UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section
14(a)
of the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant
x
Filed by a Party other than the Registrant
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Check the Appropriate Box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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DARIOHEALTH CORP.
(Name of Registrant as Specified in Its
Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate
box):
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No fee required
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Fee computed on table below per Exchange Act Rules 14a-6(1)(1)
and 0-11.
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Title of each class of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date of its filing.
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Date Filed:
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DarioHealth Corp.
8 HaToKhen Street
Caesarea Industrial Park
3088900, Israel
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On Friday, May 18, 2018
You are cordially invited to attend the
2018 Annual Meeting of Stockholders (the “
Meeting
”) of DarioHealth Corp. (the “
Company
”),
which will be held at 11:00 a.m. on Friday, May 18, 2018, at the law offices of Zysman, Aharoni, Gayer and Sullivan & Worcester
LLP, 1633 Broadway, 32nd Floor, New York, New York 10019, for the following purposes:
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1.
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To elect Erez Raphael, Yalon Farhi,
Malcolm Hoenlein, Allen Kamer, Hila Karah, Dennis M. McGrath, Richard B. Stone, Rami Yehudiha and Ori Zanco as directors to
serve on the Company’s Board of Directors for a one-year term that expires at the 2019 Annual Meeting of Stockholders,
or until their successors are elected and qualified or until their earlier resignation or removal;
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2.
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To approve, for purposes of Nasdaq
Listing Rule 5635(d), the conversion of 1,234,080 shares of the Company’s Series C Convertible Preferred Stock into
an aggregate of 2,468,160 shares of common stock, $0.0001 par value per share. The shares of Series C Convertible Preferred
Stock were issued pursuant to private placement transactions that closed on February 28, 2018 and March 6, 2018;
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3.
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To consider and vote to amend the Company’s
Amended and Restated 2012 Equity Incentive Plan to increase the number of shares authorized for issuance under the Plan by
1,500,000 shares from 3,873,000 to 5,373,000;
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4.
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To ratify the appointment by the Audit
Committee of the Board of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2018;
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5.
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To approve an amendment to the Company’s
bylaws, permitting the stockholders to remove a director with our without cause
by
a vote of the majority of the stockholders entitled to vote at a meeting of the stockholders
; and
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6.
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To transact any other business as
may properly come before the Annual Meeting or any adjournments thereof.
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All stockholders are
cordially invited to attend the Meeting. If your shares are registered in your name, please bring the admission ticket
attached to your proxy card. If your shares are registered in the name of a broker, trust, bank or other nominee, you
will need to bring a proxy or a letter from that broker, trust, bank or other nominee or your most recent brokerage account statement,
that confirms that you are the beneficial owner of those shares. If you do not have either an admission ticket or proof that you
own shares of the Company, you will not be admitted to the meeting.
The Board of Directors
has fixed the close of business on March 26, 2018, as the record date for the meeting. Only stockholders on the record date are
entitled to notice of and to vote at the meeting and at any adjournment or postponement thereof.
Your vote is important
regardless of the number of shares you own. The Company requests that you complete, sign, date and return the enclosed
proxy card without delay in the enclosed postage-paid return envelope, even if you now plan to attend the annual meeting. You
may revoke your proxy at any time prior to its exercise by delivering written notice or another duly executed proxy bearing a
later date to the Secretary of the Company, or by attending the annual meeting and voting in person.
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Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting to be held on May 18, 2018:
The proxy statement, proxy card
and Annual Report to stockholders for the year ended December 31, 2017 are also available at http://www.dariohealth.com/DH2018Proxy.pdf
Stockholders may also obtain additional
paper or e-mail copies of these materials at no cost by writing to DarioHealth Corp., 8 HaTokhen Street, Caesarea Industrial
Park 3088900, Israel, attention: Secretary (zvi@mydario.com).
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Securities and Exchange
Commission rules allow us to furnish proxy materials to our stockholders over the internet. You may also have access to the materials
for the Meeting by visiting the website: http://www.dariohealth.com/DH2018Proxy.pdf. You may also cast your vote by visiting
www.proxyvote.com if you hold your shares in “street name,” or www.vstocktransfer.com/proxy if you are a registered
stockholder. You may also authorize a proxy to vote your shares over the internet. In order to vote over the internet you must
have your stockholder identification number, which is set forth in the Notice of Internet Availability of Proxy Materials mailed
to you. You may also request a paper proxy card to submit your vote by mail. If you have any questions regarding the completion
of the enclosed proxy card or would like directions to the Annual Meeting, please call +(972)-(4) 770 4055. You may also find
directions at http://www.dariohealth.com/DH2018Proxy.pdf.
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By order of the Board of Directors
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/s/ Erez Raphael
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Erez Raphael
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Chief Executive Officer and Chairman of the Board
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Caesarea, Israel
April 2, 2018
IMPORTANT: In order to secure a quorum and to avoid the
expense of additional proxy solicitation, please either vote by internet or sign, date and return your proxy promptly in the enclosed
envelope even if you plan to attend the meeting personally. Your cooperation is greatly appreciated. If you return your proxy
without an indication of how you wish to vote, your shares will be voted for each director nominee in proposal 1 and proposals
2, 3, 4 and 5.
TABLE OF CONTENTS
PROXY
STATEMENT
DarioHealth
CORP.
ANNUAL MEETING OF STOCKHOLDERS
to be held at 11:00 a.m. on May 18,
2018
Zysman, Aharoni, Gayer and Sullivan
& Worcester LLP
1633 Broadway, 32
nd
Floor
New York, New York 10019
QUESTIONS AND ANSWERS
ABOUT THESE PROXY MATERIALS
Why am I receiving this Proxy Statement?
This Proxy Statement
describes the proposals on which our Board of Directors (the “
Board
”) would like you, as a stockholder, to
vote at our 2018 Annual Meeting of the Stockholders (the “
Meeting
”), which will take place at 11:00 a.m. on
May 18, 2018 at the law offices of Zysman, Aharoni, Gayer and Sullivan & Worcester LLP, 1633 Broadway, 32nd Floor, New York,
New York 10019.
This Proxy Statement
also gives you information on these proposals so that you can make an informed decision. We intend to mail this Proxy Statement
and accompanying proxy card on or about April 11, 2018, to all stockholders of record entitled to vote at the Meeting.
In this proxy statement,
we refer to DarioHealth Corp. as the “Company”, “we”, “us” or “our” or similar
terminology.
Website addresses
included in this proxy statement are textual references only, and the information in any website is not incorporated by reference
into this proxy statement.
How many shares must be present in order to hold the annual
meeting of stockholders?
Our Bylaws provide
that a quorum shall consist of the holders of a majority of the stock issued and outstanding and entitled to vote thereat, present
in person or represented by proxy at the Meeting. A quorum will be present if stockholders holding at least a majority of the
outstanding shares entitled to vote are present at the meeting in person or represented by proxy. On March 26, 2018 (the “
Record
Date
”), there were 16,480,164 shares of our common stock, $0.0001 par value per share (the “
Common Stock
”),
issued and outstanding and entitled to vote. Thus, the holders of 8,240,083 shares of Common Stock must be present in person or
represented by proxy at the meeting to have a quorum. If such quorum shall not be present or represented, the stockholders entitled
to vote thereat, present in person or represented by proxy, shall have the power to adjourn the Meeting, without notice other
than announcement at the meeting, until a quorum shall be present or represented. Your shares will be counted towards the quorum
only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in
person at the Meeting. Abstentions may be specified on all proposals. Abstentions and broker non-votes will be counted towards
the quorum requirement. Submitted proxies which are left blank will also be counted as present for purposes of determining a quorum,
and other than the Bylaw Proposal (as hereinafter defined), which requires the consent of the affirmative vote of sixty-six and
two-thirds percent (66 2/3%) of the Company’s outstanding Common Stock, are not counted for purposes of determining whether
a proposal has been approved in matters where the proxy does not confer the authority to vote on such proposal, and thus have
no effect on its outcome.
Who can vote at the annual meeting of stockholders?
Between February 28,
2018 and March 6, 2018, we executed two forms of Securities Purchase Agreements (together, the “
Securities Purchase Agreements
”)
with accredited and non-U.S. investors relating to two concurrent placement offerings (collectively, the “
Offering
”)
of an aggregate of 2,262,269 shares of our Common Stock, at a purchase price of $1.40 per share, an aggregate of 1,234,080 shares
of our Series C Convertible Preferred Stock, $0.0001 par value per share (the “
Series C Preferred Stock
”),
at a purchase price of $2.80 per share, and warrants (the “
Warrants
”) to purchase up to an aggregate of 3,784,351
shares of Common Stock at an exercise price of $1.80 per share (the “
Warrant Shares
”). The closings of the
Offering took place on February 28, 2018 and March 6, 2018. The shares of Common Stock issuable upon conversion of the Series
C Preferred Stock are not entitled to vote at the Meeting.
Stockholders who
owned shares of our Common Stock on the Record Date may attend and vote at the Meeting, provided, however, that the vote of all
shares of our Series C Preferred Stock and Common Stock issued in the Offering will not be counted in determining whether or not
the Private Placement Proposal (as hereinafter defined) is approved. There were 16,480,164 shares of Common Stock outstanding
on the Record Date. All shares of Common Stock have one vote per share and vote together as a single class. Information about
the stockholdings of our directors and executive officers is contained in the section of this Proxy Statement entitled “Beneficial
Ownership of Principal Stockholders, Officers and Directors” on page 35 of this Proxy Statement.
What is the proxy card?
The proxy card enables
you to appoint Erez Raphael, our President and Chief Executive Officer, and/or Zvi Ben David, our Secretary, Treasurer and Chief
Financial Officer, as your representative at the Meeting. By completing and returning the proxy card or voting online as described
herein, you are authorizing these persons to vote your shares at the Meeting in accordance with your instructions on the proxy
card. This way, your shares will be voted whether or not you attend the Meeting. Even if you plan to attend the Meeting, please
complete and return your proxy card before the Meeting date just in case your plans change. If a proposal comes up for vote at
the Meeting that is not on the proxy card, the proxies will vote your shares, under your proxy, according to their best judgment.
What am I voting on?
You are being asked to vote:
1. To elect
Erez Raphael, Yalon Farhi, Malcolm Hoenlein, Allen Kamer, Hila Karah, Dennis M. McGrath, Richard B. Stone, Rami Yehudiha and Ori
Zanco (the “
Director Nominees
”) as directors to serve on our Board for a one-year term that expires at the
2019 Annual Meeting of Stockholders, or until their successors are elected and qualified or until their earlier resignation or
removal;
2. To approve,
for purposes of Nasdaq Listing Rule 5635(d), the conversion of 1,234,080 shares of our Series C Convertible Preferred Stock into
an aggregate of 2,468,160 shares of Common Stock based on a conversion price of $1.40 per share. The shares of Series C Convertible
Preferred Stock were issued pursuant to private placement transactions that closed on February 28, 2018 and March 6, 2018 (the
“
Private Placement Proposal
”);
3. To consider
and vote to amend the Amended and Restated Company’s 2012 Equity Incentive Plan, as amended (the “
2012 Equity Incentive
Plan
”), to increase the number of shares authorized for issuance under the 2012 Equity Incentive Plan by 1,500,000 shares
from 3,873,000 to 5,373,000 (the “
Incentive Plan Proposal
”);
4. To ratify
the appointment by the Audit Committee of the Board of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global
(the “
Auditor
”) as our independent registered public accounting firm for the fiscal year ending December 31,
2018; and
5. To approve
an amendment to the our existing bylaws (the “
Bylaws
”) to permit the removal of a director from the Board with
our without cause
by a vote of the majority of the stockholders entitled
to vote at a meeting of the stockholders
(the “
Bylaw Proposal
”).
We will also transact any other business
that properly comes before the Meeting.
How does the Board recommend that I vote?
Our Board unanimously recommends that the
stockholders vote
“FOR”
each of the Director Nominees in proposal 1 and for each of proposals 2, 3, 4 and 5.
What is the difference between holding shares as a stockholder
of record and as a beneficial owner?
Most of our stockholders
hold their shares in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates in their
own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If, on the Record
Date, your shares were registered directly in your name with our transfer agent, VStock Transfer LLC, you are a “stockholder
of record” who may vote at the Meeting, and we are sending these proxy materials directly to you. As the stockholder of
record, you have the right to direct the voting of your shares by returning the enclosed proxy card to us or to vote in person
at the Meeting. Whether or not you plan to attend the Meeting, please complete, date and sign the enclosed proxy card to ensure
that your vote is counted.
Beneficial Owner
If, on the Record
Date, your shares were held in an account at a brokerage firm or at a bank or other nominee holder, you are considered the beneficial
owner of shares held “in street name,” and these proxy materials are being forwarded to you by your broker or nominee
who is considered the stockholder of record for purposes of voting at the Meeting. As the beneficial owner, you have the right
to direct your broker on how to vote your shares and to attend the Meeting. However, since you are not the stockholder of record,
you may not vote these shares in person at the Meeting unless you receive a valid proxy from your brokerage firm, bank or other
nominee holder. To obtain a valid proxy, you must make a special request of your brokerage firm, bank or other nominee holder.
If you do not make this request, you can still vote by using the voting instruction card enclosed with this proxy statement; however,
you will not be able to vote in person at the Meeting.
How do I vote?
(1) You may
vote by mail.
You may vote by mail by completing, signing and dating your proxy card and returning it in the enclosed, postage-paid
and addressed envelope. If we receive your proxy card prior to the Meeting and if you mark your voting instructions on the proxy
card, your shares will be voted:
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according to the best judgment of the proxies if a proposal comes up for a vote at the Meeting
that is not on the proxy card.
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If you return a signed card, but do
not provide voting instructions, your shares will be voted:
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for each of the Director Nominees to serve on the Board;
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for the Private Placement Proposal;
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for the Incentive Plan Proposal;
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for the ratification of the appointment of the Auditor as our independent registered
public accounting firm for the fiscal year ending December 31, 2018;
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for the Bylaw Proposal; and
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according to the best judgment of either Mr. Raphael or Mr. Ben David if a proposal comes
up for a vote at the Meeting that is not on the proxy card.
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(2) You may
vote in person at the Meeting.
We will pass out written ballots to anyone who wants to vote at the Meeting. However, if you
hold your shares in street name, you must bring to the Meeting a valid proxy from the broker, bank or other nominee holding your
shares that confirms your beneficial ownership of the shares and gives you the right to vote your shares. Holding shares in street
name means you hold them through a brokerage firm, bank or other nominee, and therefore the shares are not held in your individual
name. We encourage you to examine your proxy card closely to make sure you are voting all of your shares.
(3) You may vote online.
You
may also have access to the materials for the Meeting by visiting the website: http://www.dariohealth.com/DH2018Proxy.pdf. You
may also cast your vote by visiting www.proxyvote.com if you hold your shares in “street name,” or www.vstocktransfer.com/proxy
if you are a registered stockholder.
What does it mean if I receive more than one proxy card?
You may have multiple accounts at the transfer
agent and/or with brokerage firms. Please sign and return all proxy cards to ensure that all of your shares are voted.
What if I change my mind after I return my proxy?
You may revoke your proxy and change your
vote at any time before the polls close at the Meeting. You may do this by:
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sending a written notice to Zvi Ben David, our corporate Secretary, stating that you would
like to revoke your proxy of a particular date;
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signing another proxy card with a later date and returning it before the polls close at
the Meeting; or
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attending the Meeting and voting in person.
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Please note, however,
that if your shares are held of record by a brokerage firm, bank or other nominee, you must instruct your broker, bank or other
nominee that you wish to change your vote by following the procedures on the voting form provided to you by the broker, bank or
other nominee. If your shares are held in street name, and you wish to attend and vote at the Meeting, you must bring to the Meeting
a legal proxy from the broker, bank or other nominee holding your shares, confirming your beneficial ownership of the shares and
giving you the right to vote your shares.
Will my shares be voted if I do not sign and return my proxy
card?
If your shares are
held in street name or in your name and you do not sign and return your proxy card, your shares will not be voted unless you vote
in person at the Meeting.
How are votes counted?
You may vote “for,”
“against,” or “abstain” on each of the proposals being placed before our stockholders. Abstentions and
broker non-votes (
i.e.
, shares held by brokers on behalf of their customers, which may not be voted on certain matters
because the brokers have not received specific voting instructions from their customers with respect to such matters) will be
counted solely for the purpose of determining whether a quorum is present at the Meeting.
What are broker non-votes?
Broker non-votes
occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee
holding the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name,
the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the
beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters
that are considered to be “routine,” but not with respect to “non-routine” matters. In the event that
a broker, bank, or other agent indicates on a proxy that it does not have discretionary authority to vote certain shares on a
non-routine proposal, then those shares will be treated as broker non-votes. Proposals No. 1, 2, 3 and 5 are non-routine proposals;
therefore, your broker, bank or other agent is not entitled to vote your shares on Proposals No. 1, 2, 3 and 5 without your instructions.
How many votes are required to elect the Director Nominees
as directors of the Company?
The affirmative vote
of a majority of the votes cast at the Meeting by the holders of Common Stock represented in person or by proxy and entitled to
vote is required for approval of the election of each of the Director Nominees. Abstentions are considered present for purposes
of establishing a quorum but will have no effect on the election of directors. Broker non-votes will not affect the outcome of
the vote on this matter.
How many votes are required to approve the Private Placement
Proposal?
The affirmative vote
of a majority of the votes cast at the Meeting by the holders of Common Stock represented in person or by proxy and entitled to
vote is required for approval of the Private Placement Proposal. Abstentions are considered present for purposes of establishing
a quorum but will have no effect on the Private Placement Proposal. Broker non-votes will not affect the outcome of the vote on
this matter.
