State of Israel | | | 3844 | | | Not Applicable |
(State or Other Jurisdiction of Incorporation or Organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification No. ) |
Andrea L. Nicolás Yossi Vebman Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, New York 10001 Tel: +1-212-735-3000 Fax: +1-212-735-2000 | | | Ian Rostowsky Amit, Pollak, Matalon & Co. APM House, 18 Raoul Wallenberg St. Building D. Ramat Hachayal Tel Aviv 6971915, Israel Tel: +972-3-568-9000 Fax: +972-73-297-8645 | | | Peter N. Handrinos Wesley C. Holmes Latham & Watkins LLP 200 Clarendon Street Boston, Massachusetts 02116 Tel: +1-617-948-6000 Fax: +1-617-948-6001 | | | Chaim Friedland Ari Fried Gornitzky & Co. Zion House 45 Rothschild Blvd. Tel Aviv 6578403, Israel Tel. +972-3-710-9191 Fax: +972-3-560-6555 |
Title of each Class of Securities to be Registered | | | Proposed Maximum Aggregate Offering Price(1)(2) | | | Amount of Registration Fee(3) |
Ordinary shares, par value NIS 0.01 per share | | | $125,000,000 | | | $16,225.00 |
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended (the “Securities Act”). |
(2) | Includes ordinary shares that the underwriters may purchase pursuant to their option to purchase additional ordinary shares. |
(3) | Calculated pursuant to Rule 457(o) under the Securities Act based on an estimate of the proposed maximum aggregate offering price. |
| | Per share | | | Total | |
Initial public offering price | | | $ | | | $ |
Underwriting discounts and commissions(1) | | | $ | | | $ |
Proceeds to us (before expenses) | | | $ | | | $ |
(1) | Refer to “Underwriting” for additional information regarding underwriting compensation. |
Cantor | | | Oppenheimer & Co. | | | Berenberg | | | CIBC Capital Markets |
| | Page | |
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
| |
• | Digital X-ray source with the potential to significantly reduce the costs of medical imaging systems. We believe our digital X-ray source technology will allow us to manufacture the Nanox.ARC, if cleared, at substantially lower costs compared to medical imaging systems that use a legacy analog X-ray source without sacrificing imaging quality. A lower cost device has the potential to substantially increase medical imaging availability and improve accessibility of early-detection services broadly across the globe. |
• | Technology designed to improve upon the industry standard with integrated radiology diagnostics via a cloud-based MSaaS platform. The Nanox.ARC employs our novel digital X-ray source that is designed to be energy-efficient, smaller and can be more precisely controlled compared to existing X-ray source. By integrating the Nanox.CLOUD, we believe the Nanox System could provide a streamlined process where each scanned image is uploaded automatically to the cloud system and matched to a human radiology expert and decision assistive AI algorithms to provide scan reviews and diagnostics in a significantly shorter time frame than current diagnostics, which could substantially reduce wait-times for imaging results and increase early detection rates compared to currently employed imaging process protocols. |
• | Business model designed to increase the availability of medical imaging. Our primary business model is based on a pay-per-scan pricing structure as opposed to the capital expenditure-based business model currently used by medical imaging manufacturing companies. We believe our business model will significantly reduce the price per scan compared to the current global average cost of $300 per scan, and has the potential to commoditize medical imaging services at prices that are affordable to a greater number of people. We believe our MSaaS business model has the potential to expand the total size of the X-ray-based medical imaging market. |
• | Secure regulatory clearance for our medical imaging system. We expect to take a multi-step approach to the regulatory clearance process. As a first step, we submitted a 510(k) application for a single-source version of the Nanox.ARC to an accredited Review Organization under the Third Party Review Program in January 2020. In response to the feedback we received from the reviewer, we are conducting standard functional and safety tests to support the 510(k) application and expect to submit the results from these tests in the third quarter of 2020. The timeline was delayed due to the impact of COVID-19 on the external labs we work with to complete these tests. We will continue to optimize and develop further features of the Nanox.ARC, and plan to submit an additional 510(k) application under the Third Party Review Program with respect to the multiple-source Nanox.ARC during the fourth quarter of 2020, which, if cleared, will be our commercial imaging system. |
• | Jumpstart the MSaaS-based medical imaging market with strategic partnerships. We plan to produce and deploy an initial wave of approximately 15,000 Nanox.ARC units over the next three to four years to jumpstart the MSaaS-based medical imaging market. We have entered into a contract manufacturing agreement with a subsidiary of Foxconn for the commercial production and assembly of the Nanox.ARC and we have entered into commercial agreements with strategic regional partners for the deployment, operation and marketing of the Nanox System broadly across the globe, including in the United States and certain countries in Asia, Europe, Africa and South America. We plan to work with these partners to achieve local integrations into health maintenance organizations, electronic health record systems, payment methods and insurance coverage companies. In addition, we have entered into collaboration agreements with cloud-based enterprises and are actively seeking collaboration opportunities, as we anticipate an industry shift to a digital and cloud-based subscription model will bring more digital healthcare disruptors into the market. |
• | Maximize the commercial potential of our technology with simultaneous business models. We plan to commercialize our novel X-ray source technology by pursuing three simultaneous business models, which we believe will provide us the flexibility and long-term sustainability to monetize our technology. |
• | Subscription Model: In certain countries, if permitted by the laws in the applicable jurisdiction, our primary sales strategy will be based on a pay-per-scan pricing structure, where we expect to sell the Nanox System at low cost or at no cost, with a suggested retail price per scan that is substantially lower than the current global average charge, and receive a portion of the proceeds from each scan as the right-to-use licensing fee and fees for usage of the Nanox.CLOUD, artificial intelligence capability and maintenance support. |
• | Sales Model: In certain countries, to accommodate specific local regulatory requirements, we expect to sell the Nanox.ARC for a one-time charge at a price that is substantially less than current market offerings. |
• | Licensing Model: For certain medical imaging market participants, we plan to tailor our X-ray source technology to their specific imaging systems to replace the legacy X-ray source or to license our X-ray source technology to them to develop new types of imaging systems. We expect to charge a one-time licensing fee upfront and receive recurring royalty payments for each system sold. |
• | Leverage the Nanox System to bring added value to our collaborators. We expect that the Nanox System will enable us to accumulate a significant number of medical images, which have the potential to be used by collaborators, such as medical AI-analytics companies, through machine learning algorithms to increase the probability of early disease detection. |
• | we are a development-stage company with limited operating history. We may never be able to effectuate our business plan or achieve any revenue or profitability. Therefore, at this stage of our business, potential investors have a high probability of losing their entire investment; |
• | our efforts may never demonstrate the feasibility of our X-ray source technology for commercial applications; |
• | we are highly dependent on the successful development, marketing and sale of our X-ray source technology and the related products and services; |
• | our business models depend on the successful commercial application of Nanox.CLOUD, which is subject to numerous risks and uncertainties; |
• | business interruptions resulting from the COVID-19 pandemic or similar public health crises could cause a disruption of the development, deployment or regulatory clearance of the Nanox System and adversely impact our business; |
• | products utilizing our technology may need to be approved or cleared by the FDA and similar regulatory agencies worldwide. We may not receive, or may be delayed in receiving, the necessary approval or clearance for our future products, which would adversely affect business, financial condition, results of operations and products; |
• | we may not be successful in implementing our business models; |
• | we expect to depend on third parties to manufacture the Nanox.ARC and to supply certain component parts; |
• | it is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection; |
• | patent terms may be inadequate to protect our competitive position on our future products for an adequate amount of time; |
• | our product candidates and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business; |
• | under applicable employment laws, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees; and |
• | conditions in Israel could materially and adversely affect our business. |
• | the option to include in an initial public offering registration statement only two years of audited financial statements and selected financial data and only two years of related disclosure; |
• | reduced executive compensation disclosure; and |
• | an exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) in the assessment of our internal control over financial reporting. |
• | the last day of our fiscal year during which we have total annual revenue of at least $1.07 billion; |
• | the last day of our fiscal year following the fifth anniversary of the closing of this offering; |
• | the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or |
• | the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which, among other things, would occur if the market value of our ordinary shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter. |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; |
• | the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission (the “SEC”) of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; and |
• | Regulation Fair Disclosure (“Regulation FD”), which regulates selective disclosures of material information by issuers. |
• | the majority of our executive officers or directors are U.S. citizens or residents; |
• | more than 50% of our assets are located in the United States; or |
• | our business is administered principally in the United States. |
• | ordinary shares issuable upon the exercise of options to purchase ordinary shares outstanding under the NANO-X Imaging Ltd. 2019 Equity Incentive Plan (the “2019 Equity Incentive Plan”) as of , 2020, at a weighted average exercise price of $ per share; |
• | additional ordinary shares reserved for future issuance under our 2019 Equity Incentive Plan as of , 2020; |
• | ordinary shares issuable upon the exercise of warrants to purchase ordinary shares as of , 2020, at a weighted average exercise price of $ per share, which warrants shall not expire upon the closing of this offering if not exercised; and |
• | ordinary shares issuable upon the exercise of options to purchase ordinary shares to be granted to A-Labs, which provided certain consulting services for this offering, at the closing of this offering, at an exercise price of $16.00 per share. |
• | the assumed exercise prior to the closing of this offering of certain outstanding warrants that shall otherwise expire upon such closing to purchase ordinary shares for an aggregate purchase price of approximately $ million; |
• | no exercise of the outstanding share options or warrants (other than as described above) after , 2020; |
• | no exercise by the underwriters of their option to purchase up to additional ordinary shares from us; and |
• | the adoption and effectiveness of our amended and restated articles of association, which will occur immediately prior to the closing of this offering. |
| | Six months ended June 30, | | | Year ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | |
| | ($ in thousands, except per share data) | ||||||||||
Consolidated Statement of Operations Data: | | | | | | | | | ||||
Research and development expenses | | | $4,152 | | | $340 | | | $2,717 | | | $672 |
Marketing expenses | | | 1,745 | | | 242 | | | 1,556 | | | 209 |
General and administrative expenses | | | 7,903 | | | 1,079 | | | 18,298 | | | 1,023 |
Operating loss | | | (13,800) | | | (1,661) | | | (22,571) | | | (1,904) |
Financial (income) expenses, net | | | (14) | | | 14 | | | (8) | | | 5 |
Net loss for the year | | | $(13,786) | | | $(1,675) | | | $(22,563) | | | $(1,909) |
Basic and diluted loss per ordinary share(1) | | | $(0.47) | | | $(0.07) | | | $(0.90) | | | $(0.09) |
Weighted average number of ordinary shares outstanding – basic and diluted(1) | | | 29,273 | | | 23,452 | | | 25,181 | | | 20,793 |
Pro forma basic and diluted loss per ordinary share(2) | | | $ | | | $ | | | $ | | | $ |
Pro forma weighted average number of ordinary shares outstanding – basic and diluted(2) | | | | | | | | |
(1) | See Note 7 to our unaudited condensed consolidated financial statements and Note 11 to our audited consolidated financial statements appearing at the end of this prospectus for further details on the calculation of basic and diluted net loss per share. |
(2) | Pro forma loss per ordinary share is calculated by dividing loss for the year by the pro forma weighted average number of ordinary shares outstanding during the period, which gives effect to the Transactions (as defined and further described under “Capitalization”). |
| | Actual | | | Pro forma(2) | | | Pro forma, as adjusted(3) | |
| | As of June 30, 2020 | |||||||
| | ($ in thousands) | |||||||
Consolidated Balance Sheet Data: | | | | | | | |||
Cash and cash equivalents | | | $39,524 | | | $ | | | $ |
Working capital(1) | | | 37,846 | | | | | ||
Total assets | | | 43,581 | | | | | ||
Total liabilities | | | 3,222 | | | | | ||
Accumulated deficit | | | (54,387) | | | | | ||
Total shareholders’ equity | | | 40,359 | | | | |
(1) | We define working capital as current assets less current liabilities. |
(2) | The summary pro forma balance sheet data gives effect to the Transactions (as defined and further described under “Capitalization”). |
(3) | The summary pro forma as adjusted balance sheet data gives effect to (i) the Transactions (as defined and further described under “Capitalization”), and (ii) the issuance of ordinary shares in this offering, at an assumed initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses, including the fees payable to A-Labs, payable by us. |
• | the Nanox.CLOUD requires a considerable investment of technical, financial, and legal resources, which may not be available to us; |
• | it may require separate regulatory clearances or approvals; |
• | it may not be technically viable to integrate the Nanox.CLOUD with the businesses of our potential customers and collaborators, such as local operators, radiologists, cloud storage providers, medical AI software providers and others; |
• | market acceptance of the MSaaS model is affected by a variety of factors, including security, reliability, scalability, customization, performance, customer preference, patients’ concerns with entrusting a third party to store and manage their health data, public concerns regarding privacy and compliance with restrictive laws or regulations; |
• | our cloud-based service may raise concerns among our customer base, including concerns regarding changes to pricing over time, service availability, information security of a cloud-based solution and access to medical images while offline; |
• | the Nanox.CLOUD may be subject to computer system failures, cyber-attacks or other security breaches; |
• | incorrect or improper implementation or use of the Nanox.CLOUD by third-party cloud-service providers under our Sales Model could result in customer dissatisfaction and harm our business and reputation; |
• | undetected software errors or flaws in the Nanox.CLOUD could harm our reputation or decrease market acceptance of the MSaaS model; and |
• | we may incur higher costs than we expected as we expand our cloud-based services. |
• | our ability to achieve sufficient market acceptance by hospitals and clinics, providers of medical imaging services, medical professionals such as radiologists, third-party payors and others in the medical community; |
• | our ability to compete with existing medical imaging technology companies; |
• | our ability to establish, maintain and expand our sales, marketing and distribution networks; |
• | our ability to obtain and/or maintain necessary regulatory approvals; and |
• | our ability to effectively protect our intellectual property. |
• | the process of manufacturing and deploying the Nanox System is a complex, multi-step process that depends on factors outside our control, and could cause us to expend significant time and resources prior to earning associated revenues; |
• | the manufacturing cost of the Nanox.ARC may be higher than we expect, may increase significantly, or may increase at a higher rate than anticipated, and we may not be able to set or timely adjust our pay-per-scan pricing to compensate for any increased costs; |
• | the manufacturing of the Nanox.ARC may take longer than we expected, and we may have insufficient manufacturing capacity and experience delays in the manufacturing and deployment of the Nanox System, which would have a negative impact on the timing of our revenues; |
• | deployment and full utilization of the Nanox System may not be achieved or may take substantially longer than we expect, and we may not be able to deploy a sufficient number of units of the Nanox System to support our business or to effectively stimulate market interest; |
• | a Nanox System may perform fewer scans per day than our estimates due to a number of factors, including low market acceptance rate, technical failures and downtime, service disruptions, outages or other performance problems, which would have a negative impact on our revenues and our ability to recover costs; |
• | the implementation, integration and testing of the Nanox.CLOUD with our potential customers and collaborators can be complex, time-consuming and expensive for them, which may have a negative impact on the timing of our revenues; |
• | as part of the Subscription Model, we will be responsible for maintenance of the Nanox System units we deploy, which may be more costly and time-consuming than we expect; |
• | our customers may not be able to find or retain a sufficient number of radiologists to review the images generated by the Nanox System, especially as we deploy additional Nanox Systems and the volume of scans increases; |
• | the portion of our pay-per-scan pricing allocated to our collaborators may not be acceptable to them, either now or in the future, and pricing negotiations with such collaborators may be a complex and time-consuming process; |
• | our pay-per-scan pricing may not be sufficient to recover our costs and may not be adjusted in a timely manner, which could negatively affect our revenues or cause our revenues and results of operations to vary significantly from period to period; |
• | we may be unsuccessful in maintaining our target price per scan because we do not control the price charged by local operators and higher prices may adversely affect market acceptance of the Nanox System; and |
• | regulatory authorities may challenge our Subscription Model altogether, and impose significant civil, criminal, and administrative penalties, damages, fines, and/or exclusion from government funded healthcare programs, which could adversely affect our revenues and results of operations. |
• | generate widespread awareness, acceptance and adoption of our technology and future products or services; |
• | develop new or enhanced technologies or features that improve the convenience, efficiency, safety or perceived safety, and productivity of our technology and future products or services; |
• | properly identify customer needs and deliver new products or services or product enhancements to address those needs; |
• | limit the time required from prototype development to commercial production; |
• | limit the timing and cost of regulatory approvals; |
• | attract and retain qualified personnel and collaborators; |
• | protect our inventions with patents or otherwise develop proprietary products and processes; and |
• | secure sufficient capital resources to expand both our continued research and development, and sales and marketing efforts. |
• | insufficient capacity or delays in meeting our demand; |
• | inadequate manufacturing yields, inferior quality and excessive costs; |
• | inability to manufacture products that meet the agreed upon specifications; |
• | inability to obtain an adequate supply of materials; |
• | inability to comply with the relevant regulatory requirements for the manufacturing process; |
• | limited warranties on products supplied to us; |
• | inability to comply with our contractual obligations; |
• | potential increases in prices; and |
• | increased exposure to potential misappropriation of our intellectual property. |
• | effectiveness of the sales and marketing efforts of us, and our partners such as the local partners; |
• | perception by medical professionals and patients of the convenience, safety, efficiency and benefits of the Nanox.ARC, the Nanox.CLOUD or products using our technology, compared to competing methods of medical imaging; |
• | opposition from certain industry leaders, which may limit our ability to promote the Nanox.ARC or the Nanox.CLOUD and to penetrate into the medical imaging market in certain geographical areas; |
• | the existence of established medical imaging technology; |
• | willingness of market participants to accept the MSaaS model; |
• | the changing and volatile U.S. and global economic environments, including as a result of the COVID-19 pandemic; |
• | timing of market introduction of competing products, and the sales and marketing initiatives of such products; |
• | press and blog coverage, social media coverage, and other publicity and public relations factors by others; |
• | lack of financing or other resources to successfully develop and commercialize our technology and implement our business plan; |
• | the level of commitment and support that we receive from our partners, such as local operators, cloud storage providers and medical AI software providers, as well as medical professionals such as radiologists; and |
• | coverage determinations and reimbursement levels of third party payors. |
• | reimbursement and insurance coverage; |
• | our inability to find agencies, dealers or distributors in specific countries or regions; |
• | our inability to directly control commercial activities of third parties; |
• | limited resources to be deployed to a specific jurisdiction; |
• | the burden of complying with complex and changing regulatory, tax, accounting and legal requirements; |
• | different medical imaging practice and customs in foreign countries affecting acceptance in the marketplace; |
• | import or export licensing and other requirements; |
• | longer accounts receivable collection times; |
• | longer lead times for shipping; |
• | language barriers for technical training; |
• | reduced protection of intellectual property rights in some foreign countries; |
• | foreign currency exchange rate fluctuations; and |
• | interpretations of contractual provisions governed by foreign laws in the event of a contract dispute. |
• | limiting payments for imaging services in physician offices and free-standing imaging facility settings based upon rates paid to hospital outpatient departments; |
• | reducing payments for certain imaging procedures when performed together with other imaging procedures in the same family of procedures on the same patient on the same day in the physician office and free-standing imaging facility setting; |
• | making significant revisions to the methodology for determining the practice expense component of the Medicare payment applicable to the physician office and free-standing imaging facility setting which results in a reduction in payment; and |
• | revising payment policies and reducing payment amounts for imaging procedures performed in the hospital outpatient setting. |
• | disputes among payors as to which party is responsible for payment; |
• | disparity in coverage among various payors; |
• | disparity in information and billing requirements among payors; and |
• | incorrect or missing billing information, which is required to be provided by the ordering physician. |
• | we may not be able to control the amount and timing of resources that our collaborators may devote to our technology; |
• | should a collaborator fail to comply with applicable laws, rules or regulations when performing services for us, we could be held liable for such violations; |
• | our collaborators may have a shortage of qualified personnel, particularly radiologists who can review the medical images generated by the Nanox System, especially as we deploy additional Nanox Systems and the volume of scans increases; |
• | we may be required to relinquish important rights, such as marketing and distribution rights; |
• | business combinations or significant changes in a collaborator’s business strategy may adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement; |
• | under certain circumstances, a collaborator could move forward with a competing product developed either independently or in collaboration with others, including our competitors; |
• | our current or future collaborators may utilize our proprietary information in a way that could expose us to competitive harm; |
• | our collaborators could obtain ownership or other control over intellectual property that is material to our business; and |
• | collaborative arrangements are often terminated or allowed to expire, which could delay the ability to commercialize our technology. |
• | decreased demand for the Nanox System; |
• | injury to our reputation; |
• | costs of related litigation; |
• | substantial monetary awards to patients and others; |
• | loss of revenue; and |
• | the inability to commercialize future products. |
• | our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our product candidates are safe or effective for their intended uses; |
• | the disagreement of the FDA or the applicable foreign regulatory body with the design or implementation of our clinical trials or the interpretation of data from pre-clinical studies or clinical trials; |
• | serious and unexpected adverse effects experienced by participants in our clinical trials; |
• | the data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required; |
• | our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; |
• | the manufacturing process or facilities we use may not meet applicable requirements; and |
• | the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval. |
• | untitled letters or warning letters; |
• | fines, injunctions, consent decrees and civil penalties; |
• | recalls, termination of distribution, administrative detention, or seizure of our products; |
• | customer notifications or repair, replacement or refunds; |
• | operating restrictions or partial suspension or total shutdown of production; |
• | delays in or refusal to grant our requests for future clearances or approvals or foreign marketing authorizations of new products, new intended uses, or modifications to existing products; |
• | withdrawals or suspensions of product clearances or approvals, resulting in prohibitions on sales of our products; |
• | FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and |
• | criminal prosecution. |
• | The U.S. federal healthcare program Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly and practices that involve remuneration to those who prescribe, purchase, or recommend medical devices, including certain discounts, or engaging consultants as speakers or consultants, may be subject to scrutiny if they do not fit squarely within the exemption or safe harbor. Our practices may not in all cases meet all of the criteria for safe harbor protection from anti-kickback liability. Moreover, there are no safe harbors for many common practices, such as educational and research grants. Liability may be established without a person or entity having actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act. Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws, including, without limitation, our proposed Subscription Model, and our advisory, consulting and royalty agreements with certain physicians who receive compensation, in part, in the form of stock or stock options. |
• | The federal civil False Claims Act prohibits, among other things, any person from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds, or knowingly making, using, or causing to be made or used, a false record or statement material to an |
• | The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), imposes criminal and civil liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. In addition, HIPAA, as amended by HITECH, and their respective implementing regulations impose obligations, including mandatory contractual terms, on covered healthcare providers, health plans, as well as their business associates, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. |
• | The Physician Payment Sunshine Act, implemented as the Open Payments program, requires manufacturers of certain products reimbursed by Medicare, Medicaid, or the Children’s Health Insurance Program to track and report to the federal government payments and transfers of value that they make to physicians and teaching hospitals, certain other healthcare professionals beginning in 2022, group purchasing organizations, and ownership interests held by physicians and their families, and provides for public disclosures of these data. Manufacturers are required to submit annual reports to the government and failure to do so may result in civil monetary penalties for all payments, transfers of value and ownership or investment interests not reported in an annual submission, and may result in liability under other federal laws and regulations. |
• | Many states have adopted laws and regulations analogous to the federal laws cited above, including state anti-kickback and false claims laws, which may apply to items or services reimbursed under Medicaid and other state programs or, in several states, regardless of the payer. Several states have enacted legislation requiring medical device companies to, among other things, establish marketing compliance programs; file periodic reports with the state, including reports on gifts and payments to individual health care providers; make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities; and/or register their sales representatives. Some states prohibit specified sales and marketing practices, including the provision of gifts, meals, or other items to certain health care providers. |
• | strengthen the rules on placing devices on the market and reinforce surveillance once they are available; |
• | establish explicit provisions on manufacturers’ responsibilities for follow-up regarding the quality, performance and safety of devices placed on the market; |
• | improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; |
• | set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and |
• | strengthened rules for the assessment of certain high-risk devices, which may have to undergo an additional check by experts before they are placed on the market. |
• | Imposes an annual excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States, which, through a series of legislative amendments, was suspended, effective January 1, 2016 and subsequently repealed altogether on December 20, 2019; |
• | Establishes a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research; and |
• | Implements Medicare payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models. |
• | actual or anticipated fluctuations in results of operations; |
• | actual or anticipated changes in our growth rate relative to our competitors, as well as announcements by us or our competitors of significant business developments, changes in relationships with our target customers, manufacturers or suppliers, acquisitions or expansion plans; |
• | failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public, as well as variance in our financial performance from the expectations of market analysts; |
• | issuance of new or updated research or reports by securities analysts; |
• | share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; |
• | additions or departures of key management or other personnel; |
• | our involvement in litigation; |
• | disputes or other developments related to proprietary rights, including patents, litigation matters, and our ability to obtain patent protection for our technology; |
• | announcement or expectation of additional debt or equity financing efforts; |
• | sales of our ordinary shares or other securities by us, our insiders or our other shareholders, or the perception that these sales may occur in the future; |
• | the trading volume of our ordinary shares; |
• | market conditions in our industry; |
• | changes in the estimation of the future size and growth rate of our markets; and |
• | general economic, market or political conditions in the United States or elsewhere. |
• | our ability to develop and commercialize our technology and future products or services; |
• | developments or disputes concerning our product’s intellectual property rights; |
• | our or our competitors’ technological innovations; |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
• | announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new technologies or patents; |
• | failure to complete significant transactions or collaborate with vendors in manufacturing our product; and |
• | proposals for legislation that would place restrictions on the price of medical therapies. |
• | we have hired a corporate controller with U.S. GAAP and SEC reporting experience and are continuing to seek additional financial professionals to increase the number of qualified financial reporting personnel; |
• | we are selecting and implementing a new enterprise resource planning system; |
• | we are developing, communicating and implementing an accounting policy manual for our financial reporting personnel for recurring transactions and period-end closing processes; and |
• | we are establishing monitoring and oversight controls for non-recurring and complex transactions to ensure the accuracy and completeness of our consolidated financial statements and related disclosures. |
