UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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☐ | Soliciting Material Pursuant to § 240.14a-12 | |
STRATA Skin Sciences, Inc.
(Name of Registrant as Specified In Itsin its Charter)
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STRATA SKIN SCIENCES, INC.
Horsham, Pennsylvania 19044
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on September 14, 2017
December 30, 2020
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of STRATA Skin Sciences, Inc., a Delaware corporation (the "Company"“Company”). The meeting will be held on September 14, 2017December 30, 2020 at 9:00 a.m. local time, at the Company’s offices of Duane Morris LLP, 30 S. 17th Street, Philadelphia,5 Walnut Grove Drive, Suite 140, Horsham, Pennsylvania 1910319044, for the following purposes:purposes to:
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The record date for the Annual Meeting is July 18, 2017.November 3, 2020. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.
| | | By Order of the Board of Directors | |
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| | | /s/ Dr. Dolev Rafaeli | |
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| | | Dr. Dolev Rafaeli | |
| | | President and Chief Executive Officer | |
| | | November 27, 2020 |
YOUR VOTE IS IMPORTANT
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE COMPANY, ON BEHALF OF THE BOARD OF DIRECTORS, FOR THE 20172020 ANNUAL MEETING OF STOCKHOLDERS. THE PROXY STATEMENT AND THE RELATED PROXY FORM ARE BEING DISTRIBUTED ON OR ABOUT AUGUST 2, 2017.NOVEMBER 30, 2020. YOU CAN VOTE YOUR SHARES USING ONE OF THE FOLLOWING METHODS:
COMPLETE AND RETURN A WRITTEN PROXY CARD;
BY INTERNET OR TELEPHONE; OR
ATTEND OUR 20172020 ANNUAL MEETING OF STOCKHOLDERS AND VOTE.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE ENCLOSED FOR THAT PURPOSE OR VOTE YOUR SHARES BY INTERNET OR TELEPHONE. ANY STOCKHOLDER OF RECORD ATTENDING THE MEETING MAY VOTE IN PERSONAT THE MEETING EVEN IF HE OR SHE HAS RETURNED A PROXY CARD OR VOTED BY INTERNET OR TELEPHONE.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON SEPTEMBER 14, 2017DECEMBER 30, 2020 — AND THE PROXY STATEMENT ARE AVAILABLE AT http://materials.proxyvote.com/86272A.www.materials.proxyvote.com/86227A.
TABLE OF CONTENTS
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STRATA SKIN SCIENCES, INC.
Horsham, Pennsylvania 19044
PROXY STATEMENT FOR THE
Why am I receiving these materials?
We sent you this Proxy Statement and the enclosed proxy card because the Board of Directors of STRATA Skin Sciences, Inc. ("we"(“we”, "us"“us”, "our"“our”, or "the Company"“the Company”) is soliciting your proxy to vote at our 20172020 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”). You are invited to attend the Annual Meeting, and we request that you vote on the proposals described in this Proxy Statement. You do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or you may grant a proxy to vote your shares by means of the telephone or on the Internet.
We intend to mail this Proxy Statement and the accompanying proxy card together with our 20162019 Annual Report to Stockholders on or about August 2, 2017November 30, 2020 to all stockholders of record on July 18, 2017November 3, 2020 entitled to vote at the Annual Meeting. Each share of common stock outstanding on the record date will be entitled to one vote.
Who can vote at the Annual Meeting?
Only stockholders of record at the close of business on July 18, 2017November 3 2020 will be entitled to vote at the Annual Meeting. On this record date, there were 2,477,74333,769,958 shares of common stock outstanding and entitled to vote.
Stockholder of Record: Shares Registered in Your Name
If, on July 18, 2017November 3, 2020, your shares were registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, LLC, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If, on July 18, 2017November 3, 2020, your shares were held not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in "street name"“street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Annual Meeting. Since you are not the stockholder of record, however, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid legal proxy from your broker or other agent.
What am I voting on?
There are sixfive matters scheduled for a vote:vote to:
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| 2. | approve the amendment to our Fifth Amended and Restated Certificate of Incorporation to include a provision to designate the Delaware Chancery Court as the exclusive forum for certain legal actions; |
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| 6. | conduct any other business properly brought before the meeting |
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How do I vote?
You may either vote "For"“For” all the nominees to the Board of Directors or you may "Withhold"“Withhold” your vote for any nominee you specify. For each of the other matters you may vote "For"“For” or "Against"“Against” or abstain from voting. Procedures for voting are fairly simple:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the Annual Meeting, or vote by proxy using the enclosed proxy card or via the Internet or telephone (see "Voting“Voting Via the Internet or by Telephone"Telephone” below). If you vote by proxy, your shares will be voted as you specify on the proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote in person if you have already voted by proxy.
To vote in person, come to the Annual Meeting, and we will give you a ballot when you arrive at the Annual Meeting, follow the instructions on the website. To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to | ||||
Voting Via the Internet or by Telephone
Stockholders may grant a proxy to vote their shares by means of the telephone or via the Internet. The laws of the State of Delaware, under which we are incorporated, specifically permit electronically transmitted proxies, provided that each such proxy contains or is submitted with information from which the Inspector of Elections can determine that such proxy was authorized by the stockholder.
The telephone and Internet voting procedures below are designed to authenticate stockholders' identities, to allow stockholders to grant a proxy to vote their shares and to confirm that stockholders' instructions have been recorded properly. Stockholders granting a proxy to vote via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, which must be borne by the stockholder.
Stockholders of record may go to www.proxyvote.com to grant a proxy to vote their shares by means of the Internet. They will be required to provide the control number contained on their proxy cards. Any stockholder using a touch-tone telephone may also grant a proxy to vote shares by calling 1-800-690-6903and following the operator's instructions.
General Information for All Shares Voted Via the Internet or by Telephone
Votes submitted via the Internet or by telephone must be received by 11:59 p.m. EST on September 13, 2017.December 29, 2020. Submitting your proxy via the Internet or by telephone will not affect your right to vote in person should you decide to attend the Annual Meeting.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the proxy card or voting instructions as instructed by your broker, bank or other agent to ensure that your vote is counted. To vote in person at the Annual Meeting, you must obtain a valid legal proxy from your broker, bank, or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact your broker, bank or other agent to request a proxy form.
Most beneficial owners whose stock is held in street name receive instructions for granting proxies from their banks, brokers or other agents, rather than the proxy card.
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of our common stock you own as of July 18, 2017.November 3, 2020.
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What if I return a proxy card but do not make specific choices?
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your shares in the manner recommended by the Board of Directors on the matters presented in this Proxy Statement and as the proxy holders may determine in their discretion for any other matters properly presented for a vote at the Annual Meeting.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If your shares are held in an account at a bank, brokerage firm, broker-dealer or other similar organization, then you are a beneficial owner of shares registeredheld in street name. In that case, you will have received these proxy materials from that organization holding your account and, as a beneficial owner, you have the name ofright to instruct your broker, bank, trustee, or other agent and do not providenominee how to vote the organization that holdsshares held in your shares with specificaccount. If no voting instructions the organization that holdsare given, your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on howbroker or nominee has discretionary authority to vote your shares on your behalf on routine matters as determined in accordance with NYSE Rule 452 by The New York Stock Exchange. A “broker non-vote” results on a non-routine matter the organization that holdswhen your shares will inform the inspector of election thatbroker or nominee returns a proxy but does not vote on a particular proposal because it does not have thediscretionary authority to vote on this matterthat proposal and has not received voting instructions from you. We believe that your broker or nominee may not have discretionary voting power with respect to any proposal to be considered at this meeting other than Proposal No. 6. You may not vote shares held in street name at the Annual Meeting unless you obtain a legal proxy from that organization holding your shares. This is referred to as a "broker non-vote."account.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these mailed and posted proxy materials, we will bear the cost of proxies solicited by the Board of Directors. In addition to the solicitation of proxies by mail, solicitation may be made personally or by telephone or electronic communication by our directors, officers and employees, none of whom will receive additional compensation for these services. We will also reimburse brokers and other nominees for their reasonable out-of-pocket expenses incurred in connection with distributing forms of proxies and proxy materials to the beneficial owners of common stock. In addition, we have retained Okapi Partners LLC, to aid in the solicitation of proxies by mail, personally, by telephone, e-mail or other appropriate means. For these services, we will pay Okapi $9,000 plus other reasonable out-of-pocket expense reimbursement.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Yes. You may revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of four ways:
you may vote by telephone or via the Internet; or
If your shares are held by your broker or bank as a nominee or agent, you must follow the instructions provided by your broker or bank.
