SPECIAL GENERAL MEETING
TABLE OF CONTENTS

4

Itamar Medical Ltd.

9 Halamish Street, Caesarea 3088900, Israel 

________________________

PROXY STATEMENT

________________________

SPECIAL GENERAL MEETING OF SHAREHOLDERS

This Proxy Statement is furnished to the holders of record of ordinary shares or American Depositary Shares (or “ADSs”) (collectively, the “Shares”) of Itamar Medical Ltd. (“we,” “Itamar Medical” or the “Company”) at the close of business on February 17, 2020, in connection with the solicitation by our Board of Directors of proxies for use at the Special General Meeting of the Shareholders (the “General Meeting” or the “Meeting”), or at any adjournment thereof, pursuant to the accompanying Notice of Annual General Meeting of Shareholders.

The Meeting will be held on Wednesday, March 18, 2020, at 4:00 p.m. (Israel time), at our executive offices at 9 Halamish Street, Caesarea 3088900, Israel.

INTRODUCTION

We are Itamar Medical Ltd., an Israeli company. We are a medical technology company focused on the development and commercialization of non-invasive medical devices to aid in the diagnosis of respiratory sleep disorders. We commercialize a digital healthcare platform to facilitate the continuum of care for effective sleep apnea management with a focus on the core sleep, cardiology and direct to consumer, or DTC, markets. We offer a Total Sleep Solution, or TSS, to help physicians provide comprehensive sleep apnea management in a variety of clinical environments to optimize patient care and reduce healthcare system costs

Unless indicated otherwise by the context, all references in this Proxy Statement to:

5

On January 24, 2020, the exchange rate between the NIS and the dollar, as quoted by the Bank of Israel, was NIS 3.46 to $1.00. Unless derived from our financial statements or indicated otherwise by the context, statements in this Proxy Statement that provide the dollar equivalent of NIS amounts or provide the NIS equivalent of dollar amounts are based on the exchange rate, as quoted by the Bank of Israel, as of such date.

PURPOSE OF THE MEETING

It is proposed that at the Meeting, the following resolutions be adopted:

RECOMMENDATION OF THE BOARD OF DIRECTORS

Our Board of Directors recommends a vote FOR approval of all the proposals set forth in this Proxy Statement.

SOLICITATION OF PROXIES

General

A form of proxy for use at the Meeting and a return envelope for the proxy are enclosed. If a shareholder’s Shares are held via the Company’s Israeli registrar for trading on the TASE, he or she should deliver or mail (via registered mail) his or her completed proxy (or voting instruction card) to the offices of the Company at 9 Halamish Street, Caesarea 3088900, Israel, Attention: General Counsel and Company Secretary together with a proof of ownership (‘Ishur Baalut’), as of the record date, issued by his or her broker, at least 48 hours prior to the time of the Meeting. Alternatively, such a shareholder may vote electronically via MAGNA, the electronic voting system of the ISA, up to six (6) hours before the time fixed for the Meeting. You should receive instructions about electronic voting from your broker.

6

Shareholders may revoke the authority granted by their execution of proxies before the effective exercise thereof by filing with the Company a written notice of revocation or duly executed proxy bearing a later date, or by voting in person at the Meeting. However, if a shareholder attends the Meeting and does not elect to vote in person, his or her proxy will not be revoked. Unless otherwise indicated on the form of proxy, if a proxy is properly executed and received by the Company prior to the Meeting, Shares represented by the proxy will be voted in favor of all the matters to be presented to the Meeting, as described above. If a shareholder on the form of proxy makes a specification, the Shares represented thereby will be voted in accordance with such specification. On all matters considered at the Meeting, abstentions of a holder of Shares will be treated as neither a vote “for” or “against” the matter, although they will be counted in determining if a quorum is present.

Under the terms of the Deposit Agreement among the Company and The Bank of New York Mellon, as Depositary, and the holders of the ADSs, the Depositary shall endeavor (insofar as is practicable and in accordance with the applicable law and the articles of association of the Company) to vote or cause to be voted the number of Shares represented by ADSs in accordance with the instructions provided by the holders of ADSs to the Depositary. If no instructions are received by the Depositary from any holder of ADSs with respect to any of the Shares represented by the ADSs evidenced by such holder’s receipts on or before the date established by the Depositary for such purpose, the Depositary will not exercise any discretion in voting the Shares, except that, if a holder of our ADSs does not provide the Depositary with voting instructions for an agenda item in the Meeting in a timely manner, we may instruct the Depositary, if we reasonably do not know of any substantial opposition to such agenda item and the matter is not materially adverse to the interests of our shareholders, to treat the holder as giving a discretionary proxy to a person designated by us as to that matter.

Shareholder Proposals and Position Statements

In accordance with the Companies Law, (i) position statements with respect to any of the proposals at the Meeting must be delivered to Itamar Medical no later than ten days prior to the date of the Meeting; and (ii) eligible shareholders, holding at least one percent of our outstanding ordinary shares, may present proper proposals for inclusion in the Meeting by submitting their proposals to us within seven days following the date hereof and, if we determine that a shareholder proposal is appropriate to be added to the agenda of the Meeting, we will publish a revised agenda in the manner set forth below.

If applicable, valid position statements and/or revise agenda will be published by way of issuing a press release and/or filing a Form 6-K with the SEC and the ISA.

RECORD DATE; QUORUM; VOTING RIGHTS

Only shareholders of record at the close of business on February 17, 2020, will be entitled to notice of, and to vote at, the Meeting and any adjournments or postponements thereof. As of February 5, 2020, we had 423,103,011 issued and outstanding ordinary shares.