• | The initiation, timing, progress and results of our research and development, manufacturing and commercialization activities with respect to our X-ray source technology, the Nanox.ARC, the Nanox.CLOUD and the Nanox System; |
• | our ability to successfully demonstrate the feasibility of our technology for commercial applications; |
• | our expectations regarding the necessity of, timing of filing for, and receipt of, regulatory clearances or approvals regarding our technology, the Nanox.ARC and the Nanox.CLOUD; |
• | our ability to secure and maintain required FDA clearance and similar approvals from regulatory agencies worldwide and comply with applicable quality standards and regulatory requirements; |
• | our ability to manufacture the Nanox.ARC, if cleared, at substantially lower costs compared to medical imaging systems that use a legacy analog X-ray source; |
• | our ability to manufacture, market and deploy approximately 15,000 Nanox.ARC units within the contemplated timeframe; |
• | our ability to meet our planned deployment schedule for the Nanox System units within the contemplated timeframe; |
• | the pricing structure of our products and services, if such products and services receive regulatory clearance or approval; |
• | the implementation of our business models; |
• | our expectations regarding collaborations with third-parties and their potential benefits; |
• | our ability to enter into and maintain our arrangements with third-party manufacturers and suppliers; |
• | our ability to conduct business globally; |
• | our expectations regarding when certain patents may be issued and the protection and enforcement of our intellectual property rights; |
• | our ability to operate our business without infringing the intellectual property rights and propriety technology of third parties; |
• | regulatory developments in the United States and other jurisdictions; |
• | estimates of our expenses, future revenues, capital requirements and our needs for additional financing; |
• | the rate and degree of market acceptance of our technology and our products; |
• | development relating to our competitors and the medical imaging industry; |
• | our estimates of the adoption of the MSaaS-based model by market participants; |
• | our estimates regarding the market opportunities for our technology and our products; |
• | our ability to attract, motivate and retain key executive managers; |
• | our ability to comply with data protection laws, regulations and similar rules and to establish and maintain adequate cyber-security and data protection; |
• | our ability to obtain third-party payor coverage or reimbursement of our Nanox System; |
• | our expectation regarding the maintenance of our foreign private issuer and emerging growth company status; |
• | our expectations regarding the use of proceeds from this offering; |
• | the effect of the COVID-19 pandemic, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to the development, deployment and regulatory clearance of the Nanox Systems; and |
• | our success at managing other risks and uncertainties, including those listed under “Risk Factors.” |
• | between $ million to $ million will be used for the manufacturing of the initial wave of Nanox.ARC units planned for global deployment and investment in manufacturing capacities; to the extent the cost-per-unit of the Nanox.ARC is higher than we expected or the amount of proceeds we receive is lower than we expected, we plan to reduce the number of units to be manufactured with such proceeds accordingly; |
• | between $ million to $ million will be used for the shipping, installation and deployment costs of the Nanox System; to the extent the number of units of the Nanox.ARC to be manufactured is reduced for the reasons described above, the amount of proceeds to be used for shipping, installation and deployment will be reduced accordingly; |
• | between $ million to $ million will be used for the continued research and development of the Nanox.ARC, the development of the Nanox.CLOUD and for regulatory clearance in various regions, which we expect will be sufficient for obtaining the 510(k) medical device clearance with respect to the Nanox.ARC with the FDA; and |
• | the remaining funds, if any, to be used for sales and marketing expenses, general and administrative expenses and general corporate purposes. |
• | the existence of unforeseen or other opportunities or the need to take advantage of changes in timing of our existing activities; |
• | the need or desire on our part to accelerate, increase, reduce or eliminate one or more existing initiatives due to, among other things, changing market conditions or competitive developments or interim results of research and development efforts; |
• | results from our business development and marketing efforts; |
• | the effect of federal, state, and local regulation on our business; and |
• | the presentation of strategic opportunities of which we are not currently aware (including acquisitions, joint ventures, licensing and other similar transactions). |
• | an actual basis; |
• | a pro forma basis to give effect to (i) the receipt of $66,000,000 and the issuance of 4,125,000 ordinary shares to certain investors after June 30, 2020 in connection with the Private Placement, and (ii) the receipt of $ pursuant to the exercise of warrants held by certain of our shareholders and the related issuance of ordinary shares as a result thereof immediately prior to the closing of this offering (collectively, the “Transactions”); and |
• | on a pro forma as adjusted basis to give further effect to the issuance and sale of ordinary shares by us in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses, including the fees payable to A-Labs, payable by us. |
| | As of June 30, 2020 | |||||||
| | Actual | | | Pro Forma | | | Pro Forma As Adjusted(1) | |
| | ($ in thousands, except share and per share amounts) | |||||||
Cash and cash equivalents | | | $39,524 | | | $ | | | $ |
Shareholders’ equity: | | | | | | | |||
Ordinary Shares, par value NIS 0.01 per share; 40,000,000 shares authorized, actual; 100,000,000 shares authorized, pro forma and pro forma as adjusted; 30,679,965 shares issued and outstanding, actual; shares issued and outstanding, pro forma; shares issued and outstanding, pro forma as adjusted | | | 85 | | | — | | | — |
Additional paid-in capital | | | 94,661 | | | | | ||
Accumulated deficit | | | (54,387) | | | | | ||
Total shareholders’ equity | | | 40,359 | | | | | ||
Total capitalization | | | $40,359 | | | $ | | | $ |
(1) | Each $1.00 increase or decrease in the assumed initial public offering price of $ per share (which is the midpoint of the price range set forth on the cover page of this prospectus) would increase or decrease the amount of each of cash and cash equivalents, additional paid-in capital, total shareholders’ equity and total capitalization on a pro forma as adjusted basis by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses, including the fees payable to A-Labs, payable by us. Each increase or decrease of 1.0 million in the number of ordinary shares we are offering would increase or decrease the pro forma as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total shareholders’ equity and total capitalization by approximately $ million, assuming no change in the assumed initial public offering price and after deducting the estimated underwriting discounts and commissions and estimated offering expenses, including the fees payable to A-Labs, payable by us. |
• | 4,586,424 ordinary shares issuable upon the exercise of options to purchase ordinary shares outstanding under the 2019 Equity Incentive Plan as of June 30, 2020, at a weighted average exercise price of $3.70 per share; |
• | 3,455,512 additional ordinary shares reserved for future issuance under our 2019 Equity Incentive Plan as of June 30, 2020; |
• | 5,496,984 ordinary shares issuable upon the exercise of warrants to purchase ordinary shares as of June 30, 2020, at a weighted average exercise price of $10.14 per share, which warrants shall not expire upon the closing of this offering if not exercised; and |
• | ordinary shares issuable upon the exercise of options to purchase ordinary shares to be granted to A-Labs, which provided certain consulting services for this offering, at the closing of this offering, at an exercise price of $16.00 per ordinary share. |
• | subtracting our liabilities from our tangible assets as of June 30, 2020; and |
• | dividing the difference by the number of ordinary shares outstanding as of June 30, 2020. |
Assumed initial public offering price per share | | | | | $ | |
Historical net tangible book value per share as of June 30, 2020 | | | $1.31 | | | |
Increase per share attributable to the Transactions | | | | | ||
Pro forma net tangible book value (deficit) per share as of June 30, 2020 | | | | | ||
Increase per share attributable to this offering | | | | | ||
Pro forma as adjusted net tangible book value per share after this offering | | | | | $ | |
Dilution per share to new investors in this offering | | | | | $ |
| | Ordinary Shares Purchased | | | Total Consideration | | | Average Price Per Share | |||||||
| | Number | | | % | | | Amount | | | % | | |||
Existing shareholders | | | | | | | $ | | | | | $ | |||
New investors | | | | | | | | | | | |||||
Total | | | | | 100% | | | | | 100% | | |
• | the percentage of ordinary shares held by existing shareholders will decrease to approximately % of the total number of our ordinary shares outstanding after this offering; and |
• | the number of shares held by new investors will increase to , or approximately % of the total number of our ordinary shares outstanding after this offering. |
• | 4,586,424 ordinary shares issuable upon the exercise of options to purchase ordinary shares outstanding under the 2019 Equity Incentive Plan as of June 30, 2020, at a weighted average exercise price of $3.70 per share; |
• | 3,455,512 additional ordinary shares reserved for future issuance under our 2019 Equity Incentive Plan as of June 30, 2020; |
• | 5,496,984 ordinary shares issuable upon the exercise of warrants to purchase ordinary shares as of June 30, 2020, at a weighted average exercise price of $10.14 per share, which warrants shall not expire upon the closing of this offering if not exercised; and |
• | ordinary shares issuable upon the exercise of options to purchase ordinary shares to be granted to A-Labs, which provided certain consulting services for this offering, at the closing of this offering, at an exercise price of $16.00 per ordinary share. |
| | Six months ended June 30, | | | Year ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | |
| | ($ in thousands, except per share data) | ||||||||||
Consolidated Statement of Operations Data: | | | | | | | | | ||||
Research and development expenses | | | $4,152 | | | $340 | | | $2,717 | | | $672 |
Marketing expenses | | | 1,745 | | | 242 | | | 1,556 | | | 209 |
General and administrative expenses | | | 7,903 | | | 1,079 | | | 18,298 | | | 1,023 |
Operating loss | | | (13,800) | | | (1,661) | | | (22,571) | | | (1,904) |
Financial (income) expenses, net | | | (14) | | | 14 | | | (8) | | | 5 |
Net loss for the year | | | $(13,786) | | | $(1,675) | | | $(22,563) | | | $(1,909) |
Basic and diluted loss per ordinary share(1) | | | (0.47) | | | (0.07) | | | $(0.90) | | | $(0.09) |
Weighted average number of ordinary shares outstanding – basic and diluted(1) | | | 29,273 | | | 23,452 | | | 25,181 | | | 20,793 |
(1) | Basic loss per share and diluted loss per share are the same because outstanding options would be anti-dilutive due to our net losses in these periods. See Note 7 to our unaudited condensed consolidated financial statements and Note 11 to our audited consolidated financial statements appearing at the end of this prospectus for further details on the calculation of basic and diluted net loss per share attributable to our ordinary shareholders. |
| | As of June 30, | | | As of December 31, | ||||
| | 2020 | | | 2019 | | | 2018 | |
| | ($ in thousands) | |||||||
Consolidated Balance Sheet Data: | | | | | | | |||
Cash and cash equivalents | | | $39,524 | | | $8,072 | | | $5 |
Working capital(1) | | | 37,846 | | | (10,627) | | | (6,540) |
Total assets | | | 43,581 | | | 11,871 | | | 1,855 |
Total liabilities | | | 3,222 | | | 20,649 | | | 8,239 |
Accumulated deficit | | | (54,387) | | | (40,601) | | | (18,038) |
Total shareholders’ equity (deficit) | | | 40,359 | | | (8,778) | | | (6,384) |
(1) | We define working capital as current assets less current liabilities. |
• | expenses incurred in connection with the development of our products, including payments made pursuant to agreements with third parties, such as outside consultants related to process development and manufacturing activities, as well as patent registrations; |
• | costs of components and materials, including payments made pursuant to agreements with third parties; |
• | costs of laboratory supplies incurred for each program; |
• | facilities, depreciation and other expenses, including direct or allocated expenses for rent and maintenance of facilities, as well as insurance costs; |
• | costs related to compliance with regulatory requirements; and |
• | employee-related expenses, including salaries, related benefits and share-based compensation expenses for employees engaged in research and development activities. |
• | the timing and progress of development activities; |
• | our ability to maintain our current research and development programs and to establish new ones; |
• | the receipt of regulatory approvals from applicable regulatory authorities without the need for independent clinical trials or validation; |
• | the timing, receipt and terms of any marketing approvals from applicable regulatory authorities; |
• | our ability to establish new licensing or collaboration arrangements; |
• | the performance of our future collaborators, if any; |
• | establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; |
• | obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights; |
• | launching commercial sales of our products, including the Nanox.ARC hardware and Nanox.CLOUD software, whether alone or in collaboration with others; and |
• | maintaining a continued acceptable safety profile of the products following approval. |
| | Six months ended June 30, | | | |||||
| | 2020 | | | 2019 | | | Change | |
| | ($ in thousands) | |||||||
Operating expenses | | | | | | | |||
Research and development | | | $4,152 | | | $340 | | | $3,812 |
Marketing | | | 1,745 | | | 242 | | | 1,503 |
General and administrative | | | 7,903 | | | 1,079 | | | 6,824 |
Operating loss | | | (13,800) | | | (1,661) | | | (12,139) |
Financial (income) expenses, net | | | (14) | | | 14 | | | (28) |
Net loss | | | $(13,786) | | | $(1,675) | | | $(12,111) |
| | Six months ended June 30, | ||||
| | 2020 | | | 2019 | |
| | ($ in thousands) | ||||
Research and Development Expenses: | | | | | ||
R&D - salaries and wages | | | $723 | | | $151 |
Share-based compensation | | | 1,917 | | | 0 |
R&D - professional services | | | 1,497 | | | 157 |
Other | | | 15 | | | 32 |
Total | | | $4,152 | | | $340 |
| | Six months ended June 30, | ||||
| | 2020 | | | 2019 | |
| | ($ in thousands) | ||||
Marketing Expenses: | | | | | ||
Marketing – salaries and wages | | | $246 | | | $8 |
Marketing and business development | | | 855 | | | 234 |
Share-based compensation | | | 644 | | | 0 |
Total | | | $1,745 | | | $242 |
| | Six months ended June 30, | ||||
| | 2020 | | | 2019 | |
| | ($ in thousands) | ||||
General and Administrative Expenses: | | | | | ||
G&A – salaries and wages | | | $783 | | | $26 |
Share-based compensation | | | 5,786 | | | 0 |
Management fee | | | 77 | | | 278 |
G&A – professional services | | | 765 | | | 524 |
Legal fees | | | 103 | | | 149 |
Rent and Maintenance | | | 233 | | | 58 |
Other | | | 156 | | | 44 |
Total | | | $7,903 | | | $1,079 |
| | Year ended December 31, | | | |||||
| | 2019 | | | 2018 | | | Change | |
| | ($ in thousands) | |||||||
Operating expenses | | | | | | | |||
Research and development | | | $2,717 | | | $672 | | | $2,045 |
Marketing | | | 1,556 | | | 209 | | | 1,347 |
General and administrative | | | 18,298 | | | 1,023 | | | 17,275 |
Operating loss | | | (22,571) | | | (1,904) | | | (20,667) |
Financial (income) expenses, net | | | (8) | | | 5 | | | (13) |
Net loss | | | $(22,563) | | | $(1,909) | | | $(20,654) |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
| | ($ in thousands) | ||||
Research and Development Expenses: | | | | | ||
R&D - salaries and wages | | | $437 | | | $131 |
Share-based compensation | | | 661 | | | — |
R&D - professional services | | | 1,450 | | | 519 |
Other | | | 169 | | | 22 |
Total | | | $2,717 | | | $672 |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
| | ($ in thousands) | ||||
Marketing Expenses: | | | | | ||
Marketing – salaries and wages | | | $200 | | | $— |
Marketing and business development | | | $439 | | | $ 59 |
Share-based compensation | | | 617 | | | — |
Other | | | 300 | | | 150 |
Total | | | $1,556 | | | $209 |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
| | ($ in thousands) | ||||
General and Administrative Expenses: | | | | | ||
G&A – salaries and wages | | | $461 | | | $88 |
Share-based compensation | | | 14,967 | | | 115 |
Management fee | | | 534 | | | 429 |
G&A – professional services | | | 1,470 | | | 84 |
Legal fees | | | 417 | | | 165 |
Other | | | 449 | | | 142 |
Total | | | $18,298 | | | $1,023 |
| | Six months ended June 30, | | | Year ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2019 | | | 2018 | |
| | ($ in thousands) | ||||||||||
Net cash used in operating activities | | | $(4,738) | | | $(1,060) | | | $(5,524) | | | $(3,671) |
Net cash used in investing activities | | | (244) | | | (80) | | | (125) | | | (73) |
Net cash provided by financing activities | | | 36,481 | | | 9,264 | | | 13,861 | | | 3,684 |
Net change in cash and cash equivalents and restricted cash | | | $31,499 | | | $8,124 | | | $8,212 | | | $(60) |
• | seek regulatory approvals for any additional products; |
• | seek to discover and develop additional products; |
• | establish a manufacturing, sales, marketing, medical affairs and distribution infrastructure to commercialize the Nanox System for which we may obtain marketing approval and intend to commercialize on our own or jointly; |
• | hire additional quality control and scientific personnel; |
• | expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; |
• | maintain, expand and protect our intellectual property portfolio; and |
• | acquire or in-license other products and technologies. |
• | the scope, progress, results and costs of researching and developing the Nanox System; |
• | the costs, timing and outcome of regulatory review of the Nanox.ARC; |
• | the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for the Nanox System for which we receive marketing approval; |
• | commercial manufacturing of the Nanox System and sufficient inventory to support commercial launch; |
• | the revenue, if any, received from commercial sale of the Nanox System, should the Nanox.ARC receive marketing approval; |
• | the cost and timing of hiring new employees to support our continued growth; |
• | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; |
• | the ability to establish and maintain collaborations on favorable terms, if at all; and |
• | the timing, receipt and amount of sales of the Nanox System, if any. |
| | Payment due by period | |||||||||||||
| | ($ in thousands) | |||||||||||||
Contractual Obligations | | | Total | | | Less than 1 year | | | 1-3 years | | | 3-5 years | | | More than 5 years |
Capital (Finance) Lease Obligations | | | — | | | — | | | — | | | — | | | — |
Operating Lease Obligations | | | $526 | | | $140 | | | $386 | | | — | | | — |
Purchase Obligations | | | — | | | — | | | — | | | — | | | — |
Total | | | $526 | | | $140 | | | $386 | | | — | | | — |
| | % | |
Computers | | | 10-33 |
Office furniture and lab equipment | | | 10-20 |
Level 1: | Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. |
Level 2: | Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. |
Level 3: | Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
• | Digital X-ray source with the potential to significantly reduce the costs of medical imaging systems. We believe our digital X-ray source technology will allow us to manufacture the Nanox.ARC, if cleared, at substantially lower costs compared to medical imaging systems that use a legacy analog X-ray source without sacrificing imaging quality. A lower cost device has the potential to substantially increase medical imaging availability and improve accessibility of early-detection services broadly across the globe. |
• | Technology designed to improve upon the industry standard with integrated radiology diagnostics via a cloud-based MSaaS platform. The Nanox.ARC employs our novel digital X-ray source that is designed to be energy-efficient, smaller and can be more precisely controlled compared to existing X-ray source. By integrating the Nanox.CLOUD, we believe the Nanox System could provide a streamlined process where each scanned image is uploaded automatically to the cloud system and matched to a human radiology expert and decision assistive AI algorithms to provide scan reviews and diagnostics in a significantly shorter time frame than current diagnostics, which could substantially reduce wait-times for imaging results and increase early detection rates compared to currently employed imaging process protocols. |
• | Business model designed to increase the availability of medical imaging. Our primary business model is based on a pay-per-scan pricing structure as opposed to the capital expenditure-based business model currently used by medical imaging manufacturing companies. We believe our business model will significantly reduce the price per scan compared to the current global average cost of $300 per scan, and has the potential to commoditize medical imaging services at prices that are affordable to a greater number of people. We believe our MSaaS business model has the potential to expand the total size of the X-ray-based medical imaging market. |
• | Secure regulatory clearance for our medical imaging system. We expect to take a multi-step approach to the regulatory clearance process. As a first step, we submitted a 510(k) application for a single-source version of the Nanox.ARC to an accredited Review Organization under the Third Party Review Program in January 2020. In response to the feedback we received from the reviewer, we are conducting standard functional and safety tests to support the 510(k) application and expect to submit the results from these tests in the third quarter of 2020. The timeline was delayed due to the impact of COVID-19 on the external labs we work with to complete these tests. We will continue to optimize and develop further features of the Nanox.ARC, and plan to submit an additional 510(k) application under the Third Party Review Program with respect to the multiple-source Nanox.ARC during the fourth quarter of 2020, which, if cleared, will be our commercial imaging system. |
• | Jumpstart the MSaaS-based medical imaging market with strategic partnerships. We plan to produce and deploy an initial wave of approximately 15,000 Nanox.ARC units over the next three to four years to jumpstart the MSaaS-based medical imaging market. We have entered into a contract |
• | Maximize the commercial potential of our technology with simultaneous business models. We plan to commercialize our novel X-ray source technology by pursuing three simultaneous business models, which we believe will provide us the flexibility and long-term sustainability to monetize our technology. |
• | Subscription Model: In certain countries, if permitted by the laws in the applicable jurisdiction, our primary sales strategy will be based on a pay-per-scan pricing structure, where we expect to sell the Nanox System at low cost or at no cost, with a suggested retail price per scan that is substantially lower than the current global average charge, and receive a portion of the proceeds from each scan as the right-to-use licensing fee and fees for usage of the Nanox.CLOUD, artificial intelligence capability and maintenance support. |
• | Sales Model: In certain countries, to accommodate specific local regulatory requirements, we expect to sell the Nanox.ARC for a one-time charge at a price that is substantially less than current market offerings. |
• | Licensing Model: For certain medical imaging market participants, we plan to tailor our X-ray source technology to their specific imaging systems to replace the legacy X-ray source or to license our X-ray source technology to them to develop new types of imaging systems. We expect to charge a one-time licensing fee upfront and receive recurring royalty payments for each system sold. |
• | Leverage the Nanox System to bring added value to our collaborators. We expect that the Nanox System will enable us to accumulate a significant number of medical images, which have the potential to be used by collaborators, such as medical AI-analytics companies, through machine learning algorithms to increase the probability of early disease detection. |
* | We expect to contract with third parties to provide maintenance and support services. |
Entity | | | Date of MSaaS Agreement | | | Region | | | Number of Nanox Systems to be Provided | | | Minimum Annual Fee and Amount of Letter of Credit (approximate) | | | Initial Term | | | Renewal Term |
The Gateway Group, Ltd. | | | February 11, 2020 | | | Australia, New Zealand and Norway | | | 1,000 | | | $58 million | | | 3 years | | | 3 years |
Golden Vine International Company, Ltd. | | | May 28, 2020 | | | Taiwan and Singapore | | | 500 | | | Up to $29 million | | | 5 years | | | 5 years* |
Promedica Bioelectronics s.r.l. | | | May 29, 2020 | | | Italy | | | 500 | | | $29 million | | | 4 years | | | 3 years |
JSC Roel Group | | | May 29, 2020 | | | Russian Federation | | | 500 | | | $12.6 million | | | 5 years | | | 5 years |
Clarity Medical Solution, a division of “Grodnobioproduct” LLC | | | June 4, 2020 | | | Belarus | | | 100 | | | $3.7 million | | | 3 years | | | 4 years |
Gold Rush | | | June 16, 2020 | | | South Africa | | | 500 | | | $15.5 million | | | 3 years | | | 3 years |
LATAM Business Development Group Ltd. | | | July 6, 2020 | | | Brazil | | | 1,000 | | | $4.8 million (9 million Letter of Credit) in Year 1 $14.5 million in Year 2 $24.2 million in Year 3*** | | | 6 years | | | 3 years |
APR 1998 S.L. | | | July 25, 2020 | | | Spain | | | 420 | | | $11.4 million | | | 5 years | | | 5 years** |
TOTAL | | | | | | | 4,520 | | | $163.8 million | | | | |
* | The MSaaS Agreement with Golden Vine International Company, Ltd. may also be terminated by either party upon notice stipulating that the notifying party has come to the conclusion, based on market evidence, that there is no business merit for the Nanox.ARC in Taiwan or Singapore. |
** | The MSaaS Agreement with APR 1998 S.L. may also be terminated by the service provider at the end of a six-month trial period by sending within five days a formal notice to the Company if trial results are not satisfactory. |
*** | The enforceability of the standby letter of credit from LATAM Business Development Group Ltd. in our favor is also conditioned upon the parties finalizing within 90 days of the date of the agreement, in mutually agreed form, the terms and conditions of the statement of work, the system requirement specifications and the service level agreement. |
• | Competing digital X-ray sources with same or better attributes; and |
• | Competing enterprises operating an MSaaS business model. |
• | establishment registration and device listing with the FDA; |
• | QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; |
• | labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products; |
• | requirements related to promotional activities; |
• | clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of certain modifications to PMA-approved devices; |
• | medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; |
• | correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; |
• | the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and |
• | post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device. |
• | warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; |
• | recalls, withdrawals or administrative detention or seizure of our products; |
• | operating restrictions or partial suspension or total shutdown of production; |
• | refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; |
• | withdrawing 510(k) clearances or PMA approvals that have already been granted; |
• | refusal to grant export approvals for our products; or |
• | criminal prosecution. |
Area of Activity | | | As of June 30, 2020 |
General and Administrative | | | 11 |
Research, Development and Quality Assurance | | | 15 |
Sales and Marketing | | | 1 |
Total | | | 27 |
Name | | | Age | | | Position |
Executive Officers | | | | | ||
Ran Poliakine | | | 52 | | | Founder, Chief Executive Officer and Director* |
Itzhak Maayan | | | 55 | | | Chief Financial Officer |
Tal Shank | | | 42 | | | Vice President Corporate Development |
Yoel Raab | | | 65 | | | Chief Technology Officer |
Anat Kaphan | | | 50 | | | Vice President Product Marketing |
Shirly Kaufman-Kirshenbaum | | | 46 | | | Vice President Human Resources |
| | | | |||
Non-Employee Directors and Director Nominees | | | | | ||
Onn Fenig | | | 45 | | | Director |
Floyd Katske | | | 69 | | | Director |
Erez Meltzer | | | 62 | | | Director |
Richard Stone | | | 77 | | | Director |
* | This individual will occupy the position of Chairman of the board of directors upon the closing of this offering. |
• | we intend to follow Israeli corporate governance practices instead of the Nasdaq requirements with regard to, among other things, the nomination committee and director nomination procedures. |
• | we intend to comply with Israeli law, which permits a company to determine in its articles of association the number of shareholders and percentage of holdings required for such a quorum. Our amended and restated articles of association provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general shareholders meeting. While the quorum set forth in our amended and restated articles of association with respect to an adjourned meeting is identical to the quorum for any other meeting (as described in the initial sentence), if, within half an hour from the time appointed for the adjourned meeting, a quorum is not present, a quorum shall thereafter consist of one or more shareholders present in person or by proxy, regardless of the number or percentage of our outstanding shares held by them; |
• | with the exception of our external directors and directors elected by our board of directors due to a vacancy, in accordance with the staggered nomination as described under “—Board of Directors and Officers,” we intend to elect our directors to hold office until the annual general meeting of our shareholders that occurs in the third year following his or her election and until his or her successor shall be elected and qualified. The nominations for directors, which are presented to our shareholders by our board of directors, are generally made by the board of directors itself, in accordance with the provisions of our amended and restated articles of association and the Companies Law; |
• | we intend to adopt and approve material changes to equity incentive plans in accordance with the Companies Law, which does not impose a requirement of shareholder approval for such actions. In addition, we intend to follow Israeli corporate governance practice, which requires shareholder approval prior to an issuance of securities in connection with equity-based compensation of officers, directors, employees or consultants only under certain circumstances, in lieu of Nasdaq Marketplace Rule 5635(c); |
• | as opposed to making periodic reports to shareholders and proxy solicitation materials available to shareholders in the manner specified by the Nasdaq corporate governance rules, the Companies Law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. We will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC’s proxy solicitation rules; and |
• | we will follow Israeli corporate governance practices instead of Nasdaq requirements to obtain shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law such as (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at our company), (ii) extraordinary transactions with controlling shareholders, (iii) terms of employment or other engagement of the controlling shareholder of the company or such controlling shareholder’s relative, (iv) private placements that will result in a change of control, (v) certain transactions, other than a public offering, involving issuances of a 20% or greater interest in us and (vi) certain acquisitions of the stock or assets of another company. |
• | an employment relationship; |
• | a business or professional relationship maintained on a regular basis; |
• | control; and |
• | service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public if such director was appointed as a director of the private company in order to serve as an external director following the initial public offering. |
• | the majority of the shares voted at the meeting in favor of the election of the external director, excluding abstentions, include at least a majority of the votes of shareholders who are not controlling shareholders and do not have a personal interest in the appointment (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder); or |
• | the total number of shares held by non-controlling shareholders or any one on their behalf that are voted against the election of the external director does not exceed 2% of the aggregate voting rights in the company. |
• | his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company’s voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholders voting for such reelection exceeds 2% of the aggregate voting rights in the company and subject to additional restrictions set forth in the Companies Law with respect to the affiliation of the external director nominee; |
• | the external director proposed his or her own nomination, and such nomination was approved in accordance with the requirements described in the paragraph above; or |
• | his or her service for each such additional term is recommended by the board of directors and is approved at a meeting of shareholders by the same majority required for the initial election of an external director (as described above). |
• | the chairman of the board of directors; |
• | a controlling shareholder or a relative of a controlling shareholder; |
• | any director employed by the company or by one of its controlling shareholders or by an entity controlled by one of its controlling shareholders (other than as a member of the board of directors); |
• | any director who regularly provides services to the company, to one of its controlling shareholders or to an entity controlled by one of its controlling shareholders; or |
