UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K/A

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

Under the Securities Exchange Act of 1934

 

SOL-GEL TECHNOLOGIES LTD.

(Translation of registrant’s name into English)

For the month of May 2022

7 Golda Meir Street

Ness Ziona 7403650, Israel

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F ☒           Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K

Attached hereto and incorporated herein by reference is the following exhibit:

Exhibits 99.1 is hereby incorporated by reference into the Company's Registration Statement on Form S-8 (Registration No. 333-223915) and its Registration Statements on Form F-3 (Registration Nos. 333-230564 and 333-264190).

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

---

Exhibit 99.1

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 23, 2022

________________________

Dear Sol-Gel Technologies Ltd. Shareholders:

 

We cordially invite you to attend an Annual Meeting of Shareholders (the “Meeting”) of Sol-Gel Technologies Ltd. (the “Company”) to be held at 4:00 p.m. (Israel time) on Thursday, June 23, 2022, at our offices at 7 Golda Meir St., Weizmann Science Park, Ness Ziona, Israel.

 

The Meeting is being called for the following purposes:

 

In addition, shareholders at the Meeting will have an opportunity to review and ask questions regarding the financial statements of the Company for the fiscal year ended December 31, 2021.

 

The Company is currently unaware of any other matters that may be raised at the Meeting. Should any other matters be properly raised at the Meeting, the persons designated as proxies shall vote according to their own judgment on those matters.

Our Board of Directors unanimously recommends that you vote in favor of each of the above proposals, which are described in the attached Proxy Statement.

Shareholders of record at the close of business on Wednesday May 17, 2022 are entitled to notice of and to vote at the Meeting.

 

Whether or not you plan to attend the Meeting, it is important that your shares be represented and voted at the Meeting. Accordingly, after reading the Notice of Annual Meeting of Shareholders and attached Proxy Statement, please mark, date, sign and mail the enclosed proxy or voting instruction form as promptly as possible. If voting by mail, the proxy must be received by Broadridge Financial Solutions, Inc. or at our registered office at least 48 hours (or such shorter period as the Chairman of the Meeting may determine) prior to the appointed time of the Meeting to be validly included in the tally of ordinary shares voted at the Meeting. An earlier deadline may apply to receipt of your voting instruction form, if indicated therein. Detailed proxy voting instructions are provided both in the Proxy Statement and on the enclosed proxy card and voting instruction form. Proxies may also be executed electronically via www.proxyvote.com by utilizing the control number sent to you. Shareholders who hold their shares in street name may be able to utilize the control number sent to them to submit their voting instruction to their brokers, trustees or nominees by other means, if so indicated on their voting instruction form. An electronic copy of the enclosed proxy materials will also be available for viewing at http://ir.sol-gel.com/.

Sol-Gel Technologies Ltd.

SOL-GEL TECHNOLOGIES LTD.

7 Golda Meir St., Weizmann Science Park, Ness Ziona, 7403650, Israel

+972-8-931-3433

__________________________

PROXY STATEMENT

__________________________

 

ANNUAL MEETING OF SHAREHOLDERS

 

This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board”) of Sol-Gel Technologies Ltd. (“Sol-Gel” or the “Company”) to be voted at an Annual Meeting of Shareholders (the “Meeting”) and at any adjournment thereof, pursuant to the accompanying Notice of Annual Meeting of Shareholders. The Meeting will be held at 4:00 p.m. (Israel time) on Thursday, June 23, 2022, at our offices at 7 Golda Meir St., Weizmann Science Park, Ness Ziona, Israel.

 

This Proxy Statement, the attached Notice of Annual Meeting of Shareholders and the enclosed proxy card or voting instruction card are being made available on or about May 19, 2022 to holders of Sol-Gel ordinary shares. 

 

You are entitled to receive notice of, and to vote at, the Meeting, if you hold ordinary shares as of the close of business on Wednesday, May 17, 2022, the record date for the Meeting. You can vote your shares by attending the Meeting or by following the instructions under “How You Can Vote” below. Our Board urges you to vote your shares so that they will be counted at the Meeting or at any postponements or adjournments of the Meeting.

 

Agenda Items

 

The Meeting is being called for the following purposes:

In addition, shareholders at the Meeting will have an opportunity to review and ask questions regarding the financial statements of the Company for the fiscal year ended December 31, 2021.

The Company is currently unaware of any other matters that will come before the Meeting. Should any other matters be properly presented at the Meeting, the persons designated as proxies shall vote according to their own judgment on those matters.

Board Recommendation

 

Our Board unanimously recommends that you vote ”FOR” each of the above proposals.

Quorum

 

Vote Required for Approval of the Proposals 

 

The affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (excluding abstentions) is necessary for the approval of each of the Proposals 1 and 3. Apart from for the purpose of determining a quorum, broker non-votes will not be counted as present and are not entitled to vote.

 

 

The approval of Proposal 2 requires the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the voting power represented at the Meeting in person or by proxy and voting thereon, excluding abstentions.

 

A controlling shareholder and a shareholder that has a personal interest are qualified to participate in the vote on each of the proposals; however, the vote of such shareholders may not be counted towards the majority requirement described in the first bullet point above and will not count towards the 2% threshold described in the second bullet point above.

