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Date Filed : Jul 26, 2018
SECURITIESAND EXCHANGE COMMISSION
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the Securities Exchange Act of 1934
Filedby the Registrant [X]
Filedby a Party other than the Registrant [ ]
Checkthe appropriate box:
MICROBOT MEDICAL INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Paymentof filing fee (Check the appropriate box):
25Recreation Park Drive, Unit 108
NOTICEOF ANNUAL MEETING OF SHAREHOLDERS
TOBE HELD ON SEPTEMBER 4, 2018
NOTICEIS HEREBY GIVEN, that the 2018 Annual Meeting of Shareholders of Microbot Medical Inc. (the “Company”) will be heldat 11:00 A.M., Eastern Time on September 4, 2018 at the Company’s office located at 25 Recreation Park Drive, Unit 108,Hingham, MA 02043. At the Annual Meeting, you will be asked to vote on:
TheBoard of Directors has fixed the close of business on July 13, 2018 as the record date for determining shareholders who are entitledto receive notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.
Yourvote is important to us. Whether or not you intend to be present at the meeting, please sign and date the enclosed proxy cardand return it in the enclosed envelope. Returning a proxy will not deprive you of your right to attend the Annual Meeting andvote your shares in person.
Theforegoing items of business are more fully described in the accompanying proxy statement.
ByOrder of the Board of Directors,
Chairman,President and Chief Executive Officer
Dated:July 26, 2018
2018ANNUAL MEETING OF SHAREHOLDERS
Thisproxy statement and the accompanying proxy card is furnished in connection with the solicitation by the Board of Directors (the“Board”) of Microbot Medical Inc., a Delaware corporation (the “Company”), of proxies for use at the 2018Annual Meeting of Shareholders (the “Annual Meeting”) to be held at the Company’s office located at 25 RecreationPark Drive, Unit 108, Hingham, MA 02043 at 11:00 A.M., Eastern Time, on September 4, 2018, or at any adjournment or postponementthereof, for the purposes set forth in this proxy statement and the accompanying Notice of Annual Meeting of Shareholders. Thisproxy statement and the accompanying proxy card is first being mailed on or about July 27, 2018 to all Shareholders ofthe Company entitled to vote at the Annual Meeting (the “Shareholders”).
TheCompany will bear the cost of solicitation of proxies. Directors, officers and employees of the Company may solicit proxies bytelephone, email, facsimile, in person or otherwise for no additional compensation. The Company has retained Morrow Sodali LLCto act as a proxy solicitor in conjunction with the annual stockholders meeting at an estimated cost of $10,000 plus expenses.The Company will pay the entire costs of such solicitation as well as the costs of printing and filing this proxy statement andproxy card. The Company will reimburse banks, brokerage firms, proxy solicitors, and other custodians, nominees and fiduciariesfor reasonable expenses incurred by them in sending proxy materials to the beneficial owners of shares.
TheBoard of Directors has fixed the close of business on July 13, 2018, as the record date for determining stockholders entitledto notice of, and to vote at, the Annual Meeting or at any postponement or adjournment thereof. There were 43,720,427 shares ofour common stock, $.01 par value, outstanding on July 13, 2018, each of which is entitled to one vote for each share on the mattersto be voted upon.
Stockholdersare being asked to vote on three proposals at the Company’s 2018 Annual Meeting. The proposals to be voted on and relatedrecommendations from the Board of Directors are as follows:
Inthe election of directors, which is Proposal Number 1, you may vote “FOR” both of the nominees or your vote may be“WITHHELD” with respect to one or both of the nominees. For Proposal Number 2 and Proposal Number 3, you may vote“FOR,” vote “AGAINST” or “ABSTAIN.” If you “ABSTAIN” as to Proposal Number 2,the abstention will have no effect. An abstention, a “broker non-vote,” or a failure to submit a proxy card or voteat the Annual Meeting with respect to Proposal Number 3 will have the same effect as voting “AGAINST” such proposal.
Sharesof our common stock represented by proxies in the form enclosed that are properly executed and returned to us and not revokedwill be voted as specified in the proxy by the stockholder. In the absence of contrary instructions, or in instances where nospecifications are made, the shares will be voted:
Anystockholder signing and delivering a proxy may revoke it at any time before it is voted by delivering to the company’s corporatesecretary a written revocation or a duly executed proxy bearing a date later than the date of the proxy being revoked. Any stockholderattending the Annual Meeting in person may revoke his, her or its proxy and vote his, her or its shares at the Annual Meeting.
Howto vote shares at our 2018 Annual Meeting.
Votingat the Annual Meeting. All Company stockholders are invited to attend the Annual Meeting in person. Any stockholder that attendsthe meeting in person may deliver a completed proxy card in person or vote by completing a ballot, which will be available atthe meeting. However, each stockholder intending to vote in person at the Annual Meeting should note that if his, her or its sharesare held in the name of a bank, broker or other nominee, such stockholder must obtain a legal proxy, executed in his, her or itsfavor, from the holder of record to be able to vote at the Annual Meeting. Stockholders should allow enough time prior to theAnnual Meeting to obtain this proxy from the holder of record, if needed.
Thisyear, registered stockholders of the Company, meaning stockholders who hold the Company’s stock directly (not through abank, broker, or other nominee) may cast their vote in any of the following ways:
Voteby Internet. Registered stockholders can vote over the Internet at www.envisionreports.com/MBOT by following the instructionson the proxy card. Internet voting facilities for registered stockholders of record will be available 24 hours a day and willclose at 10:00 a.m. (EDT) on September 4, 2018.
Voteby Mail. Registered stockholders can vote by mail by signing, dating and mailing the enclosed proxy card in the postage-paidenvelope provided. If the envelope is missing, such a stockholder can mail the completed proxy card or voting instruction cardto Proxy Services, c/o Computershare Investor Services, P.O. Box 505008, Louisville, KY 40233-9814. The completed card must bereceived no later than September 3, 2018.
Voteby Telephone. Registered stockholders can vote by telephone by calling the phone number located on the top of your proxy cardand following the voice prompts. You will need information from your proxy card to submit your proxy by telephone. Telephone votingfacilities for registered stockholders of record will be available 24 hours a day and will close at 10:00 a.m. (EDT) on September4, 2018.
Thisyear, beneficial stockholders of the Company, meaning stockholders who hold the Company’s stock in the name of a bank, broker,or other nominee (commonly referred to as holding shares in “street name”) may cast their vote in any of the followingways:
Voteby Internet. Beneficial stockholders can vote over the Internet at www.proxyvote.com by following the online instructions.Internet voting facilities for beneficial stockholders of record will be available 24 hours a day and will close at 10:00 a.m.(EDT) on September 4, 2018.
Voteby Mail. Beneficial stockholders can vote by mail by signing, dating and mailing the enclosed voting instruction form (“VIF”)in the postage-paid envelope provided. The completed card must be received no later than September 3, 2018.
Voteby Telephone. Beneficial stockholders can vote by telephone by calling the phone number located on the top of your VIF andfollowing the voice prompts. Telephone voting facilities for beneficial stockholders of record will be available 24 hours a dayand will close at 10:00 a.m. (EDT) on September 4, 2018.
Theshares voted electronically or represented by the proxy cards received, properly marked, dated, signed and not revoked, will bevoted at the Annual Meeting.
Quorum,Required Votes and Method of Tabulation
Consistentwith Delaware law and the Company’s amended and restated by-laws, a majority of the votes entitled to be cast on a particularmatter, present in person or represented by proxy, constitutes a quorum as to such matter. The Company will appoint one or moreelection inspectors for the meeting to count votes cast by proxy or in person at the Annual Meeting.
Ifyou hold shares beneficially in street name and do not provide your broker or nominee with voting instructions, your shares mayconstitute “broker non-votes.” Generally, broker non-votes occur on a matter when a broker is not permitted to voteon that matter without instructions from the beneficial owner and instructions have not been given. This year if you hold sharesbeneficially in street name and do not vote your shares, your broker or nominee can vote your shares at its discretion on ProposalNumber 2. In tabulating the voting result for any proposal for which the required vote is based on the number of shares present,shares that constitute broker non-votes are not considered entitled to vote on that proposal. However, for proposals for whichthe required vote is based on the number of shares of common stock issued and outstanding, broker non-votes have the same effectas a vote “AGAINST” the proposal. Thus, if stockholders do not give their broker or nominee specific instructions,their shares may not be voted for the election of directors or the Reverse Split. Abstentions and broker non-votes will be countedas present for purposes of establishing a quorum.
WhatVote is Required to Approve Each Item?
Electionof directors by stockholders, which is Proposal Number 1, will be determined by a plurality of the votes cast by the stockholdersentitled to vote at the election that are either present in person or represented by proxy. Consequently, any shares not votedat the annual meeting, whether due to abstentions, broker non-votes or otherwise, will have no impact on the election of directors.
ForProposal Number 2, the affirmative “FOR” vote is required by the holders of a majority of the shares present at theAnnual Meeting in person or by proxy and voting. Abstentions will have no effect on the outcome of this proposal.
ForProposal Number 3, the affirmative “FOR” vote is required by the holders of a majority of the shares outstanding andentitled to vote on the matter. An abstention, a “broker non-vote,” or a failure to submit a proxy card or vote atthe Annual Meeting will have the same effect as voting “AGAINST” this proposal.
Managementdoes not know of any matters to be presented at this year’s Annual Meeting other than those set forth in this proxy statementand in the notice accompanying this proxy statement. Stockholders will have no appraisal rights under Delaware law with respectto any of the matters expected to be voted on at the Annual Meeting. If other matters should properly come before the meeting,the proxy holders will vote such matters in their discretion. Any stockholder has the right to revoke his, her or its proxy atany time until it is voted.
SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Thefollowing table shows the number of shares of our common stock beneficially owned, as of July 25, 2018, by (i) each ofour directors, (ii) each of our named executive officers, (iii) all of our current directors and executive officers as a group,and (iv) all those known by us to be to a beneficial owner of more than 5% of the Company’s common stock. In general, “beneficialownership” refers to shares that an individual or entity has the power to vote or dispose of, and any rights to acquirecommon stock that are currently exercisable or will become exercisable within 60 days of July 25, 2018. We calculated percentageownership in accordance with the rules of the SEC. The percentage of common stock beneficially owned is based on 43,720,427 sharesoutstanding as of July 25, 2018. In addition, shares issuable pursuant to options or other convertible securities thatmay be acquired within 60 days of July 25, 2018 are deemed to be issued and outstanding and have been treated as outstandingin calculating and determining the beneficial ownership and percentage ownership of those persons possessing those securities,but not for any other persons.
Thistable is based on information supplied by each prospective director, officer and principal stockholder of the Company. Exceptas indicated in footnotes to this table, the Company believes that the stockholders named in this table have sole voting and investmentpower with respect to all shares of Common Stock shown to be beneficially owned by them, based on information provided by suchstockholders. Unless otherwise indicated, the address for each director, executive officer and 5% or greater stockholders of theCompany listed is: c/o Microbot Medical Inc., 25 Recreation Park Drive, Unit 108, Hingham, MA 02043.
Wecurrently have seven directors serving on our Board. The following table lists the names, ages and positions of the individualswho serve as directors of the Company, as of July 25, 2018:
Becausewe have a classified Board, with each of our directors serving a staggered three-year term, only our Class III Directors are standingfor election at our 2018 Annual Meeting. The following table shows the current composition of the three classes of our Board:
ClassI Directors (terms scheduled to expire in 2019):
ClassII Directors (term scheduled to expire in 2020):
Theindependent members of our Board, as determined by the Board in accordance with the existing Nasdaq Listing rules, are Messrs.Waizer, Bornstein, Burell, Madden and Laxminarain. The Board held approximately 18 regular and special meetings during the fiscalyear ended December 31, 2017 and acted by unanimous written consent three times. Each of our directors attended at least approximately90% of such meetings of the Board. While we encourage our directors to attend the Company’s annual Shareholder meeting,we do not have a policy requiring that they do so. All of our directors attended the Company’s 2017 annual stockholder meeting,except for Mr. Laxminarain who was appointed to the Board subsequent to the 2017 annual stockholder meeting.
Committeesof the Board of Directors
Presently,the Board has three standing committees — the Audit Committee, the Compensation and Stock Option Committee (the “CompensationCommittee”), and the Corporate Governance and Nominating Committee (the “Corporate Governance Committee”). Allmembers of the Audit Committee, the Compensation Committee, and the Corporate Governance Committee are, and are required by thecharters of the respective committees to be, independent as determined under Nasdaq Listing rules.
TheAudit Committee is composed of Messrs. Burell, Madden and Bornstein. Each of the members of the Audit Committee is independent,and the Board has determined that Mr. Burell is an “audit committee financial expert,” as defined in SEC rules. TheAudit Committee acts pursuant to a written charter which is available through our website at www.microbotmedical.com. The AuditCommittee held five meetings during the fiscal year ended December 31, 2017.
Theprimary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities. TheAudit Committee does this primarily by reviewing the Company’s financial reports and other financial information as wellas the Company’s systems of internal controls regarding finance, accounting, legal compliance, and ethics that managementand the Board of Directors have established. The Audit Committee also assesses the Company’s auditing, accounting and financialprocesses more generally. The Audit Committee recommends to the Board of Directors the appointment of a firm of independent auditorsto audit the financial statements of the Company and meets with such personnel of the Company to review the scope and the resultsof the annual audit, the amount of audit fees, the company’s internal accounting controls, the Company’s financialstatements contained in this proxy statement, and other related matters.
TheCompensation Committee is composed of Messrs. Waizer, Madden and Bornstein. Each of the members of the Compensation Committeeis independent. The Compensation Committee acts pursuant to a written charter which is available through our website at www.microbotmedical.com.The Compensation Committee held three meetings during the fiscal year ended December 31, 2017 and acted by unanimous written consentone time.
TheCompensation Committee acts pursuant to a written charter. The Compensation Committee makes recommendations to the Board of Directorsand management concerning salaries in general, determines executive compensation and approves incentive compensation for employeesand consultants.
TheCorporate Governance Committee is composed of Messrs. Waizer, Laxminarain and Burell. Each of the members of the Corporate GovernanceCommittee is independent. The Corporate Governance Committee acts pursuant to a written charter which is available through ourwebsite at www.microbotmedical.com. The Corporate Governance Committee acted by unanimous written consent one time during thefiscal year ended December 31, 2017.
TheCorporate Governance Committee oversees nominations to the Board and considers the experience, ability and character of potentialnominees to serve as directors, as well as particular skills or knowledge that may be desirable in light of the Company’sposition at any time. From time to time, the Corporate Governance Committee may engage the services of a paid search firm to helpthe Corporate Governance Committee identify potential nominees to the Board. The Corporate Governance Committee and Board seekto nominate and appoint candidates to the Board who have significant business experience, technical expertise or personal attributes,or a combination of these, sufficient to suggest, in the Board’s judgment, that the candidate would have the ability tohelp direct the affairs of the Company and enhance the Board as a whole. The Corporate Governance Committee may identify potentialcandidates through any reliable means available, including recommendations of past or current members of the Board from theirknowledge of the industry and of the Company. The Corporate Governance Committee also considers past service on the Board or onthe board of directors of other publicly traded or technology focused companies. The Corporate Governance Committee has not adopteda formulaic approach to evaluating potential nominees to the Board; it does not have a formal policy concerning diversity, forexample. Rather, the Corporate Governance Committee weighs and considers the experience, expertise, intellect, and judgment ofpotential nominees irrespective of their race, gender, age, religion, or other personal characteristics. The Corporate GovernanceCommittee may look for nominees that can bring new skill sets or diverse business perspectives. Potential candidates recommendedby security holders will be considered as provided in the company’s “Policy Regarding Shareholder Candidates for Nominationas a Director,” which sets forth the procedures and conditions for such recommendations. This policy is available throughour website at www.microbotmedical.com.
Themembers of the Corporate Governance Committee have approved the nominations of the Class III directors standing for election orreelection, as the case may be, at our 2018 Annual Meeting.
DirectorOversight and Qualifications
Whilemanagement is responsible for the day-to-day management of the risks the company faces, the Board, as a whole and through itscommittees, has responsibility for the oversight of risk management. An important part of risk management is not only understandingthe risks facing the company and what steps management is taking to manage those risks, but also understanding what level of riskis appropriate for the company. In support of this oversight function, the Board receives regular reports from our Chief ExecutiveOfficer and members of senior management on operational, financial, legal, and regulatory issues and risks. The Audit Committeeadditionally is charged under its charter with oversight of financial risk, including the company’s internal controls, andit receives regular reports from management, the company’s internal auditors and the company’s independent auditors.The chairman of the Board and independent members of the Board work together to provide strong, independent oversight of the company’smanagement and affairs through its standing committees and, when necessary, special meetings of directors.
Webelieve each of our directors brings valuable skills, experience, judgment, and perspectives to our company. The Board took thefollowing qualifications into consideration, among other things, when nominating or appointing our current directors:
HarelGadot, became President, Chief Executive Officer and Chairman of the Company’s Board following the consummation of themerger of C&RD Israel Ltd, a wholly owned subsidiary of the Company, with and into Microbot Medical Ltd. (“MicrobotIsrael”), with Microbot Israel surviving as a wholly owned subsidiary of the Company (the “Merger”). Mr. Gadotis a co-founder of Microbot Israel and has served as Microbot Israel’s Chief Executive Officer since Microbot Israel wasfounded in November 2010. He has been the Chairman of Microbot Israel’s board of directors since July 2014. He also servesas the Chairman of XACT Robotics Ltd., an Israel-based private company seeking to develop a novel platform technology for roboticneedle steering in minimally invasive interventional procedures such as biopsies and ablations, since August 2013 and MEDX XeleratorL.P., a medical device and digital health Israeli incubator, since July 2016. From December 2007 to April 2010 Mr. Gadot was aWorldwide Group Marketing Director at Ethicon Inc., a Johnson and Johnson Company, where he was responsible for the global strategicmarketing of the Company. Mr. Gadot also held management positions, as well as leading regional strategic position for Europe,Middle-East and Africa, as well as In Israel, while at Johnson and Johnson. Mr. Gadot served as director for ConTIPI Ltd. fromAugust 2010 until November 2013 when ConTIPI Ltd. was acquired by Kimberly-Clark Corporation. Mr. Gadot holds a B.Sc.in Businessfrom Siena College, Loudonville NY, and an M.B.A. from the University of Manchester, UK. The Company believes that Mr. Gadot isqualified to serve as Chairman of the Board and as President and Chief Executive Officer of the Company due to his extensive experiencein strategic marketing and general management in the medical device industry.