When are stockholder proposals due for next year's annual meeting?
Under Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), our stockholders may present proper proposals for inclusion in our Proxy Statement and for consideration at the next annual meeting of stockholders by submitting their proposals to us in a timely manner. In order to be considered for inclusion in the Proxy Statement distributed to stockholders prior to the annual meeting of stockholders in the year 2018,2021, a stockholder proposal must be received by us no later than April 4, 2018October 1, 2021 and must otherwise comply with the requirements of Rule 14a-8.
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In order to be considered for presentation at the annual meeting of stockholders in the year 2018,2021, although not included in the Proxy Statement, a stockholder proposal or nomination(s) must comply with the requirements of our FourthFifth Amended and Restated Bylaws (the "Bylaws"“Bylaws”) and be received by us nonot later than the close of business on June 16, 2018 and nothe 90th day nor earlier than the close of business on May 17, 2018;the 120th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the 20182020 annual meeting is more than thirty (30) days before or more than sixty (60) days after September 14, 2018,December 30, 2021, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the one hundred and twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the close of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by us. For the 2021 Annual Meeting of Stockholders, this period will begin on September 1, 2021, and end on October 1, 2021. In the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement (as defined in the Bylaws) by the Company naming all of the nominees for director or specifying the size of the increased Board of Directors at least 75 days prior to the first anniversary of the preceding year's annual meeting (or, if the annual meeting is held more than 30 days before or 60 days after such anniversary date, at least 75 days prior to such annual meeting), a stockholder's notice required by the Bylaws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Company. Stockholder proposals should be delivered in writing to STRATA Skin Sciences, Inc., 100 Lakeside5 Walnut Grove Drive, Suite 100,140, Horsham, Pennsylvania 19044, Attention: Secretary. A copy of our Bylaws may be obtained from us upon written request to the Secretary.
How are votes counted?
Votes will be counted by the Inspector of Elections appointed for the meeting, who will separately tabulate "For"“For”, "Against"“Against” and "Withhold"“Withhold” votes, abstentions and broker non-votes. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner (despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions). If your shares are held by your broker as your nominee (that is, in "street name"), you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. If you do not give instructions to your broker, your broker can vote your shares with respect to "discretionary" items, but not with respect to "non-discretionary" items. Discretionary items are proposals considered routine under the rules of the New York Stock Exchange on which your broker may vote shares held in street name in the absence of your voting instructions. On non-discretionary items for which you do not give your broker instructions, the shares will be treated as broker non-votes.
How many votes are needed to approve each proposal?
Proposal No. 1, the election of directors, the six nominees receiving the most “For” votes (among votes properly cast in person or by proxy) will be elected. Abstentions and broker non-votes will not constitute or be counted as votes cast for purposes of this proposal. Stockholders do not have the right to cumulate their votes for directors.
Proposal No. 2, approval of the amendment to our Fifth Amended and Restated Certificate of Incorporation to include a provision to designate the Delaware Chancery Court as the exclusive forum for certain legal actions must receive the affirmative vote of the holders of a majority of the Company’s outstanding shares of common stock is required to approve this proposal. Accordingly, abstentions and broker non-votes will have the same effect as an “Against” vote.
Proposal No. 3, an advisory vote to approve the compensation of the Company’s named executive officers must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy to be approved. Abstentions are treated as present and entitled to vote and therefore will have the same effect as an “Against” vote. Broker non-votes will have no effect on the outcome of the vote. Although the advisory vote to approve our named executive officer compensation are non-binding, as provided by law, the Compensation Committee of our Board of Directors will review the results of the vote and take them into account in making a determination concerning executive compensation.
Proposal No. 4, the ratification of Marcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020, must receive a “For” vote from the majority of shares present and entitled to vote either in person or by proxy to be approved. Abstentions will have the same effect as an “Against” vote. Broker non-votes will have no effect on the outcome of the vote.
Proposal No. 5, authorization to adjourn the meeting, if necessary, even if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 2, 3 and 4, requires the affirmative vote of a majority of the votes cast. Abstentions and broker non-votes will not constitute or be counted as votes cast for purposes of this proposal.
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least one-third of the outstanding shares of common stock entitled to vote are represented by votes at the Annual Meeting or by proxy. On the record date, there were 2,477,74333,769,958 shares of common stock outstanding and entitled to vote.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting or by telephone or via the Internet. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the chairman of the meeting or a majority of the votes present at the Annual Meeting may adjourn the meeting to another date.
How can I find out the results of the voting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. Final voting results will be published in a Current Report on Form 8-K filed by us within four business days offollowing the Annual Meeting.
How can I obtain additional copies?
For additional copies of this Proxy Statement and the enclosed proxy card and 20162019 Annual Report to Stockholders, you should contact our corporate office at STRATA Skin Sciences, Inc., 100 Lakeside5 Walnut Grove Drive, Suite 100,140, Horsham, Pennsylvania 19044, Attention: Secretary, telephone (215) 619-3200.
The following table sets forth certain information regardingreflects, as of November 2, 2020, the beneficial common stock ownership of: (a) each of our directors, (b) each executive officer, (c) each person known by us to be a beneficial holder of five percent (5%) or more of our common stock, par value $0.001, as of July 10, 2017 by: (i) each director and nominee for director; (ii) each of our executive officers who are named in the Summary Compensation Table presented herein; (iii)(d) all of our executive officers and directors as a group; and (iv) all those known by us to be beneficial owners of more than five percent of its common stock.
Name and Address Of Beneficial Owner (1) | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned (1) |
Francis J. McCaney (2) | 4,000 | * |
Christina L. Allgeier (3) | 6,250 | * |
Jeffrey F. O'Donnell, Sr. (4) | 130,856 | 5.02% |
Samuel E. Navarro (5) | 130,276 | 5.00% |
David K. Stone (6) | 32,007 | 1.28% |
Kathryn Swintek (7) | 31,566 | 1.27% |
LuAnn Via (8) | 31,827 | 1.26% |
James Coyne (9) | - | * |
All directors and officers as a group (eight persons) (10) | 366,782 | 12.92% |
Broadfin Healthcare Master Fund, Ltd (11) | 1,008,297 | 9.99% |
Sabby Healthcare Master Fund, Ltd (12) | 998,019 | 9.99% |
Sabby Volatility Warrant Master Fund, Ltd (13) | 116,571 | 9.99% |
Name and Address of Beneficial Owner (1) | | | Number of Shares Beneficially Owned | | | Percentage of Shares Beneficially Owned(1) |
Uri Geiger(9) | | | 12,112,627 | | | 35.87% |
Dolev Rafaeli(2) | | | 3,401,731 | | | 9.4% |
Matthew Hill(3) | | | 226,666 | | | * |
Samuel E. Navarro(4) | | | 211,412 | | | * |
Samuel Rubinstein(5) | | | 52,098 | | | * |
Nachum Shamir(6) | | | 74,075 | | | * |
LuAnn Via(7) | | | 132,702 | | | * |
All directors and officers as a group seven persons) | | | 16,211,311 | | | 44.2% |
| | | | | |||
Accelmed Growth Partners LP(8) | | | 12,112,627 | | | 35.87% |
Kent Lake Partners LP(9) | | | 2,701,788 | | | 8% |
Nantahala Capital Management, LLC(10) | | | 4,685,062 | | | 13.87% |
| * | Less than 1%. |
| (1) | Beneficial ownership is determined in accordance with the rules of the |
| (2) | Includes |
| Includes |
| (4) | Includes 35,000 shares, 145,276 vested options to purchase |
| Includes |
| Includes |
| (7) | Includes 40,571 shares, 60,995 vested options to purchase |
| The business address of |
| (9) | The business address of Kent Lake Partners LP (“Kent Lake”) is 591 Redwood Highway, Suite 3260 Mill Valley, California 94941. Kent Lake LLC, which serves as the general partner of Kent Lake, and Benjamin Natter, as managing member of Kent Lake LLC, may be deemed to |
The business address of |
We do not permit our non-employee directors or executive officers to hedge their economic exposures to our common stock, that they own, by engaging in transactions involving puts, calls, or other derivative securities, zero-cost collars, forward sales contracts, or buying on margin or pledging shares as collateral for a loan.
