Document:

Document

Exhibit 4.5
DESCRIPTION OF SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF
THE SECURITIES EXCHANGE ACT OF 1934
 
The following description sets forth certain material terms and provisions of our securities that are registered under Section 12 of the Securities Exchange Act of 1934, as amended. This description also summarizes relevant provisions of Delaware law. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of Delaware law and our certificate of incorporation and our bylaws. 

In addition to the summary of our capital stock that follows, we encourage you to review our Amended and Restated Certificate of Incorporation, as amended, or the Restated Certificate of Incorporation, and our By-laws, copies of which are incorporated by reference as exhibits to this Annual Report on Form 10-K.
General
     We have two classes of capital stock authorized: 
												
	 		 	51,500,000 shares of Common stock, $1.00 par value, of which 27,080,403 shares were issued and 26,874,062 shares were outstanding at December 31, 2020; and
	 			
	 		 	1,000,000 shares of preferred stock, $0.001 par value, none of which were issued and outstanding at December 31, 2020.

Common Stock
Preemptive Rights
     The holders of the common stock do not have preemptive or other rights to subscribe for additional shares of our capital stock or any security convertible into such shares. 
Dividend Rights and Restrictions
The holders of common stock are entitled to receive, when, as, and if declared by the Board of Directors, dividends out of funds legally available, payable in cash, stock, or otherwise.
Liquidation Rights
     In the event of liquidation, dissolution, or voluntary or involuntary winding up of Stewart, the holders of the common stock are entitled to share ratably in the distribution of all assets of Stewart remaining after the payment of debts and expenses. 
Voting Rights
     Common stock holders have the exclusive right to vote for the election of directors and for all other purposes. Each holder of common stock is entitled to one vote for each share of stock on all matters voted on by our stockholders. No holder of common stock has the right of cumulative voting at any election of directors.
Preferred Stock
     The Board of Directors is authorized to establish, from the authorized shares of preferred stock, one or more classes or series of shares, to designate each such class and series, and to fix the rights and preferences of each such class and series. Each such class or series of preferred stock shall have such voting powers (full or limited or no voting powers), such preferences and relative, participating, optional or other special rights, and such qualifications, limitations, or restrictions as shall be stated and expressed in the resolution or resolutions providing for the issue of such class or series of preferred stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof. The preferred stock could be used, under certain circumstances, as a method of discouraging, delaying or preventing a change of control of Stewart (by means of a merger, tender offer, proxy contest or otherwise). The issuance of preferred stock to persons friendly to the Board of Directors could also make it more difficult to remove incumbent directors or management from office even if such a change would be favorable to our stockholders generally. 

Anti-Takeover Provisions
     Certain provisions in our Restated Certificate of Incorporation and By-laws may make it less likely that our management would be changed or that someone would acquire voting control of Stewart without the consent of our Board of Directors. These provisions may delay, deter or prevent tender offers or takeover attempts that stockholders may believe are in their best interests, including tender offers or other takeover proposals that might allow stockholders to receive premiums over the market price of their common stock.
Issuance of Preferred Stock
     As discussed above, the Board of Directors could use, under certain circumstances, the preferred stock as a method of discouraging, delaying or preventing a change of control of Stewart (by means of a merger, tender offer, proxy contest or otherwise). 
Advance Notice Requirements for Director Nominations
     Our stockholders may nominate candidates for our Board of Directors; however, a stockholder must follow the advance notice procedures described in our By-laws. In general, a stockholder must submit a written notice of the nomination to our Corporate Secretary not less than ninety (90) days nor more than one-hundred and twenty (120) days prior to the anniversary of the immediately preceding annual meeting. 
Directors’ Ability to Amend By-laws
     Our Board of Directors may adopt, amend or repeal our By-laws, subject to limitations under Delaware law. 
Additional Authorized Shares of Common Stock
     Additional shares of authorized common stock available for issuance under our Restated Certificate of Incorporation could be issued at such times, under such circumstances and with such terms and conditions as to impede a change in control of Stewart. 
Special Meeting of Stockholders
     The By-laws provide that special meetings of stockholders may be called only by our Chairman of the Board, Chief Executive Officer, Board of Directors, or at the request in writing of stockholders owning twenty-five percent (25%) or more of the entire capital stock of Stewart issued and outstanding and entitled to vote. Such provisions, together with the other anti-takeover provisions described in this section, also could have the effect of discouraging a third party from initiating a proxy contest, making a tender or exchange offer or otherwise attempting to obtain control of Stewart. 
Delaware Anti-Takeover Law
     Under Section 203 of the Delaware General Corporation Law, certain “business combinations” between a Delaware corporation whose stock generally is publicly traded or held of record by more than 2,000 stockholders and an “interested stockholder” are prohibited for a three-year period following the date that such stockholder became an interested stockholder, unless (1) the corporation has elected in its certificate of incorporation or by-laws not to be governed by the Delaware anti-takeover law (Stewart has not made such an election), (2) either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder was approved by the board of directors of the corporation before the stockholder became an interested stockholder, (3) upon consummation of the transaction that made it an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the commencement of the transaction (excluding voting stock owned by directors who are also officers or held in employee stock plans in which the employees do not have a right to determine confidentially whether to tender or vote stock held by the plan), or (4) the business combination was approved by the board of directors of the corporation and ratified by 66 2/3% of the voting stock which the interested stockholder did not own. 
     The three-year prohibition does not apply to certain business combinations proposed by an interested stockholder following the announcement or notification of certain extraordinary transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority of the corporation’s directors. 

