As filed with the Securities and Exchange Commission
on March 26, 2018
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
GALMED PHARMACEUTICALS
LTD.
(Exact name of Registrant as specified in its charter)
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State of Israel
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Not Applicable
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer Identification No.)
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16 Tiomkin St.
Tel Aviv, Israel, 6578317
Tel: (+972)(3) 693-8448
(Address and telephone number of Registrant’s principal executive offices)
Puglisi & Associates
850 Library Avenue
Newark, Delaware 19711
(302) 738-6680
(Name, address, and telephone number for agent for service)
Copies of all communications, including
communications sent to agent for service, should be sent to:
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Shachar Hadar
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 Avenue
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 the effective date of this Registration Statement.
If only securities being
registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.
o
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, check the following box.
x
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.
o
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.
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If this Form is a registration
statement pursuant to General Instruction I.C. 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.
o
If this Form is a post-effective
amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box.
o
Indicate by check mark
whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company
x
If an emerging growth company
that prepares its financial statements in accordance with U.S. GAAP, 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.
o
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CALCULATION OF REGISTRATION FEE
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Title of each class of securities to be
registered
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Amount
to be registered
(1)
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Proposed
maximum
aggregate
price per unit
(2)
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Proposed
maximum
aggregate
offering price
(3)
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Amount of
registration
fee
(4)
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Ordinary shares, par value NIS 0.01 per share
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Warrants
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Subscription Rights
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Debt Securities
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Units
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Total
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$
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150,000,000
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$
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150,000,000
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$
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2,473
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(5)
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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 $150,000,000. 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 $150,000,000 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.C.
of Form F-3.
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(3)
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An indeterminate aggregate amount of securities is being
registered as may from time to time be sold at indeterminate prices.
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(4)
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The registration fee has been calculated pursuant to Rule 457(o) under the Securities Act of 1933,
as amended, on the basis of the maximum aggregate offering price of the securities listed.
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(5)
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As discussed below, pursuant to Rule 415(a)(6) of the Securities
Act, this registration statement includes a total of $130,142,500 aggregate offering price of unsold securities that were previously
registered on a registration statement on Form F-3 (Registration No. 333-203133)
The filing fee paid in connection with
such unsold securities was $15,123
. Accordingly, the $2,473 registration fee shown above
has been calculated based on the proposed maximum offering price of the additional $19,857,500 of securities registered on this
registration statement.
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Pursuant to Rule 415(a)(6) of the Securities
Act, the securities registered pursuant to this registration statement include $130,142,500 aggregate offering price of unsold
securities of the registrant previously registered on its Registration Statement on Form F-3 (Registration No. 333-203133),
filed on March 31, 2015 and declared effective on July 1, 2015, which the registrant refers to as the Prior Registration Statement.
The previously paid filing fee relating to such unsold securities under the Prior Registration Statement will continue to be applied
to such unsold securities registered in this registration statement. To the extent that, after the filing date hereof and prior
to the effectiveness of this registration statement, any such unsold securities are sold pursuant to the Prior Registration Statement,
the registrant will identify in a pre-effective amendment to this registration statement the updated amount of unsold securities
from the Prior Registration Statement to be included in this registration statement pursuant to Rule 415(a)(6) and the updated
amount of new securities to be registered on this registration statement. Pursuant to Rule 415(a)(6), the offering of the unsold
securities registered under the Prior Registration Statement, if not previously terminated, will be deemed terminated as of the
date of effectiveness of this Registration Statement.
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, or until this Registration Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This registration statement
contains two prospectuses:
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•
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a base prospectus which covers the offering, issuance and sale of such indeterminate number of
ordinary shares, which together shall have an aggregate initial offering price not to exceed $150,000,000; and
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•
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a sales agreement prospectus covering the offering, issuance and sale of the registrant’s
ordinary shares that, may be issued and sold under a sales agreement, or the Sales Agreement, between the registrant and Stifel,
Nicolaus & Company, Incorporated, or Stifel, in an aggregate amount of up to $35,000,000.
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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 $150,000,000 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 $35,000,000 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
in this prospectus is not complete and may be changed or supplemented. No securities described in this prospectus can be sold until
the registration statement that we filed to cover the securities has become effective under the rules of the Securities and Exchange
Commission. This prospectus is not an offer to sell the securities and it 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 26, 2018
PROSPECTUS
GALMED PHARMACEUTICALS LTD.
$150,000,000
Ordinary Shares
Warrants
Subscription Rights
Debt Securities
Units
We may offer, issue and
sell from time to time up to US $150,000,000 of our ordinary shares,
including in the form
of warrants to purchase ordinary shares, including in the form of 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 our 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 in a supplement to this prospectus the price and any other material terms of any such
offering. Any prospectus supplement may also add, update or change information contained in this prospectus. You should read this
prospectus and any applicable prospectus supplement, as well as the documents incorporated by reference or deemed incorporated
by reference into this prospectus, carefully before you invest in any securities.
This prospectus may not be used to offer or
sell securities unless accompanied by a prospectus supplement.
We may, from time to time,
offer to 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 underwriter,
agent or dealer and any applicable fees, commissions or discounts.
Our ordinary shares are
traded on the Nasdaq Capital Market under the symbol “GLMD.” The closing price of our ordinary shares, as reported
on the Nasdaq Capital Market on March 23, 2018, was $5.92.
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 these securities
involves a high degree of risk. Please carefully consider the risks discussed in this prospectus under “Risk Factors”
beginning on page 3 and the “Risk Factors” in “Item 3: Key Information- Risk Factors” of our most recent
Annual Report on Form 20-F incorporated by reference in this prospectus and in any applicable prospectus supplement for a discussion
of the factors you should consider carefully before deciding to purchase these securities.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a criminal offense under the laws of the United
States.
The date of this prospectus is
,
2018
Table
of Contents
ABOUT THIS PROSPECTUS
This prospectus is part
of a Registration Statement on Form F-3 that we filed with the Securities and Exchange Commission, or the SEC, utilizing a “shelf”
registration process. Under this shelf registration process, we may sell our securities described in this prospectus in one or
more offerings up to a total dollar amount of $150,000,000. 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.
Each time we offer our
securities, we will provide you with a prospectus supplement that will describe the specific amounts, prices and terms of the securities
we offer. The prospectus supplement may also add, update or change information contained in this prospectus. You should read carefully
both this prospectus and any prospectus supplement together with additional information described below under “Where You
Can Find More Information” and “Incorporation by Reference.”
This prospectus does not
contain all of the information provided in the registration statement that we filed with the Commission. For further information
about us or our ordinary shares, you should refer to that registration statement, which you can obtain from the Commission as described
below under “Where You Can Find More Information” and “Incorporation by Reference.”
You should rely only on
the information incorporated by reference or provided in this prospectus or any prospectus supplement. “Incorporated by reference”
means that we can disclose important information to you by referring you to another document filed separately with the SEC. We
have not authorized anyone to provide you with different information. We are offering to sell, and seeking offers to buy, our ordinary
shares only in jurisdictions where offers and sales are permitted. We are not making, nor will we make, an offer to sell securities
in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus
and any supplement to this prospectus is current only as of the dates on their respective covers. Our business, financial condition,
results of operations and prospects may have changed since that date.
We prepare our financial
statements in United States dollars and in accordance with accounting principles generally accepted in the United States, or U.S.
GAAP.
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.
This prospectus contains
and incorporates by reference market data and industry statistics and forecasts that are based on independent industry publications
and other publicly-available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness
of this information and we have not independently verified this information. Although we are not aware of any misstatements regarding
the market and industry data presented in this prospectus or the documents incorporated herein by reference, these 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.
Accordingly, investors should not place undue reliance on this information.
The name of our product
candidate, Aramchol™, is a registered trademark or trademark of Galmed Pharmaceuticals Ltd. in Israel, the United States
and/or other countries. All other trademarks, service marks or other tradenames appearing in this prospectus supplement and the
accompanying prospectus are the property of their respective owners. Unless otherwise mentioned or unless the context requires
otherwise, all references in this prospectus supplement and the accompanying prospectus to the “Company,” “Galmed,”
“we,” “us,” “our” or similar references mean Galmed Pharmaceuticals Ltd., a corporation formed
under the laws of the State of Israel, and its subsidiaries.
OUR BUSINESS
This summary highlights
selected information contained elsewhere in this prospectus that we consider important. This summary does not contain all of the
information you should consider before investing in our securities. You should read this summary together with the entire prospectus,
including the risks related to our business, our industry, investing in our ordinary shares and our location in Israel, that we
describe under “Risk Factors” and our consolidated financial statements and the related notes included at the end of
this prospectus before making an investment in our securities.
We are a clinical-stage
biopharmaceutical company focused on the development of the liver targeted stearoyl-coenzyme A desaturase-1, or SCD1, modulator
Aramchol, a first in class, novel, once-daily, oral therapy for the treatment of non-alcoholic steato-hepatitis, or NASH for variable
populations, as well as other liver associated disorders. We believe that our product candidate, Aramchol, has the potential to
be a disease modifying treatment for fatty liver disorders, including NASH, which is a chronic disease that constitutes a large
unmet medical need.
We are currently conducting
the ARREST Study, a multicenter, randomized, double blind, placebo-controlled Phase IIb clinical study designed to evaluate the
efficacy and safety of Aramchol in 247 subjects with NASH, who are overweight or obese, and who are pre-diabetic or type-II-diabetic.
Top line data from the ARREST Study are expected to be available during June 2018. More information about the ARREST Study may
be found on ClinicalTrials.gov identifier: NCT02279524.
Aramchol (arachidyl amido
cholanoic acid) is a novel fatty acid bile acid conjugate, inducing beneficial modulation of intra-hepatic lipid metabolism. Aramchol’s
ability to modulate hepatic lipid metabolism was discovered and validated in animal models, demonstrating down regulation of the
three key pathologies of NASH: steatosis, inflammation and fibrosis. The effect of Aramchol on fibrosis is mediated by down regulation
of steatosis and directly on human collagen producing cells. We are investing efforts into better understanding the mechanisms
by which Aramchol down regulates steatosis and fibrosis. Additional animal models are being investigated with variety of treatment
regimens. The data, thus far, demonstrates dual mode of action of Aramchol on fibrosis via improvement of Fatty Acid oxidation
as well a direct impact on stellate cells which are the collagen producing cells in the liver which results in reversing fibrosis.
Aramchol has been granted by the FDA Fast Track designation status for the treatment of NASH.
Corporate Information
Galmed Pharmaceuticals
Ltd. was incorporated in Israel on July 31, 2013 as a privately held company and is governed by the Israeli Companies Law, as amended,
or the Companies Law. However, our business has been operating since 2000 under a different group of companies established in the
same year, or the Group. Originally, we operated under the parent company, Galmed Holdings, Inc., a holdings company incorporated
in the British Virgin Islands, or GHI. GHI held all of the equity rights in and to Galmed 2000 Inc., a holdings company incorporated
in the British Virgin Islands, or GTTI. GTTI held all of the equity rights in and to Galmed International Limited, a company
incorporated in Malta, or GIL (other than 0.1% of the share capital held by GHI). GIL held all of the equity rights in and to Galmed
Medical Research Ltd., an Israeli company, or GMR, which became an inactive company in 2015. Our intellectual property was held
by GIL. The research and development was conducted by GMR as a service to GIL on a cost plus basis. GIL was responsible for all
product development.
On February 2, 2014, we
underwent a reorganization, or the Reorganization, pursuant to which all of our intangible assets (including our intellectual property)
were transferred from GIL to Galmed Research and Development Ltd., or GRD. The Reorganization was effectuated by share transfers
and asset transfers, resulting in the Company as the parent company and 100% equity-owner of the following companies: (1) GRD,
which holds all the Group’s intellectual property, including the Company’s patent portfolio; (2) GIL, which is an inactive
company; and (3) GTTI, which was liquidated in 2017. GIL holds GMR, which became an inactive company in 2015. The Reorganization
was conducted in order to simplify our capital structure, reduce our operating cost and to improve our ability to raise funds.
Immediately prior to the Reorganization, all our shareholders collectively held 9,739 ordinary shares of GHI. In connection with
the Reorganization, and in accordance with the Tax Pre-Ruling, we issued to all such shareholders ordinary shares of the Company,
such that upon the Reorganization all our shareholders collectively held 7,099,731 ordinary shares of the Company, in the same
proportion among all shareholders, which reflected a ratio of 729 ordinary shares of the Company for each ordinary share of GHI.
On March 18, 2014, we completed
our initial public offering of 3,263,010 ordinary shares at a public offering price of $13.50 per share, which included 425,610
ordinary shares issued upon the exercise in full of the underwriters’ option to purchase additional ordinary shares to cover
over-allotments, for aggregate gross proceeds of approximately $44.1 million. Net of underwriting discounts, commissions and other
estimated offering expenses, the offering raised approximately $39.9 million.
Our principal executive
offices and registered office in Israel are located at 16 Tiomkin Street, Tel Aviv, Israel, 6578317 and our telephone number is
+972-3-693-8448.
Our Amended and Restated Articles of Association, or Articles, are
on file in Israel with the office of the Israeli Registrar of Companies and available for public inspection at that office.
Our
website address is
http://www.galmedpharma.com
. The information contained on, or that can be accessed through, our
website is neither a part of nor incorporated into this prospectus supplement. We have included our website address in this prospectus
supplement solely as an inactive textual reference. We have duly designated Puglisi & Associates, with offices at 850 Library
Avenue, Newark, Delaware 1971, as our authorized agent in the United States in connection with this offering.
RISK FACTORS
Investing in our securities
involves significant risks. Before making an investment decision, you should carefully consider the risks described under “Risk
Factors” in the applicable prospectus supplement and under Item 3.D. – “Risk Factors” in our most recent
Annual Report on Form 20-F, or any updates in our Reports on Form 6-K, together with all of the other information appearing in
this prospectus or incorporated by reference into this prospectus and any applicable prospectus supplement, in light of your particular
investment objectives and financial circumstances. The risks so described are not the only risks facing us. Additional risks not
presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition
and results of operations could be materially adversely affected by any of these risks. The trading price of our securities could
decline due to any of these risks, and you may lose all or part of your investment. The discussion of risks includes or refers
to forward-looking statements; you should read the explanation of the qualifications and limitations on such forward-looking statements
discussed elsewhere in this prospectus.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus and documents
incorporated by reference into this prospectus and the other documents we have filed with the SEC that are incorporated herein
by reference may contain “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A
of the Securities Act, Section 21E of the Exchange Act, and the Private Securities Litigation Reform Act of 1995. 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, the factors summarized below:
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the timing and cost of our ongoing Phase IIb ARREST Study and planned Phase III trials, for our
product candidate, Aramchol for the treatment of patients who are overweight or obese and have pre diabetes or type II diabetes
mellitus with NASH, or whether Phase III trials will be conducted at all;
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completion and receiving favorable results of the Phase IIb ARREST Study and potential Phase III
trials for Aramchol;
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regulatory action with respect to Aramchol by the U.S. Food and Drug Administration, or the FDA,
or the European Medicines Authority, or the EMA, including but not limited to acceptance of an application for marketing authorization,
review and approval of such application, and, if approved, the scope of the approved indication and labeling;
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the commercial launch and future sales of Aramchol and any future product candidates;
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our ability to comply with all applicable post-market regulatory requirements for Aramchol in the
countries in which we seek to market the product;
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our ability to achieve favorable pricing for Aramchol;
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our expectations regarding the commercial market for NASH in patients who are overweight or obese
and have pre diabetes or type II diabetes mellitus;
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third-party payor reimbursement for Aramchol;
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our estimates regarding anticipated capital requirements and our needs for additional financing;
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market adoption of Aramchol by physicians and patients;
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the timing, cost or other aspects of the commercial launch of Aramchol;
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the development and approval of the use of Aramchol for additional indications or in combination
therapy; and
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our expectations regarding licensing, acquisitions and strategic 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 Item 3.D. –
“Risk Factors” in our most recent Annual Report on Form 20-F, or any updates in our Reports on Form 6-K. Given these
uncertainties, you should not rely upon forward-looking statements as predictions of future events.
All forward-looking statements
attributable to us or to any person 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 report. 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.
In evaluating forward-looking statements, you should consider these risks and uncertainties.
OFFER STATISTICS AND EXPECTED TIMETABLE
We may sell from time to
time pursuant to this prospectus (as may be detailed in prospectus supplements) an indeterminate number of securities as shall
have a maximum aggregate offering price of $150,000,000. The actual per share price of the securities that we will offer pursuant
hereto will depend on a number of factors that may be relevant as of the time of offer (see “Plan of Distribution”
below).
CAPITALIZATION
The following table sets
forth, on the basis of generally accepted accounting principles in the United States, our consolidated capitalization as of December
31, 2017. The information in this table should be read in conjunction with and is qualified by reference to the financial information
thereto and other financial information incorporated by reference into this prospectus.
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December 31, 2017
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(U.S. Dollars in
thousands, except share
data)
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Shareholders’ equity:
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Ordinary shares, par value NIS 0.01 per share; Authorized 50,000,000 shares; Issued and outstanding: 14,435,161 shares as of December 31, 2017
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$
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40
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Additional paid-in capital
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$
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92,381
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Accumulated other comprehensive loss
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$
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(7
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Accumulated deficit
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$
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(76,619
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)
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Total shareholders’ equity
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$
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15,795
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The above discussion and table are based on
14,435,161 shares outstanding as of December 31, 2017, and excludes as of such date:
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2,096,714 ordinary shares issuable upon exercise of outstanding stock options under our equity incentive plan, at a weighted average exercise price of $4.01;
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32,348 ordinary shares issuable upon vesting of restricted stock units, or RSUs, outstanding under our equity incentive plan; and
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187,253 ordinary shares reserved for future awards under our equity incentive plan.
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USE OF PROCEEDS
Except as otherwise provided
in the applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities offered by this prospectus
for general corporate purposes, which may include working capital, capital expenditures, research and development expenditures,
regulatory affairs expenditures, clinical trial expenditures, acquisitions of new technologies and investments, and the repayment,
refinancing, redemption or repurchase of future indebtedness or capital stock.
The intended application
of proceeds from the sale of any particular offering of securities using this prospectus will be described in the accompanying
prospectus supplement relating to such offering. The precise amount and timing of the application of these proceeds will depend
on our funding requirements and the availability and costs of other funds.
PRICE RANGE OF OUR SHARES
Our ordinary shares have been listed on the
Nasdaq Capital Market under the symbol “GLMD” since March 13, 2014. Prior to that date, there was no public trading
market for our ordinary shares. Our initial public offering was priced at $13.50 per share. The following table sets forth for
the periods indicated the high and low sales prices per ordinary share as reported on the Nasdaq Capital Market:
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Annual Information:
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Low
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High
|
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2014 (since March 13, 2014)
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$
|
4.58
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|
|
$
|
18.73
|
|
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2015
|
|
$
|
5.54
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|
|
$
|
13.50
|
|
|
2016
|
|
$
|
2.78
|
|
|
$
|
7.91
|
|
|
2017
|
|
$
|
3.43
|
|
|
$
|
9.78
|
|
|
Quarterly Information
|
|
|
|
|
|
|
|
|
|
First Quarter 2016
|
|
$
|
3.50
|
|
|
$
|
7.91
|
|
|
Second Quarter 2016
|
|
$
|
3.88
|
|
|
$
|
7.72
|
|
|
Third Quarter 2016
|
|
$
|
3.53
|
|
|
$
|
5.77
|
|
|
Fourth Quarter 2016
|
|
$
|
2.78
|
|
|
$
|
4.74
|
|
|
First Quarter 2017
|
|
$
|
3.43
|
|
|
$
|
5.79
|
|
|
Second Quarter 2017
|
|
$
|
4.40
|
|
|
$
|
7.09
|
|
|
Third Quarter 2017
|
|
$
|
6.20
|
|
|
$
|
9.39
|
|
|
Fourth Quarter 2017
|
|
$
|
6.55
|
|
|
$
|
9.78
|
|
|
Monthly Information:
|
|
|
|
|
|
|
|
|
|
September 2017
|
|
$
|
7.52
|
|
|
$
|
9.39
|
|
|
October 2017
|
|
$
|
7.16
|
|
|
$
|
9.59
|
|
|
November 2017
|
|
$
|
6.55
|
|
|
$
|
8.42
|
|
|
December 2017
|
|
$
|
7.84
|
|
|
$
|
9.78
|
|
|
January 2018
|
|
$
|
9.01
|
|
|
$
|
12.22
|
|
|
February 2018
|
|
$
|
3.61
|
|
|
$
|
10.79
|
|
On March 23, 2018, the
closing price of our ordinary shares on the Nasdaq Capital Market was $5.92.
TAXATION
The material Israeli and
U.S. federal income tax consequences relating to the purchase, ownership and disposition of any of the securities offered by this
prospectus may be set forth in the prospectus supplement offering those securities.
DESCRIPTION OF ORDINARY SHARES
The following description
of our share capital is a summary of the material terms of our Articles and Israeli corporate law regarding our ordinary shares
and the holders thereof. This description contains all material information concerning our ordinary shares but does not purport
to be complete.
Articles of Association
Our original articles of
association were registered with the Israeli Registrar of Companies at the time of incorporation of the Company on July 31, 2013,
under our registration number 51-495351-2. At the 2014 annual general meeting of shareholders, our shareholders adopted our Articles,
which became effective on the consummation of our initial public offering in the United States in March 2014, whereby we became
a public company under the Companies Law. Under Section 2 of our Articles, the purpose of the Company is to engage in any lawful
activity.
Share Capital
Our registered share capital
is NIS 500,000 divided into 50,000,000 ordinary shares, NIS 0.01 par value per share. As of March 23, 2018, there are 14,472,414 ordinary
shares outstanding, 2,063,061 ordinary shares issuable upon exercise of outstanding stock options under our equity incentive plan,
at a weighted average exercise price of $4.07, 28,748 ordinary shares issuable upon vesting of restricted stock units, or RSUs,
outstanding under our equity incentive plan; and 187,253 ordinary shares reserved for future awards under our equity incentive
plan.
All of our outstanding
ordinary shares are validly issued, fully paid and non-assessable.
Holders of ordinary shares
have one vote for each ordinary share held on all matters to be voted on by shareholders, including the election of directors.
Ordinary shares do not entitle their holders to preemptive rights. Our Articles and Israeli law do not restrict in any way the
ownership or voting of ordinary shares by non-residents or persons who are not citizens of Israel, except with respect to subjects
of nations which are in a state of war with Israel.
Election of Directors
Our board of directors,
or Board, consists of three classes of directors (not including external directors who do not form part of any class), with one
class being elected each year by shareholders at the Company’s annual general meeting for a term of approximately three years.
In accordance with our Articles, directors so elected cannot be removed from office by the shareholders until the expiration of
their term of office. Ordinary shares do not have cumulative voting rights. As a result, the holders of ordinary shares that represent
a simple majority of the voting power represented at a shareholders’ meeting and voting at the meeting have the power to
elect all of the directors put forward for election, subject to specific requirements under the Companies Law with respect to the
election of external directors. For further information as to these appointments, see “Item 6
—
Directors, Senior
Management and Employees—C. Board Practices” in our Annual Report on Form 20-F most recently filed with the SEC.
Under our Articles, a director
shall vacate his or her office if that director dies; is declared bankrupt; is declared to be legally incompetent; resigns such
office by notice in writing given to the Company; is not re-elected by the shareholders upon expiration of his or her term at the
relevant annual general meeting of shareholders; or otherwise as provided in the Companies Law.
Our Articles provide that
a director may, by written notice to the Company, appoint another person to serve as an alternate director provided that such appointment
is approved by a majority of the directors then in office, and that such appointing director may remove such alternate director.
Any alternate director shall be entitled to notice of meetings of the Board and of relevant committees and to attend and vote accordingly,
except that the alternate has no standing at any meeting at which the appointing director is present or at which the appointing
director is not entitled to participate as provided in the Companies Law. A person who is not qualified to be appointed as a director,
or a person who already serves as a director or an alternate director, may not be appointed as an alternate director.
Unless the appointing director
limits the time or scope of the appointment, the appointment is effective for all purposes until the earlier of (i) the appointing
director ceasing to be a director; (ii) the appointing director terminating the appointment; or (iii) the occurrence, with respect
to the alternate, of any of the circumstances under which a director shall vacate his or her office. The appointment of an alternate
director does not in itself diminish the responsibility of the appointing director as a director. An alternate director is solely
responsible for his or her actions and omissions and is not deemed an agent of the appointing director. Under the Companies Law,
external directors cannot generally appoint alternate directors, and a person who is not qualified to be appointed as an “independent”
director may not be appointed as an alternate to an independent director. For further information, see “Item 6
—
Directors,
Senior Management and Employees—C. Board Practices.” in our Annual Report on Form 20-F most recently filed with the
SEC. At present, there are no effective appointments of alternate directors for our Board.
Share Certificates
Ordinary share certificates
registered in the names of two or more persons are deliverable to the person first named in the share register and such delivery
shall be deemed sufficient delivery to all co-owners. Notices may be given only to the person whose name first appears in the register.
If two or more persons jointly hold or are entitled to a share, any one of them may give effectual receipt for any dividend payable
or property distributable in respect of such share.
Dividends and Dividend Policy
Dividends may be distributed
only out of profits available for dividends as determined by the Companies Law, provided that there is no reasonable concern that
the distribution will prevent the Company from being able to meet its existing and anticipated obligations when 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. 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.
Generally, under the Companies
Law, the decision to distribute dividends and the amount to be distributed is made by a company’s board of directors. The
Articles provide that the Board may from time to time declare, and cause the Company to pay, such dividends as may appear to it
to be justified by the profits of the Company and that the Board has the authority to determine the time for payment of such dividends
and the record date for determining the shareholders entitled to receive such dividends, provided the date is not before the date
of the resolution to distribute the dividend. Declaration of dividends does not require shareholder approval.
Pursuant to Section 4(b)
of the Company’s Articles, subject to the rights of holders of shares with limited or preferred rights, ordinary shares shall
confer upon the holders thereof equal rights to receive dividends and to participate in the distribution of the assets of the Company
upon its winding-up, in proportion to the amount paid up or credited as paid up on account of the nominal value of the shares held
by them respectively and in respect of which such dividends are being paid or such distribution is being made, without regard to
any premium paid in excess of the nominal value, if any.
We have never declared
or paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends in the foreseeable future. Payment
of cash dividends, if any, in the future will be at the discretion of our Board and will depend on then-existing conditions, including
our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors
our Board may deem relevant.
Payment of dividends may
also be subject to Israeli withholding taxes. See “Taxation — Israeli Tax Considerations” in our Annual
Report on Form 20-F most recently filed with the SEC for additional information.
Transfer of Shares
Ordinary shares which have
been fully paid-up are transferable by submission of a proper instrument of transfer to the Company or its transfer agent together
with the certificate of the shares to be transferred and such other evidence, if any, as the directors may require to prove the
rights of the intending transferor in the transferred shares.
Our ordinary shares that
are fully paid for are issued in registered form and may be freely transferred under our Articles, 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 or the laws of the State of Israel, except
for ownership by nationals of some countries that are, or have been, declared as enemies of Israel.
Shareholder Meetings
Our Articles provide that
an annual general meeting must be held at least once in every calendar year, not later than 15 months after the last preceding
annual general meeting, at such time and place as may be determined by the Board. The Board may, in its discretion, convene additional
shareholder meetings and, pursuant to the Companies Law, must convene a meeting upon the demand of two directors or one quarter
of the directors then in office or upon the demand of the holder or holders of 5% of the Company’s issued share capital and
1% of its voting rights or upon the demand of the holder or holders of 5% of its voting rights. All demands for shareholder meetings
must set forth the items to be considered at that meeting. Pursuant to the Companies Law, the holder or holders of 1% of the Company’s
voting rights may request the inclusion of an item on the agenda of a future shareholder meeting, provided the item is appropriate
for discussion at a shareholder meeting.
The agenda for a shareholder
meeting is determined by the Board and must include matters in respect of which the convening of a shareholder meeting was demanded
and any matter requested to be included by holder(s) of 1% of the Company’s voting rights. According to regulations promulgated
pursuant to the Companies Law and governing the terms of notice and publication of shareholder meetings of public companies, or
the General Meeting Regulations, holder(s) of one percent or more of the Company’s voting rights may propose any matter appropriate
for deliberation at a shareholder meeting to be included on the agenda of a shareholder meeting, generally by submitting a proposal
within seven days of publicizing the convening of a shareholder meeting, or, if the Company publishes a preliminary notice at least
21 days prior to publicizing the convening of a meeting (stating its intention to convene such meeting and the agenda thereof),
within 14 days of such preliminary notice. Any such proposal must further comply with the information requirements under applicable
law and the Articles.
Pursuant to the Companies
Law and regulations promulgated thereunder with respect to the convening of general meetings in a public company, shareholder meetings
generally require prior notice of not less than 21 days, and for certain matters specified in the Companies Law, not less than
35 days. The function of the annual general meeting is to elect directors in accordance with the Articles, receive and consider
the profit and loss account, the balance sheet and the ordinary reports and accounts of the directors and auditors, appoint auditors
and fix their remuneration and transact any other business which under the Articles or applicable law may be transacted by the
shareholders of a company in general meeting.
Our Articles determine
that the quorum required for either an annual (regular) or an extraordinary (special) general meeting of shareholders consists
of at least two shareholders present in person or by proxy holding shares comprising in the aggregate more than 33.33% of the voting
rights of the Company. If a meeting is convened by the Board upon the demand of shareholders or upon the demand of less than 50%
of the directors then in office or directly by such shareholders or directors and no quorum is present within half an hour from
the time appointed, it shall be cancelled. If a meeting is otherwise called and no quorum is present within such time, the meeting
is adjourned to the same day one week later at the same time and place or at such other time and place as the Board may determine
and specify in the notice of the general meeting and it shall not be necessary to give notice of such adjournment. If a quorum
is not present within half an hour from the time stated for such adjourned meeting, any two shareholders present in person or by
proxy at such meeting shall constitute a quorum even if, between them, they represent shares conferring 33.33% or less of the voting
rights of the Company.
Generally, under the Companies
Law and the Articles, shareholder resolutions are deemed adopted if approved by the holders of a simple majority of the voting
rights represented at a meeting and voting unless a different majority is required by law or pursuant to the Articles. The Companies
Law provides that resolutions on certain matters, such as amending a company’s articles of association, assuming the authority
of the board of directors in certain circumstances, appointing auditors, appointing external directors, approving certain transactions,
increasing or decreasing the registered share capital and approving most mergers must be made by the shareholders at a general
meeting. A company may determine in its articles of association certain additional matters in respect of which resolutions by the
shareholders in a general meeting will be required.
Access
to Corporate Records
Under the Companies Law,
all shareholders generally have the right to review minutes of our general meetings, our shareholder register and register of significant
shareholders (as defined in the Companies Law), our articles of association, our financial statements, other documents as provided
in the Companies Law, and any document we are required by law to file publicly with the Israeli Companies Registrar. Any shareholder
who specifies the purpose of its request may request to review any document in our possession that relates to: (i) any action or
transaction with a related party which requires shareholder approval under the Companies Law; or (ii) the approval, by the board
of directors, of an action in which an office holder has a personal interest. We may deny a request to review a document if we
determine that the request was not made in good faith, or if such denial is necessary to protect our interest or protect a trade
secret or patent.
Shareholder
Duties
Pursuant to the Companies
Law, a shareholder has a duty to act in good faith and in a customary manner toward a company and other shareholders and to refrain
from abusing his or her power in the company, including, among other things, in voting at the general meeting of shareholders and
at class shareholder meetings with respect to the following matters:
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·
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an amendment to the company’s articles of association;
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|
·
|
an increase of the company’s authorized share capital;
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|
|
·
|
approval of interested party transactions and acts of Office Holders that require shareholder approval.
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In addition, a shareholder
also has a general duty to refrain from discriminating against other shareholders.
Certain shareholders have
a further duty of fairness toward a company. These shareholders include any controlling shareholder, any shareholder who knows
that it has the power to determine the outcome of a shareholder vote or a shareholder class vote and any shareholder who has the
power to appoint or to prevent the appointment of an Office Holder of the company or other power towards the company. The Companies
Law does not define the substance of this duty of fairness, except to state that the remedies generally available upon a breach
of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder’s position
in the company into account.
Mergers
and Acquisitions under Israeli Law
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 shareholders, by a majority of each party’s shares that are voted
on the proposed merger at a shareholders’ meeting.
The board of directors
of a merging company is required pursuant to the Companies Law to discuss and determine whether in its opinion there exists a reasonable
concern that as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors,
taking into account the financial condition of the merging companies. If the board of directors has determined that such a concern
exists, it may not approve a proposed merger. Following the approval of the board of directors of each of the merging companies,
the boards of directors must jointly prepare a merger proposal for submission to the Israeli Registrar of Companies.
For purposes of the shareholder
vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares voting at the shareholders
meeting (excluding abstentions) that are held by parties other than the other party to the merger, any person who holds 25% or
more of the means of control of the other party to the merger or any one on their behalf including their relatives or corporations
controlled by any of them, vote against the merger. In addition, if the non-surviving entity of the merger has more than one class
of shares, the merger must be approved by each class of shareholders.
If the transaction would
have been approved but for the separate approval of each class of shares or the exclusion of the votes of certain shareholders
as provided above, a court may still rule that the company has approved 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 appraisal
of the merging companies’ value and the consideration offered to the shareholders.
Under the Companies Law,
each merging company must send a copy of the proposed merger plan to its secured creditors. Unsecured creditors are entitled to
receive notice of the merger, as provided by the regulations promulgated under the Companies Law. 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 the target company.
The court may also give instructions in order 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 with the
Israeli Registrar of Companies and 30 days from the date that shareholder approval of both merging companies was obtained.
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(ii)
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Special Tender Offer
|
The Companies Law provides
that an acquisition of shares of an Israeli public company must be made by means of a special tender offer if as a result of the
acquisition the purchaser would become a holder of 25% or more of the voting rights in the company. This rule does not apply if
there is already another holder of 25% or more of the voting rights in the company. Similarly, the Companies Law provides that
an acquisition of shares in a public company must be made by means of a special tender offer if as a result of the acquisition
the purchaser would become a holder of more than 45% of the voting rights in the company, if there is no other shareholder of the
company who holds more than 45% of the voting rights in the company.
These requirements do not
apply if the acquisition (i) occurs in the context of a private offering, on the condition that the shareholders’ meeting
approved the acquisition as a private offering whose purpose is to give the acquirer at least 25% of the voting rights in the company
if there is no person who holds at least 25% of the voting rights in the company, or as a private offering whose purpose is to
give the acquirer 45% of the voting rights in the company, if there is no person who holds 45% of the voting rights in the company;
(ii) was from a shareholder holding at least 25% of the voting rights in the company and resulted in the acquirer becoming a holder
of at least 25% of the voting rights in the company; or (iii) was from a holder of more than 45% of the voting rights in the company
and resulted in the acquirer becoming a holder of more than 45% of the voting rights in the company.
The special tender offer
may be consummated only if (i) at least 5% of the voting power attached to the company’s outstanding shares will be acquired
by the offeror and (ii) the special tender offer is accepted by a majority of the votes of those offerees who gave notice of their
position in respect of the offer; in counting the votes of offerees, the votes of a holder of control in the offeror, a person
who has personal interest in acceptance of the special tender offer, a holder of at least 25% of the voting rights in the company,
or any person acting on their or on the offeror’s behalf, including their relatives or companies under their control, are
not taken into account.
In the event that a special
tender offer is made, a company’s board of directors is required to express its opinion on the advisability of the offer
or shall abstain from expressing any opinion if it is unable to do so, provided that it gives the reasons for its abstention. In
addition, the board of directors must disclose any personal interest each of member of the board of directors have in the offer
or stems therefrom.
An office holder in a target
company who, in his or her capacity as an office holder, performs an action the purpose of which is to cause the failure of an
existing or foreseeable special tender offer or is to impair the chances of its acceptance, is liable to the potential purchaser
and shareholders for damages resulting from his acts, unless such office holder acted in good faith and had reasonable grounds
to believe he or she was acting for the benefit of the company. However, office holders of the target company may negotiate with
the potential purchaser in order to improve the terms of the special tender offer, and may further negotiate with third parties
in order to obtain a competing offer.
If a special tender offer
was accepted by a majority of the shareholders who announced their stand on such offer, then shareholders who did not respond to
the special offer or had objected to the special tender offer may accept the offer within four days of the last day set for the
acceptance of the offer. In the event that a special tender offer is accepted, then the purchaser or any person or entity controlling
it and any corporation controlled by them shall refrain from making a subsequent tender offer for the purchase of shares of the
target company and may not execute 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 the Companies Law,
a person may not acquire shares in a public company if, after the acquisition, he will hold more than 90% of the shares or more
than 90% of any class of shares of that company, unless a tender offer is made to purchase all of the shares or all of the shares
of the particular class. The Companies Law also provides, subject to certain exceptions, that as long as a shareholder in a public
company holds more than 90% of the company’s shares or of a class of shares, that shareholder shall be precluded from purchasing
any additional shares unless tendering an offer to purchase all of the outstanding shares of the company or the applicable class
of the shares. If the shareholders who do not respond to or accept the offer hold less than 5% of the issued and outstanding share
capital of the company or of the applicable class of the shares, and more than half of the shareholders who do not have a personal
interest in the offer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer
by operation of law. However, a tender offer will be accepted if the shareholders who do not accept it hold less than 2% of the
issued and outstanding share capital of the company or of the applicable class of the shares.