How many votes are required to approve the Incentive Plan
Proposal?
The affirmative vote
of a majority of the votes cast at the Meeting by the holders of Common Stock represented in person or by proxy and entitled to
vote is required for approval of the Incentive Plan Proposal. Abstentions are considered present for purposes of establishing
a quorum but will have no effect on the approval of the Incentive Plan Proposal. Broker non-votes will not affect the outcome
of the vote on this matter.
How many votes are required to ratify the Company’s
independent public accountants?
The affirmative vote
of a majority of the votes cast at the Meeting by the holders of Common Stock represented in person or by proxy and entitled to
vote is required to ratify the Auditor as our independent registered public accounting firm for the year ending December 31,
2018. Abstentions are considered present for purposes of establishing a quorum but will have no effect on the ratification of
our independent public accountants. There are no broker non-votes on this matter since it is a “routine” matter.
How many votes are required to approve the Bylaw Proposal?
The affirmative
vote of sixty-six and two-thirds percent (66 2/3%) of the stockholders entitled to vote at a meeting of the stockholders is required
for approval of the Bylaw Proposal. Abstentions are considered present for purposes of establishing a quorum but will have the
effect of a vote against the Bylaw Proposal. Broker non-votes will have the effect of a vote against the approval of the Bylaw
Proposal.
What happens if I don’t indicate how to vote my proxy?
If you just sign
your proxy card without providing further instructions, your shares will be counted as a “for” vote proposals 1, 2,
3, 4 and 5.
Is my vote kept confidential?
Proxies, ballots and
voting tabulations identifying stockholders are kept confidential and will not be disclosed except as may be necessary to meet
legal requirements.
Where do I find the voting results of the Meeting?
We will announce preliminary
voting results at the Meeting and file a Current Report on Form 8-K announcing the final voting results of the Meeting.
Who can help answer my questions?
You can contact our
Secretary, Treasurer and Chief Financial Officer, Zvi Ben David, at +(972)-(4) 770 4055 or by sending a letter to Mr. Ben
David at offices of the Company at 8 HaTokhen Street, Caesarea Industrial Park 3088900, Israel with any questions about proposals
described in this Proxy Statement or how to execute your vote.
No Right of Appraisal
None of Delaware law,
our Certificate of Incorporation or our Bylaws provides for appraisal or other similar rights for dissenting stockholders in connection
with any of the proposals to be voted upon at this Meeting. Accordingly, our stockholders will have no right to dissent and obtain
payment for their shares.
ALL PROXIES
RECEIVED WILL BE VOTED IN ACCORDANCE WITH THE CHOICES SPECIFIED ON SUCH PROXIES. PROXIES WILL BE VOTED IN FAVOR OF A PROPOSAL
IF NO CONTRARY SPECIFICATION IS MADE. ALL VALID PROXIES OBTAINED WILL BE VOTED AT THE DISCRETION OF THE PERSONS NAMED IN THE PROXY
WITH RESPECT TO ANY OTHER BUSINESS THAT MAY COME BEFORE THE MEETING. THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR”
EACH OF THE DIRECTOR NOMINEES IN PROPOSAL 1 AND FOR EACH OF PROPOSALS 2, 3, 4 and 5.
PROPOSAL 1
ELECTION OF DIRECTORS
Introduction
The Board has nominated
the Director Nominees, each of whom currently serves as a director, to stand for election at the Meeting. Stockholders will be
asked to elect each of the Director Nominees, each to hold office until the 2019 Annual Meeting of Stockholders or until his or
her successor is elected and qualified or until his or her earlier resignation or removal. The enclosed proxy, if returned, and
unless indicated to the contrary, will be voted for the election of each of the Director Nominees.
We have been advised
by each of the Director Nominees that they are willing to be named as a nominee and each are willing to continue to serve as a
director if elected. If some unexpected occurrence should make necessary, in the discretion of the Board, the substitution of
some other person for the nominees, it is the intention of the persons named in the proxy to vote for the election of such other
person as may be designated by the Board.
Board Qualifications
We believe that the
collective skills, experiences and qualifications of our directors provide our Board with the expertise and experience necessary
to advance the interests of our stockholders. While the Nominating and Corporate Governance Committee of our Board does not have
any specific, minimum qualifications that must be met by each of our directors, the Nominating and Corporate Governance Committee
uses a variety of criteria to evaluate the qualifications and skills necessary for each member of the Board. In addition to the
individual attributes of each of our current directors described below, we believe that our directors should have the highest
professional and personal ethics and values, consistent with our longstanding values and standards. They should have broad experience
at the policy-making level in business, exhibit commitment to enhancing stockholder value and have sufficient time to carry out
their duties and to provide insight and practical wisdom based on their past experience.
Nominee and Executive Officer Information
Listed below are the names of the directors
and executive officers of the Company, their ages as of the Record Date and positions held:
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Name
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Age
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Position(s)
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Erez Raphael
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45
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Chief Executive Officer, President and Chairman of the Board
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Zvi Ben David
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57
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Chief Financial Officer, Treasurer and Secretary
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Dror Bacher
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43
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Chief Operating Officer
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Yalon Farhi
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56
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Director
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Allen Kamer
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47
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Director
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Hila Karah
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49
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Director
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Malcolm Hoenlein
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74
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Director
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Dennis M. McGrath
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61
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Director
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Prof. Richard B. Stone
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75
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|
Director
|
|
Rami Yehudiha
|
|
48
|
|
Director
|
|
Ori Zanco
|
|
38
|
|
Director
|
Erez Raphael
has served as our Chief Executive Officer since August 9, 2013 and as a director of our company since December 2013. Mr.
Raphael has served as Chairman of the Board of Directors since November 2014. He previously and since October 2012 served as our
Vice President of Research and Development. Mr. Raphael has over 17 years of industry experience, having been responsible in his
career for product delivery, technology and business development. Prior to joining us, from 2010 to 2012, Mr. Raphael served as
Head of Business Operations for Nokia Siemens Networks, where he was responsible for establishing and implementing a new portfolio
business unit directed towards marketing and sales of complementary products. Prior to that, from 1998 to 2010, he held increasingly
senior positions at Amdocs Limited (NYSE:DOX) where he was ultimately responsible for advising the Chief Technology Officer and
implementing matters of overall business strategy. Mr. Raphael holds a B.A. in economics and business management from Haifa University.
We believe Mr. Raphael is qualified to serve on our Board because of his extensive experience with technology companies and in
sales and marketing.
Zvi Ben David
has served as our Chief Financial Officer, Treasurer and Secretary since January 7, 2015. Mr. Ben David has over 25 years
of experience in corporate and international financial management, including at both publicly-listed and private companies. Since
2012, he has acted as an independent entrepreneur with, and investor in, various medical device ventures. From 2005 to 2012, Mr.
Ben David served as the Chief Financial Officer of UltraShape Medical Ltd., a developer, manufacturer and marketer of innovative
non-invasive technologies for fat cell destruction and body sculpting. While with UltraShape, he helped lead the company through
$35 million in private financing, followed by the company’s merger with a Tel Aviv Stock Exchange company and ultimately
the company’s sale to Syneron Medical Ltd. (Nasdaq:ELOS). From 2000 to 2005, he served as Vice President and Chief Financial
Officer of Given Imaging Ltd., where he was part of the management team that led that company’s 2001 initial public offering
and 2004 follow-on offering, and served as a director of that company from its establishment in 1998 to 2000. From 1995 to June
2000, Mr. Ben David served as Vice President and Chief Financial Officer of RDC Rafael Development Corporation, one of Given Imaging
Ltd.’s principal shareholders. From 1994 to 1995, Mr. Ben David served as manager of the finance division of Electrochemical
Industries (Frutarom) Ltd., an Israeli company traded on the Tel-Aviv Stock Exchange and the American Stock Exchange, and from
1989 to 1993, Mr. Ben David served as the manager of that company’s economy and control department. From 1984 to 1988, Mr.
Ben David worked at Avigosh & Kerbs, an accounting firm in Haifa, Israel. Mr. Ben David is a certified public accountant in
Israel and holds a B.A. in economics and accounting from Haifa University.
Dror Bacher
has served as our Chief Operating Officer since July 25, 2017. Mr. Bacher previously served as our Vice President of Research
and development as well as Vice President of Operations since 2013 where he worked on product development as well as building
a scalable supply chain. Mr. Bacher has over 18 years of experience in various technological companies and his expertise includes
product management, product development and business operations in multidisciplinary environments. Between 2008 and 2013, Mr.
Bacher Served in several leadership roles at Amdocs Limited (NYSE:DOX), including working as a part of the Chief Technology Office,
managing enterprise development. programs for a variety of software products associated with service delivery, as well as serving
as head of process Prior to Amdocs, Mr. Bacher served in a senior role at Tower Semiconductor (Nasdaq:TSEM), the global specialty
foundry leader for IC manufacturing, where he was responsible for business operations and commercialization expansion. Mr. Bacher
holds a B.Sc. in computer science and an MBA degree from Haifa University.
Yalon Farhi
has been a director of our Company since June 1, 2016. Since 1998, Mr. Farhi, a Colonel in the Israeli Defense Forces
(reserves), has served as a motivational lecturer and educator at Bnei-David Institutions, a pre-army and post-army educational
program in Israel. From 1998 to January 2016, Mr. Farhi worked as an administrative manager for El-Ami, a non-governmental organization
in Israel. Previously, from 1988 to 1992, Mr. Farhi served as a private security consultant to several security companies in Israel.
In addition, for the past thirty years, Mr. Farhi has been the owner of a private gardening and land development services company
based in Israel. Mr. Farhi received a degree in Education Studies and holds a Teaching Certificate from the Moreshet Yaacov College
in Jerusalem. We believe Mr. Farhi is qualified to serve on our Board because of his business experience.
Malcolm Hoenlein
has been a director of our company since August 31, 2011. Since 1986, Mr. Hoenlein has served as Chief Executive Officer
and Executive Vice Chairman of the Conference of Presidents of Major American Jewish Organizations, the coordinating body on international
and national concerns for 52 national American Jewish organizations. Previously, he served as the founding Executive Director
of the Jewish Community Relations Council of Greater New York. Prior to that, he was the founding Executive Director of the Greater
New York Conference on Soviet Jewry. A National Defense Fellow at the Near East Center of the University of Pennsylvania, Mr.
Hoenlein taught International Relations in the Political Science Department and served as a Middle East specialist at the Foreign
Policy Research Institute. In addition, he served on the editorial staff of ORBIS, the Journal of International Affairs. He serves
as a director of several companies, Coronado Biosciences Inc. (Nasdaq: CNDO), Nanox Technologies, Data to Life, Nuvo Corp and
WellSense Technologies. Mr. Hoenlein has a B.A. in Political Science from Temple University and a Master's Degree in International
Relations from the University of Pennsylvania, as well as an honorary Doctorate of Laws from Touro College and an honorary Doctorate
of Humane Letters from Yeshiva University. He was appointed by Presidents Clinton and Bush as a U.S. delegate to the Organization
for Security and Cooperation in Europe. In 2013, he received the highest civilian decoration from King Mohamad VI of Morocco.
We believe Mr. Hoenlein is qualified to serve on our Board because of his extensive experience serving on the boards of public
and private companies.
Allen Kamer
has been a director of our company since February 28, 2017. Since September 2016, Mr. Kamer serves as a managing partner
at OurCrowd, a digital health fund. From January 2014 until June 2016, Mr. Kamer served as Chief Commercial Officer, or CCO, of
Optum Analytics, a division within Optum, Inc., United Healthcare’s health services unit. Optum Analytics was focused on
converting health information to health intelligence and delivering solutions that improve care delivery, quality and cost-effectiveness.
As the CCO, Mr. Kamer led the group’s commercialization efforts of analytics software products and solutions, including
the award-winning Optum OneTM, to U.S. provider and payer organizations. In July 2008,, Mr. Kamer was co-founder of the Humedica
Inc., which was acquired by United Healthcare in January 2013. As co-founder, Mr. Kamer helped lead efforts to raise capital,
hire the management team, and launch the business. Mr. Kamer led Corporate Development & Marketing at Humedica, Inc., and
was responsible for formulating and managing the company’s strategic partnerships, all marketing & branding activities,
and new business opportunities. Mr. Kamer has a B.A. from Brandeis University. We believe Mr. Kamer is qualified to serve on our
Board because of his business expertise and experience with life sciences companies.
Hila Karah
has been a director of our company since November 23, 2014. Ms. Karah is an independent business consultant and an investor in
several high-tech, biotech and internet companies. From 2006 to 2013, she served as a partner and Chief Investment Officer of
Eurotrust Ltd., a family office. From 2002 to 2005, she served as a research analyst at Perceptive Life Sciences Ltd., a New York-based
hedge fund. Prior to that, Ms. Karah served as research analyst at Oracle Partners Ltd., a health-care focused hedge fund. Ms.
Karah has served as a director in several private and public companies including Intec Pharma, since 2009 and Cyren Ltd since
2008. Ms. Karah holds a B.A. in Molecular and Cell Biology from the University of California, Berkeley, and studied at the University
of California, Berkeley-University of California, San Francisco Joint Medical Program. We believe Ms. Karah is qualified to serve
on our Board of Directors because of her experience as an investor in and advisor to high-tech, biotech and internet companies.
Dennis M. McGrath
has
been a director of our company since November 12, 2013. Mr. McGrath is a seasoned medical device industry executive with extensive
public company leadership experience possessing a broad range of skills in corporate finance, business development, corporate
strategy, operations and administration. After an 18 year career at PhotoMedex, Inc. (Nasdaq: PHMD), he recently joined PAVmed,
Inc (Nasdaq: PAVM, PAVMW) as its Executive Vice President and Chief Financial Officer. Previously, from 2000 to 2017 Mr. McGrath
served in several senior-level positions of PhotoMedex, Inc. (Nasdaq: PHMD), a global manufacturer and distributor of medical
device equipment and services, including from 2011 to 2017 as director, President, and Chief Financial Officer. Prior to PhotoMedex’s
reverse merger with Radiancy, Inc. in December 2011, he also served as Chief Executive Officer from 2009 to 2011 and served as
Vice President of Finance and Chief Financial Officer from 2000 to 2009. He received honors as a P.A.C.T. (Philadelphia Alliance
for Capital and Technology) finalist for the 2011 Investment Deal of the Year, award winner for the SmartCEO Magazine 2012 CEO
of the Year for Turnaround Company, and finalist for the Ernst & Young 2013 Entrepreneur of the Year. He has extensive experience
in mergers and acquisitions, both domestically and internationally, and particularly involving public company acquisitions, including
Surgical Laser Technologies, Inc, (formerly, Nasdaq: SLTI), ProCyte Corporation (formerly, Nasdaq: PRCY), LCA Vision, Inc. (formerly,
Nasdaq: LCAV) and Think New Ideas, Inc. (formerly, Nasdaq: THNK). Prior to PhotoMedex, he served in several senior level positions
of AnswerThink Consulting Group, Inc. (then, Nasdaq: ANSR, now, The Hackett Group, Nasdaq: HCKT), a business consulting and technology
integration company, including from 1999 to 2000 as Chief Operating Officer of the Internet Practice, the largest division of
AnswerThink Consulting Group, Inc., while concurrently during the merger of the companies, serving as the acting Chief Financial
Officer of Think New Ideas, Inc. (then, Nasdaq: THNK, now, Nasdaq: HCKT), an interactive marketing services and business solutions
company. Mr. McGrath also served from 1996 until 1999 as Chief Financial Officer, Executive Vice President and director of TriSpan,
Inc., an internet commerce solutions and technology consulting company, which was acquired by AnswerThink Consulting Group, Inc.
in 1999. During his tenure at Arthur Andersen & Co., where he began his career, he became a Certified Public Accountant in
1981 and he holds a B.S., maxima cum laude, in accounting from LaSalle University. In addition to serving as a director of PhotoMedex,
he serves as the audit chair and a director of several medical device companies, including Noninvasive Medical Technologies, Inc.
and Cagent Vascular, LLC, and as an advisor to the board of an orphan drug company, Palvella Therapeutics, LLC. Formerly from
2007 to 2009, Mr. McGrath served as a director of Embrella Cardiovascular, Inc. (sold to Edwards Lifesciences Corporation, NYSE:
EW). He also serves on the Board of Trustees for Manor College and the Board of Visitors for Taylor University. We believe Mr.
McGrath is qualified to serve on our Board because of his accounting expertise and his experiences serving as an officer and director
of public and private companies.
Prof. Richard
B. Stone
has been a director of our company since July 7, 2014. For more than twenty-five years, Prof. Stone has been
an active participant in early-stage business enterprises as a director or investor, including technology and biotechnology companies.
He currently serves on the board of directors of multiple technology companies, including Powermat, Espro-Accoustiguide Group,
Wellsense Technologies, NanoX Imaging Plc, Illumigyn Ltd, Cardiologic Innovations, Quality Inflow Ltd., and Check-Cap. Since 1974,
Prof. Stone has been a member of the faculty of Columbia Law School, where he held the Wilbur Friedman Chair in Tax Law for twenty
years. In addition to basic and advanced tax courses, Prof. Stone has taught in the areas of contracts, business planning and
real estate planning. Among other not-for-profit organizations he has been associated with, from 2011 to 2013, Prof. Stone served
as Chairman of the Conference of Presidents of Major American Jewish Organizations. Prof. Stone began his career in 1967 in private
practice in Washington, D.C, and thereafter joined the staff of the Solicitor General of the United States, where from 1969 to
1973 he was Assistant to the Solicitor General. He is a graduate of Harvard College and Harvard Law School. We believe Prof. Stone
is qualified to serve on our Board because of his legal expertise and experience with life sciences companies.