     The term “business combination” is defined generally to include mergers or consolidations between a Delaware corporation and an interested stockholder, transactions with an interested stockholder involving the assets or stock of the corporations or its majority-owned subsidiaries and transactions which increase an interested stockholder’s percentage ownership of stock. The term “interested stockholder” is defined generally as a stockholder who becomes the beneficial owner of 15% or more of a Delaware corporation’s voting stock. Section 203 could have the effect of delaying, deferring or preventing a change in control of Stewart. 
Transfer Agent
     The Transfer Agent and Registrar for the common stock is Computershare, and its address is P.O. Box 505000, Louisville, KY 40233-5000.Exhibit 4.6

       

      COMPENSATION POLICY

      

      NOVA MEASURING INSTRUMENTS LTD.

       

      Compensation Policy for Executive Officers and Directors

       

      
        (As Amended on June 25, 2020)

      

    

    
      
        

    

    
    

      Table of Contents

       

      
        	
                 

              	
                
                  Page

                

              
	 	 
	
                A. Overview and Objectives 

                

              	
                 3

              
	
                 

              	
                 

              
	
                B. Base Salary and Benefits 

                

              	 4
	 	 
	
                C. Cash Bonuses 

                

              	 6
	 	 
	
                D. Equity Based Compensation 

                

              	 8
	 	 
	
                E. Retirement and Termination of Service Arrangements 

                

              	 9
	 	 
	F. Exculpation, Indemnification and Insurance 	 10
	 	 
	G. Arrangements upon Change of Control 

              	 11
	 	 
	H. Board of Directors Compensation 

              	 11
	 	 
	I. Miscellaneous 

                	 12

      

    

    
      2

      
        

    

    

      A. Overview and Objectives

       

      	1.	
              Introduction

            

       

      This document sets forth the Compensation Policy for Executive Officers and Directors (this “Compensation Policy” or “Policy”) of Nova Measuring Instruments Ltd. (“Nova” or the “Company”), in accordance
        with the requirements of the Companies Law, 5759-1999 (the “Companies Law”).

       

      Compensation is a key component of Nova’s overall human capital strategy to attract, retain, reward, and motivate highly skilled individuals that will enhance Nova’s value and
        otherwise assist Nova to reach its business and financial long-term goals. Accordingly, the structure of this Policy is established to tie the compensation of each officer to Nova’s goals and performance.

       

      For purposes of this Policy, “Executive Officers” shall mean “Office Holders” as such term is defined in Section 1 of the Companies Law, excluding, unless otherwise expressly
        indicated herein, Nova’s directors.

       

      This policy is subject to applicable law and is not intended, and should not be interpreted as limiting or derogating from, provisions of applicable law to the extent not
        permitted.

       

      This Policy shall apply to compensation agreements and arrangements which will be approved after the date on which this Policy is adopted and shall serve as Nova’s Compensation
        Policy for three (3) years, commencing as of its adoption.

       

      The Compensation Committee and the Board of Directors of Nova (the “Compensation Committee” and the “Board”,

        respectively) shall review and reassess the adequacy of this Policy from time to time, as required by the Companies Law.

