which each Director ceased to be a Director; and

 

(d)

such other information as may be prescribed by the Act.

 

8.8

If the Board determines to maintain a register of directors, a copy thereof shall be kept at the registered office of the Company, and the Company may register a copy of the register of directors with the Registrar.

 

8.9

Directors shall be entitled to such compensation for their services as may be approved by the Board or a committee thereof, including, if so approved, by Resolution of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board and at any meeting of a committee of the Board. Nothing herein contained shall be construed to preclude any Director from serving the Company in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor.

 

9.

POWERS OF DIRECTORS

 

9.1

The business and affairs of the Company shall be managed by, or under the direction or supervision of, the Board. The Board has all the powers necessary for managing, and for directing and supervising, the business and affairs of the Company. The Board may authorise the payment of all expenses incurred preliminary to and in connection with the incorporation of the Company and may exercise all such powers of the Company as are not required by the Memorandum, these Articles or the Act to be exercised by the Shareholders.

 

9.2

Each Director shall exercise his or her powers for a proper purpose and shall not act or agree to the Company acting in a manner that contravenes the Memorandum, these Articles or the Act. Each Director, in exercising his or her powers or performing his or her duties, shall act honestly and in good faith in what the Director believes to be in the best interests of the Company.

 

9.3

The Board may, by Resolution of Directors, appoint any Person, including a Director, to be an officer or agent of the Company with respect to such activities as the Board may determine. The Resolution of Directors appointing an agent may authorise such agent to appoint one or more substitutes or delegates to exercise some or all of the powers conferred on the agent by the Company.

 

9.4

The Board may, by Resolution of Directors, exercise all the powers of the Company to incur indebtedness, liabilities or obligations and to secure indebtedness, liabilities or obligations whether of the Company or of any third party.

 

9.5

All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for moneys paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, in such manner as shall from time to time be determined by Resolution of Directors.

 

 

9.6

For the purposes of section 175 (Disposition of assets) of the Act, the Directors may, by Resolution of Directors, determine that any sale, transfer, lease, exchange or other disposition is in the usual or regular course of the business carried on by the Company and such determination is, in the absence of fraud, conclusive.

 

10.

PROCEEDINGS OF DIRECTORS

 

10.1

Any Director may call a meeting of the Board by sending a written notice to each other Director.

 

10.2

The Board may meet at such times and in such manner and places within or outside the British Virgin Islands as the Board may determine to be necessary or desirable.

 

10.3

A Director is deemed to be present at a meeting of the Board if he or she participates by telephone or other electronic means and all Directors participating in the meeting are able to hear each other.

 

10.4

A Director shall be given not less than three (3) days’ notice of meetings of the Board, but a meeting of the Board held without three (3) days’ notice having been given to all Directors shall be valid if all the Directors entitled to vote at the meeting who do not attend waive notice of the meeting, and for this purpose the presence of a Director at a meeting shall constitute waiver by that Director. The inadvertent failure to give notice of a meeting to a Director, or the fact that a Director has not received the notice, shall not invalidate the meeting.

 

10.5

A Director may by a written instrument appoint an alternate who need not be a Director, and the alternate shall be entitled to attend meetings in the absence of the Director who appointed him or her and to vote in place of the Director until the appointment lapses or is terminated. The appointment of an alternate shall terminate on the occurrence of any event which, if he or she were a director, would cause him to vacate such office or if his or her appointer ceases for any reason to be a director.

 

10.6

A meeting of the Board is duly constituted for all purposes if, at the commencement of the meeting, there are present in person or by alternate not less than a majority of the total number of Directors.

 

10.7

If within half an hour from the time appointed for the meeting of the Board, a quorum is not present, such meeting shall be dissolved.

 

10.8

The Directors may elect a chairman (the “Chairman of the Board”) of their meeting and determine the period for which he or she is to hold such office. At a meeting of the Board at which the Chairman of the Board is present, he or she shall preside as chairman of the meeting. If there is no Chairman of the Board or if the Chairman of the Board is not present, the Directors present shall choose one of their number to be chairman of the meeting.

 

 

10.9

An action that may be taken by the Board or a committee of the Board at a meeting may also be taken by a Resolution of Directors or a resolution of a committee of directors consented to in writing by a majority of Directors or members of the committee, as the case may be, without the need for any notice. The consent may be in the form of counterparts each counterpart being signed by one or more Directors. If the consent is in one or more counterparts, and the counterparts bear different dates, then the resolution shall take effect on the date upon which the last Director has consented to the resolution by signed counterparts.

 

10.10

The Board shall cause the following corporate records to be kept:

 

(a)

minutes of all meetings of the Board;

 

(b)

copies of all Resolutions of Directors; and

 

(c)

such other accounts and records as the Board by Resolution of Directors considers necessary or desirable or as required pursuant to the Act.

 

11.

COMMITTEES

 

11.1

The Board may, by Resolution of Directors, designate one or more committees, each consisting of one or more Directors, and delegate one or more of their powers, including the power to affix the Seal, to the committee.

 

11.2

Notwithstanding Section 11.1, the Board has no power to delegate to a committee of Directors any of the following powers:

 

(a)

to amend the Memorandum or these Articles;

 

(b)

to designate committees of Directors;

 

(c)

to delegate powers to a committee of Directors;

 

(d)

to appoint or remove directors (which does not include the power to nominate a Director to the Board or recommend the removal of a Director from the Board);

 

(e)

to approve and issue Preferred Shares;

 

(f)

to approve a plan of merger, consolidation or arrangement;

 

(g)

to make a declaration of solvency or to approve a liquidation plan;

 

(h)

to make a determination that immediately after a proposed Distribution the value of the Company’s assets will exceed its liabilities and the Company will be able to pay its debts as they fall due; or

 

(i)

to approve or adopt, or recommend to the Shareholders, any action or matter expressly required by the Act to be submitted to the Shareholders for approval.

 

 

11.3

Sections 11.2(b) and (c) do not prevent a committee of Directors, where authorised by the Resolution of Directors appointing such committee or by a subsequent Resolution of Directors, from appointing a sub-committee and delegating powers exercisable by the committee to the sub-committee.

 

11.4

The meetings and proceedings of each committee of Directors consisting of two (2) or more Directors shall be governed mutatis mutandis by the provisions of these Articles regulating the proceedings of Directors so far as the same are not superseded by any provisions in the Resolution of Directors establishing the committee.

 

11.5

Where the Directors delegate their powers to a committee of Directors they remain responsible for the exercise of that power by the committee, unless they believed on reasonable grounds at all times before the exercise of the power that the committee would exercise the power in conformity with the duties imposed on Directors of the Company under the Act.

 

12.

OFFICERS

 

12.1

The Company may by Resolution of Directors appoint officers of the Company at such times as may be considered necessary or expedient. Any number of offices may be held by the same Person.

 

12.2

The officers shall perform such duties as are prescribed at the time of their appointment subject to any modification in such duties as may be prescribed thereafter by Resolution of Directors. In the absence of any specific prescription of duties it shall be the responsibility of the Chairman of the Board to preside at meetings of directors and Shareholders, the president to manage the day to day affairs of the Company, the vice-presidents to act in order of seniority in the absence of the president but otherwise to perform such duties as may be delegated to them by the president, the secretaries to maintain the minute books and records (other than financial records) of the Company and to ensure compliance with all procedural requirements imposed on the Company by applicable law, and the treasurer to be responsible for the financial affairs of the Company.

 

12.3

The emoluments of all officers shall be fixed by Resolution of Directors.

 

12.4

The officers of the Company shall hold office until their successors are duly appointed, but any officer elected or appointed by the Board may be removed at any time, with or without cause, by Resolution of Directors. Any vacancy occurring in any office of the Company may be filled by Resolution of Directors.

 

13.

CONFLICT OF INTERESTS

 

13.1

A Director shall, forthwith after becoming aware of the fact that he or she is interested in a transaction entered into or to be entered into by the Company, disclose the interest to the Board.

 

 

13.2

A transaction entered into by the Company in respect of which a Director is interested is voidable by the Company unless (a) the Director complied with Section 13.1 prior to the entry by the Company into such transaction, (b) the transaction is approved or ratified by a majority of the disinterested Directors, (c) the material facts of the interest of the Director in the transaction are known by the Shareholders entitled to vote at a meeting of Shareholders and the transaction is approved or ratified by a Resolution of Shareholders or (d) the Company received or paid fair value for the transaction.

 

13.3

For the purposes of this Section 13, a disclosure is not made to the Board unless it is made or brought to the attention of every Director on the Board.

 

13.4

Subject to compliance with Sections 13.1 and 13.2, a Director who is interested in a transaction entered into or to be entered into by the Company may:

 

(a)

vote on a matter relating to such transaction; and

 

(b)

attend a meeting of the Board at which a matter relating to the transaction arises and be included among the Directors present at the meeting for the purposes of a quorum;

 

and, subject to compliance with the Act shall not, by reason of his or her office, be accountable to the Company for any benefit which he or she derives from such transaction and no such transaction shall be liable to be avoided on the grounds of any such interest or benefit.

 

14.

INDEMNIFICATION

 

14.1

To the fullest extent permitted by law, Directors shall not be personally liable to the Company or any Shareholder for any acts or omissions in the performance of their duties as Directors.

 

14.2

Subject to the limitations hereinafter provided, the Company shall indemnify against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any Person who:

 

(a)

is or was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by reason of the fact that the Person is or was a director of the Company; or

 

(b)

is or was, at the request of the Company, serving as a Director of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise.

 

14.3

Notwithstanding Section 14.2, the Company shall indemnify a Person only if such Person acted honestly and in good faith with a view to the best interests of the Company and, in the case of criminal proceedings, the Person had no reasonable cause to believe that their conduct was unlawful.

 

 

14.4

The decision of the Board as to whether the Person acted honestly and in good faith and with a view to the best interests of the Company and as to whether the Person had no reasonable cause to believe that his conduct was unlawful is, in the absence of fraud, sufficient for the purposes of these Articles, unless a question of law is involved.

 

14.5

The termination of any proceedings by any judgment, order, settlement, conviction or the entering of a nolle prosequi does not, by itself, create a presumption that the Person did not act honestly and in good faith and with a view to the best interests of the Company or that the Person had reasonable cause to believe that his or her conduct was unlawful.

 

14.6

Expenses, including legal fees, incurred by a Director or a former Director in defending any legal, administrative or investigative proceedings may be paid by the Company in advance of the final disposition of such proceedings upon receipt of an undertaking by or on behalf of the Director or the former Director, as applicable, to repay the amount if it shall ultimately be determined that the Director or the former Director is not entitled to be indemnified by the Company in accordance with Section 14.2.

 

14.7

The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 14 is not exclusive of any other rights to which the Person seeking indemnification or advancement of expenses may be entitled under any law, agreement, provision of the Memorandum or these Articles, Resolution of Directors, Resolution of Shareholders or otherwise.

 

14.8

If a Person referred to in Section 14.2 has been successful in defence of any proceedings referred to in Section 14.2, the Person is entitled to be indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by the Person in connection with the proceedings.

 

14.9

Any repeal or modification of this Section 14, or any portion hereof, shall only be prospective and shall not affect the rights under this Section 14 in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any Person referred to in Section 14.2.

 

14.10

If this Section 14, or any portion hereof, shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify each Director to the full extent not prohibited by any applicable portion of this section that shall not have been invalidated, or by any other applicable law. If this section shall be invalid due to the application of the indemnification provisions of another jurisdiction, then the Company shall indemnify each Director to the full extent under any other applicable law.

 

14.11

The Company may purchase and maintain insurance in relation to any Person who is or was a Director, officer or liquidator of the Company, or who at the request of the Company is or was serving as a Director, officer or liquidator of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise, against any liability asserted against the Person and incurred by the Person in that capacity, whether or not the Company has or would have had the power to indemnify the Person against the liability as provided in these Articles.

 

 

15.

RECORDS

 

15.1

The Company shall keep the following documents at the office of its registered agent:

 

(a)

the Memorandum and these Articles;

 

(b)

the register of directors, or a copy of the register of directors;

 

(c)

the register of charges or a copy of the register of charges; and

 

(d)

copies of all notices and other documents filed by the Company with the Registrar in the previous ten (10) years.

 

15.2

The Company shall maintain at the office of its registered agent a register of charges in which there shall be entered the following particulars regarding each mortgage, charge and other encumbrance created by the Company:

 

(a)

the date of creation of the charge;

 

(b)

a short description of the liability secured by the charge;

 

(c)

a short description of the property charged;

 

(d)

the name and address of the trustee for the security or, if there is no such trustee, the name and address of the chargee;

 

(e)

unless the charge is a security to bearer, the name and address of the holder of the charge; and

 

(f)

details of any prohibition or restriction contained in the instrument creating the charge on the power of the Company to create any future charge ranking in priority to or equally with the charge.

 

15.3

The Company shall procure that the Transfer Agent maintains the Transfer Agent Records and that the Transfer Agent, shall within five (5) days of a written request from the Company, provide a copy of the Transfer Agent Records to the Company.

 

15.4

The Company shall keep the following records at the office of its registered agent or at such other place or places, within or outside the British Virgin Islands, as the Board may determine:

 

(a)

minutes of meetings and Resolutions of Shareholders and classes of Shareholders; and

 

(b)

minutes of meetings and Resolutions of Directors and committees of Directors, if any.

 

 

15.5

Where any original records referred to in this Section are maintained other than at the office of the registered agent of the Company, and the place at which the original records is changed, the Company shall provide the registered agent with the physical address of the new location of the records of the Company.

 

15.6

The records kept by the Company under this Section shall be in written form or either wholly or partly as electronic records complying with the requirements of the Electronic Transactions Act, 2001 (No. 5 of 2001) as from time to time amended or re-enacted.

 

16.

SEAL

 

The Company shall have a Seal an impression of which shall be kept at the office of the registered agent of the Company. The Company may have more than one Seal and references herein to the Seal shall be references to every Seal which shall have been duly adopted by Resolution of Directors. The Board shall provide for the safe custody of the Seal and for an imprint thereof to be kept at the registered office. Except as otherwise expressly provided herein the Seal when affixed to any written instrument shall be witnessed and attested to by the signature of any one Director or other Person so authorised from time to time by Resolution of Directors. Such authorisation may be before or after the Seal is affixed, may be general or specific and may refer to any number of sealings. The Board may provide for a facsimile of the Seal and of the signature of any Director or authorised Person which may be reproduced by printing or other means on any instrument and it shall have the same force and validity as if the Seal had been affixed to such instrument and the same had been attested to as hereinbefore described.

 

17.

DISTRIBUTIONS

 

17.1

The Board may, by Resolution of Directors, authorise a Distribution at a time and of an amount it determines fit if the Board is satisfied, on reasonable grounds, that, immediately after the Distribution, the value of the Company’s assets will exceed its liabilities and the Company will be able to pay its debts as they fall due.

 

17.2

In order for the Company to determine the Shareholders entitled to receive payment of any Distribution, the Board may fix a record date, which record date shall not precede the date upon which the Resolution of Directors fixing the record date is adopted, and which record date shall not be more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining Shareholders for any such purpose shall be at the close of calendar day on which the Board adopts the Resolution of Directors relating thereto.

 

17.3

Dividends may be paid in money, shares, or other property.

 

17.4

Notice of any dividend that may have been declared shall be given to each Shareholder as specified in Section 19, and all dividends unclaimed for three (3) years after having been declared may be forfeited by Resolution of Directors for the benefit of the Company.

 

17.5

No dividend shall bear interest as against the Company and no dividend shall be paid on Treasury Shares.

 

 

18.

ACCOUNTS AND AUDIT

 

18.1

The Company shall keep records that in the view of the Board in its sole discretion are sufficient to reflect the financial position of the Company.

 

18.2

The Company may, as determined by the Board, prepare periodically, financial statements of the Company, including as may be required by applicable law and the rules of the Stock Exchange.

 

18.3

Subject to applicable law and the rules of the Stock Exchange, the auditors shall be appointed by Resolution of Directors, which auditors shall hold office until removed from office by a Resolution of Directors.1

 

18.4

The auditors may be Shareholders, but no Director or other officer shall be eligible to be an auditor of the Company during their continuance in office.

 

18.5

The remuneration of the auditors shall be determined by a committee formed by the Board in accordance with Section 11 or, in the absence of such a committee, by Resolution of Directors.

 

18.6

The auditor of the Company shall have a right of access to the books of account and vouchers of the Company, and shall be entitled to require from the Directors and officers of the Company such information and explanations as he or she reasonably thinks necessary for the performance of the duties of the auditors.

 

18.7

The auditors of the Company shall be entitled to receive notice of, and to attend any meetings of Shareholders at which the Company’s financial statements are to be presented.

 

19.

NOTICES

 

19.1

Any notice, information or written statement to be given by the Company to Shareholders may be given by personal service or by mail addressed to each Shareholder at the address shown in the Transfer Agent Records.

 

19.2

Any summons, notice, order, document, process, information or written statement to be served on the Company may be served by leaving it, or by sending it by registered mail addressed to the Company, at its registered office, or by leaving it with, or by sending it by registered mail to, the registered agent of the Company.

 

19.3

Service of any summons, notice, order, document, process, information or written statement to be served on the Company may be proved by showing that the summons, notice, order, document, process, information or written statement was delivered to the registered office or the registered agent of the Company or that it was mailed in such time as to admit to its being delivered to the registered office or the registered agent of the Company in the normal course of delivery within the period prescribed for service and was correctly addressed and the postage was prepaid.

 

 

20.

Exclusive jurisdiction OF THE BRITISH VIRGIN ISLANDS

 

Unless the Company consents in writing to the selection of an alternative forum, the courts of the British Virgin Islands shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Company, (b) any action asserting a claim of breach of a fiduciary duty owed by any Director, officer or other employee of the Company to the Company or the Company’s Shareholders, or (c) any action asserting a claim arising pursuant to any provision of British Virgin Islands law or the Memorandum or these Articles, or (d) any action asserting a claim against the Company governed by the internal affairs doctrine. The foregoing provision shall not apply to claims arising under the Securities Act, the Exchange Act or other federal securities laws for which there is exclusive federal or concurrent federal and state jurisdiction. Unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Any Person purchasing or otherwise acquiring any interest in Shares shall be deemed to have notice of and consented to the provisions of this Section 20.

 

21.

VOLUNTARY LIQUIDATION

 

21.1

The Company may be voluntarily liquidated under Part XII of the Act if it has no liabilities and it is able to pay its debts as they become due. A liquidator may, subject to the terms of the Act, be appointed by a Resolution of Directors or by a Resolution of Shareholders.

 

21.2

If the Company shall be wound up, the liquidator may, in accordance with a Resolution of Shareholders, divide amongst the Shareholders in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purpose set such value as the liquidator deems fair upon any such property to be divided as aforesaid and may determine how such division shall be carried out as between the Shareholders or different classes of Shareholders. The liquidator may vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributors as the liquidator shall think fit, but so that no Shareholder shall be compelled to accept any Shares or other securities whereon there is any liability.

 

22.

Fiscal Year

 

The fiscal year of the Company shall be the calendar year beginning on January 1 and ending on December 31, unless the Board determines otherwise by Resolution of Directors.

 

23.

CONTINUATION

 

The Company may, by Resolution of Shareholders or by a resolution passed unanimously by all Directors of the Company, continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in the manner provided under those laws.

 

 

We, Commonwealth Trust Limited, of P.O. Box 3321, Drake Chambers, Road Town, Tortola, British Virgin Islands in our capacity as registered agent for the Company hereby apply to the Registrar for the incorporation of the Company this 14th day of December, 2006.

 

Incorporator

 

Sgd: Deneshar Meade
Deneshar Meade
Authorised Signatory
HARNEYS CORPORATE SERVICES LIMITED

 

 

37

 

Exhibit 4.1

 

FIFTH AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

OF

 

ETORO GROUP LTD.

 

DATED [             ], 2025

 

FIFTH AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT

 

THIS FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (the “Agreement”) is made as of the [●] day of [●], 2025, by and among eToro Group Ltd., a company incorporated under the laws of the British Virgin Islands (the “Company”), each of the investors listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor”), and shall become effective upon and subject to the consummation of the closing of the IPO (as defined herein) of the Company.

 

RECITALS:

 

WHEREAS, the Company and certain of the Investors listed therein previously entered into that certain Fourth Amended and Restated Investors’ Rights Agreement dated as of February 1, 2023 (the “Prior Agreement”), which provides that such Prior Agreement may be amended, and the observance of any provision thereof may be waived, with the written consent of the Company and the holders of a majority of the Registrable Securities issued or issuable upon conversion of the Class F, Class E, Class D, Class C and C-2 Preferred Shares then outstanding (the “Required Vote”); and

 

WHEREAS, in connection with the consummation of the Company’s initial public offering (the “IPO”) and on the Effective Date, the Company’s outstanding preferred shares will convert into common shares, no par value of the Company, which shall in turn be reclassified as Class A Common Shares, no par value (the “Class A Common Shares”); and

 

WHEREAS, in connection therewith, the Company and certain of the Investors, constituting of the Required Vote, desire to amend and restate the Prior Agreement in its entirety with this Agreement; and

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Definitions. For purposes of this Agreement:

 

1.1 “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including, without limitation, any general partner, managing member, officer or director of such Person or an Immediate Family Member of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person or any trust for the benefit of, such Person and/or such Person’s spouse, child (natural or adopted), or any other direct lineal descendant of such Person (or his or her spouse), or any Affiliate of such trust, or, if such Person is a trust, the beneficiaries of such trust and the immediate family members of such beneficiaries; provided, that with respect to Spark Capital, the term Affiliate shall be deemed to include any Person under common management therewith, and further provided that, for so long as they hold any Registrable Securities, with respect to BRM Group Ltd, the term Affiliate shall be deemed to include Eli Barkat Ltd, Yuval Racavi Ltd and Avi Basher, and further provided that, for so long as they hold any Registrable Securities, with respect to Social Leverage, Social Leverage FX, Social Leverage FX2 and Venture51, each such Person shall be deemed to be an Affiliate of each such other Person, and further provided that, for so long as they hold any Registrable Securities, with respect to Anfield Ltd., 87215 Canada Ltd., Melbourne Disraeli Equities (MB) Inc, and Cubit Investments Ltd., each such Person shall be deemed to be an Affiliate of each such other Person.

 

 

1.2 “Board of Directors” shall mean the board of directors of the Company.

 

1.3 “Class B Common Shares” means the Company’s Class B Common Shares, no par value per share.

 

1.4 “Common Shares” means Class A Common Shares, including Class A Common Shares issuable upon conversion of Class B Common Shares.

 

1.5 “Damages” means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or (iii) any violation or alleged violation by the indemnifying party (or any of its agents or Affiliates) of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law.

 

1.6 “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Shares, including debt that is convertible into equity securities.

 

1.7 “Effective Date” means the date on which the Company’s registration statement on Form 8-A in connection with the IPO becomes effective.

 

1.8 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.9 “Excluded Registration” means (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a share option, share purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; or (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities.

 

1.10 “Form F-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

1.11 “Form F-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.12 “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

 

1.13 “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC that permits incorporation of substantial information by reference to other documents filed by the Company with the SEC.

 

1.14 “Holder” means any holder of Registrable Securities who is a party to this Agreement.

 

1.15 “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.

 

1.16 “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

1.17 “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.18 “Registrable Securities” means (i) the Common Shares held by the Investors upon completion of the IPO that were issued immediately prior to the IPO upon conversion of any class of preferred shares of the Company then outstanding, and (ii) any Common Shares issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clause (i) above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 5.1, and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Section 2.13 of this Agreement and, for purposes of Sections 2.1(a) – 2.1(d).

 

1.19 “Registrable Securities then outstanding” means the number of shares at a point in time determined by adding the number of shares of outstanding Common Shares that are Registrable Securities at such time and the number of shares of Common Shares issuable (directly or indirectly) at such time pursuant to securities that are Registrable Securities.

 

1.20 “Restricted Securities” means the securities of the Company required to bear the legend set forth in Section 2.12(b) hereof.

 

1.21 “SEC” means the Securities and Exchange Commission.

 

1.22 “SEC Rule 10b5-1” means Rule 10b5-1 promulgated by the SEC under the Exchange Act, or any successor provisions.

 

1.23 “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act, or any successor provisions.

 

1.24 “SEC Rule 144(k)” means Rule 144(k) promulgated by the SEC under the Securities Act, or any successor provisions.

 

1.25 “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act, or any successor provisions.

 

1.26 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

1.27 “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6.

 

1.28 “Selling Holder Counsel” shall have the meaning assigned to it in Section 2.6.

 

1.29 “Spark Capital” means Spark Capital II, L.P., Spark Capital Founders’ Fund II, L.P. and their respective Affiliates.

 

 

1.30 “Spark Related Entity” means Spark Capital or any of its Affiliates, partners or portfolio companies (other than the Company).

 

1.31 “Subsidiary” means, with respect to the Company, any corporation, association, partnership, limited liability company, trust or other entity of which more than fifty percent (50%) of the total voting power, whether by way of contract or otherwise, of shares or other equity interests (including limited liability company or partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly (e.g., through another Subsidiary), by (a) the Company, (b) the Company and one or more of its Subsidiaries, or (c) one or more Subsidiaries of the Company.

 

2. Registration Rights. The Company covenants and agrees as follows:

 

2.1. Demand Registration.

 

(a) Form F-1 Demand. Beginning upon one hundred eighty (180) days after the Effective Date, if the Company receives a request from the then-current Holders of a majority of the Registrable Securities that the Company file a Form F-1 or, if applicable, Form S-1 registration statement with respect to Registrable Securities then outstanding having an anticipated aggregate offering price, net of Selling Expenses, in excess of $50 million, then the Company shall (i) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within ninety (90) days after the date such request is given by the Initiating Holders, file a Form F-1 or, if applicable, Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.

 

(b) Form F-3 Demand. If at any time when it is eligible to use a Form F-3 or, if applicable, Form S-3 registration statement and the Company receives a request from the then-current Holders of a majority of the Registrable Securities then outstanding that the Company file a Form F-3 or, if applicable, Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $15 million, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form F-3 or, if applicable, Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c), Section 2.1(d) and Section 2.3.

 

(c) Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its shareholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other shareholder during such ninety (90) day period other than an Excluded Registration.

 

 

(d) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a) (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is one hundred eighty (180) days after the effective date of, a Company-initiated registration, provided, that the Company is actively employing its good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) after the Company has effected two (2) registrations pursuant to Section 2.1(a). The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(b) (i) during the period that is sixty (60) days before the Company’s good faith estimate of the date of filing of, and ending on a date that is ninety (90) days after the effective date of, a Company-initiated registration relating to shares to be sold by the Company, provided, that the Company is actively employing its good faith commercially reasonable efforts to cause such registration statement to become effective; or (ii) if the Company has effected one (1) registration pursuant to Section 2.1(b) within the twelve (12) month period immediately preceding the date of such request. A registration shall not be counted as “effected” for purposes of this Section 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration (other than as a result of a material adverse change to the Company), elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Section 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2.1(d).

 

2.2. Company Registration. If the Company proposes to register (including, for this purpose, a registration effected by the Company for shareholders other than the Holders) any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration. Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration. The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.

 

2.3. Underwriting Requirements.

 

(a) If, pursuant to Section 2.1, the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1, and the Company shall include such information in the Demand Notice. The underwriter(s) will be selected by the Initiating Holders, subject to the reasonable approval of the Company. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Section 2.3, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest round number of shares.

 

 

(b) In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by shareholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering. If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable to) the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest round number of shares. Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering, or (ii) the number of Registrable Securities included in the offering be reduced below thirty percent (30%) of the total number of securities included in such offering. For purposes of the provision in this Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners, members, retired partners, retired members, shareholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

(c) For purposes of Section 2.1, a registration shall not be counted as “effected” if, as a result of an exercise of the underwriter’s cutback provisions in Section 2.3(a), fewer than fifty percent (50%) of the total number of Registrable Securities that Holders have requested to be included in such registration statement are actually included.

 

2.4. Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a) prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities then outstanding, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Shares (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form F-3 or, if applicable, Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended indefinitely, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

 

 

(b) prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

(c) furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

(d) use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the underwriter(s) of such offering;

 

(f) use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(h) promptly make available for inspection by the selling Holders, any managing underwriter participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

(i) notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed;

 

(j) after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus; and

 

(k) ensure that, at all times after any registration statement covering a public offering of securities of the Company under the Securities Act shall have become effective, the Company’s insider trading policy shall provide that its directors may implement a trading program under SEC Rule 10b5-1 of the Exchange Act.

 

 

2.5. Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

2.6. Expenses of Registration. All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2 and up to that number of registration allowed according to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements of one counsel for the selling Holders (“Selling Holder Counsel”) selected by the Holders of a majority of the Registrable Securities then outstanding and coordinated in advance with the Company, shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities then outstanding (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities then outstanding agree to forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b), as the case may be; provided further that if, at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information, then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b). All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

2.7. Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.8. Indemnification. If any Registrable Securities are included in a registration statement under this Section 2:

 

(a) To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and shareholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the written consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

 

(b) To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by a Holder by way of indemnity or contribution under this Section 2.8(b) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

(c) Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.

 

(d) To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of a material fact, relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided, however, that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement, and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

 

(e) Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

(f) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with such applicable underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control; provided, however, that any matter expressly provided for or addressed by the provisions of this Section 2.8 that is not expressly provided for or addressed by the underwriting agreement shall be controlled by the foregoing provisions.

 

2.9. Reports Under Exchange Act. With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3 or Form F-3, the Company shall:

 

(a) make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

 

(b) use commercially reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and

 

(c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form F-3 or, if applicable, Form S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form F-3 or, if applicable, Form S-3 (at any time after the Company so qualifies to use such form).

 

2.10. Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding (voting together as a single class), which consent shall not be unreasonably withheld, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (i) to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included or (ii) to demand registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Section 5.1.

 

 

2.11. “Market Stand-Off” Agreement. Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of the IPO, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, which period may be extended upon the request of the managing underwriter, to the extent required by any FINRA rules, for an additional period of up to fifteen (15) days if the Company issues or proposes to issue an earnings or other public release within fifteen (15) days of the expiration of the 180 day lockup period), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Shares or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Shares held immediately before the effective date of the registration statement for such offering or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Shares or other securities, in cash, or otherwise. The foregoing provisions of this Section 2.11 (i) shall apply only to the IPO, (ii) shall not apply to (a) the sale of any shares to an underwriter pursuant to an underwriting agreement, (b) the establishment of a trading plan pursuant to SEC Rule 10b5-1, provided that such plan does not permit transfers during the restricted period, or (c) the transfer of any shares to any trust for the direct or indirect benefit of the Holder or one or more of the Holder’s Immediate Family Members, provided that the trustee of the trust agrees to be bound in writing by the restrictions set forth herein, and provided further that any such transfer shall not involve a disposition for value, and (iii) shall be applicable to the Holders only if all officers, directors and shareholders individually owning more than one percent (1%) of the Company’s outstanding Common Shares are subject to the same restrictions. The underwriters in connection with such registration are intended third-party beneficiaries of this Section 2.11 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 2.11 or that are necessary to give further effect thereto. Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements except that, notwithstanding the foregoing, the Company and the underwriters may, in their sole discretion, waive or terminate these restrictions with respect to Common Shares representing up to 2% of the then issued and outstanding Common Shares.