Yehezkel(Hezi) Himelfarb, became the Company’s Chief Operating Officer and General Manager of the Company’s Israeli operationson December 5, 2016 and has been a director of the Company since September 2017. Mr. Himelfarb was the Chief Executive Officerfrom 2008 through November 2016 and a member of the board of directors from 2008 through August 2016 of IceCure Medical Ltd.,a Tel Aviv Stock Exchange listed company that develops advanced cryotherapy systems (cryoablation) intended for the growing physician-officemarket. Prior to that, from 1999 to 2008, Mr. Himelfarb was the President, Chief Executive Officer and a member of the board ofdirectors of Remon Medical Technologies, Inc., a venture backed US/Israeli company that developed and commercialized smart, miniatureimplants which enabled physicians to assess and treat a variety of medical conditions, where he, among other things, led its acquisitionby Boston Scientific. From 1996 to 1999, he was the Vice President and Chief Operating Officer of Medtronic-InStent (Israel),which was part of Medtronic’s vascular division. From 1982 to 1996, Mr. Himelfarb had various positions at Scitex CorporationLtd., which was an Israeli-based company specializing in specialty equipment production. Mr. Himelfarb holds a B.Sc. in ElectronicEngineering and an M.B.A. in Marketing and Engineering Management, both from Tel Aviv University. The Company believes that Mr.Himelfarb is qualified to serve as a director of the Company due to his extensive experience managing medical device companies.
YoavWaizer, became a director of the Company following the Merger and has served as a member of the Board of Directors of MicrobotIsrael since May 2015. Mr. Waizer is a Partner and Chief Executive Officer of Medica Venture Partners, a healthcare dedicatedventure investing out of Israel in innovative capital-starved early stage and special situation companies, since November 2005.Prior to his Tenure at Medica, Mr. Waizer served as CFO & COO at Cedar Fund, a venture capital fund focuses on investing inIsrael-related high-tech companies and prior to that Mr. Waizer was the CFO of Star Ventures Israel, the Israeli fund of StarVentures, a $1 billion venture capital fund investing in all stages of development within the Telecom, Enterprise S/W, Wirelessand Life Sciences sectors. Mr. Waizer is currently a director of InterCure Ltd., a company focused on investing in medical technologycompanies that is traded on the Tel Aviv Stock Exchange, Yeda Research & Development Co. Ltd., the technology transfer armof the Weizmann Institute of Science, and XACT Robotics Ltd., a private Israeli company developing novel platform robotic technologyfor use in minimally invasive procedures. Mr. Waizer is also the CFO on a part-time basis of MEDX Xelerator L.P., a medical deviceand digital health Israeli incubator. Mr. Waizer holds Master of Business Administration in Information Systems and B.Sc. in Accountingand Statistics, both from the Tel-Aviv University. The Company believes that Mr. Waizer is qualified to serve as a member of theCompany’s board due to his extensive investment experience and extensive knowledge of the life sciences industry.
YosephBornstein, became a director of the Company following the Merger. Mr. Bornstein is a co-founder of Microbot Israel and hasbeen a member of the Board of Directors since Microbot Israel was founded in November 2010. Mr. Bornstein founded Shizim Ltd.,a life science holding group in October 2000 and has served as its president since then. Mr. Bornstein is the Chairman of GCPClinical Studies Ltd., a provider of clinical research services and educational programs in Israel since January 2002. He is theChairman of Biotis Ltd., a service company for the bio-pharmaceutical industry, since June 2000. In addition, he is the Chairmanof Dolphin Medical Ltd., a service company for the medical device industry, since April 2012 and the Chairman of ASIS EnterprisesB.B.G. Ltd., a business August 2007. In October 1992, Mr. Bornstein founded Pharmateam Ltd., an Israeli company that specializedin representing international pharmaceutical companies which was sold in 2000. Mr. Bornstein is also a founder of a number ofother privately held life-science companies. Mr. Bornstein served as the Biotechnology Committee Chairman of the Unites States-IsraelScience & Technology Commission (the “USISTF”) from September 2002 to February 2005 as well as a consultant forUSISTF from September 2002 to February 2005. He is also the founder of ILSI-Israel Life Science Industry Organization (who wasintegrated into IATI) and ITTN-Israel Tech Transfer Organization. The Company believes that Mr. Bornstein is qualified to serveas a member of the Board due to his extensive experience in, and knowledge of, the life sciences industry and international business.
ScottR. Burell, became a director of the Company following the Merger. From November 2006 until its sale to Invitae Corp. in November2017, he was the Chief Financial Officer, Secretary and Treasurer of CombiMatrix Corporation (NASDAQ: CBMX), a family health-focusedclinical molecular diagnostic laboratory specializing in pre-implantation genetic screening, prenatal diagnosis, miscarriage analysis,and pediatric developmental disorders. He successfully led the split-off of CombiMatrix in 2007 from its former parent, has ledseveral successful public and private debt and equity financing transactions as well as CombiMatrix’s reorganization in2010. Prior to this, Mr. Burell had served as CombiMatrix’s Vice President of Finance since November 2001 and as its Controllerfrom February 2001 to November 2001. From May 1999 to first joining CombiMatrix in February 2001, Mr. Burell was the Controllerfor Network Commerce, Inc., a publicly traded technology and information infrastructure company located in Seattle. Prior to this,Mr. Burell spent 9 years with Arthur Andersen’s Audit and Business Advisory practice in Seattle. During his tenure in publicaccounting, Mr. Burell worked with many clients, both public and private, in the high-tech and healthcare markets, and was involvedin numerous public offerings, spin-offs, mergers and acquisitions. Mr. Burell is also a Board member and Audit Committee Chairmanof AgEagle Aerial Systems, Inc. (NYSE: UAVS), a publicly-traded agricultural drone company based in Kansas, and is a Board memberof Collplant Holdings, Ltd. (Nasdaq: CLGN), an Israeli -based publicly traded biotechnology company focused on regenerative medicine.Mr. Burell obtained his Washington state CPA license in 1992 and is a certified public accountant (currently inactive). He holdsBachelor of Science degrees in Accounting and Business Finance from Central Washington University. The Company believes Mr. Burell’squalifications to serve on the Board include his experience as an executive of a public life sciences company and knowledge offinancial accounting in the medical technology field.
MartinMadden, has been a director of the Company since February 6, 2017. Mr. Madden has held various positions at Johnson &Johnson and its affiliates from 1986 to January 2017, most recently as Vice President, Research & Development of DePuy Synthes,a Johnson & Johnson Company, from February 2016 to January 2017. Prior to that, from July 2015 to February 2016, Mr. Maddenwas the Vice President, New Product Development of Johnson & Johnson Medical Devices. From January 2012 to July 2015, Mr.Madden was the Vice President, Research & Development of Johnson & Johnson’s Global Surgery Group. Mr. Madden holdsa MBA from Columbia University, a M.S. from Carnegie Mellon University in Mechanical Engineering, and a B.S. from the Universityof Dayton in Mechanical Engineering. The Company believes that Mr. Madden is qualified to serve as a member of the Board due tohis extensive experience in research and development, portfolio planning, technology assessment and assimilation, and projectmanagement and budgeting.
PrattipatiLaxminarain, has been a director of the Company since December 6, 2017. From April 2006 through October 2017, Mr. Laxminarainserved as Worldwide President at Codman Neuro, a global neurosurgery and neurovascular company that offers a portfolio of devicesfor hydrocephalus management, neuro intensive care and cranial surgery and other technologies, and which was part of DePuy SynthesCompanies of Johnson & Johnson. Mr. Laxminarain holds an MBA from Indian Institute of Management, Calcutta, India and a Bachelorof Engineering from Osmania University, Hyderabad, India. The Company believes that Mr. Laxminarain is qualified as a Board memberof the Company because of his extensive experience working with medical device companies and knowledge of the industries in whichthe Company intends to compete.
Followingare the name, age and other information for our named executive officers, as of July 25, 2018. All company officers havebeen appointed to serve until their successors are elected and qualified or until their earlier resignation or removal. Informationregarding Harel Gadot, our Chairman, President and Chief Executive Officer, and Yehezkel (Hezi) Himelfarb, our General Managerand Chief Operating Officer, is set forth above under “–Board of Directors.”
DavidBen Naim, became the Company’s part-time Chief Financial Officer following the consummation of the Merger. Mr. Ben Naimis the general manager of DBN Finance Services Ltd., a company which provides outsourcing financial services to public and privatecompanies, since 2014, including the Company. Through DBN Finance Services, Mr. Ben Naim has acted as the outsourced CFO for EmeraldMedical Applications Corp. (OTC:MRLA), a digital health startup company engaged in the development, sale and service of imagingsolutions, and Tempramed Inc., a private medical device company. Prior to that, Mr. Ben Naim served as Chief Financial Officerfor several companies in the biomedical and technology industries. From July 2012 to September 2014, Mr. Ben Naim served as ChiefFinancial Officer for Insuline Medical Ltd. (TASE: INSL), an Israel-based company focused on improving performance of insulintreatment methods. From 2008 until 2011, Mr. Ben Naim served as Chief Financial Officer of Crow Technologies 1977 Ltd. (OTC:CRWTF),a company that designs, develops, manufactures and sells a broad range of security and alarm systems. From 2007 to 2008, Mr. BenNaim served as Chief Financial Officer of Ilex Medical Ltd. (TASE:ILX), a leading company in the medical diagnostics field. From2003 to 2007, Mr. Ben Naim was the Corporate Controller of Tadiran Telecom Ltd. He started his career in 1998 at Deloitte &Touche where he left in 2003 as an Audit Senior Manager. Mr. Ben Naim holds a B.A. in social sciences from Open University, Israel,a CPA license from Ramat Gan College, Israel, and an M.B.A. from Ono Academic College, Israel.
Section16(a) Beneficial Ownership Reporting Compliance
Section16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers, directors,and persons who own more than 10% of a registered class of our equity securities, to file with the SEC reports of ownership ofour securities and changes in reported ownership. Executive officers, directors and greater than 10% beneficial owners are requiredby SEC rules to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of the copies of suchforms furnished to us, or written representations from the reporting persons that no Form 5 was required, we believe that, duringthe fiscal year ended December 31, 2017, all Section 16(a) filing requirements applicable to our officers, directors and greaterthan 10% beneficial owners have been met, with the exception of Mr. Madden who failed to timely file his Form 3, Mr. Bornsteinwho failed to timely file 4 reports showing 7 transactions, and Professor Moshe Shoham who failed to timely file one report showing15 transactions.