Independence of the Board of Directors
As required under the listing standards of the NASDAQ Stock Market ("NASDAQ"(“NASDAQ”), a majority of the members of a listed company's Board of Directors must qualify as "independent,"“independent,” as affirmatively determined by the Board of Directors. Our Board of Directors consults with our counsel to ensure that the Board of Director's determinations are consistent with all relevant securities and other laws and regulations regarding the definition of "independent,"“independent,” including those set forth in pertinent listing standards of NASDAQ, as are in effect from time to time.
Consistent with these considerations, after review of all relevant transactions or relationships between each director, or any of his or her family members, and us, its senior management and its independent registered public accounting firm, the Board of Directors has affirmatively determined that the majority of our directors and director nominees are independent directors within the meaning of the applicable NASDAQ listing standards. Except Francis J. McCaney,for Dr. Rafaeli, our President and Chief Executive Officer, as well as Mr. O'Donnell and Mr. Navarro, who receive consulting fees, all other current members of the Board of Directors are independent under the applicable listing standards of NASDAQ. NASDAQ.
Board Leadership Structure
Our Board of Directors administers its risk oversight function as a whole by making risk oversight a matter of collective consideration. While management is responsible for identifying risks, our Board of Directors has charged the Audit Committee of the Board of Directors with evaluating financial and accounting risk, the CompensationCompensation/Nominating and Governance Committee of the Board of Directors with evaluating risks associated with employees and compensation. Investor-related risks are usually addressed by the Board as a whole.
The Board of Directors met six10 times during the last fiscal year. During the last fiscal year, the audit committeeAudit Committee met four times, the compensation committee met seven15 times, and the nominatingCompensation/Nominating and corporate governance committeeGovernance Committee met two2 times. All directors attended at least 75% of the aggregate meetings of the Board of Directors and the committees on which they served that were held during the period in which they were a director and a committee member.
Information Regarding the Board of Directors and its Committees
Our Board of Directors has an audit committee, a compensation committeeAudit Committee and a nominatingCompensation/Nominating and governance committee.Governance Committee. The following table provides membership information for each of these committees:
NAME | AUDIT | | | COMPENSATION/ NOMINATING AND CORPORATE GOVERNANCE | ||
Dr. Uri Geiger, Chairman | | | | | ||
Samuel E. Navarro | | | X | | | |
Nachum Shamir | | | X* | |||
LuAnn Via | X* | | | X | ||
Samuel Rubinstein | X | |||||
| | X |
| * | Committee Chair |
Below is a description of each committee of the Board of Directors. Each of the committees has authority to engage independent advisors, as it deems appropriate to carry out its responsibilities. The Board of Directors has determined that each member of each committee meets the applicable rules and regulations regarding "independence"“independence” and that each member is free of any relationship that would interfere with his or her individual exercise of independent judgment with regard to us.
Audit Committee
The current members of our audit committeeAudit Committee are Kathryn Swintek, David K. Stone,LuAnn Via (Chair), Samuel Rubinstein, and LuAnn Via,Samuel Navarro, each of whom we believe satisfies the independence requirements of NASDAQ and the SEC. Ms. SwintekVia chairs this committee.committee and has been designated as the “Audit Committee financial expert” under Item 407(d)(5) of Regulation S-K. The Board of Directors determined in 2016 that each of Ms. Swintek and Mr. Stonemember of the audit committee satisfies the independence and other composition requirements of the SEC and NASDAQ. Upon Ms. Via's joining the audit committee in February 2017, the Board of Directors determined that she alsoAudit Committee satisfies the independence and other composition requirements of the SEC and NASDAQ. Our Board of Directors has determined that each member of the audit committee qualifies as an "audit committee financial expert" under Item 407(d)(5) of Regulation S-K andAudit Committee has the requisite accounting or related financial expertise required by applicable NASDAQ rules. Our audit committeeAudit Committee assists our Board of Directors in its oversight of:
appointing, evaluating and determining the compensation of our independent auditors; reviewing and approving the scope of the annual audit, the audit fee and the financial statements; reviewing disclosure controls and procedures, internal control over financial reporting, any internal audit function and corporate policies with respect to financial information; reviewing other risks that may have a significant impact on our financial statements; preparing the Audit Committee report for inclusion in the annual proxy statement; establishing procedures for the receipt, retention and treatment of complaints regarding accounting and auditing matters; approving all related person transactions, as defined by applicable SEC Rules, to which we are a party; and evaluating annually the Audit Committee charter. The Audit Committee | ||
The charter of our audit committeeAudit Committee is available in the Corporate Governance section of the Investor Relations section of our website at www.strataskinsciences.comwww.strataskinsciences.com..
The current members of our compensation committeeCompensation/Nominating Corporate Governance Committee are Nachum Shamir (Chair), LuAnn Via, James Coyne, Kathryn Swintek and David K. Stone,Samuel Rubinstein, each of whom we believe satisfies the independence requirements of NASDAQ. Ms. ViaMr. Shamir chairs this committee. The purpose of our compensation committeeCompensation/Nominating and Governance Committee is to assist in the responsibilities of the Board of Directors relating to compensation of our executive officers. In addition to its role in compensation matters, the purpose of our Compensation/Nominating and Corporate Governance Committee is to review all Board of Director-recommended and stockholder-recommended nominees, determine each nominee's qualifications and to make a recommendation to the full Board of Directors as to which persons should be the Board of Directors' nominees. Specific responsibilities of our compensationthe committee include:
reviewing and approving objectives relevant to executive officer compensation;
evaluating performance and recommending to the Board of Directors the compensation, including any incentive compensation, of the Chief Executive Officer and other executive officers in accordance with such objectives;
reviewing employment agreements for executive officers;
recommending to the Board of Directors the compensation for our directors;
administering our equity compensation plans and other employee benefit plans;
evaluating human resources and compensation strategies, as needed;
identifying and recommending to the Board of Directors individuals qualified to become members of the Board of Directors;
recommending to the Board of Directors the director nominees for the next annual meeting of stockholders;
recommending to the Board of Directors director committee assignments;
reviewing and evaluating succession planning for the Chief Executive Officer and other executive officers;
monitoring the independence of the directors;
developing and overseeing the corporate governance principles applicable to members of the Board of Directors, officers and employees;
reviewing and approving director compensation and administering the Non-Employee Director Plan;
monitoring the continuing education for our directors; and
evaluating annually the Compensation/Nominating and Corporate Governance Committee charter.
The CompensationCompensation/Nominating and Governance Committee reviews executive compensation from time to time and reports to the Board of Directors, which makes all final decisions with respect to executive compensation. The CompensationCompensation/Nominating and Governance Committee adheres to several guidelines in carrying out its responsibilities, including performance by the employees, our performance, enhancement of stockholder value, growth of new businesses and new markets and competitive levels of fixed and variable compensation.
The Compensation/Nominating and Governance Committee considers potential candidates recommended by its members, management and others, including stockholders. In considering candidates recommended by stockholders, the committee will apply the same criteria it applies in connection with candidates recommended by the Compensation/Nominating and Governance Committee. Stockholders may propose candidates to the Compensation/Nominating and Governance Committee by delivering a notice to the Compensation/Nominating and Governance Committee that contains the information required by the Bylaws. The Compensation/Nominating and Governance Committee did not pay any fee to any third party to search for, identify and/or evaluate the 2020 nominees for directors.
The Compensation/Nominating and Governance Committee does not maintain a formal diversity policy with respect to the identification or selection of directors for nomination to the Board of Directors. Diversity is just one of many factors the Compensation/Nominating and Governance Committee considers in the identification and selection of director nominees. The Company defines diversity broadly to include differences in race, gender, ethnicity, age, viewpoint, professional experience, educational background, skills and other personal attributes that can foster board heterogeneity in order to encourage and maintain board effectiveness.
The charter of our compensation committeeCompensation/Nominating and Governance Committee is available in the Corporate Governance section of the Investor Relations section of our website at www.strataskinsciences.comwww.strataskinsciences.com..
The Board of Directors' Role in Risk Oversight
Our Board of Directors administers its risk oversight function as a whole by making risk oversight a matter of collective consideration. While management is responsible for identifying risks, the Board of Directors has charged the audit committeeAudit Committee of the Board of Directors with evaluating financial and accounting risk and the compensation committeeCompensation/Nominating and Governance Committee of the Board of Directors with evaluating risks associated with employees and compensation. Investor-related risks are usually addressed by the Board of Directors as a whole.
