Company: GAUZ
Filing Date: 2025-03-11
Form Type: 20-F
Source: 0001213900-25-022437
Chunk: 58

Company: Gauzy Ltd.
Filing Date: 2025-03-11
Form: 20-F
Item: Item 5
Chunk 58
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. A
company that receives a royalty-bearing grant from the IIA is typically required to pay royalties to the IIA on income generated from
products incorporating IIA-funded know-how (including income derived from services associated with such products and from IIA-funded
know-how), up to 100% of the U. S. dollar-linked royalty-bearing grant amount plus interest.

The obligation to pay royalties
is contingent on actual income generated from such products and services. In the absence of such income, no payment of royalties is required.

In general, the Innovation
Law requires that the products developed as part of the programs under which the grants were given be manufactured in Israel, unless
prior approval is attained from the IIA (such approval is not required for the transfer of a portion of the manufacturing capacity which
does not exceed, in the aggregate, 10% of the manufacturing (in which case only notification is required, however, the IIA has a right
to deny such transfer within 30 days following the receipt of such notice)). In general, the transfer of manufacturing capacity outside
of Israel may be subject to an increase in the amount of royalties payable (depending on the manufacturing volume to be performed outside
Israel) and to an increase in the rate of royalties.

The Innovation Law also restricts
the ability to transfer IIA-funded know outside of Israel. A transfer for the purpose of the Innovation Law is generally interpreted
very broadly and includes, among other things, any sale of the IIA-funded know-how, any license to develop the IIA-funded know-how or
the products resulting from such IIA-funded know-how or any other transaction, which, in essence, constitutes a transfer
of IIA-funded know-how. This limitation does not restrict the export of products that incorporate IIA-funded know-how.
A transfer of IIA-funded know-how outside of Israel requires prior approval and may be subject to payment of a redemption fee to the
IIA, calculated in accordance with a formula provided under the Innovation Law. The redemption fee is subject to a cap of six times the
total amount of the IIA grants, plus interest.

Subject to prior approval
of the IIA, we may transfer the IIA-funded know-how to another Israeli company. If the IIA-funded know-how is
transferred to another Israeli entity, the transfer would still require IIA approval but will not be subject to the payment of the redemption
fee (however, there may be an obligation to pay royalties to the IIA from the