Codeof Business Conduct and Ethics
Wehave adopted a Code of Ethics and Conduct that applies to all of our directors, officers, employees, and consultants. A copy ofour code of ethics is posted on our website at www.microbotmedical.com. We intend to disclose any substantive amendment or waiversto this code on our website. There were no substantive amendments or waivers to this code in 2017.
Thefollowing table sets forth information regarding each element of compensation that was paid or awarded to the named executiveofficers of the Company for the periods indicated.
OutstandingEquity Awards at Fiscal Year-End
Thefollowing table presents the outstanding equity awards held by each of the named executive officers as of the end of the fiscalyear ended December 31, 2017.
HarelGadot Employment Agreement
TheCompany entered into an employment agreement (the “Gadot Agreement”) with Harel Gadot on November 28, 2016, to serveas the Company’s Chairman of the Board of Directors and Chief Executive Officer, on an indefinite basis subject to the terminationprovisions described in the Agreement. Pursuant to the terms of the Gadot Agreement, Mr. Gadot shall receive an annual base salaryof $360,000. The salary will be reviewed on an annual basis by the Compensation Committee of the Company to determine potentialincreases taking into account such performance metrics and criteria as established by the Executive and the Company.
Mr.Gadot shall also be entitled to receive a target annual cash bonus of up to a maximum amount of 40% of base salary. On March 9,2017, the Company adopted a 2017 bonus plan (the “Bonus Plan”). The Bonus Plan provided for the payment of Mr. Gadot’sbonus based on certain milestones of the Company being satisfied, as follows:
Abonus plan for 2018 has not yet been adopted by the Company. Mr. Gadot shall be further entitled to a monthly automobile allowanceand tax gross up on such allowance of $1,150, and shall be granted options to purchase shares of common stock of the Company representing5% of the issued and outstanding shares of the Company, based on vesting and other terms to be determined by the CompensationCommittee of the Board of Directors subsequent to the Effective Time.
Inthe event Mr. Gadot’s employment is terminated as a result of death, Mr. Gadot’s estate would be entitled to receiveany earned annual salary, bonus, reimbursement of business expenses and accrued vacation, if any, that is unpaid up to the dateof Mr. Gadot’s death.
Inthe event Mr. Gadot’s employment is terminated as a result of disability, Mr. Gadot would be entitled to receive any earnedannual salary, bonus, reimbursement of business expenses and accrued vacation, if any, incurred up to the date of termination.
Inthe event Mr. Gadot’s employment is terminated by the Company for cause, Mr. Gadot would be entitled to receive any compensationthen due and payable incurred up to the date of termination.
Inthe event Mr. Gadot’s employment is terminated by the Company without cause, he would be entitled to receive (i) any earnedannual salary; (ii) 12 months’ pay and full benefits, (iii) a pro rata bonus equal to the maximum target bonus for thatcalendar year; (iv) the dollar value of unused and accrued vacation days; and (v) applicable premiums (inclusive of premiums forMr. Gadot’s dependents) pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended, for twelve (12)months from the date of termination for any benefits plan sponsored by the Company. In addition, 100% of any unvested portionof his stock options shall immediately vest and become exercisable.
Theagreement contains customary non-competition and non-solicitation provisions pursuant to which Mr. Gadot agrees not to competeand solicit with the Company. Mr. Gadot also agreed to customary terms regarding confidentiality and ownership of intellectualproperty.
HeziHimelfarb Employment Agreement
Weentered into an employment agreement (the “Himelfarb Agreement”) with Mr. Himelfarb on December 5, 2016, to serveas our Chief Operating Office and General Manager, on an indefinite basis subject to the termination provisions described in theHimelfarb Agreement. Pursuant to the terms of the Himelfarb Agreement, Mr. Himelfarb shall receive a base salary of 64,000 NewIsraeli Shekel (NIS) per month or NIS 768,000 per year, or the equivalent of approximately $211,624 per annum based on an exchangerate of $.28 for NIS 1.0. The salary will be reviewed on an annual basis by the Company’s Board of Directors to determinepotential salary increases.
Mr.Himelfarb shall be entitled to grants or payments subject to the adoption by the Company at its discretion of a bonus plan orpolicy. On March 9, 2017, the Company adopted the Bonus Plan. The Bonus Plan provided for the payment of Mr. Himelfarb’sbonus of up to 25% of his base salary based on certain milestones of the Company being satisfied, as follows:
Abonus plan for 2018 has not yet been adopted by the Company. Mr. Himelfarb shall also entitled participate in the Company’smotor vehicle program and receive a motor vehicle from the Company’s vehicle pool, which shall be leased or rented by theCompany for use by Mr. Himelfarb. The Company shall pay an amount equal to 8.33% of Mr. Himelfarb’s salary, which shallbe allocated to a fund for severance pay to Mr. Himelfarb, and an additional amount equal to 6.25% of Mr. Himelfarb’s salary(6.5% as of January 1, 2017), which shall be allocated to a pension plan, in addition to disability insurance contributions andas otherwise may be required by applicable Israeli law from time to time. The Company shall also contribute to an educationalfund an amount equal to 7.5% of each monthly payment of Mr. Himelfarb’s full salary. Mr. Himelfarb is also entitled to optionsto purchase 1,087,627 shares of the Company’s common stock, which represents 3% of the Company’s issued and outstandingshares of common stock as of the closing of the Company’s merger transaction with the Subsidiary on November 28, 2016. Suchoptions have not yet been granted.
TheHimelfarb Agreement contains customary non-competition provisions pursuant to which Mr. Himelfarb agrees not to compete with theCompany. Mr. Himelfarb also agreed to customary terms regarding confidentiality and ownership of intellectual property.
DavidBen Naim Services Agreement
Weentered into a services agreement (the “Services Agreement”) with DBN Finance Services effective October 31, 2016,to provide outsourced CFO services. Pursuant to the terms of the Services Agreement, DBN Finance Services will provide its servicesexclusively through Mr. David Ben Naim, who will serve as the principal financial and accounting officer of Microbot Israel andthe Company. Mr. Ben Naim’s engagement will continue on an indefinite basis subject to the termination provisions describedin the Agreement.
Pursuantto the Agreement, the Company shall pay the Service Provider a fixed fee of NIS 22,000, or the equivalent of approximately $6,110per month based on an exchange rate of $.28 for NIS1.0, plus VAT per month, and the Company shall reimburse DBN Finance Servicesfor reasonable and customary out of pocket expenses incurred by it or Mr. Ben Naim connection with the performance of the dutiesunder the Services Agreement. In addition, the Company shall maintain for the benefit of Mr. Ben Naim, a Directors and Officersinsurance policy, according to the Company’s policy for other directors and officers of the Company.
Boththe Company and DBN Finance Services shall have the right to terminate the Agreement for any reason or without reason at any timeby furnishing the other party with a 30-day notice of termination. The Company shall further be entitled to terminate the ServicesAgreement for “cause” without notice, in which case neither DBN Finance Services nor Mr. Ben Naim shall be entitledto any compensation due to such early termination.
DBNFinance Services and Mr. Ben Naim agreed to customary provisions regarding confidentiality and intellectual property ownership.The Services Agreement also contains customary non-competition and non-solicitation provisions pursuant to which DBN Finance Servicesand Mr. Ben Naim agree not to compete and solicit with the Company during the term of the Agreement and for a period of twelvemonths following the termination of the Agreement.
TheCompany generally enters into indemnification agreements with each of its directors and executive officers. Pursuant to the indemnificationagreements, the Company has agreed to indemnify and hold harmless these current and former directors and officers to the fullestextent permitted by the Delaware General Corporation Law. The agreements generally cover expenses that a director or officer incursor amounts that a director or officer becomes obligated to pay because of any proceeding to which he is made or threatened tobe made a party or participant by reason of his service as a current or former director, officer, employee or agent of the Company,provided that he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of theCompany. The agreements also provide for the advancement of expenses to the directors and officers subject to specified conditions.There are certain exceptions to the Company’s obligation to indemnify the directors and officers, and, with certain exceptions,with respect to proceedings that he initiates.
Limitson Liability and Indemnification
Weprovide directors and officers insurance for our current directors and officers.
Ourcertificate of incorporation eliminate the personal liability of our directors to the fullest extent permitted by law. The certificateof incorporation further provide that the Company will indemnify its officers and directors to the fullest extent permitted bylaw. We believe that this indemnification covers at least negligence on the part of the indemnified parties. Insofar as indemnificationfor liabilities under the Securities Act may be permitted to our directors, officers, and controlling persons under the foregoingprovisions or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnificationis against public policy as expressed in the Securities Act of 1933 and is therefore unenforceable.
TheCompany adopted a compensation package for the non-management members of its Board, pursuant to which each such Board member wouldreceive for his services $12,000 per annum, $750 per duly called Board meeting and $250 per unanimous written consent. Furthermore,each member of the Audit Committee of the Board receives an additional $10,000 per annum, and other committee members receivean additional $5,000 per annum. Board members are also entitled to receive equity awards. Upon joining the Board, a member wouldreceive an initial grant of $40,000 of stock options (calculated as the product of the exercise price on the date of grant multipliedby the number of shares underlying the stock option award required to equal $40,000), with an additional grant of stock optionseach year thereafter, to purchase such number of shares of the Company’s common stock equal to $20,000, subject to the memberof the Board having served on the Board for at least twelve continuous months, and having attended at least 80% of the Board meetingsover the prior year.
Thefollowing table summarizes cash-based and equity compensation information for our outside directors, including annual Board andcommittee retainer fees and meeting attendance fees, for the year ended December 31, 2017:
Messrs.Gadot and Himelfarb received compensation for their services to the Company as set forth under the summary compensation tableabove.
