Corporate Governance

The purposes of the audit committee (the “Audit Committee”) of the board of directors (the “Board”) of Maris-Tech Ltd. (the “Company”) shall be as provided for in the Israeli Companies Law, 5759-1999 and the regulations promulgated thereunder (the “Companies Law”), and subject to the provisions of the Companies Law to:

1. 1. Be appointed, if and as required under the Companies Law, also as the committee for review of the Company’s financial statements (the “FS Committee”) and in such capacity to oversee the accounting and financial reporting processes of the Company and audits of the financial statements of the Company;

1. 1. Recommend to the Board to recommend to the shareholders of the Company to appoint and approve the compensation of the independent registered public accounting firm engaged to audit the Company’s financial statements as well as to terminate the aforesaid appointment;

1. In its capacity as the FS Committee, oversee and monitor (i) the integrity of the Company’s financial statements, (ii) the Company’s compliance with legal and regulatory requirements as they relate to financial statements or accounting matters, (iii) the independent registered public accounting firm’s qualifications, independence and performance, and (iv) the Company’s internal accounting and financial controls;

4. In its capacity as the FS Committee, to provide the Board with the results of its monitoring and recommendations derived therefrom;
5. In its capacity as the FS Committee, to provide to the Board such additional information and materials as it may deem necessary to make the Board aware of significant financial matters that require the attention of the Board;
6. Monitor deficiencies in the business management practices of the Company, inter alia, in consultation with the independent registered public accounting firm and internal auditor, and advise the Board on how to correct the deficiencies;
7. Decide whether to approve and recommend to the Board to approve engagements or transactions that require audit committee approval under the Companies Law, relating generally to certain related party transactions;
8. Decide as to what transactions shall be considered as “Extraordinary Transactions” as such term is defined in the Companies Law in connection to related party transaction;
9. Determine whether a competitive bidding process or other procedures are required with respect to certain related party transactions (based on the type of transaction);
10. Determine standards and policies for determining whether a transaction with a Controlling Shareholder (as defined in the Companies Law) or a transaction in which a Controlling Shareholder has a personal interest is deemed insignificant or not and the approval requirements (including, potentially, the approval of the Committee) for transactions that are not insignificant including the types of transactions that are not insignificant;
11. Meet and receive reports from both the internal auditors and independent registered public accounting firm dealing with matters that arise in connection with their audits; and
12. Conduct any investigation appropriate to fulfilling its responsibilities, and have direct access to the independent registered public accounting firm as well as anyone in the organization.

In addition, the Audit Committee will undertake those specific duties and responsibilities required under the rules and regulations of The Nasdaq Stock Market LLC, those listed below and such other duties as the Board may from time to time prescribe.

II. MEMBERSHIP.

Subject to the provisions of the Companies Law concerning the appointment and qualifications required from the Audit Committee members, such members will be appointed by, and will serve at the discretion of, the Board. The Audit Committee will consist of at least three members of the Board.  Members of the Audit Committee must meet the following criteria (as well as any other criteria required by the U.S. Securities and Exchange Commission (the “SEC”) or the Companies Law):

1. Each member will be an independent director, as defined in (i) Nasdaq Rule 5605, (ii) Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and (iii) the rules and regulations of the SEC, provided, that, one non-independent, non-employee director may serve on the Audit Committee if (a) the Board has made the required determination under Nasdaq Rule 5605(c) and (b) such Nasdaq rule is in effect or has not otherwise been superseded;
2. Each member will be able to read and understand fundamental financial statements, in accordance with Nasdaq rules and the Companies Law;
3. No member will have participated in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three years;
4. At least one member will qualify as an audit committee financial expert, under Nasdaq and SEC rules and regulations; and
5. A majority of the members of the Committee shall be “unaffiliated directors” as defined in the Companies Law (“Unaffiliated Directors”)
6. All of the Company’s External Directors (dahatzim), as defined under the Companies Law, will be members of the Audit Committee and one of such External Directors shall possess “accounting and financial expertise” consistent with the Companies Law; [1] one of them shall serve as chairperson of the Audit Committee.

Subject to the provisions of the Companies Law concerning the appointment and qualifications required from the Audit Committee members, the Board shall appoint the members of the Audit Committee, and the Audit Committee members may elect a chairman.

Without limiting the foregoing, the following persons may not serve on the Audit Committee:

1. The chairman of the Board then in office;
2. Any person who is a Controlling Shareholder or a relative (as such term is defined in the Companies Law) of such a person;
3. Any member of the Board who is employed by the Company, by any Controlling Shareholder of the Company or by a corporation under the Control (as such term is defined under the Companies Law) of any such Controlling Shareholder;

4. any member of the Board who provides services to the Company (other than as a Board member), to any Controlling Shareholder thereof, or to a corporation under the Control of a Controlling Shareholder;

5. Any director whose livelihood is dependent upon any Controlling Shareholder

III. RESPONSIBILITIES.

The responsibilities of the Audit Committee shall include the following:

1. Reviewing on a continuing basis the adequacy of the Company’s system of internal controls, including meeting periodically with the Company’s management and the independent registered public accounting firm to review the adequacy of such controls, and to review before release the disclosure regarding such system of internal controls required under SEC rules to be contained in the Company’s periodic filings and the attestations or reports by the independent registered public accounting firm relating to such disclosure (to the extent such attestations or reports are required under applicable law);

2. Pre-approving audit and non-audit services provided to the Company by the independent registered public accounting firm. The Audit Committee shall consult with management but shall not delegate these responsibilities. The Audit Committee shall also review and approve disclosures relating to fees and non-audit services required to be included in the SEC reports. Subject to the Board and shareholder approval if and to the extent required by applicable law, the Audit Committee shall have the authority to approve all audit engagement fees and terms and all non-audit engagements, as may be permissible, with the independent registered public accounting firm;

3. Reviewing on a continuing basis the activities, organizational structure and qualifications of the Company’s internal audit/financial control function;

