SaverOne 2014 Ltd.

5.2 Variable Compensation

5.2.1 Annual Bonus

Office Holders, including the Active Chairman of the Board (if relevant) and the CEO, may be entitled to an annual bonus composed of a Measurable Annual Bonus component (“the Measurable Annual Bonus”) and/or (except for the Chairman) a Discretionary Annual Bonus component (“the Discretionary Annual Bonus”), subject to the caps set forth in section 5.2.1.5 below and to the approvals required by law. The Measurable Annual Bonus and the Discretionary Annual Bonus shall be collectively referred to herein as the “Annual Bonus.” If the Measurable Annual Bonus is determined based on an annual target plan, the targets shall be brought for approval by the Compensation Committee and the Board in advance for that year, and as close as possible to the approval of the Company’s work plan/budget.4

5.2.1.1 Discretionary Annual Bonus

An Office Holder may be entitled to a Discretionary Annual Bonus, subject to the recommendation of the CEO (in the case of an Office Holder subordinate to the CEO)5 and subject to approval by the Compensation Committee and the Board. Where required by law, such Discretionary Bonus may also be subject to approval by the General Meeting of the Company. The Discretionary Annual Bonus for the CEO shall not exceed the higher of 3 monthly salaries of the CEO or 25% of the CEO’s actual variable compensation, and for other Office Holders this amount may be up to the total bonus cap detailed in section 5.2.1.5.

Notwithstanding the above, the Discretionary Bonus for Office Holders subordinate to the CEO (who are not controlling shareholders or their relatives) may be approved by the CEO alone, provided that it does not exceed 3 salaries.

This bonus may be in lieu of or in addition to the Measurable Annual Bonus, but is subject to the bonus caps detailed below.

5.2.1.2 Measurable Annual Bonus

An Office Holder (including the Active Chairman of the Board and the CEO) may be entitled to a Measurable Annual Bonus for a given year, as detailed below.

5.2.1.3 Definition of Metrics and Targets for the Bonus Plan

The metrics and targets against which Office Holder performance shall be measured, for the purpose of determining the Measurable Annual Bonus, may include one or more of two types of metrics (KPIs) – Company Metrics and Personal Metrics, as detailed below:

Company Metrics: financial performance metrics of the Company, such as operating profit, operating profitability, return on equity, revenues (based on the Company’s audited financial statements), new engagements, meeting budget or business plan targets, business expansion through acquisitions and mergers, advertising engagements/revenues from advertising in the Company’s products, development of new products and meeting development targets, entry into new business areas or new markets, gross profit, net profit, pre-tax profit, percentage increase in share price and declared dividends.

Shareholders’ Equity Growth Bonus: without derogating from the foregoing, the Measurable Annual Bonus of the Chief Executive Officer may be determined based on the increase in the Company’s shareholders’ equity during the applicable measurement period, in an amount equal to up to 1% of such increase. The Measurable Annual Bonus of the Active Chairman of the Board may be determined on the same basis, in an amount equal to up to 0.6% of such increase. For this purpose, the increase in shareholders’ equity shall be measured against the baseline shareholders’ equity reflected in the financial statements designated by the Compensation Committee and the Board, and may include increases resulting from capital raises, investments in the Company, exercises of warrants or options, investments by strategic investors and other transactions that increase the Company’s shareholders’ equity.

Such metrics may be set in advance for periods longer than a year (and even for the entire agreement term), or may be set annually by the Compensation Committee and the Board, which shall select at least one metric from the above list (and determine the weight assigned to each Company Metric), all subject to and in accordance with applicable law. The targets for each such metric shall also be set.

The Measurable Annual Bonus of the CEO and of other Office Holders who are controlling shareholders or their relatives, if any, shall be determined entirely on the basis of Company Metrics only (without personal performance metrics).

With respect to Office Holders subordinate to the CEO (who are not controlling shareholders or their relatives), the weight of Company Metrics within the scope of the Measurable Annual Bonus shall not be less than 60% of the Measurable Annual Bonus.

Performance targets for each metric for Office Holders subordinate to the CEO (who are not controlling shareholders or their relatives) may be set by the CEO, unless the Board determines otherwise, all subject to and in accordance with applicable law.