CertainRelationships and Related Transactions
Relatedparties can include any of our directors or executive officers, certain of our stockholders and their immediate family members.Each year, we prepare and require our directors and executive officers to complete Director and Officer Questionnaires identifyingany transactions with us in which the officer or director or their family members have an interest. This helps us identify potentialconflicts of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere,in any way with the interests of the company as a whole. Our code of ethics requires all directors, officers and employees whomay have a potential or apparent conflict of interest to immediately notify our general counsel, who serves as our complianceofficer. In addition, the Corporate Governance Committee is responsible for considering and reporting to the Board any questionsof possible conflicts of interest of Board members. Our code of ethics further requires pre-clearance before any employee, officeror director engages in any personal or business activity that may raise concerns about conflict, potential conflict or apparentconflict of interest. Copies of our code of ethics and the Corporate Governance Committee charter are posted on the corporategovernance section of our website at www.microbotmedical.com.
InMarch 2011, Microbot Israel entered into a consulting agreement with MEDX Ventures Group LLC, of which Mr. Gadot is the ChiefExecutive Officer, Company Group Chairman and majority equity owner (the “Gadot Consulting Agreement”), pursuant towhich Mr. Gadot served as Microbot Israel’s Chief Executive Officer. Under the terms of the Gadot Consulting Agreement,MEDX Ventures Group received a monthly fee of $17,000, which amount was to increase to $25,000 per month upon the consummationof a merger or other similar transaction. Under the Gadot Consulting Agreement, MEDX Ventures Group and Mr. Gadot was subjectto customary non-competition, non-solicitation, confidentiality and intellectual property ownership provisions. In addition, MEDXVentures Group was entitled to receive reimbursement for all direct expenses in connection with the performance of services underthe Gadot Consulting Agreement. Either Microbot or MEDX Ventures Group was entitled to terminate the Gadot Consulting Agreementupon 60 days’ written notice. MEDX Ventures Group LLC is a stockholder of Microbot. As a result of the Merger, the GadotConsulting Agreement was terminated in November 2016 and was replaced with an employment agreement between the Company and Mr.Gadot.
In2015, Microbot Israel issued convertible promissory notes, at an interest rate of 10%, in the aggregate principal amount of $411,500(the “2015 Notes”) to certain investors and Microbot Israel shareholders. The 2015 Notes matured on July 8, 2016.The principal and accrued but unpaid interest on the 2015 Notes converted into 452,650 shares of Series A Preferred Stock of MicrobotIsrael and warrants to purchase 409,750 shares of Series A Preferred Stock of Microbot Israel. The table below sets forth the2015 Notes with aggregate principal in excess of $120,000 that were purchased by Microbot’s directors, executive officersand holders of more than 5% of its capital stock.
In2016, Microbot Israel issued convertible promissory notes, at an annual interest rate of 10%, in the aggregate principal amountof $750,000 (the “2016 Notes”) to certain investors and Microbot Israel shareholders. The principal and accrued butunpaid interest on the 2016 Notes converted, at a 20% discount, into common stock upon the consummation of the Merger. The tablebelow sets forth the 2016 Notes with aggregate principal in excess of $120,000 that were purchased by Microbot Israel’sdirectors, executive officers and holders of more than 5% of its capital stock.
MicrobotIsrael entered into a license agreement with Technion Research and Development Foundation Ltd., or TRDF, in 2012 pursuant to whichMicrobot Israel obtained an exclusive, worldwide, royalty-bearing, sub-licensable license to certain patents and inventions relatingto the SCS and TipCAT technology platforms. TRDF is a founding member of Microbot and current beneficially owns approximately14.5% of Microbot’s ordinary shares on an as converted basis.
OnAugust 15, 2016, Microbot Israel and Alpha Capital Anstalt (“Alpha Capital”), a shareholder of Microbot Israel atthat time, entered into an agreement pursuant to which, among other things, Alpha Capital agreed to fund a proposed $4 millionprivate placement, which obligation would be reduced dollar-for-dollar by any third party investors investing in such privateplacement. This agreement was superseded by the Letter Agreement referred to below.
TheCompany entered into a letter agreement (the “Letter Agreement”) with Alpha Capital, dated November 18, 2016 but effectiveNovember 28, 2016 pursuant to which Alpha Capital committed to make a cash investment into the Company, no later than December31, 2016, in an amount equal to the difference between $4 million and the amount of cash released to the Company, by December31, 2016, out of escrow pursuant to the Company’s asset sale transaction with BOCO Silicon Valley, Inc., a California corporation.The Company waived Alpha Capital’s commitments under the Letter Agreement.
OnAugust 15, 2016, concurrently with the execution of the Merger Agreement, the Company (then named and operated as StemCells, Inc.)issued a 5.0% secured note (the “Secured Note”) to Alpha Capital, in the principal amount of $2 million, payable uponthe earlier of (i) 30 days following the consummation of the Merger and (ii) December 31, 2016. In addition, on August 15, 2016,the Company and Alpha Capital entered into a Security Agreement to secure the Company’s obligations under the Secured Note(the “Security Agreement”). The Company’s obligations under the Secured Note were secured by a first prioritysecurity interest in all of the Company’s intellectual property and certain other general assets. As of November 28, 2016,upon the closing of the Merger, the Company entered into a Securities Exchange Agreement (the “Exchange Agreement”)with Alpha Capital, providing for the issuance to Alpha Capital of a convertible promissory note by the Company (the “ConvertibleNote”) in a principal amount of $2,028,767, which is equal to the principal and accrued interest under the Secured Note,in exchange for (a) the full satisfaction, termination and cancellation of the Secured Note and (b) the release and terminationof the Security Agreement and the first priority security interest granted thereunder. Pursuant to the terms of the ConvertibleNote upon issuance, the Convertible Note is convertible into the Company’s common stock any time after November 28, 2017until the maturity date of November 28, 2019, based on a conversion price of $0.64, subject to adjustments as provided in theConvertible Note and the other terms and the conditions specified in the Convertible Note. Pursuant to the terms of the Note,the Company is obligated to pay interest on the outstanding principal amount owed under the Note at a fixed rate per annum of6.0%, payable at maturity or earlier conversion.
OnDecember 16, 2016, the Company entered into a Securities Exchange Agreement with Alpha Capital, pursuant to which Alpha exchangedapproximately 9,735,925 shares or rights to acquire shares of the common stock of the Company held by it, for approximately 9,736shares of a newly designated class of Series A Convertible Preferred Stock, par value $0.01 per share. The common stock and commonstock underlying the rights include all of the shares of common stock issued or issuable to Alpha Capital pursuant to the Merger.The closing of the exchange was effective as of December 27, 2016.
PrincipalAccountant Fees and Services.
Auditand Tax Fees
TheBoard, upon the recommendation of the Audit Committee, selected the independent accounting firm of Brightman Almagor Zohar &Co., a Member of Deloitte Touche Tohmatsu Limited (“Deloitte”) to audit the accounts of the Company for the year endingDecember 31, 2017.
TheAudit Committee considered the tax compliance services provided by Deloitte and concluded that provision of such services is compatiblewith maintaining the independence of the independent accountants, and approved the provision by Deloitte of tax compliance serviceswith respect to the year ending December 31, 2017.
TheAudit Committee received the following information concerning the fees of the independent accountants for the years ended December31, 2017 and 2016, has considered whether the provision of these services is compatible with independence of the independent accountants,and concluded that it is:
Auditand tax fees include administrative overhead charges and reimbursement for out-of-pocket expenses.
Pre-ApprovalPolicies and Procedures
TheAudit Committee has adopted policies and procedures for pre-approving all services (audit and non-audit) performed by our independentauditors. In accordance with such policies and procedures, the Audit Committee is required to pre-approve all audit and non-auditservices to be performed by the independent auditors in order to assure that the provision of such services is in accordance withthe rules and regulations of the SEC and does not impair the auditors’ independence. Under the policy, pre-approval is generallyprovided up to one year and any pre-approval is detailed as to the particular service or category of services and is subject toa specific budget. In addition, the Audit Committee may pre-approve additional services on a case-by-case basis. During 2015 andthrough November 28, 2016, Microbot Israel did not have a standing audit committee.
REPORTOF THE AUDIT COMMITTEE
TheAudit Committee oversees our accounting and financial reporting processes and the audits of our financial statements on behalfof the Board, and selects an independent public accounting firm to perform these audits. Management has the primary responsibilityfor establishing and maintaining adequate internal control over financial reporting, preparing the financial statements, and establishingand maintaining adequate controls over public reporting. Our independent registered public accounting firm for fiscal 2017, Deloitte,had responsibility for conducting an audit of our annual financial statements in accordance with the standards of the Public CompanyAccounting Oversight Board (United States) and expressing an opinion on the conformity of those audited financial statements withgenerally accepted accounting principles.
TheAudit Committee oversaw the independent public accounting firm’s qualifications and independence, as well as its performance.The Audit Committee assisted the Board in overseeing the preparation of the Company’s financial statements, the Company’scompliance with legal and regulatory requirements, and the performance of the Company’s internal audit function. The AuditCommittee met with personnel of the Company and Deloitte to review the scope and the results of the annual audit, the amount ofaudit fees, the Company’s internal accounting controls, the Company’s financial statements contained in the Company’sAnnual Report to Shareholders and other related matters.
TheAudit Committee has reviewed and discussed with management the financial statements for fiscal year 2017 audited by Deloitte,as well as management’s report on internal control over financial reporting, using the criteria set forth by the Committeeof Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. The Audit Committeehas discussed with Deloitte various matters related to the financial statements, including those matters required to be discussedby SAS 114 (The Auditor’s Communication with Those Charged with Governance). The Audit Committee has also discussed withDeloitte its report on internal control over financial reporting, has received the written disclosures and the letter from Deloitterequired by Public Company Accounting Oversight Board (PCAOB) Ethics and Independence Rule 3526, Communication with Audit CommitteesConcerning Independence (Rule 3526), and has discussed with Deloitte its independence.