Stockholder Communications with the Board of Directors
The Board of Directors has established a process for stockholders to communicate with the Board of Directors or with individual directors. Stockholders who wish to communicate with the Board of Directors or with individual directors should direct written correspondence to Jay Sturm, CorporateGeneral Counsel at jsturm@strataskin.com or to the following address (our principal executive offices): Board of Directors, c/o Corporate Secretary, 100 Lakeside5 Walnut Grove Drive, Suite 140, Horsham, Pennsylvania 19044. Any such communication must contain:
a representation that the stockholder is a holder of record of our capital stock; the name and address, as they appear on our books, of the stockholder sending such communication; and the class and number of shares of our capital stock that are beneficially owned by such stockholder. |
Mr. Sturm, as the Corporate Secretary, will forward such communications to the Board of Directors or the specified individual director to whom the communication is directed unless such communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the Corporate Secretary has the authority to discard the communication or to take appropriate legal action regarding such communication.
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Code of Conduct
We have adopted the Code of Business Conduct and Ethics,
The audit committeeAudit Committee oversees the Company's financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal control over financial reporting and disclosure controls and procedures. In fulfilling its oversight responsibilities, the audit committeeAudit Committee reviewed the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 20162019 with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The audit committeeAudit Committee is responsible for reviewing, approving and managing the engagement of the Company's independent registered public accounting firm, including the scope, extent and procedures of the annual audit and compensation to be paid therefore, and all other matters the audit committeeAudit Committee deems appropriate, including the Company's independent registered public accounting firm's accountability to the Board of Directors and the audit committee.Audit Committee. The audit committeeAudit Committee reviewed with the Company's independent registered public accounting firm,firms, which isare responsible for expressing an opinion on the conformity of audited financial statements with generally accepted accounting principles, itstheir respective judgment as to the quality, not just the acceptability, of the Company's accounting principles and such other matters as are required to be discussed with the audit committeeAudit Committee by the Standards of the Public Company Accounting Oversight Board ("PCAOB"(“PCAOB”), includingincluding; PCAOB Auditing Standard No. 16,Communications With Audit Committees,, the rules of the Securities and Exchange Commission ("SEC"(“SEC”) and other applicable regulations,regulations; and discussed and reviewed the results of the Company's independent registered public accounting firm's examination of the financial statements. In addition, the audit committeeAudit Committee discussed with the Company's independent registered public accounting firmfirms the independent registered public accounting firm'sfirms’ independence from management and the Company, including the matters in the written disclosures, and the letter regarding its independence by Rule 3526 of the PCAOB regarding the independent registered public accounting firm'sfirms’ communications with the audit committeeAudit Committee concerning independence. The audit committeeAudit Committee also considered whether the provision of non-audit services was compatible with maintaining the independent registered public accounting firm'sfirms’ independence.
The audit committeeAudit Committee discussed with the Company's independent registered public accounting firmfirms the overall scope and plans for its audits and received from them written disclosures and letter regarding their independence. The audit committeeAudit Committee meets with the Company's independent registered public accounting firm,firms, with and without management present, to discuss the results of its examinations, its evaluations of the Company's internal control over financial reporting and the overall quality of the Company's financial reporting. The audit committeeAudit Committee held four15 meetings during the fiscal year ended December 31, 2016.2019.
In reliance on the reviews and discussions referred to above, the audit committeeAudit Committee recommended to the Board of Directors (and the Board of Directors has approved) that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 20162019 for filing with the SEC. The audit committeeAudit Committee has also retained EisnerAmperMarcum LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2017.2020.
AUDIT COMMITTEE:
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2016,2019, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were met.
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Executive Officers
During the year ended December 31, 2019, our named executive officers were:
Dolev Rafaeli, President and Chief Executive Officer; and
Matthew C. Hill, Chief Financial Officer.
The biographical information for our current executive officers (other than Dr. Rafaeli, which is included below) are below:
Matthew C. Hill (age 52) assumed the duties of Chief Financial Officer on May 15, 2018. Prior to joining the Company, he was the chief financial officer with operational responsibilities with SS White Dental, a privately held medical device company in the dental space, from 2010. Prior to SS White, Matt served as CFO at Velcera and EP Medsystems, both publicly traded companies, where he was also responsible for public company compliance and participated in capital raising for the companies. Mr. Hill has over 20 years of experience in various capacities in public and private companies, and in public accounting with Grant Thornton LLP. Mr. Hill graduated with a B.S. in accounting from Lehigh University in 1991.
Components of Executive Compensation during 2019
During 2019 our named executive officers received salary, a car allowance, annual bonus, special bonus in recognition of the efforts made by the executives in successfully managing the restatement of the Company’s 2017 and 2018 financial statements, successfully managing the Company’s efforts to become compliant and current with all of the Company’s reporting obligations with the Securities and Exchange Commission and regaining compliance with the Nasdaq Listing Rules, all of which compliance matters have been previously disclosed in the Company’s filings, and 401(k) matching contributions.
Dr. Rafaeli earns an annual bonus each fiscal year, based upon the performance of the Company’s business during the relevant quarters in which he is employed. Such bonus during 2019 is achieved, on a quarterly basis, but is paid annually, if (a) the Company achieved positive adjusted EBITDA and (b) with such bonus amount determined as a percentage of the average aggregate collected revenue during such quarter from all installed laser machines (pro-rated for machines installed during a quarter) (“Average Revenue per Machine”) based upon the following schedule:
Average Revenue per Machine per quarter | | | Bonus (as a percentage of total company revenue for the relevant quarter) |
Up to $8,100 | | | 0.50% |
$8,101 to $9,600 | | | 0.80% |
$9,601 to $11,000 | | | 1.20% |
Above $11,001 | | | 1.50% |
The Average Revenue per Machine and positive adjusted EBITDA quarters resulted in a payout of $157,930.
Mr. Hill had a target bonus of $95,000 in 2019, with 75% of such bonus based on achieving certain revenue goals. The balance of the bonus was based on achieving personal goals, as agreed with the Chief Executive Officer and approved by the Compensation/Nominating and Governance Committee, which resulted in a total bonus payout of $49,287.
Also, during 2019, each of Dr. Rafaeli and Mr. Hill received award of cash bonuses and stock options in recognition of the efforts made by the executives in successfully managing the restatement of the Company’s 2017 and 2018 financial statements, successfully managing the Company’s efforts to become compliant and current with all of the Company’s reporting obligations with the SEC and regaining compliance with the Nasdaq Listing Rules, all of which compliance matters have been previously disclosed in the Company’s filings. The cash awards were as follows: (a) Dr. Rafaeli - $120,000; and (b) Mr. Hill - $100,000.
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The stock option grants were granted immediately after the close of business on the fourth business day after the Company became current in its filings with the SEC, which was November 22, 2019, and were made under the following terms:
| | | Shares underlying Option Grant | | | Exercise Price per share | | | Option Term | | | Vesting Period | |
Mr. Hill | | | 150,000 | | | $2.46 | | | 10 years | | | 1/3 on each anniversary of the date of grant |
Dr. Rafaeli | | | 300,000 | | | $2.46 | | | 10 years | | | 1/3 on each anniversary of the date of grant |
Summary Compensation Table
The following table sets forth the compensation earned by our principal executive officers and other executive officers during our last two completed fiscal years; such officers are referred to herein as the "named“named executive officers"officers”:
Name and Principal Position | Year | Salary ($) | Bonus ($) (4) | Stock Awards ($) (5) | Option Awards ($) (5)) | All Other Compensation ($) (6) | Total ($) |
| Francis J. McCaney (1), Director, President and Chief Executive Officer | 2016 | 56,700 | - | - | 150,273 | 1,000 | 207,973 |
| 2015 | - | - | - | - | - | - | |
| Christina L. Allgeier (2), Chief Financial Officer and Treasurer | 2016 | 200,000 | 30,000 | - | 37,600 | 13,500 | 281,100 |
| 2015 | 90,679 | 30,000 | - | - | 7,076 | 127,755 | |
| Michael R. Stewart (3), Former Director, President and Chief Executive Officer | 2016 | 344,240 | - | - | - | 388,661 | 732,901 |
| 2015 | 313,570 | 255,000 | 109,000 | - | 37,436 | 715,006 |
Name and Principal Position | | | Year | | | Salary ($) | | | Non-Equity Incentive Plan Compensation($)(4) | | | Option Awards ($)(3) | | | All Other Compensation ($)(5) | | | Total ($) |
Dolev Rafaeli(1), Director, President and Chief Executive Officer | | | 2019 | | | 400,000 | | | 277,930 | | | 466,500 | | | 23,200 | | | 1,167,630 |
| | 2018 | | | 289,077 | | | 142,853 | | | 2,223,490 | | | 36,646 | | | 2,692,066 | ||
Matthew C. Hill(2), Chief Financial Officer | | | 2019 | | | 240,000 | | | 149,287 | | | 233,250 | | | 16,000 | | | 638,537 |
| | 2018 | | | 149,169 | | | 40,627 | | | 225,250 | | | 2,800 | | | 417,846 |
| (1) |
| (2) |
| (3) | |
| (4) | Represents annual bonus amounts paid to the named individuals under the bonus plans in their respective employment agreements, and a special bonus awarded in connection with the resolution of |
Overview of Executive Employment Agreements and Payments upon Termination or Change of Control
Employment Agreement with Francis J. McCaney.Dr. Dolev Rafaeli
On October 31,March 30, 2018, the Company executed an employment agreement with Dr. Rafaeli. The term of the employment agreement commenced on April 10, 2018 until the third anniversary of the closing under the Accelmed-led investment, which term is automatically renewed for one year unless either party provides 60 days' notice prior to the end of the then current term. Dr. Rafaeli's employment with the Company would have terminated if the Accelmed-led investment had terminated prior to closing for any reason.
