As
filed with the Securities and Exchange Commission on March 1, 2019
Registration
No. 333-_____
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
INTEC
PHARMA LTD.
(Exact
name of registrant as specified in its charter)
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Israel
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Not
Applicable
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(State
or other jurisdiction of
incorporation or organization)
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(IRS.
Employer
Identification
No.)
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12
Hartom Street, Har Hotzvim
Jerusalem 9777512, Israel
Tel: (+972) (2) 586-4657
(Address
and telephone number of registrant’s principal executive offices)
Intec
Pharma, Inc.
3
Columbus Circle - 15th Floor
New
York, NY 10019
(646)
374-8050
(Name,
address and telephone number of agent for service)
Copies
of all communications, including communications sent to agent for service, should be sent to:
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Dr.
Shachar Hadar, Adv.
Meitar
Liquornik Geva Leshem Tal
16 Abba Hillel Silver Rd.
Ramat Gan 52506, Israel
Tel:
(+972) (3) 610-3100
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Gary
Emmanuel, Esq.
McDermott
Will & Emery LLP
340
Madison Ave.
New
York, NY 10173
Tel:
(212) 547-5400
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Approximate
date of commencement of proposed sale to the public:
From
time to time after this Registration Statement becomes effective as determined by market conditions
If
the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please
check the following box. ☐
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check
the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become
effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If
this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following
box. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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☐
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Accelerated filer
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☒
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Non-accelerated
filer
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☐
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Smaller reporting company
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☒
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Emerging
growth company
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☒
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
☒
CALCULATION
OF REGISTRATION FEE
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Title of each class of securities to be registered
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Proposed maximum
aggregate offering
price
(1)(2)
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Amount of registration
fee
(3)
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Ordinary Shares, no par value
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-
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Warrants
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-
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-
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Subscription Rights
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-
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Debt Securities
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-
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-
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Units
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-
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Total
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$
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200,000,000
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$
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24,240.00
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(1)
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There are being
registered under this registration statement such indeterminate number of ordinary shares, warrants, subscription rights,
debt securities, and units, as may be sold by the registrant from time to time, which collectively shall have an aggregate
initial offering price not to exceed $200,000,000. The securities registered hereunder also include such indeterminate number
of ordinary shares as may be issued upon conversion, exercise or exchange of warrants or debt securities that provide for
such conversion into, exercise for or exchange into ordinary shares. In addition, pursuant to Rule 416 under the Securities
Act of 1933, as amended, or the Securities Act, the ordinary shares being registered hereunder include such indeterminate
number of ordinary shares as may be issuable with respect to the shares being registered hereunder as a result of stock splits,
stock dividends, or similar transactions. If any debt securities are issued at an original issue discount, then
the offering may be in such greater principal amount as shall result in a maximum aggregate offering price not to exceed $200,000,000
after the date hereof.
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(2)
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Not specified as
to each class of securities to be registered pursuant to General Instruction II.D. of Form S-3. The proposed maximum
offering price per unit and proposed maximum aggregate offering price per class of security will be determined from time to
time by the registrant in connection with the issuance by the registrant of the securities registered under this registration
statement.
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(3)
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Calculated pursuant
to Rule 457(o) under the Securities Act of 1933, which permits the registration fee to be calculated on the basis of the maximum
offering price of all the securities listed.
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The
registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY
NOTE
This
registration statement contains two prospectuses:
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a base prospectus
which covers the offering, issuance and sale of such indeterminate number of ordinary shares, warrants, subscription rights,
debt securities, and units, which together shall have an aggregate initial offering price not to exceed $200,000,000; and
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a sales agreement
prospectus supplement covering the offering, issuance and sale by the registrant of up to a maximum aggregate offering price
of $75,000,000 of the registrant’s ordinary shares that may be issued and sold from time to time under a sales agreement
with Cowen and Company, LLC.
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The
base prospectus immediately follows this explanatory note. The specific terms of any securities to be offered pursuant to the
base prospectus will be specified in a prospectus supplement to the base prospectus. The sales agreement prospectus immediately
follows the base prospectus. The ordinary shares that may be offered, issued and sold under the Sales Agreement prospectus is
included in the $200,000,000 of securities that may be offered, issued and sold by the registrant under the base prospectus.
Upon
termination of the Sales Agreement, any portion of the $75,000,000 included in the sales agreement prospectus that is
not sold pursuant to the Sales Agreement will be available for sale in other offerings pursuant to the base prospectus.
The
information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until
the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to
sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is
not permitted.
SUBJECT
TO COMPLETION, DATED MARCH 1, 2019
PROSPECTUS
$200,000,000
Ordinary
Shares
Warrants
to Purchase Ordinary Shares
Subscription
Rights
Debt
Securities
Units
INTEC
PHARMA LTD.
We
may offer, issue and sell from time to time up to US $200,000,000, of our ordinary shares, warrants to purchase ordinary
shares, subscription rights, debt securities and a combination of such securities, separately or as units, in one or more
offerings. This prospectus provides a general description of offerings of these securities that we may undertake.
We
refer to the ordinary shares, warrants, subscription rights, debt securities and units collectively as “securities”
in this prospectus.
Each
time we sell securities pursuant to this prospectus, we will provide a supplement to this prospectus that contains specific information
about the offering and the specific terms of the securities offered. This prospectus may not be used to consummate a sale of securities
by us unless accompanied by the applicable prospectus supplement. You should read this prospectus and the applicable prospectus
supplement carefully before you invest in our securities.
We
may, from time to time, offer and sell the securities through public or private transactions, directly or through underwriters,
agents or dealers, on or off the Nasdaq Capital Market at prevailing market prices or at privately negotiated prices. If any underwriters,
agents or dealers are involved in the sale of any of these securities, the applicable prospectus supplement will set forth the
names of the underwriters, agents or dealers and any applicable fees, commissions or discounts. Our net proceeds from the sale
of securities will also be set forth in the applicable prospectus supplement
Our
ordinary shares are traded on the Nasdaq Capital Market under the symbol “NTEC.” The closing price of our ordinary
shares, as reported on the Nasdaq Capital Market on February 27, 2019 was $8.93.
We
are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and,
as such, we have elected to take advantage of certain reduced public company reporting requirements for this prospectus and future
filings.
Investing
in our securities involves risks. See the section entitled “Risk Factors” included in or incorporated by reference
into the accompanying prospectus supplement and in the documents we incorporate by reference in this prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is ,
2019
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or SEC, utilizing a
“shelf” registration process. Under this shelf registration process, we may offer and sell separately or together
in any combination the securities described in this prospectus in one or more offerings up to a total price to the public of $200,000,000.
The offer and sale of securities under this prospectus may be made from time to time, in one or more offerings, in any manner
described under the section in this prospectus entitled “Plan of Distribution.” This prospectus does not contain all
of the information set forth in the registration statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. Accordingly, you should refer to the registration statement and its exhibits for further information about
us and our securities. Copies of the registration statement and its exhibits are on file with the SEC. Statements contained in
this prospectus concerning the documents we have filed with the SEC are not intended to be comprehensive, and in each instance
we refer you to a copy of the actual document filed as an exhibit to the registration statement or otherwise filed with the SEC.
This
prospectus provides you with a general description of the securities we may offer. Each time we sell securities we will provide
this prospectus and a prospectus supplement that will contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this prospectus, and may also contain information about any
material federal income tax considerations relating to the securities covered by the prospectus supplement. You should carefully
read both this prospectus and any prospectus supplement together with additional information under the headings “Where You
Can Find More Information” and “Incorporation of Certain Documents by Reference.”
We
have not authorized anyone to provide you with information different from that contained or incorporated by reference in this
prospectus or any accompanying prospectus supplement or any “free writing prospectus.” We are offering to sell, and
seeking offers to buy, securities only in jurisdictions where offers and sales are permitted. The information contained in this
prospectus and in any accompanying prospectus supplement is accurate only as of the dates of their covers, regardless of the time
of delivery of this prospectus or any prospectus supplement or of any sale of our securities. Our business, financial condition,
results of operations, and prospects may have changed since those dates. You should rely only on the information contained or
incorporated by reference in this prospectus or any accompanying prospectus supplement. To the extent there is a conflict between
the information contained in this prospectus and the prospectus supplement, you should rely on the information in the prospectus
supplement, provided that if any statement in one of these documents is inconsistent with a statement in another document having
a later date — for example, a document incorporated by reference into this prospectus or any prospectus supplement —
the statement in the document having the later date modifies or supersedes the earlier statement.
This
prospectus incorporates by reference market data and certain industry data and forecasts that were obtained from market research
databases, consultant surveys commissioned by us, publicly available information, reports of governmental agencies and industry
publications and surveys. Industry surveys, publications, consultant surveys commissioned by us and forecasts generally state
that the information contained therein has been obtained from sources believed to be reliable. We have relied on certain data
from third-party sources, including internal surveys, industry forecasts and market research, which we believe to be reliable
based on our management’s knowledge of the industry. Statements as to our market position are based on the most currently
available data. While we are not aware of any misstatements regarding the industry data presented in this annual report, our estimates
involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings
“Risk Factors” in this prospectus, and under similar headings in the other documents that are incorporated herein
by reference.
Certain
figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
When
used herein, unless the context requires otherwise, references to the “Company, “we,” “our,” and
“us” refer to Intec Pharma Ltd., an Israeli company, and its U.S. subsidiary Intec Pharma Inc., unless the context
otherwise requires.
RISK
FACTORS
Before
purchasing any of the securities you should carefully consider the risk factors set forth below and incorporated by reference
in this prospectus from our most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current
Report on Form 8-K, as well as the risks, uncertainties and additional information set forth in our SEC reports on Forms 10-K,
10-Q and 8-K and in the other documents incorporated by reference in this prospectus. For a description of these reports and documents,
and information about where you can find them, see “Where You Can Find More Information” and “Incorporation
of Certain Documents By Reference.” Additional risks not presently known or that we presently consider to be immaterial
could subsequently materially and adversely affect our financial condition, results of operations, business and prospects.
FORWARD-LOOKING
STATEMENTS
This
prospectus, including the information incorporated by reference into this prospectus, contains, and any prospectus supplement
may contain statements that are forward-looking statements about our expectations, beliefs or intentions regarding, among other
things, our product development efforts, business, financial condition, results of operations, strategies, plans and prospects.
In addition, from time to time, we or our representatives have made or may make forward-looking statements, orally or in writing.
Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,”
“intend,” “plan,” “may,” “should,” “anticipate,” “could,”
“might,” “seek,” “target,” “will,” “project,” “forecast,”
“continue” or their negatives or variations of these words or other comparable words or by the fact that these statements
do not relate strictly to historical matters. These forward-looking statements may be included in, among other things, various
filings made by us with the SEC, press releases or oral statements made by or with the approval of one of our authorized executive
officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they
are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject
to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied
by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities
and results anticipated in forward-looking statements, including, but not limited to:
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we
are a clinical stage biopharmaceutical company with a history of operating losses, are
not currently profitable, do not expect to become profitable in the near future and may
never become profitable;
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our
independent registered public accounting firm has expressed substantial doubt regarding
our ability to continue as a going concern;
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because
of our limited operating history, we may not be able to successfully operate our business
or execute our business plan;
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we
face continuous technological change, and developments by competitors may render our
products or technologies obsolete or non-competitive. If our new or existing product
candidates are rendered obsolete or non-competitive, our marketing and sales will suffer
and we may never be profitable;
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we
license our core technology on an exclusive basis from Yissum (Hebrew University), and
we could lose our rights to this license if a dispute with Yissum arises or if we fail
to comply with the financial and other terms of the license;
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if
we fail to adequately protect, enforce or secure rights to the patents which were licensed
to us or any patents we may own in the future, the value of our intellectual property
rights would diminish and our business and competitive position would suffer;
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our
product candidates are at various stages of preclinical and clinical development and
may never be commercialized;
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we
cannot be certain that the results of our ACCORDANCE study or any future Phase III clinical
trial, even if all endpoints are met, will support regulatory approval of any of our
product candidates for any indication;
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our
product candidates are subject to extensive regulation and are at various stages of regulatory
development and may never obtain regulatory approval;
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we
are subject to anti-kickback laws and regulations. Our failure to comply with these laws
and regulations could have adverse consequences to us; and
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potential
political, economic and military instability in the State of Israel, where some of our
senior management, our head executive office, research and development, and manufacturing
facilities are located, may adversely affect our results of operations.
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We
believe these forward-looking statements are reasonable; however, these statements are only current predictions and are subject
to known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels
of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements.
We discuss many of these risks in this prospectus in greater detail under the heading “Risk Factors” and elsewhere
in this prospectus. Given these uncertainties, you should not rely upon forward-looking statements as predictions of future events.
All
forward-looking statements attributable to us or persons acting on our behalf speak only as of the date hereof and are expressly
qualified in their entirety by the cautionary statements included in this prospectus. We undertake no obligations to update or
revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence
of unanticipated events, except as required by law. In evaluating forward-looking statements, you should consider these risks
and uncertainties and not place undue reliance on our forward-looking statements.
OUR
BUSINESS
We
are a clinical stage biopharmaceutical company focused on developing drugs based on our proprietary Accordion Pill platform technology,
which we refer to as the Accordion Pill. Our Accordion Pill is an oral drug delivery system that is designed to improve the efficacy
and safety of existing drugs and drugs in development by utilizing an efficient gastric retention and specific release mechanism.
Our product pipeline currently includes several product candidates in various clinical trial stages. Our leading product candidate,
Accordion Pill Carbidopa/Levodopa, or AP-CD/LD, is being developed for the indication of treatment of Parkinson’s disease
symptoms in advanced Parkinson’s disease patients. We have successfully completed a Phase II clinical trial for AP-CD/LD
for the treatment of Parkinson’s disease symptoms in advanced Parkinson’s disease patients and have agreed with the
U.S. Food and Drug Administration, or FDA, on the remaining clinical development program for AP-CD/LD for the treatment of Parkinson’s
disease symptoms in advanced Parkinson’s disease patients, including the main principles of the single required pivotal
Phase III clinical trial in advanced Parkinson’s disease patients.
We
are currently conducting a pivotal Phase III clinical for AP-CD/LD for the treatment of advanced Parkinson’s disease known
as the ACCORDANCE study. In April 2016, we enrolled the first patient in the ACCORDANCE study and in October 2018, we completed
enrollment. We currently expect to release top-line results in mid-2019. In our correspondence with the FDA, the FDA previously
agreed that an acceptable regulatory pathway for AP-CD/LD would be to submit a new drug application, or NDA, pursuant to Section
505(b)(2) of the Federal Food, Drug, and Cosmetic Act, which is a streamlined approval pathway that may accelerate the time to
commercialize and decrease the costs of FDA approval for AP–CD/LD, as compared to those typically associated with a new
chemical entity.
In
February 2019, we announced that AP-CD/LD met the primary endpoint in a pharmacokinetic, or PK, study comparing the AP-CD/LD 50/500mg
dosed three times daily, the most common dose used in our on-going ACCORDANCE study, to 1.5 tablets of CD/LD immediate release
(Sinemet™) 25/100 dosed five times per day in Parkinson's disease patients.
We
have invested in the commercial scale manufacture of AP-CD/LD, for which we are in partnership with LTS Lohmann Therapie-Systeme
AG, or LTS. In December 2018, the large commercial scale production line was delivered to LTS in Andernacht, Germany, and we are
in the process of installing and connecting all the ancillary equipment. During 2019, we plan to begin the validation, bridging
and stability studies needed for regulatory filing and expect these should put us on track for a submission with the FDA in mid-to-late
2020.
In
addition, we have initiated a clinical development program for our Accordion Pill platform with the two primary cannabinoids contained
in cannabis sativa, which we refer to as AP-Cannabinoids. We are formulating and testing cannabidiol, or CBD, and 9-tetrahydrocannabinol,
or THC, for the treatment of various pain indications. AP-Cannabinoids are designed to extend the absorption phase of CBD and
THC, with the goal of more consistent levels for an improved therapeutic effect which may address several major drawbacks of current
methods of treatment, such as short duration of effect, delayed onset, variability of exposure, variability of the administered
dose and adverse events that correlate with peak levels. In March 2017, we initiated a Phase I single-center, single-dose, randomized,
three-way crossover clinical trial in Israel to compare the safety, tolerability and PK of AP-THC/CBD, with Sativex
®
,
an oral buccal spray containing CBD and THC that is commercially available outside of the United States. Initial results demonstrate
that the Accordion Pill platform is well-suited to safely deliver CBD and THC with significant improvements in exposure compared
with Sativex. In December 2018, we initiated a PK study of AP-THC. We have completed the dosing of the AP-THC PK study and the
data is in the process of being analyzed by a third party contract research organization per protocol. However, upon raw data
review, the delivery of THC does not appear to meet our full program expectations. We await the full dataset and the statistical
analysis to determine our next steps.
In
December 2018, we reported that we successfully developed an Accordion Pill for a Novartis proprietary compound that met the required
in vitro
specifications set forth in a feasibility agreement with Novartis. We have mutually agreed to proceed
with the program and plan to enter the clinic with a first-in-human PK study in the first half of 2019. We believe continued success
with this program further validates the platform, confirms our technical abilities to build custom APs and paves the way for additional
collaborative agreements.
Our
registered office and principal place of business is located at 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel and our
telephone number in Israel is +972 (2) 586 4657. Our website address is http://www.intecpharma.com. The information contained
on our website or available through our website does not constitute part of this prospectus. Our registered agent in the United
States is Intec Pharma, Inc., whose address is 3 Columbus Circle – 15th Floor, New York, NY 10019 USA.
USE
OF PROCEEDS
Unless
otherwise indicated in an accompanying prospectus supplement, the net proceeds from the sale of securities will be used for our
clinical trials, to advance our pre-commercial activities, for working capital and for general corporate purposes. Pending these
uses, we may invest the net proceeds from the sale of securities in accordance with our investment policy, as may be amended from
time to time, which currently includes bank deposits carrying interest, corporate debt obligations with a minimum
of an A rating by global rating agencies and investments in United States Government Securities and Israeli Government Securities.
When specific securities are offered, the prospectus supplement relating thereto will set forth our intended use of the net proceeds
that we receive from the sale of such securities.
THE SECURITIES WE MAY
OFFER
General
The
descriptions of the securities contained in this prospectus, together with the applicable prospectus supplements, summarize all
of the material terms and provisions of the various types of securities that we may offer. We will describe in the applicable
prospectus supplement relating to any securities the particular terms of the securities offered by that prospectus supplement.
If we indicate in the applicable prospectus supplement, the terms of the securities may differ from the terms we have summarized
below. We may also include in the prospectus supplement information about material United States federal income tax considerations
relating to the securities, and the securities exchange, if any, on which the securities will be listed.
We
may sell from time to time, in one or more offerings:
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ordinary shares;
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warrants
to purchase ordinary shares;
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subscription
rights to purchase ordinary shares or debt securities;
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debt
securities; and
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units consisting
of any combination of the securities listed above.
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In
this prospectus, we refer to the ordinary shares, subscription rights, warrants, debt securities and units collectively as “securities.”
The total dollar amount of all securities that we may sell will not exceed $200,000,000.
If
we issue debt securities at a discount from their original stated principal amount, then, for purposes of calculating the total
dollar amount of all securities issued under this prospectus, we will treat the initial offering price of the debt securities
as the total original principal amount of the debt securities.
This
prospectus may not be used to consummate a sale of securities unless it is accompanied by a prospectus supplement.
DESCRIPTION
OF ORDINARY SHARES
General
The
following are summaries of material provisions of our articles of association and the Israeli Companies Law 5759-1999, or the
Companies Law, insofar as they relate to the material terms of our ordinary shares.
As
of February 27, 2019, our authorized share capital consists of 100,000,000 ordinary shares, no par value, 33,232,988 of which
are issued and outstanding. All of our outstanding ordinary shares are validly issued, fully paid and non-assessable. Our ordinary
shares are not redeemable and do not have any preemptive rights.
Holders
of our ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders at a shareholder
meeting. Because our ordinary shares do not have cumulative voting rights in the election of directors, the holders of a majority
of the voting power represented at a shareholders meeting have the power to elect all of our directors, subject to the special
approval requirements for external directors (if applicable). Shareholders may vote at shareholder meetings either in person,
by proxy or by written ballot. The Companies Law does not allow public companies to adopt shareholder resolutions by means of
written consent in lieu of a shareholder meeting. The board of directors shall determine and provide a record date for each shareholders
meeting and all shareholders at such record date may vote. Unless stipulated differently in the Companies Law or in our articles
of association, all shareholders’ resolutions shall be approved by a simple majority vote. An amendment to our articles
of association requires the prior approval of a simple majority of our shares represented and voting at a general meeting and
of the holders of a class of shares whose rights are being affected. Our number with the Israeli Registrar of Companies is 513022780.
Our purpose is set forth in Section 2 of our articles of association and as to engage in any legal business.
Transfer
of Shares
Our
ordinary shares that are fully paid for are issued in registered form and may be freely transferred under our articles of association,
unless the transfer is restricted or prohibited by applicable law or the rules of a stock exchange on which the shares are traded.
The ownership or voting of our ordinary shares by non-residents of Israel is not restricted in any way by our articles of association
or Israeli law, except for ownership by nationals of some countries that are, or have been, in a state of war with Israel.
Exercise
of Power by the Board
Pursuant
to the Companies Law and our articles of association, our board of directors may exercise all powers and take all actions that
are not required under law or under our articles of association to be exercised or taken by our shareholders, including the power
to borrow money for company purposes.
Changes
in Share Capital
Our
articles of association enable us to increase or reduce our share capital. Any such change is subject to the provisions of the
Companies Law and must be approved by a resolution duly passed by our shareholders at a general or special meeting by voting on
such change in the capital. In addition, transactions that have the effect of reducing capital, such as the declaration and payment
of dividends in the absence of sufficient retained earnings and profits and an issuance of shares for less than their nominal
value, require a resolution of our board of directors and court approval.
Dividends
Under
the Companies Law, we may declare and pay dividends only if, upon the determination of our board of directors, there is no reasonable
concern that the distribution will prevent us from being able to meet the terms of our existing and foreseeable obligations as
they become due. Under the Companies Law, the distribution amount is further limited to the greater of retained earnings or earnings
generated over the two most recent years legally available for distribution according to our then last reviewed or audited financial
statements, provided that the date of the financial statements is not more than six months prior to the date of distribution.
In the event that we do not have retained earnings or earnings generated over the two most recent years legally available for
distribution, we may seek the approval of the court in order to distribute a dividend. The court may approve our request if it
is convinced that there is no reasonable concern that the payment of a dividend will prevent us from satisfying our existing and
foreseeable obligations as they become due.
Shareholder
Meetings
Under
the Companies Law, we are required to hold an annual general meeting of our shareholders once in every calendar year and no later
than 15 months following the date of the previous annual general meeting. All meetings other than the annual general meeting of
shareholders are referred to as special meetings. Our board of directors may call special meetings whenever it deems fit, at such
time and place, within or outside of Israel, as it may determine. In addition, the Companies Law and our articles of association
provide that our board of directors is required to convene a special meeting upon the written request of (i) any two of our directors
or one quarter of the directors then in office or (ii) one or more shareholders holding, in the aggregate, (a) 5% of our issued
share capital and 1% of our outstanding voting power or (b) 5% of our outstanding voting power.