4. Reviewing and providing guidance with respect to the independent audit and the Company’s relationship with its independent registered public accounting firm by (i) reviewing the independent registered public accounting firm’s proposed audit scope and approach; (ii) obtaining on a periodic basis a formal written statement from the independent registered public accounting firm regarding relationships and services with the Company which may impact independence and presenting this statement to the Board; (iii) actively engaging in a dialogue with the independent registered public accounting firm with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent registered public accounting firm and recommending that the Board take appropriate action to satisfy itself with regard to the registered public accounting firm’s independence; (iv) discussing with the Company’s independent registered public accounting firm the financial statements and audit findings, including any significant adjustments, management judgments and accounting estimates, significant new accounting policies and disagreements with management and any other matters required to be discussed by applicable standards of the Public Company Accounting Oversight Board; and (v) reviewing reports submitted to the Audit Committee by the independent registered public accounting firm in accordance with the applicable SEC requirements;

5. Reviewing the qualifications, performance and independence of the Company’s independent registered public accounting firm;

6. In its capacity as the FS Committee, reviewing with management and the Company’s independent registered public accounting firm such accounting policies (and changes therein) of the Company, including any financial reporting issues which could have a material impact on the Company’s financial statements, as are deemed appropriate for review by the Audit Committee prior to any interim or year-end filings with the SEC or other regulatory body;

7. In its capacity as the FS Committee, reviewing and discussing with management and the independent registered public accounting firm the annual audited financial statements and quarterly unaudited financial statements, including the Company’s disclosures under “Operating and Financial Review and Prospects,” prior to filing the Company’s annual report with the SEC;

8. In its capacity as the FS Committee, conducting a post-audit review of the financial statements and audit findings, including any significant suggestions for improvements provided to management by the independent registered public accounting firm;

9. In its capacity as the FS Committee, reviewing before release the unaudited quarterly operating results and annual audited operating results in the Company’s quarterly earnings release;

10. In its capacity as the FS Committee, reviewing before release the disclosure regarding the Company’s system of accounting and internal controls required under SEC rules to be contained in the Company’s periodic filings and the attestations or reports, if required under applicable law, by the independent registered public accounting firm relating to such disclosure;

11. Overseeing compliance with the requirements of the SEC for disclosure of registered public accounting firm’s services and Audit Committee members, member qualifications and activities;

12. In its capacity as the FS Committee, receiving periodic reports from the Company’s independent registered public accounting firm and management of the Company to review the selection, application and disclosure of the Company’s significant accounting policies and to assess the impact of other financial reporting developments that may have a bearing on the Company;

13. In its capacity as the FS Committee, reviewing with management and the independent registered public accounting firm the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Company’s financial statements;

14. Reviewing with management and the independent registered public accounting firm any correspondence with regulators or governmental agencies and any employee complaints or published reports that raise material issues regarding the Company’s financial statements, internal controls, auditing matters, or accounting policies;

15. Enforcing the Company’s independent registered public accounting firm’s accountability to the Audit Committee and instructing the independent registered public accounting firm that they are to directly report to the Audit Committee, regarding any issue disputed with management. The Audit Committee shall be responsible for the resolution of any disagreement between management and the registered public accounting firm regarding financial reporting, for the purpose of preparing or issuing an audit report or related work;

16. In its capacity as the FS Committee, reviewing the findings of any examination by regulatory agencies regarding the Company’s financial statements or accounting policies;

17. In its capacity as the FS Committee, reviewing, in conjunction with counsel, any legal matters that could have a significant impact on the Company’s financial statements;

18. Reviewing the Company’s policies relating to the avoidance of conflicts of interest and reviewing past or proposed transactions between the Company, members of the Board and management as well as internal control policies and procedures with respect to officers’ use of expense accounts and perquisites, including the use of corporate assets. The Audit Committee shall consider the results of any review of these policies and procedures by the Company’s independent registered public accounting firm;

19. Providing oversight to the Company’s chief financial officer;

20. Reviewing any auditing or accounting issues concerning the Company’s employee benefit plans;

21. If necessary, instituting special investigations relating to financial statements or accounting policies with full access to all books, records, facilities and personnel of the Company;

22. As appropriate, obtaining advice and assistance from outside legal, accounting or other advisors, and retaining such persons to provide such services. The Company shall provide appropriate funding to the Audit Committee to pay the advisors;

23. Reviewing and approving in advance any proposed related party transactions to the extent required under the Companies Law and Nasdaq and other rules; In order to assist it in carrying out such role, the Committee shall apply criteria for classification of transactions and actions as extraordinary transactions and material actions and/or as transactions that are not insignificant and shall classify certain transactions or actions accordingly, and, if involving conflicts of interests or related party transactions, shall review and consider their approval, in accordance with the Companies Law, including whether a competitive bidding process or other procedures are required with respect to certain related party transactions (based on the type of transaction);

24. Establishing and maintaining free and open means of communication between the Audit Committee, the Company’s independent registered public accounting firm, the Company’s internal audit/financial control department and management with respect to auditing and financial control matters, including providing such parties with appropriate opportunities to meet privately with the Audit Committee;

25. Establishing procedures for receiving, retaining and treating complaints received by the Company regarding accounting, internal accounting controls or auditing matters and procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

26. Reviewing and assessing on an annual basis the adequacy of its own charter, structure, processes and membership requirements;

27. Determining the appropriate funding to be provided by the Company for payment of compensation to any legal, accounting or other advisors employed by the Audit Committee;

28. Reviewing and discussing periodically with management all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Company with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses;

29. In its capacity as the FS Committee, inquiring about the application of the Company’s accounting policies and its consistency from period to period, and the compatibility of these accounting policies with generally accepted accounting principles, and (where appropriate) the Company’s provisions for future occurrences which may have a material impact on the financial statements of the Company;

30. In its capacity as the FS Committee, discussing periodically with the independent registered public accounting firm, without management being present, (i) their judgments about the quality, appropriateness, and acceptability of the Company’s accounting principles and financial disclosure practices, as applied in its financial reporting, and (ii) the completeness and accuracy of the Company’s financial statements;

31. At least annually, reviewing and discussing with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures (including management’s risk assessment and risk management policies including its investment policies and performance for cash and short-term investments);

32. Reviewing and approving any material change or waiver in the Company’s ethics codes regarding directors or senior executive officers, and disclosures made in the Company’s annual report in such regard;

33. Overseeing the hiring policies for employees or former employees of the independent registered public accounting firm, so that such hiring shall be in compliance with any applicable laws and regulations; and

34. Performing such additional activities and consider such other matters within the scope of its responsibilities or duties according to applicable law and/or as the Audit Committee and/or the Board deems necessary or appropriate.