7

The quorum required at the Meeting consists of at least two shareholders present in person or represented by proxy, within half an hour from the time appointed for holding the meeting, who hold or represent, in the aggregate, at least 33 and 1/3% of the total voting rights in the Company.  If the Meeting is adjourned for lack of a quorum, it will be adjourned to the same day in the following week at the same time and place (i.e., it will be adjourned to Wednesday, March 25, 2020, at 4:00 p.m. (Israel time) unless another time or place is determined by our Board of Directors in a notice to our shareholders. If, at such adjourned meeting, a quorum is not present within half an hour from the time appointed for holding the adjourned meeting, any two shareholders present in person or by proxy who hold or represent, in the aggregate, at least 10% of the outstanding share capital of the Company, shall constitute a quorum.

SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS & MANAGEMENT

The following table sets forth information relating to the beneficial ownership of our ordinary shares as of February 5, 2020 by:

The number of ordinary shares beneficially owned by each entity, person, board member, or executive officer is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days of February 5, 2020 through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all ordinary shares held by that person.

The percentage of ordinary shares beneficially owned is computed on the basis of 423,103,011 ordinary shares outstanding as of February 5, 2020. Ordinary shares that a person has the right to acquire within 60 days of February 5, 2020 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all board members and executive officers as a group. Unless otherwise indicated below, the address for each beneficial owner listed is c/o Itamar Medical Ltd., 9 Halamish Street Caesarea 3088900, Israel.

8

9

10

CAUTIONARY NOTE REGARDING

FORWARD-LOOKING STATEMENTS

Except for the historical information contained in this Proxy Statement, the statements contained herein are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the Private Securities Litigation Reform Act of 1995, as amended, and other federal securities laws with respect to our business, financial condition and results of operations. We urge you to consider that statements which use the terms “anticipate,” “believe,” “expect,” “plan,” “intend,” “estimate,” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements reflect our current view with respect to future events and financial results.

We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, including revenues from agreements we signed, expansion of our operations, development and release of new products, performance, levels of activity, our achievements, or industry results, to be materially different from any future results, plans to expand our operations, plans to develop and release new products, performance, levels of activity, or our achievements, or industry results, expressed or implied by such forward-looking statements. The forward-looking statements contained in this Proxy Statement are subject to risks and uncertainties, including those discussed under Item 3.D “Risk Factors” of our Annual Report and in our other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Except as required by applicable law, including the securities laws of the United States, we undertake no obligation to publicly release any update or revision to any forward-looking statements to reflect new information, future events or circumstances, or otherwise after the date hereof.

11

ITEM 1

AMENDMENT OF COMPENSATION POLICY AND RATIFICATION OF THE PURCHASE OF D&O INSURANCE

Background

Under the Companies Law, companies incorporated under the laws of Israel whose shares are listed for trading on a stock exchange or have been offered to the public in or outside of Israel, such as Itamar Medical, are required to adopt a policy governing the compensation of "office holders". The Companies Law defines the term “office holder” of a company to include a director, the chief executive officer, the chief business manager, a vice president and any officer that reports directly to the chief executive officer. (as defined above). In general, all office holders’ terms of compensation – including fixed remuneration, bonuses, equity compensation, retirement or termination payments, indemnification, liability insurance and the grant of an exemption from liability – must comply with the company's compensation policy, once adopted by the shareholders.

Pursuant to the Companies Law, the compensation policy must comply with specified criteria and guidelines and, in general, be adopted following consideration of, among others, the following factors: (i) promoting the company’s objectives, business plan and long term policy; (ii) creating appropriate incentives for the company’s office holders, considering, among others, the company's risk management policy; (iii) the company's size and nature of operations; and (iv) with respect to variable elements of compensation (such as bonuses), the office holder’s contribution to achieving corporate objectives and increasing profits, with a long-term view and in accordance with his or her role.

12

Such compensation policy is required to be approved by the Board of Directors, following the recommendation of the Compensation Committee, and the shareholders, in that order, and if the term of the compensation policy is for more than three years, it must be re-approved in such manner every three years. In May 2019, our shareholders approved several amendments to our compensation policy (the “Compensation Policy”).

Our Compensation Committee is currently composed of Ms. Ozer-Armon, the chairperson, Ms. Krindel Sieradzki and Mr. Gerstel, all of whom satisfy the respective “independence” requirements of the Companies Law, SEC and Nasdaq rules for compensation committee members.

Proposed Amendments to the Compensation Policy and Ratification of Purchase of Directors' and Officers' Insurance

Our Board of Directors approved, following the recommendation of the Compensation Committee, an amendment to the Compensation Policy, as set forth in Appendix A hereto, which relates primarily to:

In approving the amended Compensation Policy, our Compensation Committee and Board of Directors considered additional factors, including, among others, the Company's objectives, business plan and its policy with a long-term view; our business-risks management; our size and nature of operations; the prevailing market conditions with respect to D&O liability insurance in general, and in particular, those related to dual listed companies (i.e., companies listed both on the TASE as well as other stock exchanges, such as the Nasdaq); and effective transitioning and succession of executive officers.

The foregoing description of the proposed amendments to the Compensation Policy is only a summary of the amendment and is qualified by reference to the full text thereof, a copy of which is attached as Appendix A hereto.

Other than the proposed changes set forth on Appendix A, our Compensation Committee and Board of Directors did not identify any other necessary modifications to our Compensation Policy. If the changes are approved at the Meeting, our modified Compensation Policy will be valid for three years following the Meeting (or, if not approved, our current Compensation Policy will be valid until May 29, 2022).