       

      	2.	
              Objectives

            

       

      Nova’s objectives and goals in setting this Policy are to attract, motivate and retain highly experienced leaders who will contribute to Nova’s success and enhance shareholder
        value, while demonstrating professionalism in a highly achievement-oriented culture that is based on merit and rewards excellent performance in the long term, and embedding Nova’s core values as part of a motivated behavior. To that end, this
        Policy is designed, among others:

       

      	

            	2.1.	
              To closely align the interests of the Executive Officers with those of Nova’s shareholders in order to enhance shareholder value;

            

       

      	

            	2.2.	
              To align a significant portion of the Executive Officers’ compensation with Nova’s short and long-term goals and performance;

            

       

      	

            	2.3.	
              To provide the Executive Officers with a structured compensation package, including competitive salaries, performance-motivating cash and equity incentive programs and benefits, and to be able to present to each Executive Officer an
                opportunity to advance in a growing organization;

            

       

      	

            	2.4.	
              To strengthen the retention and the motivation of Executive Officers in the long term;

            

       

      	

            	2.5.	
              To provide appropriate awards in order to incentivize superior individual excellency and corporate performance; and

            

       

      	

            	2.6.	
              To maintain consistency in the way Executive Officers are compensated.

            

       

      
        3

        
          

      

      	3.	
              Compensation Instruments

            

       

      Compensation instruments under this Policy may include the following:

       

      	

            	3.1.	
              Base salary;

            

       

      	

            	3.2.	
              Benefits;

            

       

      	

            	3.3.	
              Cash bonuses;

            

       

      	

            	3.4.	
              Equity based compensation; and

            

       

      	

            	3.5.	
              Retirement and termination terms.

            

       

      	4.	
              Overall Compensation - Ratio Between Fixed and Variable Compensation

            

       

      	

            	4.1.	
              This Policy aims to balance the mix of “Fixed Compensation” (comprised of base salary and benefits) and “Variable Compensation” (comprised of cash bonuses and equity-based compensation) in order to, among other things, appropriately
                incentivize Executive Officers to meet Nova’s short- and long-term goals while taking into consideration the Company’s need to manage a variety of business risks.

            

       

      	

            	4.2.	
              The total annual bonus and equity-based compensation of each Executive Officer shall not exceed 90% of the total compensation package of such Executive Officer on an annual basis.

            

       

      	5.	
              Inter-Company Compensation Ratio

            

       

      	

            	5.1.	
              In the process of drafting and updating this Policy, Nova’s Board and Compensation Committee have examined the ratio between employer cost associated with the engagement of the Executive Officers, including directors, and the average and
                median employer cost associated with the engagement of Nova’s other employees (including contractor employees as defined in the Companies Law) (the “Ratio”).

            

       

      	

            	5.2.	
              The possible ramifications of the Ratio on the daily working environment in Nova were examined and will continue to be examined by Nova from time to time in order to ensure that levels of executive compensation, as compared to the
                overall workforce will not have a negative impact on work relations in Nova.

            

       

      B. Base Salary and Benefits

       

      	6.	
              Base Salary

            

       

      	

            	6.1.	
              A base salary provides stable compensation to Executive Officers and allows Nova to attract and retain competent executive talent and maintain a stable management team. The base salary varies among Executive Officers, and is individually
                determined according to the educational background, prior vocational experience, qualifications, company’s role, business responsibilities and the past performance of each Executive Officer.

            

       

      	

            	6.2.	
              Since a competitive base salary is essential to Nova’s ability to attract and retain highly skilled professionals, Nova will seek to establish a base salary that is competitive with base salaries paid to Executive Officers in a peer
                group of other companies operating in technology sectors which are similar in their characteristics to Nova’s, as much as possible, while considering, among others, such companies’ size and characteristics including their revenues,
                profitability rate, number of employees and operating arena (in Israel or globally), the list of which shall be reviewed and approved by the Compensation Committee at least every two years. To that end, Nova shall utilize as a reference,
                comparative market data and practices, which will include a compensation survey that compares and analyses the level of the overall compensation package offered to an Executive Officer of the Company with compensation packages in similar
                positions to that of the relevant officer) in such companies. Such compensation survey may be conducted internally or through an external independent consultant. Information on such compensation survey shall be included in the proxy
                statement published in connection with the annual general meeting of Nova’s shareholders.

            

       

      
        4

        
          

      

      	

            	6.3.	
              The Compensation Committee and the Board may periodically consider and approve base salary adjustments for Executive Officers. The main considerations for salary adjustment are similar to those used in initially determining the base
                salary, but may also include change of role or responsibilities, recognition for professional achievements, regulatory or contractual requirements, budgetary constraints or market trends. The Compensation Committee and the Board will also
                consider the previous and existing compensation arrangements of the Executive Officer whose base salary is being considered for adjustment.