Upon a successful completion
of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender
offer or not, has the right, within six months from the date of acceptance of the tender offer, to 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. However,
under certain conditions, the purchaser may provide in its offer that an offeree who accepted the tender offer will not be entitled
to such rights.
If the conditions set forth
above are not met, the purchaser may not acquire additional shares of the company from shareholders who accepted the tender offer
to the extent that following such acquisition, the purchaser would own more than 90% of the company’s issued and outstanding
share capital.
Anti-Takeover Measures under Israeli Law
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 hereof, no preferred shares
are authorized under our Articles. In the future, if we do authorize, create and issue a specific class of preferred shares, such
class of shares, depending on the specific rights that may be attached to it, may have the ability to frustrate or prevent a takeover
or otherwise prevent our shareholders from realizing a potential premium over the market value of their ordinary shares. The authorization
and designation of a class of preferred shares will require an amendment to our Articles, which requires the affirmative vote of
at least 75% of the voting rights of the Company represented personally or by proxy and voting thereon at a general meeting at
which a quorum is present. The convening of the general meeting, the shareholders entitled to participate and the majority vote
required to be obtained at such a meeting will be subject to the requirements set forth in the Articles and the Companies Law as
described above in “— Shareholder Meetings.”
In addition, certain provisions
of the Articles may have the effect of rendering more difficult or discouraging an acquisition of the Company deemed undesirable
by the Board. The classification of the Board into three classes with terms of approximately three years each, and the requirement
under Companies Law to have at least two external directors, who cannot readily be removed from office, may make it more difficult
for shareholders who oppose the policies of the Board to remove a majority of the then current directors from office quickly. It
may also, in some circumstances, together with the other provisions of the Articles and Israeli law, deter or delay potential future
merger, acquisition, tender or takeover offers, proxy contests or changes in control or management of the Company.
Changes in Capital
Our Articles enable us
to increase or reduce our share capital. Any such changes are subject to the provisions of the Companies Law and must be approved
by a resolution duly passed by our shareholders at a general 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 or profits and an issuance of shares for less than their nominal value (under certain circumstances), require the approval
of both our Board and an Israeli court.
Changes in Shareholder
Rights
Pursuant to Section 6(a)
of the Company’s Articles, if at any time the share capital is divided into different classes of shares, the Company may
by shareholder resolution, unless otherwise provided by the terms of issue of the shares of that class, modify, convert, broaden,
add or otherwise alter the rights, privileges, advantages, restrictions and provisions related or unrelated at that time to the
shares of any class with the sanction of a resolution passed by a simple majority of those present, personally or by proxy, and
voting thereon at a separate general meeting of the holders of the shares of that class. Such majority approval is consistent with
Israeli law.
Transfer Agent
Our transfer agent in the
United States is VStock Transfer, LLC.
Exchange Controls
There are no Israeli government
laws, decrees or regulations that restrict or that affect our export or import of capital or the remittance of dividends, interest
or other payments to non-resident holders of our securities, including the availability of cash and cash equivalents for use by
us and our wholly-owned subsidiaries, except for ownership by nationals of certain countries that are, or have been, in a state
of war with Israel or otherwise as set forth under “Taxation.”
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 our ordinary shares, including debt securities. Warrants may be issued independently or together with any securities and
may be attached to or separate from those securities. The warrants may be issued under warrant or subscription agreements to be
entered into between us and a bank or trust company, as warrant agent, all of which will be described in the prospectus supplement
relating to the warrants we are offering. The warrant agent will act solely as our agent in connection with the warrants and will
not have any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants.
The particular terms of
the warrants, the warrant or subscription agreements relating to the warrants and the warrant certificates representing the warrants
will be described in the applicable prospectus supplement, including some or all of the following:
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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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if applicable, any provisions for cashless exercise of the warrants;
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if applicable; any exercise limitations with
respect to the ownership limitations by the holder exercising the warrant;
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information with respect to book-entry procedures, if any;
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any material Israeli tax consequences and United States federal income tax consequences;
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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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Holders of warrants will
not be entitled, solely by virtue of being holders, to vote, to consent, to receive dividends, to receive notice as shareholders
with respect to any meeting of shareholders for the election of directors or any other matters, or to exercise any rights whatsoever
as a holder of the equity securities purchasable upon exercise of the warrants.
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 if we offer
warrants, see “Where You Can Find More Information” beginning on page 23 and “Incorporation of
Information by Reference” beginning on page 23. We urge you to read any applicable prospectus supplement and the
applicable warrant agreement and form of warrant certificate 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, if any, 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 right 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 right agreement
if we offer subscription rights, see “Where You Can Find More Information” beginning on page 23 and
“Incorporation by Reference” beginning on page 23. We urge you to read the applicable subscription right
agreement and any applicable prospectus supplement in their entirety.
DESCRIPTION OF DEBT SECURITIES
The following description,
together with the additional information we include in any applicable prospectus supplement, summarizes the material terms and
provisions of the debt securities that we may offer under this prospectus. The debt securities will be our direct general obligations
and may include debentures, notes, bonds or other evidences of indebtedness. The debt securities will be either senior debt securities
or subordinated debt securities. The debt securities will be issued under one or more separate indentures. Senior debt securities
will be issued under a senior debt indenture, and subordinated debt securities will be issued under a subordinated debt indenture.
We use the term “indentures” to refer to both the senior indenture and the subordinated indenture. A form of each of
the senior indenture and the subordinated indenture is filed as an exhibit to the registration statement of which this prospectus
is a part. The indentures will be qualified under the Trust Indenture Act. We use the term “indenture trustee” to refer
to either the senior trustee or the subordinated trustee, as applicable.
The following summaries
of material provisions of the debt securities and indentures are subject to, and qualified in their entirety by reference to, all
the provisions of the indenture applicable to a particular series of debt securities and the description thereof contained in the
prospectus supplement.
General
We will describe in each
prospectus supplement the following terms relating to a series of debt securities:
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the title or designation;
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any limit on the principal amount that may be issued;
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whether or not we will issue the series of debt securities in global form, the terms and the depositary;
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the annual interest rate, which may be fixed or variable, or the method for determining the rate and the date interest will begin to accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining such dates;
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whether or not the debt securities will be secured or unsecured, and the terms of any secured debt;
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the terms of the subordination of any series of subordinated debt;
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the place where payments will be payable;
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our right, if any, to defer payment of interest and the maximum length of any such deferral period;
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the date, if any, after which, and the price at which, we may, at our option, redeem the series of debt securities pursuant to any optional redemption provisions;
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the date, if any, on which, and the price at which we are obligated, pursuant to any mandatory sinking fund provisions or otherwise, to redeem, or at the holder’s option to purchase, the series of debt securities;
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whether the indenture will restrict our ability to pay dividends, or will require us to maintain any asset ratios or reserves;
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whether we will be restricted from incurring any additional indebtedness;
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a discussion on any material or special U.S. federal income tax considerations applicable to the debt securities;
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the denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple thereof; and
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any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities.
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Conversion or Exchange Rights
We will set forth in the
prospectus supplement the terms on which a series of debt securities may be convertible into or exchangeable for ordinary shares
or other securities. We will include provisions as to whether conversion or exchange is mandatory, at the option of the holder
or at our option. We may include provisions pursuant to which the number of ordinary shares or other securities that the holders
of the series of debt securities receive would be subject to adjustment.
Consolidation, Merger or Sale
The indentures will not
contain any covenant which restricts our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of all
or substantially all of our assets so long as (i) we are the surviving entity or (ii) the successor is a U.S. entity who assumes
all of our obligations under the indentures or the debt securities, as appropriate.
Events of Default Under the Indenture
The following may be events
of default under the indentures with respect to any series of debt securities that we may issue:
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if we fail to pay interest when due and our failure continues for a number of days to be stated in the indenture and the time for payment has not been extended or deferred;
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if we fail to pay the principal, or premium, if any, when due and the time for payment has not been extended or delayed;
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if we fail to observe or perform any other covenant contained in the debt securities or the indentures, other than a covenant specifically relating to another series of debt securities, and our failure continues for a number of days to be stated in the indenture after we receive notice from the indenture trustee or holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable series; and
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if specified events of bankruptcy, insolvency or reorganization occur as to us.
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If an event of default
with respect to debt securities of any series occurs and is continuing, the indenture trustee or the holders of at least 25% in
aggregate principal amount of the outstanding debt securities of that series, by notice to us in writing, and to the indenture
trustee if notice is given by such holders, may declare the unpaid principal, premium, if any, and accrued interest, if any, due
and payable immediately; provided that if an event of bankruptcy, insolvency or reorganization occurs, such amounts shall automatically
become due and payable without any declaration or other action on the part of the trustee or any holder.
The holders of a majority
in principal amount of the outstanding debt securities of an affected series may waive any default or event of default with respect
to the series and its consequences, except defaults or events of default regarding payment of principal, premium, if any, or interest,
unless we have cured the default or event of default in accordance with the indenture. Any waiver will cure the default or event
of default.
Subject to the terms of
the indentures, if an event of default under an indenture occurs and is continuing, the indenture trustee will be under no obligation
to exercise any of its rights or powers under such indenture at the request or direction of any of the holders of the applicable
series of debt securities, unless such holders have offered the indenture trustee reasonable indemnity. The holders of a majority
in principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the indenture trustee, or exercising any trust or power conferred on the
indenture trustee, with respect to the debt securities of that series, provided that:
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the direction given by the holder is not in conflict with any law or the applicable indenture; and
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subject to its duties under the Trust Indenture Act, the indenture trustee need not take any action that might involve it in personal liability or might be unduly prejudicial to the holders not involved in the proceeding.
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A holder of the debt securities
of any series will only have the right to institute a proceeding under the indentures or to appoint a receiver or trustee, or to
seek other remedies if:
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the holder has given written notice to the indenture trustee of a continuing event of default with respect to that series;
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the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written request, and such holders have offered reasonable indemnity to the indenture trustee to institute the proceeding as trustee; and
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the indenture trustee does not institute the proceeding, and does not receive from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series other conflicting directions within 60 days after the notice, request and offer.
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These limitations do not
apply to a suit instituted by a holder of debt securities if we default in the payment of the principal, premium, if any, or interest
on, the debt securities.
We will periodically file
statements with the indenture trustee regarding our compliance with specified covenants in the indentures.
Modification of Indenture; Waiver
We and the indenture trustee
may change an indenture without the consent of any holders with respect to specific matters, including:
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to fix any ambiguity, defect or inconsistency in the indenture; and
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to change anything that does not materially adversely affect the interests of any holder of debt securities of any series.
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In addition, under the
indentures, the rights of holders of a series of debt securities may be changed by us and the indenture trustee with the written
consent of the holders of at least a majority in aggregate principal amount of the outstanding debt securities of each series that
is affected. However, we and the indenture trustee may only make the following changes with the consent of each holder of any outstanding
debt securities affected:
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changing the fixed maturity of the series of debt securities or any installment of principal of or interest on any series of debt securities;
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reducing the principal amount, reducing the rate of or extending the time of payment of interest, or any premium payable upon the redemption of any debt securities; or
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reducing the percentage of debt securities, the holders of which are required to consent to any amendment.
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Discharge
Each indenture provides
that we can elect to be discharged from our obligations with respect to one or more series of debt securities, except for obligations
to:
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register the transfer or exchange of debt securities of the series;
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replace stolen, lost or mutilated debt securities of the series;
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maintain paying agencies;
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hold monies for payment in trust;
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compensate and indemnify the indenture trustee; and
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appoint any successor indenture trustee.
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In order to exercise our
rights to be discharged, we must deposit with the indenture trustee money or government obligations sufficient to pay all the principal
of, any premium, if any, and interest on, the debt securities of the series on the dates payments are due.
Form, Exchange and Transfer
We will issue the debt
securities of each series only in fully registered form without coupons and, unless we otherwise specify in the applicable prospectus
supplement, in denominations of $1,000 and any integral multiple thereof. The indentures provide that we may issue debt securities
of a series in temporary or permanent global form and as book-entry securities that will be deposited with, or on behalf of, a
depositary named by us and identified in a prospectus supplement with respect to that series. See “Book-Entry Issuance”
for a further description of the terms relating to any book-entry securities.
Subject to the terms of
the indentures and the limitations applicable to global securities described in the applicable prospectus supplement, the holder
of the debt securities of any series, at its option, can exchange the debt securities for other debt securities of the same series,
in any authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of
the indentures and the limitations applicable to global securities set forth in the applicable prospectus supplement, holders of
the debt securities may present the debt securities for exchange or for registration of transfer, duly endorsed or with the form
of transfer endorsed thereon duly executed if so required by us or the security registrar, at the office of the security registrar
or at the office of any transfer agent designated by us for this purpose. Unless otherwise provided in the debt securities that
the holder presents for transfer or exchange, no service charge will be required for any registration of transfer or exchange,
but we may require payment of any taxes or other governmental charges.
We will name in the applicable
prospectus supplement the security registrar, and any transfer agent in addition to the security registrar, that we initially designate
for any debt securities. We may at any time designate additional transfer agents or rescind the designation of any transfer agent
or approve a change in the office through which any transfer agent acts, except that we will be required to maintain a transfer
agent in each place of payment for the debt securities of each series.
If we elect to redeem the
debt securities of any series, we will not be required to:
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issue, register the transfer of, or exchange any debt securities of that series during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any debt securities that may be selected for redemption and ending at the close of business on the day of the mailing; or
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register the transfer of or exchange any debt securities so selected for redemption, in whole or in part, except the unredeemed portion of any debt securities we are redeeming in part.
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Payment and Paying Agents
Unless we otherwise indicate
in the applicable prospectus supplement, we will make payment of the interest on any debt securities on any interest payment date
to the person in whose name the debt securities, or one or more predecessor securities, are registered at the close of business
on the regular record date for the interest.
We will pay principal of
and any premium and interest on the debt securities of a particular series at the office of the paying agents designated by us,
except that unless we otherwise indicate in the applicable prospectus supplement, we will make interest payments by check which
we will mail to the holder. Unless we otherwise indicate in a prospectus supplement, we will designate the corporate trust office
of the indenture trustee in the City of New York as our sole paying agent for payments with respect to debt securities of each
series. We will name in the applicable prospectus supplement any other paying agents that we initially designate for the debt securities
of a particular series. We will maintain a paying agent in each place of payment for the debt securities of a particular series.
All money we pay to a paying
agent or the indenture trustee for the payment of the principal of or any premium or interest on any debt securities which remains
unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and
the holder of the security thereafter may look only to us for payment thereof.
Governing Law
The indentures and the
debt securities will be governed by and construed in accordance with the laws of the State of New York, except to the extent that
the Trust Indenture Act is applicable.
Subordination of Subordinated Notes
The subordinated notes
will be unsecured and will be subordinate and junior in priority of payment to certain of our other indebtedness to the extent
described in a prospectus supplement. The subordinated indenture does not limit the amount of subordinated notes which we may issue.
It also does not limit us from issuing any other secured or unsecured debt.
Regarding the Indenture Trustee
We will name the indenture
trustee for debt securities issued under the applicable indenture in the applicable supplement to this prospectus and, unless otherwise
indicated in a prospectus supplement, the indenture trustee will also act as Transfer Agent and Paying Agent with respect to the
debt securities. The indenture trustee may be removed at any time with respect to the debt securities of any series by act of the
holders of a majority in principal amount of the outstanding debt securities of such series delivered to the indenture trustee
and to us.
Global Securities
The debt securities of
a series may be issued in whole or in part in the form of one or more global securities that will be deposited with, or on behalf
of, a depository identified in an applicable subsequent filing and registered in the name of the depository or a nominee for the
depository. In such a case, one or more global securities will be issued in a denomination or aggregate denominations equal to
the portion of the aggregate principal amount of outstanding debt securities of the series to be represented by the global security
or securities. Unless and until it is exchanged in whole or in part for debt securities in definitive certificated form, a global
security may not be transferred except as a whole by the depository for the global security to a nominee of the depository or by
a nominee of the depository to the depository or another nominee of the depository or by the depository or any nominee to a successor
depository for that series or a nominee of the successor depository and except in the circumstances described in an applicable
subsequent filing.
We expect that the following
provisions will apply to depository arrangements for any portion of a series of debt securities to be represented by a global security.
Any additional or different terms of the depository arrangement will be described in an applicable subsequent filing.
Upon the issuance of any
global security, and the deposit of that global security with or on behalf of the depository for the global security, the depository
will credit, on its book-entry registration and transfer system, the principal amounts of the debt securities represented by that
global security to the accounts of institutions that have accounts with the depository or its nominee. The accounts to be credited
will be designated by the underwriters or agents engaging in the distribution of the debt securities or by us, if the debt securities
are offered and sold directly by us. Ownership of beneficial interests in a global security will be limited to participating institutions
or persons that may hold interest through such participating institutions. Ownership of beneficial interests by participating institutions
in the global security will be shown on, and the transfer of the beneficial interests will be effected only through, records maintained
by the depository for the global security or by its nominee. Ownership of beneficial interests in the global security by persons
that hold through participating institutions will be shown on, and the transfer of the beneficial interests within the participating
institutions will be effected only through, records maintained by those participating institutions. The laws of some jurisdictions
may require that purchasers of securities take physical delivery of the securities in certificated form. The foregoing limitations
and such laws may impair the ability to transfer beneficial interests in the global securities.
So long as the depository
for a global security, or its nominee, is the registered owner of that global security, the depository 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. Unless otherwise specified in an applicable subsequent filing and except as specified below, owners
of beneficial interests in the global security will not be entitled to have debt securities of the series represented by the global
security registered in their names, will not receive or be entitled to receive physical delivery of debt securities of the series
in certificated form and will not be considered the holders thereof for any purposes under the Indenture. Accordingly, each
person owning a beneficial interest in the global security must rely on the procedures of the depository and, if such person is
not a participating institution, on the procedures of the participating institution through which the person owns its interest,
to exercise any rights of a holder under the Indenture.
The depository may grant
proxies and otherwise authorize participating institutions to give or take any request, demand, authorization, direction, notice,
consent, waiver or other action which a holder is entitled to give or take under the applicable Indenture. We understand that,
under existing industry practices, if we request any action of holders or any owner of a beneficial interest in the global security
desires to give any notice or take any action a holder is entitled to give or take under the applicable Indenture, the depository
would authorize the participating institutions to give the notice or take the action, and participating institutions would authorize
beneficial owners owning through such participating institutions to give the notice or take the action or would otherwise act upon
the instructions of beneficial owners owning through them.
Unless otherwise specified
in applicable subsequent filings, payments of principal, premium and interest on debt securities represented by a global security
registered in the name of a depository or its nominee will be made by us to the depository or its nominee, as the case may be,
as the registered owner of the global security.
We expect that the depository
for any debt securities represented by a global security, upon receipt of any payment of principal, premium or interest, will credit
participating institutions’ accounts with payments in amounts proportionate to their respective beneficial interests in the
principal amount of the global security as shown on the records of the depository. We also expect that payments by participating
institutions to owners of beneficial interests in the global security held through those participating institutions will be governed
by standing instructions and customary practices, as is now the case with the securities held for the accounts of customers registered
in street names, and will be the responsibility of those participating institutions. None of us, the trustees or any agent of ours
or the trustees will have any responsibility or liability for any aspect of the records relating to or payments made on account
of beneficial interests in a global security, or for maintaining, supervising or reviewing any records relating to those beneficial
interests.
Unless otherwise specified
in the applicable subsequent filings, a global security of any series will be exchangeable for certificated debt securities of
the same series only if:
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the depository for such global securities notifies us that it is unwilling or unable to continue as depository or such depository ceases to be a clearing agency registered under the Exchange Act and, in either case, a successor depository is not appointed by us within 90 days after we receive the notice or become aware of the ineligibility;
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we in our sole discretion determine that the global securities shall be exchangeable for certificated debt securities; or
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there shall have occurred and be continuing an event of default under the applicable Indenture with respect to the debt securities of that series.
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Upon any exchange, owners
of beneficial interests in the global security or securities will be entitled to physical delivery of individual debt securities
in certificated form of like tenor and terms equal in principal amount to their beneficial interests, and to have the debt securities
in certificated form registered in the names of the beneficial owners, which names are expected to be provided by the depository’s
relevant participating institutions to the applicable trustee.
In the event that the Depository
Trust Company, or “DTC,” acts as depository for the global securities of any series, the global securities will be
issued as fully registered securities registered in the name of Cede & Co., DTC’s partnership nominee.
DTC is a member of the
U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency
with the Commission. Established in 1973, DTC was created to reduce costs and provide clearing and settlement efficiencies by immobilizing
securities and making “book-entry” changes to ownership of the securities. DTC provides securities movements for the
net settlements of the National Securities Clearing Corporation, or “NSCC,” and settlement for institutional trades
(which typically involve money and securities transfers between custodian banks and broker/dealers), as well as money market instruments.
DTC is a subsidiary of
The Depository Trust & Clearing Company, or “DTCC.” DTCC is a holding company established in 1999 to combine DTC
and NSCC. DTCC, through its subsidiaries, provides clearing, settlement and information services for equities, corporate and municipal
bonds, government and mortgage backed securities, money market instruments and over the-counter derivatives. In addition, DTCC
is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks.
DTCC’s customer base extends to thousands of companies within the global financial services industry. DTCC serves brokers,
dealers, institutional investors, banks, trust companies, mutual fund companies, insurance carriers, hedge funds and other financial
intermediaries—either directly or through correspondent relationships.
DTCC is industry-owned
by its customers who are members of the financial community, such as banks, broker/dealers, mutual funds and other financial institutions.
DTCC operates on an at-cost basis, returning excess revenue from transaction fees to its member firms. All services provided by
DTC are regulated by the Commission.
The 2017 DTCC Board of
Directors is composed of 20 directors serving one-year terms. Twelve directors are representatives of clearing agency participants,
including broker/dealers, custodian and clearing banks, and investment institutions; two directors are designated by DTCC’s
preferred shareholders, which are NYSE Euronext and FINRA; four directors are from non-participants; and the remaining two are
the non-executive chairman and the chief executive officer and president of DTCC. All of the Board members except those designated
by the preferred shareholders are elected annually.
To facilitate subsequent
transfers, the debt securities may be registered in the name of DTC’s nominee, Cede & Co. The deposit of the debt securities
with DTC and their registration in the name of Cede & Co. will effect no change in beneficial ownership. DTC has no knowledge
of the actual beneficial owners of the debt securities. DTC’s records reflect only the identity of the direct participating
institutions to whose accounts debt securities are credited, which may or may not be the beneficial owners. The participating institutions
remain responsible for keeping account of their holdings on behalf of their customers.
Delivery of notices and
other communications by DTC to direct participating institutions, by direct participating institutions to indirect participating
institutions, and by direct participating institutions and indirect participating institutions to beneficial owners of debt securities
are governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect.
Neither DTC nor Cede &
Co. consents or votes with respect to the debt securities. Under its usual procedures, DTC mails a proxy to the issuer as soon
as possible after the record date. The proxy assigns Cede & Co.’s consenting or voting rights to those direct participating
institution to whose accounts the debt securities are credited on the record date.
If applicable, redemption
notices shall be sent to Cede & Co. If less than all of the debt securities of a series represented by global securities are
being redeemed, DTC’s practice is to determine by lot the amount of the interest of each direct participating institutions
in that issue to be redeemed.
To the extent that any
debt securities provide for repayment or repurchase at the option of the holders thereof, a beneficial owner shall give notice
of any option to elect to have its interest in the global security repaid by us, through its participating institution, to the
applicable trustee, and shall effect delivery of the interest in a global security by causing the direct participating institution
to transfer the direct participating institution’s interest in the global security or securities representing the interest,
on DTC’s records, to the applicable trustee. The requirement for physical delivery of debt securities in connection with
a demand for repayment or repurchase will be deemed satisfied when the ownership rights in the global security or securities representing
the debt securities are transferred by direct participating institutions on DTC’s records.
DTC may discontinue providing
its services as securities depository for the debt securities at any time. Under such circumstances, in the event that a successor
securities depository is not appointed, debt security certificates are required to be printed and delivered as described above.
We may decide to discontinue
use of the system of book-entry transfers through the securities depository. In that event, debt security certificates will be
printed and delivered as described above.
DESCRIPTION OF UNITS
We may issue units comprised
of one or more of the other securities described in 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 applicable prospectus
supplement will describe:
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the designation and 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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the material terms of a unit agreement under which the units will be issued;
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any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
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whether the units will be issued in fully registered or global form.
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The
applicable prospectus supplement will describe the terms of any units. The preceding description and any description of units
in the applicable prospectus supplement does not purport to be complete and is subject to and is qualified in its entirety
by reference to the unit agreement and, if applicable, collateral arrangements and depositary arrangements relating to
such 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” beginning on page 23 and “Incorporation by Reference” beginning
on page 23. We urge you to read the applicable unit agreement and any applicable prospectus supplement in their
entirety.
PLAN OF DISTRIBUTION
The securities being offered
by this prospectus may be sold:
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to 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 Securities Exchange Act of 1934, as amended, or 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
Meitar
Liquornik Geva Leshem Tal, Law Offices, Ramat Gan, Israel
, will pass upon certain legal matters regarding the securities
offered hereby under Israeli law and McDermott Will & Emery LLP, New York, New York, will pass upon certain legal matters regarding
the securities offered hereby under U.S. federal securities law. 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
consolidated financial statements of the Company for the year ended December 31, 2017 incorporated in this prospectus supplement
by reference have been audited by the accounting firm of Brightman Almagor Zohar & Co. (a member of Deloitte Touche Tohmatsu
Limited), an independent registered public accounting firm, as set forth in their report thereon, included therein, and incorporated
herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the
SEC a registration statement on Form F-3, including amendments and relevant exhibits and schedules, under the Securities Act
covering the ordinary shares to be sold in this offering. This prospectus, which constitutes a part of the registration statement,
summarizes material provisions of contracts and other documents that we refer to in the prospectus. Since this prospectus does
not contain all of the information contained in the registration statement, you should read the registration statement and its
exhibits and schedules for further information with respect to us and our ordinary shares. You may review and copy the registration
statement, reports and other information we file at the SEC’s public reference room at 100 F Street, N.E., Washington,
D.C. 20549. You may also request copies of these documents upon payment of a duplicating fee by writing to the SEC. For further
information on the public reference facility, please call the SEC at 1-800-SEC-0330. Our SEC filings, including the registration
statement, are also available to you on the SEC’s Web site at
http://www.sec.gov
.
We are subject to the information
reporting requirements of the Exchange Act that are applicable to foreign private issuers, and under those requirements we file
reports with the SEC. Those other reports or other information may be inspected without charge at the locations described above.
As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy
statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual,
quarterly and current reports and financial statements with the SEC as frequently or as promptly as United States companies whose
securities are registered under the Exchange Act. However, we file with the SEC, within four months after the end of each fiscal
year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited
by an independent registered public accounting firm.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We file annual and special
reports and other information with the SEC (File Number 001-36345). These filings contain important information that does not appear
in this prospectus. The SEC allows us to “incorporate by reference” information into this prospectus, which means that
we can disclose important information to you by referring you to other documents which we have filed or will file with the SEC.
We are incorporating by reference in this prospectus the documents listed below and all amendments or supplements we may file to
such documents, as well as any future filings we may make with the SEC on Form 20-F under the Exchange Act before the time that
all of the securities offered by this prospectus have been sold or de-registered:
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our Annual Report on Form 20-F for the year ended December 31, 2017, filed with the SEC on March
13, 2018; and
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our Report on Form 6-K filed with the SEC on March 13, 2018 (to the extent expressly incorporated
by reference into our effective registration statements filed by us under the Securities Act); and
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the description of our ordinary shares contained in our Form 8-A filed with the SEC on March 11,
2014 including any amendment or report filed for the purpose of updating such description;
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In
addition, any reports on Form 6-K submitted to the SEC by us pursuant to the Exchange Act after the date of the initial registration
statement and prior to effectiveness of the registration statement that we specifically identify in such forms as being incorporated
by reference into the registration statement of which this prospectus forms a part and all subsequent annual reports on Form 20-F
filed after the effective date of this registration statement and prior to the termination of this offering and any reports on
Form 6-K subsequently submitted to the SEC or portions thereof that we specifically identify in such forms as being incorporated
by reference into the registration statement of which this prospectus forms a part, shall be considered to be incorporated into
this prospectus by reference and shall be considered a part of this prospectus from the date of filing or submission of such documents.
As you read the above documents,
you may find inconsistencies in information from one document to another. If you find inconsistencies between the documents and
this prospectus, you should rely on the statements made in the most recent document. All information appearing in this prospectus
is qualified in its entirety by the information and financial statements, including the notes thereto, contained in the documents
incorporated by reference herein.
We will provide, upon written or oral request,
to each person to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated by reference
in the prospectus but not delivered with the prospectus. You may request a copy of these filings, at no cost, by writing us at
Galmed Pharmaceuticals Ltd., 16 Tiomkin Street, Tel Aviv, Israel, 6578317. Our telephone number is +972-3-693-8448.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to
the foregoing provisions, or otherwise, we have been informed that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
ENFORCEABILITY OF CIVIL LIABILITIES
Service of process upon
us and upon our directors and officers and the experts named in this prospectus, most of whom reside outside the United States,
may be difficult to obtain within the United States. Furthermore, because a major portion of our assets and most 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.
We have been informed by
our legal counsel in Israel, Meitar Liquornik Geva Leshem Tal, that it may be difficult to initiate an action with respect to U.S.
securities law in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning
that Israel is not the most appropriate forum to hear 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 by expert witnesses which can be a time-consuming and costly process. Certain matters
of procedure may also be governed by Israeli law.
Subject to specified time
limitations, an Israeli court may declare a foreign civil judgment enforceable if it finds that:
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the judgment was rendered by a court which was, according to the laws of the state of the court,
competent to render the judgment,
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the judgment is no longer appealable,
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the obligation imposed by the judgment is enforceable according to the rules relating to the enforceability
of judgments in Israel and the substance of the judgment is not contrary to public policy, and
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the judgment is executory in the state in which it was
given.
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Even if the above conditions
are satisfied, an Israeli court will not enforce a foreign judgment if it was given in a state whose laws do not provide for the
enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty
or security of the State of Israel.
An Israeli court also will
not declare a foreign judgment enforceable if:
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the judgment was obtained by fraud,
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there was no due process,
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the judgment was rendered by a court not competent to render it according to the laws of private
international law in Israel,
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the judgment is at variance with another judgment that was given in the same matter between the
same parties and which is still valid, or
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at the time the action was brought in the foreign court a suit in the same matter and between the
same parties was pending before a court or tribunal in Israel.
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If a foreign judgment is
enforced by an Israel court, it generally will be payable in Israeli currency. Judgment creditors must bear the risk of unfavorable
exchange rates.
Puglisi & Associates
is the U.S. agent authorized to receive service of process in any action against us arising out of this offering. The address of
Puglisi & Associates is 850 Library Avenue, Newark, Delaware 19711.
EXPENSES
We are paying all of
the expenses of the registration of our securities under the Securities Act, including, to the extent applicable,
registration and filing fees, printing and duplication expenses, administrative expenses, accounting fees and the legal fees
of our counsel. The following is a statement of estimated expenses at the present time in connection with the distribution of
the securities registered hereby. All amounts shown are estimates except the SEC registration fee and the FINRA filing fee. The
estimates do not include expenses related to offerings of particular securities. Each prospectus supplement describing
an offering of securities will reflect the estimated expenses related to the offering of securities under that
prospectus supplement.
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SEC registration fees
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$
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2,473
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FINRA filing fee
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$
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23,000
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Legal fees and expenses
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$
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30,000
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Accountants fees and expenses
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$
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15,000
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Printing Fees
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$
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2,200
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Miscellaneous
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$
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5,000
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Total
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$
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77,673
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$150,000,000
Prospectus
, 2018
The information in this 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 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 26, 2018
PROSPECTUS
Up to $35,000,000
Ordinary Shares
We
have previously entered into a
Sales Agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel
,
pursuant to which we may offer and sell our ordinary shares from time to time through Stifel, acting as agent. Pursuant to
this prospectus, we may offer and sell our ordinary shares having an aggregate offering price of up to $35,000,000.
As
of March 23, 2018, we have sold ordinary shares having an aggregate offering price of $6,000,000 under the Sales Agreement
pursuant to our registration statement on Form F-3 filed with the Securities and Exchange Commission on March 31, 2015 (File
No. 333-203133). Such prior sales under the Sales Agreement are in addition to the offer and sale of ordinary shares under
this prospectus.
Our ordinary shares are
traded on the Nasdaq Capital Market under the symbol “GLMD.” On March 23, 2018, the last reported sale price of our
ordinary shares on the Nasdaq Capital Market was $5.92 per share.
Sales of our ordinary shares,
if any, under this prospectus may 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. Stifel is not required to sell any specific number
or dollar amount of securities, but will act as a sales agent using commercially reasonable efforts consistent with its normal
trading and sales practices, on mutually agreed terms between Stifel and us. There is no arrangement for funds to be received in
any escrow, trust or similar arrangement.
Stifel will be entitled
to compensation under the terms of the Sales Agreement at a fixed commission rate of up to 3.0% of the aggregate gross sales price
per share sold. In connection with the sale of our ordinary shares on our behalf, Stifel will be deemed to be an “underwriter”
within the meaning of the Securities Act and the compensation of Stifel will be deemed to be underwriting commissions or discounts.
Investing in our ordinary
shares involves a high degree of risk. Before making an investment decision, you should carefully consider all of the information
set forth in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein. You should
review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page S-4 of this
prospectus and under similar headings in the other documents that are incorporated by reference into this prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Stifel
The date of this prospectus is ,
2018
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This
prospectus supplement is part of a registration statement that we have filed with the Securities and Exchange Commission, or the
SEC, utilizing a shelf registration process
.
This prospectus supplement is not complete without, and may not be utilized
except in connection with, the accompanying prospectus. This prospectus supplement provides supplemental information regarding
us and updates certain information contained in the accompanying prospectus and describes the specific terms of this offering.
The accompanying prospectus gives more general information, some of which may not apply to this offering. We incorporate important
information into this prospectus supplement and the accompanying prospectus by reference.
This prospectus relates
to the offering of our ordinary shares. Before buying any of the ordinary shares offered hereby, we urge you to read carefully
this prospectus, together with the information incorporated herein by reference as described below under the heading “Incorporation
of Certain Documents by Reference.”.
You should rely only on
the information contained in, or incorporated by reference into, this prospectus. We have not, and Stifel has not, authorized anyone
to provide you with different or additional information.
We are not making offers
to sell or solicitations to buy our ordinary shares in any jurisdiction in which an offer or solicitation is not authorized or
in which the person making that offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an
offer or solicitation.
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 contains
and incorporates by reference market data and industry statistics and forecasts that are based on independent industry publications
and other publicly-available information. Although we believe these sources are reliable, we do not guarantee the accuracy or completeness
of this information and we have not independently verified this information. Although we are not aware of any misstatements regarding
the market and industry data presented in this prospectus or the documents incorporated herein by reference, these 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.
Accordingly, investors should not place undue reliance on this information.
The name of our product
candidate, Aramchol™, is a registered trademark or trademark of Galmed Pharmaceuticals Ltd. in Israel, the United States
and/or other countries. All other trademarks, service marks or other tradenames appearing in this prospectus are the property of
their respective owners. Unless otherwise mentioned or unless the context requires otherwise, all references in this prospectus
to the “Company,” “Galmed,” “we,” “us,” “our” or similar references
mean Galmed Pharmaceuticals Ltd., a corporation formed under the laws of the State of Israel, and its subsidiaries.
PROSPECTUS 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 the development of the liver targeted stearoyl-coenzyme A desaturase-1, or SCD1, modulator
Aramchol, a first in class, novel, once-daily, oral therapy for the treatment of non-alcoholic steato-hepatitis, or NASH for variable
populations, as well as other liver associated disorders. We believe that our product candidate, Aramchol, has the potential to
be a disease modifying treatment for fatty liver disorders, including NASH, which is a chronic disease that constitutes a large
unmet medical need.
We are currently conducting
the ARREST Study, a multicenter, randomized, double blind, placebo-controlled Phase IIb clinical study designed to evaluate the
efficacy and safety of Aramchol in 247 subjects with NASH, who are overweight or obese, and who are pre-diabetic or type-II-diabetic.
Top line data from the ARREST Study are expected to be available during June 2018. More information about the ARREST Study may
be found on ClinicalTrials.gov identifier: NCT02279524.