Personal Performance Metrics for Office Holders subordinate to the CEO – personal performance metrics to be set for an Office Holder (who is not a controlling shareholder or a relative thereof) subordinate to the CEO shall be set annually in advance by the CEO, according to the role performed by the Office Holder and/or based on the Company’s work plan, all subject to and in accordance with applicable law. The weight of each such personal performance metric within the total weight of personal performance metrics shall also be determined.

Meeting 90% of the targets set for each metric (Company Metric or personal performance metric) shall entitle the Office Holder to the full compensation in respect of that metric.

5.2.1.4 Calculation of the Actual Bonus

Each year, close to the date of approval of the annual financial statements, the degree of target achievement of each Office Holder shall be calculated, as set forth above, and the total bonus amount payable to the Office Holder shall be calculated accordingly, with the calculation performed separately for each metric.

5.2.1.5 Annual Bonus Caps

In all cases, the total Annual Bonus (i.e., the Discretionary Annual Bonus and/or the Measurable Annual Bonus, excluding the Special Bonus) shall not exceed: for the Chairman of the Board and CEO of the Company – 12 monthly salaries; and for other Office Holders – 6 monthly salaries.6

5.2.1.6 Reduction of the Annual Bonus

The Board may reduce up to 50% of an Office Holder’s total Annual Bonus for a given year in special circumstances that, in its discretion, justify such reduction, such as special market conditions or special circumstances related to the Office Holder’s performance.

5.2.1.7 Compensation Recovery

(a) Without derogating from the Company’s clawback policy, as adopted and amended from time to time pursuant to applicable stock exchange rules and applicable law, an Office Holder shall be required to repay to the Company any amount overpaid in respect of a bonus that was paid on the basis of data that proved to be incorrect and were restated in the Company’s financial statements within a period of three years after the date of approval of the bonus.

(b) The repayment amount shall be determined based on the difference between the amount received by the Office Holder and the amount that would have been received based on the restated financial data (“the Clawback Amount”).

(c) The Company shall be entitled to offset the Clawback Amount from any amount payable to the Office Holder (including after termination of his employment). In all cases, the authorized organs of the Company shall determine the timing, manner and terms of the clawback.

(d) Clawback as aforesaid shall not apply in the case of a restatement of the Company’s financial statements resulting from a change in applicable law or accounting standards.

(e) In addition to the foregoing, any compensation subject to recovery under the Company’s clawback policy shall be recovered in accordance with the terms of such policy. In the event of any inconsistency between this Section and the Company’s clawback policy, the clawback policy shall prevail to the extent required by applicable stock exchange rules or applicable law.

5.2.1.8 New Office Holder / Departing Office Holder

An Office Holder who joined the Company during the year shall be entitled to the Annual Bonus (pro rata to his period of employment during that year), provided that he worked at least 6 months during that year. An Office Holder whose employment with the Company ended during the year shall be entitled to the Annual Bonus (pro rata to his period of employment during that year), provided he actually worked at least 3 months during that year; however, the Compensation Committee and the Board may reduce the bonus (up to the full amount thereof).

5.2.2 Special Bonus

The authorized organs of the Company may grant an Office Holder, including the Chairman and the CEO, a special bonus (“the Special Bonus”) for a special contribution of the Office Holder to the Company’s operations, provided that the Special Bonus shall not exceed 12 monthly salaries of such Office Holder in any calendar year, subject to the limitation on discretionary variable compensation under applicable law and to all approvals required by law (as required) in accordance with the Office Holder’s role and position (e.g., CEO and/or controlling shareholder).

The Special Bonus to which the Office Holder may be entitled as aforesaid may be paid in circumstances to be specified in the engagement agreement with such Office Holder, including in the case of acquisition of control of the Company by a third party, follow-on offerings on the stock exchange in Israel, and listing of the Company’s shares for trading on a stock exchange abroad. In addition, upon completion of an initial public offering or listing for trading of a subsidiary, or the sale of a subsidiary, the Chief Executive Officer may be entitled to a cash Special Bonus equal to up to 1%, and the Active Chairman of the Board may be entitled to a cash Special Bonus equal to up to 0.6%, of the applicable equity value or transaction value, as applicable.

It shall be clarified that the Special Bonus is a separate bonus from the Annual Bonus set forth in section 5.2.1 above, and is not subject to the threshold conditions for the Measurable Annual Bonus; however, it is subject to the bonus caps in section 5.2.1.5 above.

5.3 Equity Compensation

5.3.1 The Company may offer its Office Holders, from time to time, participation in an equity compensation plan (“Equity Compensation”).