 

 

How You Can Vote

 

You can vote your shares by attending the Meeting or by completing and signing a proxy card or voting instruction form. If you are a shareholder of record, that is, your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, these proxy materials are being sent directly to you. The form of proxy card that has been sent to you can be completed, signed and returned in the envelope that was enclosed with it, or executed electronically via www.proxyvote.com by utilizing the control number sent to you. This provides the primary means for authorizing the voting of your ordinary shares without attending the Meeting in person. You may change your mind and cancel your proxy card by sending us written notice, by signing and returning a proxy card with a later date, or by voting in person or by proxy at the Meeting. We will not be able to count a proxy card unless we receive it at our principal executive offices at 7 Golda Meir St., Weizmann Science Park, Ness Ziona, 7403650, Israel, or Broadridge Financial Solutions, Inc. receives it in the enclosed envelope, not later than 6:59 a.m. Israel time on Thursday, June 23, 2022 (11:59 p.m. Eastern Time on Wednesday, June 22, 2022) or such shorter period prior to the Meeting as the Chairman of the Meeting may determine.

 

If your ordinary shares are held in a brokerage account or by a trustee or nominee, you are considered to be the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you together with a voting instruction form by the broker, trustee or nominee or an agent hired by the broker, trustee or nominee. Please follow the instructions provided by your broker, trustee or nominee to direct them how to vote your shares. Shareholders who hold their shares in street name may be able to utilize the control number appearing on their voting instruction form to submit their voting instruction to their brokers, trustees or nominees by other means, if so indicated on their voting instruction form. All votes should be submitted by 6:59 a.m. Israel time on Thursday, June 23, 2022 (11:59 p.m. Eastern Time on Wednesday, June 22, 2022), or such other deadline as may be indicated on the voting instruction form, in order to be counted towards the tally of ordinary shares voted at the Meeting (unless the Chairman of the Meeting extends that deadline). Alternatively, if you wish to attend the Meeting and vote in person, you must obtain a “legal proxy” from the broker, trustee or nominee that holds your shares, giving you the right to vote the shares at the Meeting.

If you provide specific instructions (by marking a box) with regard to the proposals, your shares will be voted as you instruct. If you sign and return your proxy card without giving specific instructions with respect to a particular proposal, your shares may be voted in favor of the proposals in accordance with the recommendation of the Board. However, if you are a beneficial owner of shares and do not specify how you want to vote on your voting instruction form, your broker will generally not be permitted to instruct the depositary to cast a vote with respect to that proposal (commonly referred to as a “broker non-vote”). In that circumstance, the shares held by you will be included in determining the presence of a quorum at the Meeting, but are not considered “present” for the purpose of voting on the relevant proposal. Such shares have no impact on the outcome of the voting on such proposal. If your shares are held of record by a bank, broker, or other nominee, we urge you to give instructions to your bank, broker, or other nominee as to how your shares should be voted so that you thereby participate in the voting on these important matters. In all cases, you must remember to indicate in writing and/or contact the Company if you are a controlling shareholder or have a personal interest in the approval of Proposals 4, 5 and 6. If you sign and return your proxy card or voting instruction form, the persons named as proxies will vote in their discretion on any other matters that properly come before the Meeting.

Who Can Vote

 

You are entitled to receive notice of the Meeting and to vote at the Meeting if you are a shareholder of record at the close of business on Wednesday, May 17, 2022. You are also entitled to notice of the Meeting and to vote at the Meeting if you held ordinary shares through a bank, broker or other nominee that is one of our shareholders of record at the close of business on Wednesday, May 17, 2022, or which appear in the participant listing of a securities depository on that date.

 

Revocation of a Proxy

 

Shareholders may revoke the authority granted by their execution of proxies at any time before the effective exercise thereof by filing with us a written notice of revocation or duly executed proxy bearing a later date, or by voting in person at the Meeting. Unless otherwise indicated on the form of proxy, shares represented by any proxy in the enclosed form, if the proxy is properly executed and received by the Company at least 48 hours (or such shorter period as the Chairman of the Meeting may determine) prior to the Meeting, will be voted in favor of the proposal and any other matters that may be presented to the Meeting, as described above.

 

Solicitation of Proxies

 

Proxies are being distributed to shareholders on or about Tuesday, May 19, 2022. Certain officers, directors, employees, and agents of the Company, none of whom will receive additional compensation therefor, may solicit proxies by telephone, email, or other personal contact. We will bear the cost for the solicitation of the proxies, including postage, printing, and handling, and will reimburse the reasonable expenses of brokerage firms and others for forwarding material to beneficial owners of shares..

 

Voting Results

 

The final voting results will be tallied by the Company’s Corporate Controller based on the information provided by the Company’s transfer agent or otherwise, and the overall results of the Meeting will be published following the Meeting in a report on Form 6-K that will be furnished to the U.S. Securities and Exchange Commission (the “SEC”).

 

Availability of Proxy Materials

 

Copies of the proxy card, the notice of the Meeting and this Proxy Statement are available at the “Investor Relations” portion of our Company’s website, http://ir.sol-gel.com/. The contents of that website are not a part of this Proxy Statement.

 

PROPOSAL NO. 1

APPOINTMENT OF AUDITORS

 

Under the Israeli Companies Law (the “Companies Law”) and the Company’s Amended and Restated Articles of Association (the “Articles”), the shareholders of the Company are authorized to appoint the Company’s independent auditors. Under the Articles, the Board of Directors or a committee of the Board of Directors, if such determination was delegated to a committee, is authorized to determine the independent auditors’ remuneration. In addition, the Listing Rules of The NASDAQ Stock Market (“Nasdaq”) require that the Company’s audit committee approve the re-appointment and remuneration of the independent auditors.