Rami Yehudiha
has been a director of our company since September 23, 2014. Mr. Yehudiha is a marketing and advertising executive with
a particular expertise in developing and implementing campaigns utilizing cutting-edge technologies and methods. From 2004 to
the present, he has served as the Founder and Chief Executive Officer of LEAD, a top ten Israeli advertising firm. From 1997 to
2003, he served as the Chief Executive Officer at Ogilvy One Israel, a part of the WPP Group. Mr. Yehudiha received his B.A. in
Political Science and Economics from Tel Aviv University and an M.B.A. in Marketing from Manchester University. We believe Mr.
Yehudiha is qualified to serve on our Board of Directors because of his experience in technology-based marketing.
Ori Zanco
has been a director of our company since April 1, 2018. Since 2017, Mr. Zanco has served as general counsel to Capital
Point Ltd. Investment Company, currently traded on the Tel Aviv Stock Exchange. From 2009 to 2016, he worked as an attorney at
the law firm of Katznell Dimant in Israel, where he managed the firm’s commercial law, capital markets and securities practice
group. Prior to that role, from 2007 to 2009, Mr. Zanco served as general counsel to Central European Estate, N.V., a Dutch real
estate company listed on the Tel Aviv Stock Exchange. In 2004, he received his M.B.A. from the College of Management Business
School and an LL.B in from the College of Management Law School, both located in Rishon L’Zion, Israel. We believe Mr. Zanco
is qualified to serve on our Board because of his legal expertise and experience with publicly listed companies.
Under the terms
of the securities purchase agreement relating to our September 2014 private placement transaction, for so long as David Edery
or his controlled affiliates held 25%, 15% and 10% of the outstanding shares of our Common Stock, Mr. Edery had the right to nominate,
respectively, three, two or one member of our seven-member Board. Mr. Edery has waived his director nomination rights effective
February 28, 2016. Mr. Yehudiha and Ms. Karah were initially appointed to our Board as nominees of Mr. Edery.
Under the terms
of the securities purchase agreement relating to our a private placement offering conducted in January 2017, our lead investor
in the offering, OurCrowd Digital Health L.P., was given the right to appoint two individuals to the our Board for so long as
the investor holds 13%, and one individual for as long as investor holds 5% of our outstanding shares of our Common Stock. We
further agreed to permit such designees to serve on our Nominating and Corporate Governance Committee. In addition, we granted
OurCrowd Digital Health L.P. the right, for a two year period, to participate in future securities offerings of the Company. On
February 28, 2017, OurCrowd Digital Health L.P. initially appointed Allen Kamer and
Yossi
Bahagon to serve on our Board as well as appointed each of Messrs. Kamer and Bahagon to serve on our Nominating and Corporate
Governance Committee. Mr. Bahagon resigned from our Board on March 15, 2018.
Under the terms
of the securities purchase agreement relating to our a private placement offering conducted in February 2018, we granted our lead
investor, Agate JT Healthcare Fund L.P., the right to appoint one individual to our Board with such designee to be nominated to
serve on the Board for so long as such investor maintains ownership in excess of 5% of our outstanding Common Stock. Agate selected Mr. Zanco to serve on our Board and Mr. Zanco was appointed to our Board on April 1, 2018.
Except for the appointment
of Yalon Farhi, whose nomination was suggested by Shmuel Farhi, a significant stockholder of the Company and a cousin of Yalon
Farhi, there are no family relationships between any of our directors or executive officers.
Except for the foregoing,
there are no arrangements between our directors and any other person pursuant to which our directors were nominated or elected
for their positions.
Except as set forth
herein, none of our directors or executive officers have been involved, in the past ten years and in a manner material to an evaluation
of such director’s or officer’s ability or integrity to serve as a director or executive officer, in any of those
“Certain Legal Proceedings” more fully detailed in Item 401(f) of Regulation S-K, which include but are not limited
to, bankruptcies, criminal convictions and an adjudication finding that an individual violated federal or state securities laws.
Additionally, none of our directors or executive officers have been involved in any material proceedings to which such director
or executive officer was a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our
subsidiaries.
Required Vote
The election of each
of the Director Nominees requires the affirmative vote of a majority of the shares of Common Stock represented in person or by
proxy and entitled to vote in the election of directors at the Meeting. Abstentions are considered present for purposes of establishing
a quorum but will have no effect on the election of directors. Broker non-votes will not affect the outcome of the vote on this
matter.
Recommendation of the Board
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE “FOR” ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
PROPOSAL 2
PRIVATE PLACEMENT PROPOSAL
Background
Between February 28,
2018 and March 6, 2018, we executed two forms of Securities Purchase Agreements with accredited and non-U.S. investors relating
to two concurrent offerings of an aggregate of 2,262,269 shares of Common Stock at a purchase price of $1.40 per share, an aggregate
of 1,234,080 shares of Series C Convertible Preferred Stock, at a purchase price of $2.80 per share, and Warrants to purchase
up to an aggregate of 3,784,351 shares of Common Stock at an exercise price of $1.80 per share. The closings of the Offering took
place on February 28, 2018 and March 6, 2018.
Pursuant to the Certificate
of Designation of Preferences, Rights and Limitations of the Series C Preferred Stock (the “
Certificate of Designation
”),
the shares of Series C Preferred Stock are convertible into an aggregate of 2,468,160 shares of Common Stock based on a conversion
price of $1.40 per share. Such conversion price is not subject to any future price-based anti-dilution adjustments but does carry
customary anti-dilution protection. The holders of the Series C Preferred Stock will not be entitled to convert such preferred
stock into shares of Common Stock until we obtain stockholder approval for such conversion and upon obtaining such stockholder
approval the Series C Preferred Stock shall automatically convert into shares of Common Stock. The holders of the Series C Preferred
Stock do not possess any voting rights. The Series C Preferred Stock carries a liquidation preference for each holder equal to
the investment made by such holder in the Series C Preferred Stock issued in the Offering, and such liquidation preference applies
in certain deemed liquidation events such as a change in control of the Company. In addition, the holders of Series C Preferred
Stock are eligible to participate in dividends and other distributions by us on an as-converted basis.
We have agreed to
file a registration statement covering the resale of the shares of Common Stock sold in the Offering, the shares of Common Stock
issuable upon conversion of the Series C Preferred Stock, and the Warrant Shares, by April 30, 2018.
Description of the Series C Preferred
Stock
Conversion Price
.
The Series C Preferred Stock entitles the holders thereof to convert their shares of Series C Preferred Stock into Common Stock
at a conversion price of $1.40 per share, subject to adjustment.
Automatic Conversion
.
The Series C Preferred Stock will automatically convert into shares of Common Stock upon obtaining stockholder approval of the
Private Placement Proposal.
Beneficial Ownership
Limitation
. Until such time as the Series C Preferred Stock is automatically converted upon obtaining stockholder approval
of the Private Placement Proposal, the holder will not have the right to convert its Series C Preferred Stock if the holder (together
with its affiliates and any other persons whose beneficial ownership of shares of Common Stock would be aggregated with the holder’s
for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”) would
beneficially own in excess of 19.99% of the number of shares of Common Stock outstanding immediately after giving effect to the
conversion, as such percentage ownership is determined in accordance with the terms of the Certificate of Designation.
Adjustments
.
The conversion price of the Series C Preferred Stock and the number of shares of Common Stock issuable upon the conversion of
the Series C Preferred Stock are subject to adjustment in certain circumstances.
Rights Upon Distribution
of Assets
. If we declare or makes any dividend or other distribution of its assets to holders of shares of Common Stock, the
exercise price in effect immediately prior to the record date fixed for determination of holders entitled to receive the distribution
shall be reduced pursuant to a formula set forth in the Warrants and the number of Warrant Shares shall be adjusted accordingly.
Listing
. There
is no established public trading market for the Series C Preferred Stock, and we do not expect a market to develop. In addition,
we do not intend to apply for listing of the Series C Preferred Stock on any national securities exchange or other nationally
recognized trading system.
Fundamental Transactions
.
In the event of any fundamental transaction, as described in the Certificate of Designation and generally including any merger
with or into another entity, sale of all or substantially all of the our assets, tender offer or exchange offer, or reclassification
of the Common Stock, we shall make appropriate provision so that Series C Preferred Stock shall thereafter be convertible for
shares of the successor entity based upon the conversion ratio or other consideration payable in the fundamental transaction.
In connection with a fundamental transaction that constitutes a corporate event, we shall make appropriate provision to ensure
that the holder will thereafter have the right to receive, upon conversion of Series C Preferred Stock in lieu of the shares of
Common Stock (or other securities, cash, assets or other property) purchasable upon the conversion of Series C Preferred Stock
prior to such fundamental transaction, such shares of stock, securities, cash, assets or any other property whatsoever which the
holder would have been entitled to receive upon the happening of such fundamental transaction had the Series C Preferred Stock
been converted immediately prior to such fundamental transaction.
Voting Rights
.
The holders of the Series C Preferred Stock do not have any voting rights, until they convert such shares into Common Stock.
The information provided
in this proxy statement contains summaries of the Certificate of Designation and is subject to, and qualified in its entirety
by reference to, the Certificate of Designation which is filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the
SEC on March 6, 2018.
Why We Need Stockholder Approval
Our Common Stock
is listed on the Nasdaq Capital Market and, as such, we are subject to the Nasdaq Stock Market Rules. Nasdaq Stock Market Rule
5635(d), (the “
Nasdaq 20% rule
”), requires stockholder approval prior to the issuance of securities in connection
with a transaction (other than a public offering) involving the sale, issuance or potential issuance of Common Stock (or securities
convertible into or exercisable for Common Stock), at a price less than market value, equal to 20% or more of the Common Stock
outstanding prior to the transaction. In order to permit the conversion of the Series C Preferred Stock, as well as the issuance
of 2,468,160 shares of Common Stock, we are seeking stockholder approval as required by the Nasdaq 20% rule.
Consequences of Not Approving this
Proposal
If we do not obtain
stockholder approval, the holders of Series C Preferred Stock will be unable to convert 1,234,080 shares of our Series C Preferred
Stock into shares of Common Stock and be unable to receive 2,468,160 shares of Common Stock.
Required Vote
The affirmative
vote of a majority of the votes cast at the Meeting by the holders of Common Stock represented in person or by proxy and entitled
to vote is required for the Private Placement Proposal, provided, however, that the vote of all shares of our Common Stock issued
in the Private Placement Offering will not be counted in determining whether or not the Private Placement Proposal is approved.
Abstentions and broker non-votes will not be counted “for” or “against” the proposal and will have no
effect on the outcome of the vote.
Recommendation of the Board
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE PRIVATE PLACEMENT PROPOSAL.
PROPOSAL 3
INCENTIVE PLAN PROPOSAL
On March 26, 2018,
the Board (upon the recommendation of the Board’s Compensation Committee (the “
Compensation Committee
”))
unanimously approved to amend the 2012 Equity Incentive Plan (the “
Plan Amendment
”), subject to stockholder
approval, to increase the number of shares of Common Stock authorized for issuance under the 2012 Equity Incentive Plan by 1,500,000
shares from 3,873,000 to 5,373,000 and to permit the issuance of stock grants under the 2012 Equity Incentive Plan.
The full text of the
proposed Plan Amendment is set out in
Annex A
to this Proxy Statement. The text of the proposed Plan Amendment is subject
to modification to include such changes as the Board deems necessary and advisable to affect the increase in the number of shares
of Common Stock reserved and available for issuance under the 2012 Equity Incentive Plan. Stockholders are being asked to approve
the Plan Amendment.
Reasons for the Plan Amendment
The purpose of our
2012 Equity Incentive Plan is to attract and retain directors, officers, consultants, advisors and employees whose services are
considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons in our development
and financial achievements. In addition, we intend to use most of the increased number of shares available under the 2012
Equity Incentive Plan to issue awards to board members, employees, consultants, advisors and service providers in lieu of cash
payments that are, or may be, owed, as a way to preserve our cash. Our Board believes that the number of shares of Common Stock
subject to the 2012 Equity Incentive Plan remaining available is insufficient to achieve the purpose of the 2012 Equity Incentive
Plan. Therefore, our Board believes the Plan Amendment is necessary to increase the number of shares of Common Stock available
under the 2012 Equity Incentive Plan, which will allow flexibility in granting awards to attract and retain key personnel and
to provide a means for directors, officers, employees, consultants and advisors to preserve our cash, to acquire and maintain
an interest in us, which interest may be measured by reference to the value of our Common Stock.
Effects of the Plan Amendment
As a result of the
Plan Amendment, there will be an increase in the total number of shares of Common Stock reserved for issuance under the 2012 Equity
Incentive Plan. This will provide us with the ability to grant more awards than are currently available under the 2012 Equity
Incentive Plan to eligible recipients including employees, directors, consultants and advisors. The issuance in the future of
awards under the 2012 Equity Incentive Plan consisting of full value awards, options to purchase shares of Common Stock and stock
grants may have the effect of diluting the earnings per share and book value per share, as well as the stock ownership and voting
rights, of the holders of the currently outstanding shares of Common Stock. The effective increase in the number of authorized
but unissued shares of Common Stock that may be issued as awards under the 2012 Equity Incentive Plan may be construed as having
an anti-takeover effect by permitting the issuance of shares to purchasers who might oppose a hostile takeover bid or oppose any
efforts to amend or repeal certain provisions of our Certificate of Incorporation or Bylaws. Holders of the Common Stock have
no preemptive or other subscription rights.
Description of the 2012 Equity Incentive Plan
Shares Subject
to the 2012 Equity Incentive Plan
. The 2012 Equity Incentive Plan provides for grants of stock options and stock grants
to employees, directors and consultants of ours (and affiliates of ours). The maximum number of shares of Common Stock currently
reserved for the grant of awards under the 2012 Equity Incentive Plan is 3,873,000, subject to adjustment as provided by the 2012
Equity Incentive Plan. As of the Record Date, 1,124,004 shares were available for future grants under the 2012 Equity Incentive
Plan If the proposal for the Plan Amendment is approved, then the maximum number of shares of Common Stock reserved for grant
of awards under the 2012 Equity Incentive Plan will be 5,373,000, of which 2,624,004 will be available for future grants.
Purpose and
Eligible Individuals
. The purpose of the 2012 Equity Incentive Plan is to retain the services of valued key employees,
directors and consultants of ours and its affiliates, thereby strengthening their incentive to achieve the objectives of our stockholders,
to serve as an aid and inducement in the hiring of new employees and to provide an equity incentive to consultants and other persons
selected by the Compensation Committee. Under the 2012 Equity Incentive Plan, awards may be granted to our officers, directors,
employees and consultants or to our affiliates (each, a “
Participant
”).
Administration
.
The Board has the authority to administer the 2012 Equity Incentive Plan or may delegate administration of the 2012 Equity Incentive
Plan to a committee of not less than two outside members of the Board, in accordance with Section 162(m) of the Internal Revenue
Code of 1986, as amended (the “
Code
”) and/or not less than two (2) non-employee directors, in accordance with
Rule 16b-3 promulgated under the Exchange Act. Our Board has delegated its administrative powers to administer the 2012 Equity
Incentive Plan to our Compensation Committee. As such, our Compensation Committee has the power, among other things, to (a) determine
terms and conditions of any option or stock right granted, including the exercise price and the vesting schedule, (b) select persons
who are to receive options, (c) interpret the 2012 Equity Incentive Plan and prescribe rules and regulations for its administration
and (d) delegate to a subcommittee any of the administrative powers the Compensation Committee is authorized to exercise, subject,
however, to such resolutions, not inconsistent with the provisions of the 2012 Equity Incentive Plan, as may be adopted from time
to time by the Board.
Stock Options
.
The Compensation Committee may grant incentive stock options (“
ISOs
”), nonqualified stock options or options
under Section 102 or 3(i) of the Israeli Tax Ordinance (New Version) 1961 (“
OTI
”) (collectively referred to
as “
Options
”). The Compensation Committee determines the number of shares of Common Stock subject to each Option,
provided that the aggregate fair market value of the shares of Common Stock with respect to which ISOs are exercisable for the
first time by a participant during any calendar year shall not exceed $100,000. The Compensation Committee determines the exercise
price of an Option, its duration and the manner and time of exercise. However, in no event shall an Option be exercisable more
than ten years following the grant date thereof. A ten percent stockholder of the Company shall not be granted an ISO unless the
exercise price of such ISO is at least 110% of the fair market value of the Common Stock at the date of grant and such ISO is
not exercisable after the expiration of five years from the date of grant. ISOs may be issued only to employees of the Company
or of a corporate subsidiary of ours, and the exercise price must be at least equal to the fair market value of the Common Stock
as of the date the Option is granted.
The Compensation Committee,
in its discretion, may provide the vesting terms of any Option. The vesting of one or more outstanding Options may be accelerated
by the Board at such times and in such amounts as it shall determine in its sole discretion.
The exercise price
of an Option may be paid in any form or method authorized by the Board and permitted by the option agreement and 2012 Equity Incentive
Plan.
ISOs granted under
the 2012 Equity Incentive Plan and the rights and privileges conferred by the 2012 Equity Incentive Plan may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or otherwise) other than by will or by applicable
laws of descent and distribution. Nonqualified stock options shall be not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by applicable laws of descent and distribution or
as otherwise provided in the option agreement.