            

       

      	7.	
              Benefits

            

       

      	

            	7.1.	
              The following benefits may be granted to the Executive Officers in order, among other things, to comply with legal requirements:

            

       

      	

            	7.1.1.	
              Vacation days in accordance with market practice;

            

       

      	

            	7.1.2.	
              Sick days in accordance with market practice;

            

       

      	

            	7.1.3.	
              Convalescence pay according to applicable law;

            

       

      	

            	7.1.4.	
              Monthly remuneration for a study fund, as allowed by applicable law and with reference to Nova’s practice and the practice in peer group companies;

            

       

      	

            	7.1.5.	
              Nova shall contribute on behalf of the Executive Officer to an insurance policy or a pension fund, as allowed by applicable law and with reference to Nova’s policies and procedures and the practice in peer group companies; and

            

       

      	

            	7.1.6.	
              Nova shall contribute on behalf of the Executive Officer towards work disability insurance, as allowed by applicable law and with reference to Nova’s policies and procedures and to the practice in peer group companies.

            

       

      	

            	7.2.	
              Non-Israeli Executive Officers may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which they are employed. Such customary benefits shall be determined based on the methods described
                in Section 6.2 of this Policy (with the necessary changes).

            

       

      	

            	7.3.	
              In the event of relocation of an Executive Officer to another geography, such Executive Officer may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which he or she is employed or
                additional payments to reflect adjustments in cost of living. Such benefits shall include reimbursement for out of pocket one-time payments and other ongoing expenses, such as housing allowance, car allowance, and home leave visit, etc.

            

       

      	

            	7.4.	
              Nova may offer additional benefits to its Executive Officers, which will be comparable to customary market practices, such as, but not limited to: cellular and land line phone benefits, company car and travel
                benefits, reimbursement of business travel including a daily stipend when traveling and other business related expenses, insurances, other benefits (such as newspaper subscriptions, academic and professional studies), etc., provided,
                however, that such additional benefits shall be determined in accordance with Nova’s policies and procedures.

            

       

      
        5

        
          

      

      C. Cash Bonuses

       

      	8.	
              Annual Cash Bonuses - The Objective

            

       

      	

            	8.1.	
              Compensation in the form of an annual cash bonus is an important element in aligning the Executive Officers’ compensation with Nova’s objectives and business goals. Therefore, a pay-for-performance element, as payout eligibility and
                levels are determined based on actual financial and operational results, as well as individual performance.

            

       

      	

            	8.2.	
              An annual cash bonus may be awarded to Executive Officers upon the attainment of pre-set periodical objectives and individual targets determined by the Compensation Committee (and, if required by law, by the Board) at the beginning of
                each calendar year, or upon engagement, in case of newly hired Executive Officers, taking into account Nova’s short and long-term goals, as well as its compliance and risk management policies. The Compensation Committee and the Board shall
                also determine applicable minimum thresholds (based on annual budget revenue and/or positive non-GAAP operating income) that must be met for entitlement to the annual cash bonus (all or any portion thereof) and the formula for calculating
                any annual cash bonus payout, with respect to each calendar year, for each Executive Officer. In special circumstances, as determined by the Compensation Committee and the Board (e.g., regulatory changes, significant changes in Nova’s
                business environment, a significant organizational change and a significant merger and acquisition events), the Compensation Committee and the Board may modify the objectives and/or their relative weights during the calendar year.

            

       

      	

            	8.3.	
              The total annual cash bonuses awarded to all of Nova’s Executive Officers shall not exceed 10% of Nova’s non-GAAP operating income.

            

       

      	

            	8.4.	
              In the event the employment of an Executive Officer is terminated prior to the end of a fiscal year, the Company may pay such Executive Officer a full annual cash bonus or a prorated one. Such bonus will become due on the same scheduled
                date for annual cash bonus payments by the Company.

            

       

      	

            	8.5.	
              The actual annual cash bonus to be awarded to Executive Officers shall be approved by the Compensation Committee and the Board.