Dr. Rafaeli's base salary is $400 thousand per year, and he is entitled to bonus compensation based upon the achievement of earnings targets. Dr. Rafaeli was awarded stock options under the 2016 we entered intoEquity Incentive Plan equal to 7.5% of the Company's equity on a fully diluted basis as of immediately following the closing of the Accelmed-led investment. The options were awarded as follows: (i) stock options exercisable for 1,557,628 shares of the Company's common stock were granted on March 30, 2018, at an exercise price of $1.12; and (ii) the balance of the stock options were awarded upon approval by the Company's stockholders of the Accelmed-led investment and the transactions contemplated thereby at the special meeting of stockholders, and the exercise price was equal to the closing trading price of the Company's shares of common stock on Nasdaq on the day of the special meeting. The shares of common stock purchasable upon exercise of the stock options are subject to certain transferability restrictions under the employment agreement and fully vest upon a change of control. The employment agreement also contains provisions for fringe benefits, reimbursement of expenses, nomination for election to the Board,
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indemnification, vacation, confidentiality, assignment of certain inventions and other intellectual property, covenant not to compete and payments of a lump sum payment equal to base salary over the initial term upon termination, depending upon the type of termination.
Employment Agreement with Francis J. McCaney, our PresidentMatthew C. Hill
On May 15, 2018, Matthew Hill began employment as the Company's Chief Financial Officer. The Company and Mr. Hill executed an employment agreement dated May 15, 2018, in connection with the appointment to the Chief Executive Officer.Financial Officer position. Under the terms of the agreement, Mr. McCaney will receive a base salary of $375,000 and will be eligible to receive a bonus of up to 50% of his base salary per annum, starting for fiscal year 2017, based on achievement of specified milestones, as determined by our Board based upon annual budgets approved by our Board from time to time, provided that the cash bonus for 2016 shall be prorated based upon the portion of such fiscal year during which Mr. McCaney was employed pursuant to the agreement.
The following table includes certain information with respect to the value of all unexercised options and unvested shares of restricted stock previously awarded to the executive officers named above at the fiscal year end, December 31, 2019.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Francis J. McCaney | - | 108,500 | 201,500 | 2.75 | 10/31/2026 | 0 | 0 | N/A | N/A |
| Christina L. Allgeier | 2,500 | 17,500 | 0 | 3.75 | 6/7/2026 | 0 | 0 | N/A | N/A |
| (1) |
| Options granted |
Director Compensation
$70,000 base compensation;
$80,000 base compensation for serving as a director, pro-rated to the date they join the Board of Directors, and an annual grant of stock options to purchase up to 15,000 shares of common stock, which grant is pro-rated to the first day of the quarter during which they join the Board of Directors. In addition, our Chairman of the Board;
$10,000 for the Chairman of the Compensation/Nominating and Governance Committee;
$20,000 for the Chairman of the Audit Committee;
$5,000 for membership on each committee (not to be paid to the Chair of the committees); and
new independent Board receives an annual feemembers shall receive a one-time grant of $50,000 and$20,000 in the chairmanform of each of our audit committee, ourrestricted stock units.
Except for the Chairman whose company rules prevent accepting equity, base compensation committee and our nominating and corporate governance committee receives an annual fee of $15,000, $10,000 and $10,000, respectively. Committee members who are not chairs of each of our audit committee, our compensation committee and our nominating and corporate governance committee receive, annual fees of $6,000, $5,000 and $5,000, respectively,is to be paid generally no more than 50% in cash, with no director to receive more than $50,000 in cash. The non-cash payments beingwill be in the form of restricted stock units vesting equally in quarterly tranches over 12 months. These payments to non-employee directors will be made on a meeting-attended basis. As our employee, Francis McCaney received no compensation for his services as a director. each quarter in advance.
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The table below sets forth our non-employee directors'directors’ compensation throughfor the year ended December 31, 2016.2019.
Name | | | Fees Earned ($) | | | Stock Awards ($)(3) | | | Total ($) |
Uri Geiger(1) | | | — | | | — | | | — |
David N. Gill(2) | | | 50,000 | | | 45,000 | | | 95,000 |
Samuel E. Navarro | | | 35,000 | | | 35,000 | | | 70,000 |
Samuel Rubinstein | | | 45,000 | | | 35,000 | | | 80,000 |
Nachum Shamir | | | 40,000 | | | 40,000 | | | 80,000 |
LuAnn Via | | | 40,000 | | | 35,000 | | | 75,000 |
Name | Fees Earned ($) | Stock Awards ($) (1) | All Other Compensation ($) (2) | Total ($) | ||||||||||||
| Jeffrey F. O'Donnell, Sr. | 73,750 | 21,165 | 120,000 | 214,915 | ||||||||||||
| Samuel E. Navarro | 38,750 | 21,165 | 120,000 | 179,915 | ||||||||||||
| David K. Stone | 52,250 | 21,165 | 0 | 73,415 | ||||||||||||
| Kathryn Swintek | 56,250 | 21,165 | 0 | 77,415 | ||||||||||||
| LuAnn Via | 46,250 | 21,165 | 0 | 67,415 | ||||||||||||
| R. Rox Anderson (3) | 41,000 | 21,165 | 0 | 62,165 | ||||||||||||
| (1) |
| (2) | Resigned from the Board on May 22, 2020. |
| (3) | These amounts |
Limitation on Directors' Liabilities; Indemnification of Officers and Directors
Our Fifth Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) and bylaws designate the relative duties and responsibilities of our officers, establish procedures for actions by directors and stockholders and other items. Our Certificate of Incorporation and bylaws also contain extensive indemnification provisions, which will permit us to indemnify our officers and directors to the maximum extent provided by Delaware law. Pursuant to our Certificate of Incorporation and under Delaware law, our directors are not liable to us or our stockholders for monetary damages for breach of fiduciary duty, except for (i) any breach of the director's duty of loyalty; (ii) acts for omissions not in good faith or which involve intentional misconduct or a knowing violation of law; breach of duty with respect to dividends and other distributions; or (iv) any transaction from which the director derived an improper personal benefit.
Pursuant to the Company’s previously executed Securities Purchase Agreement with Accelmed Growth Partners, L.P. and the Company’s indemnification agreement with Dr. Geiger, the Company has reimbursed or paid directly for each of Accelmed and Dr. Geiger for actual out-of-pocket legal expenses incurred in connection with the Company’s successfully settled litigation with Ra Medical (Strata Skin Sciences, Inc. v. Ra Medical Systems, Inc., Court of Common Pleas, Montgomery Cty., PA, No. 201821421; Ra Medical Systems, Inc. v. Strata Skin Sciences, Inc., Uri Geiger, and Accelmed Growth Partners, L.P., U.S. District Court for the Southern District of California, No. 19-cv-0920 (AJB/MSB).). These lawsuits have been settled with prejudice at no cost to the Company, Dr. Geiger, or Accelmed. For more information regarding this litigation, see Part I, Item 3. Legal Proceedings of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Current Report on Form 8-K filed on August 10, 2020.
Directors' and Officers' Liability Insurance
We have obtained directors' and officers' liability insurance, which expires on May 29, 2021. We are required under our indemnification agreements to maintain such insurance for us and members of our Board of Directors.