While the Audit Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with U.S. generally accepted accounting principles, International Financial Reporting Standards or such other accounting standards adopted by the Company, and applicable rules and regulations.

IV. MEETINGS.

The Audit Committee will meet as often as it determines, but not less frequently than once every quarter.

The Audit Committee, in its discretion, will ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. The Audit Committee will meet separately with the chief executive officer and separately with the chief financial officer of the Company at such times as are appropriate to review the financial affairs of the Company. The Audit Committee will meet periodically in separate executive session with the independent registered public accounting firm as well as any financial controllers of the Company, at such times as it deems appropriate to fulfill the responsibilities of the Audit Committee under this charter. Notwithstanding the foregoing, any person who is, pursuant to the Companies Law, forbidden from serving as a member of the Committee, shall not be present at any meeting of the Committee (during its discussions or its decision making), unless the Committee’s Chairperson has determined that such person is required during the presentation of a certain topic to the Committee, provided, however, that an employee of the Company, who is not a Controlling Shareholder or relative thereof, is permitted to be present for the discussions, but not the decision making, that take place at a meeting, and provided, furthermore, that the Company’s legal counsel and the Company’s secretary, who are not Controlling Shareholders or Relatives thereof, are permitted, if the Committee so requests, to be present at a meeting (during discussions or decision making)

The independent registered public accounting firm shall be invited to every meeting of the Audit Committee that relates to the financial statements of the Company. The internal auditor shall be invited to all Audit Committee meetings. In addition, the internal auditor may request that the chairperson of the Audit Committee convene a meeting to discuss a particular issue, and the chairperson shall convene the Audit Committee within a reasonable period of time, if the chairperson finds it appropriate to do so.

A majority of the Audit Committee members shall constitute a quorum, provided, however, that the majority of those members present shall qualify as Unaffiliated Directors and that at least one of those Unaffiliated Directors present shall be an External Director.

The action of a majority of those present at a meeting, at which a quorum is present, shall be the act of the Audit Committee.

V. MINUTES.

The Audit Committee will maintain written minutes of its meetings, which minutes will be filed with the minutes of the meetings of the Board.

VI. COMPENSATION.

Members of the Audit Committee may receive compensation for their service as Audit Committee members, subject to the provisions of the Companies Law and the Company’s compensation policy.

Members of the Audit Committee may not receive any compensation from the Company except the fees that they receive for service as members of the Board or any committee thereof.

VII. DELEGATION OF AUTHORITY.

Subject to the provisions of the Companies Law, the Audit Committee may delegate to one or more designated members of the Audit Committee the authority to pre-approve audit and permissible non-audit services, provided such pre-approval decision is presented to the full Audit Committee at its scheduled meetings.

[1] Unless at least one of the other members of the Committee is an Unaffiliated Director who (i) meets the independence requirements under the Securities Exchange Act of 1934, as amended, (ii) meets the standards of the listing requirements for membership on the audit committee and (iii) has accounting and financial expertise as defined under the Companies Law.

The Board of Directors (the “Board”) of Maris-Tech Ltd. (the “Company”) has constituted and established a Compensation Committee (the “Committee”) with the authority, responsibility and specific duties described in this Charter.  This Charter does not derogate from nor supersede, and instead will be read in conjunction with, the terms set forth in the Compensation Policy for the Company’s Office Holders (as defined under the Companies Law (as defined below)) (the “Compensation Policy”) to be recommended to the Board by the Committee, and adopted by the Board and the Company’s shareholders in accordance with the requirements set forth in the Israeli Companies Law, 5759-1999 and the regulations promulgated thereunder (the “Companies Law”).  If any term of this Charter contradicts the requirements under the Companies Law relating to the Compensation Policy, or the Compensation Policy itself, then the terms of the Companies Law and the Compensation Policy will prevail.

I. PURPOSES.

The purposes of the Committee are to:

1. Assist the Board in fulfilling its responsibilities relating to compensation of the Company’s directors, Chief Executive Officer (“CEO”) and other Office Holders (as defined in the Companies Law) and Executive Officers pursuant to the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Nasdaq Stock Market Listing Rules (the “Nasdaq Rules”);
2. Assist the Board in administering the Company’s equity incentive plans; and
3. Produce appropriate reports on executive compensation for public disclosure including, to the extent required, under applicable securities laws, the rules and regulations promulgated by the U.S. Securities and Exchange Commission (the “SEC”) and the Companies Law, or as otherwise deemed advisable by the Board.

4. The purposes and further provisions specified in this Charter are meant to serve as guidelines, are subject to applicable law, and the Committee is delegated the authority to adopt such additional procedures and standards as it deems necessary or advisable from time to time to fulfill its responsibilities.  Unless otherwise prescribed in this Charter, the Articles of Association of the Company or applicable law, the rules and procedures applicable to the operation of the Board shall apply to the operation of the Committee with any necessary changes.  Nothing herein is intended to expand applicable standards of liability under Israeli or U.S. federal securities law for directors of a corporation.