Aramchol (arachidyl amido
cholanoic acid) is a novel fatty acid bile acid conjugate, inducing beneficial modulation of intra-hepatic lipid metabolism. Aramchol’s
ability to modulate hepatic lipid metabolism was discovered and validated in animal models, demonstrating down regulation of the
three key pathologies of NASH: steatosis, inflammation and fibrosis. The effect of Aramchol on fibrosis is mediated by down regulation
of steatosis and directly on human collagen producing cells. We are investing efforts into better understanding the mechanisms
by which Aramchol down regulates steatosis and fibrosis. Additional animal models are being investigated with variety of treatment
regimens. The data, thus far, demonstrates dual mode of action of Aramchol on fibrosis via improvement of Fatty Acid oxidation
as well a direct impact on stellate cells which are the collagen producing cells in the liver which results in reversing fibrosis.
Aramchol has been granted by the FDA Fast Track designation status for the treatment of NASH.
Corporate Information
Galmed Pharmaceuticals
Ltd. was incorporated in Israel on July 31, 2013 as a privately held company and is governed by the Israeli Companies Law. However,
our business has been operating since 2000 under a different group of companies established in the same year, or the Group. Originally,
we operated under the parent company, Galmed Holdings, Inc., a holdings company incorporated in the British Virgin Islands, or
GHI. GHI held all of the equity rights in and to Galmed 2000 Inc., a holdings company incorporated in the British Virgin Islands,
or GTTI. GTTI held all of the equity rights in and to Galmed International Limited, a company incorporated in Malta, or GIL
(other than 0.1% of the share capital held by GHI). GIL held all of the equity rights in and to Galmed Medical Research Ltd., an
Israeli company, or GMR, which became an inactive company in 2015. Our intellectual property was held by GIL. The research and
development was conducted by GMR as a service to GIL on a cost plus basis. GIL was responsible for all product development.
On February 2, 2014, we
underwent a reorganization, or the Reorganization, pursuant to which all of our intangible assets (including our intellectual property)
were transferred from GIL to Galmed Research and Development Ltd., or GRD. The Reorganization was effectuated by share transfers
and asset transfers, resulting in the Company as the parent company and 100% equity-owner of the following companies: (1) GRD,
which holds all the Group’s intellectual property, including the Company’s patent portfolio; (2) GIL, which is an inactive
company; and (3) GTTI, which was liquidated in 2017. GIL holds GMR, which became an inactive company in 2015. The Reorganization
was conducted in order to simplify our capital structure, reduce our operating cost and to improve our ability to raise funds.
Immediately prior to the Reorganization, all our shareholders collectively held 9,739 ordinary shares of GHI. In connection with
the Reorganization, and in accordance with the Tax Pre-Ruling, we issued to all such shareholders ordinary shares of the Company,
such that upon the Reorganization all our shareholders collectively held 7,099,731 ordinary shares of the Company, in the same
proportion among all shareholders, which reflected a ratio of 729 ordinary shares of the Company for each ordinary share of GHI.
On March 18, 2014, we completed
our initial public offering of 3,263,010 ordinary shares at a public offering price of $13.50 per share, which included 425,610
ordinary shares issued upon the exercise in full of the underwriters’ option to purchase additional ordinary shares to cover
over-allotments, for aggregate gross proceeds of approximately $44.1 million. Net of underwriting discounts, commissions and other
estimated offering expenses, the offering raised approximately $39.9 million.
Our principal executive
offices and registered office in Israel are located at 16 Tiomkin Street, Tel Aviv, Israel, 6578317 and our telephone number is
+972-3-693-8448.
Our Amended and Restated Articles of Association, or Articles, are
on file in Israel with the office of the Israeli Registrar of Companies and available for public inspection at that office.
Our
website address is
http://www.galmedpharma.com
. The information contained on, or that can be accessed through, our
website is neither a part of nor incorporated into this prospectus supplement. We have included our website address in this prospectus
supplement solely as an inactive textual reference. We have duly designated Puglisi & Associates, with offices at 850 Library
Avenue, Newark, Delaware 1971, as our authorized agent in the United States in connection with this offering.
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 $35.0 million.
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Ordinary shares to be outstanding after this offering
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Up to 20,347,323 ordinary shares (as more fully described in the notes following this table), assuming sales of 5,912,162 ordinary shares in this offering at an offering price of $5.92 per share, which was the last reported sale price of our ordinary shares on the Nasdaq Capital Market on March 23, 2018. 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, Stifel. See “Plan of Distribution” on page S-10.
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Use of Proceeds
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We currently intend to use the net proceeds from this offering for (i) further clinical and pre-clinical development of existing and new programs, (ii) business development related activities and (iii) general corporate purposes. See “Use of Proceeds” on page S-8.
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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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GLMD
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The above discussion is
based on 14,435,161 ordinary shares outstanding as of December 31, 2017, and excludes as of such date:
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2,096,714 ordinary shares issuable upon exercise of outstanding stock options under our equity incentive plan, at a weighted average exercise price of $4.01;
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32,348 ordinary shares issuable upon vesting of restricted stock units, or RSUs, outstanding under our equity incentive plan; and
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187,253 ordinary shares reserved for future awards under our equity incentive plan.
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RISK FACTORS
An investment in our
ordinary shares involves a high degree of risk. Prior to making a decision about investing in our ordinary shares, you should carefully
consider the risks, uncertainties and assumptions under Item 3.D. – “Risk Factors” in our most recent Annual
Report on Form 20-F filed with the SEC, all of which are incorporated herein by reference and may be amended, supplemented or superseded
from time to time by other reports we file with the SEC in the future, together with information in this prospectus supplement
and any other information incorporated by reference into this prospectus supplement, including the risk factors set forth below.
See the sections of this prospectus supplement entitled “Where You Can Find More Information” and “Incorporation
of Certain Documents by Reference.” Additional risks and uncertainties not presently known to us, or that we currently see
as immaterial, may also harm our business. If any of these risks occur, our business, financial condition and operating results
could be harmed, the trading price of our ordinary shares could decline and you could lose part or all of your investment.
This prospectus supplement
also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described
below and elsewhere in this prospectus supplement. See “Cautionary Note Regarding Forward-Looking Statements” for information
relating to these forward-looking statements.
Risks Connected to our Securities and this Offering
The market price of our ordinary shares
is volatile and you may sustain a complete loss of your investment.
Since our initial public
offering, the trading price of our ordinary shares has been volatile and is likely to continue to be volatile. In addition, the
trading volume is and has been volatile and oftentimes relatively illiquid. The following factors, some of which are beyond our
control, in addition to other risk factors described in this section, may have a significant impact on the market price and trading
volume of our ordinary shares:
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delays in existing clinical trials;
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inability to obtain the approvals necessary to commence further clinical trials;
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unsatisfactory or inconclusive results of clinical trials;
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termination of clinical trials;
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adverse events in our ongoing clinical trials;
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announcements of regulatory approval or the failure to obtain it, or specific label indications
or patient populations for its use, or changes or delays in the regulatory review process;
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announcements of therapeutic innovations or new products by us or our competitors;
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adverse actions taken by regulatory agencies with respect to our clinical trials, manufacturing
supply chain or sales and marketing activities;
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changes or developments in laws or regulations applicable to Aramchol;
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any adverse changes to our relationship with manufacturers or suppliers;
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any product liability actions or intellectual property infringement actions in which we may become
involved;
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announcements concerning our competitors or the pharmaceutical industry in general;
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achievement of expected product sales and profitability or our failure to meet expectations;
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our commencement of, or involvement in, litigation;
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any major changes in our board of directors, or our Board, management or other key personnel;
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legislation in the United States, Europe and other foreign countries relating to the sale or pricing
of pharmaceuticals;
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announcements by us of significant strategic partnerships, out-licensing, in-licensing, joint ventures,
acquisitions or capital commitments;
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expiration or terminations of licenses, research contracts or other collaboration agreements;
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public concern as to the safety of drugs we, our licensees or others develop;
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success of research and development projects;
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variations in our and our competitors’ results of operations;
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changes in earnings estimates, cash flow guidance, or recommendations by securities analysts;
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developments by our licensees, if any; and
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future issuances of ordinary shares or other securities.
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Our President and Chief Executive Officer
along with our Chairman of the Board, or our principal shareholders, currently beneficially own approximately 35.1% of our outstanding
ordinary shares and after giving effect to the sale of ordinary shares in this offering will beneficially own approximately 25.3%
of our outstanding ordinary shares. Therefore, our principal shareholders will be able to exert significant control over matters
submitted to our shareholders for approval.
Our President and Chief
Executive Officer along with our Chairman of the Board, or our principal shareholders, currently beneficially own approximately
35.1% of our outstanding ordinary shares and after giving effect to the sale of ordinary shares in this offering, assuming for
this purpose, the sale of 5,912,162 ordinary shares, our principal shareholders will beneficially own approximately 25.3% of our
outstanding ordinary shares. Therefore, our principal shareholders will be able to exert significant control over matters submitted
to our shareholders for approval. As a result, these shareholders, if they acted together, could significantly influence or even
unilaterally approve matters requiring approval by our shareholders, including the election of directors and the approval of mergers
or other business combination transactions. The interests of these shareholders may not always coincide with our interests or the
interests of other shareholders. This significant concentration of share ownership may adversely affect the trading price for our
ordinary shares because investors often perceive disadvantages in owning stock in companies with controlling shareholders.
It may be difficult to enforce a judgment
of a United States court against us, our officers, directors and the Israeli experts named in this prospectus in Israel or the
United States, to assert United States securities laws claims in Israel or to serve process on our officers, directors and these
experts.
We were and continue to
be organized in Israel. Substantially all of our executive officers and directors reside outside of the United States, and all
of our assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained
against us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities
laws, may not be collectible in the United States and may not necessarily be enforced by an Israeli court. It also may be difficult
to effect service of process on these persons in the United States or to assert U.S. securities law claims in original actions
instituted in Israel. Additionally, it may be difficult for an investor, or any other person or entity, to initiate an action with
respect to United States securities laws in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of
United States securities laws reasoning that Israel is not the most appropriate forum in which 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 United States law is applicable to the
claim. If United States law is found to be applicable, the content of applicable United States law must be proven as a fact by
expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be governed by Israeli
law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty associated
with enforcing a judgment against us in Israel, our shareholders may not be able to collect any damages awarded by either a United
States or foreign court.
Anti-takeover provisions in our Articles
could make it difficult for our shareholders to replace or remove our current Board and could have the effect of discouraging,
delaying or preventing a merger or acquisition, which could adversely affect the market price of our ordinary shares.
Certain provisions of our
Articles may have the effect of rendering more difficult or discouraging an acquisition of the Company deemed undesirable by the
Board. Those provisions include:
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limiting the ability of our shareholders to convene general meetings of the Company;
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controlling procedures for the conduct of shareholder and our Board meetings, including quorum
and voting requirements; and
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the election and removal of directors.
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Moreover, the classification
of our Board into three classes with terms of approximately three years each, which was approved by shareholders of the Company,
the requirement of affirmative vote of at least 75% of the voting rights represented personally or by proxy and voting thereon
at a general meeting in order to amend or replace our Articles and the requirement under the Israeli Companies Law, 5759-1999,
as amended, to have at least two external directors who cannot readily be removed from office, together with the other provisions
of the Articles and Israeli law, could deter or delay potential future merger, acquisition, tender or takeover offers, proxy contests
or changes in control or management of the Company, some of which could be deemed by certain shareholders to be in their best interests
and which could affect the price some investors are willing to pay for our ordinary shares.
Management will have broad discretion
as to the use of the net proceeds from this offering, and we may not use the proceeds effectively.
Our management will have
broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve
our results of operations or enhance the value of our ordinary shares. Our failure to apply these funds effectively could have
a material adverse effect on our business, delay the development of our products and cause the price of our ordinary shares to
decline.
You will experience immediate and substantial
dilution in the book value per ordinary share you purchase.
Because the estimated price
per ordinary share being offered is substantially higher than the book value per our ordinary share, you will potentially suffer
substantial dilution in the net tangible book value of the ordinary shares you purchase in future offerings. Based on the estimated
public offering price of $5.92 per share (the last reported per share sale price of our ordinary shares on the Nasdaq Capital Market
on March, 23, 2018), and the net tangible book value of the ordinary shares of $1.09 per share as of December 31, 2017, if you
purchase ordinary shares in such future offerings, you will suffer an estimated dilution of $3.48 per share, or 59%, in the net
tangible book value of the ordinary shares.
You may experience future dilution as
a result of future equity offerings.
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.
Sales of a significant number of our
ordinary shares in the public markets, or the perception that such sales could occur, could depress the market price of our ordinary
shares.
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 or vesting of our RSUs.
As of March 23, 2018,
we have (i) 2,063,061 ordinary shares issuable upon exercise of outstanding stock options under our equity incentive plan, at
a weighted average exercise price of $4.07, (ii) 28,748 ordinary shares issuable upon vesting of RSUs outstanding under our equity
incentive plan, and (iii) 187,253 ordinary shares reserved for future awards under our equity incentive plan. You may incur dilution
upon the grant of shares upon exercise of such outstanding options or upon the vesting of such RSUs.
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 Stifel at any
time throughout the term of the Sales Agreement. The number of shares that are sold by Stifel 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 Stifel. 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus supplement
and documents incorporated by reference into this prospectus supplement, the accompanying prospectus and the other documents we
have filed with the SEC that are incorporated herein by reference may contain “forward-looking statements” within the
meaning of the safe harbor provisions of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the Private Securities
Litigation Reform Act of 1995. 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,
the factors summarized below:
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·
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the timing and cost of our ongoing Phase IIb ARREST Study and planned Phase III trials, for our
product candidate, Aramchol for the treatment of patients who are overweight or obese and have pre diabetes or type II diabetes
mellitus with NASH, or whether Phase III trials will be conducted at all;
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completion and receiving favorable results of the Phase IIb ARREST Study and potential Phase III
trials for Aramchol;
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regulatory action with respect to Aramchol by the U.S. Food and Drug Administration, or the FDA,
or the European Medicines Authority, or the EMA, including but not limited to acceptance of an application for marketing authorization,
review and approval of such application, and, if approved, the scope of the approved indication and labeling;
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the commercial launch and future sales of Aramchol and any future product candidates;
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our ability to comply with all applicable post-market regulatory requirements for Aramchol in the
countries in which we seek to market the product;
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our ability to achieve favorable pricing for Aramchol;
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our expectations regarding the commercial market for NASH in patients who are overweight or obese
and have pre diabetes or type II diabetes mellitus;
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third-party payor reimbursement for Aramchol;
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our estimates regarding anticipated capital requirements and our needs for additional financing;
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market adoption of Aramchol by physicians and patients;
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the timing, cost or other aspects of the commercial launch of Aramchol;
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the development and approval of the use of Aramchol for additional indications or in combination
therapy; and
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our expectations regarding licensing, acquisitions and strategic 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 our most recent
Annual Report on Form 20-F filed with the SEC, in greater detail under Item 3.D. – “Risk Factors” and elsewhere
in this prospectus supplement and accompanying 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 supplement. 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.
In evaluating forward-looking statements, you should consider these risks and uncertainties.
You should read this prospectus
supplement, the accompanying prospectus and the documents we have filed with the SEC that are incorporated by reference and any
free writing prospectus that we have authorized for use in connection with this offering completely and with the understanding
that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements
in the foregoing documents by these cautionary statements.
CAPITALIZATION
The table below sets forth
our capitalization as of December 31, 2017:
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on an actual basis; and
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on a pro forma basis to give effect to the sale of an aggregate of 5,912,162 ordinary shares at
an assumed price of $5.92 per share, the last reported sale price of our ordinary shares on March 23, 2018, for aggregate proceeds
of approximately $33.8 million, after deducting sales agent fees and estimated aggregate offering expenses payable by us.
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As of December 31, 2017
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Actual
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Pro Forma
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(U.S. Dollars in thousands, except share data)
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Shareholders’ equity:
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Ordinary shares, par value NIS 0.01 per share; Authorized 50,000,000 shares; Issued and outstanding: 14,435,161 shares as of December 31, 2017
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$
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40
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$
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57
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Additional paid-in capital
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$
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92,381
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$
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126,204
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Accumulated other comprehensive loss
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$
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(7
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)
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$
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(7
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)
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Accumulated deficit
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$
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(76,619
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)
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$
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(76,619
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)
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Total shareholders’ equity
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$
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15,795
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$
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49,635
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The above discussion and table are based on
14,435,161 shares outstanding as of December 31, 2017, and excludes as of such date:
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·
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2,096,714 ordinary shares issuable upon exercise of outstanding stock options under our equity incentive plan, at a weighted average exercise price of $4.01;
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·
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32,348 ordinary shares issuable upon vesting of RSUs outstanding under our equity incentive plan; and
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·
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187,253 ordinary shares reserved for future awards under our equity incentive plan.
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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 Stifel.
We estimate that the net
proceeds to us from the sale of our ordinary shares offered hereby will be approximately $33.8 million, after deducting sales agent
fees and the estimated offering expenses payable by us and assuming that we sell all of the shares offered hereunder.
We intend to use the net
proceeds from the sale of the securities offered under this prospectus for (i) further clinical and pre-clinical development of
existing and new programs, (ii) business development related activities and (iii) 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.
Until we use the net proceeds
of this offering, we intend to deploy the funds in either (i) cash and cash equivalents or (ii) short-term, investment grade, interest-bearing
instruments, consistent with our investment policy.
DIVIDEND POLICY
We have never declared
or paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends in the foreseeable future. Payment
of cash dividends, if any, in the future will be at the discretion of our Board and will depend on then-existing conditions, including
our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors
our Board may deem relevant. Payment of dividends may also be subject to Israeli withholding taxes. Our current plans are to retain
future earnings primarily to finance the development of our business and for other corporate purposes.
DILUTION
If you invest in 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 pro forma 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, 2017 was approximately $15.8 million, or approximately $1.09 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 $35.0 million of ordinary shares in this offering at an assumed public offering price of $5.92 per share (the last
reported sale price of our ordinary shares on the Nasdaq Capital Market on March 23, 2018), and after deducting sales agent fees
and estimated aggregate offering expenses payable by us, our pro forma net tangible book value as of December 31, 2017 would have
been approximately $49.6 million, or approximately $2.44 per share. This represents an immediate increase in net tangible book
value of approximately $1.35 per share to our existing shareholders and an immediate dilution in pro forma net tangible book value
of approximately $3.48 per share to investors participating in this offering, as illustrated by the following table:
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Assumed offering price per share of ordinary shares
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$
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5.92
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Net tangible book value per share as of December 31, 2017
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|
$
|
1.09
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|
|
|
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|
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Increase in net tangible book value per share after this offering
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|
$
|
1.35
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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Pro forma net tangible book value per share as of December 31, 2017, after giving effect to this offering
|
|
|
|
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$
|
2.44
|
|
|
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|
|
|
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Dilution per share to investors participating in this offering
|
|
|
|
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$
|
3.48
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|
The table above assumes
for illustrative purposes that an aggregate of 5,912,162 ordinary shares are sold at a price of $5.92 per share, the last reported
sales price of our ordinary shares on the Nasdaq Capital Market on March 23, 2018, for aggregate proceeds of approximately $35.0
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 14,435,161 shares outstanding as of December 31, 2017, and excludes as of such date:
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2,096,714 ordinary shares issuable upon exercise of outstanding stock options under our equity incentive plan, at a weighted average exercise price of $4.01;
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32,348 ordinary shares issuable upon vesting of RSUs, outstanding under our equity incentive plan; and
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187,253 ordinary shares reserved for future awards under our equity incentive plan.
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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.
PLAN OF DISTRIBUTION
We have previously entered into a Sales Agreement with Stifel, pursuant to which we may offer and sell
our ordinary shares from time to time through Stifel, acting as agent. Pursuant to this prospectus, we may offer and sell our ordinary
shares having an aggregate offering price of up to $35,000,000. As of March 23, 2018, we have sold ordinary shares having an aggregate
offering price of $6,000,000 under the Sales Agreement pursuant to our registration statement on Form F-3 filed with the Securities
and Exchange Commission on March 31, 2015 (File No. 333-203133). Such prior sales under the Sales Agreement are in addition to
the offer and sale of ordinary shares under this prospectus. This summary of the material provisions of the Sales
Agreement does not purport to be a complete statement of its terms and conditions. A copy of the Sales Agreement has been
filed as an exhibit to a Report on Form 6-K and incorporated by reference into this prospectus.
Upon delivery of a placement
notice and subject to the terms and conditions of the Sales Agreement, Stifel may sell our ordinary shares by any method permitted
by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act,
including sales made directly on the Nasdaq Capital Market or on any other existing trading market for our ordinary shares. We
may instruct Stifel not to sell our ordinary shares if the sales cannot be effected at or above the price designated by us from
time to time. We or Stifel may suspend the offering of our ordinary shares upon notice and subject to other conditions.
We will pay Stifel
commissions, in cash, for its services in acting as agent in the sale of our ordinary shares. Stifel will be entitled to compensation
at a fixed commission rate of up to 3.0% of the aggregate gross sales price per share sold. Because there is no minimum offering
amount required as a condition to close this offering, the actual total public offering amount, commissions and proceeds to us,
if any, are not determinable at this time. We estimate that the total expenses for the offering, excluding compensation and reimbursements
payable to Stifel under the terms of the Sales Agreement, will be approximately $75,000.
Settlement for sales of
ordinary shares will occur on the second trading day following the date on which any sales are made, or on some other date that
is agreed upon by us and Stifel in connection with a particular transaction, in return for payment of the net proceeds to us. Sales
of our ordinary shares as contemplated in this prospectus supplement and the accompanying prospectus will be settled through the
facilities of The Depository Trust Company or by such other means as we and Stifel may agree upon. There is no arrangement for
funds to be received in an escrow, trust or similar arrangement.
Stifel will use its commercially
reasonable efforts, consistent with its sales and trading practices, to solicit offers to purchase the ordinary shares under the
terms and subject to the conditions set forth in the Sales Agreement. In connection with the sale of the ordinary shares on our
behalf, Stifel will be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation
of Stifel will be deemed to be underwriting commissions or discounts. We have agreed to provide indemnification and contribution
to Stifel against certain civil liabilities, including liabilities under the Securities Act.
The offering of our ordinary
shares pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. We and
Stifel may each terminate the Sales Agreement at any time upon ten days’ prior notice.
Stifel and its affiliates
may in the future provide various investment banking, commercial banking and other financial services for us and our affiliates,
for which services they may in the future receive customary fees. To the extent required by Regulation M, Stifel will not engage
in any market making activities involving our ordinary shares while the offering is ongoing under this prospectus supplement.
This prospectus supplement
and the accompanying prospectus may be made available on a website maintained by Stifel and Stifel may distribute this prospectus
supplement and accompanying prospectus electronically.
The address of Stifel is
787 7th Avenue, New York, New York 10019.
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. Stifel
is being represented in connection with this offering by Cooley LLP, New York, New York, and, with respect to Israeli law, by Yigal
Arnon & Co., Tel Aviv, Israel.
EXPERTS
The consolidated financial
statements of the Company for the year ended December 31, 2017 incorporated in this prospectus by reference have been audited by
the accounting firm of Brightman Almagor Zohar & Co. (a member of Deloitte Touche Tohmatsu Limited), an independent registered
public accounting firm, as set forth in their report thereon, included therein, and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts
in accounting and auditing.
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 new 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 resident companies
(as defined below), such as the Company, are generally subject to corporate tax at the rate of 24% on their taxable income, as
of January 1, 2017 (25% in 2016), and 23% in 2018 and thereafter. However, the effective tax rate payable by a company that derives
income from a Preferred Enterprise or a Technology Enterprise, as discussed below, may be considerably less.
Capital gains derived by
an Israeli resident company are generally subject to tax at the same rate as the corporate tax rate. Under Israeli tax legislation,
a corporation will be considered an “Israeli resident” if it meets one of the following: (i) it was incorporated in
Israel; or (ii) the control and management of its business are exercised in Israel.
Law for the Encouragement of Industry
(Taxes), 5729-1969
The Law for the Encouragement
of Industry (Taxes), 5729-1969, which we refer to as the Industry Encouragement Law, provides several tax benefits for “Industrial
Companies”, which are defined as Israeli resident-companies which were incorporated in Israel, of which 90% or more of their
income in any tax year, other than income from certain government loans, is derived from an “Industrial Enterprise”
that it owns and located in Israel. An “Industrial Enterprise” is defined as an enterprise whose principal activity
in a given tax year is industrial production. Eligibility for benefits under the Industry Encouragement Law is not contingent upon
approval of any governmental authority.
The following tax benefits,
among others, are available to Industrial Companies:
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amortization over an eight year period of the cost of purchasing a patent, rights to use a patent
and rights to know-how, which are used for the development or advancement of the company, commencing in the year in which such
rights were first exercised;
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under limited conditions, an election to file consolidated tax returns with related Industrial
Companies controlled by it; and
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deductions of expenses related to a public offering in equal amounts over a three year period commencing
on the year of the offering.
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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 in the future or that the benefits described above will be available to us at
all.
Law for the Encouragement of Capital
Investments, 5719-1959
The Law for the Encouragement
of Capital Investments, 5719-1959, which we refer to as the Investment Law, provides certain incentives for capital investments
in production facilities (or other eligible assets). The Investment Law was significantly amended effective April 1, 2005, further
amended as of January 1, 2011 (the “2011 Amendment”) and as of January 1, 2017 (the “2017 Amendment”).
The 2011 Amendment introduced new benefits to replace those granted in accordance with the provisions of the Investment Law in
effect prior to the 2011 Amendment. The 2017 Amendment introduces new benefits for Technological Enterprises, alongside the existing
tax benefits.
Tax Benefits Under the 2011 Amendment
The 2011 Amendment canceled
the availability of the benefits granted to Industrial Companies under the Investment Law prior to 2011 and, instead, introduced
new benefits for income generated by a “Preferred Company” through its “Preferred Enterprise” (as such
terms are defined in the Investment Law) as of January 1, 2011.
The definition of a Preferred
Company includes a company incorporated in Israel that is not fully owned by a governmental entity, and that has, among other things,
a Preferred Enterprise and is controlled and managed from Israel. Under a recent amendment announced in August 2013 (the “2013
Amendment”), beginning in 2014 and in each year thereafter until 2016, a Preferred Company may only be entitled to reduced
corporate tax rates of 16%, unless the Preferred Enterprise is located in a specified development zone, in which case the rate
will be 9%. Pursuant to the 2017 Amendment, in 2017 and thereafter, the corporate tax rate for Preferred Enterprise which is located
in a specified development zone was reduced to 7.5%, while the reduced corporate tax rate for other development zones remains 16%.
Income derived by a Preferred Company from a “Special Preferred Enterprise” (as such term is defined in the Investment
Law) would be entitled, during a benefit period of ten years, to further reduced tax rates of 8%, or 5% if the Special Preferred
Enterprise is located in a certain development zone. As of January 1, 2017, the definition for ‘Special Preferred Enterprise’
includes less stringent conditions.
As of January 1, 2014,
dividends paid out of income attributed to a Preferred Enterprise or to a Special Preferred Enterprise are subject to withholding
tax at source at the rate of 20% unless a lower tax rate is 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). However, if such dividends are paid
to an Israeli company, no tax is required to be withheld (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). 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).
New Tax benefits under the 2017 Amendment
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 beneficial programs under the Investment Law.
The 2017 Amendment provides
that a technology company satisfying certain conditions will qualify as a “Preferred Technology Enterprise” and will
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 zone
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 National Authority for Technological Innovation (referred to as NATI).
The 2017 Amendment further
provides that a technology company satisfying certain conditions will qualify as a “Special Preferred Technology Enterprise”
and will 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 NATI. 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 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%.
After examining the impact of the 2017 Amendment,
we submitted a request to receive a tax ruling from the Israel Tax Authority to be recognized as a Preferred Technology Enterprise
and recently we received a tax ruling from the Israel Tax Authority granting GRD a Preferred Technology Enterprise status, subject
to terms and conditions determined in the tax ruling.
Taxation of Our Israeli Individual Shareholders
on Receipt of Dividends
Israeli residents who are
individuals are generally subject to Israeli income tax for dividends paid on our ordinary shares (other than bonus shares or share
dividends) at a rate of 25%, or 30% if the recipient of such dividend is a Substantial Shareholder (as defined below) at the time
of distribution or at any time during the preceding 12 month period.
A “Substantial Shareholder”
is generally a person who alone, or together with his or her relative or another person who collaborates with him or her on a regular
basis, holds, directly or indirectly, at least 10% of any of the “means of control” of a corporation. “Means
of control” generally include the right to vote, receive profits, nominate a director or an officer, receive assets upon
liquidation or instruct someone who holds any of the aforesaid rights regarding the manner in which he or she is to exercise such
right(s), all regardless of the source of such right.
With respect to individuals,
the term “Israeli resident” is generally defined under Israeli tax legislation as a person whose center of life is
in Israel. The Israeli Tax Ordinance (as amended by Amendment Law No. 132 of 2002), states that in order to determine the center
of life of an individual, consideration will be given to the individual’s family, economic and social connections, including:
(i) place of permanent residence; (ii) place of residential dwelling of the individual and the individual’s immediate family;
(iii) place of the individual’s regular or permanent occupation or the place of his or her permanent employment; (iv) place
of the individual’s active and substantial economic interests; (v) place of the individual’s activities in organizations,
associations and other institutions. The center of life of an individual will be presumed to be in Israel if: (i) the individual
was present in Israel for 183 days or more in the tax year; or (ii) the individual was present in Israel for 30 days or more in
the tax year, and the total period of the individual’s presence in Israel in that tax year and the two previous tax years
is 425 days or more. Such presumption may be rebutted either by the individual or by the assessing officer.
Payers of dividends on
our ordinary shares, including the Israeli stockbroker effectuating the transaction, or the financial institution through which
the securities are held, are generally required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration
of a shareholder regarding his, her or its foreign residency, to withhold tax upon the distribution of dividend at the rate of
25%, (whether the recipient is a Substantial Shareholder or not) so long as the shares are registered with a nominee company.
Taxation of Israeli Resident Corporations
on Payment of Dividends
Israeli resident corporations
are generally exempt from Israeli corporate income tax with respect to dividends paid on ordinary shares of Israeli resident corporations
as long as the profits out of which the dividends were paid were derived in Israel.
Capital Gains Taxes Applicable to Israeli
Resident Shareholders
The income tax rate applicable
to real capital gains derived by an Israeli individual resident from the sale of shares that were purchased after January 1, 2012,
whether listed on a stock exchange or not, is 25%. However, if such shareholder is considered a Substantial Shareholder 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 gain will be taxed at the rate of 30%.
Moreover, capital gains
derived by an individual shareholder who is a dealer or trader 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 2017 and 2018, including
Excess Tax as detailed below).
At 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 Israeli Tax Ordinance and regulations promulgated
thereunder the aforementioned return is not required be filed and no advance payment must be paid. Capital gain is also reportable
on the annual income tax return.
Taxation of Non-Israeli Shareholders
on Receipt of Dividends
Non-Israeli residents are
generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25% (or 30% for
individuals, if such person is a Substantial Shareholder at the time he or she receives the dividend or on any date in the 12 months
preceding such date), or 20% if the dividend is distributed from income attributed to Preferred Enterprise unless a lower rate
is provided under an applicable tax treaty between Israel and the shareholder’s country of residence and provided that a
certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance.
A non-Israeli resident
who has dividend income derived from or accrued in Israel, from which the full amount of tax was withheld at source, is generally
exempt from the duty to file tax returns in Israel in respect of such income; provided that (i) such income was not derived from
a business conducted in Israel by the taxpayer and (ii) the taxpayer has no other taxable sources of income in Israel with respect
to which a tax return is required to be filed.
For example, under 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, Israeli withholding tax on dividends paid to a U.S. resident for treaty purposes may
not, in general, exceed 25%, subject to certain conditions. Where the recipient is a U.S. corporation owning 10% or more of the
voting shares of the paying corporation during the part of the paying corporation’s taxable year which precedes the date
of payment of the dividend and during the entirety of its prior taxable year (if any), the Israeli tax withheld may not exceed
12.5%, subject to certain conditions.
Payers of dividends on
our ordinary shares, including the Israeli stockbroker effectuating the transaction, or the financial institution through which
the securities are held, are generally required, subject to any of the foregoing exemptions, reduced tax rates and the demonstration
of a shareholder regarding his, her or its foreign residency, to withhold tax upon the distribution of dividend at the rate of
25% (whether the recipient is a Substantial Shareholder or not), so long as the shares are registered with a nominee company.
Capital Gains Income Taxes Applicable
to Non-Israeli Shareholders
Non-Israeli resident shareholders
are generally exempt from Israeli capital gains tax on any gains derived from the sale, exchange or disposition of our ordinary
shares, provided that such shareholders did not acquire their shares prior to January 1, 2009 or acquired their shares after the
Company was listed for trading on Nasdaq and such gains were not derived from a permanent business or business activity of such
shareholders 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) has a controlling interest of more than 25% 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, whether directly or indirectly.
In addition, a sale of
securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty.
For example, under the U.S.-Israel Tax Treaty, the sale, exchange or disposition of our ordinary shares by a shareholder who is
a U.S. resident (for purposes of the U.S.-Israel Tax Treaty) holding the ordinary shares as a capital asset and is entitled to
claim the benefits afforded to such a resident by the U.S.-Israel Tax Treaty, or a Treaty U.S. Resident, is generally exempt from
Israeli capital gains tax unless: (i) such Treaty U.S. Resident is an individual and was present in Israel for 183 days or more
in the aggregate during the relevant taxable year; (ii) such Treaty U.S. Resident holds, directly or indirectly, shares representing
10% or more of our voting power of the Company during any part of the 12 month period preceding such sale, exchange or disposition,
subject to certain conditions; (iii) the capital gains arising from such sale, exchange or disposition are attributable to a permanent
establishment of the Treaty U.S. Resident maintained in Israel, subject to certain conditions; (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 Treaty 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 Income Tax Treaty.
Regardless of whether shareholders
may be liable for Israeli income tax on the sale of our ordinary shares, the payment of the consideration may be subject to withholding
of Israeli tax at the source. Accordingly, 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. Specifically, 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.
Excess Tax
Individuals who are subject
to tax in Israel are also subject to an additional tax at a rate of 3% (2% in 2016) on annual income exceeding a certain threshold
(NIS 803,520 for 2016, NIS 640,000 for 2017 and thereafter, which amount is linked to the annual change in the Israeli consumer
price index, including, but not limited to, dividends, interest and capital gains.
Estate and Gift Tax
Israeli law presently does
not impose estate or gift taxes.
Pre-Ruling Regarding a Reorganization
of Our Corporate Structure
In connection with the
Reorganization, we obtained a pre-ruling from the Israel Tax Authority. The Tax Pre-Ruling confirms that the transfer of shares
and assets resulting in the Company as the parent company and 100% equity-owner of GRD, which holds all the Group’s intellectual
property, including the Company’s patent portfolio and GIL, is not taxable pursuant to the provisions of the Israeli Tax
Ordinance as long as certain requirements are met. Pursuant to the Tax Pre-Ruling, certain restrictions under the Israeli tax laws
were applied to the Company and its subsidiaries, as well as to those shareholders and option holders and other holders of rights
in the share capital of the Company (on a diluted basis), who participated in the Reorganization and held such rights immediately
after the consummation of the Reorganization (the “Rights Holders”). In this section, each of the terms “Rights”
and/or “share capital (on a diluted basis)” includes shares, options to purchase shares and any other “right”
in “a body of persons” as such term is defined in the Israeli Tax Ordinance. These restrictions generally restrict
these entities and Rights Holders from making any disposition of their Rights in the transferred assets and shares for a two year
period following the consummation of the Reorganization, which ended in February 2016 (the “Restriction Period”). During
the Restriction Period, these restrictions included the following:
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Sale or otherwise disposition of our intellectual property, other than out-licensing in the ordinary
course of business, was not permitted;
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the Rights Holders immediately following the Reorganization must not have changed. Notwithstanding
this restriction, so long as the aggregate holdings of the Rights Holders, collectively, was 51% or more of the total share capital
of the Company at any time during the Restriction Period, certain changes in the holding percentages of the Rights Holders might
have been permitted during the Restriction Period under the Israeli Tax Ordinance and guidelines issued by the Israel Tax Authorities;
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the Rights Holders may not have sold or otherwise transfer or dispose of more than 10% of their
respective Rights, subject to the exemptions and relief detailed below;
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Sale or otherwise transfer or disposition of any of our shares in GHI or GIL, was not permitted;
and
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during the two tax years following the end of the year in which the Reorganization was completed
we may not have offset losses (whether business or capital losses) incurred in the year in which the Reorganization was completed
or in the years preceded that year up to the fair market value of the transferred asset.
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In addition, no deduction
for tax purposes is allowed in relation to the Reorganization.