 

2.12. Restrictions on Transfer.

 

(a) The Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. Notwithstanding the foregoing, the Company shall not require any transferee of shares pursuant to an effective registration statement or SEC Rule 144, in each case, to be bound by the terms of this Section 2.12.

 

(b) Each certificate, instrument or book entry representing (i) the Registrable Securities and (ii) any other securities issued in respect of the securities referenced in clause (i), upon any stock split, share dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be stamped or otherwise imprinted with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.

 

 

(c) The holder of each certificate representing Restricted Securities, by acceptance of ownership thereof, agrees to comply in all respects with the provisions of this Section 2. Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction or the transfer is made pursuant to SEC Rule 144, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer provided that no such notice shall be required in connection if the intended sale, pledge or transfer complies with SEC Rule 144. Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company. The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration; provided that each transferee agrees in writing to be subject to the terms of this Section 2.12. Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.12(b), except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13. Termination of Registration Rights. The right of any Holder to request registration or inclusion of Registrable Securities, in any registration pursuant to Section 2.1 or Section 2.2, as the case may be, shall terminate upon the earlier to occur of:

 

(a) such time when all of such Holder’s Registrable Securities could be sold without restriction under SEC Rule 144 within any 90 day period; or

 

(b) the fifth (5^th) anniversary of the IPO.

 

3. Additional Rights.

 

3.1. Confidentiality. During the term of this Agreement and thereafter, each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including any notice of the Company’s intention to file a registration statement or any Demand Notice), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.1 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 3.1; (iii) to any existing or prospective Affiliate, partner, member, shareholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

 

4. [Reserved].

 

4.1. Successor Indemnification.

 

4.2. If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Amended and Restated Memorandum and Articles of Association, or elsewhere, as the case may be.

 

4.3. Restrictions Due to Sanctions Laws.

 

(a) Limitations on Rights. Notwithstanding anything to the contrary, Shares, irrespective of their class, held directly or indirectly by a Sanctioned Person (“Sanctioned Shares”) shall not confer on its holder any rights pursuant to Section 2 of this Agreement. Sanctioned Shares shall not be counted for any applicable majority requirement in this Agreement.

 

(b) Relevant Definitions. Terms not otherwise defined and used in this Section 4.3 shall be ascribed such meanings as provided in the Company’s currently effective Memorandum and Articles of Association. 

 

5. Miscellaneous.

 

5.1. Successors and Assigns. The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of the Holder or, if the Holder holds any share capital of the Company in trust, is a beneficiary(ies) of such trust, together with the release of shares of the Company from trust to such beneficiary(ies), (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members or (iii) with respect to Spark Capital only, to any third party; (iv) to an assignee or transferee who acquires at least 2% of the issued share capital of the Company; or (v) to an assignee or transferee who acquires less than 2% of the issued share capital of the Company, provided that the board of directors of the Company approves that such assignee or transferee may become a party to this Agreement, in which case, subject to the other terms and conditions of this Section 5.1, such assignee or transferee shall become an “Investor” for purposes of this Agreement; provided, however, that (x) the Company is, promptly after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Section 2.11 and (z) such assignee is not a Sanctioned Person. For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or shareholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall, as a condition to the applicable transfer, establish a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

 

5.2. Choice of Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of law. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of the State of Delaware or in the federal courts located therein. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

5.3. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

5.4. Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

5.5. Notices. All notices, requests, and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given, delivered and received (i) upon personal delivery to the party to be notified; (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 6.5. If notice is given to the Company, a copy shall also be sent to Meitar Law Offices, 16 Abba Hillel Rd., Ramat-Gan, Israel, 5250608, Attention: Dan Shamgar, Adv.

 

 

5.6. Amendments and Waivers. Any term of this Agreement, including without limitation Section 4.1, may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that the Company may in its sole discretion waive compliance with Section 2.12(c); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion. Any amendment, termination, or waiver effected in accordance with this Section 5.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

5.7. Severability. In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

5.8. Aggregation of Shares. All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

5.9. Entire Agreement. This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled. Without derogating from the above it is further clarified, that this Agreement constitutes an amendment and restatement to the Prior Agreement and upon execution of this Agreement the Prior Agreement shall terminate and be of no further force or effect.

 

5.10. Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such non-breaching or non-defaulting party, nor shall it be construed to be a waiver of or acquiescence to any such breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

[Remainder of Page Intentionally Left Blank]

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	COMPANY:
	ETORO GROUP LTD.
	By:
	Name:
	Title:
	Address:

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	INVESTOR:
	[   ]
	By:
	Name:
	Title:
	Address:

 

 

 

 

 

[Signature Page to the Fifth Amended and Restated Investors Rights Agreement]

 

 

SCHEDULE A

Investors

 

[   ]

 

  

 

Exhibit 10.1

 

FORM OF INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of, by and between eToro Group Ltd., a company incorporated under the laws of the British Virgin Islands with company number 1550822 (the “Company”), and ________________________________, a Covered Person (as defined below) (the “Indemnitee”).

 

WHEREAS, the Indemnitee has agreed to serve as a Covered Person of the Company and in such capacity will render valuable services to the Company;

 

WHEREAS, the substantial increase in corporate litigation subjects directors and officers to expensive litigation risks at the same time that the availability of directors’ and officers’ liability insurance and coverage available thereunder has been severely limited;

 

WHEREAS, in order to induce and encourage highly experienced and capable persons such as the Indemnitee to serve as directors and officers of the Company, the board of directors of the Company (the “Board”) has determined that it is reasonably prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, such persons;

 

WHEREAS, the Company does not regard the protection currently available to the Indemnitee as adequate in the present circumstances, and realizes that the Indemnitee may not be willing to serve as a Covered Person without adequate protection and cover from potential liability arising in performing tasks and functions as a Covered Person, and the Company desires the Indemnitee to serve in such capacity; and

 

WHEREAS, this Agreement is a supplement to and in furtherance of the indemnification provided in the M&As or otherwise by law or statute applicable to the Company, any resolution adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of each Indemnitee thereunder.

 

NOW, THEREFORE, in consideration of the premises and mutual agreements hereinafter set forth, and other good and valuable consideration, including, without limitation, the service of the Indemnitee, the receipt of which hereby is acknowledged, and in order to induce the Indemnitee to serve, or continue to serve, as a Covered Person of the Company, the Company and the Indemnitee hereby agree as follows:

 

1.

Definitions. As used in this Agreement:

 

a. “M&As” shall mean the memorandum and articles of association of the Company (as amended from time to time).

 

 

b. “Change in Control” shall mean:

 

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act (as defied herein)), but excluding (1) the Company, (2) any trustee or other fiduciary holding securities pursuant to an employee benefit or welfare plan or employee share plan of the Company or any subsidiary or affiliate of the Company, or any entity organized, appointed, established or holding securities of the Company with voting power for or pursuant to the terms of any such plan and (3) any entity owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then outstanding securities without the prior approval of at least majority of the directors in office immediately prior to such person’s attaining such interest;

 

(ii) any merger or consolidation of the Company with any other entity, other than 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) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the Board or other governing body of such surviving entity;

 

(iii) the approval by the shareholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company, in one transaction or a series of related transactions, of all or substantially all of the Company’s assets;

 

(iv) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (i), (ii) or (iii) of this definition of Change in Control) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the members of the Board; or

 

(v) any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item or any similar or successor schedule or form) promulgated under the Exchange Act whether or not the Company is then subject to such reporting requirements.

 

c. “Claim” shall mean any threatened, asserted, pending or completed action, suit or proceeding, whether civil, criminal, administrative, investigative or other, including any arbitration or other alternative dispute resolution mechanism, or any appeal of any kind thereof, or any inquiry or investigation, in each case whether instituted by (or in the right of) the Company or any other party, in which Indemnitee was, is, may be or will be involved as a party, witness or otherwise.

 

d. “Covered Person” shall mean either a Director or an Officer of the Company (each as defined herein).

 

 

e. “Directors” shall mean those Persons appointed or elected pursuant to the Articles to hold office as directors of the Company from time to time

 

f. “Disinterested Director” with respect to any request by the Indemnitee for indemnification or advancement of expenses hereunder shall mean a director of the Company who neither is nor was a party to the Proceeding (as defined below) in respect of which indemnification or advancement is being sought by the Indemnitee.

 

g. “Exchange Act” shall mean United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

h. “Expenses” shall include reasonable attorneys’ fees and all other reasonable costs, expenses and obligations paid or incurred by an Indemnitee in good faith in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to investigate, defend, be a witness in or participate in, any Claim relating to any Proceeding.

 

i. “Independent Legal Counsel” shall mean any firm of attorneys that is experienced in matters of applicable law and reasonably selected by the Board, so long as such firm is not presently representing and has not in the preceding five (5) years represented the Company, the Company’s subsidiaries or affiliates, the Indemnitee, any entity controlled by the Indemnitee, or any party adverse to the Company in any matter material to any such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements). Notwithstanding the foregoing, the term “Independent Legal Counsel” shall not include any person who, under applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s right to indemnification or advancement of expenses under this Agreement, the M&As, which became effective immediately after the Company’s initial public offering, applicable law or otherwise.

 

j. “Officers” shall mean any “executive officer” as such term is defined in the Exchange Act.

 

k. “Proceeding” shall mean any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, hearing or any other proceeding (including, without limitation, an appeal therefrom), formal or informal, whether brought in the name of the Company or otherwise, whether of a civil, criminal, administrative or investigative nature, and whether by, in or involving a court or an administrative, other governmental or private entity or body (including, without limitation, an investigation by the Company or its Board), in which the Indemnitee was, is or will be involved as a party or otherwise, by reason of (i) the fact that the Indemnitee is or was a Director (or a director appointee) or an Officer of the Company, or is or was serving at the request of the Company as an agent of another enterprise, (ii) any actual or alleged act or omission or neglect or breach of duty, including, without limitation, any actual or alleged error or misstatement or misleading statement, which the Indemnitee commits or suffers while acting in any such capacity, or (iii) the Indemnitee attempting to establish or establishing a right to indemnification or advancement of expenses pursuant to this Agreement, the M&As, applicable law or otherwise, in each case whether or not the Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. The term “Company,” where the context requires when used in this Agreement, shall be construed to include each such subsidiary or other corporation, limited liability company, partnership, joint venture, employee benefit plan, trust or other entity or enterprise referred to in the immediately preceding sentence.

 

 

l. “Sarbanes-Oxley Act” shall mean the Sarbanes-Oxley Act of 2002.

 

m. “SEC” shall mean the U.S. Securities and Exchange Commission.

 

n. The phrase “serving at the request of the Company as an agent of another enterprise” or any similar terminology shall mean, unless the context otherwise requires, serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, employee benefit or welfare plan or other enterprise, foreign or domestic. The phrase “serving at the request of the Company” shall include, without limitation, any service as a director or an executive officer of the Company which imposes duties on, or involves services by, such director or executive officer with respect to the Company or any of the Company’s subsidiaries, affiliates, employee benefit or welfare plans, such plan’s participants or beneficiaries or any other enterprise, foreign or domestic. In the event that the Indemnitee shall be a director, officer, employee or agent of another corporation, partnership, joint venture, limited liability company, trust, employee benefit or welfare plan or other enterprise, foreign or domestic, 50% or more of the shares, combined voting power or total equity interest of which is owned by the Company or any subsidiary or affiliate thereof, then it shall be presumed conclusively that the Indemnitee is so acting at the request of the Company.

 

2. Indemnification. Subject to Section 6 below, the Company hereby agrees to hold harmless and indemnify the Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification and without limiting the generality thereof:

 

a. Proceedings by or in the Right of the Company. The Company shall indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise involved in any Proceeding by or in the right of the Company to procure a judgment in its favor against all Expenses which are actually and reasonably incurred by the Indemnitee in connection with such a Proceeding, so long as the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company; except that no indemnification under this subsection shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudicated by final judgment by a court of competent jurisdiction to be liable to the Company for dishonesty, willful default or fraud in the performance of his or her duty to the Company, unless and only to the extent that the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such amounts which such court shall deem proper.

 

b. Proceedings Other than Proceedings by or in the Right of the Company. The Company shall indemnify the Indemnitee if the Indemnitee is a party to or threatened to be made a party to or is otherwise involved in any Proceeding (other than a Proceeding by or in the right of the Company) against all Expenses which are actually and reasonably incurred by the Indemnitee in connection with such a Proceeding, so long as the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Company.

 

 

c. Indemnification for Expenses of Witness. Notwithstanding any other provision of this Agreement, to the extent that the Indemnitee has prepared to serve or has served as a witness or is made to respond to discovery requests in any Proceeding to which the Indemnitee is not a party, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee in connection therewith.

 

d. Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses incurred in connection with any Proceedings, but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses to which the Indemnitee is entitled.

 

3. Contribution. If the indemnification provided in Section 2 above is unavailable to the Indemnitee for any reason (other than those set forth in Section 6 below) in connection with a Proceeding in which the Company is jointly liable with the Indemnitee (or would be if joined in such Proceeding), the Company, in lieu of indemnifying the Indemnitee thereunder, shall contribute to the amount of Expenses which are actually and reasonably incurred and paid or payable by the Indemnitee in such proportion as is deemed fair and reasonable in the Company’s sole discretion, in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and the Indemnitee and/or (ii) the relative fault of the Company and such Indemnitee in connection with the transaction or events from which such Proceeding arose. The relative fault of the Company and the Indemnitee shall be determined, in the Company’s sole discretion, by reference to, among other things, the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Expenses.

 

4. Advancement of Expenses. The Expenses incurred by the Indemnitee in any Proceeding shall be paid reasonably promptly by the Company in advance of the final disposition of the Proceeding at the written request of the Indemnitee to the fullest extent permitted by applicable law; provided, however, that the Indemnitee shall set forth in such request reasonable evidence that such Expenses have been incurred by the Indemnitee in connection with such Proceeding and an undertaking in writing to repay any advances if it is ultimately determined as provided in subsection 5(b) of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement, the M&As, applicable law or otherwise.

 

5. Indemnification Procedure; Determination of Right to Indemnification.

 

a. Promptly after receipt by the Indemnitee of notice of the commencement of any Proceeding, the Indemnitee shall, if a claim for indemnification in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof in a written request, including therein or therewith such documentation and information as is reasonably available to the Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The omission to so notify the Company will not relieve the Company from any liability which the Company may have to the Indemnitee under this Agreement unless the Company shall have lost significant substantive or procedural rights with respect to the defense of any Proceeding as a result of such omission to so notify.

 

 

b. The Indemnitee shall be conclusively presumed to be entitled to indemnification under this Agreement unless a determination is made that the Indemnitee is not entitled to indemnification under this Agreement, the M&As, applicable law or otherwise by one of the following two methods, which, if there has not been a Change in Control, shall be at the election of the Board: (i) by a majority vote of the Board of a quorum consisting of Disinterested Directors or (ii) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, said Disinterested Directors so direct, by Independent Legal Counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee. If a Change of Control shall have occurred and the Indemnitee so requests in writing, such determination shall be made only by Independent Legal Counsel in the manner set forth in this subsection.

 

c. If (i) a determination is made that the Indemnitee is not entitled to indemnification under this Agreement or (ii) a claim for indemnification or advancement of Expenses under this Agreement is not paid by the Company within thirty (30) days after receipt by the Company of written notice thereof, the Indemnitee is entitled to an adjudication in any court of competent jurisdiction. Such judicial proceeding shall be made de novo. The burden of proving that indemnification or advances are not appropriate shall be on the Company. Neither the failure of the Directors or Independent Legal Counsel to have made a determination prior to the commencement of such action that indemnification or advancement of Expenses is proper in the circumstances because the Indemnitee has met the applicable standard of conduct, if any, nor an actual determination by the Directors or Independent Legal Counsel that the Indemnitee has not met the applicable standard of conduct shall be a defense to an action by the Indemnitee or create a presumption for the purpose of such an action that the Indemnitee has not met the applicable standard of conduct. The termination of any Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, in and of itself (i) create a presumption that the Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in the best interests of the Company and/or its shareholders, and, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his or her conduct was unlawful or (ii) otherwise adversely affect the rights of the Indemnitee to indemnification or advancement of Expenses under this Agreement, except as may be provided herein.

 

d. If a court of competent jurisdiction shall determine that the Indemnitee is entitled to any indemnification or advancement of Expenses hereunder, the Company shall pay all Expenses actually and reasonably incurred by the Indemnitee in connection with such adjudication (including, but not limited to, any appellate proceedings).

 

e. With respect to any Proceeding for which indemnification or advancement of Expenses is requested, the Company will be entitled to participate therein at its own expense and, except as otherwise provided below, to the extent that it may wish, the Company may assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee. After notice from the Company to the Indemnitee of its election to assume the defense of a Proceeding, the Company will not be liable to the Indemnitee under this Agreement for any Expenses subsequently incurred by the Indemnitee in connection with the defense thereof, other than as provided below. The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation on the Indemnitee without the Indemnitee’s written consent (which such consent shall not be unreasonably withheld). The Indemnitee shall have the right to employ his own counsel in any Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense of the Proceeding shall be at the expense of the Indemnitee, unless (i) the employment of counsel by the Indemnitee has been authorized by the Company, (ii) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of the defense of a Proceeding, or (iii) the Company shall not in fact have employed counsel to assume the defense of a proceeding, in each of which cases the fees and expenses of the Indemnitee’s counsel shall be advanced by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which the Indemnitee has reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee.

 

 

f. The Indemnitee shall give the Company such information and cooperation as the Company may reasonably require and as shall be within Indemnitee’s power. Subject to Section 3, the Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial action if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense, conduct and/or settlement of such action.

 

g. The Company shall not be liable to indemnify the Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent; provided, however, that if a Change in Control has occurred, the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle any Proceeding in which the Indemnitee is or could have been a party without the Indemnitee’s written consent unless such settlement (i) solely involves the payment of money (which shall be paid or compensated by the Company) and (ii) includes a complete and unconditional release of the Indemnitee from all liability on any claims that are the subject matter of such Proceeding. Neither the Company nor the Indemnitee will unreasonably withhold their consent to any proposed settlement. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement.

 

6. Limitations on Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against the Indemnitee:

 

a. in connection with any Proceeding initiated or brought voluntarily by the Indemnitee and not by way of defense, unless (i) the Board authorized the Proceeding prior to its initiation or (ii) the Proceeding is to enforce indemnification rights under this Agreement, the M&As, applicable law or otherwise and either (A) the Indemnitee is successful in such Proceeding in establishing his or her right, in whole or in part, to indemnification or advancement of Expenses hereunder (in which case such indemnification or advancement shall be to the fullest extent permitted by this Agreement) or (B) the court in such Proceeding shall determine that, despite the Indemnitee’s failure to establish his or her right to indemnification, Indemnitee is entitled to indemnity for such expenses (in which case such indemnification or advancement shall be to the extent provided by such court);

 

 

b. in connection with the Indemnitee preparing to serve or serving, prior to a Change in Control, as a witness in voluntary cooperation with any non-governmental or non-regulatory party or entity who or which has threatened or commenced any action or proceeding against the Company, or any director, officer, employee, trustee, agent, representative, subsidiary, parent corporation or affiliate of the Company, but such indemnification may be provided by the Company if the Board finds it to be appropriate;

 

c. for which payment has actually been made to the Indemnitee under a valid and collectible insurance policy, except in respect of any excess beyond the amount of payment under such insurance policy;

 

d. for an accounting of profits made from the purchase or sale by the Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Exchange Act or similar provisions of any foreign or United States federal, state or local statute or regulation;

 

e. for which the Indemnitee is indemnified and actually paid other than pursuant to this Agreement;

 

f. for conduct that is finally adjudged by a court of competent jurisdiction to have been caused by the Indemnitee’s dishonesty, willful default or fraud, including, without limitation, breach of the duty of loyalty, unless and only to the extent that the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such amounts which such court shall deem proper;

 

g. if a court of competent jurisdiction finally determines that such indemnification is unlawful. In this respect, the Company and the Indemnitee have been advised that the SEC takes the position that indemnification for liabilities arising under securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication;

 

h. in connection with the Indemnitee’s personal tax matters;

 

i. subject to the proviso in Section 6(a) hereof, in connection with any dispute or breach arising under any contract or similar obligation between the Company or any of its subsidiaries or affiliates and such Indemnitee; or

 

j. in connection with any reimbursement made by Indemnitee to the Company pursuant to Section 304 of the Sarbanes-Oxley Act, Section 306 of the Sarbanes-Oxley Act or Section 954 of the Dodd–Frank Wall Street Reform and Consumer Protection Act and the rules promulgated by the SEC thereunder.

 

 

7. Insurance. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees or agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, the Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a Proceeding pursuant to the terms hereof, the Company has directors’ and officers’ insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

8. No Employment Rights. Nothing in this Agreement is intended to create in the Indemnitee any right to continued employment with the Company.

 

9. Continuation of Indemnification. All agreements and obligations of the Company contained herein shall continue during the period that the Indemnitee is a Covered Person (or is or was serving at the request of the Company as an agent of another enterprise, foreign or domestic) and shall continue thereafter so long as the Indemnitee shall be subject to any Proceeding by reason of the fact that the Indemnitee is or was a Covered Person or is or was serving in any other capacity referred to in this Section 9. This Agreement shall continue in effect regardless of whether the Indemnitee continues to serve as a Covered Person or as an agent of another enterprise at the Company’s request.

 

10. Indemnification Hereunder Not Exclusive. The indemnification provided by this Agreement shall not be deemed to be exclusive of any other rights to which the Indemnitee may be entitled under the M&As, any agreement, vote of shareholders or vote of Disinterested Directors, provisions of applicable law, or otherwise, both as to action or omission in the Indemnitee’s official capacity and as to action or omission in another capacity on behalf of the Company while holding such office.

 

11. Coverage of Indemnification. The indemnification provided by this Agreement shall cover the Indemnitee’s service as a Covered Person of the Company (or service at the request of the Company as an agent of another enterprise, foreign or domestic) prior to or after the date of this Agreement.

 

12. Other Indemnity Agreement. Other than this Agreement, the Company has not entered into as of the date hereof, and shall not enter into following the date hereof, any indemnification agreement or side letter or other similar agreement or arrangement (collectively, an “Indemnity Agreement”), or amend any existing Indemnity Agreement, with any existing or future Director or Officer of the Company that has the effect of establishing rights or otherwise benefiting such Director or Officer in a manner more favorable in any respect than the rights and benefits established in favor of the Indemnitee by this Agreement, unless, in each such case, the Indemnitee is offered the opportunity to receive the rights and benefits of such Indemnity Agreement. All Indemnity Agreements shall be in writing.

 

 

13. Assignment; Successors and Assigns. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party thereto without the prior written consent of the other party, except that the Company may, without such consent, assign all such rights and obligations to a successor in interest to the Company which assumes all obligations of the Company under this Agreement in a written agreement in form and substance satisfactory to the Indemnitee. Notwithstanding the foregoing, this Agreement shall be binding upon and inure to the benefit of and be enforceable by and against the parties hereto and the Company’s successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, as well as the Indemnitee’s spouses, heirs and personal and legal representatives.

 

14. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable the Company effectively to bring suit to enforce such rights.

 

15. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any Claim made against Indemnitee to the extent the Indemnitee has otherwise actually received payment (under any insurance policy, the M&As or otherwise) of the amounts otherwise indemnifiable hereunder.

 

16. Severability. Each and every section, sentence, term and provision of this Agreement is separate and distinct so that if any section, sentence, term or provision thereof shall be held to be invalid, unlawful or unenforceable for any reason, such invalidity, unlawfulness or unenforceability shall not affect the validity, lawfulness or enforceability of any other section, sentence, term or provision hereof. To the extent required, any section, sentence, term or provision of this Agreement may be modified by a court of competent jurisdiction to preserve its validity and to provide the Indemnitee with the broadest possible indemnification permitted under applicable law. The Company’s inability, pursuant to a court order or decision, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.

 

17. Savings Clause. If this Agreement or any section, sentence, term or provision hereof is invalidated on any ground by any court of competent jurisdiction, the Company shall nevertheless indemnify the Indemnitee as to any Expenses which are incurred with respect to any Proceeding to the fullest extent permitted by any (a) applicable section, sentence, term or provision of this Agreement that has not been invalidated or (b) applicable law.

 

18. Interpretation; Governing Law. This Agreement shall be construed as a whole and in accordance with its fair meaning and any ambiguities shall not be construed for or against either party. Headings are for convenience only and shall not be used in construing meaning. This Agreement shall be governed and interpreted in accordance with British Virgin Islands laws without regard to the conflict of laws principles thereof. Each of the parties to this Agreement irrevocably agrees that the courts of the British Virgin Islands shall have nonexclusive jurisdiction to hear and determine any claim, suit, action or proceeding, and to settle any disputes, which may arise out of or are in any way related to or in connection with this Agreement, and, for such purposes, irrevocably submits to the nonexclusive jurisdiction of such courts.

 

 

19. Amendments. No amendment, supplement, waiver, modification, termination or cancellation of this Agreement shall be effective unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof. The indemnification rights afforded to the Indemnitee hereby are contract rights and may not be diminished, eliminated or otherwise affected by amendments to the M&As, or by other agreements, including directors’ and officers’ liability insurance policies, of the Company.

 

20. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to the other.

 

21. Notices. Any notice required to be given under this Agreement shall be directed to the General Counsel of the Company at c/o eToro Group Ltd., 30 Sheshet Hayamim St., Bnei Brak, Israel 5120261, and to the Indemnitee at or to such other address or email as the Indemnitee shall designate to the Company in writing.

 

22. Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

 

[The remainder of this page is intentionally left blank]

 

 

IN WITNESS WHEREOF, the parties have executed this Indemnification Agreement as of the date first written above.

 

	ETORO GROUP LTD.
	By:
		Name:
		Title:
	INDEMNITEE
	By:
		Name:
		Title:

 

 

12

 

Exhibit 10.2

 

Tradonomi Ltd.

 

 

 

 

 

 

Employee Share Option Plan (2007)

 

In Compliance With Amendment No. 132 of the Israeli Tax Ordinance 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENT

 

		Page
1.	Name.	3
2.	Purpose.	3
3.	Definitions.	3
4.	Administration.	4
5.	Eligible Optionees.	5
6.	Designation of Options Pursuant to Section 102.	5
7.	Trustee.	6
8.	Reserved Shares.	7
9.	Options.	7
10.	Option Prices.	8
11.	Exercise of Options.	8
12.	Termination of Relationship as Service Provider.	10
13.	Adjustments.	11
14.	Non-Transferability of Options and Shares.	13
15.	Term and Amendment of the Plan.	13
16.	Term of Option.	13
17.	Continuance of Employment.	14
18.	Governing Law & Jurisdiction.	14
19.	Application of Funds.	14
20.	Taxes.	14
21.	Rights Attached to the Option Shares; Proxy.	15
22.	Non-Exclusivity of the Plan.	15
23.	Dividends.	15

 

 

1.

Name.

 

This plan, as amended from time to time, shall be known as the Tradonomi Ltd. Employee Share Option Plan (2007) (the “Plan”).

 

2.

Purpose.

 

The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants (collectively, “Service Providers”) of Tradonomi Ltd. (the “Company”) and of the Company’s Affiliates (as defined below), to stimulate the active interest of Service Providers in the development and in the financial success of the Company and to promote the Company’s business by providing such Service Providers with opportunities to receive shares in the Company (“Shares”) and/or options to purchase Shares (“Options”) pursuant to this Plan. “Affiliate” shall mean any “employing company” within the meaning of Section 102(a) of the Ordinance.

 

3.

Definitions.

 

3.1

“Approved 102 Option” means a Share or an Option granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Optionee.

 

3.2

“Capital Gain Option (CGO)” as defined in Section 6.4 below.

 

3.3

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

 

3.4

“Date of Grant” – for a certain Option or Share means the date in which such Option or share is Vested to the Optionee.

 

3.5

“Employee” means a person who is employed by the Company or its Affiliate, including an individual who is serving as a director or an office holder, but excluding Controlling Shareholder.

 

3.6

“ITA” means the Israeli Tax Authorities.

 

3.7

“Non-Employee” means a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Employee.

 

3.8

“Ordinary Income Option (OIO)” as defined in Section 6.5 below.

 

3.9

“102 Option” means any Option or Share granted to Employees pursuant to Section 102 of the Ordinance.

 

3.10

“3(i) Option” means an Option or Share granted pursuant to Section 3(i) of the Ordinance to any person who is Non-Employee.

 

 

3.11

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

 

3.12

“Section 102” means section 102 of the Ordinance as now in effect or as hereafter amended.

 

3.13

“Successor Company” means any entity the Company is merged to or is acquired by, in which the Company is not the surviving entity.

 

3.14

“Trustee” means any individual or Company 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.

 

3.15

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

 

3.16

“Companies Law” means the 1999 Israeli Companies Law as now in effect or as hereafter amended.

 

4.

Administration.

 

4.1

The Plan will be administered by the board of directors of the Company (the “Board”), either directly or upon the recommendation of a Share Option Advisory Committee (the “Committee”) appointed and maintained by the Board for such purpose.

 

4.2

Subject to the general terms and conditions of this Plan, the Board shall have full authority in its discretion, from time to time and at any time, to decide on the following matters:

 

(i)

The persons to whom Options and/or Shares shall be granted (“Optionees”);

 

(ii)

The terms and provisions of the respective Option Agreements as defined in Section 9.1 below (which need not be identical) including, but not limited to, the price in which the Options shall be exercised upon (“Exercise Price”), number of the Shares to be covered by each Option, provisions concerning the time or times when and the extent to which the Options may be exercised;

 

(iii)

The acceleration of the right of an Optionee to exercise, in whole or in part, any previously granted Option, and the terms (if any) pursuant to which an Optionee’s right to exercise an Option shall be automatically accelerated;

 

(iv)

The interpretation of the provisions and the principles of supervision on the administration of the Plan;

 

 

(v)

The determination of the Fair Market Value of the Shares;

 

(vi)

The designation of Options as 102 Options or 3(i) Options;

 

(vii)

The determination in any other matter which is necessary or desirable for or incidental to the administration of the Plan.

 

Grants of Options and/or Shares shall be made pursuant to written notification to Optionees setting out the terms of the grant, as set forth in Sub-section 9.1 below.

 

4.3

The Board may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best.

 

4.4

The Board shall have the authority to grant, in its discretion, to the holder of an outstanding Option, in exchange for the surrender and cancellation of such Option, a new Option having an Exercise Price lower or higher than the Exercise Price provided in the Option so surrendered and canceled, and containing such other terms and conditions as the Board may prescribe in accordance with the provisions of the Plan. In no event may any such action of the Company impair the rights of an Optionee without such Optionee’s consent.

 

4.5

The interpretation and construction by the Board of any provision of the Plan or of any Option there under shall be final and conclusive.

 

5.

Eligible Optionees.

 

5.1

No Option or Share may be granted pursuant to this Plan to any person with regard to whom such granting requires an approval according to the fifth chapter in the sixth section of the Companies Law (“Transactions with Interested Parties”) at the time of the grant, unless such grant is approved in the manner prescribed under that chapter.