13

The Proposed Resolutions

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

“RESOLVED, to approve the Compensation Policy for Executive Officers and Directors, (as modified), as set forth in Appendix A to the Company's Proxy Statement for the Special General Meeting and to ratify and approve the purchase of D&O liability insurance as described under item 1 in the Company's Proxy Statement for the Special General Meeting.”

Required Vote

Under the Companies Law, approval of this matter requires the affirmative vote of a majority of the shares present, in person or by proxy, and voting on the matter, excluding abstaining votes; provided that either (i) the shares voted in favor of the matter include at least a majority of the shares voted by shareholders who are not “controlling shareholders” and do not have a “personal interest” in the matter, as defined under the Israeli Companies Law or (ii) that the total number of shares voted by the disinterested shareholders described in clause (i) against such resolution does not exceed two percent (2%) of the aggregate voting rights in the Company.

Under the Companies Law, a “personal interest” of a shareholder (i) includes a personal interest of any members of the shareholder’s family (or spouses thereof) or a personal interest of an entity with respect to which the shareholder (or such family member) serves as a director or chief executive officer, owns at least 5% of its outstanding share capital or voting power or has the right to appoint a director or chief executive officer and (ii) excludes an interest arising solely from the ownership of our Shares.

The Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not the shareholder is a controlling shareholder or has such a personal interest in the proposed resolution.

As of the date hereof, the Company has no controlling shareholder within the meaning of the Companies Law. However, our office holders are deemed to have a personal interest in this matter.

While it is unlikely that any of the Company’s public shareholders has a personal interest on this matter, the enclosed proxy card includes a box you can mark to confirm that you are not a controlling shareholder and do not have a personal interest in this matter. If you do not mark this box, your vote will not be counted. If you are unable to make this confirmation, please contact the Company's General Counsel and Company Secretary at +972-4-6177000 for instructions on how to vote your Shares represented by your ADSs and indicate that you are a controlling shareholder or have a personal interest or, if you hold your ADSs in "street name," you may also contact the representative managing your account, who would then contact us on your behalf. Shareholders who hold their shares through banks, brokers or other nominees that are members of the TASE should indicate whether or not they are a controlling shareholder or have a personal interest on the form of voting card that we have filed via MAGNA (if voting manually) or on the electronic voting form (if voting electronically via MAGNA).

The Board recommends a vote FOR approval of the foregoing proposed resolution.

ITEM 2

TO CLARIFY THE COMPANY’S EQUITY-BASED AWARD POLICY FOR NON-EMPLOYEE DIRECTORS

Background

The equity-based award policy for our non-employee directors, including external directors, was approved by our shareholders in the Annual General Meeting we held on May 29, 2019. Generally, the shareholders approved a grant of 110,000 stock options for each year of service to each of our non-employee directors, including to a designated corporate entity and our external directors, but excluding Mr. Chris Cleary who does not receive compensation from the Company for his service as a director (other than reimbursement of expenses). For more information with respect to the terms of such stock options, including vesting, see the Company’s proxy statement for its Annual Shareholders Meeting held on May 29, 2019, which was filed with the SEC and the ISA on April 23, 2019.

Proposed Clarifications of the Equity-Based Policy

Our Board of Directors, following the recommendation of our Compensation Committee, proposes to clarify the terms of the current equity-based award policy by providing that (i) upon the completion of a full term of service of a director (three years for external directors and one year for other directors) without being reelected at the annual or special general meeting of shareholders; or (ii) upon termination of the service of a director in the middle of the term due to the consummation of an Exit Event, as defined below (the date of such completion of the term or termination for Exit Event, the “Trigger Date”), all outstanding stock options vested on the Trigger Date shall expire within 180 days thereafter and all outstanding unvested stock options shall accelerate and be fully vested on the Trigger Date and shall expire within 180 days thereafter, similar to the acceleration to which some of our executive officers are entitled.

14

The term “Exit Event” shall mean the sale of all of the Company’s outstanding share capital (including by way of a merger in which the shareholders of the Company prior to the merger own less than 10% of the voting power of the outstanding share capital of the surviving or acquiring corporation after the merger) for a Consideration that reflects a price per share not lower than the Target Share Price, as such terms are defined below. The terms and definition of an Exit Event and the additional terms detailed hereunder is materially equivalent to those provided under the applicable grant letters provided to our executive officers, including the Company’s President and Chief Executive Officer.

“Consideration” shall mean all the proceeds given to the Company's shareholders in the Exit Event whether in cash or any other form of payment including but not limited to securities of another entity, deferred payments, contingent payments, sums allocated for indemnification. The part of the Consideration which is deferred payments and/or contingent payments and/or sums allocated for indemnification or any similar future payments, shall hereinafter be referred to as "Future Consideration". The exact amount of the Consideration and Future Consideration shall be determined by the Company's audit committee (and in case that there is no audit committee it will be determined by the administrator of the applicable equity incentive plan) which for this purpose will be allowed to use external consultants. If the Consideration and the Target Share Price and Maximum Share Price are not in the same currency, then the Consideration will be converted from NIS to dollar, based on the average of the representative NIS/dollar exchange rates that were published by the Bank of Israel ("Representative Exchange Rate") during the 90 consecutive Trading Days prior to the date of the closing of the Exit Event. All determinations and decisions of the audit committee shall be final and binding on both the Company and the applicable director.

Target Share Price - NIS 2.66 per one ordinary share of the Company, subject to the adjustments below:

Bonus Shares - In the event the Company distributes bonus shares, the Target Share Price shall be reduced by the ratio of the bonus shares distribution, as follows:

Dividend - In the event the Company distributes cash dividends, then the Target Share Price shall be reduced by the gross dividend amount so distributed per one ordinary share.