If during the Restriction
Period, we or the Rights Holders committed a violation, the transfer of shares or other rights and/or assets in connection with
the Reorganization will become subject to taxation based on the greater of the transferred assets’ fair market value on the
day of such violation or taxes that, but for the Tax Pre-Ruling, would be payable in connection with the transfer of such assets
and shares at the time of the Reorganization, linked to the Israeli consumer price index linkage differentials and interest from
the day of the actual transfer of such assets and shares until the day of payment of such taxes, unless the Israel Tax Authority
is satisfied that such violation was a result of special circumstances beyond our control. The Restriction Period ended on February
2016, and to our knowledge, neither we nor any of the Right Holders has committed a violation during the Restriction Period pursuant
to the terms and conditions of the Tax Pre Ruling.
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 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 not a PFIC for our 2017 taxable year and do not
expect to be a PFIC for the 2018 taxable year. Because the PFIC determination is highly fact intensive, there can be no assurance
that we will not be a PFIC in 2018 or for any other taxable year.
The additional 3.8% “net
investment income tax” (described below) 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” (described below) 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 their 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 not a
PFIC for our 2017 taxable year and do not expect to be a PFIC for the 2018 taxable year. Because the PFIC determination is highly
fact intensive, there can be no assurance that we will not be a PFIC in 2018 or for any other taxable 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, we do not currently intend to prepare or provide the information that would enable
a U.S. Holder to make a QEF election), 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” (described below) 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
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 for such years. 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
. One
way in which certain of the adverse consequences of PFIC status can be mitigated is for a U.S. Holder make a QEF election. Generally,
a shareholder making the QEF election is required for each taxable year to include in income a pro rata share of the ordinary earnings
and net capital gain of the QEF, subject to a separate election to defer payment of taxes, which deferral is subject to an interest
charge. An election to treat us as a QEF will not be available if we do not provide the information necessary to make such an election.
It is not expected that a U.S. Holder will be able to make a QEF election because we do not intend to provide U.S. Holders with
the information necessary to make a QEF election.
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)
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 are
required to file IRS Form 926, Return by U.S. Transferor of Property to a Foreign Corporation, and certain U.S. Holders may be
required to file 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 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 “foreign financial assets,” which would 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.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the
SEC a registration statement on Form F-3, of which this prospectus supplement and the accompanying prospectus is a part, for the
ordinary shares offered by this prospectus. This prospectus supplement and the accompanying prospectus, including the information
incorporated by reference herein and therein, do not include all of the information contained in the registration statement. You
should refer to the registration statement and its exhibits for additional information.
We file annual, quarterly
and special reports, proxy statements and other information with the SEC. You may read and copy any document we file with the SEC
at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the Public Reference Room. The SEC maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC. The SEC’s Internet site can be
found at http://www.sec.gov. In addition, we make available on or through our Internet site copies of these reports as soon as
reasonably practicable after we electronically file or furnish them to the SEC. Our Internet site can be found at http://galmedpharma.investorroom.com/sec-filings.
The information contained on, or that can be accessed through, our website is neither a part of nor incorporated into this prospectus
supplement.
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE
The SEC allows us to “incorporate
by reference” the information we file with them, which means that we can disclose important information to you by referring
you to those documents instead of having to repeat the information in this prospectus. The information incorporated by reference
is considered to be part of this prospectus supplement, and later information that we file with the SEC will automatically update
and supersede this information. We incorporate by reference the document listed below and any future filings made with the SEC
(in each case, other than those documents or the portions of those documents deemed to be furnished and not filed in accordance
with SEC rules) between the date of this prospectus supplement and the termination of the offering and also between the date of
the initial registration statement and prior to effectiveness of the registration statement:
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our Annual Report on Form 20-F for the year ended December
31, 2017, filed with the SEC on March 13, 2018;
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our Report on Form 6-K filed with the SEC on March 13, 2018 (to the extent expressly incorporated
by reference into our effective registration statements filed by us under the Securities Act); and
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the description of our ordinary shares contained in our Form 8-A filed with the SEC on March 11,
2014 including any amendment or report filed for the purpose of updating such description.
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This prospectus supplement
and accompanying prospectus are part of a registration statement on Form F-3 we have filed with the SEC under the Securities Act.
This prospectus supplement does not contain all of the information in the registration statement. We have omitted certain parts
of the registration statement, as permitted by the rules and regulations of the SEC. You may inspect and copy the registration
statement, including exhibits, at the SEC’s public reference room or website. Our statements in this prospectus supplement
about the contents of any contract or other document are not necessarily complete. You should refer to the copy of each contract
or other document we have filed as an exhibit to the registration statement for complete information.
We will provide, upon written
or oral request, to each person to whom a prospectus is delivered, a copy of any or all of the information that has been incorporated
by reference in the prospectus but not delivered with the prospectus. You may request a copy of these filings, at no cost, by writing
us at Galmed Pharmaceuticals Ltd., 16 Tiomkin Street, Tel Aviv, Israel, 6578317. Our telephone number is +972-3-693-8448.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to
the foregoing provisions, or otherwise, we have been informed that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
ENFORCEABILITY OF CIVIL LIABILITIES
We are organized under
the laws of the State of Israel, and many of our directors and executive officers, as well as the Israeli experts named herein
are not residents of the United States, and substantially all of their assets and our assets are located outside the United States.
Service of process upon our non-U.S. resident directors and executive officers or the Israeli experts named herein and enforcement
of judgments obtained in the United States against us, our directors and executive officers, or the Israeli experts named herein,
may be difficult to obtain within the United States. For further information regarding enforceability of civil liabilities against
us and certain other persons, see the risk factor “It may be difficult to enforce a judgment of a United States court against
us, our officers, directors and the Israeli experts named in this prospectus in Israel or the United States, to assert United States
securities laws claims in Israel or to serve process on our officers, directors and these experts.” under the heading “Risk
Factors” herein.
Puglisi & Associates
is the U.S. agent authorized to receive service of process in any action against us arising out of this offering. The address of
Puglisi & Associates is 850 Library Avenue, Newark, Delaware 19711.
Up to $35,000,000
Ordinary Shares
PROSPECTUS SUPPLEMENT
Stifel
, 2018
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification of Directors and Officers
Under the Israeli Companies
Law, 5759-1999 (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 the duty of care but only if a provision authorizing such exculpation
is included in its articles of association. Our Articles include such a provision. The Company may not exculpate in advance a director
from liability arising out of a prohibited dividend or distribution to shareholders.
Under the Companies Law
and the Israeli Securities Law, 5728-1968 (the “Securities Law”), a company may indemnify, or undertake in advance
to indemnify, an office holder for the following liabilities and expenses, imposed on office holder or incurred by office holder
due to acts performed by him or her as an office holder, provided its articles of association include a provision authorizing such
indemnification:
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monetary liability incurred by or 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
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 (i) no indictment was filed against such office holder as a result of such investigation or proceeding;
and (ii) no financial liability 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 or as a monetary sanction;
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a monetary liability imposed on him or her in favor of an injured party at an Administrative Procedure
(as defined below) pursuant to Section 52(54)(a)(1)(a) of the Securities Law;
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expenses incurred by an office holder in connection with an Administrative Procedure under the
Securities Law, including reasonable litigation expenses and reasonable attorneys’ fees; 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.
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An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary
Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee)
or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.
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Under the Companies Law
and the 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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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 such act would not prejudice the company;
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a breach of the duty of care to the company or to a third-party;
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a monetary liability imposed on the office holder in favor of a third-party;
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a monetary liability imposed on the office holder in favor of an injured party at an Administrative
Procedure pursuant to Section 52(54)(a)(1)(a) of the Securities Law; and
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expenses incurred by an office holder in connection with an Administrative Procedure, including
reasonable litigation expenses and reasonable attorneys’ fees.
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Nevertheless, 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 in the event office holder acted in good faith and had a reasonable basis to believe that the act would
not prejudice the company;
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a breach of the duty of care committed intentionally or recklessly, excluding a breach arising
out of the negligent conduct of the office holder;
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an act or omission committed with intent to derive unlawful personal benefit; or
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a fine, monetary sanction, penalty or forfeit levied against the office holder.
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Under the Companies Law,
exculpation, indemnification and insurance of office holders require the approval of the remuneration committee, board of directors
and, in certain circumstances, the shareholders, as described under “Item 6 — Directors, Senior Management and Employees—B.
Compensation” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2017, as filed with the SEC on March
13, 2018.
Our Articles permit us
to exculpate, indemnify and insure our office holders to the fullest extent permitted by the Companies Law and Securities Law.
Each of our office holders have entered into an indemnification agreement exculpating them, to the fullest extent permitted by
Israeli law, from liability to us for damages caused to us as a result of a breach of the duty of care and undertaking to indemnify
them to the fullest extent permitted by Israeli law, including with respect to liabilities resulting from certain acts performed
by such office holders in their capacity as an office holder of the Company, our subsidiaries or our affiliates. The indemnification
is limited both in terms of amount and coverage.
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.
Item 9. Exhibits
The index to exhibits
appears below on the page immediately following the signature pages of this Registration Statement.
Item 10. Undertakings
(a) The undersigned registrant
hereby undertakes:
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|
(1)
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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 Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
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
(a)(1)(i), (a)(1)(ii) and a(l)(iii) do not apply if the registration statement is on Form S-3 or Form F-3 and the information required
to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC 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.
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(2)
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That for the purpose of determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered
therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3)
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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.
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(4)
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To file a post-effective amendment to the registration statement to include any financial statements
required by Item 8.A. of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements
and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided that the registrant includes
in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment
need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this
chapter if such financial statements and information are contained in periodic reports filed with or furnished to the 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 Form F-3.
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(5)
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That, for the purpose of determining liability under
the Securities Act to any purchaser:
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i
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If the registrant is relying on Rule 430B:
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(A)
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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
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(B)
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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
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 the 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.
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ii.
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If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part
of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first
used after effectiveness. 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 first
use, 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 date of first use.
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(6)
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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:
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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:
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i.
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Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering
required to be filed pursuant to Rule 424;
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ii.
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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;
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iii.
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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
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iv.
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Any other communication that is an offer in the offering made by the undersigned registrant to
the purchaser.
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(b)
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The undersigned registrant hereby undertakes that, for 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.
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(c)
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The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus,
to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference
in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange
Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth
in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly
report that is specifically incorporated by reference in the prospectus to provide such interim financial information.
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(d)
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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 the provisions described in Item 10 hereof, or otherwise,
the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the 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 Act and will be governed by the final adjudication of such issue.
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(e)
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The undersigned registrant hereby undertakes 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 (“Act”) in accordance
with the rules and regulations prescribed by the Commission under section 305(b)(2) of the Act.
|
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 F-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunder
duly authorized, in the city of Tel Aviv, State of Israel, on March 26, 2018.
|
GALMED PHARMACEUTICALS LTD.
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By:
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/s/ Allen Baharaff
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Allen Baharaff
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President and Chief Executive Officer
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POWER OF ATTORNEY
Each person whose signature
appears below hereby constitutes and appoints each of Allen Baharaff and Yohai Stenzler, acting alone, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities,
to sign any or all amendments or supplements to this registration statement, whether pre-effective or post-effective and any and
all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to file the same
with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or appropriate
to be done with respect to this registration statement or any amendments or supplements hereto or any and all additional registration
statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, in the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute
or substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed below 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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DATE
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/s/ Chaim Hurvitz
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Chairman of the Board
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March 26, 2018
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Chaim Hurvitz
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/s/ Allen Baharaff
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President, Chief Executive Officer and
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March 26, 2018
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Allen Baharaff
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Director (Principal Executive Officer)
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/s/ Yohai Stenzler
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Chief Financial Officer
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March 26, 2018
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Yohai Stenzler
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(Principal Financial and Accounting Officer)
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/s/ William Marth
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Director
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March 26, 2018
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William Marth
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/s/ Shmuel Nir
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Director
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March 26, 2018
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Shmuel Nir
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/s/ Tali Yaron-Eldar
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Director
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March 26, 2018
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Tali Yaron-Eldar
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/s/ David Sidransky, M.D.
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Director
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March 26, 2018
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David Sidransky, M.D.
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/s/ Prof. Ran Oren
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Director
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March 26, 2018
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Prof. Ran Oren
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/s/ Dr. Carol L. Brosgart
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Director
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March 26, 2018
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Dr. Carol L. Brosgart
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AUTHORIZED REPRESENTATIVE
Pursuant to the Securities
Act of 1933, the undersigned, the duly authorized representative in the United States of Galmed Pharmaceuticals Ltd. has signed
this registration statement in the city of Newark, the State of Delaware, on March 26, 2018.
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Puglisi & Associates
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By:
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/s/ Donald J. Puglisi
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Name: Donald J. Puglisi
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Title: Authorized Representative
|
EXHIBIT INDEX
|
|
*
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To be filed by amendment or by a report filed under the
Securities Exchange Act of 1934, as amended, and incorporated herein by reference, if applicable.
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|
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(1)
|
Incorporated herein by reference to Report on Form 6-K filed with the SEC on December 22, 2017.
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|
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(2)
|
Incorporated herein by reference to Amendment No. 1 to the Registration Statement on Form F-1 filed
with the SEC on February 28, 2014.
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**
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To be filed separately under the electronic form type
305B2, if applicable.
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Exhibit 4.4
GALMED PHARMACEUTICALS LTD.
INDENTURE
Dated as of , 20
[ ]
Trustee
Senior Debt Securities
Table
of Contents
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Page
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|
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ARTICLE I
|
DEFINITIONS AND INCORPORATION BY REFERENCE
|
1
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|
|
|
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|
Section 1.1
|
Definitions
|
1
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|
Section 1.2
|
Other Definitions
|
4
|
|
Section 1.3
|
Incorporation by Reference of Trust Indenture Act
|
5
|
|
Section 1.4
|
Rules of Construction
|
5
|
|
|
|
|
|
ARTICLE II
|
THE SECURITIES
|
6
|
|
|
|
|
|
Section 2.1
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Issuable in Series
|
6
|
|
Section 2.2
|
Establishment of Terms of Series of Securities
|
6
|
|
Section 2.3
|
Denominations; Provision for Payment
|
8
|
|
Section 2.4
|
Execution and Authentication
|
8
|
|
Section 2.5
|
Registrar and Paying Agent
|
9
|
|
Section 2.6
|
Paying Agent to Hold Money in Trust
|
10
|
|
Section 2.7
|
Securityholder Lists
|
10
|
|
Section 2.8
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Transfer and Exchange
|
10
|
|
Section 2.9
|
Mutilated, Destroyed, Lost and Stolen Securities
|
11
|
|
Section 2.10
|
Outstanding Securities
|
12
|
|
Section 2.11
|
Treasury Securities
|
12
|
|
Section 2.12
|
Temporary Securities
|
12
|
|
Section 2.13
|
Cancellation
|
13
|
|
Section 2.14
|
Defaulted Interest
|
13
|
|
Section 2.15
|
Global Securities
|
13
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|
Section 2.16
|
CUSIP Numbers
|
14
|
|
|
|
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ARTICLE III
|
REDEMPTION
|
15
|
|
|
|
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|
Section 3.1
|
Notice to Trustee
|
15
|
|
Section 3.2
|
Selection of Securities to be Redeemed
|
15
|
|
Section 3.3
|
Notice of Redemption
|
15
|
|
Section 3.4
|
Effect of Notice of Redemption
|
16
|
|
Section 3.5
|
Deposit of Redemption Price
|
17
|
|
Section 3.6
|
Securities Redeemed in Part
|
17
|
|
|
|
|
|
ARTICLE IV
|
COVENANTS
|
17
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|
|
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|
Section 4.1
|
Payment of Principal and Interest
|
17
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|
Section 4.2
|
Reports by Company
|
17
|
|
Section 4.3
|
Compliance Certificate
|
18
|
|
Section 4.4
|
Stay, Extension and Usury Laws
|
18
|
|
Section 4.5
|
Corporate Existence
|
18
|
Table
of Contents
(continued)
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|
|
Page
|
|
|
|
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ARTICLE V
|
SUCCESSORS
|
19
|
|
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|
Section 5.1
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Consolidation, Merger and Sale of Assets
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19
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Section 5.2
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Successor Person Substituted
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19
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|
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|
ARTICLE VI
|
DEFAULTS AND REMEDIES
|
19
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|
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|
Section 6.1
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Events of Default
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19
|
|
Section 6.2
|
Acceleration of Maturity; Rescission and Annulment
|
21
|
|
Section 6.3
|
Collection of Indebtedness and Suits for Enforcement by Trustee
|
21
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|
Section 6.4
|
Trustee May File Proofs of Claim
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22
|
|
Section 6.5
|
Trustee May Enforce Claims Without Possession of Securities
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23
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|
Section 6.6
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Application of Money Collected
|
23
|
|
Section 6.7
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Limitation on Suits
|
23
|
|
Section 6.8
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Unconditional Right of Holders to Receive Principal and Interest
|
24
|
|
Section 6.9
|
Restoration of Rights and Remedies
|
24
|
|
Section 6.10
|
Rights and Remedies Cumulative
|
24
|
|
Section 6.11
|
Delay or Omission Not Waiver
|
25
|
|
Section 6.12
|
Control by Holders
|
25
|
|
Section 6.13
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Waiver of Past Defaults
|
25
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|
Section 6.14
|
Undertaking for Costs
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26
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|
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ARTICLE VII
|
TRUSTEE
|
26
|
|
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|
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|
Section 7.1
|
Duties of Trustee
|
26
|
|
Section 7.2
|
Rights of Trustee
|
27
|
|
Section 7.3
|
Individual Rights of Trustee
|
29
|
|
Section 7.4
|
Trustee’s Disclaimer
|
29
|
|
Section 7.5
|
Notice of Defaults
|
29
|
|
Section 7.6
|
Reports by Trustee to Holders
|
29
|
|
Section 7.7
|
Compensation and Indemnity
|
29
|
|
Section 7.8
|
Replacement of Trustee
|
30
|
|
Section 7.9
|
Successor Trustee by Merger, Etc
|
31
|
|
Section 7.10
|
Eligibility; Disqualification
|
31
|
|
Section 7.11
|
Preferential Collection of Claims Against Company
|
31
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|
|
|
|
|
ARTICLE VIII
|
SATISFACTION AND DISCHARGE; DEFEASANCE
|
32
|
|
|
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|
Section 8.1
|
Satisfaction and Discharge of Indenture
|
32
|
|
Section 8.2
|
Application of Trust Funds; Indemnification
|
33
|
|
Section 8.3
|
Legal Defeasance of Securities of any Series
|
33
|
|
Section 8.4
|
Covenant Defeasance
|
35
|
Table
of Contents
(continued)
|
|
|
Page
|
|
Section 8.5
|
Repayment to Company
|
36
|
|
Section 8.6
|
Reinstatement
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36
|
|
|
|
|
|
ARTICLE IX
|
AMENDMENTS AND WAIVERS
|
36
|
|
|
|
|
|
Section 9.1
|
Without Consent of Holders
|
36
|
|
Section 9.2
|
With Consent of Holders
|
37
|
|
Section 9.3
|
Limitations
|
38
|
|
Section 9.4
|
Compliance with Trust Indenture Act
|
38
|
|
Section 9.5
|
Revocation and Effect of Consents
|
38
|
|
Section 9.6
|
Notation on or Exchange of Securities
|
39
|
|
Section 9.7
|
Trustee Protected
|
39
|
|
|
|
|
|
ARTICLE X
|
MISCELLANEOUS
|
39
|
|
|
|
|
|
Section 10.1
|
Trust Indenture Act Controls
|
39
|
|
Section 10.2
|
Notices
|
39
|
|
Section 10.3
|
Communication by Holders with Other Holders
|
40
|
|
Section 10.4
|
Certificate and Opinion as to Conditions Precedent
|
40
|
|
Section 10.5
|
Statements Required in Certificate or Opinion
|
41
|
|
Section 10.6
|
Rules by Trustee and Agents
|
41
|
|
Section 10.7
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Legal Holidays
|
41
|
|
Section 10.8
|
No Recourse Against Others
|
41
|
|
Section 10.9
|
Counterparts
|
42
|
|
Section 10.10
|
Governing Law; Jury Trial Waiver
|
42
|
|
Section 10.11
|
No Adverse Interpretation of Other Agreements
|
42
|
|
Section 10.12
|
Successors
|
42
|
|
Section 10.13
|
Severability
|
42
|
|
Section 10.14
|
Table of Contents, Headings, Etc
|
42
|
|
Section 10.15
|
Securities in a Foreign Currency
|
43
|
|
Section 10.16
|
Judgment Currency
|
43
|
|
Section 10.17
|
Force Majeure
|
44
|
|
|
|
|
|
ARTICLE XI
|
SINKING FUNDS
|
44
|
|
|
|
|
|
Section 11.1
|
Applicability of Article
|
44
|
|
Section 11.2
|
Satisfaction of Sinking Fund Payments with Securities
|
45
|
|
Section 11.3
|
Redemption of Securities for Sinking Fund
|
45
|
GALMED PHARMACEUTICALS LTD.
Reconciliation and tie between Trust Indenture
Act of 1939 and Indenture
dated as of ____________, 20
|
§ 310(a)(1)
|
7.10
|
|
(a)(2)
|
7.10
|
|
(a)(3)
|
Not Applicable
|
|
(a)(4)
|
Not Applicable
|
|
(a)(5)
|
7.10
|
|
(b)
|
7.10
|
|
§ 311(a)
|
7.11
|
|
(b)
|
7.11
|
|
§ 312(a)
|
2.7
|
|
(b)
|
10.3
|
|
(c)
|
10.3
|
|
§ 313(a)
|
7.6
|
|
(b)(1)
|
7.6
|
|
(b)(2)
|
7.6
|
|
(c)(1)
|
7.6
|
|
(d)
|
7.6
|
|
§ 314(a)
|
4.2, 10.5
|
|
(b)
|
Not Applicable
|
|
(c)(1)
|
10.4
|
|
(c)(2)
|
10.4
|
|
(c)(3)
|
Not Applicable
|
|
(d)
|
Not Applicable
|
|
(e)
|
10.5
|
|
(f)
|
Not Applicable
|
|
§ 315(a)
|
7.1
|
|
(b)
|
7.5
|
|
(c)
|
7.1
|
|
(d)
|
7.1
|
|
(e)
|
6.14
|
|
§ 316(a)
|
2.11
|
|
(a)(1)(A)
|
6.12
|
|
(a)(1)(B)
|
6.13
|
|
(b)
|
6.8
|
|
§ 317(a)(1)
|
6.3
|
|
(a)(2)
|
6.4
|
|
(b)
|
2.6
|
|
§ 318(a)
|
10.1
|
Note: This reconciliation and tie shall not,
for any purpose, be deemed to be part of the Indenture.
Indenture dated as of __________, 20__, between
GALMED PHARMACEUTICALS LTD., a company organized under the laws of the State of Israel (“
Company
”), and _______________,
as trustee (“
Trustee
”).
Each party agrees as follows for the benefit
of the other party and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1
Definitions
.
“
Affiliate
”
of any specified person means any other person directly or indirectly controlling or controlled by or under common control with
such specified person. For the purposes of this definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”), as used with respect to any person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through
the ownership of voting securities or by agreement or otherwise.
“
Agent
”
means any Registrar or Paying Agent.
“
Board of Directors
”
means the board of directors of the Company or any duly authorized committee thereof.
“
Board Resolution
”
means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board
of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certification
and delivered to the Trustee.
“
Business Day
”
means, for a particular Series, any day except a Saturday, Sunday or any day, including a legal holiday, on which banking institutions
are authorized or required by law, regulation or executive order to close in The City of New York (or in connection with any payment,
the place of payment).
“
Capital Stock
”
of any person means any and all shares, interests, participations, rights or other equivalents (however designated) of the equity
of such person.
“
Certificated
Securities
” means definitive Securities in registered non-global certificated form.
“
Company
”
means the party named as such above until a successor, which duly assumes the obligations under this Indenture, replaces it and
thereafter means the successor.
“
Company Order
”
means a written order signed in the name of the Company by an Officer.
“
Corporate Trust
Office
” means the office of the Trustee at which at any particular time its corporate trust business related to this
Indenture shall be principally administered, which office at the date hereof is located at __________________,; Attention: _______________,
or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the corporate
trust office of any successor Trustee at which this Indenture shall be administered (or such other address as a successor Trustee
may designate from time to time by notice to the Holders of the Company).
“
Default
”
means any event which is, or after notice or passage of time or both would be, an Event of Default.
“
Depositary
”
means, with respect to the Securities of any Series issuable or issued in whole or in part in the form of one or more Global Securities,
the person designated as Depositary for such Series by the Company, which Depositary shall be a clearing agency registered under
the Exchange Act; and if at any time there is more than one such person, “Depositary” as used with respect to the Securities
of any Series shall mean the Depositary with respect to the Securities of such Series.
“
Discount Security
”
means any Security that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration
of acceleration of the maturity thereof pursuant to Section 6.2.
“
Dollars
”
and “
$
” means the currency of The United States of America.
“
Exchange Act
”
means the Securities Exchange Act of 1934, as amended.
“
Foreign Currency
”
means any currency or currency unit issued by a government other than the government of The United States of America.
“
Foreign Government
Obligations
” means, with respect to Securities of any Series that are denominated in a Foreign Currency, direct obligations
of, or obligations guaranteed by, the government that issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof.
“
GAAP
”
means accounting principles generally accepted in The United States of America set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect as of the date of determination.
“
Global Security
”
or “
Global Securities
” means a Security or Securities, as the case may be, in the form established pursuant
to Section 2.2 evidencing all or part of a Series of Securities, issued to the Depositary for such Series or its nominee, and registered
in the name of such Depositary or nominee.
“
Holder
”
or “
Securityholder
” means a person in whose name a Security is registered on the books of the Registrar.
“
Indenture
”
means this Indenture as amended or supplemented from time to time and shall include the form and terms of particular Series of
Securities established as contemplated hereunder.
“
interest
”
means, with respect to any Security, any interest on such Security, and with respect to any Discount Security which by its terms
bears interest only after Maturity, interest payable after Maturity.
“
Maturity
,”
when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
“
Officer
”
means the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Senior
Vice President or Vice President, the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the Company.
“
Officer’s
Certificate
” means a certificate signed by any Officer (or any person designated in writing by an Officer of the Company
as authorized to execute and deliver Officer’s Certificates) and delivered to the Trustee.
“
Opinion of Counsel
”
means a written opinion of legal counsel. The counsel may be an employee of or counsel to the Company. Opinions of Counsel required
to be delivered under this Indenture may have qualifications customary for opinions of the type required.
“
person
”
means any individual, corporation, company, voluntary association, partnership, trust, joint venture, limited liability company,
unincorporated organization or government or any agency, instrumentality or political subdivision thereof.
“
principal
”
of a Security means the principal of the Security plus, when appropriate, the premium, if any, on the Security.
“
Responsible Officer
”
means any officer of the Trustee in its Corporate Trust Office having direct responsibility for administration of this Indenture
and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with a particular subject and who shall have direct responsibility for the administration
of this Indenture.
“
SEC
”
means the Securities and Exchange Commission.
“
Securities
”
means the debentures, notes or other debt instruments of the Company of any Series authenticated and delivered under this Indenture.
“
Series
”
or “
Series of Securities
” means each series of debentures, notes or other debt instruments of the Company created
pursuant to Sections 2.1 and 2.2 hereof.
“
Stated Maturity
”
when used with respect to any Security, means the date specified in such Security as the fixed date on which the principal of such
Security is due and payable.
“
Subsidiary
”
means, with respect to any person, any corporation, partnership, joint venture, limited liability company or other business entity
of which a majority of the outstanding shares of Capital Stock or other interests having the power to vote in the election of directors,
managers or trustees thereof is at the time directly or indirectly owned or controlled by such person or one or more of the other
Subsidiaries of such person, or a combination thereof.
“
TIA
”
means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in effect on the date of this Indenture; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required
by any such amendment, the Trust Indenture Act as so amended.
“
Trustee
”
means the person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include
each person who is then a Trustee hereunder, and if at any time there is more than one such person, “Trustee” as used
with respect to the Securities of any Series shall mean the Trustee with respect to Securities of that Series.
“
United States
”
or “
U.S
.” means The United States of America (including the states thereof and the District of Columbia), its
territories and possessions and other areas subject to its jurisdiction.
“
U
.
S. Government
Obligations
” means securities which are direct obligations of, or guaranteed by, The United States of America for the
payment of which its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for
the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation evidenced by such depository receipt.
Section 1.2
Other
Definitions
.
|
TERM
|
DEFINED IN SECTION
|
|
“
Bankruptcy Law
”
|
6.1
|
|
“
Custodian
”
|
6.1
|
|
“
Event of Default
”
|
6.1
|
|
“
Judgment Currency
”
|
10.16
|
|
“
Legal Holiday
”
|
10.7
|
|
“
mandatory sinking fund payment
”
|
11.1
|
|
“
optional sinking fund payment
”
|
11.1
|
|
“
Paying Agent
”
|
2.5
|
|
“
Registrar
”
|
2.5
|
|
“
Required Currency
”
|
10.16
|
|
“
successor person
”
|
5.1
|
Section 1.3
Incorporation
by Reference of Trust Indenture Act
.
Whenever this Indenture
refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
“
Commission
”
means the SEC.
“
indenture securities
”
means the Securities.
“
indenture security
holder
” means a Securityholder.
“
indenture to
be qualified
” means this Indenture.
“
indenture trustee
”
or “
institutional trustee
” means the Trustee.
“
obligor
”
on the indenture securities means the Company and any successor obligor upon the Securities.
All other terms used in
this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and
not otherwise defined herein are used herein as so defined.
Section 1.4
Rules
of Construction
.
Unless the context otherwise
requires:
(a) a
term has the meaning assigned to it;
(b) an
accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c) “
or
”
is not exclusive;
(d) words
in the singular include the plural, and in the plural include the singular; and
(e) provisions
apply to successive events and transactions.
ARTICLE II
THE SECURITIES
Section 2.1
Issuable
in Series
.
The aggregate principal
amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in
one or more Series. All Securities of a Series shall be identical except as may be set forth or determined in the manner provided
in a Board Resolution, supplemental indenture hereto or Officer’s Certificate establishing the terms of such Series. In the
case of Securities of a Series to be issued from time to time, the Board Resolution, Officer’s Certificate or supplemental
indenture establishing the terms thereof may provide for the method by which specified terms (such as interest rate, maturity date,
record date or date from which interest shall accrue) are to be determined. Securities may differ between Series in respect of
any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of this Indenture.
Section 2.2
Establishment
of Terms of Series of Securities
.
At or prior to the issuance
of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Subsection 2.2.1
and either as to such Securities within the Series or as to the Series generally in the case of Subsections 2.2.2 through 2.2.23)
by or pursuant to a Board Resolution, and set forth or determined in the manner provided in a Board Resolution, supplemental indenture
hereto or Officer’s Certificate:
2.2.1 the
title (which shall distinguish the Securities of that particular Series from the Securities of any other Series) of the Series;
2.2.2 the
price or prices (expressed as a percentage of the principal amount thereof) at which the Securities of the Series will be issued;
2.2.3 any
limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities
of the Series pursuant to Section 2.8, 2.9, 2.12, 3.6 or 9.6);
2.2.4 the
date or dates on which the principal of the Securities of the Series is payable;
2.2.5 the
rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including,
but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series
shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such
interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date;
2.2.6 the
place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, where the Securities
of such Series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company
in respect of the Securities of such Series and this Indenture may be delivered, and the method of such payment, if by wire transfer,
mail or other means;
2.2.7 if
applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities
of the Series must be redeemed or may be redeemed, in whole or in part, at the option of the Company;
2.2.8 the
obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
2.2.9 the
dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the
option of the Holders thereof and other detailed terms and provisions of such repurchase obligations;
2.2.10 if
other than denominations of $1,000 and integral multiples of $1,000 in excess thereof, the denominations in which the Securities
of the Series shall be issuable;
2.2.11 the
forms of the Securities of the Series and whether the Securities will be issuable as Global Securities;
2.2.12 if
other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable
upon declaration of acceleration of the maturity thereof pursuant to Section 6.2;
2.2.13 the
currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, and if such currency of
denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;
2.2.14 the
designation of the currency, currencies or currency units in which payment of the principal of and interest, if any, on the Securities
of the Series will be made;
2.2.15 if
payments of principal of or interest, if any, on the Securities of the Series are to be made in one or more currencies or currency
units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to
such payments will be determined;
2.2.16 the
manner in which the amounts of payment of principal of or interest, if any, on the Securities of the Series will be determined,
if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity
index, stock exchange index or financial index;
2.2.17 the
provisions, if any, relating to any security provided for the Securities of the Series;
2.2.18 any
addition to, deletion of or change in the Events of Default which applies to any Securities of the Series and any change in the
right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant
to Section 6.2;
2.2.19 any
addition to, deletion of or change in the covenants set forth in Articles IV or V which applies to Securities of the Series;
2.2.20 any
Depositaries, trustees, interest rate calculation agents, exchange rate calculation agents or other agents with respect to Securities
of such Series if other than those appointed herein;
2.2.21 the
provisions, if any, relating to conversion or exchange of any Securities of such Series, including if applicable, the conversion
or exchange price, the conversion or exchange period, the securities or other property into which the Securities will be convertible,
provisions as to whether conversion or exchange will be mandatory, at the option of the Holders thereof or at the option of the
Company, the events requiring an adjustment of the conversion price or exchange price and provisions affecting conversion or exchange
if such Series of Securities are redeemed;
2.2.22 whether
any of the Company’s direct or indirect Subsidiaries will guarantee the Securities of that Series, including the terms of
subordination, if any, of such guarantees; and
2.2.23 any
other terms of the Series (which may supplement, modify or delete any provision of this Indenture insofar as it applies to such
Series), including any terms that may be required under applicable law or regulations or advisable in connection with the marketing
of Securities of that Series.
All Securities of any one
Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if
so provided by or pursuant to the Board Resolution, supplemental indenture hereto or Officer’s Certificate referred to above.
Section 2.3
Denominations;
Provision for Payment
.
The Securities of any Series
shall be issuable, except as otherwise provided with respect to Securities of any Series pursuant to Section 2.2, as registered
Securities in the denominations of one thousand Dollars ($1,000) or any integral multiples of $1,000 in excess thereof. Unless
otherwise provided with respect to Securities of any Series pursuant to Section 2.2, the principal of and the interest on the Securities
of any Series, if any, thereon, shall by payable in Dollars at the Corporate Trust Office of the Trustee. Unless otherwise specified
pursuant to Section 2.2 with respect to any Securities of any Series, interest on the Securities of any Series shall be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Section 2.4
Execution
and Authentication
.
Two Officers shall sign
the Securities for the Company by manual or facsimile signature.
If an Officer whose signature
is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.
A Security shall not be
valid until authenticated by the manual signature of the Trustee or an authenticating agent. The signature shall be conclusive
evidence that the Security has been authenticated under this Indenture.
The Trustee shall at any
time, and from time to time, authenticate Securities for original issue in the principal amount provided in the Board Resolution,
supplemental indenture hereto or Officer’s Certificate, upon receipt by the Trustee of a Company Order. Each Security shall
be dated the date of its authentication.
The aggregate principal
amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such
Series set forth in the Board Resolution, supplemental indenture hereto or Officer’s Certificate delivered pursuant to Section
2.2, except as provided in Section 2.9.
Prior to the issuance of
Securities of any Series, the Trustee shall have received and (subject to Section 7.1) shall be fully protected in conclusively
relying on: (a) the Board Resolution, supplemental indenture hereto or Officer’s Certificate delivered pursuant to Section
2.2 establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities
of that Series or of Securities within that Series, (b) an Officer’s Certificate complying with Section 9.7 (with respect
to the execution of supplemental indentures) and Section 10.4, and (c) an Opinion of Counsel complying with Section 9.7 (with respect
to the execution of supplemental indentures) and Section 10.4.
The Trustee shall have
the right, but not the obligation, to decline to authenticate and deliver any Securities of such Series: (a) if the Trustee, being
advised by counsel, determines that such action may not be taken lawfully; or (b) if the Trustee in good faith determines that
such action would expose the Trustee to personal liability.
The Trustee may appoint
an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company.
Section 2.5
Registrar
and Paying Agent
.
The Company shall maintain,
with respect to each Series of Securities, at the place or places specified with respect to such Series, an office or agency where
Securities of such Series may be presented or surrendered for payment (“Paying Agent”) and where Securities of such
Series may be surrendered for registration of transfer or exchange (“Registrar”). The Registrar shall keep a register
with respect to each Series of Securities and to their transfer and exchange. The Company will give prompt written notice to the
Trustee of the name and address, and any change in the name or address, of each Registrar or Paying Agent. If at any time the Company
shall fail to maintain any such required Registrar or Paying Agent or shall fail to furnish the Trustee with the name and address
thereof, such presentations and surrenders may be made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations and surrenders.
The Company may also from
time to time designate one or more co-registrars or additional paying agents and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligations to maintain
a Registrar or Paying Agent in each place so specified for Securities of any Series for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any change in the name or address of any such co-registrar
or additional paying agent. The term “Registrar” includes any co-registrar; and the term “Paying Agent”
includes any additional paying agent. The Company or any of its Affiliates may serve as Registrar or Paying Agent.