• | a director who derives most of his or her income from a controlling shareholder. |
• | recommending the retention and termination of our independent registered public accounting firm to the board of directors in accordance with Israeli law; |
• | recommending to the board of directors in accordance with Israeli law the appointment, compensation, retention and oversight of any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit services; |
• | recommending the terms of audit and non-audit services to be provided by the independent registered public accounting firm for pre-approval by our board of directors; |
• | recommending the engagement or termination of the person filling the office of our internal auditor; |
• | reviewing with management and our independent directors our financial statements prior to their submission to the SEC; and |
• | approval of certain transactions with office holders and controlling shareholders, as described below, and other related party transactions. |
1. | to recommend to the board of directors the compensation policy for directors and officers, and, once every three years, or five years from a company’s initial public offering, to recommend to the board of directors, whether the compensation policy that had been approved should be extended for a longer period of time; |
2. | to recommend to the board of directors updates to the compensation policy, from time to time, and examine its implementation; |
3. | to decide whether to approve the terms of office and employment of directors and officers that require approval of the compensation committee; and |
4. | to decide whether the compensation terms of the chief executive officer, which were determined pursuant to the compensation policy, will be exempted from approval by the shareholders because such approval would harm the ability to engage the chief executive officer. |
• | the education, skills, experience, expertise and accomplishments of the relevant office holder; |
• | the office holder’s position, responsibilities and prior compensation agreements with him or her; |
• | the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost, the average and median salary of the employees of the company, as well as the impact of such disparities on the work relationships in the company; |
• | if the terms of employment include variable components — the possibility of reducing variable components at the discretion of the board of directors and the possibility of setting a limit on the exercise value of non-cash variable equity-based components; and |
• | if the terms of employment include severance compensation — the term of employment or office of the office holder, the terms of his or her compensation during such period, the company’s performance during the such period, his or her individual contribution to the achievement of the company goals and the maximization of its profits and the circumstances under which the office holder is leaving the company. |
• | with regard to variable components: |
○ | with the exception of office holders who are subordinate to the chief executive officer, determining the variable components on long-term performance basis and on measurable criteria; however, the company may determine that an immaterial part of the variable components of the compensation package of an office holder shall be awarded based on non-measurable criteria, if such amount is not higher than three monthly salaries per annum while taking into account the office holder’s contribution to the company; |
○ | the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their grant. |
• | a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation policy, any amounts paid as part of his or her terms of employment, if such amounts were paid based on information later to be discovered to be wrong, and such information was than re-presented in the company’s financial statements; |
• | the minimum holding or vesting period of variable equity-based components, while taking into consideration long-term incentives; and |
• | a limit to retirement grants. |
• | information on the business advisability of a given action brought for his or her approval or performed by virtue of his or her position; and |
• | all other important information pertaining to such action. |
• | refrain from any act involving a conflict of interest between the performance of his or her duties in the company and his or her other duties or personal affairs; |
• | refrain from any activity that is competitive with the business of the company; |
• | refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself or herself or others; and |
• | disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his or her position as an office holder. |
• | the office holder’s relatives (spouse, siblings, parents, grandparents, descendants, spouse’s descendants and the spouses of any of these people); or |
• | any company in which the office holder or his or her relatives holds 5% or more of the shares or voting rights, serves as a director or general manager or has the right to appoint at least one director or the general manager. |
• | a transaction other than in the ordinary course of business; |
• | a transaction that is not on market terms; or |
• | a transaction that may have a material impact on the company’s profitability, assets or liabilities. |
• | a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or |
• | the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than two percent (2%) of the voting rights in the company. |
• | at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the compensation package does not exceed two percent (2%) of the aggregate voting rights in the company. |
• | an amendment to the articles of association; |
• | an increase in the company’s authorized share capital; |
• | a merger; and |
• | the approval of related party transactions and acts of office holders that require shareholder approval. |
• | a monetary liability incurred by or imposed on the office holder in favor of another person pursuant to a court judgment, including pursuant to a settlement confirmed as judgment or arbitrator’s decision approved by a competent court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria; |
• | reasonable litigation expenses, including reasonable attorneys’ fees, which were incurred by the office holder (i) as a result of an investigation or proceeding filed against the office holder by an authority authorized to conduct such investigation or proceeding; provided that such investigation or proceeding was either (a) concluded without the filing of an indictment against such office holder and without the imposition on him of any monetary obligation in lieu of a criminal proceeding; (b) concluded without the filing of an indictment against the office holder but with the imposition of a monetary obligation on the office holder in lieu of criminal proceedings for an offense that does not require proof of criminal intent; or (ii) in connection with a monetary sanction; |
• | a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure (as defined below) as set forth in Section 52(54)(a)(1)(a) to the Securities Law; |
• | expenses expended by the office holder with respect to an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees; |
• | reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or which were imposed on the office holder by a court (i) in a proceeding instituted against him or her by the company, on its behalf, or by a third party, (ii) in connection with criminal indictment of which the office holder was acquitted, or (iii) in connection with a criminal indictment which the office holder was convicted of an offense that does not require proof of criminal intent; and |
• | any other obligation or expense in respect of which it is permitted or will be permitted under applicable law to indemnify an office holder. |
• | a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; |
• | a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; |
• | a monetary liability imposed on the office holder in favor of a third party; |
• | a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of the Securities Law; and |
• | expenses incurred by an office holder in connection with an Administrative Procedure, including reasonable litigation expenses and reasonable attorneys’ fees. |
• | a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
• | an act or omission committed with intent to derive illegal personal benefit; or |
• | a fine or forfeit levied against the office holder. |
• | Forfeiture Upon Cause Termination. All awards held by a participant will be forfeited upon the participant’s termination for cause. |
• | No Repricing Without Shareholder Approval. Without prior shareholder approval, we will not (i) reduce the exercise price of a stock option, (ii) take any other action that is treated as repricing under U.S. GAAP or (ii) repurchase for cash or cancel a stock option when its exercise price is greater than the fair market value of the underlying shares in exchange for another, unless the cancellation and exchange occurs in connection with a change in capitalization or a similar change. |
• | No Transferability. Awards generally may not be transferred, except by will or the laws of descent and distribution, unless otherwise determined by the compensation committee. |
• | No Automatic Grants. The Plan does not provide for automatic grants to any participant. |
• | No Tax Gross-Ups. The Plan does not provide for any tax gross-ups. |
Name | | | Number of Options | | | Exercise Price | | | Date of Grant | | | Expiration Date |
Ran Poliakine | | | 1,206,290 | | | $2.21 | | | November 25, 2019 | | | November 25, 2029 |
Onn Fenig | | | 40,234 | | | $2.21 | | | November 25, 2019 | | | November 25, 2029 |
Floyd Katske | | | 0 | | | N/A | | | N/A | | | N/A |
Erez Meltzer | | | 0 | | | N/A | | | N/A | | | N/A |
Richard Stone | | | 100,584 | | | $2.21 | | | November 25, 2019 | | | November 25, 2029 |
Itzhak Maayan | | | 161,107 | | | $2.21 | | | November 25, 2019 | | | November 25, 2029 |
Anat Kaphan | | | 112,754 | | | $2.21 | | | November 25, 2019 | | | November 25, 2029 |
Yoel Raab | | | 152,754 | | | $2.21 | | | November 25, 2019 | | | November 25, 2029 |
Tal Shank | | | 74,362 | | | $2.21 | | | November 25, 2019 | | | November 25, 2029 |
Shirly Kaufman-Kirshenbaum | | | 0 | | | N/A | | | N/A | | | N/A |
• | each person or entity known by us to own beneficially more than 5% of our outstanding ordinary shares; |
• | each of our directors, executive officers and director nominees; and |
• | all of our executive officers, directors and director nominees as a group. |
| | Shares Beneficially Owned Prior to the Offering | | | Shares Beneficially Owned After the Offering | |||||||
Name of Beneficial Owner | | | Number | | | Percentage | | | Number | | | Percentage |
5% or greater shareholders | | | | | | | | | ||||
Ran Poliakine(1) | | | | | | | | | ||||
Moshe Moalem(2) | | | | | | | | | ||||
SK Telecom TMT Investment Corp and Affiliates(3) | | | | | | | | | ||||
Tsuri Limited and Everhart Finance Limited(4) | | | | | | | | | ||||
Yozma Group Korea | | | | | | | | | ||||
Asia Beam Limited(5) | | | | | | | | | ||||
Directors, director nominees and executive officers | | | | | | | | | ||||
Ran Poliakine(1) | | | | | | | | | ||||
Onn Fenig | | | | | * | | | | | |||
Erez Meltzer | | | | | * | | | | | |||
Richard Stone(6) | | | | | | | | | ||||
Itzhak Maayan | | | | | * | | | | | |||
Yoel Raab | | | | | * | | | | | |||
Anat Kaphan | | | | | * | | | | | |||
Tal Shank | | | | | * | | | | | |||
Shirly Kaufman-Kirshenbaum | | | | | * | | | | | |||
All directors, director nominees and executive officers as a group (9 persons) | | | | | | | | |
* | Amount represents less than 1% of outstanding ordinary shares. |
(1) | Represents (a) ordinary shares of the Company held by Ran Poliakine, (b) ordinary shares of the Company held in trust by Shay Zuckerman & Co. Law Firm (“Shay Zuckerman”), pursuant to an Escrow Agreement, dated February 3, 2020 (the “Escrow Agreement”), between Ran Poliakine, Moshe Moalem and Shay Zuckerman, as trustee, and (c) warrants to purchase ordinary shares held by Ran Poliakine. ordinary shares held by Shay Zuckerman are held in trust for the benefit of Ran Poliakine. Ran Poliakine has voting power of all the ordinary shares held in trust by Shay Zuckerman. Ran Poliakine and Moshe Moalem may be deemed to share the dispositive power over the ordinary shares held in trust by Shay Zuckerman as such ordinary shares may not be disposed of until a final settlement between Ran Poliakine and Moshe Moalem is reached with respect thereto. |
(2) | Represents (a) ordinary shares of the Company held by Moshe Moalem and (b) ordinary shares of the Company held in trust by Shay Zuckerman pursuant to the Escrow Agreement. Ran Poliakine and Moshe Moalem may be deemed to share the dispositive power over the ordinary shares held in trust by Shay Zuckerman as such ordinary shares may not be disposed of until a final settlement between Ran Poliakine and Moshe Moalem is reached with respect thereto. |
(3) | Represents ordinary shares held by SKT, ordinary shares held by Pureun Partners Asset Management Co., Ltd. (“Pureun”), ordinary shares held by EBEST-PPAM Fund No. 9 (“EBEST”), and warrants held by SKT to purchase ordinary shares. SKT has the voting and dispositive power of the shares held by Pureun and EBEST pursuant to a proxy. |
(4) | Represents ordinary shares held by Tsuri Limited and ordinary shares held by Everhart Finance Limited. The voting and dispositive power over such ordinary shares is ultimately held by Elie Douer and Marie Douer, and each of Elie Douer and Marie Douer may be deemed to share voting and dispositive power over the shares held by Tsuri Limited and Everhart Finance Limited. |
(5) | Represents ordinary shares held by Asia Beam Limited. The voting and dispositive power over such ordinary shares is ultimately held by Kasudjono Harianto. |
(6) | Consists of ordinary shares, options to purchase ordinary shares, and warrants to purchase ordinary shares held by Richard Stone, 696,196 ordinary shares and warrants to purchase ordinary shares held by Stone Isra Ventures LLC, and ordinary shares and warrants to purchase ordinary shares held by Adhoc Investors LLC. Richard Stone is the sole shareholder of Stone Isra Ventures LLC and Adhoc Investors LLC, and may be deemed to have voting and dispositive power of the ordinary shares held by Stone Isra Ventures LLC and Adhoc Investors LLC. |
• | amendments to our amended and restated articles of association; |
• | appointment or termination of our auditors; |
• | election of directors, including external directors (if applicable); |
• | approval of certain related party transactions; |
• | increases or reductions of our authorized share capital; |
• | mergers; and |
• | the exercise of our board of director’s powers by a general meeting, if our board of directors is unable to exercise its powers and the exercise of any of its powers is required for our proper management. |
• | 1% of the number of ordinary shares then outstanding; or |
• | the greater of 1% or the average weekly trading volume of our ordinary shares on the Nasdaq during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | persons other than affiliates, without restriction; and |
• | affiliates, subject to the manner-of-sale, current public information and filing requirements of Rule 144, in each case, without compliance with the six-month holding period requirement of Rule 144. |
• | Amortization over an eight-year period of the cost of purchased know-how and patents and rights to use a patent and know-how which are used for the development or advancement of the Industrial Enterprise, commencing from the tax year where the Industrial Enterprise began to use them. |
• | Under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; and |
• | Expenses related to a public offering are deductible in equal amounts from income attributed to the Industrial Enterprise over three years commencing in the year of the offering. |
• | The expenditures are approved by the relevant Israeli government ministry, determined by the field of research; or |
• | The research and development is for the promotion of the company and is carried out by or on behalf of the company seeking such tax deduction. |
• | banks and other financial institutions; |
• | insurance companies; |
• | pension plans; |
• | cooperatives; |
• | regulated investment companies; |
• | real estate investment trusts; |
• | broker-dealers; |
• | traders that elect to use a mark-to-market method of accounting; |
• | certain former U.S. citizens or long-term residents; |
• | tax-exempt entities (including private foundations); |
• | holders who acquire our ordinary shares pursuant to any employee share option or otherwise as compensation; |
• | investors that will hold our ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; |
• | persons holding our ordinary shares in connection with a trade or business outside the United States; |
• | persons that actually or constructively own 10% or more of our stock (by vote or value); |
• | investors that have a functional currency other than the U.S. dollar; |
• | partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding our ordinary shares through such entities, all of whom may be subject to tax rules that differ significantly from those discussed below. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the law of, the United States or any state thereof or the District of Columbia; |
• | an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
• | a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the Code. |
• | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ordinary shares; |
• | the amount allocated to the taxable year of the excess distribution, sale or other disposition and to any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; |
• | the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and |
• | the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
Name | | | Number of shares |
Cantor Fitzgerald & Co. | | | |
Oppenheimer & Co. Inc. | | | |
Berenberg Capital Markets, LLC | | | |
CIBC World Markets Corp. | | | |
Total | | |
| | Without option to purchase additional shares exercise | | | With full option to purchase additional shares exercise | |
Per Share | | | $ | | | $ |
Total | | | $ | | | $ |
• | 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, lend, or otherwise transfer or dispose of, directly or indirectly, any of our ordinary shares or any securities convertible into or exercisable or exchangeable for our ordinary shares (including without limitation, ordinary shares or such other securities which may be deemed to be beneficially owned by the such persons in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a share option or warrant); |
• | enter into any hedging, swap or other agreement or transaction that transfers, in whole or in part, any of the economic consequences of ownership of our ordinary shares or such other securities; or |
• | make any demand for or exercise any right with respect to the registration of any of our ordinary shares or any security convertible into or exercisable or exchangeable for our ordinary shares, or publicly disclose the intention to do any of the foregoing. |
• | 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, lend, or otherwise transfer or dispose of, directly or indirectly, or submit to, or file with, the SEC a registration statement under the Securities Act relating to, any of our ordinary shares or any securities convertible into or exercisable or exchangeable for our ordinary shares, or publicly disclose the intention to undertake any of the foregoing; or |
• | enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of our ordinary shares or any such other securities, without the prior written consent of Cantor Fitzgerald & Co. |
• | the information set forth in this prospectus and otherwise available to the representative; |
• | our prospects and the history and prospects for the industry in which we compete; |
• | an assessment of our management; |
• | our prospects for future earnings; |
• | the general condition of the securities markets at the time of this offering; |
• | the recent market prices of, and demand for, publicly traded equity securities of generally comparable companies; and |
• | other factors deemed relevant by the underwriters and us. |
(a) | to any legal entity which is a qualified investor as defined under the Prospectus Regulation; |
(b) | to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or |
(c) | in any other circumstances falling within Article 1(4) of the Prospectus Regulation, |
(a) | a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or |
(b) | a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except: |
(a) | to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; |
(b) | where no consideration is or will be given for the transfer; |
(c) | where the transfer is by operation of law; |
(d) | as specified in Section 276(7) of the SFA; or |
(e) | as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. |
Itemized expense | | | Amount |
SEC registration fee | | | $12,980 |
FINRA filing fee | | | 15,500 |
Nasdaq listing fee | | | * |
Printing and engraving expenses | | | * |
Legal fees and expenses | | | * |
Transfer agent and registrar fees | | | * |
Accounting fees and expenses | | | * |
Miscellaneous | | | * |
Total | | | $* |
* | To be filed by amendment. |
• | the judgment was rendered by a court which was, according to the laws of the state of the court, competent to render the judgment; |
• | the obligation imposed by the judgment is enforceable according to the rules relating to the enforceability of judgments in Israel and the substance of the judgment is not contrary to public policy; and |
• | the judgment is executory in the state in which it was given. |
• | the judgment was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases); |
• | the enforcement of the judgment is likely to prejudice the sovereignty or security of the State of Israel; |
• | the judgment was obtained by fraud; |
• | the opportunity given to the defendant to bring its arguments and evidence before the court was not reasonable in the opinion of the Israeli court; |
• | the judgment was rendered by a court not competent to render it according to the laws of private international law as they apply in Israel; |
• | the judgment is contradictory to another judgment that was given in the same matter between the same parties and that is still valid; or |
• | at the time the action was brought in the foreign court, a lawsuit in the same matter and between the same parties was pending before a court or tribunal in Israel. |
/s/ Kesselman & Kesselman | | | |
Certified Public Accountants (Isr.) | | | |
A member firm of PricewaterhouseCoopers International Limited | | | |
| | ||
Tel Aviv, Israel | | | |
February 18, 2020, except with respect to the matters which have removed the substantial doubt about the Company’s ability to continue as a going concern discussed in Note 1d and Note 12(d), (e), (f), (g) as to which the date is July 30, 2020 | | |
| | December 31, | ||||
| | 2019 (*) | | | 2018 (*) | |
| | U.S. Dollars in thousands | ||||
Assets | | | | | ||
CURRENT ASSETS: | | | | | ||
Cash and cash equivalents | | | 8,072 | | | 5 |
Prepaid expenses and other current assets | | | 1,564 | | | — |
Related party prepaid expenses | | | — | | | 1,694 |
Total current assets | | | 9,636 | | | 1,699 |
| | | | |||
NON-CURRENT ASSETS: | | | | | ||
Restricted cash | | | 145 | | | — |
Property and equipment, net | | | 228 | | | 156 |
Deferred offering costs | | | 1,197 | | | — |
Operating lease right-of-use asset | | | 526 | | | — |
Other non-current assets | | | 139 | | | — |
Total non-current assets | | | 2,235 | | | 156 |
Total assets | | | 11,871 | | | 1,855 |
| | | | |||
Liabilities and Capital Deficiency | | | | | ||
CURRENT LIABILITIES: | | | | | ||
Accounts payable | | | 475 | | | 82 |
Accrued expenses and other liabilities | | | 1,828 | | | — |
Related party liability | | | 17,820 | | | 8,157 |
Current maturities of operating leases | | | 140 | | | — |
Total current liabilities | | | 20,263 | | | 8,239 |
| | | | |||
NON-CURRENT LIABILITIES: | | | | | ||
Non-current operating leases | | | 386 | | | — |
Total non-current liabilities | | | 386 | | | — |
Total liabilities | | | 20,649 | | | 8,239 |
COMMITMENTS | | | | | ||
SHAREHOLDERS' DEFICIT: | | | | | ||
Ordinary Shares, par value NIS 0.01 per share, 40,000,000 and 30,000,000 shares authorized at December 31, 2019 and 2018, respectively; 27,150,080 and 21,924,208 issued and outstanding at December 31, 2019 and 2018, respectively | | | 75 | | | 58 |
Additional paid-in capital | | | 31,748 | | | 11,596 |
Accumulated deficit | | | (40,601) | | | (18,038) |
TOTAL SHAREHOLDERS' DEFICIT | | | (8,778) | | | (6,384) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | | | 11,871 | | | 1,855 |
(*) | The consolidated financial statements as of and for the years ended December 31, 2019 and 2018 reflect a retrospective application of a transaction under common control - see note 1c |
| | Year ended December 31, | ||||
| | 2019 (*) | | | 2018 (*) | |
| | U.S. Dollars in thousands | ||||
OPERATING EXPENSES: | | | | | ||
Research and development | | | 2,717 | | | 672 |
Marketing | | | 1,556 | | | 209 |
General and administrative | | | 18,298 | | | 1,023 |
TOTAL OPERATING EXPENSES | | | 22,571 | | | 1,904 |
OPERATING LOSS | | | (22,571) | | | (1,904) |
FINANCIAL (INCOME) EXPENSES, net | | | (8) | | | 5 |
NET LOSS | | | (22,563) | | | (1,909) |
BASIC AND DILUTED LOSS PER SHARE | | | (0.90) | | | (0.09) |
THE WEIGHTED AVERAGE OF THE NUMBER OF ORDINARY SHARES (in thousands) | | | 25,181 | | | 20,793 |
(*) | The consolidated financial statements as of and for the years ended December 31, 2019 and 2018 reflect a retrospective application of a transaction under common control - see note 1c |
| | Ordinary shares | | | Additional paid-in capital | | | Accumulated deficit | | | Total | ||||
| | Number of shares | | | Amount | | | U.S. Dollars in thousands | |||||||
BALANCE AT JANUARY 1, 2018 | | | 20,257,434 | | | 41 | | | 7,814 | | | (16,129) | | | (8,274) |
CHANGES DURING 2018: | | ||||||||||||||
Issuance of ordinary shares | | | 1,666,774 | | | 17 | | | 3,667 | | | | | 3,684 | |
Share-based compensation | | | | | | | 115 | | | | | 115 | |||
Net loss for the year | | | | | | | | | (1,909) | | | (1,909) | |||
BALANCE AT DECEMBER 31, 2018 | | | 21,924,208 | | | 58 | | | 11,596 | | | (18,038) | | | (6,384) |
CHANGES DURING 2019: | | | | | | | | | | | |||||
Issuance of ordinary shares and warrants, net of issuance costs | | | 4,762,656 | | | 16 | | | 14,022 | | | | | 14,038 | |
Issuance of ordinary shares upon exercise of warrants | | | 454,166 | | | 1 | | | 136 | | | | | 137 | |
Issuance of ordinary shares to investors upon exercise of warrants | | | 9,050 | | | ** | | | 25 | | | | | 25 | |
Share-based compensation | | | | | | | 16,245 | | | | | 16,245 | |||
Additional consideration with respect to an assets purchase agreement, see note 1c and note 6 | | | | | | | (10,276) | | | | | (10,276) | |||
Net loss for the year | | | | | | | | | (22,563) | | | (22,563) | |||
BALANCE AT DECEMBER 31, 2019 | | | 27,150,080 | | | 75 | | | 31,748 | | | (40,601) | | | (8,778) |
(*) | The consolidated financial statements as of and for the years ended December 31, 2019 and 2018 reflect a retrospective application of a transaction under common control - see note 1c |
(**) | Less than 1 thousand US dollars. |
| | Year ended December 31, | ||||
| | 2019 (*) | | | 2018 (*) | |
| | U.S. Dollars in thousands | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | ||
Net loss for the year | | | (22,563) | | | (1,909) |
Adjustments required to reconcile net loss to net cash used in operating activities: | | | | | ||
Share-based compensation | | | 16,245 | | | 115 |
Depreciation | | | 53 | | | 35 |
Changes in operating assets and liabilities: | | |||||
Prepaid expenses and other current assets | | | (1,564) | | | 66 |
Related party prepaid expenses | | | 1,081 | | | (1,844) |
Other non-current assets | | | (139) | | | — |
Accounts payable | | | 393 | | | (134) |
Operating lease | | | ** | | | — |
Accrued expenses and other liabilities | | | 970 | | | — |
Net cash used in operating activities | | | (5,524) | | | (3,671) |
| | | | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | ||
Purchase of property and equipment | | | (125) | | | (73) |
Net cash used in investing activities | | | (125) | | | (73) |
| | | | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | ||
Proceeds from issuance of ordinary shares and warrants , net of issuance costs | | | 14,038 | | | 3,684 |
Proceeds from issuance of ordinary shares upon exercise of warrants | | | 162 | | | — |
Deferred offering costs | | | (339) | | | — |
Net cash provided by financing activities | | | 13,861 | | | 3,684 |
| | | | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | | | 8,212 | | | (60) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE YEAR | | | 5 | | | 65 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE YEAR | | | 8,217 | | | 5 |
SUPPLEMENTARY INFORMATION ON ACTIVITIES NOT INVOLVING CASH FLOWS | | | | | ||
Unpaid offering costs | | | 858 | | | — |
Recognition of operating lease right-of-use asset against operating lease liabilities | | | 548 | | | — |
Additional consideration with respect to an assets purchase agreement, see note 1c | | | (10,276) | | | — |
(*) | The consolidated financial statements as of and for the years ended December 31, 2019 and |
(**) | Less than 1 thousand US dollars. |
a. | Nano-X Imaging Ltd., an Israeli company (hereinafter “the Company” or “Nanox IL” or “the Successor Company”), was incorporated on December 20, 2018 and commenced its operations on September 3, 2019. |
b. | Nanox Imaging PLC is a public limited company incorporated in Gibraltar in 2012 (hereinafter “Nanox PLC” or “the predecessor company”). |
c. | As of September 3 2019, Nanox IL and Nanox PLC had the same shareholders and, therefore, the transaction was treated as a transaction under common control for accounting purposes. |
1) | only the net assets that were transferred in the transaction according to the APA. Net assets which were not transferred in the transaction are not reflected in these consolidated financial statements. |
2) | no interests of Nanox Japan were transferred under the APA. The consolidated statements of operation include the costs incurred for services provided by Nanox Japan to Nanox PLC. |
3) | the consideration in the transaction (the “Related Party Liability”) was recorded at the beginning of the earliest period presented against a decrease in shareholders' equity, with the exception of the cash consideration that was received by Nanox PLC from its equity financing activities in 2019, and which was recorded in 2019 (refer to note 8a). |
4) | all of the share-related information reflect the share information of Nanox IL. |
d. | In accordance with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements–Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern, management is required to perform a two-step analysis of its ability to continue as a going concern. Management must first evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern (step 1). If management concludes that substantial doubt is raised, management is also required to consider whether its plans alleviate that doubt (step 2). |
a. | Use of estimates in the preparation of financial statements |
b. | Functional currency |
c. | Statement of Cash Flows |
d. | Cash and cash equivalents |
e. | Restricted Cash |
f. | Property and equipment, net |
| | % | |
Computers | | | 10-33 |
Office furniture and lab equipment | | | 10-20 |
g. | Impairment of long-lived assets |
h. | Severance pay |
i. | Legal and other contingencies |
j. | Research and development expenses |
k. | Marketing expenses |
l. | Income tax |
1) | The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it is more likely than not that a portion or all of the deferred tax assets will not be realized, based on the weight of available positive and negative evidence. Deferred tax liabilities and assets are classified as non-current in accordance with ASU 2015-17. |
2) | Taxes that would apply in the event of disposal of investments in foreign subsidiaries have not been taken into account in computing the deferred income taxes, as it is the Company’s intent and ability to hold these investments. |
m. | Share-based compensation |
n. | Loss per share |
o. | Fair value measurement |
p. | Deferred Offering Costs |
q. | Newly issued and recently adopted accounting pronouncements: |
(i) | In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840). The guidance, along with amendments that were adopted thereafter, requires entities to record lease assets and lease liabilities on the balance sheet for all leases (unless an exception is applied) and disclose key information about leasing arrangements. The Company adopted the new lease standard on January 1, 2019 and used the effective date as the Company's date of initial application. |
(a) | Not reassess whether any existing contracts are or contain a lease; |
(b) | Not reassess the classification of leases that commenced before the effective date (for example, all existing leases that were classified as operating leases in accordance with Topic 840 will continue to be classified as operating leases, and all existing leases that were classified as capital leases in accordance with Topic 840 will continue to be classified as finance leases); |
(c) | Exclude initial direct costs from measurement of the right of use asset at the date of initial application. |
(ii) | See note 2(m) for other accounting pronouncement adopted during the year ended December 31, 2019. |
| | December 31, | ||||
| | 2019 | | | 2018 | |
| | (U.S. Dollars in thousands) | ||||
Office furniture and lab equipment | | | 325 | | | 217 |
Computers | | | 39 | | | 22 |
| | 364 | | | 239 | |
Less: accumulated depreciation | | | 136 | | | 83 |
Total property and equipment, net | | | 228 | | | 156 |
| | December 31, | ||||
| | 2019 | | | 2018 | |
| | (U.S. Dollars in thousands) | ||||
Cash and cash equivalents | | | 8,072 | | | 5 |
Restricted bank deposit | | | 145 | | | — |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | | | 8,217 | | | 5 |
| | Year ended December 31, | |
| | 2019 | |
| | (U.S. Dollars in thousands) | |
Operating lease cost: | | | |
Fixed payments | | | 25 |
Short-term lease cost | | | 112 |
Total operating lease cost | | | 137 |
| | Year ended December 31, | |
| | 2019 | |
| | (U.S. Dollars in thousands) | |
Cash paid for amounts included in the measurement of lease liabilities: | | | |
Operating cash flows from operating leases | | | 25 |
Right-of-use assets obtained in exchange for lease obligations (non-cash): | | | |
Operating leases | | | 548 |
| | December 31, | |
| | 2019 | |
| | (U.S. Dollars in thousands) | |
Operating leases: | | | |
Operating lease right-of-use assets | | | 526 |
Current maturities of operating leases | | | 140 |
Non-current operating leases | | | 386 |
Total operating lease liabilities | | | 526 |