Rights Offering - In the event of a rights offering conducted by the Company, the Target Share Price shall be adjusted to the benefit component in the rights offering as, as follows:

Recapitalization - In the event the ordinary shares shall be subdivided or combined into a greater or smaller number of shares ("Recapitalization"), an appropriate adjustment shall be made by the Board of Directors to the Target Share Price to reflect such Recapitalization, so that participants rights are not materially better or worse off as a result of the Recapitalization.

Maximum Share Price – NIS 5.32 per one ordinary share of the Company, subject to the adjustments detailed above.

If the term Stock Exchange shall mean Nasdaq, then the Target Share Price and Maximum Share Price shall be converted from NIS to dollar based on the average of the Representative Exchange Rate during the 90 consecutive Trading Days prior to: December 20, 2022 or the date of the closing of the Exit Event, as applicable.

In line with the proportionate compensation of our external directors pursuant to the Companies Regulations (rules regarding compensation and expenses to an external director) – 2000 (the “Compensation Regulations”), the foregoing clarification shall apply to all of the Company’s non-employee directors who may serve the Company from time to time (excluding Mr. Chris Cleary), including “other directors”, as defined in the Compensation Regulations, and the Company’s external directors with respect to the equity-based award policy, which was approved by our shareholders on May 29, 2019, as well as to future grants to such directors.

15

The Proposed Resolution

It is proposed that at the Meeting, the following resolutions be adopted:

“RESOLVED, to approve the clarifications of the equity-based policy to the Company’s non-employee directors who may serve the Company from time to time, all as detailed in Item 2 of the Company's Proxy Statement for the Special General Meeting”.

Required Vote

Under the Companies Law, approval of this matter requires the affirmative vote of a majority of the shares present, in person or by proxy, and voting on the matter, excluding abstaining votes; provided that either (i) the shares voted in favor of the matter include at least a majority of the shares voted by shareholders who are not “controlling shareholders” and do not have a "personal interest" in the matter, as defined under the Israeli Companies Law (see Item 1 above) or (ii) that the total number of shares voted by the disinterested shareholders described in clause (i) against such resolution does not exceed two percent (2%) of the aggregate voting rights in the Company.

As of the date hereof, the Company has no controlling shareholder within the meaning of the Companies Law. However, all non-employee directors are deemed to have a personal interest in this matter.

The Israeli Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not the shareholder is a controlling shareholder or has such a personal interest in the proposed resolution.

16

While it is unlikely that any of the Company’s public shareholders has a personal interest on this matter, the enclosed proxy card includes a box you can mark to confirm that you are not a controlling shareholder and do not have a personal interest in this matter. If you do not mark this box, your vote will not be counted. If you are unable to make this confirmation, please contact the Company's General Counsel and Company Secretary, at +972-4-617700 for instructions on how to vote your Shares represented by your ADSs and indicate that you are a controlling shareholder or have a personal interest or, if you hold your ADSs in "street name," you may also contact the representative managing your account, who would then contact us on your behalf. Shareholders who hold their shares through banks, brokers or other nominees that are members of the TASE should indicate whether or not they are a controlling shareholder or have a personal interest on the form of voting card that we have filed via MAGNA (if voting manually) or on the electronic voting form (if voting electronically via MAGNA).

The Board recommends a vote FOR approval of the foregoing proposed resolution.

ITEM 3

APPROVAL OF EQUITY-BASED GRANTS TO THE COMPANY’S PRESIDENT AND CHIEF EXECUTIVE OFFICER

Background

Under the Companies Law, the terms of compensation, including the grant of equity-based compensation, of a president and chief executive officer of a company incorporated under the laws of Israel whose shares are listed for trade on a stock exchange or have been offered to the public in or outside of Israel, such as Itamar Medical, require the approval of the compensation committee, the board of directors and, subject to certain exceptions, the shareholders.

Mr. Gilad Glick has served as our President and Chief Executive Officer since July 2013. Mr. Glick also serves as a director and as acting president of our U.S. Subsidiary, Itamar Medical, Inc. As more fully described under “Compensation of Executive Officers” in our Form F-1 filed on January 29, 2020, the compensation granted to Mr. Glick in 2019 in terms of cost to the Company (as will be recognized in our financial statements for the year ended December 31, 2019), was as follows*:

17

* The cost reflected in this table is calculated in accordance with IFRS and is as will be recognized in our financial statements for the year ended December 31, 2019 (subject to year-end audit adjustments). It is noted that, in accordance with IFRS, cash compensation amounts denominated in currencies other than the dollar were converted into dollars at the exchange rate between the NIS and the dollar as of the end of each month during 2019, the period covered by the table (which, on average for 2019, was approximately NIS 3.56 per $1.00).

Proposed Grants in Exchange for a Waiver of Certain Prior Grants

Consistent with our Compensation Policy, our Compensation Committee and Board of Directors determined in May 2019, and ratified and reapproved in February 2020, to approve the grant of performance-based options and performance-based restricted share units (“RSUs”), in exchange for the waiver of certain performance-based options and performance-based RSUs to several executive officers and, subject to shareholder approval at the Meeting, also to Mr. Glick as detailed below. In addition, in January 2020, our Compensation Committee and Board of Directors determined to approve the grant of service stock options to Mr. Glick as detailed below. In approving this proposed matter, our Compensation Committee and Board of Directors considered the prevailing market price of the Company’s shares, and the alignment of the interests of the Company’s President and Chief Executive Officer with those of Company’s shareholders in order to incentivize him to continue in his position and drive the Company’s growth in the long-term, along with additional factors, including the following:

18

Mr. Glick, our President and Chief Executive Officer, received in March 2016 a grant of, among others, 8,388,512 performance-based stock options and 1,692,312 performance-based RSUs (as amended by approval of our shareholders in May 2018), of which under the terms of the said grant (i) 100% would have vested on December 20, 2020 if the price of our ordinary shares was, at such time, at least NIS 4.24 per share (equivalent to $1.22), or (ii) 50% will vest if the price of our ordinary shares was, at such time, at least NIS 1.70 per share (equivalent to $0.49).