Restricted Stock
.
The Compensation Committee may award shares of Common Stock to a Participant subject to such conditions and restrictions as the
Compensation Committee may determine. Restrictions could include conditions that require the Participant to forfeit the shares
in the event that the Participant ceases to provide services to us or any of our affiliates thereof before a stated time.
The period of restriction,
the number of shares of restricted stock granted, the purchase price, if any, and such other conditions and/or restrictions as
the Compensation Committee may establish will be set forth in an award agreement.
After all conditions
and restrictions applicable to restricted shares have been satisfied or have lapsed, shares of restricted stock will become freely
transferable, as determined by the Compensation Committee and stated in the award agreement.
The Compensation Committee may make a stock
award without any restrictions.
Effect of Certain
Corporate Transactions
. If a recapitalization or similar transaction occurs that does not alter the existing proportionate
ownership of the Common Stock, appropriate adjustments shall be made in the exercise price, the purchase price, if any, and number
of outstanding awards. In the case of a change of control (as defined in the 2012 Equity Incentive Plan), such as a merger, acquisitive
transaction, reorganization, liquidation or other transaction (a “
Major Transaction
”) that does alter such
proportionate ownership, vested awards generally may be exercised before such transaction and persons owning Common Stock as a
result of awards made under the 2012 Equity Incentive Plan will participate on the same basis as other owners of Common Stock.
Alternatively, the Board may determine in the case of a Major Transaction that awards will continue in effect on a basis similar
to that in effect prior to such Major Transaction, including with respect to vesting, except that such rights shall apply with
respect to the surviving entity or shall be assumed by the surviving or acquiring corporation (in accordance, as applicable, with
the requirements of Section 409A of the Code or Section 424 of the Code). The Board may, in its discretion, accelerate vesting
in whole or in part in connection with a Major Transaction. The 2012 Equity Incentive Plan also provides that Awards may be liquidated
for a cash payment.
Further Amendments
to the 2012 Equity Incentive Plan
. The Board or the Compensation Committee may, at any time, modify, amend or terminate
the 2012 Equity Incentive Plan or modify or amend awards granted under the 2012 Equity Incentive Plan, including, without limitation,
such modifications or amendments as are necessary to maintain compliance with applicable laws. However, the Board or the Compensation
Committee may not, without approval of our stockholders: (1) increase the total number of shares covered by the 2012 Equity Incentive
Plan, except by adjustments upon certain changes in capitalization; (2) change the aggregate number of shares of Common Stock
that may be issued to any single person; (3) change the class of persons eligible to receive awards under the 2012 Equity Incentive
Plan; or (4) make other changes in the 2012 Equity Incentive Plan that require stockholder approval under applicable law (including
any rules of any applicable stock exchange or stock quotation system of which our shares of Common Stock are traded). Except as
otherwise provided in the 2012 Equity Incentive Plan or an Award agreement, no amendment will adversely affect outstanding awards
without the consent of the participant. Any termination of the 2012 Equity Incentive Plan will not terminate awards then outstanding,
without the consent of the participant.
Term of the
2012 Equity Incentive Plan
. Unless sooner terminated by the Board, the 2012 Equity Incentive Plan will terminate on the
day prior to the tenth anniversary of its adoption by the Board. No award may be granted after such termination or during any
suspension of the 2012 Equity Incentive Plan.
U.S. Tax Treatment
.
The following description of the federal income tax consequences of awards is general and does not purport to be complete.
Incentive Stock Options
Generally, a participant
incurs no federal income tax liability on either the grant or the exercise of an ISO, although a participant will generally have
taxable income for alternative minimum tax purposes at the time of exercise equal to the excess of the fair market value of the
shares subject to the Option over the exercise price. Provided that the shares are held for at least one year after the date of
exercise of the Option and at least two years after its date of grant, any gain realized on a subsequent sale of the shares will
be taxed as long-term capital gain. If the shares are disposed of within a shorter period of time, the participant will recognize
ordinary compensation income in an amount equal to the difference between the fair market value of the shares on the date of exercise
(or the sale price of the shares sold, if less) over the exercise price. We receive no tax deduction on the grant or exercise
of an ISO, but we may be entitled to a tax deduction if the participant recognizes ordinary compensation income on account of
a premature disposition of shares acquired on exercise of an ISO, in the same amount and at the same time as the participant recognizes
income.
Nonqualified Stock Options
A participant realizes
no taxable income when a nonqualified stock option is granted. Instead, the difference between the fair market value of the shares
acquired pursuant to the exercise of the Option and the exercise price paid is taxed as ordinary compensation income (subject
to employment taxes and withholding) when the Option is exercised. The difference is measured and taxed as of the date of exercise,
if the shares are not subject to a "substantial risk of forfeiture," or as of the date or dates on which the risk terminates
in other cases. A participant may elect (as described under Restricted Stock below) to be taxed on the difference between the
exercise price and the fair market value of the shares on the date of exercise, even though some or all of the shares acquired
are subject to a substantial risk of forfeiture. Once ordinary compensation income is recognized, gain on the subsequent sale
of the shares is taxed as short-term or long-term capital gain, depending on the holding period after exercise. We receive no
tax deduction on the grant of a nonqualified stock option, but may be entitled to a tax deduction when a participant recognizes
ordinary compensation income on or after exercise of the Option, in the same amount as the income recognized by the participant.
Stock Grants
With respect to
stock grants under our 2012 Equity Incentive Plan that are made without any restrictions, a participant generally recognizes ordinary
compensation income equal to the excess of the fair market value of the shares received over the amount paid (if any). We generally
will be entitled to a deduction in an amount equal to the ordinary compensation income recognized by a participant.
When the stock
is subsequently sold, the participant generally will recognize capital gain or loss (short-term or long-term, as applicable) equal
to the difference between the amount realized upon the sale of the shares and his or her tax basis (generally the amount paid
plus any ordinary compensation income recognized).
Restricted Stock
If stock is awarded
subject to restrictions, a participant generally will not recognize income at the time of the award, but will instead recognize
ordinary compensation income equal to the excess of the fair market value of the shares received over the amount paid (if any)
when restrictions on transferability or that otherwise constitute a substantial risk of forfeiture lapse.
A participant may
elect to be taxed at the time of the receipt of the shares, rather than upon the lapse of restrictions on transferability or substantial
risk of forfeiture, but if the participant subsequently forfeits such shares, the participant would not be entitled to any tax
deduction for the amount of previously recognized ordinary compensation income. (He or she will be entitled to a capital loss
for the amount paid (if any) for the shares.) The participant must file a so-called Section 83(b) election with the Internal Revenue
Service within 30 days of the receipt of the shares.
We generally will
be entitled to a deduction at the time, and in an amount equal to, the ordinary compensation income is recognized by the participant.
When the stock
is subsequently sold, the participant generally will recognize capital gain or loss (short-term or long-term, as applicable) equal
to the difference between the amount realized upon the sale of the shares and his or her tax basis (generally the amount paid
plus any ordinary compensation income recognized).
Dividends
A participant will
generally not receive the benefit of dividends prior to the exercise of an option. Unless an election under Section 83(b) of the
Code has been made, the full amount of dividends or other distributions of property made with respect to stock awards before the
lapse of any applicable restrictions (Restricted Stock) will constitute ordinary compensation income, and we are generally entitled
to a deduction at the same time and in the same amount as the income is realized by the participant.
Section 162(m) of the Code
Section 162(m)
of the Code generally disallows an income tax deduction to public companies for compensation in excess of $1,000,000 paid in any
year to the principal executive officer, the principal financial officer and the three other most highly compensated executive
officers. Recent changes to Section 162(m) of the Code mean that each of these persons for a particular year after 2016 will remain
subject to this limit in subsequent years, even if not included in that group for the year. In addition, the performance-based
compensation exception, which may have applied to one or more of our outstanding options or other forms of equity award, is no
longer available after 2017.
Nevertheless, the
deductibility of compensation is but one of the critical factors in the design and implementation of any compensation arrangement,
and the Compensation Committee and our Board reserve the right to pay nondeductible compensation when appropriate.
Israeli Tax
Treatment
. The following is a summary of the Israeli income tax consequences of certain transactions under the 2012 Equity
Incentive Plan with regard to the granting of awards to Israeli participants. It is general and does not purport to be comprehensive.
Generally, the 2012
Equity Incentive Plan provides for the granting of awards to employees, directors and consultants under either Section 102 or
Section 3(i) of the ITO. The awards granted under the 2012 Equity Incentive Plan to employees and officeholders, who are not controlling
shareholders (as defined in the ITO) are subject to the “capital gains tax route” under Section 102 of the ITO (the
“
Capital Gains Tax Route
”), and the awards granted to participants in the 2012 Equity Incentive Plan who do
not qualify to receive awards under the Capital Gains Tax Route, including consultants, service providers and controlling shareholders,
are subject to Section 3(i) of the ITO.
The Capital Gains
Tax Route generally provides for a reduced tax rate of 25% on gains realized upon the sale of the award’s underlying shares,
subject to the fulfillment of certain procedures and conditions including the deposit of such awards (or shares issued upon their
exercise or shares in case restricted stock was granted) for a requisite period of time with a trustee approved by the Israeli
Tax Authority (currently, 24 months from the date of grant). Notwithstanding the above, in any event where the exercise price
of the underlying shares subject to the awards is less than the fair market value of the underlying shares at the time of grant
of the awards (calculated as the average value of a company's shares on the 30 trading days preceding the date of grant), such
amount will be deemed ordinary income of the award holder, taxed at the applicable marginal tax rate (up to 50% in 2016) together
with health insurance and social security insurance payments, on the date of sale of the underlying shares and/or the date of
the release of such underlying shares from trust. In the event the requirements of Section 102 of the ITO for the allocation of
awards according to the Capital Gains Tax Route are not met, the benefit attributed to the award holder as a result of the grant
of such awards will be taxed as ordinary work income at applicable marginal income tax rates (together with health insurance and
social security insurance payments). For as long as the restricted stock or the shares issued upon exercise of awards are registered
in the name of the trustee, the voting rights with respect to such shares will remain with the trustee. Under the Capital Gains
Tax Route, a company, or its Israeli subsidiary, as the case may be, is generally not entitled to recognize a deduction for Israeli
tax purposes on the gain recognized by the award holder upon sale of the shares underlying the awards (except for such amount
that will be deemed ordinary income of the award holder as explained above). Our Israeli subsidiary will be required to withhold
applicable tax (and social security and national health insurance charges, if applicable) at source on behalf of the award holder
and may be required to pay social security and national health insurance charges.
Generally, with respect
to a holder of an award under Section 3(i) of the ITO that is not registered for trade, the taxable event shall take place on
the date of exercise of the award into shares, and the income will be classified as regular employment or work income subject
to marginal tax rates (if the participant is an individual) or corporate tax rates (if the participant is a corporation).
New 2012 Equity Incentive Plan Benefits
If the Plan Amendment
is approved by our stockholders, the number of awards that will be received by or allocated to our employees, directors and consultants
is not determinable at this time. For information regarding swards made to our named executive officers under the 2012 Equity
Incentive Plan outstanding as of December 31, 2017, see “Outstanding Equity Awards at Fiscal Year-End.” For information
regarding awards made to our directors under the 2012 Equity Incentive Plan outstanding as of December 31, 2017, and for a description
of our compensation program for directors, see “Non-Employee Director Remuneration Policy.”
The following table
provides information as of December 31, 2017 with respect to options outstanding under the 2012 Equity Incentive Plan and the
Company’s other equity compensation arrangements.
|
Plan category
|
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
|
Number of securities
remaining available
for future issuance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
1,304,638
|
|
|
$
|
5.98
|
|
|
|
1,138,254
|
|
|
Equity compensation plans not approved by security holders *
|
|
|
12,029
|
|
|
$
|
126.04
|
|
|
|
-
|
|
|
Equity compensation plans not approved by security holders **
|
|
|
4,225
|
|
|
$
|
125.10
|
|
|
|
-
|
|
|
Equity compensation plans not approved by security holders ***
|
|
|
54,490
|
|
|
$
|
5.76
|
|
|
|
-
|
|
|
Equity compensation plans not approved by security holders ****
|
|
|
2,778
|
|
|
$
|
7.02
|
|
|
|
-
|
|
|
Total
|
|
|
1,378,160
|
|
|
$
|
7.39
|
|
|
|
1,138,254
|
|
|
*
|
In March 2013, our Board adopted a non-employee director’s remuneration policy.
|
|
**
|
On May 2014, our Board approved the grant of non-plan options
to the Company’s Scientific Advisory Board (“SAB”). These options have an exercise price of $125.10, vest
in 4 quarterly installments in arrears, have a cashless exercise feature and a ten year term.
|
|
***
|
In September 2015, our Board approved the grant of non-plan
options to our Board members and members of our SAB. These options have an exercise price of $5.76 per share, one third vesting
immediately and the balance vest over 8 quarterly installments, have a cashless exercise feature and a six year term.
|
|
****
|
In December 2015, our Board approved the grant of non-plan options
to a member of the SAB. The options to the SAB member have an exercise price of $7.02 per share, and vest over a three year
period. One third vest after one year and the balance vest over 8 quarterly installments after the first anniversary; these
options have a cashless exercise feature and a six year term.
|
Required Vote
The affirmative vote
of a majority of the votes cast at the Meeting by the holders of Common Stock represented in person or by proxy and entitled to
vote is required for approval of the Incentive Plan Proposal. Abstentions are considered present for purposes of establishing
a quorum but will have no effect on the approval of the Incentive Plan Proposal. Broker non-votes will not affect the outcome
of the vote on this matter.
Recommendation of the Board
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS
VOTE “FOR” THE INCENTIVE PLAN PROPOSAL.
PROPOSAL 4
RATIFICATION OF THE APPOINTMENT OF THE
COMPANY’S INDEPENDENT AUDITORS
FOR FISCAL 2018
On March 21, 2018,
the Audit Committee of the Board appointed the firm of Kost Forer Gabbay & Kasierer to serve as our independent auditors for
our fiscal year ending December 31, 2018. Stockholders will be asked to ratify the Auditor to serve as our independent auditors.
The Board’s Audit Committee (the “
Audit Committee
”) is directly responsible for appointing our independent
registered public accounting firm. The Audit Committee is not bound by the outcome of this vote but will consider these voting
results when selecting the Company’s independent auditor for fiscal year 2019. The Auditor has been our auditor since June
22, 2012. A representative of the Auditor is not expected to be present at the Meeting.
The following table
sets forth fees billed to us by Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, our independent registered
public accounting firm, during the fiscal years ended December 31, 2017 and December 31, 2016 for: (i) services rendered for the
audit of our annual financial statements and the review of our quarterly financial statements; (ii) services by our independent
registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements
and that are not reported as audit fees; (iii) services rendered in connection with tax compliance, tax advice and tax planning;
and (iv) all other fees for services rendered.
|
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
|
Audit Fees
|
|
$
|
86,000
|
|
|
$
|
83,000
|
|
|
Audited Related Fees
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Tax Fees (1)
|
|
$
|
12,000
|
|
|
$
|
16,000
|
|
|
All Other Fees (2)
|
|
$
|
56,000
|
|
|
$
|
55,000
|
|
|
Total
|
|
$
|
154,000
|
|
|
$
|
154,000
|
|
|
|
(1)
|
Consists of fees relating to our tax compliance and tax planning.
|
|
|
(2)
|
Consists of fees relating to our private placements.
|
Audit Committee Policies
The Audit Committee
of our Board is solely responsible for the approval in advance of all audit and permitted non-audit services to be provided by
the independent auditors (including the fees and other terms thereof), subject to the de minimis exceptions for non-audit services
provided by Section 10A(i)(1)(B) of the Exchange Act, which services are subsequently approved by the Board prior to the completion
of the audit. None of the fees listed above are for services rendered pursuant to such de minimus exceptions. The audit, tax and
non-audit services provided by the Auditor in 2016 and 2017 set forth above were pre-approved by our Audit Committee.
Required Vote
The affirmative vote
of a majority of the shares of Common Stock represented in person or by proxy and entitled to vote is required to ratify the Auditor
as our independent registered public accounting firm for the year ending December 31, 2018. Abstentions are considered present
for purposes of establishing a quorum but will have no effect on the ratification of our independent public accountants. There
are no broker non-votes on this matter since it is a “routine” matter.
Recommendation of the Board
THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
Ratification of the appointment by
the Audit Committee of the Board of the Auditor as the Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2018.
PROPOSAL 5
A
MENDMENT
TO OUR EXISTING BYLAWS TO MODIFY CERTAIN DIRECTOR REMOVAL REQUIREMENTS
Summary of Bylaw Amendment and Background
We are asking our
stockholders to approve an amendments to our Bylaws which will permit our stockholders to remove a director with our without cause
by a vote of the majority of the stockholders entitled to vote at a meeting of the stockholders. Currently, Article 3, Section
3.3 of our Bylaws provides that our stockholders may only remove a director for cause upon the vote of sixty-six and two-thirds
percent (66 2/3%) of the stockholders entitled to vote at a meeting of the stockholders. The Board believes that as a matter of
effective corporate governance and to support our stockholders’ rights, the Bylaws should be amended to permit stockholders
to remove a director with our without cause with a simple majority. As a result, the Board determined that such an amendment is
in the best interests of the Company and its stockholders and the Board has unanimously adopted a resolution approving and declaring
advisable the amendment described in this Proposal 5.
Proposed Amendment to Bylaws
Article 3, Section
3.3 of our existing Bylaws would be amended to clarify that our stockholders will have the right to remove a director with our
without cause by a vote of the majority of the stockholders entitled to vote at a meeting of the stockholders.