| | December 31, | |
| | 2019 | |
Weighted average remaining lease term | | | |
Operating leases | | | 3.96 years |
| | ||
Weighted average discount rate | | | |
Operating leases | | | 5.6% |
| | December 31, | |
| | 2019 | |
| | (U.S. Dollars in thousands) | |
2020 | | | 146 |
2021 | | | 146 |
2022 | | | 146 |
2023 | | | 145 |
2024 and thereafter | | | — |
Total operating lease payments | | | 583 |
Less: imputed interest | | | 57 |
Present value of lease liabilities | | | 526 |
a. | Nanox Japan has been using two rooms and one clean room at the premises of the University of Tokyo since 2012. The total annual payments in 2019 were approximately $76 thousand. |
b. | As to the agreements for services with Six-Eye Interactive Ltd. (“Six-Eye”) – refer to note 10c. |
c. | Nanox IL entered into an advisory agreement with A-Labs Finance and Advisory Ltd. (“A-Labs”), effective February 1, 2019, as amended on October 18, 2019, pursuant to which A-Labs will provide the Company |
d. | During September 2019, the Company entered into a Service Agreement with RMD AP Limited, a company registered under the laws of Hong Kong (RMD). RMD undertook to provide the Company with services related to the Asia Pacific region, including, among others, operational and business development related matters. The agreement is for a period of one year and the agreed commitment for the services is $800 thousand. RMD will bear all costs and expenses incurred beyond such agreed upon amount. |
e. | During September 2019, Nanox IL entered into a Collaboration Agreement with Hadasit Medical Research Services and Development Ltd. (“Hadasit”), a wholly owned subsidiary of the Hadassah Medical Organization. The parties agreed to collaborate with respect to the Company's medical imaging technology and resulting medical images devices (the “Company Products”), by way of (a) joint research and development projects (each, a “Research Project”), and (b) the provision by Hadasit of services in connection with the Company Products, such as testing and consulting work, where no innovative research will be carried out (each, a “Service”). Each Research Project and Service shall be rendered under a separate project agreement concluded between the parties in writing from time to time (collectively, the “Project Agreements”). The parties envisage the collaboration to continue over a period of five years, unless an extension is agreed by the parties in writing. Under such agreement, the Company paid Hadasit a non-refundable advance payment for the Research Projects and Services, in the amount of $ 250 thousand, which shall be credited against payments due from time to time to Hadasit under the Project Agreements. Nanox IL has no obligation to enter into Project Agreements with Hadasit in excess of such advanced payment. |
f. | On December 16, 2019, Nanox IL signed an agreement with Dr. Ilung Kim for provision of services to the Company. Dr. Kim will not receive any cash compensation, but will be granted options to purchase 1,206,290 ordinary shares with an exercise price of $2.21 per ordinary share. 301,572 of the options vested as of the grant date and the remaining 904,718 options will vest in equal monthly installments over a period of three years from the vesting commencement date. In the event of an IPO or Deemed Liquidation (as defined therein), all unvested options shall fully accelerate immediately prior to the consummation of the IPO. The vested options shall be exercisable until the earlier of (a) the second anniversary of termination of the engagement by and among the Company and Dr. Ilung Kim, or (b) the tenth anniversary from the date of grant. |
a. | Share capital |
b. | Share based compensation |
1) | Share-based compensation to non-employees : |
| | Year ended December 31, | | | Year ended December 31, | |||||||
| | 2019 | | | 2018 | |||||||
| | Number of share-based payment awards | | | Weighted average exercise price | | | Number of share-based payment awards | | | Weighted average payment exercise price | |
Outstanding at beginning of year | | | 1,592,874 | | | $1.32 | | | 1,751,140 | | | $1.40 |
Changes during the year: | | |||||||||||
Granted | | | 2,271,698 | | | $2.77 | | | — | | | — |
Exercised | | | (454,166) | | | $0.3 | | | — | | | — |
Forfeited | | | — | | | — | | | — | | | — |
Expired | | | — | | | — | | | — | | | — |
Cancelled | | | — | | | — | | | (158,266) | | | $2.21 |
Outstanding at end of year | | | 3,410,406 | | | $1.89 | | | 1,592,874 | | | $1.32 |
Exercisable at end of year | | | 1,830,809 | | | $3.79 | | | 1,592,874 | | | $1.32 |
| | 2019 | | | 2018 | |
Fair value of one ordinary share | | | 16 | | | 2.21 |
Dividend yield | | | 0 | | | 0 |
Expected volatility | | | 41.11% - 50.59% | | | 51.97% - 72.25% |
Risk-free interest rate | | | 1.55%-1.76% | | | 1.52%-2.94% |
Contractual term (years) | | | 0.50 – 10.00 | | | 1.05 – 6.00 |
| | December 31, 2018 | ||||||||||
Exercise price | | | Awards outstanding | | | Awards exercisable | ||||||
| Number of awards outstanding at end of year | | | Weighted average remaining contractual life (years) | | | Number of awards exercisable at end of year | | | Weighted average remaining contractual life (years) | ||
$0.01 | | | 186,815 | | | 2.33 | | | 186,815 | | | 2.33 |
$0.30 | | | 454,166 | | | 0.77 | | | 454,166 | | | 0.77 |
$1.92 | | | 472,606 | | | 2.81 | | | 472,606 | | | 2.81 |
$2.21 | | | 479,287 | | | 3.37 | | | 479,287 | | | 3.37 |
| | December 31, 2019 | ||||||||||
Exercise price | | | Awards outstanding | | | Awards exercisable | ||||||
| Number of awards outstanding at end of year | | | Weighted average remaining contractual life (years) | | | Number of awards exercisable at end of year | | | Weighted average remaining contractual life (years) | ||
$0.01 | | | 186,815 | | | 1.33 | | | 186,815 | | | 1.33 |
$1.92 | | | 472,606 | | | 1.81 | | | 472,606 | | | 1.81 |
$2.21 | | | 2,727,028 | | | 5.27 | | | 1,163,402 | | | 5.27 |
$20.87 | | | 23,957 | | | 5.69 | | | 7,986 | | | 5.69 |
2) | Share-based compensation to employees, officers and directors |
| | Year ended December 31, 2019 | ||||
| | Number of share-based payment awards | | | Weighted average exercise price | |
Outstanding at beginning of year | | | — | | | — |
Changes during the year: | | |||||
Granted | | | 1,667,267 | | | 2.21 |
Exercised | | | — | | | — |
Forfeited | | | — | | | — |
Expired | | | — | | | — |
Cancelled | | | — | | | — |
Outstanding at end of year | | | 1,667,267 | | | 2.21 |
Exercisable at end of year | | | 450,557 | | | 2.21 |
| | 2019 | |
Fair value of one ordinary share | | | 16 |
Dividend yield | | | 0 |
Expected volatility | | | 46.1% - 50.65% |
Risk-free interest rate | | | 1.65% - 1.68% |
Contractual term (years) | | | 5.75 - 6.23 |
December 31, 2019 | ||||||||||||
Awards outstanding | | | Awards exercisable | |||||||||
Exercise price | | | Number of awards outstanding at end of year | | | Weighted average remaining contractual life (years) | | | Number of awards exercisable at end of year | | | Weighted average remaining contractual life (years) |
$2.21 | | | 1,667,267 | | | 9.90 | | | 450,557 | | | 9.90 |
3) | (i) Share-based compensation expenses for awards granted to non-employees, employees, officers and directors in the amount of $661 thousand included in the Company’s consolidated statements of operations for the year ended December 31, 2019 were recorded as research and development expenses. |
a. | Basis of taxation |
b. | Tax assessments |
c. | Deferred tax assets |
a. | Balances with related parties: |
| | December 31, | ||||
| | 2019 | | | 2018 | |
| | (U.S. Dollars in thousands) | ||||
Related party prepaid expenses – See d below | | | — | | | 1,694 |
Related party liability, refer to note 6 | | | 17,820 | | | 8,157 |
b. | Related parties transactions: |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
| | (U.S. Dollars in thousands) | ||||
Research and development | | | 154 | | | 542 |
General and administrative | | | 5,824 | | | 892 |
c. | Six-Eye agreements for services |
d. | The related party prepaid expenses reflect funds raised during 2018 (refer to note 8a) in an amount of $ 3,684 thousand from third party investors, less amounts payable in accordance with Six-Eye service agreement (see c above). The funds were received directly by Six-Eye (these funds were not received by the Company nor remitted from the Company to Six-Eye) less amounts payable in accordance with Six-Eye service agreement (see c above). |
e. | Effective from September 2019, Nanox IL signed an executive employment agreement with Ran Poliakine (“the CEO”) to serve as the Company’s CEO (“the CEO agreement”). According to the CEO agreement, the CEO will be entitled to a monthly gross salary of $40 thousand, which will be increased to $60 thousand upon the Company's consummation of an IPO. The CEO will be entitled to other benefits as described in the CEO agreement including an annual bonus subject to performance criteria. The CEO was granted options to purchase 1,206,290 ordinary shares with an exercise price of $2.21 per ordinary share. 301,572 of the options were vested as of the grant date and the remaining 904,718 options will be vested in equal monthly installments over a period of three years from the vesting commencement date. Share-based compensation expenses in an amount of $5,299 thousand included in the Company’s consolidated statements of operations for the year ended December 31, 2019 were recorded as general and administrative expenses for the abovementioned awards. |
a. | Basic |
| | Year ended December 31, | ||||
| | 2019 | | | 2018 | |
Net loss attributable to Company’s owners | | | $(22,563) | | | $(1,909) |
The weighted average of the number of ordinary shares (in thousands) | | | 25,181 | | | 20,793 |
Basic and diluted loss per share | | | $(0.90) | | | $(0.09) |
b. | Diluted |
a. | During January 2020, subject to entering into a share purchase agreement in the aggregate amount of at least $6 million, and a pre-money valuation of more than $100 million, the Nanox IL’s Board approved the issuance and allotment of 1,109,245 ordinary shares to Nanox PLC with the purchase price of $12.00 per share, which reflects a discount of 25% from the price of the last financing round of the Company. As a result, on January 30, 2020 the related party liability was settled into equity at a price per share reflecting a discount of 25% from the price of the last financing round. |
b. | During January and February 2020 Nanox IL issued additional 257,723 ordinary shares to other investors for an aggregate purchase price of approximately $3.4 million at a $16 per ordinary share. |
c. | In February 2020, the Company granted a total of 407,868 awards with an exercise price of $2.21 per share to employees and service providers. |
d. | During the first half of 2020, the Company entered into share purchase agreements with certain investors (together, the “Investors”), under which the Company issued an aggregate of 2,368,250 ordinary shares to the Investors, at a price per share of $16.00, for an aggregate purchase price of approximately $37.9 million. |
e. | In July 2020, the Company issued 625,000 ordinary shares to one of its investors, as part of their $20 million equity investment at a price per share of $16.00, for a purchase price of $10 million, received in July 2020, which reflects the second portion of the investor’s $20 million investment. |
f. | In July 2020, the Company entered into additional share purchase agreements with certain investors for the issuance of 3,500,000 ordinary shares at a price per share of $16.00, for an aggregate purchase price of approximately $56 million. As of the date of the issuance of these financial statements, the funds were not received yet. |
g. | The Company has evaluated subsequent events through July 30, 2020, the date on which the consolidated financial statements were available to be issued. |
| | June 30, 2020 | | | December 31, 2019 | |
| | U.S. Dollars in thousands | ||||
Assets | | | | | ||
CURRENT ASSETS: | | | | | ||
Cash and cash equivalents | | | 39,524 | | | 8,072 |
Related party prepaid expenses | | | 35 | | | — |
Prepaid expenses and other current assets | | | 890 | | | 1,564 |
TOTAL CURRENT ASSETS | | | 40,449 | | | 9,636 |
| | | | |||
NON-CURRENT ASSETS: | | | | | ||
Restricted cash | | | 192 | | | 145 |
Property and equipment, net | | | 439 | | | 228 |
Deferred offering costs | | | 1,469 | | | 1,197 |
Operating lease right-of-use asset | | | 934 | | | 526 |
Other non-current assets | | | 98 | | | 139 |
TOTAL NON-CURRENT ASSETS | | | 3,132 | | | 2,235 |
TOTAL ASSETS | | | 43,581 | | | 11,871 |
| | | | |||
Liabilities and Shareholders' Equity (Capital Deficiency) | | | | | ||
CURRENT LIABILITIES: | | | | | ||
Accounts payable | | | 406 | | | 475 |
Accrued expenses and other liabilities | | | 1,690 | | | 1,828 |
Related party accrued liabilities | | | 192 | | | 72 |
Related party liability | | | — | | | 17,748 |
Current maturities of operating leases | | | 315 | | | 140 |
TOTAL CURRENT LIABILITIES | | | 2,603 | | | 20,263 |
| | | | |||
NON-CURRENT LIABILITIES: | | | | | ||
Non-current operating leases | | | 619 | | | 386 |
TOTAL NON-CURRENT LIABILITIES | | | 619 | | | 386 |
TOTAL LIABILITIES | | | 3,222 | | | 20,649 |
| | | | |||
COMMITMENTS SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY): | | | | | ||
Ordinary Shares, par value NIS 0.01 per share, 40,000,000 authorized at June 30, 2020 and December 2019, respectively; 30,679,965 and 27,150,080 issued and outstanding at June 30, 2020 and December 31, 2019, respectively | | | 85 | | | 75 |
Additional paid-in capital | | | 94,661 | | | 31,748 |
Accumulated deficit | | | (54,387) | | | (40,601) |
TOTAL SHAREHOLDERS’ EQUITY (CAPITAL DEFICIENCY) | | | 40,359 | | | (8,778) |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (CAPITAL DEFICIENCY) | | | 43,581 | | | 11,871 |
| | Six Months Ended June 30, | | | Three Months Ended June 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
| | (U.S. dollars in thousands, except for per share data) | ||||||||||
OPERATING EXPENSES: | | | | | | | | | ||||
Research and development | | | 4,152 | | | 340 | | | 1,786 | | | 172 |
Marketing | | | 1,745 | | | 242 | | | 772 | | | 122 |
General and administrative | | | 7,903 | | | 1,079 | | | 3,871 | | | 659 |
OPERATING LOSS | | | (13,800) | | | (1,661) | | | (6,429) | | | (953) |
FINANCIAL EXPENSES (INCOME), NET | | | (14) | | | 14 | | | (65) | | | 11 |
NET LOSS | | | (13,786) | | | (1,675) | | | (6,364) | | | (964) |
| | | | | | | | |||||
BASIC AND DILUTED LOSS PER SHARE | | | (0.47) | | | (0.07) | | | (0.21) | | | (0.04) |
WEIGHTED AVERAGE NUMBER OF | | | | | | | | | ||||
ORDINARY SHARES (in thousands) | | | 29,273 | | | 23,452 | | | 29,628 | | | 24,456 |
| | Ordinary shares | | | Additional paid-in capital | | | Accumulated deficit | | | Total | ||||
| | Number of shares | | | Amount | | |||||||||
| | | | | | U.S. Dollars in thousands | |||||||||
BALANCE AT JANUARY 1, 2020 | | | 27,150,080 | | | 75 | | | 31,748 | | | (40,601) | | | (8,778) |
CHANGES DURING SIX MONTHS ENDED JUNE 30, 2020 | | | | | | | | | | | |||||
Issuance of ordinary shares, net of issuance costs | | | 2,368,250 | | | 10 | | | 36,690 | | | | | 36,700 | |
Conversion of related party liability to shareholders' equity | | | 1,109,245 | | | | | 17,748 | | | | | 17,748 | ||
Issuance of ordinary shares to employees and non-employees upon exercise of warrants | | | 29,766 | | | * | | | 66 | | | | | 66 | |
Issuance of ordinary shares to investors upon exercise of warrants | | | 22,624 | | | * | | | 62 | | | | | 62 | |
Share-based compensation | | | | | | | 8,347 | | | | | 8,347 | |||
Net loss | | | | | | | | | (13,786) | | | (13,786) | |||
BALANCE AT JUNE 30, 2020 | | | 30,679,965 | | | 85 | | | 94,661 | | | (54,387) | | | 40,359 |
| | Ordinary shares | | | Additional paid-in capital | | | Accumulated deficit | | | Total | ||||
| | Number of shares | | | Amount | | |||||||||
| | | | | | U.S. Dollars in thousands | |||||||||
BALANCE AT JANUARY 1, 2019 | | | 21,924,208 | | | 58 | | | 11,596 | | | (18,038) | | | (6,384) |
CHANGES DURING SIX MONTHS ENDED JUNE 30, 2019 | | | | | | | | | | | |||||
Issuance of ordinary shares and warrants, net of issuance costs | | | 4,450,146 | | | 13 | | | 9,251 | | | | | 9,264 | |
Additional consideration for an asset purchase agreement | | | | | | | 174 | | | | | 174 | |||
Net loss | | | | | | | | | (1,675) | | | (1,675) | |||
BALANCE AT JUNE 30, 2019 | | | 26,374,354 | | | 71 | | | 21,021 | | | (19,713) | | | 1,379 |
(*) | Less than 1 thousand US dollars. |
| | Ordinary shares | | | Additional paid-in capital | | | Accumulated deficit | | | Total | ||||
| | Number of shares | | | Amount | | |||||||||
| | | | | | U.S. Dollars in thousands | |||||||||
BALANCE AT APRIL 1, 2020 | | | 29,261,215 | | | 81 | | | 68,912 | | | (48,023) | | | 20,970 |
CHANGES DURING THREE MONTHS ENDED JUNE 30, 2020 | | | | | | | | | | | |||||
Issuance of ordinary shares, net of issuance costs | | | 1,418,750 | | | 4 | | | 22,252 | | | 22,256 | | | |
Share-based compensation | | | | | | | 3,497 | | | | | 3,497 | |||
Net loss | | | | | | | | | (6,364) | | | (6,364) | |||
BALANCE AT JUNE 30, 2020 | | | 30,679,965 | | | 85 | | | 94,661 | | | (54,387) | | | 40,359 |
| | Ordinary shares | | | Additional paid-in capital | | | Accumulated deficit | | | Total | ||||
| | Number of shares | | | Amount | | |||||||||
| | | | | | U.S. Dollars in thousands | |||||||||
BALANCE AT APRIL 1, 2019 | | | 22,250,688 | | | 59 | | | 11,908 | | | (18,749) | | | (6,782) |
CHANGES DURING THREE MONTHS ENDED JUNE 30, 2019 | | | | | | | | | | | |||||
Issuance of ordinary shares and warrants, net of issuance costs | | | 4,123,666 | | | 12 | | | 9,103 | | | | | 9,115 | |
Additional consideration for an asset purchase agreement | | | | | | | 10 | | | | | 10 | |||
Net loss | | | | | (964) | | | (964) | | | | | |||
BALANCE AT JUNE 30, 2019 | | | 26,374,354 | | | 71 | | | 21,021 | | | (19,713) | | | 1,379 |
| | Six Months Ended | ||||
| | June 30, | ||||
| | 2020 | | | 2019 | |
| | U.S. Dollars in thousands | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | ||
Net loss | | | (13,786) | | | (1,675) |
Adjustments required to reconcile net loss to net cash used in operating activities: | | | | | ||
Share-based compensation | | | 8,347 | | | — |
Depreciation | | | 33 | | | 24 |
Changes in operating assets and liabilities: | | | | | ||
Prepaid expenses and other current assets | | | 782 | | | — |
Related party prepaid expenses | | | (35) | | | 654 |
Other non-current assets | | | 41 | | | — |
Accounts payable | | | (69) | | | (63) |
Operating leases | | | * | | | — |
Accrued expenses and other liabilities | | | (51) | | | — |
Net cash used in operating activities | | | (4,738) | | | (1,060) |
| | | | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | ||
Purchase of property and equipment | | | (244) | | | (80) |
Net cash used in investing activities | | | (244) | | | (80) |
| | | | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | ||
Proceeds from issuance of ordinary shares and warrants, net of issuance costs | | | 37,237 | | | 9,264 |
Proceeds from issuance of ordinary shares upon exercise of warrants | | | 128 | | | — |
Deferred offering costs | | | (884) | | | — |
Net cash provided by financing activities | | | 36,481 | | | 9,264 |
| | | | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | | | 31,499 | | | 8,124 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF THE PERIOD | | | 8,217 | | | 5 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE PERIOD | | | 39,716 | | | 8,129 |
SUPPLEMENTARY INFORMATION ON ACTIVITIES NOT INVOLVING CASH FLOWS: | | | | | ||
Unpaid offering costs | | | 138 | | | — |
Conversion of related party liability to shareholders' equity | | | 17,748 | | | — |
Additional consideration for an asset purchase agreement | | | — | | | 174 |
Operating lease liabilities arising from obtaining operating right-of-use assets | | | 486 | | | — |
Issuance costs | | | 537 | | | — |
(*) | Less than 1 thousand US dollars. |
a. | Nano-X Imaging Ltd., an Israeli Company (hereinafter “the Company” or “Nanox IL” or “the Successor Company”), was incorporated on December 20, 2018 and commenced its operations on September 3, 2019. |
b. | The Company's solution, referred to as the Nanox System, has two integrated components – “Nanox.ARC” and “Nanox.CLOUD”. Nanox.ARC is a medical imaging system incorporating the Company’s novel digital X-ray source. Nanox.CLOUD is a cloud-based system designed to provide end-to-end medical imaging services, including services such as image repository, radiologist matching, online and offline diagnostics review and annotation, connectivity to diagnostic assistive AI systems, billing and reporting. |
c. | In order to complete its technology development program, the Company will require significant funding. Moreover, the Company has experienced net losses and negative cash flows from operations since its inception and has relied on its ability to fund its operations primarily through equity financings. As of June 30, 2020, the Company had an accumulated deficit and negative cash flows from operations. The Company anticipates such losses will continue until its product candidates reach commercial profitability. |
d. | Current Impact of COVID-19 |
| | Six months ended June 30, | | | Six months ended June 30, | |||||||
| | 2020 | | | 2019 | |||||||
| | Number of share-based payment Awards | | | Weighted average exercise price | | | Number of share-based payment awards | | | Weighted average exercise price | |
Outstanding, at beginning of period | | | 3,410,406 | | | $1.89 | | | 1,592,874 | | | $1.32 |
Changes during the period: | | | | | | | | | ||||
Granted | | | 121,840 | | | $8.91 | | | — | | | — |
Exercised | | | (29,766) | | | $2.21 | | | — | | | — |
Forfeited | | | — | | | — | | | — | | | — |
Expired | | | — | | | — | | | — | | | — |
Cancelled | | | — | | | — | | | — | | | — |
Outstanding at end of period | | | 3,502,480 | | | $2.07 | | | 1,592,874 | | | $1.32 |
Exercisable at end of period | | | 2,168,033 | | | $2.40 | | | 1,592,874 | | | $1.32 |
| | Six months ended June 30, 2020 | |
Fair value of one ordinary share | | | 16 |
Dividend yield | | | 0 |
Expected volatility | | | 44.40% - 57.34% |
Risk-free interest rate | | | 0.34%-1.61% |
Contractual term (years) | | | 5.00-10.00 |
June 30, 2020 Awards outstanding | | | | | | | Awards exercisable | |||||
| | Number of Awards outstanding at end of period | | | Weighted average remaining contractual life (years) | | | Number of Award exercisable at end of Period | | | Weighted average remaining contractual life (years) | |
$0.01 | | | 186,815 | | | 0.83 | | | 186,815 | | | 0.83 |
$1.92 | | | 472,606 | | | 1.31 | | | 472,606 | | | 1.31 |
$2.21 | | | 2,759,896 | | | 5.25 | | | 1,441,420 | | | 5.25 |
$16 | | | 59,206 | | | 4.96 | | | 59,206 | | | 4.96 |
$20.87 | | | 23,957 | | | 5.19 | | | 7,986 | | | 5.19 |
June 30, 2019 Awards outstanding | | | | | | | Awards exercisable | |||||
| | Number of Awards outstanding at end of period | | | Weighted average remaining contractual life (years) | | | Number of Award exercisable at end of Period | | | Weighted average remaining contractual life (years) | |
$0.01 | | | 186,815 | | | 1.83 | | | 186,815 | | | 1.83 |
$0.30 | | | 454,166 | | | 0.27 | | | 454,166 | | | 0.27 |
$1.92 | | | 472,606 | | | 2.31 | | | 472,606 | | | 2.31 |
$2.21 | | | 479,287 | | | 2.87 | | | 479,287 | | | 2.87 |
| | Six months ended June 30, 2020 | |||||||
| | Number of share-based payment awards | | | Weighted average exercise price | | | Weighted average remaining contractual life (years) | |
Outstanding at beginning of period | | | 1,667,267 | | | 2.21 | | | 9.90 |
Changes during the period: | | | | | | | |||
Granted | | | 295,234 | | | 2.21 | | | 9.60 |
Exercised | | | — | | | — | | | — |
Forfeited | | | — | | | — | | | — |
Expired | | | — | | | — | | | — |
Cancelled | | | (9,375) | | | 2.21 | | | — |
Outstanding at end of period | | | 1,953,126 | | | 2.21 | | | 9.55 |
Exercisable at end of period | | | 726,880 | | | 2.21 | | | 9.55 |
| | 2020 | |
Fair value of one ordinary share | | | $16 |
Dividend yield | | | 0 |
Expected volatility | | | 45.11% - 50.65% |
Risk-free interest rate | | | 1.45% - 1.61% |
Contractual term (years) | | | 10 |
| | Six Months Ended June 30, | | | Three Months Ended June 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
| | (U.S. dollars in thousands) | ||||||||||
Research and development | | | 1,917 | | | — | | | 240 | | | — |
Marketing | | | 644 | | | — | | | 322 | | | — |
General and administrative | | | 5,786 | | | — | | | 2,935 | | | — |
| | 8,347 | | | — | | | 3,497 | | | — |
a. | On June 4, 2020, the Company signed a supplemental lease agreement to expand its facilities in Israel, which expires in June 2023 (“Supplemental Lease Agreement”). The monthly rate for the Supplemental Lease Agreement is approximately $14 thousand per month. |
b. | For services with SixAI Ltd. (“SixAI”), see Note 6c. |
a. | Related parties transactions: |
| | Six Months Ended June 30, | | | Three Months Ended June 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
| | (U.S. Dollars in thousands) | ||||||||||
Research and development | | | 115 | | | 99 | | | 90 | | | 50 |
General and administrative | | | — | | | 278 | | | — | | | 148 |
b. | Six-Eye Interactive agreements for services |
c. | SixAI Ltd. Service agreement |
d. | Pursuant to the Asset Purchase Agreement between Nanox IL and Nanox PLC, as more fully described in the Company's annual financial statements, as of June 30, 2020, the Company has a related party liability balance of $192 thousand. |
a. | Basic |
| | Six Months Ended June 30, | | | Three Months Ended June 30, | |||||||
| | 2020 | | | 2019 | | | 2020 | | | 2019 | |
Net loss | | | (13,786) | | | (1,675) | | | $(6,364) | | | $(964) |
Weighted average number of ordinary shares (in thousands) | | | 29,273 | | | 23,452 | | | 29,628 | | | 24,456 |
Basic and diluted loss per share | | | (0.47) | | | (0.07) | | | $(0.21) | | | $(0.04) |
b. | Diluted |
a. | In July 2020, the Company issued 625,000 ordinary shares to one of its investors, at a price per share of $16.00, for a purchase price of $10 million, received in July 2020, which reflects the second portion of the investor’s $20 million investment. |
b. | In July 2020, the Company entered into additional share purchase agreements with certain investors for the issuance of 3,500,000 ordinary shares at a price per share of $16.00, for an aggregate purchase price of approximately $56 million. As of the date of the issuance of these financial statements, the funds were not received yet. |
c. | The Company has evaluated subsequent events through July 30, 2020, the date on which the consolidated financial statements were available to be issued. |
Item 6. | Exculpation, Insurance and Indemnification of Office Holders (Including Directors and Officers). |
• | a monetary liability incurred by or imposed on the office holder in favor of another person pursuant to a court judgment, including pursuant to a settlement confirmed as judgment or arbitrator’s decision approved by a competent court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria; |
• | reasonable litigation expenses, including reasonable attorneys’ fees, which were incurred by the office holder (i) as a result of an investigation or proceeding filed against the office holder by an authority authorized to conduct such investigation or proceeding, provided that such investigation or proceeding; was either (a) concluded without the filing of an indictment against such office holder and without the imposition on him of any monetary obligation in lieu of a criminal proceeding; (b) concluded without the filing of an indictment against the office holder but with the imposition of a monetary obligation on the office holder in lieu of criminal proceedings for an offense that does not require proof of criminal intent; or (ii) in connection with a monetary sanction; |
• | a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure (as defined below) as set forth in Section 52(54)(a)(1)(a) to the Securities Law; |
• | expenses expended by the office holder with respect to an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees; |
• | reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or which were imposed on the office holder by a court (i) in a proceeding instituted against him or her by the company, on its behalf, or by a third party, (ii) in connection with criminal indictment of which the office holder was acquitted, or (iii) in connection with a criminal indictment which the office holder was convicted of an offense that does not require proof of criminal intent; and |
• | Any other obligation or expense in respect of which it is permitted or will be permitted under applicable law to indemnify an office holder. |
• | a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company; |
• | a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; |
• | a monetary liability imposed on the office holder in favor of a third party; |
• | a monetary liability imposed on the office holder in favor of an injured party at an Administrative Procedure pursuant to Section 52(54)(a)(1)(a) of the Securities Law; and |
• | expenses incurred by an office holder in connection with an Administrative Procedure, including reasonable litigation expenses and reasonable attorneys’ fees. |
• | a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
• | an act or omission committed with intent to derive illegal personal benefit; or |
• | a fine or forfeit levied against the office holder. |
Item 7. | Recent Sales of Unregistered Securities. |
Item 8. | Exhibits and Financial Statement Schedules. |
(a) | Exhibits |
(b) | Financial Statement Schedules |
Item 9. | Undertakings. |
(a) | The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. |
(b) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
(c) | The undersigned registrant hereby undertakes that: |
1. | For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
2. | For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
Exhibit No. | | | Description |
1.1* | | | Form of Underwriting Agreement |
2.1† | | | Asset Purchase Agreement, dated September 3, 2019, by and between the Registrant and Nanox Imaging PLC |
2.2† | | | Amendment to the Asset Purchase Agreement, dated December 3, 2019, by and between the Registrant and Nanox Imaging PLC |
2.3† | | | Amendment to the Asset Purchase Agreement, dated December 31, 2019, by and between the Registrant and Nanox Imaging PLC |
3.1† | | | Articles of Association of the Registrant |
3.2* | | | Form of Amended and Restated Articles of Association of the Registrant to become effective immediately prior to the closing of the offering |
4.1* | | | Specimen share certificate |
| | Form of warrants to purchase ordinary shares, dated September 2, 2019, in connection with the warrants originally issued to certain investors by Nanox Imaging PLC in 2016 | |
| | Form of warrants to purchase ordinary shares, dated September 2, 2019, in connection with the warrants originally issued to certain finders by Nanox Imaging PLC in 2015 | |
| | Form of warrants to purchase ordinary shares, dated September 2, 2019, in connection with the warrants originally issued to certain finders and employee by Nanox Imaging PLC in 2014 and 2015 | |
| | Form of warrants to purchase ordinary shares issued to A-Labs Finance and Advisory Ltd. | |
| | Warrant to purchase ordinary shares, dated September 2, 2019, issued to SK Telecom TMT Investment Corp. | |
| | Amendment to Warrant to purchase ordinary shares, dated June 4, 2020, issued to SK Telecom TMT Investment Corp. | |
5.1* | | | Opinion of Amit, Pollak, Matalon & Co., counsel to the Registrant, as to the validity of the ordinary shares (including consent) |
| | Contract Manufacturing Agreement, dated May 26, 2020, by and between the Registrant and FoxSemicon Integrated Technology, Inc. | |
10.2* | | | Registration Rights Agreement by and among the Registrant and the certain shareholders named therein |
| | 2019 Equity Incentive Plan | |
| | U.S. Sub-Plan | |
10.5* | | | Form of Indemnification Agreement between the Registrant and each director and executive officer |
21.1† | | | List of subsidiaries of the Registrant |
| | Consent of PricewaterhouseCoopers International Limited, an independent registered public accounting firm | |
23.2* | | | Consent of Amit, Pollak, Matalon & Co. (included in Exhibit 5.1) |
| | Power of Attorney (included in signature page to Registration Statement) |
* | To be filed by amendment. |
† | Previously submitted. |
| | NANO-X IMAGING LTD | ||||
| | | | |||
| | By | | | /s/ Ran Poliakine | |
| | | | Name: Ran Poliakine | ||
| | | | Title: Chief Executive Officer |
Signatures | | | Title | | | Date |
| | | | |||
/s/ Ran Poliakine | | | Director and Chief Executive Officer (Principal Executive Officer) | | | July 30, 2020 |
Ran Poliakine | | |||||
| | | | |||
/s/ Itzhak Maayan | | | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | | | July 30, 2020 |
Itzhak Maayan | | |||||
| | | | |||
/s/ Onn Fenig | | | Director | | | July 30, 2020 |
Onn Fenig | | |||||
| | | | |||
/s/ Floyd Katske | | | Director | | | July 30, 2020 |
Floyd Katske | | |||||
| | | | |||
/s/ Erez Meltzer | | | Director | | | July 30, 2020 |
Erez Meltzer | | |||||
| | | | |||
/s/ Richard Stone | | | Director | | | July 30, 2020 |
Richard Stone | | |||||
| | | |
| | By: | | | AUTHORIZED REPRESENTATIVE | ||||
| | | | | | ||||
| | By: | | | /s/ Richard Stone | ||||
| | | | Name: | | | Richard Stone | ||
| | | | Title: | | | Director |
COMPANY:
|
||
NANO-X IMAGING Ltd.
|
||
By:
|
|
|
Name: Ran Poliakine
|
||
Title: CEO
|
||
HOLDER:
|
||
By:
|
||
Name:
|
||
Title:
|
||
Address:
|
||
Facsimile:
|
||
Email:
|
1. |
The undersigned hereby elects to exercise this Warrant (in whole or in part) and accordingly to purchase ___________ shares of Ordinary Shares of the Company, pursuant to the terms of this Warrant, and tenders herewith payment of the
purchase price of such shares in full, in an amount of US$_________ .
|
2. |
Please issue a certificate or certificates representing said shares of Ordinary Shares in the name of the undersigned or in such other name as is specified below:
|
(Name)
|
|||
(Address)
|
|||
Date:
|
|||
1) |
If traded on a securities exchange, the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty (30) day period ending three (3) days prior to the closing;
|
2) |
If actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing; and
|
3) |
If there is no active public market, the value shall be the fair market value thereof, as determined by the Board in good faith after consultation with a financial advisor or investment bank of United States national reputation.
|
COMPANY:
|
||
NANO-X IMAGING Ltd.
|
||
By:
|
||
Name: Ran Poliakine
|
||
Title: CEO
|
||
HOLDER:
|
||
By:
|
||
Name:
|
||
Title:
|
||
Address:
|
||
Facsimile:
|
||
Email:
|
1. |
The undersigned hereby elects to exercise this Warrant (in whole or in part) and accordingly to purchase ___________ shares of Ordinary Shares of the Company, pursuant to the terms of this Warrant, and tenders herewith payment of the
purchase price of such shares in full, in an amount of US$_________ .