II. MEMBERSHIP.

1. The Committee’s membership shall satisfy the following requirements:
   
   1. The Committee shall have three (3) or more members.
   2. The members of the Committee shall be independent (an “Independent Director”) (or be subject to an applicable exception) as determined in accordance with applicable law, including Rule 10C-1 of the Exchange Act and the Nasdaq
   3. To the extent Article ‎IX below shall not apply, each “external director” appointed under the Companies Law (an “External Director”) shall be a member of the Committee. A majority of the members of the Committee shall be External Directors, or, if so permitted pursuant to the Companies Law, “unaffiliated directors” as defined in the Companies Law (“Unaffiliated Directors”).
2. Notwithstanding the foregoing, to the extent Article ‎IX below shall not apply, the Chairman of the Board or any director employed by or otherwise providing services to the Company or to a Controlling Shareholder (as such term is defined under the Companies Law) or any entity controlled by a Controlling Shareholder of the Company may not serve on the Committee. To the extent Article ‎IX below shall not apply, any member of the Committee who is not an External Director must be a director whose total compensation does not exceed the amounts being paid by the Company to each External Director.
3. Subject to applicable law, (i) the Committee’s members shall be appointed by and serve at the discretion of the Board, (ii) members shall serve until their successors are duly designated and qualified, (iii) any member of the Committee may be removed at any time, with or without cause, by a resolution of the Board, and (iv) any vacancy on the Committee occurring for any cause whatsoever (or without cause) may be filled by a resolution of the Board.
4. The Board shall designate one (1) of the External Directors, or to the extent Article ‎IX below applies, one (1) of the Independent Directors, as the Committee’s chairperson (“Chairperson”).
5. The Chairperson shall be designated by the Board. To the extent applicable the Chairperson shall be an External Director.
6. To the extent Article ‎IX below shall not apply, a member of the Committee may not receive directly or indirectly from the Company any compensatory fee except as provided in the regulations promulgated under the Companies Law pertaining to External Directors’ compensation.

III. MEETINGS AND AUTHORITY.

1. The Committee shall meet as circumstances require. The Chairperson will preside at each meeting of the Committee and, in consultation with the other members of the Committee then present, shall determine the length of such meeting and the agenda of items to be addressed at such meeting.  The presence (in person or via telephone or other means of communication) of a majority of the members of the Committee shall constitute a quorum for the transaction of business at a meeting of the Committee, and the act of a majority of those present at any meeting at which there is a quorum and who are entitled to vote on the matter shall be the act of the Committee, provided, however, to the extent Article ‎IX below shall not apply, that at least one (1) of those present shall be an External Director.
2. The Committee may ask members of management or others to attend meetings and provide pertinent information, as necessary. Notwithstanding the foregoing, to the extent Article ‎IX below shall not apply, (i) any person who is, pursuant to the Companies Law, forbidden from serving as a member of the Committee, shall not be present at any meeting of the Committee (during its discussions or its decision making), unless the Chairperson has determined that such person is required during the presentation of a certain topic to the Committee, provided, however, that an employee of the Company, who is not a Controlling Shareholder or Relative thereof (as such term is defined under the Companies Law), is permitted, if the Committee so requests, to be present for the discussions, but not the decision making, that take place at a meeting, and provided, further, that the Company’s legal counsel and the Company’s secretary, who are not Controlling Shareholders or Relatives thereof, are permitted, if the Committee so requests, to be present at a meeting (during discussions and/or decision making), and (ii) the CEO shall also not be present during voting or deliberations on his or her compensation.
3. Subject to applicable law, the Committee may delegate its authority to subcommittees established from time to time by the Committee. Such subcommittees shall consist of one (1) or more members of the Committee or the Board and shall report to the Committee.

IV. RETENTION OF OUTSIDE ADVISERS.

1. The Committee shall have the power, without Board approval and at the Company’s expense (which shall be funded appropriately by the Company), to retain, oversee the work of, and subsequently terminate independent, outside legal counsel, compensation consultants and other experts and consultants to assist the Committee in connection with its responsibilities, and shall have the sole and direct authority to approve such advisers’ compensation and other retention terms.
2. The Committee may select a compensation consultant, legal counsel or other adviser to the Committee only after taking into consideration all factors relevant to that person’s independence from the Company’s management, including the following:
   
   1. The provision of other services to the Company by the firm that employs the compensation consultant, legal counsel or other adviser;
   2. The amount of fees received from the Company by the firm that employs the compensation consultant, legal counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation consultant, legal counsel or other adviser (to the extent that such information is reasonably available);
   3. The policies and procedures of the firm that employs the compensation consultant, legal counsel or other adviser that are designed to prevent conflicts of interest;
   4. Any business or personal relationship of the compensation consultant, legal counsel or other adviser with a member of the Committee;
   5. Any ordinary shares of the Company owned by the compensation consultant, legal counsel or other adviser; and
   6. Any business or personal relationship of the compensation consultant, legal counsel, other adviser or the firm employing the adviser with an executive officer of the Company.
3. None of the above independence criteria shall: (a) require the Committee to implement or act consistently with the advice or recommendations of the compensation consultant, independent legal counsel or other adviser to the Committee; or (b) affect the ability or obligation of the Committee to exercise its own judgment in fulfillment of the duties of the Committee.
4. Furthermore, none of the above criteria need be considered by the Committee in retaining an adviser who only provides (i) consulting on any broad-based plan that does not discriminate in scope, terms, or operation, in favor of executive officers or directors of the Company, and that is available generally to all salaried employees of the Company; or (ii) information that either is not customized for the Company or that is customized based on parameters that are not developed by the compensation consultant. In addition, none of the above criteria needs to be considered by the Committee if it seeks advice from in-house legal counsel to the Company.

V. DUTIES AND RESPONSIBILITIES.

The Committee shall have the power and authority of the Board to perform the duties and to fulfill the responsibilities detailed below.  The Committee’s approval of any matter below shall not derogate from the requirements of the Companies Law pursuant to which approval of the Board and, in certain cases, the Company’s shareholders is required for certain acts or transactions, and under such circumstances the Committee’s approval shall constitute only a recommendation to any such body.