Basedupon such review and discussions, the Audit Committee recommended to the Board of Directors, and the Board approved the recommendation,that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year endingDecember 31, 2017 for filing with the SEC.
Theforegoing Audit Committee Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under these acts, except to the extent we specificallyincorporate by reference into such filings.
PROPOSAL1: NOMINEES FOR ELECTION OF CLASS II DIRECTORS
Thenumber of directors is currently fixed at seven. Both our restated certificate of incorporation, as amended to date, and our amendedand restated by-laws provide for the classification of the Board into three classes (Class I, Class II and Class III), as nearlyequal in number as possible, with the term of office of one class expiring each year.
Unlessotherwise instructed, the enclosed proxy will be voted to elect the nominees named below, each of whom is now a Class III director,as Class III directors for a term of three years expiring at the 2021 Annual Meeting of Shareholders and until their successorsare duly elected and qualified. Both Class III director nominees have been recommended by the Corporate Governance Committee becauseof their past experience serving on the Company’s Board, the breadth of their business expertise, sound judgment, and demonstratedleadership, among other things. Proxies cannot be voted for a greater number of persons than the number of nominees named below.It is expected that the nominees will be able to serve, but if any are unable to serve, the proxy will be voted for a substitutenominee or nominees designated by the Board.
TheCorporate Governance Committee has recommended and the Board has nominated Yoseph Bornstein and Prattipati Laxminarainfor election as the Company’s Class III directors to serve as Class III Directors until the 2021 Annual Meeting of Shareholders.
THEBOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL 1 TO ELECT AS DIRECTORS THE TWO NOMINEES DESCRIBEDABOVE.
PROPOSAL2: RATIFICATION OF INDEPENDENT REGISTERED ACCOUNTING FIRM
TheCompany is asking the stockholders to ratify the selection of Deloitte, or its U.S. affiliate, as the Company’s independentpublic accountants for the fiscal year ending December 31, 2018. The affirmative vote of the holders of a majority of the sharesrepresented and voting at the Annual Meeting will be required to ratify the selection of Deloitte or its U.S. affiliate.
Inthe event the stockholders fail to ratify the appointment, the Audit Committee of the Board of Directors will consider it as arecommendation to select other auditors for the subsequent year, which the Audit Committee would then take under advisement. Evenif the selection is ratified, the Audit Committee of the Board at its discretion could decide to terminate the engagement of Deloitteor its U.S. affiliate and engage another firm at any time if the Audit Committee determines that such a change would be necessaryor desirable in the best interests of the Company and its stockholders.
Arepresentative of Deloitte is expected to attend the Annual Meeting telephonically and is not expected to make a statement, butwill be available to respond to appropriate questions and may make a statement if such representative desires to do so.
THEBOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL 2 TO RATIFY THE SELECTION OF DELOITTE OR ITS U.S. AFFILIATEAS THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2018.
PROPOSAL3: APPROVAL OF AMENDMENT TO THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT
OurBoard has adopted a resolution declaring advisable and recommending to the stockholders for their approval a proposal to amendthe Company’s restated certificate of incorporation, as amended to date, to effect a reverse stock split of the Company’sissued and outstanding common stock at any whole number ratio of not less than one-for-five (1:5) and not greater than one-for-twenty(1:20) (the “Reverse Split”). Approval of this Proposal Number 3 would grant our Board the authority, without furtheraction by the stockholders, to carry out the Reverse Split, at any time within three months after the date stockholder approvalfor the Reverse Split is obtained from our stockholders, with the exact exchange ratio and timing of the Reverse Split (if atall) to be determined at our Board’s discretion. Our primary reason for seeking to effect the Reverse Split is that theReverse Split is the most effective means of increasing the per-share market price of our common stock in order to maintain ourlisting on the Nasdaq Capital Market.
OurBoard’s decision whether or not (and when) to effect a Reverse Split (and at what whole number ratio to effect the ReverseSplit) will be based on a number of factors, including market conditions, existing and anticipated trading prices for our commonstock and the continued listing requirements of the NASDAQ Capital Market.
Asample form of the certificate of amendment relating to this Proposal Number 3, which we would complete and file with the Secretaryof State of the State of Delaware to carry out the Reverse Split, is attached to this proxy statement as Schedule A (the “Amendment”).Stockholders are encouraged to review this carefully as it would modify the capitalization of the Company upon its effectiveness.
Asexplained below, we are asking our stockholders to approve this Proposal Number 3 because we believe a Reverse Split would resultin a higher price per share for the outstanding shares of our common stock, which we require to satisfy the continued listingrequirements of the NASDAQ Capital Market to maintain a minimum bid price of $1.00 per share for our common stock, and make ourstock more marketable to investors and promote greater liquidity for our stockholders. In addition, as explained below, the ReverseSplit, if approved by our stockholders and implemented by our Board, would result in an effective increase in the number of authorizedshares of common stock available to us for future issuance to fund our continued operations and to grow our business.
Whatto Expect from a Reverse Stock Split
Ifapproved by our stockholders, the Reverse Split would be implemented simultaneously for all of our then-outstanding common stock(the “Old Shares”) and the exchange ratio would be the same for all of our issued and outstanding shares of commonstock. The Reverse Split would affect all of our stockholders uniformly and would not affect any stockholder’s percentageownership interests in the Company, except to the extent that the Reverse Split results in any of our stockholders owning a fractionalshare, because fractional shares would be rounded up to the nearest whole share. Shares of common stock issued pursuant to theReverse Split (the “New Shares”) would remain fully paid and nonassessable. The Reverse Split would not affect ourcontinuing to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended. Upon becomingeffective, the Reverse Split would automatically convert outstanding Old Shares into a smaller fraction of New Shares, dependingupon which conversion ratio our Board may select. Outstanding derivative securities, such as options and warrants, exercisablefor, or convertible into, our common stock would be proportionally adjusted, as would the exercise and conversion prices of thosederivative securities.
Theinformation in the following table summarizes the possible effect of the Reverse Stock Split based upon our issued and outstandingequity, as of July 25, 2018:
Asof July 25, 2018, the Company had approximately 167,472,208 authorized, but unissued and available and unreserved, sharesof Common Stock. Consequently, the Reverse Split would have the important effect of increasing the number of authorized and availableshares of Common Stock to approximately 209,494,442 shares (at the 1 for 5 ratio) and 217,373,611 shares (at the 1 for 20 ratio).
Inaddition, all other things being equal, a reverse stock split by a publicly traded company reduces the number of shares outstandingbut leaves the market capitalization of the Company the same, which should increase the price per share of the Company’sstock. Put another way, after a reverse stock split, the enterprise value of the Company is spread over fewer shares and so theper share price of the stock should be commensurately higher. As an example, a hypothetical company with a market value of $12.5million and 50 million shares outstanding would have a trading price of $0.25 per share ($12.5 million divided by 50 million),while the same company with only 1.25 million shares outstanding would have a trading price of $10.00 per share ($12.5 milliondivided by 1.25 million). We can therefore anticipate, but can give no assurance, that the Reverse Split would proportionatelyincrease the per share trading price of our outstanding common stock by an amount approximately equal to the inverse of the ratioselected by the Board (for example, an increase of 10 times current trading price for a one-for-ten Reverse Split).
Rationalefor a Reverse Stock Split
Aspreviously disclosed in a Current Report on Form 8-K filed on March 28, 2018, on March 22, 2018, the Listing Qualifications Staff(the “Staff”) of The NASDAQ Stock Market notified the Company that, based upon the closing bid price of the Company’scommon stock for the 30 prior consecutive business days, the Company no longer satisfied the minimum $1.00 closing bid price requirement,as set forth in Nasdaq Listing Rule 5550(a)(2), and had been provided a 180-day grace period to regain compliance with that requirement,through September 18, 2018.
TheBoard is asking the stockholders to grant it the authority, at its discretion, to effect the Reverse Split, which the Board believesis an effective way to increase the minimum bid price of our common stock proportionately and put us in a position to regain compliancewith Nasdaq Listing Rule 5550(a)(2).
TheBoard believes that maintaining the listing of the Company’s common stock on Nasdaq is in the best interests of the Companyand its stockholders. The Board believes that the delisting of the Company’s common stock from Nasdaq would impair our abilityto raise additional funds and would result in decreased liquidity and/or increased volatility in our common stock, among otherthings. See “Certain Risks Associated with the Reverse Stock Split” below for more information.
Althoughwe expect that the Reverse Split will result in an increase in the market price of our common stock, the Reverse Split may notresult in a permanent increase in the market price of our common stock, which is dependent on many factors, including generaleconomic, market and industry conditions and other factors detailed from time to time in the reports we file with the SEC.
PotentialAdvantages of a Reverse Stock Split
Approvalof this Proposal Number 3 would permit the company’s Board of Directors, in its discretion, to file the Amendment with theDelaware Secretary of State in order to effect the Reverse Split. This, we believe, could provide a number of potential advantages,which we describe below.
PotentialAdvantage #1- Effective Increase in Authorized Shares. Because the Reverse Split would decrease the number of shares of commonstock outstanding and the number of shares reserved for outstanding derivative securities, such as warrants and options, withoutchanging the Company’s authorized capital in any way, there would be a greater proportion of shares available for issuancefollowing the Reverse Split, as set forth above.