Subject
to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote
at general meetings are the shareholders of record on a date to be decided by the board of directors. Furthermore, the Companies
Law and our articles of association require that resolutions regarding the following matters must be passed at a general meeting
of our shareholders:
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amendments to our
articles of association;
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appointment or termination
of our auditors;
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appointment and
dismissal of external directors (if applicable);
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approval of acts
and transactions requiring general meeting approval pursuant to the Companies Law;
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director compensation
and compensation of the principal executive officer (subject to certain exceptions);
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increases or reductions
of our authorized share capital;
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the exercise of
our board of directors’ powers by a general meeting, if our board of directors is unable to exercise its powers and
the exercise of any of its powers is required for our proper management; and
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authorization of
the chairman of the board of directors or his relative to act as the company’s chief executive officer or act with such
authority; or authorization of the company’s chief executive officer or his relative to act as the chairman of the board
of directors or act with such authority.
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The
Companies Law requires that a notice of any annual or special shareholders meeting be provided at least 21 days prior to the meeting
and if the agenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders
or interested or related parties, or an approval of a merger, notice must be provided at least 35 days prior to the meeting.
The
Companies Law does not allow shareholders of publicly traded companies to approve corporate matters by written consent.
Pursuant
to our articles of association, holders of our ordinary shares have one vote for each ordinary share held on all matters submitted
to a vote before the shareholders at a general meeting.
Quorum
The
quorum required for our general meetings of shareholders consists of at least two shareholders present in person, by proxy or
written ballot who hold or represent between them at least thirty three and one third percent (33
1/3
%) of the total
outstanding voting rights, within half an hour from the appointed time.
A
meeting adjourned for lack of a quorum is adjourned to the same day in the following week at the same time and place or on a later
date if so specified in the summons or notice of the meeting. At the reconvened meeting, the quorum required consists of at least
two shareholders present in person, by proxy or written ballot who hold or represent between them at least thirty three and one
third percent (33
1/3
%) of the total outstanding voting rights, within half an hour from the appointed time.
Resolutions
Our
articles of association provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required
by applicable law.
Under
the Companies Law, a shareholder of a public company may vote in a meeting and in a class meeting by means of a written ballot
in which the shareholder indicates how he or she votes on resolutions relating to the following matters:
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an appointment or
removal of directors;
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an approval of transactions
with office holders or interested or related parties, that require shareholder approval;
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an approval of a
merger;
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authorizing the
chairman of the board of directors or his relative to act as the company’s chief executive officer or act with such
authority; or authorize the company’s chief executive officer or his relative to act as the chairman of the board of
directors or act with such authority;
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any other matter
that is determined in the articles of association to be voted on by way of a written ballot. Our articles of association do
not stipulate any additional matters; and
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other matters which
may be prescribed by Israel’s Minister of Justice.
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The
Companies Law provides that a shareholder, in exercising his or her rights and performing his or her obligations toward the company
and its other shareholders, must act in good faith and in a customary manner, and avoid abusing his or her power. This is required
when voting at general meetings on matters such as changes to the articles of association, increasing the company’s authorized
share capital, mergers and approval of certain interested or related party transactions. A shareholder also has a general duty
to refrain from depriving any other shareholder of its rights as a shareholder. In addition, any controlling shareholder, any
shareholder who knows that its vote can determine the outcome of a shareholder’s vote and any shareholder who, under such
company’s articles of association, can appoint or prevent the appointment of an office holder or has other power towards
the company, is required to act with fairness towards the company. The Companies Law does not describe the substance of this duty
except that the remedies generally available upon a breach of contract will also apply to a breach of the duty to act with fairness,
and, to the best of our knowledge, we believe there is no binding case law that addresses this subject directly.
Under
the Companies Law, unless provided otherwise in a company’s articles of association, a resolution at a shareholders meeting
requires approval by a simple majority of the voting rights represented at the meeting, in person, by proxy or written ballot,
and voting on the resolution. Generally, a resolution for the voluntary winding up of the company requires the approval of holders
of 75% of the voting rights represented at the meeting, in person, by proxy or by written ballot and voting on the resolution.
In
the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of
our ordinary shares in proportion to their shareholdings. This right, as well as the right to receive dividends, may be affected
by the grant of preferential dividend or distribution rights to the holders of a class of shares with preferential rights that
may be authorized in the future.
Access
to Corporate Records
Under
the Companies Law, all shareholders of a company generally have the right to review minutes of the company’s general meetings,
its shareholders register and principal shareholders register, its articles of association, its financial statements and any document
it is required by law to file publicly with the Israeli Companies Registrar and the Israeli Securities Authority, or ISA. Any
of our shareholders may request access to review any document in our possession that relates to any action or transaction with
a related party, interested party or office holder that requires shareholder approval under the Companies Law. We may deny a request
to review a document if we determine that the request was not made in good faith, that the document contains a commercial secret
or a patent or that the document’s disclosure may otherwise prejudice our interests.
Acquisitions
under Israeli Law
Full
Tender Offer
A
person wishing to acquire shares or a class of shares of an Israeli public company and who would, as a result, own more than 90%
of the target company’s issued and outstanding share capital or of a certain class of its shares, is required by the Companies
Law to make a full tender offer (as defined in the Companies Law) to all of the company’s shareholders for the purchase
of all of the issued and outstanding shares of the company or class of shares. If either (i) the shareholders who do not accept
the offer hold, in the aggregate, less than 5% of the issued and outstanding share capital of the company or of the applicable
class, and more than half of the shareholders who do not have a personal interest in the offer accept the offer, or (ii) the shareholders
who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the applicable
class, then all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However,
a shareholder that had its shares so transferred, whether or not it accepted the tender offer (unless otherwise provided in the
offering memorandum), may, within six months from the date of acceptance of the tender offer, petition the court to determine
that the tender offer was for less than fair value and that the fair value should be paid as determined by the court. If either
(i) the shareholders who did not accept the tender offer hold at least 5% of the issued and outstanding share capital of the company
or of the applicable class of shares or the shareholders who accept the offer constitute less than a majority of the offerees
that do not have a personal interest in the acceptance of the tender offer, or (ii) the shareholders who did not accept the tender
offer hold 2% or more of the issued and outstanding share capital of the company (or of the applicable class), the acquirer may
not acquire shares of the company that will increase its holdings to more than 90% of the company’s issued and outstanding
share capital or of the applicable class from shareholders who accepted the tender offer. Shares purchased not in accordance with
those provisions shall become “dormant shares” and shall not grant the purchaser any rights so long as they are held
by the purchaser.
Special
Tender Offer
According
to the Companies Law, an acquisition pursuant to which a purchaser shall hold a “controlling stake”, that is
defined as 25% or more of the voting rights if no other shareholder holds a controlling stake, or an acquisition pursuant to which
such purchaser shall hold more than 45% of the voting rights of the company if no other shareholder owns more than 45% of the
voting rights, may not be performed by way of market accumulation, but only by way of a special tender offer (as defined in the
Companies Law) made to all of the company’s shareholders on a pro rata basis. A special tender offer may not be consummated
unless a majority of the shareholders who announced their stand on such offer have accepted it (in counting the total votes of
such shareholders, shares held by the controlling shareholders, shareholders who have a personal interest in the offer, shareholders
who own 25% or more of the voting rights in the company, relatives or representatives of any of the above or the bidder and corporations
under their control, shall not be taken into account). A shareholder may be free to object to such an offer without such objection
being deemed as a waiver of his right to sell its respective shares if the transaction is approved by a majority of the company’s
shareholders despite his objection. Shares purchased not in accordance with those provisions shall become “dormant shares”
and shall not grant the purchaser any rights so long as they are held by the purchaser. If a special tender offer is accepted,
then the purchaser or any person or entity controlling it or under common control with the purchaser or such controlling person
or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger
with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook
to effect such an offer or merger in the initial special tender offer.
Under
regulations enacted pursuant to the Companies Law, the above special tender offer requirements may not apply to companies whose
shares are listed for trading on a foreign stock exchange if, among other things, the relevant foreign laws or the rules of the
stock exchange include provisions limiting the percentage of control which may be acquired or that the purchaser is required to
make a tender offer to the public. However, we believe the ISA’s current opinion is that such leniency does not apply with
respect to companies whose shares are listed for trading on stock exchanges in the United States, including the Nasdaq Capital
Market.
Merger
The
Companies Law permits merger transactions if approved by each party’s board of directors and, unless certain requirements
described under the Companies Law are met, a majority of each party’s shares voted on the proposed merger at a shareholders’
meeting called with at least 35 days’ prior notice.
For
purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the
shares represented at the shareholders meeting that are held by parties other than the other party to the merger, or by any person
who holds 25% or more of the outstanding shares or the right to appoint 25% or more of the directors of the other party, vote
against the merger. If the transaction would have been approved but for the separate approval of each class or the exclusion of
the votes of certain shareholders as provided above, a court may still approve the merger upon the request of holders of at least
25% of the voting rights of a company, if the court holds that the merger is fair and reasonable, taking into account the value
of the parties to the merger and the consideration offered to the shareholders.
Upon
the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that
there exists a reasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations
of any of the parties to the merger, and may further give instructions to secure the rights of creditors.
In
addition, a merger may not be completed unless at least 50 days have passed from the date that a proposal for approval of the
merger was filed by each party with the Israeli Registrar of Companies and 30 days have passed from the date the merger was approved
by the shareholders of each party.
Antitakeover
Measures
The
Companies Law allows us to create and issue shares having rights different from those attached to our ordinary shares, including
shares providing certain preferred rights, distributions or other matters and shares having preemptive rights. As of the date
of this prospectus, we do not have any authorized or issued shares other than our ordinary shares. In the future, if we do create
and issue a class of shares other than ordinary shares, such class of shares, depending on the specific rights that may be attached
to them, may delay or prevent a takeover or otherwise prevent our shareholders from realizing a potential premium over the market
value of their ordinary shares. The authorization of a new class of shares will require an amendment to our articles of association
which requires the prior approval of the holders of a majority of our shares at a general meeting.
DESCRIPTION
OF WARRANTS
We
may issue and offer warrants under the material terms and conditions described in this prospectus and any accompanying prospectus
supplement. The accompanying prospectus supplement may add, update or change the terms and conditions of the warrants as described
in this prospectus.
We
may issue warrants to purchase ordinary shares. Warrants may be issued independently or together with any other securities and
may be attached to, or separate from, such securities. Each series of warrants will be issued under a separate warrant agreement
to be entered into between us and a warrant agent. The warrant agent will act solely as our agent and will not assume any obligation
or relationship of agency for or with holders or beneficial owners of warrants. The terms of any warrants to be issued and a description
of the material provisions of the applicable warrant agreement will be set forth in the applicable prospectus supplement.
The
applicable prospectus supplement will describe the following terms of any warrants in respect of which this prospectus is being
delivered:
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the title of such
warrants;
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the aggregate number
of such warrants;
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the price or prices
at which such warrants will be issued and exercised;
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the currency or
currencies in which the price of such warrants will be payable;
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the securities purchasable
upon exercise of such warrants;
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the date on which
the right to exercise such warrants shall commence and the date on which such right shall expire;
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if applicable, the
minimum or maximum amount of such warrants which may be exercised at any one time;
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if applicable, the
designation and terms of the securities with which such warrants are issued and the number of such warrants issued with each
such security;
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if applicable, the
date on and after which such warrants and the related securities will be separately transferable;
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information with
respect to book-entry procedures, if any;
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material Israeli
and United States federal income tax consequences, if any;
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the anti-dilution
provisions of the warrants, if any; and
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any other terms
of such warrants, including terms, procedures and limitations relating to the exchange and exercise of such warrants.
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The
description in the applicable prospectus supplement of any warrants we offer will not necessarily be complete and will be qualified
in its entirety by reference to the applicable warrant agreement and warrant certificate, which will be filed with the SEC if
we offer warrants. For more information on how you can obtain copies of the applicable warrant agreement and warrant certificate
if we offer warrants, see “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference”
beginning on page 30. We urge you to read the applicable warrant agreement and warrant certificate and any applicable prospectus
supplement in their entirety.
DESCRIPTION
OF SUBSCRIPTION RIGHTS
We
may issue subscription rights to purchase our ordinary shares. These subscription rights may be issued independently or together
with any other security offered hereby and may or may not be transferable by the shareholder receiving the subscription rights
in such offering. In connection with any offering of subscription rights, we may enter into a standby arrangement with one or
more underwriters or other purchasers pursuant to which the underwriters or other purchasers may be required to purchase any securities
remaining unsubscribed for after such offering.
The
prospectus supplement relating to any subscription rights we offer will, to the extent applicable, include specific terms relating
to the offering, including some or all of the following:
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the price, if any,
for the subscription rights;
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the exercise price
payable for each ordinary share upon the exercise of the subscription rights;
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the number of subscription
rights to be issued to each shareholder;
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the number and terms
of the ordinary shares which may be purchased per each subscription right;
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the extent to which
the subscription rights are transferable;
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any other terms
of the subscription rights, including the terms, procedures and limitations relating to the exchange and exercise of the subscription
rights;
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the date on which
the right to exercise the subscription rights shall commence, and the date on which the subscription rights shall expire;
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the extent to which
the subscription rights may include an over-subscription privilege with respect to unsubscribed securities; and
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if applicable, the
material terms of any standby underwriting or purchase arrangement which may be entered into by us in connection with the
offering of subscription rights.
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The
description in the applicable prospectus supplement of any subscription rights we offer will not necessarily be complete and will
be qualified in its entirety by reference to the applicable subscription rights agreement, which will be filed with the SEC if
we offer subscription rights. For more information on how you can obtain copies of the applicable subscription rights agreement
if we offer subscription rights, see “Where You Can Find More Information” and “Incorporation of Certain Documents
by Reference” beginning on page 30. We urge you to read the applicable subscription rights agreement and any applicable
prospectus supplement in their entirety.
DESCRIPTION
OF DEBT SECURITIES
General
We
may issue senior and subordinated debt securities under indentures by and among us, certain of our subsidiaries, if any, and a
trustee
to be named in the senior indenture
, as the indenture trustee. Each indenture
will be subject to, and governed by, the Trust Indenture Act of 1939, as amended, or the Trust Indenture Act, and we may supplement
the indenture from time to time.
This
prospectus summarizes the material provisions of the indentures and the debt securities that we may issue under the indentures.
This summary is not complete and may not describe all of the provisions of the indentures or of any of the debt securities that
might be important to you. For additional information, you should carefully read the forms of indenture and debt securities that
are filed as exhibits to the registration statement of which this prospectus forms a part and any definitive indentures, supplemental
indentures and forms of debt securities that are incorporated by reference as exhibits to such registration statement.
When
we offer to sell a particular series of debt securities, we will describe the specific terms of those debt securities in a supplement
to this prospectus. We will also indicate in the supplement whether the general terms in this prospectus apply to a particular
series of debt securities. Accordingly, for a description of the terms of a particular issue of debt securities, you should carefully
read both this prospectus and the applicable supplement.
In
the summary below, we have included references to the section numbers of the indentures so that you can easily locate the related
provisions in the indentures for additional detail. You should also refer to the applicable indenture for the definitions of any
capitalized terms that we use below but do not define in this prospectus. When we refer to particular sections of the indentures
or to defined terms in the indentures, we intend to incorporate by reference those sections and defined terms into this prospectus.
Terms
The
debt securities will be our direct obligations. The amount of debt securities we may offer under this prospectus is unlimited
as to principal amount. We may issue the debt securities, from time to time and in one or more series, established in or pursuant
to authority granted by one or more resolutions of our board of directors, and set forth in, or determined in the manner provided
in, an officers’ certificate, or established in one or more supplemental indentures. We may issue debt securities with terms
different from those of our previously issued debt securities (Section 301).
Each
indenture provides that there may be more than one trustee under such indenture, each such trustee with respect to one or more
series of debt securities. Any trustee under the indentures may resign or be removed with respect to one or more series of debt
securities, and a successor trustee may be appointed to act with respect to that series (Sections 608 and 609). If two or more
persons act as trustee with respect to different series of debt securities, each trustee shall be a trustee of a trust under that
indenture separate and apart from the trust administered by any other trustee (Sections 101 and 609). Except as otherwise indicated
in this prospectus, each trustee may take any action described in this prospectus only with respect to the one or more series
of debt securities for which it is trustee under the relevant indenture.
You
should refer to the applicable supplement to this prospectus relating to a particular series of debt securities for the specific
terms of the debt securities, including, but not limited to:
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the title of the
debt securities, whether the debt securities will be guaranteed and the identity of the guarantor or guarantors, if any;
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the total principal
amount of the debt securities and any limit on the total principal amount;
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the price, expressed
as a percentage of the principal amount of the debt securities, at which we will issue the debt securities and any portion
of the principal amount payable upon acceleration of the debt securities;
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the terms, if any,
by which holders of the debt securities may convert or exchange the debt securities for our ordinary shares, or any of our
other securities or property;
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if the debt securities
are convertible or exchangeable, any limitations on the ownership or transferability of the securities or property into which
holders may convert or exchange the debt securities;
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the date or dates,
or the method for determining the date or dates, on which we will be obligated to pay the principal of the debt securities
and the amount of principal we will be obligated to pay;
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the rate or rates,
which may be fixed or variable, at which the debt securities of the series will bear interest, if any, or the method by which
the rate or rates will be determined;
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whether the debt
securities rank as senior, senior subordinated or subordinated or any combination thereof and the terms of any subordination;
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the date or dates,
or the method for determining the date or dates, from which any interest will accrue on the debt securities, the dates on
which we will be obligated to pay any interest, the regular record dates, if any, for the interest payments, or the method
by which the dates will be determined, the persons to whom we will be obligated to pay interest and the basis upon which interest
will be calculated, if other than that of a 360-day year consisting of twelve 30-day months;
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the place or places
where the principal of, and any premium, make-whole amount, interest or additional amounts on, the debt securities will be
payable, where the holders of the debt securities may surrender their debt securities for conversion, transfer or exchange,
and where the holders may serve notices or demands to us in respect of the debt securities and the indenture (Section 101);
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whether the debt
securities will be in registered or bearer form, and the terms and conditions relating to the form, and, if in registered
form, the denominations in which we will issue the debt securities if other than $1,000 or a multiple of $1,000 and, if in
bearer form, the denominations in which we will issue the debt securities if other than $5,000;
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the identity of
the trustee of the debt securities of the series and, if other than the trustee, the identity of each security registrar and/or
paying agent for debt securities of the series;
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the period or periods
during which the price or prices, including any premium at which, the currency or currencies in which, and the other terms
and conditions upon which, we may redeem the debt securities at our option, if we have such an option;
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any obligation that
we have to redeem, repay or purchase debt securities under any sinking fund or similar provision or at the option of a holder
of debt securities and the terms and conditions upon which we will redeem, repay or purchase all or a portion of the debt
securities under that obligation;
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the currency or
currencies in which we will sell the debt securities and in which the debt securities will be denominated and payable;
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whether the amount
of payment of principal of, and any premium, make-whole amount or interest on, the debt securities of the series may be determined
with reference to an index, formula or other method and the manner in which the amounts will be determined;
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whether the principal
of, and any premium, make-whole amount, additional amounts or interest on, the debt securities of the series are to be payable,
at our election or at the election of a holder of the debt securities, in a currency or currencies other than that in which
the debt securities are denominated or stated to be payable, the period or periods during which, and the terms and conditions
upon which, this election may be made, and the time and manner of, and identity of the exchange rate agent responsible for,
determining the exchange rate between the currency or currencies in which the debt securities are denominated or stated to
be payable and the currency or currencies in which the debt securities will be payable;
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the designation
of the initial exchange rate agent, if any, or any depositaries;
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any provisions granting
special rights to the holders of the debt securities of the series at the occurrence of named events;
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any additions to,
modifications of or deletions from the terms of the debt securities with respect to the events of default or covenants contained
in the indenture;
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whether the debt
securities of the series will be issued in certificated or book-entry form and the related terms and conditions, including
whether any debt securities will be issued in temporary and/or permanent global form, and if so, whether the owners of interests
in any permanent global debt security may exchange those interests for debt securities of that series and of like tenor of
any authorized form and denomination and the circumstances under which any exchanges may occur, if other than in the manner
provided in the indenture (Section 305), and, if debt securities of or within the series are to be issuable as a global debt
security, the identity of the depositary for such series;
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the date as of which
any bearer securities, and/or temporary global debt security representing outstanding securities of or within the series will
be dated if other than the date of original issuance of the first debt security of the series to be issued;
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if the debt securities
will be issued in definitive form only upon our receipt, or the trustee’s receipt, of certificates or other documents,
or upon the satisfaction of conditions, a description of those certificates, documents or conditions;
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if the debt securities
will be issued upon the exercise of debt warrants, the time, manner and place for the debt securities to be authenticated
and delivered;
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the applicability,
if any, of the defeasance and covenant defeasance provisions of the indenture, as described below under “Modification
of the Indentures—Discharge, Defeasance and Covenant Defeasance”;
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any applicable U.S.
federal income tax consequences, including whether and under what circumstances we will pay any additional amounts, as contemplated
in the indenture on the debt securities, to any holder who is not a U.S. person in respect of any tax, assessment or governmental
charge withheld or deducted and, if we will pay additional amounts, whether, and on what terms, we will have the option to
redeem the debt securities in lieu of paying the additional amounts;
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the provisions,
if any, relating to any security provided for the debt securities of the series;
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any other covenant
or warranty included for the benefit of the debt securities of the series;
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any proposed listing
of the debt securities on any securities exchange or market; and
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any other terms
of the debt securities or of any guarantees issued in connection with the debt securities not inconsistent with the provisions
of the indenture (Section 301).
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The
debt securities may provide for our payment of less than their entire principal amount if their maturity is accelerated as a result
of the occurrence and continuation of an event of default (Section 502). If this is the case, the debt securities would have what
is referred to as “original issue discount.” Any special U.S. federal income tax, accounting and other considerations
applicable to original issue discount securities will be described in the applicable prospectus supplement.
We
may issue debt securities from time to time, with the principal amount payable on any principal payment date, or the amount of
interest payable on any interest payment date, to be determined by reference to one or more currencies or currency exchange rates,
commodity prices, equity indices or other factors. Holders of debt securities with these features may receive payment of a principal
amount on any principal payment date, or a payment of interest on any interest payment date, that is greater than or less than
the amount of principal or interest otherwise payable on the applicable dates, depending upon the value on those dates of the
applicable currencies or currency exchange rates, commodity prices, equity indices or other factors.
Information
as to the methods for determining the amount of principal or interest payable on any date, the currencies or currency exchange
rates, commodity prices, equity indices or other factors to which the amount payable on that date is linked and additional tax
considerations will be included in the applicable prospectus supplement. All debt securities of any one series will be substantially
identical, except as to denomination and except as may otherwise be provided by an officers’ certificate or in any supplement
to the applicable indenture. We are not required to issue all of the debt securities of a series at the same time, and, unless
otherwise provided in the applicable indenture, supplemental indenture or officers’ certificate, we may re-open a series
without the consent of the holders of the debt securities of that series to issue additional debt securities of that series.
The
indentures do not contain any provisions that limit our ability to incur indebtedness or that would protect holders of debt securities
in the event we become a party to a highly-leveraged or similar transaction in which we would incur or acquire a large amount
of additional debt, but such provisions may appear in the applicable prospectus supplement. You should refer to the applicable
prospectus supplement for information regarding any deletions from, modifications of or additions to the events of default or
covenants that are described below, including any addition of a covenant or other provision providing event risk or similar protection.
Guarantees
Debt
securities may be issued and unconditionally and irrevocably guaranteed by us or certain of our subsidiaries, if any, that are
listed as guarantors in the applicable supplement to this prospectus. Any guarantee would cover the timely payment of the principal
of, and any premium, make-whole amount, interest or sinking fund payments on, the debt securities, whether we make the payment
at a maturity date, as a result of acceleration or redemption or otherwise. We will more fully describe the existence and terms
of any guarantee of any of our debt securities by us or our subsidiaries in the prospectus supplement relating to those debt securities.