 

5.2

Subject to any restriction imposed by the applicable law, Options and/or Shares may be granted to Employees and/or Non-Employees of the Company or of any Affiliate; provided, however, that (i) Employees may only be granted 102 Options; (ii) Non-Employees may only be granted 3(i) Options; and (iii) Controlling Shareholders may only be granted 3(i) Options. The grant of an Option and/or Shares to an Optionee hereunder shall neither entitle such Optionee to participate, nor disqualify him from participating, in any other grant of Options and/or Shares pursuant to this Plan or to any other share incentive or share option plan of the Company or any of its related companies.

 

6.

Designation of Options Pursuant to Section 102.

 

6.1

The Company may designate Options and/or Shares granted to Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.

 

 

6.2

The grant of Approved 102 Options shall be made under this Plan adopted by the Board as described in Section 15 below, and shall be conditioned upon the approval of this Plan by the ITA.

 

6.3

Approved 102 Option may either be classified as Capital Gain Option (“CGO”) or Ordinary Income Option (“OIO”).

 

6.4

Approved 102 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) shall be referred to herein as CGO.

 

6.5

Approved 102 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) shall be referred to herein as OIO.

 

6.6

The Company’s election of the type of Approved 102 Options as CGO or OIO granted to Employees (the “Election”), shall be appropriately filed with the ITA before the Date of Grant of an Approved 102 Option. Such Election shall become effective beginning the first Date of Grant of an Approved 102 Option under this Plan and shall remain in effect until the end of the year following the year during which the Company first granted Approved 102 Options. The Election shall obligate the Company to grant only the type of Approved 102 Option it has elected, and shall apply to all Optionees who were granted Approved 102 Options during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options simultaneously.

 

6.7

All Approved 102 Options must be held in trust by a Trustee, as described in Section 7 below.

 

6.8

For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102 of the Ordinance and the regulations promulgated there under.

 

7.

Trustee.

 

7.1

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

 

 

7.2

Anything to the contrary notwithstanding, the Trustee shall not release any Approved 102 Options which were not already exercised into Shares by the Optionee or any Shares issued upon exercise of Approved 102 Options prior to the full payment of the Optionee’s tax liabilities arising from such Approved 102 Options and/or Shares. The Trustee may release the Approved 102 Options or Shares to the employee only after (i) The receipt by the Trustee of an acknowledgment from the Income Tax Authority that the Optionee has paid any applicable tax due pursuant to the applicable law, or (ii) The Trustee withholds any applicable tax due pursuant to the applicable law.

 

7.3

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

 

7.4

Upon receipt of Approved 102 Option, the Optionee will sign an undertaking to release the Trustee from any liability with respect to any action or decision duly taken and bona fide executed in relation with the Plan, or with respect to any Approved 102 Option or Share granted to the Optionee thereunder.

 

7.5

The voting rights vested in Shares issued upon exercise of Options shall be exercised in accordance with the terms and conditions as set forth in section 21 below.

 

8.

Reserved Shares.

 

The Company has reserved 5000 Ordinary Shares, nominal value of no par value per share, authorized but unissued, for purposes of the Plan, subject to any adjustment as provided in Section 13 hereof. Any Shares under the Plan, in respect of which the right hereunder of an Optionee to purchase the same shall for any reason terminate, expire or otherwise cease to exist, shall again be available for grant under the Plan. Any Shares which remain unissued and which are not subject to Options at the termination of the Plan shall cease to be reserved for purposes of the Plan, provided that until the termination of the Plan the Company shall at all times reserve a sufficient number of Shares to meet the requirements of the Plan.

 

9.

Options.

 

9.1

Each Option and/or Share granted under this Plan shall be evidenced by a written agreement between the Company and the Optionee (the “Option Agreement”). Each Option Agreement shall state, inter-alia, the number of the Shares to be granted and/or the number of shares to which the Option relates, the vesting periods, the Exercise Price, the exercise period and the type of Option granted there under (whether a CGO, OIO, Unapproved 102 Option or a 3(i) Option). The applicable terms and conditions of this Plan shall be incorporated in each Option Agreement.

 

 

9.2

For the avoidance of doubt, the holders of Options shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares purchasable upon the exercise of any part of an Option, nor shall they be deemed to be a class of shareholders or creditors of the Company for purpose of the operation of sections 350 and 351 of the Companies Law or any successor to such section, until registration of the Optionee as an holder of such Shares in the Company’s register of members upon exercise of the Option in accordance with the provisions of the Plan.

 

9.3

The Company’s obligation to issue Shares, including upon exercise of an Option, granted under the Plan is expressly conditioned upon (a) the Company’s completion of any registration or other qualifications of such Shares under all applicable laws, rules and regulations or (b) representations and undertakings taken by the Optionee (or the Optionee’s legal representative, heir or legatee, in the event of the Optionee’s death) to assure that the sale of the Shares complies with any registration exemption requirements which the Company in its sole discretion shall deem necessary or advisable.

 

9.4

This Plan shall not affect in any way any option to purchase the Company’s shares which was granted before the date of the Plan’s adoption by the Board.

 

10.

Option Prices.

 

The exercise price per share covered by each Option shall be as determined by the Board.

 

11.

Exercise of Options.

 

11.1

Options shall be exercisable pursuant to the terms under which they were awarded and subject to the terms and conditions of this Plan.

 

11.2

An Option, or any part thereof, shall he exercisable by the Optionee’s signing and returning to the Company at its principal office (and to the Trustee, where applicable), a “Notice of Exercise” in the form as the Board shall from time to time approve, together with full payment for the Shares underlying such Option and, if applicable, a proxy as specified in Section 21.2 hereunder.

 

11.3

Each payment for Shares under an Option shall be in respect of a whole number of Shares, shall be effected in cash payable to the order of the Company, or such other method of payment acceptable to the Company as determined by the Board, and shall be accompanied by a notice stating the number of Shares being paid for thereby.

 

 

11.4

The Board may from time to time and upon the consent of the Optionee, cancel all or any portion of any Options then subject to exercise, and the Company’s obligation in respect of such Options may be discharged by (i) payment to the Optionee of an amount in cash equal to the excess, if any, of the Fair Market Value of the Shares at the date of such cancellation subject to the portion of the Options so canceled over the aggregate Exercise Price of such Options, (ii) the issuance or transfer to the Optionee of Shares of the Company with a Fair Market Value at the date of such transfer equal to any such excess, or (iii) a combination of cash and Shares with a combined value equal to any such excess, all as determined by the Company in its sole discretion.

 

11.5

For the purpose of this section 11 and of section 13, “Fair Market Value” means, as of any date, the value of the Shares which shall be determined as follows:

 

(a)

If the Shares are listed on any established stock exchange or a national market system, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; In case the Shares are listed on more then one established stock exchange, the Fair Market Value shall be the closing sales price at the stock exchange in which the Shares’ trading volume in that day is the largest.

 

Without derogating from the above, 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 are listed on any established stock exchange or a national market system or if the Company’s shares will be registered for trading within ninety (90) days following the Date of Grant, the Fair Market Value of a Share 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;

 

(b)

If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination; or

 

(c)

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

 

11.6

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

 

 

12.

Termination of Relationship as Service Provider.

 

12.1

Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, such Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, then (A) in the event that Optionee ceases to be a Service Provider for any reason other than for Cause, death or Disability, the unvested portion of the Option will not vest, and the vested Options shall remain exercisable for three (3) months following the Optionee’s termination and (B) in the event that Optionee ceases to be a Service Provider for Cause (as hereinafter defined), the Option shall terminate immediately upon the date of such termination for Cause such that the unvested portion of the Option will not vest, and the vested portion of the Option shall no longer be exercisable.

 

If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified in the Option Agreement or this Plan, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. For purposes of this Plan and any Option or Option Agreement, the date of termination (whether for Cause or otherwise) shall be deemed to be the earlier of the date on which the Company or the Optionee, as the case may be, gives notice of the Optionee’s cessation as a Service Provider (regardless of the effective date of such notice) or the date on which the Optionee actually ceases to be a Service Provider, according to the earlier of the two.

 

The term “Cause” shall mean involving (i) conviction of any felony involving moral turpitude or affecting the Company; (ii) repeated and unreasonable refusal to carry out a reasonable directive of the Company or of Optionee’s supervisor which involves the business of the Company or its Affiliate and was capable of being lawfully performed; (iii) embezzlement of funds of the Company or its Affiliate; (iv) any breach of the Optionee’s fiduciary duties or duties of care towards the Company or its Affiliate; including, without limitation, disclosure of confidential information of the Company or its Affiliate or breach of any obligation not to compete with the Company or its Affiliate; and (v) any conduct (other than conduct in good faith) reasonably determined by the Board to be materially detrimental to the Company.

 

12.2

Disability of Optionee. If an Optionee ceases to he a Service Provider as a result of the Optionee’s disability, the Optionee may exercise his or her Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of disability (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for six (6) months following the Optionee’s date of disability. If, on the date of disability, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after the date of disability, the Optionee does not exercise his or her Option within the time specified in the Option Agreement or this Plan, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

 

For the purpose of this section, “date of disability” shall mean the date in which the Optionee ceased to provide services to the Company as a result of the Optionee’s disability.

 

12.3

Death. If an Optionee dies while a Service Provider, the Option may be exercised within such period of time as is specified in the Option Agreement to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement) by the Optionee’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for eighteen (18) months following the date of death or for six (6) months following the date of the issuance of a succession order or the issuance of an inheritance order, according to the earlier of the three. If, at the time of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If after the date of death the Option is not so exercised within the time specified in the Option Agreement or this Plan, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 

12.4

Deemed Cessation. Unless the Board provides otherwise, vesting of Options and/or Shares granted hereunder shall be tolled during any unpaid leave of absence. For the purpose of this section only, “unpaid leave of absence” shall mean an unpaid leave of absence of more than 90 days, in accumulation, within one calendar year, or alternatively an unpaid leave of absence of at least 60 consecutive days (including weekends, religious holidays and national holidays). For the avoidance of doubt, sick leave, reserve duty leave or maternity leave shall not be considered an unpaid leave of absence.

 

13.

Adjustments.

 

13.1

Upon the occurrence of any of the following described events, an Optionee’s rights to purchase Shares under the Plan shall be adjusted as hereinafter provided: in the event of a merger of the Company with or into another company (the “Successor Company”), or the sale of all or substantially all of the assets or shares of the Company (collectively: the “Transaction”) while unexercised Options remain outstanding under the Plan (the “Unexercised Options”), each Unexercised Option shall be assumed or substituted as provided for under section 13.2 herein. In the case of such assumption and/or substitution of shares, appropriate adjustments shall be made in the Exercise Price to reflect such action, and all other terms and conditions of the Option Agreements, such as the Vesting Dates, shall remain in force, all subject to the Board’s determination which shall be final.

 

 

13.2

For the purposes of section 13.1 above, an Option shall be considered assumed or substituted if, following the Transaction, the Option confers the right to purchase or receive, for each Share covered by the Option immediately prior to the Transaction, the consideration (whether in shares, options, cash, or other securities or property) received in the Transaction by holders of shares for each share held on the effective date of the Transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Transaction is not solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary, the Board may, with the consent of the Successor Company, provide for the consideration to be received upon the exercise of the Option to be solely Ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary equal in Fair Market Value to the per Share consideration received by holders of a majority of the outstanding shares in the Transaction; and provided further that the Board may determine, in its discretion, that in lieu of such assumption or substitution of Options for options of the Successor Company or its parent or subsidiary, such Options shall be substituted for any other type of asset or property, including cash, which is fair under the circumstances.

 

13.3

If the Company is liquidated or dissolved while vested Options remain unexercised and outstanding under the Plan, then all such vested and outstanding Options may be exercised in full by the Optionees as of the effective date of any such liquidation or dissolution of the Company. All such outstanding Options may be exercised in full by the Optionee’s notice in writing to the Company of their intention to so exercise.

 

13.4

If the outstanding shares of the Company shall at any time be changed or exchanged by declaration of a stock dividend (bonus shares), stock split, combination or exchange of shares, recapitalization, or any other like event by or of the Company according to which the share capital of the Company is increased without receipt of consideration by the Company (excluding a conversion of any convertible securities of the Company), and as often us the same shall occur, then the number, class and kind of the Shares subject to the Plan or subject to any Options therefore granted, and the Exercise Prices, shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares without changing the aggregate Exercise Price, provided, however, that no adjustment shall be made by reason of the distribution of subscription rights (rights offering) on outstanding stock. Upon happening of any of the foregoing, the class and aggregate number of Shares issuable pursuant to the Plan (as set forth in section 8 hereof), in respect of which Options have not yet been exercised, shall be appropriately adjusted, all as shall be determined by the Board whose determination shall be final. However, no adjustments of the number of Options or the Exercise Price shall be made in the case of dividend allocation (as defined in the Israeli Companies Law), whether in cash or not.

 

 

14.

Non-Transferability of Options and Shares.

 

14.1

No Option and/or Share shall be assignable, transferable (other than by will or by the laws of descent and distribution) or given as collateral, and during the Optionee’s lifetime an Option may be exercised only by such Optionee. For the purposes of this Section, an Option and/or Share shall also refer to any right in respect thereof. Any such action made directly or indirectly, for an immediate validation or for a future one shall he void.

 

14.2

In case an Option and/or Share is transferred, either by will or by the laws of descent and distribution, the transferee shall be subjected to all terms and conditions as was the former owner of that Option and/or Share.

 

14.3

Shares for which full payment has not been made, shall not be assignable or transferable by the Optionee. For avoidance of doubt, the foregoing shall not be deemed to restrict the transfer of an Optionee’s rights in respect of Options or Shares purchasable pursuant to the exercise thereof upon the death of such Optionee to such Optionee’s estate or other successors by operation of law or will, whose rights therein shall be governed by Sub-section 12.3 hereof, and as may otherwise be determined by the Board.

 

14.4

As long as the Shares are held by the Trustee in favor of the Optionee, all rights the last possesses over the Shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.

 

15.

Term and Amendment of the Plan.

 

15.1

The Plan was adopted by the Board on _______ and shall expire on (ten years later) (except as to Options outstanding on that date).

 

15.2

The Board may, at any time and from time to time, suspend, alter, amend (all, in any relevant respect), terminate or extend the term of the Plan. In no event may any such action of the Company impair the rights of an Optionee, without such Optionee’s consent, with regard to any Option previously granted to such Optionee. Termination of the Plan shall not affect the Board’s ability to exercise the powers granted to it hereunder with respect to Options and/or Shares granted under the Plan prior to the date of such termination.

 

16.

Term of Option.

 

Anything herein to the contrary notwithstanding, if any Option, or any part thereof, has not been exercised and the Shares covered thereby not paid for within ten (10) years after the date on which the Option was granted, or any other period as set forth in the Option Agreement grunting such Option pursuant to Section 9, which shall not exceed 10 years, such Option, or such part thereof, and the right to acquire such Shares shall terminate, all interests and rights of the Optionee in and to the same shall expire.

 

 

17.

Continuance of Employment.

 

Neither this Plan nor any offer of Shares or Options to an Optionee shall impose any obligation on the Company or a related company thereof, to continue the employment of any Optionee, or hire the Optionee’s services and nothing in the Plan or in any Option granted pursuant thereto shall confer upon any Optionee any right to continue in the employment or service of the Company or a related company thereof or restrict the right of the Company or a related company thereof to terminate such employment or service hiring at any time.

 

18.

Governing Law & Jurisdiction.

 

18.1

The Plan, all Option Agreements, and ancillary document issued there under or in connection therewith, shall be governed by, and interpreted in accordance with, the laws of the State of Israel, without giving effect to the principles of conflict of laws.

 

18.2

Any dispute, controversy, or claim arising out of or relating to this Plan or any Option Agreement, including but not limited to its existence, its binding effect, interpretation, performance, breach or termination, shall be referred to and finally determined by arbitration conducted before a single arbitrator in accordance with Israel’s Law of Arbitration (1968). The arbitration shall be conducted in Tel Aviv, Israel. The arbitrator shall be selected pursuant to the mutual agreement of the Parties within thirty (30) days commencing of the date in which either of the Parties requests arbitration hereunder. In the absence of such mutual agreement, the arbitrator shall be selected by the then Head of the Israeli Bar Association. The arbitration shall be not be subject to procedural laws and regulations or to evidence rules applicable in Israeli (or other) courts.

 

19.

Application of Funds.

 

The proceeds received by the Company from the exercise of the Options granted under the Plan will be used for general corporate purposes of the Company.

 

20.

Taxes.

 

20.1

All tax liability regarding the grant of shares and/or the grant or exercise of the Options, and the issue, holding and disposition of the Option and/or Shares, and/or the granting of any consideration under sections 11 or 13 of this Plan, shall be borne by the Optionee. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, such Optionee shall indemnify (i) the Company and/or its Affiliates that employs the Optionee and (ii) the Trustee, if applicable, 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 Optionee.

 

 

20.2

Except as otherwise required by law, the Company shall not be obligated to issue Shares upon the exercise of any Options, or to grant any consideration under sections 11 or 13 of this Plan, or release any Share certificate to an Optionee until all required payments (including, withholding taxes) have been fully made.

 

21.

Rights Attached to the Option Shares; Proxy.

 

21.1

Subject: to section 21.2 herein, Shares acquired according to: this Plan shall have the same rights and privileges as attached to any other ordinary share of the Company.

 

21.2

An Optionee who acquired Shares according to this Plan shall have no voting rights as a shareholder (in any and all matters whatsoever), as long as, and to the extent that, such voting rights deprivation is required under the provisions of Section 102 and any rules, regulations or orders promulgated thereunder. For that purpose, if required by the Company (at its sole discretion) the Optionee shall execute an irrevocable proxy (“Irrevocable Proxy”), pursuant to which the shares shall be voted according to the directions of the Board, and such Irrevocable Proxy may be assigned to the person or persons designated by the Board.

 

Such person or persons designated by the Board shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him/her, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the voting of such Proxy unless arising out of such member’s own fraud or bad faith, to the extent permitted by applicable law. Such indemnification shall be in addition to any rights of indemnification the person(s) may have as a director or otherwise under the Company’s Articles of Association, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.

 

22.

Non-Exclusivity of the Plan.

 

The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable.

 

23.

Dividends.

 

With respect to all Shares (in contrast to unexercised Options) issued according to this Plan and held by the Trustee, if applicable, the Optionee shall be entitled to receive dividends in accordance with the quantity of such Shares, and subject to the provisions of the Company’s Articles of Association (and all amendments thereto) and subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder.

 

 

15

 

Exhibit 10.3

 

	eToro Group Ltd.
	2021 Share Incentive Plan, as amended

 

Unless otherwise defined, terms used herein shall have the meaning ascribed to them in Section ‎2 hereof.

 

1.

PURPOSE; TYPES OF AWARDS; CONSTRUCTION.

 

1.1. Purpose. The purpose of this 2021 Share Incentive Plan (as amended, this “Plan”) is to afford an incentive to Service Providers of eToro Group Ltd., a company incorporated under the laws of the British Virgin Islands (together with any successor corporation thereto, the “Company”), or any Affiliate of the Company, which now exists or hereafter is organized or acquired by the Company or its Affiliates, to continue as Service Providers, to increase their efforts on behalf of the Company or its Affiliates and to promote the success of the Company’s business, by providing such Service Providers with opportunities to acquire a proprietary interest in the Company by the issuance of Shares or restricted Shares (“Restricted Shares”) of the Company, Options, Restricted Share Units (“RSUs”), share appreciation rights and other Share-based Awards pursuant to Sections ‎11 through ‎13 of this Plan.

 

1.2. Types of Awards. This Plan is intended to enable the Company to issue Awards under various tax regimes, including:

 

(i) pursuant and subject to the provisions of Section 102 of the Ordinance (or the corresponding provision of any subsequently enacted statute, as amended from time to time), and all regulations and interpretations adopted by any competent authority, including the Israel Tax Authority (the “ITA”), including the Income Tax Rules (Tax Benefits in Stock Issuance to Employees) 5763-2003 or such other rules so adopted from time to time (the “Rules”) (such Awards that are intended to be (as set forth in the Award Agreement) and which qualify as such under Section 102 of the Ordinance and the Rules, “102 Awards”);

 

(ii)  pursuant to Section 3(i) of the Ordinance or the corresponding provision of any subsequently enacted statute, as amended from time to time (such Awards, “3(i) Awards”);

 

(iii) Incentive Stock Options within the meaning of Section 422 of the Code, or the corresponding provision of any subsequently enacted United States federal tax statute, as amended from time to time, to be granted to Employees who are deemed to be residents of the United States, for purposes of taxation, or are otherwise subject to U.S. Federal income tax (such Awards that are intended to be (as set forth in the Award Agreement) and which qualify as an incentive stock option within the meaning of Section 422(b) of the Code, “Incentive Stock Options”);

 

(iv) Options not intended to be (as set forth in the Award Agreement) or which do not qualify as an Incentive Stock Option to be granted to Service Providers who are deemed to be residents of the United States for purposes of taxation, or are otherwise subject to U.S. Federal income tax (“Nonqualified Stock Options”);

 

(v) Share appreciation rights; and

 

(vi) Restricted Shares, RSUs and other forms of Share-based Awards.

 

 

In addition to the issuance of Awards under the relevant tax regimes in the United States of America and the State of Israel, and without derogating from the generality of Section ‎24, this Plan contemplates issuances to Grantees in other jurisdictions or under other tax regimes with respect to which the Committee is empowered, but is not required, to make the requisite adjustments in this Plan, to adopt sub-plans under this Plan and/or to set forth the relevant conditions in an appendix to this Plan or in the Company’s agreement with the Grantee in order to comply with Applicable Law of such other jurisdictions or the requirements of such other tax regimes.

 

1.3. Construction. To the extent any provision herein conflicts with the conditions of any relevant tax law, rule or regulation which are relied upon for tax relief in respect of a particular Award to a Grantee, the Committee is empowered, but is not required, hereunder to determine that the provisions of such law, rule or regulation shall prevail over those of this Plan and to interpret and enforce such prevailing provisions. With respect to 102 Awards, if and to the extent any action or the exercise or application of any provision hereof or authority granted hereby is conditioned or subject to obtaining a ruling or tax determination from the ITA, to the extent required by Applicable Law, then the taking of any such action or the exercise or application of such section or authority with respect to 102 Awards shall be conditioned upon obtaining such ruling or tax determination, and, if obtained, shall be subject to any condition set forth therein; it being clarified that there is no obligation to apply for any such ruling or tax determination (which shall be in the sole discretion of the Committee) and no assurance is made that if applied any such ruling or tax determination will be obtained (or the conditions thereof).

 

2.

DEFINITIONS.

 

2.1. Terms Generally. Except when otherwise indicated by the context, (i) the singular shall include the plural and the plural shall include the singular; (ii) any pronoun shall include the corresponding masculine, feminine and neuter forms; (iii) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth therein or herein), (iv) references to any law, constitution, statute, treaty, regulation, rule or ordinance, including any section or other part thereof shall refer to it as amended from time to time and shall include any successor thereof, (v) reference to a “company” or “entity” shall include a, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof, and reference to a “person” shall mean any of the foregoing or an individual, (vi) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Plan in its entirety, and not to any particular provision hereof, (vii) all references herein to Sections shall be construed to refer to Sections to this Plan; (viii) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; and (ix) use of the term “or” is not intended to be exclusive.

 

2.2. Defined Terms. The following terms shall have the meanings ascribed to them in this Section ‎2:

 

2.2.1 “Affiliate” shall mean, (i) with respect to any person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such person, including, without limitation, any Parent or Subsidiary, or (ii) Employer.

 

 

2.2.2 “Applicable Law” shall mean any applicable law, rule, regulation, statute, pronouncement, policy, interpretation, judgment, order or decree of any federal, provincial, state or local governmental, regulatory or adjudicative authority or agency, of any jurisdiction, and the rules and regulations of any stock exchange, over-the-counter market or trading system on which the Company’s shares are then traded or listed.

 

2.2.3  “Award” shall mean any issuance of Shares or Restricted Shares, Options, RSUs, share appreciation rights and other Share-based Awards granted under this Plan.

 

2.2.4  “Board” shall mean the Board of Directors of the Company.

 

2.2.5  “Change in Board Event” shall mean any time at which individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board.

 

2.2.6  “Code” shall mean the United States Internal Revenue Code of 1986, and any applicable regulations promulgated thereunder, all as amended.

 

2.2.7  “Committee” shall mean a committee established or appointed by the Board to administer this Plan, subject to Section ‎3.1.

 

2.2.8  “Controlling Shareholder” shall have the meaning set forth in Section 32(9) of the Ordinance.

 

2.2.9  “Disability” shall mean (i) the inability of a Grantee to engage in any substantial gainful activity or to perform the major duties of the Grantee’s position with the Company or its Affiliates by reason of any medically determinable physical or mental impairment which has lasted or can be expected to last for a continuous period of not less than 12 months (or such other period as determined by the Committee), as determined by a qualified doctor acceptable to the Company, (ii) if applicable, a “permanent and total disability” as defined in Section 22(e)(3) of the Code or Section 409A(a)(2)(c)(i) of the Code, as amended from time to time, or (iii) as defined in a policy of the Company that the Committee deems applicable to this Plan, or that makes reference to this Plan, for purposes of this definition. Notwithstanding the foregoing, for Awards that are subject to Section 409A of the Code, Disability shall mean that a Grantee is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.

 

2.2.10 “Employee” shall mean any person treated as an employee (including an officer or a director who is also treated as an employee) in the records of the Company or any of its Affiliates (and in the case of 102 Awards, subject to Section ‎9.3 or in the case of Incentive Stock Options, who is an employee for purposes of Section 422 of the Code); provided, however, that neither service as a director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of this Plan. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of a person’s rights, if any, under this Plan as of the time of the Company’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination.

 

 

2.2.11 “Employer” means, for purpose of a 102 Trustee Award, the Company or an Affiliate, Subsidiary or Parent thereof, which is an “employing company” within the meaning and subject to the conditions of Section 102(a) of the Ordinance.

 

2.2.12 “employment”, “employed” and words of similar import shall be deemed to refer to the employment of Employees or to the services of any other Service Provider, as the case may be.

 

2.2.13 “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, and all regulations, guidance and other interpretative authority issued thereunder.

 

2.2.14 “exercise,” “exercised” and words of similar import, when referring to an Award that does not require exercise or that is settled upon vesting (such as may be the case with RSUs or Restricted Shares, if so determined in their terms), shall be deemed to refer to the vesting of such an Award (regardless of whether or not the wording included reference to vesting of such an Awards explicitly).

 

2.2.15 “Exercise Period” shall mean the period, commencing on the date of grant of an Award, during which an Award shall be exercisable, subject to any vesting provisions thereof (including any acceleration thereof, if any) and subject to the termination provisions hereof.

 

2.2.16 “Exercise Price” shall mean the exercise price for each Share covered by an Option or the purchase price for each Share covered by any other Award.

 

2.2.17 “Fair Market Value” shall mean, as of any date, the value of a Share or other securities, property or rights as determined by the Board, in its discretion, subject to the following: (i) if, on such date, the Shares are listed on any securities exchange, the closing sales price per Share on which the Shares are principally traded on such date, or if no sale occurred on such date, the last day preceding such date on which a sale occurred, as reported in The Wall Street Journal or such other source as the Company deems reliable; (ii) if, on such date, the Shares are then quoted in an over-the-counter market, the average of the closing bid and asked prices for the Shares in that market on such date, or if there are no bid and asked prices on such date, the last day preceding such date on which there are bid and asked prices, as reported in The Wall Street Journal or such other source as the Company deems reliable; or (iii) if, on such date, the Shares are not then listed on a securities exchange or quoted in an over-the-counter market, or in case of any other securities, property or rights, such value as the Committee, in its sole discretion, shall determine, with full authority to determine the method for making such determination and which determination shall be conclusive and binding on all parties, and shall be made after such consultations with outside legal, accounting and other experts as the Committee may deem advisable; provided, however, that, if applicable, the Fair Market Value of the Shares shall be determined in a manner that is intended to satisfy the applicable requirements of and subject to Section 409A of the Code, and with respect to Incentive Stock Options, in a manner that is intended to satisfy the applicable requirements of and subject to Section 422 of the Code, subject to Section 422(c)(7) of the Code. If the Shares are listed or quoted on more than one established stock exchange or over-the-counter market, the Committee shall determine the principal such exchange or market and utilize the price of the Shares on that exchange or market (determined as per the method described in clauses (i) or (ii) above, as applicable) for the purpose of determining Fair Market Value.

 

 

2.2.18 “Grantee” shall mean a person who has been granted an Award(s) under this Plan.

 

2.2.19 “Option” shall mean a grant of options to purchase Shares, including, for the avoidance of doubt, Incentive Stock Options and Nonqualified Stock Options.

 

2.2.20 “Ordinance” shall mean the Israeli Income Tax Ordinance (New Version) 5271-1961, and the regulations and rules (including the Rules) promulgated thereunder, all as amended from time to time.

 

2.2.21 “Parent” shall mean any company (other than the Company), which now exists or is hereafter organized, (i) in an unbroken chain of companies ending with the Company if, at the time of granting an Award, each of the companies (other than the Company) owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain, or (ii) if applicable and for purposes of Incentive Stock Options, that is a “parent corporation” of the Company, as defined in Section 424(e) of the Code.

 

2.2.22 “Retirement” shall mean a Grantee’s retirement pursuant to Applicable Law or in accordance with the terms of any tax-qualified retirement plan maintained by the Company or any of its Affiliates in which the Grantee participates or is subject to.

 

2.2.23 “Securities Act” shall mean the U.S. Securities Act of 1933, and the rules and regulations promulgated thereunder, all as amended from time to time.

 

2.2.24 “Service Provider” shall mean an Employee, director, officer, consultant, advisor and any other person or entity who provides services to the Company or any Parent, Subsidiary or other Affiliate thereof. Service Providers shall include prospective Service Providers to whom Awards are granted in connection with written offers of an employment or other service relationship with the Company or any Parent, Subsidiary or any other Affiliates thereof, provided, however, that such employment or service shall have actually commenced. Notwithstanding the foregoing, unless otherwise determined by the Committee, each Service Provider shall be an “employee” as defined in the General Instructions to Form S-8 Registration Statement under the Securities Act (or any successor form thereto) at the time the Award is granted to the Service Provider.

 

2.2.25 “Share(s)” shall mean Common Shares, no par value per share, of the Company (including Common Shares resulting or issued as a result of share split, reverse share split, bonus shares, combination or other recapitalization events), or shares of such other class of shares of the Company as shall be designated by the Board in respect of the relevant Award(s). “Shares” include any securities or property issued or distributed with respect thereto.

 

2.2.26 “Subsidiary” shall mean any company (other than the Company), which now exists or is hereafter organized or acquired by the Company, (i) in an unbroken chain of companies beginning with the Company if, at the time of granting an Award, each of the companies other than the last company in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other companies in such chain, or (ii) if applicable and for purposes of Incentive Stock Options, that is a “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.