 

At the Meeting, shareholders will be asked to approve the re-appointment of Kesselman & Kesselman, certified public accountants in Israel and a member of PricewaterhouseCoopers International Limited, as the Company's auditors for the year ending December 31, 2022 and for an additional period until the next annual general meeting. Kesselman & Kesselman has no relationship with the Company or with any affiliate of the Company except to provide audit services and tax consulting services.

 

Information on fees paid to the Company's independent auditors may be found in the Company's Annual Report on Form 20-F filed with the Securities and Exchange Commission.

 

It is proposed that the following resolution be adopted at the Meeting:

 

 “RESOLVED, that Kesselman & Kesselman be, and hereby is, appointed as the independent auditors of the Company for the year 2022 and for an additional period until the next annual general meeting.”

 

The affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (excluding abstentions) is required to adopt the proposed resolution.

The Board of Directors and audit committee recommend that the shareholders vote “FOR” the proposed resolution.

 

 

PROPOSAL NO. 2

 

APPROVAL OF AN AMENDMENT TO THE COMPANY'S ARTICLES OF ASSOCIATION

 

Article 56 of the Articles currently classifies the Company directors into three classes, with the directors of each class serving for staggered three-year terms. Accordingly, only one class of directors currently stands for election at each of the Company’s annual meeting of shareholders, such that shareholders vote on and elect one-third of the Board each year. For the reasons described below, the Board believes that declassifying the Board is in the best interests of the Company and its shareholders. Accordingly, the Board has approved, and recommends that our shareholders approve, amendments to our Articles to declassify the Board and provide for the annual election of directors other than for our external directors whose terms of office are governed by the Israeli Companies Law.

 

The proposed amendments to the Articles 56 to 58 Articles are attached to this proxy statement as Appendix A (marked to show changes from the current Articles).

Historically, the Company has viewed the classified structure of the Board as benefiting shareholders by promoting continuity and stability in the management of the business and affairs of the Company and encouraging directors to take a long-term perspective. Although these may continue to be important benefits, the Board has considered the fact that classified boards may be viewed as having the effect of reducing the accountability of directors to shareholders. The Board also recognizes the benefit of providing shareholders an annual opportunity to express their satisfaction or dissatisfaction with the actions of the members of the Board of Directors. The Board of Directors believes it is important for it to maintain shareholders confidence by demonstrating that it is responsive and accountable to shareholders and committed to strong corporate governance.

If the amendment is adopted, at each annual meeting of shareholders, except in the case of external directors whose terms of office are governed by the Israeli Companies Law, each director shall be elected for a term expiring at the next succeeding annual meeting of shareholders and until such director’s successor shall have been elected.

It is proposed that the following resolution be adopted at the Meeting:

The affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power represented at the Meeting in person or by proxy and voting thereon, excluding abstentions, is required to adopt the proposed resolution.

The Board of Directors recommends that the shareholders vote “FOR” the proposed resolution.

 

PROPOSAL NO. 3

 

RE-ELECTION OF MR. ALON SERI-LEVY MR. MOSHE ARKIN, MR. ITAI ARKIN 

MR. JONATHAN B. SIEGEL AS DIRECTORS 

Currently, the Company's non-external directors are divided into three classes with staggered three-year terms. Each class consists, as nearly equal in number as practicable, of one-third of the total number of directors constituting the entire Board (other than the external directors). The term of one class of directors expires at each annual general meeting, at which each of the successors elected to replace the directors of the class whose term expired at such annual general meeting shall be elected to hold office until the third annual general meeting next succeeding his or her election and until his or her respective successor has been elected and qualified.

The Board of Directors has nominated each of Mr. Alon Seri-Levy, Mr. Moshe Arkin, Mr. Itai Arkin, Ms. Hani Lerman, Mr. Shmuel Ben Zvi, Ms. Yaffa Krindel-Sieradzki and Mr. Jonathan B. Siegal to be re-elected as a director for an additional one-year term until the annual general meeting to be held in 2023. This proposal assumes the approval of the amendment to the Articles to provide that all Company directors will be elected or re-elected every year rather than every three years as proposed in Proposal 2.

 

The Company is not aware of any reason why any of the nominees, if elected, should not be able to serve as a director.

 

Each of Mr. Alon Seri-Levy, Mr. Moshe Arkin, Mr. Itai Arkin, Ms. Hani Lerman, Mr. Shmuel Ben Zvi, Ms. Yaffa Krindel-Sieradzki and Mr. Jonathan B. Siegal has attested to the Board of Directors and to the Company that he or she meets all the requirements in connection with the election of directors under the Companies Law, per the statement substantially in the form attached hereto as Appendix B.

 

The following information with respect to the nominees is based upon the information furnished by the nominees:

 

 

 

 

It is proposed that the following resolution be adopted at the Meeting:

 

“RESOLVED, that Mr. Alon Seri-Levy, Mr. Moshe Arkin, Mr. Itai Arkin Ms. Hani Lerman, Mr. Shmuel Ben Zvi, Ms. Yaffa Krindel-Sieradzki and Mr. Jonathan B. Siegal be, and each of them hereby is, elected to hold office as a director of the Company for an additional one-year term until the annual general meeting to be held in 2023.”

 

The affirmative vote of the holders of a majority of the voting power represented at the Meeting in person or by proxy and voting thereon (excluding abstentions) is required to adopt the proposed resolution.

The Board of Directors recommends that the shareholders vote “FOR” the proposed resolution.