Denominations,
Interest, Registration and Transfer
Unless
the applicable prospectus supplement states otherwise, any debt securities of any series that we issue in registered form will
be issued in denominations of $1,000 and multiples of $1,000, and debt securities of any series that we issue in bearer form will
be issued in denominations of $5,000 (Section 302).
Unless
the applicable prospectus supplement states otherwise, the principal of, and any premium, make-whole amount or interest on, any
series of debt securities will be payable in the currency designated in the prospectus supplement at the corporate trust office
of the trustee, initially, the corporate trust office of the trustee to be named in the senior indenture. At our option, however,
payment of interest may be made by check mailed to the address of the person entitled to the interest payment as it appears in
the security register for the series or by wire transfer of funds to that person at an account maintained within the United States
(Sections 301, 305, 307 and 1002). We may at any time designate additional paying agents or rescind designation of any paying
agents or approve a change in the office through which any paying agent acts, except that we will be required to maintain a paying
agent in each place of payment for any series. All monies that we pay to a paying agent for the payment of any principal of, or
any premium, make-whole amount, interest or additional amounts on, any debt security which remains unclaimed at the end of two
years after that payment became due and payable will be repaid to us. After that time, the holder of the debt security will be
able to look only to us for payment (Section 1003).
Any
interest that we do not punctually pay on any interest payment date with respect to a debt security will cease to be payable to
the holder on the applicable regular record date and may either:
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be paid to the holder
at the close of business on a Special Record Date for the payment of defaulted interest, to be determined by the trustee (Sections
101 and 307); or
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be paid at any time
in any other lawful manner, as more fully described in the indentures.
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Subject
to certain limitations imposed upon debt securities issued in book-entry form, debt securities of any series will be exchangeable
for other debt securities of the same series and of the same total principal amount and authorized denomination upon the surrender
of the debt securities at the corporate trust office of the trustee. In addition, subject to certain limitations imposed upon
debt securities issued in book-entry form, the debt securities of any series may be surrendered for conversion, transfer or exchange
at the corporate trust office of the trustee. Every debt security surrendered for conversion, transfer or exchange must be duly
endorsed or accompanied by a written instrument of transfer. There will be no service charge for any transfer or exchange of any
debt securities, but we may require holders to pay any tax or other governmental charge payable in connection with the transfer
or exchange (Section 305).
If
the applicable prospectus supplement refers to us designating any transfer agent for any series of debt securities, in addition
to the trustee, we may at any time remove the transfer agent or approve a change in the location at which the transfer agent acts,
except that we will be required to maintain a transfer agent in each place of payment for any series of debt securities. We may
at any time designate additional transfer agents with respect to any series of debt securities (Section 1002).
Neither
we nor any trustee will be required to do any of the following:
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issue, register
the transfer of or exchange debt securities of any series during a period beginning at the opening of 15 business days before
there is a selection of debt securities of that series to be redeemed and ending at the close of business on the day of mailing
or publication of the relevant notice of redemption;
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register the transfer
of or exchange any debt security, or portion thereof, called for redemption, except the unredeemed portion of any debt security
being only partially redeemed;
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exchange any debt
security in bearer form that is selected for redemption, except that a debt security in bearer form may be exchanged for a
debt security in registered form of that series and like denomination, provided that the debt security in registered form
must be simultaneously surrendered for redemption; or
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issue or register
the transfer or exchange of any debt security that has been surrendered for repayment at the option of the holder, except
the portion, if any, of the debt security that will not be partially or entirely repaid (Section 305).
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Global
Debt Securities
The
debt securities of a series may be issued in the form of one or more fully registered global securities that will be deposited
with a depositary or with a custodian for a depositary identified in the prospectus supplement relating to the series and registered
in the name of the depositary or its nominee. In this case, we will issue one or more global securities in a denomination or total
denominations equal to the portion of the total principal amount of outstanding registered debt securities of the series to be
represented by the global security or securities. We expect that any global securities issued in the United States would be deposited
with The Depositary Trust Company, as depositary or its custodian. We may issue any global securities in fully registered form
on a temporary or permanent basis. Unless and until a global security is exchanged for debt securities in definitive registered
form, a permanent global security may not be transferred except as a whole by the depositary to its nominee or by a nominee to
the depositary or another nominee, or by the depositary or its nominee to a successor of the depositary or the successor depositary’s
nominee.
The
specific terms of the depositary arrangement with respect to any series of debt securities to be represented by a registered global
security will be described in the applicable prospectus supplement. We anticipate that the following provisions will apply to
depositary arrangements.
Ownership
of beneficial interests in a global security will be limited to persons that have accounts with, or are participants of, the depositary
for the registered global security, or persons that may hold interests through participants. When we issue a registered global
security, the depositary will credit, on its book-entry registration and transfer system, the participants’ accounts with
the respective principal amounts of the debt securities represented by the global security owned by those participants. The accounts
to be credited will be designated by any dealers, underwriters or agents participating in an offering of the debt securities,
or by us or the trustee if we are directly offering the debt securities. The participants’ ownership, and any transfer,
of a registered global security will be shown on records maintained by the depositary, and ownership of persons who hold debt
securities through participants will be reflected on the records of the participants. State and federal laws may impair a person’s
ability to own, transfer or pledge interests in a registered global security.
So
long as the depositary or its nominee is the registered owner of the global security, the depositary or its nominee, as the case
may be, will be considered the sole owner or holder of the debt securities represented by the global security for all purposes
under the applicable indenture. Except as set forth below, owners of beneficial interests in a global security will not be entitled
to have the debt securities represented by the registered global security registered in their names, will not receive or be entitled
to receive physical delivery of the debt securities in definitive form and will not be considered the owners or holders of the
debt securities under the applicable indenture. Accordingly, each person owning a beneficial interest in a registered global security
must rely on the depositary’s procedures and, if that person is not a participant, on the procedures of the participant
through which that person owns its interest to exercise any rights of a holder under the applicable indenture. We understand that
under existing industry practices, if we request any action of holders or if an owner of a beneficial interest in a registered
global security desires to give or take any action which a holder is entitled to give or take under the applicable indenture,
the depositary would authorize the participants holding the relevant beneficial interests to give or take the action, and the
participants would authorize beneficial owners owning through those participants to give or take the action or would otherwise
act upon the instructions of beneficial owners holding through them.
Payments
of principal of, and any premium, make-whole amount, interest or additional amounts on a registered global security will be made
to the depositary or its nominee, as the case may be, as the registered owner of the global security. Neither we, the trustee,
the paying agent nor the registrar, nor any other agent of ours or of the trustee, will have any responsibility or liability for
any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the global security or
for maintaining, supervising or reviewing any records relating to the beneficial ownership interests.
We
expect that once the depositary receives any payment of principal of, any premium, make-whole amount, interest or additional amount
on, a registered global security, the depositary will immediately credit the participants’ accounts with payments in amounts
proportionate to their respective beneficial interests in the global security, as shown on the records of the depositary. We also
expect that payments by the participants to owners of beneficial interests in the registered global security held through the
participants will be governed by standing customer instructions and customary practices, as is now the case with the securities
held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of
the participants.
If
the depositary is at any time unwilling or unable to continue as depositary or ceases to be a clearing agency under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, and we do not appoint a successor depositary within 90 days, we will issue
debt securities in definitive form in exchange for the registered global security. In addition, we may at any time and in our
sole discretion decide not to have any of the debt securities of a series represented by one or more global securities, and, in
such event, we will issue debt securities in definitive form in exchange for all of the global security or securities representing
the debt securities. We will register any debt securities issued in definitive form in exchange for a global security in the name
or names that the depositary provides to the trustee. We expect that those names will be based upon directions received by the
depositary from the participants with respect to ownership of beneficial interests in the global security.
Debt
securities in bearer form may also be issued in the form of one or more global securities that will be deposited with a common
depositary for Euroclear and Clearstream, or with a nominee for the depositary identified in the applicable prospectus supplement.
We will describe in the applicable prospectus supplement the specific terms and procedures of the depositary arrangement, including
the specific terms of the depositary arrangement and any specific procedures, for the issuance of debt securities in definitive
form in exchange for a global security in bearer form, with respect to any portion of a series of debt securities to be represented
by a global security in bearer form.
Merger,
Consolidation or Sale
We
may consolidate with, or sell, lease or convey all or substantially all of our assets to, or merge with or into, any other corporation,
trust or entity provided that:
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we are the survivor
in the transaction, or the survivor, if not us, is an entity organized under the laws of the United States or a state of the
United States, or the State of Israel, which entity expressly assumes by supplemental indenture the due and punctual payment
of the principal of, and any premium, make-whole amount, interest and additional amounts on, all of the outstanding debt securities
and the due and punctual performance and observance of all of the covenants and conditions contained in the indenture;
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immediately after
giving effect to the transaction and treating any indebtedness that becomes an obligation of ours or one of our subsidiaries
as a result of the transaction as having been incurred by us or our subsidiary at the time of the transaction, there is no
event of default under the applicable indenture and no event which, after notice or the lapse of time, or both, would become
an event of default; and
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we deliver an officers’
certificate and an opinion of our legal counsel, each as to the satisfaction of conditions contained in the applicable indenture
(Sections 801 and 803).
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This
covenant would not apply to any recapitalization transaction, a change of control of us or a transaction in which we incur a large
amount of additional debt, unless the transactions or change of control included a merger, consolidation or transfer or lease
of substantially all of our assets. Except as may be described in the applicable prospectus supplement, there are no covenants
or other provisions in the indentures providing for a “put” right or increased interest or that would otherwise afford
holders of debt securities additional protection in the event of a recapitalization transaction, a change of control of us or
a transaction in which we incur a large amount of additional debt.
Certain
Covenants
Provision
of Financial Information
Whether
or not we are subject to Section 13 or 15(d) of the Exchange Act, we will file annual reports and other documents with the
SEC pursuant to Sections 13 and 15(d) of the Exchange Act as if we were so subject, on or prior to the dates by which we are or
would have been required to file those documents if we were so subject. In any event, we will:
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file with the applicable
trustee copies of the annual reports and other documents that we are or would be required to file with the SEC under Sections
13 and 15(d) of the Exchange Act within 15 days of each of the respective dates by which we are or would have been required
to file those reports with the SEC; and
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promptly upon written
request and payment of the reasonable cost of duplication and delivery, supply copies of those documents to holders and any
prospective holders of debt securities if filing those documents with the SEC is not permitted under the Exchange Act (Section
1005).
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Additional
Covenants
Any
additional covenants with respect to any series of debt securities will be described in the applicable prospectus supplement.
Events
of Default, Notice and Waiver
Except
as otherwise provided in the applicable prospectus supplement, the following events are “events of default” with respect
to any series of debt securities that we may issue under the indentures:
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we fail for 30 days
to pay any installment of interest or any additional amounts payable on any debt security of that series;
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we fail to pay the
principal of, or any premium or make-whole amount on, any debt security of that series when due, either at maturity, redemption
or otherwise;
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we fail to make
any sinking fund payment as required for any debt security of that series;
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we breach or fail
to perform any covenant or warranty contained in the applicable indenture, other than a covenant added solely for the benefit
of a different series of debt securities issued under the applicable indenture or except as otherwise provided for in the
applicable indenture, and our breach or failure to perform continues for 60 days after we have received written notice in
accordance with the applicable indenture of our breach or failure to perform;
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we default under
a bond, debenture, note, mortgage, indenture or instrument evidencing indebtedness for money borrowed by us, or by any subsidiaries
of ours that we have guaranteed or for which we are directly responsible or liable as obligor or guarantor, that has a principal
amount outstanding of $20,000,000 or more, other than indebtedness which is non-recourse to us or our subsidiaries, which
default has caused the indebtedness to become due and payable earlier than it would otherwise have become due and payable,
and the indebtedness has not been discharged or the acceleration has not been rescinded or annulled, within 30 days after
written notice was provided to us in accordance with the applicable indenture;
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the bankruptcy,
insolvency or reorganization or court appointment of a receiver, liquidator or appointment of a trustee for us or of any of
our Significant Subsidiaries, or for all or substantially all of our properties or the properties of our Significant Subsidiaries
(Section 101); and
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any other event
of default described in the applicable prospectus supplement and indenture (Section 501).
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If
there is a continuing event of default with respect to outstanding debt securities of a series, then the trustee or the holders
of not less than 25% in aggregate principal amount of the outstanding debt securities of that series, voting as a single class,
may declare immediately due and payable the principal amount or other amount as may be specified by the terms of those debt securities
and any premium or make-whole amount on the debt securities of that series; provided, however, that upon the occurrence and continuation
of certain defaults related to bankruptcy or insolvency, the principal (or, if any debt securities are Original Issue Discount
Securities or Indexed Securities, such portion of the principal as may be specified in the terms thereof) of, and the Make-Whole
Amount, if any, on, all the outstanding debt securities of that series and any accrued interest through the occurrence of such
Event of Default, shall become due and payable immediately, without any declaration or other act by the trustee or any other holder.
However, at any time after an acceleration with respect to debt securities of a series has been made, but before a judgment or
decree for payment of the money due has been obtained by the trustee, the holders of not less than a majority in principal amount
of the outstanding debt securities of that series may cancel the acceleration and annul its consequences if:
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we pay or deposit
with the trustee all required payments of the principal of, and any premium, make-whole amount, interest, and additional amounts
on, the applicable series of debt securities, plus fees, expenses, disbursements and advances of the trustee; and
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all events of default,
other than the nonpayment of accelerated principal, premium, or interest, with respect to the applicable series of debt securities
have been cured or waived as provided in the indentures (Section 502).
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The
indentures also provide that the holders of not less than a majority in principal amount of the outstanding debt securities of
any series may waive any past default with respect to that series and its consequences (except in respect of certain events of
default related to bankruptcy or insolvency, the waiver of which requires approval of a majority in principal amount of all outstanding
debt securities under the applicable indenture), except a default involving:
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our failure to pay
the principal of, and any premium, make-whole amount, interest or additional amounts on, any debt security; or
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a covenant or provision
contained in the applicable indenture that cannot be modified or amended without the consent of the holders of each outstanding
debt security affected by the default (Section 513).
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The
trustee is generally required to give notice to the holders of debt securities of each affected series within 90 days of a default
actually known to a Responsible Officer of the trustee unless the default has been cured or waived. The trustee may, however,
withhold notice of default if the Responsible Officers of the trustee in good faith determine that the withholding of such notice
is in the interests of the holders of the debt securities of that series unless the default relates to:
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our failure to pay
the principal of, and any premium, make-whole amount, interest or additional amounts on, any debt security of that series;
or
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any sinking fund
installment for any debt securities of that series (Sections 101 and 601).
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Each
indenture provides that no holder of debt securities of any series may institute a proceeding with respect to the indenture or
for any remedy under the indenture, unless the trustee fails to act for 60 days after it has received a written notice of a continuing
event of default with respect to the debt securities of that series from such holder and a written request to institute proceedings
in respect of an event of default from the holders of not less than 25% in principal amount of the outstanding debt securities
of that series (except in respect of certain events of default related to bankruptcy or insolvency, which requires the written
request of not less than 25% in principal amount of all outstanding debt securities under the applicable indenture), as well as
an offer of indemnity satisfactory to the trustee; provided, that no direction inconsistent with such request has been given to
the trustee during such 60-day period by the holders of a majority in principal amount of outstanding debt securities of that
series (Section 507). This provision will not prevent, however, any holder of debt securities from instituting suit for the enforcement
of payment of the principal of, and any premium, make-whole amount, interest or additional amounts on, the debt securities at
their respective due dates (Section 508).
Subject
to provisions in each indenture relating to the trustee’s duties in case of default, the trustee is not under an obligation
to exercise any of its rights or powers under the indenture at the request or direction of any holders of any series of debt securities
then outstanding, unless the holders have offered to the trustee security or indemnity satisfactory to it (Section 602). Subject
to these provisions for the indemnification of the trustee, the holders of not less than a majority in principal amount of all
outstanding debt securities under the applicable indenture will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee, or of exercising any trust or power conferred upon the trustee. The trustee
may, however, refuse to follow any direction which conflicts with any law or the applicable indenture, which may involve the trustee
in personal liability or which may be unduly prejudicial to the holders of debt securities of the applicable series not joining
in the direction (Section 512).
Within
120 days after the close of each fiscal year, we must deliver to the trustee a certificate, signed by one of several specified
officers, stating that officer’s knowledge of our compliance with all the conditions and covenants under the applicable
indenture, and, in the event of any noncompliance, specifying the noncompliance and the nature and status of the noncompliance
(Section 1006).
Modification
of the Indentures
Modification
Without Consent of the Holders
Together
with the trustee, we may, when authorized by our Board of Directors, modify each of the indentures without the consent of any
holder of debt securities for any of the following purposes:
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to evidence the
succession of another person to us as obligor under the indenture;
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to add to our existing
covenants additional covenants for the benefit of the holders of all or any series of debt securities, or to surrender any
right or power conferred upon us in the indenture;
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to add events of
default for the benefit of the holders of all or any series of debt securities;
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to add or change
any provisions of the indenture to facilitate the issuance of, or to liberalize the terms of, debt securities in bearer form,
or to permit or facilitate the issuance of debt securities in uncertificated form, provided that this action will not adversely
affect the interests of the holders of the debt securities of any series in any material respect;
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to add, change or
eliminate any provisions of the indenture, provided that any addition, change or elimination shall neither apply to any debt
security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision
nor modify the rights of the holder of any debt security with respect to such provision or become effective only when there
are no outstanding debt securities;
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to secure previously
unsecured debt securities;
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to establish the
form or terms of debt securities of any series, including the provisions and procedures, if applicable, for the conversion
or exchange of the debt securities into our ordinary shares or other securities or property;
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to evidence and
provide for the acceptance or appointment of a successor trustee or facilitate the administration of the trusts under the
indenture by more than one trustee;
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to make any provision
with respect to the conversion or exchange of rights of holders pursuant to the requirements of the indenture;
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to cure any ambiguity,
defect or inconsistency in the indenture, provided that the action does not adversely affect the interests of holders of debt
securities of any series issued under the indenture;
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to close the indenture
with respect to the authentication and delivery of additional series of debt securities or to qualify, or maintain qualification
of, the indenture under the Trust Indenture Act; or
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to supplement any
of the provisions of the indenture to the extent necessary to permit or facilitate defeasance and discharge of any series
of debt securities, provided that the action shall not adversely affect the interests of the holders of the debt securities
of any series in any material respect (Section 901).
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Modification
With Consent of Holders
Together
with the trustee, we may, when authorized by our Board of Directors, also make modifications and amendments to each indenture
with the consent of the holders of a majority in principal amount of the outstanding debt securities of all affected series. Without
the consent of each affected holder, however, no modification to either indenture may:
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change the stated
maturity of the principal of, or any premium, make-whole amount or installment of principal of, or interest on, any debt security;
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reduce the principal
amount of, or the rate or amount of interest on, or any premium or make-whole amount payable on redemption of, or any additional
amounts payable with respect to, any debt security or change any obligation to pay additional amounts except as permitted
by the indenture;
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reduce the amount
of principal of an original issue discount security or make-whole amount that would be due and payable upon declaration of
acceleration of the maturity of the original discount or other security, or would be provable in bankruptcy, or adversely
affect any right of repayment of the holder of any debt security;
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change the place
of payment or the currency or currencies of payment of the principal of, and any premium, make-whole amount, interest, or
additional amounts on, any debt security;
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impair the right
to institute suit for the enforcement of any payment on or with respect to any debt security;
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reduce the percentage
of the holders of outstanding debt securities of any series necessary to modify or amend the indenture, to waive compliance
with provisions of the indenture or defaults and their consequences under the indenture, or to reduce the quorum or voting
requirements contained in the indenture;
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make any change
that adversely affects the right to convert or exchange any debt security other than as permitted by the indenture or decrease
the conversion or exchange rate or increase the conversion or exchange price of any such debt security; or
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modify any of the
foregoing provisions or any of the provisions relating to the waiver of past defaults or covenants, except to increase the
required percentage of holders necessary to effect that action or to provide that other provisions may not be modified or
waived without the consent of the holder of the debt security (Section 902).
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Documentation
Any
modification or amendment of an indenture, whether effected with or without the consent of any holder, will be documented in a
supplemental indenture.
Discharge,
Defeasance and Covenant Defeasance
Unless
the terms of a series of debt securities provide otherwise, under the indentures, we may discharge some of our respective obligations
to holders of any series of debt securities that:
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have not already
been delivered to the trustee for cancellation and that either have become due and payable or will become due and payable
within one year; or
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are
scheduled for redemption within one year.
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We
can discharge these obligations by irrevocably depositing with the trustee funds in the currency or currencies in which the debt
securities are payable in an amount sufficient to pay and discharge the entire indebtedness on those debt securities, including
principal of, and any premium, make-whole amount, interest and additional amounts on, the debt securities on and up to the date
of such deposit, or, if the debt securities have become due and payable, on and up to the stated maturity or redemption date,
as the case may be (Section 401).
In
addition, if the terms of the debt securities of a series permit us to do so, we may elect either of the following:
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to
defease and be discharged from any and all obligations with respect to the debt securities, except, among other things, our
obligations to the holders of Outstanding Securities (Sections 1402, 1403 and 1404);
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pay
any additional amounts upon the occurrence of several particular tax and other events;
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pay
the fees, expenses and indemnitees of the trustee;
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register
the transfer or exchange of the debt securities;
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replace
temporary or mutilated, destroyed, lost or stolen debt securities;
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maintain
an office or agency for the debt securities; and
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hold
monies for payment in trust; or
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to
be released from our obligations with respect to the debt securities under sections of the applicable indenture described
under “Certain Covenants” or, if permitted by the terms of the debt securities, our obligations with respect to
any other covenant.
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If
we choose to be released from our respective obligations under the covenants, any failure to comply with any of the obligations
imposed on us by the covenants will not constitute a default or an event of default with respect to the debt securities (Section
1403). However, to make either election, we must irrevocably deposit with the trustee an amount, in such currency or currencies
in which the debt securities are payable at their stated maturity, or in Government Obligations (Section 101), or both, that will
provide sufficient funds to pay the principal of, and any premium, make-whole amount, interest and additional amounts on, the
debt securities, and any mandatory sinking fund or similar payments on the debt securities, on the relevant scheduled due dates.
We
may defease and discharge the obligations, as described in the preceding paragraphs, only if, among other things, we have delivered
to the trustee an opinion of counsel to the effect that:
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the
holders of the debt securities will not recognize income, gain or loss for U.S. federal income tax purposes as a result of
the defeasance or covenant defeasance described in the previous paragraphs and will be subject to U.S. federal income tax
on the same amounts, in the same manner and at the same times as would have been the case if the defeasance or covenant defeasance
had not occurred; and
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in
the case of defeasance, the opinion of counsel must refer to, and be based upon, a ruling of the Internal Revenue Service,
or IRS, or a change in applicable U.S. federal income tax laws occurring after the date of the applicable indenture (Section
1404).
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Unless
otherwise provided in the applicable prospectus supplement, if, after we have deposited funds and/or Government Obligations to
effect defeasance or covenant defeasance with respect to debt securities of any series:
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the
holder of a debt security of the series elects to receive payment in a currency other than that in which the deposit has been
made in respect of the debt security (Section 301); or
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a
conversion event, as defined below, occurs in respect of the currency in which the deposit has been made,
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then
the indebtedness represented by the debt security will be fully discharged and satisfied through the payment of the principal
of, and any premium, make-whole amount and interest on, the debt security as they become due, and additional amounts, if any,
out of the proceeds yielded by converting the amount deposited in respect of the debt security into the currency in which the
debt security becomes payable as a result of the holder’s election or the conversion event based on the applicable market
exchange rate (Section 1405).