 

 

2.2.27 “tax(es)” shall mean (a) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including all income, capital gains, alternative or add-on minimum, transfer, value added tax, real and personal property, withholding, payroll, employment, escheat, social security, disability, national security, health tax, wealth surtax, stamp, registration and estimated taxes, customs duties, fees, assessments and charges of any similar kind whatsoever (including under Section 280G of the Code) or other tax of any kind whatsoever, (b) all interest, indexation differentials, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (a), (c) any transferee or successor liability in respect of any items described in clauses (a) or (b) payable by reason of contract, assumption, transferee liability, successor liability, operation of Applicable Law, or as a result of any express or implied obligation to assume Taxes or to indemnify any other person, and (d) any liability for the payment of any amounts of the type described in clause (a) or (b) payable as a result of being a member of an affiliated, consolidated, combined, unitary or aggregate or other group for any taxable period, including under U.S. Treasury Regulations Section 1.1502-6(a) (or any predecessor or successor thereof of any analogous or similar provision under Applicable Law) or otherwise.

 

2.2.28 “Ten Percent Shareholder” shall mean a Grantee who, at the time an Award is granted to the Grantee, owns shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary, within the meaning of Section 422(b)(6) of the Code.

 

2.2.29 “Trustee” shall mean the trustee appointed by the Committee to hold the Awards (and, in relation with 102 Trustee Awards, approved by the ITA), if so appointed.

 

2.2.30 Other Defined Terms. The following terms shall have the meanings ascribed to them in the Sections set forth below:

 

Term	Section
102 Awards	1.2(i)
102 Capital Gains Track Awards	9.1
102 Non-Trustee Awards	9.2
102 Ordinary Income Track Awards	9.1
102 Trustee Awards	9.1
3(i) Awards	1.2(ii)
Award Agreement	6
Cause	6.6.4.4
Company	1.1
Effective Date	24.1
Election	9.2
Eligible 102 Grantees	9.3.1
Incentive Stock Options	1.2(iii)
Information	16.4
ITA	1.1(i)
Merger/Sale	14.2
Nonqualified Stock Options	1.2(iv)
Plan	1.1

 

 

Term	Section
Prior Plan(s)	5.2
Pool	1.1
Recapitalization	14.1
Required Holding Period	9.5
Restricted Period	11.2
Restricted Share Agreement	11
Restricted Share Unit Agreement	12
Restricted Share	1.1
RSUs	1.1
Rules	1.1(i)
Securities	17.1
Successor Corporation	14.2.1
Withholding Obligations	18.5

 

3.	ADMINISTRATION.

 

3.1. To the extent permitted under Applicable Law, and the Memorandum of Association and Articles of Association of the Company (each as may be amended and supplemented from time to time, the “Articles of Association”) and any other governing document of the Company, this Plan shall be administered by the Committee. In the event that the Board does not appoint or establish a committee to administer this Plan, this Plan shall be administered by the Board and, accordingly, any and all references herein to the Committee shall be construed as references to the Board. In the event that an action necessary for the administration of this Plan is required under Applicable Law to be taken by the Board without the right of delegation, or if such action or power was explicitly reserved by the Board in appointing, establishing and empowering the Committee, then such action shall be so taken by the Board. In any such event, all references herein to the Committee shall be construed as references to the Board. Even if such a Committee was appointed or established, the Board may take any actions that are stated to be vested in the Committee, and shall not be restricted or limited from exercising all rights, powers and authorities under this Plan or Applicable Law. The Board shall appoint the members of the Committee, may from time to time remove members from, or add members to, the Committee, and shall fill vacancies in the Committee, however caused, provided that the composition of the Committee shall at all times be in compliance with any mandatory requirements of Applicable Law, the Articles of Association and any other governing document of the Company. The Committee may select one of its members as its Chairman and shall hold its meetings at such times and places as it shall determine. The Committee may appoint a Secretary, who shall keep records of its meetings, and shall make such rules and regulations for the conduct of its business as it shall deem advisable and subject to mandatory requirements of Applicable Law.

 

3.2. Subject to the terms and conditions of this Plan, any mandatory provisions of Applicable Law and any provisions of any Company policy required under mandatory provisions of Applicable Law, and in addition to the Committee’s powers contained elsewhere in this Plan, the Committee shall have full authority, in its discretion, from time to time and at any time, to determine any of the following, or to recommend to the Board any of the following if it is not authorized to take such action according to Applicable Law:

 

(i) eligible Grantees,

 

(ii)  grants of Awards and setting the terms and provisions of Award Agreements (which need not be identical) and any other agreements or instruments under which Awards are made, including, the number of Shares underlying each Award and the class of Shares underlying each Award (if more than one class was designated by the Board),

 

 

(iii) the time or times at which Awards shall be granted,

 

(iv) the terms, conditions and restrictions applicable to each Award (which need not be identical) and any Shares acquired upon the exercise or (if applicable) vesting thereof, including, (1) designating Awards under Section ‎1.2; (2) the vesting schedule, the acceleration thereof and terms and conditions upon which Awards may be exercised or become vested, (3) the Exercise Price, (4) the method of payment for Shares purchased upon the exercise or (if applicable) vesting of the Awards, (5) the method for satisfaction of any tax withholding obligation arising in connection with the Awards or such Shares, including by the withholding or delivery of Shares, (6) the time of the expiration of the Awards, (7) the effect of the Grantee’s termination of employment with the Company or any of its Affiliates, and (8) all other terms, conditions and restrictions applicable to the Award or the Shares not inconsistent with the terms of this Plan,

 

(v) to accelerate, continue, extend or defer the exercisability of any Award or the vesting thereof, including with respect to the period following a Grantee’s termination of employment or other service,

 

(vi) the interpretation of this Plan and any Award Agreement and the meaning, interpretation and applicability of terms referred to in Applicable Law,

 

(vii) policies, guidelines, rules and regulations relating to and for carrying out this Plan, and any amendment, supplement or rescission thereof, as it may deem appropriate,

 

(viii) to adopt supplements to, or alternative versions of, this Plan, including, without limitation, as it deems necessary or desirable to comply with the laws of, or to accommodate the tax regime or custom of, foreign jurisdictions whose citizens or residents may be granted Awards,

 

(ix) the Fair Market Value of the Shares or other securities property or rights,

 

(x) the tax track (capital gains, ordinary income track or any other track available under the Section 102 of the Ordinance) for the purpose of 102 Awards,

 

(xi) the authorization and approval of conversion, substitution, cancellation or suspension under and in accordance with this Plan of any or all Awards or Shares,

 

(xii) unless otherwise provided under the terms of this Plan, the amendment, modification, waiver or supplement of the terms of any outstanding Award (including reducing the Exercise Price of an Award), provided, however, that if such amendments increase the Exercise Price of an Award or reduce the number of Shares underlying an Award, then such amendments shall require the consent of the applicable Grantee, unless such amendment is made pursuant to the exercise of rights or authorities in accordance with Sections ‎14 or ‎24,

 

(xiii) without limiting the generality of the foregoing, and subject to the provisions of Applicable Law, to grant to a Grantee, who is the holder of an outstanding Award, in exchange for the cancellation of such Award, a new Award having an Exercise Price lower than that provided in the Award so canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of this Plan or to set a new Exercise Price for the same Award lower than that previously provided in the Award,

 

 

(xiv) to correct any defect, supply any omission or reconcile any inconsistency in this Plan or any Award Agreement and all other determinations and take such other actions with respect to this Plan or any Award as it may deem advisable to the extent not inconsistent with the provisions of this Plan or Applicable Law, and

 

(xv) any other matter which is necessary or desirable for, or incidental to, the administration of this Plan and any Award thereunder.

 

3.3. The authority granted hereunder includes the authority to modify Awards to eligible individuals who are foreign nationals or are individuals who are employed outside the State of Israel or the United States of America, to recognize differences in local law, tax policy or custom, in order to effectuate the purposes of this Plan but without amending this Plan.

 

3.4. The Board and the Committee shall be free at all times to make such determinations and take such actions as they deem fit. The Board and the Committee need not take the same action or determination with respect to all Awards, with respect to certain types of Awards, with respect to all Service Providers or any certain type of Service Providers and actions and determinations may differ as among the Grantees, and as between the Grantees and any other holders of securities of the Company.

 

3.5. All decisions, determinations, and interpretations of the Committee, the Board and the Company under this Plan shall be final and binding on all Grantees (whether before or after the issuance of Shares pursuant to Awards), unless otherwise determined by the Committee, the Board or the Company, respectively. The Committee shall have the authority (but not the obligation) to determine the interpretation and applicability of Applicable Law to any Grantee or any Awards. No member of the Committee or the Board shall be liable to any Grantee for any action taken or determination made in good faith with respect to this Plan or any Award granted hereunder.

 

3.6. Any officer or authorized signatory of the Company shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided such person has apparent authority with respect to such matter, right, obligation, determination or election. Such person or authorized signatory shall not be liable to any Grantee for any action taken or determination made in good faith with respect to this Plan or any Award granted hereunder.

 

4.

ELIGIBILITY.

 

Awards may be granted to Service Providers of the Company or any Affiliate thereof, taking into account, at the Committee’s discretion and without an obligation to do so, the qualification under each tax regime pursuant to which such Awards are granted, subject to the limitation on the granting of Incentive Stock Options set forth in Section ‎8.1. A person who has been granted an Award hereunder may be granted additional Awards, if the Committee shall so determine, subject to the limitations herein. However, eligibility in accordance with this Section ‎4 shall not entitle any person to be granted an Award, or, having been granted an Award, to be granted an additional Award.

 

 

Awards may differ in number of Shares covered thereby, the terms and conditions applying to them or on the Grantees or in any other respect (including, that there should not be any expectation (and it is hereby disclaimed) that a certain treatment, interpretation or position granted to one shall be applied to the other, regardless of whether or not the facts or circumstances are the same or similar).

 

5.

SHARES.

 

5.1. The maximum aggregate number of Shares that may be issued pursuant to Awards under this Plan (the “Pool”) shall be the sum of (a) [●]¹ Shares plus (and without the need to further amend the Plan), (b) on January 1, 2026 and on January 1^st of each calendar year thereafter through and including January 1, 2035, a number of Shares equal to the lesser of: (i) five percent (5%) of the total number of Shares outstanding as of the end of the last day of the immediately preceding calendar year, and (ii) such smaller amount of Shares as is determined by the Board, if so determined prior to the January 1^st of the calendar year in which the increase will occur, plus (c) any Shares underlying awards under the Prior Plan(s) as of the Effective Date which, following the Effective Date, become available for issuance under the Plan pursuant to Section 5.2 below, in all events subject to adjustment as provided in Section 14.1. Notwithstanding the foregoing, the total number of Shares that may be issued pursuant to Incentive Stock Options granted under this Plan shall be [●], subject to adjustment as provided in Section 14.1. The Board may, at its discretion, reduce the number of Shares that may be issued pursuant to Awards under this Plan, at any time (provided that such reduction does not derogate from any issuance of Shares in respect of Awards then outstanding).

 

5.2. Any Shares (a) underlying an Award granted hereunder or an award granted under the Company’s Employee Share Option Plan (2007) (the “Prior Plan”) that has expired, or was cancelled, terminated, forfeited, or settled in cash in lieu of issuance of Shares, for any reason, without having been exercised; (b) if permitted by the Company, tendered to pay the Exercise Price of an Award (or the exercise price or other purchase price of any option or other award under the Prior Plan(s)), or withholding tax obligations with respect to an Award (or any awards under the Prior Plan(s)); or (c) if permitted by the Company, subject to an Award (or any award under the Prior Plan(s)) that are not delivered to a Grantee because such Shares are withheld to pay the Exercise Price of such Award (or any award under the Prior Plan(s)), or withholding tax obligations with respect to such Award (or such other award) shall automatically, and without any further action on the part of the Company or any Grantee, again be available for grant of Awards and for issuance upon exercise or (if applicable) vesting thereof for the purposes of this Plan (unless this Plan shall have been terminated), unless the Board determines otherwise. Awards that may only be settled in cash shall not count against the Pool. Such Shares may be, in whole or in part, authorized but unissued Shares, (and, subject to obtaining a ruling as it applies to 102 Awards) treasury shares (dormant shares) or otherwise Shares that shall have been or may be repurchased by the Company (to the extent permitted pursuant to Applicable Law).

 

5.3. Unless determined otherwise by the Board or the Committee, any Shares under the Pool that are not subject to outstanding or exercised Awards at the termination of this Plan shall cease to be reserved for the purpose of this Plan.

 

5.4. From and after the Effective Date, no further grants or awards shall be made under the Prior Plan(s); however, Awards made under the Prior Plan(s) before the Effective Date shall continue in effect in accordance with their terms.

 

1	7.5% of share capital calculated immediately after the closing of the offering

 

 

6.

TERMS AND CONDITIONS OF AWARDS.

 

Each Award granted pursuant to this Plan shall be evidenced by a written or electronic agreement between the Company and the Grantee or a written or electronic notice delivered by the Company (the “Award Agreement”), in substantially such form or forms and containing such terms and conditions, as the Committee shall from time to time approve. The Award Agreement shall comply with and be subject to the following general terms and conditions and the provisions of this Plan (except for any provisions applying to Awards under different tax regimes), unless otherwise specifically provided in such Award Agreement, or the terms referred to in other Sections of this Plan applying to Awards under such applicable tax regimes, or terms prescribed by Applicable Law. Award Agreements need not be in the same form and may differ in the terms and conditions included therein.

 

6.1. Number of Shares. Each Award Agreement shall state the number of Shares covered by the Award.

 

6.2. Type of Award. Each Award Agreement may state the type of Award granted thereunder, provided that the tax treatment of any Award, whether or not stated in the Award Agreement, shall be as determined in accordance with Applicable Law.

 

6.3. Exercise Price. Each Award Agreement shall state the Exercise Price, if applicable. Subject to Sections ‎3, ‎7.2 and ‎8.2 and to the foregoing, the Committee may reduce the Exercise Price of any outstanding Award, on terms and subject to such conditions as it deems advisable. The Exercise Price shall also be subject to adjustment as provided in Section ‎14 hereof. The Exercise Price of any Award granted to a Grantee who is subject to U.S. federal income tax shall be determined in accordance with Section 409A of the Code, in accordance with Section ‎7.2.

 

6.4. Manner of Exercise.

 

6.4.1  An Award may be exercised, as to any or all Shares as to which the Award has become exercisable, (a) by written notice delivered in person or by mail (or such other methods of delivery prescribed by the Company) to the stock plan administrator designated by the Company or to such other person as determined by the Committee, (b) by way of an exercise order submitted via the online service operated and maintained by the Company or any of its service providers, or (c) or in any other manner as the Committee shall prescribe from time to time, specifying the number of Shares with respect to which the Award is being exercised (which may be equal to or lower than the aggregate number of Shares that have become exercisable at such time, subject to the last sentence of this Section), accompanied by payment of the aggregate Exercise Price for such Shares in the manner specified in the following sentence. The Exercise Price shall be paid in full with respect to each Share, at the time of exercise and as a condition therefor, either (i) in cash, (ii) if the Company’s shares are listed for trading on any securities exchange or over-the-counter market, and if the Committee so determines, all or part of the Exercise Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company or the Trustee, (iii) if the Company’s shares are listed for trading on any securities exchange or over-the-counter market, and if the Committee so determines, all or part of the Exercise Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all or part of the loan proceeds to the Company or the Trustee, (iv) by applying the Cashless Exercise Mechanism set forth in Section ‎6.4.3 below, or (v) in such other manner as the Committee shall determine, which may include procedures for cashless exercise.

 

6.4.2  The application of Cashless Exercise Mechanism with respect to any 102 Awards shall be subject to obtaining a ruling from the ITA, to the extent required by Applicable Law.

 

 

6.4.3  Unless otherwise determined by the Committee, any and all Options (other than Incentive Stock Options) may be exercised using a cashless exercise mechanism, in which case the number of the Shares to be issued by the Company upon such exercise shall be calculated pursuant to the following formula (the “Cashless Exercise Mechanism”):

 

 

Where:	X =	the number of Shares to be issued to the Grantee.
	Y =	the number of Shares, as adjusted to the date of such calculation, underlying the number of Options being exercised.
	A =	the Fair Market Value of one Share at the exercise date.
	B =	the Exercise Price of the Options being exercised.
Upon the completion of the calculation, if X is a negative number, then X shall be deemed to equal 0 (zero).

 

6.5. Term and Vesting of Awards.

 

6.5.1  Each Award Agreement shall provide the vesting schedule for the Award as determined by the Committee. The Committee shall have the authority to determine the vesting schedule and accelerate the vesting of any outstanding Award and remove any restrictions thereupon at such time and under such circumstances as it, in its sole discretion, deems appropriate.

 

6.5.2  The Award Agreement may contain performance goals and measurements (which, in case of 102 Trustee Awards, may, if then required, be subject to obtaining a specific tax ruling or determination from the ITA), and the provisions with respect to any Award need not be the same as the provisions with respect to any other Award. Such performance goals may include, but are not limited to, revenues, sales, operating income, earnings before interest and taxes, return on investment, earnings per share, share trading price and performance hurdles or targets, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee. The Committee may adjust performance goals pursuant to Awards previously granted to take into account changes in law and accounting and tax rules and to make such adjustments as the Committee deems necessary or appropriate to reflect the inclusion or the exclusion of the impact of extraordinary or unusual items, events or circumstances.

 

6.5.3  The Exercise Period of an Award will be ten (10) years from the date of grant of the Award, unless otherwise determined by the Committee and stated in the Award Agreement, but subject to the vesting provisions described above and the early termination provisions set forth in Section ‎6.6 hereof. At the expiration of the Exercise Period, any Award, or any part thereof, that has not been exercised within the term of the Award and the Shares covered thereby not paid for in accordance with this Plan and the Award Agreement shall terminate and become null and void, and all interests and rights of the Grantee in and to the same shall expire.

 

 

6.6. Termination.

 

6.6.1  Unless otherwise determined by the Committee, and subject to this Section ‎6.6 hereof, an Award may not be exercised unless the Grantee was, since the date of grant of the Award throughout the vesting dates, and is then (at the time of exercise), a Service Provider.

 

6.6.2  Except as otherwise determined by the Committee or provided in an Award Agreement, in the event that the employment or service of a Grantee terminates and the Grantee is no longer a Service Provider, all Awards of such Grantee that are unvested at the time of such termination shall terminate on the date of such termination, and all Awards of such Grantee that are vested and exercisable at the time of such termination shall be settled in accordance with their terms and Options and stock appreciation rights may be exercised up to ninety (90) days after the date of such termination (or such different period as the Committee shall prescribe, in general or on a case-by-case basis), but in any event no later than the date of expiration of the Award’s term as set forth in the Award Agreement or pursuant to this Plan, except as set forth below in Section 6.6.3 and Section 6.6.4.

 

6.6.3  Notwithstanding Section ‎6.6.2, if the Company (or its Subsidiary or other Affiliate thereof, as applicable) shall have terminated the Grantee’s employment or service for Cause (as defined below) (whether the facts or circumstances that constitute such Cause occur prior to or after termination of employment or service), or if facts or circumstances arise or are discovered with respect to the Grantee that would have constituted Cause, then all Awards theretofore granted to such Grantee (whether vested or not) shall terminate and be subject to recoupment by the Company on the date of such termination (or on such subsequent date on which such facts or circumstances arise or are discovered, as the case may be) unless otherwise determined by the Committee, and any Shares issued upon exercise or (if applicable) vesting of Awards (including other Shares or securities issued or distributed with respect thereto, and including the gross amount of any proceeds, gains or other economic benefit the Grantee actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award), whether held by the Grantee or by the Trustee for the Grantee’s benefit, shall be deemed to be irrevocably offered for sale to the Company, any of its Affiliates or any person designated by the Company to purchase, at the Company’s election and subject to Applicable Law, either for no consideration, for the par value of such Shares (if such Shares bear a par value) or against payment of the Exercise Price previously received by the Company for such Shares upon their issuance, as the Committee deems fit, upon written notice to the Grantee at any time prior to, at or after the Grantee’s termination of employment or service. Such Shares or other securities shall be sold and transferred within 30 days from the date of the Company’s notice of its election to exercise its right. If the Grantee fails to transfer such Shares or other securities to the Company, the Company, at the decision of the Committee, shall be entitled to forfeit or repurchase such Shares and to authorize any person to execute on behalf of the Grantee any document necessary to effect such transfer, whether or not the share certificates are surrendered. The Company shall have the right and authority to effect the above either by, subject to Applicable Law: (i) repurchasing all of such Shares or other securities held by the Grantee or by the Trustee for the benefit of the Grantee, or designate the purchaser of all or any part of such Shares or other securities, for the Exercise Price paid for such Shares, the par value of such Shares (if such Shares bear a par value) or for no payment or consideration whatsoever, as the Committee deems fit; (ii) forfeiting all or any part of such Shares or other securities; (iii) redeeming all or any part of such Shares or other securities, for the Exercise Price paid for such Shares, the par value of such Shares (if such Shares bear a par value) or for no payment or consideration whatsoever, as the Committee deems fit; (iv) taking action in order to have all or any part of such Shares or other securities converted into deferred shares entitling their holder only to their par value (if such Shares bear a par value) upon liquidation of the Company; or (v) taking any other action which may be required in order to achieve similar results, including requiring the Grantee to repay to the Company in cash the Fair Market Value of such Shares or other securities as of the date of the Company’s notice of its election to exercise its rights under this Section 6.6.3; all as shall be determined by the Committee, at its sole and absolute discretion, and the Grantee is deemed to irrevocably empower the Company or any person which may be designated by it to take any action by, in the name of or on behalf of the Grantee to comply with and give effect to such actions (including, voting such shares, filling in, signing and delivering share transfer deeds, etc.).

 

 

6.7. If a Grantee shall die while employed by, or performing service for, the Company or any of its Affiliates, or within the ninety (90) period (or such longer period of time as determined by the Board, in its discretion) after the date of termination of such Grantee’s employment or service (or within such different period as the Committee may have provided pursuant to Section 6.6 hereof), or if the Grantee’s employment or service with the Company or any of its Affiliates shall terminate by reason of Disability, all Options and stock appreciation rights theretofore granted to such Grantee may (to the extent otherwise vested and exercisable and unless earlier terminated in accordance with their terms) be exercised by the Grantee or by the Grantee’s estate or by a person who acquired the legal right to exercise such Awards by bequest or inheritance, or by a person who acquired the legal right to exercise such Awards in accordance with applicable law in the case of Disability of the Grantee, as the case may be, at any time within one (1) year (or such longer period of time as determined by the Committee, in its discretion) after the death or Disability of the Grantee (or such different period as the Committee shall prescribe), but in any event no later than the date of expiration of the Award’s term as set forth in the Award Agreement or pursuant to this Plan. In the event that an Options and stock appreciation rights granted hereunder shall be exercised as set forth above by any person other than the Grantee, written notice of such exercise shall be accompanied by a certified copy of letters testamentary or proof satisfactory to the Committee of the right of such person to exercise such Award.

 

6.7.1  Notwithstanding anything to the contrary, the Committee, in its absolute discretion, may, on such terms and conditions as it may determine appropriate, extend the periods for which Awards held by any Grantee may continue to vest and be exercisable or accelerate the vesting and exercisability of Awards in whole or in part, subject to Section 409A of the Code for Grantees who are United States taxpayers and provided that for all Grantees, Options and stock appreciation rights may not be exercisable after the maximum term specified in the Plan; it being clarified that such Awards may lose their entitlement to certain tax benefits under Applicable Law (including, without limitation, qualification of an Award as an Incentive Stock Option) as a result of the modification of such Awards and/or in the event that the Award is exercised beyond the later of: (i) ninety (90) days after the date of termination of the employment or service relationship; or (ii) the applicable period under Section 6.6.4 above with respect to a termination of the employment or service relationship because of the death or Disability of a Grantee.

 

6.7.2  For purposes of this Plan:

 

6.7.2.1 A termination of employment or service relationship of a Grantee shall not be deemed to occur (except to the extent required by the Code with respect to the Incentive Stock Option status of an Option) in case of (i) a transition or transfer of a Grantee among the Company and its Affiliates, (ii) a change in the capacity in which the Grantee is employed or renders service to the Company or any of its Affiliates or a change in the identity of the employing or engagement entity among the Company and its Affiliates, provided, in case of the foregoing clauses (i) and (ii) above, that the Grantee has remained continuously employed by and/or in the service of the Company and its Affiliates since the date of grant of the Award and throughout the vesting period; or (iii) if the Grantee takes any authorized leave.

 

 

6.7.2.2 An entity or an Affiliate thereof assuming an Award or issuing in substitution thereof in a transaction to which Section 424(a) of the Code applies or in a Merger/Sale in accordance with Section ‎14 shall be deemed as an Affiliate of the Company for purposes of this Section ‎6.6, unless the Committee determines otherwise.

 

6.7.2.3 In the case of a Grantee whose principal employer or service recipient is a Subsidiary or other Affiliate thereof, the Grantee’s employment or service relationship shall also be deemed terminated for purposes of this Section ‎6.6 as of the date on which such principal employer or service recipient ceases to be a Subsidiary or other Affiliate thereof.

 

6.7.2.4 The term “Cause” shall mean (irrespective of, and in addition to, any definition included in any other agreement or instrument applicable to the Grantee, and unless otherwise determined by the Committee) any of the following: (i) any theft, fraud, embezzlement, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, falsification of any documents or records of the Company or any of its Affiliates, felony or similar act by the Grantee (whether or not related to the Grantee’s relationship with the Company); (ii) an act of moral turpitude by the Grantee, or any act that causes significant injury to, or is otherwise adversely affecting, the reputation, business, assets, operations or business relationship of the Company (or a Subsidiary or other Affiliate thereof, when applicable); (iii) any breach by the Grantee of any material agreement with or of any material duty of the Grantee to the Company or any Subsidiary or other Affiliate thereof (including breach of confidentiality, non-disclosure, non-use non-competition or non-solicitation covenants towards the Company or any of its Affiliates) or failure to abide by code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct), or repeated and unreasonable refusal to carry out a reasonable directive of the Company or of Grantee’s supervisor which involves the business of the Company or its Affiliate and was capable of being lawfully performed; (iv) any act which constitutes a breach of a Grantee’s fiduciary duty towards the Company or a Subsidiary or other Affiliate thereof, including disclosure of confidential or proprietary information thereof or acceptance or solicitation to receive unauthorized or undisclosed benefits, irrespective of their nature, or funds, or promises to receive either, from individuals, consultants or corporate entities with whom the Company or a Subsidiary or other Affiliate thereof conducts business; (v) the Grantee’s unauthorized use, misappropriation, destruction, or diversion of any tangible or intangible asset or corporate opportunity of the Company or any of its Affiliates (including, without limitation, the improper use or disclosure of confidential or proprietary information); or (vi) any circumstances that constitute grounds for termination for cause under the Grantee’s employment or service agreement with the Company or Affiliate, to the extent applicable or (vi) any conduct (other than conduct in good faith) reasonably determined by the Board to be materially detrimental to the Company. For the avoidance of doubt, the determination as to whether a termination is for Cause for purposes of this Plan, shall be made in good faith by the Committee and shall be final and binding on the Grantee.

 

 

6.8. Securities Law Restrictions. Except as otherwise provided in the applicable Award Agreement or other agreement between the Service Provider and the Company, if the exercise of an Award following the termination of the Service Provider’s employment or service (other than for Cause) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under the Securities Act or equivalent requirements under equivalent laws of other applicable jurisdictions, then the Award shall remain exercisable and terminate on the earlier of (i) the expiration of a period of three (3) months (or such longer period of time as determined by the Committee, in its discretion) after the termination of the Service Provider’s employment or service during which the exercise of the Award would not be in such violation, or (ii) the expiration of the term of the Award as set forth in the Award Agreement or pursuant to this Plan. In addition, unless otherwise provided in a Grantee’s Award Agreement, if the sale of any Shares received upon exercise or (if applicable) vesting of an Award following the termination of the Grantee’s employment or service (other than for Cause) would violate the Company’s insider trading policy, then the Award shall terminate on the earlier of (i) the expiration of a period equal to the applicable post-termination exercise period after the termination of the Grantee’s employment or service during which the exercise of the Award would not be in violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Award as set forth in the applicable Award Agreement or pursuant to this Plan.

 

6.9. Other Provisions. The Award Agreement evidencing Awards under this Plan shall contain such other terms and conditions not inconsistent with this Plan as the Committee may determine, at or after the date of grant, including provisions in connection with the restrictions on transferring the Awards or Shares covered by such Awards, which shall be binding upon the Grantees and any purchaser, assignee or transferee of any Awards, and other terms and conditions as the Committee shall deem appropriate.

 

7.

NONQUALIFIED STOCK OPTIONS.

 

Awards granted pursuant to this Section ‎7 are intended to constitute Nonqualified Stock Options and shall be subject to the general terms and conditions specified in Section ‎6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Awards under different tax laws or regulations. In the event of any inconsistency or contradictions between the provisions of this Section ‎7 and the other terms of this Plan, this Section ‎7 shall prevail. However, if for any reason the Awards granted pursuant to this Section ‎7 (or portion thereof) does not qualify as an Incentive Stock Option, then, to the extent of such non-qualification, such Option (or portion thereof) shall be regarded as a Nonqualified Stock Option granted under this Plan. In no event will the Board, the Company or any Parent or Subsidiary or any of their respective employees or directors have any liability to Grantee (or any other person) due to the failure of the Option to qualify for any reason as an Incentive Stock Option.

 

7.1. Certain Limitations on Eligibility for Nonqualified Stock Options. Nonqualified Stock Options may not be granted to a Service Provider who is deemed to be a resident of the United States for purposes of taxation or who is otherwise subject to United States federal income tax unless the Shares underlying such Options constitute “service recipient stock” under Section 409A of the Code or unless such Options comply with the payment requirements of Section 409A of the Code.

 

7.2. Exercise Price. The Exercise Price of a Nonqualified Stock Option shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option unless the Committee specifically indicates that the Awards will have a lower Exercise Price and the Award complies with Section 409A of the Code or such Option is granted to a Grantee who is not a U.S. taxpayer. Notwithstanding the foregoing, a Nonqualified Stock Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Award is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of that complies with Section 424(a) of the Code 1.409A-1(b)(5)(v)(D) of the U.S. Treasury Regulations or any successor guidance.

 

 

8.

INCENTIVE STOCK OPTIONS.

 

Awards granted pursuant to this Section ‎8 are intended to constitute Incentive Stock Options and shall be granted subject to the following special terms and conditions, the general terms and conditions specified in Section ‎6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Awards under different tax laws or regulations. In the event of any inconsistency or contradictions between the provisions of this Section ‎8 and the other terms of this Plan, this Section ‎8 shall prevail.

 

8.1. Eligibility for Incentive Stock Options. Incentive Stock Options may be granted only to Employees of the Company, or to Employees of a Parent or Subsidiary, determined as of the date of grant of such Options. An Incentive Stock Option granted to a prospective Employee upon the condition that such person become an Employee shall be deemed granted effective on the date such person commences employment, with an exercise price determined as of such date in accordance with Section ‎8.2.

 

8.2. Exercise Price. The Exercise Price of an Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value of the Shares covered by the Awards on the date of grant of such Option or such other price as may be determined pursuant to the Code. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than the minimum exercise price set forth above if such Award is granted pursuant to an assumption or substitution for another option in a manner that complies with the provisions of Section 424(a) of the Code.

 

8.3. Date of Grant. Notwithstanding any other provision of this Plan to the contrary, no Incentive Stock Option may be granted under this Plan after 10 years from the date this Plan is adopted, or the date this Plan is approved by the shareholders, whichever is earlier.