1. Recommending to the Board the initial Compensation Policy of the Company (if not previously adopted by the Board) and subsequently reviewing from time to time and recommending to the Board for determination the overall compensation of the Company to be paid to the CEO and other Office Holders (including any employment agreements to be entered into by the Company therewith), with a view to rewarding management appropriately for their contributions to achieving the Company’s corporate goals and objectives, as determined by the Committee, and aligning the Company’s compensation policies with such objectives and shareholders’ interests, in each case taking into account the Compensation Policy.
2. Recommending whether a Compensation Policy should continue in effect, if the then-current policy has a term of greater than five (5) years from the date of consummation of the Company’s initial public offering, or otherwise three (3) years (approval of either a new Compensation Policy or the continuation of an existing Compensation Policy must in any case occur after five (5) years from the date of consummation of the Company’s initial public offering, or otherwise every three (3) years).
3. Recommending to the Board periodic updates to the Compensation Policy.
4. Assessing implementation of and adherence to the Compensation Policy.
5. Reviewing and approving any specific corporate goals and objectives relevant to the compensation of the CEO and other Office Holders, adopted under the then-effective Compensation Policy and determining the compensation of the CEO and other Office Holders based on such evaluation.
6. Reviewing and, subject to applicable law, recommending for Board approval, the grant of options, restricted shares, restricted share units, share appreciation rights and other equity-based grants (each, an “Award”) consistent with the Company’s incentive compensation plan or plans then in effect (collectively, the “Plans”) and Compensation Policy, and, subject to applicable law, administering the Plans. The Committee may make recommendations to the Board with respect to incentive compensation plans, including reservation of shares for issuance thereunder.
7. Oversee compliance with the compensation reporting requirements of the U.S. SEC to the extent applicable or to the extent the Committee determines that disclosures are desirable even if not required.
8. Review and periodically evaluate and make recommendations to the Board regarding the compensation and benefits for the Company’s non-employee directors, taking into account the Compensation Policy.
9. Determine whether to recommend that the Board adopt a share ownership policy for directors and executive officers.
10. Review and discuss with management, if appropriate, any conflicts of interest raised by the work of a compensation consultant or advisor retained by the Committee or management and how such conflict is being addressed, and prepare or review any disclosure in the Company’s filings required in accordance with applicable SEC rules and regulations.
11. Perform such other activities and functions as are required by applicable law, stock exchange rules or provisions of the Company’s charter documents, or as are otherwise necessary and advisable, in its or the Board’s discretion, for the efficient discharge of its duties.

VI. REPORTING.

The Committee will apprise the Board regularly of its decisions and recommendations and of significant developments in the course of performing the above responsibilities and duties.

VII. REVIEW.

The Committee shall annually review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.  In addition, the Committee shall annually review its own performance under this Charter and applicable laws and regulations.

VIII. MINUTES.

The Committee will maintain written minutes of its meetings.

IX. COMPANIES REGULATIONS (ALLEVIATIONS FOR COMPANIES IF THEIR SECURITIES ARE REGISTERED ON A STOCK EXCHANGE OUTSIDE OF ISRAEL), 5760-2000.

To the extent (i) there is no Controlling Shareholder of the Company; and (ii) the Company elected to follows the rules and regulations of the SEC and the Nasdaq Rules in connection with appointment of Independent Directors and composition of the Committee as applicable to companies incorporated in any state of the United States of America, the provisions of Sections 118A, 219(c), 239(a), 243 and 249 of the Companies Law shall not apply.

X. INTERPRETATION; DEFINITIONS.

1. To the extent any of the provisions included herein is a description or summary of any applicable law or is intended to recite the provisions of any applicable law, then in the event of any inconsistency, contradiction or any other conflict between the provisions herein and the provisions of such applicable law, the provisions of such applicable law shall prevail and supersede and shall be deemed to constitute an integral part of this Charter. In the event that any such provision of applicable law is amended to include any relief or exclusion, then, such relief and exclusions shall be deemed to constitute an integral part of this Charter, whether or not such conflict, inconsistency or contradiction arises.
2. Any references to any law, statute or regulation are to it as amended, supplemented or restated, from time to time (and, in the case of any law, to any successor provisions or re-enactment or modification thereof being in force at the time); any reference to “law” shall include any supranational, national, federal, state, local, or foreign statute or law and all rules and regulations promulgated thereunder (including, any rules, regulations or forms prescribed by any governmental authority or securities exchange commission or authority); and any reference to “law” shall be read subject to the Company’s Articles of Association, as amended from time to time.
3.  

This Code of Ethics and Business Conduct (the “Code”) of Maris-Tech Ltd. (the “Company”) applies to the Chief Executive Officer, President, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Controller and persons performing similar functions (collectively, the “Senior Officers”) along with all directors and other employees of the Company (the Senior Officers, directors and employees are hereinafter collectively referred to as the “Covered Persons”). This Code covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets out basic principles to guide all Covered Persons. All Covered Persons should conduct themselves accordingly and seek to avoid the appearance of improper behavior in any way relating to the Company.

Any Covered Person who has any questions about the Code should consult with the Chief Executive Officer, the President, the Company’s board of directors (the “Board”) or the Company’s audit committee (the “Audit Committee”).

The Company has adopted the Code for the purpose of promoting:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
• full, fair, accurate, timely and understandable disclosure in all reports and documents that the Company files with, or submits to, the Securities and Exchange Commission (“SEC”) and in other public communications made by the Company that are within the Covered Person’s area of responsibility;
• compliance with applicable governmental laws, rules and regulations;
• the prompt internal reporting of violations of the Code; and
• accountability for adherence to the Code.

4. HONEST AND ETHICAL CONDUCT

   Each Senior Officer and member of the Board owes a duty to the Company to act with integrity. Integrity requires, among other things, being honest and candid. Covered Persons must adhere to a high standard of business ethics and are expected to make decisions and take actions based on the best interests of the Company, as a whole, and not based on personal relationships or benefits. Generally, a “conflict of interest” occurs when an Covered Person’s personal interests is, or appears to be, inconsistent with, interferes with or is opposed to the best interests of the Company or gives the appearance of impropriety.