5.3.2 Equity Compensation may be granted in the form of shares, restricted shares, options, restricted stock units (RSUs), or other equity-based instruments convertible into or exercisable for ordinary shares of the Company (for example, performance-based restricted stock units or performance-based restricted shares), provided that such equity instrument constitutes a share-based payment. In such case, the provisions below shall apply mutatis mutandis.

5.3.3 The Equity Compensation plan shall be subject, inter alia, to the following limitations:

Notwithstanding the foregoing, RSUs granted to each of the Chief Executive Officer or the Active Chairman of the Board may represent up to 5% of the Company’s share capital on a fully diluted basis as of the applicable date of grant and may vest over a period of two years, including one-third upon the execution of the applicable engagement agreement or receipt of the approvals required under applicable law, one-third after 12 months and one-third after 24 months. The terms of such RSUs may provide for full acceleration of all unvested RSUs upon the occurrence of a change of control or similar transaction and the termination of the applicable Office Holder’s service by the Company.

6. Director Compensation, Chairman of the Board

Directors in the Company shall be entitled – all subject to approval by the authorized organs of the Company, in accordance with the provisions of any applicable law – to annual compensation and participation compensation (similar to external directors) within the ranges permitted for external director compensation pursuant to the Companies Regulations (Rules Regarding Compensation and Expenses to an External Director), as amended from time to time, with a possible differentiation in compensation between an “expert director” and a non-expert director, as relevant. Directors shall also be entitled to reimbursement of expenses in accordance with the aforesaid regulations and the provisions of any applicable law. Directors shall only be entitled to receive the above compensation from the Company, and all other provisions of this policy shall not apply to them (unless explicitly stated or implied otherwise by the context).

A director employed by the Company for pay (including as an independent service provider) or who is entitled to separate compensation from the Company (including the Active Chairman of the Board) shall not be entitled to director compensation for so long as he is employed for pay or is entitled to separate compensation as aforesaid (the Active Chairman of the Board may be entitled to fixed salary and variable compensation as detailed in this Compensation Policy above).

The Company may from time to time enter into consulting services agreements with Board members (provided they are not external directors or independent directors). If any Board member enters into a consulting services agreement with the Company, he shall be entitled to additional compensation, in addition to the compensation payable to him by virtue of his service as a director, which may include measurable targets to be determined by the Company’s organs at the time of engagement, and shall be determined according to the scope, complexity and contribution of the services to the Company, but shall not exceed NIS 200,000 per year (in terms of company cost), plus direct related expenses. The compensation for the additional role may be paid in cash and/or by way of allocation of Company securities, provided that no more than 50% of the director’s compensation shall be paid in cash, with the balance paid as Equity Compensation.

Without derogating from the above, a director (provided he is not serving as CEO of the Company, external director or independent director) who acts as a broker or intermediary in a merger, acquisition, business combination, and/or commercial transaction (hereinafter: “the Transaction”) between the Company and a third party, may be entitled to brokerage fees, provided that the total rate of brokerage fees paid to all eligible directors who were involved in the Transaction, collectively, shall not exceed three percent (3%) of the total consideration of the Transaction, as approved by the authorized organs of the Company (hereinafter: “the Brokerage Fees”). For the avoidance of doubt, such limitation shall apply as a cumulative amount per transaction for all eligible directors, whether one director or several, and the allocation of Brokerage Fees among them shall be determined by the authorized organs. Eligibility for Brokerage Fees is conditional upon the director(s) having made a material and substantial contribution to the Transaction, and upon the Transaction having been actually completed. Approval and the exact rate of Brokerage Fees shall be determined by the authorized organs of the Company (without participation of the interested director) and shall be subject to all approvals required by law.

In addition, and subject to applicable law and the approval of the authorized organs of the Company, directors in the Company may be entitled to Equity Compensation, as detailed in section 5.3 above, up to a cap of NIS 500,000 per year. The value of Equity Compensation shall be calculated at fair value on the date of grant, per vesting year (calculated on a linear basis over the vesting years).

7. Termination Conditions

7.1 Prior Notice

An Office Holder may be entitled to a prior notice period not exceeding 3 months; provided that the Chief Executive Officer and the Active Chairman of the Board may each be entitled to a prior notice period of up to six months. During the prior notice period, the Office Holder shall be required to continue serving in his position, unless the Company decides that he shall not continue to serve in practice, and the Office Holder may be entitled to continuation of all terms of tenure and employment during the prior notice period without change, or alternatively the Office Holder shall be paid payment in lieu of prior notice. An Office Holder may be entitled to the Annual Bonus also for the prior notice period.