TheReverse Split would not have any immediate effect on the proportionate voting power or other rights of our existing stockholders.However, upon issuance, any additional shares of authorized common stock issued would have rights identical to our currently outstandingshares of common stock. To the extent that the additional authorized shares of capital stock are issued in the future, they maydecrease the voting rights of existing stockholders and, depending on the price at which they are issued, could be economicallydilutive to existing stockholders and have a negative effect on the market price of the common stock. Current stockholders haveno preemptive or similar rights, which means that current stockholders do not have a prior right to purchase any new issue ofcapital stock in order to maintain their proportionate ownership of the Company. We could also use the additional shares of capitalstock for potential strategic transactions including, among other things, acquisitions, strategic partnerships, joint ventures,restructurings, business combinations, and investments, although we have no definitive present plans to do so. We cannot provideassurances that any such transactions will be consummated on favorable terms or at all, that they will enhance stockholder valueor that they will not adversely affect our business or the trading price of our stock. However, we believe the effective increasein the Company’s authorized capital will be important to preserving the Company’s ability to opportunistically acquireassets and technologies to grow our business; a vote against this proposal could therefore hurt our ability to grow our businessand complete our existing product development efforts.
Managementis unaware of any specific effort to obtain control of the Company, and has no present intention of using the proposed effectiveincrease in the number of authorized shares of common stock as an anti-takeover device. However, our authorized, but unissued,capital stock could be used to make an attempt to effect a change in control more difficult.
PotentialAdvantage #2- Maintain NASDAQ Capital Market Listing. We believe that having our common stock delisted from the NASDAQ CapitalMarket would be undesirable for our stockholders and potentially bad for our business. Among other things, being delisted couldreduce the liquidity of our common stock. We also deem valuable our ticker symbol, which is easily recognized as “MBOT”and which we could lose if we were delisted by the NASDAQ Capital Market. Also, being listed on the NASDAQ Capital Market carrieswith it certain prestige, and we feel it improves the recognition of our Company.
Whileno assurances can be given, our Board believes that the Reverse Split, at a whole number exchange ratio ranging from one-for-fiveto one-for-ten, should result in an increase in the Company’s price per share, and thereby help the company meet the $1.00per share minimum bid price requirement.
Whilethe Company’s stock price could trade above $1.00 on its own accord over the next few months, our Board believes that itis in the Company’s best interests and in the interests of our stockholders to seek approval of the proposed Amendment toeffect the Reverse Split, so that we can regain compliance even if the Company’s stock trading price does not increase above$1.00 per share by September 18, 2018, the end of our second 180-day compliance period. Even if our common stock’s closingbid price were to satisfy the minimum closing bid price requirements prior to approval of this Proposal Number 3, we may stilleffect the Amendment if our stockholders approve this Proposal and our Board determines that effecting the Reverse Split wouldbe in the best interests of the Company and its stockholders.
PotentialAdvantage #3- Facilitate Potential Future Financings. By preserving our NASDAQ Capital Market listing, we can continue toconsider and pursue a wide range of future financing options to support our ongoing business. We believe being listed on a nationalsecurities exchange, such as the NASDAQ Capital Market, is valued highly by many investors such as large institutions. A listingon a national securities exchange also has the potential to create better liquidity and reduce volatility for buying and sellingshares of our stock, which benefits our current and future stockholders.
PotentialAdvantage #4- Increase Our Common Stock Price to a Level More Appealing for Investors. We believe that the Reverse Split couldenhance the appeal of our common stock to the financial community, including institutional investors, and the general investingpublic. We believe that a number of institutional investors and investment funds are reluctant to invest in lower priced securitiesand that brokerage firms may be reluctant to recommend lower priced stock to their clients, which may be due in part to a perceptionthat lower-priced securities are less promising as investments, are less liquid in the event that an investor wishes to sell his,her or its shares, or are less likely to be followed by institutional securities research firms. We believe that the reductionin the number of issued and outstanding shares of our common stock caused by the Reverse Split, together with the anticipatedincreased stock price immediately following and resulting from the Reverse Split, may encourage further interest and trading inour common stock and thus possibly promote greater liquidity for our stockholders, thereby resulting in a broader market for ourcommon stock than that which currently exists.
CertainRisks Associated with the Reverse Stock Split
Whilewe believe the proposed Reverse Split is critically important to our Company and its stockholders, the Reverse Stock does carrywith it several significant risks.
Wecannot assure you, for example, that the market price per share of our common stock after the Reverse Split will rise or remainconstant in proportion to the reduction in the number of shares of common stock outstanding before the Reverse Split. For example,using the closing price of our common stock on July 25, 2018 of $0.6191 per share as an example, if our Board wereto implement the Reverse Split at a one-for-ten ratio, we cannot assure you that the post-split market price of our common stockwould be or would remain at a price of ten times greater than $0.6191, or $6.191 ($0.6191 x 10). There canbe no assurance that the minimum bid price per share of our common stock would remain in excess of $1.00 following the ReverseSplit for a sustained period of time, or long enough to satisfy Nasdaq’s continued listing requirements. If it appears tothe Nasdaq staff that we will not be able to comply with Nasdaq Listing Rule 5550(a)(2), or if we do not meet the minimum stockholders’equity or any other listing standard, our common stock may be subject to delisting. If our common stock is delisted, our commonstock would likely trade only in the over-the-counter market. If our common stock were to trade on the over-the-counter market,selling our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactionscould be delayed, and security analysts’ coverage of us may be reduced, or eliminated. In addition, in the event our commonstock is delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage them from effectingtransactions in our common stock, further limiting the liquidity thereof. These factors could result in lower prices and largerspreads in the bid and ask prices for our common stock and would substantially impair our ability to raise additional funds andcould result in a loss of institutional investor interest and fewer development opportunities for us.
Themarket price of our common stock will also be based on our performance and other factors, most of which are unrelated to the numberof shares outstanding. If the Reverse Split is effected and the market price of our common stock declines, the percentage declineas an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absenceof a Reverse Split. Furthermore, the liquidity of our common stock could be adversely affected by the reduced number of sharesthat would be outstanding after the Reverse Split.
Becausethe number of authorized shares of the Company’s common stock will not be reduced proportionately, the Reverse Split willincrease the Board’s ability to issue authorized and unissued shares without further stockholder action. Without takinginto account the impact of the proposed Reverse Split, the Company already has a substantial number of authorized but unissuedshares of stock, the issuance of which would be dilutive to our existing stockholders and may cause a decline in the trading priceof our common stock, With respect to authorized but unissued and unreserved shares, the Company could also use such shares tooppose a hostile takeover attempt or delay or prevent changes in control or changes in or removal of management.
Inaddition, the Reverse Split may increase the number of stockholders who own odd lots (less than 100 shares). Any stockholder whoowns fewer than 500 to 2,000 shares of common stock, depending on the final ratio, prior to the Reverse Split willown fewer than 100 shares of common stock following the Reverse Split. Stockholders who hold odd lots typically experience anincrease in the cost of selling their shares and may have greater difficulty in effecting sales. Furthermore, some stockholdersmay cease being stockholders of the Company following the Reverse Split. Any stockholder who owns fewer than 5 to 20shares of common stock, depending on the final ratio, prior to the Reverse Split will own less than one share of common stockfollowing the Reverse Split and therefore such stockholder will receive cash equal to the market value of such fractional shareand cease being a stockholder of the Company, as further described below under “–Procedure for Effecting the ReverseStock Split and Exchange of Stock Certificates”.
CertainRisks Associated with Not Adopting the Reverse Stock Split Charter Amendment
Failureto carry out the Reverse Stock Split also carries several significant risks.
Delisting.If our stockholders do not approve the Reserve Split, the Company could be delisted from the NASDAQ Capital Market, therebypotentially decreasing the liquidity of our stock and hurting or stock’s market price and discouraging future investmentsin our Company.
Procedurefor Effecting Reverse Stock Split and Exchange of Stock Certificates
Ifthis Proposal Number 3 is approved by our stockholders, we would file the Amendment with the Delaware Secretary of State at suchtime as our Board has determined the appropriate effective time for the Reverse Split. Our Board may delay effecting the Amendmentwithout resoliciting stockholder approval to any time within three months after the date stockholder approval is obtained (ifat all). The Amendment would become effective on the date the Amendment is filed with the Delaware Secretary of State (the “ReverseSplit Effective Date”). Beginning on the Reverse Split Effective Date, each certificate representing Old Shares would bedeemed for all corporate purposes to evidence ownership of New Shares.
Assoon as practicable after the Reverse Split Effective Date, stockholders would be notified that the Reverse Split has been effected.Holders of Old Shares may then surrender certificates representing Old Shares in exchange for certificates representing New Sharesin accordance with the procedures required by our transfer agent. Any Old Shares submitted for transfer, whether pursuant to asale or other disposition, or otherwise, would automatically be exchanged for New Shares. STOCKHOLDERS SHOULD NOT DESTROY ANYSTOCK CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL NOTIFIED OF THE REVERSE SPLIT EFFECTIVE DATE.
Nofractional shares would be issued in connection with the Reverse Split. Stockholders of record who otherwise would be entitledto receive fractional shares, would be entitled to rounding up of their fractional share to the nearest whole share.
Effecton Convertible Shares, Options, Warrants and Other Securities
Alloutstanding options, warrants and other securities entitling their holders to purchase or acquire shares of our common stock wouldbe adjusted as a result of the Reverse Split, as required by the terms of each security. In particular, the conversion ratio foreach security would be reduced proportionately, and the exercise price, if applicable, would be increased proportionately, inaccordance with the terms of each security and based on the exchange ratio implemented in the Reverse Stock Split.
TheAmendment is not expected to affect the common stock capital account on our balance sheet. As of the Reverse Split Effective Date,the stated capital on our balance sheet attributable to our common stock is expected to be reduced proportionately based on theselected exchange ratio, and the additional paid-in capital account is expected to be credited with the amount by which the statedcapital is reduced. In future financial statements, we would restate net income or loss per share and other per share amountsfor periods ending before the Reverse Split to give retroactive effect to the Reverse Split. The per share net income or lossand net book value of our common stock would be increased because there would be fewer shares of our common stock outstanding.