            

       

      	9.	
              Annual Cash Bonuses - The Formula

            

       

      Executive Officers other than the CEO

       

      	

            	9.1.	
              The annual cash bonus of Nova’s Executive Officers, other than the chief executive officer (the “CEO”), will be based on performance objectives and a discretionary evaluation of the Executive
                Officer’s overall performance by the CEO and subject to minimum thresholds. The performance objectives will be approved by Nova’s CEO at the commencement of each calendar year (or upon engagement, in case of newly hired Executive Officers
                or in special circumstances as indicated in Section 8.2 above) on the basis of, but not limited to, company, division and individual objectives. The performance measurable objectives, which include the objectives and the weight to be
                assigned to each achievement in the overall evaluation, will be based on:

            

       

      	

            	9.1.1.	
              Overall company performance measures, which are based on actual financial and operational results, such as revenues, sales, operating income and cash flow. At least 30% of the annual cash bonus of Nova’s Executive Officers will be based
                on overall company performance measures; and

            

       

      	

            	9.1.2.	
              Divisional objectives which may include operational objectives, such as market share, initiation of new markets and products and operational efficiency, customer focus objectives, such as system availability requirements and customer
                satisfaction, project milestones objectives, such as product implementation in production, product acceptance and new product penetration, and investment in human capital objectives, such as employee satisfaction, employee retention and
                employee training and leadership programs.

            

       

      
        6

        
          

      

      	

            	9.2.	
              Information on the CEO’s performance measurable objectives shall be included in the proxy statement published in connection with the annual general meeting of Nova’s shareholders.

            

       

      	

            	9.3.	
              The target annual cash bonus that an Executive Officer, other than the CEO, will be entitled to receive for any given calendar year, will not exceed 100% of such Executive Officer’s annual base salary.

            

       

      	

            	9.4.	
              The maximum annual cash bonus including for overachievement performance that an Executive Officer, other than the CEO, will be entitled to receive for any given calendar year, will not exceed 150% of such Executive Officer’s annual base
                salary.

            

       

      CEO

       

      	

            	9.5.	
              The annual cash bonus of Nova’s CEO will be mainly based on performance measurable objectives and subject to minimum thresholds as provided in Section 8.2 above. Such performance measurable objectives will be determined annually by
                Nova’s Compensation Committee (and, if required by law, by Nova’s Board) at the commencement of each calendar year (or upon engagement, in case of newly hired CEO or in special circumstances as indicated in Section 8.2 above) on the basis
                of, but not limited to, company and personal objectives. These performance measurable objectives, which include the objectives and the weight to be assigned to each achievement in the overall evaluation, will be categorized as described
                below:

            

       

      	

            	9.5.1.	
              Between 40%-60% will be based on overall company performance measures, which are based on actual financial and operational results, such as revenues, sales, operating income and cash flow; and

            

       

      	

            	9.5.2.	
              Between 20%-50% will be based on goals set forth in the Company’s annual operating plan and long-term plan, such as expansion of the Company’s organic growth engines and achieving strategic technology objectives.

            

       

      	

            	9.6.	
              The less significant part of the annual cash bonus granted to Nova’s CEO, and in any event not more than 30% of the annual cash bonus, may be based on a discretionary evaluation of the CEO’s overall performance by the Compensation
                Committee and the Board based on quantitative and qualitative criteria.

            

       

      	

            	9.7.	
              The target annual cash bonus that the CEO will be entitled to receive for any given calendar year, will not exceed 150% of his or her annual base salary.

            

       

      	

            	9.8.	
              The maximum annual cash bonus including for overachievement performance that the CEO will be entitled to receive for any given calendar year, will not exceed 200% of his or her annual base salary.

            

       

      	10.	
              Other Bonuses

            

       

      	

            	10.1.	
              Special Bonus. Nova may grant its Executive Officers a special bonus as an award for special achievements (such as in connection with mergers and acquisitions, offerings, achieving target budget or business plan under exceptional
                circumstances or special recognition in case of retirement) at the CEO’s discretion (and in the CEO’s case, at the Board’s discretion), subject to any additional approval as may be required by the Companies Law (the “Special Bonus”). The Special Bonus will not exceed 30% of the Executive Officer’s total compensation package on an annual basis.

            

       

      
        7

        
          

      

      	

            	10.2.	
              Signing Bonus. Nova may grant a newly recruited Executive Officer a signing bonus at the CEO’s discretion (and in the CEO’s case, at the Board’s discretion), subject to any additional approval as may be required by the Companies
                Law (the “Signing Bonus”). The Signing Bonus will not exceed three (3) monthly entry base salaries of the Executive Officer.