Our Board of Directors, following the recommendation of the Compensation Committee, resolved that in light of, among other things, the factors described above, the terms of the foregoing grant shall be amended, as follows:

Out of the total of 8,388,512 outstanding and unvested performance-based options and 1,692,312 performance-based RSUs previously issued to our President and Chief Executive Officer, 3,019,864 performance-based options and 609,232 performance-based RSUs (representing approximately 36% of the foregoing performance-based options and performance-based RSUs) shall be irrevocably cancelled and waived in exchange for the grant detailed in section 2 below. With respect to the remainder of previously granted performance-based options and performance-based RSUs the following shall apply:

* The original vested quantities of the performance-based options and the performance-based RSUs and original vesting quantities as calculated by the original Vesting Schedule shall remain the same as calculated between the Target Share Price of NIS 1.70 (equivalent to $0.49) to a Maximum Share Price of NIS 4.24 (equivalent to $1.23) (e.g., at a share price of NIS2.42 (equivalent to $0.70), 64% of the original performance-based options and performance-based RSUs shall become vested).

For the sake of clarity, the remainder of previously granted performance-based options and performance-based RSUs shall remain in full force and effect in accordance with their grant terms, including the Plan.

19

In exchange for Mr. Glick’s consent to the cancellation of the foregoing performance-based options and performance-based RSUs as detailed in section 1 above, he shall be granted with performance-based equity grants as follows:

Grant Date

The date of the Meeting.

Performance-Based Options

A grant of 3,019,864 performance-based options at an exercise price per share of NIS1.22 (equivalent to $0.35) each to purchase one Ordinary Share, which will vest subject to satisfaction of the performance criteria detailed below.

Performance-Based RSUs

A grant of 609,232 performance-based RSUs each to purchase one Ordinary Share, which will vest subject to satisfaction of the performance criteria as provided below. The purchase price of each such performance-based RSU shall be NIS 0.30 (equivalent to $0.09), subject to applicable law.

*The term Market Price means the average of the closing prices of the Ordinary Shares on the Stock Exchange (as defined below) during the applicable Test Period, which means a period of 90 consecutive Trading Days (or other period determined by the Company’s Board of Directors) immediately prior to December 20, 2022. Stock Exchange or SE means the stock exchange where the Company's shares are traded, provided however, that if the Company's shares will be traded on both the TASE and NASDAQ, than Stock Exchange shall mean the stock exchange where the average daily trading volume in the Company's share, during the applicable Test Period, is higher.

** The term Target Share Price means NIS 2.66 (equivalent to $0.77), per one Ordinary Share (subject to adjustments by the Compensation Committee and Board of Directors pursuant to our Israeli Equity Incentive Plan 2016 (the “Plan”)).

*** The Maximum Share Price means NIS 5.32 (equivalent to $1.54), per one Ordinary Share (subject to adjustments by the Compensation Committee and Board of Directors pursuant to the Plan).

Acceleration of vesting upon the occurrence of an Exit Event

The vesting of the performance-based options and performance-based RSUs shall accelerate in accordance with the grant agreement of Mr. Glick. This means that, if the closing of an Exit Event, i.e. the sale of all of the Company's outstanding share capital (including by way of a merger in which the shareholders of the Company prior to the merger own less than 10% of the voting power of the outstanding share capital of the surviving or acquiring corporation after the merger) for a consideration that reflects a price per share not lower than the Target Share Price, as defined above (the "Closing") shall occur prior to December 20, 2022, the Performance- Based Options and Performance-Based RSUs shall vest as follows:

20

Expiration Date

All unexercised performance-based options and performance-based RSUs shall expire and cease to be exercisable at 5:00 p.m. Israel time on May 20, 2029.

Other Terms

All other terms and conditions in connection with the above performance-based options and performance-based RSUs shall be as set forth in the Plan.

Proposed Grants of Service Stock Options

On January 2, 2020, our Compensation Committee and Board of Directors determined to approve the grant to Mr. Glick of 1,676,425 service stock options at an exercise price per share of NIS 1.28 (equivalent to $0.37), each to purchase one Ordinary Share the vesting start date of which shall be the date of the Board’s approval of such grant (the “Effective Date”).

The Service Options shall vest as follows:

All unexercised Service Options shall expire and cease to be exercisable at 5:00 p.m. Israel time on January 2, 2030. All other terms and conditions in connection with the above Service Options shall be as set forth in the Plan.

Below is summary of our President and Chief Executive Officers’ service options, performance-based options and performance-based RSUs grants and cancellation, as of 2016 and to date, assuming that proposal in this Item 3 shall be approved at the Meeting.. Mr. Glick also had 1,470,8333 service options granted to him in 2013. For more details about our President and Chief Executive Officer’s beneficial ownership of our shares, see above under the caption “Security Ownership by Certain Beneficial Owners and Management.

* Calculated based on the number of shares outstanding as of February 5, 2020.