 

8.4. Exercise Period. No Incentive Stock Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Award, subject to Section ‎8.6. No Incentive Stock Option granted to a prospective Employee may become exercisable prior to the date on which such person commences employment.

 

8.5. $100,000 Per Year Limitation. The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of the Shares with respect to which all Incentive Stock Options granted under this Plan and all other “incentive stock option” plans of the Company, or of any Parent or Subsidiary, become exercisable for the first time by each Grantee during any calendar year shall not exceed one hundred thousand United States dollars ($100,000) with respect to such Grantee. To the extent that the aggregate Fair Market Value of Shares with respect to which such Incentive Stock Options and any other such incentive stock options are exercisable for the first time by any Grantee during any calendar year exceeds one hundred thousand United States dollars ($100,000), such options shall be treated as Nonqualified Stock Options. The foregoing shall be applied by taking options into account in the order in which they were granted. If the Code is amended to provide for a different limitation from that set forth in this Section ‎8.5, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Awards as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonqualified Stock Option in part by reason of the limitation set forth in this Section ‎8.5, the Grantee may designate which portion of such Option the Grantee is exercising. In the absence of such designation, the Grantee shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion may be issued upon the exercise of the Option.

 

 

8.6. Ten Percent Shareholder. In the case of an Incentive Stock Option granted to a Ten Percent Shareholder, notwithstanding the foregoing provisions of this Section ‎8, (i) the Exercise Price shall not be less than one hundred and ten percent (110%) of the Fair Market Value of a Share on the date of grant of such Incentive Stock Option, and (ii) the Exercise Period shall not exceed five (5) years from the effective date of grant of such Incentive Stock Option.

 

8.7. Payment of Exercise Price. Each Award Agreement evidencing an Incentive Stock Option shall state each alternative method by which the Exercise Price thereof may be paid.

 

8.8. Leave of Absence. A Grantee’s employment shall not be deemed to have terminated if the Grantee takes a leave of absence which was authorized by the Company. Subject to compliance with Applicable Law, including if applicable, Section 409A of the Code, the Committee may adopt rules and make determinations on how a leave of absence will impact an Award, including, without limitation, tolling the vesting schedule or treating such leave of absence as a termination of employment or other service (such rules may be applied retroactively).

 

8.9. Exercise Following Termination. Notwithstanding anything else in this Plan to the contrary, Incentive Stock Options that are not exercised within three (3) months following termination of the Grantee’s employment with the Company or its Parent or Subsidiary or with a corporation (or a parent or subsidiary of such corporation) issuing or assuming an Option of such Grantee in a transaction to which Section 424(a) of the Code applies, or within one year in case of termination of the Grantee’s employment with the Company or its Parent or Subsidiary due to a Disability (within the meaning of Section 22(e)(3) of the Code), shall be deemed to be Nonqualified Stock Options.

 

8.10. Notice to Company of Disqualifying Disposition. Each Grantee who receives an Incentive Stock Option must agree to notify the Company in writing immediately after the Grantee makes a Disqualifying Disposition of any Shares received pursuant to the exercise of Incentive Stock Options. A “Disqualifying Disposition” is any disposition (including any sale) of such Shares before the later of (i) two years after the date the Grantee was granted the Incentive Stock Option, or (ii) one year after the date the Grantee acquired Shares by exercising the Incentive Stock Option. If the Grantee dies before such Shares are sold, these holding period requirements do not apply and no disposition of the Shares will be deemed a Disqualifying Disposition.

 

9.

102 AWARDS.

 

Awards granted pursuant to this Section ‎9 are intended to constitute 102 Awards and shall be granted subject to the following special terms and conditions, the general terms and conditions specified in Section ‎6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Awards under different tax laws or regulations. In the event of any inconsistency or contradictions between the provisions of this Section ‎9 and the other terms of this Plan, this Section ‎9 shall prevail.

 

 

9.1. Tracks. Awards granted pursuant to this Section ‎9 are intended to be granted pursuant to Section 102 of the Ordinance pursuant to either (i) Section 102(b)(2) or (3) thereof (as applicable), under the capital gain track (“102 Capital Gain Track Awards”), or (ii) Section 102(b)(1) thereof under the ordinary income track (“102 Ordinary Income Track Awards”, and together with 102 Capital Gain Track Awards, “102 Trustee Awards”). 102 Trustee Awards shall be granted subject to the special terms and conditions contained in this Section ‎9, the general terms and conditions specified in Section ‎6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Options under different tax laws or regulations.

 

9.2. Election of Track. Subject to Applicable Law, the Company may grant only one type of 102 Trustee Awards at any given time to all Grantees who are to be granted 102 Trustee Awards pursuant to this Plan, and shall file an election with the ITA regarding the type of 102 Trustee Awards it elects to grant before the date of grant of any 102 Trustee Awards (the “Election”). Such Election shall also apply to any other securities, including bonus shares, received by any Grantee as a result of holding the 102 Trustee Awards. The Company may change the type of 102 Trustee Awards that it elects to grant only after the expiration of at least 12 months from the end of the year in which the first grant was made in accordance with the previous Election, or as otherwise provided by Applicable Law. Any Election shall not prevent the Company from granting Awards, pursuant to Section 102(c) of the Ordinance without a Trustee (“102 Non-Trustee Awards”).

 

9.3. Eligibility for Awards. Subject to Applicable Law, 102 Awards may only be granted to an “employee” within the meaning of Section 102(a) of the Ordinance (which as of the date of the adoption of this Plan means (i) individuals employed by an Israeli company being the Company or any of its Affiliates, and (ii) individuals who are serving and are engaged personally (and not through an entity) as “office holders” by such an Israeli company), but may not be granted to a Controlling Shareholder (“Eligible 102 Grantees”). Eligible 102 Grantees may receive only 102 Awards, which may either be granted to a Trustee or granted under Section 102 of the Ordinance without a Trustee.

 

9.4. 102 Award Grant Date.

 

9.4.1  Each 102 Award will be deemed granted on the date determined by the Committee, subject to Section ‎9.4.2, provided that (i) the Grantee has signed all documents required by the Company or pursuant to Applicable Law, and (ii) with respect to 102 Trustee Award, the Company has provided all applicable documents to the Trustee in accordance with the guidelines published by the ITA, and if an agreement is not signed and delivered by the Grantee within 90 days from the date determined by the Committee (subject to Section ‎9.4.2), then such 102 Trustee Award shall be deemed granted on such later date as such agreement is signed and delivered and on which the Company has provided all applicable documents to the Trustee in accordance with the guidelines published by the ITA. In the case of any contradiction, this provision and the date of grant determined pursuant hereto shall supersede and be deemed to amend any date of grant indicated in any corporate resolution or Award Agreement.

 

9.4.2  Unless otherwise permitted by the Ordinance, any grants of 102 Trustee Awards that are made on or after the date of the adoption of this Plan or an amendment to this Plan, as the case may be, that may become effective only at the expiration of thirty (30) days after the filing of this Plan or any amendment thereof (as the case may be) with the ITA in accordance with the Ordinance shall be conditional upon the expiration of such 30-day period, such condition shall be read and is incorporated by reference into any corporate resolutions approving such grants and into any Award Agreement evidencing such grants (whether or not explicitly referring to such condition), and the date of grant shall be at the expiration of such 30-day period, whether or not the date of grant indicated therein corresponds with this Section. In the case of any contradiction, this provision and the date of grant determined pursuant hereto shall supersede and be deemed to amend any date of grant indicated in any corporate resolution or Award Agreement.

 

 

9.5. 102 Trustee Awards.

 

9.5.1  Each 102 Trustee Award, each Share issued pursuant to the exercise of any 102 Trustee Award, and any rights granted thereunder, including bonus shares, shall be issued to and registered in the name of the Trustee and shall be held in trust for the benefit of the Grantee for the requisite period prescribed by the Ordinance (the “Required Holding Period”). In the event that the requirements under Section 102 of the Ordinance to qualify an Award as a 102 Trustee Award are not met, then the Award may be treated as a 102 Non-Trustee Award or 3(9) Award, all in accordance with the provisions of the Ordinance. After expiration of the Required Holding Period, the Trustee may release such 102 Trustee Awards and any such Shares, provided that (i) the Trustee has received an acknowledgment from the ITA that the Grantee has paid any applicable taxes due pursuant to the Ordinance, or (ii) the Trustee and/or the Company and/or the Employer withholds all applicable taxes and compulsory payments due pursuant to the Ordinance arising from the 102 Trustee Awards and/or any Shares issued upon exercise or (if applicable) vesting of such 102 Trustee Awards. The Trustee shall not release any 102 Trustee Awards or Shares issued upon exercise or (if applicable) vesting thereof prior to the payment in full of the Grantee’s tax and compulsory payments arising from such 102 Trustee Awards and/or Shares or the withholding referred to in (ii) above.

 

9.5.2  Each 102 Trustee Award shall be subject to the relevant terms of the Ordinance, the Rules and any determinations, rulings or approvals issued by the ITA, which shall be deemed an integral part of the 102 Trustee Awards and shall prevail over any term contained in this Plan or Award Agreement that is not consistent therewith. Any provision of the Ordinance, the Rules and any determinations, rulings or approvals by the ITA not expressly specified in this Plan or Award Agreement that are necessary to receive or maintain any tax benefit pursuant to Section 102 of the Ordinance shall be binding on the Grantee. Any Grantee granted a 102 Trustee Awards shall comply with the Ordinance and the terms and conditions of the trust agreement entered into between the Company and the Trustee. The Grantee shall execute any and all documents that the Company and/or its Affiliates and/or the Trustee determine from time to time to be necessary in order to comply with the Ordinance and the Rules.

 

9.5.3  During the Required Holding Period, the Grantee shall not release from trust or sell, assign, transfer or give as collateral, the Shares issuable upon the exercise or (if applicable) vesting of a 102 Trustee Awards and/or any securities issued or distributed with respect thereto, until the expiration of the Required Holding Period. Notwithstanding the above, if any such sale, release or other action occurs during the Required Holding Period it may result in adverse tax consequences to the Grantee under Section 102 of the Ordinance and the Rules, which shall apply to and shall be borne solely by such Grantee. Subject to the foregoing, the Trustee may, pursuant to a written request from the Grantee, but subject to the terms of this Plan, release and transfer such Shares to a designated third party, provided that both of the following conditions have been fulfilled prior to such release or transfer: (i) payment has been made to the ITA of all taxes and compulsory payments required to be paid upon the release and transfer of the Shares, and confirmation of such payment has been received by the Trustee and the Company, and (ii) the Trustee has received written confirmation from the Company that all requirements for such release and transfer have been fulfilled according to the terms of the Company’s corporate documents, any agreement governing the Shares, this Plan, the Award Agreement and any Applicable Law.

 

 

9.5.4  If a 102 Trustee Award is exercised or (if applicable) vested, the Shares issued upon such exercise or (if applicable) vesting shall be issued in the name of the Trustee for the benefit of the Grantee.

 

9.5.5  Upon or after receipt of a 102 Trustee Award, if required, the Grantee may be required to sign an undertaking to release the Trustee from any liability with respect to any action or decision duly taken and executed in good faith by the Trustee in relation to this Plan, or any 102 Trustee Awards or Share granted to such Grantee thereunder.

 

9.6. 102 Non-Trustee Awards. The foregoing provisions of this Section ‎9 relating to 102 Trustee Awards shall not apply with respect to 102 Non-Trustee Awards, which shall, however, be subject to the relevant provisions of Section 102 of the Ordinance and the applicable Rules. The Committee may determine that 102 Non-Trustee Awards, the Shares issuable upon the exercise or (if applicable) vesting of a 102 Non-Trustee Awards and/or any securities issued or distributed with respect thereto, shall be allocated or issued to the Trustee, who shall hold such 102 Non-Trustee Awards and all accrued rights thereon (if any), in trust for the benefit of the Grantee and/or the Company, as the case may be, until the full payment of tax arising from the 102 Non-Trustee Awards, the Shares issuable upon the exercise or (if applicable) vesting of a 102 Non-Trustee Awards and/or any securities issued or distributed with respect thereto. The Company may choose, alternatively, to force the Grantee to provide it with a guarantee or other security, to the satisfaction of each of the Trustee and the Company, until the full payment of the applicable taxes.

 

9.7. Written Grantee Undertaking. To the extent and with respect to any 102 Trustee Award, and as required by Section 102 of the Ordinance and the Rules, by virtue of the receipt of such Award, the Grantee is deemed to have provided, undertaken and confirmed the following written undertaking (and such undertaking is deemed incorporated into any documents signed by the Grantee in connection with the employment or service of the Grantee and/or the grant of such Award), which undertaking shall be deemed to apply and relate to all 102 Trustee Awards granted to the Grantee, whether under this Plan or other plans maintained by the Company, and whether prior to or after the date hereof.

 

9.7.1  The Grantee shall comply with all terms and conditions set forth in Section 102 of the Ordinance with regard to the “Capital Gain Track” or the “Ordinary Income Track”, as applicable, and the applicable rules and regulations promulgated thereunder, as amended from time to time;

 

9.7.2  The Grantee is familiar with, and understands the provisions of, Section 102 of the Ordinance in general, and the tax arrangement under the “Capital Gain Track” or the “Ordinary Income Track” in particular, and its tax consequences; the Grantee agrees that the 102 Trustee Awards and Shares that may be issued upon exercise or (if applicable) vesting of the 102 Trustee Awards (or otherwise in relation to the 102 Trustee Awards), will be held by the Trustee appointed pursuant to Section 102 of the Ordinance for at least the duration of the “Holding Period” (as such term is defined in Section 102) under the “Capital Gain Track” or the “Ordinary Income Track”, as applicable. The Grantee understands that any release of such 102 Trustee Awards or Shares from trust, or any sale of the Share prior to the termination of the Holding Period, as defined above, will result in taxation at marginal tax rate, in addition to deductions of appropriate social security, health tax contributions or other compulsory payments; and

 

 

9.7.3  The Grantee agrees to the trust agreement signed between the Company, the Employer and the Trustee appointed pursuant to Section 102 of the Ordinance.

 

10.

3(i) AWARDS.

 

Awards granted pursuant to this Section ‎10 are intended to constitute 3(i) Awards and shall be granted subject to the general terms and conditions specified in Section ‎6 hereof and other provisions of this Plan, except for any provisions of this Plan applying to Awards under different tax laws or regulations. In the event of any inconsistency or contradictions between the provisions of this Section ‎10 and the other terms of this Plan, this Section ‎10 shall prevail.

 

10.1. To the extent required by the Ordinance or the ITA or otherwise deemed by the Committee to be advisable, the 3(i) Awards and/or any shares or other securities issued or distributed with respect thereto granted pursuant to this Plan shall be issued to the Grantee and shall be supervised by a Trustee nominated by the Committee in accordance with the provisions of the Ordinance or the terms of a trust agreement, as applicable. In such event, the Trustee shall hold such Awards and or other securities issued or distributed with respect thereto in trust, until exercised or (if applicable) vested by the Grantee and the full payment of tax arising therefrom, pursuant to the Company’s instructions from time to time as set forth in a trust agreement, which will have been entered into between the Company and the Trustee. If determined by the Board or the Committee, and subject to such trust agreement, the Trustee shall be responsible for withholding any taxes to which a Grantee may become liable upon issuance of Shares, whether due to the exercise or (if applicable) vesting of Awards.

 

10.2. Shares pursuant to a 3(9) Award shall not be issued, unless the Grantee delivers to the Company payment in cash or by bank check or such other form acceptable to the Committee of all withholding taxes due, if any, on account of the Grantee acquired Shares under the Award or gives other assurance satisfactory to the Committee of the payment of those withholding taxes.

 

11.

RESTRICTED SHARES.

 

The Committee may award Restricted Shares to any eligible Grantee, including under Section 102 of the Ordinance. Each Award of Restricted Shares under this Plan shall be evidenced by a written agreement between the Company and the Grantee (the “Restricted Share Agreement”), in such form as the Committee shall from time to time approve. The Restricted Shares shall be subject to all applicable terms of this Plan, which in the case of Restricted Shares granted under Section 102 of the Ordinance shall include Section ‎9 hereof, and may be subject to any other terms that are not inconsistent with this Plan. The provisions of the various Restricted Shares Agreements entered into under this Plan need not be identical with respect to any two Awards or Grantees. The Restricted Share Agreement shall comply with and be subject to Section ‎6 and the following terms and conditions, unless otherwise specifically provided in such Agreement and not inconsistent with this Plan or Applicable Law:

 

11.1. Purchase Price. Section ‎6.4 shall not apply. Each Restricted Share Agreement shall state an amount of Exercise Price to be paid by the Grantee, if any, in consideration for the issuance of the Restricted Shares and the terms of payment thereof, which may include payment in cash or, subject to the Committee’s approval, by issuance of promissory notes or other evidence of indebtedness on such terms and conditions as determined by the Committee.

 

 

11.2. Restrictions. Restricted Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution (in which case they shall be transferred subject to all restrictions then or thereafter applicable thereto), until such Restricted Shares shall have vested (the period from the date on which the Award is granted until the date of vesting of the Restricted Shares thereunder being referred to herein as the “Restricted Period”). The Committee may also impose such additional or alternative restrictions and conditions on the Restricted Shares, as it deems appropriate, including the satisfaction of performance criteria (which, in case of 102 Trustee Awards, may be subject to obtaining a specific tax ruling or determination from the ITA). Such performance criteria may include, but are not limited to, sales, earnings before interest and taxes, return on investment, earnings per share, share trading price and performance hurdles and targets, any combination of the foregoing or rate of growth of any of the foregoing, as determined by the Committee or pursuant to the provisions of any Company policy required under mandatory provisions of Applicable Law. Certificates for shares issued pursuant to Restricted Share Awards, if issued, shall bear an appropriate legend referring to such restrictions, and any attempt to dispose of any such shares in contravention of such restrictions shall be null and void and without effect. Such certificates may, if so determined by the Committee, be held in escrow by an escrow agent appointed by the Committee, or, if a Restricted Share Award is made pursuant to Section 102 of the Ordinance, by the Trustee. In determining the Restricted Period of an Award the Committee may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded Restricted Shares on successive anniversaries of the date of such Award. To the extent required by the Ordinance or the ITA, the Restricted Shares issued pursuant to Section 102 of the Ordinance shall be issued to the Trustee in accordance with the provisions of the Ordinance and the Restricted Shares shall be held for the benefit of the Grantee for at least the Required Holding Period.

 

11.3. Forfeiture; Repurchase. Subject to such exceptions as may be determined by the Committee, if the Grantee’s continuous employment with or service to the Company or any Affiliate thereof shall terminate (such that Grantee is no longer a Service Provider of either the Company or any Affiliate thereof) for any reason prior to the expiration of the Restricted Period of an Award or prior to the timely payment in full of the Exercise Price of any Restricted Shares, any Restricted Shares remaining subject to vesting or with respect to which the purchase price has not been paid in full, shall thereupon be forfeited, transferred to, and redeemed, repurchased or cancelled by, as the case may be, in any manner as set forth in Section 6.6.3(i) through (v), subject to Applicable Law and the Grantee shall have no further rights with respect to such Restricted Shares.

 

11.4. Ownership. During the Restricted Period the Grantee shall possess all incidents of ownership of such Restricted Shares, subject to Section ‎6.9 and Section ‎11.2, including the right to vote and receive dividends with respect to such Shares. All securities, if any, received by a Grantee with respect to Restricted Shares as a result of any stock split, stock dividend, combination of shares, or other similar transaction shall be subject to the restrictions applicable to the original Award. Notwithstanding anything to the contrary herein, dividends which are paid to the Company’s shareholders prior to the vesting date of any Restricted Shares shall only be paid to the Grantee of such Restricted Shares to the extent the vesting conditions applicable to such Restricted Shares are subsequently satisfied (and any such dividends will be paid no later than March 15 of the calendar year following the calendar year in which the right to the dividend payment becomes nonforfeitable).

 

 

12.

RESTRICTED SHARE UNITS.

 

An RSU is an Award covering a number of Shares that is settled, if vested and (if applicable) exercised, by issuance of those Shares or, in the discretion of the Committee, an amount of cash equal to the aggregate Fair Market Value of the Shares underlying the Award (other than with respect to 102 Trustee Awards). An RSU may be awarded to any eligible Grantee, including under Section 102 of the Ordinance. The Award Agreement relating to the grant of RSUs under this Plan (the “Restricted Share Unit Agreement”), shall be in such form as the Committee shall from time to time approve. The RSUs shall be subject to all applicable terms of this Plan, which in the case of RSUs granted under Section 102 of the Ordinance shall include Section ‎9 hereof, and may be subject to any other terms that are not inconsistent with this Plan. The provisions of the various Restricted Share Unit Agreements entered into under this Plan need not be identical. RSUs may be granted in consideration of a reduction in the recipient’s other compensation.

 

12.1. Exercise Price. No payment of Exercise Price shall be required as consideration for RSUs, unless included in the Award Agreement or as required by Applicable Law, and Section ‎6.4 shall apply, if applicable.

 

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

 

12.3. Settlements of Awards. Settlement of vested RSUs shall be made in the form of Shares or, in the discretion of the Committee, an amount of cash equal to the aggregate Fair Market Value of the Shares underlying the Award (other than with respect to 102 Trustee Awards). Distribution to a Grantee of an amount (or amounts) from settlement of vested RSUs can be deferred to a date after vesting as determined by the Committee. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until the grant of RSUs is settled, the number of Shares underlying such RSUs shall be subject to adjustment pursuant hereto.

 

12.4. Section 409A Restrictions. Notwithstanding anything to the contrary set forth herein, any RSUs granted under this Plan that are not exempt from the requirements of Section 409A of the Code shall contain such restrictions or other provisions so that such RSUs will comply with the requirements of Section 409A of the Code, if applicable to the Grantee. Such restrictions, if any, shall be determined by the Committee and contained in the Restricted Share Unit Agreement evidencing such RSU.

 

13.

OTHER SHARE OR SHARE-BASED AWARDS.

 

13.1. The Committee may grant other Awards under this Plan pursuant to which Shares (which may, but need not, be Restricted Shares pursuant to Section ‎11 hereof), cash (in settlement of Share-based Awards) or a combination thereof, are or may in the future be acquired or received, or Awards denominated in stock units, including units valued on the basis of measures other than market value.

 

13.2. The Committee may also grant stock appreciation rights without the grant of an accompanying option, which rights shall permit the Grantees to receive, at the time of any exercise of such rights, cash equal to the amount by which the Fair Market Value of the Shares in respect to which the right was granted is so exercised exceeds the exercise price thereof. The exercise price of any such stock appreciation right granted to a Grantee who is subject to U.S. federal income tax shall be determined in compliance with Section ‎7.2.

 

 

13.3. Such other Share-based Awards as set forth above may be granted alone, in addition to, or in tandem with any Award of any type granted under this Plan (without any obligation or assurance that that such Share-based Awards will be entitled to tax benefits under Applicable Law or to the same tax treatment as other Awards under this Plan).

 

14.

EFFECT OF CERTAIN CHANGES.

 

14.1. General. In the event of a division or subdivision of the outstanding share capital of the Company, any distribution of bonus shares (stock split), consolidation or combination of share capital of the Company (reverse stock split), reclassification with respect to the Shares or any similar recapitalization events (each, a “Recapitalization”), a merger (including, a reverse merger and a reverse triangular merger), consolidation, amalgamation or like transaction of the Company with or into another corporation, a reorganization (which may include a combination or exchange of shares, spin-off or other corporate divestiture or division, or other similar occurrences, the Committee shall make, without the need for a consent of any holder of an Award, such adjustments as determined by the Committee to be appropriate, in its discretion, in order to adjust (i) the number and class of shares reserved and available for grants of Awards, (ii) the number and class of shares covered by outstanding Awards, (iii) the Exercise Price per share covered by any Award, (iv) the terms and conditions concerning vesting and exercisability and the term and duration of the outstanding Awards, (v) the type or class of security, asset or right underlying the Award (which need not be only that of the Company, and may be that of the surviving corporation or any affiliate thereof or such other entity party to any of the above transactions), and (vi) any other terms of the Award that in the opinion of the Committee should be adjusted. Subject to Applicable Law, any fractional shares resulting from such adjustment shall be treated as determined by the Committee, and in the absence of such determination shall be rounded to the nearest whole share, and the Company shall have no obligation to make any cash or other payment with respect to such fractional shares. No adjustment shall be made by reason of the distribution of subscription rights or rights offering to outstanding shares or other issuance of shares by the Company, unless the Committee determines otherwise. The adjustments determined pursuant to this Section ‎14.1 (including a determination that no adjustment is to be made) shall be final, binding and conclusive.

 

Notwithstanding anything to the contrary included herein, and subject to Applicable Law and the applicable accounting standards, in the event of a distribution of cash dividend by the Company to all holders of Shares, the Committee shall have the authority to determine, without the need for a consent of any holder of an Award, that the Exercise Price of any Award, which is outstanding and unexercised on the record date of such distribution, shall be reduced by an amount equal to the per Share gross dividend amount distributed by the Company, and the Committee may determine that the Exercise Price following such reduction shall be not less than the par value of a Share (if such Shares bear a par value). The application of this Section with respect to any 102 Awards shall be subject to obtaining a ruling from the ITA, to the extent required by applicable law and subject to the terms and conditions of any such ruling.

 

 

14.2. Merger/Sale of Company. In the event of (i) a sale of all or substantially all of the assets of the Company, or a sale (including an exchange) of all or substantially all of the shares of the Company, to any person (as “person” is defined in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof), or a purchase by a shareholder of the Company or by an Affiliate of such shareholder, of all the shares of the Company held by all or substantially all other shareholders or by other shareholders who are not Affiliated with such acquiring party; (ii) a merger (including, a reverse merger and a reverse triangular merger), consolidation, amalgamation or like transaction of the Company with or into another corporation; (iii) a scheme of arrangement for the purpose of effecting such sale, merger, consolidation, amalgamation or other transaction; (iv) approval by the shareholders of the Company of a complete liquidation or dissolution of the Company, (v) Change in Board Event; or (vi) such other transaction or set of circumstances that is determined by the Board, in its discretion, to be a transaction subject to the provisions of this Section ‎14.2 excluding any of the foregoing transactions in clauses (i) through (iv) if the Board determines that such transaction should be excluded from the definition hereof and the applicability of this Section ‎14.2 (each of the foregoing transactions, a “Merger/Sale”), then, without derogating from the general authority and power of the Board or the Committee under this Plan, without the Grantee’s consent and action and without any prior notice requirement, the Committee may make, in its sole and absolute discretion, any determination as to the treatment of Awards including, without limitation, as provided herein:

 

14.2.1 Unless otherwise determined by the Committee, any Award then outstanding shall be assumed or be substituted by the Company, or by the successor corporation in such Merger/Sale or by any parent or Affiliate thereof, as determined by the Committee in its discretion (the “Successor Corporation”), under terms as determined by the Committee or the terms of this Plan applied by the Successor Corporation to such assumed or substituted Awards.

 

For the purposes of this Section ‎14.2.1, the Award shall be considered assumed or substituted if, following a Merger/Sale, the Award confers on the holder thereof the right to purchase or receive, for each Share underlying an Award immediately prior to the Merger/Sale, either (i) the consideration (whether shares or other securities, cash or other property, or rights, or any combination thereof) distributed to or received by holders of Shares in the Merger/Sale for each Share held on the effective date of the Merger/Sale (and if holders were offered a choice or several types of consideration, the type of consideration as determined by the Committee, which need not be the same type for all Grantees), or (ii) regardless of the consideration received by the holders of Shares in the Merger/Sale, solely shares or any type of Awards (or their equivalent) of the Successor Corporation at a value to be determined by the Committee in its discretion, or a certain type of consideration (whether shares or other securities, cash or other property, or rights, or any combination thereof) as determined by the Committee. Any of the consideration referred to in the foregoing clauses (i) and (ii) shall be subject to the same vesting and expiration terms of the Awards applying immediately prior to the Merger/Sale, unless determined by the Committee in its discretion that the consideration shall be subject to different vesting and expiration terms, or other terms, and the Committee may determine that it be subject to other or additional terms. The foregoing shall not limit the Committee’s authority to determine, that in lieu of such assumption or substitution of Awards for Awards of the Successor Corporation, such Award will be substituted for shares or other securities, cash or other property, or rights, or any combination thereof, including as set forth in Section ‎14.2.2 hereof.

 

14.2.2 Regardless of whether or not Awards are assumed or substituted, the Committee may (but shall not be obligated to):

 

14.2.2.1  provide for the Grantee to have the right to exercise the Award in respect of Shares covered by the Award which would otherwise be exercisable or vested, under such terms and conditions as the Committee shall determine, and the cancellation of all unexercised Awards (whether vested or unvested) upon or immediately prior to the closing of the Merger/Sale, unless the Committee provides for the Grantee to have the right to exercise the Award, or otherwise for the acceleration of vesting of such Award, as to all or part of the Shares covered by the Award which would not otherwise be exercisable or vested, under such terms and conditions as the Committee shall determine;

 

 

14.2.2.2  provide for the cancellation of each outstanding Award at or immediately prior to the closing of such Merger/Sale, and if and to what extent payment shall be made to the Grantee of an amount in, shares or other securities of the Company, the acquirer or of a corporation or other business entity which is a party to the Merger/Sale, in cash or other property, in rights, or in any combination thereof, as determined by the Committee to be fair in the circumstances, and subject to such terms and conditions as determined by the Committee. The Committee shall have full authority to select the method for determining the payment (being the intrinsic (“spread”) value of the option, Black-Scholes model or any other method). Inter alia, and without limitation of the following determination being made in other circumstances, the Committee’s determination may provide that payment shall be set to zero if the value of the Shares is determined to be less than the Exercise Price, or in respect of Shares covered by the Award which would not otherwise be exercisable or vested, or that payment may be made only in excess of the Exercise Price; and/or

 

14.2.2.3  provide that the terms of any Award shall be otherwise amended, modified or terminated, as determined by the Committee to be fair in the circumstances.

 

14.2.3 Subject to Applicable Law, the Committee may, determine: (i) that any payments made in respect of Awards shall be made or delayed to the same extent that payment of consideration to the holders of the Shares in connection with the Merger/Sale is made or delayed as a result of escrows, indemnification, earn outs, holdbacks or any other contingencies or conditions; (ii) the terms and conditions applying to the payment made or payable to the Grantees, including participation in escrow, indemnification, releases, earn-outs, holdbacks or any other contingencies; and (iii) that any terms and conditions applying under the applicable definitive transaction agreements shall apply to the Grantees (including, appointment and engagement of a shareholders or sellers representative, payment of fees or other costs and expenses associated with such services, indemnifying such representative, and authorization to such representative within the scope of such representative’s authority in the applicable definitive transaction agreements).

 

14.2.4 The Committee may, determine to suspend the Grantee’s rights to exercise any vested portion of an Award for a period of time prior to the signing or consummation of a Merger/Sale transaction.