Unless
otherwise provided in the applicable prospectus supplement, a “conversion event” means the cessation of use of:
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a
currency issued by the government of one or more countries other than the United States, both by the government of the country
that issued that currency and for the settlement of transactions by a central bank or other public institutions of or within
the international banking community;
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the
European Community, both within the European Monetary System and, for the settlement of transactions, by public institutions
of or within the European Community; or
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any
currency for the purposes for which it was established.
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Unless
otherwise provided in the applicable prospectus supplement, we will make all payments of principal of, and any premium, make-whole
amount, interest and additional amounts on, any debt security that is payable in a foreign currency that ceases to be used by
its government of issuance in United States dollars.
In
the event that we effect covenant defeasance with respect to any debt securities and the debt securities are declared due and
payable because of the occurrence of an event of default other than:
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the
event of default described in the fourth bullet under “Certain Covenants—Events of Default, Notice and Waiver,”
which would no longer be applicable to the debt securities of that series (Section 1005); or
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the
event of default described in the sixth bullet under “Certain Covenants—Events of Default, Notice and Waiver”
with respect to a covenant as to which there has been covenant defeasance,
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then
the amount on deposit with the trustee will still be sufficient to pay amounts due on the debt securities at the time of their
stated maturity but may not be sufficient to pay amounts due on the debt securities at the time of the acceleration resulting
from the event of default. In this case, we would remain liable to make payment of the amounts due at the time of acceleration.
The
applicable prospectus supplement may describe any additional provisions permitting defeasance or covenant defeasance, including
any modifications to the provisions described above, with respect to a particular series of debt securities.
Conversion
and Exchange Rights
The
terms on which debt securities of any series may be convertible into or exchangeable for our ordinary shares or other securities
or property will be described in the applicable prospectus supplement. These terms will include:
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the
conversion or exchange price, or the manner of calculating the price;
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the
exchange or conversion period;
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whether
the conversion or exchange is mandatory, or voluntary at the option of the holder or at our option;
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any
restrictions on conversion or exchange in the event of redemption of the debt securities and any restrictions on conversion
or exchange; and
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the
means of calculating the number of shares of our ordinary shares or other securities or property of us to be received by the
holders of debt securities.
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The
conversion or exchange price of any debt securities of any series that are convertible into our ordinary shares, may be adjusted
for any stock dividends, stock splits, reclassification, combinations or similar transactions, as set forth in the applicable
prospectus supplement (Article Sixteen).
Governing
Law
The
indentures are governed by the laws of the State of New York.
Redemption
of Debt Securities
The
debt securities may be subject to optional or mandatory redemption on terms and conditions described in the applicable prospectus
supplement. Subject to such terms, we may opt at any time to partially or entirely redeem the debt securities.
From
and after notice has been given as provided in the applicable indenture, if funds for the redemption of any debt securities called
for redemption shall have been made available on the redemption date, the debt securities will cease to bear interest on the date
fixed for the redemption specified in the notice, and the only right of the holders of the debt securities will be to receive
payment of the redemption price.
DESCRIPTION
OF UNITS
We
may issue units comprised of one or more of the other securities that may be offered under this prospectus, in any combination.
Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder
of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is
issued may provide that the securities included in the unit may not be held or transferred separately at any time, or at any time
before a specified date.
The
prospectus supplement relating to any units we offer will, to the extent applicable, include specific terms relating to the offering,
including some or all of the following:
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the
material terms of the units and of the securities comprising the units, including whether and under what circumstances those
securities may be held or transferred separately;
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any
material provisions relating to the issuance, payment, settlement, transfer or exchange of the units or of the securities
comprising the units; and
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any
material provisions of the governing unit agreement that differ from those described above.
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The
description in the applicable prospectus supplement of any units we offer will not necessarily be complete and will be qualified
in its entirety by reference to the applicable unit agreement, which will be filed with the SEC if we offer units. For more information
on how you can obtain copies of the applicable unit agreement if we offer units, see “Where You Can Find More Information”
and “Incorporation of Certain Documents by Reference” beginning on page 30. We urge you to read the applicable unit
agreement and any applicable prospectus supplement in their entirety.
FORMS
OF SECURITIES
Each
debt security and, to the extent applicable, warrant, subscription right and unit, will be represented either by a certificate
issued in definitive form to a particular investor or by one or more global securities representing the entire issuance of securities.
Certificated securities in definitive form and global securities will be issued in registered form. Definitive securities name
you or your nominee as the owner of the security, and in order to transfer or exchange these securities or to receive payments
other than interest or other interim payments, you or your nominee must physically deliver the securities to the trustee, registrar,
paying agent or other agent, as applicable. Global securities name a depositary or its nominee as the owner of the debt securities
or warrants represented by these global securities. The depositary maintains a computerized system that will reflect each investor’s
beneficial ownership of the securities through an account maintained by the investor with its broker/dealer, bank, trust company
or other representative, as we explain more fully below.
Global
Securities
Registered
Global Securities
. We may issue the registered debt securities and, to the extent applicable, warrants, subscription rights
and units, in the form of one or more fully registered global securities that will be deposited with a depositary or its nominee
identified in the applicable prospectus supplement and registered in the name of that depositary or nominee. In those cases, one
or more registered global securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate
principal or face amount of the securities to be represented by registered global securities. Unless and until it is exchanged
in whole for securities in definitive registered form, a registered global security may not be transferred except as a whole by
and among the depositary for the registered global security, the nominees of the depositary or any successors of the depositary
or those nominees.
If
not described below, any specific terms of the depositary arrangement with respect to any securities to be represented by a registered
global security will be described in the prospectus supplement relating to those securities. We anticipate that the following
provisions will apply to all depositary arrangements.
Ownership
of beneficial interests in a registered global security will be limited to persons, called participants, that have accounts with
the depositary or persons that may hold interests through participants. Upon the issuance of a registered global security, the
depositary will credit, on its book-entry registration and transfer system, the participants’ accounts with the respective
principal or face amounts of the securities beneficially owned by the participants. Any dealers, underwriters or agents participating
in the distribution of the securities will designate the accounts to be credited. Ownership of beneficial interests in a registered
global security will be shown on, and the transfer of ownership interests will be effected only through, records maintained by
the depositary, with respect to interests of participants, and on the records of participants, with respect to interests of persons
holding through participants. The laws of some states may require that some purchasers of securities take physical delivery of
these securities in definitive form. These laws may impair your ability to own, transfer or pledge beneficial interests in registered
global securities.
So
long as the depositary, or its nominee, is the registered owner of a registered global security, that depositary or its nominee,
as the case may be, will be considered the sole owner or holder of the securities represented by the registered global security
for all purposes under the applicable indenture or warrant agreement. Except as described below, owners of beneficial interests
in a registered global security will not be entitled to have the securities represented by the registered global security registered
in their names, will not receive or be entitled to receive physical delivery of the securities in definitive form and will not
be considered the owners or holders of the securities under the applicable indenture or warrant agreement. Accordingly, each person
owning a beneficial interest in a registered global security must rely on the procedures of the depositary for that registered
global security and, if that person is not a participant, on the procedures of the participant through which the person owns its
interest, to exercise any rights of a holder under the applicable indenture or warrant agreement. We understand that under existing
industry practices, if we request any action of holders or if an owner of a beneficial interest in a registered global security
desires to give or take any action that a holder is entitled to give or take under the applicable indenture or warrant agreement,
the depositary for the registered global security would authorize the participants holding the relevant beneficial interests to
give or take that action, and the participants would authorize beneficial owners owning through them to give or take that action
or would otherwise act upon the instructions of beneficial owners holding through them.
Principal,
premium, if any, interest payments on debt securities and any payments to holders with respect to warrants represented by a registered
global security registered in the name of a depositary or its nominee will be made to the depositary or its nominee, as the case
may be, as the registered owner of the registered global security. None of the Company, the trustees, the warrant agents or any
other agent of the Company, the trustees or the warrant agents will have any responsibility or liability for any aspect of the
records relating to payments made on account of beneficial ownership interests in the registered global security or for maintaining,
supervising or reviewing any records relating to those beneficial ownership interests.
We
expect that the depositary for any of the securities represented by a registered global security, upon receipt of any payment
of principal, premium, interest or other distribution of underlying securities or other property to holders on that registered
global security, will immediately credit participants’ accounts in amounts proportionate to their respective beneficial
interests in that registered global security as shown on the records of the depositary. We also expect that payments by participants
to owners of beneficial interests in a registered global security held through participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities held for the accounts of customers in bearer form
or registered in “street name,” and will be the responsibility of those participants.
If
the depositary for any of these securities represented by a registered global security is at any time unwilling or unable to continue
as depositary or ceases to be a clearing agency registered under the Exchange Act, and a successor depositary registered as a
clearing agency under the Exchange Act is not appointed by us within 90 days, we will issue securities in definitive form in exchange
for the registered global security that had been held by the depositary. Any securities issued in definitive form in exchange
for a registered global security will be registered in the name or names that the depositary gives to the relevant trustee or
warrant agent or other relevant agent of ours or theirs. It is expected that the depositary’s instructions will be based
upon directions received by the depositary from participants with respect to ownership of beneficial interests in the registered
global security that had been held by the depositary.
PLAN
OF DISTRIBUTION
We
may sell the securities described in this prospectus from time to time in one or more of the following ways:
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or through one or more underwriters on a firm commitment or agency basis;
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through
put or call option transactions relating to the securities;
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to
or through dealers, who may act as agents or principals, including a block trade (which may involve crosses) in which a broker
or dealer so engaged will attempt to sell as agent but may position and resell a portion of the block as principal to facilitate
the transaction;
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through
privately negotiated transactions;
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purchases
by a broker or dealer as principal and resale by such broker or dealer for its own account pursuant to this prospectus;
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directly
to purchasers, including our affiliates, through a specific bidding or auction process, on a negotiated basis or otherwise;
to or through one or more underwriters on a firm commitment or best efforts basis;
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exchange
distributions and/or secondary distributions;
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ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
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in
an “at the market offering”, within the meaning of Rule 415(a)(4) of the Securities into an existing trading market,
on an exchange or otherwise;
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transactions
not involving market makers or established trading markets, including direct sales or privately negotiated transactions;
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transactions
in options, swaps or other derivatives that may or may not be listed on an exchange;
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through
any other method permitted pursuant to applicable law; or
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through
a combination of any such methods of sale.
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At
any time a particular offer of the securities covered by this prospectus is made, a revised prospectus or prospectus supplement,
if required, will be distributed which will set forth the aggregate amount of securities covered by this prospectus being offered
and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, any discounts, commissions,
concessions and other items constituting compensation from us and any discounts, commissions or concessions allowed or re-allowed
or paid to dealers. Such prospectus supplement, and, if necessary, a post-effective amendment to the registration statement of
which this prospectus is a part, will be filed with the SEC to reflect the disclosure of additional information with respect to
the distribution of the securities covered by this prospectus. In order to comply with the securities laws of certain states,
if applicable, the securities sold under this prospectus may only be sold through registered or licensed broker-dealers. In addition,
in some states the securities may not be sold unless they have been registered or qualified for sale in the applicable state or
an exemption from registration or qualification requirements is available and is complied with.
The
distribution of securities may be effected from time to time in one or more transactions, including block transactions and transactions
on the Nasdaq Capital Market or any other organized market where the securities may be traded. The securities may be sold at a
fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating to the prevailing
market prices or at negotiated prices. The consideration may be cash or another form negotiated by the parties. Agents, underwriters
or broker-dealers may be paid compensation for offering and selling the securities. That compensation may be in the form of discounts,
concessions or commissions to be received from us or from the purchasers of the securities. Any dealers and agents participating
in the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities
may be deemed to be underwriting discounts. If any such dealers or agents were deemed to be underwriters, they may be subject
to statutory liabilities under the Securities Act.
Agents
may from time to time solicit offers to purchase the securities. If required, we will name in the applicable prospectus supplement
any agent involved in the offer or sale of the securities and set forth any compensation payable to the agent. Unless otherwise
indicated in the prospectus supplement, any agent will be acting on a best efforts basis for the period of its appointment. Any
agent selling the securities covered by this prospectus may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the securities.
To
the extent that we make sales to or through one or more underwriters or agents in at-the-market offerings, we will do so pursuant
to the terms of a distribution agreement between us and the underwriters or agents. If we engage in at-the-market sales pursuant
to a distribution agreement, we will sell any of our listed securities to or through one or more underwriters or agents, which
may act on an agency basis or on a principal basis. During the term of any such agreement, we may sell any of our listed securities
on a daily basis in exchange transactions or otherwise as we agree with the underwriters or agents. The distribution agreement
will provide that any of our listed securities which are sold will be sold at prices related to the then prevailing market prices
for our listed securities. Therefore, exact figures regarding proceeds that will be raised or commissions to be paid cannot be
determined at this time and will be described in a prospectus supplement. Pursuant to the terms of the distribution agreement,
we also may agree to sell, and the relevant underwriters or agents may agree to solicit offers to purchase, blocks of our listed
securities. The terms of each such distribution agreement will be set forth in more detail in a prospectus supplement to this
prospectus.
If
underwriters are used in a sale, securities will be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale, or under delayed delivery contracts or other contractual commitments. Securities may be offered
to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. If an underwriter or underwriters are used in the sale of securities, an underwriting agreement
will be executed with the underwriter or underwriters, as well as any other underwriter or underwriters, with respect to a particular
underwritten offering of securities, and will set forth the terms of the transactions, including compensation of the underwriters
and dealers and the public offering price, if applicable. The prospectus and prospectus supplement will be used by the underwriters
to resell the securities.
If
a dealer is used in the sale of the securities, we or an underwriter will sell the securities to the dealer, as principal. The
dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale. To
the extent required, we will set forth in the prospectus supplement the name of the dealer and the terms of the transactions.
We
may directly solicit offers to purchase the securities and may make sales of securities directly to institutional investors or
others. These persons may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale of
the securities. To the extent required, the prospectus supplement will describe the terms of any such sales, including the terms
of any bidding or auction process, if used.
Agents,
underwriters and dealers may be entitled under agreements which may be entered into with us to indemnification by us against specified
liabilities, including liabilities incurred under the Securities Act, or to contribution by us to payments they may be required
to make in respect of such liabilities. If required, the prospectus supplement will describe the terms and conditions of the indemnification
or contribution. Some of the agents, underwriters or dealers, or their affiliates may be customers of, engage in transactions
with or perform services for us or our subsidiaries.
Any
person participating in the distribution of securities registered under the registration statement that includes this prospectus
will be subject to applicable provisions of the Exchange Act, and the applicable SEC rules and regulations, including, among others,
Regulation M, which may limit the timing of purchases and sales of any of our securities by that person. Furthermore, Regulation
M may restrict the ability of any person engaged in the distribution of our securities to engage in market-making activities with
respect to our securities. These restrictions may affect the marketability of our securities and the ability of any person or
entity to engage in market-making activities with respect to our securities.
Certain
persons participating in an offering may engage in over-allotment, stabilizing transactions, short-covering transactions, penalty
bids and other transactions that stabilize, maintain or otherwise affect the price of the offered securities. These activities
may maintain the price of the offered securities at levels above those that might otherwise prevail in the open market, including
by entering stabilizing bids, effecting syndicate covering transactions or imposing penalty bids, each of which is described below:
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a
stabilizing bid means the placing of any bid, or the effecting of any purchase, for the purpose of pegging, fixing or maintaining
the price of a security.
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a
syndicate covering transaction means the placing of any bid on behalf of the underwriting syndicate or the effecting of any
purchase to reduce a short position created in connection with the offering.
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a
penalty bid means an arrangement that permits the managing underwriter to reclaim a selling concession from a syndicate member
in connection with the offering when offered securities originally sold by the syndicate member are purchased in syndicate
covering transactions.
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These
transactions may be effected on an exchange or automated quotation system, if the securities are listed on that exchange or admitted
for trading on that automated quotation system, or in the over-the-counter market or otherwise.
If
so indicated in the applicable prospectus supplement, we will authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase offered securities from us at the public offering price set forth in such prospectus
supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts
will be subject only to those conditions set forth in the prospectus supplement and the prospectus supplement will set forth the
commission payable for solicitation of such contracts.
In
addition, ordinary shares or warrants may be issued upon conversion of or in exchange for debt securities or other securities.
Any
underwriters to whom offered securities are sold for public offering and sale may make a market in such offered securities, but
such underwriters will not be obligated to do so and may discontinue any market making at any time without notice. The offered
securities may or may not be listed on a national securities exchange. No assurance can be given that there will be a market for
the offered securities.
Any
securities that qualify for sale pursuant to Rule 144 or Regulation S under the Securities Act may be sold under Rule 144 or Regulation
S rather than pursuant to this prospectus.
In
connection with offerings made through underwriters or agents, we may enter into agreements with such underwriters or agents pursuant
to which we receive our outstanding securities in consideration for the securities being offered to the public for cash. In connection
with these arrangements, the underwriters or agents may also sell securities covered by this prospectus to hedge their positions
in these outstanding securities, including in short sale transactions. If so, the underwriters or agents may use the securities
received from us under these arrangements to close out any related open borrowings of securities.
We
may enter into derivative transactions with third parties or sell securities not covered by this prospectus to third parties in
privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, such
third parties (or affiliates of such third parties) may sell securities covered by this prospectus and the applicable prospectus
supplement, including in short sale transactions. If so, such third parties (or affiliates of such third parties) may use securities
pledged by us or borrowed from us or others to settle those sales or to close out any related open borrowings of shares, and may
use securities received from us in settlement of those derivatives to close out any related open borrowings of shares. The third
parties (or affiliates of such third parties) in such sale transactions will be underwriters and will be identified in the applicable
prospectus supplement (or a post-effective amendment).
We
may loan or pledge securities to a financial institution or other third party that in turn may sell the securities using this
prospectus. Such financial institution or third party may transfer its short position to investors in our securities or in connection
with a simultaneous offering of other securities offered by this prospectus or in connection with a simultaneous offering of other
securities offered by this prospectus.
LEGAL MATTERS
Certain legal matters
with respect to Israeli law and with respect to the validity of the offered securities under Israeli law will be passed upon for
us by Meitar Liquornik Geva Leshem Tal, Ramat Gan, Israel. Certain legal matters with respect to U.S. federal securities law will
be passed upon for us by McDermott Will & Emery LLP, New York, NY. Additional legal matters may be passed upon for us or any
underwriters, dealers or agents, by counsel that we will name in the applicable prospectus supplement.
EXPERTS
The financial statements
incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2018 have been
so incorporated in reliance on the report (which contains an explanatory paragraph relating to the Company’s ability to
continue as a going concern as described in Note 1(2) to the financial statements) of Kesselman & Kesselman, Certified Public
Accountants (Isr.), an independent registered public accounting firm and a member firm of PricewaterhouseCoopers International
Limited, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Prior to January 1,
2019, we were subject to the reporting requirements of the Exchange Act that are applicable to a foreign private issuer. In accordance
with the Exchange Act, we filed reports, including annual reports on Form 20-F, with the SEC. We also furnished to the SEC under
cover of Form 6-K material information required to be made public in Israel, filed with and made public by any stock exchange or
distributed by us to our shareholders. We were also exempt from the rules under the Exchange Act prescribing the furnishing and
content of proxy statements to shareholders and our officers, directors and principal shareholders were exempt from the “short-swing
profits” reporting and liability provisions contained in Section 16 of the Exchange Act and related Exchange Act rules.
Effective January 1,
2019, we are required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are
more detailed and extensive in certain respects, and which must be filed more promptly, than the forms available to a foreign private
issuer. In addition, we are now required to comply with U.S. proxy requirements and Regulation FD (Fair Disclosure) and our officers,
directors and principal shareholders are subject to the beneficial ownership reporting and short-swing profit recovery requirements
in Section 16 of the Exchange Act.
We have filed a registration
statement on Form S-3 with the SEC under the Securities Act of 1933. This prospectus is part of the registration statement but
the registration statement includes and incorporates by reference additional information and exhibits. We file annual, quarterly
and current reports, proxy statements and other information with the SEC. The SEC maintains a web site that contains reports, proxy
and information statements and other information regarding companies, such as ours, that file documents electronically with the
SEC. The address of that site on the worldwide web is http://www.sec.gov. The information on the SEC’s web site is not part
of this prospectus, and any references to this web site or any other web site are inactive textual references only.
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
The SEC allows us
to “incorporate by reference” information that we file with it into this prospectus, which means that we can disclose
important information to you by referring you to those documents. The information incorporated by reference is an important part
of this prospectus. The information incorporated by reference is considered to be a part of this prospectus, and information that
we file later with the SEC will automatically update and supersede information contained in this prospectus and any accompanying
prospectus supplement.
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our Annual Report on Form 10-K for the fiscal year ended on December 31, 2018, filed with the SEC on February 27, 2019;
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our Current
Reports on Form 8-K (other than the information furnished pursuant to Item 2.02 or 7.01 thereof or related exhibits
furnished pursuant to Item 9.01 thereof) filed with the SEC January 2, 2019, January 7, 2019, January 25, 2019, and
February 27, 2019; and
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the description of our ordinary shares contained in Item 1 of the Registration Statement on Form 8-A (File No. 001-37521), filed with the SEC on July 28, 2015, including any amendment or report filed for the purpose of updating such description.
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All filings filed by
us pursuant to the Exchange Act after the date of the initial filing of this registration statement and prior to the effectiveness
of such registration statement (excluding information furnished pursuant to Items 2.02 and 7.01 of Form 8-K) shall also be deemed
to be incorporated by reference into the prospectus.
You should rely only
on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you
with different information. Any statement contained in a document incorporated by reference into this prospectus will be deemed
to be modified or superseded for the purposes of this prospectus to the extent that a later statement contained in this prospectus
or in any other document incorporated by reference into this prospectus modifies or supersedes the earlier statement. Any statement
so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. You
should not assume that the information in this prospectus is accurate as of any date other than the date of this prospectus or
the date of the documents incorporated by reference in this prospectus.
We will provide you
without charge, upon your written or oral request, a copy of any of the documents incorporated by reference in this prospectus,
other than exhibits to such documents which are not specifically incorporated by reference into such documents. Please direct your
written or telephone requests to 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel Attn: Chief Financial Officer, telephone
number +972 (2) 586 4657. You may also obtain information about us by visiting our website at
www.intecpharma.com
. Except
for the specific incorporated documents listed above, no information available on or through our website shall be deemed to be
incorporated in this prospectus or the registration statement of which it forms a part.
ENFORCEABILITY OF CIVIL LIABILITIES
We are incorporated
under the laws of the State of Israel. Service of process upon us and upon certain of our directors and officers and the Israeli
experts named in this prospectus, certain of whom reside outside the United States, may be difficult to obtain within the United
States. Furthermore, because substantially all of our assets and certain of our directors and officers are located outside the
United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible
within the United States.
It may be difficult
to assert U.S. securities law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based
on a violation of U.S. securities laws reasoning that Israel is not the most appropriate forum to bring such a claim. In addition,
even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim.
If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact which can be a time-consuming
and costly process. Certain matters of procedure will also be governed by Israeli law.