 

The Companies Law requires that the terms of service and employment of a company’s chief executive officer be approved by the company’s compensation committee, the board of directors and the shareholders of the company, except in the limited circumstances set forth in the Companies Law. In addition, the Companies Law provides that transactions between a company and its directors regarding their terms of office as director, and with respect to their terms of employment in other positions in the company, are subject to the approval of such company’s compensation committee, board of directors and shareholders.

 

It is proposed to grant options to purchase Ordinary Shares in the Company to Dr. Alon Seri-Levy, the Company’s chief executive officer. Dr. Alon Seri-Levy co-founded the Company and has served as its chief executive officer since its incorporation in 1997 until today.

 

 

Dr. Seri-Levy was last granted equity-based compensation in May 2018, when he received options to acquire 105,471 Ordinary Shares, with a value of $703,642. The options vested over a period of four years, with the last vesting date occurring on May 23, 2022.

 

The options would become fully vested in the event of a “Change of Control”, which means either (i) a transaction or series of transactions (other than an offering of our ordinary shares (or any shares substituted for such ordinary shares) which we are or may in the future be authorized to issue to the general public through a registration statement filed with the Securities and Exchange Commission) resulting in the acquisition by any individual, entity or group of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934), through sale of shares, merger, consolidation, or otherwise, of 100% of the then outstanding shares; provided, however, that any acquisition by the Company or by any affiliate (as defined in Rule 405 under the Securities Act of 1933) of the Company shall not constitute a Change of Control or (ii) a sale or other disposition of all or substantially all of the assets of the Company and its subsidiaries on a consolidated basis.

 

In addition, Dr. Alon Seri-Levy’s employment agreement provides for full acceleration of vesting of options if Dr. Alon Seri-Levy’s employment is terminated by the Company without Cause (as defined in the employment agreement) or voluntarily by him for Good Reason (as defined in the employment agreement) within 12 months of a Change of Control, A Change of Control is (i) a sale of shares, merger, consolidation, or otherwise, of more than 30% of our then outstanding Company shares (unless, following such acquisition Mr. Moshe Arkin beneficially owns, directly or indirectly 50% or more of the then outstanding Company shares); or (ii) a sale or other disposition of all or substantially all of the assets of Company and its subsidiaries on a consolidated basis.

 

It is proposed that the following resolution be adopted at the Meeting:

 

“RESOLVED, to approve the grant of options to Dr. Alon Seri-Levy, the Company’s chief executive officer, exercisable into 302,064 ordinary shares of the Company on the terms described in the Proxy Statement.”

Following the recommendation of the Compensation Committee, the Board of Directors approved amendments to the Compensation Policy and recommended its approval by the shareholders in the form attached hereto as Appendix C (marked to show changes from the current Compensation Policy) (the “Amended Compensation Policy”). The general description of the proposed amendments to the Compensation Policy described below is qualified in its entirety by reference to the full text of the proposed Amended Compensation Policy attached hereto.

-

The current Compensation Policy does not provide a maximum base salary for the executive officers. The Amended Compensation Policy provides for the following maximum base salaries: (i) for a Company CEO resident in Israel, a maximum monthly base salary not exceeding NIS 120,000 and total fixed and variable compensation (including equity based compensation) not to exceed NIS 5 million per year; (ii) for Company executive officers (other than Board of Directors member or CEO) resident in Israel, a monthly base salary not exceeding NIS 90,000; (iii) for a Company CEO resident in the U.S. or another location outside of Israel, such base salary as shall be determined by the shareholders pursuant to applicable law; and (iv) for Company executive officers (other than Board of Directors member or CEO) resident in the U.S. or another location outside of Israel, an annual base salary not exceeding USD 400,000, in each case subject to increases in the consumer price index in the relevant jurisdiction in which the executive resides. For purposes of calculating the maximum fixed and variable compensation each year, the value of any equity award will be allocated equally over the number of years during which such equity award vests.

-

Providing for a cap on the aggregate amount of special bonuses and any discretionary bonus paid in any year to any executive officer of twelve (12) monthly salaries. The Compensation Committee and Board determined that the existing separate cap for signing bonus should be kept as is due to the need at times to pay a signing bonus to encourage a talented executive to join the Company from another employer and at times to compensation him/her for any bonus such executive would forfeit from his/her existing employer to join the Company.

-

Increasing the minimum vesting period of equity awards granted to executive officers from two years to three years.

-

Providing that the first tranche of all equity awards granted to executives may not vest and become exercisable prior to the first anniversary of the date of grant.

-

Providing that the determination of the fair value of a grant shall be made on the date of approval by the Board rather than on the date of grant. For equity awards subject to shareholder approval, the Company is currently not able to determine the fair value of such equity awards in advance of the shareholder meeting to approve the grant, which makes it difficult for the Board to determine in advance if a grant of equity complies with the Compensation Policy. The proposed change is intended to address this by enabling the Board to determine fair value at the time it approves the equity grants.

-

Providing for a cap on the adjustment period/retirement bonus and advance notice period to twelve (12) monthly salaries.

OTHER MATTERS

 

Our Board does not intend to bring any matters before the Meeting other than those specifically set forth in the Notice of Annual Meeting of Shareholders and knows of no matters to be brought before the Meeting by others. If any other matters properly come before the Meeting, it is the intention of the persons named in the accompanying proxy to vote such proxy in accordance with their judgment and based on the recommendation of the Board.

ADDITIONAL INFORMATION

 

 The Company’s annual report on Form 20-F/A, filed with the SEC on April 7, 2022, is available on the SEC’s website at www.sec.gov as well as under the Investor Relations section of the Company’s website at http://ir.sol-gel.com.