            

       

      	

            	10.3.	
              Relocation Bonus. Nova may grant its Executive Officers a special bonus in the event of relocation of an Executive Officer to another geography (the “Relocation Bonus”). The Relocation bonus
                will include customary benefits associated with such relocation and its monetary value will not exceed 30% of the Executive Officer’s annual base salary.

            

       

      	11.	
              Compensation Recovery (“Clawback”)

            

       

      	

            	11.1.	
              In the event of an accounting restatement, Nova shall be entitled to recover from its Executive Officers the bonus compensation or performance-based equity compensation in the amount in which such compensation exceeded what would have
                been paid under the financial statements, as restated, provided that a claim is made by Nova prior to the second anniversary of fiscal year end of the restated financial statements.

            

       

      	

            	11.2.	
              Notwithstanding the aforesaid, the compensation recovery will not be triggered in the following events:

            

       

      	

            	11.2.1.	
              The financial restatement is required due to changes in the applicable financial reporting standards; or

            

       

      	

            	11.2.2.	
              The Compensation Committee has determined that Clawback proceedings in the specific case would be impossible, impractical or not commercially or legally efficient.

            

       

      	

            	11.3.	
              Nothing in this Section 11 derogates from any other “Clawback” or similar provisions regarding disgorging of profits imposed on Executive Officers by virtue of applicable securities laws.

            

       

      D. Equity Based Compensation

       

      	12.	
              The Objective

            

       

      	

            	12.1.	
              The equity-based compensation for Nova’s Executive Officers is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the
                alignment between the Executive Officers’ interests with the long-term interests of Nova and its shareholders, and to strengthen the retention and the motivation of Executive Officers in the long term. In addition, since equity-based awards
                are structured to vest over several years, their incentive value to recipients is aligned with longer-term strategic plans.

            

       

      	

            	12.2.	
              The equity-based compensation offered by Nova is intended to be in a form of share options and/or other equity based awards, such as RSUs, in accordance with the Company’s equity incentive plan in place as may be updated from time to
                time.

            

       

      	

            	12.3.	
              Equity-based compensation awarded by the Company to employees, Executive Officers or directors shall not be, in the aggregate, in excess of 10% of the Company’s share capital on a fully diluted basis at the date of the grant.

            

       

      	

            	12.4.	
              All equity-based incentives granted to Executive Officers shall be subject to vesting periods in order to promote long-term retention of the awarded Executive Officers. Unless determined otherwise in a specific award agreement approved
                by the Compensation Committee and the Board, grants to Executive Officers other than directors shall vest gradually over a period of between three (3) to five (5) years or based on performance. The exercise price of options shall be
                determined in accordance with Nova’s Equity-Based Compensation Policy, the main terms of which shall be disclosed in the annual report of Nova.

            

       

      
        8

        
          

      

      	

            	12.5.	
              All other terms of the equity awards shall be in accordance with Nova’s incentive plans and other related practices and policies. Accordingly, the Board may, following approval by the Compensation Committee, extend the period of time for
                which an award is to remain exercisable and make provisions with respect to the acceleration of the vesting period of any Executive Officer’s awards, including, without limitation, in connection with a corporate transaction involving a
                change of control, subject to any additional approval as may be required by the Companies Law.

            

       

      	13.	
              General Guidelines for the Grant of Awards

            

       

      	

            	13.1.	
              The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal
                responsibilities of the Executive Officer.

            

       

      	

            	13.2.	
              In determining the equity-based compensation granted to each Executive Officer, the Compensation Committee and Board shall consider the factors specified in Section 13.1 above, and in any event the total fair market value of an
                annual equity-based compensation at the time of grant shall not exceed: (i) with respect to the CEO - 500% of the CEO’s annual base salary; and (ii) with respect to each of the other Executive Officers - 300% of such Executive Officer’s
                annual base salary.

            

       

      	

            	13.3.	
              The fair market value of the equity-based compensation for the Executive Officers will be determined according to acceptable valuation practices at the time of grant.

            

       

      E. Retirement and Termination of Service Arrangements

       

      	14.	
              Advanced Notice Period

            

       

      Nova may provide an Executive Officer, other than the CEO, according to his/her seniority in the Company, his/her contribution to the Company’s goals and achievements and the
        circumstances of retirement and the CEO a prior notice of termination of up to three (3) months, during which the Executive Officer may be entitled to all of the compensation elements, and to the continuation of vesting of his/her options.