Subject to specified
time limitations and legal procedures, Israeli courts may enforce a United States judgment in a civil matter which, subject to
certain exceptions, is non-appealable, including judgments based upon the civil liability provisions of the Securities Act and
the Exchange Act and including a monetary or compensatory judgment in a non-civil matter, provided that:
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the judgments are obtained after due process before a court of competent jurisdiction, according to the laws of the state in which the judgment is given and the rules of private international law currently prevailing in Israel;
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the prevailing law of the foreign state in which the judgments were rendered allows the enforcement of judgments of Israeli courts (however, the Israeli courts may waive this requirement following a request by the attorney general);
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adequate service of process has been effected and the defendant has had a reasonable opportunity to be heard and to present his or her evidence;
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the judgments are not contrary to public policy, and the enforcement of the civil liabilities set forth in the judgments does not impair the security or sovereignty of the State of Israel;
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the judgments were not obtained by fraud and do not conflict with any other valid judgment in the same matter between the same parties;
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an action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted in the foreign court; and
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the obligations under the judgment are enforceable according to the laws of the State of Israel and according to the law of the foreign state in which the relief was granted.
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We have irrevocably
appointed Intec Pharma, Inc., as our agent to receive service of process in any action against us in any United States federal
or state court arising out of this offering or any purchase or sale of securities in connection with this offering.
If a foreign judgment
is enforced by an Israeli court, it generally will be payable in Israeli currency, which can then be converted into non-Israeli
currency and transferred out of Israel. Under existing Israeli law, a foreign judgment payable in foreign currency may be paid
in Israeli currency at the rate of exchange in force on the date of the payment. Current Israeli exchange control regulations also
permit a judgment debtor to make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court
stated in Israeli currency ordinarily will be linked to the Israeli consumer price index plus interest at the annual statutory
rate set by Israeli regulations prevailing at the time. Judgment creditors must bear the risk of unfavorable exchange rates.
The information
in this prospectus supplement is not complete and may be changed. We may not sell any of these securities until the registration
statement filed with Securities and Exchange Commission is effective. This preliminary prospectus supplement is not an offer to
sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO
COMPLETION, DATED MARCH 1, 2019
PROSPECTUS SUPPLEMENT
(To Prospectus dated ,
2019)
Intec
Pharma Ltd.
Up to
$75,000,000
Ordinary
Shares
We have entered into
a sales agreement with Cowen and Company, LLC, or Cowen, relating to the ordinary shares offered by this prospectus supplement
and the accompanying prospectus. In accordance with the terms of the sales agreement, we may offer and sell ordinary shares having
an aggregate offering price of up to $75,000,000 from time to time through Cowen acting as our agent.
Our ordinary shares
are traded on the Nasdaq Capital Market under the symbol “NTEC.” The last reported sale price for our ordinary shares
on February 27, 2019, as quoted on the Nasdaq Capital Market, was $8.93 per ordinary share
Sales of our ordinary
shares, if any, under this prospectus supplement and the accompanying prospectus will be made in sales deemed to be an “at
the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or the Securities
Act. Cowen is not required to sell any specific amount of securities, but will act as our sales agent using commercially reasonable
efforts consistent with its normal trading and sales practices, on mutually agreed terms between Cowen and us. There is no arrangement
for funds to be received in any escrow, trust or similar arrangement.
The compensation to
Cowen for sales of ordinary shares sold pursuant to the sales agreement will be an amount up to 3.0% of the gross proceeds of any
ordinary shares sold under the sales agreement. In connection with the sale of the ordinary shares on our behalf, Cowen will be
deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of Cowen will be deemed
to be underwriting commissions or discounts. We have also agreed to provide indemnification and contribution to Cowen with respect
to certain liabilities, including liabilities under the Securities Act or the Securities Exchange Act of 1934, as amended.
We are an emerging
growth company as that term is used in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act and, as such, we have elected
to take advantage of certain reduced public company reporting requirements for this prospectus and future filings.
Investing in our
ordinary shares involves risks. See the section entitled “
Risk Factors
” beginning on page S-4 of this prospectus
supplement and in the documents we incorporate by reference into this prospectus supplement and the accompanying prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement and the accompanying prospectus. Any representation to the contrary is a criminal
offense.
Cowen
The date of this prospectus is ,
2019
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus are part of a registration statement that we filed with the Securities and
Exchange Commission, or SEC, utilizing a “shelf” registration process. This document is in two parts. The first part
is the prospectus supplement, which describes the specific terms of this offering. The second part is the accompanying prospectus,
including the documents incorporated by reference into the accompanying prospectus, which provides more general information about
securities we may offer from time to time, some of which may not apply to this offering. Generally, when we refer to this prospectus,
we are referring to both parts of this document combined. We urge you to carefully read this prospectus supplement and the prospectus,
and the documents incorporated by reference herein and therein, before buying any of the securities being offered under this prospectus
supplement. This prospectus supplement may add or update information contained in the prospectus and the documents incorporated
by reference therein. To the extent that any statement we make in this prospectus supplement is inconsistent with statements made
in the accompanying prospectus or any documents incorporated by reference therein that were filed before the date of this prospectus
supplement, the statements made in this prospectus supplement will be deemed to modify or supersede those made in the accompanying
prospectus and such documents incorporated by reference therein. If any statement in one of these documents is inconsistent with
a statement in another document having a later date – for example, a document incorporated by reference in the accompanying
prospectus – the statement in the document having the later date modifies or supersedes the earlier statement.
You
should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus,
or contained in any free writing prospectus prepared by us or on our behalf. We have not, and Cowen has not, authorized anyone
to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely
on it. The distribution of this prospectus supplement and sale of these securities in certain jurisdictions may be restricted by
law. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. Persons
in possession of this prospectus supplement or the accompanying prospectus are required to inform themselves about and observe
any such restrictions. This prospectus supplement and the accompanying prospectus are not, and under no circumstances are to be
construed as, an advertisement or a public offering of securities in Israel. Any public offer or sale of securities in Israel may
be made only in accordance with the Israeli Securities Law, 5728-1968 (which requires, among other things, the filing of a prospectus
in Israel or an exemption therefrom). The information contained in this prospectus supplement, the accompanying prospectus and
the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, and in any free writing
prospectus that we have authorized for use in connection with this offering, is accurate only as of the date of those respective
documents regardless of the time of delivery of this prospectus supplement or the accompanying prospectus or when any sale of our
ordinary shares occurs. Our business, financial condition, results of operations and prospects may have changed since those dates.
You should read this
prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement and
the accompanying prospectus, in their entirety, before making an investment decision. You should also read and consider the information
in the documents to which we have referred you in the sections of this prospectus supplement entitled “Where You Can Find
More Information” and “Incorporation of Certain Documents by Reference.”
This prospectus supplement
and the accompanying prospectus contain summaries of certain provisions contained in some of the documents described herein, but
reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the
actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated herein
by reference as exhibits to the registration statement, and you may obtain copies of those documents as described below under the
section entitled “Where You Can Find More Information.”
We further note that
the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any document that is incorporated
by reference herein were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose
of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant
to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such
representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.
This prospectus supplement
incorporates by reference market data and certain industry data and forecasts that were obtained from market research databases,
consultant surveys commissioned by us, publicly available information, reports of governmental agencies and industry publications
and surveys. Industry surveys, publications, consultant surveys commissioned by us and forecasts generally state that the information
contained therein has been obtained from sources believed to be reliable. We have relied on certain data from third-party sources,
including internal surveys, industry forecasts and market research, which we believe to be reliable based on our management’s
knowledge of the industry. Statements as to our market position are based on the most currently available data. While we are not
aware of any misstatements regarding the industry data presented in this annual report, our estimates involve risks and uncertainties
and are subject to change based on various factors, including those discussed under the headings “Risk Factors” in
this prospectus, and under similar headings in the other documents that are incorporated herein by reference.
Certain figures included
in this prospectus supplement have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables
may not be an arithmetic aggregation of the figures that precede them.
When used herein, unless the context
requires otherwise, references to the “Company, “we,” “our,” and “us” refer to Intec
Pharma Ltd., an Israeli company and its U.S. subsidiary Intec Pharma Inc., unless the context otherwise requires.
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights
certain information about us, this offering and selected information contained elsewhere in or incorporated by reference into this
prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether
to invest in our ordinary shares. For a more complete understanding of our company and this offering, we encourage you to read
and consider carefully the more detailed information in this prospectus, including the information incorporated by reference in
this prospectus, and the information included in any free writing prospectus that we have authorized for use in connection with
this offering, including the information under the heading “Risk Factors” in this prospectus on page S-4.
Our Company
We are a clinical stage
biopharmaceutical company focused on developing drugs based on our proprietary Accordion Pill platform technology, which we refer
to as the Accordion Pill. Our Accordion Pill is an oral drug delivery system that is designed to improve the efficacy and safety
of existing drugs and drugs in development by utilizing an efficient gastric retention and specific release mechanism. Our product
pipeline currently includes several product candidates in various clinical trial stages. Our leading product candidate, Accordion
Pill Carbidopa/Levodopa, or AP-CD/LD, is being developed for the indication of treatment of Parkinson’s disease symptoms
in advanced Parkinson’s disease patients. We have successfully completed a Phase II clinical trial for AP-CD/LD for the treatment
of Parkinson’s disease symptoms in advanced Parkinson’s disease patients and have agreed with the U.S. Food and Drug
Administration, or FDA, on the remaining clinical development program for AP-CD/LD for the treatment of Parkinson’s disease
symptoms in advanced Parkinson’s disease patients, including the main principles of the single required pivotal Phase III
clinical trial in advanced Parkinson’s disease patients.
We are currently conducting
a pivotal Phase III clinical for AP-CD/LD for the treatment of advanced Parkinson’s disease known as the ACCORDANCE study.
In April 2016, we enrolled the first patient in the ACCORDANCE study and in October 2018, we completed enrollment. We currently
expect to release top-line results in mid-2019. In our correspondence with the FDA, the FDA previously agreed that an acceptable
regulatory pathway for AP-CD/LD would be to submit a new drug application, or NDA, pursuant to Section 505(b)(2) of the Federal
Food, Drug, and Cosmetic Act, which is a streamlined approval pathway that may accelerate the time to commercialize and decrease
the costs of FDA approval for AP–CD/LD, as compared to those typically associated with a new chemical entity.
In February 2019, we
announced that AP-CD/LD met the primary endpoint in a pharmacokinetic, or PK, study comparing the AP-CD/LD 50/500mg dosed three
times daily, the most common dose used in our on-going ACCORDANCE study, to 1.5 tablets of CD/LD immediate release (Sinemet™)
25/100 dosed five times per day in Parkinson's disease patients.
We have invested in
the commercial scale manufacture of AP-CD/LD, for which we are in partnership with LTS. In December 2018, the large commercial
scale production line was delivered to LTS in Andernach, Germany. We are in the process of installing and connecting all the ancillary
equipment and expect to begin the validation, bioequivalency and stability studies needed for approval of our commercial production
processes in the coming months. After preliminary discussions with the FDA in anticipation of filing for marketing approval of
AP-CD/LD, we remain confident we are on track to submit an NDA for approval of AP-CD/LD in mid- to late-2020, assuming positive
topline data in the Accordance Study in mid-2019.
In addition, we have
initiated a clinical development program for our Accordion Pill platform with the two primary cannabinoids contained in cannabis
sativa, which we refer to as AP-Cannabinoids. We are formulating and testing cannabidiol, or CBD, and 9-tetrahydrocannabinol, or
THC, for the treatment of various pain indications. AP-Cannabinoids are designed to extend the absorption phase of CBD and THC,
with the goal of more consistent levels for an improved therapeutic effect which may address several major drawbacks of current
methods of treatment, such as short duration of effect, delayed onset, variability of exposure, variability of the administered
dose and adverse events that correlate with peak levels. In March 2017, we initiated a Phase I single-center, single-dose, randomized,
three-way crossover clinical trial in Israel to compare the safety, tolerability and PK of AP-THC/CBD, with Sativex
®
,
an oral buccal spray containing CBD and THC that is commercially available outside of the United States. Initial results demonstrate
that the Accordion Pill platform is well-suited to safely deliver CBD and THC with significant improvements in exposure compared
with Sativex. In December 2018, we initiated a PK study of AP-THC. We have completed the dosing of the AP-THC PK study and the
data is in the process of being analyzed by a third party contract research organization per protocol. However, upon raw data review,
the delivery of THC does not appear to meet our full program expectations. We await the full dataset and the statistical analysis
to determine our next steps.
In December 2018, we
reported that we successfully developed an Accordion Pill for a Novartis proprietary compound that met the required
in vitro
specifications set forth in a feasibility agreement with Novartis. We have mutually agreed to proceed with the program
and plan to enter the clinic with a first-in-human PK study in the first half of 2019. We believe continued success with this program
further validates the platform, confirms our technical abilities to build custom APs and paves the way for additional collaborative
agreements.
Corporate Information
Our registered office
and principal place of business is located at 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel and our telephone number
in Israel is +972 (2) 586 4657. Our website address is http://www.intecpharma.com. The information contained on our website
or available through our website does not constitute part of this prospectus. Our registered agent in the United States is Intec
Pharma, Inc., whose address is 3 Columbus Circle – 15
th
Floor, New York, NY 10019 USA.
THE OFFERING
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Ordinary shares offered by us
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Our ordinary shares having an aggregate offering price of up to $75 million.
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Ordinary shares to be outstanding after this offering
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Up to 41,631,644 ordinary shares (as
more fully described in the notes following this table), assuming sales of 8,398,656 ordinary shares in this
offering at an offering price of $8.93 per share, which was the last reported sale price of our ordinary
shares on the Nasdaq Capital Market on February 27, 2019. The actual number of ordinary shares issued will
vary depending on the sales price under this offering.
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Plan of Distribution
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“At the market offering” that
may be made from time to time through our sales agent, Cowen. See “Plan of Distribution” on page S-21.
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Use of Proceeds
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We currently intend to use the net proceeds
from this offering to fund our clinical trials, to advance our pre-commercial activities, for working capital and for general corporate
purposes. Pending these uses, we may invest the net proceeds from the sale of securities in accordance with our investment policy,
as may be amended from time to time, which currently includes bank deposits carrying interest, corporate debt obligations
with a minimum of an A rating by global rating agencies and investments in United States Government Securities and Israeli Government
Securities. See “Use of Proceeds” on page S-7.
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Risk Factors
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Investing in our ordinary shares involves
significant risks. See “Risk Factors” on page S-4, and under similar headings in other documents incorporated by
reference into this prospectus.
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Nasdaq Capital Market symbol
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“NTEC”
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Unless
otherwise indicated, the number of ordinary shares to be outstanding after this offering is based on 33,232,988 ordinary
shares outstanding as of February 27, 2019 and excludes (i) 4,063,183 ordinary shares that we have reserved for issuance upon
the exercise of outstanding options under our 2015 incentive plan, as of February 27, 2019, at a weighted average exercise
price of $6.26 per ordinary share and that expire between 2024 and 2027, (ii) 295,452 ordinary shares that we have reserved
for issuance upon the exercise of outstanding options under our 2005 incentive plan, as of February 27, 2019, at a
weighted average exercise price of NIS 27.52 per ordinary share and that expire between 2019 and 2020, and (iii) 8,035
options issued outside of such plans, as of February 27, 2019, with an exercise price of NIS 0.50 per ordinary share and
that expire in 2019.
RISK FACTORS
Investing in our
ordinary shares involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described
below and in our Annual Report on Form 10-K for the year ended December 31, 2018, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K incorporated by reference in this prospectus supplement and the accompanying prospectus, any amendment or update thereto
reflected in our subsequent filings with the SEC, and all of the other information in this prospectus supplement and the accompanying
prospectus, including our financial statements and related notes incorporated by reference in this prospectus supplement and the
accompanying prospectus. If any of these risks is realized, our business, financial condition, results of operations and prospects
could be materially and adversely affected. In that event, the trading price of our ordinary shares could decline and you could
lose part or all of your investment. Additional risks and uncertainties that are not yet identified or that we think are immaterial
may also materially harm our business, operating results and financial condition and could result in a complete loss of your investment.
Risks Related to this Offering
Purchasers in this offering will
experience immediate and substantial dilution in the book value of their investment.
The ordinary
shares sold in this offering from time to time will be sold at various prices; however, we expect the price per ordinary
share will be substantially higher than the net tangible book value of our ordinary shares. Therefore, purchasers of our
ordinary shares in this offering will experience immediate dilution in the net tangible book value of the ordinary shares
purchased in this offering. Assuming that an aggregate of 8,398,656 ordinary shares are sold at a public offering price of $8.93 per share, the last reported sale price of our ordinary shares on the Nasdaq Capital Market on February 27, 2019, for
aggregate gross proceeds of $75,000,000 and after deducting estimated commissions and estimated offering expenses payable by
us, our adjusted net tangible book value as of December 31, 2018, would have been approximately $125.9 million, or
approximately $3.02 per ordinary. As a result, if you purchase ordinary shares in this offering at that assumed public
offering price, you would suffer immediate and substantial dilution of $5.91 per share with respect to the net tangible book
value of the ordinary shares. See “Dilution” in this prospectus supplement for a detailed illustration of the
dilution you will incur if you purchase shares in this offering.
We will have broad discretion in how we use the net proceeds
of this offering. We may not use these proceeds effectively, which could affect our results of operations and cause our stock price
to decline.
We intend to use the
net proceeds from this offering to fund our clinical trials, to advance our pre-commercial activities, for working capital and
for general corporate purposes. Our management will have broad discretion over the use of proceeds from this offering, and we could
spend the proceeds from this offering in ways with which you may not agree or that do not yield a favorable return. Accordingly,
you will be relying on the judgment of our management with regard to the use of these net proceeds, and you will not have the opportunity
as part of your investment decision to assess whether the proceeds are being used appropriately. Our needs may change as the business
and the industry that we address evolves. It is possible that the proceeds will be invested in a way that does not yield a favorable,
or any, return. The failure of our management to use such funds effectively could have a material adverse effect on our business,
financial condition, operating results and cash flow.
If we raise additional capital in the future, your ownership
in us could be diluted.
In order to raise additional
capital, we may at any time, including during this offering, offer additional ordinary shares or other securities convertible into
or exchangeable for our ordinary shares at prices that may not be the same as the price per share in this offering. We may sell
shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in
this offering, and investors purchasing shares or other securities in the future could have rights superior to existing shareholders,
including investors who purchase ordinary shares in this offering. The price per share at which we sell additional ordinary shares
or securities convertible into ordinary shares in future transactions may be higher or lower than the price per share in this offering.
Until such time, if
ever, as we can generate substantial revenue from the sale of our products, we may finance our cash needs through a combination
of equity offerings, debt financings and license and development agreements. To the extent that we raise additional capital through
the further sale of equity securities or convertible debt securities, your ownership interest will be diluted, and the terms of
these securities may include liquidation or other preferences that adversely affect your rights as a shareholder.
Sales of a substantial number of our ordinary shares in
the public market could cause our stock price to fall.
We may issue and sell
additional ordinary shares in the public markets, including during this offering. As a result, a substantial number of our ordinary
shares may be sold in the public market. Sales of a substantial number of our ordinary shares in the public markets, including
during this offering, or the perception that such sales could occur, could depress the market price of our ordinary shares and
impair our ability to raise capital through the sale of additional equity securities.
Our shareholders may be diluted by
the exercise of outstanding options to purchase ordinary shares
As of February 27,
2019, we have (i) 4,063,183 that we have reserved for issuance upon the exercise of outstanding options under our 2015 incentive
plan, (ii) 295,452 ordinary shares that we have reserved for issuance upon the exercise of outstanding options under our 2005 incentive
plan, and (iii) 8,035 options issued outside of such plans. We expect to issue additional equity awards to compensate employees,
and may issue additional shares to raise capital, to pay for services, or for other corporate purposes. Any such issuances will
have the effect of diluting the interests of current shareholders. The future issuance of any such additional ordinary shares may
create downward pressure on the trading price of our ordinary shares.
The actual number of shares we will
issue under the Sales Agreement, at any one time or in total, is uncertain.
Subject to certain
limitations in the Sales Agreement and compliance with applicable law, we have the discretion to deliver a placement notice to
Cowen at any time throughout the term of the Sales Agreement. The number of shares that are sold by Cowen after delivering a placement
notice will fluctuate based on the market price of the ordinary shares during the sales period and limits we set with Cowen. Because
the price per share of each share sold will fluctuate based on the market price of our ordinary shares during the sales period,
it is not possible at this stage to predict the number of shares that will ultimately be issued.
FORWARD-LOOKING STATEMENTS
This prospectus supplement,
including the information incorporated by reference into this prospectus, contains, and any prospectus supplement may contain statements
that are forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development
efforts, business, financial condition, results of operations, strategies, plans and prospects. In addition, from time to time,
we or our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can
be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,”
“may,” “should,” “anticipate,” “could,” “might,” “seek,”
“target,” “will,” “project,” “forecast,” “continue” or their negatives
or variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical
matters. These forward-looking statements may be included in, among other things, various filings made by us with the SEC, press
releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements
relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements
relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause
our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors
could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking
statements, including, but not limited to:
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we are a clinical stage biopharmaceutical company with a history of operating losses, are not currently
profitable, do not expect to become profitable in the near future and may never become profitable;
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our independent registered public accounting firm has expressed substantial doubt regarding our
ability to continue as a going concern;
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because of our limited operating history, we may not be able to successfully operate our business
or execute our business plan;
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we face continuous technological change, and developments by competitors may render our products
or technologies obsolete or non-competitive. If our new or existing product candidates are rendered obsolete or non-competitive,
our marketing and sales will suffer and we may never be profitable;
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we license our core technology on an exclusive basis from Yissum (Hebrew University), and we could
lose our rights to this license if a dispute with Yissum arises or if we fail to comply with the financial and other terms of the
license;
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if we fail to adequately protect, enforce or secure rights to the patents which were licensed to
us or any patents we may own in the future, the value of our intellectual property rights would diminish and our business and competitive
position would suffer;
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our product candidates are at various stages of preclinical and clinical development and may never
be commercialized;
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we cannot be certain that the results of our ACCORDANCE study or any future Phase III clinical
trial, even if all endpoints are met, will support regulatory approval of any of our product candidates for any indication;
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our product candidates are subject to extensive regulation and are at various stages of regulatory
development and may never obtain regulatory approval;
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we are subject to anti-kickback laws and regulations. Our failure to comply with these laws and
regulations could have adverse consequences to us; and
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potential political, economic and military instability in the State of Israel, where some of our
senior management, our head executive office, research and development, and manufacturing facilities are located, may adversely
affect our results of operations.
|
We believe these forward-looking
statements are reasonable; however, these statements are only current predictions and are subject to known and unknown risks, uncertainties
and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to
be materially different from those anticipated by the forward-looking statements. We discuss many of these risks in this prospectus
in greater detail under the heading “Risk Factors” and elsewhere in this prospectus. Given these uncertainties, you
should not rely upon forward-looking statements as predictions of future events.
All forward-looking
statements attributable to us or persons acting on our behalf speak only as of the date hereof and are expressly qualified in their
entirety by the cautionary statements included in this prospectus. We undertake no obligations to update or revise forward-looking
statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events,
except as required by law. In evaluating forward-looking statements, you should consider these risks and uncertainties and not
place undue reliance on our forward-looking statements.
USE OF PROCEEDS
The amount of proceeds
from this offering will depend upon the number of ordinary shares sold and the market price at which they are sold. There can be
no assurance that we will be able to sell any shares under or fully utilize the Sales Agreement with Cowen.
We intend to use the
net proceeds from the sale of the securities offered under this prospectus to fund our clinical trials, to advance our pre-commercial
activities, for working capital and for general corporate purposes.
Although we have identified
some potential uses of the net proceeds to be received upon completion of this offering, we cannot specify these uses with certainty.
Our management will have broad discretion in the application of the net proceeds from this offering and could use them for purposes
other than those contemplated at the time of this offering. Our shareholders may not agree with the manner in which our management
chooses to allocate and spend the net proceeds. Moreover, our management may use the net proceeds for corporate purposes that may
not result in our being profitable or increase our market value.