The Proposed Resolutions

It is proposed that at the Meeting, the following resolutions be adopted:

“RESOLVED, to approve the grant to the Company’s President and Chief Executive Officer of (i) performance-based options and performance-based RSUs to the Company’s President and Chief Executive Officer, subject to the waiver of certain performance-based options and performance-based RSUs, and (ii) service options, in each case, as detailed in Item 3 of the Company's Proxy Statement for the Special General Meeting”.

21

Required Vote

Under the Companies Law, approval of this matter requires the affirmative vote of a majority of the shares present, in person or by proxy, and voting on the matter, excluding abstaining votes; provided that either (i) the shares voted in favor of the matter include at least a majority of the shares voted by shareholders who are not “controlling shareholders” and do not have a "personal interest" in the matter, as defined under the Israeli Companies Law (see Item 1 above) or (ii) that the total number of shares voted by the disinterested shareholders described in clause (i) against such resolution does not exceed two percent (2%) of the aggregate voting rights in the Company.

As of the date hereof, the Company has no controlling shareholder within the meaning of the Companies Law. However, Mr. Glick is deemed to have a personal interest in this matter.

The Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not the shareholder is a controlling shareholder or has such a personal interest in the proposed resolution.

While it is unlikely that any of the Company’s public shareholders has a personal interest on this matter, the enclosed proxy card includes a box you can mark to confirm that you are not a controlling shareholder and do not have a personal interest in this matter. If you do not mark this box, your vote will not be counted. If you are unable to make this confirmation, please contact the Company's General Counsel and Company Secretary, at +972-4-617700 for instructions on how to vote your Shares represented by your ADSs and indicate that you are a controlling shareholder or have a personal interest or, if you hold your ADSs in "street name," you may also contact the representative managing your account, who would then contact us on your behalf. Shareholders who hold their shares through banks, brokers or other nominees that are members of the TASE should indicate whether or not they are a controlling shareholder or have a personal interest on the form of voting card that we have filed via MAGNA (if voting manually) or on the electronic voting form (if voting electronically via MAGNA).

The Board recommends a vote FOR approval of the foregoing proposed resolution.

ITEM 4

PRESIDENT AND CHIEF EXECUTIVE OFFICER SPECIAL BONUS

Background

Under the Companies Law, the terms of compensation, including the grant of bonuses, of a chief executive officer of a company incorporated under the laws of Israel whose shares are listed for trade on a stock exchange or have been offered to the public in or outside of Israel, such as Itamar Medical, require the approval of the compensation committee, the board of directors and, subject to certain exceptions, the shareholders.

Mr. Gilad Glick has served as our President and Chief Executive Officer since July 2013. Mr. Glick also serves as acting president of our U.S. Subsidiary, Itamar Medical Inc. Consistent with our Compensation Policy, in January 2020, our Compensation Committee and Board of Directors determined to approve a special bonus of NIS 258,762 (equivalent to $74,873) to Mr. Glick in consideration of his performance during 2019, which bonus represents the equivalent of three monthly salaries of Mr. Glick. In approving the proposed bonus, our Compensation Committee and Board of Directors considered various factors, including our Compensation Policy and other elements of compensation payable to Mr. Glick as well as factors set forth in the Companies Law and the factors listed under Item 3 above.

The Proposed Resolutions

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

“RESOLVED, that the proposed grant of bonus to Gilad Glick, the President and Chief Executive Officer of the Company, as described in Item 4 of the Company's Proxy Statement for the Special General Meeting, be, and the same hereby is, approved.”

22

Required Vote

Under the Companies Law, approval of this matter requires the affirmative vote of a majority of the shares present, in person or by proxy, and voting on the matter, excluding abstaining votes; provided that either (i) the shares voted in favor of the matter include at least a majority of the shares voted by shareholders who are not “controlling shareholders” and do not have a "personal interest" in the matter, as defined under the Israeli Companies Law (see Item 1 above) or (ii) that the total number of shares voted by the disinterested shareholders described in clause (i) against such resolution does not exceed two percent (2%) of the aggregate voting rights in the Company.

As of the date hereof, the Company has no controlling shareholder within the meaning of the Companies Law. However, Mr. Glick is deemed to have a personal interest in this matter.

The Israeli Companies Law requires that each shareholder voting on the proposed resolution indicate whether or not the shareholder is a controlling shareholder or has such a personal interest in the proposed resolution.

23

While it is unlikely that any of the Company’s public shareholders has a personal interest on this matter, the enclosed proxy card includes a box you can mark to confirm that you are not a controlling shareholder and do not have a personal interest in this matter. If you do not mark this box, your vote will not be counted. If you are unable to make this confirmation, please contact the Company's General Counsel and Company Secretary, at +972-4-617700 for instructions on how to vote your Shares represented by your ADSs and indicate that you are a controlling shareholder or have a personal interest or, if you hold your ADSs in "street name," you may also contact the representative managing your account, who would then contact us on your behalf. Shareholders who hold their shares through banks, brokers or other nominees that are members of the TASE should indicate whether or not they are a controlling shareholder or have a personal interest on the form of voting card that we have filed via MAGNA (if voting manually) or on the electronic voting form (if voting electronically via MAGNA).

The Board recommends a vote FOR approval of the foregoing proposed resolution.

OTHER MATTERS

The Board of Directors currently knows of no other business to be transacted at the Meeting, other than as set forth in the Notice of Special General Meeting of Shareholders; but, if any other matter is properly presented at the Meeting, the persons named in the enclosed form of proxy will vote upon such matters in accordance with their best judgment.