   Business decisions and actions must be made in the best interests of the Company and should not be influenced by personal considerations or relationships. Relationships with the Company’s stakeholders, for example suppliers, competitors and customers, should not in any way affect an Covered Person’s responsibility and accountability to the Company. Conflicts of interest can arise when a Covered Person or a member of his or her family receive improper gifts, entertainment or benefits as a result of his or her position in the Company. Specifically, each Covered Person must:

   1. act with integrity, including being honest and candid, while still maintaining the confidentiality of information when required or consistent with the Company’s policies;
   2. avoid violations of the Code, including actual or apparent conflicts of interest with the Company in personal and professional relationships;
   3. disclose to the Board or the Audit Committee any material transaction or relationship that could reasonably be expected to give rise to a breach of the Code, including actual or apparent conflicts of interest with the Company;
   4. obtain approval from the Board or Audit Committee before making any decisions or taking any action that could reasonably be expected to involve a conflict of interest or the appearance of a conflict of interest;
   5. observe both the form and spirit of laws and governmental rules and regulations, accounting standards and Company policies;
   6. maintain a high standard of accuracy and completeness in the Company’s financial records;
   7. ensure full, fair, timely, accurate and understandable disclosure in the Company’s periodic reports;
   8. report any violations of the Code to the Board or Audit Committee;
   9. proactively promote ethical behavior among peers in his or her work environment; and
   10. maintain the skills appropriate and necessary for the performance of his or her duties.

    

   DISCLOSURE OF COMPANY INFORMATION

   As a result of the Company’s status as a public company, it is required to file periodic and other reports with the SEC. The Company takes its public disclosure responsibility seriously to ensure that these reports furnish the marketplace with full, fair, accurate, timely and understandable disclosure regarding the financial and business condition of the Company. All disclosures contained in reports and documents filed with or submitted to the SEC, or other government agencies, on behalf of the Company, or contained in other public communications made by the Company, must be complete and correct in all material respects and understandable to the intended recipient.

   The Senior Officers, in relation to his or her area of responsibility, must be committed to providing timely, consistent and accurate information, in compliance with all legal and regulatory requirements. It is imperative that this disclosure be accomplished consistently during both good times and bad and that all parties in the marketplace have equal or similar access to this information.

   All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions, and must conform both to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the book” funds, assets or liabilities should not be maintained unless permitted by applicable law or regulation. Senior Officers involved in the preparation of the Company’s financial statements must prepare those statements in accordance with generally accepted accounting principles, consistently applied, and any other applicable accounting standards and rules so that the financial statements materially, fairly and completely reflect the business transactions and financial statements and related condition of the Company. Further, it is important that financial statements and related disclosures be free of material errors.

   Specifically, each Senior Officer must:

   1. familiarize himself or herself with the disclosure requirements generally applicable to the Company;
   2. not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, including the Company’s independent auditors, governmental regulators, self-regulating organizations and other governmental officials;
   3. to the extent that he or she participates in the creation of the Company’s books and records, promote the accuracy, fairness and timeliness of those records; and
   4. in relation to his or her area of responsibility, properly review and critically analyze proposed disclosure for accuracy and completeness.

   CONFIDENTIAL INFORMATION

   Covered Persons must maintain the confidentiality of confidential information entrusted to them by the Company of its customers, suppliers, joint venture partners, or others with whom the Company is considering a business or other transaction, except when disclosure is authorized by a Senior Officer or required or mandated by laws or regulations. Confidential information includes all non-public information that might be useful or helpful to competitors or harmful to the Company or its customers or suppliers, if disclosed. It also includes information that suppliers, customers and other parties have entrusted to the Company. The obligation to preserve confidential information continues even after employment ends.

   Records containing personal data about employees or private information about customers and their employees are confidential. They are to be carefully safeguarded, kept current, relevant and accurate. They should be disclosed only to authorized personnel or as required by law.

   All inquiries regarding the Company from non-employees, such as financial analysts and journalists, should be directed to a Senior Officer, the Board or the Audit Committee. The Company’s policy is to cooperate with every reasonable request of government investigators for information. At the same time, the Company is entitled to all the safeguards provided by law for the benefit of persons under investigation or accused of wrongdoing, including legal representation. If a representative of any government or government agency seeks an interview or requests access to data or documents for the purposes of an investigation, the Covered Person should refer the representative to a Senior Officer, the Board or the Audit Committee. Covered Persons also should preserve all materials, including documents and e-mails, that might relate to any pending or reasonably possible investigation.

   COMPLIANCE WITH LAWS

   Covered Persons must respect and obey all applicable foreign, federal, state and local laws, rules and regulations applicable to the business and operations of the Company.

   Covered Persons who have access to, or knowledge of, material nonpublic information from or about the Company are prohibited from buying, selling or otherwise trading in the Company’s stock or other securities. “Material nonpublic information” includes any information, positive or negative, that has not yet been made available or disclosed to the public and that might be of significance to an investor, as part of the total mix of information, in deciding whether to buy or sell stock or other securities.

   Covered Persons also are prohibited from giving “tips” on material nonpublic information, that is directly or indirectly disclosing such information to any other person, including family members, other relatives and friends, so that they may trade in the Company’s stock or other securities.

   Furthermore, if, during the course of an Covered Person’s service with the Company, he or she acquires material nonpublic information about another company, such as one of the Company’s customers or suppliers, or if he or she learns that the Company is planning a major transaction with another company (such as an acquisition), the Covered Person is restricted from trading in the securities of the other company. The Company also maintains an Insider Trading Policy, which each Covered Person must review and comply with.

    

   REPORTING ACTUAL AND POTENTIAL VIOLATIONS OF THE CODE AND ACCOUNTABILITY FOR COMPLIANCE WITH THE CODE

   The Company, through the Board or the Audit Committee, is responsible for applying this Code to specific situations in which questions may arise and has the authority to interpret this Code in any particular situation.

   This Code is not intended to provide a comprehensive guideline for Covered Persons in relation to their business activities with the Company. Any Covered Person may seek clarification on the application of this Code from the Board or the Audit Committee.

   Each Covered Person must:

   1. notify the Company of any existing or potential violation of this Code, and failure to do so is itself a breach of the Code; and
   2. not retaliate, directly or indirectly, or encourage others to do so, against any Covered Person for reports, made in good faith, of any misconduct or violations of the Code solely because that Covered Person raised a legitimate ethical issue.

   3. The Company installed a physical box where an employees may report any compliance concerns and be assured their identity will be protected and kept anonymous. Moreover employees may send an email to the following email: doron@kreston.co.il. In addition,  the company provides periodic training for all employees on the Code of Ethics and the use of the “hotline” box and email.