 

 The Company is subject to the information reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”) applicable to foreign private issuers. The Company fulfills these requirements by filing reports with the SEC. The Company’s SEC filings are also available to the public on the SEC’s website at www.sec.gov. As a foreign private issuer, the Company is exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements. The circulation of this Proxy Statement should not be taken as an admission that the Company is subject to those proxy rules.

 

Ness Ziona, Israel

 

May 19, 2022

54.

The Board shall have and execute all powers and/or responsibilities allocated to the Board by the Statutes and these Articles, including setting the Company’s policies and supervision over the execution of the powers and responsibilities of the CEO. The Board may execute any power of the Company that is not specifically allocated by the Statutes or by these Articles to another organ of the Company.

55.

The number of directors on the Board shall be no less than five (5) but no more than nine (9), including any External Directors required to be appointed by the Companies Law (if required). A reduction of the maximum number of directors on the Board under this Article 55, shall not affect the term in office of serving directors determined prior to such reduction.

56.

The directors, excluding the External Directors, shall be elected at each Annual Meeting by a Simple Majority and shall hold office until the end of the next succeeding Annual Meeting, unless their office is vacated prior thereto in accordance with the provisions of these Articles and the Law. This Article shall not apply to the election and tenure of External Directors, in respect of whom the provisions of the Law shall apply. classified, with respect to the term for which they each severally hold office, into three classes, as nearly equal in number as practicable, hereby designated as Class I, Class II and Class III. The Board may assign members of the Board already in office to such classes at the time such classification becomes effective.

56.1.

The term of office of the initial Class I directors shall expire at the first Annual Meeting to be held in 2019 and when their successors are elected and qualified,

56.2.

The term of office of the initial Class II directors shall expire at the first Annual Meeting following the Annual Meeting referred to in Article 56.1 above and when their successors are elected and qualified, and

56.3.

The term of office of the initial Class III directors shall expire at the first Annual Meeting following the Annual Meeting referred to in Article 56.2 above and when their successors are elected and qualified.

57.

[Reserved]At each Annual Meeting, commencing with the Annual Meeting to be held in 2019, each of the successors elected to replace the directors of a Class whose term shall have expired at such Annual Meeting shall be elected to hold office until the third Annual Meeting next succeeding his or her election and until his or her respective successor shall have been elected and qualified. Notwithstanding anything to the contrary, each director shall serve until his or her successor is elected and qualified or until such earlier time as such director’s office is vacated.

58.

The Board may at any time and from time to time appoint any person as a director to fill a vacancy (whether such vacancy is due to a director no longer serving or due to the number of directors serving being less than the maximum number stated in Article 55 above). In the event of one or more such vacancies in the Board, the continuing directors may continue to act in every matter; provided, however, that if their number is less than the minimum number provided for pursuant to Article 55 above, they may only act in an emergency or to fill the office of a director which has become vacant up to a number equal to the minimum number provided for pursuant to Article 55 above. The office of a director that was appointed by the Board to fill any vacancy shall be in effect until the next Annual Meeting or until he or she shall cease serving in office pursuant to the provisions of these Articles. only be for the remaining period of time during which the director whose service has ended was filled would have held office, or in case of a vacancy due to the number of directors serving being less than the maximum number stated in Article 55 above, the Board shall determine at the time of appointment the class pursuant to Article 56 above, to which the additional director shall be assigned. Other than as provided in this Article 58, directors may be elected only at Annual Meetings.

59.

The term of office of a director shall commence on the date of such director’s election by the Annual Meeting or by the Board or on a later date, should such date be determined in the resolution of appointment of the Annual Meeting or of the Board. An Annual Meeting may dismiss a director during the term only by a Special Majority vote (except for External Directors, who may be dismissed only as set forth under the Law).

60.	An amendment to Articles 54-60 shall require a Special Majority.

Appendix B - Form of Statement of a Candidate to Serve as a Director

 

The undersigned, ____________________, hereby declares to Sol-Gel Technologies Ltd. (the “Company”), effective as of ____________________________, as follows:

 

I am making this statement as required under Section 224B of the Israeli Companies Law, 5759-1999 (the “Israeli Companies Law”). Such provision requires that I make the statements set forth below prior to, and as a condition to, the submission of my election as a director of the Company to the approval of the Company's shareholders.

 

I possess the necessary qualifications and skills and have the ability to dedicate the appropriate time for the purpose of performing my service as a director in the Company, taking into account, among other things, the Company's special needs and its size.

 

My qualifications were presented to the Company. In addition, attached hereto is a biographical summary as contained in the Company's most recent Form 20-F, which includes a description of my academic degrees, as well as previous experience relevant for the evaluation of my suitability to serve as a director.

 

I am not restricted from serving as a director of the Company under any items set forth in Sections 226¹, 226A² or 227³ of the Israeli Companies Law, which include, among other things, restrictions relating to the appointment of a minor, a person who is legally incompetent, a person who was declared bankrupt, a person who has prior convictions or anyone whom the administrative enforcement committee of the Israel Securities Law 5728-1968 (the “Israel Securities Law”) prohibits from serving as a director.

 

I am aware that this statement shall be presented at the Annual General Meeting of Shareholders of the Company in which my election shall be considered, and that pursuant to Section 241 of the Israeli Companies Law it shall be kept in the Company’s registered office and shall be available for review by any person.

 

Should a concern arise of which I will be aware and/or that will be brought to my attention, pursuant to which I will no longer fulfill one or more of the requirements and/or the declarations set forth above, I shall notify the Company immediately, in accordance with Section 227A of the Israeli Companies Law.