 

14.2.5 Without limiting the generality of this Section ‎14, if the consideration in exchange for Awards in a Merger/Sale includes any securities and due receipt thereof by any Grantee (or by the Trustee for the benefit of such Grantee) may require under applicable law (i) the registration or qualification of such securities or of any person as a broker or dealer or agent with respect to such securities; or (ii) the provision to any Grantee of any information under the Securities Act or any other securities laws, then the Committee may determine that the Grantee shall be paid in lieu thereof, against surrender of the Shares or cancellation of any other Awards, an amount in cash or other property, or rights, or any combination thereof, as determined by the Committee to be fair in the circumstances, and subject to such terms and conditions as determined by the Committee. Nothing herein shall entitle any Grantee to receive any form of consideration that such Grantee would be ineligible to receive as a result of such Grantee’s failure to satisfy (in the Committee’s sole determination) any condition, requirement or limitation that is generally applicable to the Company’s shareholders, or that is otherwise applicable under the terms of the Merger/Sale, and in such case, the Committee shall determine the type of consideration and the terms applying to such Grantees.

 

 

14.2.6 Neither the authorities and powers of the Committee under this Section ‎14.2, nor the exercise or implementation thereof, shall (i) be restricted or limited in any way by any adverse consequences (tax or otherwise) that may result to any holder of an Award, and (ii) as, inter alia, being a feature of the Award upon its grant, be deemed to constitute a change or an amendment of the rights of such holder under this Plan, nor shall any such adverse consequences (as well as any adverse tax consequences that may result from any tax ruling or other approval or determination of any relevant tax authority) be deemed to constitute a change or an amendment of the rights of such holder under this Plan, and may be effected without consent of any Grantee and without any liability to the Company or its Affiliates or to its or their respective officers, directors, employees and representatives and the respective successors and assigns of any of the foregoing. The Committee need not take the same action with respect to all Awards or with respect to all Service Providers. The Committee may take different actions with respect to the vested and unvested portions of an Award. The Committee may determine an amount or type of consideration to be received or distributed in a Merger/Sale which may differ as among the Grantees, and as between the Grantees and any other holders of shares of the Company.

 

14.2.7 The Committee may determine that upon a Merger/Sale any Shares held by Grantees (or for Grantee’s benefit) are sold in accordance with instructions issued by the Committee in connection with such Merger/Sale, which shall be final, conclusive and binding on all Grantees.

 

14.2.8 All of the Committee’s determinations pursuant to this Section ‎14 shall be at its sole and absolute discretion, and shall be final, conclusive and binding on all Grantees (including, for clarity, as it relates to Shares issued upon exercise or vesting of any Awards or that are Awards, unless otherwise determined by the Committee) and without any liability to the Company or its Affiliates, or to their respective officers, directors, employees, shareholders and representatives, and the respective successors and assigns of any of the foregoing, in connection with the method of treatment, chosen course of action or determinations made hereunder.

 

14.2.9 If determined by the Committee, the Grantees shall be subject to the definitive agreement(s) in connection with the Merger/Sale as applying to holders of Shares including, such terms, conditions, representations, undertakings, liabilities, limitations, releases, indemnities, appointing and indemnifying shareholders/sellers representative, participating in transaction expenses, shareholders/sellers representative expense fund and escrow arrangement, in each case as determined by the Committee. Each Grantee shall execute (and authorizes any person designated by the Company to so execute, as well as (if applicable) the Trustee holding any Shares for the Grantee’s behalf) such separate agreement(s) or instruments as may be requested by the Company, the Successor Corporation or the acquirer in connection with such in such Merger/Sale or otherwise under or for the purpose of implementing this Section ‎14.2, and in the form required by them. The execution of such separate agreement(s) may be a condition to the receipt of assumed or substituted Awards, payment in lieu of the Award, the exercise of any Award or otherwise to be entitled to benefit from shares or other securities, cash or other property, or rights, or any combination thereof, pursuant to this Section ‎14.2 (and the Company (and, if applicable, the Trustee) may exercise its authorization above and sign such agreement on behalf of the Grantee or subject the Grantee to the provisions of such agreements).

 

 

14.2.10  Notwithstanding the foregoing, for each Award that constitutes deferred compensation under Section 409A of the Code, to the extent required to avoid the imposition of taxes or penalties under Section 409A of the Code, no such Award shall become payable as a result of a Merger/Sale unless such Merger/Sale also constitutes a change in the ownership or effective control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A of the Code.

 

14.3. Reservation of Rights. Except as expressly provided in this Section ‎14 (if any), the Grantee of an Award hereunder shall have no rights by reason of any transaction or event referred to in this Section ‎14 (including, Recapitalization of shares of any class, any increase or decrease in the number of shares of any class, or any dissolution, liquidation, reorganization, business combination, exchange of shares, spin-off or other corporate divestiture or division, or other similar occurrences, or Merger/Sale). Any issue by the Company of shares of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, type or price of shares subject to an Award. The grant of an Award pursuant to this Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structures or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or part of its business or assets or engage in any similar transactions.

 

15.

NON-TRANSFERABILITY OF AWARDS; SURVIVING BENEFICIARY.

 

15.1. All Awards granted under this Plan by their terms shall not be transferable other than by will or by the laws of descent and distribution, unless otherwise determined by the Committee or under this Plan, provided that with respect to Shares issued upon exercise of Awards, Shares issued upon the vesting of Awards or Awards that are Shares, the restrictions on transfer shall be the restrictions referred to in Section ‎16 (Conditions upon Issuance of Shares) hereof. Subject to the above provisions, the terms of such Award, this Plan and any applicable Award Agreement shall be binding upon the beneficiaries, executors, administrators, heirs and successors of such Grantee. Awards may be exercised or otherwise realized, during the lifetime of the Grantee, only by the Grantee or by his guardian or legal representative, to the extent provided for herein. Any transfer of an Award not permitted hereunder (including transfers pursuant to any decree of divorce, dissolution or separate maintenance, any property settlement, any separation agreement or any other agreement with a spouse) and any grant of any interest in any Award to, or creation in any way of any direct or indirect interest in any Award by, any party other than the Grantee shall be null and void and shall not confer upon any party or person, other than the Grantee, any rights. A Grantee may file with the Committee a written designation of a beneficiary, who shall be permitted to exercise such Grantee’s Award or to whom any benefit under this Plan is to be paid, in each case, in the event of the Grantee’s death before he or she fully exercises his or her Award or receives any or all of such benefit, on such form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Grantee, the executor or administrator of the Grantee’s estate shall be deemed to be the Grantee’s beneficiary. Notwithstanding the foregoing, upon the request of the Grantee and subject to Applicable Law, the Committee, at its sole discretion, may permit the Grantee to transfer the Award to a trust whose beneficiaries are the Grantee and/or the Grantee’s immediate family members (all or several of them).

 

15.2. Notwithstanding any other provisions of the Plan to the contrary, no Incentive Stock Option may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution or in accordance with a beneficiary designation pursuant to Section ‎15.1. Further, all Incentive Stock Options granted to a Grantee shall be exercisable during his or her lifetime only by such Grantee.

 

 

15.3. As long as the Shares are held by the Trustee in favor of the Grantee, all rights possessed by the Grantee over the Shares are personal, and may not be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.

 

15.4. If and to the extent a Grantee is entitled to transfer an Award and/or Shares underlying an Award in accordance with the terms of the Plan and any other applicable agreements, such transfer shall be subject (in addition, to any other conditions or terms applying thereto) to receipt by the Company from such proposed transferee of a written instrument, on a form reasonably acceptable to the Company, pursuant to which such proposed transferee agrees to be bound by all provisions of the Plan and any other applicable agreements, including without limitation, any restrictions on transfer of the Award and/or Shares set forth herein (however, failure to so deliver such instrument to the Company as set forth above shall not derogate from all such provisions applying on any transferee).

 

15.5. The provisions of this Section ‎15 shall apply to the Grantee and to any purchaser, assignee or transferee of any Shares.

 

16.

CONDITIONS UPON ISSUANCE OF SHARES; GOVERNING PROVISIONS.

 

16.1. Legal Compliance. The grant of Awards and the issuance of Shares upon exercise or settlement of Awards shall be subject to compliance with all Applicable Law as determined by the Company, including, applicable requirements of federal, state and foreign law with respect to such securities. The Company shall have no obligations to issue Shares pursuant to the exercise or settlement of an Award and Awards may not be exercised or settled, if the issuance of Shares upon exercise or settlement would constitute a violation of any Applicable Law as determined by the Company, including, applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Shares may then be listed. In addition, no Award may be exercised unless (i) a registration statement under the Securities Act or equivalent law in another jurisdiction shall at the time of exercise or settlement of the Award be in effect with respect to the shares issuable upon exercise of the Award, or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Award may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act or equivalent law in another jurisdiction. The inability of the Company to obtain authority from any regulatory body having jurisdiction, if any, deemed by the Company to be necessary to the lawful issuance and sale of any Shares hereunder, and the inability to issue Shares hereunder due to non-compliance with any Company policies with respect to the sale of Shares, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority or compliance shall not have been obtained or achieved. As a condition to the exercise of an Award, the Company may require the person exercising such Award to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any Applicable Law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company, including to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares, all in form and content specified by the Company.

 

16.2. Provisions Governing Shares. Shares issued pursuant to an Award shall be subject to this Plan and shall be subject to the Articles of Association of the Company, and any other governing documents of the Company and all policies, manuals and internal regulations of the Company, as in effect from time to time.

 

 

16.3. Share Purchase Transactions; Forced Sale. In the event that the Board approves a Merger/Sale effected by way of a forced or compulsory sale (whether pursuant to the Company’s Memorandum of Association, Articles of Association and any other governing document of the Company, any Applicable Law, or any shareholders agreement or otherwise) or in the event of a transaction for the sale of all shares of the Company, then, without derogating from such provisions and in addition thereto, the Grantee shall be obligated, and shall be deemed to have agreed to the offer to effect the Merger/Sale (and the Shares held by or for the benefit of the Grantee shall be included in the shares of the Company approving the terms of such Merger/Sale for the purpose of satisfying the required majority), and shall sell all of the Shares held by or for the benefit of the Grantee on the terms and conditions applying to the holders of Shares, in accordance with the instructions then issued by the Board, whose determination shall be final. No Grantee shall contest, bring any claims or demands, or exercise any appraisal or dissenters’ rights related to any of the foregoing. Each Grantee shall execute (and authorizes any person designated by the Company to so execute, as well as (if applicable) the Trustee holding any Shares for the Grantee’s behalf) such documents and agreements, as may be requested by the Company relating to matters set forth in or otherwise for the purpose of implementing this Section ‎16.3. The execution of such separate agreement(s) may be a condition by the Company to the exercise of any Award and the Company (and, if applicable, the Trustee) may exercise its authorization above and sign such agreement on behalf of the Grantee or subject the Grantee to the provisions of such agreements.

 

16.4. Data Privacy; Data Transfer. Information related to Grantees and Awards hereunder, as shall be received from Grantee or others, and/or held by, the Company or its Affiliates from time to time, and which information may include sensitive and personal information related to Grantees (“Information”), will be used by the Company or its Affiliates (or third parties appointed by any of them, including the Trustee) to comply with any applicable legal requirement, or for administration of the Plan as they deems necessary or advisable, or for the respective business purposes of the Company or its Affiliates (including in connection with transactions related to any of them). The Company and its Affiliates shall be entitled to transfer the Information among the Company or its Affiliates, and to third parties for the purposes set forth above, which may include persons located abroad (including, any person administering the Plan or providing services in respect of the Plan or in order to comply with legal requirements, or the Trustee, their respective officers, directors, employees and representatives, and the respective successors and assigns of any of the foregoing), and any person so receiving Information shall be entitled to transfer it for the purposes set forth above. The Company shall use commercially reasonable efforts to ensure that the transfer of such Information shall be limited to the reasonable and necessary scope. By receiving an Award hereunder, Grantee acknowledges and agrees that the Information is provided at Grantee’s free will and Grantee consents to the storage and transfer of the Information as set forth above.

 

16.5. Prohibition on Executive Officer Loans. Notwithstanding any other provision of the Plan to the contrary, no Grantee who is a member of the Board or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

 

16.6. Clawback Provisions. All Awards (including the gross amount of any proceeds, gains or other economic benefit the Grantee actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award) will be subject to recoupment by the Company to the extent required to comply with Applicable Law or any policy of the Company (subject to Applicable Law) providing for the reimbursement of incentive compensation, whether or not such policy was in place at the time of grant of an Award.

 

 

17.

AGREEMENT REGARDING TAXES; DISCLAIMER.

 

17.1. If the Company shall so require, as a condition of exercise or (if applicable) vesting of an Award, the release of Shares by the Trustee or the vesting or settlement of an Award, a Grantee shall agree that, no later than the date of such occurrence, the Grantee will pay to the Company (or the Trustee, as applicable) or make arrangements satisfactory to the Company and the Trustee (if applicable) regarding payment of any applicable taxes and compulsory payments of any kind required by Applicable Law to be withheld or paid.

 

17.2. TAX LIABILITY. ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH MAY ARISE FROM THE GRANT OF ANY AWARDS OR THE EXERCISE OR (IF APPLICABLE) VESTING THEREOF, THE SALE OR DISPOSITION OF ANY SHARES GRANTED HEREUNDER OR ISSUED UPON EXERCISE OR (IF APPLICABLE) THE VESTING OF ANY AWARD, THE ASSUMPTION, SUBSTITUTION, CANCELLATION OR PAYMENT IN LIEU OF AWARDS OR FROM ANY OTHER ACTION IN CONNECTION WITH THE FOREGOING (INCLUDING WITHOUT LIMITATION ANY TAXES AND COMPULSORY PAYMENTS, SUCH AS SOCIAL SECURITY OR HEALTH TAX PAYABLE BY THE GRANTEE OR THE COMPANY IN CONNECTION THEREWITH) SHALL BE BORNE AND PAID SOLELY BY THE GRANTEE, AND THE GRANTEE SHALL INDEMNIFY THE COMPANY, ITS SUBSIDIARIES AND AFFILIATES AND THE TRUSTEE, AND SHALL HOLD THEM HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY SUCH TAX OR PAYMENT OR ANY PENALTY, INTEREST OR INDEXATION THEREON. EACH GRANTEE AGREES TO, AND UNDERTAKES TO COMPLY WITH, ANY RULING, SETTLEMENT, CLOSING AGREEMENT OR OTHER SIMILAR AGREEMENT OR ARRANGEMENT WITH ANY TAX AUTHORITY IN CONNECTION WITH THE FOREGOING WHICH IS APPROVED BY THE COMPANY.

 

17.3. NO TAX ADVICE. THE GRANTEE IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING, EXERCISING OR DISPOSING OF AWARDS HEREUNDER. THE COMPANY (INCLUDING ITS AFFILIATES OR ITS AFFILIATES’ EMPLOYEES, DIRECTORS AND OFFICERS) DOES NOT ASSUME ANY RESPONSIBILITY TO ADVISE THE GRANTEE ON SUCH MATTERS, WHICH SHALL REMAIN SOLELY THE RESPONSIBILITY OF THE GRANTEE.

 

 

17.4. TAX TREATMENT. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE OR ASSUME ANY LIABILITY OR RESPONSIBILITY TO THE EFFECT THAT ANY AWARD SHALL QUALIFY WITH ANY PARTICULAR TAX REGIME OR RULES APPLYING TO PARTICULAR TAX TREATMENT, OR BENEFIT FROM ANY PARTICULAR TAX TREATMENT OR TAX ADVANTAGE OF ANY TYPE AND THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) SHALL BEAR NO LIABILITY IN CONNECTION WITH THE MANNER IN WHICH ANY AWARD IS TREATED FOR TAX PURPOSES, REGARDLESS OF WHETHER THE AWARD WAS GRANTED OR WAS INTENDED TO QUALIFY UNDER ANY PARTICULAR TAX REGIME OR TREATMENT. THIS PROVISION SHALL SUPERSEDE ANY TYPE OF AWARDS OR TAX QUALIFICATION INDICATED IN ANY CORPORATE RESOLUTION OR AWARD AGREEMENT, WHICH SHALL AT ALL TIMES BE SUBJECT TO THE REQUIREMENTS OF APPLICABLE LAW. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE AND SHALL NOT BE REQUIRED TO TAKE ANY ACTION IN ORDER TO QUALIFY ANY AWARD WITH THE REQUIREMENT OF ANY PARTICULAR TAX TREATMENT AND NO INDICATION IN ANY DOCUMENT TO THE EFFECT THAT ANY AWARD IS INTENDED TO QUALIFY FOR ANY TAX TREATMENT SHALL IMPLY SUCH AN UNDERTAKING. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE TO REPORT FOR TAX PURPOSES ANY AWARD IN ANY PARTICULAR MANNER, INCLUDING IN ANY MANNER CONSISTENT WITH ANY PARTICULAR TAX TREATMENT. NO ASSURANCE IS MADE BY THE COMPANY OR ANY OF ITS AFFILIATES (INCLUDING THE EMPLOYER) THAT ANY PARTICULAR TAX TREATMENT ON THE DATE OF GRANT WILL CONTINUE TO EXIST OR THAT THE AWARD WOULD QUALIFY AT THE TIME OF EXERCISE, VESTING OR DISPOSITION THEREOF WITH ANY PARTICULAR TAX TREATMENT. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) SHALL NOT HAVE ANY LIABILITY OR OBLIGATION OF ANY NATURE IN THE EVENT THAT AN AWARD DOES NOT QUALIFY FOR ANY PARTICULAR TAX TREATMENT, REGARDLESS WHETHER THE COMPANY COULD HAVE OR SHOULD HAVE TAKEN ANY ACTION TO CAUSE SUCH QUALIFICATION TO BE MET AND SUCH QUALIFICATION REMAINS AT ALL TIMES AND UNDER ALL CIRCUMSTANCES AT THE RISK OF THE GRANTEE. THE COMPANY DOES NOT UNDERTAKE OR ASSUME ANY LIABILITY TO CONTEST A DETERMINATION OR INTERPRETATION (WHETHER WRITTEN OR UNWRITTEN) OF ANY TAX AUTHORITIES, INCLUDING IN RESPECT OF THE QUALIFICATION UNDER ANY PARTICULAR TAX REGIME OR RULES APPLYING TO PARTICULAR TAX TREATMENT. IF THE AWARDS DO NOT QUALIFY UNDER ANY PARTICULAR TAX TREATMENT IT COULD RESULT IN ADVERSE TAX CONSEQUENCES TO THE GRANTEE.

 

17.5. The Company or any Subsidiary or other Affiliate thereof (including the Employer) may take such action as it may deem necessary or appropriate, in its discretion, for the purpose of or in connection with withholding of any taxes and compulsory payments which the Trustee, the Company or any Subsidiary or other Affiliate thereof (including the Employer) (or any applicable agent thereof) is required by any Applicable Law to withhold in connection with any Awards, including, without limitations, any income tax, social benefits, social insurance, health tax, pension, payroll tax, fringe benefits, excise tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and applicable by law to the Grantee (collectively, “Withholding Obligations”). Such actions may include (i) requiring a Grantees to remit to the Company or the Employer in cash an amount sufficient to satisfy such Withholding Obligations and any other taxes and compulsory payments, payable by the Company or the Employer in connection with the Award or the exercise or (if applicable) the vesting thereof; (ii) subject to Applicable Law, allowing the Grantees to surrender Shares to the Company, in an amount that at such time, reflects a value that the Committee determines to be sufficient to satisfy such Withholding Obligations; (iii) withholding Shares otherwise issuable upon the exercise of an Award at a value which is determined by the Company to be sufficient to satisfy such Withholding Obligations; (iv) allowing Grantees to satisfy all or part of the Withholding Obligations by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company or the Trustee; or (iv) any combination of the foregoing. The Company shall not be obligated to allow the exercise or vesting of any Award by or on behalf of a Grantee until all tax consequences arising therefrom are resolved in a manner acceptable to the Company.

 

17.6. Each Grantee shall notify the Company in writing promptly and in any event within ten (10) days after the date on which such Grantee first obtains knowledge of any tax authority inquiry, audit, assertion, determination, investigation, or question relating in any manner to the Awards granted or received hereunder or Shares issued thereunder and shall continuously inform the Company of any developments, proceedings, discussions and negotiations relating to such matter, and shall allow the Company and its representatives to participate in any proceedings and discussions concerning such matters. Upon request, a Grantee shall provide to the Company any information or document relating to any matter described in the preceding sentence, which the Company, in its discretion, requires.

 

 

17.7. With respect to 102 Non-Trustee Options, if the Grantee ceases to be employed by the Company, Parent, Subsidiary or any Affiliate (including the Employer), the Grantee shall extend to the Company and/or the Employer a security or guarantee for the payment of taxes due at the time of sale of Shares, all in accordance with the provisions of Section 102 of the Ordinance and the Rules.

 

17.8. If a Grantee makes an election under Section 83(b) of the Code to be taxed with respect to an Award as of the date of transfer of Shares rather than as of the date or dates upon which the Grantee would otherwise be taxable under Section 83(a) of the Code, such Grantee shall deliver a copy of such election to the Company upon or prior to the filing such election with the U.S. Internal Revenue Service. Neither the Company nor any Affiliate (including the Employer) shall have any liability or responsibility relating to or arising out of the filing or not filing of any such election or any defects in its construction.

 

18.

RIGHTS AS A SHAREHOLDER; VOTING AND DIVIDENDS.

 

18.1. Subject to Section ‎11.4, a Grantee shall have no rights as a shareholder of the Company with respect to any Shares covered by an Award until the Grantee shall have exercised or (as applicable) vests in the Award, paid any Exercise Price therefor and becomes the record holder of the subject Shares. In the case of 102 Awards, the Trustee shall have no rights as a shareholder of the Company with respect to the Shares covered by such Award until the Trustee becomes the record holder for such Shares for the Grantee’s benefit, and the Grantee shall not be deemed to be a shareholder and shall have no rights as a shareholder of the Company with respect to the Shares covered by the Award until the date of the release of such Shares from the Trustee to the Grantee and the transfer of record ownership of such Shares to the Grantee (provided, however, that the Grantee shall be entitled to receive from the Trustee any cash dividend or distribution made on account of the Shares held by the Trustee for such Grantee’s benefit, subject to any tax withholding and compulsory payment). No adjustment shall be made for dividends (ordinary or extraordinary, whether in shares or other securities, cash or other property, or rights, or any combination thereof) or distribution of other rights for which the record date is prior to the date on which the Grantee or Trustee (as applicable) becomes the record holder of the Shares covered by an Award, except as provided in Section ‎14 hereof.

 

18.2. With respect to all Awards issued in the form of Shares hereunder or upon the exercise or (if applicable) the vesting of Awards hereunder, any and all voting rights attached to such Shares shall be subject to Section ‎6.9, and the Grantee shall be entitled to receive dividends distributed with respect to such Shares, subject to the provisions of the Company’s Memorandum of Association, Articles of Association and any other governing document of the Company, as amended from time to time, and subject to any Applicable Law.

 

18.3. The Company may, but shall not be obligated to, register or qualify the sale of Shares under any applicable securities law or any other Applicable Law.

 

19.

NO REPRESENTATION BY COMPANY.

 

By granting the Awards, the Company is not, and shall not be deemed as, making any representation or warranties to the Grantee regarding the Company, its business affairs, its prospects or the future value of its Shares and such representations and warranties are hereby disclaimed. The Company shall not be required to provide to any Grantee any information, documents or material in connection with the Grantee’s considering an exercise of an Award. To the extent that any information, documents or materials are provided, the Company shall have no liability with respect thereto. Any decision by a Grantee to exercise an Award shall solely be at the risk of the Grantee.

 

 

20.

NO RETENTION RIGHTS.

 

Nothing in this Plan, any Award Agreement or in any Award granted or agreement entered into pursuant hereto shall confer upon any Grantee the right to continue in the employ of, or be in the service of the Company or any Subsidiary or other Affiliate thereof as a Service Provider or to be entitled to any remuneration or benefits not set forth in this Plan or such agreement, or to interfere with or limit in any way the right of the Company or any such Subsidiary or other Affiliate thereof to terminate such Grantee’s employment or service (including, any right of the Company or any of its Affiliates to immediately cease the Grantee’s employment or service or to shorten all or part of the notice period, regardless of whether notice of termination was given by the Company or its Affiliates or by the Grantee). Awards granted under this Plan shall not be affected by any change in duties or position of a Grantee, subject to Section ‎6.6. No Grantee shall be entitled to claim and the Grantee hereby waives any claim against the Company or any Subsidiary or other Affiliate thereof that he or she was prevented from continuing to vest Awards as of the date of termination of his or her employment with, or services to, the Company or any Subsidiary or other Affiliate thereof. No Grantee shall be entitled to any compensation in respect of the Awards which would have vested had such Grantee’s employment or engagement with the Company (or any Subsidiary or other Affiliate thereof) not been terminated.

 

21.

PERIOD DURING WHICH AWARDS MAY BE GRANTED.

 

21.1. Awards may be granted pursuant to this Plan from time to time during the period commencing on the Effective Date and ending on the date that this Plan is terminated by the Board, except that Incentive Stock Options shall not be granted following the ten (10) year anniversary of the earlier of the date this Plan was approved by (x) the Board or (y) the shareholders of the Company. From and after the date the Board terminates this Plan, no grants of Awards may be made and this Plan shall continue to be in full force and effect with respect to Awards or Shares issued thereunder that remain outstanding.

 

22.

AMENDMENT OF THIS PLAN AND AWARDS.

 

22.1. The Board at any time and from time to time may suspend, terminate, modify or amend this Plan, whether retroactively or prospectively. Any amendment effected in accordance with this Section shall be binding upon all Grantees and all Awards, whether granted prior to or after the date of such amendment, and without the need to obtain the consent of any Grantee. No termination or amendment of this Plan shall affect any then outstanding Award unless expressly provided by the Board.

 

22.2. Subject to changes in Applicable Law that would permit otherwise, without the approval of the Company’s shareholders, there shall be (i) no increase in the maximum aggregate number of Shares that may be issued under this Plan as Incentive Stock Options (except by operation of the provisions of Section ‎14.1), (ii) no change in the class of persons eligible to receive Incentive Stock Options, and (iii) no other amendment of this Plan that would require approval of the Company’s shareholders under any Applicable Law or the rules of the applicable stock market or exchange, if any, on which the Shares are principally quoted or traded. Unless not permitted by Applicable Law, if the grant of an Award is subject to approval by shareholders, the date of grant of the Award shall be determined as if the Award had not been subject to such approval. Failure to obtain approval by the shareholders shall not in any way derogate from the valid and binding effect of any grant of an Award that is not an Incentive Stock Option.

 

22.3. The Board or the Committee at any time and from time to time may modify or amend any Award theretofore granted, including any Award Agreement, whether retroactively or prospectively.

 

 

23.

APPROVAL.

 

23.1. This Plan shall take effect upon its adoption by the Board and approval by the shareholders within twelve (12) months before or after adoption by the Board (the “Effective Date”).

 

23.2. 102 Awards are conditional upon the filing with or approval by the ITA, if required, as set forth in Section ‎9.4. Failure to so file or obtain such approval shall not in any way derogate from the valid and binding effect of any grant of an Award, which is not a 102 Award.

 

24.

RULES PARTICULAR TO SPECIFIC COUNTRIES; SECTION 409A.

 

24.1. Notwithstanding anything herein to the contrary, the terms and conditions of this Plan may be supplemented or amended with respect to a particular country or tax regime by means of a sub-plan or an appendix to this Plan, and to the extent that the terms and conditions set forth in any sub-plan or appendix conflict with any provisions of this Plan, the provisions of such sub-plan or appendix shall govern with respect to Awards made pursuant thereto. Terms and conditions set forth in such sub-plan or appendix shall apply only to Awards granted to Grantees under the jurisdiction of the specific country or such other tax regime that is the subject of such sub-plan or appendix and shall not apply to Awards issued to a Grantee not under the jurisdiction of such country or such other tax regime. The adoption of any such sub-plan or appendix shall be subject to the approval of the Board or the Committee, and if and to the extent determined by the Committee to be required by Applicable Law in connection with the application of certain tax treatment, pursuant to applicable stock exchange rules or regulations or otherwise, then also the approval of the shareholders of the Company at the required majority.

 

24.2. This Section ‎24.2 shall only apply to Awards granted to Grantees who are subject to United States Federal income tax.

 

24.2.1 It is the intention of the Company that the Plan as well as Awards granted under the Plan shall be exempt from, or to the extent subject thereto, to comply with Section 409A, and to the maximum extent permitted, the Plan and the terms and conditions of all Awards shall be interpreted and administered accordingly.

 

24.2.2 Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, the Grantee shall not be considered to have terminated employment or service with the Company or its Affiliate for purposes of the Plan and no payment shall be due to the Grantee under the Plan or any Award until the Grantee would be considered to have incurred a “separation from service” within the meaning of Section 409A of the Code from the Company and its Affiliates. Any payments described in the Plan that are due within the “short term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Law requires otherwise. Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate identified payment for purposes of Section 409A of the Code..

 

 

24.2.3 The Company shall have complete discretion to interpret and construe the Plan and any Award Agreement in any manner that establishes an exemption from (or compliance with) the requirements of Section 409A of the Code. If for any reason, such as imprecision in drafting, any provision of the Plan and/or any Award Agreement does not accurately reflect its intended establishment of an exemption from (or compliance with) Section 409A of the Code, as demonstrated by consistent interpretations or other evidence of intent, such provision shall be considered ambiguous as to its exemption from (or compliance with) Section 409A of the Code and shall be interpreted by the Company in a manner consistent with such intent, as determined in the discretion of the Company. If, notwithstanding the foregoing provisions of this Section ‎24.2.4, any provision of the Plan or any such agreement would cause a Grantee to incur any additional tax or interest under Section 409A of the Code, the Company may reform such provision in a manner intended to avoid the incurrence by such Grantee of any such additional tax or interest; provided that the Company shall maintain, to the extent reasonably practicable, the original intent and economic benefit to the Grantee of the applicable provision without violating the provisions of Section 409A of the Code. For the avoidance of doubt, no provision of this Plan shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from any Grantee or any other individual to the Company or any of its affiliates, employees or agents.

 

24.2.4 Notwithstanding any other provision in the Plan, any Award Agreement, or any other written document establishing the terms and conditions of an Award, if any Grantee is a “specified employee,” within the meaning of Section 409A of the Code, as of the date of his or her “separation from service” (as defined under Section 409A of the Code), then, to the extent required by Treasury Regulation Section 1.409A-3(i)(2) (or any successor provision) to avoid the imposition of any individual tax and penalty interest charges imposed under Section 409A of the Code, the settlement and payment made to such Grantee of such Award (or other amounts) on account of his or her separation from service shall not be made before a date that is six months after the date of his or her separation from service (or death, if earlier).

 

24.2.5 Notwithstanding any other provision of this Section ‎24.2 to the contrary, although the Company intends to administer the Plan so that Awards will be exempt from, or will comply with, the requirements of Section 409A of the Code, the Company does not warrant that any Award under the Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local, or non-United States law. The Company shall not be liable to any Grantee for any tax, interest, or penalties the Grantee might owe as a result of the grant, holding, vesting, exercise, or payment of any Award under the Plan.

 

25.

GOVERNING LAW; JURISDICTION.

 

This Plan and all determinations made and actions taken pursuant hereto shall be governed by the laws of the State of Israel, except with respect to matters that are subject to tax laws, regulations and rules of any specific jurisdiction, which shall be governed by the respective laws, regulations and rules of such jurisdiction. Certain definitions, which refer to laws other than the laws of such jurisdiction, shall be construed in accordance with such other laws. The competent courts located in Tel-Aviv-Jaffa, Israel shall have exclusive jurisdiction over any dispute arising out of or in connection with this Plan and any Award granted hereunder. By signing any Award Agreement or any other agreement relating to an Award, each Grantee irrevocably submits to such exclusive jurisdiction.