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Related PersonParty Transactions
On June 22, 2015, weMarch 30, 2018, the Company entered into a securitiesstock purchase agreement (the “Accelmed Purchase Agreement”) with the Purchasers, including certain funds managed by Sabby Management, LLC and Broadfin Capital LLC, in connection with a private placement. We sold $10.0Accelmed, pursuant to which Accelmed agreed to invest $13.0 million aggregate principal amount of Notes bearing interest at 9% per year, with a maturity dateto purchase, upon closing, 12,037,037 shares of the earlier of 30 days after we obtain stockholder approval of stock issuances under the Debentures and the Warrants or November 30, 2015. The Purchasers of the Notes were issued Warrants to purchase an aggregate of 3.0 million shares of common stock, having an exercise price of $3.75 per share. We also issued $32.5 million aggregate principal amount of Debentures that, subject to certain ownership limitations and stockholder approval conditions, will be convertible into 43,333,334 shares ofCompany's common stock at a price per share of $1.08. The Company may incur additional expenses, or Accelmed may receive additional shares in the event of certain contingencies. The Company is required to reimburse Accelmed for its legal, consulting, due diligence and certain costs related to the proposed transaction, including the reasonable legal fees, disbursements and related charges of Accelmed's counsel in an initial conversion priceaggregate amount not to exceed $400,000 (or up to $500,000 in the event of $3.75 per share. The Debentures bear interestcertain contingencies, and subject to no cap in the event the Company's stockholders do not approve the transaction) at the rateearliest of 2.25% per year, and, unless previously converted, will mature on(i) the five-year anniversaryclosing, or (ii) the termination of Accelmed Purchase Agreement for any reason other than by reason of a breach of the date of issuance. Our obligationsAccelmed Purchase Agreement by Accelmed.
Upon closing under the Debt Securities are secured by a first priority lien on all of our assets, except for a second lien on our intellectual property. As a conditionAccelmed Purchase Agreement, Accelmed was the largest shareholder of the new term note facility,Company.
The Accelmed Purchase Agreement also requires that the Debentures from bothCompany indemnify Accelmed for certain items as defined in the 2014 and 2015 financings were amended. The Debentures holders' first priority lien was subordinatedAccelmed Purchase Agreement, which may result in the issuance of additional shares of the Company's common stock to the new term note facility. Additionally, as a condition ofInvestors in the term note facility,event the maturity date of both Debentures was extended to June 30, 2021. Effective uponCompany incurs additional cash obligations above the datethresholds contained in the Stockholder Approval, on September 30, 2015, we repriced outstanding Warrants held by certain investors to reduce the exercise price to $3.75 per share.
In connection with the foregoing June 22, 2015 financing transaction among usAccelmed investment, the Company entered into two separate stock purchase agreements on March 30, 2018, each for $1.0 million with two then current stockholders, Broadfin and Sabby. Upon closing of these transactions with the one hand andclosing under the Purchasers represented byAccelmed Purchase Agreement, each of Sabby Management LLC and Broadfin Capital LLC on the other hand,, and also in connection with a July 2014 financing which resulted in the issuance of 4% Senior Secured Convertible Debentures, on June 6, 2017, we entered into a Securities Exchange Agreement (the "Agreement") with the holders of its 2.25% Senior Series A Secured Convertible Debentures due June 30, 2021 and 4% Senior Secured Convertible Debentures due July 30, 2021, pursuant to which the holders have agreed to exchange all of such debentures with an aggregate principal amount of approximately $40.6 million into 40,617received 925,926 shares of newly created Series C Convertible Preferred Stock. In addition to eliminating approximately $40.6 million of senior secured debt, the exchange will also eliminate our obligation to pay approximately $4.0 million of interest payments over the next four years. The closing of the exchange, and the elimination of such senior debt, will occur within two business days of the approval of our stockholders of the exchange, including the issuance of the shares of common stock issuable upon conversion of the shares of preferred stock, subject to customary closing conditions. Our Series C Convertible Preferred Stock to be issued pursuant to the Agreement will have the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A to the Agreement.
The foregoing descriptions of the Agreement and the Certificate of Designations are subject to, and qualified in their entirety by such documents, which have been previously submitted as Exhibit 10.1 to our Current Report on Form 8-K filed on June 6, 2017, which is incorporated by reference as if fully set forth herein. We undertake to provide, without charge, to each person to whom this proxy statement is delivered, upon written or oral request of said person each by first class mail or other equal prompt means within one business day of the receipt of said request, a copy of the Agreement and the Certificate Designations. Such requests may be directed to Corporate Secretary, STRATA Skin Sciences, Inc., 100 Lakeside Drive, Suite 100, Horsham, Pennsylvania, 19044; telephone: (215) 619-3200.
Pursuant to the Retained Risk Provisions, each of Gohan Investments and Dr. Rafaeli received an additional 5,814 shares.
In connection with the litigation with RA Medical, the Company agreed to indemnify Uri Geiger and Accelmed Growth Partners, L.P. for their out of pocket costs. During the year ended December 31, 2017.2019, the Company has reimbursed Accelmed Growth Partners, L.P. approximately $25. The directors were each paid an up-front fee of $40,000 for advice and services rendered priorlitigation was settled without cost to the date of the agreement, a retainer of $10,000 per month, commencing November 10, 2015 and continuing on the tenth day of each month through the expiration of the agreement, and reimbursement of pre-approved, out-of-pocket expenses.Company, Dr. Geiger, or Accelmed.
Review, Approval or Ratification of Transactions with Related Persons
In accordance with its charter, the audit committeeAudit Committee is responsible for reviewing all "related“related party transactions"transactions” (defined as such transactions required to be disclosed pursuant to Item 404 of Regulation S-K) on an on-going basis. All such related party transactions must be approved by the Audit Committee.
Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-Average Exercise Price of Outstanding Options | Number of Securities Remaining Available Under Equity Compensation Plans (excluding securities reflected in column (A)) | ||||||||||
| (A) | (B) | (C) | ||||||||||
| Equity compensation plans | ||||||||||||
| approved by security holders | 900,139 | $ | 5.11 | 1,658,878 | ||||||||
| Equity compensation plans not approved by security holders | - | - | - | |||||||||
| Total | 900,139 | $ | 5.11 | 1,658,878 | ||||||||
There are sevensix nominees for the sevensix director positions presently authorized by our Board of Directors and our Bylaws. The names of the persons who are nominees for director and their positions and offices with us are set forth in the table below. Each director to be elected will hold office until the 20182021 Annual Meeting of Stockholders and until his or her successor is elected and has qualified, or until such director's earlier death, resignation or removal. Although there is no formal policy, we encourage our directors to attend our annual meetings.meetings, and each director was in attendance at the 2019 annual meeting.
Directors are elected by a plurality of the votes present in person or represented by proxy and entitled to vote at the Annual Meeting. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the sevensix nominees named below. In the event that any nominee should be unavailable for election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute nominee as the Board of Directors may propose. Each of the nominees listed below has been nominated for and has agreed to stand for election and we have no reason to believe that any nominee will be unable to serve.
The following is a brief biography of each nominee for director:
Name | | Position | | | Age | |
Dr. Uri Geiger | | | Chairman of the Board | | 52 | |
Dr. Dolev Rafaeli | | | President, Chief Executive Officer and Director | | 56 | |
Samuel E. Navarro | | Director | | 64 | ||
Nachum Shamir | | Director | | 66 | ||
Samuel Rubinstein | | Director | | 81 | ||
LuAnn Via | | Director | | 67 |
Dr. Uri GeigerJeffrey F. O'Donnell, Sr. was appointed to serve on the Board of Directors in January 2014 and appointed as became our Chairman of the Board of Directors of the Company effective on May 29, 2018. Dr. Geiger is a co-founder and Managing Partner of Accelmed, a private equity investment firm he co-founded in March 2014. Mr. O'Donnell is currently President and Chief Executive Officer of Trice Medical, an emerging growth2009 focused on medical device company developing optical needles used by orthopedic surgeonscompanies. Prior to diagnose soft tissue damagefounding Accelmed, Dr. Geiger served as the CEO of joints. In 2008, Mr. O'Donnell started Embrella Cardiovascular, Inc.Exalenz Bioscience Ltd., a medical device startup company. In July 2009, Mr. O'Donnelltechnology company, from May 2006 until December 2008. Prior to that, Dr. Geiger co-founded and was named President and Chief Executive Officerthe CEO of GalayOr Networks, a developer of optical components from 2001 until 2003. Dr. Geiger was also the company,founding partner of Dragon Variation Fund in 2000, one of Israel’s first hedge funds, which was later sold to Edwards Lifesciences CorporationMigdal in March 2011. From 1999 through 2009, Mr. O'Donnell2007. Dr. Geiger worked on Wall Street during the 1990s, where he gained a broad understanding of and significant experience in capital markets. Dr. Geiger was formerly an adjunct professor at Tel Aviv University’s Recanati School of Business where he lectured on private equity and venture capital and authored the books “Startup Companies and Venture Capital” and “From Concept to Wall Street.” Dr. Geiger served as President, Chief Executive Officer and a Directorthe Chairman of PhotoMedex, Inc., a public medical device company listed on the NASDAQ Stock Market. From 1995 through 2000, Mr. O'Donnell was at Cardiovascular Dynamics, Inc., a company focused in interventional cardiology, where he served in a number of senior executive positions, including President and Chief Operating Officer and Chairman and Chief Executive Officer. Cardiovascular Dynamics became Radiance Medical Systems, which was purchased by Endologix, Inc. in 2000. Mr. O'Donnell remained on the Board of Directors until 2012. Currently, Mr. O'Donnell sits on the Board of Directors of BioSig Technologies.Cogentix Medical from November 2016 until its sale in April 2018 and he is currently on the board of a number of public and private medical device companies. We believe Mr. O'Donnell'sDr. Geiger's qualifications to serve on theour Board of Directors includeincludes his extensive entrepreneurial, management and investment know-how having created and built many successful medical device enterprises.