 

IN WITNESS WHEREOF, the undersigned has signed this statement as of the date set forth above.

 

Name: ________________________

Signature: ______________________

Date: ________________________

¹ As of the date hereof, Section 226 of the Israeli Companies Law generally provides that a candidate shall not be appointed as a director of a public company (i) if the person was convicted of an offense not listed below but the court determined that due to its nature, severity or circumstances, he/she is not fit to serve as a director of a public company for a period that the court determined which shall not exceed five years from judgment or (ii) if he/she has been convicted of one or more offences specified below, unless five years have elapsed from the date the convicting judgment was granted or if the court has ruled, at the time of the conviction or thereafter, that he/she is not prevented from serving as a director of a public company:

 

(1) offenses under Sections 290-297 (bribery), 392 (theft by an officer), 415 (obtaining a benefit by fraud), 418-420 (forgery), 422-428 (fraudulent solicitation, false registration in the records of a legal entity, manager and employee offences in respect of a legal entity, concealment of information and misleading publication by a senior officer of a legal entity, fraud and breach of trust in a legal entity, fraudulent concealment, blackmail using force, blackmail using threats) of the Israel Penal Law 5737-1997; and offences under sections 52C, 52D (use of inside information), 53(a) (offering shares to the public other than by way of a prospectus, publication of a misleading detail in the prospectus or in the legal opinion attached thereto, failure to comply with the duty to submit immediate and period reports) and 54 (fraud in securities) of the Israel Securities Law;

 

(2) conviction by a court outside of the State of Israel of an offense of bribery, fraud, offenses of directors/managers in a corporate body or exploiting inside information.

 

² As of the date hereof, Section 226A of the Israeli Companies Law provides that if the administrative enforcement committee of the Israel Securities Authority has imposed on a person enforcement measures that prohibited him/her from holding office as director of a public company, that person shall not be appointed as a director of a public company in which he/she is prohibited to serve as a director according to this measure.

 

³ As of the date hereof, Section 227 of the Israeli Companies Law provides that a candidate shall not be appointed as a director of a company if he/she is a minor, legally incompetent, was declared bankrupt and not discharged, and with respect to a corporate body – in case of its voluntary dissolution or if a court order for its dissolution was granted.

B - 2

			Page
A.	Overview and Objectives		C - 3
B.	Base Salary and Benefits		C - 5
C.	Cash Bonuses (Excluding Directors)		C -6
D.	Equity-Based Compensation		C - 8
E.	Retirement and Termination of Service Arrangements (Excluding Directors)		C - 10
F.	Exemption, Indemnification and Insurance		C - 10
G.	Arrangements upon Change of Control		C -11
H.	Board of Directors Compensation		C - 11
I.	Miscellaneous		C -12

1.

Introduction

2.

Objectives

2.1.

To closely align the interests of the Executive Officers with those of Sol-Gel's shareholders in order to enhance shareholder value;

2.2.

To provide the Executive Officers with a structured compensation package, while creating a balance between the fixed components, i.e., the base salaries and benefits, and the variable compensation, such as bonuses and equity-based compensation in order to minimize potential conflicts between the interests of Executive Officers and those of Sol-Gel;

2.3.

To strengthen the retention and the motivation of Executive Officers in the short and long term.

2.4.

This Compensation Policy was prepared taking into account the Company's nature, size and business and financial characteristics.

3.

Compensation structure and instruments

•

Base salary;

•

Benefits and perquisites;

•

Cash bonuses (short-to-medium term incentive);

•

Equity based compensation (medium-to-long term incentive); and

•

Retirement and termination of service arrangements payments.

4.

Overall Compensation - Ratio Between Fixed and Variable Compensation

5.

Intra-Company Compensation Ratio

6.2.

Position: Company CEO in Israel

6.3.

The monthly Base Salary for the Company CEO resident is Israel shall not exceed NIS 120,000 for a full time position. The total fixed and variable compensation (including equity based compensation) payable to the Company CEO shall not exceed NIS 5 million per year. Such maximum amounts may be increased from time to time based on increases in the Israeli Consumer Price Index from the date of approval of this Policy.  For purposes of calculating the total fixed and variable compensation payable to the Company CEO each year, the value of any equity award granted to the Company CEO determined on the date of Board approval will be allocated equally over the number of years during which such equity award vests.

6.4.

Position: Executive Officers in Israel (other than Board member or CEO) The monthly Base Salary for Executive Officers (other than Board member or CEO) resident in Israel shall not exceed NIS 90,000 for a full time position. Such maximum amount may be increased from time to time based on increases in the Israeli Consumer Price Index from the date of approval of this Policy.

6.5.

Position: Company CEO in the U.S. or other location outside of Israel The annual Base Salary for the Company CEO resident in the U.S. or another location outside of Israel shall be determined by the shareholders pursuant to applicable law.

6.6.

Position: Officers in the U.S. or other location outside of Israel (other than Board member or CEO) The annual Base Salary for the Executive Officers (other than Board member or CEO) resident in the U.S. or other location outside of Israel shall not exceed USD 400,000 for a full time position. Such amount may be linked to increases in the Consumer Price Index in the U.S. (or in such other location, as the case may be) from the date of approval of this Policy.

7.

Benefits

7.1.