 

26.

NON-EXCLUSIVITY OF THIS PLAN.

 

The adoption of this Plan shall not be construed as creating any limitations on the power or authority of the Company to adopt such other or additional incentive or other compensation arrangements of whatever nature as the Company may deem necessary or desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which the Company or any Affiliate now has or will lawfully put into effect, including any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits and executive short-term or long-term incentive plans.

 

 

27.

MISCELLANEOUS.

 

27.1. Survival. The Grantee shall be bound by and the Shares issued upon exercise or (if applicable) the vesting of any Awards granted hereunder shall remain subject to this Plan after the exercise or (if applicable) the vesting of Awards, in accordance with the terms of this Plan, whether or not the Grantee is then or at any time thereafter employed or engaged by the Company or any of its Affiliates.

 

27.2. Additional Terms. Each Award awarded under this Plan may contain such other terms and conditions not inconsistent with this Plan as may be determined by the Committee, in its sole discretion.

 

27.3. Fractional Shares. No fractional Share shall be issuable upon exercise or vesting of any Award and the number of Shares to be issued shall be rounded down to the nearest whole Share (and the Company shall have liability to compensate for such fractional shares at any time), with in any Share remaining at the last vesting date due to such rounding to be issued upon exercise at such last vesting date.

 

27.4. Severability. If any provision of this Plan, any Award Agreement or any other agreement entered into in connection with an Award shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. In addition, if any particular provision contained in this Plan, any Award Agreement or any other agreement entered into in connection with an Award shall for any reason be held to be excessively broad as to duration, geographic scope, activity or subject, it shall be construed by limiting and reducing such provision as to such characteristic so that the provision is enforceable to fullest extent compatible with Applicable Law as it shall then appear.

 

27.5. Captions and Titles. The use of captions and titles in this Plan or any Award Agreement or any other agreement entered into in connection with an Award is for the convenience of reference only and shall not affect the meaning or interpretation of any provision of this Plan or such agreement.

 

* * *

 

 

38

 

 

 

Exhibit 10.4

 

ETORO GROUP LTD. 2025 EMPLOYEE SHARE PURCHASE PLAN

 

Article I.
PURPOSE

 

The purpose of this Plan is to assist Eligible Employees of the Company and its Designated Subsidiaries in acquiring a share ownership interest in the Company.

 

The Plan consists of two components: (i) the Section 423 Component and (ii) the Non-Section 423 Component. The Section 423 Component is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code and shall be administered, interpreted and construed in a manner consistent with the requirements of Section 423 of the Code. The Non-Section 423 Component authorizes the grant of rights which need not qualify as rights granted pursuant to an “employee stock purchase plan” under Section 423 of the Code. Rights granted under the Non-Section 423 Component shall be granted pursuant to separate Offerings containing such sub-plans, appendices, rules or procedures as may be adopted by the Administrator and designed to achieve tax, securities laws or other objectives for Eligible Employees and Designated Subsidiaries but shall not be intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. Except as otherwise determined by the Administrator or provided herein, the Non-Section 423 Component will operate and be administered in the same manner as the Section 423 Component. Offerings intended to be made under the Section 423 Component will be designated as such by the Administrator at or prior to the time of such Offering.

 

For purposes of this Plan, the Administrator may designate separate Offerings under the Plan in which Eligible Employees will participate. The terms of these Offerings need not be identical, even if the dates of the applicable Offering Period(s) in each such Offering are identical, provided that the terms of participation are the same within each separate Offering under the Section 423 Component (as determined under Section 423 of the Code). Solely by way of example and without limiting the foregoing, the Company could, but shall not be required to, provide for simultaneous Offerings under the Section 423 Component and the Non-Section 423 Component of the Plan.

 

Article II.
DEFINITIONS AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.

 

2.1 “Administrator” means the entity, including any committee specifically designated by the Board, that conducts the general administration of the Plan as provided in Article XI.

 

2.2 “Affiliate” means any entity in which the Company has an equity or other ownership interests.

 

2.3 “Agent” means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or an Employee with regard to the Plan.

 

2.4 “Applicable Law” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which Shares are listed or quoted and the applicable laws and rules of any non-U.S. country or other jurisdiction where rights under this Plan are granted.

 

 

2.5 “Board” means the Board of Directors of the Company.

 

2.6 “Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

 

2.7 “Common Share” means a Class A common share, no par value, of the Company and such other securities of the Company that may be substituted therefore.

 

2.8 “Company” means eToro Group Ltd., a company organized under the laws of the British Virgin Islands, or any successor.

 

2.9 “Compensation” of an Eligible Employee means, unless otherwise determined by the Administrator, the gross base compensation or wages received by such Eligible Employee as compensation for services to the Company or any Designated Subsidiary, including overtime payments but excluding sales commissions, incentive compensation, bonuses, expense reimbursements, fringe benefits, any amounts realized from the exercise of any stock options or incentive awards and other special payments.

 

2.10 “Designated Subsidiary” means any Subsidiary designated by the Administrator in accordance with Section 11.2(b), such designation to specify whether such participation is in the Section 423 Component or Non-Section 423 Component. A Designated Subsidiary may participate in either the Section 423 Component or Non-Section 423 Component, but not both; provided that a Subsidiary that, for U.S. tax purposes, is disregarded from the Company or any Subsidiary that participates in the Section 423 Component shall automatically constitute a Designated Subsidiary that participates in the Section 423 Component. The designation by the Administrator of Designated Subsidiaries and changes in such designations by the Administrator shall not require shareholder approval. Only entities that are subsidiary corporations of the Company within the meaning of Section 424 of the Code may be designated as Designated Subsidiaries for purposes of the Section 423 Component, and if an entity does not so qualify, it shall automatically be deemed to be a Designated Subsidiary in the Non-Section 423 Component.

 

2.11 “Effective Date” means the date upon which the Plan is approved by the shareholders of the Company, provided that the Board has adopted the Plan on, or within 12 months prior to, such date.

 

2.12 “Eligible Employee” means:

 

(a) With respect to the Section 423 Component of the Plan, an Employee who does not, immediately after any rights under this Plan are granted, own (directly or through attribution) share possessing 5% or more of the total combined voting power or value of all classes of Shares and other securities of the Company, a Parent or a Subsidiary (as determined under Section 423(b)(3) of the Code). For purposes of the foregoing, the rules of Section 424(d) of the Code with regard to the attribution of share ownership shall apply in determining the share ownership of an individual, and a share that an Employee may purchase under outstanding options shall be treated as a share owned by the Employee. With respect to an Employee participating in the Non-Section 423 Component, such qualification shall not apply, unless otherwise required by Applicable Law.

 

(b) Notwithstanding the foregoing, the Administrator may provide in an Offering Document that an Employee shall not be eligible to participate in an Offering Period under the Section 423 Component if: (i) such Employee is a highly compensated employee within the meaning of Section 423(b)(4)(D) of the Code; (ii) such Employee has not met a service requirement designated by the Administrator pursuant to Section 423(b)(4)(A) of the Code (which service requirement may not exceed two years); (iii) such Employee’s customary employment is for twenty hours per week or less; (iv) such Employee’s customary employment is for less than five months in any calendar year; and/or (v) such Employee is a citizen or resident of a non-U.S. jurisdiction and the grant of a right to purchase Shares under the Plan to such Employee would be prohibited under the laws of such non-U.S. jurisdiction or the grant of a right to purchase Shares under the Plan to such Employee in compliance with the laws of such non-U.S. jurisdiction would cause the Plan to violate the requirements of Section 423 of the Code, as determined by the Administrator in its sole discretion; provided, further, that any exclusion in clauses (i), (ii), (iii), (iv) or (v) shall be applied in an identical manner under each Offering Period to all Employees, in accordance with Treasury Regulation Section 1.423-2(e).

 

 

(c) With respect to the Non-Section 423 Component, the foregoing rules shall apply in determining who is an “Eligible Employee,” except (i) the Administrator may limit eligibility further within the Company or a Designated Subsidiary so as to only designate some Employees of the Company or a Designated Subsidiary as Eligible Employees, and (ii) to the extent the foregoing eligibility rules are not consistent with applicable local laws, the applicable local laws shall control.

 

2.13  “Employee” means any individual who renders services to the Company or any Designated Subsidiary in the status of an employee, and, with respect to the Section 423 Component, a person who is an employee of the Company or any Designated Subsidiary within the meaning of Section 3401(c) of the Code. For purposes of an individual’s participation in, or other rights under the Plan, all determinations by the Company shall be final, binding and conclusive, notwithstanding that any court of law or governmental agency subsequently makes a contrary determination. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury Regulation Section 1.421-1(h)(2). Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period.

 

2.14 "Enrollment Date” means the first Trading Day of each Offering Period.

 

2.15 "Fair Market Value” means, as of any date, the value of Shares determined as follows: (i) if the Shares are listed on any established stock exchange, its Fair Market Value will be the closing sales price for such Shares as quoted on such exchange for such date, or if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; (ii) if the Shares are not traded on a stock exchange but are quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the last date preceding such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (iii) without an established market for the Shares, the Administrator will determine the Fair Market Value in its discretion.

 

2.16 "Non-Section 423 Component” means those Offerings under the Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which rights to purchase Shares during an Offering Period may be granted to Eligible Employees that need not satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

 

2.17 "Offering” means an offer under the Plan of a right to purchase Shares that may be exercised during an Offering Period as further described in Article IV hereof. Unless otherwise specified by the Administrator, each Offering to the Eligible Employees of the Company or a Designated Subsidiary shall be deemed a separate Offering, even if the dates and other terms of the applicable Offering Periods of each such Offering are identical, and the provisions of the Plan will separately apply to each Offering. To the extent permitted by Treas. Reg. § 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component need not be identical, provided that the terms of the Section 423 Component and an Offering thereunder together satisfy Treas. Reg. § 1.423-2(a)(2) and (a)(3).

 

 

2.18 “Offering Document” has the meaning given to such term in Section 4.1.

 

2.19 “Offering Period” has the meaning given to such term in Section 4.1.

 

2.20 “Parent” means any corporation, other than the Company, in an unbroken chain of corporations ending with the Company if, at the time of the determination, each of the corporations other than the Company owns shares possessing 50% or more of the total combined voting power of all classes of shares in one of the other corporations in such chain.

 

2.21 “Participant” means any Eligible Employee who has executed a subscription agreement and been granted rights to purchase Shares pursuant to this Plan.

 

2.22 “Payday” means the regular and recurring established day for payment of Compensation to an Employee of the Company or any Designated Subsidiary.

 

2.23 “Plan” means this 2025 Employee Share Purchase Plan, including both the Section 423 Component and Non-Section 423 Component and any other sub-plans or appendices hereto, as amended from time to time.

 

2.24 “Purchase Date” means the last Trading Day of each Offering Period or such other date as determined by the Administrator and set forth in the Offering Document.

 

2.25 “Purchase Price” means the purchase price designated by the Administrator in the applicable Offering Document (which purchase price, for purposes of the Section 423 Component, shall not be less than 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower); provided, however, that, in the event no purchase price is designated by the Administrator in the applicable Offering Document, the purchase price for the Offering Periods covered by such Offering Document shall be 85% of the Fair Market Value of a Share on the Enrollment Date or on the Purchase Date, whichever is lower; provided, further, that the Purchase Price may be adjusted by the Administrator pursuant to Article VIII and shall not be less than the par value of a Share (if any).

 

2.26 “Section 423 Component” means those Offerings under the Plan, together with the sub-plans, appendices, rules or procedures, if any, adopted by the Administrator as a part of this Plan, in each case, pursuant to which rights to purchase Shares during an Offering Period may be granted to Eligible Employees that are intended to satisfy the requirements for rights to purchase Shares granted pursuant to an “employee stock purchase plan” that are set forth under Section 423 of the Code.

 

2.27  “Securities Act” means the U.S. Securities Act of 1933, as amended.

 

2.28 “Share” means a Common Share.

 

2.29 “Subsidiary” means any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of the determination, each of the corporations other than the last corporation in an unbroken chain owns shares possessing 50% or more of the total combined voting power of all classes of shares in one of the other corporations in such chain; provided, however, that a limited liability company or partnership may be treated as a Subsidiary to the extent either (a) such entity is treated as a disregarded entity under Treasury Regulation Section 301.7701-3(a) by reason of the Company or any other Subsidiary that is a corporation being the sole owner of such entity, or (b) such entity elects to be classified as a corporation under Treasury Regulation Section 301.7701-3(a) and such entity would otherwise qualify as a Subsidiary. In addition, with respect to the Non-Section 423 Component, Subsidiary shall include any corporate or non-corporate entity in which the Company has a direct or indirect equity interest or significant business relationship.

 

 

2.30 “Trading Day” means a day on which national stock exchanges in the United States are open for trading.

 

2.31 “Treas. Reg.” means U.S. Department of the Treasury regulations.

 

Article III.
SHARES SUBJECT TO THE PLAN

 

3.1 Number of Shares. Subject to Article VIII, the aggregate number of Shares that may be issued pursuant to rights granted under the Plan shall be [●]¹ Shares. In addition to the foregoing, subject to Article VIII, on the first day of each calendar year beginning on January 1, 2026 and ending on and including January 1, 2035, the number of Shares available for issuance under the Plan shall be increased by that number of Shares equal to the lesser of (a) [1]% of the Shares outstanding on the last day of the immediately preceding calendar year, and (b) such smaller number of Shares as may be determined by the Board. If any right granted under the Plan shall for any reason terminate without having been exercised, the Shares not purchased under such right shall again become available for issuance under the Plan. Notwithstanding anything in this Section 3.1 to the contrary, the number of Shares that may be issued or transferred pursuant to the rights granted under the Section 423 Component of the Plan shall not exceed an aggregate of [●] Shares, subject to Article VIII.

 

3.2 Shares Distributed. Any Shares distributed pursuant to the Plan may consist, in whole or in part, of authorized and unissued Shares, treasury shares or Shares purchased on the open market.

 

Article IV.
Offering Periods; Offering Documents; Purchase Dates

 

4.1 Offering Periods. The Administrator may from time to time grant or provide for the grant of rights to purchase Shares under the Plan to Eligible Employees during one or more periods (each, an “Offering Period”) selected by the Administrator. The terms and conditions applicable to each Offering Period shall be set forth in an “Offering Document” adopted by the Administrator, which Offering Document shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate and shall be incorporated by reference into and made part of the Plan and shall be attached hereto as part of the Plan. The provisions of separate Offerings or Offering Periods under the Plan need not be identical.

 

4.2 Offering Documents. Each Offering Document with respect to an Offering Period shall specify (through incorporation of the provisions of this Plan by reference or otherwise):

 

(a) the length of the Offering Period, which period shall not exceed twenty-seven months;

 

1

2% of the share capital calculated immediately after the offering

 

 

(b) the maximum number of Shares that may be purchased by any Eligible Employee during such Offering Period, which, in the absence of a contrary designation by the Administrator, shall be 1,000 Shares or, if lesser and with respect to the Section 423 Component only, the number of Shares equal to $25,000 divided by the Fair Market Value of a Share on the Enrollment Date, which price shall be adjusted if the price per Share is adjusted pursuant to Article VIII; and

 

(c) such other provisions as the Administrator determines are appropriate, subject to the Plan.

 

Article V.
ELIGIBILITY AND PARTICIPATION

 

5.1 Eligibility. Any Eligible Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of this Article V and, for the Section 423 Component, the limitations imposed by Section 423(b) of the Code.

 

5.2 Enrollment in Plan.

 

(a) Except as otherwise set forth in an Offering Document or determined by the Administrator, an Eligible Employee may become a Participant in the Plan for an Offering Period by delivering a subscription agreement to the Company by such time prior to the Enrollment Date for such Offering Period (or such other date specified in the Offering Document) designated by the Administrator and in such form as the Company provides.

 

(b) Each subscription agreement shall designate a whole percentage of such Eligible Employee’s Compensation to be withheld by the Company or the Designated Subsidiary employing such Eligible Employee on each Payday during the Offering Period as payroll deductions under the Plan. The percentage of Compensation designated by an Eligible Employee may not be less than 1% and may not be more than the maximum percentage specified by the Administrator in the applicable Offering Document (which percentage shall be 20% in the absence of any such designation) as payroll deductions, provided that, in no event shall the actual amount withheld on any Payday hereunder exceed the net amount payable to the Eligible Employee on such Payday after taxes and any other applicable deductions therefrom (and if amounts to be withheld hereunder would otherwise result in a negative payment to the Eligible Employee on such Payday, the amount to be withheld hereunder shall instead be reduced by the least amount necessary to avoid a negative payment amount for the Eligible Employee on such Payday, as determined by the Administrator. The payroll deductions made for each Participant shall be credited to an account for such Participant under the Plan and shall be deposited with the general funds of the Company. Unless determined otherwise by the Administrator, all payroll deductions in respect of the Non-Section 423 Component for Employees shall be made only by after-tax payroll deductions by the Company or Designated Subsidiary.

 

(c) A Participant may increase or decrease the percentage of Compensation designated in his or her subscription agreement, subject to the limits of this Section 5.2, or may suspend his or her payroll deductions, at any time during an Offering Period; provided, however, that the Administrator may limit the number of changes a Participant may make to his or her payroll deduction elections during each Offering Period in the applicable Offering Document (and in the absence of any specific designation by the Administrator, a Participant shall be allowed to decrease or increase his or her payroll deduction elections one time during each Offering Period). Any such change or suspension of payroll deductions shall be effective with the first full payroll period following five business days after the Company’s receipt of the new subscription agreement (or such shorter or longer period as may be specified by the Administrator in the applicable Offering Document). In the event a Participant suspends his or her payroll deductions, such Participant’s cumulative payroll deductions prior to the suspension shall remain in his or her account and shall be applied to the purchase of Shares on the next occurring Purchase Date and shall not be paid to such Participant unless he or she withdraws from participation in the Plan pursuant to Article VII.

 

 

(d) Except as otherwise set forth in an Offering Document or determined by the Administrator, a Participant may participate in the Plan only by means of payroll deduction and may not make contributions by lump sum payment for any Offering Period.

 

5.3 Payroll Deductions. Except as otherwise provided in the applicable Offering Document, payroll deductions for a Participant shall commence on the first Payday following the Enrollment Date and shall end on the last Payday in the Offering Period to which the Participant’s authorization is applicable, unless sooner terminated by the Participant as provided in Article VII or suspended by the Participant or the Administrator as provided in Section 5.2 and Section 5.6, respectively. Notwithstanding any other provisions of the Plan to the contrary, in non-U.S. jurisdictions where participation in the Plan through payroll deductions is prohibited, the Administrator may provide that an Eligible Employee may elect to participate through contributions to the Participant’s account under the Plan in a form acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that, for any Offering under the Section 423 Component, the Administrator shall take into consideration any limitations under Section 423 of the Code when applying an alternative method of contribution.

 

5.4 Effect of Enrollment. A Participant’s completion of a subscription agreement will enroll such Participant in the Plan for each subsequent Offering Period on the terms contained therein until the Participant either submits a new subscription agreement, withdraws from participation under the Plan as provided in Article VII or otherwise becomes ineligible to participate in the Plan.

 

5.5 Limitation on Purchase of Shares. An Eligible Employee may be granted rights under the Section 423 Component only if such rights, together with any other rights granted to such Eligible Employee under “employee stock purchase plans” of the Company, any Parent or any Subsidiary, as specified by Section 423(b)(8) of the Code, do not permit such employee’s rights to purchase shares of the Company or any Parent or Subsidiary to accrue at a rate that exceeds $25,000 of the fair market value of such shares (determined as of the first day of the Offering Period during which such rights are granted) for each calendar year in which such rights are outstanding at any time. This limitation shall be applied in accordance with Section 423(b)(8) of the Code.

 

5.6 Suspension of Payroll Deductions. Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 5.5 (with respect to the Section 423 Component) or the other limitations set forth in this Plan, a Participant’s payroll deductions may be suspended by the Administrator at any time during an Offering Period. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares by reason of Section 423(b)(8) of the Code, Section 5.5 or the other limitations set forth in this Plan shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Purchase Date.

 

5.7 Non-U.S. Employees. In order to facilitate participation in the Plan, the Administrator may provide for such special terms applicable to Participants who are citizens or residents of a non-U.S. jurisdiction, or who are employed by a Designated Subsidiary outside of the United States, as the Administrator may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Except as permitted by Section 423 of the Code, with respect to the Section 423 Component, such special terms may not be more favorable than the terms of rights granted under the Section 423 Component to Eligible Employees who are residents of the United States. Such special terms may be set forth in an addendum to the Plan in the form of an appendix or sub-plan (which appendix or sub-plan may be designed to govern Offerings under the Section 423 Component or the Non-Section 423 Component, as determined by the Administrator). To the extent that the terms and conditions set forth in an appendix or sub-plan conflict with any provisions of the Plan, the provisions of the appendix or sub-plan shall govern. The adoption of any such appendix or sub-plan shall be pursuant to Section 11.2(f). Without limiting the foregoing, the Administrator is specifically authorized to adopt rules and procedures, with respect to Participants who are non-U.S. nationals or employed in non-U.S. jurisdictions, regarding the exclusion of particular Subsidiaries from participation in the Plan, eligibility to participate, the definition of Compensation, handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures, establishment of bank or trust accounts to hold payroll deductions or contributions.

 

 

5.8 Leave of Absence. During leaves of absence approved by the Company meeting the requirements of Treasury Regulation Section 1.421-1(h)(2) under the Code, unless otherwise set forth in the terms of an Offering Document, a Participant may continue participation in the Plan by making cash payments to the Company on his or her normal Payday equal to the Participant’s authorized payroll deduction.

 

Article VI.
grant and Exercise of rights

 

6.1 Grant of Rights. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted a right to purchase the maximum number of Shares specified under Section 4.2, subject to the limits in Section 5.5, and shall have the right to buy, on each Purchase Date during such Offering Period (at the applicable Purchase Price), such number of whole Shares as is determined by dividing (a) such Participant’s payroll deductions accumulated prior to such Purchase Date and retained in the Participant’s account as of the Purchase Date, by (b) the applicable Purchase Price (rounded down to the nearest Share). The right shall expire on the last day of the Offering Period, or if earlier, the date on which the Participant withdraws in accordance with Section 7.1 or Section 7.3.

 

6.2 Exercise of Rights. On each Purchase Date, each Participant’s accumulated payroll deductions and any other additional payments specifically provided for in the applicable Offering Document will be applied to the purchase of whole Shares, up to the maximum number of Shares permitted pursuant to the terms of the Plan and the applicable Offering Document, at the Purchase Price. No fractional Shares shall be issued upon the exercise of rights granted under the Plan, unless the Offering Document specifically provides otherwise. Any cash in lieu of fractional Shares remaining after the purchase of whole Shares upon exercise of a purchase right will be credited to a Participant’s account and carried forward and applied toward the purchase of whole Shares for the next following Offering Period, unless the Administrator provides that such amounts should be returned to the Participant in one lump sum payment in a subsequent payroll check. Shares issued pursuant to the Plan may be evidenced in such manner as the Administrator may determine and may be issued in certificated form or issued pursuant to book-entry procedures.

 

6.3 Pro Rata Allocation of Shares. If the Administrator determines that, on a given Purchase Date, the number of Shares with respect to which rights are to be exercised may exceed (a) the number of Shares that were available for issuance under the Plan on the Enrollment Date of the applicable Offering Period, or (b) the number of Shares available for issuance under the Plan on such Purchase Date, the Administrator may in its sole discretion provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Purchase Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants for whom rights to purchase Shares are to be exercised pursuant to this Article VI on such Purchase Date, and shall either (i) continue all Offering Periods then in effect, or (ii) terminate any or all Offering Periods then in effect pursuant to Article IX. The Company may make pro rata allocation of the Shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company’s shareholders subsequent to such Enrollment Date. The balance of the amount credited to the account of each Participant that has not been applied to the purchase of Shares shall be paid to such Participant without interest in one lump sum in cash as soon as reasonably practicable after the Purchase Date or such earlier date as determined by the Administrator.

 

 

6.4 Withholding. At the time a Participant’s rights under the Plan are exercised, in whole or in part, or at the time some or all of the Shares issued under the Plan is disposed of, the Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, that arise upon the exercise of the right or the disposition of the Shares. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation or Shares received pursuant to the Plan the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Shares by the Participant.

 

6.5 Conditions to Issuance of Shares. The Company shall not be required to issue or deliver any certificate or certificates for, or make any book entries evidencing, Shares purchased upon the exercise of rights under the Plan prior to fulfillment of all of the following conditions: (a) the admission of such Shares to listing on all stock exchanges, if any, on which the Shares are then listed; (b) the completion of any registration or other qualification of such Shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, that the Administrator shall, in its absolute discretion, deem necessary or advisable; (c) the obtaining of any approval or other clearance from any state or federal governmental agency that the Administrator shall, in its absolute discretion, determine to be necessary or advisable; (d) the payment to the Company of all amounts that it is required to withhold under federal, state or local law upon exercise of the rights, if any; and (e) the lapse of such reasonable period of time following the exercise of the rights as the Administrator may from time to time establish for reasons of administrative convenience.

 

Article VII.
WITHDRAWAL; CESSATION OF ELIGIBILITY

 

7.1 Withdrawal. A Participant may withdraw all but not less than all of the payroll deductions credited to his or her account and not yet used to exercise his or her rights under the Plan at any time by giving written notice to the Company in a form acceptable to the Company no later than one week prior to the end of the Offering Period (or such shorter or longer period as may be specified by the Administrator in the applicable Offering Document). All of the Participant’s payroll deductions credited to his or her account during an Offering Period shall be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal and such Participant’s rights for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of any subsequent Offering Period unless the Participant is an Eligible Employee and timely delivers to the Company a new subscription agreement by the applicable enrollment deadline for any such subsequent Offering Period, as determined by the Administrator.

 

7.2 Future Participation. A Participant’s withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan that may hereafter be adopted by the Company or a Designated Subsidiary or in subsequent Offering Periods that commence after the termination of the Offering Period from which the Participant withdraws.

 

 

7.3 Cessation of Eligibility. Upon a Participant’s ceasing to be an Eligible Employee for any reason, he or she shall be deemed to have elected to withdraw from the Plan pursuant to this Article VII and the payroll deductions credited to such Participant’s account during the Offering Period shall be paid to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 12.4, as soon as reasonably practicable, and such Participant’s rights for the Offering Period shall be automatically terminated. If a Participant transfers employment from the Company or any Designated Subsidiary, or the Company (as the case may be), participating in the Section 423 Component to any Designated Subsidiary participating in the Non-Section 423 Component, such transfer shall not be treated as a termination of employment, but the Participant shall immediately cease to participate in the Section 423 Component; however, any contributions made for the Offering Period in which such transfer occurs shall be transferred to the Non-Section 423 Component, and such Participant shall immediately join the then-current Offering under the Non-Section 423 Component upon the same terms and conditions in effect for the Participant’s participation in the Section 423 Component, except for such modifications otherwise applicable for Participants in such Offering. A Participant who transfers employment from any Designated Subsidiary participating in the Non-Section 423 Component to the Company or any Designated Subsidiary participating in the Section 423 Component shall not be treated as terminating the Participant’s employment and shall remain a Participant in the Non-Section 423 Component until the earlier of (i) the end of the current Offering Period under the Non-Section 423 Component or (ii) the Enrollment Date of the first Offering Period in which the Participant is eligible to participate following such transfer. Notwithstanding the foregoing, the Administrator may establish different rules to govern transfers of employment between entities participating in the Section 423 Component and the Non-Section 423 Component, consistent with the applicable requirements of Section 423 of the Code.

 

Article VIII.
Adjustments upon Changes in SHARES

 

8.1 Changes in Capitalization. Subject to Section 8.3, in the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), change in control, reorganization, merger, amalgamation, consolidation, combination, repurchase, redemption, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event, as determined by the Administrator, affects the Shares such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any outstanding purchase rights under the Plan, the Administrator shall make equitable adjustments, if any, to reflect such change with respect to (a) the aggregate number and type of Shares (or other securities or property) that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 and the limitations established in each Offering Document pursuant to Section 4.2 on the maximum number of Shares that may be purchased); (b) the class(es) and number of Shares and price per Share subject to outstanding rights; and (c) the Purchase Price with respect to any outstanding rights.

 

8.2 Other Adjustments. Subject to Section 8.3, in the event of any transaction or event described in Section 8.1 or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in Applicable Law or accounting principles, the Administrator, in its discretion, and on such terms and conditions as it deems appropriate, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any right under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

 

(a) To provide for either (i) termination of any outstanding right in exchange for an amount of cash, if any, equal to the amount that would have been obtained upon the exercise of such right had such right been currently exercisable or (ii) the replacement of such outstanding right with other rights or property selected by the Administrator in its sole discretion;

 

 

(b) To provide that the outstanding rights under the Plan shall be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar rights covering the shares of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

 

(c) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding rights under the Plan and/or in the terms and conditions of outstanding rights and rights that may be granted in the future;

 

(d) To provide that Participants’ accumulated payroll deductions may be used to purchase Shares prior to the next occurring Purchase Date on such date as the Administrator determines in its sole discretion and the Participants’ rights under the ongoing Offering Period(s) shall be terminated; and

 

(e) To provide that all outstanding rights shall terminate without being exercised.

 

8.3 No Adjustment Under Certain Circumstances. Unless determined otherwise by the Administrator, no adjustment or action described in this Article VIII or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Section 423 Component of the Plan to fail to satisfy the requirements of Section 423 of the Code.

 

8.4 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Administrator under the Plan, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares subject to outstanding rights under the Plan or the Purchase Price with respect to any outstanding rights.

 

Article IX.
Amendment, modification and termination

 

9.1 Amendment, Modification and Termination. The Administrator may amend, suspend or terminate the Plan at any time and from time to time; provided, however, that approval of the Company’s shareholders shall be required to amend the Plan to: (a) increase the aggregate number, or change the type, of shares that may be sold pursuant to rights under the Plan under Section 3.1 (other than an adjustment as provided by Article VIII) or (b) change the corporations or classes of corporations whose employees may be granted rights under the Plan.

 

9.2 Certain Changes to Plan. Without shareholder consent and without regard to whether any Participant rights may be considered to have been adversely affected (and, with respect to the Section 423 Component of the Plan, to the extent permitted by Section 423 of the Code), the Administrator shall be entitled to change the Offering Periods, add or revise Offering Period share limits, limit the frequency and/or number of changes in the amount withheld from Compensation during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion to be advisable that are consistent with the Plan.

 

 

9.3 Actions In the Event of Unfavorable Financial Accounting Consequences. In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Administrator may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:

 

(a) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;

 

(b) shortening any Offering Period so that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the Administrator action;

 

(c) allocating Shares; and

 

(d) such other changes and modifications as the Administrator determines are necessary or appropriate.

 

Such modifications or amendments shall not require shareholder approval or the consent of any Participant.

 

9.4 Payments Upon Termination of Plan. Upon termination of the Plan, the balance in each Participant’s Plan account shall be refunded as soon as practicable after such termination, without any interest thereon, or the Offering Period may be shortened so that the purchase of Shares occurs prior to the termination of the Plan.