Dr. Dolev Rafaeli was appointed the Company’s Interim Chief Executive Officer effective April 10, 2018 and became the Company’s Chief Executive Officer effective on May 29, 2018. Dr. Rafaeli has over 25 years of experience in the healthcare, industry; his traditional corporate background with emerging growth company experience;medical device, consumer and his past experienceindustrial services fields. He served as a president, chief executive officer or director of several other companies.
Samuel Navarro has served as a member of the Board of Directors since March 2014.2014 and services as a member of the Audit Committee. Since October 2008, Mr. Navarro has been Managing Partner at Gravitas Healthcare, LLC, which
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provides strategic advisory services to medical technology companies. From September 2005 to October 2008, Mr. Navarro was Managing Director of Cowen & Co. in New York City and head of their Medical Technology Investment Banking initiatives, leading a team of senior people, and was responsible for building the franchise across all product categories, including M&A/Advisory and financing services and products. From 2001 to 2005, Mr. Navarro was at The Galleon Group running the Galleon Healthcare Fund as a Senior Portfolio Manager. He was responsible for all health care investments across all sectors, including pharmaceutical/biopharmaceutical industries, medical technology and hospital supplies, and all areas of healthcare services. From July 1998 to February 2001, Mr. Navarro was Global Head of Healthcare Investment Banking at ING Barings. Mr. Navarro has also served or serves on the boards of Arstasis, BioSig Technologies, Derma Sciences, MicroTherapeutics, Jomed, PhotoMedex and Pixelux Entertainment. Mr. Navarro received an MBA in Finance from The Wharton School at the University of Pennsylvania, a Master of Science in Engineering from Stanford University and a Bachelor of Science in Engineering from The University of Texas at Austin. We believe Mr. Navarro's qualifications to serve on the Board of Directors include his wealth of knowledge and industry expertise in finance, investment banking, mergers and acquisitions, equity research and investment management experience in the medical device industry.
Shmuel (Samuel) Rubinstein David K. Stone has served asbecame a memberdirector of the Board of Directors since December 2011Company effective May 29, 2018 and served as Chairman of our Board of Directors from June 2013 to November 2013. In 2006, Mr. Stone founded Liberty Tree Advisors, LLC, a life sciences advisory firm where he served as a Managing Director until January 2017. Prior to this, from 2000 to 2006 Mr. Stone was a Managing Director and Partner at Flagship Ventures, a venture capital fund focused in the life sciences industry. From 1989 to 1999, Mr. Stone led the biotechnology equity research team at Cowen & Company. Mr. Stone is currentlyservices on the Board of Directors of PAKA Pulmonary Pharmaceuticals. He has also served on the Board of Directors of Seahorse Bioscience, where he was Chairman of the Audit Committee from 2001 to November 2015 when Seahorse Bioscience was acquired by Agilent. He servedand on the BoardCompensation/Nominating and Governance Committee. Mr. Rubinstein has served for over 20 years as the Chief Executive Officer and General Manager of DirectorsTaro Pharmaceuticals Industries, a NASDAQ traded dermatology company. Under his management, Taro grew to become a multinational company with over 1000 employees worldwide and turnover of Oscient Pharmaceuticals, whereclose to $450 million. In 2003, Mr. Rubinstein received the Exceptional Industrialist award. During these years he servedalso finished an International Marketing Course at the Wharton School of the University of Pennsylvania. Mr. Rubinstein serves as Chairman from 2005a board member in Clal Biotechnology Industries, Exalenz, Medison Biotech, Trima Pharma, Kamada, and as consultant to 2009. In March 2017, Mr. Stone was sanctioned by FINRA,Marcum and Sol-Gel Pharma. Milky is also a director at the Financial Industry RegulatoryMedical Research Fund near The Tel Aviv Sourasky Medical Center and The National Authority for failure to supervise a broker in a private securities transaction. The sanction consists of a two-month suspension from associating with any FINRA member firm in a principal capacity and a minimal fine.Yiddish Culture. We believe Mr. Stone'sRubinstein's qualifications to serve on the Board of Directors include his extensivewealth of knowledge and industry expertise in finance, investment banking, mergers and acquisitions, equity research and investment management experience in the dermatology industry.
Nachum (Homi) Shamir became a director of the Company effective May 29, 2018 and chairs our Compensation/Nominating and Governance Committee. Mr. Shamir has been the President and Chief Executive Officer of Luminex Corporation, which develops, manufactures, and markets biological testing technologies in the clinical diagnostic and life science industries, since October 2014. Mr. Shamir previously served, from 2006 to 2014, as President and CEO of Given Imaging, a developer, manufacturer, and marketer of diagnostic products for the visualization and detection of disorders of the gastrointestinal tract. Prior to joining Given Imaging, Mr. Shamir was Corporate Vice President of Eastman Kodak Company and President of Eastman Kodak´s Transaction and Industrial Solutions Group. Additionally, he served over 10 years at Scitex Corporation in positions of increasing responsibility, including President and CEO from 2003 to 2004. Prior to Scitex Corporation, Mr. Shamir held senior management positions at various international companies mainly in the Asia Pacific regions. Mr. Shamir currently serve as a biopharmaceutical industry research analystdirector in Luminex Corp (LMNX) and his venture capital work with numerous pharmaceuticalpreviously served in Given Imaging (GIVN), Cogentix Medical (CGNT) and medical device companies.
LuAnn Via has served as a member of the Board of Directors since April 2012.2012, and is the Chair of the Audit Committee. She also services as a member of the Compensation/Nominating and Governance Committee. From November 2012 through January 2017, Ms. Via was President and CEO of Christopher & Banks Corporation, a specialty retailer of women's clothes; a company operating more than 500 retail stores. Prior to this, Ms. Via served as the President and Chief Executive Officer of Payless ShoeSource, a unit of Collective Brands, Inc., from July 2008 to October 2012 when the company was acquired and taken private. Before joining Payless ShoeSource, from January 2006 Ms. Via served as group divisional President of Lane Bryant and Cacique store chains and as President of Catherines stores, both divisions of Charming Shoppes, Inc. Prior to this, and for more than 20 years, Ms. Via held several leadership positions with a number of top retailers. Ms. Via is a member of Women Corporate Directors and The Committee of 200, a business women's leadership group. We believe Ms. Via's qualifications to serve on the Board of Directors include her experience in retail sales and manufacturing and her extensive experience as a CEO and senior executive of several publicly-listed companies.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"“FOR” ALL OF THE NOMINEES IN PROPOSAL NO. 1.
AS THE PROPOSED EXCHANGE OF OUR OUTSTANDING DEBENTURESEXCLUSIVE FORUM FOR CERTAIN LEGAL ACTIONS
The Board believes that the addition of this exclusive forum provision is in the best interest of the Company and its stockholders. This proposal should be read in conjunction with and is qualified in its entirety by reference to the text of the proposed amendment attached to this proxy statement as Appendix A
Reasons for the Proposal
In light of the benefits of an exclusive forum provision, the Board has determined that it is advisable and in the best interests of the Company and its stockholders to amend the Charter to provide for the exclusive forum provision.