   The Board or the Audit Committee will take all actions it considers appropriate to investigate any breach of the Code reported to it. All Covered Persons are required to cooperate fully with any such investigations and to provide truthful and accurate information. If the Board or the Audit Committee determines that a breach has occurred, it will take or authorize disciplinary or preventative action as it deems appropriate, after consultation with the Company’s counsel if warranted, up to and including termination of employment. Where appropriate, the Company will not limit itself to disciplinary action but may pursue legal action against the offending Covered Person involved. In some cases, the Company may have a legal or ethical obligation to call violations to the attention of appropriate enforcement authorities.

   Compliance with the Code may be monitored by audits performed by the Board, Audit Committee, the Company’s counsel and/or by the Company’s outside auditors. All Covered Persons are required to cooperate fully with any such audits and to provide truthful and accurate information.

   Any waiver of this Code for any Covered Person may be made only by the Board or the Audit Committee and will be promptly disclosed to stockholders and others, as required by applicable law. The Company must disclose changes to and waivers of the Code in accordance with applicable law.

                                                                                                                  Maris-Tech Ltd.

                                                                                                           Insider Trading Policy

                                                                                      Effective May 15,  2023

1. Introduction

This policy determines acceptable transactions in the securities of Maris-Tech Ltd. (the “Company”) by our officers and other employees, directors and consultants. This policy arises from the Company’s status as a public company whose securities are listed on the Nasdaq Capital Market, under the symbols “MTEK” and “MTEKW”.  During the course of your employment, directorship or consultancy with the Company, you may receive important information that is not yet publicly available (“inside information”), about the Company or about other publicly-traded companies with which the Company has business dealings. Because of your access to this inside information, you may be in a position to profit financially by engaging in any transaction involving the  Company’s securities, or securities of another publicly-traded company, or to disclose such information to a third party who does so profit or which you may have reasonable belief to assume will use the inside information (a “tippee”).

1. Insider Trading Policy

1. Securities Transactions

Use of inside information by someone for personal gain, or to pass on, or “tip,” the inside information to someone who uses it for personal gain, is illegal, regardless of the quantity of securities, and is therefore prohibited. You can be held liable both for your own transactions and for transactions effected by a tippee, or even a tippee of a tippee. Furthermore, it is important that the appearance of insider trading in securities be avoided. The only exception is that transactions directly with the Company, e.g., option exercises for cash, or purchases under a Trading Plan (as defined below), are permitted. However, the subsequent sale (including the sale of shares in a cashless exercise program) or other disposition of such shares is fully subject to these restrictions.

1. Inside Information

As a practical matter, it is sometimes difficult to determine whether you possess inside information. The key to determining whether nonpublic information you possess about a public company is inside information is whether dissemination of the information would likely affect the market price of the company’s securities or would likely be considered important, or “material”, by investors who are considering trading in that company’s securities. Certainly, if the information makes you want to trade, it would probably have the same effect on others. Remember, both positive and negative information can be material. If you possess inside information, you may not trade in a company’s securities, advise anyone else to do so or communicate the information to anyone else until you know that the information has been publicly disseminated. This means that in some circumstances, you may have to forego a proposed transaction in a company’s securities even if you planned to execute the transaction prior to learning of the inside information and even though you believe you may suffer an economic loss or sacrifice an anticipated profit by waiting. “Trading” includes engaging in short sales, transactions in put or call options, hedging transactions and other inherently speculative transactions, for your own account or for others.

Although by no means an all-inclusive list, information about the following items may be considered to be inside information until it is publicly disseminated:

• financial results or forecasts;
• confirming or updating previous disclosures or analysts’ reports;
• major product or technological developments;
• Results of experiments in existing or new technologies or in technologies developed by the company;
• major contract awards or cancellations;
• M&A activity, including acquisitions or dispositions of assets or divisions;
• pending public or private sales of debt or equity securities;
• declaration of share splits, dividends or changes in dividend policy;
• senior management or control changes;
• possible tender offers or proxy fights;
• significant write-offs;
• significant litigation or settlements;
• impending bankruptcy;
• gain or loss of a significant license agreement or other contracts with customers or suppliers;
• pricing changes or discount policies;
• cybersecurity risks and incidents;
• corporate partner relationships or joint venture developments; and
• governmental actions or regulations.

For information to be considered publicly disseminated, it must be widely disclosed through a press release or U.S. Securities Exchange Commission filing, and a sufficient amount of time must have passed to allow the information to be fully disclosed. Generally speaking, information will be considered publicly disseminated after two full trading days have elapsed since the date of public disclosure of the information. For example, if an announcement of inside information of which you were aware was made prior to trading on Wednesday, then you may execute a transaction in the Company’s securities on Friday.

1. Trading by Directors, Officers, Other Employees, and Consultants of the Company

We require directors, officers, other employees and consultants of the Company to do more than refrain from insider trading. We require that they limit their transactions in the Company’s shares to defined time periods following public dissemination of quarterly (if applicable) interim and annual financial results and notify, and receive approval from, the Chief Financial Officer prior to engaging in transactions in the Company’s securities and observe other restrictions designed to minimize the risk of apparent or actual insider trading.

1. Covered Insiders

The provisions outlined in this policy apply to all directors, officers and employees of the Company. Generally, any entities or family members of those individuals whose trading activities are controlled or influenced by any of such persons should be considered to be subject to the same restrictions.

1. Window Period   

Generally, except as set forth in this paragraph B, in paragraph C and in paragraph D of this policy, directors, officers and other employees may buy or sell securities of the Company only during a “window period” that opens after two full trading days have elapsed after the public dissemination of the Company’s annual, interim or quarterly (if applicable) financial results and closes on the last trading day two weeks before the end of the quarter, or six month period (as applicable, and depending on whether the Company reports on a semiannual basis or quarterly basis). This window period may be closed early or may not open if, in the judgment of the Company’s Chief Financial Officer, there exists undisclosed information that would make trades by the Company’s directors, officers or employees inappropriate. It is important to note that the fact that the window period has closed early or has not opened should be considered inside information. A director, officer or other employee who believes that special circumstances require such person to trade outside the window period should consult with the Company’s Chief Financial Officer.  Permission to trade outside the window period will be granted only where the circumstances are extenuating and there appears to be no significant risk that the trade may subsequently be questioned.