In addition to the Base Salary, the following benefits may be granted to the Executive Officers (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's general meeting pf shareholders), in order, among other things, to comply with legal requirements. It shall be clarified, that the list below is an open list and Sol-Gel (subject to the abovementioned required approvals) may grant to its Executive Officers other similar, comparable or customary benefits, subject to the applicable law. In addition, Executive Officers employed outside of Israel may receive other similar, comparable or customary benefits as applicable in the relevant jurisdiction in which they are employed.

•

Vacation days in accordance with market practice and the applicable law, up to a cap of 30 days per annum;

•

Sick days in accordance with market practice and the applicable law; However, the Company may decide to cover sick days from the first day;

•

Convalescence pay according to the applicable law;

•

Medical Insurance in accordance with market practice and the applicable law;

•

With respect to Executive Officers employed in Israel: monthly remuneration for a study fund ("Keren Hishtalmut"), as allowed by applicable tax law and with reference to Sol-Gel’s practice and common market practice;

•

Pension and savings – according to local market practices and legislation;

•

Disability insurance – the Company may purchase disability insurance, according to applicable legislation.

7.2.

Sol-Gel may offer additional benefits to its Executive Officers, including but not limited to: communication, company car and travel benefits, insurances and other benefits (such as newspaper subscriptions, academic and professional studies), etc., including their gross up.

7.3.

Sol-Gel may reimburse its Executive Officers for reasonable work-related expenses incurred as part of their activities, including without limitations, meeting participation expenses, reimbursement of business travel, including a daily stipend when traveling and accommodation expenses. Sol-Gel may provide advance payments to its Executive Officers in connection with work-related expenses.

8.

Signing Bonus

9.

Annual Bonuses

9.1.

The annual bonus that may be paid to the Executive Officers for any fiscal year shall not exceed twelve (12) monthly Base Salaries to the CEO, and six (6) monthly Base Salaries to any other Executive Officer.

9.2.

CEO

Position	Company/Individual Performance Measures	Company's Discretion
CEO	75%-100%	0%-25%

9.3.

Other Executive Officers (Excluding CEO and Directors)

10.

Special Bonuses

11.

Additional Provisions Relating to Cash Bonuses

11.1.

Pro Rata Payment

11.2.

Compensation Recovery ("Clawback")

11.2.2.

In the event of an accounting restatement, Sol-Gel shall be entitled to recover from its Executive Officers the bonus compensation in the amount in which such bonus exceeded what would have been paid under the financial statements, as restated ("Compensation Recovery"), provided that a claim is made by Sol-Gel prior to the third anniversary of fiscal year end of the restated financial statements.

11.2.3.

Notwithstanding the aforesaid, the Compensation Recovery will not be triggered in the following events:

•

The financial restatement is required due to changes in the applicable financial reporting standards; or

•

The Company (subject to any required approval by the applicable law) has determined that clawback proceedings in the specific case would be impossible, impractical or not commercially or legally efficient; or

•

The amount to be paid under the clawback proceedings is less than 10% of the relevant bonus received by the Executive Officer.

11.2.4.

It shall be clarified, that Sol-Gel shall not be entitled to Compensation Recovery with respect to equity-based compensation granted to its Executive Officers.

11.3.

Reduction or Postponement

12.

General and Objectives

12.1.

The Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general meeting of shareholders) may grant from time to time equity-based compensation which will be individually determined and awarded according to, inter alia, the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the Executive Officer. Equity-based compensation may also be awarded to the Company's directors, including, for the avoidance of doubt, the Executive Chairman, provided that such directors do not also serve as officers in the Company.

12.2.

The main objectives of the equity-based compensation is to enhance the alignment between the Executive Officers' and directors' interests with the long term interests of Sol-Gel and its shareholders, and to strengthen the retention and the motivation of Executive Officers in the medium-to-long term. In addition, since equity-based awards are structured to vest over several years, their incentive value to recipients is aligned with longer-term strategic plans.

12.3.

The equity based compensation offered by Sol-Gel is intended to be in a form of options exercisable into shares, restricted shares and/or other equity based awards, such as restricted share units (RSUs), in accordance with the Company's incentive plan in place as may be updated from time to time.2

13.

Fair Market Value

14.

Taxation Regime

15.

Exercise Period

16.

Vesting

17.

For details regarding ceilings with respect to director's equity-based compensation see section 29 below.

18.

General

19.

Advanced Notice Period

19.1.

Sol-Gel (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's general meeting of shareholders) may provide each Executive Officer (excluding directors), pursuant to an Executive Officer's employment agreement and according to the Company's decision per each case, a prior notice of termination of up to six (6) months, except for the CEO whose prior notice may be of up to twelve (12) months (the "Advance Notice Period"). During the Advance Notice Period, the Executive Officer may be entitled to all of the compensation elements, and to the continuation of vesting of his/her options, restricted shares, RSUs and/or any other equity based awards.

19.2.

During the Advance Notice Period, an Executive Officer will be required to keep performing his/her duties pursuant to his/her agreement with the Company, unless the Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's general meeting of shareholders) has waived the Executive Officer’s services to the Company during the Advance Notice Period and pay the amount payable in lieu of notice, plus the value of benefits.

19.3.

In the event of a change of control in the Company, the Company (subject to the approvals of the Compensation Committee and the Board, and with respect to the CEO- also the Company's general meeting of shareholders) may decide to extend the Advance Notice Period as provided in section 19.1 above (and the compensation paid for such Advance Notice Period, accordingly) to up to two times the original Advance Notice Period of the Executive Officer, in accordance with the applicable law as of that time.

20.

Adjustment Period/Retirement Bonus

21.

Additional Retirement and Termination Benefits

22.

Exemption

23.

Indemnification

24.