Currently, plaintiffs seeking to bring claims against the Company for matters to which the holders have agreedexclusive forum provision relates could use the Company's diverse operations to exchangebring duplicative suits in multiple jurisdictions or to choose a forum state that may not apply Delaware law, the Company's state of incorporation, to the Company's internal affairs in the same manner as the Court of Chancery of the State of Delaware would do so. The proposed provision is intended to avoid subjecting the Company to the expense and other costs of duplicative lawsuits in multiple jurisdictions. While an exclusive forum provision may limit a stockholder's ability to bring a claim in a judicial forum that the stockholder finds favorable for disputes within the scope described above, the Board believes that the ability to require such actions to be brought in a single forum that is expert in applying the law of the Company's state of incorporation provides numerous efficiencies and benefits to the Company and its stockholders that outweigh those considerations.
Delaware offers a specialized Court of Chancery of the State of Delaware to address corporate law matters, with streamlined procedures and processes which help provide relatively quick decisions. This accelerated schedule can minimize the time, cost and uncertainty of litigation for all parties. The Court of such debenturesChancery of the State of Delaware has developed considerable expertise with an aggregate principal amountrespect to corporate law issues, as well as a substantial and influential body of approximately $40.6 million into 40,617 sharescase law construing Delaware's corporate law and long-standing precedent regarding corporate governance. This provides stockholders and the Company with more predictability regarding the outcome of newly created Series C Convertible Preferred Stock ("Preferred Stock").intra-corporate disputes. In addition, to eliminating approximately $40.6 millionthis provision would promote judicial fairness and avoid conflicting results, as well as make the Company's defense of senior secured debt,applicable claims more focused and economical, such as by avoiding duplicative discovery. For these reasons, the exchange will also eliminate our obligation to pay approximately $4.0 millionBoard believes that providing for the Court of interest payments over the next four years.
No Appraisal Rights
Under Delaware law, the Company's stockholders are not entitled to appraisal rights with respect to the proposed amendment to the Charter to add the exclusive forum provision, and the elimination ofCompany will not independently provide stockholders with any such senior debt, will occur within two business days of the approval of our stockholders of the exchange, including the issuance transaction of up to 15,098,981 shares of common stock issuable upon conversion of the shares of Preferred Stock, subject to customary closing conditions. rights.
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Vote Required and Recommendation
The approval of Preferred Stock to be issued pursuantthe amendment designating the Court of Chancery of the State of Delaware, to the Agreement will havefullest extent permitted by law, as the rights, preferencessole and privileges set forthexclusive forum for specified legal actions unless otherwise consented to by the Company, as reflected in the Certificate of Designation (the "Certificate"), which we describe below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE“FOR” PROPOSAL TO APPROVE THE ISSUANCE OF UP TO AN AGGREGATE OF 15,098,981 SHARES OF COMMON STOCK UPON CONVERSION OF OUR PREFERRED STOCK TO BE ISSUED UPON THE PROPOSED EXCHANGE OF OUR OUTSTANDING DEBENTURES.
ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
As we view the optimal therapeutic dosing technology as a key factordescribe in driving such growth. Achievement of this objective requires that we closely monitor our expenses, including compensation expenses. Accordingly, we seek to target our cash compensation levels at or below market and pay a significant portion of total compensation in the form of stock options.
“RESOLVED, that the compensation paid to ourthe company’s named executive officers, as disclosed pursuant to Item 402the compensation disclosure rules of Regulation S-K,the Securities and Exchange Commission, including the narrative disclosure regarding executive compensation, the compensation tables and narrative discussion,any related material disclosed in this proxy statement, is hereby APPROVED.”
Approval of Proposal No. 3 requires the frequencyaffirmative vote of a majority of the shares present or represented by proxy and voting on executive compensation remains at every three years, our next vote on executive compensation will occur in connection with our 2020the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"“FOR” PROPOSAL NO. 3.
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The audit committeeAudit Committee of the Board of Directors has selected EisnerAmperMarcum LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20172020 and has further directed that the Board of Directors submit the selection of EisnerAmperMarcum LLP as our independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. EisnerAmper LLP audited our financial statements in 2015 and 2016.
Stockholder ratification of the selection of EisnerAmperMarcum LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise. However, the Board of Directors, on behalf of the audit committee,Audit Committee, is submitting the selection of EisnerAmperMarcum LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the audit committeeAudit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the audit committeeAudit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of us and our stockholders.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"“FOR” PROPOSAL NO. 5.4.
Principal Accountant Fees
The following is a summary oftable shows the aggregate fees billed topaid or accrued by us for the audit and other services provided by EisnerAmperMarcum LLP for professional services rendered during the fiscal years ended December 31, 20162019 and December 31, 2015:2018:
| 2016 | 2015 | |||||||
Audit Fees (1) | $ | 370,500 | $ | 411,939 | ||||
Audit-Related Fees (2) | - | - | ||||||
Tax Fees (3) | 56,500 | 70,000 | ||||||
All Other Fees (4) | - | - | ||||||
| Total | $ | 427,000 | $ | 481,939 | ||||
| | | 2019 | | | 2018 | |
Audit Fees(1) | | | $266,500 | | | $579,000 |
Audit-Related Fees(2) | | | — | | | 125,000 |
Tax Fees(3) | | | — | | | — |
All Other Fees(4) | | | — | | | — |
Total | | | $266,500 | | | $704,000 |
(1) | Consists of fees billed for the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements. These services were billed in 2019 following Marcum’s engagement in 2019. |
(2) | Consists of assurance and related services that are reasonably related to the performance of the audit and reviews of our financial statements and are not included in |
(3) | Consists of all tax related services. |
(4) | There were no other fees billed by |
Pre-Approval of Audit and Non-Audit Services
Consistent with the SEC's rules, the audit committeeAudit Committee charter requires that the audit committeeAudit Committee review and pre-approve all audit services and permitted non-audit services provided by the independent auditors to us or any of our subsidiaries. The audit committeeAudit Committee may delegate pre-approval authority to a member of the audit committeeAudit Committee and if it does, the decisions of that member must be presented to the full audit committeeAudit Committee at its next scheduled meeting.
The audit committee'sAudit Committee's pre-approval policy provides as follows:
All fees to our independent accounting firm were approved by the audit committee.
Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"“FOR” PROPOSAL NO.6.NO. 5
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as "householding,"“householding,” potentially means extra convenience for stockholders and cost savings for companies.
A single proxy statement may be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that it will be "householding"“householding” communications to your address, "householding"“householding” will continue until you are notified otherwise or until you notify your broker or the Company that you no longer wish to participate in "householding."“householding.” If, at any time, you no longer wish to participate in "householding"“householding” and would prefer to receive a separate proxy statement and annual report in the future you may notify your broker or direct your written request to: STRATA Skin Sciences, Inc., 100 Lakeside5 Walnut Grove Drive, Suite 100,140, Horsham, Pennsylvania 19044, Attention: Secretary. Stockholders who currently receive multiple copies of the proxy statement at their address and would like to request "householding"“householding” of their communications should contact their broker. In addition, we will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the annual report and proxy statement to a stockholder at a shared address to which a single copy of the documents was delivered.
The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.
| | | By | | | Order of the Board of Directors | | | ||
| | | | /s/ Dr. Dolev Rafaeli | | | ||||
| | | | Dr. Dolev Rafaeli | | | ||||
| | | | | President and Chief Executive Officer | | |
November 27, 2020
A copy of our Annual Report on Form 10-K for the year ended December 31, 20162019 is available without charge upon written request to: STRATA Skin Sciences, Inc., 100 Lakeside5 Walnut Grove Drive, Suite 100,140, Horsham, Pennsylvania 19044, Attention: Secretary.
Appendix A
1. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for:
(a) any derivative action or proceeding brought on behalf of the corporation;
(b) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or agent of the corporation to the corporation or the corporation's stockholders;
(c) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the certificate of incorporation or the by-laws of the corporation; or
(d) any action asserting a claim governed by the internal affairs doctrine;
in each case, subject to said court having personal jurisdiction over the indispensable parties named as defendants therein. If any action the subject matter of which is within the scope of this Section 1 of Article XI is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce this Section 1 of Article XI (an “Enforcement Action”), and (y) having service of process made upon such stockholder in any such Enforcement Action by service upon such stockholder's counsel in the Foreign Action as agent for such stockholder. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 1 of Article XI.
2. Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 2 of Article XI.