1. Exceptions to Window Period

1. Option/Warrant Exercises. Other than as provided in paragraphs III.C.3 and III.C.4 below, directors, officers and other employees may exercise options to purchase shares of the Company granted under the Company’s equity incentive plans in cash without restriction to any particular period in light of information then available to the public.- However, the subsequent sale of the shares (including sales of shares in a cashless exercise) acquired upon the exercise of such options is subject to all provisions of this policy.
2. 10b5-1 Automatic Trading Programs.  Rule 10b5-1 under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) provides an affirmative defense from insider trading liability under the U.S. federal securities laws for transactions in the Company’s securities made pursuant to, and in compliance with, a written plan established by a director, officer or other employee that meets the requirements of Rule 10b5-1 (a “Trading Plan”) that meets each of the following requirements: (a) the Trading Plan is adopted by the insider during a Window Period and when the insider is not in possession of material non-public information; (b) the Trading Plan is followed by the insider; (c) the Trading Plan either (i) specifies the amount of securities to be sold and the date on which the securities are to be sold, (ii) includes a written formula or algorithm, or computer program, for determining the amount of securities to be sold and the price at which and the date on which the securities are to be purchased or sold, or (iii) does not permit the insider to exercise any subsequent influence over how, when, or whether to effect sales; provided, in addition, that any other person who, pursuant to the Trading Plan, does exercise such influence must not have been aware of the material non-public information when doing so; (d) the Trading Plan includes a representation from the insider adopting the Trading Plan that such insider (i) is not aware of any inside information about the Company or its securities and (ii) is adopting the Trading Plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act; (e) the Trading Plan provides that trading under it cannot begin until the later of (i) 90 days after the adoption of the Trading Plan or (ii) two business days following the disclosure of the Company’s financial results in a Report of Foreign Private Issuer on Form 6-K or Annual Report on Form 20-F (such period being referred to as the “cooling-off period”, but, in either case, not to exceed 120 days following the adoption of the Trading Plan, and provided that if the insider is not a director or officer of the Company, such cooling-off period shall be at least 30 days rather than the longer periods set forth above); (f) at the time it is adopted the Trading Plan conforms to all other requirements of Rule 10b5-1 then in effect; (g) the Trading Plan was reviewed by the Company prior to establishment, solely to confirm compliance with this policy and the securities laws; and (h) the Trading Plan allows for the cancellation of a transaction and/or suspension of such Trading Plan upon notice and request by the Company to the individual if any proposed trade (i) fails to comply with applicable laws (e.g., exceeding the number of shares that may be sold under Rule 144 under the U.S. Securities Act of 1933, as amended (“Rule 144”)) or (ii) would create material adverse consequences for the Company.  The Company must be notified of the establishment of any such Trading Plan, any amendments to such Trading Plan and the termination of such Trading Plan.
3. Former Employees.  Former employees of the Company who have left the Company and still own securities of the Company that have not been forfeited shall contact the Company’s Chief Financial Officer to discuss trading outside the window period on a case-by-case basis. 

1. Pre-Clearance and Advance Notice of Transactions

In addition to the requirements of paragraph B above, directors, officers and other employees that the Company’s Chief Financial Officer deems to have routine access to material non-public information may not engage in any transaction in the Company’s securities, including any purchase or sale in the open market, loan or other transfer of beneficial ownership without first obtaining pre-clearance of the transaction from the Company’s Chief Financial Officer, at least two trading days in advance of the proposed transaction. The Company’s Chief Financial Officer will then determine whether the transaction may proceed.  Pre-cleared transactions not completed within five trading days shall require new pre-clearance under the provisions of this paragraph.  The Company may, at its discretion, shorten such period of time.

Advance notice of gifts or an intent to exercise an outstanding option or warrant to purchase shares shall be given to the Company’s Chief Financial Officer. To the extent possible, advance notice of upcoming transactions to be effected pursuant to an established Trading Plan under Section III.C.2 above shall also be given to the Company’s Chief Financial Officer.  

1. Prohibition of Speculative or Short-term Trading 

No director, officer or other employee may engage in short sales, transactions in put or call options, hedging transactions, margin accounts or other inherently speculative transactions with respect to the Company’s securities at any time.

1. Control Shares 

Directors and officers should take care not to violate the restrictions on sales by control persons (Rule 144 under the Securities Act), and should file any notices of sale required by Rule 144.

1. Rule 144 and Section 16 Matters for Directors and Officers

Directors and officers of the Company must also comply with Rule 144, or another applicable exemption from registration.  The practical effect of Rule 144 is that directors and officers who sell the Company’s securities may be required to comply with a number of requirements including holding period, volume limitation, manner of sale and U.S. Securities and Exchange Commission filing requirements.  The Company may provide separate memoranda and other appropriate materials to its directors and officers regarding compliance with Rule 144.  In addition, if the Company is no longer considered a “foreign private issuer”, the directors and officers who transact in Company securities have to report such transactions through the filing of Form 4s with the U.S. Securities and Exchange Commission. The Company will advise such persons if they are subject to the requirements of Form 4 and the reporting requirements of Section 16 of the Exchange Act.

1. Duration of Policy’s Applicability

This policy continues to apply to your transactions in the Company’s securities or the securities of other publicly traded companies engaged in business transactions with the Company even after your employment, directorship or consultancy with the Company has terminated. If you are in possession of inside information when your relationship with the Company concludes, you may not trade in the Company’s securities or the securities of any such other company until the information has been publicly disseminated or is no longer material.

1. Penalties

Anyone who effects transactions in the Company’s securities or the securities of other public companies engaged in business transactions with the Company (or provides information to enable others to do so) on the basis of inside information is subject to both civil liability and criminal penalties, as well as disciplinary action by the Company. An employee, director or consultant who has questions about this policy should contact his or her own attorney or our Chief Financial Officer, Nir Bussy, at nir@maris-tech.com.

* * *

Adopted/last amended: [•] [•], 2023