       

      	15.	
              Adjustment Period

            

       

      Nova may provide an additional adjustment period of up to nine (9) months to an Executive Officer, other than the CEO, according to his/her seniority in the Company, his/her
        contribution to the Company’s goals and achievements and the circumstances of retirement and to the CEO, during which the Executive Officer may be entitled to all of the compensation elements, and to the continuation of vesting of his/her options.

       

      	16.	
              Additional Retirement and Termination Benefits

            

       

      Nova may provide additional retirement and terminations benefits and payments as may be required by applicable law (e.g., mandatory severance pay under Israeli labor laws), or
        which will be comparable to customary market practices.

       

      	17.	
              Non-Compete Grant

            

       

      Upon termination of employment and subject to applicable law, Nova may grant to its Executive Officers a non-compete grant as an incentive to refrain from competing with Nova for
        a defined period of time. The terms and conditions of the non-compete grant shall be decided by the Board and shall not exceed such Executive Officer’s monthly base salary multiplied by twelve (12).

       

      
        9

        
          

      

      	18.	
              Limitation Retirement and Termination of Service Arrangements

            

       

      The total non-statutory payments under Section 14-17 above shall not exceed the Executive Officer’s monthly base salary multiplied by twenty-four (24).

       

      F. Exculpation, Indemnification and Insurance

       

      	19.	
              Exculpation

            

       

      Nova may exempt its directors and Executive Officers in advance for all or any of his/her liability for damage in consequence of a breach of the duty of care vis-a-vis Nova, to
        the fullest extent permitted by applicable law.

       

      	20.	
              Insurance and Indemnification

            

       

      	

            	20.1.	
              Nova may indemnify its directors and Executive Officers to the fullest extent permitted by applicable law, for any liability and expense that may be imposed on the director or the Executive Officer, as provided in the indemnity agreement
                between such individuals and Nova, all subject to applicable law and the Company’s articles of association.

            

       

      	

            	20.2.	
              Nova will provide directors’ and officers’ liability insurance (the “Insurance Policy”) for its directors and Executive Officers as follows:

            

       

      	

            	20.2.1.	
              The annual premium to be paid by the Nova shall not exceed 9% of the aggregate coverage of the Insurance Policy;

            

       

      	

            	20.2.2.	
              The limit of liability of the insurer shall not exceed the greater of $50 million or 30% of the Company’s shareholders equity based on the most recent financial statements of the Company at the time of approval by the Compensation
                Committee; and

            

       

      	

            	20.2.3.	
              The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation Committee (and, if required by law, by the Board) which shall determine that the sums are
                reasonable considering Nova’s exposures, the scope of coverage and the market conditions and that the Insurance Policy reflects the current market conditions, and it shall not materially affect the Company’s profitability, assets or
                liabilities.

            

       

      	

            	20.3.	
              Upon circumstances to be approved by the Compensation Committee (and, if required by law, by the Board), Nova shall be entitled to enter into a “run off” Insurance Policy of up to seven (7) years, with the same insurer or any other
                insurance, as follows:

            

       

      	

            	20.3.1.	
              The limit of liability of the insurer shall not exceed the greater of $50 million or 30% of the Company’s shareholders equity based on the most recent financial statements of the Company at the time of approval by the Compensation
                Committee;

            

       

      	

            	20.3.2.	
              The annual premium shall not exceed 300% of the last paid annual premium; and

            

       

      	

            	20.3.3.	
              The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Compensation Committee (and, if required by law, by the Board) which shall determine that the sums are
                reasonable considering the Company’s exposures covered under such policy, the scope of cover and the market conditions, and that the Insurance Policy reflects the current market conditions and that it shall not materially affect the
                Company’s profitability, assets or liabilities.

            

       

      
        10

        
          

      

      	

            	20.4.	
              Nova may extend the Insurance Policy in place to include cover for liability pursuant to a future public offering of securities as follows:

            

       

      	

            	20.4.1.	
              The additional premium for such extension of liability coverage shall not exceed 50% of the last paid annual premium; and

            

       

      	

            	20.4.2.	
              The Insurance Policy, as well as the additional premium shall be approved by the Compensation Committee (and if required by law, by the Board) which shall determine that the sums are reasonable considering the exposures pursuant to such
                public offering of securities, the scope of cover and the market conditions and that the Insurance Policy reflects the current market conditions, and it does not materially affect the Company’s profitability, assets or liabilities.