|
2. |
Please issue a certificate or certificates representing said shares of Ordinary Shares in the name of the undersigned or in such other name as is specified below:
|
(Name)
|
|||
(Address)
|
|||
By:
|
|||
Name:
|
|||
Title:
|
|||
Date:
|
COMPANY:
|
||
NANO-X IMAGING Ltd.
|
||
By:
|
||
Name: Ran Poliakine
|
||
Title: CEO
|
||
HOLDER:
|
||
By:
|
||
Name:
|
||
Title:
|
||
Address:
|
||
Email:
|
X
|
= Y*(A-B)
|
||
A
|
|||
Where
|
X
|
=
|
the number of Shares to be issued to the Holder.
|
Y
|
=
|
the number of Shares subject to this warrant that are being exercised.
|
|
A
|
=
|
the fair market value of one Share.
|
|
B
|
=
|
the Exercise Price (as adjusted to the date of such calculation).
|
COMPANY:
|
||
NANO-X IMAGING LTD.
|
||
By:
|
||
Name:
|
||
Title:
|
||
HOLDER:
|
||
A-LABS FINANCE AND ADVISORY
|
||
By:
|
||
Name:
|
||
Title:
|
TO:
|
Nano-X Imaging Ltd.
|
Attention: Chief Executive Officer
|
(Name)
|
||
(Address)
|
||
By:
|
||
Name:
|
||
(please print)
|
||
Title:
|
||
Date:
|
COMPANY:
|
||
NANOX IMAGING PLC.
|
||
By:
|
/s/ Ran Poliakine
|
|
Name: Ran Poliakine
|
||
Title: CEO
|
||
HOLDER:
|
||
SK TELECOM TMT INVESTMENT CORP.
|
||
By:
|
/s/Yangki Kim
|
|
Name: Yangki Kim
|
||
Title: CEO
|
||
Address:
|
55 E. 59th Street, 10th
Floor
|
|
Facsimile:
|
NY, NY 10022
|
|
Email:
|
Yangki@SKUSA.com
|
|
(Name)
|
||
(Address)
|
SK TELECOM TMT INVESTMENT CORP.
|
||
By:
|
||
Name:
|
||
Title:
|
||
Date:
|
1. |
Defined Terms
|
2. |
Warrant Exercise Period
|
2.1 |
The term “Exercise Period” of the Warrant shall be amended so
it shall mean the period commencing on the date of the Warrant and ending on the earlier of (i) June 17, 2025, and (ii) closing of an Exit Event.
|
2.2 |
Notwithstanding the above, the term “Exit Event” as defined in
Section 5 of the Warrant shall not include the following: “(iii) the consummation of an underwritten initial public offering of the Company’s
shares”.
|
3. |
Miscellaneous
|
3.1 |
This Amendment shall come into force and effect upon consummation of the initial Closing by the Holder in the Company according to the Share Purchase Agreement by and
among the Company and the Holder (and/or its affiliates) dated June 4, 2020.
|
3.2 |
The provisions of the Warrant shall be deemed amended as required so to reflect the terms of this Amendment. This Amendment shall constitute an integral part of the
Warrant.
|
3.3 |
Except as expressly amended hereby, the provisions, terms and conditions of the Warrant (including its exhibits) shall remain in full force and effect. In the event
of inconsistency between the provisions of this Amendment and the terms of the Warrant, the provisions of this Amendment shall prevail.
|
3.4 |
This Amendment may be executed in one or more counterparts (including by facsimile or PDF attachment to e-mail), each of which shall be deemed to be a duplicate
original, but all of which taken together shall constitute one and the same Amendment.
|
Company:
|
||
Nano-X Imaging Ltd.
|
||
By:
|
/s/Ran Poliakine
|
|
Name:
|
Ran Poliakine
|
|
Title:
|
CEO
|
|
Holder:
|
||
SK Telecom TMT Investment Corp
|
||
By:
|
/s/So young Shin
|
|
Name:
|
So young Shin
|
|
Title:
|
CEO
|
1.
|
DEFINITIONS
|
1.1.
|
“Affiliate” means a company directly or indirectly controlled by, controlling, or under common control with a Party, where “control” means direct
or indirect possession of a majority of the voting stock or other voting ownership interests in the company. For the avoidance of doubt, each Affiliate is listed in Appendix D.
|
1.2.
|
“Agreement” will mean this Contract Manufacturing Agreement and all written amendments mutually agreed to in writing by both parties including
all Exhibits, Schedules, Statements of Work or Purchase Orders that hereafter will be executed and delivered by the Parties.
|
1.3.
|
“Assembly Charges” means the charges detailed in this Agreement and/or detailed in quotations for products which will be governed by this
Agreement, including, but not limited to, charges for board level assembly, in-circuit test, functional testing, system level assembly, system level test, enclosures, interconnect, packaging and/or shipping from a FITI plant of
manufacture.
|
1.4.
|
“Approved Supplier List” or “ASL” will mean NANOX’s approved supplier list, as NANOX may amend from time
to time and advise FITI in writing.
|
1.5.
|
“Bill of Material” or “BOM” means the parts, components and other materials detailed in this Agreement,
and/or detailed in quotations for products which will be governed by this Agreement and as it may be modified pursuant to Section 6.9.
|
1.6.
|
“Confidential Information” means trade secrets, know-how, inventions (whether patentable or not), ideas, improvements, materials, data,
specifications, drawings, processes, results, and formulae and all other confidential business, technical and financial information of the parties, including without limitation, the Specifications and the Product components delivered to
FITI by NANOX.
|
1.7.
|
“Credit Note” means a written commitment by FITI to deduct a payable amount from a future invoice.
|
1.8.
|
“Days” will mean calendar days unless otherwise noted.
|
1.9.
|
“Quarter” will mean calendar quarters unless otherwise noted.
|
1.10.
|
“Deliverable(s)” means any Product, System or Service delivered, or to be delivered, by FITI under this Agreement and any applicable Purchase
Order.
|
1.11.
|
“Documentation” means all Bill of Material, assembly documentation, test procedures, ASL, test procedures, printed circuit board
(“PCB”)fabrication documentation, written instructions, manuals, descriptions, and any other documents (a) related to the Deliverables, and (b) necessary for FITI to support NANOX’s business requirements (such as provisioning, testing,
operating and troubleshooting) in connection with the Deliverables and (c) detailed, comprehensive, and prepared in conformance with generally accepted industry standards of professional care, skill, diligence and competence
|
1.12.
|
“Economic Order Quantity” means the minimum quantity specified by a supplier to obtain advantageous pricing for individual parts, components and
other materials listed in the Bill of Material.
|
1.13.
|
“End-User” means a customer of one or more services or products offered by NANOX or a NANOX Affiliate.
|
1.14.
|
“Engineering Change Order” means any change initiated by NANOX to the Product or its design, manufacturing or content.
|
1.15.
|
“Excess Materials” means parts, components and other materials listed in the Bill of Material are not anticipated to be consumed, based on
Purchase Orders of Deliverables issued by NANOX.
|
1.16.
|
“Forecast” means a non-binding monthly Product projection and reference of capacity preparation for FITI as described in Section 3.1 of this
Agreement.
|
1.17.
|
“Intellectual Property” means mean all rights in, arising out of, or associated with the Products in any jurisdiction, including without
limitation, documentation, processes and procedures developed or acquired by NANOX or FITI, as the case may be, for the manufacture of Products, including without limitation, product binders, process documentation, photographs, custom
tooling, fixtures, production line setup, line layouts, process improvements, fixture designs, or other designs, drawings, plans, reports, patterns, charts, graphs, operation sheets, practices, inventions, computer software (including
source code and object code), flow charts, manuals, functional descriptions, operating data and other similar data and information, and including any patents, patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, trade secrets, industrial designs and any other intellectual property and related applications for any of the foregoing.
|
1.18.
|
“Inventory” means all parts, components, work in progress, finished Products and other materials that are specifically required for the
manufacture of Products and purchased and/or manufactured by FITI on behalf of NANOX.
|
1.19.
|
“Minimum Order Quantity” or “MOQ” means the minimum order quantity available from suppliers for parts,
components and other materials listed in the Bill of Material.
|
1.20.
|
“Non-Cancelable, Non-returnable Materials” means parts, components and other materials listed in the Bill of Material for which suppliers,
manufacturers, or distributors have limited or restricted the purchasers’ rights, including rights of return, rescheduling and cancellation.
|
1.21.
|
“Obsolete Materials” means parts, components and other materials listed in the Bill of Material or deleted from a Bill of Material, which as of a
particular date have zero demand and/or are anticipated to have zero demand within six (6) months thereafter, based on the current Forecast in effect as of such particular date, and which are not associated with Products currently
manufactured by FITI.
|
1.22.
|
“Orders” are orders for Products or Services set out in by one Party in Quotations, Purchase Orders or Statement of Work, as applicable, which
have been agreed to by the other Party.
|
1.23.
|
“Product(s)” means NANOX’s products manufactured by FITI hereunder.
|
1.24.
|
“Product Technology” has the meaning given in Section 18.3.
|
1.25.
|
“Property” means any parts, components and other materials, tooling, fixtures, or test equipment (i) provided by NANOX to FITI, or (ii) purchased
by FITI on NANOX’s behalf in connection with the manufacture or assembly of the Product by FITI, provided that NANOX has paid to FITI all amounts owing in respect thereof.
|
1.26.
|
“Purchase Order & Release” means a written authorization by NANOX to FITI authorizing the shipment of Products.
|
1.27.
|
“Purchase Commitment” means a written commitment by NANOX to purchase Products and authorization for FITI to ship and invoice Products. Purchase
Commitment will be Purchase Orders.
|
1.28.
|
“Quality Agreement” means a separate agreement executed between FITI and NANOX describing the policies, practices, and procedures used for
manufacture of the Product.
|
1.29.
|
“Quality Documents” means all documents, certificates, test results, specifications, and other information as required under the terms of the
Quality Agreement.
|
1.30.
|
“Quarantine Products” has the meaning given in Section 26.3.
|
1.31.
|
“Services” means the provision by FITI of all required parts, components and other materials as listed in the Bill of Material together with all
assembly services including but not limited to board level assembly, in-circuit and functional testing, packaging and/or shipping of finished Product.
|
1.32.
|
“Shipment Notification” means written notification that Product associated with a Purchase Order is completed and ready for shipment, including
all required Quality Documents.
|
1.33.
|
“Specifications” means, with respect to each Product, the Bill of Material, schematics, assembly drawings, process documentation, test
specifications, current revision number and NANOX’s Approved Supplier List as provided in writing by NANOX to FITI for such Product, and any written revisions thereof provided by NANOX to FITI.
|
1.34.
|
“Statement of Work” or “SOW” means documents that provide project specific terms and conditions attached
to the Agreement.
|
1.35.
|
“Term” has the meaning given in Section 2.4.
|
2.
|
SCOPE
|
2.1.
|
CONSTRUCTION.
|
2.2.
|
QUOTES.
|
•
|
Upon notification by NANOX to FITI of NANOX’s intention to have FITI manufacture the Deliverables and provide the Services described in this Agreement, FITI will provide a Quote for the Deliverables as requested by NANOX. Prices
provided in Quotes will be valid for at least thirty (30) days from the date of the quotation.
|
•
|
Apart from minimum 1000 systems per year, this agreement neither authorizes FITI to provide, nor commits NANOX to order, any Deliverables. NANOX makes no commitment to purchase whatsoever, whether in terms of dollar volume, amount,
type of Deliverables or otherwise by its execution of this Agreement. NANOX’s issuance of a Purchase Commitment will constitute NANOX’s agreement to pay for Deliverables and any other costs, as established in this Agreement or Statement
of Work (“SOW”) which result from FITI providing Deliverables to NANOX and FITI’s agreement to provide the Deliverables, in each case in accordance with this Agreement and the applicable Purchase Order or SOW, as agreed to in writing by
the Parties.
|
2.3.
|
ORDER OF PRECEDENCE
|
i.
|
This Agreement;
|
ii.
|
Statement of Work;
|
iii.
|
Specifications;
|
iv.
|
Orders
|
2.4.
|
TERM OF AGREEMENT
|
2.5.
|
MANUFACTURING SERVICES AND PRODUCTS TO BE PROVIDED
|
2.6.
|
AFFILIATE TRANSACTIONS
|
2.7.
|
HEADINGS
|
3.
|
FORECAST AND ORDER PROCEDURE
|
3.1.
|
On an annual basis commencing 30 days following initial manufacturing of the first 4 units and at the Pt
day of each month thereafter during the Term, NANOX will provide FITI with a rolling Forecast of its estimated monthly requirements of Products covering a minimum of the next twelve (12) months of demand. It is agreed that NANOX will
order and FITI will manufacture and supply at least 1,000 units of the Product in each 12 month period during the Term.
|
3.2.
|
FITI will use the Forecast to prepare the supply chain to cover the material lead times and the FITI Manufacturing Lead times. NANOX places orders on the supply chain to secure material
delivery, these items will be managed as Excess Materials pursuant to Section 14.
|
3.3.
|
FITI will acknowledge receipt of Orders as soon as reasonably practicable and notify NANOX of acceptance or non-acceptance of Orders within Seven (7) days of receipt for orders with
supporting forecast and that have been placed with requested delivery dates set at lead time or greater. Upon acceptance and acknowledgement of NANOX’s Purchase Orders by FITI, FITI will be obligated to manufacture and deliver to NANOX,
and in accordance with Section 11, NANOX will be firmly and irrevocably obligated to buy from FITI the Products set forth in the Purchase Orders. FITI may not unreasonably reject an Order that complies with the terms of this Agreement.
|
3.4.
|
FITI will use its commercially reasonable efforts to accept unplanned Orders or an increase in the quantity to be delivered relative to an Order, subject to NANOX’s agreement to pay any
related out-of-pocket costs and charges incurred by FITI to meet NANOX’s Order requirements, provided such charges are agreed to in writing in advance by NANOX.
|
3.5.
|
Orders will incorporate by reference, the terms and conditions of this Agreement. This Agreement will supersede the terms and conditions of such Orders and exclude any pre-printed terms
and conditions found on NANOX’s Orders, which will be deemed deleted. Orders will describe in more detail the required Product and/or Service to be rendered by FITI and will include: Part No., description and Price per unit of Product;
the quantities ordered; Product revision details and such other information as the parties may agree is required. Orders may be issued in writing, by mail or facsimile, or by electronic means as agreed to by the parties.
|
4.
|
WORKFLOWS
|
4.1.
|
FITI and NANOX may engage under two different workflows:
|
•
|
Products with supporting Forecast
|
•
|
Products without supporting Forecast
|
4.2.
|
Products with Forecast
|
•
|
Lead time on Products with supporting Forecast will be as shown in Appendix A. NANOX will convert Forecast to Purchase Orders with requested delivery dates set at lead time or greater. FITI will
confirm delivery dates for Purchase Orders placed at lead time and with supporting Forecast.
|
•
|
For Purchase Orders that are placed inside lead time, FITI will review the request and advise NANOX within five (5) business days outlining what commitments can be made to the request inside lead time, what effect, if any, the
expedited delivery may have to previously committed Purchase Orders, and any out-of-pocket costs and expenses that will need to be paid, including, freight, overtime and the like, to expedite deliveries.
|
4.3.
|
Products without Forecast
|
•
|
Lead time on Products without supporting forecast are listed in Appendix B. NANOX will place Purchase Order’s to their requirements at this leadtime.
|
•
|
FITI will confirm delivery dates for Purchase Orders placed at these lead times.
|
•
|
For Purchase Orders that are placed inside lead time, FITI will review the request and advise NANOX within five (5) business days outlining what commitments can be made to the request inside lead time, what effect, if any, the
expedited delivery may have to previously committed Purchase Orders, and any premium that will need to be paid, including, freight, overtime and the like, to expedite deliveries.
|
5.
|
PRICES, TAXES AND PAYMENT
|
5.1.
|
Prices for the Products are set forth in Appendix C. Pricing under this Agreement may be modified only if expressly agreed to in writing by the
Parties. Appendix C may be modified from time to time to add or delete Products and adjust Prices as agreed to by both Parties. In the event there is a change in market conditions or pricing from
suppliers in connection with any parts, components or other materials to be purchased by FITI, then either Party may request an amendment to the quoted Price by giving written notice to the other Party detailing the specific reasons and
for the requested Price change. The Parties agree to review all Product Pricing each Quarter to agree any changes to material purchase costs and labor times and adjust pricing accordingly.
|
5.2.
|
Prices include all taxes except such sales and use taxes which FITI is required by law to collect from NANOX and except VAT. Such VAT and taxes, if any, will be payable in addition to
the prices set forth on Appendix C. Where FITI is required by law to collect and/or account for such VAT and taxes (See Appendix E) from NANOX, such VAT and
taxes will be separately stated in FITI’s invoice and will be paid by NANOX to FITI unless NANOX provides an exemption to FITI and, in the case of VAT, subject to FITI providing a valid VAT invoice to NANOX in the form and manner required
by law from the Country of Origin to allow NANOX to recover such VAT (to the extent NANOX allowed to do so by law).
|
5.3.
|
Purchase of Products and Services by NANOX will not make NANOX liable for any Income, Employment or other business Taxes that are a result of FITI’s business operations.
|
5.4.
|
Product pricing is based on economic manufacturing lot sizes as established by FITI in the quotations.
|
5.5.
|
The terms of payment by NANOX will be as shown in Appendix F.
|
5.6.
|
Each invoice issued by FITI to NANOX will include, without limitation: (a) FITI’s name and remit address, (b) invoice number, (c) invoice date, (d) the name of NANOX’ contact, (e) the
NANOX division or business unit and cost center or the NANOX Purchase Order number, (f) description of the Products or Services being ordered, (g) the date shipment was made, and (h) the shipping point of origin and destination. The line
items on the invoice must match the line items on the Purchase Commitment or Purchase Order, including the Price and description. All invoices, except amounts disputed in good faith will be paid per the terms of this Agreement. FITI will
invoice NANOX for Deliverables (a) in the case of Products, when shipped to NANOX, or (b) in the case of Services, in accordance with the terms established in FITI Quotations for Services accepted by NANOX.
|
5.7.
|
NANOX will provide documents and information reasonably requested by FITI for purposes of evaluating creditworthiness including, but not limited to, credit applications and audited
financial statements. Any decision to extend or maintain credit will be at FITI’s reasonable discretion.
|
5.8.
|
In the event that any Engineering Change Order or change to the Bill of Material results in an increase or decrease in the price of, or time required for, the performance of any aspect
of the Services, the parties will negotiate, in good faith and without unreasonable delay, an appropriate adjustment to the contract pricing and/or delivery schedule to reflect such changes. NANOX will be responsible for all costs related
to obsolescence and additional set-up costs relating to any Product changes requested by NANOX. FITI will use reasonable commercial efforts to minimize such costs.
|
5.9.
|
FITI’s quoted Assembly Charges are based on NANOX providing Purchase Orders, Releases and/or Forecast in accordance with this Agreement and at appropriate lead times. Quoted Assembly
Charges are based on standard deliveries of parts, components and other materials available to the electronics industry. In the event that certain parts, components or other materials are on allocation or in the event that additional
costs are incurred in order to procure parts, components or other materials to meet Purchase Orders, Releases and/or Forecasts and/or changes in NANOX’s Purchase Orders, Releases and/or Forecasts that are beyond the agreed upon allowable
variance in scheduling referred then such additional costs will be invoiced to NANOX. In addition, NANOX will be responsible for any additional direct costs resulting from Engineering Change Orders, replacement of suppliers by NANOX or
special transportation of Products requested by NANOX, including without limitation, all applicable freight charges, duties, taxes and brokerage fees.
|
5.10.
|
Any Excess Materials or Obsolete Materials subject to purchase or prepayment by NANOX will, at NANOX’s request, be sold by FITI to NANOX at raw material purchase cost plus any
additional direct costs such as handling costs and SG&A.
|
5.11.
|
When a NANOX approved changes are planned and implemented, FITI is obligated to comply with requirements from NANOX, and NANOX will be responsible for the increased direct costs due to
NANOX’s approved changes.
|
5.12.
|
NANOX, itself or through a third party reputable representative (subject to customary confidentiality and non-disclosure undertakings) may examine or audit all relevant books, records
and files maintained by FITI and its affiliates with respect to this Agreement (“Audit”). Any Audit shall be performed subject to prior written notice to the audited Party, during business hours and in a manner least disruptive to the
business of the audited party. The auditing party may have the Audit or investigations performed relating to FITI and its affiliates’ costs, billing and payment practices or activities regarding this Agreement to ensure compliance with
this Agreement. Should NANOX discover a material non-compliance by FITI with respect to the billing or payment practices or activities under this Agreement, then, without derogating from the NANOX’s other rights or remedies at law or
according to this Agreement, such material non-compliance if not remedied within 30 days of written notice to FITI, it shall be considered a material breach of the Agreement entitling NANOX to terminate this Agreement.
|
6.
|
MATERIALS
|
6.1.
|
NANOX hereby authorizes FITI, and FITI will be entitled to, order Materials in accordance with the Approved Supplier List, supplier purchase prices, lead-times, Minimum Order Quantity,
Economic Order Quantity, cancellation terms and standard packaging sizes as necessary to support Orders. Each Quarter the Parties will agree, for all Materials, the Approved Supplier List, supplier purchase prices, Minimum Order Quantity,
Economic Order Quantity, standard packaging sizes, supplier cancellation terms and lead-times.
|
6.2.
|
Where NANOX so directs, FITI will procure Materials in accordance with NANOX’s Approved Supplier List. To use other suppliers of Materials, FITI must obtain NANOX’s prior written
consent, which consent will normally be provided within thirty (30) days and, in any event, will not be unreasonably withheld or delayed.
|
6.3.
|
In the event of any inconsistency between the terms and conditions of this Agreement and NANOX negotiated terms and conditions with suppliers for NANOX controlled components, then to
the extent of any such inconsistencies, FITI will be relieved of any liability to NANOX with respect to NANOX controlled components.
|
6.4.
|
For NANOX controlled Materials, NANOX will use its commercially reasonable efforts to require its suppliers to provide inbound hubs for the benefit of FITI and NANOX. FITI will only be
required to purchase Materials from such inbound bonded hubs consistent with NANOX’s immediate requirements for the manufacture of Products in accordance with Orders placed by NANOX and accepted by FITI.
|
6.5.
|
When requested by NANOX and upon receipt of a NANOX Order, FITI will purchase lifetime buys of Materials that exceed the Forecast horizon. Upon receipt of the Materials, FITI will
invoice NANOX for such Materials. Payment will be due to FITI, without offset or deduction and refer payment term of all material orders refer to Appendix F. Every month during the Term of this
Agreement, FITI will identify and notify NANOX of all present or potential market Obsolete Materials known to FITI and present NANOX a recommended course of action.
|
6.6.
|
Where NANOX directs FITI to buy Materials from contracts that are negotiated by NANOX, FITI will have primary responsibility for directing the suppliers to perform in accordance with
these contracts.
|
6.7.
|
When available, and if requested by NANOX, FITI agrees to purchase Materials from NANOX to support Orders. Pricing for such Materials will be as per the current agreed purchase price.
|
6.8.
|
All requests for additions or deletions to the NANOX supplied ASL will be submitted in writing to NANOX along with sufficient justification to enable NANOX to approve or deny the
request.
|
6.9.
|
NANOX may from time to time issue Engineering Change Orders and make changes to the Bill of Material as a result of Engineering Change Orders, the introduction of new designs or the
obsolescence of prior designs. FITI will use reasonable commercial efforts to accommodate such changes. Refer to 5.8, NANOX and FITI will mutually agree on the time-line for implementation of Engineering Change Orders.
|
7.
|
DELIVERY AND RISK
|
7.1.
|
Except as agreed otherwise, all Products sold to NANOX are delivered EXW (INCOTERMS 2010).
|
7.2.
|
FITI will arrange transportation and specify carrier and transportation instructions on NANOX’s behalf and at NANOX’s cost. FITI will furnish such paperwork and information as NANOX may
reasonably request with respect to shipments.
|
7.3.
|
Risk of loss and damage will pass from FITI to NANOX upon delivery by FITI, pursuant to Section 7.1 above, except that FITI will remain responsible for damage or losses caused by
packaging without either following NANOX’s specification or getting NANOX approval.
|
7.4.
|
All Products will be packed by FITI in secure packaging consistent with industry best practices or otherwise as may be agreed to by NANOX.
|
7.5.
|
NANOX is responsible for obtaining:
|
•
|
Any government or regulatory approvals relating to the marketing, sale or use of products from the destination or specified port or locations and maintaining compliance with all applicable laws and
regulations including customs clearance in any jurisdiction to or from which Products are shipped or in or from which the Products are marketed, distributed or sold.
|
7.6.
|
FITI will ship Products to the location specified in the applicable Purchase Order or Statement of Work using the method of shipping specified therein. FITI will select the carrier and
insurance consistent with industry best practices using FITI’s reasonable commercial efforts.
|
7.7.
|
All shipments will include shipping documentation which includes, without limitation, the following information: (a) a certificate of compliance, (b) a Purchase Order number, and (c)
any other special purchase or shipping instructions as required by NANOX
|
8.
|
FLEXIBILITY AND RESCHEDULING
|
8.1.
|
Upon NANOX’s request, FITI will use its commercially reasonable efforts to:
|
•
|
accept unplanned Orders, or,
|
•
|
accelerate delivery dates of existing Orders, or,
|
•
|
accept increases in quantities on existing Orders;
|
8.2.
|
Subject to NANOX agreeing to meet any increased direct costs incurred by FITI as a result of such activity, allowable variance for Purchase Orders:
|
Prior to original
promised
Shipment date
|
Cancellation
|
Max Reschedule
|
Last 30 days
|
No
|
0 days
|
31 to 90 days
|
No
|
30 days
|
> 90 days
|
No
|
Nolimit
|
9.
|
OWNERSHIP OF PROPERTY
|
9.1.
|
The parties acknowledge and agree that the Property is owned by NANOX and will not be disposed of in any way without NANOX’s prior written authorization and written consent. FITI agrees
to act in a commercially reasonable and prudent manner in its handling and storage of Property so as to minimize any loss or damage thereto. FITI further agrees to segregate the Property from other materials in FITI’s possession and
ensure that at all times the Property is clearly identified as being the property of NANOX. The parties acknowledge and agree that the Property that is furnished by NANOX to FITI will be independently insured by NANOX, and that FITI will
bear the risk of loss of all other Property until delivered to NANOX in accordance with the terms of Section 7.1 above as well as any costs incurred by NANOX to any Property provided by it to FITI or its subcontractors that is not covered
by insurance due to an act or omission of FITI or its subcontractors.
|
9.2.
|
From time to time during the Term, NANOX may agree in writing to pay for the reasonable cost of tooling, test fixtures and other equipment that is required by FITI for the manufacture
of Products or Components, including new, enhanced or advanced versions thereof and including for increased capacity, and that is only useful for such manufacture. Any such agreement will be binding only if memorialized in a writing
signed by an authorized representative of NANOX and subject to terms and conditions of this Agreement. All such tooling, test fixtures and other equipment will be the property of NANOX and will be deemed Loaned Equipment. FITI will
provide NANOX with detailed quote and cost breakdowns for any such tooling, test fixtures and other equipment prior to NANOX signing any such agreement authorizing FITI to incur such costs.
|
9.3.
|
NANOX will retain ownership of all Loaned Equipment (if any), including all repairs thereto and replacements thereof and NANOX should bear all costs and expense of such equipment,
including but not limited to shipping, insurance, maintenance, etc.. FITI will not remove or obscure any labels indicating NANOX’ ownership of the Loaned Equipment. FITI may use the Loaned Equipment only for making Products for NANOX and
its Affiliates and will preserve the Loaned Equipment in the same manner as it preserves its own equipment. Upon notice to FITI, NANOX may terminate the loan of any Loaned Equipment that is no longer needed for use by FITI for making
Products. All Loaned Equipment will be returned to NANOX upon termination of this Agreement.
|
9.4.
|
NANOX or its designated representative will have the right upon reasonable notice and at reasonable times during business hours, to inspect the premises of FITI and observe the
facilities and process and procedures employed by FITI for the manufacture of the Products for the purposes of ensuring that the requirements of this Agreement, including, without limitation, Section 9.1 above, are being complied with by
FITI.
|
9.5.
|
In the event it will be necessary to develop special tooling, fixtures and similar items for the manufacture of the Products, FITI will so inform NANOX and the parties will agree on the
final design for such tooling, etc. FITI will provide a quotation with separate line item details and pricing for development of such tooling, etc. and the parties will negotiate in good faith final pricing and the method of payment,
whether under a separate Purchase Order or as a cost element to be added to the unit price of Products and such agreement will be binding only if memorialized in a writing signed by an authorized representative of NANOX. The tooling, etc.
will be treated as new Property to be delivered to NANOX upon request, provided payment for the tooling, etc. has been made.
|
10.
|
FINANCIAL, TECHNICAL INFORMATION AND ASSISTANCE
|
10.1.
|
NANOX and FITI agree to provide the requesting party with relevant details concerning current financial information upon request, provided that parties will not make such a request more
than once per calendar quarter. Parties agree to use this information for the sole purpose of an on-going financial review of the operations of the party. Such information will be treated as Confidential Information for the purposes of
this Agreement.
|
10.2.
|
Subject to restrictions imposed under FITI’s contractual obligations with third parties FITI will provide NANOX with reasonable access to costed Bill of Material for each active Product
covered by this Agreement or the applicable SOW.
|
10.3.
|
The parties agree to mutually advise each other from time to time, without charge, with respect to all technical information relating to the Product that will be useful for the
manufacture of the Product.
|
10.4.
|
FITI will develop and provide to NANOX, upon written request, a business interruption recovery plan that includes emergency backup capacity and appropriate record protection and
recovery. Business interruption recovery plan to be provided to NANOX will be in writing within ten (10) days upon such request.
|
11.