Required Vote
The
amendment described in this Proposal 5 will not become effective unless approved by the affirmative vote of at least sixty-six
and two-thirds percent (66 2/3%) of the stockholders entitled to vote at a meeting of the stockholders. If this Proposal 5 is
adopted, the proposed Bylaw amendment will be effective immediately following the Annual Meeting. If this Proposal 5 is not approved,
Article 3, Section 3.3 of our existing Bylaws will not be amended.
Abstentions are considered present for purposes of establishing
a quorum but will the effect of a vote against the approval of the Bylaw Proposal. Broker non-votes will also have the effect
of a vote against the approval of the Bylaw Proposal.
The description
of the proposed amendment to our Bylaws set forth in this Proposal 5 is only a summary and is qualified in its entirety by reference
to the full text of Amendment No. 1 to DarioHealth Corp.’s Bylaws, a copy of which is provided in
Annex B
to this
Proxy Statement, with additions of text indicated by underlining and deletions of text indicated by strike-outs.
Recommendation of the Board
THE BOARD RECOMMENDS
THAT THE STOCKHOLDERS VOTE “FOR” THE BYLAW PROPOSAL.
CORPORATE GOVERNANCE
Director Independence
Our Board has reviewed
the materiality of any relationship that each of our directors has with us, either directly or indirectly. Based on this review,
our Board determined that Prof. Stone, Messrs. Hoenlein, Yehudiha, Kamer, and McGrath and Ms. Karah are “independent directors”
as defined in the Nasdaq Listing Rules and Rule 10A-3 promulgated under the Exchange Act.
Meetings of the Board
Our Board met in telephonically
6 times during the fiscal year ended December 31, 2017 and also acted by unanimous written consent on 9 occasions. Each member
of our then current Board was present for at least 33% percent or more of the Board meetings held.
Board Committees
Our Board has established
three standing committees: Audit, Compensation, and Nomination and Corporate Governance.
Audit Committee
Our Audit Committee
is comprised of Messrs. Hoenlein, McGrath and Prof. Stone, each of whom is an independent director. Mr. McGrath is the Chairman
of the Audit Committee. Mr. McGrath is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation
S-K.
Our Audit Committee
oversees our corporate accounting, financial reporting practices and the audits of financial statements. For this purpose, the
Audit Committee has a charter (which is reviewed annually) and performs several functions. The Audit Committee charter is available
on our website at www.mydario.com under the Investors / Governance section. The Audit Committee:
• evaluates
the independence and performance of, and assesses the qualifications of, our independent auditor and engage such independent auditor;
• approves
the plan and fees for the annual audit, quarterly reviews, tax and other audit-related services and approve in advance any non-audit
service to be provided by our independent auditor;
• monitors
the independence of our independent auditor and the rotation of partners of the independent auditor on our engagement team as
required by law;
• reviews
the financial statements to be included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and reviews with
management and our independent auditor the results of the annual audit and reviews of our quarterly financial statements; and
• oversees
all aspects our systems of internal accounting control and corporate governance functions on behalf of the board.
The Audit Committee
met telephonically on 4 occasions during the fiscal year ended December 31, 2017 and also acted by unanimous written consent on
9 occasions. Each of the members of the Audit Committee attended 75% of the meetings held by the Audit Committee during the time
each director served as a member of the committee.
Compensation Committee
Our Compensation Committee
is comprised of Messrs. Hoenlein, McGrath, Yehudiha and Ms. Karah. Mr. Hoenlein is the Chairman of the Compensation Committee.
Under the terms of the Securities Purchase Agreement in our September 2014 Private Placement, we agreed to appoint two nominees
of our lead investor, David Edery, to the Compensation Committee. Both Mr. Yehudiha and Ms. Karah were initially nominees of Mr.
Edery. These appointment rights were waived on February 28, 2016.
The Compensation Committee
reviews or recommends the compensation arrangements for our management and employees and also assists our Board in reviewing and
approving matters such as company benefit and insurance plans, including monitoring the performance thereof. The Compensation
Committee has a charter (which is reviewed annually) and performs several functions. The Compensation Committee charter is available
on our website at www.mydario.com under the Investors /Governance section.
The Compensation Committee
has the authority to directly engage, at our expense, any compensation consultants or other advisers as it deems necessary to
carry out its responsibilities in determining the amount and form of employee, executive and director compensation.
The Compensation Committee
met telephonically on 1 occasion during the fiscal year ended December 31, 2017 and acted by unanimous written consent on 13 occasions.
Each of the members of the Compensation Committee attended 100% of the meetings held during the time each director served as a
member of the committee.
Nominating and Corporate Governance
Committee
Our Nominating and
Corporate Governance Committee is currently comprised of Prof. Stone and Messrs. Kamer, and Yehudiha. Prof. Stone is the Chairman
of the Nominating and Corporate Governance Committee.
Under the terms
of the Securities Purchase Agreement in our September 2014 Private Placement, we agreed to appoint two nominees of our lead investor,
David Edery to the Nominating and Corporate Governance Committee. Mr. Yehudiha was initially the nominee of Mr. Edery serving
on this committee. These appointment rights were waived on February 28, 2016. In addition, under the terms of the securities purchase
agreement relating to our January 2017 Private Placement, our lead investor in the offering, OurCrowd Digital Health L.P., was
given the right to appoint two members to our Board for so long as the investor holds 13% and 5% of our outstanding shares of
our Common Stock. We further agreed to permit such designees to serve on our Nominating and Corporate Governance Committee. Messrs.
Kamer and Bahagon were appointed to our Board as nominees of OurCrowd. Such investor currently has the right to appoint one director
to our Board. On March 15, 2018, Mr. Bahagon resigned from our Board.
The Nominating and
Corporate Governance Committee is charged with the responsibility of reviewing our corporate governance policies and with proposing
potential director nominees to the Board for consideration. This committee also has the authority to oversee the hiring of potential
executive positions in our company. The Nominating and Corporate Governance Committee operates under a written charter, which
will be reviewed and evaluated at least annually.
Other than the nomination
request submitted with respect to the nomination of Yalon Farhi, the nomination rights of Mr. Edery, the board appointment rights
relating to OurCrowd Digital Health L.P and Agate JT Healthcare Fund L.P., we have never received communications from stockholders
recommending individuals to serve as our directors. For the fiscal year ended December 31, 2017, we did not pay a fee to any third
party to identify or evaluate, or assist in identifying or evaluating, potential nominees for our Board. Other than the nomination
request submitted with respect to the nomination of Yalon Farhi, as well as the board appointment rights relating to OurCrowd
Digital Health L.P., Agate JT Healthcare Fund L.P, and Mr. Edery, we have not received any recommendations from stockholders for
Board nominees. All of the nominees for election at the Meeting are current members of our Board.
The Nominating and
Corporate Governance Committee will review a reasonable number of candidates for director recommended by a stockholders who satisfy
the notice, information and consent provisions set forth in the Company’s Bylaws. The Board will use the same evaluation
criteria and process for director nominees recommended by stockholders as it uses for other director nominees. A stockholder wishing
to formally nominate an individual for election to the Board must do so by following the procedures described in the Company’s
Bylaws. There has been no change to the procedures by which stockholders may recommend nominees to our Board. For information
concerning stockholder proposals, see “Stockholder Proposals” below in this Proxy Statement.
The Board believes
that all of its directors should have the highest personal integrity and have a record of exceptional ability and judgment. The
Board also believes that its directors should ideally reflect a mix of experience and other qualifications. There is no firm requirement
of minimum qualifications or skills that candidates must possess. The Nomination and Corporate Governance Committee evaluates
director candidates based on a number of qualifications, including their independence, judgment, leadership ability, expertise
in the industry, experience developing and analyzing business strategies, financial literacy, risk management skills, and, for
incumbent directors, his or her past performance.
The Nomination and
Corporate Governance Committee acted by unanimous written consent on 1 occasion during the fiscal year ended December 31, 2017.
Each of the nominees
for election at this Meeting was recommended to the Board by the Nominating and Corporate Governance Committee.
Board Leadership Structure and Role
in Risk Oversight
Although we do not
require separation of the offices of the Chairman of the Board and Chief Executive Officer, we historically have a different person
serving in each such role; however, following the resignation of Dr. Oren Fuerst as our Chairman of the Board on November 23,
2014, Mr. Erez Raphael currently serves as our President, Chief Executive Officer and Chairman of the Board. The decision whether
to combine or separate these positions depends on what our Board deems to be in the long-term interest of stockholders in light
of prevailing circumstances. We believe that the separation of duties provides strong leadership for the Board while allowing
the Chief Executive Officer to be the leader of the Company, focusing on its employees and operations. We are seeking a qualified
person to serve as our Chairman of the Board. In addition, through the Audit, Compensation, Nomination and Corporate Governance
Committees, our independent directors who are members thereof provide strong independent leadership for each of those committees.
Our Board’s,
including our Audit and Compensation Committees’, as appropriate, role in risk oversight includes risk analysis and assessment
in connection with each financial and business review, update and decision-making proposal and is an integral part of all Board
deliberations. Each of our Board committees is focused on specific risks within their areas of responsibility, but the Board believes
that the overall enterprise risk management process is more properly overseen by all of the members of the Board. The Audit Committee
is responsible for overseeing the management of financial and accounting risks. The Compensation Committee is responsible for
overseeing the management of risks relating to executive compensation plans and arrangements. While each Committee is responsible
for the evaluation and management of such risks, the entire Board is regularly informed through Committee reports. The Board incorporates
the insight provided by these reports into its overall risk management analysis.
The Board’s
role in our risk oversight is consistent with our leadership structure, with our President and Chief Executive Officer and other
members of senior management having responsibility for assessing and managing our risk exposure, and the Board providing oversight
in connection with those efforts.
Code of Ethics
On March 5, 2013,
our Board adopted a Code of Business Conduct and Ethics which is available on our internet website at http://mydario.investorroom.com/CorporateGovernance.
Procedures for Contacting Directors
The Board has established
a process for stockholders to send communications to the Board. Stockholders may communicate with the Board generally or a specific
director at any time by writing to: DarioHealth Corp., at 8 HaToKhen Street, Caesarea Industrial Park 3088900, Israel, Attention:
Zvi Ben David. We review all messages received, and forward any message that reasonably appears to be a communication from a stockholder
about a matter of stockholder interest that is intended for communication to the Board. Communications are sent as soon as practicable
to the director to whom they are addressed, or if addressed to the Board generally, to the Chairman of the Board. Because other
appropriate avenues of communication exist for matters that are not of stockholder interest, such as general business complaints
or employee grievances, communications that do not relate to matters of stockholder interest are not forwarded to the Board.
Attendance at Special and Annual Stockholder
Meetings
We encourage our directors
to attend our special and annual stockholders meetings. Mr. Erez Raphael, our Chief Executive Officer, President and Chairman
of the Board and Zvi Ben David, our Chief Financial Officer, Treasurer and Secretary, attended our last annual stockholder meeting.
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of
the Exchange Act requires our executive officers and directors, and persons who own more than 10% of our Common Stock, to file
reports regarding ownership of, and transactions in, our securities with the SEC and to provide us with copies of those filings.
Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons,
except for the Form 3 filed by OurCrowd Digital Health L.P. on January 27, 2017 and the Form 3 filed by Shehnee Lawrence Farhi
on February 14, 2018, we believe that during fiscal year ended December 31, 2017, all filing requirements applicable to our officers,
directors and ten percent beneficial owners were complied with.
Executive Compensation
The following table summarizes compensation
of our named executive officers, as of December 31, 2017 and 2016.
Summary Compensation Table
Name and
Principal Position
|
|
Year
|
|
Salary ($)*
|
|
|
Bonus ($)
|
|
|
Stock Awards
|
|
|
Option
Awards
($)**
|
|
|
Non-equity
incentive plan
compensation
|
|
|
Non-qualified
incentive plan
compensation
|
|
|
All Other
Compensation ($)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Erez Raphael
|
|
2017
|
|
$
|
146,679
|
(1)
|
|
|
|
|
|
$
|
1,063,401
|
(3)
|
|
$
|
389,406
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
75,341
|
|
|
$
|
1,674,827
|
|
|
(Chairman and Chief Executive Officer)
|
|
2016
|
|
$
|
128,953
|
(1)
|
|
$
|
100,000
|
(2)
|
|
$
|
118,828
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
72,642
|
(5)
|
|
$
|
420,423
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zvi Ben David
|
|
2017
|
|
$
|
131,136
|
(6)
|
|
|
|
|
|
$
|
398,500
|
(7)
|
|
$
|
86,559
|
(8)
|
|
|
|
|
|
|
|
|
|
$
|
43,786
|
|
|
$
|
659,981
|
|
|
(Chief Financial Officer)
|
|
2016
|
|
$
|
110,978
|
(6)
|
|
|
|
|
|
$
|
76,649
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
32,279
|
(9)
|
|
$
|
219,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dror Bacher
|
|
2017
|
|
$
|
130,011
|
(10)
|
|
|
|
|
|
$
|
304,970
|
(11)
|
|
$
|
95,878
|
(12)
|
|
|
|
|
|
|
|
|
|
$
|
59,254
|
|
|
$
|
590,113
|
|
|
(Chief Operating Officer)
|
|
2016
|
|
$
|
119,456
|
(10)
|
|
|
|
|
|
$
|
27,048
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
55,261
|
(13)
|
|
$
|
201,765
|
|
|
*
|
Certain compensation paid by the company is denominated in New
Israeli Shekel (or the NIS). Such compensation is calculated for purposes of this table based on the annual average currency
exchange for such period.
|
|
**
|
Amount shown does not reflect dollar amount actually received.
Instead, this amount reflects the aggregate grant date fair value of each stock option granted in the fiscal years ended December
31, 2016, computed in accordance with the provisions of ASC 718 “Compensation - Stock Compensation”, or ASC 718.
Assumptions used in accordance with ASC 718 are included in Note 9 to our consolidated financial statements included in this
Annual Report.
|
|
(1)
|
In accordance with his second amendment to the employment agreement
with our company effective August 11, 2013, Mr. Raphael was entitled to a monthly salary of NIS 44,000, commencing April 1,
2016, his monthly salary was increased to NIS 80,000 (approximately $22,857 per month). During 2016 and 2017, Mr.
Raphael agreed to a waiver of 42% and 45% respectively, of his cash salary according to our salary program (see further details
in “Employment and Related Agreements” below).
|
|
(2)
|
On March 2016, Mr. Raphael was paid a bonus of $100,000 following
the successful completion of the public offering.
|
|
(3)
|
On January 27, 2016, Mr. Raphael was granted 1,364 shares
of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the period from January to March
2016. On June 23, 2016, Mr. Raphael was granted 7,089 shares of our Common Stock under our 2012 Equity Incentive Plan against
waiver of cash salary for the period from April to June 2016, On August 1, 2016, Mr. Raphael was granted 7,688 shares of our
Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the period from July to September 2016,
On January 10, 2017, Mr. Raphael was granted 11,205 shares of our Common Stock under our 2012 Equity Incentive Plan against
waiver of cash salary for the period from October to December 2016. On January 30, 2017, Mr. Raphael was granted 11,381 shares
of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the period from January to March
2017. On April 13, 2017, Mr. Raphael was granted 10,369 shares of our Common Stock under our 2012 Equity Incentive Plan against
waiver of cash salary for the period from April to June 2017. On July 10, 2017, Mr. Raphael was granted 17,036 shares of our
Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the period from July to September 2017.
On October 23, 2017, Mr. Raphael was granted 21,128 shares of our Common Stock under our 2012 Equity Incentive Plan against
waiver of cash salary for the period from October to December 2017. On January 30, 2017, Mr. Raphael was granted 227,616 shares
of our Common Stock under our 2012 Equity Incentive Plan, and on April 20, 2017, Mr. Raphael was granted 50,000 shares of
our Common Stock under our 2012 Equity Incentive Plan, as a bonus for the 2016 achievements of the Company.
|
|
(4)
|
During 2017, Mr. Raphael was granted 143,164 options to purchase
shares of our Common Stock. The balance shall vest in twelve equal quarterly installments from the grant date during a three-year
period. We may grant Mr. Raphael additional options to purchase shares of Common Stock from time to time at the discretion
of our Board or the Compensation Committee thereof (see further details in “Employment and Related Agreements”
below).
|
|
(5)
|
In addition to his salary, Mr. Raphael is entitled to receive
a leased automobile and mobile phone during his employment as well as reimbursements for expenses accrued. These benefits
as well as other social benefits under Israeli law are included as part of his “All Other Compensation”.
|
|
(6)
|
In accordance with his employment agreement with our company
effective January 8, 2015, Mr. Ben David was initially entitled to a monthly salary and additional compensation (excluding
social benefits under applicable Israeli law) of NIS 31,200 (approximately $8,914) for providing eighty percent of his working
time to our company. Beginning on March 1, 2015, Mr. Ben David began working for us on a full time basis pursuant to the terms
of his employment agreement at which point Mr. Ben David’s salary was increased to NIS 39,000 (approximately $11,142)
per month, and commencing April 1, 2016 his monthly salary was updated to NIS 60,000 (approximately $17,142). During 2016
and 2017, Mr. Ben David agreed to a waiver of 35.2% and 35.0% respectively of his cash salary according to our salary program
(see further details in “Employment and Related Agreements” below).
|
|
(7)
|
On January 27, 2016, Mr. Ben David was granted 1,736 shares
of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the period from January to March
2016.
|
|
|
On June 23, 2016, Mr. Ben David
was granted 4,135 shares of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the
period from April to June 2016, On August 1, 2016, Mr. Ben David was granted 4,485 shares of our Common Stock under our
2012 Equity Incentive Plan against waiver of cash salary for the period from July to September 2016, On January 10, 2017,
Mr. Ben David was granted 6,536 shares of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash
salary for the period from October to December 2016.