The Company hereby appoints
the Trustee as the initial Registrar and Paying Agent for each Series unless another Registrar or Paying Agent, as the case may
be, is appointed prior to the time Securities of that Series are first issued.
Section 2.6
Paying
Agent to Hold Money in Trust
.
The Company shall require
each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Securityholders
of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on
the Securities of that Series, and will notify the Trustee in writing of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company or a Subsidiary of the Company) shall have no further liability for the money. If the Company
or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of Securityholders
of any Series of Securities all money held by it as Paying Agent. Upon any bankruptcy, reorganization or similar proceeding with
respect to the Company, the Trustee shall serve as Paying Agent for the Securities.
Section 2.7
Securityholder
Lists
.
The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders
of each Series of Securities and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least ten days before each interest payment date and at such other times as the Trustee may request
in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Securityholders
of each Series of Securities.
Section 2.8
Transfer
and Exchange
.
Where Securities of a Series
are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal
amount of Securities of the same Series, the Registrar shall register the transfer or make the exchange if its requirements for
such transactions are met. To permit registrations of transfers and exchanges, the Trustee shall authenticate Securities at the
Registrar’s request. No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant
to Sections 2.12, 3.6 or 9.6).
Neither the Company nor
the Registrar shall be required (a) to issue, register the transfer of, or exchange Securities of any Series for the period beginning
at the opening of business fifteen days immediately preceding the mailing of a notice of redemption of Securities of that Series
selected for redemption and ending at the close of business on the day of such mailing, or (b) to register the transfer of or exchange
Securities of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Securities
selected, called or being called for redemption in part.
Section 2.9
Mutilated,
Destroyed, Lost and Stolen Securities
.
If any mutilated Security
is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered
to the Company and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Security and (b) such
security or indemnity bond as may be required by each of them to hold itself and any of its agents harmless, then, in the absence
of written notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall
execute and upon receipt of a Company Order the Trustee shall authenticate and make available for delivery, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same Series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, pay such Security.
Upon the issuance of any
new Security under this Section 2.9, the Company may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any
Series issued pursuant to this Section 2.9 in lieu of any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities
of that Series duly issued hereunder.
The provisions of this
Section 2.9 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.10
Outstanding
Securities
.
The Securities outstanding
at any time are all the Securities authenticated by the Trustee except for those canceled by the Registrar and those described
in this Section 2.10 as not outstanding.
If a Security is replaced
pursuant to Section 2.9, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser.
If the Paying Agent (other
than the Company, a Subsidiary of the Company or an Affiliate of the Company) holds on the Maturity of Securities of a Series money
sufficient to pay such Securities payable on that date, then on and after that date such Securities of the Series cease to be outstanding
and interest on them ceases to accrue.
The Company may purchase
or otherwise acquire the Securities, whether by open market purchases, negotiated transactions or otherwise. A Security does not
cease to be outstanding because the Company or an Affiliate of the Company holds the Security.
In determining whether
the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for such
purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a
declaration of acceleration of the Maturity thereof pursuant to Section 6.2.
Section 2.11
Treasury
Securities
.
In determining whether
the Holders of the required principal amount of Securities of a Series have concurred in any request, demand, authorization, direction,
notice, consent or waiver, Securities of a Series owned by the Company or any Affiliate of the Company shall be disregarded, except
that for the purposes of determining whether the Trustee shall be protected in conclusively relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Securities of a Series that a Responsible Officer of the Trustee actually
knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded
if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such request, demand, authorization,
direction, notice, consent or waiver with respect to the Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.
Section 2.12
Temporary
Securities
.
Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon a Company Order. Temporary
Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate
for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee upon receipt of a Company Order
shall authenticate definitive Securities of the same Series and date of maturity in exchange for temporary Securities. Until so
exchanged, temporary Securities shall have the same rights under this Indenture as the definitive Securities.
Section 2.13
Cancellation
.
The Company at any time
may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent, if not the Trustee, shall forward to
the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all
Securities surrendered for transfer, exchange, payment, replacement, conversion or cancellation and shall dispose of such canceled
Securities (subject to the record retention requirement of the Exchange Act and the Trustee) in accordance with its customary procedures
and deliver a certificate of such cancellation to the Company upon written request of the Company. The Company may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee for cancellation.
Section 2.14
Defaulted
Interest
.
If the Company defaults
in a payment of interest on a Series of Securities, it may pay the defaulted interest, plus, to the extent permitted by law, any
interest payable on the defaulted interest, to the persons who are Securityholders of the Series on a subsequent special record
date. The Company shall fix the record date and payment date. At least 10 days before the special record date, the Company shall
mail to the Trustee and to each Securityholder of the Series a notice that states the special record date, the payment date and
the amount of interest to be paid. The Company may pay defaulted interest in any other lawful manner.
Section 2.15
Global
Securities
.
2.15.1
Terms
of Securities
. A Board Resolution, a supplemental indenture hereto or an Officer’s Certificate shall establish whether
the Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depositary
for such Global Security or Securities.
2.15.2
Transfer
and Exchange
. Notwithstanding any provisions to the contrary contained in Section 2.8 of this Indenture and in addition thereto,
any Global Security shall be exchangeable pursuant to Section 2.8 of this Indenture for Securities registered in the names of Holders
other than the Depositary for such Security or its nominee only if (a) such Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a clearing agency registered
under the Exchange Act, and, in either case, the Company fails to appoint a successor Depositary registered as a clearing agency
under the Exchange Act within 90 days of such event or (b) the Company determines in its sole discretion not to have such Securities
represented by one or more Global Securities and executes and delivers to the Trustee an Officer’s Certificate to the effect
that such Global Security shall be so exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Securities registered in such names as the Depositary shall direct in writing in an aggregate principal
amount equal to the principal amount of the Global Security with like tenor and terms.
Except as provided in this
Section 2.15.2, a Global Security may not be transferred except as a whole by the Depositary with respect to such Global Security
to a nominee of such Depositary, by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any such nominee to a successor Depositary or a nominee of such a successor Depositary.
2.15.3
Legend
.
Any Global Security issued hereunder shall bear a legend in substantially the following form:
“THIS SECURITY IS
A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR
A NOMINEE OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY,
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH A SUCCESSOR DEPOSITARY.”
2.15.4
Acts
of Holders
. The Depositary, as a Holder, may appoint agents and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under this
Indenture.
2.15.5
Payments
.
Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the
principal of and interest, if any, on any Global Security shall be made to the Holder thereof, which in the case of a Depositary
therefor will be made in accordance with its applicable procedures.
2.15.6
Consents,
Declaration and Directions
. The Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount
of outstanding Securities of such Series represented by a Global Security as shall be specified in a written statement of the Depositary
or by the applicable procedures of such Depositary with respect to such Global Security, for purposes of obtaining any consents,
declarations, waivers or directions required to be given by the Holders pursuant to this Indenture.
Section 2.16
CUSIP
Numbers
.
The Company in issuing
the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP”
numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other elements of identification printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Trustee shall have no liability for any defect in the “CUSIP”
numbers as they appear on any Security, notice or elsewhere. The Company will promptly notify the Trustee in writing of any change
in the “CUSIP” numbers.
ARTICLE III
REDEMPTION
Section 3.1
Notice
to Trustee
.
The Company may, with respect
to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the
Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in
such Securities. If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity
thereof all or part of the Series of Securities pursuant to the terms of such Securities, it shall notify the Trustee in writing
of the redemption date and the principal amount of Series of Securities to be redeemed. The Company shall give the notice to the
Trustee at least 45 days before the redemption date, unless a shorter period is satisfactory to the Trustee.
Section 3.2
Selection
of Securities to be Redeemed
.
Unless otherwise indicated
for a particular Series by a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, if less than
all the Securities of a Series are to be redeemed, the Trustee shall select the Securities of the Series to be redeemed in any
manner that the Trustee deems fair and appropriate, including selecting by lot or other method, unless otherwise required by law
or applicable stock exchange requirements, subject, in the case of Global Securities, to the applicable rules and procedures of
the Depositary;
provided tha
t the unredeemed portion of the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such Security. The Trustee shall make the selection from
Securities of the Series outstanding not previously called for redemption. Provisions of this Indenture that apply to Securities
of a Series called for redemption also apply to portions of Securities of that Series called for redemption.
Section 3.3
Notice
of Redemption
.
Unless otherwise indicated
for a particular Series by Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed.
The notice shall identify
the Securities of the Series to be redeemed and shall state:
(a) the
redemption date;
(b) the
redemption price and the amount of accrued interest, if any, to be paid;
(c) the
name and address of the Paying Agent and, if applicable, the conversion Agent;
(d) for
convertible Securities, the conversion price;
(e) if
any Global Security is being redeemed in part, the portion of the principal amount of such Global Security to be redeemed and that,
after the redemption date upon surrender of such Global Security, the principal amount thereof will be decreased by the portion
thereof redeemed pursuant thereto;
(f) if
any Certificated Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed, and that,
after the redemption date, upon surrender of such Security, a new Certificated Security in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Certificated Security;
(g) that
Securities of the Series (or portion thereof) called for redemption must be surrendered to the Paying Agent to collect the redemption
price;
(h) that
interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date unless the Company
defaults in the deposit of the redemption price;
(i) the
CUSIP number, if any, and state that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed
in the SEC’s notice or printed on the Securities; and
(j) any
other information as may be required by the terms of the particular Series or the Securities of a Series being redeemed.
At the Company’s
request, the Trustee shall give the notice of redemption in the Company’s name and at its expense, provided, however, that
the Company has delivered to the Trustee, at least 15 days (unless a shorter time shall be acceptable to the Trustee) prior to
the notice date, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information
to be stated in such notice.
Section 3.4
Effect
of Notice of Redemption
.
Once notice of redemption
is mailed as provided in Section 3.3, Securities of a Series called for redemption become due and payable on the redemption date
and at the redemption price. Except as otherwise provided in the supplemental indenture, Board Resolution or Officer’s Certificate
for a Series, a notice of redemption may not be conditional. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price plus accrued interest to the redemption date other than Securities or portions of Securities called for
redemption which have been delivered by the Company to the Registrar for cancellation. The Paying Agent shall return to the Company
any money not required for that purpose.
Unless the Company shall
default in the payment of Securities (and accrued interest) called for redemption, interest on such Securities shall cease to accrue
after the redemption date. Convertible Securities called for redemption shall cease to be convertible after the close of business
on the Business Day immediately preceding the redemption date, unless the Company shall default in the payment of such Securities
on the redemption date, in which event the Securities shall remain convertible until paid (together with accrued interest).
Failure to give notice
of redemption, or any defect in such notice to the Holder of any Security of a Series designated for redemption, in whole or in
part, shall not affect the sufficiency of any notice of redemption with respect to the Holder of any other Security of such Series.
Section 3.5
Deposit
of Redemption Price
.
On or before 10:00 a.m.,
New York City time, on the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption
price of and accrued interest, if any, on all Securities to be redeemed on that date.
Section 3.6
Securities
Redeemed in Part
.
Upon surrender of a Certificated
Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Certificated Security of the same Series
and the same maturity equal in principal amount to the unredeemed portion of the Security surrendered and concurrently cancel the
surrendered Certificated Security.
ARTICLE IV
COVENANTS
Section 4.1
Payment
of Principal and Interest
.
The Company covenants and
agrees for the benefit of the Holders of each Series of Securities that it will duly and punctually pay the principal of and interest,
if any, on the Securities of that Series in accordance with the terms of such Securities and this Indenture. On or before 10:00
a.m., New York City time, on the applicable payment date, the Company shall deposit with the Paying Agent money sufficient to pay
the principal of and interest, if any, on the Securities of each Series in accordance with the terms of such Securities and this
Indenture. Principal and interest shall be considered paid on the date due if the Paying Agent holds in accordance with this Indenture
on that date money sufficient to pay all principal and interest then due and the Paying Agent is not prohibited from paying such
money to the Holders on such date pursuant to the terms of this Indenture.
Section 4.2
Reports
by Company
.
(a) As
long as any Securities are outstanding, the Company shall file with the Trustee, and transmit to the Holders, such information,
documents and other reports, and such summaries thereof, as may be required pursuant to TIA § 314(a). All reports, information
and documents referred to in this Section 4.2 will be deemed to be filed with the Trustee and transmitted to the Holders at the
time such reports, information or documents are publicly filed with the SEC via the SEC’s EDGAR filing system (or any successor
system), it being understood that the Trustee shall have no responsibility whatsoever to determine if such filings have been made.
(b) Delivery
of reports, information and documents to the Trustee under this Section 4.2 are for informational purposes only and shall not constitute
a representation or warranty as to the accuracy or completeness of the reports, information and documents. The Trustee’s
receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information
contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled
to rely exclusively on Officer’s Certificates).
Section 4.3
Compliance
Certificate
.
To the extent any Securities
of a Series are outstanding, the Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company, an Officer’s Certificate (which need not contain the statements provided for in Section 10.4) from its principal
executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company
and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to
determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating,
as to such Officer signing such certificate, that to his or her knowledge the Company is not in default in the performance or observance
of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all
such Defaults or Events of Default of which the Officer has knowledge). Such Officer’s Certificate need not include a reference
to any non-compliance that has been fully cured prior to the date as of which such certificate speaks.
Section 4.4
Stay,
Extension and Usury Laws
.
The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture or the Securities; and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
Section 4.5
Corporate
Existence
.
Subject to Article V, the
Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence
and rights (charter and statutory); provided, however, that the Company shall not be required to preserve any such right if the
Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company
and its Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to the Holders.
ARTICLE V
SUCCESSORS
Section 5.1
Consolidation,
Merger and Sale of Assets
.
The Company may not consolidate
with or merge with or into, sell, convey, transfer or dispose of all or substantially all of its assets to any other person (a
“
successor person
”), whether in one transaction or a series of related transactions, unless:
(a) (i)
the Company is the surviving corporation or (ii) the successor person (if other than the Company) (A) is a corporation, limited
liability corporation, partnership or trust organized under the laws of the United States; and (B) expressly assumes, by an indenture
supplemental hereto, the Company’s obligations on the Securities and under this Indenture; and
(b) immediately
after giving effect to the transaction, no Default or Event of Default shall have happened and be continuing.
The Company shall deliver
to the Trustee prior to the consummation of the proposed transaction an Officer’s Certificate to the foregoing effect and
an Opinion of Counsel stating that the proposed transaction and any supplemental indenture comply with Section 5.1 of this Indenture.
Notwithstanding the above,
any Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties to the Company. Neither
an Officer’s Certificate nor an Opinion of Counsel shall be required to be delivered in connection therewith.
Section 5.2
Successor
Person Substituted
.
Upon any consolidation
or merger, or any sale, conveyance, transfer, or lease of all or substantially all of the assets of the Company and its Subsidiaries
in accordance with Section 5.1, the successor person formed by such consolidation or into or with which the Company is merged or
to which such sale, conveyance, transfer, or lease is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture and the Securities with the same effect as if such successor person has been named
as the Company herein; and, thereafter, the predecessor Company, in the case of a sale, conveyance or transfer (other than a lease),
shall be released from all obligations and covenants under this Indenture and the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1
Events
of Default
.
“
Event of Default
,”
wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing
Board Resolution, supplemental indenture or Officer’s Certificate, it is provided that such Series shall not have the benefit
of said Event of Default:
(a) failure
to pay any interest on any Security of that Series when it becomes due and payable, and continuance of such default for a period
of 30 days (unless the entire amount of such payment is deposited by the Company with the Trustee or with a Paying Agent prior
to 10:00 a.m., New York City time, on the 30th day of such period);
(b) failure
to pay principal of any Security of that Series at its Maturity;
(c) default
in the performance or breach of any covenant of the Company in this Indenture (other than defaults pursuant to sub-clauses (a)
through (c) above or defaults related to a covenant that has been included in this Indenture solely for the benefit of a Series
of Securities other than that Series), which default continues uncured for a period of 90 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal
amount of the outstanding Securities of that Series a written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a “Notice of Default” hereunder;
(d) the
Company pursuant to or within the meaning of any Bankruptcy Law:
(i) commences
a voluntary case,
(ii) consents
to the entry of an order for relief against it in an involuntary case,
(iii) consents
to the appointment of a Custodian of it or for all or substantially all of its property, or
(iv) makes
a general assignment for the benefit of its creditors;
(e) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is
for relief against the Company in an involuntary case,
(ii) appoints
a Custodian of the Company or for all or substantially all of its property, or
(iii) orders
the liquidation of the Company, and the order or decree remains unstayed and in effect for 60 days; or
(f) any
other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental
indenture hereto or an Officer’s Certificate, in accordance with Section 2.2.18.
The term “
Bankruptcy
Law
” means title 11, U.S. Code or any similar federal or state law for the relief of debtors. The term “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A Default under one Series
of Securities issued under this Indenture will not necessarily be a default under another Series of Securities under this Indenture.
The Company will, so long
as any of the Securities are outstanding, deliver to the Trustee, within 30 days of becoming aware of any Default or Event of Default,
an Officer’s Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 6.2
Acceleration
of Maturity; Rescission and Annulment
.
If an Event of Default
with respect to Securities of any Series at the time outstanding occurs and is continuing (other than an Event of Default referred
to in Section 6.1(d) or (e)) then in every such case the Trustee or the Holders of not less than 25% in principal amount of the
outstanding Securities of that Series may declare the principal amount (or, if any Securities of that Series are Discount Securities,
such portion of the principal amount as may be specified in the terms of such Securities) of and accrued and unpaid interest, if
any, on all of the Securities of that Series to be due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) and accrued and unpaid
interest, if any, shall become immediately due and payable. If an Event of Default specified in Section 6.1(d) or (e) shall occur,
the principal amount (or specified amount) of and accrued and unpaid interest, if any, on all outstanding Securities shall
ipso
facto
become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
At any time after such
a declaration of acceleration with respect to any Series has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of
the outstanding Securities of that Series, by written notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if all Events of Default with respect to Securities of that Series, other than the non-payment of the principal
and interest, if any, of Securities of that Series which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 6.13.
No such rescission shall
affect any subsequent Default.
Section 6.3
Collection
of Indebtedness and Suits for Enforcement by Trustee
.
The Company covenants that
if
(a) default
is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for
a period of 30 days, or
(b) default
is made in the payment of principal of any Security at the Maturity thereof, or
(c) default
is made in the deposit of any sinking fund payment, if any, when and as due by the terms of a Security,
then
, the Company will, upon demand
of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities
for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue
principal and any overdue interest at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to
pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be
payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
If an Event of Default
with respect to any Securities of any Series occurs and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such Series by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.4
Trustee
May File Proofs of Claim
.
In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor
or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for
the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(a) to
file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file
such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(b) to
collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
Section 6.5
Trustee
May Enforce Claims Without Possession of Securities
.
All rights of action and
claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment
of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has been recovered.
Section 6.6
Application
of Money Collected
.
Any money or property collected
by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money or property on account of principal or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of
all amounts due to the Trustee under this Indenture; and
Second: To the payment
of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and interest, respectively; and
Third: To the Company.
Section 6.7
Limitation
on Suits
.
No Holder of any Security
of any Series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such
Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that
Series;
(b) the
Holders of not less than 25% in principal amount of the outstanding Securities of that Series have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such
Holder or Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by the Trustee in compliance with such request;
(d) the
Trustee has failed to institute any such proceeding for 60 days after its receipt of such notice, request and offer of indemnity;
and
(e) no
direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the outstanding Securities of that Series;
it being understood, intended and expressly
covenanted by the Holder of every Security with every other Holder and the Trustee that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice
the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders
or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all
such Holders of the applicable Series;
provided
,
however
, that the Trustee does not have an affirmative duty to ascertain
whether or not such actions or forbearances are unduly prejudicial to such Holders.
Section 6.8
Unconditional
Right of Holders to Receive Principal and Interest
.
Notwithstanding any other
provision in this Indenture, the Holder of any Security has the right, which is absolute and unconditional, to receive payment
of the principal of and interest, if any, on such Security on the Maturity of such Security, including the Stated Maturity expressed
in such Security (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such Holder.
Section 6.9
Restoration
of Rights and Remedies
.
If the Trustee or any Holder
has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively
to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 6.10
Rights
and Remedies Cumulative
.
Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.9, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, shall not, to the extent permitted by law, prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.11
Delay
or Omission Not Waiver
.
No delay or omission of
the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 6.12
Control
by Holders
.
The Holders of a majority
in principal amount of the outstanding Securities of any Series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such Series, provided that:
(a) such
direction shall not be in conflict with any rule of law or with this Indenture;
(b) the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction;
(c) subject
to the provisions of Section 7.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer of the Trustee, determine that the proceeding so directed would involve the Trustee in personal
liability; and
(d) prior
to taking any action as directed under this Section 6.12, the Trustee shall be entitled to indemnity satisfactory to it against
the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
Section 6.13
Waiver
of Past Defaults
.
The Holders of not less
than a majority in principal amount of the outstanding Securities of any Series may on behalf of the Holders of all the Securities
of such Series waive any past Default hereunder with respect to such Series and its consequences, except a Default in the payment
of the principal of or interest on any Security of such Series (
provided
,
however
, that the Holders of a majority
in principal amount of the outstanding Securities of any Series may rescind an acceleration and its consequences, including any
related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other Default.
Section 6.14
Undertaking
for Costs
.
All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees
and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 6.14 shall not apply to any suit instituted by the Company, to
any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than
10% in principal amount of the outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement
of the payment of the principal of or interest on any Security on or after the Maturity of such Security, including the Stated
Maturity expressed in such Security (or, in the case of redemption, on the redemption date).
ARTICLE VII
TRUSTEE
Section 7.1
Duties
of Trustee
.
(a) If
an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs.
(b) Except
during the continuance of an Event of Default:
(i) The
Trustee need perform only those duties that are specifically set forth in this Indenture and no others.
(ii) In
the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon Officer’s Certificates or Opinions of Counsel furnished to the Trustee and conforming
to the requirements of this Indenture; however, in the case of any such Officer’s Certificates or Opinions of Counsel which
by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such Officer’s
Certificates and Opinions of Counsel to determine whether or not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The
Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct,
except that:
(i) This
sub-clause (c) does not limit the effect of sub-clause (b) of this Section 7.1.
(ii) The
Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(iii) The
Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Securities
of any Series in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding
Securities of such Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such Series
in accordance with Section 6.12.
(d) Every
provision of this Indenture that in any way relates to the Trustee is subject to sub-clauses (a), (b) and (c) of this Section 7.1.
(e) The
Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in performing such duty or exercising such right or power.
(f) The
Trustee shall not be liable for interest on any money received by it. Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No
provision of this Indenture shall require the Trustee to risk its own funds or otherwise incur any financial liability in the performance
of any of its duties, or in the exercise of any of its rights or powers, if adequate indemnity against such risk is not assured
to the Trustee in its satisfaction.
(h) The
Paying Agent, the Registrar and any authenticating agent shall be entitled to the protections and immunities as are set forth in
sub-clauses (e), (f) and (g) of this Section 7.1 and in Section 7.2, each with respect to the Trustee.
Section 7.2
Rights
of Trustee
.
(a) The
Trustee may conclusively rely on and shall be protected in acting or refraining from acting upon any document (whether in its original
or facsimile form) believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before
the Trustee acts or refrains from acting, it shall be entitled to receive an Officer’s Certificate or an Opinion of Counsel
or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in conclusive reliance on such
Officer’s Certificate or Opinion of Counsel.
(c) The
Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
No Depositary shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depositary.
(d) The
Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within
its rights or powers, provided that the Trustee’s conduct does not constitute willful misconduct or negligence.
(e) The
Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(f)
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture
at the request or direction of any of the Holders of Securities unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction.
(g) The
Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(h) The
Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a default is received by a Responsible Officer of
the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities generally or the Securities
of a particular Series and this Indenture.
(i)
In no event shall the Trustee be liable to any person for special, punitive, indirect, consequential or incidental loss
or damage of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the
likelihood of such loss or damage.
(j)
The permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an
obligation or duty to do so.
(k) The
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other
Person employed to act hereunder.
(l)
The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties
hereunder.
(m) The
Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized
at such time to take specified actions pursuant to this Indenture.
Section 7.3
Individual
Rights of Trustee
.
The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of
the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.4
Trustee’s
Disclaimer
.
The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of
the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication.
Section 7.5
Notice
of Defaults
.
If a Default or Event of
Default occurs and is continuing with respect to the Securities of any Series and if it is actually known to a Responsible Officer
of the Trustee, the Trustee shall mail to each Securityholder of the Securities of that Series notice of a Default or Event of
Default within 90 days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or
Event of Default. Except in the case of a Default or Event of Default in payment of principal of or interest on any Security of
any Series, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in
the interests of Securityholders of that Series.
Section 7.6
Reports
by Trustee to Holders
.
Within 60 days after each
anniversary of the date of this Indenture, the Trustee shall transmit by mail to all Securityholders, as their names and addresses
appear on the register kept by the Registrar, a brief report dated as of such reporting date, in accordance with, and to the extent
required under, TIA § 313.
A copy of each report at
the time of its mailing to Securityholders of any Series shall be filed with the SEC and each national securities exchange on which
the Securities of that Series are listed. The Company shall promptly notify the Trustee in writing when Securities of any Series
are listed on any national securities exchange or of any delisting thereof.
Section 7.7
Compensation
and Indemnity
.
The Company shall pay to
the Trustee from time to time compensation for its services as the Company and the Trustee shall from time to time agree upon in
writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable out of pocket expenses incurred by it. Such expenses shall
include the reasonable compensation and expenses of the Trustee’s agents and counsel.
The Company shall indemnify
each of the Trustee and any predecessor Trustee against any cost, expense, claim (whether asserted by the Company, a Holder or
any other person) or liability (including the cost of defending itself), including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee), incurred by it except as set forth in the next paragraph in the performance of
its duties under this Indenture as Trustee or Agent. The Trustee shall notify the Company promptly of any claim for which it may
seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder, unless
and to the extent that the Company is materially prejudiced thereby. The Company shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have one separate counsel and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent, which consent will not be unreasonably withheld. This indemnification
shall apply to officers, directors, employees, shareholders and agents of the Trustee.
The Company need not reimburse
any expense or indemnify against any loss or liability incurred by the Trustee or by any officer, director, employee or shareholder
of the Trustee through willful misconduct or negligence.
To secure the Company’s
payment obligations in this Section 7.7, the Trustee shall have a lien prior to the Securities of any Series on all money or property
held or collected by the Trustee, except that held in trust to pay principal of and interest on particular Securities of that Series.
When the Trustee incurs
expenses or renders services after an Event of Default specified in Section 6.1(f) or (g) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this
Section 7.7 shall survive the termination of this Indenture or the resignation or removal of the Trustee.
Section 7.8
Replacement
of Trustee
.
A resignation or removal
of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance
of appointment as provided in this Section 7.8.
The Trustee may resign
at any time with respect to the Securities of one or more Series by so notifying the Company at least 30 days prior to the date
of the proposed resignation. The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee
with respect to that Series by so notifying the Trustee and the Company in writing. The Company may remove the Trustee with respect
to Securities of one or more Series if:
(a) the
Trustee fails to comply with Section 7.10;
(b) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a
Custodian or public officer takes charge of the Trustee or its property; or
(d) the
Trustee becomes incapable of acting.
If the Trustee resigns
or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee
with respect to the Securities of any one or more Series does not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders of at least a majority in principal amount of the Securities of
the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense
of the Company.
A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor Trustee subject to the lien provided for in Section
7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee with respect to each Series of Securities for which it is acting as Trustee under this Indenture.
A successor Trustee shall mail a notice of its succession to each Securityholder of each such Series. Notwithstanding replacement
of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 hereof shall continue for the benefit
of the retiring Trustee with respect to expenses and liabilities incurred by it for actions taken or omitted to be taken in accordance
with its rights, powers and duties under this Indenture prior to such replacement.
Section 7.9
Successor
Trustee by Merger, Etc
.
If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee, if such successor corporation is eligible and qualified
under Section 7.10.
Section 7.10
Eligibility;
Disqualification
.
This Indenture shall always
have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee shall always have a combined
capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall
comply with TIA § 310(b).
Section 7.11
Preferential
Collection of Claims Against Company
.
The Trustee is subject
to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 8.1
Satisfaction
and Discharge of Indenture
.
This Indenture shall upon
Company Order cease to be of further effect (except as hereinafter provided in this Section 8.1), and the Trustee, at the expense
of the Company, shall execute instruments acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all
Securities theretofore authenticated and delivered (other than Securities that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.9) have been delivered to the Trustee for cancellation; or
(ii) all
such Securities not theretofore delivered to the Trustee for cancellation:
(1) have
become due and payable, or
(2) will
become due and payable at their Stated Maturity within one year, or
(3) have
been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company;
and the Company, in the case
of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount
of money or U.S. Government Obligations sufficient for the purpose of paying and discharging the entire indebtedness on such Securities
not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case
of Securities which have become due and payable on or prior to the date of such deposit) or to the Stated Maturity or redemption
date, as the case may be;
(b) the
Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(c) the
Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction
and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.7, and, if money shall have been
deposited with the Trustee pursuant to sub-clause (a) of this Section 8.1, the provisions of Sections 2.5, 2.8, 2.9, 8.2 and 8.5
shall survive.
Section 8.2
Application
of Trust Funds; Indemnification
.
(a) Subject
to the provisions of Section 8.5, all money or U.S. Government Obligations deposited with the Trustee pursuant to Section 8.1,
all money and U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3
or 8.4 and all money received by the Trustee in respect of U.S. Government Obligations or Foreign Government Obligations deposited
with the Trustee pursuant to Section 8.3 or 8.4, shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the persons entitled thereto, of the principal and interest for whose payment
such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments
as contemplated by Sections 8.3 or 8.4.
(b) The
Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government
Obligations or Foreign Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest and principal received
in respect of such obligations other than any payable by or on behalf of Holders.
(c) The
Trustee shall deliver or pay to the Company from time to time upon Company Order any U.S. Government Obligations or Foreign Government
Obligations or money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of independent
certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, are then
in excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government
Obligations or Foreign Government Obligations or money were deposited or received. This provision shall not authorize the sale
by the Trustee of any U.S. Government Obligations or Foreign Government Obligations held under this Indenture.
Section 8.3
Legal
Defeasance of Securities of any Series
.
Unless this Section 8.3
is otherwise specified, pursuant to Section 2.2, to be inapplicable to Securities of any Series, the Company shall be deemed to
have paid and discharged the entire indebtedness on all the outstanding Securities of any Series on the 91st day after the date
of the deposit referred to in sub-clause (d) hereof, and the provisions of this Indenture, as it relates to such outstanding Securities
of such Series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall, upon receipt of a Company
Order, execute instruments acknowledging the same), except as to:
(a) the
rights of Holders of Securities of such Series to receive, from the trust funds described in sub-clause (d) hereof, (i) payment
of the principal of and each installment of principal of and interest on the outstanding Securities of such Series on the Maturity
of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable
to the Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture
and the Securities of such Series;
(b) the
provisions of Sections 2.5, 2.8, 2.9, 8.2, 8.3 and 8.5; and
(c) the
rights, powers, trust and immunities of the Trustee hereunder and the Company’s obligations in connection therewith;
provided that, the following conditions shall
have been satisfied:
(d) the
Company shall have deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust
funds in trust for the purpose of making the following payments, specifically pledged as security for and dedicated solely to the
benefit of the Holders of such Securities: (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars
and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than
a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect
thereof in accordance with their terms (and without reinvestment), will provide, not later than one day before the due date of
any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent public accountants
or investment bank expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment
of principal of and interest, if any, on and any mandatory sinking fund payments in respect of all the Securities of such Series
on the dates such installments of interest or principal and such sinking fund payments are due;
(e) such
deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;
(f)
no Default or Event of Default with respect to the Securities of such Series shall have
occurred and be continuing on the date of such deposit or during the period ending on the 91st day after such date;
(g) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel to the effect that (i) the
Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution
of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of the Securities of such Series will not recognize income,
gain or loss for U.S. federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to
U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred;
(h) the
Company shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company
with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and
(i)
the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of
Counsel, each stating that all conditions precedent provided for relating to the defeasance contemplated by this Section 8.3
have been complied with.
Section 8.4
Covenant
Defeasance
.
Unless this Section 8.4
is otherwise specified pursuant to Section 2.2 to be inapplicable to Securities of any Series, the Company may omit to comply with
respect to the Securities of any Series with any term, provision or condition set forth under Sections 4.2 and 4.3, 4.4 and 5.1as
well as any additional covenants specified in a supplemental indenture for such Series of Securities or a Board Resolution or an
Officer’s Certificate delivered pursuant to Section 2.2 (and the failure to comply with any such covenants shall not constitute
a Default or Event of Default with respect to such Series under Section 6.1) and the occurrence of any event specified in a supplemental
indenture for such Series of Securities or a Board Resolution or an Officer’s Certificate delivered pursuant to Section 2.2.18
and designated as an Event of Default shall not constitute a Default or Event of Default hereunder, with respect to the Securities
of such Series, provided that the following conditions shall have been satisfied:
(a) With
reference to this Section 8.4, the Company has deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c))
with the Trustee as trust funds in trust for the purpose of making the following payments specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such Securities: (i) in the case of Securities of such Series denominated
in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in
a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of
interest and principal in respect thereof in accordance with their terms (and without reinvestment), will provide, not later than
one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm
of independent certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee,
to pay and discharge each installment of principal of and interest, if any, on and any mandatory sinking fund payments in respect
of the Securities of such Series on the dates such installments of interest or principal and such sinking fund payments are due;
(b) Such
deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;
(c) No
Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of
such deposit;
(d) The
Company shall have delivered to the Trustee an Opinion of Counsel to the effect that Holders of the Securities of such Series will
not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and covenant defeasance 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 such deposit and covenant defeasance had not occurred;
(e) The
Company shall have delivered to the Trustee an Officer’s Certificate stating the deposit was not made by the Company with
the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and
(f)
The Company shall have delivered to the Trustee an Officer’s Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the covenant defeasance
contemplated by this Section 8.4 have been complied with.
Section 8.5
Repayment
to Company
.
Subject to applicable abandoned
property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years after such principal or interest has become due and payable. After that,
Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned
property law designates another person.
Section 8.6
Reinstatement
.
If the Trustee or the Paying
Agent is unable to apply any money deposited with respect to Securities of any Series in accordance with Section 8.1 by reason
of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under this Indenture with respect to the Securities of such
Series and under the Securities of such Series shall be revived and reinstated as though no deposit had occurred pursuant to Section
8.1 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 8.1; provided,
however, that if the Company has made any payment of principal of or interest on any Securities because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent after payment in full to the Holders.
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.1
Without
Consent of Holders
.
The Company and the Trustee
may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Securityholder:
(a) to
add guarantees with respect to any Series of Securities or secure any Series of Securities;
(b) to
surrender any of the Company’s rights or powers under this Indenture;
(c) to
add covenants or Events of Default for the benefit of the Securityholders of any Series of Securities;
(d) to
comply with the applicable rules or procedures of the Depositary;
(e) to
cure any ambiguity, defect or inconsistency, as described in the Officer’s Certificate delivered pursuant to Section 10.4;
(f)
to comply with Article V;
(g) to
provide for uncertificated Securities in addition to or in place of certificated Securities;
(h) to
make any change that does not materially adversely affect the rights of any Securityholder;
(i)
to provide for the issuance of and establish the form and terms and conditions of Securities of any
Series as permitted by this Indenture;
(j)
to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to
the Securities of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more than one Trustee;
(k) to
comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;
(l) to
comply with the rules or regulations of any securities exchange or automated quotation system on which any of the Securities may
be listed or traded; and
(m) to
change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall not be effective
with respect to any outstanding Securities of any Series created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision.
Section 9.2
With
Consent of Holders
.
The Company and the Trustee
may enter into a supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the
outstanding Securities of each Series affected by such supplemental indenture (including consents obtained in connection with a
tender offer or exchange offer for the Securities of such Series), for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Securityholders of each such Series. Except as provided in Section 6.13, the Holders of at least a majority in principal
amount of the outstanding Securities of any Series by written notice to the Trustee (including consents obtained in connection
with a tender offer or exchange offer for the Securities of such Series) may waive compliance by the Company with any provision
of this Indenture or the Securities with respect to such Series.
It shall not be necessary
for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental
indenture or waiver, but it shall be sufficient if such consent approves the substance thereof. After a supplemental indenture
or waiver under this Section 9.2 becomes effective, the Company shall mail to the Holders of Securities affected thereby, a notice
briefly describing the supplemental indenture or waiver. Any failure by the Company to mail or publish such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.
Section 9.3
Limitations
.