Pending these uses,
we may invest the net proceeds from the sale of securities in accordance with our investment policy, as may be amended from time
to time, which currently includes bank deposits carrying interest, corporate debt obligations with a minimum of
an A rating by global rating agencies and investments in United States Government Securities and Israeli Government Securities.
DILUTION
If you purchase our
ordinary shares, your interest will be diluted immediately to the extent of the difference between the public offering price per
share of our ordinary shares and the as adjusted net tangible book value per share of our ordinary shares after this offering.
The net tangible book
value of our ordinary shares as of December 31, 2018 was approximately $53.6 million, or approximately $1.61 per share. Net tangible
book value per share represents the amount of our total tangible assets less total liabilities divided by the total number of our
ordinary shares outstanding.
After giving
effect to the sale of $75 million of ordinary shares in this offering at an assumed public offering price of $8.93 per share
(the last reported sale price of our ordinary shares on the Nasdaq Capital Market on February 27, 2019), and after deducting
commissions and estimated aggregate offering expenses payable by us, our as adjusted net tangible book value as of December
31, 2018 would have been approximately $125.9 million, or approximately $3.02 per share. This represents an immediate
increase in net tangible book value of approximately $1.41 per share to our existing shareholders and an immediate dilution
in as adjusted net tangible book value of approximately $5.91 per share to investors participating in this offering, as
illustrated by the following table:
|
Assumed offering price per share of ordinary shares
|
|
|
|
|
|
$
|
8.93
|
|
|
|
|
|
|
|
|
|
|
|
|
Net tangible book value per share as of December 31, 2018
|
|
$
|
1.61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in net tangible book value per share after this offering
|
|
$
|
1.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted net tangible book value per share as of December 31, 2018, after giving effect to this offering
|
|
|
|
|
|
$
|
3.02
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilution per share to investors participating in this offering
|
|
|
|
|
|
$
|
5.91
|
|
The table above
assumes for illustrative purposes that an aggregate of 8,398,656 ordinary shares are sold at a price of $8.93 per share, the
last reported sales price of our ordinary shares on the Nasdaq Capital Market on February 27, 2019, for aggregate proceeds of
approximately $75 million. The shares sold in this offering, if any, will be sold from time to time at various prices.
The above discussion
and table are based on 33,232,988 shares outstanding as of December 31, 2018, and excludes as of such date (i) 3,138,183 ordinary
shares that we have reserved for issuance upon the exercise of outstanding options under our 2015 incentive plan, as of December
31, 2018, at a weighted average exercise price of $5.85 per share and that expire between 2024 and 2027, (ii) 295,452 ordinary
shares that we have reserved for issuance upon the exercise of outstanding options under our 2005 incentive plan, as of December
31, 2018, at a weighted average exercise price of NIS 27.52 per ordinary share and that expire between 2019 and 2020, and (iii)
8,035 options issued outside of such plans, as of December 31, 2018, with an exercise price of NIS 0.5 per ordinary share and that
expire in 2019.
To the extent that
any of these outstanding options are exercised or we issue additional shares under our equity incentive plans, there will be further
dilution to new investors. In addition, we may choose to raise additional capital at any time, including during this offering,
due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating
plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance
of these securities could result in further dilution to our shareholders.
MATERIAL TAX CONSIDERATIONS
The following description
is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our ordinary
shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax
consequences that may arise under the laws of any state, local, foreign, including Israel, or other taxing jurisdiction
.
Certain Israeli Tax Considerations
The following is a
brief summary of the material Israeli income tax laws applicable to us. This section also contains a discussion of material Israeli
tax consequences concerning the ownership and disposition of our ordinary shares. This summary does not discuss all the aspects
of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to
some types of investors subject to special treatment under Israeli law. Examples of this kind of investor include residents of
Israel or investors in securities who are subject to special tax regimes not covered in this discussion. To the extent that the
discussion is based on tax legislation that has not yet been subject to judicial or administrative interpretation, we cannot assure
you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. This summary is based
on laws and regulations in effect as of the date hereof and does not take into account possible future amendments which may be
under consideration.
General Corporate Tax Structure in
Israel
Israeli companies
are generally subject to corporate tax on their taxable income at the rate of 23% for the 2018 tax year and thereafter. However,
the effective tax rate payable by a company that derives income from an Approved Enterprise, a Benefited Enterprise, a Preferred
Enterprise, Technology Enterprise or a Special Preferred Technology Enterprise (as discussed below) may be considerably less. Capital
gains derived by an Israeli resident company are subject to tax at the prevailing corporate tax rate.
Law for the Encouragement of Industry (Taxes), 5729-1969
The Law for the Encouragement
of Industry (Taxes), 5729-1969, or the Industry Encouragement Law, defines an “Industrial Company” as an Israeli resident
company incorporated in Israel, of which 90% or more of its income in any tax year, other than income from certain government loans,
is derived from an “Industrial Enterprise” owned by it and located in Israel or in the “Area”, in accordance
with the definition in section 3a of the Israeli Income Tax Ordinance (New Version) 1961, or the Ordinance. An “Industrial
Enterprise” is defined as an enterprise which is held by an Industrial Company whose principal activity in any given tax
year is industrial production.
The following tax benefits,
among others, are available to Industrial Companies:
|
|
●
|
amortization over an eight-year
period of the cost of patents and rights to use a patent and know-how that were purchased in good faith and are used for the development
or advancement of the Industrial Enterprise, commencing from the tax year where the Industrial Enterprise began to use them;
|
|
|
●
|
under certain conditions, the right to elect to file consolidated tax returns with Israeli Industrial Companies controlled by it; and
|
|
|
●
|
expenses related to a public offering are deductible in equal amounts over three years commencing on the year of the offering.
|
We believe that we
qualify as an “Industrial Company” within the meaning of the Industry Encouragement Law. There can be no assurance
that we will continue to qualify as an Industrial Company or that the benefits described above will be available to us in the future.
Tax Benefits under the Law for the
Encouragement of Capital Investments, 5719-1959
Tax benefits prior to the 2005 Amendment
The Law for the Encouragement
of Capital Investments, 5719-1959, or the Investment Law, provides that a capital investment in eligible facilities may, upon application
to the Israeli Authority for Investments and Development of the Ministry of Economy and Industry of the State of Israel, or the
Investment Center, be granted the status of an Approved Enterprise. Each certificate of approval for an Approved Enterprise relates
to a specific investment program delineated both by its financial scope, including sources of funds, and by its physical characteristics
of the facility or other assets, e.g., the equipment to be purchased and utilized pursuant to the program.
The tax benefits under
the Investment Law also apply to income generated by a company from the grant of a usage right with respect to know-how developed
pursuant to the Approved Enterprise, income generated from royalties, and income derived from a service which is auxiliary to such
usage right or royalties, provided that such income is generated within the ordinary course of business of the company investing
in the Approved Enterprise.
If a company has more
than one approval or only a portion of its capital investments is approved, its effective tax rate is the result of a weighted
average of the applicable rates. The tax benefits under the Investment Law are not, generally, available with respect to income
derived from products manufactured outside of Israel. In addition, the tax benefits available to a company investing in an Approved
Enterprise are contingent upon the fulfillment of conditions stipulated in the Investment Law and related regulations and the criteria
set forth in the specific certificate of approval, as described above. In the event that a company does not meet these conditions,
it would be required to refund the amount of tax benefits, plus a consumer price index linked adjustment and interest, or other
monetary penalty.
A company that has
an Approved Enterprise program and which qualifies as a foreign investment company, or a FIC, will be eligible for a three-year
extension of tax benefits following the expiration of the seven-year period referenced above. In addition, in the event that the
level of foreign ownership in an Approved Enterprise reaches 49% or higher, the corporate tax rate applicable to income earned
from the Approved Enterprise is reduced as follows:
|
% of Foreign Ownership
|
|
Tax Rate
|
|
|
49% or more but less than 74%
|
|
|
20
|
%
|
|
74% or more but less than 90%
|
|
|
15
|
%
|
|
90% or more
|
|
|
10
|
%
|
Additionally, a company
may elect to forgo its entitlements to grants and tax benefits under the grant track and apply for alternative package of tax benefits,
or the Alternative Track, for a benefit period of between seven and ten years . Under the Alternative Track, a company’s
undistributed income derived from the Approved Enterprise will be exempt from corporate tax for a period of between two and ten
years, starting from the first year the company derives taxable income under the Approved Enterprise program. The length of time
of this exemption will depend on the geographic location of the Approved Enterprise within Israel. After the exemption period lapses,
the company is subject to tax at a corporate tax rate of between 10% to 23% depending on the level of foreign investment in the
company in each year, as detailed above, for the remainder of the benefit period.
A company that has
elected the Alternative Track and subsequently pays a dividend out of income derived from the Approved Enterprise during the tax
exemption period will be subject to corporate tax on the amount which is determined by the distributed amount (grossed up to reflect
such pre-tax income that it would have had to earn in order to distribute the dividend) with the effective corporate tax rate which
would have been applied had the company not elected the Alternative Track, which is between 10%-23%, depending on the level of
foreign investment in the company in each year as explained above. Dividends paid out of any income derived from an Approved Enterprise
are generally subject to withholding tax at source at the reduced rate of 15% or at a lower rate provided under an applicable tax
treaty (subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate),
if the dividend is distributed during the tax exemption period or within 12 years thereafter. In the event, however, where the
company qualifies as a FIC, there is no such time limitation.
Under the Investment
Law, a company that has elected the Alternative Track is not obliged to distribute retained profits, and may generally decide from
which year’s profits to declare dividends.
The Company is not
entitled to an Approved Enterprise status.
Tax benefits under the
2005 Amendment
An amendment to the
Investment Law, which became effective as of April 1, 2005, or the 2005 Amendment, changed certain provisions of the Investment
Law. An eligible investment program under the 2005 Amendment qualifies for benefits as a “Benefited Enterprise” (rather
than as an Approved Enterprise which status is still applicable for investment programs approved prior to December 31, 2004 and/or
investment programs under the grant track). According to the 2005 Amendment, to qualify a Benefited Enterprise, only companies
with Approved Enterprises receiving cash grants require the prior approval of the Investment Center. Further, a company may claim
the tax benefits offered by the Investment Law directly in its tax returns, provided that its facilities meet the criteria for
tax benefits set forth in the 2005 Amendment. A company that has a Benefited Enterprise may, at its discretion, approach the Israel
Tax Authority for a pre-ruling confirming that it meets the criteria with the provisions of the Investment Law.
The duration of the
tax benefits under the 2005 Amendment is limited to the earlier of seven or ten years (depending on the geographic location of
the Benefited Enterprise within Israel) from the Commencement Year (as described below) or 12 years from the first day of the year
of election. Commencement Year is defined as the later of the first tax year in which a company had derived liable income for tax
purposes from the Benefited Enterprise, or the year of election which is the year in which a company requested to have the tax
benefits apply to the Benefited Enterprise. The tax benefits granted to a Benefited Enterprise are determined, depending on the
geographic location of the Benefited Enterprise within Israel, according to one of the following, which may be applicable to us:
(i) Similar to the
Alternative Track, exemption from corporate tax may be available on undistributed income for a period of two to ten years, depending
on the geographic location of the Benefited Enterprise within Israel, and a corporate tax rate of 10% to 23% for the remainder
of the benefit period, depending on the level of foreign investment in each year. Benefits may be granted for a term of seven to
ten years, depending on the level of foreign investment in the company. If the company pays a dividend out of income derived from
the Benefited Enterprise during the tax exemption period, such income will be subject to deferred corporate tax with respect to
the amount distributed (grossed up to reflect such pre-tax income that it would have had to earn in order to distribute the dividend)
at the corporate tax rate which would have otherwise been applied. The company is required to withhold tax on such distribution
at a rate of 15%, or such lower rate may be provided in an applicable tax treaty (subject to the receipt in advance of a valid
certificate from the Israel Tax Authority allowing for a reduced tax rate); or
(ii) A special track,
or the Ireland Track, which enables companies owning facilities in certain geographical locations in Israel to pay corporate tax
at a flat rate of 11.5% on income derived from the Benefited Enterprise. The benefit period is for ten years. Upon payment of dividends,
the company is required to withhold tax on such dividend at a rate of 15% for Israeli residents and at a rate of 4% for foreign
residents.
Under the Investment
Law, we may be entitled to tax benefits, by virtue of our status as a “Benefited Enterprise,” which was awarded to
us in October 2007. As of December 31, 2018, we had not yet generated operating income that will allow us to benefit from the tax
benefits under the Investment Law. The tax benefits under the Investment Law may apply for a period of up to ten years from the
first year in which taxable income will be generated. Our tax benefits period is scheduled to expire at the end of 2023.
In order to remain
eligible for the tax benefits of a Benefited Enterprise, we must continue to meet certain conditions stipulated in the Investment
Law and its regulations, as amended. In addition, in order to remain eligible for the tax benefits available to the Benefited Enterprise,
we must also comply with the conditions set forth in a tax ruling we received from the Israeli Tax Authority. These conditions
include, among other things, that the production, directly or through subcontractors, of all our products should be performed within
certain regions of Israel. If we do not meet these requirements, the tax benefits would be reduced or canceled.
Tax benefits under the
2011 Amendment
On December 29, 2010,
the Israeli Parliament approved the 2011 Amendment to the Investment Law, or the 2011 Amendment. The 2011 Amendment significantly
revised the tax incentive regime in Israel and commenced on January 1, 2011.
The 2011 Amendment
introduced a new status of “Preferred Enterprise”, replacing the existing status of “Benefited Enterprise”
and introduced new benefits for income generated by a “Preferred Company” through its Preferred Enterprise. A Preferred
Company is an Industrial Company meeting certain conditions (including a minimum threshold of 25% export). However, under the 2011
Amendment, the requirement for a minimum investment in productive assets in order to be eligible for the benefits granted under
the Investment Law as with respect to “Benefited Enterprise” was cancelled.
A Preferred Company
is entitled to a reduced flat tax rate with respect to the income attributed to the Preferred Enterprise at the following rates:
|
Tax Year
|
|
Development Region “A”
|
|
|
Other Areas within Israel
|
|
|
2011-2012
|
|
|
10
|
%
|
|
|
15
|
%
|
|
2013
|
|
|
7
|
%
|
|
|
12.5
|
%
|
|
2014-2016
|
|
|
9
|
%
|
|
|
16
|
%
|
|
2017 onwards
|
|
|
7.5
|
%
|
|
|
16
|
%
|
The classification
of income generated from the provision of usage rights in know-how or software that were developed in the Preferred Enterprise,
as well as royalty income received with respect to such usage, as Preferred Enterprise income is subject to the issuance of a pre-ruling
from the Israeli Tax Authority stipulating that such income is associated with the productive activity of the Preferred Enterprise
in Israel.
In addition, the 2011
Amendment introduced a new status of “Special Preferred Company,” which is an Industrial Company meeting, in addition
to the conditions prescribed for a “Preferred Company,” certain additional conditions (including that the annual Preferred
Enterprise income is at least NIS 1.5 billion in 2016, and NIS 1 billion in 2017 and thereafter). The tax rate applicable for a
period of ten years to income generated by such an enterprise will be reduced to 5%, if located in Development Region “A”,
or to 8%, if located in other area within the State of Israel. As of January 1, 2017, the definition for ‘Special Preferred
Enterprise’ includes less stringent conditions.
Dividends distributed
from income which is attributed to a “Preferred Enterprise” or a “Special Preferred Enterprise” will be
subject to withholding tax at source at the following rates: (i) Israeli resident corporations – 0%, (although, if such dividends
are subsequently distributed to individuals or a non-Israeli company, withholding tax at a rate of 20% or such lower rate as may
be provided in an applicable tax treaty will apply (subject to the receipt in advance of a valid certificate from the Israel Tax
Authority allowing for a reduced tax rate)) (ii) Israeli resident individuals – 20%, and (iii) non-Israeli residents - 20%,
subject to a reduced tax rate under the provisions of an applicable tax treaty (subject to the receipt in advance of a valid certificate
from the Israel Tax Authority allowing for a reduced tax rate). In 2017-2019, dividends paid out of preferred income attributed
to a “Special Preferred Enterprise”, directly to a foreign parent company, are subject to withholding tax at source
at the rate of 5% (temporary provisions).
The 2011 Amendment
also revised the grant track to apply only to the approved programs located in Development Region “A” and provides
not only cash grants (as prior to the 2011 Amendment) but also the granting of loans. In addition, a company owning a Preferred
Enterprise under the grant track may be entitled also to the tax benefits which are prescribed for a Preferred Enterprise.
The provisions of the
2011 Amendment do not apply to existing “Benefited Enterprises” or “Approved Enterprises,” which will continue
to be entitled to the tax benefits under the Investment Law, as in effect prior to the 2011 Amendment, unless the company owning
such enterprises had made an election to apply the provisions of the 2011 Amendment (such election cannot be later rescinded),
which is to be filed with the Israeli Tax Authority, not later than the date prescribed for the filing of the company’s annual
tax return for the respective year.
We have examined the
possible effect, if any, of the provisions of the 2011 Amendment on our consolidated financial statements and have decided, at
this time, not to apply for the new benefits under the 2011 Amendment.
Tax benefits under the
2017 Amendment
The 2017 Amendment
to the Investment Law, or the 2017 Amendment, was enacted as part of the Economic Efficiency Law that was published on December
29, 2016, and is effective as of January 1, 2017. The 2017 Amendment provides new tax benefits for two types of “Technology
Enterprises,” as described below, and is in addition to the other existing tax benefit programs under the Investment Law.
The 2017 Amendment
provides that a technology company satisfying certain conditions may qualify as a “Preferred Technology Enterprise”
and thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as “Preferred Technology Income,” as
defined in the Investment Law. The tax rate is further reduced to 7.5% for a Preferred Technology Enterprise located in Development
Region “A.” In addition, a Preferred Technology Company will enjoy a reduced corporate tax rate of 12% on capital gain
derived from the sale of certain “Benefitted Intangible Assets” (as defined in the Investment Law) to a related foreign
company if the Benefitted Intangible Assets were acquired from a foreign company on or after January 1, 2017 for at least NIS 200
million, and the sale receives prior approval from the IIA.
The 2017 Amendment
further provides that a technology company satisfying certain conditions may qualify as a “Special Preferred Technology Enterprise”
and thereby enjoy a reduced corporate tax rate of 6% on “Preferred Technology Income” regardless of the company’s
geographic location within Israel. In addition, a Special Preferred Technology Enterprise will enjoy a reduced corporate tax rate
of 6% on capital gain derived from the sale of certain “Benefitted Intangible Assets” to a related foreign company
if the Benefitted Intangible Assets were either developed by an Israeli company or acquired from a foreign company on or after
January 1, 2017, and the sale received prior approval from the IIA. A Special Preferred Technology Enterprise that acquires Benefitted
Intangible Assets from a foreign company for more than NIS 500 million will be eligible for these benefits for at least ten years,
subject to certain approvals as specified in the Investment Law.
Dividends distributed
by a Preferred Technology Enterprise or a Special Preferred Technology Enterprise, paid out of Preferred Technology Income, are
generally subject to withholding tax at source at the rate of 20% or such lower rate as may be provided in an applicable tax treaty
(subject to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate). However,
if such dividends are paid to an Israeli company, no tax is required to be withheld. If such dividends are distributed to a foreign
company and other conditions are met, the withholding tax rate will be 4% (or a lower rate under a tax treaty, if applicable, subject
to the receipt in advance of a valid certificate from the Israel Tax Authority allowing for a reduced tax rate).
Taxation of the Company Shareholders
Capital Gains
Capital gain tax is
imposed on the disposal of capital assets by an Israeli resident, and on the disposal of such assets by a non-Israel resident if
those assets are (i) located in Israel, (ii) are shares or a right to a share in an Israeli resident corporation, or (iii) represent,
directly or indirectly, rights to assets located in Israel, unless a tax treaty between Israel and the seller’s country of
residence provides otherwise. The Ordinance distinguishes between “Real Capital Gain” and the “Inflationary Surplus.”
Real Capital Gain is the excess of the total capital gain over Inflationary Surplus computed generally on the basis of the increase
in the Israeli consumer price index between the date of purchase and the date of disposal. Inflationary Surplus is not currently
subject to tax in Israel.
The Real Capital Gain
accrued by Israeli individual residents on the sale of our ordinary shares (that were purchased after January 1, 2012, whether
listed on a stock exchange or not) will be taxed at the rate of 25%. However, if such shareholder is a “Controlling Shareholder”
(i.e., a person who holds, directly or indirectly, alone or together with such person’s relative or another person, 10% or
more of one of the Israeli resident company’s means of control (including, among other things, the right to receive profits
of the company, voting rights, the right to receive the company’s liquidation proceeds and the right to appoint a director))
at the time of sale or at any time during the preceding 12 month period and/or claims a deduction for interest and linkage differences
expenses in connection with the purchase and holding of such shares, such capital gain will be taxed at the rate of 30%.
The Real Capital Gain
derived by Israeli corporation residents will be generally subject to the ordinary corporate tax (23% in 2019 and thereafter).
Israeli individual
resident shareholders dealing in securities, or to whom such income is otherwise taxable as ordinary business income are taxed
in Israel at their marginal rates applicable to business income (up to 50% in 2019, including, Excess Tax, if any, as described
below).
Notwithstanding the
foregoing, Real Capital Gain derived from the sale of our ordinary shares by a non-Israeli resident (whether an individual or a
corporation) shareholder may be exempt under the Ordinance from Israeli capital gains provided that such shareholder did not acquire
their shares prior to January 1, 2009 or acquired their shares after the Company was listed for trading on Nasdaq or another recognized
exchange and such gains were not derived from a permanent establishment of such shareholder in Israel. These provisions dealing
with capital gain are not applicable to a person whose gains from selling or otherwise disposing of the shares are deemed to be
business income. However, non-Israeli corporations will not be entitled to the foregoing exemptions if an Israeli resident (i)
holds more than 25% of the means of control in such non-Israeli corporation or (ii) is the beneficiary of or is entitled to 25%
or more of the revenues or profits of such non-Israeli corporation, in each case, whether directly or indirectly.
In addition, the sale
of shares may be exempt from Israeli capital gain tax under the provisions of an applicable tax treaty (subject to the receipt
in advance of a valid certificate from the Israel Tax Authority allowing for an exemption).
For example, the Convention
between the Government of the United States of America and the Government of Israel with respect to Taxes on Income, as amended,
or the U.S.-Israel Tax Treaty, exempts U.S. residents (for the purposes of the U.S.-Israel Tax Treaty) from Israeli capital gain
tax in connection with a sale, unless (i) the U.S. resident owned, directly or indirectly, 10% or more of the Israeli resident
company’s voting power at any time within the 12 month period preceding such sale, subject to certain conditions; (ii) the
seller, being an individual, is present in Israel for a period or periods of 183 days or more in the aggregate during the relevant
taxable year; and (iii) the capital gain from the sale, exchange or disposition was derived through a permanent establishment that
the U.S. resident maintains in Israel; (iv) the capital gains arising from such sale, exchange or disposition is attributed to
real estate located in Israel; or (v) the capital gains arising from such sale, exchange or disposition is attributed to royalties.
In any such case, the sale, exchange or disposition of our ordinary shares would be subject to Israeli tax, to the extent applicable.
However, under the U.S.-Israel Tax Treaty, such U.S. resident would be permitted to claim a credit for such taxes against U.S.
federal income tax imposed on any gain from such sale, exchange or disposition, under the circumstances and subject to the limitations
specified in the U.S.-Israel Tax Treaty.