Insurance

24.1.

Sol-Gel (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general meeting of shareholders) will provide "Directors’ and Officers’ Liability Insurance" (the "Insurance Policy"), as well as a "run off" insurance policy for its Executive Officers as follows:

•

The annual premium to be paid by Sol-Gel shall not exceed $1.5 million of the aggregate coverage of the Insurance Policy;

•

The limit of liability of the insurer shall be up to $75 million per event and in the aggregate in the insurance period.

•

The deductible amount per each claim shall not exceed $5 million.

•

The Insurance Policy, as well as the limit of liability and the premium for each extension or renewal shall be approved by the Company, which shall determine (subject to the approvals of the Compensation Committee and the Board, and with respect to the Company's directors and CEO- also the Company's general meeting of shareholders) that the sums are reasonable considering Sol-Gel's exposures, the scope of coverage and the market conditions and that the Insurance Policy reflects the current market conditions, and it shall not materially affect the Company's profitability, assets or liabilities.

•

The policy will also cover the liability of the controlling shareholders due to their positions as Executive Officers in the Company, from time to time, provided that the coverage terms in this respect do not exceed those of the other Executive Officers in the Company.

25.

The following benefits may be granted to the Executive Officers in addition to the benefits applicable in the case of any retirement or termination of service upon a "Change of Control" following of which the employment of the Executive Officer is terminated or adversely adjusted in a material way:

25.1.

Vesting acceleration of outstanding options, restricted shares, restricted share units (RSUs) and/or other equity based awards.

25.2.

Extension of the exercising period of options, restricted shares, restricted share units (RSUs) and/or other equity based awards for Sol-Gel’s Executive Officers for a period of up to five (5) years, following the date of termination of employment.

25.3.

An Advance Notice Period, in accordance with section 19.3 above.

25.4.

An Adjustment period/retirement bonus in accordance with section 20 above, of up to twelve (12) months of Employment Cost.

26.

The compensation of the Company's directors shall be in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time, or in accordance with section 27 below, subject to any required approvals by the applicable law.

27.

The compensation of the Company's directors (including external directors and independent directors) shall not exceed the following:

27.1.

Base payment of $45,000 $58,500 per year (the "Base Payment");

27.2.

Chairman of the Board- an additional amount of $25,000 $32,500 per year to the Base Payment;

27.3.

Committee Chairman- an additional amount of $10,000 $13,000 per year to the Base Payment; and

27.4.

Committee member- an additional amount of $5,000 $6,500 per year to the Base Payment.

28.

Following June 23, 2023, the maximum compensation of the Company's directors (including external directors and independent directors) will increase by 15% and shall not exceed the following:

29.

In addition, the Company may engage with its directors (excluding external and independent directors) for the receipt of consulting services and/or other special services, for a consideration of up to $1,000 per day, plus reasonable expense reimbursement. Such compensation shall be paid for a maximum of 6 days per year for each director.

30.

Directors may be granted equity-based compensation in accordance with the applicable principles detailed in section D of this Policy, and subject to the provisions of the Companies Law and the regulations thereunder.4

31.1.

Director: $55,000 per year (the "Equity Compensation");

31.2.

Chairman of the Board- an additional amount of $55,000 per year to the Equity Compensation;

31.3.

Committee Chairman- an additional amount of $10,000 per year per year to the Equity Compensation;

31.4.

Committee member- an additional amount of $5,000 per year to the Equity Compensation;

32.

Sol-Gel's external and independent directors may be entitled to reimbursement of expenses in accordance with the Companies Law and the regulations thereunder.

33.

This Policy is designed solely for the benefit of Sol-Gel. Nothing in this Compensation Policy shall be deemed to grant any of Sol-Gel’s Executive Officers or employees or any third party any right or privilege in connection with their employment by the Company and their compensation thereof. Such rights and privileges, to which Executive Officers or employees serving in the Company or that will serve in the Company in the future, are entitled for, shall be governed by the respective personal employment agreements.

34.

This Policy is subject to applicable law and is not intended, and should not be interpreted as limiting or derogating from, provisions of applicable law to the extent not permitted, nor should it be interpreted as limiting or derogating from the Company’s Articles of Association.

35.

This Policy is not intended to affect current agreements nor affect obligating customs (if applicable) between the Company and its Executive Officers as such may exist prior to the approval of this Compensation Policy, subject to any applicable law.

36.

In the event of amendments made to the Companies Law or any regulations promulgated thereunder providing relief in connection with Sol-Gel’s compensation to its Executive Officers, Sol-Gel may elect to act pursuant to such relief without regard to any contradiction with this Policy.

37.

The Company (subject to any required approvals by the applicable law) may determine that none or only part of the payments, benefits and perquisites shall be granted, and is authorized to cancel or suspend a compensation package or part of it.

38.

An immaterial change in the terms of office of Executive Officers (excluding directors, a controlling shareholder or a controlling shareholder's relative) during the term of this Compensation Policy, will be subject to the approval of the Company's CEO only (changes in the terms of office of the CEO shall be approved in accordance with the Companies Law). An immaterial change in this matter shall be deemed to be a change that does not exceed 5% of the annual Employment Cost with respect to the employment of such an Executive Officer in the Company, subject to the conditions prescribed in this Compensation Policy.

39.

It should be clarified, that the compensation components detailed in this Policy do not relate to various components that the Company may provide to all or part of its employees and/or its Executive Officers, such as: parking spaces, entry permits for its assets, reimbursement for meals and accommodation expenses, vacations, company events, etc.

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