Without the consent of
each Securityholder affected, an amendment or waiver may not:
(a) reduce
the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver;
(b) reduce
the rate of or extend the time for payment of interest (including default interest) on any Security or that Series;
(c) reduce
the principal of, or change the Stated Maturity of, any Security or reduce the amount of, or postpone the date fixed for, the payment
of any sinking fund or analogous obligation;
(d) reduce
the principal amount of Discount Securities payable upon acceleration of the maturity thereof;
(e) waive
a Default or Event of Default in the payment of the principal of or interest, if any, on any Security (except a rescission of acceleration
of the Securities of any Series by the Holders of at least a majority in principal amount of the then outstanding Securities of
such Series and a waiver of the payment default that resulted from such acceleration);
(f)
make the principal of or interest, if any, on any Security payable in any currency other than
that stated in the Security;
(g) make
any change in Sections 6.8 or 6.13 or this Section 9.3; or
(h) waive
a redemption payment with respect to any Security.
Section 9.4
Compliance
with Trust Indenture Act
.
Every amendment to this
Indenture or the Securities of one or more Series shall be set forth in a supplemental indenture hereto that complies with the
TIA as then in effect.
Section 9.5
Revocation
and Effect of Consents
.
Until an amendment is set
forth in a supplemental indenture or a waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent
by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting
Holder’s Security, even if notation of the consent is not made on any Security.
Any amendment or waiver
once effective shall bind every Securityholder of each Series affected by such amendment or waiver unless it is of the type described
in any of sub-clauses (a) through (h) of Section 9.3. In that case, the amendment or waiver shall bind each Holder of a Security
who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the
consenting Holder’s Security.
The Company may, but shall
not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other
action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding
the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and
only those persons, shall be entitled to give such consent or to revoke any consent previously given or take any such action, whether
or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120
days after such record date.
Section 9.6
Notation
on or Exchange of Securities
.
The Company or the Trustee
may place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated. The Company
in exchange for Securities of that Series may issue and the Trustee shall authenticate upon request new Securities of that Series
that reflect the amendment or waiver.
Section 9.7
Trustee
Protected
.
In executing, or accepting
the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall receive, and (subject to Section 7.1) shall be fully protected in conclusively relying
upon, an Officer’s Certificate or an Opinion of Counsel or both complying with Section 10.4 and stating that the supplemental
indenture is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms,
subject to customary exceptions. The Trustee shall sign all supplemental indentures upon delivery of such an Officer’s Certificate
or Opinion of Counsel or both, except that the Trustee need not sign any supplemental indenture that, in its sole discretion, adversely
affects its rights.
ARTICLE X
MISCELLANEOUS
Section 10.1
Trust
Indenture Act Controls
.
If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by
the TIA, such required or deemed provision shall control.
Section 10.2
Notices
.
Any request, demand, notice
or communication by the Company or the Trustee to the other, or by a Holder to the Company or the Trustee, is duly given if in
writing and delivered in person or mailed by first-class mail:
if to the Company:
Galmed Pharmaceuticals Ltd.
if to the Trustee:
Attention:
The Company or the Trustee
by notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication
to a Securityholder shall be mailed by first-class mail to his address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Securityholder of any Series or any defect in it shall not affect its sufficiency with respect
to other Securityholders of that or any other Series.
If a notice or communication
is mailed or published in the manner provided above, within the time prescribed, it is duly given, whether or not the Securityholder
receives it.
If the Company mails a
notice or communication to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time.
Notwithstanding any other
provision of this Indenture or any Security, where this Indenture or any Security provides for notice of any event (including any
notice of redemption) to a Holder of a Global Security (whether by mail or otherwise), such notice shall be sufficiently given
to the Depositary for such Security (or its designee) pursuant to the customary procedures of such Depositary.
Section 10.3
Communication
by Holders with Other Holders
.
Securityholders of any
Series may communicate pursuant to TIA § 312(b) with other Securityholders of that Series or any other Series with respect
to their rights under this Indenture or the Securities of that Series or all Series. The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA § 312(c).
Section 10.4
Certificate
and Opinion as to Conditions Precedent
.
Upon any request or application
by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an
Officer’s Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an
Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
Section 10.5
Statements
Required in Certificate or Opinion
.
Each certificate or opinion
with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant
to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall include:
(a) a
statement that the person making such certificate or opinion has read such covenant or condition;
(b) a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a
statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a
statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
Section 10.6
Rules
by Trustee and Agents
.
The Trustee may make reasonable
rules for action by or a meeting of Securityholders of one or more Series. Any Agent may make reasonable rules and set reasonable
requirements for its functions.
Section 10.7
Legal
Holidays
.
Unless otherwise provided
by Board Resolution, Officer’s Certificate or supplemental indenture hereto for a particular Series, a “
Legal Holiday
”
is any day that is not a Business Day. If a payment date is a Legal Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 10.8
No
Recourse Against Others
.
A director, officer, employee
or stockholder (past or present), as such, of the Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration
for the issue of the Securities.
Section 10.9
Counterparts
.
This Indenture may be executed
in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the same agreement. The exchange of copies of this Indenture
and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as
to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted
by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 10.10
Governing
Law; Jury Trial Waiver
.
THIS INDENTURE AND THE
SECURITIES, INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES, SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW).
EACH OF THE COMPANY AND
THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY.
Section 10.11
No
Adverse Interpretation of Other Agreements
.
This Indenture may not
be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 10.12
Successors
.
All agreements of the Company
in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor.
Section 10.13
Severability
.
In case any provision in
this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 10.14
Table
of Contents, Headings, Etc
.
The Table of Contents,
Cross Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 10.15
Securities
in a Foreign Currency
.
Unless otherwise specified
in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate delivered pursuant to Section 2.2 of this
Indenture with respect to a particular Series of Securities, whenever for purposes of this Indenture any action may be taken by
the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular
action at the time outstanding and, at such time, there are outstanding Securities of any Series which are denominated in more
than one currency, then the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose
of taking such action shall be determined by converting any such other currency into a currency that is designated upon issuance
of any particular Series of Securities. Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an
Officer’s Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities,
such conversion shall be at the spot rate for the purchase of the designated currency as published in The Financial Times in the
“Currency Rates” section (or, if The Financial Times is no longer published, or if such information is no longer available
in The Financial Times, such source as may be selected in good faith by the Company) on any date of determination. The provisions
of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series denominated in
currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.
All decisions and determinations
provided for in the preceding paragraph shall, in the absence of manifest error, to the extent permitted by law, be conclusive
for all purposes and irrevocably binding upon the Trustee and all Holders.
Section 10.16
Judgment
Currency
.
The Company agrees, to
the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any
court it is necessary to convert the sum due in respect of the principal of or interest or other amount on the Securities of any
Series (the “
Required Currency
”) into a currency in which a judgment will be rendered (the “
Judgment
Currency
”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee
could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable
judgment is entered, unless such day is not a Business Day, then the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency
on the Business Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture
to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to
the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action
for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the
full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for
any other sum due under this Indenture.
Section 10.17
Force
Majeure
.
In no event shall the Trustee
be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by,
directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war
or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions
of utilities, communications or computer (software and hardware) services, it being understood that the Trustee shall use reasonable
best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable
under the circumstances.
Section 10.18
U.S.A.
Patriot Act
.
The parties hereto acknowledge
that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help
fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each
person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree
that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements
of the U.S.A. Patriot Act.
ARTICLE XI
SINKING FUNDS
Section 11.1
Applicability
of Article
.
The provisions of this
Article shall be applicable to any sinking fund for the retirement of the Securities of a Series if so provided by the terms of
such Securities pursuant to Section 2.2 and except as otherwise permitted or required by any form of Security of such Series issued
pursuant to this Indenture.
The minimum amount of any
sinking fund payment provided for by the terms of the Securities of any Series is herein referred to as a “
mandatory sinking
fund payment
” and any other amount provided for by the terms of Securities of such Series is herein referred to as an
“
optional sinking fund payment
.” If provided for by the terms of Securities of any Series, the cash amount of
any sinking fund payment may be subject to reduction as provided in Section 11.2. Each sinking fund payment shall be applied to
the redemption of Securities of any Series as provided for by the terms of the Securities of such Series.
Section 11.2
Satisfaction
of Sinking Fund Payments with Securities
.
The Company may, in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of any Series to be made pursuant to the terms of
such Securities (a) deliver outstanding Securities of such Series to which such sinking fund payment is applicable (other than
any of such Securities previously called for mandatory sinking fund redemption) and (b) apply as credit Securities of such Series
to which such sinking fund payment is applicable and which have been repurchased by the Company or redeemed either at the election
of the Company pursuant to the terms of the Securities of such Series (except pursuant to any mandatory sinking fund) or through
the application of permitted optional sinking fund payments or other optional redemptions pursuant to the terms of such Securities,
provided that such Securities have not been previously so credited. Such Securities shall be received by the Trustee, together
with an Officer’s Certificate with respect thereto, not later than 15 days prior to the date on which the Trustee begins
the process of selecting Securities for redemption, and shall be credited for such purpose by the Trustee at the price specified
in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities in lieu of cash payments pursuant to this Section 11.2, the
principal amount of Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be less than
$100,000, the Trustee need not call Securities of such Series for redemption, except upon receipt of a Company Order that such
action be taken, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking
fund payment,
provided
,
however
, that the Trustee or such Paying Agent shall from time to time upon receipt of a
Company Order pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery
by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to
the cash payment required to be released to the Company.
Section 11.3
Redemption
of Securities for Sinking Fund
.
Not less than 45 days (unless
otherwise indicated in the Board Resolution, supplemental indenture hereto or Officer’s Certificate in respect of a particular
Series of Securities) prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee
an Officer’s Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that Series pursuant
to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof,
if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 11.2, and the optional
amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the Company shall thereupon be obligated
to pay the amount therein specified. Not less than 30 days (unless otherwise indicated in the Board Resolution, Officer’s
Certificate or supplemental indenture in respect of a particular Series of Securities) before each such sinking fund payment date
the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.2
and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided
in Section 3.3. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in
the manner stated in Sections 3.4, 3.5 and 3.6.
[
Signature page follows
]
IN WITNESS WHEREOF, the
parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
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GALMED PHARMACEUTICALS LTD., as Issuer
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By:
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Name:
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Its:
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, as Trustee
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By:
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Name:
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Its:
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Exhibit 4.5
GALMED PHARMACEUTICALS LTD.
INDENTURE
Dated as of , 20
[ ]
Trustee
Subordinated Debt Securities
Table
of Contents
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Page
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ARTICLE I
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DEFINITIONS AND INCORPORATION BY REFERENCE
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1
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Section 1.1
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Definitions
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1
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Section 1.2
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Other Definitions
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4
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Section 1.3
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Incorporation by Reference of Trust Indenture Act
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5
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Section 1.4
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Rules of Construction
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5
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ARTICLE II
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THE SECURITIES
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6
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Section 2.1
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Issuable in Series
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6
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Section 2.2
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Establishment of Terms of Series of Securities
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6
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Section 2.3
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Denominations; Provision for Payment
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8
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Section 2.4
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Execution and Authentication
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9
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Section 2.5
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Registrar and Paying Agent
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9
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Section 2.6
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Paying Agent to Hold Money in Trust
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10
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Section 2.7
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Securityholder Lists
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10
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Section 2.8
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Transfer and Exchange
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11
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Section 2.9
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Mutilated, Destroyed, Lost and Stolen Securities
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11
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Section 2.10
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Outstanding Securities
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12
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Section 2.11
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Treasury Securities
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12
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Section 2.12
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Temporary Securities
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13
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Section 2.13
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Cancellation
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13
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Section 2.14
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Defaulted Interest
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13
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Section 2.15
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Global Securities
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13
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Section 2.16
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CUSIP Numbers
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15
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ARTICLE III
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REDEMPTION
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15
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Section 3.1
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Notice to Trustee
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15
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Section 3.2
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Selection of Securities to be Redeemed
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15
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Section 3.3
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Notice of Redemption
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15
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Section 3.4
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Effect of Notice of Redemption
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16
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Section 3.5
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Deposit of Redemption Price
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17
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Section 3.6
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Securities Redeemed in Part
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17
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ARTICLE IV
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COVENANTS
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17
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Section 4.1
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Payment of Principal and Interest
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17
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Section 4.2
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Reports by Company
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18
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Section 4.3
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Compliance Certificate
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18
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Section 4.4
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Stay, Extension and Usury Laws
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18
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Section 4.5
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Corporate Existence
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19
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ARTICLE V
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SUCCESSORS
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19
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Section 5.1
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Consolidation, Merger and Sale of Assets
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19
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Table
of Contents
(continued)
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Page
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Section 5.2
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Successor Person Substituted
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19
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ARTICLE VI
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DEFAULTS AND REMEDIES
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20
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Section 6.1
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Events of Default
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20
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Section 6.2
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Acceleration of Maturity; Rescission and Annulment
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21
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Section 6.3
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Collection of Indebtedness and Suits for Enforcement by Trustee
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22
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Section 6.4
|
Trustee May File Proofs of Claim
|
22
|
|
Section 6.5
|
Trustee May Enforce Claims Without Possession of Securities
|
23
|
|
Section 6.6
|
Application of Money Collected
|
23
|
|
Section 6.7
|
Limitation on Suits
|
24
|
|
Section 6.8
|
Unconditional Right of Holders to Receive Principal and Interest
|
24
|
|
Section 6.9
|
Restoration of Rights and Remedies
|
24
|
|
Section 6.10
|
Rights and Remedies Cumulative
|
25
|
|
Section 6.11
|
Delay or Omission Not Waiver
|
25
|
|
Section 6.12
|
Control by Holders
|
25
|
|
Section 6.13
|
Waiver of Past Defaults
|
26
|
|
Section 6.14
|
Undertaking for Costs
|
26
|
|
|
|
|
|
ARTICLE VII
|
TRUSTEE
|
26
|
|
|
|
|
|
Section 7.1
|
Duties of Trustee
|
26
|
|
Section 7.2
|
Rights of Trustee
|
27
|
|
Section 7.3
|
Individual Rights of Trustee
|
29
|
|
Section 7.4
|
Trustee’s Disclaimer
|
29
|
|
Section 7.5
|
Notice of Defaults
|
29
|
|
Section 7.6
|
Reports by Trustee to Holders
|
29
|
|
Section 7.7
|
Compensation and Indemnity
|
30
|
|
Section 7.8
|
Replacement of Trustee
|
30
|
|
Section 7.9
|
Successor Trustee by Merger, Etc
|
31
|
|
Section 7.10
|
Eligibility; Disqualification
|
31
|
|
Section 7.11
|
Preferential Collection of Claims Against Company
|
32
|
|
|
|
|
|
ARTICLE VIII
|
SATISFACTION AND DISCHARGE; DEFEASANCE
|
32
|
|
|
|
|
|
Section 8.1
|
Satisfaction and Discharge of Indenture
|
32
|
|
Section 8.2
|
Application of Trust Funds; Indemnification
|
33
|
|
Section 8.3
|
Legal Defeasance of Securities of any Series
|
33
|
|
Section 8.4
|
Covenant Defeasance
|
35
|
|
Section 8.5
|
Repayment to Company
|
36
|
|
Section 8.6
|
Reinstatement
|
36
|
Table
of Contents
(continued)
|
|
|
Page
|
|
|
|
|
|
ARTICLE IX
|
AMENDMENTS AND WAIVERS
|
36
|
|
|
|
|
|
Section 9.1
|
Without Consent of Holders
|
36
|
|
Section 9.2
|
With Consent of Holders
|
37
|
|
Section 9.3
|
Limitations
|
38
|
|
Section 9.4
|
Compliance with Trust Indenture Act
|
38
|
|
Section 9.5
|
Revocation and Effect of Consents
|
38
|
|
Section 9.6
|
Notation on or Exchange of Securities
|
39
|
|
Section 9.7
|
Trustee Protected
|
39
|
|
|
|
|
|
ARTICLE X
|
MISCELLANEOUS
|
39
|
|
|
|
|
|
Section 10.1
|
Trust Indenture Act Controls
|
39
|
|
Section 10.2
|
Notices
|
40
|
|
Section 10.3
|
Communication by Holders with Other Holders
|
40
|
|
Section 10.4
|
Certificate and Opinion as to Conditions Precedent
|
41
|
|
Section 10.5
|
Statements Required in Certificate or Opinion
|
41
|
|
Section 10.6
|
Rules by Trustee and Agents
|
41
|
|
Section 10.7
|
Legal Holidays
|
41
|
|
Section 10.8
|
No Recourse Against Others
|
42
|
|
Section 10.9
|
Counterparts
|
42
|
|
Section 10.10
|
Governing Law; Jury Trial Waiver
|
42
|
|
Section 10.11
|
No Adverse Interpretation of Other Agreements
|
42
|
|
Section 10.12
|
Successors
|
42
|
|
Section 10.13
|
Severability
|
43
|
|
Section 10.14
|
Table of Contents, Headings, Etc
|
43
|
|
Section 10.15
|
Securities in a Foreign Currency
|
43
|
|
Section 10.16
|
Judgment Currency
|
43
|
|
Section 10.17
|
Force Majeure
|
44
|
|
Section 10.18
|
U.S.A. Patriot Act
|
44
|
|
|
|
|
|
ARTICLE XI
|
SINKING FUNDS
|
44
|
|
|
|
|
|
Section 11.1
|
Applicability of Article
|
44
|
|
Section 11.2
|
Satisfaction of Sinking Fund Payments with Securities
|
45
|
|
Section 11.3
|
Redemption of Securities for Sinking Fund
|
45
|
|
|
|
|
|
ARTICLE XII
|
SUBORDINATION OF SECURITIES
|
46
|
|
|
|
|
|
Section 12.1
|
Subordination of Terms
|
46
|
GALMED PHARMACEUTICALS LTD.
Reconciliation and tie between Trust Indenture
Act of 1939 and
Indenture, dated as of , 20
|
§ 310(a)(1)
|
7.10
|
|
(a)(2)
|
7.10
|
|
(a)(3)
|
Not Applicable
|
|
(a)(4)
|
Not Applicable
|
|
(a)(5)
|
7.10
|
|
(b)
|
7.10
|
|
§ 311(a)
|
7.11
|
|
(b)
|
7.11
|
|
§ 312(a)
|
2.7
|
|
(b)
|
10.3
|
|
(c)
|
10.3
|
|
§ 313(a)
|
7.6
|
|
(b)(1)
|
7.6
|
|
(b)(2)
|
7.6
|
|
(c)(1)
|
7.6
|
|
(d)
|
7.6
|
|
§ 314(a)
|
4.2, 10.5
|
|
(b)
|
Not Applicable
|
|
(c)(1)
|
10.4
|
|
(c)(2)
|
10.4
|
|
(c)(3)
|
Not Applicable
|
|
(d)
|
Not Applicable
|
|
(e)
|
10.5
|
|
(f)
|
Not Applicable
|
|
§ 315(a)
|
7.1
|
|
(b)
|
7.5
|
|
(c)
|
7.1
|
|
(d)
|
7.1
|
|
(e)
|
6.14
|
|
§ 316(a)
|
2.11
|
|
(a)(1)(A)
|
6.12
|
|
(a)(1)(B)
|
6.13
|
|
(b)
|
6.8
|
|
§ 317(a)(1)
|
6.3
|
|
(a)(2)
|
6.4
|
|
(b)
|
2.6
|
|
§ 318(a)
|
10.1
|
Note: This reconciliation and tie shall not,
for any purpose, be deemed to be part of the Indenture.
Indenture dated as of , 20
, between GALMED PHARMACEUTICALS LTD., a company organized under the laws of the State of Israel (“Company”), and ,
as trustee (“
Trustee
”).
Each party agrees as follows for the benefit
of the other party and for the equal and ratable benefit of the Holders of the Securities issued under this Indenture.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1
Definitions
.
“Affiliate”
of any specified person means any other person directly or indirectly controlling or controlled by or under common control with
such specified person. For the purposes of this definition, “control” (including, with correlative meanings, the terms
“controlled by” and “under common control with”), as used with respect to any person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through
the ownership of voting securities or by agreement or otherwise.
“Agent”
means any Registrar or Paying Agent.
“Board of Directors”
means the board of directors of the Company or any duly authorized committee thereof.
“Board Resolution”
means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been adopted by the Board
of Directors or pursuant to authorization by the Board of Directors and to be in full force and effect on the date of the certification
and delivered to the Trustee.
“Business Day”
means, for a particular Series, any day except a Saturday, Sunday or any day, including a legal holiday, on which banking institutions
are authorized or required by law, regulation or executive order to close in The City of New York (or in connection with any payment,
the place of payment).
“Capital Stock”
of any person means any and all shares, interests, participations, rights or other equivalents (however designated) of the equity
of such person.
“Certificated
Securities”
means definitive Securities in registered non-global certificated form.
“Company”
means the party named as such above until a successor, which duly assumes the obligations under this Indenture, replaces it and
thereafter means the successor.
“Company Order”
means a written order signed in the name of the Company by an Officer.
“Corporate Trust
Office”
means the office of the Trustee at which at any particular time its corporate trust business related to this
Indenture shall be principally administered, which office at the date hereof is located at , Attention: , or
such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the corporate trust
office of any successor Trustee at which this Indenture shall be administered (or such other address as a successor Trustee may
designate from time to time by notice to the Holders of the Company).
“Default”
means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Depositary”
means, with respect to the Securities of any Series issuable or issued in whole or in part in the form of one or more Global Securities,
the person designated as Depositary for such Series by the Company, which Depositary shall be a clearing agency registered under
the Exchange Act; and if at any time there is more than one such person,
“Depositary”
as used with respect to
the Securities of any Series shall mean the Depositary with respect to the Securities of such Series.
“Discount Security”
means any Security that provides for an amount less than the stated principal amount thereof to be due and payable upon declaration
of acceleration of the maturity thereof pursuant to Section 6.2.
“Dollars”
and
“$”
means the currency of The United States of America.
“Exchange Act”
means the Securities Exchange Act of 1934, as amended.
“Foreign Currency”
means any currency or currency unit issued by a government other than the government of The United States of America.
“Foreign Government
Obligations”
means, with respect to Securities of any Series that are denominated in a Foreign Currency, direct obligations
of, or obligations guaranteed by, the government that issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof.
“GAAP”
means accounting principles generally accepted in The United States of America set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect as of the date of determination.
“Global Security”
or
“Global Securities”
means a Security or Securities, as the case may be, in the form established pursuant
to Section 2.2 evidencing all or part of a Series of Securities, issued to the Depositary for such Series or its nominee, and registered
in the name of such Depositary or nominee.
“Holder”
or
“Securityholder”
means a person in whose name a Security is registered on the books of the Registrar.
“Indenture”
means this Indenture as amended or supplemented from time to time and shall include the form and terms of particular Series of
Securities established as contemplated hereunder.
“interest”
means, with respect to any Security, any interest on such Security, and with respect to any Discount Security which by its terms
bears interest only after Maturity, interest payable after Maturity.
“Maturity,”
when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
“Officer”
means the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Senior
Vice President or Vice President, the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the Company.
“Officer’s
Certificate”
means a certificate signed by any Officer (or any person designated in writing by an Officer of the Company
as authorized to execute and deliver Officer’s Certificates) and delivered to the Trustee.
“Opinion of Counsel”
means a written opinion of legal counsel. The counsel may be an employee of or counsel to the Company. Opinions of Counsel required
to be delivered under this Indenture may have qualifications customary for opinions of the type required.
“person”
means any individual, corporation, company, voluntary association, partnership, trust, joint venture, limited liability company,
unincorporated organization or government or any agency, instrumentality or political subdivision thereof.
“principal”
of a Security means the principal of the Security plus, when appropriate, the premium, if any, on the Security.
“Responsible Officer”
means any officer of the Trustee in its Corporate Trust Office having direct responsibility for administration of this Indenture
and also means, with respect to a particular corporate trust matter, any other officer to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with a particular subject and who shall have direct responsibility for the administration
of this Indenture.
“SEC”
means the Securities and Exchange Commission.
“Securities”
means the subordinated debentures, notes or other debt instruments of the Company of any Series authenticated and delivered under
this Indenture.
“Series”
or
“Series of Securities”
means each series of debentures, notes or other debt instruments of the Company created
pursuant to Sections 2.1 and 2.2 hereof.
“Stated Maturity”
when used with respect to any Security, means the date specified in such Security as the fixed date on which the principal of such
Security is due and payable.
“Subsidiary”
means, with respect to any person, any corporation, partnership, joint venture, limited liability company or other business entity
of which a majority of the outstanding shares of Capital Stock or other interests having the power to vote in the election of directors,
managers or trustees thereof is at the time directly or indirectly owned or controlled by such person or one or more of the other
Subsidiaries of such person, or a combination thereof.
“TIA”
means the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in effect on the date of this Indenture; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after such date, “TIA” means, to the extent required
by any such amendment, the Trust Indenture Act as so amended.
“Trustee”
means the person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have
become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include
each person who is then a Trustee hereunder, and if at any time there is more than one such person, “Trustee” as used
with respect to the Securities of any Series shall mean the Trustee with respect to Securities of that Series.
“United States”
or
“U.S.”
means The United States of America (including the states thereof and the District of Columbia), its
territories and possessions and other areas subject to its jurisdiction.
“U.S. Government
Obligations”
means securities which are direct obligations of, or guaranteed by, The United States of America for the
payment of which its full faith and credit is pledged and which are not callable or redeemable at the option of the issuer thereof,
and shall also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government
Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for
the account of the holder of a depository receipt, provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation evidenced by such depository receipt.
Section 1.2
Other
Definitions
.
|
TERM
|
DEFINED IN SECTION
|
|
“Bankruptcy Law”
|
6.1
|
|
“Custodian”
|
6.1
|
|
“Event of Default”
|
6.1
|
|
“Judgment Currency”
|
10.16
|
|
“Legal Holiday”
|
10.7
|
|
“mandatory sinking fund payment”
|
11.1
|
|
“optional sinking fund payment”
|
11.1
|
|
“Paying Agent”
|
2.5
|
|
“Registrar”
|
2.5
|
|
“Required Currency”
|
10.16
|
|
“successor person”
|
5.1
|
Section 1.3
Incorporation
by Reference of Trust Indenture Act
.
Whenever this Indenture
refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
“Commission”
means the SEC.
“indenture securities”
means the Securities.
“indenture security
holder”
means a Securityholder.
“indenture to
be qualified”
means this Indenture.
“indenture trustee”
or
“institutional trustee”
means the Trustee.
“obligor”
on the indenture securities means the Company and any successor obligor upon the Securities.
All other terms used in
this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA and
not otherwise defined herein are used herein as so defined.
Section 1.4
Rules
of Construction
.
Unless the context otherwise
requires:
(a) a
term has the meaning assigned to it;
(b) an
accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c)
“or”
is not exclusive;
(d) words
in the singular include the plural, and in the plural include the singular; and
(e) provisions
apply to successive events and transactions.
ARTICLE II
THE SECURITIES
Section 2.1
Issuable
in Series
.
The aggregate principal
amount of Securities that may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in
one or more Series. All Securities of a Series shall be identical except as may be set forth or determined in the manner provided
in a Board Resolution, supplemental indenture hereto or Officer’s Certificate establishing the terms of such Series. In the
case of Securities of a Series to be issued from time to time, the Board Resolution, Officer’s Certificate or supplemental
indenture establishing the terms thereof may provide for the method by which specified terms (such as interest rate, maturity date,
record date or date from which interest shall accrue) are to be determined. Securities may differ between Series in respect of
any matters, provided that all Series of Securities shall be equally and ratably entitled to the benefits of this Indenture.
Section 2.2
Establishment
of Terms of Series of Securities
.
At or prior to the issuance
of any Securities within a Series, the following shall be established (as to the Series generally, in the case of Subsection 2.2.1
and either as to such Securities within the Series or as to the Series generally in the case of Subsections 2.2.2 through 2.2.24)
by or pursuant to a Board Resolution, and set forth or determined in the manner provided in a Board Resolution, supplemental indenture
hereto or Officer’s Certificate:
2.2.1 the
title (which shall distinguish the Securities of that particular Series from the Securities of any other Series) of the Series;
2.2.2 the
price or prices (expressed as a percentage of the principal amount thereof) at which the Securities of the Series will be issued;
2.2.3 any
limit upon the aggregate principal amount of the Securities of the Series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities
of the Series pursuant to Section 2.8, 2.9, 2.12, 3.6 or 9.6);
2.2.4 the
date or dates on which the principal of the Securities of the Series is payable;
2.2.5 the
rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine such rate or rates (including,
but not limited to, any commodity, commodity index, stock exchange index or financial index) at which the Securities of the Series
shall bear interest, if any, the date or dates from which such interest, if any, shall accrue, the date or dates on which such
interest, if any, shall commence and be payable and any regular record date for the interest payable on any interest payment date;
2.2.6 the
place or places where the principal of and interest, if any, on the Securities of the Series shall be payable, where the Securities
of such Series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company
in respect of the Securities of such Series and this Indenture may be delivered, and the method of such payment, if by wire transfer,
mail or other means;
2.2.7 if
applicable, the period or periods within which, the price or prices at which and the terms and conditions upon which the Securities
of the Series must be redeemed or may be redeemed, in whole or in part, at the option of the Company;
2.2.8 the
obligation, if any, of the Company to redeem or purchase the Securities of the Series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms
and conditions upon which Securities of the Series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
2.2.9 the
dates, if any, on which and the price or prices at which the Securities of the Series will be repurchased by the Company at the
option of the Holders thereof and other detailed terms and provisions of such repurchase obligations;
2.2.10 if
other than denominations of $1,000 and integral multiples of $1,000 in excess thereof, the denominations in which the Securities
of the Series shall be issuable;
2.2.11 the
forms of the Securities of the Series and whether the Securities will be issuable as Global Securities;
2.2.12 if
other than the principal amount thereof, the portion of the principal amount of the Securities of the Series that shall be payable
upon declaration of acceleration of the maturity thereof pursuant to Section 6.2;
2.2.13 the
currency of denomination of the Securities of the Series, which may be Dollars or any Foreign Currency, and if such currency of
denomination is a composite currency, the agency or organization, if any, responsible for overseeing such composite currency;
2.2.14 the
designation of the currency, currencies or currency units in which payment of the principal of and interest, if any, on the Securities
of the Series will be made;
2.2.15 if
payments of principal of or interest, if any, on the Securities of the Series are to be made in one or more currencies or currency
units other than that or those in which such Securities are denominated, the manner in which the exchange rate with respect to
such payments will be determined;
2.2.16 the
manner in which the amounts of payment of principal of or interest, if any, on the Securities of the Series will be determined,
if such amounts may be determined by reference to an index based on a currency or currencies or by reference to a commodity, commodity
index, stock exchange index or financial index;
2.2.17 the
provisions, if any, relating to any security provided for the Securities of the Series;
2.2.18 any
addition to, deletion of or change in the Events of Default which applies to any Securities of the Series and any change in the
right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant
to Section 6.2;
2.2.19 any
addition to, deletion of or change in the covenants set forth in Articles IV or V which applies to Securities of the Series;
2.2.20 any
Depositaries, trustees, interest rate calculation agents, exchange rate calculation agents or other agents with respect to Securities
of such Series if other than those appointed herein;
2.2.21 the
provisions, if any, relating to conversion or exchange of any Securities of such Series, including if applicable, the conversion
or exchange price, the conversion or exchange period, the securities or other property into which the Securities will be convertible,
provisions as to whether conversion or exchange will be mandatory, at the option of the Holders thereof or at the option of the
Company, the events requiring an adjustment of the conversion price or exchange price and provisions affecting conversion or exchange
if such Series of Securities are redeemed;
2.2.22 whether
any of the Company’s direct or indirect Subsidiaries will guarantee the Securities of that Series, including the terms of
subordination, if any, of such guarantees;
2.2.23 the
subordination terms of the Securities of the Series; and
2.2.24 any
other terms of the Series (which may supplement, modify or delete any provision of this Indenture insofar as it applies to such
Series), including any terms that may be required under applicable law or regulations or advisable in connection with the marketing
of Securities of that Series.
All Securities of any one
Series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if
so provided by or pursuant to the Board Resolution, supplemental indenture hereto or Officer’s Certificate referred to above.
Section 2.3
Denominations;
Provision for Payment
.
The Securities of any Series
shall be issuable, except as otherwise provided with respect to Securities of any Series pursuant to Section 2.2, as registered
Securities in the denominations of one thousand Dollars ($1,000) or any integral multiples of $1,000 in excess thereof. Unless
otherwise provided with respect to Securities of any Series pursuant to Section 2.2, the principal of and the interest on the Securities
of any Series, if any, thereon, shall by payable in Dollars at the Corporate Trust Office of the Trustee. Unless otherwise specified
pursuant to Section 2.2 with respect to any Securities of any Series, interest on the Securities of any Series shall be computed
on the basis of a 360-day year consisting of twelve 30-day months.
Section 2.4
Execution
and Authentication
.
Two Officers shall sign
the Securities for the Company by manual or facsimile signature.
If an Officer whose signature
is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.
A Security shall not be
valid until authenticated by the manual signature of the Trustee or an authenticating agent. The signature shall be conclusive
evidence that the Security has been authenticated under this Indenture.
The Trustee shall at any
time, and from time to time, authenticate Securities for original issue in the principal amount provided in the Board Resolution,
supplemental indenture hereto or Officer’s Certificate, upon receipt by the Trustee of a Company Order. Each Security shall
be dated the date of its authentication.
The aggregate principal
amount of Securities of any Series outstanding at any time may not exceed any limit upon the maximum principal amount for such
Series set forth in the Board Resolution, supplemental indenture hereto or Officer’s Certificate delivered pursuant to Section
2.2, except as provided in Section 2.9.
Prior to the issuance of
Securities of any Series, the Trustee shall have received and (subject to Section 7.1) shall be fully protected in conclusively
relying on: (a) the Board Resolution, supplemental indenture hereto or Officer’s Certificate delivered pursuant to Section
2.2 establishing the form of the Securities of that Series or of Securities within that Series and the terms of the Securities
of that Series or of Securities within that Series, (b) an Officer’s Certificate complying with Section 9.7 (with respect
to the execution of supplemental indentures) and Section 10.4, and (c) an Opinion of Counsel complying with Section 9.7 (with respect
to the execution of supplemental indentures) and Section 10.4.
The Trustee shall have
the right, but not the obligation, to decline to authenticate and deliver any Securities of such Series: (a) if the Trustee, being
advised by counsel, determines that such action may not be taken lawfully; or (b) if the Trustee in good faith determines that
such action would expose the Trustee to personal liability.
The Trustee may appoint
an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company.
Section 2.5
Registrar
and Paying Agent
.
The Company shall maintain,
with respect to each Series of Securities, at the place or places specified with respect to such Series, an office or agency where
Securities of such Series may be presented or surrendered for payment (“
Paying Agent
”) and where Securities
of such Series may be surrendered for registration of transfer or exchange (“
Registrar
”). The Registrar shall
keep a register with respect to each Series of Securities and to their transfer and exchange. The Company will give prompt written
notice to the Trustee of the name and address, and any change in the name or address, of each Registrar or Paying Agent. If at
any time the Company shall fail to maintain any such required Registrar or Paying Agent or shall fail to furnish the Trustee with
the name and address thereof, such presentations and surrenders may be made or served at the Corporate Trust Office of the Trustee,
and the Company hereby appoints the Trustee as its agent to receive all such presentations and surrenders.
The Company may also from
time to time designate one or more co-registrars or additional paying agents and may from time to time rescind such designations;
provided
,
however
, that no such designation or rescission shall in any manner relieve the Company of its obligations
to maintain a Registrar or Paying Agent in each place so specified for Securities of any Series for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or rescission and of any change in the name or address of
any such co-registrar or additional paying agent. The term “
Registrar
” includes any co-registrar; and the term
“
Paying Agent
” includes any additional paying agent. The Company or any of its Affiliates may serve as Registrar
or Paying Agent.
The Company hereby appoints
the Trustee as the initial Registrar and Paying Agent for each Series unless another Registrar or Paying Agent, as the case may
be, is appointed prior to the time Securities of that Series are first issued.
Section 2.6
Paying
Agent to Hold Money in Trust
.
The Company shall require
each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust, for the benefit of Securityholders
of any Series of Securities, or the Trustee, all money held by the Paying Agent for the payment of principal of or interest on
the Securities of that Series, and will notify the Trustee in writing of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company or a Subsidiary of the Company) shall have no further liability for the money. If the Company
or a Subsidiary of the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of Securityholders
of any Series of Securities all money held by it as Paying Agent. Upon any bankruptcy, reorganization or similar proceeding with
respect to the Company, the Trustee shall serve as Paying Agent for the Securities.
Section 2.7
Securityholder
Lists
.
The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders
of each Series of Securities and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least ten days before each interest payment date and at such other times as the Trustee may request
in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Securityholders
of each Series of Securities.
Section 2.8
Transfer
and Exchange
.
Where Securities of a Series
are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal principal
amount of Securities of the same Series, the Registrar shall register the transfer or make the exchange if its requirements for
such transactions are met. To permit registrations of transfers and exchanges, the Trustee shall authenticate Securities at the
Registrar’s request. No service charge shall be made for any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer tax or similar governmental charge payable upon exchanges pursuant
to Sections 2.12, 3.6 or 9.6).