On March 31, 2016, Mr. Ben David was
granted 20,000 shares of our Common Stock under our 2012 Equity Incentive Plan as a bonus for the successful completion of the
public offering in March 2016.
On January 30, 2017, Mr. Ben David was granted 6,639 shares of our Common Stock
under our 2012 Equity Incentive Plan against waiver of cash salary for the period from January to March 2017. On April 13, 2017,
Mr. Ben David was granted 6,049 shares of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary
for the period from April to June 2017. On July 10, 2017, Mr. Ben David was granted 9,938 shares of our Common Stock under our
2012 Equity Incentive Plan against waiver of cash salary for the period from July to September 2017. On October 23, 2017, Mr.
Ben David was granted 12,325 shares of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for
the period from October to December 2017. On January 30, 2017, Mr. Ben David was granted 74,896 shares of our Common Stock under
our 2012 Equity Incentive Plan, and on April 20, 2017, Mr. Ben David was granted 20,000 shares of our Common Stock under our 2012
Equity Incentive Plan, as a bonus for the 2016 achievements of the Company.
|
|
(8)
|
During 2017, Mr. Ben David was granted 31,823 options to
purchase shares of our Common Stock. The balance shall vest in twelve equal quarterly installments from the grant date during
a three-year period. We may grant Mr. Ben David additional options to purchase shares of Common Stock from time to time at
the discretion of our Board or the Compensation Committee thereof (see further details in “Employment and Related Agreements”
below).
|
|
(9)
|
In addition to his salary, Mr. Ben David is entitled to receive
a mobile phone during his employment as well as reimbursements for expenses accrued. These benefits as well as other social
benefits under Israeli law are included as part of his “All Other Compensation.”
|
|
(10)
|
In accordance with his second amendment to the employment agreement
with our company effective April 2016, Mr. Bacher was entitled to a monthly salary of NIS 48,000 (approximately $13,714 per
month), Commencing July 1, 2017, Mr. Dror was appointed as our Chief Operating Officer and his monthly salary was increased
to NIS 55,000 (approximately $15,714 per month). During 2017, Mr. Bacher agreed to a waiver of 24% of his cash salary according
to our salary program (see further details in “Employment and Related Agreements” below)
|
|
(11)
|
On January 30, 2017, Mr. Bacher was granted 2,845 shares
of our Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the period from January to March
2017. On April 13, 2017, Mr. Bacher was granted 2,592 shares of our Common Stock under our 2012 Equity Incentive Plan against
waiver of cash salary for the period from April to June 2017. On July 10, 2017, Mr. Bacher was granted 7,572 shares of our
Common Stock under our 2012 Equity Incentive Plan against waiver of cash salary for the period from July to September 2017.
On October 23, 2017, Mr. Bacher was granted 9,390 shares of our Common Stock Common Stock under our 2012 Equity Incentive
Plan against waiver of cash salary for the period from October to December 2017. On January 30, 2017 Mr. Bacher was granted
49,745 shares of our Common Stock under our 2012 Equity Incentive Plan, on April 20, 2017 Mr. Bacher was granted 20,000 shares
of our Common Stock under our 2012 Equity Incentive Plan, as a bonus for the 2016 achievements of the Company, on July 25,
2017 Mr. Bacher was granted 10,000 shares of our Common Stock under our 2012 Equity Incentive Plan, upon his promotion to
COO of the Company, and on October 23, 2017 Mr. Bacher was granted 8,080 shares of our Common Stock under our 2012 Equity
Incentive Plan as a bonus for getting FDA clearance for certain Android smart phone devices in the U.S..
|
|
(12)
|
During January 2017, Mr. Bacher was granted 27,492 options
to purchase shares of our Common Stock which will vest in twelve equal quarterly installments over a three-year period from
the grant date. During July 2017, Mr. Bacher was granted 10,000 options to purchase shares of our Common Stock which will
vest in twelve equal quarterly installments over a three-year period from the grant date. We may grant Mr. Bacher additional
options to purchase shares of Common Stock from time to time at the discretion of our Board or the Compensation Committee
thereof (see further details in “Employment and Related Agreements” below).
|
|
(13)
|
In addition to his salary, Mr. Bacher is entitled to receive
a leased automobile and mobile phone during his employment as well as reimbursements for expenses accrued. These benefits
as well as other social benefits under Israeli law are included as part of his “All Other Compensation”.
|
All compensation awarded
to our executive officers were independently reviewed by our Compensation Committee.
Employment and Related Agreements
Except as set forth
below, we currently have no other written employment agreements with any of our officers and directors. The following is a description
of our current executive employment agreements:
Erez Raphael
,
Chief Executive Officer and Chairman of our Board of Directors
– On August 30, 2013, LabStyle Innovation Ltd., our
Israeli subsidiary, entered into an amendment to a Personal Employment Agreement with Mr. Raphael in connection with his August
2013 appointment as our President and Chief Executive Officer. Pursuant to the terms of his employment agreement as amended, Mr.
Raphael is entitled to a monthly salary of NIS 80,000 (approximately $22,857 per month). During 2016 and 2017, Mr. Raphael agreed
to a waiver of 42% and 45% respectively of his cash salary according to our salary program pursuant to which Mr. Raphael received
compensation shares of restricted Common Stock as consideration for cash salary waived.
On July 25, 2017,
we, through our Israeli subsidiary, LabStyle Innovation Ltd., executed an Amended and Restated Employment Agreement with Mr. Raphael.
Pursuant to the agreement, Mr. Raphael kept his monthly salary and shall be eligible for an annual bonus equal to up to 60% of
his annual base salary. Mr. Raphael’s employment agreement expires on December 31, 2020. In the event Mr. Raphael’s
employment agreement is terminated by us at will, by Mr. Raphael for good reason as provided thereby, or in conjunction with a
change of control, Mr. Raphael shall be entitled to receive 24 months base salary and severance payment pursuant to applicable
Israeli severance law, provided, however that in the event such termination occurs during the final year of the term, or within
the last 6 months of a renewal period of the term, Mr. Raphael shall be entitled to receive 12 months base salary and severance
payment pursuant to applicable Israeli severance law. In the event the employment agreement is terminated by us for cause, Mr.
Raphael will only be entitled to severance payment under applicable Israeli severance law. Mr. Raphael’s employment agreement
also includes a one year non-competition and non-solicitation provision, certain confidentiality covenants and assignment of any
of his company-related inventions. Under the terms of the agreement, Mr. Raphael is entitled to certain expense reimbursements
and other standard benefits, including vacation, sick leave, contributions to a manager’s insurance policy and study fund
and car and mobile phone allowances.
On January 27,
2016, the Compensation Committee of our Board approved the issuance to Mr. Raphael of 1,364 shares of our Common Stock under our
2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $10,637 salary otherwise payable to Mr. Raphael from
January to March 2016.
On June 23, 2016,
the Compensation Committee of our Board approved the issuance to Mr. Raphael of 7,089 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $36,185 salary otherwise payable to Mr. Raphael from April
to June 2016.
On August 1, 2016,
the Compensation Committee of our Board approved the issuance to Mr. Raphael of 7,688 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $36,045 salary otherwise payable to Mr. Raphael from July
to September 2016.
On January 10,
2017, the Compensation Committee of our Board approved the issuance to Mr. Raphael of 11,205 shares of our Common Stock under
our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $35,961 salary otherwise payable to Mr. Raphael
from October to December 2016.
On January 30,
2017, the Compensation Committee of our Board approved the issuance to Mr. Raphael of 11,381 shares of our Common Stock under
our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $36,444 salary otherwise payable to Mr. Raphael
from January to March 2017.
On April 13, 2017,
the Compensation Committee of our Board approved the issuance to Mr. Raphael of 10,369 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $37,953 salary otherwise payable to Mr. Raphael from April
to June 2017.
On July 10, 2017,
the Compensation Committee of our Board approved the issuance to Mr. Raphael of 17,036 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $39,389 salary otherwise payable to Mr. Raphael from July
to September 2017.
On October 23,
2017, the Compensation Committee of our Board approved the issuance to Mr. Raphael of 21,128 shares of our Common Stock under
our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $39,222 salary otherwise payable to Mr. Raphael
from October to December 2017.
Zvi Ben David
,
Chief Financial Officer, Treasurer and Secretary
– On January 8, 2015, LabStyle Innovation Ltd., our Israeli subsidiary,
entered into a Personal Employment Agreement with Mr. Ben David. Pursuant to his employment agreement, Mr. Ben David was initially
entitled to a monthly salary and additional compensation (excluding social benefits under applicable Israeli law) of NIS 31,200
(approximately $8,914) for providing eighty percent of his working time to our company. Beginning on March 1, 2015, Mr. Ben David
began working for us on a full time basis pursuant to the terms of his employment agreement at which point Mr. Ben David’s
salary was increased to NIS 39,000 (approximately $11,142). Commencing April 1, 2016, Mr. Ben David’s Salary was updated
to NIS 60,000 (approximately $17,142) per month. During 2016 and 2017, Mr. Ben David agreed to a waiver of 35.2% and 35.0% respectively
of his cash salary according to our salary program pursuant to which Mr. Ben David received compensation shares of restricted
Common Stock as consideration for cash salary waived.
Mr. Ben David's employment
agreement may be terminated by either party at will upon 90 days prior written notice or terminated by us for cause, as defined
under the employment agreement. In the event the employment agreement is terminated by us at will, Mr. Ben David shall be entitled
to receive 6 months base salary and severance payment pursuant to applicable Israeli severance law. In the event the employment
agreement is terminated by us at will, Mr. Ben David shall be entitled to receive 90 days of severance plus any required
severance payment pursuant to applicable Israeli severance law. In the event the employment agreement is terminated by us for
cause, Mr. Ben David will only be entitled to severance payment under applicable Israeli severance law. The employment agreement
also includes a twelve month non-competition and non-solicitation provision, certain confidentiality covenants and assignment
of any of his company-related inventions to the company. Under the terms of the employment agreement, Mr. Ben David is entitled
to certain expense reimbursements and other standard benefits, including vacation, sick leave, contributions to a manager’s
insurance policy and study fund and mobile phone allowances.
On January 27,
2016, the Compensation Committee of our Board approved the issuance to Mr. Ben David of 1,736 shares of our Common Stock under
our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $13,538 salary otherwise payable to Mr. Ben David
from January to March 2016.
On March 31, 2016,
the Compensation Committee of our Board approved the issuance to Mr. Ben David of 20,000 shares of our Common Stock under our
2012 Equity Incentive Plan. Such shares were issued as a bonus for the successful completion of the public offering in March 2016.
On June 23, 2016,
the Compensation Committee of our Board approved the issuance to Mr. Ben David of 4,135 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $21,108 salary otherwise payable to Mr. Ben David from
April to June 2016.
On August 1, 2016,
the Compensation Committee of our Board approved the issuance to Mr. Ben David of 4,485 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $21,026 salary otherwise payable to Mr. Ben David from
July to September 2016.
On January 10,
2017, the Compensation Committee of our Board approved the issuance to Mr. Ben David of 6,536 shares of our Common Stock under
our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $20,977 salary otherwise payable to Mr. Ben David
from October to December 2016.
On January 30,
2017, the Compensation Committee of our Board approved the issuance to Mr. Ben David of 6,639 shares of our Common Stock under
our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $21,259 salary otherwise payable to Mr. Ben David
from January to March 2017.
On April 13, 2017,
the Compensation Committee of our Board approved the issuance to Mr. Ben David of 6,049 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $ $22,139 salary otherwise payable to Mr. Ben David from
April to June 2017.
On July 10, 2017,
the Compensation Committee of our Board approved the issuance to Mr. Ben David of 9,938 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $22,977 salary otherwise payable to Mr. Ben David from
July to September 2017.
On October 23,
2017, the Compensation Committee of our Board approved the issuance to Mr. Ben David of 12,325 shares of our Common Stock under
our 2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $22,879 salary otherwise payable to Mr. Ben David
from October to December 2017.
Dror Bacher,
Chief Operating Officer
– On August 30, 2013, LabStyle Innovation Ltd., our Israeli subsidiary, entered into an employment
agreement with Mr. Bacher, pursuant to which Mr. Bacher receives an annual base salary of NIS 55,000 (approximately $15,714),
effective as of July 2017. Pursuant to Mr. Bacher’s existing personal employment agreement as amended, either we or Mr.
Bacher may terminate his employment agreement upon thirty days notice, provided, however, that in the event of a termination for
cause, Mr. Bacher’s employment may be terminated immediately. Mr. Bacher’s employment agreement also includes a twelve
(12) month non-competition and non-solicitation provision, certain confidentiality covenants and assignment of any of his company-related
inventions. Under the terms of Mr. Bacher’s employment agreement, Mr. Bacher is entitled to certain expense reimbursements
and other standard benefits, including vacation, sick leave, life and disability insurance and car and mobile phone allowances.
In addition, in conjunction with his appointment as Chief Operating Officer, we issued Mr. Bacher 10,000 shares of Common Stock, and 10,000 options that will vest in 12 equal quarterly installments over a three-year period with an exercise price of $2.46
per share, all issued pursuant to the Registrant’s Amended and Restated 2012 Equity Incentive Plan.
During the fiscal
year ended December 31, 2017, Mr. Bacher agreed to waive approximately 24% of his cash salary pursuant to our shares for salary
program and its 2012 Equity Incentive Plan, and as a result, Mr. Bacher received shares of Common Stock in lieu of a portion of
his annual cash salary.
On January 10,
2017, the Compensation Committee of our Board approved the issuance to Mr. Bacher of 2,801 shares of our Common Stock under our
2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $8,990 salary otherwise payable to Mr. Bacher from
October to December 2016.
On January 30,
2017, the Compensation Committee of our Board approved the issuance to Mr. Bacher of 2,845 shares of our Common Stock under our
2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $9,111 salary otherwise payable to Mr. Bacher from
January to March 2017.
On April 13, 2017,
the Compensation Committee of our Board approved the issuance to Mr. Bacher of 2,592 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $9,488 salary otherwise payable to Mr. Bacher from April
to June 2017.
On July 10, 2017,
the Compensation Committee of our Board approved the issuance to Mr. Bacher of 7,572 shares of our Common Stock under our 2012
Equity Incentive Plan. Such shares were issued in lieu of the waiver of $17,506 salary otherwise payable to Mr. Bacher from July
to September 2017.
On October 23,
2017, the Compensation Committee of our Board approved the issuance to Mr. Bacher of 9,390 shares of our Common Stock under our
2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $17,432 salary otherwise payable to Mr. Bacher from
October to December 2017.
On October 23,
2017, the Compensation Committee of our Board approved the issuance to Mr. Bacher of 8,080 shares of our Common Stock under our
2012 Equity Incentive Plan. Such shares were issued in lieu of the waiver of $15,000 of a cash bonus otherwise payable to Mr.
Bacher for his efforts in obtaining FDA clearance for certain Android smartphone devices in the U.S.
Outstanding Equity Awards at Fiscal
Year-End
|
Name
|
|
Number of
securities
underlying
unexercised
options (#)
exercisable
|
|
|
Number of
securities
underlying
unexercised
options (#)
unexercisable
|
|
|
Equity
incentive
plan awards:
Number of
securities
underlying
unexercised
unearned
options (#)
|
|
|
Option
exercise
price ($)
|
|
|
Option
expiration
date
|
|
|
Erez Raphael
|
|
|
2,001
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
121,50
|
|
|
|
March
14, 2023
|
|
|
(Chairman and Chief Executive Officer)
|
|
|
223
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
270.00
|
|
|
|
June
5, 2023
|
|
|
|
|
|
3,334
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
240.30
|
|
|
|
August
28, 2023
|
|
|
|
|
|
889
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
166.50
|
|
|
|
January
6, 2024
|
|
|
|
|
|
4,667
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
88.20
|
|
|
|
July
6, 2024
|
|
|
|
|
|
168,904
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.76
|
|
|
|
September
3, 2021
|
|
|
|
|
|
35,790
|
|
|
|
107,374
|
(1)
|
|
|
-
|
|
|
$
|
3.202
|
|
|
|
January
30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zvi Ben David
|
|
|
43,073
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.76
|
|
|
|
September
3, 2021
|
|
|
(Chief Financial Officer, Secretary and Treasurer)
|
|
|
7,955
|
|
|
|
23,868
|
(1)
|
|
|
-
|
|
|
$
|
3.202
|
|
|
|
January
30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dror Bacher
|
|
|
1,334
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
166.50
|
|
|
|
January
6, 2024
|
|
|
(Chief Operating Officer)
|
|
|
1,334
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
88.20
|
|
|
|
July
6, 2024
|
|
|
|
|
|
25,338
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.76
|
|
|
|
September
3, 2021
|
|
|
|
|
|
6,389
|
|
|
|
3,195
|
(1)
|
|
|
-
|
|
|
$
|
7.02
|
|
|
|
December
17, 2021
|
|
|
|
|
|
6,873
|
|
|
|
20,619
|
(1)
|
|
|
-
|
|
|
$
|
3.202
|
|
|
|
January
30, 2023
|
|
|
|
|
|
834
|
|
|
|
9,166
|
(1)
|
|
|
-
|
|
|
$
|
2.46
|
|
|
|
July
25, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Option Shares
|
|
|
308,938
|
|
|
|
164,222
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
(1)
|
Vests
in 12 equal quarterly installments over a three-year period.
|
Non-Employee Director Remuneration
Policy
In March 2013, our Board adopted the following
non-employee director remuneration policy:
Cash Awards
Our non-employee directors
(currently Messrs. Hoenlein, McGrath and Yehudiha, Prof. Stone and Ms. Karah) will receive the following cash payments for each
fiscal year: (i) $25,000 per year, to be paid quarterly in arrears and (ii) $16,000 for Board committee service, to be paid quarterly
in arrears;
provided, however,
that such quarterly payments and committee meeting fees shall accrue and shall be payable
upon the approval of Mr. Raphael at such time when our company is adequately capitalized in his reasonable discretion.