|
CANCELLATION
|
11.1.
|
If NANOX cancels an Order (or any part thereof),then:
|
a)
|
in the case of prototypes, pilot, pre-production, work-in-process (which FITI will be entitled to complete and deliver to NANOX) or finished Products, NANOX will pay to FITI the full
costs incurred by FITI plus mark-up of _% for such Order (or any part thereof) so cancelled.
|
b)
|
NANOX will pay for all costs associated with any Obsolete Inventory and/or Excess Inventory that arises as a result of the cancellation of such Order (or any part thereof), in
accordance with Sections 12, 13 and 14 of this Agreement.
|
11.2.
|
If any Order (or part thereof) is cancelled due to a termination of this Agreement (other than due to a breach by FITI), NANOX may direct FITI to cease its manufacturing operations in
respect of Products affected by such termination. In the event of such termination, NANOX will pay to FITI all relevant amounts specified in Section 20.
|
11.3.
|
FITI will use its commercially reasonable efforts to attempt to mitigate the costs described above on behalf of NANOX, including, without limitation, canceling outstanding orders for
Materials, selling the Materials to a third party (with NANOX’s agreement), returning Materials to the Supplier, and using the Materials at FITI sites for other customers where feasible. All costs of Obsolete or Excess Materials and
related handling charges will be addressed in accordance with Sections 12, 13 and 14.
|
12.
|
EXCESS AND/OR OBSOLETE MATERIAL
|
12.1.
|
Inventory held by or placed on order with suppliers by FITI on behalf of NANOX to meet the Product demand contained in Purchase Orders that are defined as NANOX specific materials or
Non-Cancelable, Non-Returnable Materials and are subject to Minimum Purchase quantities or Economic Order Quantity requirements, will be NANOX’s responsibility in the event of cancellation of Purchase Orders; any new released Purchase
Order; any changes in Purchase Orders; demand delays or reschedules; any Engineering Change Orders; introduction of new designs; obsolescence of prior designs; changes in the Bill of Materials; end of life of a Product variation; long
been stored without using in any circumstance, and / or termination of this Agreement, which results in inventory becoming Excess Materials and/or Obsolete Materials Such inventory will be dispositioned in accordance with Sections 13 and
14.
|
13.
|
RESOLUTION OF OBSOLETE MATERIALS
|
13.1.
|
Parties agree to address Obsolete Materials on an occurrence basis in accordance with the following terms:
|
•
|
FITI will provide NANOX with a report of an occurrence. The report will provide a detailed listing of Obsolete Materials with supporting details which explain the generation of the Obsolete Materials.
|
•
|
FITI will provide NANOX with a written Obsolete Materials Claim. The Claim will include detail by Part Number including, but not limited to, price, quantity claimed, current inventory, current on-order and
explanation as to the reason for the claim.
|
•
|
FITI has provided the report in accordance with this Section, NANOX and FITI will complete a review and reconciliation of FITI’s Obsolete Materials Claim within 45 working days after receipt of the claim.
|
•
|
NANOX will issue to FITI within 45 working days after NANOX and FITI complete the review and reconciliation, a Purchase Order for agreed Obsolete Materials. NANOX will instruct FITI as to how material is to
be disposition upon purchase by NANOX.
|
•
|
If requested by NANOX, FITI will store NANOX purchased Obsolete Materials in a system segregated customer owned raw material (“CORM”) location until such time as NANOX consumes material in support of
Purchase Orders for applicable Excess Materials and Obsolete Materials or NANOX instructs FITI to dispose of same. Should there be no movement of any quantity of a part number within twelve (12) months then NANOX will be responsible for
the movement and disposition of such part numbers from FITI. NANOX is responsible for any cost (for example, but not limited to costs of scraping, duties, taxes, shipping, packing, order cancelling and crating) result from disposing or
extending of storage NANOX Consignment Materials at FITI.
|
•
|
FITI will provide NANOX on a monthly basis, a detailed listing of NANOX CORM inventory and a detailed listing of FITI use of NANOX inventory in support of manufacturing of items per NANOX Purchase Orders.
|
•
|
FITI agrees to consume any NANOX consigned Materials held in CORM inventory prior to the purchasing by FITI of any additional materials. Each month FITI will issue a Credit Note with both NANOX and FITI
approved and signed to NANOX accounts receivable balance in the amount equal to the value of the NANOX CORM inventory FITI consumed.
|
•
|
FITI will exercise all commercially reasonable efforts to mitigate Obsolete Materials prior to NANOX’s purchase of same. Where appropriate, FITI will work to cancel and reschedule orders with existing
suppliers in order to better facilitate the consumption of the inventory or material and re-distribute, where feasible, such materials for consumption within FITI. NANOX agrees to participate in mitigating any rescheduling and
cancellation costs. Where one hundred percent of the component costs cannot be retrieved from the suppliers, FITI will obtain NANOX prior approval before selling the material.
|
13.2.
|
Resolution of these items will be dealt with in the quarterly management review meeting.
|
14.
|
RESOLUTION OF EXCESS MATERIALS
|
14.1.
|
Parties agree to address Excess Materials on a occurrence basis in accordance with the following terms:
|
•
|
FITI will provide NANOX with a report of an occurrence. The report will provide a detailed listing of Excess Materials with supporting details which explain the generation of the Excess Materials.
|
•
|
FITI will provide NANOX with a written Excess Materials Claim. The Claim will include detail by Part No. including, but not limited to, price, quantity claimed, current inventory, current on-order and
explanation as to the reason for the claim.
|
•
|
FITI has provided the report in accordance with this Section, NANOX and FITI will complete a review and reconciliation of FITI’s Excess Materials Claim within 5 working days after receipt of the claim.
|
•
|
NANOX will issue to FITI within 45 working days after NANOX and FITI complete the review and reconciliation, a Purchase Order for agreed Excess Materials. These Excess Materials purchased by NANOX will
become as CORM at FITI’s management after necessary payment has been received by FITI from NANOX. NANOX will instruct FITI as to how material is to be disposition upon purchase by NANOX.
|
•
|
If requested by NANOX, FITI will store NANOX purchased Excess Materials in a system segregated customer owned raw material (“CORM”) location until such time as NANOX consumes material in support of Purchase
Orders for applicable Excess Materials and Obsolete Materials or NANOX instructs FITI to dispose of same. Should there be no movement of any quantity of a part number within twelve (12) months then NANOX will be responsible for the
movement and disposition of such part numbers from FITI. NANOX is responsible for any cost (for example, but not limited to costs of scraping, duties, taxes, shipping, packing, order cancelling and crating) result from disposing or
extending of storage NANOX Consignment Materials at FITI.
|
•
|
FITI will provide NANOX on a monthly basis, a detailed listing of NANOX CORM inventory and a detailed listing of FITI use of NANOX inventory in support of manufacturing of items per NANOX Purchase Orders.
|
•
|
FITI agrees to consume any NANOX consigned Materials held in CORM inventory prior to the purchasing by FITI of any additional materials. Each month, FITI will issue a Credit Note with both NANOX and FITI
approved and signed to NANOX accounts receivable balance in the amount equal to the value of the NANOX CORM inventory FITI consumed.
|
•
|
FITI will exercise all commercially reasonable efforts to mitigate Excess Materials prior to NANOX’s purchase of same. Where appropriate, FITI will work to cancel and reschedule orders with existing
suppliers in order to better facilitate the consumption of the inventory or material and re-distribute, where feasible, such materials for consumption within FITI. NANOX agrees to participate in mitigating any rescheduling and
cancellation costs. Where one hundred percent of the component costs cannot be retrieved from the suppliers, FITI will obtain NANOX prior approval before selling the material.
|
14.2.
|
Resolution of these items will be dealt with in the quarterly management review meeting.
|
15.
|
LIMITED WARRANTY AND LIMITATIONS OF DAMAGES
|
15.1.
|
FITI warrants that the Products, parts, components and materials made by FITI will conform to NANOX’s applicable Specifications and will be free from defects in in material and
workmanship, for a period of twelve (12) months from the date of acceptance by NANOX’s End-User, but no later than eighteen (18) months from the date of acceptance by NANOX such as sign-off of Device History Record. The date of acceptance
by NANOX shall within 30 days for the first 10 units and 7 days from the 11th unit and on, after FITI delivery to NANOX. This warranty does not apply to (a) CORM, parts, components or other materials consigned or supplied by NANOX to
FITI, (b) defects resulting from NANOX’s design of the Products, (c) Products used in violation of written procedures or instructions furnished by FITI, or (d) Products that have been abused, damaged, altered, misused or improperly
installed, modified or repaired by any person or entity after title passes to NANOX. Notwithstanding anything else in this Agreement, FITI assumes no liability for or obligation related to the performance, accuracy, Specifications,
failure to meet Specifications or defects of or due to tooling, designs or instructions produced or supplied by NANOX. Upon any failure of a Product to comply with the foregoing warranty, NANOX need to inform FITI within 14 days of event
occurred and include FITI for all discussion and communication of root cause analysis, and if such analysis comes to a conclusion that events are due to FITI’s failure of warranty, FITI’s sole obligation, and NANOX’s sole remedy, is for
FITI, at its option, to issue a Credit Note for such unit or to promptly repair or replace such unit and return it to NANOX freight pre-paid.
|
15.2.
|
FITI further represents, warrants and covenants to NANOX as follows:
|
•
|
The Services will be provided by FITI in a professional, workmanlike and timely manner.
|
•
|
FITI will provide assembly and testing in accordance with the Specifications.
|
•
|
FITI and its subsidiaries and affiliates will comply with all applicable laws and regulations from the Country of Origin in providing the Products and Services.
|
•
|
FITI and its subsidiaries and affiliates will comply with all applicable laws and regulations, including without limitation, applicable anti-corruption laws and have instituted and maintain and will
continue to maintain policies and procedures designed to promote and achieve compliance with such laws;
|
•
|
The parties will identify a standard Quality reporting method of Quality data and process response mechanisms which will be provided to NANOX on an ongoing basis.
|
•
|
All Products will be delivered to NANOX free and clear of any encumbrances and third party rights except such encumbrances and third party rights are due to FITI’s performance under NANOX’s instructions or
requirements.
|
•
|
FITI has been granted or issued all permits required for the storage, handling, and disposal of all materials or hazardous waste used by FITI in the performance of this Agreement. FITI has implemented
programs necessary to monitor and maintain all required licenses and permits and to prevent releases of the material to the environment. FITI’s employees will have been trained to properly, safely, and legally (in accordance with all
applicable laws and regulations from the Country of Origin) handle hazardous material and wastes. FITI will notify NANOX in writing, immediately upon discovery of any regulatory action taken or initiated against FITI, whether or not such
action relates to or arises out of this Agreement, which may impact FITI’s ability to deliver the Products. Regulatory compliance and management of FITI’s facilities and processes is strictly the responsibility of FITI and NANOX has no
express or implied responsibility for the same.
|
15.3.
|
UNDER NO CIRCUMSTANCES WILL EITHER PARTY OR ITS AFFILIATES BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES UNDER ANY LEGAL OR EQUITABLE THEORY OF LIABILITY (INCLUDING, WITHOUT
LIMITATION, BREACH OF CONTRACT, STRICT LIABILITY, NEGLIGENCE, OR OTHER TORT, OR BREACH OF STATUTORY DUTY), FOR ANY SPECIAL, INCIDENTAL INDIRECT, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT IN ANY WAY (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES RESULTING FROM LOST PROFITS, LOSS OF USE, LOSS OF DATA, OR LOSS OF BUSINESS), REGARDLESS OF WHETHER SUCH OTHER PARTY OR ITS AFFILIATES WILL BE ADVISED, WILL HAVE OTHER
REASON TO KNOW, OR IN FACT WILL KNOW OF THE POSSIBILITY OF THE FOREGOING.
|
15.4.
|
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, EXCEPTING, IN THE CASE OF NANOX, FOR AMOUNTS OWED BY NANOX OR NANOX AFFILLIATES TO FITI UNDER THIS AGREEMENT TO FITI FOR PURCHASES
AND FOR AMOUNTS CALCULATED PURSUANT TO THE INVENTORY PROTECTION CLAUSES, AND EXCEPTING, IN THE CASE OF BOTH PARTIES, ANY INTELLECTUCAL PROPERTY INFRINGEMENT CLAIM OR ANY BREACH BY EITHER PARTY OF ANY CONFIDENTIALITY PROVISION OF THIS
AGREEMENT, EACH PARTY’S ENTIRE LIABILITY AND RESPONSIBILITY IN RESPECT OF ANY CLAIMS, DEMANDS, ACTIONS, LOSSES, DAMAGES, COSTS OR EXPENSE ARISING FROM OR RELATED TO THIS AGREEMENT, OR THE DEVELOPMENT, DELIVERY, PROVISION, USE OR
PERFORMANCE OF THE SERVICES OR PRODUCTS PROVIDED UNDER THIS AGREEMENT, WILL BE LIMITED IN THE AGGREGATE TO DIRECT DAMAGES NOT EXCEEDING THE AMOUNT PAID BY NANOX TO FITI FOR PRODUCTS AND/OR SERVICES IN THE TWELVE (12) MONTHS PRECEDING THE
EVENT WHICH GAVE RISE TO THE CLAIM. THE PROVISIONS OF THIS SECTION WILL APPLY IN RESPECT OF ANY CLAIMS, DEMANDS, ACTIONS, LOSSES, DAMAGES, COSTS OR EXPENSE OF THE OTHER PARTY OR ANY OTHER PERSON OR ENTITY, WHETHER BASED ON BREACH OF
CONTRACT, TORT (INCLUDING NEGLIGENCE), OR OTHER SUCH RIGHTS, BREACH OF A FUNDAMENTAL TERM, FUNDAMENTAL BREACH OR OTHERWISE.
|
15.5.
|
IT IS UNDERSTOOD BY AND BETWEEN THE PARTIES THAT THERE ARE NO REPRESENTATIONS, WARRANTIES OR CONDITIONS IN THIS AGREEMENT OTHER THAN THE REPRESENTATIONS AND WARRANTIES PROVIDED IN THIS
AGREEMENT, AND THE PARTIES HEREBY EXPRESSLY WAIVE ALL OTHER REPRESENTATIONS, WARRANTIES, CONDITIONS AND REMEDIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY, MERCHANTABLE
QUALITY OR FITNESS FOR A PARTICULAR PURPOSE AND ALL OTHERS ARISING BY STATUTE OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE.
|
16.
|
INDEMNIFICATION
|
16.1.
|
For those suppliers not on the ASL, FITI will use commercially reasonable efforts to procure from suppliers of parts, components and other materials used in the Products, indemnity
protection extending to NANOX, including the defense of actions and payment of all claims, costs, damages, judgments and reasonable legal fees resulting from or arising out of any alleged and/or actual infringement or other violation of
any patents, patent rights, trademarks, trademark rights, trade names, trade name rights, copyrights, trade secrets, industrial designs, proprietary rights and processes or other such rights with respect to all parts, components and other
materials procured by FITI under this Agreement.
|
16.2.
|
In the event that FITI is unable to secure the indemnity contemplated under Section 16.1, for any part, component or other material, FITI will notify NANOX and allow NANOX to
participate in discussions with the supplier in question with regard to securing such indemnification. If the indemnification is still not available after this process, NANOX may then approve the part, component or other material without
indemnification or ask that FITI source the part, component or other material elsewhere. NANOX will be responsible for any change in price of the part, component or other material in question.
|
16.3.
|
FITI’s General Third-Party Indemnity. In addition to and without limiting NANOX’s rights available under statute or common law, FITI agrees to indemnify, defend and hold harmless NANOX,
NANOX Affiliates and their respective directors, officers, agents, and employees, against any and all losses including without limitation claims, damages, losses, liabilities, costs, expenses and reasonable attorneys’ fees and legal costs
which arise out of or relate to FITI’s failure to comply with any applicable local, state, federal, and foreign laws and regulations in the performance of FITI’s obligations under this Agreement, in each case, in the jurisdiction where
FITI performs its obligations under this Agreement.
|
16.4.
|
NANOX’s General Third-Party Indemnity. In addition to and without limiting FITI’s rights available under statute or common law, NANOX agrees to indemnify, defend and hold harmless FITI,
FITI Affiliates and their respective directors, officers, agents, and employees, against any and all losses including without limitation claims, damages, losses, liabilities, costs, expenses and reasonable attorneys’ fees and legal costs
which arise out of or relate to NANOX’s failure to comply with any applicable local, state, federal, and foreign laws and regulations in the performance of NANOX’s obligations under this Agreement, in each case, in the jurisdiction where
NANOX performs its obligations under this Agreement.
|
16.5.
|
Indemnification by FITI. FITI will defend, indemnify and hold harmless NANOX and its Affiliates, and their respective directors, officers, agents and employees, (“NANOX Indemnitees”),
from and against any and all liabilities, damages, settlements, claims, actions or expenses (including, without limitation, reasonable attorneys’ fees and other reasonable expenses of litigation) (a) awarded by a court or arbitral
tribunal of final resort or in final settlement and based on a claim of a third party, including any employee, contractor or agent of FITI or its Affiliates, or (b) otherwise suffered by any NANOX Indemnitee, arising in case (a) or (b)
from (i) disclosure or use of any Confidential Information of NANOX or its Affiliates by or through FITI or its Affiliates (including their employees and subcontractors) in breach the confidentiality requirements of this agreement; (ii)
FITI’s material breach of this Agreement or any representation or warranty made by FITI to NANOX or its Affiliates under this Agreement; (iii) any injury or death of any person occurring on the premises of FITI or at such other location
where FITI performs any its obligations under this Agreement; (iv) FITI’s supply of Products not meeting the Specifications due to FITI’s failure to perform in strict compliance with the terms of this Agreement; (v) a claim that FITI’s
manufacturing processes of any Product infringes upon, misappropriates or violates any Intellectual Property Rights of a third party, or (vi) grossly negligent or reckless act or omission or misconduct on the part of FITI or its
Affiliates.
|
16.6.
|
Indemnification by NANOX. NANOX will defend, indemnify and hold harmless FITI and its Affiliates, and their respective directors, officers and employees, (“FITI Indemnitees”) from and
against any and all liabilities, damages, settlements, claims, actions or expenses (including, without limitation, reasonable attorneys’ fees and other reasonable expenses of litigation) (a) awarded by a court or arbitral tribunal of
final resort or in final settlement and based on a claim of a third party, including any employee, contractor or agent of NANOX or its Affiliates, or (b) otherwise suffered by any FITI Indemnitee, arising in case (a) or (b) from: (i)
product liability resulting from either NANOX advertising of any Product or defects in design with respect to Specifications developed by NANOX or its Affiliates; (ii) disclosure or use of any Confidential Information of FITI or its
Affiliates by or through NANOX or its Affiliates (including their employees, contractors and agents) in breach of Section 11; (iii) any injury or death of any person occurring on the premises of NANOX or at such other location where NANOX
performs any its obligations under this Agreement; (iv) NANOX’s material breach of this Agreement or any representation or warranty made by NANOX to FITI or its Affiliates under this Agreement; (v) an allegation that any Product or the
manufacture, import, service, support, distribution, use or sale thereof infringes upon, misappropriates or violates any Intellectual Property rights of a third party with respect to any Specifications developed by NANOX or its Affiliates
to the extent that such Specifications are the subject of the claim of infringement; or (vi) grossly negligent or reckless act or omission or misconduct on the part of NANOX or its Affiliates.
|
16.7.
|
In order to benefit from the indemnification provisions set forth above each party must promptly notify the other in writing of any claims related to such indemnification claims and no
such claims will be settled without the other party’s prior written consent, which consent shall not be unreasonably delayed, withheld or denied.
|
17.
|
ASSIGNMENT
|
18.
|
PROTECTION OF INTERESTS
|
18.1.
|
FITI will, during the term of this Agreement and for a period of seven years thereafter, keep in confidence all of the Confidential Information received by it. FITI will not use the
Confidential Information other than as may be expressly permitted under the terms of this Agreement or by a separate written agreement signed by NANOX. FITI will take reasonable steps to prevent unauthorized disclosure or use of the
Confidential Information and to prevent it from falling into the public domain or into the possession of unauthorized persons. FITI will not disclose the Confidential Information to any person or entity other than its officers, employees,
consultants and subsidiaries who need access to such Confidential Information in order to perform its obligations under this Agreement.
|
18.2.
|
NANOX will, during the term of this Agreement and for a period of seven years thereafter, keep in confidence all of the Confidential Information received by it. NANOX will not use the
Confidential Information other than as may be expressly permitted under the terms of this Agreement or by a separate written agreement signed by FITI. NANOX will take reasonable steps to prevent unauthorized disclosure or use of the
Confidential Information and to prevent it from falling into the public domain or into the possession of unauthorized persons. NANOX will not disclose the Confidential Information to any person or entity other than its officers,
employees, consultants and subsidiaries who need access to such Confidential Information in order to perform its obligations under this Agreement.
|
18.3.
|
Confidential Information will not include any information that: (a) becomes publicly known without fault or breach on the part of FITI; (b) NANOX provides to others without restriction
on disclosure; (c) FITI obtains from a third party without breach of a nondisclosure obligation and without restriction on disclosure; (d) is already known to FITI prior to its disclosure by NANOX or (e) must be disclosed by FITI by
statutory or regulatory provision, or court order, provided, however, that FITI provides notice thereof to NANOX together with the statutory or regulatory provision or court order on which such disclosure is based, as soon as practicable
prior to such disclosure.
|
18.4.
|
FITI recognizes and agrees that the Products may incorporate certain Confidential Information which is proprietary to NANOX, including, without limitation, software source and object
codes (“Product Technology”). All Product Technology is and will remain the property of NANOX For each Product, subject to the terms and conditions of this Agreement, NANOX grants FITI a non-exclusive, royalty-free license to use the
Specifications and the Product Technology solely to manufacture the Products and otherwise perform its obligations hereunder.
|
18.5.
|
All Intellectual Property owned by the respective party will remain the sole property of such party. It is clarified and agreed that all Intellectual Property rights in and to the
Products and the underlying technology is and shall belong to NANOX and its licensors or designees and FITI shall not acquire any rights thereto except IP rights FITI develops for manufacture and assembly. During the Term of this
Agreement and at all times thereafter, the parties will keep in confidence all of the Intellectual Property received by it. Neither party will use, replicate, distribute, share or disclose to any person or entity the Intellectual
Property, other than as may be expressly permitted by a separate written agreement signed by the other party. The parties will each take reasonable steps to prevent unauthorized disclosure or use of the Intellectual Property and to
prevent such Intellectual Property from falling into the public domain or into the possession of unauthorized persons.
|
18.6.
|
FITI agrees not to undertake process changes, design changes or process step discontinuance that could alter, or cause alteration of, any Specifications, without prior written
authorization from NANOX. NANOX agrees to respond to FITI’s request for process or design changes within thirty (30) days of receipt of a detailed request from FITI with all relevant information.
|
19.
|
RIGHT TO TERMINATE
|
19.1.
|
In the event that either party is in material breach of any of its obligations under this Agreement, then the other party may give written notice of such breach to the defaulting party
and request remedy of such breach. If the party in breach fails to remedy such breach within ninety (90) days after the date of notice, or some other reasonable period of time as may be mutually agreed to by the parties, then this
Agreement may be terminated immediately by written notice of termination given by the complaining party.
|
19.2.
|
Notwithstanding the provisions contained in Section 19.1, either party may terminate this Agreement by written notice to take effect immediately upon receipt thereof by the other party
in the event that the party receiving notice has become bankrupt or insolvent or has made a general assignment for the benefit of creditors, or a receiver is appointed for its business or a voluntary or involuntary petition of bankruptcy
is filed, or proceedings for the reorganization of the party are instituted, or either party has attempted to assign any part of the rights granted to it under this Agreement without prior written consent of the other.
|
20.
|
EFFECT OF TERMINATION
|
20.1.
|
Upon termination of this Agreement:
|
a)
|
NANOX will within thirty (30) days thereafter pay to FITI all monies due and owing pursuant to this Agreement, including without limitation, any remaining payments in accordance with
this Agreement for Inventory, Property, work in process and finished Products then being held by FITI upon delivery of such items to NANOX if NANOX so requests.
|
b)
|
At the option of NANOX, and provided that NANOX has made the payments required under Section 20.1(a) and is otherwise not in material breach of this Agreement, FITI will continue to
provide the Services and manufacture the Products as contemplated under this Agreement for such term as may be agreed upon by the parties, except that payment to FITI for Products and Services will be on such consignment or value- added
basis as may be agreed upon by the parties.
|
c)
|
Promptly after the later of the termination of this Agreement and the termination of the ongoing arrangement referred to in Section 20.1(b):
|
•
|
The parties will facilitate the transfer of all Property then being held by FITI to NANOX including all documentation relating thereto, provided that NANOX has paid to FITI all amounts due and owing.
|
•
|
FITI will return all original design drawings, copies of drawings, Specifications, written descriptions, and other recorded technical information furnished to FITI by NANOX pursuant to this Agreement;
|
•
|
FITI will make available for purchase or license by NANOX any Intellectual Property specifically developed by FITI for use in production of the Products, upon terms to be agreed upon by the parties;
provided that, such Intellectual Properties are deemed specifically developed by FITI for use in production of the Products and FITI shall notify NANOX promptly after development of such Intellectual Property; and
|
•
|
each party will cease to use the documentation and information provided to it by the other party pursuant to the provisions of this Agreement.
|
20.2.
|
The termination or expiration of this Agreement for any reason will not release any party hereto of any liability which at the time of termination or expiration had already accrued to
the other party in respect to any act or omission prior thereto.
|
20.3.
|
The following Sections will survive the expiration or termination for any reason of this Agreement: 9.1, 15.3, 15.4, 16.4, 16.5, 18.1, 18.2, 18.3, 18.4, 18.5, 20.1, 23.1, 24.1, and
24.10, together with any payment obligations arising prior to such expiry or termination.
|
21.
|
FORCE MAJEURE
|
21.1.
|
None of the parties will be liable for any failure or omission in the performance of any provision of this Agreement, if failure is caused by or will arise directly or indirectly, from
acts of God, government orders, legislation, or regulations, embargoes, fire, storm, floods, strikes, wars, acts of terrorism or riots. FITI will, however, give prompt notice to NANOX in the event of the occurrence of any of the above
contingencies that FITI expects will delay the delivery of the Services or any part thereof in a timely manner. Any notice from FITI will include its estimate as to the expected period of delay. Upon receipt of such notice or upon NANOX
becoming aware of the occurrence of any of the above contingencies which NANOX reasonably expects will delay the delivery of the Services or any part thereof, NANOX will be free to obtain some or all of the Services without delay and
without penalty that are expected to be the subject of delay from other suppliers during such period notwithstanding its obligations under this Agreement. In such circumstances, FITI will co-operate with NANOX and any new suppliers to
achieve a smooth, effective and expeditious transition and FITI will deliver any Property as directed by NANOX during the period of delay. FITI will be entitled to give notice to NANOX following resolution of any outstanding difficulties
resulting from any such contingency in respect of which it has given notice, or that NANOX became aware of, that FITI is then in a position to provide the affected Services in a timely manner in accordance with the provisions of this
Agreement. In any event, NANOX I will then deal with FITI in connection with the provision of the affected Services commencing on the 30th day following receipt of such notice from FITI.
|
22.
|
DISPUTE RESOLUTION; ARBITRATION
|
22.1.
|
Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity hereof (each, a “Dispute”), will be submitted for negotiation
and resolution to the Chief Operating Officer of NANOX (or to such other person of equivalent or superior position designated by NANOX in a written notice to FITI) and the [Director of Fabrication and Service Business Group] of FITI (or
to such other person of equivalent or superior position designated by FITI in a written notice to NANOX), by delivery of written notice (each, a “Dispute Notice”) from either of the parties to the other party. Such persons shall negotiate
in good faith to resolve the Dispute. If the Parties are unable to resolve any Dispute within ninety (90) days after delivery of the applicable Dispute Notice, either party demand binding arbitration in accordance with the provisions
Sections 22.2 and 22.3 below. This agreement to arbitrate shall continue in full force and effect despite the expiration, rescission or termination of this Agreement. The parties knowingly and voluntarily waive their rights to have their
dispute tried and adjudicated by a judge and jury except as expressly provided herein. The arbitrator shall apply the Swiss Rules of International Arbitration of the Swiss Chambers’ Arbitration Institution.
|
22.2.
|
Arbitration Procedure. If the parties are unable to resolve a Dispute following the process outlined in Section 22.1 above, then any party may demand arbitration by sending written
notice to the other party. The arbitration and the selection of the arbitrator(s) will be conducted in accordance with such rules as may be agreed upon by the parties, or, failing agreement within thirty (30) days after arbitration is
demanded, under the Swiss Rules of International Arbitration of the Swiss Chambers’ Arbitration Institution (the “Rules”) as such Rules may be modified by this Agreement. If the parties are unable to agree upon a single arbitrator within
thirty (30) days following the date arbitration is demanded a single arbitrator will be appointed according to the Rules. Unless the parties agree otherwise, they shall be limited in their discovery to directly relevant documents.