 

Article X.
TERM OF PLAN

 

The Plan shall become effective on the Effective Date. The effectiveness of the Plan shall be subject to approval of the Plan by the Company’s shareholders within twelve months before or after the date the Plan is first approved by the Board. No right may be granted under the Plan prior to such shareholder approval. No rights may be granted under the Plan during any period of suspension of the Plan or after termination of the Plan.

 

Article XI.
ADMINISTRATION

 

11.1 Administrator. Unless otherwise determined by the Board, the Administrator of the Plan shall be the Compensation Committee of the Board (or another committee or a subcommittee of the Board to which the Board delegates administration of the Plan). The Board may at any time vest in the Administrator any authority or duties for administration of the Plan. The Administrator may delegate administrative tasks under the Plan to the services of an Agent or Employees to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant.

 

 

11.2 Authority of Administrator. The Administrator shall have the power, subject to, and within the limitations of, the express provisions of the Plan:

 

(a) To determine when and how rights to purchase Shares shall be granted and the provisions of each offering of such rights (which need not be identical).

 

(b) To designate from time to time which Subsidiaries of the Company shall be Designated Subsidiaries, which designation may be made without the approval of the shareholders of the Company.

 

(c) To impose a mandatory holding period pursuant to which Employees may not dispose of or transfer Shares purchased under the Plan for a period of time determined by the Administrator in its discretion.

 

(d) To construe and interpret the Plan and rights granted under it, and to establish, amend and revoke rules and regulations for its administration. The Administrator, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.

 

(e) To amend, suspend or terminate the Plan as provided in Article IX.

 

(f) Generally, to exercise such powers and to perform such acts as the Administrator deems necessary or expedient to promote the best interests of the Company and its Subsidiaries and to carry out the intent that the Plan be treated as an “employee stock purchase plan” within the meaning of Section 423 of the Code for the Section 423 Component.

 

(g) The Administrator may adopt sub-plans applicable to particular Designated Subsidiaries or locations, which sub-plans may be designed to be outside the scope of Section 423 of the Code. The rules of such sub-plans may take precedence over other provisions of this Plan, with the exception of Section 3.1 hereof, but unless otherwise superseded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan.

 

11.3 Decisions Binding. The Administrator’s interpretation of the Plan, any rights granted pursuant to the Plan, any subscription agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties.

 

Article XII.
MISCELLANEOUS

 

12.1 Restriction upon Assignment. A right granted under the Plan shall not be transferable other than by will or the applicable laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant. Except as provided in Section 12.4 hereof, a right under the Plan may not be exercised to any extent except by the Participant. The Company shall not recognize and shall be under no duty to recognize any assignment or alienation of the Participant’s interest in the Plan, the Participant’s rights under the Plan or any rights thereunder.

 

 

12.2 Rights as a Shareholder. With respect to Shares subject to a right granted under the Plan, a Participant shall not be deemed to be a shareholder of the Company, and the Participant shall not have any of the rights or privileges of a shareholder, until such Shares have been issued to the Participant or his or her nominee following exercise of the Participant’s rights under the Plan. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash securities, or other property) or distribution or other rights for which the record date occurs prior to the date of such issuance, except as otherwise expressly provided herein or as determined by the Administrator.

 

12.3 Interest. No interest shall accrue on the payroll deductions or contributions of a Participant under the Plan.

 

12.4 Designation of Beneficiary.

 

(a) A Participant may, in the manner determined by the Administrator, file a written designation of a beneficiary who is to receive any Shares and/or cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to a Purchase Date on which the Participant’s rights are exercised but prior to delivery to such Participant of such Shares and cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the Participant’s rights under the Plan. If the Participant is married and resides in a community property state, a designation of a person other than the Participant’s spouse as his or her beneficiary shall not be effective without the prior written consent of the Participant’s spouse.

 

(b) Such designation of beneficiary may be changed by the Participant at any time by written notice to the Company. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company shall deliver such Shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

12.5 Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

12.6 Equal Rights and Privileges. Subject to Section 5.7, all Eligible Employees will have equal rights and privileges under the Section 423 Component so that the Section 423 Component of this Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Subject to Section 5.7, any provision of the Section 423 Component that is inconsistent with Section 423 of the Code will, without further act or amendment by the Company, the Board or the Administrator, be reformed to comply with the equal rights and privileges requirement of Section 423 of the Code. Eligible Employees participating in the Non-Section 423 Component need not have the same rights and privileges as other Eligible Employees participating in the Non-Section 423 Component or as Eligible Employees participating in the Section 423 Component.

 

12.7 Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

 

12.8 Reports. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of Shares purchased and the remaining cash balance, if any.

 

 

12.9 No Employment Rights. Nothing in the Plan shall be construed to give any person (including any Eligible Employee or Participant) the right to remain in the employ of the Company or any Parent or Subsidiary or affect the right of the Company or any Parent or Subsidiary to terminate the employment of any person (including any Eligible Employee or Participant) at any time, with or without cause.

 

12.10 Notice of Disposition of Shares. Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of a right under the Section 423 Component of the Plan if such disposition or transfer is made: (a) within two years from the Enrollment Date of the Offering Period in which the Shares were purchased or (b) within one year after the Purchase Date on which such Shares were purchased. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Participant in such disposition or other transfer.

 

12.11 Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company or any Subsidiary will be liable to any Participant, former Participant, designated beneficiary or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any Offering Period, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company or any Subsidiary.  The Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any Subsidiary that has been or will be granted or delegated any duty or power relating to the Plan’s administration or interpretation, against any cost or expense (including attorneys’ fees) or liability (including any sum paid in settlement of a claim with the Administrator’s approval) arising from any act or omission concerning this Plan unless arising from such person’s own fraud or bad faith.

 

12.12 Data Privacy. As a condition for participation in the Plan, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this section by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan.  The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security number, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and participation details, to implement, manage and administer the Plan and any Offering Period(s) (the “Data”).  The Company and its Subsidiaries and affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan and any Offering Period(s), and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management.  These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country.  By participating in any Offering Period under the Plan, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares.  The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan.  A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 12.12 in writing, without cost, by contacting the local human resources representative.  If the Participant refuses or withdraws the consents in this Section 12.12, and the Company may cancel Participant’s ability to participate in the Plan or any Offering Period(s).  For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.

 

 

12.13 Conformity to Securities Laws.  Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws.  Notwithstanding anything herein to the contrary, the Plan and all Offering Periods will be administered only in conformance with Applicable Laws.  To the extent Applicable Laws permit, the Plan and all Offering Periods will be deemed amended as necessary to conform to Applicable Laws.

 

12.14 Relationship to Other Benefits.  No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.

 

12.15 Governing Law. The Plan and any agreements hereunder shall be administered, interpreted and enforced in accordance with the laws of the State of Israel, disregarding any state’s choice of law principles requiring the application of a jurisdiction’s laws other than the State of Israel. Certain definitions, which refer to the laws of such jurisdiction, shall be construed in accordance with other such laws. The competent courts located in Tel-Aviv-Jaffa, Israel shall have exclusive jurisdiction over any dispute arising out of or in connection with this Plan and any award granted hereunder.

 

12.16 Electronic Forms. To the extent permitted by Applicable Law and in the discretion of the Administrator, an Eligible Employee may submit any form or notice as set forth herein by means of an electronic form approved by the Administrator. Before the commencement of an Offering Period, the Administrator shall prescribe the time limits within which any such electronic form shall be submitted to the Administrator with respect to such Offering Period in order to be a valid election.

 

12.17 Section 409A. The Section 423 Component of the Plan and the rights to purchase Shares granted pursuant to Offerings thereunder are intended to be exempt from the application of Section 409A of the Code and the U.S. Department of Treasury Regulations and other interpretive guidance issued thereunder (collectively, “Section 409A”). Neither the Non-Section 423 Component nor any right to purchase Shares granted pursuant to an Offering thereunder is intended to constitute or provide for “nonqualified deferred compensation” within the meaning of Section 409A. Notwithstanding any provision of the Plan to the contrary, if the Administrator determines that any right to purchase Shares granted under the Plan may be or become subject to Section 409A or that any provision of the Plan may cause a right to purchase Shares granted under the Plan to be or become subject to Section 409A, the Administrator may adopt such amendments to the Plan and/or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions as the Administrator determines are necessary or appropriate to avoid the imposition of taxes under Section 409A, either through compliance with the requirements of Section 409A or with an available exemption therefrom.

 

* * * * *

 

 

ETORO GROUP LTD.

2025 EMPLOYEE SHARE PURCHASE PLAN

ISRAEI APPENDIX

 

This Israeli Appendix (the “Appendix”) to the 2025 Employee Share Purchase Plan (as amended from time to time, the “Plan”) of eToro Group Ltd. (the “Company”) shall apply only to persons who are, or are deemed to be, residents of the State of Israel for Israeli tax purposes.

 

1. GENERAL

 

1.1. The Administrator, in its discretion, may grant a right to purchase Awards to Eligible Employees and shall determine whether any Award is intended to be a 102 Award. Each exercise of a right to purchase an Award shall be evidenced by a Subscription Agreement, which shall expressly identify the Award type, and be in such form and contain such provisions, as the Administrator shall from time to time deem appropriate.

 

1.2. The Plan shall apply to any Awards and rights to purchase Awards, in each case granted pursuant to this Appendix, provided, that the provisions of this Appendix shall supersede and govern in the case of any inconsistency or conflict, either explicit or implied, arising between the provisions of this Appendix and the Plan.

 

1.3. Unless otherwise defined in this Appendix, capitalized terms contained herein shall have the same meanings given to them in the Plan.

 

2. DEFINITIONS.

 

2.1. “102 Award” means any Award intended to qualify (as set forth in the Subscription Agreement) and which qualifies under Section 102, provided it is settled only in Shares.

 

2.2. “102 Capital Gain Track Award” means any Award granted by the Company to an Employee pursuant to Section 102(b)(2) or (3) (as applicable) of the Ordinance under the capital gain track.

 

2.3. “102 Non-Trustee Award” means any Award granted by the Company to an Employee pursuant to Section 102(c) of the Ordinance without a Trustee.

 

2.4. “102 Ordinary Income Track Award” means any Award granted by the Company to an Employee pursuant to Section 102(b)(1) of the Ordinance under the ordinary income track.

 

2.5.  “102 Trustee Awards” means, collectively, 102 Capital Gain Track Awards and 102 Ordinary Income Track Awards.

 

2.6. “Affiliate” means, with respect to any person, any other person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such person (with the term “control” or “controlled by” within the meaning of Rule 405 of Regulation C under the Securities Act), including, without limitation, any Parent or Subsidiary.

 

 

2.7. “Award” shall mean any Share purchased according to the Plan.

 

2.8. “Election” as defined in Section ‎3.2 below.

 

2.9. “Employee” means an “employee” within the meaning of Section 102(a) of the Ordinance (which as of the date of the adoption of this Appendix means (i) an individual employed by an Employer, and (ii) an individual who is serving and is engaged personally (and not through an entity) as an “office holder” by an Employer, excluding any controlling shareholder as to such term is defined in Section 32(9) of the Ordinance.), provided such Employee also satisfies the eligibility requirements under the Plan.

 

2.10. “Employer” means, for purpose of a 102 Trustee Award, an Affiliate, Subsidiary or Parent which is an “employing company” within the meaning and subject to the conditions of Section 102(a) of the Ordinance.

 

2.11. “ITA” means the Israel Tax Authority.

 

2.12.  “Ordinance” means the Israeli Income Tax Ordinance (New Version), 1961, including the Rules and any other regulations, rules, orders or procedures promulgated thereunder, as may be amended or replaced from time to time.

 

2.13. “Required Holding Period” as defined in Section ‎3.5.1 below.

 

2.14. “Rules” means the Income Tax Rules (Tax Benefits in Share Issuance to Employees) 5763-2003.

 

2.15. “Section 102” means Section 102 of the Ordinance.

 

2.16. “Trust Agreement” means the agreement to be signed between the Company, an Employer and the Trustee for the purposes of Section 102.

 

2.17. “Trustee” means the trustee appointed by the Company’s Administrator to hold the Awards and approved by the ITA.

 

2.18. “Subscription Agreement” means a written or electronic agreement between the Company and the Participant or a written or electronic notice delivered by the Company evidencing the exercise of an Award granted pursuant to the Plan, in substantially such form or forms and containing such terms and conditions, as the Administrator shall from time to time approve.

 

2.19. “Withholding Obligations” as defined in Section ‎4.5 below.

 

3. 102 AWARDS

 

3.1. Tracks. Awards granted pursuant to this Section ‎3 are intended to be granted as either 102 Capital Gain Track Awards or 102 Ordinary Income Track Awards. 102 Trustee Awards shall be granted subject to the special terms and conditions contained in this Section ‎3 and the general terms and conditions of the Plan, except for any provisions of the Plan applying to Awards under different tax laws or regulations.

 

 

3.2. Election of Track. Subject to Applicable Law, the Company may grant only one type of 102 Trustee Award at any given time to all Employees who are to be granted 102 Trustee Awards pursuant to this Appendix, and shall file an election with the ITA regarding the type of 102 Trustee Award it elects to grant before the date of grant of any 102 Trustee Award (the “Election”). Such Election shall also apply to any other securities received by any Employee as a result of holding the 102 Trustee Awards. The Company may change the type of 102 Trustee Award that it elects to grant only after the expiration of at least 12 months from the end of the year in which the first grant was made in accordance with the previous Election, or as otherwise provided by Applicable Law. Any Election shall not prevent the Company from granting 102 Non-Trustee Awards.

 

3.3. Eligibility for Awards. Subject to Applicable Law, 102 Awards may only be granted to Employees. Such 102 Awards may either be granted to a Trustee or granted under Section 102 without a Trustee.

 

3.4. 102 Award Grant Date.

 

3.4.1. Each 102 Award will be deemed granted on the date determined by the Administrator, subject to the provisions of the Plan, provided that (i) the Employee has signed all documents required by the Company or pursuant to Applicable Law, and (ii) with respect to any 102 Trustee Award, the Company has provided all applicable documents to the Trustee in accordance with the guidelines published by the ITA.

 

3.4.2. Unless otherwise permitted by the Ordinance, any grants of 102 Trustee Awards that are made on or after the date of the adoption of the Plan and this Appendix or an amendment to the Plan or this Appendix, as the case may be, that may become effective only at the expiration of thirty (30) days after the filing of the Plan and this Appendix or any amendment thereof (as the case may be) with the ITA in accordance with the Ordinance shall be conditional upon the expiration of such 30-day period, and such condition shall be read and is incorporated by reference into any corporate resolutions approving such grants and into any Subscription Agreement evidencing such grants (whether or not explicitly referring to such condition), and the date of grant shall be at the expiration of such 30-day period, whether or not the date of grant indicated therein corresponds with this Section. In the case of any contradiction, this provision and the date of grant determined pursuant hereto shall supersede and be deemed to amend any date of grant indicated in any corporate resolution or Subscription Agreement.

 

3.5. 102 Trustee Awards.

 

3.5.1. Each Share issued pursuant to the 102 Trustee Award shall be allocated or issued to and registered in the name of the Trustee and shall be held in trust or controlled by the Trustee for the benefit of the Participant for the requisite period prescribed by the Ordinance (the “Required Holding Period”). In the event that the requirements under Section 102 to qualify an Award as a 102 Trustee Award are not met, then the Award may be treated as a 102 Non-Trustee Award (as determined by the Company), all in accordance with the provisions of the Ordinance. After the expiration of the Required Holding Period, the Trustee may release such 102 Trustee Awards and any such Shares, provided that (i) the Trustee has received an acknowledgment from the ITA that the Participant has paid any applicable taxes due pursuant to the Ordinance, or (ii) the Trustee and/or the Company and/or the Employer withhold(s) all applicable taxes and compulsory payments due pursuant to the Ordinance arising from the 102 Trustee Awards. The Trustee shall not release any 102 Trustee Awards prior to the payment in full of the Participant’s tax and compulsory payments arising from such 102 Trustee Awards or the withholding referred to in (ii) above.

 

 

3.5.2. Each 102 Trustee Award shall be subject to the relevant terms of the Ordinance, the Rules and any determinations, rulings or approvals issued by the ITA, which shall be deemed an integral part of the 102 Trustee Awards and shall prevail over any term contained in the Plan, this Appendix or the Subscription Agreement that is not consistent therewith. Any provision of the Ordinance, the Rules and any determinations, rulings or approvals by the ITA not expressly specified in the Plan, this Appendix or Subscription Agreement that are necessary to receive or maintain any tax benefit pursuant to Section 102 shall be binding on the Participant. Any Participant granted a 102 Trustee Award shall comply with the Ordinance and the terms and conditions of the Trust Agreement entered into between the Company and the Trustee. The Participant shall execute any and all documents that the Company and/or the Affiliate and/or the Trustee determine from time to time to be necessary in order to comply with the Ordinance and the Rules.

 

3.5.3. During the Required Holding Period, the Participant shall not release from trust or sell, assign, transfer or give as collateral, the Shares issuable in connection with a 102 Trustee Award and/or any securities issued or distributed with respect thereto, until the expiration of the Required Holding Period. Notwithstanding the above, if any such sale, release or other action occurs during the Required Holding Period it may result in adverse tax consequences to the Participant under Section 102 and the Rules, which shall apply to and shall be borne solely by such Participant. Subject to the foregoing, the Trustee may, pursuant to a written request from the Participant, but subject to the terms of the Plan and this Appendix, release and transfer such Shares to a designated third party, provided that both of the following conditions have been fulfilled prior to such release or transfer: (i) payment has been made to the ITA of all taxes and compulsory payments required to be paid upon the release and transfer of the Shares, and confirmation of such payment has been received by the Trustee and the Company, and (ii) the Trustee has received written confirmation from the Company that all requirements for such release and transfer have been fulfilled according to the terms of the Company’s corporate documents, any agreement governing the Shares, the Plan, this Appendix, the Subscription Agreement and any Applicable Law.

 

3.5.4. Upon or after receipt of a 102 Trustee Award, if required, the Participant may be required to sign an undertaking to release the Trustee from any liability with respect to any action or decision duly taken and executed in good faith by the Trustee in relation to the Plan, this Appendix, or any 102 Trustee Awards granted to such Participant hereunder.

 

 

3.6. 102 Non-Trustee Awards. The foregoing provisions of this Section ‎3 relating to 102 Trustee Awards shall not apply with respect to 102 Non-Trustee Awards, which shall, however, be subject to the relevant provisions of Section 102 and the applicable Rules. The Administrator may determine that 102 Non-Trustee Awards and/or any securities issued or distributed with respect thereto, shall be allocated or issued to the Trustee, who shall hold such 102 Non-Trustee Award and all accrued rights thereon (if any) in trust for the benefit of the Participant and/or the Company, as the case may be, until the full payment of tax arising from the 102 Non-Trustee Awards and/or any securities issued or distributed with respect thereto. The Company may choose, alternatively, to require the Participant to provide the Company with a guarantee or other security, to the satisfaction of each of the Trustee and the Company, until the full payment of the applicable taxes.

 

3.7. Written Participant Undertaking. With respect to any 102 Trustee Award, as required by Section 102 and the Rules, by virtue of the receipt of such Award, the Participant is deemed to have provided, undertaken and confirmed the following written undertaking (and such undertaking is deemed incorporated into any documents signed by the Participant in connection with the grant of such Award), and which undertaking shall be deemed to apply and relate to all 102 Trustee Awards granted to the Participant, whether under the Plan and this Appendix or other plans maintained by the Company, and whether prior to or after the date hereof:

 

3.7.1. The Participant shall comply with all terms and conditions set forth in Section 102 with regard to the “Capital Gain Track” or the “Ordinary Income Track”, as applicable, and the applicable rules and regulations promulgated thereunder, as amended from time to time;

 

3.7.2. The Participant is familiar with, and understands the provisions of, Section 102 in general, and the tax arrangement under the “Capital Gain Track” or the “Ordinary Income Track” in particular, and its tax consequences; the Participant agrees that the 102 Trustee Awards will be held by a Trustee appointed pursuant to Section 102 for at least the duration of the “Holding Period” (as such term is defined in Section 102) under the “Capital Gain Track” or the “Ordinary Income Track”, as applicable. The Participant understands that any release of such 102 Trustee Awards or Shares from trust, or any sale of the Shares prior to the termination of the Holding Period, as defined above, will result in taxation at the marginal tax rate, in addition to deductions of appropriate social security, health tax contributions or other compulsory payments; and

 

3.7.3. The Participant agrees to the Trust Agreement signed between the Company, the Employer and the Trustee appointed pursuant to Section 102.

 

4. AGREEMENT REGARDING TAXES; DISCLAIMER

 

4.1. If the Company shall so require, as a condition of the release of Shares by the Trustee, a Participant shall agree that, no later than the date of such occurrence, the Participant will pay to the Company (or the Trustee, as applicable) or make arrangements satisfactory to the Company and the Trustee (if applicable) regarding payment of any applicable taxes and compulsory payments of any kind required by Applicable Law to be withheld or paid.

 

 

4.2. TAX LIABILITY. ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH MAY ARISE FROM THE GRANT OF ANY AWARDS, THE SALE OR DISPOSITION OF ANY SHARES GRANTED HEREUNDER, THE ASSUMPTION, SUBSTITUTION, CANCELLATION OR PAYMENT IN LIEU OF AWARDS OR FROM ANY OTHER ACTION IN CONNECTION WITH THE FOREGOING (INCLUDING WITHOUT LIMITATION ANY TAXES AND COMPULSORY PAYMENTS, SUCH AS SOCIAL SECURITY OR HEALTH TAX PAYABLE BY THE PARTICIPANT OR THE COMPANY IN CONNECTION THEREWITH) SHALL BE BORNE AND PAID SOLELY BY THE PARTICIPANT, AND THE PARTICIPANT SHALL INDEMNIFY THE COMPANY, THE AFFILIATE AND THE TRUSTEE, AND SHALL HOLD THEM HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY SUCH TAX OR PAYMENT OR ANY PENALTY, INTEREST OR INDEXATION THEREON. EACH PARTICIPANT AGREES TO, AND UNDERTAKES TO COMPLY WITH, ANY RULING, SETTLEMENT, CLOSING AGREEMENT OR OTHER SIMILAR AGREEMENT OR ARRANGEMENT WITH ANY TAX AUTHORITY IN CONNECTION WITH THE FOREGOING WHICH IS APPROVED BY THE COMPANY.

 

4.3. NO TAX ADVICE. THE PARTICIPANT IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING, EXERCISING OR DISPOSING OF AWARDS HEREUNDER. THE COMPANY DOES NOT ASSUME ANY RESPONSIBILITY TO ADVISE THE PARTICIPANT ON SUCH MATTERS, WHICH SHALL REMAIN SOLELY THE RESPONSIBILITY OF THE PARTICIPANT.

 

4.4. TAX TREATMENT. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DOES NOT UNDERTAKE OR ASSUME ANY LIABILITY OR RESPONSIBILITY TO THE EFFECT THAT ANY AWARD SHALL QUALIFY WITH ANY PARTICULAR TAX REGIME OR RULES APPLYING TO PARTICULAR TAX TREATMENT, OR BENEFIT FROM ANY PARTICULAR TAX TREATMENT OR TAX ADVANTAGE OF ANY TYPE AND THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) SHALL BEAR NO LIABILITY IN CONNECTION WITH THE MANNER IN WHICH ANY AWARD IS EVENTUALLY TREATED FOR TAX PURPOSES, REGARDLESS OF WHETHER THE AWARD WAS GRANTED OR WAS INTENDED TO QUALIFY UNDER ANY PARTICULAR TAX REGIME OR TREATMENT. THIS PROVISION SHALL SUPERSEDE ANY DESIGNATION OF AWARDS OR TAX QUALIFICATION INDICATED IN ANY CORPORATE RESOLUTION OR SUBSCRIPTION AGREEMENT, WHICH SHALL AT ALL TIMES BE SUBJECT TO THE REQUIREMENTS OF APPLICABLE LAW. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE AND SHALL NOT BE REQUIRED TO TAKE ANY ACTION IN ORDER TO QUALIFY ANY AWARD WITH THE REQUIREMENTS OF ANY PARTICULAR TAX TREATMENT AND NO INDICATION IN ANY DOCUMENT TO THE EFFECT THAT ANY AWARD IS INTENDED TO QUALIFY FOR ANY TAX TREATMENT SHALL IMPLY SUCH AN UNDERTAKING. NO ASSURANCE IS MADE BY THE COMPANY, ANY OF ITS AFFILIATES (INCLUDING THE EMPLOYER) THAT ANY PARTICULAR TAX TREATMENT ON THE DATE OF GRANT WILL CONTINUE TO EXIST OR THAT THE AWARD WILL QUALIFY AT THE TIME OF DISPOSITION THEREOF WITH ANY PARTICULAR TAX TREATMENT. THE COMPANY AND THE AFFILIATE (INCLUDING THE EMPLOYER) SHALL NOT HAVE ANY LIABILITY OR OBLIGATION OF ANY NATURE IN THE EVENT THAT AN AWARD DOES NOT QUALIFY FOR ANY PARTICULAR TAX TREATMENT, REGARDLESS WHETHER THE COMPANY OR ITS AFFILIATES (INCLUDING THE EMPLOYER) COULD HAVE TAKEN ANY ACTION TO CAUSE SUCH QUALIFICATION TO BE MET AND SUCH QUALIFICATION REMAINS AT ALL TIMES AND UNDER ALL CIRCUMSTANCES AT THE RISK OF THE PARTICIPANT. THE COMPANY AND ITS AFFILIATES (INCLUDING THE EMPLOYER) DO NOT UNDERTAKE OR ASSUME ANY LIABILITY TO CONTEST A DETERMINATION OR INTERPRETATION (WHETHER WRITTEN OR UNWRITTEN) OF ANY TAX AUTHORITY, INCLUDING IN RESPECT OF THE QUALIFICATION UNDER ANY PARTICULAR TAX REGIME OR RULES APPLYING TO PARTICULAR TAX TREATMENT. IF THE AWARDS DO NOT QUALIFY UNDER ANY PARTICULAR TAX TREATMENT IT COULD RESULT IN ADVERSE TAX CONSEQUENCES TO THE PARTICIPANT.

 

 

4.5. The Company or the Affiliate (including the Employer) may take such action as it may deem necessary or appropriate, in its discretion, for the purpose of or in connection with withholding of any taxes and compulsory payments which the Trustee, the Company or the Affiliate (including the Employer) is required by any Applicable Law to withhold in connection with any Awards, including, without limitations, any income tax, social benefits, social insurance, health tax, pension, payroll tax, fringe benefits, excise tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and applicable by law to the Participant (collectively, “Withholding Obligations”). Such actions may include (i) requiring Participants to remit to the Company or the Employer in cash an amount sufficient to satisfy such Withholding Obligations and any other taxes and compulsory payments, payable by the Company or the Employer in connection with the Award; (ii) subject to Applicable Law, allowing the Participants to surrender Shares, in an amount that at such time, reflects a value that the Administrator determines to be sufficient to satisfy such Withholding Obligations; or (iii) any combination of the foregoing.

 

4.6. Each Participant shall notify the Company in writing promptly and in any event within ten (10) days after the date on which such Participant first obtains knowledge of any tax bureau inquiry, audit, assertion, determination, investigation, or question relating in any manner to the Awards granted or received hereunder or Shares issued thereunder and shall continuously inform the Company of any developments, proceedings, discussions and negotiations relating to such matter, and shall allow the Company and its representatives to participate in any proceedings and discussions concerning such matters. Upon request, a Participant shall provide to the Company any information or document relating to any matter described in the preceding sentence, which the Company, in its discretion, requires.

 

4.7. With respect to 102 Non-Trustee Awards, if the Participant ceases to be employed by the Company or any Parent, Subsidiary or Affiliate (including the Employer), the Participant shall extend to the Company and/or the Employer a security or guarantee for the payment of taxes due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the Rules.

 

5. RIGHTS AND OBLIGATIONS AS A SHAREHOLDER

 

5.1. A Participant shall have no rights as a shareholder of the Company with respect to any Shares covered by an Award until the Participant becomes the record holder of the subject Shares. In the case of 102 Awards (if such Awards are being held by a Trustee), the Trustee shall have no rights as a shareholder of the Company with respect to the Shares covered by such Award until the Trustee becomes the record holder for such Shares for the Participant’s benefit, and the Participant shall not be deemed to be a shareholder and shall have no rights as a shareholder of the Company with respect to the Shares covered by the Award until the date of the release of such Shares from the Trustee to the Participant and the transfer of record ownership of such Shares to the Participant (provided however that the Participant shall be entitled to receive from the Trustee any cash dividend or distribution made on account of the Shares held by the Trustee for such Participant’s benefit, subject to any tax withholding and compulsory payment). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights for which the record date is prior to the date on which the Participant or Trustee (as applicable) becomes the record holder of the Shares covered by an Award, except as provided in the Plan.

 

 

5.2. With respect to Shares issued in connection with Awards hereunder, any and all voting rights attached to such Shares shall be subject to the provisions of the Plan, and the Participant shall be entitled to receive dividends distributed with respect to such Shares, subject to the provisions of the Company’s Articles of Association, as amended from time to time, and subject to any Applicable Law.

 

5.3. The Company may, but shall not be obligated to, register or qualify the sale of Shares under any applicable securities law or any other Applicable Law.

 

5.4. Shares issued pursuant to an Award shall be subject to the Company’s Articles of Association (as amended from time to time), any limitation, restriction or obligation applicable to shareholders included in any shareholders agreement applicable to all or substantially all of the holders of Shares (regardless of whether or not the Participant is a formal party to such shareholders agreement), any other governing documents of the Company, and all policies, manuals and internal regulations adopted by the Company from time to time, in each case, as may be amended from time to time, including any provisions included therein concerning restrictions or limitations on disposition of Shares (such as, but not limited to, right of first refusal and lock up/market stand-off) or grant of any rights with respect thereto, forced sale and bring along provisions, any provisions concerning restrictions on the use of inside information and other provisions deemed by the Company to be appropriate in order to ensure compliance with Applicable Laws. Each Participant shall execute such separate agreement(s) as may be requested by the Company relating to matters set forth in this Section 5.4.

 

6. GOVERNING LAW

 

6.1. This Appendix shall be governed by and construed in accordance with the laws of the State of Israel (excluding its choice-of-law provisions) except that applicable Israeli laws, rules and regulations (as amended) shall apply to any mandatory tax matters arising hereunder.

 

****

 

 

Exhibit 21.1

 

Subsidiaries of eToro Group Ltd.

 

Name of Subsidiary		Jurisdiction of Incorporation or Organization
eToro Asset Management Limited		Australia
eToro AUS Capital Pty Ltd		Australia
eToro (Europe) Limited		Cyprus
eToro Group Trading Ltd		British Virgin Islands
eToro Ltd		Israel
eToro (ME) Limited		Emirate of Abu Dhabi
eToro Money Malta Ltd		Malta
eToro Money UK Ltd		United Kingdom
eToro (Seychelles) Limited		Seychelles
eToro (UK) Limited		United Kingdom
eToro USA LLC		United Sates (Delaware)
eToro USA Securities Inc.		United States (Delaware)
eToro X Limited		Gibraltar
Spaceship Capital Limited		Australia