Stock and Option Awards
On April 3, 2015,
our Board approved a compensation plan under which the executive officers have been granted the authority (in their discretion
from time to time with the concurrence of the impacted individuals, and subject to applicable laws, rules and regulations) to
cause the issuance of shares of Common Stock to our directors, officers and employees as consideration for a reduction in cash
salary or fees owed to such individuals. For that purpose a pool of up to 122,222 shares of Common Stock is reserved under a shares
for salary program.
On January 3, 2016,
1,349 shares were issued to each of Prof. Stone, Mr. Hoenlein and Mr. McGrath in lieu of $10,250 in fees otherwise payable to
each of them for the period from October 1, 2015 to December 31, 2015 (this grant included a correction to the grant made on October
6, 2015).
On January 3, 2016,
the Compensation Committee of our Board approved the issuance to each of Ms. Karah and Mr. Yehudiha of 1,351 shares of our Common
Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of $10,250 in fees otherwise payable to each of Ms.
Karah and Mr. Yehudiha for the period from October 1, 2015 to December 31, 2015.
On June 19, 2016,
the Compensation Committee of our Board approved the issuance to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and
Mr. Yehudiha of 2,008 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of $10,250
in fees otherwise payable to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and Mr. Yehudiha for the period from January
1, 2016 to March 31, 2016.
On July 27, 2016,
the Compensation Committee of our Board approved the issuance to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and
Mr. Yehudiha of 2,186 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of $10,250
in fees otherwise payable to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and Mr. Yehudiha for the period from April
1, 2016 to June 30, 2016.
On January 10,
2017, the Compensation Committee of our Board approved the issuance to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah
and Mr. Yehudiha of 6,388 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of
$20,500 in fees otherwise payable to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and Mr. Yehudiha for the period
from July 1, 2016 to December 31, 2016. In addition, the Compensation Committee of our Board approved the issuance to Mr. Farhi
of 4,544 shares of our Common Stock under the 2012 Equity Incentive Plan. Such shares were issued in lieu of $14,583.33 in fees
otherwise payable to Mr. Farhi for the period June 1, 2016 to December 31, 2016.
On January 30, 2017,
the Compensation Committee of our Board approved a grant of an aggregate of 111,242 options to our non-employee directors. These
options have an exercise price of $3.202 per share. The options shall vest in 12 quarterly installments over a three-year period
from the grant date.
On April 13, 2017,
the Compensation Committee of our Board approved the issuance to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and
Mr. Yehudiha of 2,800 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of $10,250
in fees otherwise payable to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and Mr. Yehudiha for the period from January
1, 2017 to March 31, 2017. In addition, the Compensation Committee of our Board approved the issuance to Mr. Farhi of 1,708 shares
of our Common Stock under the 2012 Equity Incentive Plan. Such shares were issued in lieu of $6,250 in fees otherwise payable
to Mr. Farhi for the period January 1, 2017 to March 31, 2017. In addition, the Compensation Committee of our Board approved the
issuance to each of Mr. Kamer and Mr. Bahagon of 569 shares of our Common Stock under the 2012 Equity Incentive Plan. Such shares
were issued in lieu of $2,083.33 in fees otherwise payable to each of Mr. Kamer and Mr. Bahagon for the period March 1, 2017 to
March 31, 2017.
On July 9, 2017,
the Compensation Committee of our Board approved the issuance to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and
Mr. Yehudiha of 4,433 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of $10,250
in fees otherwise payable to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and Mr. Yehudiha for the period from April
1, 2017 to June 30, 2017. In addition, the Compensation Committee of our Board approved the issuance to each of Mr. Farhi, Mr.
Kamer and Mr. Bahagon of 2,703 shares of our Common Stock under the 2012 Equity Incentive Plan. Such shares were issued in lieu
of $6,250 in fees otherwise payable to Mr. Farhi, Mr. Kamer and Mr. Bahagon for the period April 1, 2017 to June 30, 2017.
On October 23,
2017, the Compensation Committee of our Board approved the issuance to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah
and Mr. Yehudiha of 5,521 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of
$10,250 in fees otherwise payable to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and Mr. Yehudiha for the period
from July 1, 2017 to September 30, 2017. In addition, the Compensation Committee of our Board approved the issuance to each of
Mr. Farhi, Mr. Kamer and Mr. Bahagon of 3,367 shares of our Common Stock under the 2012 Equity Incentive Plan. Such shares were
issued in lieu of $6,250 in fees otherwise payable to Mr. Farhi, Mr. Kamer and Mr. Bahagon for the period July 1, 2017 to September
30, 2017.
On January 4, 2018,
the Compensation Committee of our Board approved the issuance to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and
Mr. Yehudiha of 6,531 shares of our Common Stock under our 2012 Equity Incentive Plan. Such shares were issued in lieu of $10,250
in fees otherwise payable to each of Prof. Stone, Mr. Hoenlein, Mr. McGrath, Ms. Karah and Mr. Yehudiha for the period from October
1, 2017 to December 31, 2017. In addition, the Compensation Committee of our Board approved the issuance to each of Mr. Farhi,
Mr. Kamer and Mr. Bahagon of 3,983 shares of our Common Stock under the 2012 Equity Incentive Plan. Such shares were issued in
lieu of $6,250 in fees otherwise payable to Mr. Farhi, Mr. Kamer and Mr. Bahagon for the period October 1, 2017 to December 31,
2017.
Compensation
Compensation Committee Review
The Compensation Committee
shall, if it deems necessary or prudent in its discretion, reevaluate and approve in January of each such year (or in any event
prior to the first board meeting of such fiscal year) the cash and equity awards (amount and manner or method of payment) to be
made to non-employee directors for such fiscal year. In making this determination, the Compensation Committee shall utilize such
market standard metrics as it deems appropriate, including, without limitation, an analysis of cash compensation paid to independent
directors of our peer group.
The Compensation Committee
shall also have the power and discretion to determine in the future whether non-employee directors should receive annual or other
grants of options to purchase shares of Common Stock or other equity incentive awards in such amounts and pursuant to such policies
as the Compensation Committee may determine utilizing such market standard metrics as it deems appropriate, including, without
limitation, an analysis of equity awards granted to independent directors of our peer group.
Participation of Employee Directors;
New Directors
Unless separately
and specifically approved by the Compensation Committee in its discretion, no employee director of our company shall be entitled
to receive any remuneration for service as a director (other than expense reimbursement as per prevailing policy).
New directors joining
our Board shall be entitled to a pro rated portion (based on months to be served in the fiscal year in which they join) of cash
and stock option or other equity incentive awards (if applicable) for the applicable fiscal year at the time they join the board.
Summary Director Compensation Table
The following table
summarizes the annual compensation paid to our non-employee directors for the fiscal year ended December 31, 2017:
Name and
Principal
Position
|
|
Year
|
|
Fees Paid
or
Earned in
Cash
($)
|
|
|
Stock
Awards
|
|
|
Option
Awards
($)*
|
|
|
Non-equity
incentive
plan
compensation
|
|
|
Non-
qualified
deferred
compensation
earnings
|
|
|
All other
compensation
($)
|
|
|
Total ($)
|
|
|
Malcolm Hoenlein
|
|
2017
|
|
$
|
-
|
|
|
$
|
41,000
|
(1)
|
|
$
|
28,813
|
(2)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
69,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis McGrath
|
|
2017
|
|
$
|
-
|
|
|
$
|
41,000
|
(3)
|
|
$
|
28,813
|
(4)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
69,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prof. Richard B. Stone
|
|
2017
|
|
$
|
-
|
|
|
$
|
41,000
|
(5)
|
|
$
|
28,813
|
(6)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
69,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rami Yehudiha
|
|
2017
|
|
$
|
-
|
|
|
$
|
41,000
|
(7)
|
|
$
|
28,813
|
(8)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
69,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yalon Farhi
|
|
2017
|
|
$
|
-
|
|
|
$
|
25,000
|
(9)
|
|
$
|
56,173
|
(10)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
81,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hila Karah
|
|
2017
|
|
$
|
-
|
|
|
$
|
41,000
|
(11)
|
|
$
|
28,813
|
(12)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
69,813
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allen Kamer
|
|
2017
|
|
$
|
-
|
|
|
$
|
20,833.33
|
(13)
|
|
$
|
-
|
(14)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,833.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yossi Bahagon(17)
|
|
2017
|
|
$
|
-
|
|
|
$
|
20,833.33
|
(15)
|
|
$
|
-
|
(16)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
20,833.33
|
|
|
*
|
The amount shown does not reflect dollar amount actually received.
Instead, this amount reflects the aggregate grant date fair value of each stock option granted in the fiscal year ended December
31, 2017, computed in accordance with the provisions of ASC 718. Assumptions used in accordance with ASC 718 are included
in Note 9 to our consolidated financial statements included in this Annual Report.
|
|
(1)
|
40,496 stock awards are outstanding as of December 31, 2017.
|
|
(2)
|
35,653 option awards are outstanding as of December 31, 2017.
|
|
(3)
|
33,148 stock awards are outstanding as of December 31, 2017.
|
|
(4)
|
33,152 option awards are outstanding as of December 31, 2017.
|
|
(5)
|
33,104 stock awards are outstanding as of December 31, 2017.
|
|
(6)
|
32,874 option awards are outstanding as of December 31, 2017.
|
|
(7)
|
31,857 stock awards are outstanding as of December 31, 2017.
|
|
(8)
|
31,207 option awards are outstanding as of December 31, 2017.
|
|
(9)
|
12,322 stock awards are outstanding as of December 31, 2017.
|
|
(10)
|
31,207 option awards are outstanding as of December 31, 2017.
|
|
(11)
|
35,745 stock awards are outstanding as of December 31, 2017.
|
|
(12)
|
31,207 option awards are outstanding as of December 31, 2017.
|
|
(13)
|
6,639 stock awards are outstanding as of December 31, 2017.
|
|
(14)
|
No option awards are outstanding as of December 31, 2017.
|
|
(15)
|
6,639 stock awards are outstanding as of December 31, 2017.
|
|
(16)
|
No option awards are outstanding as of December 31, 2017.
|
|
(17)
|
Mr. Bahagon resigned from our Board effective as of March 15, 2018.
|
REPORT OF THE AUDIT
COMMITTEE
In the course of our
oversight of the Company’s financial reporting process, we have: (1) reviewed and discussed with management the audited
financial statements for the fiscal year ended December 31, 2017; (2) discussed with the Independent Auditors the matters
required to be discussed by the statement on Auditing Standards No. 1301 of the Public Company Accounting Oversight Board; (3) received
the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements
of the standards of the Public Company Accounting Oversight Board regarding the independent accountant’s communications
with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s
independence; (4) discussed with the independent registered public accounting firm its independence; and (5) considered
whether the provision of non-audit services by the independent registered public accounting firm is compatible with maintaining
its independence and concluded that it is compatible at this time.
Based on the foregoing
review and discussions, the Audit Committee recommended to the Board that the audited financial statements be included in the
annual report on Form 10-K for the fiscal year ended December 31, 2017, for filing with the Securities and Exchange Commission.
|
|
By the Audit
Committee of the Board of
Directors of
DarioHealth
Corp.
|
|
|
|
|
|
Dennis M. McGrath, Chairman
Malcolm Hoenlein
Richard B. Stone
|
Beneficial
Ownership of Principal Stockholders, Officers and Directors
The following table
sets forth information regarding the beneficial ownership of our Common Stock as of April 1, 2018, by each person known by us
to be the beneficial owner of more than 5% of our outstanding shares of Common Stock, each of our named executive officers and
directors; and all of our executive officers and Director Nominees as a group.
|
|
|
|
|
|
Percent of
|
|
|
|
|
Shares of
Common
|
|
|
Common
Stock
|
|
|
|
|
Beneficially
|
|
|
Beneficially
|
|
|
Name of Beneficial Owner
|
|
Stock Owned
|
|
|
Owned
(1)
|
|
|
Officers and Directors
|
|
|
|
|
|
|
|
|
|
Erez Raphael
(2)
|
|
|
1,906,645
|
|
|
|
11.2
|
%
|
|
Zvi Ben David
(3)
|
|
|
633,062
|
|
|
|
3.8
|
%
|
|
Dror Bacher(4)
|
|
|
190,679
|
|
|
|
1.2
|
%
|
|
Malcolm Hoenlein
(5)
|
|
|
73,342
|
|
|
|
*
|
|
|
Dennis M. McGrath
(6)
|
|
|
63,493
|
|
|
|
*
|
|
|
Prof. Richard B. Stone
(7)
|
|
|
233,617
|
|
|
|
1.4
|
%
|
|
Rami Yehudiha
(8)
|
|
|
60,257
|
|
|
|
*
|
|
|
Hila Karah
(9)
|
|
|
64,145
|
|
|
|
*
|
|
|
Yalon Farhi
(10)
|
|
|
29,307
|
|
|
|
*
|
|
|
Allen Kamer
(11) (12)
|
|
|
1,399,511
|
|
|
|
8.5
|
%
|
|
Ori Zanco
(13)
|
|
|
0
|
|
|
|
0
|
%
|
|
All Executive Officers and Directors as a group (11 persons)
|
|
|
4,654,058
|
|
|
|
27.8
|
%
|
|
5% Stockholders
|
|
|
|
|
|
|
|
|
|
OurCrowd Digital Health L.P.
(12)
|
|
|
1,388,889
|
|
|
|
8.4
|
%
|
|
Agate JT Healthcare Fund L.P.
(13)
|
|
|
1,428,571
|
|
|
|
8.7
|
%
|
|
Shmuel Farhi
(14)
|
|
|
1,263,353
|
|
|
|
7.5
|
%
|
|
Shehnee Lawrence Farhi
(15)
|
|
|
1,550,975
|
|
|
|
9.3
|
%
|
|
(1)
|
Percentage ownership is based on 16,480,164 shares of our
Common Stock outstanding as of April 1, 2018 and, for each person or entity listed above, warrants or options to purchase
shares of our Common Stock which exercisable within 60 days of the date of this Proxy Statement.
|
|
(2)
|
Includes 239,669 vested options and 1,112 warrants to purchase
Common Stock. Excludes 83,513 options which are not vested. Also includes 757,509 shares of our Common Stock and 256,387 warrants
to purchase Common Stock, held by Dicilyon Consulting and Investment Ltd. Erez Raphael is the natural person with voting and
dispositive power over our securities held by Dicilyon Consulting and Investment Ltd. The address of Dicilyon Consulting and
Investment Ltd. is 7 B'Chshvan St No. 8, Ramat HaSharon, Israel.
|
|
(3)
|
Includes 56,332 vested options to purchase Common Stock and
160,519 warrants to purchase Common Stock. Excludes 18,564 options which are not vested. Includes 9,018 shares and 28,573
warrants owned by spouse
|
|
(4)
|
Includes 49,151 vested options to purchase Common Stock and
278 warrants to purchase Common Stock. Excludes 25,931 options which are not vested.
|
|
(5)
|
Includes 26,315 vested options to purchase Common Stock.
Excludes 9,338 options which are not vested.
|
|
(6)
|
Includes 23,814 vested options to purchase Common Stock.
Excludes 9,338 options which are not vested.
|
|
(7)
|
Includes 36,112 warrants to purchase Common Stock, and 23,536
vested options to purchase Common Stock. Excludes 9,338 options which are not vested.
|
|
(8)
|
Includes 21,869 vested options to purchase Common Stock.
Excludes 9,338 options which are not vested.
|
|
(9)
|
Includes 21,869 vested options to purchase Common Stock.
Excludes 9,338 options which are not vested.
|
|
(10)
|
Includes 13,002 vested options to purchase Common Stock.
Excludes 18,205 options which are not vested.
|
|
(11)
|
Mr. Kamer is a Managing Partner of OurCrowd Digital Health L.P.
and therefore the securities held by OurCrowd Digital Health L.P. may be deemed to be beneficially owned by Mr. Kamer. Mr.
Kamer disclaims beneficial ownership of the securities owned by OurCrowd Digital Health L.P. except to the extent of his pecuniary
interest therein.
|
|
(12)
|
Based solely on information contained in the filed Schedule
13G filed with the SEC on January 27, 2017, reporting beneficial ownership of OurCrowd Digital health L.P., and on the exchange
agreement signed between the Company and OurCrowd Digital health L.P. on November 13, 2017. The address of OurCrowd Digital
health L.P address is 28 Hebron Rd., Jerusalem 918001, Israel.
|
|
(13)
|
Based on the Securities Purchase Agreement executed by and
between Agate JT Healthcare Fund L.P. and the Company dated February 28, 2018.
|
|
(14)
|
Based on information contained in the filed Schedule 13D filed
with the SEC on October 10, 2017, reporting beneficial ownership of Mr. Shmuel Farhi. Includes 305,557 warrants to purchase
Common Stock issued to Mr. Shmuel Farhi. Mr. Shmuel Farhi’s address is 484 Richmond St., London, England, N6A 3E6.
|
|
(15)
|
Based solely on information contained in the filed Schedule
13G filed with the SEC on February 14, 2018, reporting beneficial ownership of Ms. Farhi and on the Securities Purchase Agreement
executed by and between Ms. Farhi and the Company on March 6 2018. Includes 367,689 warrants to purchase Common Stock issued
to Ms. Farhi. Ms. Farhi’s address is 413 Grangeover Crt., London, Ontario, Canada.
|
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
Executive Officers and Directors
We have entered into
employment and consulting agreements and granted stock awards to our executive officers and directors as more fully described
in “Executive Compensation” above.