In some
instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration
may be subject to withholding of Israeli tax at source, as detailed above. Shareholders may be required to demonstrate that they
are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale. For example, in transactions
involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise, the Israel Tax Authority
may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by this authority or obtain
a specific exemption from the Israel Tax Authority to confirm their status as non-Israeli resident, and, in the absence of such
declarations or exemptions, may require the purchaser of the shares to withhold taxes at source.
Either the purchaser,
the Israeli stockbrokers or financial institution through which the shares are held is obliged, subject to the above mentioned
exemptions, to withhold tax upon the sale of securities on the amount of the consideration paid upon the sale of the securities
(or on the Real Capital Gain realized on the sale, if known), at the rate of 25% in respect of an individual, at the rate of 30%
in respect of a “Controlling Shareholder” (as defined above), or at a rate of corporate tax, in respect of a corporation
(23% in 2019 and thereafter).
Upon the sale of securities
traded on a stock exchange, a detailed return, including a computation of the tax due, must be filed and an advanced payment must
be paid on January 31 and July 31 of every tax year in respect of sales of securities made within the previous six months. However,
if all tax due was withheld at source according to applicable provisions of the Ordinance and regulations promulgated thereunder,
the aforementioned return need not be filed and no advance payment must be paid. Capital gain is also reportable on the annual
income tax returns.
Dividends
A distribution of dividends
from income to an Israeli resident individual, which is not attributed to an Approved Enterprise/Benefited Enterprise/Preferred
Enterprise, will generally be subject to income tax at a rate of 25%. However, a 30% tax rate will apply if the dividend recipient
is a “Controlling Shareholder” (as defined above) at the time of distribution or at any time during the preceding 12
month period. If the recipient of the dividend is an Israeli resident corporation, such dividend will generally be exempt from
tax provided the income from which such dividend is distributed was derived or accrued within Israel.
Distribution of dividends
from income attributed to a Preferred Enterprise is generally subject to a tax at a rate of 20%. However, if such dividends are
distributed to an Israeli resident company, and are subsequently distributed to individuals or a non-Israeli company, withholding
tax at a rate of 20% or such lower rate as may be provided in an applicable tax treaty will apply. Dividends distributed from income
attributed to an Approved Enterprise and/or a Benefited Enterprise are subject to a tax rate of 15%. If the dividend is attributable
partly to income derived from an Approved Enterprise, Benefited Enterprise or Preferred Enterprise, and partly from other sources
of income, the income tax rate will be a blended rate reflecting the relative portions of the types of income.
The Ordinance generally
provides that a non-Israeli resident (either individual or corporation) is subject to an Israeli tax on the receipt of dividends
at the rate of 25% (30% if the dividends recipient is a “Controlling Shareholder” (as defined above), at the time of
distribution or at any time during the preceding 12 month period); those rates are subject to a reduced tax rate or an exemption
from tax under the provisions of an applicable tax treaty.
For example, under
the U.S.-Israel Tax Treaty, the following rates will apply in respect of dividends distributed by an Israeli resident company to
a U.S. resident (for purposes of the U.S.-Israel Tax Treaty): (i) with regard to a dividend distributed from income which is not
attributed to an Approved Enterprise/Benefited Enterprise/Preferred Enterprise, if the U.S. resident is a corporation which holds
during that portion of the taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable
year (if any), at least 10% of the outstanding shares of the voting stock of the Israeli resident paying corporation and not more
than 25% of the gross income of the Israeli resident paying corporation for such prior taxable year (if any) consists of certain
type of interest or dividends – the maximum tax rate of withholding is 12.5% if a certificate for a reduced withholding tax
rate would be provided in advance from the Israeli Tax Authority, (ii) with regard to a dividend distributed from income derived
from an Approved Enterprise/Benefited Enterprise under the Investment Law, if the U.S. resident is a corporation which holds during
that portion of the taxable year which precedes the date of payment of the dividend and during the whole of its prior taxable year
(if any), at least 10% of the outstanding shares of the voting stock of the Israeli resident paying corporation and not more than
25% of the gross income of the Israeli resident paying corporation for such prior taxable year (if any) consists of certain type
of interest or dividends, the tax rate of withholding 15% will be applicable if a certificate for a reduced withholding tax rate
would be provided in advance from the Israeli Tax Authority, and (iii) in all other cases, the tax rate is 25%. The aforementioned
rates under the U.S.-Israel Tax Treaty will not apply if the dividend income was derived through a permanent establishment that
the U.S. resident maintains in Israel.
A non-Israeli resident
who receives dividend income derived from or accrued from Israel, from which the full amount of tax was withheld at source, is
generally exempt from the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was
not generated from business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel
with respect to which a tax return is required to be filed and (iii) the taxpayer is not obliged to pay Excess Tax (as described
below).
Payors of dividends
on our shares, including the Israeli stockbroker effectuating the transaction, or the financial institution through which the securities
are held, are required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration of a shareholder of
his, her or its foreign residency, to withhold taxes upon the distribution of dividends at a rate of 25%, provided that the shares
are registered with a nominee company (for corporations and individuals).
Excess Tax
Individuals who are
subject to tax in Israel (whether such individual is an Israeli resident or non-Israeli resident) are also subject to an additional
tax, at a rate of 3%, on annual income exceeding a certain threshold (NIS 649,560 for 2019), which amount is linked to the annual
change in the Israeli consumer price index, including, but not limited to income derived from dividends, interest and capital gains.
Foreign Exchange Regulations
Non-residents of Israel
who hold our ordinary shares are able to receive any dividends, and any amounts payable upon the dissolution, liquidation and winding
up of our affairs, repayable in non-Israeli currency at the rate of exchange prevailing at the time of conversion. However, Israeli
income tax is generally required to have been paid or withheld on these amounts. In addition, the statutory framework for the potential
imposition of currency exchange control has not been eliminated, and may be restored at any time by administrative action.
Estate and Gift Tax
Israeli law presently
does not impose estate or gift taxes.
Certain U.S. Federal Income Tax Considerations
The following is a
general summary of certain material U.S. federal income tax consequences relating to the purchase, ownership and disposition of
our ordinary shares by U.S. Holders (as defined below). This summary is based on the Internal Revenue Code of 1986, as amended,
or the Code, the regulations of the U.S. Department of the Treasury issued pursuant to the Code, or the Treasury Regulations, the
income tax treaty between the United States and Israel, or the U.S.-Israel Tax Treaty, and administrative and judicial interpretations
thereof, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, or to different
interpretation. No ruling has been sought from the IRS with respect to any U.S. federal income tax consequences described below,
and there can be no assurance that the IRS or a court will not take a contrary position. This summary is no substitute for consultation
by prospective investors with their own tax advisors and does not constitute tax advice. This summary applies only to U.S. Holders
that hold our ordinary shares as capital assets for U.S. federal income tax purposes (generally, property held for investment)
and does not address all of the tax considerations that may be relevant to specific U.S. Holders in light of their particular circumstances
or to U.S. Holders subject to special treatment under U.S. federal income tax law (including, without limitation, banks, insurance
companies, tax-exempt entities, retirement plans, regulated investment companies, partnerships, dealers in securities, brokers,
real estate investment trusts, certain former citizens or residents of the United States, persons who acquire our ordinary shares
as part of a straddle, hedge, conversion transaction or other integrated investment, persons who acquire our ordinary shares through
the exercise or cancellation of employee stock options or otherwise as compensation for their services, persons that have a “functional
currency” other than the U.S. dollar, persons that own (or are deemed to own, indirectly, or by attribution) 10% or more
of our shares (by vote or value), or persons that mark their securities to market for U.S. federal income tax purposes). This summary
does not address any U.S. state or local or non-U.S. tax considerations, any U.S. federal estate, gift or alternative minimum tax
considerations, or any U.S. federal tax consequences other than U.S. federal income tax consequences.
As used in this summary,
the term “U.S. Holder” means a beneficial owner of our ordinary shares that is, for U.S. federal income tax purposes,
(i) an individual citizen or resident of the United States, (ii) a corporation, or other entity taxable as a corporation for U.S.
federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District
of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax regardless of its source, or (iv) a trust
with respect to which a court within the United States is able to exercise primary supervision over its administration and one
or more U.S. persons have the authority to control all of its substantial decisions, or that has a valid election in effect under
applicable Treasury Regulations to be treated as a “United States person.”
If an entity or arrangement
treated as a partnership for U.S. federal income tax purposes holds our ordinary shares, the tax treatment of such entity or arrangement
treated as a partnership and each person treated as a partner thereof generally will depend upon the status and activities of the
entity and such person. A holder that is treated as a partnership for U.S. federal income tax purposes should consult its own tax
advisor regarding the U.S. federal income tax considerations applicable to it and its partners of the purchase, ownership and disposition
of our ordinary shares.
Prospective investors
should be aware that this summary does not address the tax consequences to investors who are not U.S. Holders. Prospective investors
should consult their own tax advisors as to the particular tax considerations applicable to them relating to the purchase, ownership
and disposition of our ordinary shares, including the applicability of U.S. federal, state and local tax laws and non-U.S. tax
laws.
Taxation of U.S. Holders
Distributions
.
Subject to the discussion below under “Passive Foreign Investment Company,” a U.S. Holder that receives a distribution
with respect to an ordinary share generally will be required to include the amount of such distribution in gross income as a dividend
(without reduction for any Israeli tax withheld from such distribution) when actually or constructively received to the extent
of the U.S. Holder’s pro rata share of our current and/or accumulated earnings and profits (as determined under U.S. federal
income tax principles). Any distributions in excess of our earnings and profits will be applied against and will reduce (but not
below zero) the U.S. Holder’s tax basis in its ordinary shares, and, to the extent they exceed that tax basis, will be treated
as gain from the sale or exchange of our ordinary shares. We do not intend to calculate our earnings and profits under U.S. federal
income tax principles. Therefore, a U.S. Holder should expect that a distribution will be treated as a dividend even if that distribution
would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.
As noted above, we
do not anticipate paying any cash dividends in the foreseeable future. If we were to pay dividends, we expect to pay such dividends
in NIS. A dividend paid in NIS, including the amount of any Israeli taxes withheld, will be includible in a U.S. Holder’s
income at a U.S. dollar amount calculated by reference to the exchange rate in effect on the date such dividend is received, regardless
of whether the payment is in fact converted into U.S. dollars. If the dividend is converted to U.S. dollars on the date of receipt,
a U.S. Holder generally will not recognize a foreign currency gain or loss. However, if the U.S. Holder converts the NIS into U.S.
dollars on a later date, the U.S. Holder must include, in computing its income, any gain or loss resulting from any exchange rate
fluctuations. The gain or loss will be equal to the difference between (i) the U.S. dollar value of the amount included in income
when the dividend was received and (ii) the amount received on the conversion of the NIS into U.S. dollars. Such gain or loss generally
will be ordinary income or loss and will be U.S. source income or loss for U.S. foreign tax credit purposes. U.S. Holders should
consult their own tax advisors regarding the tax consequences to them if we pay dividends in NIS or any other non-U.S. currency.
Subject to certain
significant conditions and limitations, any Israeli taxes paid on or withheld from distributions from us and not refundable to
a U.S. Holder may be credited against the U.S. Holder’s U.S. federal income tax liability or, alternatively, may be deducted
from the U.S. Holder’s taxable income. The election to deduct, rather than credit, foreign taxes, is made on a year-by-year
basis and applies to all foreign taxes paid by a U.S. Holder or withheld from a U.S. Holder that year. Dividends paid on the ordinary
shares generally will constitute income from sources outside the United States and be categorized as “passive category income”
or, in the case of some U.S. Holders, as “general category income” for U.S. foreign tax credit purposes. Because the
rules governing foreign tax credits are complex, U.S. Holders should consult their own tax advisors regarding the availability
of foreign tax credits in their particular circumstances.
Dividends paid on the
ordinary shares will not be eligible for the “dividends-received” deduction generally allowed to corporate U.S. Holders
with respect to dividends received from U.S. corporations.
Certain distributions
treated as dividends that are received by an individual U.S. Holder from a “qualified foreign corporation” generally
qualify for a 20% reduced maximum tax rate so long as certain holding period and other requirements are met. A non-U.S. corporation
(other than a “passive foreign investment company,” or “PFIC”, for the taxable year in which the dividend
is paid or the preceding taxable year) generally will be considered to be a qualified foreign corporation (i) if it is eligible
for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines
is satisfactory for purposes of this provision and which includes an exchange of information program, or (ii) with respect to any
dividend it pays on stock which is readily tradable on an established securities market in the United States. Dividends paid by
us in a taxable year in which we are not a PFIC and with respect to which we were not a PFIC in the preceding taxable year are
expected to be eligible for the 20% reduced maximum tax rate, although we can offer no assurances in this regard. However, any
dividend paid by us in a taxable year in which we are a PFIC or were a PFIC in the preceding taxable year will be subject to tax
at regular ordinary income rates (along with any applicable additional PFIC tax liability, as discussed below). As discussed below
under “Passive Foreign Investment Company,” we believe that we were a PFIC for our 2018 taxable year and expect to
be a PFIC for the 2019 taxable year. Because PFIC status is determined annually and is based on our income, assets and activities
for the entire taxable year, it is not possible to determine with certainty whether we will be characterized as a PFIC for the
2019 taxable year until after the close of the year, and there can be no assurance that we will not be classified as a PFIC in
any future year.
The additional 3.8%
“net investment income tax” (discussed below under “Medicare Tax on Investment Income”) may apply to dividends
received by certain U.S. Holders who meet certain modified adjusted gross income thresholds.
Sale, Exchange or
Other Taxable Disposition of Ordinary Shares
. Subject to the discussion under “Passive Foreign Investment Company”
below, a U.S. Holder generally will recognize capital gain or loss upon the sale, exchange, or other taxable disposition of our
ordinary shares in an amount equal to the difference between the amount realized on the sale, exchange, or other taxable disposition
and the U.S. Holder’s adjusted tax basis (determined under U.S. federal income tax rules) in such ordinary shares. This capital
gain or loss will be long-term capital gain or loss if the U.S. Holder’s holding period in our ordinary shares exceeds one
year. Preferential tax rates for long-term capital gain (currently, with a maximum rate of 20%) will apply to individual U.S. Holders.
The deductibility of capital losses is subject to limitations. The gain or loss generally will be income or loss from sources within
the United States for U.S. foreign tax credit purposes, subject to certain possible exceptions under the U.S.-Israel Tax Treaty.
The additional 3.8% “net investment income tax” (discussed below under “Medicare Tax on Investment Income”)
may apply to gains recognized upon the sale, exchange, or other taxable disposition of our ordinary shares by certain U.S. Holders
who meet certain modified adjusted gross income thresholds.
U.S. Holders should
consult their own tax advisors regarding the U.S. federal income tax consequences of receiving currency other than U.S. dollars
upon the disposition of our ordinary shares.
Passive Foreign
Investment Company.
In general, a non-U.S. corporation will be treated as a PFIC for U.S. federal income tax purposes
in any taxable year in which either (i) at least 75% of its gross income is “passive income,” or (ii) on average at
least 50% of its assets by value produce passive income or are held for the production of passive income. Passive income for this
purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities
transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts
derived by reason of the temporary investment of funds, including those raised in a public offering. Assets that produce or are
held for the production of passive income include cash, even if held as working capital or raised in a public offering, marketable
securities and other assets that may produce passive income. In determining whether a non-U.S. corporation is a PFIC, a proportionate
share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value)
is taken into account.
A foreign corporation’s
PFIC status is an annual determination that is based on tests that are factual in nature, and our status for any year will depend
on our income, assets, and activities for such year. Based upon our review of our financial data, we believe that we were a PFIC
for our 2018 taxable year and expect to be a PFIC for the 2019 taxable year. Because PFIC status is determined annually and is
based on our income, assets and activities for the entire taxable year, it is not possible to determine with certainty whether
we will be characterized as a PFIC for the 2019 taxable year until after the close of the year, and there can be no assurance that
we will not be classified as a PFIC in any future year.
Default PFIC Rules
.
If we are a PFIC for any tax year, a U.S. Holder who does not make a timely “qualified electing fund” election, or
“QEF election” (as discussed below), or a mark-to-market election (as described below), referred to in this summary
as a “Non-Electing U.S. Holder,” will be subject to special rules with respect to (i) any “excess distribution”
(generally, the portion of any distributions received by the Non-Electing U.S. Holder on the ordinary shares in a taxable year
in excess of 125% of the average annual distributions received by the Non-Electing U.S. Holder in the three preceding taxable years,
or, if shorter, the Non-Electing U.S. Holder’s holding period for the ordinary shares), and (ii) any gain realized on the
sale or other disposition of such ordinary shares. Under these rules:
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the excess distribution or
gain would be allocated ratably over the Non-Electing U.S. Holder’s holding period for such ordinary shares;
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the amount allocated to the current taxable year and any year prior to us becoming a PFIC would be taxed as ordinary income; and
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the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
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If a Non-Electing U.S.
Holder who is an individual dies while owning our ordinary shares, the Non-Electing U.S. Holder’s successor would be ineligible
to receive a step-up in tax basis of such ordinary shares. Non-Electing U.S. Holders should consult their tax advisors regarding
the application of the “net investment income tax” (discussed below under “Medicare Tax on Investment Income”)
to their specific situation.
To the extent a distribution
on our ordinary shares does not constitute an excess distribution to a Non-Electing U.S. Holder, such Non-Electing U.S. Holder
generally will be required to include the amount of such distribution in gross income as a dividend to the extent of our current
and/or accumulated earnings and profits (as determined for U.S. federal income tax purposes) that are not allocated to excess distributions.
The tax consequences of such distributions are discussed above under “Taxation of U.S. Holders—Distributions.”
Each U.S. Holder is encouraged to consult its own tax advisor with respect to the appropriate U.S. federal income tax treatment
of any distribution on our ordinary shares.
If we are treated as
a PFIC for any taxable year during the holding period of a Non-Electing U.S. Holder, we will continue to be treated as a PFIC for
all succeeding years during which the Non-Electing U.S. Holder is treated as a direct or indirect Non-Electing U.S. Holder even
if we are not a PFIC in any such year. A U.S. Holder is encouraged to consult its tax advisor with respect to any available elections
that may be applicable in such a situation, including the “deemed sale” election of Code Section 1298(b)(1) (which
will be taxed under the adverse tax rules described above).
We may invest in the
equity of foreign corporations that are PFICs or may own subsidiaries that own PFICs. If we are classified as a PFIC, under attribution
rules, U.S. Holders will be subject to the PFIC rules with respect to their indirect ownership interests in such PFICs, such that
a disposition of the ordinary shares of the PFIC or receipt by us of a distribution from the PFIC generally will be treated as
a deemed disposition of such ordinary shares or the deemed receipt of such distribution by the U.S. Holder, subject to taxation
under the PFIC rules. There can be no assurance that a U.S. Holder will be able to make a QEF election or a mark-to-market election
with respect to PFICs in which we invest. Each U.S. Holder is encouraged to consult its own tax advisor with respect to tax consequences
of an investment by us in a corporation that is a PFIC.
QEF Election
.
Certain of the adverse consequences of PFIC status can be mitigated if a U.S. Holder makes a QEF election. A U.S. Holder who makes
a timely QEF election, referred to in this disclosure as an “Electing U.S. Holder,” with respect to us must report
for U.S. federal income tax purposes his pro rata share of our ordinary earnings and net capital gain, if any, for our taxable
year that ends with or within the taxable year of the Electing U.S. Holder. The “net capital gain” of a PFIC is the
excess, if any, of the PFIC’s net long-term capital gains over its net short-term capital losses. The amount so included
in income generally will be treated as ordinary income to the extent of such Electing U.S. Holder’s allocable share of the
PFIC’s ordinary earnings and as long-term capital gain to the extent of such Electing U.S. Holder’s allocable share
of the PFIC’s net capital gains. Such Electing U.S. Holder generally will be required to translate such income into U.S.
dollars based on the average exchange rate for the PFIC’s taxable year with respect to the PFIC’s functional currency.
Such income generally will be treated as income from sources outside the United States for U.S. foreign tax credit purposes. Amounts
previously included in income by such Electing U.S. Holder under the QEF rules generally will not be subject to tax when they are
distributed to such Electing U.S. Holder. The Electing U.S. Holder’s tax basis in our ordinary shares generally will increase
by any amounts so included under the QEF rules and decrease by any amounts not included in income when distributed.
An Electing U.S. Holder
will be subject to U.S. federal income tax on such amounts for each taxable year in which we are a PFIC, regardless of whether
such amounts are actually distributed to such Electing U.S. Holder. However, an Electing U.S. Holder may, subject to certain limitations,
elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. If an Electing U.S. Holder
is an individual, any such interest will be treated as non-deductible “personal interest.”
Any net operating losses
or net capital losses of a PFIC will not pass through to the Electing U.S. Holder and will not offset any ordinary earnings or
net capital gain of a PFIC recognized by the Electing U.S. Holder in subsequent years.
So long as an Electing
U.S. Holder’s QEF election with respect to us is in effect with respect to the entire holding period for our ordinary shares,
any gain or loss recognized by such Electing U.S. Holder on the sale, exchange or other disposition of such shares generally will
be long-term capital gain or loss if such Electing U.S. Holder has held such shares for more than one year at the time of such
sale, exchange or other disposition. Preferential tax rates for long-term capital gain (currently, a maximum rate of 20%) will
apply to individual U.S. Holders. The deductibility of capital losses is subject to limitations.
In general, a U.S.
Holder must make a QEF election on or before the due date for filing its income tax return for the first year to which the QEF
election is to apply. A U.S. Holder makes a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance
with the instructions thereto. Upon request, we will annually furnish U.S. Holders with information needed in order to complete
IRS Form 8621 (which form would be required to be filed with the IRS on an annual basis by the U.S. Holder) and to make and maintain
a valid QEF election for any year in which we or any of our subsidiaries that we control is a PFIC. There is no assurance, however,
that we will have timely knowledge of our status as a PFIC, or that the information that we provide will be adequate to allow U.S.
Holders to make a QEF election. A QEF election will not apply to any taxable year during which we are not a PFIC, but will remain
in effect with respect to any subsequent taxable year in which we become a PFIC. Each U.S. Holder should consult its own tax advisor
with respect to the advisability of, the tax consequences of, and the procedures for making a QEF election with respect to us.
Mark-to-Market Election
.
Alternatively, if our ordinary shares are treated as “marketable stock,” a U.S. Holder would be allowed to make a “mark-to-market”
election with respect to our ordinary shares, provided the U.S. Holder completes and files IRS Form 8621 in accordance with the
relevant instructions and related Treasury Regulations. If that election is made, the U.S. Holder generally would include as ordinary
income in each taxable year the excess, if any, of the fair market value of our ordinary shares at the end of the taxable year
over such holder’s adjusted tax basis in such ordinary shares. The U.S. Holder would also be permitted an ordinary loss in
respect of the excess, if any, of the U.S. Holder’s adjusted tax basis in our ordinary shares over their fair market value
at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-
market election. A U.S. Holder’s tax basis in our ordinary shares would be adjusted to reflect any such income or loss amount.
Gain realized on the sale, exchange or other disposition of our ordinary shares would be treated as ordinary income, and any loss
realized on the sale, exchange or other disposition of our ordinary shares would be treated as ordinary loss to the extent that
such loss does not exceed the net mark-to-market gains previously included in income by the U.S. Holder, and any loss in excess
of such amount will be treated as capital loss. Amounts treated as ordinary income will not be eligible for the favorable tax rates
applicable to qualified dividend income or long-term capital gains.