            

       

      G. Arrangements upon Change of Control

       

      	21.	
              The following benefits may be granted to the Executive Officers in addition to the benefits applicable in the case of any retirement or termination of service upon a “Change of Control”:

            

       

      	

            	21.1.	
              Vesting acceleration of outstanding options or other equity-based awards;

            

       

      	

            	21.2.	
              Extension of the exercising period of options for Nova’s Executive Officer for a period of up to one (1) year in case of an Executive Officer other than the CEO and two (2) years in case of the CEO, following the date of employment
                termination; and

            

       

      	

            	21.3.	
              Up to an additional six (6) months of continued base salary and benefits following the date of employment termination (the “Additional Adjustment Period”). For avoidance of doubt, such additional
                Adjustment Period shall be in addition to the advance notice and adjustment periods pursuant to Sections 14 and 15 of this Policy, but subject to the limitation set forth in Section 18 of this Policy.

            

       

      	

            	21.4.	
              A cash bonus not to exceed 150% of the Executive Officer’s annual base salary in case of an Executive Officer other than the CEO and 200% in case of the CEO.

            

       

      H. Board of Directors Compensation

       

      		22.3.	
              The following benefits may be granted to Nova's Board members: All Nova’s Board members, excluding the chairman of the Board, shall be entitled to an equal annual and
                per-meeting compensation.22.2. The compensation of the Company’s directors (including external directors and independent directors) shall be in accordance with the Companies Regulations (Rules Regarding the Compensation and Expenses of an
                External Director), 5760-2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel), 5760-2000, as such regulations may be amended from time to time (“Compensation of Directors Regulations”) and, in any event, the annual payment and the per-meeting payment shall not be greater than two (2) times the maximal annual payment and per-meeting payment, respectively, allowed
                under the Compensation of Directors Regulations, in the case of Nova.

            

      

      

      	

            	22.3.	
              Notwithstanding the provisions of Sections 22.1 and 22.2 above, in special circumstances, such as in the case of a professional director, an expert director or a director who makes a unique contribution to the Company, such director’s
                compensation may be different than the compensation of all other directors and maybe greater than the maximal amount allowed, in the case of Nova, by the Compensation of Directors Regulations.

            

       

      
        11

        
          

      

      	

            	22.4.	
              The chairman of the Board shall be entitled to a base compensation that shall not exceed six (6) times the compensation of a director (including annual and per meeting compensation and excluding equity compensation).

            

       

      	

            	22.5.	
              Each member of Nova’s Board (excluding the chairman of the Board) may be granted annually equity-based awards with a total fair market value of up to US$150,000. The equity-based awards shall vest annually over a period of between three
                (3) to four (4) years.

            

       

      	

            	22.6.	
              The chairman of the Board may be granted up to an average annual equity compensation (of two (2) sequential years) that shall not exceed six (6) times of any director’s equity compensation per year.

            

       

      	

            	22.7.	
              In addition, members of Nova’s Board may be entitled to reimbursement of expenses when traveling abroad on behalf of Nova.

            

       

      	

            	22.8.	
              It is hereby clarified that the compensation stated under Section H will not apply to directors who serve as Executive Officers.

            

       

      I. Miscellaneous

       

      	23.	
              Nothing in this Policy shall be deemed to grant any of Nova’s Executive Officers or employees or any third party any right or privilege in connection with their employment by the Company. Such rights and privileges shall be governed by
                the respective personal employment agreements. The Board may determine that none or only part of the payments, benefits and perquisites detailed in this Policy shall be granted, and is authorized to cancel or suspend a compensation package
                or part of it.

            

       

      	24.	
              An Immaterial Change in the Terms of Employment of an Executive Officer other than the CEO may be approved by the CEO, provided that the amended terms of employment are in accordance with this Policy. An “Immaterial Change in the Terms
                of Employment” means a change in the terms of employment of an Executive Officer with an annual total cost to the Company not exceeding an amount equal to two (2) monthly base salaries of such employee. 

            

       

      	25.	
              In the event that new regulations or law amendment in connection with Executive Officers and directors compensation will be enacted following the adoption of this Policy, Nova may follow such new regulations or law amendments, even if
                such new regulations are in contradiction to the compensation terms set forth herein.

            

       

      *********************

       

      This Policy is designed solely for the benefit of Nova and none of the provisions thereof are intended to provide any rights or remedies to any person other than Nova.

       

    

  

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