September 2014 Private Placement
On September 23, 2014,
we entered into and closed the transactions contemplated by a definitive Securities Purchase Agreement. The lead investor in the
financing memorialized in such agreement was Dicilyon Consulting and Investment Ltd. (“Dicilyon”), an affiliate of
Israeli investor David Edery who invested $3 million in the private placement purchasing 1,667 shares of our Series A Convertible
Preferred Stock (which converted into 525,564 shares of our Common Stock on March 8, 2016 in conjunction with a closing of our
public offering) and 231,248 warrants to purchase Common Stock following the entry into a warrant replacement agreement with Dicilyon
whereby Dicilyon replaced 210,226 warrants issued in 2014 which contained a net settlement cash feature and liquidated damages
penalties with 231,248 warrants which contain a standard anti-dilution clause, both groups of warrants with an exercise price
of $8.559 per share and exercisable until September 23, 2018. Pursuant to the Securities Purchase Agreement, Mr. Edery and his
controlled affiliates were granted certain special rights, including, among other things, (i) a two year pre-emptive right to
participate in our future financings, subject to certain exceptions, in an amount which would allow Mr. Edery to maintain his
fully-diluted percentage ownership of the Company, and (ii) a right that, for so long as Mr. Edery holds 25%, 15% and 10% of the
outstanding shares of Common Stock, Mr. Edery shall have the right to appoint, respectively, three, two or one member of our seven
person Board. The preemptive rights were waived in connection with the March 2016 public offering and Mr. Edery has waived his
director nomination rights effective February 28, 2016. In connection with the closing of the transactions contemplated by the
Securities Purchase Agreement, Mr. Edery’s company appointed Rami Yehudiha to serve as a member of the Board and on November
18, 2014, Mr. Edery’s company exercised its right to appoint two members to the Board by requesting that Dr. Oren Fuerst
and Dr. Steven A. Kaplan resign from the Board. Accordingly, Dr. Kaplan resigned from the Board effective as of November 21, 2014
and Dr. Fuerst resigned from the Board effective as of November 23, 2014. On November 23, 2014, the remaining members of the Board
acted by unanimous written consent to name two appointees of Mr. Edery’s company, Dr. Peter M. Kash and Ms. Hila Karah,
as members of the Board. On February 25, 2015, Dr. Peter M. Kash resigned from his position as a member of the Board for personal
reasons. On June 15, 2015, both Mr. Yehudiha and Ms. Karah were elected to our Board by our shareholders. On March 1, 2016, Dicilyon
irrevocably granted voting and dispositive power over our shares held by it to Erez Raphael, our Chairman and Chief Executive
Officer.
January 2017 Private Placement
On January 9, 2017,
we held the initial closing of our private placement offering with OurCrowd Digital Health L.P., the lead investor, and an additional
investor, and issued and sold an aggregate of 1,113,922 shares of Common Stock and warrants to purchase 1,113,922 shares of our
Common Stock. Pursuant to the terms of the securities purchase agreement with OurCrowd Digital Health L.P., we granted OurCrowd
Digital Health L.P. the right to nominate two individuals to the our Board for so long as the investor holds 13% and 5% of our
outstanding shares of our Common Stock. We further agreed to permit such designees to serve on our Nominating and Corporate Governance
Committee. In addition, we granted OurCrowd Digital Health L.P. the right, for a two year period, to participate in future securities
offerings of the Company. On February 28, 2017, OurCrowd Digital Health L.P. appointed Allen Kamer and
Yossi
Bahagon to serve on our Board as well as appointed each of Messrs. Kamer and Bahagon to serve on our Nominating and Corporate
Governance Committee. Such investor no longer holds in excess of 13% of our outstanding shares of Common Stock and currently has
the right to appoint one director to our Board of Directors. Mr. Bahagon resigned from our Board of Directors effective as of
March 15, 2018.
February 2018 Private Placement
Between
February 28, 2018 and March 6, 2018, we executed two forms of Securities Purchase Agreements with accredited and non-U.S.
investors relating to the Offering of an aggregate of 2,262,269 shares of our Common Stock, an aggregate of 1,234,080 shares
of our Series C Preferred Stock and Warrants to purchase up to an aggregate of 3,784,351 shares of our Common Stock. Pursuant
to the terms of the securities purchase agreement with Agate JT Healthcare Fund L.P, a significant investor in the Offering,
we granted Agate JT Healthcare Fund L.P. the right to appoint one individual to our Board with such designee to be nominated
to serve on the Board for so long as such investor maintains ownership in excess of 5% of our outstanding Common Stock. Agate
selected Mr. Zanco to serve on our Board and Mr. Zanco was appointed to our Board on April 1, 2018.
Statement of Policy
All transactions (if
any) between us and our officers, directors or five percent stockholders, and respective affiliates will be on terms no less favorable
than could be obtained from unaffiliated third parties and will be approved by a majority of our independent directors who do
not have an interest in the transactions and who had access, at our expense, to our legal counsel or independent legal counsel.
To the best of
our knowledge, other than as set forth above, there were no material transactions, or series of similar transactions, or any currently
proposed transactions, or series of similar transactions, to which we were or are to be a party, in which the amount involved
exceeds the lesser of $120,000 or 1% of the average of our total assets at year end for the last two completed fiscal years, and
in which any director or executive officer, or any security holder who is known by us to own of record or beneficially more than
5% of any class of our Common Stock, or any member of the immediate family of any of the foregoing persons, has an interest (other
than compensation to our officers and directors in the ordinary course of business).
Stockholder Communications
Stockholders wishing
to communicate with the Board may direct such communications to the Board c/o the Company, Attn: Zvi Ben David. Mr. Ben David
will present a summary of all stockholder communications to the Board at subsequent Board meetings. The directors will have the
opportunity to review the actual communications at their discretion.
Additional Information
Accompanying this
Proxy Statement is a copy of the Annual Report. Such Report includes the Company’s audited financial statements for the
2017 fiscal year and certain other financial information, which is incorporated by reference herein.
In addition, we are
subject to certain informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements
and other information with the SEC. Such reports, proxy statements and other information are available on the SEC’s website
at www.sec.gov. Stockholders who have questions in regard to any aspect of the matters discussed in this Proxy Statement should
contact Zvi Ben David, Chief Financial Officer of the Company, at 8 HaToKhen Street, Caesarea Industrial Park 3088900, Israel.
STOCKHOLDER
PROPOSALS
Proposals of stockholders
intended to be included in the Company’s proxy statement and form of proxy for use in connection with the Company’s
2019 Annual Meeting of Stockholders must be received by the Company’s Secretary at the Company’s principal executive
offices at 8 HaTokhen Street, Caesarea Industrial Park 3088900, Israel, not less than 90 days nor more than 120 days prior to
the annual meeting of stockholders, and must otherwise satisfy the procedures contained in the Company’s Bylaws or as prescribed
by Rule 14a-8 under the Exchange Act.
Stockholder proposals
with respect to director nominees for use in connection with the Company’s 2019 Annual Meeting of Stockholders must be received
by the Company’s Secretary at the Company’s principal executive offices at not less than 60 days before the date of
the annual meeting of stockholders. A stockholder wishing to formally nominate an individual for election to the Board must do
so by following the notice, information and consent provisions described in the Company’s Bylaws. In that regard, the stockholder
must set forth the (a) the name, age, business address and the primary legal residence address of each nominee proposed in such
notice, (b) the principal occupation or employment of such nominee, (c) the number of shares of capital stock of the Company which
are owned directly or indirectly of record and directly or indirectly beneficially owned by the nominee and each of its affiliates
(within the meaning of Rule 144 under the Securities Act of 1933, as amended), including any shares of the Company owned or controlled
via derivatives, hedged positions and other economic and voting mechanisms, (d) any material agreements, understandings or relationships,
including financial transactions and compensation, between the nominating stockholder and the proposed nominees and (e) such other
information concerning each such nominee as would be required, under the rules of the Securities and Exchange Commission, in a
proxy statement soliciting proxies in a contested election of such nominees. The Board will use the same evaluation criteria and
process for director nominees recommended by stockholders as it uses for other director nominees. There has been no change to
the procedures by which stockholders may recommend nominees to our Board.
It is suggested that
any such proposals be submitted by certified mail, return receipt requested.
If we do not receive
notice of a stockholder proposal within this timeframe, our management will use its discretionary authority to vote the shares
they represent, as the Board may recommend. We reserve the right to reject, rule out of order, or take other appropriate
action with respect to any proposal that does not comply with these requirements.
HOUSEHOLDING OF
ANNUAL MEETING MATERIALS
Some banks, brokers
and other nominee record holders may be participating in the practice of “householding” proxy statements and annual
reports. This means that only one copy of our proxy statement or annual report may have been sent to multiple stockholders
in your household. We will promptly deliver a separate copy of either document to you if you call or write us at the address
shown on the first page of this proxy statement. If you want to receive separate copies of the annual report and any proxy
statement in the future or if you are receiving multiple copies and would like to receive only one copy for your household, you
should contact your bank, broker, or other nominee record holders, or you may contact us at the address shown on the first page of
this proxy statement or by phone at +(972)-(4) 770 4055.
OTHER MATTERS
As of the date of
this proxy statement, our management knows of no matter not specifically described above as to any action which is expected to
be taken at the Meeting. The persons named in the enclosed proxy, or their substitutes, will vote the proxies, insofar as the
same are not limited to the contrary, in their best judgment, with regard to such other matters and the transaction of such other
business as may properly be brought at the Meeting.
IF YOU HAVE NOT
VOTED BY INTERNET, PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE.
A PROMPT RETURN OF YOUR PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
|
|
By
order of the Board of Directors
,
|
|
|
|
|
|
|
|
|
/s/
Erez Raphael
|
|
|
Erez Raphael
|
|
|
Chief
Executive Officer and Chairman of the Board
|
Caesarea, Israel
April 2
,
2018
Amendment to Amended and Restated 2012
Equity Incentive Plan
WHEREAS
, DarioHealth
Corp. (the “Company”) maintains the DarioHealth Corp.’s Amended and Restated 2012 Equity Incentive Plan (the
“Incentive Plan”);
WHEREAS
, the
Board of Directors (the “Board”) and the Compensation Committee of the Board has determined that it is in the best
interests of the Company to amend the Incentive Plan to increase the maximum number of shares of the Company’s common stock
authorized to be issued under the Incentive Plan by 1,500,000, from 3,873,000 to 5,373,000; and
WHEREAS
,
pursuant
to Section 13 of the Incentive Plan, an amendment that materially increases the aggregate number of shares that may be issued
under the Incentive Plan generally must be approved by a majority of votes cast by the stockholders of the Company in accordance
with applicable stock exchange rules.
NOW, THEREFORE
,
effective as of the date of approval by a majority of votes cast by the stockholders of the Company in accordance with applicable
stock exchange rules, the Incentive Plan is hereby amended in the following particulars:
|
|
1.
|
Section 4(a) of the Incentive Plan is deleted in its entirety
and replaced with the following:
|
Share Reserve
. Subject
to the provisions of Section 11 relating to adjustments upon changes in Common Stock, the Common Stock that may be issued pursuant
to Awards shall not exceed in the aggregate of 5,373,000 shares of Common Stock. During the terms of the Awards, the Company shall
keep available at all times the number of shares of Common Stock required to satisfy such Awards.
|
|
2.
|
In all other respects the Incentive Plan shall remain unchanged
and in full force and effect.
|
AMENDMENT NO.
1 TO
BYLAWS OF
DARIOHEALTH
CORP.
(a Delaware
Corporation)
(adopted effective
as of May __, 2018)
1. Article
3, Section 3.3 of the Bylaws is deleted in its entirety and replaced with the following:
SECTION 3.3.
Vacancies,
Additional Directors; Removal From Office; Resignation
. If any vacancy occurs in the Board of Directors caused by death, resignation,
retirement, disqualification, removal from office or otherwise, or if any new directorship is created by an increase in the authorized
number of directors, a majority of the directors then in office, though less than a quorum, or a sole remaining director, but
not the stockholders of the Corporation, may choose a successor or fill the newly created directorship. Any director so chosen
shall hold office for the unexpired term of his or her predecessor in his or her office and until his or her successor shall be
elected and qualified, unless sooner displaced. No decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director. A director may be removed from his or her position by the Board of Directors with
or without cause. The stockholders of the Corporation may
only
remove a member of the Board of Directors
for
with our without
cause, which removal shall only occur at a meeting of the stockholders, duly called, by the affirmative
vote of
sixty-six and two-thirds percent (66 2/3%)
a majority
of the stockholders entitled to vote thereat.
Any director may resign or voluntarily retire upon giving written notice to the Chairman of the Board or the Board of Directors.
Such retirement or resignation shall be effective upon the giving of the notice, unless the notice specifies a later time for
its effectiveness. If such retirement or resignation is effective at a future time, the Board of Directors may elect a successor
to take office when the retirement or resignation becomes effective.
For purposes of this Section 3.3, “cause”
shall mean: (i) the director’s conviction or plea of nolo contendere of a serious felony involving (a) moral turpitude or
(b) a violation of federal or state securities laws, but excluding any conviction based entirely on vicarious liability, (ii)
the director’s commission of any material act of dishonesty resulting or intended to result in material personal gain or
enrichment of such director at the expense of the Corporation or any of its subsidiaries and which act, if made the subject of
criminal charges, would be reasonably likely to be charged as a felony, (iii) the willful failure by such director to perform,
or the gross negligence of such director in performing, the duties of a director or (iv) the director being adjudged legally incompetent
by a court of competent jurisdiction.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS
,
EREZ RAPHAEL AND ZVI BEN DAVID,
AND EACH OF THEM, AS PROXIES OF THE UNDERSIGNED, WITH FULL POWER OF SUBSTITUTION, TO VOTE
ALL THE SHARES OF COMMON STOCK OF DARIOHEALTH CORP. HELD OF RECORD BY THE UNDERSIGNED ON MARCH 26
,
2018, AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2018 AT 11 AM ET, at the law offices of Zysman, Aharoni, Gayer
and Sullivan & Worcester LLP, 1633 Broadway, 32nd Floor, New York, New York 10019, OR ANY ADJOURNMENT THEREOF.
1. Election of Erez Raphael, Yalon
Farhi, Malcolm Hoenlein, Allen Kamer, Hila Karah, Dennis M. McGrath, Richard B. Stone, Rami Yehudiha and Ori Zanco to hold office
until the 2019 Annual Meeting of Stockholders or their successors are elected and qualified or until their earlier resignation
or removal.
Erez Raphael
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Yalon Farhi
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Malcolm Hoenlein
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Allen Kamer
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Hila Karah
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Dennis M. McGrath
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Richard B. Stone
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Rami Yehudiha
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
Ori Zanco
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
2. To approve, for purposes of
Nasdaq Listing Rule 5635(d), the conversion of 1,234,080 shares of the Company’s Series C Convertible Preferred Stock (the
“
Series C Preferred Stock
”) into an aggregate of 2,468,160 shares of common stock, $0.0001 par value per share,
based on a conversion price of $1.40 per share. The shares of Series C Preferred Stock were issued pursuant to private placement
transactions that closed on February 28, 2018 and March 6, 2018;
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
2a. Please indicate below whether
you acquired shares in the Offering that was conducted by the Company in February and March 2018. If you indicate “FOR”
below,
you will not be entitled to vote on Proposal 2
“Private Placement Proposal.” If you indicate
“AGAINST” or “ABSTAIN” you will be entitled to vote on Proposal 2 “Private Placement Proposal.”
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
3. To approve an amendment to the
Amended and Restated 2012 Equity Incentive Plan to increase the number of shares of Common Stock authorized for issuance under
the 2012 Equity Incentive Plan from 3,873,000 shares to 5,373,000.
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
4. To ratify the appointment by the
Audit Committee of the Company’s Board of Directors of Kost Forer Gabbay & Kasierer as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2018.
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
5. To approve an amendment to
the Company’s bylaws to permit the removal of a director with our without cause
by
a vote of the majority of the stockholders entitled to vote at a meeting of the stockholders.
|
¨
FOR
|
¨
AGAINST
|
¨
ABSTAIN
|
In their discretion, upon the transaction
of any other matters which may properly come before the meeting or any adjournment thereof.
The shares represented by this proxy,
when properly executed, will be voted as specified by the undersigned stockholder(s). If this card contains no specific voting
instructions, the shares will be voted
FOR
each of the director nominees and for each of the other proposals described
on this card.
|
|
|
|
|
Signature of Stockholder(s)
|
|
|
|
|
|
Date
|
Please sign exactly as the name appears
below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign the corporate name by the president or other authorized
officer. If a partnership, please sign in the partnership name by an authorized person.
VOTE BY INTERNET— if a registered
holder by visiting www.vstocktransfer.com/proxy; if a beneficial holder by visiting www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have
your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic
voting instruction form.
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