Date: February 11, 2020

24

APPENDIX A

Amendments to Compensation Policy

(Changes shown: proposed new text is underlined, text proposed to be deleted is struck-through)

25

APPENDIX A

Amendments to Compensation Policy

Itamar Medical Ltd.

(The "Company")

Compensation Policy

As approved by the Company's Compensation Committee on March 10, 2019

By the Company's Board of Directors on March 12, 2019

And by the Company's Shareholders at a Meeting of the Shareholders on May 29 2019

The definitions and terms in this Compensation Policy shall have the definitions assigned them in the Companies Law of 1999 (hereinafter: the "Companies Law"), unless otherwise defined in the Compensation Policy.

The Companies Law-1999 (hereinafter: the "Companies Law") sets forth provisions, which addresses regulating the structure of compensation to officers in publicly held companies and in bond companies, as well as establishes a special process for its approval. In accordance with the Amendment, the Compensation Committee and the Board of Directors of the Company adopted this Compensation Policy.

The considerations which guided the Compensation Committee of the Company (hereinafter: the "Compensation Committee") and the Company's Board of Directors in adapting the policy are advancement of the Company's objectives, its workplan, and its policy through the perspective of the current year and with a long-term view; creating appropriate incentives for officers in the Company taking into account, inter alia, the Company's risk management policy; creating congruence between the officers' interests and the interests of the Company's shareholders; the Company's size and the character of its activities; as well as regarding terms of service and employment that include variable components – the officer's contribution to achieving the Company's goals, to maximizing its profits, and to maximizing the Company's value, all with a long-term view and according to the officer's role.

26

The Compensation Policy was drafted taking into account the character of the Company as a company active in the field of research and development, marketing, and sale of medical devices, taking into account the scope of the Company's current activities, its being a dual listed company traded on the biomed index of the Tel Aviv Stock Exchange Ltd. (hereinafter: the "Stock Exchange") and the Nasdaq stock Exchange in the U.S. (hereinafter: the "Nasdaq"), taking into account the Company's strategy to increase the scope of the Company's activities according to the Company's business plans and strategies.

The principles of the Compensation Policy were formulated after internal deliberations that took place within the Company's Compensation Committee and Board of Directors in consultation with external advisors. The principles of this policy were intended to ensure that the officer's compensation will be consistent with the Company's interests and its total organizational strategy while taking into account the Company's risk management policy and, at the same time, will result in increasing the officers' sense of identity with the Company and its activities, will increase their satisfaction and motivation, and will result in retaining the officers in the Company over time.

The compensation principles are based on targets and indices that are derived, inter alia, from various Company plans, as determined by the Board of Directors from time to time.

The components of the Compensation Policy will address each of the following:

27

The provisions of this Compensation Policy apply to the officers in the Company only, as defined in the Companies Law.

The Compensation Policy is worded in the masculine for the sake of convenience only, but its provision shall apply equally regarding women and men, without differentiation and without change.

It is clarified that anywhere in the Compensation Policy where it indicates annual wage (gross)/base salaries, the total actual cost to the Company, will also include payment of social and related benefits to the extent required by law.

It is emphasized that this policy does not grant rights to the Company's officers, and the officers in the Company shall not have an inherent right based on the adoption of this Compensation Policy to receive any of the compensation components specified in the Compensation Policy. The compensation components to which the officers will be entitled will be solely those approved individually regarding each officer by the organs empowered to do so by the Company.

28

The ratio between the maximal annual costs of the fixed components and the maximal annual cost of the variable components for officers in the Company as determined in the framework of this Compensation Policy is as follows:

29

30

31

32

33

34

35

In any event of a termination of an employment or service relationship (other than in the event of the termination of an officer under circumstances which, in the opinion of the Compensation Committee and the Board of Directors, grant the Company the right to terminate him without severance pay under the law), the officer will be entitled to severance pay under the law or, alternatively, in the amount of the payments deposited on his behalf with respect to severance pay into a provident fund, pension funds, etc., in accordance with the provisions of Section 14 of the Severance Pay Law of 1963, all at the discretion of the Company and according to what is stipulated in the employment or service agreement.

Notwithstanding the above, the Company shall be entitled to stipulate in the employment or service agreement with the officer (whether on the date the employment agreement or service agreement is executed or whether in the framework of an update to the employment or service agreement or a settlement agreement) a higher amount in severance pay than that which is due to the officer under the law, up to a cap equal to four (4) monthly salaries (and all social benefits, vacation days and all other benefits the officer is entitled to under law and/or his employment or service agreement) above the foregoing severance amounts, which will be determined taking into consideration the officer's role, position, the number of years of his employment or service by with the Company, and so forth.

For the avoidance of doubt, the Company shall be permitted to enter into service, consulting or similar agreements with retired officers (including the Company’s CEO) in affect as of the effective date of termination of employment or service date, not as office holders.

36

The Company is entitled to grant an officer (including the Company CEO) an annual bonus that will be calculated according to the level of his having met targets and indices and various types, in whole or in part, all as specified below. The said targets and indices with respect to the Company CEO, shall be approved by the Compensation Committee and the Board of Directors.

The Company may grant officers who report to the Company CEO (excluding directors) an annual bonus, which will be calculated taking into consideration the level of the respective officer's having met targets and indices and various types, in whole or in part. Such targets and indices shall be determined solely by the Company's CEO, as detailed hereunder.