Generally, stock will
be considered marketable stock if it is “regularly traded” on a “qualified exchange” within the meaning
of applicable Treasury Regulations. A class of stock is regularly traded on an exchange during any calendar year during which such
class of stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter. To be marketable
stock, our ordinary shares must be regularly traded on a qualifying exchange (i) in the United States that is registered with the
SEC or a national market system established pursuant to the Exchange Act or (ii) outside the United States that is properly regulated
and meets certain trading, listing, financial disclosure and other requirements. Our ordinary shares are expected to constitute
“marketable stock” as long as they remain listed on the Nasdaq Capital Market and are regularly traded.
A mark-to-market election
will not apply to our ordinary shares held by a U.S. Holder for any taxable year during which we are not a PFIC, but will remain
in effect with respect to any subsequent taxable year in which we become a PFIC. Such election will not apply to any PFIC subsidiary
that we own. Each U.S. Holder is encouraged to consult its own tax advisor with respect to the availability and tax consequences
of a mark-to-market election with respect to our ordinary shares.
Each U.S. Holder should
consult its own tax adviser with respect to the applicability of the “net investment income tax” (discussed below under
“Medicare Tax on Investment Income”) where a mark-to-market election is in effect.
In addition, U.S. Holders
should consult their tax advisors regarding the IRS information reporting and filing obligations that may arise as a result of
the ownership of ordinary shares in a PFIC, including IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment
Company or Qualified Electing Fund.
The U.S. federal
income tax rules relating to PFICs, QEF elections, and mark-to market elections are complex. U.S. Holders are urged to consult
their own tax advisors with respect to the purchase, ownership and disposition of our ordinary shares, any elections available
with respect to such ordinary shares and the IRS information reporting obligations with respect to the purchase, ownership and
disposition of our ordinary shares.
Certain Reporting Requirements
Certain U.S. Holders
may be required to file IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation, and IRS Form 5471, Information
Return of U.S. Persons With Respect to Certain Foreign Corporations, reporting transfers of cash or other property to us and information
relating to the U.S. Holder and us. Substantial penalties may be imposed upon a U.S. Holder that fails to comply. See also the
discussion regarding Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing
Fund, above.
In addition, certain
U.S. Holders must report information on IRS Form 8938, Statement of Specified Foreign Financial Assets, with respect to their investments
in certain “specified foreign financial assets,” which may include an investment in our ordinary shares, if the aggregate
value of all of those assets exceeds $50,000 on the last day of the taxable year (and in some circumstances, a higher threshold).
This reporting requirement applies to individuals and certain U.S. entities.
U.S. Holders who fail
to report required information could become subject to substantial penalties. U.S. Holders should consult their tax advisors regarding
the possible implications of these reporting requirements arising from their investment in our ordinary shares.
Backup Withholding Tax and Information
Reporting Requirements
Generally, information
reporting requirements will apply to distributions on our ordinary shares or proceeds on the disposition of our ordinary shares
paid within the United States (and, in certain cases, outside the United States) to U.S. Holders other than certain exempt recipients,
such as corporations. Furthermore, backup withholding (currently at 24%) may apply to such amounts if the U.S. Holder fails to
(i) provide a correct taxpayer identification number, (ii) report interest and dividends required to be shown on its U.S. federal
income tax return, or (iii) make other appropriate certifications in the required manner. U.S. Holders who are required to establish
their exempt status generally must provide such certification on IRS Form W-9.
Backup withholding
is not an additional tax. Amounts withheld as backup withholding from a payment may be credited against a U.S. Holder’s U.S.
federal income tax liability and such U.S. Holder may obtain a refund of any excess amounts withheld by filing the appropriate
claim for refund with the IRS and furnishing any required information in a timely manner.
Medicare Tax on Investment Income
Certain U.S. persons,
including individuals, estates and trusts, will be subject to an additional 3.8% Medicare tax, or “net investment income
tax,” on unearned income. For individuals, the additional net investment income tax applies to the lesser of (i) “net
investment income” or (ii) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married
and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s
gross investment income reduced by the deductions that are allocable to such income. Investment income generally includes, among
other things, passive income such as interest, dividends, annuities, royalties, rents, and capital gains. U.S. Holders are urged
to consult their own tax advisors regarding the implications of the additional net investment income tax resulting from their ownership
and disposition of our ordinary shares.
THE DISCUSSION ABOVE
IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR
IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY
SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
RESEARCH
GRANTS
We previously received
grants from the Government of the State of Israel through the Innovation Authority, or IIA (formerly known as the Office of the
Chief Scientist of the Israeli Ministry of Economy and Industry, or the OCS), for a research and development program (including
a follow-up program for the clinical development of the Accordion Pill) in the aggregate amount of approximately NIS 50.2 million.
However, in March 2018, we repaid a portion of the grant amounts received in 2016 in the amount of approximately NIS 8.1 million
(approximately $2.3 million), including interest and linkage differences, following a review and assessment by the IIA of the 2016
program. We have not yet paid royalties to the IIA for these programs as we currently have no revenues from sales of products whose
development was assisted by the governmental grants. As of February 27, 2019, the aggregate net amount of grants that we have received
from the IIA is approximately NIS 42.3 million (or approximately $11.3 million), which amount has accrued aggregate interest of
approximately $650,000 as of such date.
In February 2018, the
IIA approved our request to transfer all of the manufacturing rights of our AP-CD/LD product candidate that was developed under
one of the IIA funded programs to LTS. As a result, we will be required to pay the IIA royalties from revenue generated from our
AP-CD/LD product candidate at an increased rate and up to an increased cap amount. The IIA noted that the approval granted was
exceptional and that the IIA will not approve us manufacturing additional product candidates out of Israel. For a description of
our obligations in connection with the grants from IIA under the Encouragement of Industrial Research, Development and Technological
Innovation in the Industry Law, 5744-1984, see “Item 1. — Business — Research Grants — Grants Under the
Innovation Law” and “Item 1-A. Risk Factors — Risks Related to Our Operations in Israel” in our Annual
Report on Form 10-K for the year ended December 31, 2018.
PLAN OF DISTRIBUTION
We have entered into
a sales agreement with Cowen, under which we may issue and sell from time to time up to $75,000,000 of our ordinary shares through
Cowen as our sales agent. Sales of our ordinary shares, if any, will be made at market prices by any method that is deemed to be
an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, including sales made directly on
the Nasdaq Capital Market or any other existing trading market for our ordinary shares. If authorized by us in writing, Cowen may
purchase shares of our ordinary shares as principal.
Cowen will offer our
ordinary shares subject to the terms and conditions of the sales agreement on a daily basis or as otherwise agreed upon by us and
Cowen. We will designate the maximum amount of ordinary shares to be sold through Cowen on a daily basis or otherwise determine
such maximum amount together with Cowen. Subject to the terms and conditions of the sales agreement, Cowen will use its commercially
reasonable efforts to sell on our behalf all of the ordinary shares requested to be sold by us. We may instruct Cowen not to sell
ordinary shares if the sales cannot be effected at or above the price designated by us in any such instruction. Cowen or we may
suspend the offering of our ordinary shares being made through Cowen under the sales agreement upon proper notice to the other
party. Cowen and we each have the right, by giving written notice as specified in the sales agreement, to terminate the sales agreement
in each party’s sole discretion at any time.
The aggregate compensation
payable to Cowen as sales agent will be an amount equal to up to 3.0% of the gross sales price of the shares sold through it pursuant
to the sales agreement. We have also agreed to reimburse up to an aggregate of $75,000 of Cowen’s actual outside legal expenses
incurred by Cowen in connection with this offering. We estimate that the total expenses of the offering payable by us, excluding
commissions payable to Cowen under the sales agreement, will be approximately $400,000.
The remaining sales
proceeds, after deducting any expenses payable by us and any transaction fees imposed by any governmental, regulatory, or self-regulatory
organization in connection with the sales, will equal our net proceeds for the sale of such ordinary shares.
Cowen will provide
written confirmation to us following the close of trading on the Nasdaq Capital Market on each day in which ordinary shares are
sold through it as sales agent under the sales agreement. Each confirmation will include the number of ordinary shares sold through
it as sales agent on that day, the volume weighted average price of the shares sold, the percentage of the daily trading volume
and the net proceeds to us.
We will report at least
quarterly the number of ordinary shares sold through Cowen under the sales agreement, the net proceeds to us and the compensation
paid by us to Cowen in connection with the sales of ordinary shares.
Settlement for sales
of ordinary shares will occur, unless the parties agree otherwise or as otherwise required by law, on the second business day that
is also a trading day following the date on which any sales were made in return for payment of the net proceeds to us. There is
no arrangement for funds to be received in an escrow, trust or similar arrangement.
In connection with
the sales of our ordinary shares on our behalf, Cowen will be deemed to be an “underwriter” within the meaning of the
Securities Act, and the compensation paid to Cowen will be deemed to be underwriting commissions or discounts. We have agreed in
the sales agreement to provide indemnification and contribution to Cowen against certain liabilities, including liabilities under
the Securities Act. As sales agent, Cowen will not engage in any transactions that stabilize our ordinary shares.
Our ordinary shares are listed on the Nasdaq
Capital Market and trade under the symbol “NTEC.” The transfer agent of our ordinary shares is VStock Transfer, LLC.
Cowen and/or its affiliates have provided,
and may in the future provide, various investment banking and other financial services for us for which services they have received
and, may in the future receive, customary fees.
LEGAL MATTERS
Certain legal matters
with respect to U.S. law will be passed upon for us by McDermott Will & Emery LLP, New York, New York and certain legal matters
with respect to Israeli law will be passed upon for us by Meitar Liquornik Geva Leshem Tal, Law Offices, Ramat Gan, Israel. Cowen
and Company, LLC is being represented by Cooley LLP, New York, New York, with respect to U.S. law and by Gornitzky & Co., Tel-Aviv,
Israel, with respect to Israeli law in connection with this offering.
EXPERTS
The financial statements
incorporated in this prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2018 have been
so incorporated in reliance on the report (which contains an explanatory paragraph relating to the Company’s ability to
continue as a going concern as described in Note 1(2) to the financial statements) of Kesselman & Kesselman, Certified Public
Accountants (Isr.), an independent registered public accounting firm and a member firm of PricewaterhouseCoopers International
Limited, given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Prior to January 1,
2019, we were subject to the reporting requirements of the Exchange Act that are applicable to a foreign private issuer. In accordance
with the Exchange Act, we filed reports, including annual reports on Form 20-F, with the SEC. We also furnished to the SEC under
cover of Form 6-K material information required to be made public in Israel, filed with and made public by any stock exchange or
distributed by us to our shareholders. We were also exempt from the rules under the Exchange Act prescribing the furnishing and
content of proxy statements to shareholders and our officers, directors and principal shareholders were exempt from the “short-swing
profits” reporting and liability provisions contained in Section 16 of the Exchange Act and related Exchange Act rules.
Effective January 1,
2019, we are required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are
more detailed and extensive in certain respects, and which must be filed more promptly, than the forms available to a foreign private
issuer. In addition, we are now required to comply with U.S. proxy requirements and Regulation FD (Fair Disclosure) and our officers,
directors and principal shareholders are subject to the beneficial ownership reporting and short-swing profit recovery requirements
in Section 16 of the Exchange Act.
We have filed a registration
statement on Form S-3 with the SEC under the Securities Act of 1933. This prospectus is part of the registration statement but
the registration statement includes and incorporates by reference additional information and exhibits. We file annual, quarterly
and current reports, proxy statements and other information with the SEC. The SEC maintains a web site that contains reports, proxy
and information statements and other information regarding companies, such as ours, that file documents electronically with the
SEC. The address of that site on the worldwide web is http://www.sec.gov. The information on the SEC’s web site is not part
of this prospectus, and any references to this web site or any other web site are inactive textual references only.
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE
The SEC allows us to
“incorporate by reference” information that we file with it into this prospectus, which means that we can disclose
important information to you by referring you to those documents. The information incorporated by reference is an important part
of this prospectus. The information incorporated by reference is considered to be a part of this prospectus, and information that
we file later with the SEC will automatically update and supersede information contained in this prospectus and any accompanying
prospectus supplement.
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our Annual Report on Form 10-K for the fiscal year ended on December 31, 2018, filed with the SEC on February 27, 2019;
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our
Current Reports on Form 8-K (other than the information furnished pursuant to Item 2.02 or 7.01 thereof or related exhibits
furnished pursuant to Item 9.01 thereof) filed with the SEC January 2, 2019, January 7, 2019, January 25, 2019, and February
27, 2019; and
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●
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the description of our ordinary shares contained in Item 1 of the Registration Statement on Form 8-A (File No. 001-37521), filed with the SEC on July 28, 2015, including any amendment or report filed for the purpose of updating such description.
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All filings filed by
us pursuant to the Exchange Act after the date of the initial filing of this registration statement of which this prospectus supplement
and the accompanying prospectus is a part and prior to the effectiveness of such registration statement (excluding information
furnished pursuant to Items 2.02 and 7.01 of Form 8-K) shall also be deemed to be incorporated by reference into the prospectus.
You should rely only
on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you
with different information. Any statement contained in a document incorporated by reference into this prospectus will be deemed
to be modified or superseded for the purposes of this prospectus to the extent that a later statement contained in this prospectus
or in any other document incorporated by reference into this prospectus modifies or supersedes the earlier statement. Any statement
so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus. You
should not assume that the information in this prospectus is accurate as of any date other than the date of this prospectus or
the date of the documents incorporated by reference in this prospectus.
We will provide you
without charge, upon your written or oral request, a copy of any of the documents incorporated by reference in this prospectus,
other than exhibits to such documents which are not specifically incorporated by reference into such documents. Please direct your
written or telephone requests to 12 Hartom Street, Har Hotzvim, Jerusalem 9777512, Israel Attn: Chief Financial Officer, telephone
number +972 (2) 586 4657. You may also obtain information about us by visiting our website at
www.intecpharma.com
. Except
for the specific incorporated documents listed above, no information available on or through our website shall be deemed to be
incorporated in this prospectus or the registration statement of which it forms a part.
INTEC
PHARMA LTD.
Up
to $75,000,000
Ordinary
Shares
PROSPECTUS SUPPLEMENT
Cowen
,
2019
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The statement of estimated expenses in connection
with the issuance and distribution of the securities being registered, other than sales discounts and commissions:
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SEC registration fee
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$
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24,240
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Transfer agents’ fees
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*
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Printing and engraving costs
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*
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Legal fees and expenses
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*
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Accountants fees and expenses
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*
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Miscellaneous
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*
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Total
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*
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*
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These fees and expenses depend on the securities offered and the number of issuances and accordingly cannot be estimated at this
time.
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Item 15. Indemnification of Directors and Officers
Under the Israeli Companies
Law 5759-1999, or the Companies Law, a company may not exculpate an office holder from liability for a breach of the duty of loyalty.
An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused
to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its
articles of association. Our articles of association include such a provision. Under the Companies Law, a company may not exculpate
in advance a director from liability arising out of a breach of the duty of care with respect to a dividend or distribution to
shareholders.
Under the Companies
Law and the Israeli Securities Law, 5728-1968, or the Israeli Securities Law, a company may indemnify an office holder in respect
of the following liabilities and expenses incurred for acts performed by him or her as an office holder, pursuant to an undertaking
made either in advance of an event or following an event, provided its articles of association include a provision authorizing
such indemnification:
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financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned foreseen events and amount or criteria;
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reasonable litigation expenses, including attorneys’ fees, incurred by the office holder (i) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (A) no indictment was filed against such office holder as a result of such investigation or proceeding; and (B) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (ii) in connection with a monetary sanction; and
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reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf, or by a third party, or in connection with criminal proceedings in which the office holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent; and
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expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law.
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Under the Companies
Law and the Israeli Securities Law, a company may insure an office holder against the following liabilities incurred for acts performed
by him or her as an office holder if and to the extent provided in the company’s articles of association:
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●
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a breach of the duty of loyalty to the company, provided that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;
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a breach of duty of care to the company or to a third party, to the extent such a breach arises out of the negligent conduct of the office holder; and
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a financial liability imposed on the office holder in favor of a third party.
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Under our articles
of association, we may insure and indemnify an office holder against the aforementioned liabilities as well as the following liabilities:
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any breach of duty of care to us or to a third party;
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any other action which is permitted by law to insure an office holder against;
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any financial liability in favor of a victim of a felony pursuant to Section 52 of the Israeli Securities Law.
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Under the Companies
Law, a company may not indemnify, exculpate or insure an office holder against any of the following:
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a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not harm the company;
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a breach of duty of care committed intentionally or recklessly, excluding a breach arising solely out of the negligent conduct of the office holder;
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an act or omission committed with intent to derive illegal personal benefit; or
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a civil or administrative fine or forfeit levied against the office holder.
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Under the Companies
Law, exculpation, indemnification and insurance of office holders in a public company must be approved by the compensation committee
and the board of directors and, with respect to certain office holders or under certain circumstances, also by the shareholders.
Our articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or
to be permitted by the Companies Law and the Israeli Securities Law.
We have entered into
agreements with each of our directors and executive officers exculpating them, to the fullest extent permitted by law and our articles
of association, and undertaking to indemnify them to the fullest extent permitted by law and our articles of association. This
indemnification is limited to events determined as foreseeable by the board of directors based on our activities, and to an amount
or according to criteria determined by the board of directors as reasonable under the circumstances.
The maximum indemnification
amount set forth in such agreements is limited to an amount which shall not exceed 25% of our shareholders equity based on our
most recently audited or reviewed financial statements prior to actual payment of the indemnification amount. Such maximum amount
is in addition to any amount paid (if paid) under insurance and/or by a third-party pursuant to an indemnification arrangement.
In the opinion of the
SEC, indemnification of directors and office holders for liabilities arising under the Securities Act, however, is against public
policy and therefore unenforceable.
We have obtained directors’
and officers’ liability insurance for the benefit of our office holders and intend to continue to maintain such coverage
and pay all premiums thereunder to the fullest extent permitted by the Companies Law. In addition, we have entered into agreements
with each of our office holders undertaking to indemnify them to the fullest extent permitted by the Companies Law, including with
respect to liabilities resulting from this offering to the extent that these liabilities are not covered by insurance.
Item 16. Exhibits
The index to exhibits
appears below on the page immediately before the signature pages of this Registration Statement.
Item 17. Undertakings
(a)
The undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective
registration statement; and
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided
,
however, that paragraphs (i), (ii) and (iii) above do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in reports filed with or furnished to the Securities and Exchange Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration
statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To
remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the
termination of the offering.
(5) That,
for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(A) Each
prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration statement; and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on
Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement
as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale
of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.
(6) That,
for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities:
The undersigned
Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule
424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to
by the undersigned Registrant;
(iii)
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.
(b)
That, for the purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) The
undersigned Registrant hereby undertakes to supplement the prospectus, after the expiration of the subscription period (if any),
to set forth the results of the subscription offer, the transactions by the underwriters during the subscription period, the amount
of unsubscribed securities to be purchased by the underwriters, and the terms of any subsequent reoffering thereof. If any public
offering by the underwriters is to be made on terms differing from those set forth on the cover page of the prospectus, a post-effective
amendment will be filed to set forth the terms of such offering.
(h) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to any charter provision, by law or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment
by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
(j) To
file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310
of the Trust Indenture Act (the “Act”) in accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Act.
EXHIBIT INDEX
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Exhibit No.
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Document
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1.1
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Form of Underwriting Agreement.*
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1.2
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Sales Agreement, dated March 1, 2019, by and between Intec Pharma Ltd. And Cowen and Company, LLC
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4.1
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Specimen share certificate (filed as Exhibit 2.1 to the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2017 filed with the SEC on March 9, 2018) (File No. 001-37521) and incorporated by reference herein).
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4.2
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Form of Warrant Agreement (including form of Warrant Certificate).*
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4.3
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Form of Subscription Right Agreement (including form of Right Certificate).*
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4.4
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Form of Debt Security.*
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4.5
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Form of Senior Indenture.
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4.6
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Form of Subordinated Indenture.
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4.7
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Form of Unit Agreement (including form of Unit Certificate).*
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5.1
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Opinion of Meitar Liquornik Geva Leshem Tal, Israeli legal counsel to the Registrant.
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5.2
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Opinion of McDermott Will & Emery LLP, U.S. legal counsel to the Registrant.
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23.1
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Consent of Kesselman & Kesselman, Certified Public Accountants (Isr.) independent registered public accounting firm, a member firm of PricewaterhouseCoopers International Limited.
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23.2
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Consent of Meitar Liquornik Geva Leshem Tal (included in Exhibit 5.1).
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23.3
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Consent of McDermott Will & Emery LLP (included in Exhibit 5.2).
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24.1
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Power of Attorney (included on signature page to Registration Statement).
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25.1
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Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939 of the Trusts under the Indenture**
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*
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To be filed, if applicable, by amendment, or as an exhibit to a report on Form 8-K and incorporated herein by reference.
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**
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To be filed by amendment to this registration statement
or by a report filed under the Securities Act of 1934, as amended, and incorporated herein by reference.
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SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Jerusalem, State of Israel on March 1, 2019.
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By:
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/s/ Jeffrey Meckler
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Name:
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Jeffrey Meckler
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Title:
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Chief Executive Officer
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KNOW ALL PERSONS BY
THESE PRESENTS, each director and officer whose signature appears below constitutes and appoints Jeffrey Meckler or Nir Sassi,
or either of these, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, to sign
in any and all capacities any and all amendments or post-effective amendments to this registration statement on Form S-3, and to
sign any and all additional registration statements relating to the same offering of securities of the Registration Statement that
are filed pursuant to Rule 462(b) of the Securities Act, and to file the same with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission, granting such attorney-in-fact and agent full power and authority
to do all such other acts and execute all such other documents as he may deem necessary or desirable in connection with the foregoing,
as fully as the undersigned may or could do in person, hereby ratifying and confirming all that such attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the
dates indicated.
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Signature
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Title
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|
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|
|
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|
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/s/
Dr. John W. Kozarich
|
|
Chairman of the Board of Directors
|
|
March 1, 2019
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Dr. John W. Kozarich
|
|
|
|
|
|
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|
|
|
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/s/ Jeffrey A. Meckler
|
|
Chief Executive Officer and Vice-Chairman of the Board of Directors
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|
March 1, 2019
|
|
Jeffrey A. Meckler
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Nir Sassi
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
March 1, 2019
|
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Nir Sassi
|
|
|
|
|
|
|
|
|
|
|
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/s/
Gil Bianco
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Director
|
|
March 1, 2019
|
|
Gil Bianco
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|
|
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|
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|
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/s/
Anthony J. Maddaluna
|
|
Director
|
|
March 1, 2019
|
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Anthony J. Maddaluna
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|
|
|
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|
|
|
/s/
Hila Karah
|
|
Director
|
|
March 1, 2019
|
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Hila Karah
|
|
|
|
|
|
|
|
|
|
|
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/s/
Issac Silberman
|
|
Director
|
|
March 1, 2019
|
|
Issac Silberman
|
|
|
|
|
|
|
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/s/
Roger J. Pomerantz, M.D.
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Director
|
|
March 1, 2019
|
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Roger J. Promerantz, M.D.
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|
|
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|
|
|
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/s/
William B. Hayes
|
|
Director
|
|
March 1, 2019
|
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William B. Hayes
|
|
|
|
|
Signature of authorized representative
in the United States
Pursuant to the requirements
of the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of Intec Pharma
Ltd. has signed this registration statement on the 1st day of March, 2019.
|
|
INTEC PHARMA, INC.
|
|
|
|
|
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By:
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/s/ Nir
Sassi
|
|
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Name:
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Nir Sassi
|
|
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Title:
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Treasurer and Secretary
|
II-7
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