Neither the Company nor
the Registrar shall be required (a) to issue, register the transfer of, or exchange Securities of any Series for the period beginning
at the opening of business fifteen days immediately preceding the mailing of a notice of redemption of Securities of that Series
selected for redemption and ending at the close of business on the day of such mailing, or (b) to register the transfer of or exchange
Securities of any Series selected, called or being called for redemption as a whole or the portion being redeemed of any such Securities
selected, called or being called for redemption in part.
Section 2.9
Mutilated,
Destroyed, Lost and Stolen Securities
.
If any mutilated Security
is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a
new Security of the same Series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered
to the Company and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Security and (b) such
security or indemnity bond as may be required by each of them to hold itself and any of its agents harmless, then, in the absence
of written notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall
execute and upon receipt of a Company Order the Trustee shall authenticate and make available for delivery, in lieu of any such
destroyed, lost or stolen Security, a new Security of the same Series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead
of issuing a new Security, pay such Security.
Upon the issuance of any
new Security under this Section 2.9, the Company may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any
Series issued pursuant to this Section 2.9 in lieu of any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities
of that Series duly issued hereunder.
The provisions of this
Section 2.9 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.10
Outstanding
Securities
.
The Securities outstanding
at any time are all the Securities authenticated by the Trustee except for those canceled by the Registrar and those described
in this Section 2.10 as not outstanding.
If a Security is replaced
pursuant to Section 2.9, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser.
If the Paying Agent (other
than the Company, a Subsidiary of the Company or an Affiliate of the Company) holds on the Maturity of Securities of a Series money
sufficient to pay such Securities payable on that date, then on and after that date such Securities of the Series cease to be outstanding
and interest on them ceases to accrue.
The Company may purchase
or otherwise acquire the Securities, whether by open market purchases, negotiated transactions or otherwise. A Security does not
cease to be outstanding because the Company or an Affiliate of the Company holds the Security.
In determining whether
the Holders of the requisite principal amount of outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, the principal amount of a Discount Security that shall be deemed to be outstanding for such
purposes shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon a
declaration of acceleration of the Maturity thereof pursuant to Section 6.2.
Section 2.11
Treasury
Securities
.
In determining whether
the Holders of the required principal amount of Securities of a Series have concurred in any request, demand, authorization, direction,
notice, consent or waiver, Securities of a Series owned by the Company or any Affiliate of the Company shall be disregarded, except
that for the purposes of determining whether the Trustee shall be protected in conclusively relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Securities of a Series that a Responsible Officer of the Trustee actually
knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded
if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such request, demand, authorization,
direction, notice, consent or waiver with respect to the Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor.
Section 2.12
Temporary
Securities
.
Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon a Company Order. Temporary
Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate
for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee upon receipt of a Company Order
shall authenticate definitive Securities of the same Series and date of maturity in exchange for temporary Securities. Until so
exchanged, temporary Securities shall have the same rights under this Indenture as the definitive Securities.
Section 2.13
Cancellation
.
The Company at any time
may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent, if not the Trustee, shall forward to
the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all
Securities surrendered for transfer, exchange, payment, replacement, conversion or cancellation and shall dispose of such canceled
Securities (subject to the record retention requirement of the Exchange Act and the Trustee) in accordance with its customary procedures
and deliver a certificate of such cancellation to the Company upon written request of the Company. The Company may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee for cancellation.
Section 2.14
Defaulted
Interest
.
If the Company defaults
in a payment of interest on a Series of Securities, it may pay the defaulted interest, plus, to the extent permitted by law, any
interest payable on the defaulted interest, to the persons who are Securityholders of the Series on a subsequent special record
date. The Company shall fix the record date and payment date. At least 10 days before the special record date, the Company shall
mail to the Trustee and to each Securityholder of the Series a notice that states the special record date, the payment date and
the amount of interest to be paid. The Company may pay defaulted interest in any other lawful manner.
Section 2.15
Global
Securities
.
2.15.1
Terms
of Securities
. A Board Resolution, a supplemental indenture hereto or an Officer’s Certificate shall establish whether
the Securities of a Series shall be issued in whole or in part in the form of one or more Global Securities and the Depositary
for such Global Security or Securities.
2.15.2
Transfer
and Exchange
. Notwithstanding any provisions to the contrary contained in Section 2.8 of this Indenture and in addition thereto,
any Global Security shall be exchangeable pursuant to Section 2.8 of this Indenture for Securities registered in the names of Holders
other than the Depositary for such Security or its nominee only if (a) such Depositary notifies the Company that it is unwilling
or unable to continue as Depositary for such Global Security or if at any time such Depositary ceases to be a clearing agency registered
under the Exchange Act, and, in either case, the Company fails to appoint a successor Depositary registered as a clearing agency
under the Exchange Act within 90 days of such event or (b) the Company determines in its sole discretion not to have such Securities
represented by one or more Global Securities and executes and delivers to the Trustee an Officer’s Certificate to the effect
that such Global Security shall be so exchangeable. Any Global Security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Securities registered in such names as the Depositary shall direct in writing in an aggregate principal
amount equal to the principal amount of the Global Security with like tenor and terms.
Except as provided in this
Section 2.15.2, a Global Security may not be transferred except as a whole by the Depositary with respect to such Global Security
to a nominee of such Depositary, by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by
the Depositary or any such nominee to a successor Depositary or a nominee of such a successor Depositary.
2.15.3
Legend
.
Any Global Security issued hereunder shall bear a legend in substantially the following form:
“THIS SECURITY IS
A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR
A NOMINEE OF THE DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY
OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY,
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH A SUCCESSOR DEPOSITARY.”
2.15.4
Acts
of Holders
. The Depositary, as a Holder, may appoint agents and otherwise authorize participants to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action which a Holder is entitled to give or take under this
Indenture.
2.15.5
Payments
.
Notwithstanding the other provisions of this Indenture, unless otherwise specified as contemplated by Section 2.2, payment of the
principal of and interest, if any, on any Global Security shall be made to the Holder thereof, which in the case of a Depositary
therefor will be made in accordance with its applicable procedures.
2.15.6
Consents,
Declaration and Directions
. The Company, the Trustee and any Agent shall treat a person as the Holder of such principal amount
of outstanding Securities of such Series represented by a Global Security as shall be specified in a written statement of the Depositary
or by the applicable procedures of such Depositary with respect to such Global Security, for purposes of obtaining any consents,
declarations, waivers or directions required to be given by the Holders pursuant to this Indenture.
Section 2.16
CUSIP
Numbers
.
The Company in issuing
the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP”
numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other elements of identification printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Trustee shall have no liability for any defect in the “CUSIP”
numbers as they appear on any Security, notice or elsewhere. The Company will promptly notify the Trustee in writing of any change
in the “CUSIP” numbers.
ARTICLE III
REDEMPTION
Section 3.1
Notice
to Trustee
.
The Company may, with respect
to any Series of Securities, reserve the right to redeem and pay the Series of Securities or may covenant to redeem and pay the
Series of Securities or any part thereof prior to the Stated Maturity thereof at such time and on such terms as provided for in
such Securities. If a Series of Securities is redeemable and the Company wants or is obligated to redeem prior to the Stated Maturity
thereof all or part of the Series of Securities pursuant to the terms of such Securities, it shall notify the Trustee in writing
of the redemption date and the principal amount of Series of Securities to be redeemed. The Company shall give the notice to the
Trustee at least 45 days before the redemption date, unless a shorter period is satisfactory to the Trustee.
Section 3.2
Selection
of Securities to be Redeemed
.
Unless otherwise indicated
for a particular Series by a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, if less than
all the Securities of a Series are to be redeemed, the Trustee shall select the Securities of the Series to be redeemed in any
manner that the Trustee deems fair and appropriate, including selecting by lot or other method, unless otherwise required by law
or applicable stock exchange requirements, subject, in the case of Global Securities, to the applicable rules and procedures of
the Depositary; provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination
(which shall not be less than the minimum authorized denomination) for such Security. The Trustee shall make the selection from
Securities of the Series outstanding not previously called for redemption. Provisions of this Indenture that apply to Securities
of a Series called for redemption also apply to portions of Securities of that Series called for redemption.
Section 3.3
Notice
of Redemption
.
Unless otherwise indicated
for a particular Series by Board Resolution, a supplemental indenture hereto or an Officer’s Certificate, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail a notice of redemption by first-class mail to each Holder
whose Securities are to be redeemed.
The notice shall identify
the Securities of the Series to be redeemed and shall state:
(a) the
redemption date;
(b) the
redemption price and the amount of accrued interest, if any, to be paid;
(c) the
name and address of the Paying Agent and, if applicable, the conversion Agent;
(d) for
convertible Securities, the conversion price;
(e) if
any Global Security is being redeemed in part, the portion of the principal amount of such Global Security to be redeemed and that,
after the redemption date upon surrender of such Global Security, the principal amount thereof will be decreased by the portion
thereof redeemed pursuant thereto;
(f)
if any Certificated Security is being redeemed in part, the portion of the principal
amount of such Security to be redeemed, and that, after the redemption date, upon surrender of such Security, a new
Certificated Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder
thereof upon cancellation of the original Certificated Security;
(g) that
Securities of the Series (or portion thereof) called for redemption must be surrendered to the Paying Agent to collect the redemption
price;
(h) that
interest on Securities of the Series called for redemption ceases to accrue on and after the redemption date unless the Company
defaults in the deposit of the redemption price;
(i) the
CUSIP number, if any, and state that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed
in the SEC’s notice or printed on the Securities; and
(j) any
other information as may be required by the terms of the particular Series or the Securities of a Series being redeemed.
At the Company’s
request, the Trustee shall give the notice of redemption in the Company’s name and at its expense, provided, however, that
the Company has delivered to the Trustee, at least 15 days (unless a shorter time shall be acceptable to the Trustee) prior to
the notice date, an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information
to be stated in such notice.
Section 3.4
Effect
of Notice of Redemption
.
Once notice of redemption
is mailed as provided in Section 3.3, Securities of a Series called for redemption become due and payable on the redemption date
and at the redemption price. Except as otherwise provided in the supplemental indenture, Board Resolution or Officer’s Certificate
for a Series, a notice of redemption may not be conditional. Upon surrender to the Paying Agent, such Securities shall be paid
at the redemption price plus accrued interest to the redemption date other than Securities or portions of Securities called for
redemption which have been delivered by the Company to the Registrar for cancellation. The Paying Agent shall return to the Company
any money not required for that purpose.
Unless the Company shall
default in the payment of Securities (and accrued interest) called for redemption, interest on such Securities shall cease to accrue
after the redemption date. Convertible Securities called for redemption shall cease to be convertible after the close of business
on the Business Day immediately preceding the redemption date, unless the Company shall default in the payment of such Securities
on the redemption date, in which event the Securities shall remain convertible until paid (together with accrued interest).
Failure to give notice
of redemption, or any defect in such notice to the Holder of any Security of a Series designated for redemption, in whole or in
part, shall not affect the sufficiency of any notice of redemption with respect to the Holder of any other Security of such Series.
Section 3.5
Deposit
of Redemption Price
.
On or before 10:00 a.m.,
New York City time, on the redemption date, the Company shall deposit with the Paying Agent money sufficient to pay the redemption
price of and accrued interest, if any, on all Securities to be redeemed on that date.
Section 3.6
Securities
Redeemed in Part
.
Upon surrender of a Certificated
Security that is redeemed in part, the Trustee shall authenticate for the Holder a new Certificated Security of the same Series
and the same maturity equal in principal amount to the unredeemed portion of the Security surrendered and concurrently cancel the
surrendered Certificated Security.
ARTICLE IV
COVENANTS
Section 4.1
Payment
of Principal and Interest
.
The Company covenants and
agrees for the benefit of the Holders of each Series of Securities that it will duly and punctually pay the principal of and interest,
if any, on the Securities of that Series in accordance with the terms of such Securities and this Indenture. On or before 10:00
a.m., New York City time, on the applicable payment date, the Company shall deposit with the Paying Agent money sufficient to pay
the principal of and interest, if any, on the Securities of each Series in accordance with the terms of such Securities and this
Indenture. Principal and interest shall be considered paid on the date due if the Paying Agent holds in accordance with this Indenture
on that date money sufficient to pay all principal and interest then due and the Paying Agent is not prohibited from paying such
money to the Holders on such date pursuant to the terms of this Indenture.
Section 4.2
Reports
by Company
.
(a) As
long as any Securities are outstanding, the Company shall file with the Trustee, and transmit to the Holders, such information,
documents and other reports, and such summaries thereof, as may be required pursuant to TIA § 314(a). All reports, information
and documents referred to in this Section 4.2 will be deemed to be filed with the Trustee and transmitted to the Holders at the
time such reports, information or documents are publicly filed with the SEC via the SEC’s EDGAR filing system (or any successor
system), it being understood that the Trustee shall have no responsibility whatsoever to determine if such filings have been made.
(b) Delivery
of reports, information and documents to the Trustee under this Section 4.2 are for informational purposes only and shall not constitute
a representation or warranty as to the accuracy or completeness of the reports, information and documents. The Trustee’s
receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information
contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled
to rely exclusively on Officer’s Certificates).
Section 4.3
Compliance
Certificate
.
To the extent any Securities
of a Series are outstanding, the Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the
Company, an Officer’s Certificate (which need not contain the statements provided for in Section 10.4) from its principal
executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company
and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officer with a view to
determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating,
as to such Officer signing such certificate, that to his or her knowledge the Company is not in default in the performance or observance
of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall have occurred, describing all
such Defaults or Events of Default of which the Officer has knowledge). Such Officer’s Certificate need not include a reference
to any non-compliance that has been fully cured prior to the date as of which such certificate speaks.
Section 4.4
Stay,
Extension and Usury Laws
.
The Company covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture or the Securities; and the Company (to the extent it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law has been enacted.
Section 4.5
Corporate
Existence
.
Subject to Article V, the
Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence
and rights (charter and statutory);
provided
,
however
, that the Company shall not be required to preserve any such
right if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business
of the Company and its Subsidiaries taken as a whole and that the loss thereof is not adverse in any material respect to the Holders.
ARTICLE V
SUCCESSORS
Section 5.1
Consolidation,
Merger and Sale of Assets
.
The Company may not consolidate
with or merge with or into, sell, convey, transfer or dispose of all or substantially all of its assets to any other person (a
“
successor person
”), whether in one transaction or a series of related transactions, unless:
(a) (i)
the Company is the surviving corporation or (ii) the successor person (if other than the Company) (A) is a corporation, limited
liability corporation, partnership or trust organized under the laws of the United States; and (B) expressly assumes, by an indenture
supplemental hereto, the Company’s obligations on the Securities and under this Indenture; and
(b) immediately
after giving effect to the transaction, no Default or Event of Default shall have happened and be continuing.
The Company shall deliver
to the Trustee prior to the consummation of the proposed transaction an Officer’s Certificate to the foregoing effect and
an Opinion of Counsel stating that the proposed transaction and any supplemental indenture comply with Section 5.1 of this Indenture.
Notwithstanding the above,
any Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties to the Company. Neither
an Officer’s Certificate nor an Opinion of Counsel shall be required to be delivered in connection therewith.
Section 5.2
Successor
Person Substituted
.
Upon any consolidation
or merger, or any sale, conveyance, transfer, or lease of all or substantially all of the assets of the Company and its Subsidiaries
in accordance with Section 5.1, the successor person formed by such consolidation or into or with which the Company is merged or
to which such sale, conveyance, transfer, or lease is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under this Indenture and the Securities with the same effect as if such successor person has been named
as the Company herein; and, thereafter, the predecessor Company, in the case of a sale, conveyance or transfer (other than a lease),
shall be released from all obligations and covenants under this Indenture and the Securities.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1
Events
of Default
.
“
Event of Default
,”
wherever used herein with respect to Securities of any Series, means any one of the following events, unless in the establishing
Board Resolution, supplemental indenture or Officer’s Certificate, it is provided that such Series shall not have the benefit
of said Event of Default:
(a) failure
to pay any interest on any Security of that Series when it becomes due and payable, and continuance of such default for a period
of 30 days (unless the entire amount of such payment is deposited by the Company with the Trustee or with a Paying Agent prior
to 10:00 a.m., New York City time, on the 30th day of such period);
(b) failure
to pay principal of any Security of that Series at its Maturity;
(c) default
in the performance or breach of any covenant of the Company in this Indenture (other than defaults pursuant to sub-clauses (a)
through (c) above or defaults related to a covenant that has been included in this Indenture solely for the benefit of a Series
of Securities other than that Series), which default continues uncured for a period of 90 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal
amount of the outstanding Securities of that Series a written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a “Notice of Default” hereunder;
(d) the
Company pursuant to or within the meaning of any Bankruptcy Law:
(i) commences
a voluntary case,
(ii) consents
to the entry of an order for relief against it in an involuntary case,
(iii) consents
to the appointment of a Custodian of it or for all or substantially all of its property, or
(iv) makes
a general assignment for the benefit of its creditors;
(e) a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is
for relief against the Company in an involuntary case,
(ii) appoints
a Custodian of the Company or for all or substantially all of its property, or
(iii) orders
the liquidation of the Company, and the order or decree remains unstayed and in effect for 60 days; or
(f) any
other Event of Default provided with respect to Securities of that Series, which is specified in a Board Resolution, a supplemental
indenture hereto or an Officer’s Certificate, in accordance with Section 2.2.18.
The term
“Bankruptcy
Law”
means title 11, U.S. Code or any similar federal or state law for the relief of debtors. The term
“Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A Default under one Series
of Securities issued under this Indenture will not necessarily be a default under another Series of Securities under this Indenture.
The Company will, so long
as any of the Securities are outstanding, deliver to the Trustee, within 30 days of becoming aware of any Default or Event of Default,
an Officer’s Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 6.2
Acceleration
of Maturity; Rescission and Annulment
.
If an Event of Default
with respect to Securities of any Series at the time outstanding occurs and is continuing (other than an Event of Default referred
to in Section 6.1(d) or (e)) then in every such case the Trustee or the Holders of not less than 25% in principal amount of the
outstanding Securities of that Series may declare the principal amount (or, if any Securities of that Series are Discount Securities,
such portion of the principal amount as may be specified in the terms of such Securities) of and accrued and unpaid interest, if
any, on all of the Securities of that Series to be due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) and accrued and unpaid
interest, if any, shall become immediately due and payable. If an Event of Default specified in Section 6.1(d) or (e) shall occur,
the principal amount (or specified amount) of and accrued and unpaid interest, if any, on all outstanding Securities shall ipso
facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.
At any time after such
a declaration of acceleration with respect to any Series has been made and before a judgment or decree for payment of the money
due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of
the outstanding Securities of that Series, by written notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if all Events of Default with respect to Securities of that Series, other than the non-payment of the principal
and interest, if any, of Securities of that Series which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 6.13.
No such rescission shall
affect any subsequent Default.
Section 6.3
Collection
of Indebtedness and Suits for Enforcement by Trustee
.
The Company covenants that
if
(a) default
is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for
a period of 30 days, or
(b) default
is made in the payment of principal of any Security at the Maturity thereof, or
(c) default
is made in the deposit of any sinking fund payment, if any, when and as due by the terms of a Security,
then
, the Company
will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable
on such Securities for principal and interest and, to the extent that payment of such interest shall be legally enforceable, interest
on any overdue principal and any overdue interest at the rate or rates prescribed therefor in such Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
If the Company fails to
pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial
proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or deemed to be
payable in the manner provided by law out of the property of the Company or any other obligor upon such Securities, wherever situated.
If an Event of Default
with respect to any Securities of any Series occurs and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such Series by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 6.4
Trustee
May File Proofs of Claim
.
In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial
proceeding relating to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor
or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for
the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise,
(a) to
file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Securities and to file
such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding, and
(b) to
collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same,
and any custodian, receiver,
assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
Section 6.5
Trustee
May Enforce Claims Without Possession of Securities
.
All rights of action and
claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment
of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders of the Securities in respect of which such judgment has been recovered.
Section 6.6
Application
of Money Collected
.
Any money or property collected
by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money or property on account of principal or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment
of all amounts due to the Trustee under this Indenture; and
Second: To the payment
of all indebtedness of the Company to which such Series of Securities is subordinated to the extent required by Article 12 of this
Indenture; and
Third: To the payment
of the amounts then due and unpaid for principal of and interest on the Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and interest, respectively; and
Fourth: To the Company.
Section 6.7
Limitation
on Suits
.
No Holder of any Security
of any Series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(a) such
Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that
Series;
(b) the
Holders of not less than 25% in principal amount of the outstanding Securities of that Series have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(c) such
Holder or Holders have offered to the Trustee indemnity or security satisfactory to the Trustee against the costs, expenses and
liabilities which might be incurred by the Trustee in compliance with such request;
(d) the
Trustee has failed to institute any such proceeding for 60 days after its receipt of such notice, request and offer of indemnity;
and
(e) no
direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority
in principal amount of the outstanding Securities of that Series;
it being understood, intended
and expressly covenanted by the Holder of every Security with every other Holder and the Trustee that no one or more of such Holders
shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of
such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit
of all such Holders of the applicable Series; provided, however, that the Trustee does not have an affirmative duty to ascertain
whether or not such actions or forbearances are unduly prejudicial to such Holders.
Section 6.8
Unconditional
Right of Holders to Receive Principal and Interest
.
Notwithstanding any other
provision in this Indenture, the Holder of any Security has the right, which is absolute and unconditional, to receive payment
of the principal of and interest, if any, on such Security on the Maturity of such Security, including the Stated Maturity expressed
in such Security (or, in the case of redemption, on the redemption date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such Holder.
Section 6.9
Restoration
of Rights and Remedies
.
If the Trustee or any Holder
has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively
to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 6.10
Rights
and Remedies Cumulative
.
Except as otherwise provided
with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in Section 2.9, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder,
or otherwise, shall not, to the extent permitted by law, prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.11
Delay
or Omission Not Waiver
.
No delay or omission of
the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 6.12
Control
by Holders
.
The Holders of a majority
in principal amount of the outstanding Securities of any Series shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such Series, provided that:
(a) such
direction shall not be in conflict with any rule of law or with this Indenture;
(b) the
Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction;
(c) subject
to the provisions of Section 7.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good
faith shall, by a Responsible Officer of the Trustee, determine that the proceeding so directed would involve the Trustee in personal
liability; and
(d) prior
to taking any action as directed under this Section 6.12, the Trustee shall be entitled to indemnity satisfactory to it against
the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
Section 6.13
Waiver
of Past Defaults
.
The Holders of not less
than a majority in principal amount of the outstanding Securities of any Series may on behalf of the Holders of all the Securities
of such Series waive any past Default hereunder with respect to such Series and its consequences, except a Default in the payment
of the principal of or interest on any Security of such Series (provided, however, that the Holders of a majority in principal
amount of the outstanding Securities of any Series may rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default.
Section 6.14
Undertaking
for Costs
.
All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees
and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 6.14 shall not apply to any suit instituted by the Company, to
any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than
10% in principal amount of the outstanding Securities of any Series, or to any suit instituted by any Holder for the enforcement
of the payment of the principal of or interest on any Security on or after the Maturity of such Security, including the Stated
Maturity expressed in such Security (or, in the case of redemption, on the redemption date).
ARTICLE VII
TRUSTEE
Section 7.1
Duties
of Trustee
.
(a) If
an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture
and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person’s own affairs.
(b) Except
during the continuance of an Event of Default:
(i) The
Trustee need perform only those duties that are specifically set forth in this Indenture and no others.
(ii) In
the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon Officer’s Certificates or Opinions of Counsel furnished to the Trustee and conforming
to the requirements of this Indenture; however, in the case of any such Officer’s Certificates or Opinions of Counsel which
by any provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such Officer’s
Certificates and Opinions of Counsel to determine whether or not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other facts stated therein).
(c) The
Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct,
except that:
(i) This
sub-clause (c) does not limit the effect of sub-clause (b) of this Section 7.1.
(ii) The
Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(iii) The
Trustee shall not be liable with respect to any action taken, suffered or omitted to be taken by it with respect to Securities
of any Series in good faith in accordance with the direction of the Holders of a majority in principal amount of the outstanding
Securities of such Series relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such Series
in accordance with Section 6.12.
(d) Every
provision of this Indenture that in any way relates to the Trustee is subject to sub-clauses (a), (b) and (c) of this Section 7.1.
(e) The
Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in performing such duty or exercising such right or power.
(f) The
Trustee shall not be liable for interest on any money received by it. Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No
provision of this Indenture shall require the Trustee to risk its own funds or otherwise incur any financial liability in the performance
of any of its duties, or in the exercise of any of its rights or powers, if adequate indemnity against such risk is not assured
to the Trustee in its satisfaction.
(h) The
Paying Agent, the Registrar and any authenticating agent shall be entitled to the protections and immunities as are set forth in
sub-clauses (e), (f) and (g) of this Section 7.1 and in Section 7.2, each with respect to the Trustee.
Section 7.2
Rights
of Trustee
.
(a) The
Trustee may conclusively rely on and shall be protected in acting or refraining from acting upon any document (whether in its original
or facsimile form) believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before
the Trustee acts or refrains from acting, it shall be entitled to receive an Officer’s Certificate or an Opinion of Counsel
or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in conclusive reliance on such
Officer’s Certificate or Opinion of Counsel.
(c) The
Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.
No Depositary shall be deemed an agent of the Trustee and the Trustee shall not be responsible for any act or omission by any Depositary.
(d) The
Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within
its rights or powers, provided that the Trustee’s conduct does not constitute willful misconduct or negligence.
(e) The
Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance
thereon.
(f) The
Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders of Securities unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(g) The
Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(h) The
Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a default is received by a Responsible Officer of
the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities generally or the Securities
of a particular Series and this Indenture.
(i) In
no event shall the Trustee be liable to any person for special, punitive, indirect, consequential or incidental loss or damage
of any kind whatsoever (including but not limited to lost profits), even if the Trustee has been advised of the likelihood of such
loss or damage.
(j) The
permissive right of the Trustee to take the actions permitted by this Indenture shall not be construed as an obligation or duty
to do so.
(k) The
rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other
Person employed to act hereunder.
(l) The
Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
(m) The
Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized
at such time to take specified actions pursuant to this Indenture.
Section 7.3
Individual
Rights of Trustee
.
The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of
the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.4
Trustee’s
Disclaimer
.
The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company’s use of
the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its authentication.
Section 7.5
Notice
of Defaults
.
If a Default or Event of
Default occurs and is continuing with respect to the Securities of any Series and if it is actually known to a Responsible Officer
of the Trustee, the Trustee shall mail to each Securityholder of the Securities of that Series notice of a Default or Event of
Default within 90 days after it occurs or, if later, after a Responsible Officer of the Trustee has knowledge of such Default or
Event of Default. Except in the case of a Default or Event of Default in payment of principal of or interest on any Security of
any Series, the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in
the interests of Securityholders of that Series.
Section 7.6
Reports
by Trustee to Holders
.
Within 60 days after each
anniversary of the date of this Indenture, the Trustee shall transmit by mail to all Securityholders, as their names and addresses
appear on the register kept by the Registrar, a brief report dated as of such reporting date, in accordance with, and to the extent
required under, TIA § 313.
A copy of each report at
the time of its mailing to Securityholders of any Series shall be filed with the SEC and each national securities exchange on which
the Securities of that Series are listed. The Company shall promptly notify the Trustee in writing when Securities of any Series
are listed on any national securities exchange or of any delisting thereof.
Section 7.7
Compensation
and Indemnity
.
The Company shall pay to
the Trustee from time to time compensation for its services as the Company and the Trustee shall from time to time agree upon in
writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable out of pocket expenses incurred by it. Such expenses shall
include the reasonable compensation and expenses of the Trustee’s agents and counsel.
The Company shall indemnify
each of the Trustee and any predecessor Trustee against any cost, expense, claim (whether asserted by the Company, a Holder or
any other person) or liability (including the cost of defending itself), including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee), incurred by it except as set forth in the next paragraph in the performance of
its duties under this Indenture as Trustee or Agent. The Trustee shall notify the Company promptly of any claim for which it may
seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder, unless
and to the extent that the Company is materially prejudiced thereby. The Company shall defend the claim and the Trustee shall cooperate
in the defense. The Trustee may have one separate counsel and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent, which consent will not be unreasonably withheld. This indemnification
shall apply to officers, directors, employees, shareholders and agents of the Trustee.
The Company need not reimburse
any expense or indemnify against any loss or liability incurred by the Trustee or by any officer, director, employee or shareholder
of the Trustee through willful misconduct or negligence.
To secure the Company’s
payment obligations in this Section 7.7, the Trustee shall have a lien prior to the Securities of any Series on all money or property
held or collected by the Trustee, except that held in trust to pay principal of and interest on particular Securities of that Series.
When the Trustee incurs
expenses or renders services after an Event of Default specified in Section 6.1(f) or (g) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under any Bankruptcy Law.
The provisions of this
Section 7.7 shall survive the termination of this Indenture or the resignation or removal of the Trustee.
Section 7.8
Replacement
of Trustee
.
A resignation or removal
of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance
of appointment as provided in this Section 7.8.
The Trustee may resign
at any time with respect to the Securities of one or more Series by so notifying the Company at least 30 days prior to the date
of the proposed resignation. The Holders of a majority in principal amount of the Securities of any Series may remove the Trustee
with respect to that Series by so notifying the Trustee and the Company in writing. The Company may remove the Trustee with respect
to Securities of one or more Series if:
(a) the
Trustee fails to comply with Section 7.10;
(b) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a
Custodian or public officer takes charge of the Trustee or its property; or
(d) the
Trustee becomes incapable of acting.
If the Trustee resigns
or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.
Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee
with respect to the Securities of any one or more Series does not take office within 30 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders of at least a majority in principal amount of the Securities of
the applicable Series may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense
of the Company.
A successor Trustee shall
deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring
Trustee shall transfer all property held by it as Trustee to the successor Trustee subject to the lien provided for in Section
7.7, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee with respect to each Series of Securities for which it is acting as Trustee under this Indenture.
A successor Trustee shall mail a notice of its succession to each Securityholder of each such Series. Notwithstanding replacement
of the Trustee pursuant to this Section 7.8, the Company’s obligations under Section 7.7 hereof shall continue for the benefit
of the retiring Trustee with respect to expenses and liabilities incurred by it for actions taken or omitted to be taken in accordance
with its rights, powers and duties under this Indenture prior to such replacement.
Section 7.9
Successor
Trustee by Merger, Etc
.
If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee, if such successor corporation is eligible and qualified
under Section 7.10.
Section 7.10
Eligibility;
Disqualification
.
This Indenture shall always
have a Trustee who satisfies the requirements of TIA § 310(a)(1), (2) and (5). The Trustee shall always have a combined capital
and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply
with TIA § 310(b).
Section 7.11
Preferential
Collection of Claims Against Company
.
The Trustee is subject
to TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed
shall be subject to TIA § 311(a) to the extent indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 8.1
Satisfaction
and Discharge of Indenture
.
This Indenture shall upon
Company Order cease to be of further effect (except as hereinafter provided in this Section 8.1), and the Trustee, at the expense
of the Company, shall execute instruments acknowledging satisfaction and discharge of this Indenture, when
(a) either
(i) all
Securities theretofore authenticated and delivered (other than Securities that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.9) have been delivered to the Trustee for cancellation; or
(ii) all
such Securities not theretofore delivered to the Trustee for cancellation:
(1) have
become due and payable, or
(2) will
become due and payable at their Stated Maturity within one year, or
(3) have
been called for redemption or are to be called for redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company;
and the Company, in the
case of (1), (2) or (3) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an
amount of money or U.S. Government Obligations sufficient for the purpose of paying and discharging the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit
(in the case of Securities which have become due and payable on or prior to the date of such deposit) or to the Stated Maturity
or redemption date, as the case may be;
(b) the
Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(c) the
Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction
and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.7, and, if money shall have been
deposited with the Trustee pursuant to sub-clause (a) of this Section 8.1, the provisions of Sections 2.5, 2.8, 2.9, 8.2 and 8.5
shall survive.
Section 8.2
Application
of Trust Funds; Indemnification
.
(a) Subject
to the provisions of Section 8.5, all money or U.S. Government Obligations deposited with the Trustee pursuant to Section 8.1,
all money and U.S. Government Obligations or Foreign Government Obligations deposited with the Trustee pursuant to Section 8.3
or 8.4 and all money received by the Trustee in respect of U.S. Government Obligations or Foreign Government Obligations deposited
with the Trustee pursuant to Section 8.3 or 8.4, shall be held in trust and applied by it, in accordance with the provisions of
the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as
its own Paying Agent) as the Trustee may determine, to the persons entitled thereto, of the principal and interest for whose payment
such money has been deposited with or received by the Trustee or to make mandatory sinking fund payments or analogous payments
as contemplated by Sections 8.3 or 8.4.
(b) The
Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against U.S. Government
Obligations or Foreign Government Obligations deposited pursuant to Sections 8.3 or 8.4 or the interest and principal received
in respect of such obligations other than any payable by or on behalf of Holders.
(c) The
Trustee shall deliver or pay to the Company from time to time upon Company Order any U.S. Government Obligations or Foreign Government
Obligations or money held by it as provided in Sections 8.3 or 8.4 which, in the opinion of a nationally recognized firm of independent
certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee, are then
in excess of the amount thereof which then would have been required to be deposited for the purpose for which such U.S. Government
Obligations or Foreign Government Obligations or money were deposited or received. This provision shall not authorize the sale
by the Trustee of any U.S. Government Obligations or Foreign Government Obligations held under this Indenture.
Section 8.3
Legal
Defeasance of Securities of any Series
.
Unless this Section 8.3
is otherwise specified, pursuant to Section 2.2, to be inapplicable to Securities of any Series, the Company shall be deemed to
have paid and discharged the entire indebtedness on all the outstanding Securities of any Series on the 91st day after the date
of the deposit referred to in sub-clause (d) hereof, and the provisions of this Indenture, as it relates to such outstanding Securities
of such Series, shall no longer be in effect (and the Trustee, at the expense of the Company, shall, upon receipt of a Company
Order, execute instruments acknowledging the same), except as to:
(a) the
rights of Holders of Securities of such Series to receive, from the trust funds described in sub-clause (d) hereof, (i) payment
of the principal of and each installment of principal of and interest on the outstanding Securities of such Series on the Maturity
of such principal or installment of principal or interest and (ii) the benefit of any mandatory sinking fund payments applicable
to the Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture
and the Securities of such Series;
(b) the
provisions of Sections 2.5, 2.8, 2.9, 8.2, 8.3 and 8.5; and
(c) the
rights, powers, trust and immunities of the Trustee hereunder and the Company’s obligations in connection therewith;
provided that, the following
conditions shall have been satisfied:
(d) the
Company shall have deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c)) with the Trustee as trust
funds in trust for the purpose of making the following payments, specifically pledged as security for and dedicated solely to the
benefit of the Holders of such Securities: (i) in the case of Securities of such Series denominated in Dollars, cash in Dollars
and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in a Foreign Currency (other than
a composite currency), money and/or Foreign Government Obligations, which through the payment of interest and principal in respect
thereof in accordance with their terms (and without reinvestment), will provide, not later than one day before the due date of
any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm of independent public accountants
or investment bank expressed in a written certification thereof delivered to the Trustee, to pay and discharge each installment
of principal of and interest, if any, on and any mandatory sinking fund payments in respect of all the Securities of such Series
on the dates such installments of interest or principal and such sinking fund payments are due;
(e) such
deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;
(f) no
Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of
such deposit or during the period ending on the 91st day after such date;
(g) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel to the effect that (i) the
Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (ii) since the date of execution
of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, the Holders of the Securities of such Series will not recognize income,
gain or loss for U.S. federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to
U.S. federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit,
defeasance and discharge had not occurred;
(h) the
Company shall have delivered to the Trustee an Officer’s Certificate stating that the deposit was not made by the Company
with the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and
(i) the
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this Section 8.3 have been complied with.
Section 8.4
Covenant
Defeasance
.