37

38

The Compensation Committee and the Board of Directors (with respect to the Company CEO) or the Company CEO (with respect to officers reporting to him) will determine the number and composition of the targets as well as the weights of the targets in the same category (for example: If 2 personal targets are chosen, then the Board of Directors will determine the weight of each of them provided that their total weight not exceed 100%). The Compensation Committee and the Board of Directors, or the Company CEO, as set forth above, may condition the entitlement to compensation in meeting one target and may determine that all targets shall be of only one type.

Specifics of the targets in each measurement category as well as the relative weight of each of the measurement categories will be coordinated for each officer separately (to the extent that targets were indeed determine for each officer, as aforementioned), according to the officer's seniority, role and according to the organizational unit to which he belongs and/or which he supervises.

In relation to officers who report to the CEO of the Company, to the extent that their annual bonus will be contingent upon meeting targets, the weight of each of the different measurement categories will be determined each year in advance, with the approval of the CEO. In relation to the CEO of the Company, the targets and the weight of each of the different measurement categories will be determined at least each year in advance by the Board of Directors of the Company and with the approval of the Compensation Committee. Notwithstanding the above, it shall be possible to determine said weights for a number of years in advance subject to the authority of the relevant organ to update, to the extent necessary, these weights at the start of each calendar year.

39

Subject to the principles for determination of a bonus set forth in this section above, including the cap applicable to such bonus, and mutatis mutandis:

40

41

42

The Compensation Committee and the Board of Directors of the Company shall be entitled, in exceptional cases, at their discretion, to reduce or cancel a bonus or commissions to an officer.

The Company shall be entitled to adopt, from time to time, plans for distributing options to be exercised for shares in the Company, plans for granting shares, restricted shares and/or restricted share units (RSUs) and so forth (in this section: "Securities"), to the officers, with the purpose of maintain the officers with the Company for the long term as well of incentivizing the officers in the Company to meet the annual and perennial work plan's targets or any other target determined by the Compensation Committee and the Board of Directors of the Company (including a share price target or company value target on the exchange on which the Company's shares are traded), all in accordance with the terms specified in this Compensation Policy, below inn connection with officers.

The Company shall be entitled to grant Securities based such plans including to officers, from time to time, in accordance with the education, qualifications, expertise, professional experience, position, areas of responsibility, and measure of contribution to the Company of the relevant officer.

43

The fair value of the Securities granted to each director on the grant date, in annual terms, based on a linear calculation, shall not exceed the sum of NIS 300,000.

It is clarified that unless otherwise stipulated by the Compensation Committee and the Board of Directors and subject to the provisions of all laws (including the provisions of the Companies Law-1999 (the "Companies Law") and the provisions of the Stock Exchange bylaws), the exercise price of shares and restricted share units is zero.

44

The Compensation Committee and the Board of Directors will be entitled to stipulate that on the occurrence of an Acceleration Event (as defined, below), or as a result of the end of an engagement because of death or disability, the vesting of the Securities granted to the officer, in whole or in part, will accelerate, including in relation to Securities granted prior to approval of this Compensation Policy.

"Acceleration Event" means one or more of the following events, when the Company has exclusive discretion to decide in relation to each grant of Securities, which of the below events will be included under the definition of an Acceleration Event in relation to that same grant (and provided that the definition will include at least one event from the below list): (A) Change in control (as this term is defined in the Securities Law of 1968) in the Company; (B) sale of all or most of the Company's assets; (C) a grant of a worldwide, exclusive license to all or most of the Company's intellectual property; (D) a merger, after which those who were shareholders in the Company prior to the merger will hold less than 50% (or any lower percentage determined by the Compensation Committee and the Board of Directors) of the issued equity and voting rights in the surviving or acquiring corporation, as applicable, after the merger; (D) an initial public offering (IPO) in the US.

45

46

The Company is entitled to employ the officer as an independent contractor and not as a salaried employee. In such case, all of the ceilings stipulated in this document will be translated to employer cost terms in order to examine whether the terms of the employment of that same officer meet the principles of this Compensation Policy, which shall apply to him mutatis mutandis. In such case, the term "employment agreement" in this policy shall be called an "agreement for the provision of services" or a "consulting agreement," as applicable.

Notwithstanding the provisions of this Compensation Policy, the cap (including fix components and variable components) for the compensation of an officer living outside of Israel for the purpose of performing his duties overseas shall be according to the compensation common for similar functionaries in the Company or functionaries in other publicly traded companies similar in size and character to the Company and who live in that same state.

47

48

In the event in which the Company's audited and consolidated financial statements are amended for any year, in such manner that had the amount of the grant, which was due to the officer with respect to that same year, been calculated according to the amended data, the officer would have received a grant in a different amount, the Company shall pay the officer, or the officer shall reimburse the Company, as applicable, the difference between the amount of the grant received and that to which he would have been entitled as a result of said amendment, provided that a period of three (3) years has not passed from the date on which the grant whose reimbursement is sought was made. The manner of payment or reimbursement of such sums, as applicable, including spreading such sums into incremental payments, payment dates, linkage of such sums, etc., shall be determined by the Compensation Committee and Board of Directors of the Company.

The Compensation Policy shall remain in effect for a period of three years, commencing on the date of approval of the Compensation Policy by the general meeting.

49

The Compensation Committee and the Board of Directors of the Company examined the ratios between the cost of the terms of service and employment of the officers and the cost⁵ of salary of the rest of the employees of the Company and contractors employed by the Company,⁶ and in particular – the ratios to the average salary and the median salary of such employees, as of the date of the approval of this Compensation Policy, and determined that these ratios are not expected to have an impact on the employment relationships in the Company with regard, inter alia, to the manner of the Company's activities and its size as well as the responsibility borne by the various officers in the Company and the complexity of their positions.

50

* * * * *

51