7.2 Adjustment Period / Retirement Grant

The Office Holder may be entitled to an adjustment period (in addition to the prior notice as set forth above) and/or a retirement grant that shall not, together, exceed the caps set forth in the table below:

The adjustment period or retirement grant shall be approved for an Office Holder taking into account the Office Holder’s terms of tenure and employment, the Office Holder’s employment period, the Company’s performance during his employment period, the Office Holder’s contribution to the Company, and the circumstances of his departure. The Compensation Committee and the Board may condition payment of the retirement grant on a minimum employment period of the Office Holder with the Company.

During the adjustment period, the Office Holder shall be entitled to all employment terms to which he was entitled during his period of employment with the Company, except for the Annual Bonus. The Company may redeem the adjustment period in whole or in part.

7.3 Severance Pay

Upon termination of employment, the Office Holder shall be entitled to severance pay in accordance with applicable law (including arrangements under Section 14 of the Severance Pay Law, 5723-1961).

8. Insurance, Indemnification and Exemption Arrangements for Office Holders

An Office Holder (including a director) may be entitled, in addition to the compensation package as set forth in this Compensation Policy, and subject to approval by the authorized organs of the Company, to directors’ and officers’ liability insurance, including POSI insurance (or equivalent), an indemnification letter and exemption, all subject to the provisions of any applicable law.

Directors’ and Officers’ liability insurance for the Company and its subsidiaries. The limits of liability under such insurance policy shall not exceed US$ 25 million per claim and per policy period, plus reasonable legal costs above the limits of liability in territories in which such legal costs can be insured. The insurance shall be extended to include entity coverage for securities claims.

POSI (Public Offering Securities Insurance) policy, providing coverage for directors and Office Holders in the Company in respect of their liability in connection with an initial public offering of securities by the Company and/or additional offerings. The limits of liability under any such insurance policy shall not exceed US$ 30 million per claim and per period.

The aggregate indemnification amount the Company shall provide under its indemnification undertaking to all directors and other Office Holders in the Company, in respect of a monetary liability imposed upon them in favor of another person by a court judgment, shall not exceed the higher of: (i) 25% of the equity attributable to the Company’s shareholders per its latest financial statements (annual or quarterly) known before the date of actual payment; or (ii) US$ 10 million. Other indemnification terms shall be within the limits permitted by law.

9. Approval of Immaterial Changes in Terms of Office Holders Subordinate to the CEO

An immaterial change in the terms of tenure and employment of an Office Holder subordinate to the CEO of the Company shall require only the approval of the CEO, provided that the updated terms of tenure and employment of the Office Holder do not exceed the caps and provisions of the Compensation Policy and subject to the provisions of any applicable law; for this purpose, an “immaterial change” means a change of up to 10% of the total annual compensation cost of the Office Holder, cumulatively, relative to such cost as originally approved by the Compensation Committee and the Board.7 Changes as aforesaid, if made, shall be reported to the Compensation Committee.

The criteria for an “immaterial change” as set forth above shall apply, mutatis mutandis, also to an immaterial change in the CEO’s compensation components, for the purposes of Section 272(d) of the Companies Law. For the avoidance of doubt, the change shall be assessed against the total cost of all such components as originally approved by the authorized organs.

10. Settlement of Debt by Allocation of Securities

The Company may, subject to the provisions of any applicable law and to the decisions and approvals of the authorized organs of the Company (in accordance with the provisions of law and the identity of the Office Holder), and as required based on professional opinion, settle, repay or arrange, in whole or in part, an existing or future debt of the Company to an Office Holder (including with CPI linkage), including where such Office Holder is a controlling shareholder, by way of allocation of the Company’s securities, including shares, options, warrants, convertible securities or other equity instruments of the Company.

Such allocation shall be on terms, at a value, conversion ratio, timing and manner to be determined by the authorized organs of the Company, on the basis of reasonable business considerations. Without derogating from the above, where the debt is settled by way of conversion into Company shares, the share price for the purpose of conversion shall not be less than the average closing price of the Company’s shares on the stock exchange during the 30 trading days preceding the date of the allocation decision, plus 25%.