Unless this Section 8.4
is otherwise specified pursuant to Section 2.2 to be inapplicable to Securities of any Series, the Company may omit to comply with
respect to the Securities of any Series with any term, provision or condition set forth under Sections 4.2 and 4.3, 4.4 and 5.1as
well as any additional covenants specified in a supplemental indenture for such Series of Securities or a Board Resolution or an
Officer’s Certificate delivered pursuant to Section 2.2 (and the failure to comply with any such covenants shall not constitute
a Default or Event of Default with respect to such Series under Section 6.1) and the occurrence of any event specified in a supplemental
indenture for such Series of Securities or a Board Resolution or an Officer’s Certificate delivered pursuant to Section 2.2.18
and designated as an Event of Default shall not constitute a Default or Event of Default hereunder, with respect to the Securities
of such Series, provided that the following conditions shall have been satisfied:
(a) With
reference to this Section 8.4, the Company has deposited or caused to be irrevocably deposited (except as provided in Section 8.2(c))
with the Trustee as trust funds in trust for the purpose of making the following payments specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of such Securities: (i) in the case of Securities of such Series denominated
in Dollars, cash in Dollars and/or U.S. Government Obligations, or (ii) in the case of Securities of such Series denominated in
a Foreign Currency (other than a composite currency), money and/or Foreign Government Obligations, which through the payment of
interest and principal in respect thereof in accordance with their terms (and without reinvestment), will provide, not later than
one day before the due date of any payment of money, an amount in cash, sufficient, in the opinion of a nationally recognized firm
of independent certified public accountants or investment bank expressed in a written certification thereof delivered to the Trustee,
to pay and discharge each installment of principal of and interest, if any, on and any mandatory sinking fund payments in respect
of the Securities of such Series on the dates such installments of interest or principal and such sinking fund payments are due;
(b) Such
deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument
to which the Company is a party or by which it is bound;
(c) No
Default or Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of
such deposit;
(d) The
Company shall have delivered to the Trustee an Opinion of Counsel to the effect that Holders of the Securities of such Series will
not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and covenant defeasance 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 such deposit and covenant defeasance had not occurred;
(e) The
Company shall have delivered to the Trustee an Officer’s Certificate stating the deposit was not made by the Company with
the intent of defeating, hindering, delaying or defrauding any other creditors of the Company; and
(f) The
Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the covenant defeasance contemplated by this Section 8.4 have been complied with.
Section 8.5
Repayment
to Company
.
Subject to applicable abandoned
property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years after such principal or interest has become due and payable. After that,
Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned
property law designates another person.
Section 8.6
Reinstatement
.
If the Trustee or the Paying
Agent is unable to apply any money deposited with respect to Securities of any Series in accordance with Section 8.1 by reason
of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under this Indenture with respect to the Securities of such
Series and under the Securities of such Series shall be revived and reinstated as though no deposit had occurred pursuant to Section
8.1 until such time as the Trustee or the Paying Agent is permitted to apply all such money in accordance with Section 8.1; provided,
however, that if the Company has made any payment of principal of or interest on any Securities because of the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent after payment in full to the Holders.
ARTICLE IX
AMENDMENTS AND WAIVERS
Section 9.1
Without
Consent of Holders
.
The Company and the Trustee
may amend or supplement this Indenture or the Securities of one or more Series without the consent of any Securityholder:
(a) to
add guarantees with respect to any Series of Securities or secure any Series of Securities;
(b) to
surrender any of the Company’s rights or powers under this Indenture;
(c) to
add covenants or Events of Default for the benefit of the Securityholders of any Series of Securities;
(d) to
comply with the applicable rules or procedures of the Depositary;
(e) to
cure any ambiguity, defect or inconsistency, as described in the Officer’s Certificate delivered pursuant to Section 10.4;
(f)
to comply with Article V;
(g) to
provide for uncertificated Securities in addition to or in place of certificated Securities;
(h) to
make any change that does not materially adversely affect the rights of any Securityholder;
(i)
to provide for the issuance of and establish the form and terms and conditions of Securities of any Series as
permitted by this Indenture;
(j)
to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more Series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee;
(k) to
comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;
(l) to
comply with the rules or regulations of any securities exchange or automated quotation system on which any of the Securities may
be listed or traded; and
(m) to
change or eliminate any of the provisions of this Indenture, provided that any such change or elimination shall not be effective
with respect to any outstanding Securities of any Series created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision.
Section 9.2
With
Consent of Holders
.
The Company and the Trustee
may enter into a supplemental indenture with the written consent of the Holders of at least a majority in principal amount of the
outstanding Securities of each Series affected by such supplemental indenture (including consents obtained in connection with a
tender offer or exchange offer for the Securities of such Series), for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the
rights of the Securityholders of each such Series. Except as provided in Section 6.13, the Holders of at least a majority in principal
amount of the outstanding Securities of any Series by written notice to the Trustee (including consents obtained in connection
with a tender offer or exchange offer for the Securities of such Series) may waive compliance by the Company with any provision
of this Indenture or the Securities with respect to such Series.
It shall not be necessary
for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed supplemental
indenture or waiver, but it shall be sufficient if such consent approves the substance thereof. After a supplemental indenture
or waiver under this Section 9.2 becomes effective, the Company shall mail to the Holders of Securities affected thereby, a notice
briefly describing the supplemental indenture or waiver. Any failure by the Company to mail or publish such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.
Section 9.3
Limitations
.
Without the consent of
each Securityholder affected, an amendment or waiver may not:
(a) reduce
the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver;
(b) reduce
the rate of or extend the time for payment of interest (including default interest) on any Security or that Series;
(c) reduce
the principal of, or change the Stated Maturity of, any Security or reduce the amount of, or postpone the date fixed for, the payment
of any sinking fund or analogous obligation;
(d) reduce
the principal amount of Discount Securities payable upon acceleration of the maturity thereof;
(e) waive
a Default or Event of Default in the payment of the principal of or interest, if any, on any Security (except a rescission of acceleration
of the Securities of any Series by the Holders of at least a majority in principal amount of the then outstanding Securities of
such Series and a waiver of the payment default that resulted from such acceleration);
(f)
make the principal of or interest, if any, on any Security payable in any currency other than that stated
in the Security;
(g) make
any change in Sections 6.8 or 6.13 or this Section 9.3; or
(h) waive
a redemption payment with respect to any Security.
Section 9.4
Compliance
with Trust Indenture Act
.
Every amendment to this
Indenture or the Securities of one or more Series shall be set forth in a supplemental indenture hereto that complies with the
TIA as then in effect.
Section 9.5
Revocation
and Effect of Consents
.
Until an amendment is set
forth in a supplemental indenture or a waiver becomes effective, a consent to it by a Holder of a Security is a continuing consent
by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting
Holder’s Security, even if notation of the consent is not made on any Security.
Any amendment or waiver
once effective shall bind every Securityholder of each Series affected by such amendment or waiver unless it is of the type described
in any of sub-clauses (a) through (h) of Section 9.3. In that case, the amendment or waiver shall bind each Holder of a Security
who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the
consenting Holder’s Security.
The Company may, but shall
not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other
action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding
the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and
only those persons, shall be entitled to give such consent or to revoke any consent previously given or take any such action, whether
or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120
days after such record date.
Section 9.6
Notation
on or Exchange of Securities
.
The Company or the Trustee
may place an appropriate notation about an amendment or waiver on any Security of any Series thereafter authenticated. The Company
in exchange for Securities of that Series may issue and the Trustee shall authenticate upon request new Securities of that Series
that reflect the amendment or waiver.
Section 9.7
Trustee
Protected
.
In executing, or accepting
the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts
created by this Indenture, the Trustee shall receive, and (subject to Section 7.1) shall be fully protected in conclusively relying
upon, an Officer’s Certificate or an Opinion of Counsel or both complying with Section 10.4 and stating that the supplemental
indenture is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms,
subject to customary exceptions. The Trustee shall sign all supplemental indentures upon delivery of such an Officer’s Certificate
or Opinion of Counsel or both, except that the Trustee need not sign any supplemental indenture that, in its sole discretion, adversely
affects its rights.
ARTICLE X
MISCELLANEOUS
Section 10.1
Trust
Indenture Act Controls
.
If any provision of this
Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by
the TIA, such required or deemed provision shall control.
Section 10.2
Notices
.
Any request, demand, notice
or communication by the Company or the Trustee to the other, or by a Holder to the Company or the Trustee, is duly given if in
writing and delivered in person or mailed by first-class mail:
if to the Company:
Galmed Pharmaceuticals Ltd.
if to the Trustee:
Attention:
The Company or the Trustee
by notice to the other may designate additional or different addresses for subsequent notices or communications.
Any notice or communication
to a Securityholder shall be mailed by first-class mail to his address shown on the register kept by the Registrar. Failure to
mail a notice or communication to a Securityholder of any Series or any defect in it shall not affect its sufficiency with respect
to other Securityholders of that or any other Series.
If a notice or communication
is mailed or published in the manner provided above, within the time prescribed, it is duly given, whether or not the Securityholder
receives it.
If the Company mails a
notice or communication to Securityholders, it shall mail a copy to the Trustee and each Agent at the same time.
Notwithstanding any other
provision of this Indenture or any Security, where this Indenture or any Security provides for notice of any event (including any
notice of redemption) to a Holder of a Global Security (whether by mail or otherwise), such notice shall be sufficiently given
to the Depositary for such Security (or its designee) pursuant to the customary procedures of such Depositary.
Section 10.3
Communication
by Holders with Other Holders
.
Securityholders of any
Series may communicate pursuant to TIA § 312(b) with other Securityholders of that Series or any other Series with respect
to their rights under this Indenture or the Securities of that Series or all Series. The Company, the Trustee, the Registrar and
anyone else shall have the protection of TIA § 312(c).
Section 10.4
Certificate
and Opinion as to Conditions Precedent
.
Upon any request or application
by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an
Officer’s Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an
Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
Section 10.5
Statements
Required in Certificate or Opinion
.
Each certificate or opinion
with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant
to TIA § 314(a)(4)) shall comply with the provisions of TIA § 314(e) and shall include:
(a) a
statement that the person making such certificate or opinion has read such covenant or condition;
(b) a
brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(c) a
statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a
statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.
Section 10.6
Rules
by Trustee and Agents
.
The Trustee may make reasonable
rules for action by or a meeting of Securityholders of one or more Series. Any Agent may make reasonable rules and set reasonable
requirements for its functions.
Section 10.7
Legal
Holidays
.
Unless otherwise provided
by Board Resolution, Officer’s Certificate or supplemental indenture hereto for a particular Series, a “
Legal Holiday
”
is any day that is not a Business Day. If a payment date is a Legal Holiday at a place of payment, payment may be made at that
place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 10.8
No
Recourse Against Others
.
A director, officer, employee
or stockholder (past or present), as such, of the Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration
for the issue of the Securities.
Section 10.9
Counterparts
.
This Indenture may be executed
in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the same agreement. The exchange of copies of this Indenture
and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as
to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted
by facsimile or PDF shall be deemed to be their original signatures for all purposes.
Section 10.10
Governing
Law; Jury Trial Waiver
.
THIS INDENTURE AND THE
SECURITIES, INCLUDING ANY CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE SECURITIES, SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW).
EACH OF THE COMPANY
AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTION CONTEMPLATED HEREBY
.
Section 10.11
No
Adverse Interpretation of Other Agreements
.
This Indenture may not
be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 10.12
Successors
.
All agreements of the Company
in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor.
Section 10.13
Severability
.
In case any provision in
this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 10.14
Table
of Contents, Headings, Etc
.
The Table of Contents,
Cross Reference Table, and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.
Section 10.15
Securities
in a Foreign Currency
.
Unless otherwise specified
in a Board Resolution, a supplemental indenture hereto or an Officer’s Certificate delivered pursuant to Section 2.2 of this
Indenture with respect to a particular Series of Securities, whenever for purposes of this Indenture any action may be taken by
the Holders of a specified percentage in aggregate principal amount of Securities of all Series or all Series affected by a particular
action at the time outstanding and, at such time, there are outstanding Securities of any Series which are denominated in more
than one currency, then the principal amount of Securities of such Series which shall be deemed to be outstanding for the purpose
of taking such action shall be determined by converting any such other currency into a currency that is designated upon issuance
of any particular Series of Securities. Unless otherwise specified in a Board Resolution, a supplemental indenture hereto or an
Officer’s Certificate delivered pursuant to Section 2.2 of this Indenture with respect to a particular Series of Securities,
such conversion shall be at the spot rate for the purchase of the designated currency as published in The Financial Times in the
“Currency Rates” section (or, if The Financial Times is no longer published, or if such information is no longer available
in The Financial Times, such source as may be selected in good faith by the Company) on any date of determination. The provisions
of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a Series denominated in
currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.
All decisions and determinations
provided for in the preceding paragraph shall, in the absence of manifest error, to the extent permitted by law, be conclusive
for all purposes and irrevocably binding upon the Trustee and all Holders.
Section 10.16
Judgment
Currency
.
The Company agrees, to
the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any
court it is necessary to convert the sum due in respect of the principal of or interest or other amount on the Securities of any
Series (the
“Required Currency”
) into a currency in which a judgment will be rendered (the
“Judgment
Currency”
), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee
could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable
judgment is entered, unless such day is not a Business Day, then the rate of exchange used shall be the rate at which in accordance
with normal banking procedures the Trustee could purchase in The City of New York the Required Currency with the Judgment Currency
on the Business Day preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture
to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)), in any currency other than the Required Currency, except to
the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action
for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the
full amount of the Required Currency so expressed to be payable, and (iii) shall not be affected by judgment being obtained for
any other sum due under this Indenture.
Section 10.17
Force
Majeure
.
In no event shall the Trustee
be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by,
directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war
or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions
of utilities, communications or computer (software and hardware) services, it being understood that the Trustee shall use reasonable
best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable
under the circumstances.
Section 10.18
U.S.A.
Patriot Act
.
The parties hereto acknowledge
that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help
fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each
person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree
that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements
of the U.S.A. Patriot Act.
ARTICLE XI
SINKING FUNDS
Section 11.1
Applicability
of Article
.
The provisions of this
Article shall be applicable to any sinking fund for the retirement of the Securities of a Series if so provided by the terms of
such Securities pursuant to Section 2.2 and except as otherwise permitted or required by any form of Security of such Series issued
pursuant to this Indenture.
The minimum amount of any
sinking fund payment provided for by the terms of the Securities of any Series is herein referred to as a
“mandatory sinking
fund payment”
and any other amount provided for by the terms of Securities of such Series is herein referred to as an
“optional sinking fund payment.”
If provided for by the terms of Securities of any Series, the cash amount of
any sinking fund payment may be subject to reduction as provided in Section 11.2. Each sinking fund payment shall be applied to
the redemption of Securities of any Series as provided for by the terms of the Securities of such Series.
Section 11.2
Satisfaction
of Sinking Fund Payments with Securities
.
The Company may, in satisfaction
of all or any part of any sinking fund payment with respect to the Securities of any Series to be made pursuant to the terms of
such Securities (a) deliver outstanding Securities of such Series to which such sinking fund payment is applicable (other than
any of such Securities previously called for mandatory sinking fund redemption) and (b) apply as credit Securities of such Series
to which such sinking fund payment is applicable and which have been repurchased by the Company or redeemed either at the election
of the Company pursuant to the terms of the Securities of such Series (except pursuant to any mandatory sinking fund) or through
the application of permitted optional sinking fund payments or other optional redemptions pursuant to the terms of such Securities,
provided that such Securities have not been previously so credited. Such Securities shall be received by the Trustee, together
with an Officer’s Certificate with respect thereto, not later than 15 days prior to the date on which the Trustee begins
the process of selecting Securities for redemption, and shall be credited for such purpose by the Trustee at the price specified
in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly. If as a result of the delivery or credit of Securities in lieu of cash payments pursuant to this Section 11.2, the
principal amount of Securities of such Series to be redeemed in order to exhaust the aforesaid cash payment shall be less than
$100,000, the Trustee need not call Securities of such Series for redemption, except upon receipt of a Company Order that such
action be taken, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking
fund payment,
provided
,
however
, that the Trustee or such Paying Agent shall from time to time upon receipt of a
Company Order pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery
by the Company to the Trustee of Securities of that Series purchased by the Company having an unpaid principal amount equal to
the cash payment required to be released to the Company.
Section 11.3
Redemption
of Securities for Sinking Fund
.
Not less than 45 days (unless
otherwise indicated in the Board Resolution, supplemental indenture hereto or Officer’s Certificate in respect of a particular
Series of Securities) prior to each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee
an Officer’s Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that Series pursuant
to the terms of that Series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof,
if any, which is to be satisfied by delivering and crediting of Securities of that Series pursuant to Section 11.2, and the optional
amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and the Company shall thereupon be obligated
to pay the amount therein specified. Not less than 30 days (unless otherwise indicated in the Board Resolution, Officer’s
Certificate or supplemental indenture in respect of a particular Series of Securities) before each such sinking fund payment date
the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 3.2
and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided
in Section 3.3. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 3.4, 3.5 and 3.6.
ARTICLE XII
SUBORDINATION OF SECURITIES
Section 12.1
Subordination
of Terms
.
The payment by the Company
of the principal of, premium, if any, and interest on any Series of Securities issued under this Indenture shall be subordinated
to the extent set forth in a Board Resolution, supplemental indenture hereto or Officer’s Certificate relating to such Series
of Securities.
[Signature page follows]
IN WITNESS WHEREOF, the
parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
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GALMED PHARMACEUTICALS LTD., as Issuer
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By:
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Name:
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Its:
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, as Trustee
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By:
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Name:
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Its:
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Exhibit 5.1
March 26, 2018
Galmed Pharmaceuticals Ltd.
16 Ze’ev Tiomkin Street
Tel Aviv 6578317
Israel
Re:
Registration Statement on Form F-3
Ladies and Gentlemen:
We have acted as counsel
to Galmed Pharmaceuticals Ltd., a company organized under the laws of the State of Israel (the “
Company
”), in
connection with its filing of a registration statement on Form F-3 (the “
Registration Statement
”) under the
Securities Act of 1933, as amended (the “
Securities Act
”), with the U.S. Securities and Exchange Commission
(the “
Commission
”), which registers the offer, issuance and sale by the Company, from time to time, of up to
$150 million, in the aggregate, of any one or more of the following types of securities, individually or in units:
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(a)
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ordinary shares, par value NIS 0.01 per share of the Company (“
Ordinary Shares
” or “
Shares
”);
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(b)
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warrants to purchase Ordinary Shares (“
Warrants
”);
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(c)
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subscription rights to purchase Shares (the “
Rights
”);
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(d)
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senior or subordinated debt securities of the Company (the “
Debt Securities
”) to be issued by the Company pursuant to an indenture (a “
Company Indenture
”) to be executed by the Company and the relevant trustee under the Company Indenture; or
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(e)
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units comprised of one or more of the other securities that may be offered under the Registration Statement (the “
Units
”) (collectively, the Shares, Warrants, Rights, Debt Securities and Units are referred to as the “
Securities
”).
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We have also acted as Israeli
counsel to the Company in connection with the At-The-Market Equity Offering Sales Agreement, dated as of December 22, 2017 (the
“
Sales Agreement
”), entered into by and between the Company and Stifel, Nicolaus & Company, Incorporated
(the “
Agent
”), pursuant to which the Company has agreed to offer and sell Ordinary Shares having an aggregate
offering price of up to $35 million (the “
ATM Shares
”). The ATM Shares will be issued pursuant to the
Registration Statement and the related prospectus contained therein covering the ATM Shares.
This opinion letter is
furnished to you at your request to enable you to fulfill the requirements of Item 601(b)(5) of Regulation S-K under the Securities
Act, in connection with the filing of the Registration Statement.
In connection herewith,
we have examined the originals, or photocopies or copies, certified or otherwise identified to our satisfaction, of: (i) the form
of the Registration Statement, to which this opinion letter is attached as an exhibit; (ii) a copy of the articles of association
of the Company, as currently in effect (the “
Articles
”); (iii) minutes of the meeting of the board of
directors of the Company (the “
Board
”) at which the filing of the Registration Statement and the actions
to be taken in connection therewith were approved; (iv) minutes of the meeting of the Board at which the execution of the Sales
Agreement and the actions to be taken in connection therewith were approved; and (v) such other corporate records, agreements,
documents and other instruments, and such certificates or comparable documents of public officials and of officers and representatives
of the Company as we have deemed relevant and necessary as a basis for the opinions hereafter set forth. We have also made inquiries
of such officers and representatives as we have deemed relevant and necessary as a basis for the opinions hereafter set forth.
In such examination, we
have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted
to us as originals, the conformity to original documents of all documents submitted to us as certified, confirmed as photostatic
copies and the authenticity of the originals of such latter documents. As to all questions of fact material to these opinions that
have not been independently established, we have relied upon certificates or comparable documents of officers and representatives
of the Company.
We have also assumed the
truth of all facts communicated to us by the Company and that all minutes of meetings of the Board that have been provided to us
are true and accurate and have been properly prepared in accordance with the Articles and all applicable laws. We have assumed,
in addition, that at the time of the execution and delivery of any definitive purchase, underwriting or similar agreement between
the Company and any third party pursuant to which any of the Securities may be issued (a “
Securities Agreement
”),
the Securities Agreement will be the valid and legally binding obligation of such third party, enforceable against such third party
in accordance with its terms. We have further assumed that at the time of the issuance and sale of any of the Securities, the terms
of the Securities, and their issuance and sale, will have been established so as not to violate any applicable law or result in
a default under or breach of any agreement or instrument binding upon the Company and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the Company.
Based upon and subject
to the foregoing, we are of the opinion that:
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1.
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With respect to the Shares, assuming (a) the taking of all necessary corporate action to authorize and approve the issuance of any Shares, the terms of the offering thereof and related matters (for purposes of this paragraph 1, the “
Authorizing Resolutions
”), (b) the effectiveness of the Registration Statement, and any amendments thereto (including any post-effective amendments), and that such effectiveness shall not have been terminated or rescinded, (c) the delivery and filing of an appropriate prospectus supplement with respect to the offering of the Shares in compliance with the Securities Act and the applicable rules and regulations thereunder, (d) approval by the Board of, and entry by the Company into, and performance by the Company under, any applicable Securities Agreement, in the form filed as an exhibit to the Registration Statement, any post-effective amendment thereto or to a Report of Foreign Private Issuer on Form 6-K, pursuant to which the Shares may be issued and sold, and (e) receipt by the Company of the consideration for the Shares as provided for in the Authorizing Resolutions and in accordance with the provisions of any such Securities Agreement and the applicable convertible Securities, if any, pursuant to which the Shares may be issued, such Shares, including any Ordinary Shares issued upon exercise or conversion of any Securities, will be validly issued, fully paid and non-assessable.
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2.
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With respect to the Warrants, assuming the (a) taking of all necessary corporate action to authorize and approve the issuance and terms of any Warrants, the terms of the offering thereof and related matters (for purposes of this paragraph 2, the “
Authorizing Resolutions
”), (b) the effectiveness of the Registration Statement, and any amendments thereto (including any post-effective amendments), and that such effectiveness shall not have been terminated or rescinded, (c) the due authorization, execution and delivery of (i) the warrant agreement to be dated on or about the date of the first issuance of the applicable Warrants thereunder, by and between the Company and a warrant agent to be selected by the Company (each, a “
Warrant Agreement
”) and (ii) any certificates relating to the Warrants, (d) the delivery and filing of an appropriate prospectus supplement with respect to the offering of the Warrants in compliance with the Securities Act and the applicable rules and regulations thereunder, (e) entry by the Company into, and performance by the Company under, any applicable Warrant Agreement, in the form filed as an exhibit to the Registration Statement, any post-effective amendment thereto or to a Report of Foreign Private Issuer on Form 6-K, pursuant to which the Warrants may be issued and sold, (f) due establishment by all necessary corporate action and in conformity with the Articles (as then in effect), the Warrant Agreement and any warrant certificates, of the terms of the Warrants and of their issuance and sale, (g) due execution and counter-signature, in accordance with the provisions of the Warrant Agreement, and due issuance, sale and delivery, in accordance with the provisions of any such Warrant Agreement, the Registration Statement and the prospectus included therein, of the Warrants and (h) receipt by the Company of the consideration for the Warrants as provided for in the Authorizing Resolutions and in accordance with the provisions of any such Securities Agreement, such Warrants, including any Ordinary Shares issued upon exercise or conversion of any Warrants, will constitute valid and legally binding obligations of the Company.
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3.
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With respect to the Rights, assuming the (a) taking of all necessary corporate action to authorize and approve the issuance and the terms of the Rights, the terms of the offering thereof and related matters (for purposes of this paragraph 3, the “
Authorizing Resolutions
”), (b) the effectiveness (without termination or rescindment) of the Registration Statement, as finally amended (including any post-effective amendments), under the Securities Act, (c) the due authorization, execution and delivery of (i) the rights agreement to be dated on or about the date of the first issuance of the applicable Rights thereunder, by and between the Company and a rights agent to be selected by the Company (a “
Rights Agreement
”) and (ii) any certificates relating to the Rights, (d) the delivery and filing of an appropriate prospectus supplement with respect to the offering of the Rights in compliance with the Securities Act and the applicable rules and regulations thereunder, (e) approval by the Board of, and entry by the Company into, and performance by the Company under, any applicable Rights Agreement, in the form filed as an exhibit to the Registration Statement, any post-effective amendment thereto or to a Report of Foreign Private Issuer on Form 6-K, pursuant to which the Rights may be issued and sold, (f) due establishment by all necessary corporate action and in conformity with the Articles (as then in effect) and the Rights Agreement and any rights certificates, of the terms of the Rights and of their issuance and sale, (g) due execution and counter-signature, in accordance with the provisions of the Rights Agreement, and due issuance, sale and delivery, in accordance with the provisions of any such Rights Agreement, the Registration Statement and the prospectus included therein, of the Rights and (h) receipt by the Company of the consideration for the Rights as provided for in the Authorizing Resolutions and in accordance with the provisions of any such Rights Agreement, such Rights will constitute valid and legally binding obligations of the Company.
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4.
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With respect to the Units, assuming the (a) taking of all necessary corporate action to authorize and approve the issuance and the terms of the Units and any Securities that are components to the units, the terms of the offering thereof and related matters (for purposes of this paragraph 4, the “
Authorizing Resolutions
”), (b) the effectiveness (without termination or rescindment) of the Registration Statement, as finally amended (including any post-effective amendments), under the Securities Act, (c) the due authorization, execution and delivery of (i) the Unit Agreement to be dated on or about the date of the first issuance of the applicable Units thereunder, by and between the Company and a rights agent to be selected by the Company (a “
Units Agreement
”) and (ii) any certificates relating to the Units, (d) the delivery and filing of an appropriate prospectus supplement with respect to the offering of the Units in compliance with the Securities Act and the applicable rules and regulations thereunder, (e) approval by the Board of, and entry by the Company into, and performance by the Company under, any applicable Units Agreement, in the form filed as an exhibit to the Registration Statement, any post-effective amendment thereto or to a Report of Foreign Private Issuer on Form 6-K, pursuant to which the Units may be issued and sold, (f) due establishment by all necessary corporate action and in conformity with the Articles (as then in effect) and the Units Agreement and any rights certificates, of the terms of the Units and of their issuance and sale, (g) due execution and counter-signature, in accordance with the provisions of the Unit Agreement, and due issuance, sale and delivery, in accordance with the provisions of any such Units Agreement, the Registration Statement and the prospectus included therein, of the Units and (h) receipt by the Company of the consideration for the Units as provided for in the Authorizing Resolutions and in accordance with the provisions of any such Units Agreement, such Units will constitute valid and legally binding obligations of the Company.
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5.
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With respect to the ATM Shares, assuming that prior to the issuance of any of ATM Shares under the Sales Agreement, the price, number of ATM Shares and certain other terms of issuance with respect to any specific placement notice delivered under the Sales Agreement will be authorized and approved by the Board or a pricing committee of the Board in accordance with Israeli law, all corporate proceedings necessary for the authorization, issuance and delivery of the ATM Shares shall have been taken and, upon issuance pursuant to the terms of the Sales Agreement and in accordance with resolutions of the Board related to the offering of the ATM Shares, the ATM Shares will be validly issued, fully paid and non-assessable.
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You have informed us that
you intend to issue the Securities from time to time on a delayed or continuous basis, and this opinion is limited to the laws,
including the rules and regulations, as in effect on the date hereof. We understand that prior to issuing any Securities you will
afford us an opportunity to review the corporate approval documents and operative documents pursuant to which such Securities are
to be issued (including the Authorizing Resolutions, a Securities Agreement (if applicable) and an appropriate prospectus supplement),
and we will file such supplement or amendment to this opinion (if any) as we may reasonably consider necessary or appropriate by
reason of the terms of such Securities.
With respect to our opinion
as to the Shares, including any Ordinary Shares issued upon exercise or conversion of any Securities and the ATM Shares, we have
assumed that, at the time of issuance and sale and to the extent any such issuance would exceed the maximum share capital of the
Company currently authorized, the number of Ordinary Shares that the Company is authorized to issue shall have been increased in
accordance with the Company’s Articles and as described in the Registration Statement such that a sufficient number of Ordinary
Shares are authorized and available for issuance under the Articles.
Members of our firm are
admitted to the Bar in the State of Israel, and we do not express any opinion as to the laws of any other jurisdiction. This opinion
is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated.
We consent to the filing
of this opinion as an exhibit to the Registration Statement and to the reference to our firm appearing under the caption “Legal
Matters” and “Enforceability of Civil Liabilities” in the prospectus forming part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section
7 of the Securities Act, the rules and regulations of the Commission promulgated thereunder or Item 509 of the Commission’s
Regulation S-K under the Securities Act.
This opinion letter is
rendered as of the date hereof and we disclaim any obligation to advise you of facts, circumstances, events or developments that
may be brought to our attention after the effective date of the Registration Statement that may alter, affect or modify the opinions
expressed herein.
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Very truly yours,
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/s/ Meitar Liquornik Geva Leshem Tal
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Meitar Liquornik Geva Leshem Tal
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Exhibit 5.2
Boston Brussels Chicago Dallas Düsseldorf Frankfurt Houston London Los Angeles Miami
Milan Munich New York Orange County Paris Rome Seoul Silicon Valley Washington, D.C.
Strategic alliance with MWE China
Law Offices (Shanghai)
March 26, 2018
Galmed Pharmaceuticals Ltd.
16 Tiomkin St.
Tel Aviv 6578317
Israel
Re:
Galmed Pharmaceuticals Ltd Registration Statement on
Form F-3
Ladies and Gentlemen:
We have acted as U.S.
special counsel to Galmed Pharmaceuticals Ltd., an Israeli company organized under the laws of the State of Israel (the “Company”),
in connection with the filing of a registration statement on Form F-3 (the “Registration Statement”) to be filed under
the Securities Act of 1933, as amended (the “Securities Act”), with the U.S. Securities and Exchange Commission (the
“Commission”). The Registration Statement is being filed for the registration of the following securities which may
subsequently be allotted and issued by the Company up to an aggregate initial offer price of $150,000,000 of (i) ordinary shares
of NIS 0.01 each (the “Ordinary Shares”), (ii) debt securities of the Company (“Debt Securities”), (iii)
warrants to purchase Ordinary Shares (the “Warrants”), (iv) rights to purchase Ordinary Shares (“Subscription
Rights”) and (v) units consisting of Ordinary Shares, one or more Debt Securities, Warrants or Subscription Rights, in any
combination (“Units”) (together, the “Securities”).
For purposes of this
opinion letter, we have assumed that the Debt Securities will be either senior debt securities or subordinate debt securities and
will be issued pursuant to a senior debt indenture or a subordinate debt indenture, respectively (collectively, the “Indentures”),
forms of which will be filed as exhibits to the Registration Statement. We have reviewed such documents and made such examination
of matters of fact and questions of law as we have considered appropriate for purposes of this letter.
We are opining herein
only as to the internal laws of the State of New York, and we express no opinion with respect to the applicability thereto, or
the effect thereon, of the laws of any other jurisdiction, or as to any matters of municipal law or the laws of any local agency
within any jurisdiction. With respect to the laws of the State of Israel, we understand that you are relying upon the opinion,
dated the date hereof, of Meitar Liquornik Geva Leshem Tal, counsel to the Company in Israel, and our opinion is subject to the
same assumptions, qualifications and limitations with respect to such law as contained in such opinion of Meitar Liquornik Geva
Leshem Tal. We express no opinion herein regarding the validity or issuance of the Ordinary Shares, Warrants, Subscription Rights
or Units, which matters are being addressed in such opinion of Meitar Liquornik Geva Leshem Tal.
We have examined signed
copies of the Registration Statement and have also examined and relied upon minutes of meetings of the Board of Directors of the
Company as provided to us by the Company, the articles of association of the Company, as restated and/or amended to date (the “Articles”),
and such other documents as we have deemed necessary or appropriate for purposes of rendering the opinion hereinafter set forth.
In addition, we have examined and relied, to the extent we deemed proper, on certificates of officers of the Company as to factual
matters, and on originals or copies certified or otherwise identified to our satisfaction, of all such corporate records of the
Company and such other instruments and certificates of public officials and other persons as we have deemed appropriate. In our
examination, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the original documents
of all documents submitted to us as copies, the genuineness of all signatures on documents reviewed by us and the legal capacity
of natural persons. Other than our examination of the documents indicated above, we have made no other examination in connection
with this opinion.
U.S.
practice conducted through McDermott Will & Emery LLP.
340 Madison Avenue New York New York 10173-1922 Telephone: +1 212 547 5400 Facsimile: +1 212 547 5444 www.mwe.com
Page 2
We have assumed (a)
that each of the Securities and each applicable agreement pursuant to which such Securities will be issued will be duly authorized,
executed and delivered by the parties thereto in accordance with applicable law, consistent with the procedures and terms described
in the Registration Statement and the applicable Prospectus Supplement and in accordance with the Company’s Articles, (b)
that each of the Securities will be validly issued, fully paid and nonassessable (to the extent applicable), (c) that the Debt
Securities, the Indentures, the Warrants, the Subscription Rights and the Units will constitute legally valid and binding obligations
of the parties thereto (other than the Company), enforceable against each of them in accordance with their respective terms, and
(d) that the status of each of the Debt Securities, the Indentures, the Warrants, the Subscription Rights and the Units as legally
valid and binding obligations of the parties will not be affected by any (i) breaches of, or defaults under, agreements or instruments,
(ii) violations of statutes, rules, regulations or court or governmental orders, or (iii) failures to obtain required consents,
approvals or authorizations from, or to make required registrations, declarations or filings with, governmental authorities.
Subject to the foregoing
and the other matters set forth herein, it is our opinion that as of the date hereof, when (i) the Registration Statement, as finally
amended, is declared or has otherwise become effective under the Securities Act, (ii) the Securities have been duly authorized,
executed and delivered by all necessary corporate action of the Company, (iii) the specific terms of any particular series of Debt
Securities have been duly established in accordance with the Indentures and applicable law and authorized by all necessary corporate
action of the Company (including, without limitation, by the adoption by the board of directors of the Company of resolutions duly
authorizing the issuance and delivery of such Debt Securities), and (iv) any such Debt Securities have been duly executed and issued
by the Company, duly authenticated by the applicable trustee in accordance with the Indentures and duly delivered by or on behalf
of the Company against payment therefor in the manner contemplated by the Registration Statement or the related prospectus and
by such corporate action, (1) the Debt Securities will be valid and binding obligations of the Company, enforceable against the
Company in accordance with the terms of the Indentures, (2) the Warrants will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms to the extent governed by New York law, (3) the Subscription Rights
will be valid and binding obligations of the Company, enforceable against the Company in accordance with their terms to the extent
governed by New York law, and (4) the Units will be valid and binding obligations of the Company, enforceable against the Company
in accordance with their terms to the extent governed by New York law.
To the extent that
the obligations of the Company under the applicable indenture governing the Debt Securities may be dependent upon such matters,
we have assumed for purposes of this opinion (i) that the Trustee is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization and is duly qualified to engage in the activities contemplated by the indenture governing
such Debt Securities and (ii) that the indenture has been duly authorized, executed and delivered by and constitutes the legal,
valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms, except that the enforceability
thereof may be limited by or subject to bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or other similar
laws now or hereafter existing that affect the rights and remedies of creditors generally and equitable principles of general applicability.
Page 3
Our opinion set forth
above is subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, (ii) general equitable principles (whether considered in a proceeding
in equity or at law), (iii) an implied covenant of good faith and fair dealing and (iv) the effects of the possible application
of foreign laws or foreign governmental or judicial action affecting creditors’ rights.
The opinion set forth
herein is rendered as of the date hereof, and we assume no obligation to update such opinion to reflect any facts or circumstances
which may hereafter come to our attention or any changes in the law which may hereafter occur (which may have retroactive effect).
This opinion is rendered to you in connection with the filing of the Registration Statement referenced above. This opinion may
not be relied upon for any other purpose, or furnished to, quoted or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.
We hereby consent to
the reference to our firm under the caption “Legal Opinions” in the Registration Statement and to the use of this opinion
as an exhibit to the Registration Statement. In giving this consent, we do not hereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
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Very truly yours,
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/s/ McDermott Will & Emery LLP
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Exhibit 23.1
CONSENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation
by reference in this Registration Statement on Form F-3 of our report dated March 13, 2018 relating to the financial statements
of Galmed Pharmaceuticals Ltd. (the “Company”) appearing in the Annual Report on Form 20-F of the Company for the year
ended December 31, 2017.
We also consent to the
reference to us under the heading “Experts” in the Prospectus, which is part of this Registration Statement.
Date: March 26, 2018
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/s/ Brightman Almagor Zohar & Co.
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Brightman Almagor Zohar & Co.,
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Certified Public Accountants
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A Member of Deloitte Touche Tohmatsu Limited
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