Responses or objections to a document request shall be served twenty (20) days after receipt of the request. The arbitrator shall resolve any discovery disputes. The arbitration shall take place in Zurich, Switzerland.
|
22.3.
|
Awards. The arbitrator shall only have the authority to award actual money damages (with interest on unpaid amounts from the date due) and the arbitrator shall not have the authority to
award exemplary or punitive damages, and the parties expressly waive any claimed right to such damages. The arbitration shall be of each party’s individual claims only, and no claim of any other party shall be subject to arbitration in
such proceeding. The decision of the arbitrator(s) shall be enforceable in any court of competent jurisdiction. The costs and expenses of the arbitration, but not the costs and expenses of the parties, shall be shared equally by the
parties; provided that if the arbitrato determines that one party prevailed in the proceeding, then the other party shall bear the entire cost and expense of the arbitration. If a party fails to proceed with arbitration, unsuccessfully
challenges the arbitration award, or fails to comply with the arbitration award, the other party is entitled to costs, including reasonable attorneys’ fees, for having to compel arbitration or defend or enforce the award. Except as
otherwise required by law, the parties and the arbitrator(s) shall maintain as confidential all information or documents obtained during the arbitration process, including the resolution of the dispute.
|
22.4.
|
Exceptions. Nothing in this Section 22.4 will prohibit or hinder NANOX and FITI from bringing an action for injunctive or other preliminary relief in any jurisdiction to enforce its
rights under this Agreement,
|
23.
|
NOTICE
|
23.1.
|
Any notice required or permitted to be given for the purposes of this Agreement will be in writing and will be sufficiently given if personally delivered to an officer of the party,
notice is being given to or sent by facsimile, courier or registered letter, postage prepaid and:
|
•
|
if to FITI, addressed to it at:
|
•
|
if to NANOX, addressed to it at:
|
24.
|
GENERAL PROVISIONS
|
24.1.
|
Nothing contained in this Agreement will constitute a joint venture or partnership between the parties hereto or empower a party to bind the other.
|
24.2.
|
Unless otherwise specified, words importing the singular include the plural and vice versa and words importing gender include all genders.
|
24.3.
|
The division of this Agreement into sections, the insertion of headings and the provision of a table of contents are for convenience of reference only and are not to affect the
construction or interpretation of this Agreement.
|
24.4.
|
Each party will from time to time promptly execute and deliver all further documents and take all further action reasonably necessary to give effect to the provisions of this Agreement.
|
24.5.
|
This Agreement will be governed by and construed in accordance with the laws of Zurich, Switzerland. It is agreed and understood that any Purchase Order or other document related to the
Services issued by NANOX to FITI during the term of this Agreement will be subject to and governed by the terms of this Agreement.
|
24.6.
|
This Agreement constitutes the entire agreement between the parties with respect to the subject matter and supersedes all prior agreements, negotiations, discussions, undertakings,
representations, warranties and understandings, whether written or verbal. No amendment, supplement, restatement or termination of any provision of this Agreement is binding unless it is in writing and signed by each party to this
Agreement.
|
24.7.
|
This Agreement ensures to the benefit of and binds the parties and their respective successors and permitted assigns.
|
24.8.
|
If any provision of this Agreement is or becomes illegal, invalid or unenforceable in any jurisdiction, the illegality, invalidity or
unenforceability of that provision will not affect:
|
•
|
the legality, validity or enforceability of the remaining provisions of this Agreement; or
|
•
|
the legality, validity or enforceability of that provision in any other jurisdiction.
|
24.9.
|
Amounts to be paid or calculated under this Agreement are to be paid or calculated in currency of the United States of America.
|
24.10.
|
No waiver of any provision of this Agreement is binding unless it is in writing and signed by all the parties to this Agreement entitled to grant the waiver. No failure to exercise, and
no delay in exercising, any right or remedy, under this Agreement will be deemed to be a waiver of that right or remedy. No waiver of any breach of any provision of this Agreement will be deemed to be a waiver of any subsequent breach of
that provision.
|
25.
|
RELATIONSHIP TERMS
|
25.1.
|
Project Managers. Each party will appoint a single project manager. The Project Managers will act as liaisons between the parties with respect to the performance of this Agreement.
Either party may replace its project manager effective on notice to the other party.
|
25.2.
|
Regular Meetings. The parties will establish a schedule of regular meetings at mutually agreed to timing to track progress, performance and action itemclosure.
|
25.3.
|
Quarterly Business Review Meetings. NANOX and FITI will hold quarterly business review meetings that include the project teams as well as the senior management of both parties. Agenda
to Include:
|
•
|
Review of previous QBR (Quarterly Business Review) minutes /Actions
|
•
|
NANOX corporate update
|
•
|
FITI corporate update
|
•
|
Highlights of the last quarter’s engagement
|
•
|
Assessment of FITI performance
|
•
|
FITI feedback to NANOX
|
•
|
Review of current business issues
|
•
|
Focus items for the following quarter and continuous improvement initiatives.
|
25.4.
|
NANOX Technical Assistance. NANOX will make available to FITI, as requested by FITI, reasonable technical assistance with respect to that Product or Component. All such will be provided
at no charge except as otherwise agreed in writing by the parties.
|
25.5.
|
FITI Technical Support. From time to time during the Term, FITI will make available to NANOX, as requested by NANOX, reasonable ongoing sustaining engineering support and resources for
possible new Products and Components and possible enhancements to or advanced versions of Products and Components, including without limitation assistance in the preparation of engineering change controls. All such assistance will be
provided at no charge except as otherwise agreed in writing by the parties.
|
26.
|
QUALITY AND RMA PROCESSES
|
26.1.
|
Concurrently herewith, the parties are entering into that certain Quality Agreement (the “Quality Agreement”) that outlines the set of manufacturing standards applicable to FITI in
connection with the Contract Manufacturing Services provided by FITI to NANOX hereunder. In addition to meeting all of the requirements outlined in the Quality Agreement, FITI’s Quality Management System (“QMS”) will be compliant to the
requirements of ISO 13485 unless otherwise specified in a Purchase Order and agreed in writing between the Parties.
|
26.2.
|
The QMS will include, at a minimum, standard operating procedures covering the following areas;
|
•
|
Purchasing Control
|
•
|
Supplier Controls
|
•
|
Production & Process Control
|
•
|
Inspection, Measurement & Test Equipment
|
•
|
ESD (Electrostatic Discharge, Ref. 26.4)
|
•
|
Manufacturing Process Validation
|
•
|
Acceptance Activities
|
•
|
Non-Conforming Product
|
•
|
Corrective & Preventative Action
|
•
|
Labeling & Packaging Control
|
•
|
Handling, Storage, Distribution & Installation
|
•
|
Records
|
•
|
Servicing
|
•
|
Annual Product Review
|
26.3.
|
Products which do not pass normal testing are referred to as “Quarantine Products”. During the normal manufacturing process, it is possible that Products produced in accordance with all
Specifications will not pass Product testing. FITI will use commercially reasonable efforts to repair and/or rework the Product. In the event it is unfeasible to repair the Product to a shippable state and the Quarantine Products are not
caused as a result of FITI non-conformance to Specifications, then FITI will invoice NANOX after a period of forty-five (45) days for the Product.
|
26.4.
|
FITI will protect all material against corrosion, contamination, deterioration, damage or other spoilage during handling, transit, and storage. FITI will establish an Electrostatic
Discharge (“ESD”) Control program to protect sensitive items during manufacturing, testing, inspection, packaging, transportation, shipping, rework, repair and failure analysis.
|
26.5.
|
FITI will mark each Product (i.e. component, field replaceable unit, etc.) with a unique serial number, as requested by NANOX, traceable to its production records including test and
inspection results, as applicable. FITI will maintain serial number records for each Product for a period of five (5) years past the Product’s shipment date. Unique serial numbers must be linked to appropriate test, inspection and repair
information, as applicable.
|
26.6.
|
Upon request by NANOX for a return authorization for credit, refund, repair, or replacement of Product, regardless of whether such Product is under warranty, FITI will, within five (5)
days after receipt of request, either issue a return authorization or provide NANOX with written substantiation for the refusal to issue the return authorization within 48 hours of receipt of a request to return. The request of RMA may
include but not limit to a preliminary defective analysis and any requested actions to parties, which NANOX shall follow the format of RMA request form, if available, provided by FITI. Unless otherwise provided in this Agreement, all
returns of Product are at FITI’s expense if root cause analysis confirms that Products failure mode is due to FITI and covered under Warranty as established in this Agreement. If Product is found to be in compliance with Specifications,
NANOX will be responsible of all shipping costs and any failure analysis costs incurred by FITI and will immediately pay to FITI any monies previously deducted.
|
27.
|
EPIDEMIC DEFECTS
|
27.1.
|
Defects found from the materials, products or components made or purchased by FITI in more than five (5) units delivered to NANOX or its designee during any one (1) year period, will be
hereinafter defined as “Epidemic Defects.” FITI is responsible, at its sole cost and expense, for repair and replacement of the Epidemic Defects. Additionally, FITI will be responsible for logistics costs, including freight, of the failed
products and will support NANOX with resources such as appropriate staging areas, rework and technical resources necessary for said repair and replacement. An Epidemic Defect will not, however, be deemed to occur if the affected Product
was not tested by FITI before shipment at NANOX’s written direction. NANOX will provide FITI notice of the existence of an Epidemic Defect within six (6) months after it could have been established that an Epidemic Defect has occurred,
failing which NANOX will be deemed to have waived its right to enforce this paragraph.
|
27.2.
|
Corrective Action Plan. FITI will provide a Corrective Action Plan (“CAP”) to NANOX within a time frame reasonably acceptable to NANOX if any one or more of the following events occur:
(a) a Product’s annual failure rate exceeds five percent (5%); or (b) a Product provides no electrical pulse upon first connection or first use of Product(s), regardless of time lapse between receipt of Product(s), and connection/first
use of Product(s); or (c) Epidemic Defect occurs as described in the subsection above. The CAP will address implementation and procedure milestones for remedying the problem. Once the CAP is approved by NANOX, FITI will use all
commercially reasonable efforts to implement the CAP.
|
27.3.
|
Reimbursement by FITI. If FITI fails to repair, replace or refund defective materials, Products or components made or purchased by FITI, in accordance with the terms of this Section,
any cost incurred by NANOX in supporting the Product(s) for NANOX to the level of the warranty support committed to by FITI hereunder (including costs for re-procurement of substitute product from a third party supplier at equivalent
cost) may be deducted from amounts due FITI, or if no amounts are due, FITI will reimburse NANOX for all such costs within forty-five (45) days of receipt of NANOX’ invoice which NANOX may provide to FITI following the completion of any
corrective action plan as contemplated by this Section.
|
28.
|
COMPLIANCE WITH ENVIRONMENTAL LAWS
|
FoxSemicon Integrated Technology, Inc. (Seal)
|
||
By:
|
/s/ Yangwei Liu
|
|
(Authorized Signing Officer)
|
Print Name:
|
Yangwei Liu
|
Job Title:
|
||
day of ,
|
NANO-X Imaging Ltd.
|
||
By:
|
/s/ Ran Poliakine
|
|
(Authorized Signing Officer)
|
Print Name: Ran Poliakine
|
||
Job Title: CEO
|
||
26 day of May, 2020
|
Product
|
Part Number
|
Product
|
Part Number
|
ALLOCATION ITEM
|
0/QTR (1)
|
1/QTR (2)
|
2/QTR (3)
|
3/QTR (4)
|
4/QTR (5)
|
5/QTR (6)
|
6/QTR (7)
|
MATERIAL OVERHEAD
|
|||||||
Burden — FITI Internal (%)
|
|||||||
Burden — Approved Suppliers (%)
|
|||||||
Burden — NANOX Provided (%)
|
|||||||
LABOR
|
|||||||
Direct Labor— Rate ($)
|
|||||||
Indirect Labor— Ratio (%)
|
|||||||
Indirect Labor — Rate ($)
|
|||||||
MARGIN
|
|||||||
SG&A (%)
|
|||||||
Profit (%)
|
•
|
FoxSemicon Integrated Technology (Shanghai) Inc.
|
•
|
FoxSemicon Integrated Technology (Kunshan) Inc.
|
1.
|
Testing materials that are not for machine/equipment assembly and are applicable for general imports, will be subject to custom duties, VAT or anti-dumping duties (when required);
|
2.
|
Bonded imported materials with shortage, customer does not agree for replenishment, the amount of the shortfall will be subject to customs duties and VAT;
|
3.
|
Bonded imported materials with defects, customer does not agree with the return policy, the amount of the scrap will be subject to customs duties, VAT or anti-dumping duties;
|
4.
|
Bonded imported materials to be transferred to domestic sales, which are subject to customs duties and VAT;
|
5.
|
Bonded imported materials somehow being decided not to export to customers after the assembly of finished products, the materials of such will be subject to customs duties, VAT, and the interest of deferred
tax.
|
6.
|
Bonded imported materials being damaged during the assembly process, are subject to customs duties, and VAT.
|
•
|
70% on Shipment Notification
|
•
|
10% within thirty (30) days after Shipment
|
•
|
20% with Purchase Order
|
•
|
60% on Shipment Notification
|
•
|
20% within thirty (30) days after Shipment
|
•
|
30% with Purchase Order
|
•
|
60% when ready for delivery and approved and approved following testing by NANOX
|
•
|
10% within thirty (30) days after Shipment.
|
1. |
Purpose
|
2. |
Definitions
|
2.1.
|
Defined Terms. Initially capitalized terms, as used in this Plan, shall have the meaning ascribed thereto as set forth below:
|
“Administrator”
|
means the Board, or a committee to which the Board shall have delegated power to act on its behalf with respect to the Plan. Subject to the Articles of Association of the Company, the Administrator, if it is
a committee, shall consist of such number of members (but not less than two) as may be determined by the Board (the “Committee”). The Board will cause the Committee to satisfy the applicable
requirements of any securities exchange on which the Shares may then be listed. For purposes of Awards to Participants who are subject to Section 16 of the U.S. Securities Exchange Act of 1934, Committee means all of the members of the
Committee who are “non-employee directors” within the meaning of Rule 16b-3 adopted under the U.S. Securities Exchange Act of 1934.
|
“Affiliate(s)”
|
means with respect to any Person, (i) any other Person, directly or indirectly, controlling, controlled by or under common control with such Person, and (ii) any other Person determined by the
Administrator. With respect to Awards under Section 102, an Affiliate shall mean any “employing company” within the meaning of Section 102 of the Tax Ordinance.
|
“Award”
|
shall mean any Option (including Incentive Stock Options and Non-Qualified Stock Options, as such terms are defined in the US Sub-Plan), Share, Restricted Share, RSUs or any Other Share‑based Award
(including, but not limited to, Share Appreciation Rights (“SARs”)).
|
“Award Letter”
|
means a letter from the Company or Affiliate to a Participant in which the Participant is notified of the decision to Grant to the Participant Awards according to the terms of the Plan. The Award Letter shall
specify (i) the type of Award (ii) the Tax Provision under which the Award is Granted; (iii) the Tax Track that the Company chose according to Section 11 of the Plan (if applicable); (iv) the Exercise Price; (v) the number of Awards Granted
to the Participant; (vi) the Vesting Schedule; and (vii) any other terms the Company deems fit.
|
“Board”
|
means the board of directors of the Company.
|
“Cause”
|
shall, with respect to each Participant, have the same meaning ascribed to such term or a similar term in the Participant’s employment or other engagement agreement or other documents to which the Company or
any of its parents, subsidiaries, affiliates or related entities and the Participant are a party concerning the provision of services by the Participant to the Company or any such entities, or, in the absence of such an agreement or
definition: (i) any breach of Participant’s obligations towards the Company (or any of its Affiliates) in accordance with such Participant’s employment agreement, services agreement, non-disclosure agreement, assignment of invention
agreement, non-compete agreement, or any other instrument or agreement to which the Participant is bound; (ii) any dishonest act on the part of the Participant including without limitations - fraud,
theft, breach of fiduciary duty, embezzlement; (iii) any criminal offense by Participant; (iv) any act by Participant that may adversely affect the reputation, business, or business relationship of the Company (or its Affiliates); (v) any
failure by Participant to abide by the Company’s policies or code of conduct; or (vi) any circumstances that constitute grounds for termination for cause under the Participant’s employment or service agreement with the Company or its
Affiliates.
|
“Commencement Date”
|
means the date of commencement of the vesting schedule with respect to a Grant of Awards which, unless otherwise determined by the Administrator, shall be the date of the decision of the Grant of the Awards
by the Administrator.
|
“Company”
|
means Nano-X Imaging Ltd., a company incorporated under the laws of the State of Israel.
|
“Consideration”
|
means with respect to outstanding Awards, the right to receive, for each Share subject to the Award immediately prior to the M&A Transaction, the consideration (whether shares, cash, or other securities
or property) received in the M&A Transaction by holders of Shares of the Company for each Share held on the effective date of the Transaction, or any type of consideration determined by the Administrator, at its sole discretion,
including a cashless exercise method.
|
“Consultant”
|
means any third party who is not entitled to receive Awards under Section 102, on behalf of whom an Award is Granted under Section 3(i).
|
“Control,” “Controlled,” and Correlative Terms
|
mean the ability to direct the activity of a Person, and a Person shall be presumed to control another Person if he holds 10% or more of (1) the voting rights at a general meeting (or the equivalent governing
body) of a Person; or (2) the right to appoint directors (or the equivalent governing body) of a Person.
|
“Disability”
|
means total and permanent physical or mental impairment or sickness of a Participant, that is potentially permanent in character or that can be expected to last for a continuous period of not less than 12
months, making it impossible for the Participant to continue such Participant’s employment with or service to the Company or Affiliate.
|
“Exercise,” “Exercised,” and Correlative Terms
|
mean, 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), the vesting of such
an Award (regardless of whether or not the wording included reference to vesting of such an Award explicitly).
|
“Exercise Price”
|
means, the price determined by the Administrator in accordance with Section 7.1 below which is to be paid to the Company in order to exercise a Granted Option and convert such into an Underlying Share, the
per Share exercise price of a SAR granted to a Participant, or the purchase price for each Share covered by any other Award.
|
“Fair Market Value”
|
means, as of any date, the value of a Share determined as follows:
(i) If the Shares are listed on any established stock exchange or a national market system, including without limitation the Tel-Aviv Stock Exchange or The Nasdaq Stock Market, the Fair Market Value shall be
the closing sales price for such Shares (or the closing bid, if no sales were reported), as quoted on such exchange or system for the last market trading day prior to time of determination, as reported in the Wall Street Journal, or such
other source as the Board deems reliable. Without derogating from the above, solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Tax 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 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 30 trading days preceding the Date of Grant or on the 30 trading days following the date of registration for trading, as the case may be;
(ii) If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean between the high bid and low asked prices for the Shares
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Board.
|
“Grant,” “Granted,” and Correlative Terms
|
means the grant of Awards by the Company to a Participant pursuant to an Award Letter issued to the Participant.
|
“Holding Period”
|
means with regard to Awards Granted under Section 102, the period in which the Awards Granted to a Qualified Participant or, upon exercise thereof the Underlying Shares, are to be held by
the Trustee on behalf of the Qualified Participant, in accordance with Section 102, and pursuant to the Tax Track which the Company selects.
|
“IPO”
|
means the initial public offering of shares of the Company and the listing of such shares for trading on any recognized stock exchange or over-the-counter or computerized securities trading system.
|
“Law”
|
means the laws of the State of Israel as are in effect from time to time.
|
“M&A Transaction”
|
means a “Deemed Liquidation Event” or other similar terms defined in the Articles of Association of the Company, and in the absence of such definition each of the
following events: (i) any merger, reorganization or consolidation of the Company with or into another incorporated Person, or the acquisition of the Company by another Person by means of any transaction or series of related transactions,
except any such merger, reorganization or consolidation in which the issued shares of the Company as of immediately prior to such transaction continue to represent, or are converted into or exchanged for shares that represent, immediately
following such merger, reorganization, or consolidation, at least a majority, by voting power, of the outstanding shares of the surviving or acquiring incorporated Person; or (ii) a sale or other disposition of all or substantially all of
the shares or assets of the Company (including, for this purpose, a conveyance, sale or disposition, or a license of all or substantially all of the intellectual property rights of the Company, which has the effect or economic impact
similar to a sale of all or substantially all of the intellectual property rights of the Company), in a single transaction or a series of related transactions.
|
“Non-Qualified Participant”
|
means any person who is not qualified to receive Awards under the provisions of Section 102, on behalf of whom an Award is Granted pursuant to Section 3(i).
|
“Notice of Exercise”
|
shall have the meaning set forth in Section 7.4 below.
|
“Option”
|
means an option to purchase one Share of the Company.
|
“Other Share-based Award”
|
means Awards, other than Options, consisting of Share units, or other Awards, valued in whole or in part by reference to, or otherwise based on, Shares.
|
“Participant”
|
means a Qualified Participant, or a Non-Qualified Participant.
|
“Person”
|
means any individual, corporation, partnership, company, estate, trust, association or other organization or entity.
|
“Plan” or “Incentive Plan”
|
means this 2019 Equity Incentive Plan, as may be amended from time to time, and any applicable Sub‑Plan.
|
“Qualified Participant”
|
means an Israeli who is employed by the Company or its Affiliates, including an individual who is serving as a director or an office holder, but excluding any controlling stockholder according to the meaning
ascribed to it in Section 32(9) of the Tax Ordinance, all in accordance with and subject to the provisions of Section 102 of the Tax Ordinance.
|
“Retirement”
|
means the termination of a Participant’s employment as a result of his or her reaching the earlier of (i) the age of retirement as defined by Law; or (ii) the age of retirement specified in the Participant’s
employment agreement.
|
“Section 102”
|
means Section 102 of the Tax Ordinance.
|
“Section 102 Rules”
|
means the Income Tax Rules (Tax Relief for Issuance of Shares to Employees), 2003.
|
“Section 3(i)” or “Section 3(i) Rules”
|
means Section 3(i) of the Tax Ordinance and the applicable rules thereto or under applicable regulations.
|
“Share(s)”
|
means an ordinary share(s) of the Company with par value of NIS 0.01 (or of such other class as determined by the Board).
|
“Sub-Plan”
|
means any supplements or sub-plans to this Plan adopted by the Board, applicable to Participants employed or otherwise engaged in a certain country or region or subject to the laws of a certain country or
region, as deemed by the Board to be necessary or desirable to comply with the laws of such country or region, or to accommodate the tax policy or custom thereof, which, if and to the extent applicable to any particular Participant, shall
constitute an integral part of this Plan
|
“Tax Ordinance”
|
means the Israeli Income Tax Ordinance [New Version], 1961, as amended, and any regulations, rules, orders or procedures promulgated thereunder.
|
“Tax Track”
|
means one of the tax tracks described under Section 102.
|
“Tax Provision”
|
means, with respect to the Grant of Awards, the provisions of one of the three Tax Tracks in Section 102, or the provisions of Section 3(i).
|
“Term of the Awards”
|
means, with respect to Granted but unexercised Awards, the time period set forth in Section 9 below.
|
“Trustee”
|
means a Trustee appointed by the Company to hold in trust, Options and the Underlying Shares issued upon exercise of such Options, Restricted Shares, Other Share-based Awards, Performance Awards or RSU’s on
behalf of Participants.
|
“Underlying Shares”
|
means Shares issued or to be issued upon exercise of Granted Awards, all in accordance with the Plan.
|
2.2.
|
General. Without derogating from the meanings ascribed to the capitalized terms above, all singular references in this Plan shall include the plural and vice versa, and reference to one gender shall
include the other, unless otherwise required by the context.
|
|
3. |
Shares Available for Awards
|
The total number of Underlying Shares reserved for issuance under the Plan and any modification thereof, shall be determined from time to time by the Board.
Such number of Shares shall be subject to adjustment as required for the implementation of the provisions of the Plan, in accordance with Section 4
below.
|
|
In the event that Awards Granted under the Plan expire or otherwise terminate in accordance with the provisions of the Plan, such expired or terminated Awards shall become available for future Grants under
the Plan.
|
The grant of any Award may be contingent upon the Participant executing the appropriate Award Agreement. The Company may retain the right in an Award Agreement, other than an Award Agreement with a
Qualified Participant, to cause a forfeiture of the gain realized by a Participant on account of actions taken by the Participant in violation or breach of or in conflict with any employment agreement, non-competition agreement, any
agreement prohibiting solicitation of employees or clients of the Company or any Affiliate thereof or any confidentiality obligation with respect to the Company or any Affiliate thereof, or otherwise in competition with the Company or any
Affiliate thereof, to the extent specified in such Award Agreement applicable to the Participant. Furthermore, the Company may annul an Award if the Participant is terminated for Cause.
|
|
4. |
Adjustments; Repricing
|
5. |
Administration of the Plan
|
5.1. |
Power. Subject to the Law, the Articles of Association of the Company, and any resolution to the contrary by the Board, the Administrator is authorized, in its sole and absolute
discretion, to exercise all powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan, including, without limitation, to do the following:
|
(a) |
Determine the identity of the Participants in the Plan;
|
(b) |
Determine the number of Awards to be Granted for each Participant’s benefit and the Exercise Price (subject to the approval of the Board if such approval is required by Law);
|
(c) |
Determine the time or times at which Awards shall be Granted;
|
(d) |
Determine whether, to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered;
|
(e) |
Determine any terms and conditions in addition to those specified in the Plan under which an Award may be Granted;
|
(f) |
Determine any measures, and to take actions, necessary or advisable for the administration and implementation of the Plan;
|
(g) |
Interpret the provisions of the Plan and to take all actions resulting there from including without limitation;
|
(h) |
Subject to Section 7, accelerate the date on which any Award under the Plan becomes exercisable;
|
(i) |
Waive or amend Plan provisions relating to exercise of Awards, including exercise of Awards after termination of employment, for any reason;
|
(j) |
Amend any of the terms of the Plan, or any prior determinations of the Administrator; and
|
(k) |
Adopt supplements to the Plan, including without limitations in order to accommodate tax regime of foreign jurisdictions.
|
5.2. |
Limitations.
|
(a) |
With respect to any action necessary for the administration of the Plan, which is under any applicable Law or the Company’s Articles of Association, required to be taken by the Board, without any right of delegation, notwithstanding
anything to the contrary herein, such action shall be taken by the Board.
|
(b) |
Notwithstanding the provisions of Section 5.1 above, no interpretations, determinations or actions of the Administrator shall contradict the provisions of applicable Law.
|
(c) |
Notwithstanding any other provisions herein to the contrary and unless otherwise decided by the Administrator, no Award of Options or SARs shall be granted with an Exercise Price of less than the Fair Market Value as of the date of such
Grant.
|
6. |
Grant and Allocation of Awards
|
6.1. |
Timing of Initial Grant of Awards. Initial Awards may be Granted pursuant to the Ordinance at any time following 30 days after a request for approval of the Plan has been submitted for approval to
the Israeli Income Tax Authorities pursuant to the requirements of the Tax Ordinance.
|
6.2. |
Conditions for Grant of Awards.
|
(a) |
The Grant has been approved by the necessary corporate bodies of the Company; and
|
(b) |
All other approvals, consents or requirements necessary by Law have been received or met.
|
6.3. |
Date of Grant. The date on which Awards shall be deemed Granted under the Plan shall be the date the Administrator resolves to Grant such Award or any future date determined to be the effective date of a Grant of an Award, if so
expressly stated by the Administrator in its determination relating to the Grant of an Award, subject to the execution by the Participant of all such instruments required by the Company with respect to the Grant, and (with respect to all
Awards issued to the Trustee) the timely delivery of all such instruments required by the Trustee with respect to the such Grant, in accordance with the provisions of the Tax Ordinance (“Date of Grant”).
|
6.4. |
Clawbacks. Any Award, amount, or benefit received under the Plan shall be subject to potential cancellation, recoupment, rescission, payback, or other action in accordance with the terms of any applicable Company clawback policy
or any applicable law, as may be in effect from time to time, including the requirements of (i) Section 304 of the U.S. Sarbanes Oxley Act and Section 954 of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act and any
implementing rules and regulations thereunder; (ii) similar rules under the laws of any other jurisdiction; and (iii) any policies adopted by the Company to implement such requirements, all to the extent determined by the Board to be
applicable to the Participant, provided that the Clawback provisions under this Section shall not apply to Qualified Participants. By accepting an Award, the Participant shall be deemed to have acknowledged and consented to the Company’s
application, implementation, and enforcement of any applicable Company clawback policy that may apply to the Participant, whether adopted prior to or following the date of the Award, and any provision of applicable law relating to
cancellation, recoupment, rescission, or payback of compensation, and to have agreed that the Company may take such actions as may be necessary to effectuate any such policy or applicable law, without further consideration or action.
|
6.5. |
Breach of Agreements. If the Participant breaches a non-competition, non-solicitation, non‑disclosure, non-disparagement, or other restrictive covenant set forth in an Award Agreement or any other agreement between the
Participant and the Company or any Affiliate, whether while the Participant is an employee, director, officer or Consultant of the Company or Affiliate or after the Participant’s Termination of Engagement (as defined in Section 10.1),
in addition to any other penalties or restrictions that may apply under any such agreement, state law, or otherwise, the Participant, other than a Qualified Participant, shall forfeit or pay to the Company:
|
(a) |
any and all outstanding Awards Granted to the Participant, including Awards that have become earned or vested;
|
(b) |
any Shares held by the Participant in connection with the Plan that were acquired by the Participant after the Participant’s Termination of Engagement and within the 12‑month period immediately preceding the Participant’s Termination of
Engagement; and
|
(c) |
the profit realized by the Participant from the sale, or other disposition for consideration, of any Shares received by the Participant in connection with the Plan after the Participant’s Termination of Engagement, and within the
12-month period immediately preceding the Participant’s Termination of Engagement where such sale or disposition occurs in such similar time period.
|
7. |
Exercise of Awards
|
7.1.
|
Exercise Price. The Exercise Price per Underlying Share deliverable upon the exercise of an Award shall be determined by the Administrator as of the Date of Grant of the Award. The Exercise Price
shall be set forth in the Award Letter.
|
|
7.2.
|
Vesting Schedule. Unless otherwise determined by the Administrator (at its sole discretion), all Awards Granted on a certain date shall, subject to continued
employment with or service to the Company or Affiliate by the Participant, and shall vest and become exercisable in accordance with the vesting schedule determined by the Administrator and specified in the Award Agreement.
|
|
7.3.
|
Exercise of a portion of the Awards. The exercise of a portion of the Awards Granted shall not cause the expiration, termination or cancellation of the
remaining unexercised Awards held by the Trustee on behalf of the Participant.
|
|
7.4. |
Manner of Exercise. An Award may be exercised by and upon the fulfilment of the following:
|
(a) |
Notice of Exercise
|
(b) |
Exercise Price
|
(c) |
Allocation of Shares
|
(d) |
Expenses
|
8. |
Waiver of Award Rights
|
9. |
Term of the Awards
|
10. |
Termination of Engagement
|
10.1. |
Termination of Engagement. If a Participant ceases to be an employee, director, officer or Consultant of the
Company or Affiliate for any reason (“Termination of Engagement”) other than death, Retirement, Disability or Cause, then unless otherwise determined in a Participant’s Award Agreement or by the
Administrator prior to the Termination of Engagement, any vested but unexercised Awards on the date of Termination of Engagement (as shall be determined by the Company or Affiliate, in its sole discretion), Granted to Participant may be
exercised, if not previously expired, not later than the earlier of (i) 90 days after the date of Termination of Engagement, or (ii) the Term of the Awards.