DiscretionaryAuthority of the Board of Directors to Abandon Reverse Stock Split
OurBoard reserves the right to abandon the Amendment without further action by our stockholders at any time before the effectivenessof the filing with the Delaware Secretary of State of the certificate of amendment to the Company’s Restated Certificateof Incorporation, even if the Reverse Split has been authorized by our stockholders at the Annual Meeting. By voting in favorof the Reverse Split, you are expressly also authorizing our Board to determine not to proceed with, and abandon, the ReverseSplit, if it should so decide.
NeitherDelaware law, the Company’s Restated Certificate of Incorporation, nor the Company’s amended and restated by-lawsprovides for appraisal or other similar rights for dissenting stockholders in connection with this proposal. Accordingly, theCompany’s stockholders will have no right to dissent and obtain payment for their shares, and we will not independentlyprovide stockholders with any such right.
MaterialFederal Income Tax Consequences
Thefollowing discussion of certain U.S. federal income tax consequences to the Company’s stockholders of the Reverse Split,if effected, does not purport to be a complete discussion of all of the possible U.S. federal income tax consequences and is includedfor general information only, is not intended as tax advice to any person and is not a comprehensive description of the tax consequencesthat may be relevant to each shareholder’s own particular circumstances. The discussion is based on the Internal RevenueCode of 1986, as amended (the “Code”), applicable Treasury Regulations promulgated thereunder, judicial authorityand current administrative rulings and practices as in effect on the date of this proxy statement. Changes to the laws could alterthe tax consequences described below, possibly with retroactive effect. The Company has not sought and will not seek an opinionof counsel or a ruling from the Internal Revenue Service regarding the U.S. federal income tax consequences of the reverse stocksplit.
Thisdiscussion addresses the U.S. federal income tax consequences only to a stockholder that is (i) a citizen or individual residentof the United States, (ii) a corporation organized in or under the laws of the United States or any state thereof or the Districtof Columbia or otherwise subject to U.S. federal income taxation on a net income basis in respect of our common stock, (iii) atrust if (1) a U.S. court is able to exercise primary supervision over administration of such trust and one or more U.S. personshave the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated asa U.S. person, or (iv) an estate whose income is subject to U.S. federal income taxation regardless of its source. This discussionaddresses only those shareholders who hold their pre-reverse stock split shares as “capital assets” as defined inthe Code (generally, property held for investment), and will hold the shares received in the Reverse Split as capital assets.Further, it does not address any state, local, foreign or other income tax consequences, nor does it address the tax consequencesto shareholders that are subject to special tax rules, such as, without limitation, shareholders who are subject to the alternativeminimum tax, banks, insurance companies, regulated investment companies, personal holding companies, shareholders who are not“United States persons” as defined in Section 7701(a)(30) of the Code, U.S. persons whose functional currency is notthe U.S. dollar, broker-dealers, tax-exempt entities, or S corporations, partnerships or other entities or arrangements treatedas partnerships for U.S. federal income tax purposes (or investors therein). If an entity or arrangement treated as a partnershipfor U.S. federal income tax purposes holds pre-reverse stock split shares of our stock, the U.S. federal income tax treatmentof a partner of the partnership will depend on the status of the partner and the activities of the partnership and upon certaindeterminations made at the partnership level. Partners in partnerships holding our common stock are urged to consult their owntax advisors about the U.S. federal income tax consequences of the reverse stock split.
Stockholdersare advised to consult their own tax advisers regarding the U.S. federal income tax consequences of the Reverse Split in lightof their personal circumstances and the consequences under state, local and foreign tax laws, and also as to any estate or gifttax considerations.
ExchangePursuant to Reverse Stock Split
Nogain or loss will be recognized by a stockholder upon such stockholder’s exchange of pre-reverse stock split shares forpost-reverse stock split shares pursuant to the Reverse Split, except to the extent of cash, if any, received in lieu of fractionalshares, further described in “Cash in Lieu of Fractional Shares” below. The aggregate tax basis of the post-reversestock split shares received in the Reverse Split, including any fractional share deemed to have been received, will be equal tothe aggregate tax basis of the pre-reverse stock split shares exchanged therefor, and the holding period of the post-reverse stocksplit shares will include the holding period of the pre-reverse stock split shares.
TheCompany will not recognize any gain or loss as a result of the reverse stock split.
VoteNecessary to Approve Proposal 3; Directors’ Recommendation
Approvalof this Reverse Split Proposal requires the affirmative vote of the holders of a majority of the shares of Common Stock outstandingand entitled to vote on the matter, either in person or by proxy, at the meeting. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOUVOTE “FOR” THIS PROPOSAL 3 TO APPROVE THE AMENDMENT TO THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION TOEFFECT A REVERSE STOCK SPLIT.
Shareholderswho wish to present proposals for inclusion in the Company’s proxy materials for the 2019 Annual Meeting of Shareholdersmay do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. To be eligible, the Shareholder proposalsmust be received by our corporate secretary on or before May 7, 2019.
Shareholderswho wish to make a proposal at the 2019 Annual Meeting of Shareholders, other than one that will be included in our proxy materials,must notify us no later than July 21, 2019 (see Rule 14a-4 under the Exchange Act). If a Shareholder who wishes to present a proposalat the 2019 Annual Meeting of Shareholders fails to notify us by July 21, 2019, the proxies that management solicits for the meetingwill confer discretionary authority to vote on the Shareholder’s proposal if it is properly brought before the meeting.
ShareholderNominations of Directors
Ashareholder entitled to vote for the election of directors at a meeting may nominate persons for election as directors by givingtimely notice thereof in proper written form to the secretary accompanied by a petition signed by at least 100 record holdersof capital stock of the Company which shows the class and number of shares held by each person and which represent in the aggregate1% or more of the outstanding shares entitled to vote in the election of directors. The submission must be in writing and deliveredto Microbot Medical Inc., Attn: Secretary, Board of Directors, 25 Recreation Park Drive, Unit 108, Hingham, MA 02043, in accordancewith the advance notice procedures and other requirements set forth in Section 3.2 of our bylaws for nominees to be consideredfor nomination at the 2019 annual meeting. These requirements are separate from, and in addition to, the requirements discussedabove to have the shareholder nomination or other proposals included in our proxy statement and form of proxy/voting instructioncard pursuant to the SEC’s rules. Submissions must include the name, address and number of shares of common stock beneficiallyowned by each participant in the Nominating Shareholder group, a representation that the Nominating Shareholder meets the requirementsdescribed in the Board policy and will continue to meet them through the date of the annual meeting, a description of all arrangementsor understandings between or among the Nominating Shareholder group (or any participant in the Nominating Shareholder group) andthe candidate or any other person or entity regarding the candidate, all information regarding the candidate that the Companywould be required to disclose in a proxy statement under SEC rules, including whether the candidate is independent or, if not,a description of the reasons why not, the consent of the candidate to serve as a director, and representations by the candidateregarding his or her performance of the duties of a director. Full details may be obtained from the secretary of the Board atthe address above or on our website at www.microbotmedical.com. The Corporate Governance Committee will consider and evaluateup to two candidates recommended in accordance with this policy in connection with any annual meeting. The Corporate GovernanceCommittee will consider and evaluate candidates recommended by Shareholders on the same basis as candidates recommended by othersources.
Inaddition, the Company’s by-laws provide that a Shareholder entitled to vote for the election of directors at a meeting maynominate persons for election as directors by giving timely notice thereof in proper written form to the Secretary accompaniedby a petition signed by at least 100 record holders of capital stock of the Company representing in the aggregate 1% or more ofthe outstanding shares entitled to vote in the election of directors, which petition must show the class and number of sharesheld by each person. To be timely, such notice and petition must be received at the principal executive offices of the Companynot less than 60 days nor more than 90 days prior to the meeting, except if less than 70 days notice of the date of the meetingis given to Shareholders, in which case the notice and petition must be received not later than the close of business on the tenthday following the day on which notice of the date of the meeting was mailed or public disclosure of such date was made. The requestingShareholder is required to provide information with respect to the nominee(s) for director similar to that described above, asmore fully set forth in the Company’s by-laws.
TheCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, as filed with the SEC, is available withoutcharge upon request by writing to Microbot Medical Inc. at 25 Recreation Park Drive, Unit 108, Hingham, MA 02043, Attention: InvestorRelations. A copy of this report is also available through our website at www.microbotmedical.com or, alternatively, at www.sec.gov.
“Householding”of Proxy Materials
Somebanks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statementsand annual reports. This means that only one copy of our proxy statement and annual report to shareholders may have been sentto multiple shareholders in your household. The Company will promptly deliver a separate copy of either document to you if youcontact the Secretary at the following address or telephone number: Microbot Medical Inc., 25 Recreation Park Drive, Unit 108,Hingham, MA 02043; telephone: (781) 875-3605. In addition, copies of both documents may be obtained from our website (www.microbotmedical.com,click on the button “Investors” and then “Presentations and Resources”). You may also request informationfrom Morrow Sodali LLC, our proxy solicitor, at the following address and telephone number: Morrow Sodali LLC, 470 West Avenue,Stamford, CT 06902; Stockholders Call Toll Free: 800-662-5200; Microbotemail@example.com. If you want to receive separatecopies of the proxy statement or the annual report to shareholders in the future, or if you are receiving multiple copies andwould like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or youmay contact the Company at the above address or telephone number.
TheBoard knows of no business that will come before the meeting for action except as described in the accompanying Notice of Meeting.However, as to any such business, the persons designated as proxies will have authority to act in their discretion.