|
Unless otherwise determined in a Participant’s Award Agreement, all other Awards Granted for the benefit of Participant shall expire upon the date of Termination of
Engagement unless modified by the Administrator prior to the Termination of Engagement.
|
|
10.2. |
Termination for Cause. If subsequent to the Participant’s Termination of Engagement, but prior to the exercise of Awards Granted to such Participant, the Administrator determines that either prior or subsequent to the
Participant’s Termination of Engagement, the Participant engaged in conduct which would constitute Cause, then the Participant’s right to exercise the Awards Granted to such Participant shall immediately cease upon such determination, and
the Awards shall thereupon expire.]
|
10.3. |
Termination by Reason of Death, Retirement, or Disability. Unless otherwise determined in a Participant’s Award Agreement, in the event of Termination of Engagement of a Participant by reason of death, Retirement, or Disability,
any vested but unexercised Awards shall be exercisable in the case of death, by his or her estate, personal representative or beneficiary, or in the case of Retirement or Disability, by the Participant or his or her personal representative
(as the case may be), until the earlier of (i) 360 days after the date of Termination of Engagement; or (ii) the Term of the Awards.
|
10.4. |
Exceptions. In special circumstances, pertaining to the Termination of Engagement of a certain Participant, the Administrator may in its sole discretion decide to extend any of the periods
stated above in Sections 10.1‑10.3.
|
10.5. |
Transfer of Employment or Service. A Participant’s right to Awards or the exercise thereof that were Granted to him or her under this Plan, shall not be terminated or expire solely as a result of the fact that the Participant’s
employment or service as an employee, officer, director or Consultant changes from the Company to an Affiliate or vice versa. Furthermore, the Administrator may determine that the transfer of a Participant from a status of an employee,
officer or director to a status of a Consultant or from a status of a Consultant to a status of an employee, officer or director, shall not be deemed a Termination of Engagement for purposes hereof .
|
11. |
Awards and Tax Provisions
|
● |
The Company may Grant Awards to Qualified Participants in accordance with the provisions of Section 102 and the Rules.
|
● |
The Company may Grant Awards to Non-Qualified Participants in accordance with the provisions of Section 3(i).
|
11.1. |
Tax Provision Selection. The Company shall elect under which Tax Provision each Award is Granted in accordance with any applicable Law and its sole discretion – i.e. the Company
shall elect whether to Grant Awards to Participants under one of the three Section 102 Tax Tracks, or under the provisions of Section 3(i). The Company shall notify each Participant in the Award Letter, under which Tax Provision the Awards
are Granted and, if applicable, under which Section 102 Tax Track, each Award is Granted.
|
11.2. |
Section 102 Trustee Tax Tracks. If the Company elects to Grant Awards to Qualified Participants through (i) the Capital Gains Track Through a Trustee, or (ii) the Income Tax Track Through a Trustee, then, in accordance with the
requirements of Section 102, the Company shall appoint a Trustee who will hold in trust on behalf of each Qualified Participant the Granted Awards and the Underlying Shares issued upon exercise of such Awards in trust on behalf of each
Qualified Participant. In addition, the following terms shall apply: (i) the Trustee shall hold other shares received subsequently following any realization of rights, including without limitation bonus shares; (ii) in the event the
requirements for Section 102 Trustee Tax Tracks are not met, Section 102 awards may be regarded as grants without a Trustee, all in accordance with the provisions of Section 102; (iii) a
Qualified Participant shall not sell or release from trust any award/share received upon the exercise of an award 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 Tax Ordinance; (iv) if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules, regulations, orders or
procedures promulgated thereunder shall apply to and shall be borne by such Qualified Participant. The Participant shall be bound by the trust agreement executed between the Company and any such trustee, including any amendment thereof.
|
11.3. |
Income Tax Track Without a Trustee. If the Company elects to Grant Awards to Israeli Participants according
to the provisions of this track, then the Awards will not be subject to a Holding Period of this Plan.
|
11.4. |
Concurrent Conditions. The Holding Period of Section 102, if any, is in addition to the vesting period as specified in Section 7.2 of the Plan. The Holding
Period and vesting period may run concurrently, but neither is a substitute for the other, and each are independent terms and conditions for Awards Granted.
|
11.5. |
Trust Agreement. The terms and conditions applicable to the trust relating to the Tax Track selected by the Company, as appropriate, shall be set forth in an agreement signed by the Company
and the Trustee (the “Trust Agreement”).
|
12. |
Rights as a Shareholder
|
13. |
No Special Employment Rights
|
14. |
Restrictions on Sale of Awards
|
14.1. |
Options. Options may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent.
|
14.2. |
Shares. No transfer of Underlying Shares shall be effective unless made in compliance with the Articles of Association of the Company (as may be amended from time to time), including,
without derogating from the generality of the above, the required approval of any transfer of Shares by the Board in accordance with the Company’s Articles of Association (as in effect from time to time), right of first refusal, right of
co-sale, and the right of bring along, all to the extent existing under the Articles of Association of the Company. Without derogating from the aforesaid, all Underlying Shares shall be subject to restrictions set forth in any shareholders
agreement (or other similar instrument) applicable to all or substantially all of the shareholders of the Company.
|
14.3. |
Restricted Shares. As stated in Section 27 below.
|
14.4. |
Restricted Share units. As stated in Section 28 below.
|
14.5. |
M&A Transaction. In the event of an M&A Transaction, the outstanding (including the unexercised, vested, unvested or restricted) portion of each outstanding Award shall be assumed or substituted with an equivalent Award
or the right to receive Consideration by the acquiring or successor corporation or an affiliate thereof, as shall be determined by such entity and/or the Administrator, subject to the terms hereof. In the event that the successor
corporation or any affiliate thereof does not provide for such an assumption, and/or substitution of outstanding Awards and/or the provision of Consideration for outstanding Awards, then unless determined otherwise with respect to a
specific outstanding Award, the Administrator shall have sole and absolute discretion to determine the effect of the M&A Transaction on the portion of Awards outstanding immediately prior to the effective time of the M&A
Transaction, which may include any one or more of the following, whether in a manner equitable or not among individual Participants or groups of Participants: (i) all or a portion of the outstanding Awards shall become exercisable in full
on a date no later than two days prior to the date of consummation of the M&A Transaction, or on another date and/or dates or at an event and/or events as the Administrator shall determine at its sole and absolute discretion, provided
that unless otherwise determined by the Administrator, the exercise and/or vesting of all Awards that otherwise would not have been exercisable and/or vested in the absence of an M&A Transaction, shall be contingent upon the actual
consummation of the M&A Transaction; and/or (ii) that all or a portion or certain categories of the outstanding Awards shall be cancelled upon the actual consummation of the M&A Transaction, and instead the holders thereof will
receive Consideration, or no Consideration, in the amount and under the terms determined by the Administrator at it sole and absolute discretion; and/or (iii) that an adjustment or interpretation of the terms of the Awards shall be made in
order to facilitate the M&A Transaction and/or otherwise as required in context of the M&A Transaction.
|
14.6. |
Acceleration Provision. The Administrator, in its sole discretion, may decide to add a provision in certain Award Letters, according to which in case of an M&A Transaction, all or some of the unvested Awards, shall
automatically accelerate.
|
14.7. |
Lock Up. Notwithstanding the Holding Period, following the Company’s IPO, the Administrator may determine that the Underlying Shares issued pursuant to the exercise of Awards may be
subject to a lock-up period of 180 days, or such longer period of time as may be determined by the Board , during which time Participants shall not be allowed to sell Shares.
|
15. |
Voting
|
(a) |
The Board may, at its discretion, replace the Representative from time to time.
|
(b) |
Shares subject to proxy shall be voted by the Representative on any issue or resolution brought before the shareholders of the Company as instructed by the Board.
|
(c) |
Each Participant, upon execution of the irrevocable proxy specified above, undertakes to hold the Representative harmless from any and all claims related or connected to said proxy.
|
(d) |
The Representative shall be indemnified and held harmless by the Company against any cost or expense (including attorneys’ fees) reasonably incurred by the Representative, 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 the Shares subject to proxy, unless arising out of the Representative’s own fraud or gross negligence, to the extent permitted by
applicable Law. In the event the Representative shall have indemnification by virtue of other functions or services he or she performs for the Company or Affiliate (whether by agreement, insurance policy or decision of the appropriate
corporate body (ies) of the Company and/or Affiliate), this indemnification shall be in addition to any such other indemnification.
|
16. |
Tax Matters
|
17. |
Withholding Taxes
|
With regard to Awards Granted to Qualified Participants , until all taxes have been paid in accordance with Rule 7 of the Section 102 Rules, Awards and/or Underlying Shares may not be sold, transferred,
assigned, pledged, encumbered, or otherwise wilfully hypothecated or disposed of, and no power of attorney (other than pursuant to Section 15 above) or deed of transfer, whether for immediate or future use may be validly given.
Notwithstanding the foregoing, the Awards and/or Underlying Shares may be validly transferred in accordance with Section 20 below, provided that the transferee thereof shall be subject to the provisions of Section 102 and the
Section 102 Rules as would have been applicable to the deceased Israeli Participant were he or she to have survived.
|
18. |
No Transfer of Awards
|
19. |
Transfer of Rights Upon Death
|
(a) |
A written request for such transfer and a copy of the legal documents creating and confirming the right of the person acting with respect to the Participant’s estate and of the transferee;
|
(b) |
A written consent by the transferee to pay any amounts in connection with the Awards and Underlying Shares any payment due according to the provisions of the Plan and otherwise abide by all the terms of the Plan; and
|
(c) |
Any other such evidence as the Administrator may deem necessary to establish the right to the transfer of the Award or Underlying Share issued upon the exercise thereof and the validity of the transfer.
|
20. |
No Right of Others to Awards
|
21. |
Expenses and Receipts
|
22. |
Required Approvals
|
23. |
Applicable Law
|
24. |
Treatment of Participants
|
25. |
No Conflicts
|
26. |
Participant Undertakings
|
|
By entering into this Plan, the Participant shall (1) agree and acknowledge that he or she has received and read the Plan and the Award Letter; (2) undertake all the provisions set forth in: Section 3(i)
or Section 102 as applicable (including provisions regarding the applicable Tax Track that the Company has selected), the Plan, the Award Letter and the Trust Agreement (if applicable); and (3) if the Options are Granted under Section
102, the Israeli Participant shall undertake that subject to the provisions of Section 102 and the Rules, he or she shall not sell or release the Underlying Shares from trust before the end of the Holding Period (if any). Any and all
rights underlying an Award Granted under Section 102 shall be issued to the Trustee and held thereby until the lapse of the Holding Period, and such rights shall be subject to the Tax Track which is applicable to such Exercised Shares.
|
|
27. |
Restricted shares.
|
27.1.
|
Purchase Price. Each Restricted Share Award Letter shall state an amount of Exercise Price to be paid by the Participant, if any, in consideration for the issuance of the Restricted Shares and the
terms of payment thereof, which may include, payment in cash or other evidence of indebtedness on such terms and conditions as determined by the Board.
|
27.2. |
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
Share thereunder being referred to herein as the “Restricted Period”). The Board may also impose such additional or alternative restrictions and conditions on the Restricted Shares, as it deems
appropriate, including the satisfaction of performance criteria. Such performance criteria may include, but are not limited to, sales, earnings before interest and taxes, return on investment, earnings per share, any combination of the
foregoing or rate of growth of any of the foregoing, as determined by the 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 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 Board, be held in escrow by an escrow agent appointed by the Board, or, if a Restricted Share Award is made pursuant to Section 102, by the Trustee. In determining the Restricted Period of an Award the Board
may provide that the foregoing restrictions shall lapse with respect to specified percentages of the awarded Restricted Shares on successive anniversaries of the date of such Award. To the extent required by the Tax Ordinance, the
Restricted Shares issued pursuant to Section 102 shall be issued to the Trustee in accordance with the provisions of the Tax Ordinance and the Restricted Shares shall be held for the benefit of the Participant for such period as may be
required by the Tax Ordinance.
|
27.3.
|
Forfeiture; Repurchase. Subject to such exceptions as may be determined by the Board, if the Participant’s continuous employment with or service to the Company or any Affiliate thereof shall
terminate for any reason prior to the expiration of the Restricted Period of an Award or prior to the timely payment in full of the Exercise Price of any Restricted Shares, any 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 this Plan, subject to applicable Laws and the
Participant shall have no further rights with respect to such Restricted Shares.
|
|
27.4.
|
Ownership. During the Restricted Period the Participant shall possess all incidents of ownership of such Restricted Shares, subject to Section 15 and Section 27.2, including the
right to vote and receive dividends with respect to such Shares. All securities, if any, received by a Participant 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.
|
|
28. |
Restricted Share Units
|
28.1.
|
Exercise Price. No payment of Exercise Price shall be required as consideration for RSUs, unless included in the Award Letter or as required by applicable Law.
|
28.2.
|
Shareholders’ Rights. The Participant 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 Participant.
|
|
28.3.
|
Vesting of RSUs. Shares shall be issued to or for the benefit of Participant promptly following each vesting date determined by the
Administrator, provided that Participant is still engaged by the Company on the applicable vesting date. After each such vesting date the Company shall promptly cause to be issued for the benefit of Participant Shares with respect to RSUs
that became vested on such vesting date. It is clarified that no Shares shall be issued pursuant to the RSUs to Participant until the vesting criteria determined by the Administrator is met.
|
28.4.
|
Settlements of Awards. Settlement of vested RSUs shall be made in the form of Shares. Distribution to a Participant of an amount (or amounts) from settlement of vested RSUs can be deferred to a
date after settlement as determined by the Board. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until the grant of RSUs is settled, the number of Shares underlying such RSUs
shall be subject to adjustment pursuant hereto, mutatis mutandis.
|
|
29. |
Other Share-Based Awards
|
|
Grant of Other Share-based Awards. Other Share-based Awards may be granted either alone or in addition to or in conjunction with other Awards under the Plan. Other Share-based Awards may be granted
in lieu of other cash or other compensation to which a Participant is entitled from the Company or may be used in the settlement of amounts payable in shares of Shares under any other compensation plan or arrangement of the Company.
Subject to the provisions of the Plan, the Administrator shall have the sole and complete authority to determine the persons to whom and the time or times at which such Awards shall be made, the number of shares of Shares to be granted
pursuant to such Awards, and all other conditions of such Awards. Unless the Administrator determines otherwise, any such Award shall be confirmed by an Award Letter, which shall contain such provisions as the Board determines to be
necessary or appropriate to carry out the intent of this Plan with respect to such Award.
|
|
29.2.
|
Terms of Other Stock-based Awards. Any Share subject to Awards made under this Section 29 may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.
|
30. |
Rules Particular To Specific Countries
|
1.
|
Definitions.
|
2.
|
Shares Reserved under US Sub-Plan for Incentive Stock Options.
|
3.
|
Grants of Awards.
|
4.
|
Special Terms for Incentive Stock Options.
|
4.1
|
Disqualification. To the extent that any Award does not qualify as an Incentive Stock Option (whether because of its provisions or the time or manner of its exercise or otherwise), such
Award or the portion thereof that does not qualify shall constitute a separate Non-Qualified Stock Option.
|
4.2
|
Exercise Price. The exercise price per Share subject to an Incentive Stock Option shall be determined by the Board at the time of grant of such Incentive Stock Option; provided that the
per share exercise price of an Award shall not be less than 100% of the Fair Market Value of the Share at the time of grant of such Incentive Stock Option; and provided, further, that if an Incentive Stock Option is
granted to a Ten Percent Shareholder, the exercise price per Share shall be no less than 110% of the Fair Market Value of the Share at the time of the grant of such Incentive Stock Option.
|
4.3
|
Award Term. The term of each Incentive Stock Option shall be fixed by the Board; provided, however, that no Incentive Stock Option shall be exercisable more than 10 years after
the date such Incentive Stock Option is granted; and provided, further, that the term of an Incentive Stock Option granted to a Ten Percent Shareholder shall not exceed five years.
|
4.4
|
Incentive Stock Option Limitations. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of Shares with respect to which Incentive Stock Options are
exercisable for the first time by an employee during any calendar year under this Plan and/or any other stock option plan of the Company, any Subsidiary or any Parent exceeds $100,000, such Incentive Stock Options shall be treated as
Non-Qualified Stock Options. In addition, if an employee does not remain employed by the Company, any Subsidiary or any Parent at all times from the time an Incentive Stock Option is granted until three months prior to the date of
exercise thereof (or such other period as required by Section 422 of the Code), such Incentive Stock Option shall be treated as a Non-Qualified Stock Option.
|
4.5
|
Effect of Termination. Notwithstanding anything to the contrary in the Plan or this US Sub-Plan, and in the absence of a provision specifying otherwise in the relevant Award Letter, then with
respect to Incentive Stock Options, the following provisions must be met in order for the Award to qualify as an Incentive Stock Option under the Code:
|
(a)
|
in the event that the Participant ceases to be an employee of the Company or any Subsidiary or Parent for any reason other than the Participant's death or Disability, the Vested Awards must be exercised within 3 months from the
Participant's Termination Date;
|
(b)
|
in the event that the Participant's employment with the Company, a Subsidiary or Parent terminates as a result of the Participant's death or Disability, the Vested Award must be exercised within 12 months following the Participant's
Termination Date.
|
4.6
|
Notice of Disposition. The Participant shall give the Company prompt notice of any disposition of Shares acquired by exercise of an Incentive Stock Option within (i) two years from the date of
grant of such Incentive Stock Option or (ii) one year after the transfer of such Shares to the Participant.
|
4.7
|
Right to Exercise. During a Participant's lifetime, an Incentive Stock Option may be exercised only by the Participant.
|
5.
|
Terms And Conditions Of Performance Awards
|
5.1
|
Performance Conditions. The right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be
specified by the Board. The Board may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, including but not limited to the Business Criteria listed below in Section
5.3.
|
5.2
|
Performance Goals Generally. The performance goals for such Performance Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each
of such criteria, as specified by the Board consistent with this Section 5.2. The Board may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition for the grant, exercise and/or settlement of such Performance Awards. Performance goals may, in the discretion of the Board, be established on a Company-wide basis, or
with respect to one or more business units, divisions, subsidiaries or business segments, as applicable. Performance goals may be absolute or relative (to the performance of one or more comparable companies or indices). Measurement of
performance goals may exclude (in the discretion of the Board) the impact of charges for restructuring, discontinued operations, extraordinary items, and other unusual non-recurring items, and the cumulative effects of tax or accounting
changes (each as defined by generally accepted accounting principles and as identified in the Company's financial statements or other SEC filings). Performance goals may differ for Performance Awards granted to any one Participant or to
different Participants.
|
5.3
|
Business Criteria. One or more of the following business criteria for the Company, on a consolidated basis, and/or specified subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), may be used by the Board in establishing performance goals for such Performance Awards: (i) cash flow; (ii) earnings per share, as adjusted for any stock split, stock dividend
or other recapitalization; (iii) earnings measures; (iv) return on equity; (v) total shareholder return; (vi) share price performance, as adjusted for any stock split, stock dividend or other recapitalization; (vii) return on capital;
(viii) revenue; (ix) income; (x) profit margin; (xi) return on operating revenue; (xii) brand recognition/acceptance; (xiii) customer satisfaction; (xiv) productivity; (xv) expense targets; (xvi) market share; (xvii) cost control
measures; (xviii) balance sheet metrics; (xix) strategic initiatives; (xx) implementation, completion or attainment of measurable objectives with respect to recruitment or retention of personnel or employee satisfaction; or (xxi) any
other business criteria established by the Board; provided, however, that such business criteria shall include any derivations of business criteria listed above (e.g., income shall include pre-tax income, net income, operating income,
etc.).
|
5.4
|
Settlement of Performance Awards; Other Terms. Settlement of Performance Awards shall be in cash, Shares, other Awards or other property, in the discretion of the Board. The Board may, in its
discretion make adjustments, including to reduce the amount of a settlement otherwise to be made, in connection with such Performance Awards.
|
6.
|
Shareholder Approval; Amendment of US Sub-Plan and Individual Awards.
|
6.1
|
Shareholder Approval. The Plan and this US Sub-Plan shall be submitted to the Company's shareholders for approval within twelve (12) months after the Effective Date. If the shareholders fail to
approve this US Sub-Plan within such period, then any grants, or exercises that have already occurred under this US Sub-Plan will be rescinded and no additional grants or exercises of Awards granted hereunder will thereafter be made under
this US Sub-Plan.
|
6.2
|
Amendment.
|
(a)
|
This US Sub-Plan may be amended or terminated in accordance with Section 5.1 of the Plan; provided, however, that no amendment may be made without the approval of the shareholders of the Company entitled to vote
in accordance with applicable law if such amendment would: (i) increase the aggregate number of Shares that may be issued under this US Sub-Plan as Incentive Stock Options; (ii) change the classification of individuals eligible to receive
Incentive Stock Options under this US Sub-Plan; (iii) decrease the minimum exercise price of any Award below the amounts specified herein; (iv) extend the term of the Plan under Section 9 of the Plan; or (v) require shareholder
approval in order for the US Sub-Plan to continue to comply with Section 422 of the Code to the extent applicable to Incentive Stock Options or otherwise require shareholder approval to comply with applicable law.
|
(b)
|
Notwithstanding any other provisions of the Plan or this US Sub-Plan to the contrary, (i) the Board may amend this US Sub-Plan or any Award granted hereunder without the consent of the Participant if the Board determines that such
amendment is required or advisable for the Company, the Plan, this US Sub-Plan or any Award to satisfy, comply with or meet the requirements of any law, regulation, rule or accounting standard, and (ii) neither the Company nor the Board
shall take any action pursuant to Section 5 of this US Sub-Plan or Section 5 of the Plan, or otherwise, that would cause an Award that is otherwise exempt under Section 409A of the Code to become subject to Section 409A of
the Code, or that would cause an Award that is subject to Section 409A of the Code to fail to satisfy the requirements of Section 409A of the Code.
|
7.
|
Limits on Transfer.
|
8.
|
Deferred Compensation.
|
9.
|
Section 25102(o) of the California Corporations Code.
|
10.
|
Rule 16b-3.
|
Tel-Aviv, Israel
|
/s/ Kesselman & Kesselman
|
July 30, 2020
|
Certified Public Accountants (Isr.)
|
A member firm of PricewaterhouseCoopers International Limited
|
'0 0V]P>7)I9VAT($AE=VQE='0@
M4&%C:V%R9"P@,C P- !S9C,R !#$0 7?___S)@ !Y0 /V/___[
MH?___:( /; # =?_; $, 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$!
M 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! ?_; $,! 0$!
M 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$!
M 0$! 0$! 0$! 0$! 0$! ?_ !$( ' !P@,!(@ "$0$#$0'_Q ? !!0$!
M 0$! 0 0(#! 4&!P@)"@O_Q "U$ " 0,# @0#!04$! 7T!
M @, !!$%$B$Q008346$'(G$4,H&1H0@C0K'!%5+1\"0S8G*""0H6%Q@9&B4F
M)R@I*C0U-C %=1T35/B-9V4ADT^U^($_C+0/"TVK6-Q>:!
MH_COPK<:;KNH_1/_ =4?\%$O%7[*W[)G@O]ECX4:Q=Z%\2/VQ7\6Z5XN\2:
M3??9M3\,_ KP;'HL/CC3('M+VWU#3[WXGZEXDTGP?#=O;W6GZAX-M/B5I3B&
M^EL[B#_/%_9T_9\^*W[5?QO^&G[/'P1\,W'B[XH_%?Q/9^%O"NC0[T@6>=9;
MG4-8U>[2*9=*\-^&](MM0\1>*- ]_
M:8^ JZ/\,/VA+-WMH]1US4H[&8>"OBVUG!)E++XJZ%IEU?W]PMIIMC_PG^B?
M$#2M(T^#2-(LGE4'NOFOZ_KJ!^W=%%%: ?X6]?[''_!([_E%S_P3X_[,]_9^
M_P#5:>':_P K#_AUY_P4P_Z1V_MT_P#B)'Q^_P#G?U_JX_\ !+SPAXL^'_\
MP3B_89\#^//"_B+P3XU\(_LJ_ [P[XK\'^+M$U+PWXI\,>(-)^'N@V6JZ%XA
M\/ZS;66K:+K&F7D,UIJ&F:E:6U[97,4D%S!%*C(,H)W>G3_(#[NHHHK4 HHH
MH _S2_\ @[N_Y2C>!/\ LSWX4?\ JR_C;7TW_P &:?\ R +NXT?X>:+K%H$%O?Z+XQ^(LFK>(K4&1GM-9^#]I,T:[
MX6;^.G_@F)^QY>_MY?MV_LX_LPK'<_\ "-^/?'MK?_$F]M9I+2;3/A-X-M;G
MQE\3KNVOTM[J.PU6;P7H6LZ;X=GN8OL\WB>_T6R=@UVF?2/^"Q_[9K?MX?\
M!1;]I#X[:5J[:O\ #F'Q?)\-/@P\5Y>W6E+\(_AB&\)>$=6T6&_6.?3;/QT;
M#4/B9?:8(HDM=?\ &VLD(&D8G^IG_@ST_8K?1?!W[0W[?'B[1VAO?&EU'^SK
M\&;NZCO;><^%=!NM+\7?%W7;..:-;#4-*U[Q1'X"\-Z;JMJ\L]GJO@+QEI3-
M$)+F.3'XI>5_P7^8']M-C8V6EV-GIFFVEM8:=IUK;V-A86<$=M9V5E:0I;VM
MI:VT*I#;VUM!''#!!$BQQ1(L:*JJ /YP_P#@L-_P<(?\.G?VF/ W[.O_ R-
M_P +\_X3/X%>&?C5_P )A_POS_A5G]F_\)%X_P#B=X&_X1K_ (1__A2WQ&^V
M?8_^%<_VI_;/]N6OVC^V?L7]E0?V=]KOOZ1J_A]_X.6O^"4W_!0#]N?]NOX3
M_%K]E3]G76/BY\//#O[)?@7X=:SXDT_QM\+_ W#9>,])^,/QX\2ZCH;6/C7
MQOX:U666VT/Q=X=OVN[>QET^1-22&*[DN8+NA[.V__! _9W_@B]_P6X_X
M>]:U^T+I'_#,G_#/7_"A]+^&>I?:/^%S_P#"V?\ A*O^%BW?CFU\GRO^%3_#
M3^P_['_X0O?YGFZQ_:']I;?+L?L>ZZ_*/4HH+O\ DR_XG'B/6/\ F):[K^NZE_T]:IK&LZQJEU_VWO=1
MU+4;V?\ Z;75W=3?\M)9.?\ 6T_X(<_\$[I?^";O[!/@#X5^+;2*'XX?$J]E
M^,WQ]D5X9SIWQ#\7:9I=M;^"(;B&:[A>U^'/A32_#_@ZY-E?76DZCXDTSQ)X
METMHX/$+1C*/O2N_7_)?UO8#^1S_ (@Z/V_/^CD?V/O_ >_&G_YS=,/A#\"?BE
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MY
'0 0V]P>7)I9VAT($AE=VQE='0@
M4&%C:V%R9"P@,C P- !S9C,R !#$0 7?___S)@ !Y0 /V/___[
MH?___:( /; # =?_; $, 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$!
M 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! ?_; $,! 0$!
M 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$!
M 0$! 0$! 0$! 0$! 0$! ?_ !$( '0 F ,!(@ "$0$#$0'_Q ? !!0$!
M 0$! 0 0(#! 4&!P@)"@O_Q "U$ " 0,# @0#!04$! 7T!
M @, !!$%$B$Q008346$'(G$4,H&1H0@C0K'!%5+1\"0S8G*""0H6%Q@9&B4F
M)R@I*C0U-C
'0 0V]P>7)I9VAT($AE=VQE='0@
M4&%C:V%R9"P@,C P- !S9C,R !#$0 7?___S)@ !Y0 /V/___[
MH?___:( /; # =?_; $, 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$!
M 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! ?_; $,! 0$!
M 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$! 0$!
M 0$! 0$! 0$! 0$! 0$! ?_ !$(!X %H ,!(@ "$0$#$0'_Q ? !!0$!
M 0$! 0 0(#! 4&!P@)"@O_Q "U$ " 0,# @0#!04$! 7T!
M @, !!$%$B$Q008346$'(G$4,H&1H0@C0K'!%5+1\"0S8G*""0H6%Q@9&B4F
M)R@I*C0U-C6!*\ XR.F*S)/]'EDC8FXA#\D'",O0,#S@GN,<<
5(I(XY8S)9C,EO.5'FJXQA0_)
M7;QP",@CH0*S6GNH5!F>'48V?>/-X)4X^3;AP H'*YYS]#1
2)R?,F/4!@,@
M XZDDGN.E84-RHN'A_=AU+@!QN,K'&>2,=>O/.>A'%-\\D7$DP"7"G"2;B78
M$??9L9"+@97'_P!8 TIY)!B7 BD=L2*#NB*'.T'H , YX/O67,TL<=TT&%ML
M,LK*QVR2D?+@8&U3R,\].!FK$XDBM/LL
.C#GL1R32BUMF!$
%0\3 R*V&6495 >=J]21Q\V<#TJ"<.5$DH5)
M3_RS3'(('W2!R.V,8' YSP 2F:)
4Q^1=Q7+\<9S@D5OZ=O2)X[:X$RP L\S#;)'*W#2JN3D#:,
M?,IX_$ &3J'AMYXRUDH9E?
QS^V[^S#_ -E>\,#\! '3[.YO9%46-YEF2VBD=5S@%BH IQW7JOS)E\+_ *ZG^>[^R#_R<]\"/^RE
M>%__ $OCK_